Ionis Pharmaceuticals Inc (IONS) 2016 Q1 法說會逐字稿

Welcome to Ionis Pharmaceuticals' first-quarter financial results conference call.

Please note, this event is being recorded.

Leading the call today from Ionis is Dr. Stan Crooke, Ionis's Chairman and CEO.

Dr. Crooke, please begin.

Good morning and thanks everyone for joining us on today's call to discuss our first-quarter financial results and business highlights.

On the call today, Beth will walk you through our financial results and Lynn had planned to discuss the progress we're breaking across our business including our three phase-3 drugs and our recent announcement on our new commercial partner for Kynamro.

But she has got laryngitis, so she is on the phone and Sarah will take over and do that for her.

I will then provide some comments on the Merck Ionis litigation against Gilead and how this relates to advances we've made and continue to make in basic search and technology and how these innovations, at the core of Ionis, continue to generate increasing value.

And I will close with a brief summary of our upcoming events.

Let me start with our most recent news, Kynamro.

We think Kynamro is a valuable drug.

We acquired Kynamro and found what we believe is the ideal partner for Kynamro.

Why is Kastle ideal?

We have been impressed with the quality and the experience of the Kastle team.

They plan to have a single focus Kynamro; their commitment is high.

We believe Kastle will invest in the marketing, sales and support functions that are necessary to commercialize Kynamro to its fullest potential.

And Kastle believes that the opportunity for Kastle goes well beyond the United States.

We think the financial terms are attractive and the potential to earn up to $95 million in payments.

We also received a 10% common equity stake in Kastle and we will receive double-digit royalties beginning next year.

So this is very much a bet on Kynamro and Kastle, our perspective.

Just two weeks ago at the AAN meeting, we reported new data through nusinersen for the ongoing open-label Phase 3 study in the offense with Type-1 SMA.

Tremendously encouraged with all the evidence and benefit we are seeing in these babies including pre-survival, increased muscle function, achievements in new developmental milestones and increases in electrophysiological measurements now.

We also understand the challenge when gaining rapid approval based on historical controls.

This substantial past and recent experience, even in rare disease situations, shows that any approach other than working cooperatively with regulatory agencies around the world, need to prolong delays.

While we're working closely with Biogen to execute what we believe is the best strategy to gain the most rapid approval possible for Nusinersen, we're pleased with the interactions we're having with regulators.

We're moving on a path designed to achieve the earliest possible approval.

We started this year with excellent progress on our pipeline and, as you will see from Beth's report, we remain in a very strong financial position.

We're on track with our 2016 financial guidance.

Joining me on today's call are Lynne Parshall, Chief Operating Officer, who, as I said, because of her laryngitis will not be very much, if at all; Beth Hougen, Chief Financial Officer; Sarah Boyce, Chief Business Officer; and Wade Walke, Vice President of Corporate Communications and Investor Relations.

And now, Wade, could you read our forward-looking language statement, please?

Yes, thanks Dan.

A reminder to everyone, that this conference call includes forward-looking statements regarding the financial outlook for Ionis, Ionis's business and the business of Akcea therapeutics and the therapeutic and commercial potential of Ionis's technologies and products and development.

Any statement describing Ionis's goals, expectations, financial or other projections, intentions or beliefs, including the commercial potential of Nusinersen, Ionis-TTR RX and volanesorsen and Kynamro is a forward looking statement and should be considered an at-risk statement.

Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics.

And in the endeavor of building a business around such drugs.

Ionis's forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements.

Although Ionis's forward-looking statements reflect a good-faith judgment of its Management, these statements are based only on facts and factors currently known by Ionis.

As a result, you're cautioned not to rely on these forward-looking statements.

These and other risks concerning Ionis's programs are described in additional detail on Ionis's annual report on form 10-K for the year ended December 31, 2015, which is on file with the SEC.

Copies of this and other documents are available from the Company.

Now, I would like to turn the call over to Beth.

Thank you, Wade.

Good morning, everyone and thank you for joining us.

I am pleased to report that we maintained our strong financial performance by ending the first quarter with a pro forma net operating loss of $35 million and more than $700 million of cash.

Our expenses for the quarter were right on track; and because much of our planned revenue for the year is in the latter part of the year, we are on track to meet our guidance of a pro forma net operating loss in the low $60 million range and a year-end cash balance in excess of $600 million.

In our year-end call in February, we projected 2016 revenue of more than $240 million.

The majority of which comes from milestone payments as our partner programs advance.

Our ability to generate substantial revenue from milestone payments is a natural result of our large advancing pipeline and our partnering successes.

Because we're generating such a significant amount of our revenue from milestone payments, our revenue and our pro forma net-operating loss fluctuates on a quarterly basis.

