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

Good afternoon. It's hard to check sometimes. Good afternoon, everyone. My name is Akash Tewari. I'm a pharma and biotech analyst here at Jefferies. This is day 2 of our London Healthcare Conference. I have the pleasure of hosting Ionis. Brett, why don't I hand it off to you to give some intro remarks, and then we'll get started.

Happy to. Good afternoon, everybody. Thanks for joining. Thank you, Akash. It's great to be here. So a brief introduction on Ionis. Of course, Ionis is a genetic medicines company focused on targeting RNA for therapeutics, a well-established company. We've had a remarkable year this year. We've been working towards this year for the last several years as we built Ionis into a fully integrated commercial stage biotechnology company, proud to say that this year we launched our first 2 medicines independently in the U.S. The approval of WAINUA -- I'm sorry, the approval of TRYNGOLZA for FCS, the first ever FDA-approved medicine for the severe genetic disease was approved in December of last year, and we launched it this year. And then in August of this year, our second independent launch was based on the approval of DAWNZERA as a prophylactic treatment for hereditary angioedema. I'm thrilled to say that both launches are off to excellent starts. The pipeline is also delivering remarkably well. At the American Heart Association just 2 weeks ago, we announced detailed data from our Phase III program called CORE and CORE 2 for severe hypertriglyceridemia, a disease that's caused by severely elevated triglycerides that affects millions of people in the United States alone. Groundbreaking results in which we not only demonstrated substantial unprecedented reductions in triglycerides, also unprecedented first time ever shown remarkable reductions in acute pancreatitis, which is the key aspect of this disease that affects these patients the most. It can be fatal. We also, in September, announced positive Phase III data for a wholly owned neurology drug for Alexander disease, a severe neurodegenerative disease that we're planning to receive approval for next year as well as for TRYNGOLZA for severe hypertriglyceridemia. As I said, Akash, this is a remarkable year for the company, a real breakthrough year, but it sets up for an even more exciting year for next year, which we're expecting 5 Phase III readouts next year from our deep pipeline. We're expecting 2 FDA approvals, potentially 3, we're waiting for the third one to read out in chronic HBV. But as I said, we already have the Phase III data for the other 2. So we're in great shape, and we're looking forward to the future, a great year this year and next year is set up to be even more remarkable.

Understood. The opening panel actually had at the conference, I had the pleasure of hosting John at Alnylam, then he's at Coursera. And it's kind of interesting. In his next attempt, he's CEO of another company, they're going after a long-acting siRNA that's targeting blood pressure and then a known target like PCSK9, running a primary prevention study first and then going even maybe for a direct-to-consumer like market. And like some of these themes, you see this with like the Lilly GLP-1 deal, cardiovascular disease needs to shift, having better compliance is not a nice to have, it's kind of a must-have, especially when you think about it for payers, and I think you guys -- and I know we'll talk about some of the specific stuff, but this is kind of interesting to me. You guys have a way to stratify cardiovascular disease with a first product and then a backup in a way that I don't think a lot of other companies do. I want you to kind of think about that with sHTG, right? Because we think, okay, FCS is a smaller opportunity, sHTG is a bigger opportunity. But there's also this idea of why is it okay if I have triglycerides that are at 300 or 500, right? When you think about where sHTG is headed 5, 10 years down the line because you have backup products there as well, why is Ionis in a unique position?

We are in a unique position, Akash. First of all, this is an enormous unmet need. As I said, millions of people with severe hypertriglyceridemia that are at risk of -- that suffer from all kinds of symptoms, but most notably a potentially fatal acute pancreatitis attack due to severely elevated triglycerides. And it's a known disease. These patients are already being treated by physicians. So it's recognized. They're already on fibrates and fish oils and statins and so on, but they can't get their triglycerides even close to target. So this is an enormous opportunity first time out of the gate. We're going to focus on the most severely at-risk patient population first in that segment of millions of people I already mentioned, maybe up to 1 million that are -- have already had a history of acute pancreatitis or at very high levels, 80 and above, who are at very high risk for an acute pancreatitis attack. Many of those -- most of those patients have already had an AP attack. To your point, then moving forward to that naive patient population, if you will, with severely elevated triglycerides to prevent that first attack from happening. That's what you would call primary care, if you will, not primary care, but preventive medicine. And we're certainly going to be targeting that population, too, which expands the scope of the market opportunity for us. In addition, our platform technology continues to advance forward at remarkable speed. We have a molecule now in Phase I testing. It will be in Phase II development next year for severe hypertriglyceridemia. That's allowing us to go from a very convenient once per month self-administered treatment, which olezarsen is today, to twice a year, self-administration, maybe once per year, self-administration beyond that. So that's life cycle management there, allowing us to make the medicine even more convenient for patients. After that, then there's a whole another population of patients that suffer from high triglycerides, which I think is really where you're driving to, which is that patient population that is mildly elevated and at high risk for cardiovascular disease. That's not severe hypertriglyceridemia, 500 and above, that's 150 to 500 who are particularly at risk due to atherosclerosis due to cardiovascular disease. We're looking at that population now. We're trying to -- we are figuring out what's the best approach to tackling that disease indication, whether it be olezarsen, whether it be the follow-on molecule or some other approach to managing triglycerides. That's coming. Stay tuned for that. But right now, we have several irons in the fire, and we're going to take full advantage of our opportunity to be first to market.

