Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) Q3 2023 Earnings Call Transcript

Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) Q3 2023 Earnings Call Transcript November 2, 2023

Ionis Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-1.03 EPS, expectations were $-1.01.

Operator: Good morning, and welcome to Ionis’ Third Quarter 2023 Financial Results Conference Call. As a reminder this call is being recorded. At this time, I would like to turn the call over Mr. Wade Walke, Senior Vice President of Investor Relations to lead off the call. Please begin, sir.

Wade Walke: Thank you, Chuck. Before we begin I encourage everyone to go to the Investors section of the Ionis website to view the press release and related financial tables we will be discussing today, including a reconciliation of GAAP to non-GAAP financials. We believe non-GAAP financial results better represent the economics of our business and how we manage our business. We have also posted slides on our website that accompany today’s call. With me this morning are Brett Monia, Chief Executive Officer; Onaiza Cadoret, Chief Global Product Strategy and Operations Officer; Richard Geary, Chief Development Officer; and Beth Hougen, Chief Financial Officer; Eric Swayze, Executive Vice President of Research; and Eugene Schneider Chief Clinical Development Officer will also join us for the Q&A portion of the call.

I would like to draw your attention to Slide 3, which contains our forward-looking statement. During this call, we will be making forward-looking language statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult the risk factors contained in our SEC filings for additional detail. With that, I’ll turn the call over to Brett.

Brett Monia: Thanks, Wade. Good morning, everyone, and thanks for joining us on today’s call. Since taking the helm at Ionis nearly four years ago we have executed on a strategy to deliver next level value. And we have done so with a clear vision and laser focus on our strategic objectives to bring our medicines directly to patients build our wholly-owned pipeline and to extend our leadership in oligonucleotide therapeutics. Our successes this year which are a direct result of our efforts in these key areas move us closer to achieving our ultimate goal to deliver a steady cadence of new transformational medicines to patients and to generate next-level value for all Iona stakeholders. We are on the cusp of delivering our near-term commercial medicines to patients starting with the first potential approval of eplontersen this year.

We and our co-commercialization partner AstraZeneca are prepared to launch eplontersen following US approval. We’re also executing on a global regulatory strategy with potential approvals in the EU and Canada next year. Additional filings are also planned positioning us for a steady cadence of approvals around the world. We recently achieved another of our key objectives for eplontersen with the publication of a comprehensive review of the Phase 3 neurotransform study results in JAMA. Publishing our results in a highly respected journal like JAMA, reflects the importance of our Phase 3neuro transform study for the treatment of ATTR polyneuropathy and showcases the strength and quality of our results. Based on its strong overall profile including highly positive Phase 3 data together with the freedom of a simple at-home monthly self-administration profile ,we believe eplontersen is well positioned to become the therapy of choice for ATTR patients who remain underserved by current therapies.

Following closely behind eplontersen are olezarsen and donidalorsen our wholly-owned near-term commercial opportunities. We were very pleased with the positive top line data we reported last month from our olezarsen Phase 3 BALANCE study in patients SES. olezarsen showed significant reductions which was a studies primary efficacy end point along with a favorable safety and tolerability profile. But most importantly for patients olezarsen demonstrated substantial reductions in acute pancreatitis events. Making olezarsen in the first lipid-lowering therapy to achieve this result in the clinical setting. With these highly positive results we are on track to file for marketing approval in the US and EU early next year positioning olezarsen for its first potential approval as early as the end of next year assuming priority review in the US.

We also continue to be encouraged by the performance of donidalorsen our medicine for the prophylactic treatment of HAE. We recently reported two year open-label extension data which demonstrated favorable safety and tolerability along with durable and sustained protection against HAE attacks. Consistent with the previously reported one year OLE results and our Phase II results. We are getting closer and are looking forward to our Phase III readout with data expected in the first half of next year for donidalorsen. We also made significant progress recently in further strengthening our wholly-owned neurology pipeline by advancing Zilganersen our treatment for Alexander’s disease into Phase 3 development. Advancing Zilganersen further expanded our rich Phase 3 pipeline to a total of nine drugs in development for 11 separate indications.

