Ionis Pharmaceuticals, Inc. (IONS) Earnings Call Transcript & Summary

Hello, everyone. My name is Mitchell Kapoor. I'm a senior biotech analyst at H.C. Wainright. I'm joined today by Brett Monia, the CEO of Ionis Pharmaceuticals. Brett, thank you so much for joining us today.

Thank you. It's great to be here.

So maybe to set the stage for our discussion. You could just give an overview of where the company is at today. You've had a lot of recent updates, big pipeline. But what's the focus of Ionis today? What are the key initiatives and we can go from there?

Yes, wow, we've enjoyed some extraordinary success progress, over the last couple of years, really highlighted by this year, where we've had -- some recent, a big, big successful outcomes. But just -- just 3 weeks ago, we had DAWNZERA, the first ever RNA-targeted medicine for prophylactic treatment of hereditary angioedema approved by the FDA and we can talk about that. We're well into the launch now executing operationally. And although it's early days, it's going well. And of course, just last week, right after Labor Day weekend, we shared top line data from our olezarsen Phase III study in severe hypertriglyceridemia. Remarkable outcome for this prevalent disease that really is in desperate need for more effective treatments to manage triglycerides and acute pancreatitis. Truly remarkable outcome in that study and we're preparing for a supplemental NDA and to get that drug approved on the heels of the first indication for that medicine, Tryngolza which is now launched for familial chylomicronemia syndrome or FCS. So that's just the tip of the iceberg, but there's been a lot of success and the pipeline continues to deliver over and over again.

Great. So with the limited time that we have today, a lot of it will focus on olezarsen and DAWNZERA just because it's the most recent updates for the company, a lot of focus on that. One of the most interesting things that came out of the CORE and CORE2 studies recently was the 90% roll over into the open label extension, which kind of highlights the patient appetite for olezarsen in the SHTG population. Is there anything you can say about you know, now that these patients are in the open-label extension, what are you seeing in terms of persistence adherence and tolerability in these patients? And how do you think it will predict real-world use of olezarsen?

Yes. It's really remarkable. A study that enrolled more than 1,000 patients has such a high enrollment rate into the open-label extension a 12-month study, more than 90% as you said, have elected to roll into the open-label extension. And I think it really reflects the first of all the excellent tolerability in the safety profile that olezarsen has demonstrated. But also recognition by these patients that they want -- they need more effective treatments to manage severely elevated triglycerides. Remember, most of these patients were on treatment, right, to manage SHTG and they're inadequate. So they already sold that they need better treatments. They're on fibrates, omega-3, fatty acids, statins and so on. And yet they still elected to enroll into the study. So they get it. They get the need to reduce the risk of acute pancreatitis that can be fatal, to reduce the risk of diabetes, or organ failure and so on. So I think it reflects the tolerability profile and the severe the serious unmet need for more effective treatments to manage severely elevated triglycerides.

Great. And yes, the acute pancreatitis production is a huge potential impact on commercialization. You showed 85% acute pancreatitis production. The next question we have is how do you translate that into the payer models? Will you publish formal health economic data to accelerate broad access pr how do you see that playing out with peers?

Well, I mean the results were, like I said, we're incredibly positive. We achieved 72% mean reductions of triglycerides on top of standard of care in these patients with triglycerides in the order of 800 or 900 or so in our studies and with an 85% reduction in an acute pancreatitis versus placebo, highly statistically significant in the first time ever demonstrated. Now in the HCP community, the physicians that treat patients severe hypertriglyceridemia, acute pancreatitis was a remarkable achievement. It's proven a hypothesis that's been out there for decades that if you can lower triglycerides in this patient population, we get them at arm's rate for acute pancreatitis, but they are already be convinced that you need to lower triglycerides in this patient population to do so substantially. But on the payer side of things. And on the pricing side of things, having that acute pancreatitis data is incredibly important to really demonstrate not just the reduction in biomarker, triglycerides, which have been linked to AP, but actually to show to payers that you're going to keep patients out of the hospital, prevent mortality potentially, prevent recurrent acute pancreatitis, which is common in this patient population for years and years to come if you can just manage the triglycerides. So from a payer and endpoint, it's going to be incredibly important to get coverage quickly for patients and also it allows us to -- it gives us leverage for optimizing pricing once we get to that highly prevalent disease or condition severe hypertriglyceridemia. And then outside the U.S., of course, outcome data is often even more important to drive payer and pricing because the desire to have outcome data much more in Europe and elsewhere compared to the U.S. So very important for payer, very important for pricing and truly remarkable demonstration has never been shown before.