The variations and the timing of our revenue quarter to quarter and year to year are expected and consistent with our projections.

In the first quarter of 2016, we earned $37 million in revenue, including more than $16 million from the amortization of upfront payments and more than $15 million from milestone payments.

Our milestone payments in the first quarter included $12.5 million from Biogen for advancing Nusinersen in Ionis-BIIB4Rx and $1.5 million from GSK when they initiated the Phase 1 study for Ionis-HBV-LRx.

Under our agreement with Kastle, we're eligible to earn up to $95 million including a $15 million upfront payment which we will recognize in the second quarter; an additional $10 million payment on the third anniversary of the deal; and up to $70 million in sales-related milestone payments.

We also received a 10% equity stake in Kastle.

Starting in 2017, we will earn royalties in the mid to low teens on global net sales of Kynamro.

Under our arrangement Sanofi Genzyme, they're eligible to receive a 3% royalty on sales of Kynamro and 3% of the cash payments we receive from Kastle plus a modest one-time payment for transition services.

Over the remainder of 2016, we have many opportunities to earn additional payments from our partners.

Assuming we successfully complete the Phase 2 study of Ionis-Factor 11 Rx, we will earn a $55 million milestone payment from Bayer.

We will also have the opportunity to earn $25 million for advancing the first drug under our cardiometabolic and renal disease collaboration with AstraZeneca; and $10 million for advancing the first drug enter our J&J collaboration.

We also have numerous opportunities to earn meaningful milestone payments as we advance research programs and drugs under our Biogen collaboration.

Our operating expenses for the first quarter were in line with our expectations.

A significant portion of our expenses were associated with the five Phase 3 studies and three open-label extension studies for our Phase-3 drugs.

In addition, we have been funding Akcea's pre-commercialization activities in preparation for the launch of volanesorsen following the successful completion of the Phase-3 study.

In the first quarter, we continued to advance our technology and our pipeline while managing our expenses prudently.

This was due in part to the substantial leverage we achieved when our partners performed many activities that moved our programs forward effectively and efficiently.

Our achievements to date have positioned us for continued financial strength.

Now, I would like to turn the call over to Sarah.

Thanks, Beth.

We are well along in preparation of NDA packages for all three of our Phase-3 drugs.

In anticipation of Phase-3 data for each of them in the first half of next year.

As Stan mentioned, two weeks ago at the AAN meeting, we provided an update from our ongoing Phase 2 open-label study in infants with Type I SMA.

When we began the study, we hoped to delay the progression of SMA to keep these babies from losing more muscle function and succumbing to respiratory failure.

What we are observing in the study has greatly exceeded our hopes.

We are observing the infants in this study treated with Nusinersen are not only living longer than natural history would predict, but also improving.

We have yet to reach a median event-free age in the study.

All of our infants continuing in this study are now toddlers.

They are all over the age of 2 and several are over 3 years old.

These children are doing things that you would never expect from an infant with Type I SMA.

These infants are living longer without requiring permanent respiratory assistance.

We are also observing increases in their muscle function measured by in ten scores.

To correlate with the achievement of new and unexpected development milestones.

When we last updated you, we had infants in this study sitting unaided.

This is remarkable for babies diagnosed with Type-I SMA, who are never expected to sit.

As of the latest data analysis, in January, even more babies are sitting unaided.

And remarkably, we now have babies crawling, standing and two are even walking.

We also provided for the first time, at AAN, a look at the electrophysiological measurements we're collecting in the study.

We have observed increases from baseline in C-Map after two measurements from motion nerves in both the arm and the leg.

C-Map is an electrophysiological measure that is used to monitor the functional state of a motion nerve and muscle units and can provide insight into the normal development or degeneration of the neuromuscular system.

According to published natural history data on infants with Type-I SMA, C-Map measurements declined sharply after symptom onset, remain low and do not improve over time.

To see increases in C-Map in these infants in our study is quite promising and very different from what the natural history would predict and consistent with what we are observing and consistent with all other increases in muscle function we are observing.

These data continue to support our confidence that Nusinersen could provide significant therapeutic benefits to patients with SMA for whom there are no approved therapies.

We see a large opportunity for Nusinersen to potentially provide value for patients with SMA and to create a considerable commercial opportunity.

There are about 30,000 to 35,000 patients with SMA in EU, US and Japan.

If Nusinersen is made available to increase -- is able to increase the survival of a Type-I infants, who make up half of the SMA patients born each year, the size of the patient population is likely to grow substantially.

Biogen will be responsible for piloting Nusinersen and we are confident that the drug price will reflect the value that Nusinersen can bring to infants and children with a potentially fatal, progressively debilitating rare disease.