And importantly, we remain on track to accomplish our other key strategic goals across the business, including achieving our 2023 financial guidance. With that, I’ll turn the call over to Onaiza, to discuss our expectations for the Eplontersen: launch and to briefly review the status of our go-to-market activities for Olezarsen and Donidalorsen. After Onaiza Richard will discuss our recent pipeline progress and after that Beth will review our third quarter financial results. And then, I’ll wrap things up before taking your questions. And with that, over to Onaiza.

Onaiza Cadoret: Thank you, Brett. As Brett outlined and as you will hear from Richard in more detail in a moment Ionis’ pipeline holds tremendous promise. And today we are ready to begin delivering our medicines to patients. With an estimated 40,000 patients worldwide and fewer than 20% of patients on an approved treatment, hereditary ATTR Polyneuropathy remains significantly under-diagnosed and largely underserved disease. In large part the low rate of diagnosis is driven by the systemic nature and the heterogeneous presentation of this disease, while Peripheral Neuropathy may be the most important symptom in many patients. Others may present with Cardiomyopathy and still others with symptoms like GI disease leading to muscle wasting.

By leveraging Ionis’ deep knowledge of ATTR and AstraZeneca’s significant commercial reach, we are uniquely positioned to recognize ATTR in undiagnosed patients and get them on treatment early in their disease progress. And in doing so we are well positioned to grow this largely untapped market. Our field team is built and deployed and already executing on our strategy to drive Eplontersen growth through disease education and brand awareness. Additionally, we recently launched our unbranded disease education campaign called “See the Patterns” aimed at accelerating diagnosis by helping HCP spot potential ATTR in patients with seemingly disparate systems. We also recently launched our health care professional website aimed at driving disease and brand awareness among ATTR treaters.

Additionally, we are investing in rich data sources with the potential to identify ATTR-PN patients and support the field team’s effectiveness to improve the diagnosis and treatment rates. With this potential approval in about six weeks we and AstraZeneca are ready to deliver Eplontersen to patients with ATTR Polyneuropathy. And as our launch gets underway a key measure of our success will be in achieving our goal of Eplontersen becoming the preferred choice for newly diagnosed patients with ATTR Polyneuropathy. We expect Olezarsen to be the first medicine we launch independently. We are developing Olezarsen in two indications the rare FCS indication and the broader sHTG indication with potential first mover advantage in both settings. Additionally, the fast track designation we have for FCS gives us the potential for an expedited review.

And together with the extremely positive results we reported from the Phase 3 BALANCE study in patients with FCS. In hand, we are moving forward with our launch preparations with even greater pace. With the capabilities established for the Eplontersen launch, we are in a strong position to build upon this foundation and enable stronger launch readiness for FCS. And as we prepare for the follow-on sHTG indication we plan to further scale these capabilities to realize the full potential of the product pending Phase 3 trial results and FDA approval. We expect our next independent launch to be with Donidalorsen for the prophylactic treatment of HAE. This is an attractive market for us because it involves fairly concentrated set of prescribers allowing us to deliver Donidalorsen to HAE patients with an efficiently sized field team.

With the compelling Phase 2 and OLE data we have seen to-date, together with a once-monthly self-administration profile we believe Donidalorsen is positioned to be an important new Prophylactic Treatment for HAE patients, once approved. I’m pleased to say that we are right where we should be in preparing for our first independent launches of Olezarsen and Donidalorsen. Our commercial infrastructure is in place and we are ready to begin delivering our medicines to people in need as they come to the market. This is a very exciting time for Ionis. I’m proud to be part of it, and I look forward to keeping you up-to-date as our next important step unfold. Now, over to Richard.