Right. And maybe just one more on this because, again, I think this long-term approach doesn't get talked about enough. The advent of combination therapy, I mean, we're seeing this across I&I. I think we're going to start seeing this right, like why just Lp(a), why just LDL, a polypill makes sense but if you're not adherent again, that's the problem. What optionality does the Ionis team have with these yearly next-gen siRNA treatments to kind of combine multiple targets and use that as your approach to target, let's say, the 500 -- the 100 to 500 elevated triglyceride population. Should we be thinking about that?

Absolutely. We have full rein, full capabilities and the ability without anything tying us down to pursue combination therapy. You kind of gleaned into it. I mean, one of the things we're thinking about for that mildly elevated 150 to 500 is a combination approach, looking at a drug that can lower triglycerides and some other risk factor. Our medicines are very low volume, very easy to work with, formulated simple saline solution. The ability to have a fixed-dose combination once per month or once every 6 months or once a year is definitely in our target abilities, and that's exactly what we're thinking there. You could also think about combinations with Lp(a) as well with an APOC3 inhibitor or a PCSK9 inhibitor or something like that. All that is on the table for Ionis. Another example of that is the work we're doing with AstraZeneca, looking at the ability to combine a silencer for TTR cardiomyopathy with a depleter that depletes amyloid out of the cardiac tissue. That work is in process, and we're looking to get something started in the clinic shortly.

Understood. Actually, maybe that's an interesting bridge to TTR. I know we were talking about this last year. One of the things you reminded me, you were like, gosh, we still have to kind of meet with AstraZeneca, figure out where the therapeutic window is. And to be clear, there's some safety issues with the depleter. So you start thinking about what populations this makes the most sense in. I'm sure AstraZeneca generate even more internal data with that kind of neuroimmune asset. When you think about where you can get this paradigm of, let's say, short-acting depletion, profound proBNP reduction and then switch to a silencer for kind of maintenance therapy. Are we thinking about this or like severe polyneuropathy, severe ATTR patients? Or in fact, maybe this could be a full switch opportunity where really that's the paradigm. It's not about stabilizers and silencers, but it actually might go into a depleter silencer paradigm.

Yes. So we're still working out the details. So I can't provide a lot of details on what we're thinking about what a clinical trial design would look like. But I can tell you that we're focused on cardiomyopathy, not the polyneuropathy indication out of the gate, and we think that the ability of a depleter to go in together with a silencer that blocks the production of a disease-causing protein TTR with a depleter that helps clear the amyloid from the heart rapidly is a great approach to go out of the gate, and then you could back off on the depleter because you've now cleared the amyloid and you're not going to get a lot more amyloid in the heart because you block the -- you silence the production of TTR. So the indication will be in cardiomyopathy to get out of the gate. And -- but how exactly what doses and all that is we're still working through.

Understood. And maybe just like I cover argenx. So I think I've seen kind of real-time Medicare Part D revised environment, you have a subcu version of that drug, you have an IV version of that drug. Theoretically, there is a strong financial incentive for doctors to give an IV, but we're seeing 75% of new patient starts go to the prefilled syringe for VYVGART. But again, that's maybe orphan. This is more specialty cardiovascular. How do you think about, again, the narrative that Part B is more preferred versus the reality that your work -- your team is doing in terms of having a Part D product for ATTR on the ground?

So that's not been our experience that Part B is preferred over Part D. What our experience has been is that there are centers and there are physicians that may prefer prescribing a Part B drug for the reasons we all know, personal incentives or financial incentives, those sorts of things. Maybe some patients prefer seeing a health care provider periodically as opposed to self-administering, but there's a lot of patients. There's a lot of physicians that don't want the headache of having to set up appointments with their patients when they're very busy to come in, get an administered product that they can actually self-administer themselves, and certainly, our experience has been a lot of patients prefer the independence of being able to self-administer using an auto-injector themselves at any time, whether they're at work, on vacation, at home, to be able to do that. So we -- our experience has been, there's plenty of room for both. We like the ability for self-administration. We think there's -- that's a huge opportunity. And also, when you get into these larger patient populations like in TTR cardiomyopathy, we're no longer only in centers of excellence where these physicians are -- have the capabilities, the infrastructure to be able to handle Part B types of drugs. We're getting out now into the communities where you have a physician seeing just 2 or 3 patients or 4 or 5 patients or that kind of thing, and they don't have the infrastructure to handle that kind of thing. So the ability to self-administer is going to -- is resonating really well, and we think it's going to do really well.

