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

All right. Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the Biotech analysts here, and it's my pleasure to introduce Brett Monia, our CEO from Ionis Pharmaceuticals. But before we get started, I just need to read a quick disclosure statement for important disclosures. Please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, Brett, thanks for joining us today. We really appreciate it. And maybe to kick things off, if you could just give an introduction to Ionis maybe for people that are less familiar with your story?

Yes. Thanks, Mike. Good afternoon, everybody. It's a pleasure to be here. So Ionis, we are a genetic medicines company focused on RNA targeted medicines, of course, with 7 approved -- FDA-approved medicines on the market today for severe, rare genetic diseases and a pipeline -- a deep pipeline that has today 9 Phase III programs that are due to readout this year, next year and for several years to come. We've had extraordinary progress over the last -- a little bit in the last couple of years, especially this year, really, really exciting results this year from our pipeline. It was -- it began in the late December, approval of Tryngolza, the first-ever FDA-approved medicine for familial chylomicronemia syndrome, FCS. This is a disease -- a genetic disease in which patients suffer from severely elevated triglycerides and they have all kinds of comorbidities but the biggest risk is potentially fatal acute pancreatitis. That launch is off to a great start. It's our first independent commercial launch in our history. And then just last week, we reported second -- results for a Phase III program for a second indication for Tryngolza, olezarsen for a broad patient population, nonrare prevalent disease, called severe hypertriglyceridemia in which we really had blockbuster amazing results from that program. And we're looking forward to filing the NDA -- supplemental NDA for that program by the end of the year. And just 3 weeks ago, we had approval of our second independent launch, a medicine called DAWNZERA for hereditary angioedema, and that launch is now underway. So we're really proud of the great progress we're making, and it's setting us up for a lot more exciting news to come later in the second half of this year and well into next year.

Great. Thanks for that introduction. And obviously, you've had a lot of success recently launching your first drug and getting the second drug approved as you mentioned, but I thought maybe we could start with Tryngolza in FCS. You mentioned you're off to a strong start there. It's only been 2 quarters so far, but you've sort of put up numbers ahead of expectations. So maybe talk a little bit about what's behind that? What's driving that?

Yes. So again, the first ever FDA-approved medicine for this severe debilitating disease, familial chylomicronemia syndrome, FCS. The launch is off to a very strong start, has really exceeded all external consensus estimates -- estimations across the board with $26 million in revenue through the first 2 quarters and we've now increased our guidance for the community to be in the $75 million to $80 million range for the year. Pretty remarkable for this rare disease that afflicts about 3,000 people in the United States. The reason for the success is, of course, it starts with the drug profile. It's really shown -- has shown amazing triglyceride reductions in FCS patients with substantial reductions in acute pancreatitis and substantial reductions in hospitalizations as well for these patients. So it's a great drug profile, very well tolerated, very convenient for individuals, the ability to self-administer using a simple auto-injector once per month. So it starts there. The other success that we've had, of course, is with our commercial organization, and our medical organization, doing really a fabulous job in identifying patients to identify and confirm that they are indeed FCS patients, getting them on to drug quickly and really having very positive payer interactions, whether it be government coverage or commercial coverage, it's all going very well. And then lastly, the team has done an outstanding job in converting patients that were in our expanded access program in the U.S. as well as from our clinical trials, converting them over to commercial drug as well. So all that has really contributed to a very successful launch to date. And we expect the launch to continue to go well through this year and well into next year ahead of our expected launch in severe hypertriglyceridemia.

And you mentioned the groundbreaking results you recently had in sHTG. But before we dig into some of those results, maybe just talk a little bit about the market opportunity in terms of the patient population and what the unmet need looks like there?

Yes. We couldn't be more pleased with the results of the Phase III trials CORE and CORE2 in patients with severe hypertriglyceridemia that we announced the day after Labor Day. Like FCS, these patients, these individuals suffer from a whole host of problems due to severely elevated triglycerides. Like FCS patients, their biggest risk is a potentially fatal, almost always debilitating attack of the pancreas and acute pancreatitis attack, severe inflammation of the pancreas. Unlike FCS, this is a prevalent disease. It afflicts millions of people in the United States who have triglycerides above 500 milligrams per deciliter, which is the definition of severe hypertriglyceridemia. Many of these patients are in the 1,000s as were in our trial. And there are no effective treatment options available for these patients today. Current treatments for sHTG are generic medicines like fibrates, omega-3 fatty acids, statins, what have you. They have very mild effects on reducing triglycerides in severely elevated conditions. The results we announced last week were groundbreaking, validating all kinds of hypotheses that have been in the medical community for decades that if you lower triglycerides enough in this patient population, that you can actually reduce the risk of acute pancreatitis. So we've been believed, never been proven. We proved it. Not only did we achieve substantial reductions in triglycerides of 72% mean triglyceride reduction on top of standard of care in our CORE trial, we also demonstrated an 85% statistically significant reduction in acute pancreatitis events in the trial, all with favorable safety and tolerability. So really groundbreaking results that we couldn't be more pleased with.

