Ionis Pharmaceuticals Inc (IONS) 2018 Q3 法說會逐字稿

Good morning, and welcome to the Ionis Pharmaceuticals Third Quarter 2018 Financial Results Conference Call.

As a reminder, this call is being recorded.

At this time, I would like to turn the call over to Wade Walke, Vice President, Investor Relations, to lead off the call.

Please begin.

Thank you, Cole.

Before we begin, I encourage everyone to go to the Investor section of the Ionis website to find our press release and the related financial tables, including a reconciliation of the GAAP to pro forma financial measures that we will discuss today.

We believe pro forma financial results better represent the economics of our business and how we manage our business.

We have also posted slides on our website to accompany our discussion today.

With me on the call today are Stan Crooke, Chairman of the Board and Chief Executive Officer; Beth Hougen, Chief Financial Officer; Damien McDevitt, Chief Business Officer; and Brett Monia, Chief Operating Officer.

I'd like to draw your attention to Slide 3, which contains our forward-looking language statement, which we'll be making today -- forward-looking language statements, which 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 discussed in our SEC filings for additional detail.

And with that, I'll turn the call over to Stan.

Thanks, Wade, and good morning, everyone.

Thanks for joining us.

In the third quarter, we achieved a number of important milestones.

And in the aggregate, that results in continued financial strength of the company.

We're on track for our third consecutive year of pro forma operating income, and we're doing this while launching TEGSEDI and preparing to launch WAYLIVRA.

Our solid financial performance results from multiple resources of revenue, including growing SPINRAZA revenue on top of our substantial base of R&D revenue from numerous successful partnerships.

With the TEGSEDI launch underway, we look forward to adding commercial revenue from this drug and potentially, WAYLIVRA.

We expect SPINRAZA sales to continue to grow globally, given the positive new data Biogen reported from the NURTURE study in presymptomatic infants.

We also expect to see continued growth in key patient segments such as the adult patients in the U.S., which make up 60% of the SMA population at -- with only a fraction of those patients now being treated.

The positive impact of SPINRAZA has now been recognized with several Prix Galien awards around the world and was also recently recognized again by the scientific community with the awarding of the Breakthrough Prize in Life Sciences to Frank Bennett, our SVP of Research and Head of Neurological Disease Franchise.

Frank shared this honor with Dr. Adrian Krainer of Cold Spring Harbor Laboratories.

The TEGSEDI launch is now underway in multiple countries, and we and our affiliate, Akcea, are encouraged by the continuing enthusiasm we're seeing from the amyloidosis community for this drug.

With a strong team, the necessary infrastructure and global strategy in place, we're confident in Akcea's ability to successfully launch TEGSEDI.

With WAYLIVRA, we and Akcea are in active discussions with EAME -- EMA and we continue our conversations for the path forward with the FDA.

All of these review processes are progressing.

Our EAP program is going well, and we continue to work to bring all the patients with FCS, the first-ever treatment of this ultra-rare debilitating and potentially fatal disease.

In the Phase II study of AKCEA-APO(a)-LRx, the drug demonstrated a substantial dose-dependent reductions in 8 LP(a) in patients with established cardiovascular disease and elevated LP(a).

We also observed the favorable safety and tolerability profile.

We're very encouraged by the drug's performance using convenient low-volume monthly doses.

We and Akcea, along with our partner, Novartis, now have what we need to select the dose and advance the drug into a large cardiovascular outcome study to demonstrate the cardiovascular benefits of lowering LP(a), a genetically validated driver cardiovascular disease affecting millions of patients worldwide.

Phase II study of APO(a)-LRx is the largest and the longest study of a LICA drug to date with nearly 300 patients dosed up to 12 months.

The robust target reduction and favorable safety and tolerability profile observed in this study adds to our confidence in the potential of LICA drugs to treat a broad range of diseases with convenient dosing regimens.

Roche expects to initiate the Phase III program for IONIS-HTTRx in patients with Huntington disease before the year-end, including a pivotal study and a natural history study.

Building on our successful relationship with Roche, we entered a new collaboration for the development of Ionis Factor B LRx for the treatment of patients with a broad range of complement-mediated diseases, beginning with Geographic Atrophy in the advanced stage of dry age-related macular degeneration.