We believe Nusinersen has the potential to create a fundamental change in the course of this terrible disease.

We expect it will be priced accordingly.

We understand the significance of these results to the families of babies and children with SMA.

We understand that every month matters and the frustration families must feel waiting for Nusinersen to proceed through the required clinical development and regulatory framework.

We and Biogen are doing everything in our power to expedite Nusinersen through developments and approvals.

All of our positive regulatory interactions give us confidence that we are on the right track to achieve the approval of Nusinersen as soon as possible.

And Biogen continues to move ahead with their preparations to commercialize Nusinersen so that, after we file and obtain approval, Biogen can rapidly make Nusinersen broadly available to patients.

While of course we understand for families, for patients and their families, the time it takes to develop Nusinersen seems quite long.

In fact, it is actually quite remarkable that we are close to commercialization just four years after entering the clinic.

We are also making significant progress with IONIS-TTRRx.

In July, at the international Society of Amyloidosis meeting, we plan to report updated data from the open-label extension study for IONIS-TTRRx and Dr. Benson plans to provide an update on the very encouraging data from its open-label study in patients with TTR cardiomyopathy.

We will review both data updates more broadly, at our R&D day, on July 13.

We're on track to have data from the Phase 3 Neuro-TTR study in the first half of 2017.

We continue to observe robust participation in the open-label extension study from patients who are eligible to roll over into that study.

Today, with GSK, we are conducting a broad development program designed to cover all forms of TTR amyloidosis.

We believe that Ionis-TTRRx could be of significant value to patients with TTR amyloidosis.

This is a fatal debilitating multi-organ disease for which patients have very limited therapeutic options.

If our Neuro-TTR study is positive, GSK plans to file first for marketing approval of Ionis-TTRRx in patients with the polyneuropathy form of TTR amyloidosis.

There are approximately 10,000 patients worldwide with familial amyloid polyneuropathy.

GSK will be responsible for process pricing Ionis-TTRRx and we are confident that the drug's price will reflect the significant potential value of this drug to patients with TTR amyloidosis and is likely to be comparable to other drugs used to treat severe diseases in orphan patient populations of a similar size with unmet medical need.

GSK also plans to evaluate Ionis-TTRRx in patients with the cardiomyopathy form of TTR Amyloidosis.

GSK is working closely with the FDA to address their questions on the study to get Phase 3 cardio TTR study underway as quickly as possible.

In the Cardio-TTR study, GSK plans to evaluate Ionis-TTRRx in an outcomes study in patients with the familial form of TTR Amyloidosis, as well as wild type form.

These patients have a buildup of TTR Amyloid in the heart muscle and, once symptomatic, all progress at the same rate with a similar constellation of symptoms.

We continue to advance in Neuro-TTR study and we are still progressing on track to complete the study in the first half of 2017.

JSK has already begun commercial activities to support NDA and NAA filings needed for the approval and launch of Ionis-TTRRx in patients with polyneuropathy.

These activities are timed such that once the Phase 3 NEURO-TTR data is in hand, GSK will be ready for the marketing approval without delay.

The breadth of GSK's sales and marketing organization around the world is important to ensure that Ionis-TTRRx is quickly established as a standard of care.

We believe GSK is the right partner to maximize this commercial opportunity.

Because TTR Amyloidosis is a multi-organ disease, there is significant overlap in symptoms observed in patients with polyneuropathy and cardiomyopathy forms of the disease.

We believe that one product will streamline the regulatory process, physician education and the sales effort.

We hope to be able to show more of these plans at R&D day and as the program advances.

Akcea is continuing to make excellent progress, preparing to file for approval and to launch volanesorsen.

We have two Phase-3 studies of volanesorsen ongoing for two life-threatening orphan genetic diseases, FCS and FPL.

Akcea's Phase-3 study in FCS patients is fully enrolled with data planned for the first half of 2017; and the Phase-3 study in FPL is well underway.

Both of these diseases are marked with extremely high levels of triglycerides.

FPL and FCS are estimated to affect 3,000 to 5,000 patients worldwide.

Given that FCS and FPL are both genetic diseases, we believe that the patient numbers will actually be higher for two reasons.

First, as you find one patient, you often locate the family of patients.

Second, as typically found with orphan diseases, once the treatment is developed, an awareness of the disease and the clarity of the diagnosis is defined, many more patients are likely to be more formally diagnosed with the correct disease name.

Akcea is actively engaged in a variety of activities to identify patients, prelaunch, as well as to raise awareness of the diseases and streamline their diagnosis.

While it is too early to comment on a specific price for volanesorsen, we believe volanesorsen's price, consistent with all our phase-3 drugs, will reflect the potential value of this drug.

Most recently, we announced the Kastle Therapeutics has acquired Kynamro from us.

