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

Good morning. It's my pleasure to be moderating this chat with the Ionis team. With me is Beth Hougen, CFO; and Kyle Jenne, Chief Global Product Strategy Officer. I thought you were Chief Commercial Officer. Is this a slightly different title?

No, this is this right title. I actually have a Chief Commercial Officer that reports in to me.

Okay. Interesting. Okay. Cool. I was thinking you was just like Head of Commercial. But we'll have a lot to talk about and go through some specific programs, but maybe we can start, Beth, if you want to just give a quick update and set the stage, sound good. Thank you.

Sure. Absolutely. Good morning. Thank you for having us. We're thrilled to be here. It has been a year for Ionis, full of some really important accomplishments from commercial execution through the pipeline, data, Phase III data. And so we're really excited to be sitting here today. We've got TRYNGOLZA on the market now. It was approved in December of last year for FCS. And it's -- frankly, it's been beating expectations throughout the entire year. Every quarter, we've been raising our expectations. Our guidance now is $85 million to $95 million for the full year, and we couldn't be more thrilled with the commercial execution. The team has been doing a great job with that. And then very recently, in August, we had an on-time approval for DAWNZERA, our second independent launch, and that's for HAE. That drug is now on the market. It's early days, but we're seeing a lot of excitement from the community, from the physicians that treat these patients and these -- and the patients as well. Quickly got the drug into channel, got patients on their medications and the enthusiasm continues to build. So we're looking forward to that in the coming days. And then most recently, we had 2 Phase 3 data readouts. Importantly, we had the CORE and CORE2 data readout for olezarsen, which is the TRYNGOLZA for sHTG, the much broader patient population. And those data were just incredibly impressive. So we're really excited about moving that drug to the market, potential $1 billion opportunity. And then shortly after that, in September, we also had Phase 3 data that was impressive for Zilganersen for Alexander disease. It's an ultra-rare neurological disease, often fatal and frequently seen in children as well as sometimes in adults. And that data was really impressive. We were able to see a change in motor function for these patients that is really unprecedented, combined with really good safety and tolerability profile. So we're looking forward to bringing that one to the market next year as well. So as you think about commercially, we have 2 independent launches underway right now, 2 potentially next year. Our mid-stage and earlier-stage pipeline continues to deliver as well. So we're looking forward to more data over the course of next year from that. And our partnered programs are moving along really well with at least 4, maybe 5 Phase 3 data readouts next year. All of that underpinned by a very healthy balance sheet, strong financial position and profile. So it puts us really in a great position to continue to execute with excellence.

Awesome. Great. Congrats on all the progress. Thank you -- as it relates to TRYNGOLZA or olezarsen, so I think on the -- on the efficacy side, I feel like it's almost uncontroversial, like I don't really know what to ask. And I think on the investor side, the 2 things people have been asking about are just some of the safety updates on the margin and then also commercial positioning. So maybe to start with safety. The only 2 things that I think came out of the full data were questions around liver enzymes and could that lead to some sort of monitoring and then also liver fat. Is there anything you can say about each of those? And what is your sort of base case expectation on how these might be managed in the real world?

Yes. Happy to talk about that. We love talking about olezarsen. As you know, we just came from New Orleans and where we presented the Phase 3 data at AHA. It was extremely well received, to your point. So let me maybe just step back and talk about the efficacy first so that we can put really the Phase 3 data in context for folks. We saw substantial and sustained very rapid reductions in triglycerides up to 72% placebo adjusted. That led to an 85% reduction in acute pancreatitis. That's what these patients really suffer from. The acute pancreatitis that could land them in the ICU for a week or 2 or more multiple times, it creates tremendous risk for them going forward because as you have one event, you could have multiple events, your increased risk for multiple events. And acute pancreatitis can be fatal. So it's a very serious disease, and we were able to reduce the risk of that by 85%. Let me tell you 2 numbers that really resonate with the physicians we've talked to. First is the number needed to treat for the overall patient population that we studied, it was 20 in 1 year. That is an impressive statistic. Usually in cardiovascular outcome trials, you would see significantly higher numbers over a 5-year or 6-year period. So this was really impressive. And in the very severe patients, the ones who are at highest risk, that number dropped to 4. So again, in a year. So very, very impressive efficacy data. So that's, I think, important as we think about the safety observations or the lab observations that you were mentioning. As it pertains to ALTs and ASTs, there were slight increases, but no clinical sequelae whatsoever. So no correlation with any clinical issues whatsoever for these patients. And on the liver fat, similar thing, slight increases and no clinical sequelae, no concerns. The experts that we've talked to are not at all concerned about it, and the open-label extension study is continuing. So we think the overall profile for this drug is extremely positive and leads us to having tremendous confidence in at least $1 billion opportunity for this drug.