We believe Roche is the right partner to maximize the potential for success of this program.

And the substantial level of participation we retain in the drug's commercial success is another example of the strong value of our antisense platform.

Beyond these important highlights, we've had numerous other pipeline achievements, which not only contribute to our significant financial strength but more importantly, show that important new drugs are advancing closer to patients who desperately need them.

Our focus remains on delivering innovative new medicines to patients in need while positioning the company for continued growth.

I'll now turn the call over to Beth.

Thank you, Stan.

Good morning, everyone.

We ended the first 9 months of 2018 with operating income of $25 million and net income of $51 million, both on a pro forma basis.

Our strong financial results were driven by double-digit revenue growth compared to the same period in 2017.

A nearly threefold increase in commercial revenues from SPINRAZA royalties compared to the first 9 months of 2017 together with a substantial base of R&D revenue were key factors contributing to our financial performance this year.

Additionally, we ended the third quarter with approximately $2 billion in cash.

With TEGSEDI now launched in multiple countries and a catalyst rich the next 6 months, we are positioned for continued financial success.

We project our fourth quarter results will be driven by growth in commercial revenue from SPINRAZA royalties as global sales increase.

Last quarter, we moved into the highest royalty tier, which means we earn a greater share of each dollar of SPINRAZA sales.

In addition, we expect TEGSEDI product sales to contribute to our commercial revenue growth in the fourth quarter.

We also project our fourth quarter R&D revenue to increase due to the amortization of the $75 million upfront payment from our new collaboration with Roche for our FB program.

Now already this quarter, we have earned 2 milestone payments from AstraZeneca totaling nearly $30 million for advancing 2 different programs.

We are on track to easily meet our guidance of pro forma operating income even while investing in the launch of TEGSEDI and preparing to launch WAYLIVRA.

We are projecting to end the year with more than $1.8 billion in cash, making us cash accretive for 6 out of the last 7 years.

We plan to use our cash to continue to advance and expand our pipeline, including growing our pipeline of Ionis-owned drugs.

Worldwide, SPINRAZA revenues grew to $468 million, driven by quarter-over-quarter and year-over-year revenue growth in the U.S. and even greater revenue growth outside the U.S. Notably, year-to-date, SPINRAZA global revenues surpassed $1 billion in the third quarter.

The number of patients being treated with SPINRAZA increased by approximately 20% from the second quarter of 2018.

And now nearly 6,000 patients are on SPINRAZA, including in the EAP and clinical studies.

In the U.S., more than 50% of new start forms in the third quarter were for adult patients, driving a greater-than-20% increase in the number of U.S. adult patients on SPINRAZA compared to the second quarter of 2018.

Adult patients represent the largest SMA patient segment, accounting for approximately 60% of the prevalent SMA patient population.

However, only about 15% of these patients are receiving SPINRAZA today, representing a significant opportunity for growth.

Revenue growth outside the U.S. was meaningful as the pace of reimbursement increased, particularly in Europe, Asia Pacific and Latin America.

We expect revenue growth outside the U.S. to continue in the fourth quarter of 2018 as the number of patients on treatment increases.

That growth combined with stability in U.S. SPINRAZA revenue in the fourth quarter compared to the third quarter of this year should result in increased royalty revenues from SPINRAZA, which are nearly all profit.

R&D revenue from numerous drugs and numerous successful collaborations continues to be a significant component of our total revenue.

So far this year, we have earned more than $225 million in R&D revenue, which does not include the nearly $30 million in milestone payments we've earned so far in the fourth quarter.

R&D revenue is a significant and sustainable source of revenue for us, which is why we included this source of revenue in our valuation model.

As I discussed last quarter, our R&D revenue consists of 4 key components: amortization of upfront payments; milestone payments, which represent progress in our existing partnerships; license fees, which represent new transactions and partners advancing existing program; and services we provide to our partners.

Through the end of September, we had recognized $92 million of revenue from amortization.

And one significant component of this is in the third quarter with $14 million for the first full quarter of amortization for our new Biogen collaboration.