In this transaction, not only did will receive up-front dollars and equity, but we also have the potential to earn milestone patients including payments associated with various sales levels plus ongoing royalties on sales beginning in 2017.

We look forward to potentially adding commercial revenues in the form of Kynamro royalties to our financials next year.

Placing Kynamro in the hands of a partner with the ability and commitment to maximize its potential was important for us.

Despite the emergence of new cholesterol-lowering therapies, there still remains a significant unmet need for homozygous FH patients.

Kastle believes, as do we, that Kynamro has the lipid-lowering profile to fulfill that need.

The Kastle team's background and expertise in successfully marketing orphan drugs for under diagnosed, rare diseases should see a great fit for Kynamro.

They have committed to investing significant resources to expand the market for Kynamro.

To increase the potential commercial value of Kynamro, Kastle has also already initiated activities to identify new patients to bring on to therapy in the United States and to pursue market approval in other countries.

Now, I would like to turn the call back over to Stan for closing remarks.

Thanks, Sarah.

We have three Phase-3 drugs.

They're all first in class; they are all new chemical entities that are in development for three different uses.

And we are completing Phase-3 clinical trials at the same time.

This is an achievement that we are tremendously proud of, one that very few, if any biotech companies, have achieved.

There are solid reasons.

I'm personally optimistic about each of these Phase-3 programs.

First, consider Nusinersen.

Even though we're comparing our Phase-2 results to historical controls, me and the physicians treating these patients are excited about what we're seeing.

These data give us confidence that the Phase-3 trials will confirm optimism.

Now focus on volanesorsen, both designed to treat patients with extremely elevated triglycerides.

Primary endpoint in our Phase-3 trial for volanesorsen is triglyceride reduction.

Entered our Phase-3 program with an extensive amount of data that showed that volanesorsen substantially reduced triglycerides in every patient population we studied from patients with moderate to extremely high triglycerides including dramatic reductions from patients with FCS.

Phase-2 data set then supports our optimism that the Phase-3 trials for volanesorsen will be positive as well.

We have a similar position on Ionis-TTRRx.

Although the cause of TTR amyloidosis is a TTR protein, a protein that causes amyloid wax to form and to grow.

This is shown in normal volunteers and patients, an 80% average reduction of TTR proteins.

Moreover, in Dr. Benson's study, in patients with the cardiac form of TTR Amyloidosis, these significant reductions in TTR have correlated with patients.

Thus again, multiple data sets support our optimism that the Phase-3 trial of Ionis-TTRRx will be positive.

As we look ahead, we have the opportunity to show benefit with not just one Phase-3 drug, three Phase-3 drugs, that are three new chemical entities in multiple different patient populations; and the data from each of these drugs should be available in the first half of next year.

We are well along in NDA preparations for all three drugs and plan to file rapidly after positive Phase-3 data.

Of course, means that we can have all three drugs on the market over the course of the next couple of years.

That's a really remarkable position to be in.

Of course that's not all.

We have a pipeline rich in valuing opportunities and we will be updating you on a number of the other drugs in the pipeline as the year progresses.

We plan to present additional data from our Lica programs this year with initial clinical data from Ionis Angipuitin Line III, LRx and Ionis GSK IV LRx.

We hope to see results similar to those with our ApoalRx drug.

What's at 30-fold or potent and the unconjugated parent drug had a weekly ED50 dose, 4.5 mg, displayed an excellent tolerability profile.

Through potency that our LICA Technology provides, supports the potential for ultra-low dosing, ultra-low volumes as well as less frequent dosing, which can substantially improve patient convenience and compliance; and it allows us to expand anosims drugs into additional uses and even larger patient populations.

Studies are getting underway.

In addition to Angipuitin Line IIILRx and GSK IVLRx data at our R&D day in July, we plan to present additional lipid measurements from a Phase-2 study looking at Ionis AboALRx in patients with high LPLA.

Phase-2 data from a study evaluating Ionis AR25Rx in patients with advanced solid tumors and Phase-2 interim data from a study evaluating Ionis GCTRx in patients with Type II diabetes.

We're looking forward to sharing all of that information with you at that meeting.

Before I conclude and open the call up for Q&A, I want to just take a minute to comment on the recent news from the Merck Ionis patent infringement, Gilead.

Here's what's important to me about that.

First, the jury found that all 10 claims of the two patents involved in the dispute were valid.

This once again emphasizes the quality and broad scope of our innovation.

Second, it emphasizes the breadth, depth, value of our intellectual property.

We continue to expand as we advance our technology.

They led innovation for a good many of years and continue to be impressed with the fact that innovation, almost always, but it is sometimes very difficult to predict exactly what specific element of an invention will generate value at a particular time.