Can you just talk about acute pancreatitis and sort of the analysis you did there and how sort of combine the two studies and how unique that was?

Yes. We really took an innovative approach, highly innovative approach to the clinical trial design to maximize the probability that we would be able to see at least favorable trends in reducing acute pancreatitis, let alone statistical significance in reducing it. So there's two trials -- two pivotal trials, CORE and CORE2, both were 12 months long, in total a little over 1,000 patients with severely elevated triglycerides, 13% to 22%, depending on the trial had a history of acute pancreatitis in the last 10 years. The primary endpoint in both CORE and CORE2 was at 6 months and that was on triglycerides compared to placebo. We evaluated two doses, I forgot to mention that, 50 milligrams, 80 milligrams in placebo. The primary endpoint in triglycerides was at 6 months. That's where we achieved the 72% mean reductions in CORE that I mentioned before. However, to maximize the probability of a successful outcome in acute pancreatitis, we wanted to power the study as strongly as possible. So we let the studies go out for the AP endpoint, a key secondary endpoint at 12 months. And we combined CORE and CORE2 treatment arms, olezarsen versus the combined CORE and CORE2 placebo. And that really innovative design allowed us to really demonstrate highly statistically significant reductions in acute pancreatitis. That, of course, was all prespecified and agreed to with the FDA as an appropriate endpoint in the trial.

You shared a lot of the top line results, but you plan to share some detailed data, I think, later this year at some point. Maybe talk a little bit about that and if there's other additional analyses you plan to include in that or any other thing we should be looking out further?

Yes, we're looking forward to it. We're really looking forward to sharing the full data set at a medical meeting in the second half of this year. There are some obvious meetings to target. We're hoping to get on late-breaking clinical trial opportunities to present the data. Also, we'll look to present a simultaneous publication as well for the full data set. What we're looking to present, of course, are the details, not just on triglyceride lowering on acute pancreatitis, including a number of events in the trial, events in CORE versus CORE2, 50 milligram dose versus 80 milligram dose, it all looks very good. And we're looking forward to sharing that. The time course for reductions of acute pancreatitis compared to placebo history versus non -- patients without a history of acute pancreatitis. So all that will come. But the other secondary endpoints will be important too, right? Not only will we share what I think is very impressive reductions in apoC-III, the target for olezarsen apoB100, a risk factor for cardiovascular disease, remnant cholesterol and so on. We're also going to share results on percentage of patients that we actually got below 500 milligrams per deciliter, which means that we got them below the definition of severe hypertriglyceridemia. Also, the percentage of patients we got below 150 milligrams per deciliter, which now means that you have normal triglycerides. And the results are impressive. So all those secondary endpoints will be shared along with a good update on, of course, the favorable safety and tolerability.

Okay. So more to look forward to from the data. And I guess if you could talk about next steps from here on the regulatory front and kind of what are the pieces of the puzzle to sort of get that moving forward?

The team is actively -- they actually started preparing some of the NDA material, supplemental NDA materials ahead of the data readout to get the submission completed as rapidly as possible. We'll get that done by the end of the year. We're -- our base case right now, we're assuming a standard supplemental NDA review of 10 months, which puts us in an approval and launch in the early fourth quarter of next year. In addition, we're working through the presentation of source, of course, and very importantly, our commercial organization has already begun building the commercial team to launch sHTG, building off of the FCS commercial team. And all that will be in place in the first half -- by the first half of next year.

In terms of adding to your commercial infrastructure, maybe give a little bit more detail around that in terms of what needs to be done and how big a lift that is from here?