Absolutely. And we think that's an amazing data and assuming it receives approval in the SHTG population. We're seeing 3 entry points, and I think maybe that's been corroborated by some of your statements, but would be curious to hear your thoughts on the patients who are above 500 mg per deciliter without prior AP. Those who are between 880 mg and 1,000 mg at very high risk even without a history of AP and then the patients who are above 1,000 mg. Where do you see kind of olezarsen making inroads first in SHTG populations and before broadening into the broader 500 mg to 880 mg segment without AP?

So there are more than 3 million people in the United States who are classified as having severe hypertriglyceridemia, that is triglycerides above 500 mg. Normal triglycerides are 150 mg and below. And they are at risk for the problems that I already highlighted. Highlight the most important on the first acute pancreatitis, which can be fatal. We are going to focus first, our market strategy on the high-risk patient population, like you say. Okay? And that's really the patients that have had a history of acute pancreatitis, right? Because once you've had one event, the chances of having another event goes up exponentially, and it continues after that until you can have complete pancreatic failure and multi-organ failure. The second -- and it's about 50,000 people in the U.S. The second segment is much larger. It's patients that are above 880 milligrams per deciliter, which is about 600,000 people in the United States. What's so special about 880? 880 is when your triglycerides are packaged almost entirely as chylomicrons, not in lipid particles like VLDL. But they're now on chylomicrons, which cause occlusion of the pancreatic capillaries and causing pancreatic failure. So these patients are at the highest risk for acute pancreatitis and that's the second segment that we're going to focus on those 2 segments. And then eventually, we will evolve or we will emerge and expand into patients that have high triglycerides and have other comorbidities like diabetes, like heart disease, like hypertension, coupled with their highest triglycerides, puts them at high risk for all kinds of problems, and that will be the sort of where we evolve into and that gets us into the 1 million patient plus segment in the U.S. and then we can expand from there. But that's certainly, that's a lot to bite off right out of the gate and it's really, really high unmet need. We're really excited about being first to market with this new class of RNA-targeted medicines that are going to really -- that are really going to have a substantial benefit to patients with SHTG.

Yes, and GLP-1s are using some of these populations that may overlap with diabetes, obesity, metabolic syndrome, these overlap with SHTG but they have -- GLP-1s have a modest effect on lowering TGs with the risk of pancreatitis. So it makes it a controversial choice in this setting. Wondering how you see olezarsen? Is it going to be positioned complementary and dial back to GLP-1 or maybe as a safer alternative?

The GLPs are, of course, are being -- are approved for diabetes and for obesity. Our drug is for severe hypertriglyceridemia, but I think your point is that there's a lot of overlap, right? There's a lot of time for SHTG patients have severely elevated triglycerides and can be obese or diabetic. So they will be used complementary, but they won't be used in place of each other. Like you said, GLP-1s have a modest reduction in triglycerides. Nothing like the 72% or so mean reductions that we're seeing for olezarsen, in our study, and they come with an added risk of pancreatitis. So it's the exact -- it's kind of contraindicated in that sense to be using patients that are at high risk for acute pancreatitis. I could tell you that, although it wasn't the most common med in our study, everybody in our study, we're on standard of care fibrates, fish oils and statins were the most common. Patients that are on GLP-1 in our study, and they benefited from olezarsen, so absolutely complementary.

Got you. Very helpful. Okay. And then RNA medicines are new to cardiometabolic community, what do you see the biggest barriers to physician adoption? And how are you addressing those ahead of the launch?

Yes, we actually have seen a lot of enthusiasm for RNA targeted medicines. So of course, we're not a vaccine. We're targeting RNA. We're either modifying the function of the RNA or in the case of olezarsen, we are causing -- promoting the degradation of the RNA thereby for APOCIII, thereby blocking the production of the protein APOCIII from the liver. The enthusiasm by the medical community has been overwhelmingly positive. They love the fact that we're doing cutting-edge science. They love to be working with cutting-edge medicines like this. Today, we have 7 FDA-approved medicines from Ionis, and there are other companies working on RNA targeted medicines too. Of course, with success. And we're expecting several additional, many additional medicines that will be approved, not just for severe rare indications but for broad indications that are coming like olezarsen for severe hypertriglyceridemia, cardiovascular disease and so on. We have safely treated did many tens of thousands of patients chronically on the market today as well -- and then you could double that for clinical trials very safely with our medicines. So we're actually very pleased with the positive receptivity of the HCP community for this new class of medicines.