We recognized $45 million in the first 9 months of this year in milestone payments.

Two significant milestone payments in the third quarter were $10 million from AstraZeneca when they initiated a Phase I study for the first drug in our cardiometabolic collaboration and $10 million from Biogen when we initiated a Phase I/II clinical study evaluating our second drug to treat patients with ALS.

We earned $64 million in R&D revenue during the first 9 months of this year from license fees, primarily from AstraZeneca earlier in the year.

This does not include the $12 million license fee we earned from the new collaboration with PTC to commercialize TEGSEDI and WAYLIVRA in Latin America, which we include in our commercial revenue.

Finally, we earned $25 million from services we've provided to our partners, primarily for manufacturing commercial and clinical supplies for them.

Looking ahead, we expect our R&D revenue to grow based on 3 factors: an increase in the number of partnerships; an increase in partnered programs; and larger payments as partnered programs advance.

Let me give you some examples.

First, our R&D revenue increases as the number of collaborations we have increases.

We recently entered into a second collaboration with Roche.

Under this collaboration, we received a $75 million upfront payment.

Together with Roche, we will be conducting a Phase II study in patients with Geographic Atrophy.

Therefore, we will be amortizing the upfront payment over the course of the study beginning in the fourth quarter.

We currently have 13 collaborations with large pharmaceutical companies, a number that has more than doubled over the last 6 years.

Second, we are progressing more and more programs under our successful collaborations.

For each program we advance, we are eligible to earn milestone payments and license fees.

We currently have 22 partnered programs, a number that has nearly tripled since 2012.

In 2012, we earned $51 million of revenue related to license fees and milestone payments.

That's compared to over $135 million in license fees and milestone payments we have earned so far this year.

Third, as our partnered programs advance, the dollar amount we earn for milestone payments and license fees increases, reflecting the increase in value of the advancing program.

For example, when we initiated the Phase I/II study in Huntington's patients, we received a $22 million milestone payment from Roche to help fund our cost to conduct the study.

When Roche doses the first patient in the pivotal study, we will earn a $35 million milestone payment.

Importantly, the $35 million will be all profit to us since Roche will be conducting the study.

In summary, we are sustainably profitable and cash accretive with a manageable expense structure.

Our growing commercial revenues together with our substantial base of R&D revenues positions us to finish 2018 in a strong financial position and sets us up for growth in 2019.

With that, I'll turn the call over to Damien to provide a commercial update.

Great.

Thank you, Beth.

Good morning, everyone.

While this is early days in the TEGSEDI launch, we are pleased with the progress the Akcea team is making to get TEGSEDI to the patients in need in the U.S., EU and Canada.

While we are not providing sales guidance today, we and Akcea will keep you updated on how the launch is going.

TEGSEDI was recently approved in the U.S. with a broad label for treatment of the polyneuropathy hATTR amyloidosis in adults regardless of stage of disease.

Akcea's patients support program has launched as enrolling patients.

Akcea Connect was built to support patients through every step of their treatment journey.

Dedicated nurse case managers guide patients in establishing their monitoring routine as part of the REMS program, help navigate insurance coverage options, provide home injection training and more.

And together with Akcea's lab service partner, Quest, patients have the option for at-home services.

Akcea's U.S. field team is making good progress in connecting with treating physicians, and we are pleased that the first prescriptions have been received.

In addition, the TEGSEDI market access team is well along with their efforts to partner with payers.

Importantly, the team is working with those payers who cover the majority of lives in the U.S. to develop a strategy that best fits the goals on the patient populations they serve while ensuring that financial barriers do not negatively impact the patients in need.

Akcea's specialty pharmacy, Accredo, is experienced in supporting this unique need of the rare disease communities, helping to simplify access to therapy.

Today, Accredo has been certified into the REMS program and is ready to assist patients.

Accredo has a team of specialty clinicians, pharmacists and over 600 field-based nurses located throughout the U.S. who will augment the Akcea Connect team of nurse case managers to provide support and address the needs of the hATTR community.

In Germany, patients are now receiving TEGSEDI in the commercial setting.

Akcea's goal is to ensure that patients who need TEGSEDI have access to this.