Yes. Let me jump in on the commercial side. I think it's -- first, on the FCS front, the launch has gone exceptionally well. The broad label that TRYNGOLZA has today for FCS patients that can be either clinically or genetically confirmed in order to get the product reimbursed and get these patients treated has been very well received by the HCP community. We are currently targeting about 3,000 of the highest sHTG prescribers in the United States. These are HCPs that are using standard of care treatments, fish oils, fibrates and other therapies in order to try to reduce triglycerides in this patient population with sHTG. Today, on label, we are out selling TRYNGOLZA and we're narrowing that population down to the FCS patient population. Very, very encouraging in terms of the conversations that we're having with HCPs around the need to treat, the willingness to treat, the understanding of acute pancreatitis, the risk that these patients are under, the fact that they don't want the first event ever to happen, and they really want to prevent these patients from getting worse and having an event and ending up in the hospital with a potentially fatal event of acute pancreatitis. So very well understood in this HCP population that's treating the highest number of sHTG patients. From a revenue standpoint, we've done very well quarter-over-quarter, $57 million through the end of September with our FCS indication. Q4, we anticipate continuing to find additional newly diagnosed patients. The team is doing a great job of educating and HCPs that have treated patients with TRYNGOLZA are actually looking for more patients to treat because of a very positive response that they're seeing when they're getting these patients on treatment and treating them accordingly. When we get to sHTG, the patient population obviously goes from about 3,000 patients in FCS up to approximately 3.4 million in sHTG.

And Kyle, can I ask you just a question on that because this is just as you're talking, it's making me think of my next question, which is just when you think about that 3.4 million population, how would you funnel it from like patients who've had a pancreatitis event historically, patients above 880 versus like everyone else? Because I feel like if you were building a model, right, like you could make penetrations that sort of sequentially go through those buckets?

And that's exactly the way to think about it, Paul, and that's exactly the way that we're going to approach this market. I described that as the beachhead, where do we want to establish olezarsen in the market for sHTG. And it's in the high-risk sHTG patient population. So out of the 3.4 million patients, there are about 1 million patients within that population that have high-risk sHTG, which is inclusive of patients over 880, patients over 500 with a history of acute pancreatitis or over 500 with comorbidities, such as ASCVD or type 2 diabetes. If you want to break that patient population down a little bit, there are about 60,000 or so patients that have over 500 with a history of AP. And there are approximately 540,000 or so that are over 880, okay? So it's around 600,000 patients in that. And then if you layer on those patients with comorbidities, it reaches the 1 million population, if not beyond that. So again, tremendous opportunity. In terms of our targeting, I mentioned about the 3,000 HCPs that we're targeting today. When we get to sHTG, the strategy is going to be to reach approximately 20,000 of the highest sHTG treaters today. We know where they are. We know that they're currently seeing these patients. We know that they're currently using standard of care that's available to them, fish oils, fibrates, et cetera. And we know that many of those patients, unfortunately, are not getting below 500, which is the threshold in which acute pancreatitis becomes a significant concern. So targeting strategy out to 20,000 HCPs those 20,000 are treating well over 350,000 of these sHTG patients. So we'll be able to get to that physician community, educate accordingly on the disease state, share clinical data. And obviously, once olezarsen is approved, we'll be able to sell on label in the sHTG population. So we've got a great strategy, a great team in place today for FCS. We're also scaling that team. So our next step is to go from approximately 30 customer-facing team members that we have today. We'll go up to approximately 200 early next year. And those 200 customer-facing team members will be able to reach those 20,000 HCPs and do exactly what I've described. #1, we'll be selling on label for TRYNGOLZA today in FCS, hopefully being able to treat and benefit those patients. And then secondly, we'll be able to begin to educate around sHTG in a compliant way so that we can also identify some of the sHTG patients leading up to the potential approval of TRYNGOLZA or olezarsen next year in sHTG. On the regulatory front, on timing, Paul, just real quick. By the end of this year, we anticipate filing the sNDA. The timing for an sNDA is a 10-month review process. So we would anticipate under a regular review process that the approval would come sometime in the October time frame of next year. And obviously, we will pursue any means possible to accelerate that regulatory time line as well to figure out if there's a way we can shorten that and bring olezarsen to this patient population as quickly as possible.