And the price of olezarsen at $10,000 to $20,000. Looks quite modest on a per patient basis. But once the volumes scale, the budget impact could be huge for payers. So how do you avoid payer pushback on pricing and preserve net price durability as a market?

Yes. So just level set for everybody. Today, olezarsen, brand name Tryngolza was approved and launched for the rare disease familial chylomicronemia syndrome, which is severely elevated triglycerides due to a genetic cause. SHTG is no known genetic cause of it, the disease. So it's a common disease. Today, Tryngolza is launched with a rare disease price, it's not surprising. When we get into the SHTG and we launch in SHTG, we will bring that price down to match a highly prevalent disease like SHTG. We have to and we will thread the needle such that we ensure patient access, that patients who need this drug can get this drug both from a cost standpoint, from a payer standpoint, coverage and so on. But also to make sure that we bring the value to our shareholders, the value to Ionis that is appropriate, and we should receive. The $10,000 to $20,000 dollar range that you highlighted was preliminary. When we first began to think about what the pricing step down would be from a rare disease to a common disease. We still -- we have a lot of work to do. That was prior to having data. Certainly, the acute pancreatitis state in the magnitude of triglyceride lowering that were achieved in our Phase III study, we'll provide more leverage for pricing but we have a lot of work to do between now and the early fourth quarter of next year when we launched this drug on making sure we get the right price to ensure patient access and to drive value for our shareholders.

Great. And when would you expect ex U.S. momentum for olezarsen and SHTG? Is that something that could be a reality in 2027? Or is it something that is a little bit further out?

Well, the first step is to get olezarsen launch in Europe for FCS and we're expecting the approval in Europe very soon in the second half of this year. We have a partner, a commercial partner in Sobi to launch this drug. They're excited about the opportunity for FCS. They're really excited about the data we shared last week in SHTG. We expect to start seeing revenue for FCS next year, but it will take some time to get onto the market for SHTG. So it'll probably be sometime after that.

Okay. Great. And then CORE and CORE2 data will be presented later this year. We're targeting a medical meeting. What analysis should we expect to see? Would it be responder breakouts, absolute AP event counts, subgroup safety? And could we assume AHA might be a viable venue?

AHA would be thrilled to have to be able to present the full data set at AHA with a simultaneous publication. We don't know that yet. We're still working through the submission and the acceptance for a late breaker, but that's certainly our goal. The data -- we're going to present as much data as we can and do realize that we still are going through the data. It's a lot of data. What we reported last week was top line data. But we will report on the details of the acute pancreatitis. For example, how does the 50-milligram dose compared to the 80-milligram dose, how did the first pivotal study CORE compared to CORE2 recurrent versus first-time AP events in this study. We're going to try to go through all of that. But then in addition to that, AP was a key secondary outcome. We will look through at all the other secondary outcomes like effects on VLDL cholesterol, remnant cholesterol ApoB 100, how many patients were we able to drive below 500? So get them out of -- the definition of SHTG. What percentage of patients were we able to drive below 150, normal triglyceride levels. It's really exciting. I could tell you that we achieved both of those, and you'll see the numbers on percentages when we share the data. And of course, on more details on safety and tolerability, which was very favorable. So we'll do everything we can and get all that data out there in the medical presentation, but it will certainly be contained in a publication simultaneously.

Very exciting. We're looking forward to that. Switching to DAWNZERA for a bit. So we're a couple of weeks into the launch now. And could you just talk about what you're seeing in terms of early signals? Would you expect this to be a switch market, naive market? And are you seeing any indication that's tracking as such?