But an example is the relationship that we had with Merck in the late 90s.

Of course we have always been interested in the positional chemistry of ASO's with the building box nucleosides.

We worked with Merck to develop nucleoside analogues which they might use to treat HCV and we might use to advance ASO medicinal chemistry and ASO performance.

That research led directly to the patents that are being litigated by Merck with Gilead.

So the fact that the jury confirmed that all 10 claims in both patents were valid is great news for us.

Even though there are additional legal steps that are underway, the confirmation of the validity of these patents is another important demonstration of the value of our innovation.

Whatever the outcome, it's all upside for us.

We have no costs associated with this litigation and we get 20% of whatever is awarded to Merck after they pay their litigation expenses.

While we're looking at the work that we were doing in the 90s with Merck, might not have been able to predict exactly the value, each person would have known that value was built.

The choice to work with Merck was also consistent with our interest in the treatment of HCV at the time.

It coincided with our early interest in using ASOs to alter micronase.

After working with Merck, sure that we understood HCV and that was essential in the discovery of the anti-HCV properties, the miR-122 inhibitors.

That led directly to the identification of the first miR-122 inhibitor, the potent HCV agent, which in turn helped us found Regulus to focus broadly on micro RNA therapeutics.

Now, Regulus has continued to move the miR 122 program along, showing excellent results.

All this research is connected.

The key point I'm making is basic research and technology advancement which are at the core of Ionis continue to generate ever-increasing value.

Now, that value may not be as obvious as a Phase-3 drug.

It's tremendously important in the short- and long-term value.

Today in the Company, innovation is an all-time high.

Progress is even faster than in the past and the breadth of activities that we have is remarkable, such as the enormously exciting neurological disease pipeline that we've added to our portfolio that we discussed a couple of weeks ago.

We're continuing to make transformative advances in our technology which broaden and expand the application of anosims technology to new mechanisms, targets and new diseases.

I'm really hoping that you can join me at our upcoming R&D day during which I will spend some time mapping out the future potential anosims technology based on the innovations that we're making today.

We have in hand today a pipeline rich in opportunity focused on bringing new drugs to patients with the highest unmet medical needs, have an almost unlimited potential for the future.

With that, I would like to turn the call open to Q&A.

Gary, if you can set us up for Q&A, please.

(Operator Instructions)

Jim Birchenough, Wells Fargo Securities.

Hi, guys.

Congrats on all the progress.

Just on the SMA program, Stan, perhaps in terms of nusinersen and getting it to patients as quickly as possible.

Could you maybe discuss some of the regulatory options, and whether an accelerated approval filing is possible, or whether there is some way to shorten the review cycle, once you get the Phase III data?

Just interested in what measures are open to shorten that time to get this to the patients?

Jim, thanks for the question.

I'm just a bit uncomfortable getting into any detail about this, given the fact that we're engaged in a variety of conversations with regulatory agencies around the world.

And, of course, I don't want to get in front of Biogen.

I think what I can say is, that we've continued to have these productive interactions, and we have an asset we believe assures an earliest filing, and much as we possibly can, the most rapid and productive interactions that would lead to the earliest approval.

That's really all I feel comfortable discussing just now.

Lynne with her laryngitis may have even less to say.

Do you want to add or subtract anything, Lynne?

No, I was just going to say exactly what you did, Stan.

Thank you.

I'm sorry, I can't provide more detail, Jim.

No, that's understandable.

So maybe just a second question on the TTR program, and the update that we're going to get shortly.

From either of those updates, would we get some visibility on what the issue might be holding back the cardio TTR program, and is there any additional detail you can just provide on that?

Yes, we will be providing an update in July on the open label cardiac study done by Dr. Benson, and we're very encouraged by what we're seeing.

And I should also add, of course, that familial polyneuropathy study continues nicely.

The concern therefore, focuses and it derives from (inaudible) monitoring, and questions that the cardiovascular division -- cardio renal division of the FDA asked, making sure that this very large outcome study might be possible.

Those concerns do focus on platelet reductions.

We have seen some platelet reductions in our patients treated with TTRRx.

(Inaudible) essentially all of the negative earning possible, hard to understand the mechanism.

What I can tell you right now, we believe those events are quite manageable and modifiable, and as we're doing in the FAP study.

And that we think there is potential for some interaction between amyloid protein TTR, all the proteins are known to associate with platelets and cause issues.

And the fact that we're affecting those protein levels, and that work is still in progress.

And so that is about as much as I can say today.

And Stan, maybe just to follow up quickly on that.

I think what I'm hearing that this is a unique situation, involving the interaction with the antisense with amyloid, and the amyloid with the platelet.

But something I'm presuming you haven't seen in any other program, as you've been developing your antisense oligonucelotides over the last several decades?