Yes. So we -- right now, we have about 30 sales members in the field for FCS that will grow to somewhere 200 or maybe above 200 for the severe hypertriglyceridemia to cover about 20,000 HCPs in the U.S. that are rapidly -- that are currently managing sHTG patients. These are your lipid specialists, cardiologists, endocrinologists. We're also building our omnichannel. We have omnichannel capabilities in place already. We're expanding that to make sure we reach as many HCPs as possible. We're doing -- we're conducting extensive market research on pricing. We -- currently, Tryngolza is priced at a rare disease price. For FCS, that will come down to match a prevalent disease, and we have all that work to do, we'll share that. Those are our conclusions when we're getting ready to launch next year. So a lot to do between now and next year to make -- ensure that we fully take full advantage and maximize our success for this blockbuster opportunity, which we have the first drug ever to really meaningfully address severe hypertriglyceridemia.

You mentioned pricing, and I just wanted to get your maybe updated thoughts there, if you have any? In the past, you sort of suggested a range for sHTG but obviously, now you have very strong AP reduction as well. How does that impact your thinking on where you can price it.

Yes. We have a lot of work to do now that we have the data. So now comes the time to roll up our sleeves and really get the work done. Obviously, having such strong triglyceride reduction with outcome data in acute pancreatitis, gives us meaningful leverage to optimize the price in the U.S. as well as in Europe, where outcome data is critically important. So the AP data in Europe for pricing and reimbursement is going to be absolutely -- is very helpful. We will settle on a price to maximize access for the patients, to maximize the number of patients that have easy access to olezarsen while also making sure that we receive the full value that this drug is really providing. So a lot of work to do there. Some of the numbers that we put out there in the past were before we had data and now we have the data. So now it's really time to refine our -- sharpen our pencils and really refine our conclusions on pricing. So a lot of work to do there.

Okay. Great. And maybe we can shift to your second independent launch, DAWNZERA, for HAE approved a couple of weeks ago now. Maybe talk a little bit about the market opportunity there and some of the challenges that these patients with HAE are currently facing?

Yes. Unlike Tryngolza for FCS, where we are first FDA-approved medicine, olezarsen for sHTG were first meaningful treatment for sHTG that we expect to be approved by the FDA next year. HAE prophylaxis is an indication where there are several prophylactic treatments already on the market. So it's very different. With that said, we believe that DAWNZERA has the profile to be the treatment of choice for many patients who suffer with hereditary angioedema. What we know is despite the fact that there are prophylactic treatments on the market today, patients are substantially, significantly underserved. They're unsatisfied with current treatments. They're unsatisfied with the efficacy. They're still getting attacks, unpredictable debilitating attacks that can happen any time without no known triggers. They are unsatisfied with tolerability profiles of current prophylactic treatments and the convenience. They're unsatisfied with the inconvenience of current treatments, at least some of them. Donidalorsen now being launched with a brand name of DAWNZERA checks all three of those boxes. We have shown really remarkable efficacy that's far above 80% reductions in HAE attacks in our Phase III study, that grew into the 90% reduction of attack in our long-term open-label extension studies out to a year, so a very durable efficacy, excellent tolerability and the convenience of using a simple auto-injector self-administered once every 4 weeks or once every 8 weeks, it's up to the patient and the HCP to decide what treatment algorithm they prefer. Not surprisingly, with current prophylactic treatments, what we're seeing and what's been published is that around 20% of patients are switching treatments in the U.S. today as they're unsatisfied. We think we can take advantage of that. A recent Harris Poll that was conducted shows that 9 out of 10 patients with HAE are very much willing to try another treatment option if it becomes available that they think could satisfy their unmet needs, efficacy, tolerability or convenience. And in fact, to that end, recognizing that patients are unsatisfied with their current prophy treatments, we set out to address that directly by conducting a Switch study. Another innovative trial design that we implemented that -- in which we invited patients from the three main prophy treatments that are on the market today in the United States, to come on to a clinical trial in which they got to switch over to DAWNZERA and did so -- and what we found was that patients enrolled and signed up for the clinical trial very quickly, not surprisingly, since they're unsatisfied. We have Phase II data that they saw already, and they're -- I assume they were impressed with the data. And what we found in that trial was not only were we able to prevent any gaps in protection when we wean them off of one treatment and wean them on to DAWNZERA. We were able to reduce their attack rate further compared to their baseline values of 64%. And at the end of that trial, they were asked to fill out an independent survey, a questionnaire on how they felt about their current treatment versus the previous treatment and 84% of patients concluded that they preferred DAWNZERA over their previous treatments for various combinations of efficacy, tolerability and convenience. So we think this drug, although, we're coming into a market that has other treatments there already has the potential to be a preferred treatment of choice for many patients and our team, we're now -- we got approval 3 weeks ago. We got drug in channel within a week and prescriptions have been written and drug is with patients already, really nice operation. We've estimated in the U.S. market peak sales of $500 million for Ionis.