Richard Geary: Thank you, Onaiza. We could not be more pleased with the performance of our pipeline. Eplontersen has continued to perform exceptionally well demonstrating durable and sustained efficacy and safety through 85 weeks of treatment in patients with ATTR polyneuropathy. Just this morning, we presented new data at the European ATTR amyloidosis meeting that further reinforces these results, demonstrating improvements in measures of neuropathy impairment and quality of life that were seen in a substantial number of patients at 35 and 66 weeks and were sustained through the 85 week analysis. And benefit across secondary endpoints at 85 weeks showed improved neuropathy specific and physical health related patient quality of life stabilized or improved ambulatory status, and stabilized nutritional status with eplontersen treatment.

And last month at HFSA, we showed data demonstrating improvement in cardiac function and structure in a predefined cardiac subpopulation of polyneuropathy patients from the neuro transform study. The positive results from NEURO-TTRansform also support our confidence in the potential for eplontersen to benefit patients in the larger ATTR cardiomyopathy indication. With CARDIO-TTRansform fully enrolled, we remain on track for data as early as the first half of 2025. As a reminder, with over 1,400 patients CARDIO-TTRansform is the largest study in this patient population to-date, designed to generate the data physicians and payers want and need to understand the value of eplontersen offers for patients and to enable the best possible treatment decisions for patients.

Following eplontersen, olezarsen is the next drug we expect to bring to the market, and is the first we expect to commercialize independently. In the BALANCE study the 80-milligram dose of olezarsen demonstrated statistically significant reductions in triglycerides, robust target engagement and a favorable safety and tolerability profile consistent with the profile seen with our other like medicines. In addition, olezarsen demonstrated unprecedented substantial and clinically meaningful reductions in acute pancreatitis attacks. This is remarkable, because it’s the first time a lipid-lowering therapy has ever achieved this result in a clinical trial setting. Based on the positive data we reported from the Phase 3 BALANCE study, we believe that olezarsen is poised to become the standard of care for patients with FCS.

Our next step will be to file for marketing approval in the U.S. and EU in the first half of next year positioning olezarsen for its first potential approval in late 2024 assuming priority review in the U.S. In addition to our clinical development program for FCS, we also have an ongoing program for patients with severe hypertriglyceridemia, or SHTG. Phase 3 studies in SHTG patients are ongoing, and we expect those studies to read out in late 2024 or early 2025 depending on enrollment. Following closely behind olezarsen is our next wholly-owned medicine donidalorsen to treat patients with hereditary angioedema. Despite several treatments already on the market, HAE continues to represent a significant unmet need. For example, in a study recently conducted by the Hereditary Angioedema Association of over 500 patients with HAE, only 13% of these patients reported having good control of their disease with more than 85% reporting two or more attacks per year.

Data reported from the ongoing Phase 2 open-label extension study of donidalorsen show sustained and durable reductions in HAE attacks and favorable safety and tolerability over two years and support donidalorsen’s potential to address the unmet need. We look forward to presenting a comprehensive look at the two-year OLE data next week at the ACAAI Conference. With enrollment completed in the Phase 3 OASIS-HAE study, we remain on track for data in the first half of next year. And from our robust late-stage pipeline we look forward to updates from bepirovirsen and IONIS-FB-LRx. Next week at AASLD GSK plans to present new data from the Phase 2b B together study of bepirovirsen in combination with pegylated interferon. In this weekend at Kidney Week, we plan to present new interim results from our ongoing Phase 2 study of our Roche partnered medicine IONIS-FB-LRx in patients with IgA nephropathy.

We also made significant advances with our industry-leading neurology franchise this year. Today, we have two approved breakthrough medicines for neurological disease on the market SPINRAZA and QALSODY. And we have another 12 in clinical development. and more than 10 new programs in preclinical development or lead optimization. Among our partner neurology programs we recently completed enrollment in the Phase ½ study of ION582 in patients with Angelman syndrome putting us on track for data around the middle of next year. And we were encouraged by the positive data our partner Biogen recently reported from the Phase 1b and long-term extension studies of IONIS-MAPTRx in patients with early Alzheimer’s disease. Data presented at the clinical trials on Alzheimer’s disease conference showed numerical improvements on multiple cognitive and functional scales and continued favorable safety and tolerability in this small early-stage study.