No, with the 2 prime methoxyethyl gapmer chemistry, which is what the chemistry is that's in the TTR drug, they're now -- I would, guess, more than 10,000 patients that have been treated.

And we have many thousands of patients that we have treated that are in our [safety] database.

We also have patients who have been treated now for longer than five years on [Amro].

And so, in the database of that size of course you're going to see some platelet reductions.

There are all kinds of platelet reductions that go on, on clinical trials.

But the observations in the TTR study appear to be really limited to the TTR disease situation.

I think one of the things that everyone should recall, is that as we advance our technology into a wide range of diseases of very sick patients, there are other drug disease interactions that you have to deal with.

We think this is manageable in the TTR patients, and we are doing just that.

Great.

Thanks for taking the question, Stan.

You bet.

Chad Messer, Needham & Company.

Great.

Thanks for taking my question.

A couple more on TTR with the cardio program, you're enrolling patients with both familial and wild type.

I presume there is an analogous situation in neuro, and wanted to know if you were going to do anything to address those patients?

And then, if I could just add another one on TTR, you're now with your partner GSK, you're kind of broadly going after all the TTR patients.

But sometime back, you made a decision to focus in neuro.

And I'm just wondering if there was a rationale at the time, for going after that sub population?

I think -- and let me make sure I understand your question.

But in the outcome study, that GSK plans to initiate in the cardiac form of the disease, you're right, it will be both the familial as well as wild type.

And the decision to do that, was based on a great deal of work that GSK did and others, that demonstrated that once the diagnosis was made, there might be some difference in the agent.

Once the diagnosis was made, the clinical course was very similar.

In the FAP study, we have a significant fraction of patients who do have cardiac form of the disease, and they will be evaluated separately as a subgroup, a specified subgroup -- Phase III study.

Now if I understand the question that you asked -- the final question you asked, about the history, it goes like this.

We initiated the FAP study immediately after Phase I. And we wanted to get some early evidence in that study of [reagent] results, particularly GSK wanted that, before beginning, cardiac study.

There was also a good bit of work going on to evaluate what was the best course with the cardiac patient.

So that time was very well spent, because GSK decided to initiate a large outcome study, it's the first hard endpoint cardiovascular outcome study to be conducted in this patient population.

But was staggered, and it was done, I think as you might expect, initial information, and the help of the design of what would be an optimal cardiac study.

Did I get your questions right, Chad?

Again, mostly.

I guess, I was just wondering if there's something about the endpoints in neuro, that you thought might be easier, or easier to hit, or were more well understood.

And I think maybe to summarize what I'm hearing you say, and correct me if I'm wrong, there was more to learn about the planning of a cardio study, and so waiting there, maybe made more sense.

Well, some, yes.

Remember we have partner, and these investments are very substantial.

We moved from Phase I to Phase III FAP.

And so the decision was, was to gain some experience before investing in this very large cardiac outcome study.

And to use that time to design the most fulsome approach to gaining broad approval in the cardiac indication.

So it was a business decision, having to do with costs and risks, and the amount of information that you'd like to have before you go all in.

Okay.

Thank you.

Jessica Fye, JPMorgan.

Hey, good morning.

Thanks for taking my question.

Maybe going back to the regulatory side with SMA.

Stan, you talked about the risk of filing too soon, without complete understanding of what the regulators want to see, as it could ultimately result in a longer time to eventual approval, compared to getting it right the first time?

Within that framework, can you give us any color on whether the FDA agrees on the natural history information that you've gathered, about whether that's basically reflective of the current standard of care?

And then second, on the Lp(a) program in aortic stenosis, it looks like there is evidence that patients progress faster in their stenosis when they have elevated Lp(a).

But can you talk about any evidence, that the elevated levels are truly causable, so that we can have greater confidence, that bringing them down would help slow that progression?

Thanks.

We have had a series of conversations with regulatory agencies.

And while there are always questions about historical controls, I think there is general agreement that the standard of care in our study, is as close to equivalent standard of care that was in the natural history study that we used as a comparison, as could possibly be.

And the study was done in the same centers, by the same physicians, and almost contemporaneously.

The other thing to remember is that the clinical course has not changed several years.

So I think, I would not want to imply the regulatory agencies are ever thrilled about having historical controls as an approach.

But as in that context, I think the historical controls are considered high quality, and appropriate historical controls.

And then, your question about -- did that answer that question Jessica?

Yes.

Thank you.

And with regard to aortic stenosis, you're absolutely right.

I think the data support the notion that patients who have elevated Lp(a) and aortic stenosis have a more rapidly progressing clinical course, leading eventually to either valve replacement, or congestive heart failure.