And you mentioned only [indiscernible] approved a couple of weeks ago, you've got product in the channel already. Any sort of early feedback you're hearing or anything you can share there?

Too early on the launch to add any color to that. But what I can tell you is that the sentiment in the HAE community has been very positive, very complementary. We've been working very closely with the HAE Association and other patient groups. And we've been actually very much moved, overwhelmed, at times with the positivity that we've received from the community and how excited they are about DAWNZERA. So we think we're going to leverage that sentiment and execute on our launch, but it's a little early to comment on any color on the launch.

Got it. Maybe we can shift gears a little bit now to WAINUA and maybe start with TTR-PN first and just talk a little bit about some of the recent trends you're seeing there.

Yes. So just to level set eplontersen, WAINUA, the brand name, WAINUA, was developed by Ionis in our first-ever co-development, co-commercialization partnership, that is with AstraZeneca. And we're developing it for two indications, the hereditary polyneuropathy indication, TTR polyneuropathy indication and the TTR cardiomyopathy population. 50,000 patients polyneuropathy, upwards of 500,000 plus in cardiomyopathy. The polyneuropathy indication was approved at the very end of 2023 and the launch has gone well. We believe that based on the overall drug profile, which has been shown for actually not just halting of disease but actually a reversal and improvement of disease in many cases, coupled with the convenience of self-administered auto-injector once per month using a low-volume painless injection has resonated very well with the patient community. So the launch is going well. We're seeing really substantial demand for WAINUA for HATTR polyneuropathy. And we think that the benefits that we're seeing there or the positive sentiment we're seeing there for polyneuropathy is going to resonate and translate very well once we get to the cardiomyopathy indication, not too far down the road.

Maybe we can continue on just the cardiomyopathy there. There's two approved products there, one recent -- or multiple, three, sorry, with two recently launched earlier this year. Just -- any thoughts on the market opportunity a year ago versus how you're thinking now? Is it more optimistic than in the past potentially?

It is. It's a growth market. It's clear that this -- the size of this market, it continues to grow with new entrants coming into the market. It's been estimated to be $20 billion, $30 billion, $40 billion and growing. And we believe that WAINUA, eplontersen, will be treatment of choice and do very well in this market once we get there for cardiomyopathy. There's two classes of mechanisms. There's a silencer class like eplontersen, and then there's the stabilizer class. And both are shown -- both are showing great promise. And obviously, tafamidis first as a stabilizer has proven to be successful on the market. We believe that the silencer class is going to do very well. We believe in the mechanism, will be superior to other mechanisms and will be the preferred treatment of choice for -- as first-line treatment as well as for patients that progress on stabilizers and all patients eventually progress on stabilizers that's been shown as well as for combination usage with stabilizers. The mechanisms can be -- clearly should be complementary to each other. Our cardiomyopathy Phase III study is the largest study by far, that has been ever conducted in TTR cardiomyopathy with more than -- with 1,400 patients in that study. We have a very strong mix of combination with tafamidis as well as monotherapy in the study. And we believe that when we read this study out in the second half of next year, that we're going to have the richest data set, compelling data set not only in the overall population, which is CV mortality and hospitalizations, but in the subgroups that include combination usage with tafamidis, which is very important because tafamidis is the treatment of choice today in the U.S. market and globally really. And having that data for physicians to see the benefits of combination usage is going to go a long way. And we're going to be the ones in the best position to have the best data. So potential benefits of the combination usage.

Got it. Later this year, you're also planning an Innovation Day, I think, in October, if I remember. Maybe just talk about what we should expect?