The data published in JAMA Neurology showed a rapid substantial and sustained reduction in Tau and phosphorylate and Tau in CSF as well as reduced Tau pathology on PET imaging with up to 100 weeks of IONIS and MAPTRx treatment. And we’re particularly excited with the progress we’re making in building and advancing our wholly-owned neurology pipeline, which represents one of our highest priorities. As Brett mentioned, we advanced Zilganersen into Phase 3 development in patients with Alexander’s disease a rare debilitating pediatric leukodystrophy with no approved treatment. We’re on track to advance ION 717 into Phase 1/2 first in human study in patients with prion disease before the end of the year. And following ION 717, we expect to advance three more wholly-owned neurological disease medicines into the clinic next year.

This has been an eventful year so far and we’re looking forward to several additional key events in the coming months including the US Eplontersen approval launch and additional regulatory filings and approvals outside the US. Olezarsen regulatory filings in FCF and Donidalorsen Phase 3 data. We will keep you updated on our progress on these events and more throughout the coming year. And with that over to Beth.

Beth Hougen: Thank you, Richard. Our year-to-date financial results keep us on track to achieve our 2023 financial guidance, while we continue to execute on our strategy to unlock next level value. Revenue continued to be substantial and sustained with revenues of $144 million and $463 million in the three and nine months ended September 30, 2023 reflecting a 10% decrease and a 6% increase, respectively compared to the same periods last year and driven by the timing of certain partner payments. As anticipated, our operating expenses and operating loss for the third quarter and year-to-date increased over the same period last year as we advanced our commercial readiness activities and our pipeline, especially, our late-stage programs.

We remain well capitalized with $2.2 billion in cash and investments at the end of September enabling us to continue investing in our strategic goals. Our commercial revenue from SPINRAZA royalties was $67 million and $179 million in the third quarter and year-to-date respectively. Reflecting SPINRAZA’s resilience against emerging competition in the US and abroad, SPINRAZA’s global sales in the third quarter demonstrated a low single-digit increase compared to last quarter and compared to the same quarter last year. As a result, our revenue from SPINRAZA royalties increased by 9% compared to last quarter and 8% compared to the same quarter last year. We earned R&D revenue of $60 million in the third quarter and $233 million year-to-date. The significant R&D revenue we continue to generate reflects the value that IONIS’ technology is creating as numerous partnered programs advance.

In line with our goal to invest for revenue growth, our non-GAAP operating expenses increased in the third quarter and year-to-date compared to last year. With most of our ongoing Phase 3 studies fully enrolled our study costs increased as expected which resulted in higher R&D expenses. And as we prepare to launch eplontersen, olezarsen, and donidalorsen, our SG&A expenses also increased modestly year-over-year. Our year-to-date results keep us on track to meet our 2023 financial guidance. We continue to project revenues of more than $575 million. We expect our fourth quarter R&D revenue to be driven by the potential $50 million milestone payment from AstraZeneca for the US approval of eplontersen. R&D revenue from continued development about eplontersen and additional revenue from Biogen and from our recently expanded collaborations with Novartis and Roche.

We project our 2023 non-GAAP operating expenses to come in at the higher end of our guidance, which is between $970 million and $995 million. And looking ahead we expect to generate a substantial and sustained base of R&D revenue from multiple sources in 2024 as our partnered programs advance. And we expect that eplontersen will continue to be an important source of revenue in 2024. We have the potential to earn a milestone payment for an additional eplontersen approval outside the US. We also expect to begin generating modest royalty revenue next year with growth expected as the launch ramps up. We project our expenses to grow modestly next year with our R&D expenses approaching steady state as our late-stage programs are fully enrolled. And our SG&A expenses to ramp up in line with the planned launches of eplontersen, olezarsen, and donidalorsen.

We have a strong financial foundation substantial recurring R&D revenue, a substantial and sustainable royalty revenue that can continue to grow and we expect to add new product revenue from our advancing and expanding wholly owned pipeline. Together with our prolific technology, we believe we are on a path to successfully bring our medicines to patients and to unlock next level value. And with that I’ll turn the call back over to Brett.