Too early to say on what types of patients switch patients, newly diagnosed patients that are coming out of DAWNZERA, I mean it's just been 3 weeks. But I can tell you that operationally, our team has done a fantastic job. We had, first of all, we had our first scripts coming into Ionis hours after the announcement of the launch from HCA. That's pretty cool. We then had drug in channel within a week and drug in patients' hands within 3 weeks. So we actually have patients now self-injecting using the auto-injector DAWNZERA for as a prophylactic for HAE. And we think that, that bodes really well for the success of this launch. This is a switch market. In the United States, more than 70% of patients with HAE are on a prophylactic treatment already. However, patients are not satisfied. The current treatments either are not providing the efficacy, safety -- efficacy, tolerability or convenience that they desperately need. And we believe DAWNZERA checks all 3 of those boxes, and we have switch data. We have a clinical trial that we conducted a prospective switch study, which we invited patients that were on standard of care today for prophylactic treatment of HAE to come on to DAWNZERA and to show that we can safely switch them with no gaps in protection. We were 100% effective at doing that. So there were no breakdown in coverage. There was no breakdown on coverage. And we were able to further reduce their attacks, more than 60% further reduction in attacks compared to their baseline values on their previous treatments. And in an independent survey on quality of life and how patients are doing, more than 80% of patients said that they prefer DAWNZERA over their previous treatment. So it's a switch market, and it will take some time to get those switches happening, right? It's not the -- unlike Tryngolza for FCS, which is the first ever FDA-approved medicine. Here, we -- it's going to take a little bit of time to launch the -- or to switch these patients over, but we're confident we're going to be successful.

And while it's a switch market, obviously, the data showing that people prefer DAWNZERA, would you expect to generate real-world data after launch that shows patients prefer this and we should move this into the first line?

Yes. Well, we believe that DAWNZERA will be used in first-line treatment because of the advantages that I highlighted already on efficacy, convenience and tolerability. The convenience of DAWNZERA, can be administered either every 4 weeks or every 8 weeks using a simple auto injectors, painless auto-injector that takes 10 to 15 seconds to administer. So there's no reason why newly diagnosed patients could not be on DAWNZERA and we expect to have that. But as I said before, that's the minority of the patients in the United States. Most are on a treatment. But newly diagnosed patients, and by the way, diagnosis happens typically within the first 10 years of life. So these are young individuals that get diagnosed with this. Our drug is indicated for 12 years and older but newly diagnosed patients, we don't see any reason why they couldn't go on to DAWNZERA. But majority will be switches, and we think we're going to do really well in switching patients over.

And it's expected DAWNZERA could be $0.5 billion opportunity at peak. Can you kind of give us the sense of what you're thinking about the ramp to peak? Is that a slow steady cadence? Or are there inflection points to get there?

It will be steady, but it will be slower than a drug that is first to market, right? Because of the time it's going to take to switch patients, the time it's going to take for patients to set up appointments with their allergists or their immunologist and say, "Okay, I want to switch." Or the HDP says, "I want to switch you. Okay, this is how you do it. Let's get it going and that kind of thing." It just takes a little bit longer. So the $500 million plus is the revenue expectations that we have stated, but that's for the U.S., of course, outside the U.S., we have a partner, Otsuka, who will also add to that. But it will take a little bit of time to ramp it up, but we're confident we're going to get there.

Great. And maybe finally, if you could just give us the next 12 to 18 months ahead for Ionis and what you think could be some valuable inflection points for the company that investors should watch for.

There's a lot going on, a lot of exciting upcoming events. Of course, we're looking forward to HTG. We have 6 Phase III readouts between this -- the remainder of this year and next year with both wholly owned programs and our partnered program, including our drug for Alexander's disease, severe rare leukodystrophy. That's wholly owned by Ionis, that's second half of this year. Next year, we have pelacarsen with our partner, Novartis, for LP(a)-driven cardiovascular disease. Another outcome trial -- or cardiovascular outcome trial in the second half of next year eplontersen, brand name is WAINUA which is approved for TTR polyneuropathy. We expect Phase III data for TTR cardiomyopathy, a block -- another blockbuster opportunity like olezarsen in the second half of next year. And then additional Phase III readouts from our partnered pipeline next year as well. We're going to share quite a bit of this data in early October at our R&D Day, which we call now Innovation Day of our pipeline, our commercial strategy, our finances -- financial plans and the technology advancements that we're making. So I recommend everybody to join us for that.

Great. A super exciting year ahead. Really appreciate your time, Brett, and thank you all for joining us today in the room. Thank you.

Thanks, Mitch.