Great. On the pricing, so I think, I'll phrase this maybe a different way than you've been asked before. I think part of the reason why you guys get bugged so much on pricing and how aggressive you're going to be or not is because there's some -- there's a camp of the investment community that is bullish on the value of the drug, but thinks that it's going to be used more narrowly and wonders if it's already going to be used more narrowly in the super, super high-risk patients, why not price it that way. So I know you've talked about pricing it for broader access. What gives you the confidence that this is going to be used like more broadly than the people, who have a history of AP. Especially since like I think some of the other triglyceride launches again totally different apples and oranges, right, like haven't been billion-dollar drugs that you are alluding to?

Yes. So the first thing is we know from a demand standpoint and the research that we've done that HCPs understand that triglycerides at this level have an extremely high risk of these patients having acute pancreatitis. So the need is there. The second thing is when you get above 500, you get above 880. It doesn't matter if these patients have had a historical event or not. HCPs are telling us that they want to prevent the first attack from ever occurring. You're right about, I think back to my beachhead comment, right? I also believe that patients that are above 500 with a history of AP, very -- no-brainer to put those patients on. Patients above 880, no-brainer to put them on. We just talked about how large that segment is, right? It's still north of 600,000 patients just in those 2 buckets, and then you can go beyond that. So when we're looking at this and doing the research and talking to HCPs, and we tell them the clinical trial primary endpoint was anybody that's above 500 lowering triglycerides period. And they say, I want -- I would need a therapy, want a therapy to be able to lower triglycerides and get these patients below 500. And they have suboptimal treatments and therapies today on standard of care, as I mentioned, and they're looking for something better. Our clinical trial supports exactly that patient population, right? CORE and CORE2 added olezarsen on top of standard of care. So these patients were on multiple background therapies and still not getting to goal. So when you combine the totality of the evidence and you talk to HCPs, what they're telling us is it's not just for the high-risk sHTG patients that I intend to treat. I intend to treat a broader population than that. If you price too high, what happens is you put restrictions in place from the payers that then restrict their ability to do that. And if you restrict their ability to do what -- in the broader population, you ultimately will also restrict the population that you intend to treat, which is a high-risk population because they'll say it's too hard, too difficult. I don't know, if I'm going to get it approved and I don't want to use your drug. So our goal is to maximize the value of olezarsen 100%, right? How do we get the price at a point that maximizes the value. We treat as many patients as possible with as few restrictions as possible, but we don't get to a point, where there's so many restrictions that HCPs aren't willing to use the therapy. That's what we've got to figure out how to balance.

Yes. Do you have any thoughts right now on like the right analogs?

I wouldn't say analogs, but the research that we've done over the last couple of years and the research that we've just kicked off, right? We've just gotten the CORE and CORE2 study results. As Beth mentioned, the results are so strong. I mean this is a landmark study with groundbreaking results when you look at what's been achieved here. Triglyceride lowering, an 85% reduction in acute pancreatitis in this patient population. We're still going through the data around reductions in hospitalizations and ER visits, et cetera. Beth mentioned the number needed to treat, 20 in the population above 500, 4 in the population above 880 with a history of acute pancreatitis. This is going to be really hard data for any following competitor to be able to match up to. I mean the standard is extremely high in terms of the bar that we've set here with this. We're taking the totality of this data and going out and doing our market research with HCPs and payers to figure out where the pricing is ultimately going to land. Right now, we've committed to the $10,000 to $20,000 range because of the number of patients that we think would potentially go on to this therapy. We'll see if that sticks as we put the evidence out there and work with payers and do the research and see, where we can take the program.