To accomplish this goal, Akcea is working to make TEGSEDI available to patients across numerous countries in the EU as quickly as possible.

Additionally, Akcea Connect is rolling out in the EU to provide the optimal level of support for patients in each country.

In Canada, Akcea Connect is in place, and we look forward to delivering the first drugs to treat polyneuropathy caused by hATTR amyloidosis to these patients.

Given TEGSEDI's robust efficacy and simple self-administration, we believe TEGSEDI will be the treatment of choice for people with hATTR and their physicians.

Beyond the U.S., EU and Canada, we and Akcea look forward to PTC Therapeutics moving TEGSEDI forward in Latin America.

We are also looking to expand beyond these initial regions as part of our strategy to enable global access to TEGSEDI.

This weekend, at the International Society for Pharmacoeconomics and Outcomes Research meeting, Akcea is presenting more detailed analysis from the NEURO-TTR study, demonstrating TEGSEDI's positive impact on patients' quality of life.

These analyses look at TEGSEDI's effect on patients' ability to complete day-to-day activities as well as positive changes in physical and mental health.

Now turning to WAYLIVRA.

In the EU, our review process is ongoing.

In the U.S. and Canada, we plan to work with regulators to confirm a path forward.

As Akcea continues to work to bring the first-ever treatment to patients with FCS, the EAP program is ongoing, and Akcea is prepared to launch in the EU as quickly as possible, assuming approval.

In addition, Akcea is making progress with patient identification with a focus on diagnosis, which provides support for our estimate of 3,000 to 5,000 FCS patients worldwide.

Now over to Brett to review key highlights from our pipeline.

Thanks, Damien.

So we achieved several additional successes since our second quarter update that I'll now review briefly, and we look forward to providing a detailed update at our Investor Day next month.

Biogen recently provided an exciting update from the NURTURE study in presymptomatic infants with SMA.

As of May 2018, all patients in the study were alive without the need for permanent ventilation or were sitting independently and nearly all were able to walk.

And importantly, every participant in the study has continued to make progress and achieved milestones more consistent with normal development.

These long-term data provide further evidence that early diagnosis of SMA and treatment with SPINRAZA can fundamentally alter the course of this disease for presymptomatic infants and adds to the body of evidence supporting SPINRAZA as the standard of care for all patients with SMA.

Shifting gears a bit.

In the Phase II study of AKCEA-APO(a)-LRx, patients with established cardiovascular disease in elevated LP(a) levels achieved dose-dependent reductions in LP(a) with most patients in the active group attaining levels below the established threshold of risk for cardiovascular disease.

Additionally, APO(a)-LRx demonstrated a favorable safety and tolerability profile consistent with our other LICA drugs.

As is well documented, elevated LP(a) levels is a driver of cardiovascular disease that affects millions of people worldwide.

It cannot be controlled with lifestyle modifications such as diet or exercise, and there are no approved therapies that specifically target and reduce LP(a) levels.

The Ionis and Akcea team, with our partner, Novartis, are now preparing for an end-of-Phase II meeting with the FDA, followed by the potential initiation of a large cardiovascular outcome study, which will be designed to demonstrate the cardiovascular benefits of lowering LP(a) levels in patients with established cardiovascular disease.

Novartis, of course, is highly experienced in conducting large CV outcome studies, and they have been actively preparing to initiate the study once they exercise their option.

And importantly, with royalties up to the low 20% range, we retain significant value in the commercial success of the drug.

We look forward to presenting additional data from the Phase II study this Saturday at AHA and at our Investor Day next month.

Shifting attention.

Our partner, AstraZeneca, recently reported positive Phase II data for danvatirsen, our STAT3 inhibitor, at this year's ESMO conference.

In combination with durvalumab, AstraZeneca's PD-L1 blocking antibody in recurrent metastatic head and neck cancer, treatment resulted in 7% of patients achieving a complete tumor response and 23% achieving either a partial or a complete tumor response.

This response rate is estimated to be double that durvalumab alone based on previous studies in this difficult-to-treat patient population.

And our partnership with Roche continues to go well also.

Roche announced the study design for the IONIS-HTTRx pivotal program, which they plan to initiate before the end of the year.