Understood. Now you may have, along with your partner, AstraZeneca, data back half of next year, maybe sooner, maybe later, and I think when you talk to investors, especially your like the combo, is it going to be static or not? There was kind of a binary view of looking at it. And to be fair, AstraZeneca has revised their studies to add endpoints specifically looking at the combination. And if you ask them, they say, our event rates are tracking as expected. But Brett, like should we be thinking about this as binary as either you're showing a static benefit on top of a stabilizer or not? Or are there other endpoints, other ways that you've powered this trial where you feel like you can go to payers and actually have an incremental advantage over the Alnylam program?

Well, let me first start by saying that this is a market that the prevalence is not well understood still today. This is a growth market. We're seeing it with the stabilizers and the silencers growing this market, and we don't know where the ceiling is. We believe that eplontersen, which we're going to have Phase III data in the second half of next year, the largest study ever conducted in TTR cardiomyopathy by far, is going to have the richest data set in subsets as well as the primary, of course, which is highly derisked now with the first silencer showing very nice positive outcome in their outcome trial and very good uptake on the market. We think we're going to do really well. In addition to the fact that we have the ability to self-administer -- patients have the ability to self-administer and we have the richest data set, we're going to have a lot of great data in subgroups as well. You highlighted the combination subgroup, which has been elevated in our final statistical analysis plan to a key secondary endpoint because our confidence has grown that we should -- we have the potential to see meaningful benefit there. And obviously, if it's elevated in the secondary, we're hopeful that it could hit stat sig. I would say that strong trends are actually going to be very helpful too, even if we don't hit the statistical significance in combination, this will be the only ones to have -- potentially have a meaningful demonstration of benefit on hard endpoints like mortality, other endpoints like hospitalizations, biomarkers, also imaging. We have -- are the only ones in our study having the most robust imaging MRI and scintigraphy data, which we're going to be able to look at amyloid burden in the heart and heart function as monotherapy in combination usage. At the end of the day, we believe that the silencers will do very well in frontline therapy. We'll do very well in all the patients that progress on stabilizers to go over to a new mechanism, a silencer, 100% of patients eventually progress on stabilizers and combination usage, and certainly, if you have data that's convincing, stat sig or not, convincing that combination usage is going to benefit patients, physicians are going to be even more enthusiastic to combine them.

Okay. There's a provocative -- like when I looked at the HELIOS-B data and my team looked at it, I wouldn't characterize that as a strong trend, to be honest, right? Like a, it didn't -- it wasn't stat sig, but it wasn't trending in a really profound direction either. I think there's a perception in your drugs in terms of target knockdown are largely similar. So I think the kind of question I'd ask you is, well, what would lead in terms of your trial design, not just powering because trend would be, again, directionally the shape of the curve, that's not just a powering dynamic, where the separation in combination would look different to what we saw with HELIOS-B?

It's numbers, game, that with the -- they had a relatively small study, especially when you start breaking down 700 or so patients down into subgroups where it's -- you're just going to get more variability, you're going to get -- the separation curve are going to be less convincing. Our study is more than 1,400, more than double the size of the study. So we're going to have the best data in combination, potentially be able to show separation faster. Certainly, the more patients you have, the more power you have, the more -- the greater the opportunity for statistical significant in all your endpoints, whether it be the mortality Kaplan-Meier curves or the composite hospitalizations plus mortality, you're going to have the ability to show stat sig in situations where it's less clear with smaller studies. But we have the ability to -- we're well positioned to be able to be the only ones to show meaningful benefit in combination usage, but we'll see. At the end of the day, we believe we have a great medicine for this really large market opportunity, and the neuropathy launch is going really well, and we think that's going to resonate really well and translate to cardiomyopathy as well.

Understood. Again, a topic I think that doesn't always come up, and I think it is incredibly important, yearly SPINRAZA. And again, it's about advances in chemistry that your team has made that, again, I don't think we talk about enough. First of all, can you frame that readout for us? When are we going to get a pivotal data release? And number two, when we think about right now, the trajectory of SPINRAZA, it's a meaningful product. It's in decline or at least stabilizing decline, let's put it that way. But SMA is a mature market. I can't help but think if a yearly SPINRAZA product did get to the market and you'd have been able to have similar or maybe even better efficacy, you could see that curve go from this to going back into a growth market, what's the framework we should be thinking about for that readout? Could we actually see this return to growth?