Okay. Makes sense. Anything else to add here?

Not right now.

All right. We'll hit another topic. Maybe let's quickly just talk about HAE. I know it's early, but it's a crowded space. You've heard that a million times from people. Who do you think are the early adopters to this therapy?

So the interesting thing in the HAE market, while there are prophylactic therapies that are available today and many patients in the United States are already on treatment, about 75% of the identified HAE patients are on a prophylactic therapy in the United States, which makes this a switch market. What's interesting about this market is patients are still unsatisfied. When you look at the data, it shows that about 20%, if not more, patients are switching on an annual basis between the existing prophylactic therapies that are on the market today. And the reason that they're switching is for a number of reasons. There are really 3 key reasons. 1 is efficacy. They're continuing to have breakthrough attacks on the treatments that they're on, and they're looking for something better. #2, tolerability, the therapies that are out there, sometimes they're not well tolerated, and they're looking for something that could be better for them. And #3 is convenience. The standard today is every 2 weeks. in terms of administration and/or an oral on a daily basis. So these patients are not happy. They're not satisfied, and I think there's an opportunity to do better with a better therapy. So what HCPs and patients have both told us is that the profile of DAWNZERA matches up very nicely regardless of 1 of those 3 reasons and has potentially an added benefit for the HAE patient population. So when you look at reduction in attacks, we just had the college meeting last week, 94% to 95% in reduction of attacks over a 1-year period with DAWNZERA. DAWNZERA is able to be dosed every 4 or every 8 weeks. So now you're extending the dosing regimen to the longest dosing interval out there. And tolerability, extremely well tolerated. It's an auto-injector that patients can self-administer a very low dose, 0.8 mls and patients are starting and taking this therapy and doing very well on it. So the early adopters today are first identified patients that have 1 of those 3 reasons that they're looking for a better option for their prophylactic treatment in HAE. HCPs are talking to these patients more readily about how are they feeling and how are they doing because now there is a new novel treatment available, the first RNA-targeted therapy against the prekallikrein pathway. So we've got something that's innovative and different from an MOA standpoint and then obviously, the profile of the drug that I just mentioned. So that dynamic and conversation, I think, is going to drive uptake and utilization in a switch market. So it will take time to build this market, as you would expect, because patients are going to be coming in throughout the course of the year and having conversations with their HCPs and understanding the profile and getting these patients started on drug.

Have you put a revenue number on this drug?

Greater than $500 million is our expectation for peak sales. For the end of this year, what we've said is we are comfortable with where consensus is today, which is right in the $8 million range for the end of this year. And we expect that to build and grow into next year.

And when you guys forecast this one, because it's obviously a little bit trickier, what are the assumptions you make around longer-acting therapies or like an oral prophy drug that is materially more effective than Orladeyo? Like it feels like just in my own mind, like there's a wide variance of outcomes in how this category looks?

It absolutely is. And if you look at this market, it's a growing market. I mean, well over $1.5 billion in the U.S., and I think it's going to continue to grow over time, especially as new therapies come into play. So to say that we're going to reach a peak of greater than $500 million, I think, is very realistic for the profile and the way that Dawnzera stacks up. The other thing to keep in mind, as you just mentioned, as you model this is to think about the 4- and 8-week dosing schedule and the way that patients and HCPs will actually use the drug. We're thinking it's 80-20 probably more on 4-week than 8-week, but we'll see over time as that evolves to kind of see how the market builds and how HCPs actually treat the patients. But we expect patients to do very well on Dawnzera.

Okay. Okay. Great. Since I have the commercial lead here, I want to ask a TTR question, but not on the clinical side. And again, forgive me because I think the underlying assumption here is like you have a very competitive TTR drug that is likely to work in the cardiovascular outcome study. And so, let's just assume that for a second. How do you think the TTR market unfolds over time on the payer side? Because I think, like one interesting element of this is just the Part B dynamics versus the Part D dynamics. My opinion is like vutrisiran has partially been able to maintain this really premium price because it's decoupled from this kind of Part D contracting battle. How do you think about that with eplontersen given that the CM formulary in Part D is more crowded than the PN formulary? And how does the potential for generic tafamidis play into that?