Working closely with regulators, Roche has designed a highly innovative pivotal study to generate a robust dataset to get this important medicine to people with Huntington's disease as rapidly as possible.

The program will include 2 studies with patients beginning to enroll by early 2019.

The first study is a Phase III study, which will be the world's first to measure the effect of a drug that directly reduces the amount of the protein that causes Huntington's disease in patients.

This 2-year study will evaluate long-term safety and efficacy in up to 660 symptomatic Huntington's disease patients around the globe.

The second study is a 15-month natural history study in up to 100 symptomatic patients designed to further our understanding of the correlation between changes in mutant huntingtin protein and clinical measures.

As a reminder, IONIS-HTTRx is the first and only drug to demonstrate a substantial lowering of the mutant huntingtin protein with trends in clinical benefit in patients with Huntington's disease, which, together, support the drug's potential to slow or perhaps halt disease progression.

As Stan mentioned, we recently built upon our successful relationship with Roche with a new collaboration for the development and commercialization of IONIS-FB-LRx for the treatment of people with a broad range of complement-mediated diseases beginning with Geographic Atrophy, the advanced stage of dry AMD.

As a reminder, for each product in our pipeline, we see the commercialization strategy that maximizes the drug's commercial success while optimizing our participation in that success and partnered IONIS-FB-LRx because the development of drugs for retinal disease, and particularly Geographic Atrophy is complex and requires specialized experience.

Roche has a substantial development infrastructure and experience in developing and commercializing new medicines for retinal diseases.

Furthermore, Roche is prepared to pursue additional complement-mediated disease indications well suited for IONIS-FB-LRx.

Importantly, with royalties of up to 20%, we participate substantially in the commercial success of this drug.

And in the coming months, we look forward to showing more of the data we have generated from our LICA programs -- our other LICA programs, in clinical studies and publishing the full integrated safety database for these LICA drugs, which are performing exceptionally well.

In clinical studies, our LICA drugs have demonstrated increases in potency of 30-fold or greater, enabling low volume and less frequent dosing.

We've also observed good safety and tolerability with potent target reduction.

These results are consistent with those observed in the Phase II study of our APO(a)-LRx drug in nearly 300 patients treated for up to a year.

And finally, we have had many additional achievements since our second quarter update.

We completed enrollment of a Phase IIb study of Ionis Factor XI RX in patients with end-stage renal disease on dialysis and initiated a Phase I study of the LICA version, Ionis Factor XI LRx, both with data expected in the second half of 2019.

AstraZeneca initiated a Phase I study of our first-generation 2.5 LICA drug to enter the clinic, IONIS AZ4-2.5-LRx, which is 1 of 3 drugs in development under our highly productive cardiometabolic renal disease collaboration with AstraZeneca.

And Biogen initiated a Phase I/II study of IONIS-C9Rx, our second familial ALS drug, which is in addition to IONIS-SOD1Rx, which is in a Phase I/II study in familial ALS in patients with SOD1 mutations with data expected in Q1 2019.

As shown on this slide, we successfully completed many key milestones this year.

In the fourth quarter and into 2019, we are looking forward to numerous important catalysts, including several regulatory decisions, data readouts and study initiations.

We also look forward to discussing many of these events at our Investor Day in December.

And now I'll turn the call back over to you, Stan.

Thanks, Brett.

So the third quarter was another very strong quarter for the company.

We continued to demonstrate the power of the financial model that we built with continuing financial strength even while launching TEGSEDI and preparing to launch WAYLIVRA.

So we are -- we continue to be sustainably profitable, and we believe we are positioned for continued growth.

We believe WAYLIVRA demonstrates a positive benefit-risk profile for patients suffering with FCS with no therapeutic options.

Regulatory process continues in the EU, and we are in conversations with the FDA and the Canadian authorities as well.

Akcea is ready to launch WAYLIVRA as quickly as possible once we have approval in the EU and other territories.

We have a number of near-term value drivers, including plans to initiate at least 3 pivotal studies before the end of the year.

These are programs with the potential to change the course of fatal genetic diseases such as Huntington's disease, TTR amyloidosis as well as diseases that affect millions of patients such as LPA -- LP(a)-driven cardiovascular diseases.