Brett Monia: Thanks Beth. We are very proud of the remarkable progress we’ve made this year. We believe that the successes we’ve achieved so far this year position us to drive substantial value for patients, our shareholders, and all Ionis stakeholders. Strategically, we have arrived where we are today by being focused on a clear vision and by being focused on all our support and strategic objectives necessary to achieve our vision. We’ve now established all of the functional capabilities we need to deliver a steady cadence of new and potentially transformational medicines to the market. We are advancing and growing our wholly owned pipeline and have established Ionis as a leader in cardiovascular and neurology drug development.

We continue to extend our leadership position in Oligonucleotide type therapeutics by expanding and diversifying our technology further optimizing our capabilities for existing therapeutic areas and opening up new areas for drug discovery and we continue to strengthen our financial foundation, providing the means to support all our strategic objectives. And today, with one of the most robust late-stage pipelines in the industry, with nine medicines in development for 11 indications, we’re turning that promise into new medicines for patients in need and not just one or two, but a steady and growing cadence of new transformational medicines over the mid and long-term. And in achieving this goal, we are positioned to drive great value for all Ionis stakeholders.

With that, I’ll now open the call up for questions. Operator?

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Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Gary Nachman with Raymond James. Please go ahead.

Gary Nachman: Hi. Thanks for taking the question. So, on eplontersen for ATTRPN, any additional updates regarding your interactions with the FDA? And how everything is progressing in front of the PDUFA? Have they requested any additional data and are label discussions progressing in the way you would like them to? And then, just on the commercial plans. Given the competitive dynamics in the space with [Indiscernible], how will payers be viewing Eplontersen? What’s your work telling you there? Will all these drugs be covered on most formularies? And where is AstraZeneca on the hiring of the sales force? Just give us a sense of how big you think that will be? Thanks.

Brett Monia: Thank you, Gary. I’ll take the first one and briefly give you an update on regulatory. And then I’ll ask Onaiza to cover the second part of your question on competitive dynamics. So, it’s — we don’t comment on ongoing regulatory discussions for drugs under review for potential approval. But what I can say with high confidence is that, we’re very pleased with the progress we’re making with the FDA and bringing up on teen to an on-time potential approval either PDUFA date on December 22. So there’s been really — everything is moving on track with that. And I also want to remind you everybody that we are now under review with our filings accepted in Canada and in Europe with potential approvals for those markets as well for next year for Eplontersen and TTR polyneuropathy. Onaiza?

Onaiza Cadoret: Hi Gary. Your launch plans are really underway. I would say they’re actually in place. We have hired all the necessary people for a very, very effective launch. The salespeople as you know is being led by AstraZeneca are hired and deployed in market. They are in the field. They are working on disease and brand awareness, really given that this is a very growth market, identifying with different physician sets, the types of symptoms that ATTRPM patients present with is very much underway. You’ve seen some of the campaigns on see the patterns. So they’re out there really since the last month in field. And we are just awaiting approval, PDUFA is December 22 and all things are in motion. Our nurse case managers on the Ionis side are hired and have been trained.

And since they’re mostly post approval, we would deploy them right after. And as you know the field medical team has been in place for the last 18 months to two years. So, all signals are ready to go. From a payer perspective, I think we have a very strong payer strategy. We’ve done a lot of research with the majority of the payers in the US. We don’t expect anything different than other kind of agents that have been priced on the analogs of rare disease pricing. Again, we believe this is a really active rare disease. We do not expect tons of beyond the normal prior authorization for a rare disease to get through. We haven’t seen much shift in the landscape here so far.

Gary Nachman: All right. Great. Thank you.

Operator: The next question will come from Luca Issi with RBC Capital. Please go ahead.

Luca Issi: Great. Thanks so much for taking the questions. Maybe two quick ones. One on Hepatitis B. What was your reaction to GSK in licensing the ex- RNAi from Arrowhead and J&J, given that they already have a sound thing agent with you, why do you think they need a second one? And then maybe circling back on the prior question so TTR polyneuropathy in PDUFA, any color on manufacturing? Has the tech transfer to AstraZeneca been successfully completed? Has the FDA expected the facility that will provide the commercial supply? Just trying to understand, if there is anything that keeps you up at night ahead of PDUFA? Thanks so much.