Yes. In October, we're going to have what we used to call in the past R&D Day, give people a flavor for what this is, but we're more than R&D now as a fully integrated commercial stage biotech company. So we rebranded it as Innovation Day. We're going to provide a really meaningful update on the pipeline, new pipeline products actually, new pipeline programs that we're going to discuss that are in the cardiometabolic space, in the neurology space, our two main franchises. We're also going to share some remarkable progress we're making in the technology, including the efforts we're making in medicinal chemistry that is allowing us to dose much less frequently. So increased durability in different programs. An example I'll highlight is the recent data that our partner, Biogen shared for our SMA program, salanersen, using Ionis novel chemistry that is supporting once per year intrathecal dosing for SMA and that Phase III study is going to start next year. We have other programs that are designed to do similar things as salanersen is doing with IT delivery for CNS diseases once per year. We're going to talk a little bit about that, new targets for -- in technology advancements for targeting neuromuscular diseases, skeletal muscle, heart failure, cardiac myocytes and delivering our drugs across the blood-brain barrier to the CNS. We'll also talk quite a bit about our commercial success to date with Tryngolza. The work we're doing with DAWNZERA and our strategy for sHTG and our strategy for our -- one of our -- one of the leading neurology franchises of anybody, what the strategy will be for upcoming launches for -- expected launches for Angelman syndrome, in Alexander disease to name just two of many. And then, of course, our financial strategy, our financial expectations. We are very much committed to be self-sustaining, cash flow positive with continued revenue growth year-over-year in the near term. And we will also share our plan to get there and what it will take to get there in the near term. So very much looking forward to it. I hope folks can join us.

Yes. So you have a very sort of robust pipeline that you're going to highlight and maybe just a big picture strategy question. How do you balance deciding whether to sort of advance some of these programs on your own versus partnering? Or how do you think about that going forward?

We take a very proactive, aggressive approach to prioritizing our pipeline that starts back in research. So drug discovery prioritization is happening in a formal active way. And then we take that all the way through and we check in on all those programs as they're progressing through IND-supporting tox studies, are they still the priorities that we set, Phase I, Phase II, Phase III and so forth. Today, our prioritization process is very different than what it used to be many years ago when we were a company that was focused on partnering our programs. Today, our top priority and prioritization is what are we going to keep, what are we going to -- how are we going to build our -- continue to build our wholly-owned pipeline, what are the top priorities? Where can we build the synergism -- synergies, I should say, with like our neurology franchise. Synergies, cardiovascular, cardiometabolic franchise, follow-on programs, you'll hear a little bit about Innovation Day too. We're using some of the new chemistries and mechanisms we're developing at Ionis. We have follow-on programs to ensure that the investments we're making in our lead programs launched or to be launched are going to have a lot of longevity for years to come with new chemistries, new molecules against those targets and programs. So those are part of the prioritization exercise. At the end of the day, there will always -- so that's the top priority. There will always be programs that we feel aren't worth the resources, everybody has limited resources, and we have -- we are no different. And if we don't believe that a program will make the cut, we will choose to partner it to make sure that the drug is available for -- gets to patients and it brings additional revenue and upside to Ionis. So -- or other situations, we may learn something new during the course of drug development that we may deprioritize the program and increase priority. But the take-home message is the #1 -- the top priority is to build a wholly-owned pipeline to ensure we're really generating greatest value for shareholders, for patients and for Ionis.

Yes, may we could ask -- we got a few minutes left here. So maybe just Alexander disease, you're going to have some data coming up later this year. Maybe talk about what to expect and sort of the market opportunity around that.

Yes. Another example of our leading neurology franchise in addition to -- it's a proven platform for the work we've done over the years in CNS diseases starting with SPINRAZA for SMA and QALSODY for ALS, SOD1 ALS, our tau program for Alzheimer's disease, all really shown remarkable benefit in the clinic. It's 1 of 13 drugs in development for CNS diseases for rare like Huntington's, broad like Alzheimer's, more than half are wholly owned today. This is a -- Alexander's disease is an ultrarare leukodystrophy, genetically caused by overproduction of a protein called GFAP. And we've developed a drug that lowers GFAP, normalizes it in preclinical models and has really remarkable preclinical data. And we took on another example of a very innovative trial design that we came up with at Ionis. Recognizing the ultra-rare nature of this disease we felt that it was appropriate to do one clinical trial, right, not to do a Phase I, II study and then a Phase III study, but to go right in there, utilizing natural history data to our benefit that we have developed over the years, conducted a trial that we think could show benefit in patients by targeting GFAP in this trial. So it's a very novel design, primary endpoint, it's about 70 patients or so, placebo-controlled single-dose level. And the primary endpoint in the study is a 10-minute meter distance -- walk distance. These patients suffer from major motor function disorders, cognitive disorders, and other problems. It can be typically fatal and also massive seizures that are continuous throughout life. So our primary endpoint is a motor function test, 10-meter walk test, and we're going to have that data in the second half of this year, and we're hopeful the data will be strong enough to support an NDA submission early next year.

Great. It looks like we're just about out of time. So why don't we wrap it up there. Thanks so much, Brett. Appreciate your time.

Thank you, Mike.