We also have multiple mid-stage programs in a number of therapeutic areas that we're excited about and which have the potential to drive longer-term growth.

We look forward to discussing more about these programs as they progress.

With that, I'll turn the call over to Cole to set us up for Q&A.

Cole, would you please set us up?

(Operator Instructions) And our first question comes from Tyler Van Buren with Piper Jaffray.

I guess my -- the first one was with respect to the TEGSEDI REMS program.

Specifically, regarding logistics for docs who aren't, I guess, as familiar with REMS programs, how easy is it going to be for them to sign up?

What specifically do they have to do?

How are you guys helping them?

And how long could that take?

I noticed that some of the questionnaires online are actually quite simple with less than 10 questions, but just wanted to better understand that process.

Yes.

So thank you for your question, Tyler.

So this is why we have set up Akcea Connect to help position some patients, work through the paperwork associated with the REMS program.

So as you spotted, the -- it's very straightforward going through these paperwork.

And to date, there's been no issues.

We've got physicians and patients certified through REMS and registered on Akcea Connect.

Just to add to that, Tyler, I actually went through the process myself.

And so there was a lot of effort at reducing the burden everywhere: on the patient, on the physician, on the physician's office.

And so I feel very, very comfortable with how easy it is to enroll in the program that Akcea has put together.

I think it's quite an exciting advance in managing these processes.

That's great.

Are you able to say how many doctors are certified on the REMS or how many patients are on the REMS?

No.

We're not providing numbers.

But we have had patients and physicians certified today, but we're not giving out the exact numbers at this point.

We're encouraged by what we're seeing.

Okay.

And the second question was with respect to the platelet monitoring.

I guess I'm assuming that the samples need to be taken by a nurse, and that the patient can't do it themselves.

Or maybe you could correct me if I'm wrong.

But specifically and logistically, how will it happen?

How long will it take?

And if someone's on a business trip, how would you get their platelet levels monitored on a weekly basis?

So the patient -- the platelet monitoring will happen -- blood draws will be done at home and with the -- with nurses.

And so does that help?

The -- so platelet monitoring is designed so it will be as convenient as possible.

We'll go where the patient wants us to go.

The patient is near a lab as they prefer going in and getting their blood drawn there, great.

If they're traveling.

Why, of course, there are clinical laboratories everywhere.

And they're set up so that the patient can go there and get the job done.

And of course, we're providing the opportunities to have the platelets determined or blood drawn in the home as well.

I guess once a week.

It's over in a matter of just a couple of minutes.

It's rapid, easy.

Certainly, speaking for myself, I would rather do that than go to an infusion center and spend the day getting an IV infusion.

Yes.

I -- and that makes sense.

I guess if you're having nurses go to the patients' home or if they're on a business trip and wherever location they are, don't you guys have to have a lot of nurses on staff or be plugged into some large network?

Just I guess curious to hear a little bit about that.

Yes.

So we are plugged into the large network through Accredo, there are 600 nurses on staff throughout the U.S. So that's a fairly large network available.

And Quest, of course.

We have a partnership with Quest so that there's a lab on -- it's not Starbucks but it's almost Starbucks, except the lines are shorter.

And our next question comes from Paul Matteis with Stifel.

This is Ben Burnett on for Paul Matteis.

Just a question on the SOD1 program, the upcoming readout here.

Can you discuss what level of knockdown you would constitute as sufficient in support of advancing the program?

And then I guess secondly, are you able to speak to the level of enrollment to the extension study?

And I guess could you just sort of remind us of the regulatory path forward for this, assuming positive data in 2019?

Sure.

This is Brett.

I'm happy to take that call -- that question.

So as you -- as I think you inferred, we can measure SOD1 drug levels.

We've validated SOD1 levels in the CSF much like we did for the Huntington program where we're able to demonstrate marked reductions in the CSF for Huntington.

So that will be part of the clinical study.

It's a 3-month study in patients with symptomatic ALS with SOD1 mutations.

And based on our preclinical data, we -- that reductions on the order of 30%, 50%.