And the evidence that APO(a) is causal, both genetic -- that is, there are genetic studies have suggest it, and then mechanistic.

The bulk of the lipid community, at least that I talk to, believe that the principal problem is oxidized phospholipids which stimulate then an inflammatory response wherever they accumulate, including vessels and valves, and APO(a) is a principal oxidized phospholipid [varying] lipoprotein.

And so, there is evidence certainly, that suggests that APO(a) is causative.

But when you blaze new ground with new targets and new opportunities, in the end you ultimately prove the truth of that, the drug that works.

And so, that's what we're doing.

And obviously, if you have additional questions, we can set you up with [Sam Tsimikas] and [Owitson], who are certainly two of the world leaders in standing APO(a) and its pathophysiologic effects.

Great.

Thank you.

Stephen Willey, Stifel.

Hi, this is Philomena Kamya in for Stephen Willey.

Thanks for taking the questions.

We were just wondering when we can expect an update from the STAT3 program?

We've updated it some, and it's progressing.

It's in one of those stages, in which you are making progress, but there is not a cut point or endpoint that is an appropriate one to bring all the data together.

What I would say is we and AZ, are encouraged by what we are seeing, and the trials are progressing.

Lynne, do you want to add anything to that if you can?

No.

The study is ongoing, and I think the plan is to update it next year on that.

We have seen very interesting results with complete responses, and we discussed the issues on -- looking at both the stromal cell and [piter] cell activities, as well as the direct antitumor effects.

And then, the decision to move it in combination with (inaudible).

Understood.

And just as a second question, we -- with respect to your collaboration with Biogen, will we -- can we expect the disclosure of the targets BIIB 4x, 4, 5 and 6 soon?

Well, they will be disclosed -- the decision about exactly when we will be able to talk about, what those targets is Biogen's.

May I add something Stan?

One thing that you might do is look at the various presentations that we made at AAN, and that may give you some strong clues as to what those targets could be.

We mentioned at the AAN, that we had systematically evaluated where ASOs go after intrathecal administration in the brain.

And as we learned that they were very broadly distributed, and we moved more aggressively to a wide range of diseases.

We emphasized that we are moving to some very large categories of diseases, such as Parkinson's, and Alzheimer's and other types of neurodegenerative disorders.

So it would be a perfectly reasonable thing to assume that those Biogen drugs are targeting diseases like those.

Okay.

Great.

Thank you very much, and congratulations on the progress made thus far.

Eric Schmidt, Cowen and Company.

Good morning.

Thanks for taking my question.

Stan, on the TTRRx program, now that you've indicated that the monitoring issue related to thrombocytopenia.

Give us a sense of the scope of the thrombocytopenia that you observed in that population?

Was it a substantial percentage, was there any Grade 3 or Grade 4 events?

I don't want to get into any more detail in a study that's ongoing and blinded, and give you numbers that I know will change as we progress.

These TTR patients are very sick.

They have multiple organ failures.

They have signs of renal functions, platelets, and many other things that are ongoing as a result of the disease process.

And we have had a handful -- less than that, of meaningful declines in platelets that, of course, we have been monitoring carefully.

That's really all I'm comfortable saying.

Lynne, do you want to add on that at all?

No.

Okay.

Maybe, in terms of the question that Jim was asking about, that this being a potential platform issue, or the concern out there that this could be a platform issue.

I know you have very large safety database of generation 2.0 patients that have been treated.

Can you give us a sense of the incidence of ITP in that database?

Have you looked at that?

Well, we haven't -- ITP really just boils down to finding platelet antibodies, and no other cause of platelet reduction.

We have not had sufficient -- there have been declines in platelets that you see across a big database.

But there hasn't been sufficient platelet issues that we've focused significantly on it, until we begun encountering these issues with [Barr].

So they're very limited.

And there will be variations, depending on disease and the sequence and so on (inaudible) class affect.

But we think the problems that we're experiencing in our study are related to the drug disease interaction.

Is there pre-clinical model that can inform that hypothesis that you can see it -- again I don't know if there is even a model of TTR where you can show clearances associated (multiple speakers) --?

And there have been studies that have shown the amyloid proteins interacts with platelets, and activates them, and that sort of thing.

And of course, we do most of our -- we do our large scale testing in monkeys, and in monkeys, you have all kinds of complicated issues with complement and so on.

So it's an answer that we have to primarily get into clinic -- and that's what we're doing.

Okay, thanks.

Maybe just a quick one for Beth.

Obviously, it looks like the 2016 revenue is second half weighted.

But are there particular lumpy or large milestone payments that you are expecting, that we could get a read on, just to provide a little bit more visibility on the incoming revenues?

Sure, Eric.