Brett Monia: Thanks, Luca. So we have a very good relationship with GSK. So we’re aware of what was coming, what was announced this week. The way to think about it is that, the acquisition of the RNAi molecule from Vanson really represents a double down, a triple down if you will on Bepirovirsen. Bepirovirsen is the only treatment that has produced a meaningful percentage of patients achieving a functional cure patients with HPV, chronic HPV. And in the Phase IIb in the CLEAR study, what we demonstrated with GSK was about a 10% functional cure rate. However, in patients with a lower HPV burden like 1,000 IUs per million, I think per milliliter that functional cure rate was well into the 20%-plus range, which is really impressive.

And so the strategy that GSK has stated for bringing in the RNAi molecule, which has not shown functional cures but what it has shown is reduction in HPV antigen levels, two levels that — which has a substantial percentage of patients can get below that 1,000 IU level is to do a sequential treatment to reach even more patients to achieve even greater percentage of functional cures by bringing patients down to a level maybe below 1,000, more patients below 1,000 IUs per milliliter and then coming in with Bepirovirsen. So this is an added dimension to a very comprehensive clinical program for Bepirovirsen to reach as many patients as possible and to achieve the highest percentage possible for functional cures for Bepirovirsen. And it’s also consistent with everything that GSK has been saying in which they will be exploring different combinations for Bepirovirsen to maximize success on this market, which as you know is hundreds of millions of people suffering from chronic HPV.

So we’re very pleased about this new outcome with GSK for Bepirovirsen. And Beth maybe you could talk a little bit about where we are with the our launch preparations for commercial supply?

Beth Hougen: Sure. Absolutely. We are all ready to go just as we are on the commercial side and the medical affairs side. All of the products needed for launch has been manufactured. It was manufactured through the regulatory process has been reviewed is ready to go. We just are waiting for a final label to do label and packaging and get product into channel shortly after approval, and all of the tech transfer necessary from Ionis to AstraZeneca with the commercial manufacturer the contract manufacturer is done. And all of that has gone extremely well. So we are — all systems is ready to go.

Luca Issi: Great. Thanks so much.

Operator: The next question will come from Yale Jen with Laidlaw & Company. Please go ahead.

Yale Jen: Good morning and thanks for taking the questions. I’ve got two quick ones here. The first one is for the SPINRAZA sales, I believe that will be ordinarily announced by Biogen. But, nevertheless, you indicated that the growth — small growth quarter-over-quarter, should we at believe that this is again consistent with the stabilization of the franchise in the larger SMA space? Then I have a quick follow-up.

Beth Hougen: So, what I would say is we’re very pleased with the low single-digit growth in — against last quarter and against the previous quarter — same quarter last year. We believe that demonstrates SPINRAZA’s continued resiliency even in the face of emerging competition Beyond that I really need to respect Biogen’s earnings call next week and I really can’t go any further.

Yale Jen: Okay, great. That’s helpful. And in terms of a JAMA publication regarding the eplontersen to sustain the benefit, how should we think about that to incorporate into the marketing strategy, particularly for newly treated or untreated patients?

Brett Monia: The publication specifically? I mean, that’s going to be a really effective tool to, right, Onaiza?

Onaiza Cadoret: Yeah, I think with the promotional and regulatory guidance, looking at the JAMA publication and where our promotional messages are headed. It’s going to be highly supportive. The JAMA publication is also very consistent with the label that we expect so that will allow for use by both the medical teams as well as the sales teams as well and that’s what we expect.

Brett Monia: Yeah. So in other words, although our package that’s under review at the FDA is based on the week 35 interim data that we reported last year having this publication for week 66 and week 85 is very, very helpful from a marketing standpoint and we expect to utilize that publication very effectively. I think that was the basis of your question.