We're very proud of the fact that we discovered and developed and got approved the first ever FDA-approved medicine for spinal muscular atrophy. SPINRAZA is still performing as a blockbuster despite emerging competition that has come forward with one single advantage, convenience. The efficacy of SPINRAZA is second to none for SMA, but it's administered every 4 months intrathecally, but its efficacy, like I said, is second to none. So we've dealt with the convenience issue by focusing on Ionis chemistry that can allow us to get to once per year dosing intrathecally. We delivered that medicine, licensed it to Biogen. Biogen did the Phase II study and the data supported once per year dosing and not just the convenience, but also evidence of even deeper, better efficacy based on neurofilament light chain reductions in that study. Based on that data, they launched -- they're going to launch into a Phase III study in the first half of next year. Open-label study, looking -- a pivotal study to get once per year dosing on the market, which we think based on the convenience and potentially even greater efficacy, we'll have the opportunity to reemerge as the #1 choice and go back to growth for the franchise overall for SMA.

And just remind us, what are the economic terms of your next-gen SPINRAZA versus the current compound?

Yes, significantly more attractive to Ionis. Royalties in the mid-20% range. Today, they're in the mid-teens.

Okay. Understood. As we think about the sHTG launch and I know your team is doing work in terms of stratifying patients who to go after, what are your call points? Let's do a couple of things. A, post the data that -- the full data that came out, what's the feedback you're hearing from providers in terms of their kind of urgency to get patients on your medication? And then number two, touch a bit about the free fraction increase, and are there any concerns about that on the doctor side?

Yes. Let me start by saying -- by just highlighting the fact that the FCS, familial chylomicronemia syndrome launch is off to a great start. It's doing very well, and the physicians that treat FCS patients, this is a severely elevated triglyceride disease as well, are already asking when can they put their patients that have severe hypertriglyceridemia, sHTG on TRYNGOLZA. It's not approved for that yet. We announced the Phase III data, and we're looking at approval next year in the second half of next year. The feedback we've gotten from physicians that manage these patients, cardiologists, lipid specialists, endocrinologists has been congratulations, congratulations. This is breakthrough groundbreaking results. When can I get, I'm so excited about treating my patients because they're already treating many of these patients. Hundreds of thousands are already on fibrates and omega-3s, and they can't even get near goal on their triglycerides, and they can't wait to get to olezarsen for severe hypertriglyceridemia. So the efficacy was remarkable, 85% reduction in acute pancreatitis attacks, normalization of triglycerides in more than 50% of cases and so on, excellent safety. There are more severe adverse events in the placebo group than in the treatment group. AEs overall were well balanced. We saw a small increase that was dose dependent. We have 2 doses, 50 and 80 milligrams, both were highly efficacious, small like a 2.5% increase at 50 milligrams and slightly more at 80 milligrams with no clinical sequelae. No correlation with any other things aspects that would cause concern about a safety issue. It's on target, Akash. We're massively lowering triglycerides to get these patients on a harm way for acute pancreatitis. One of the mechanisms and -- one mechanism is metabolism. The other mechanism is clearance through the liver. There's a small increase in liver fat because of that, and we think that it's inconsequential, and even with long-term treatment, and we're beginning to see it in the open-label extension that patients are stabilizing or even clearing the liver. The liver just -- we'll be able to manage it. It's not a concern.

Last question on this. In terms of fibrates, look, I think there's emerging data that fibrates may not actually be a good medication for patients with high triglycerides, and we start thinking about where you could get put on to guidelines and how that paradigm will start to shift. A, can you talk about where you expect to be put on guidelines? And b, are you hearing feedback that perhaps fibrates may actually be removed or at least demoted in terms of where they are in the treatment paradigm?

Yes. This was a key question that we had with several advisory teams, advisory panels at the American Heart Association. Uniformly, they believe that our approach will become part of guidelines for managing patients with severely elevated triglycerides. Now guidelines take time to change. They will be. Honestly, Akash, I have not heard that fibrates would be removed from that because they are in the guidelines now, fibrates as well as omega-3 fish oil, omega-3 fatty acids to treat sHTG. I have not heard about fibrates being removed, but certainly, consistently, we've heard that our medicine, our mechanism of action is in the guidelines for the future for the treatment of severe hypertriglyceridemia, which is pretty remarkable considering there are more than 3 million people in the United States alone with sHTG.

Understood. Let's wrap it up there. Thank you so much. Always. I really appreciate it.

Thanks, Akash.