Yes. Let me start by saying, I mean, this is -- it's such a high-growth market. The CM market, you've seen it double essentially within the last 2 years. I mean the exponential identification of patients, new therapies coming in, especially silencer class coming in, et cetera, I think, is going to drive this market significantly higher over time. The projections are going to be globally that the CM market is going to be greater than $20 billion. AstraZeneca has said that they expect WAINUA to perform at greater than $5 billion in peak sales. So back to your point about the profile of WAINUA being very strong, very competitive and having AZ as a powerhouse partner in this program, I think, is going to be very meaningful for patients and for the revenue opportunity here. On the payer side, you're right, Paul. It's been interesting to see the vutrisiran launch. They've done very well. Their strategy to maintain price and where they had a polyneuropathy pricing as opposed to dropping when they got to cardiomyopathy pricing. We'll see where that goes over time. I think that's a payer question for us to stay in tune with to see how much pressure is there and see if they do have to decrease price over time in order to maintain access for the patients that they're trying to reach. On the Part D side, right, or on the commercial -- excuse me, on the pharmacy benefit side, you've got a couple of different stabilizers that are there that are fighting it out. Pfizer has been there for a long time. They've done a phenomenal job establishing tafamidis in the marketplace, and they've done a great job of creating access there. I think the question for WAINUA ultimately will be how do you compete from a silencer and a stabilizer class standpoint. CARDIO-TTRansform will help inform that. It's the largest trial ever done in the TTR space. I think the body of evidence that we'll have to work with will be able to help us justify pricing.

And do you think -- so Alnylam has seen some combo use. Do you think that, that actually would be allowed by 2 drugs on the Part D side? Like I feel like it's a little bit of a whole grandfathered in because the Part B folks are not eating the tafamidis cost. Is that an unfair way to think about it?

I think it's going to be dependent upon data and evidence. Right?

Okay. And I think like you think if the data is great, they'll pay for multiple 6-figure drugs.

I think that's absolutely correct.

Where are we seeing combo?

We are today. we are seeing today. But it's going to be data-driven, right? So...

I think, this is a huge market. It's just like this is one of the more complex like payer dynamics that I can think of. And there's not great precedent, you know what I mean so.

Yes. But up to this point, WAINUA coverage has been exceptional based on the profile and the patients that are being treated. When you get to cardiomyopathy, we're really, really excited next year to read out the CARDIO-TTRansform trial, see what those data look like and be able to put that evidence together to be able to justify price in the pharmacy benefit side.

Okay. Okay. Fair enough. We have 4 minutes left. What would -- there's always so much to talk about with Ionis. What do you guys want to talk about?

Where do you want to go? I love to talk about the financial profile of the company.

Okay. Please.

I think we had Innovation Day at the beginning of October. And for the first time, we laid out a clear path to positive cash flow breakeven in 2028. That was a major event for Ionis. We really put a stake in the ground. And I think that the foundation for that is not only the strong balance sheet and financial profile we have today, but the financial outlook that we're anticipating as we look forward. Just in our current marketed products and our late-stage Phase 3 programs, we anticipate annual peak sales of $5 billion or more. $3 billion of that is coming from our wholly-owned pipeline. And again, just our marketed programs and our late-stage programs that should be reaching the market in the next few years or so. That, I think, is really important. Additionally, to amplify on that or accelerate that, we've got a projection of greater than $2 billion in royalties from our partnered programs. And that's really important because those royalties are essentially without cost. So they drop directly to the bottom line. So they amplify or accelerate our financial outlook and our financial performance. So I think the fact that we have 2 products on the market today independently launched, we have 2 more coming next year. We have 4 to 5 Phase 3 data readouts from our partner programs next year means that we could have 5, 6, 7, 8 products on the market in the next couple of 3 years, driving to that $5-plus billion in peak revenue. And that's what gives us the confidence to put the stake in the ground that we're going to be self-sustaining from a cash flow perspective at breakeven in 2028 and then accelerating that cash flow and that eventually that profitability push here very shortly. So I'm really excited about where we are financially. I think it's a huge strength for the company, and then it's a unique profile that other companies really can't leverage the way that we are.

Yes. That's great. All right. We can wrap-up. We have 1 minute left, but I think we covered a lot. So thank you both very much.