The three in particular, that we've been guiding folks to are, of course the $55 million milestone from the Bayer, that we would earn on the completion of the Phase II study in the dialysis patients.

And that will be late this year, we would anticipate.

There is a $25 million milestone payment that we can earn from AstraZeneca for advancing the first drug into development under the cardio renal collaboration with them.

And that would be second-half.

The third large milestone payment is the $10 million from Johnson & Johnson, for moving a first drug under that collaboration into development.

And then, of course, there is a number of other important and fairly significant milestone payments under Biogen, and both research and drugs in development, that could come in throughout the course of the year.

Perfect.

That's helpful.

Yes, Eric, we've been doing this for a long time with this model, and we're highly confident that we are going to meet or exceed our financial guidance.

Thank you, guys.

Salveen Richter, Goldman Sachs.

Thanks for taking my question.

So with regard to TTR again.

So with, in terms of the platelet issue, would that be particularly problematic in patients with cardiomyopathy, whether either in conjunction with polyneuropathy as their primary manifestation?

We don't think so.

We think the difference is, a different division of the FDA, and -- but there's no reason to believe that the situation will be different, patient populations.

And so, we don't think so.

Great.

And then, could you help us frame expectations for the Factor XI data coming in the second half, where should we look for it, and what exactly, how many patients, what exactly are we looking for here?

So remember, this is a study to set the stage for the large studies that Bayer will be conducting in patients with (inaudible) function.

And so, the main goal of the study is to understand pharmacokinetics, so we can define dose and dose frequency.

Because there are differences in [clinitrate] patients who have failure, and are undergoing dialysis and those sorts of thing.

So our primary goal is safety, and to help us pick dose or doses for large studies, that will be looking at patients who need [ano thrombosis] and have renal function, so what's we're doing.

I can't remember the exact numbers.

It's -- I think it's like 40 or 50 patients.

Lynne, do you remember?

It's between 40 and 50 patients, yes.

And it's coming along nicely.

We are pretty confident today, that we will have all of the information we need from the study, based on what we are seeing, but to help us pick a good dose and a good dose schedule for the upcoming study.

So we think -- we are very optimistic, Salveen, to give us exactly what we need.

Great.

Thanks, Stan.

Yale Jen, Laidlaw & Company.

Good morning, and thanks for taking the question.

Many of those have been answered.

So I have two brief ones.

First one is that, in terms of the patient recruitment for the nusinersen Phase III study in infants, we know that you guys guided that the patient recruitment should be completed this quarter.

Is there any update on that, in terms of the status?

It's progressing as we described.

Can you anticipate complete this quarter as you previously guided?

Yes, it will get done.

Okay.

And the next question is for the Dr. Benson's presentation for the TTR, and what venue this presentation will be presented?

I can't remember, but I imagine Sarah or Lynne does?

Yes, it's the ISA meeting, which is the international Society of Amyloidosis that's held over the Fourth of July weekend.

Okay.

Great.

And the last question here is, one of the programs have not been mentioned too much, which is for the retinitis pigmentosa.

I guess, the Phase I/II study was started in the third-quarter.

Would you have any other comments, or maybe a little color on this program?

Not today.

It's progressing.

Okay.

Great.

Thanks, Stan, and congrats on the progress so far.

Thank you.

Jim Birchenough, Wells Fargo Securities.

Hi, guys.

One of the program you haven't spent a lot of time on discussing, and maybe you can't with GSK as a partner.

But hepatitis B is an emerging area of focus, and just wondering you can talk about the targets you're pursuing in that collaboration?

And how do you think about that program, fitting in with other developments in Hep B drug development?

Well, we're excited about it, and GSK is very excited about it.

There a couple drugs in that program.

And unfortunately, Jim it's a very competitive area.

And so, GSK is anxious that we not discuss it in any more detail.

Got it.

And I hate to do this, but just going back to the platelet issue in the TTR program.

I think it's important to understand what this isn't.

And so, just wondering, is there any issue antibody generation to the antisense, that's interacting with the platelet?

Is there any direct antisense effect on platelets that you've seen in the past?

Just trying to rule out things that might be concerning more broadly?

We have not ever identified --I can't say not ever -- I don't (technical difficulties) a direct anti-platelet anti-ASO antibody.

Perfect.

Okay, thanks Stan.

This concludes our question-and-answer session.

I would like to turn the conference back over to Doctor Crooke for any closing remarks.

Well, thank you very much, everyone, and I appreciate all of the thoughtful questions.

We continue to make broad progress, and we're looking forward to the completion of these Phase III programs successfully, and updating you in more detail on the Phase II pipeline, and the progress and technology in the coming months.

Thanks very much.

The conference is now concluded.

Thank you for attending today's presentation.

You may now disconnect.