30% or 50%, much like Huntington, have shown significant benefit in animal models of SOD1 ALS.

In fact, those types of reductions have shown complete halting of disease progression in SOD1 animal models.

Regarding the study, study's enrolled, and we're looking at data readout in the first quarter of next year.

And as for our regulatory path, it's hard to say until we see the data.

But as I mentioned, the study design is very similar to the Huntington study.

And as you know, the Huntington study went from Phase I to a pivotal Phase III study.

So it's not outside the realm of possibility that based on the data that comes out, Biogen would move in that direction.

And our next question comes from Chad Messer with Needham & Company.

Great.

I had one on danvatirsen, the STAT3 program.

What can we expect from that next maybe in terms of other indications?

And any idea when that might join the ranks of Phase III along with some of the other programs?

Thanks, Chad.

So thanks for the question.

Yes.

Our immuno-oncology program, our -- in our oncology program, in general, is really showing a lot of great potential.

Our STAT3 leads the way.

It's our -- it was our first-generation 2.5 molecule to enter the clinic.

And we recently, with AstraZeneca, recently reported very encouraging results, as I highlighted in the script in the presentation we just gave in patients with refractory head and neck cancer in combination with durvalumab.

That study -- that drug in that combination has also now started a study in non-small cell lung cancer.

So that's another indication to your question, in bladder cancer and AstraZeneca is exploring other oncology indications for this program.

AstraZeneca is collecting more and more data in this study, in the second-line refractory study as well as in first-line head and neck cancer patients in combination with durvalumab.

And over the next few months, they're planning to make a decision on the next stage of development for the program in head and neck cancer, which could certainly be a pivotal study.

And our next question comes from Gena Wang with Barclays.

One question regarding SPINRAZA.

I know at the World Muscle, NURTURE data was very impressive.

Just wondering what will be the next step to expand label to the presymptomatic patients.

And then a very quick question regarding the WAYLIVRA.

Any plan for the FDA regulatory path for the next step?

Thanks.

The SPINRAZA label supports administration of SPINRAZA to patients of any sort with SMA.

And certainly, more and more babies are being treated presymptomatically because the data are so overwhelmingly positive.

So that's happening as we speak.

Yes.

And of course, just add to that, Stan, as you know, Gena, the newborn screening is -- has incorporated now officially, nationally SMN2 as a genetic measurement in the newborn screen panel to identify patients that are presymptomatic with -- that will develop SMA.

And now that's becoming incorporated into the statewide system and nationally as well.

So all this bodes very well for treating more and more patients presymptomatically in both the genetic testing as well as the data, the NURTURE data that was presented at World Muscle.

The other thing that's sort of been forgotten, but it's tremendously impressive to me is that it's not just in the NURTURE study that we see with continuing treatment patients continue to get better and better.

We're seeing the same sort of behavior in the less severe infants and infants that are treated asymptomatically, and we're seeing it in the Type 2 and the adult patients as well.

So today, SPINRAZA has delivered incredible value.

And the longer we treat, the better it is for essentially all the patient types that have been treated with SPINRAZA.

It's really quite exciting.

Our next question comes from Jessica Fye with JPMorgan.

Great.

Can you help us think about when we could see extension data from the Huntington's Phase I/II trial?

I think ClinicalTrials.gov says it's 14 months of treatment with completion in December of '19.

Is it possible we could see incremental update sooner, given that it's open-label?

Also, can you talk to the dose levels and dosing frequency in that extension trial?

So -- sure, Jess.

The -- Roche is not -- well, the open-label extension study is going very well.

All the patients are, obviously, enrolled into the study.

And they're in the study, and they're continuing to be treated.

And it's going well, as I said.

Roche has been very transparent.

It has worked very closely with patient advocacy, patients, doctors, physicians and has been very transparent in the information they provided.

They haven't said specifically when and in what cadence they're going to actually share data from the open-label extension, but we believe that they'll be sharing data over the course of 2019 because it's so important to the patient community to share that data and let them know how the program is going.

The dosing is the same as it was in Phase I/II, which is monthly dosing.

And they're administering the top dose, and that was from the Phase II study.

Okay.

And apologies if I missed this, but for the 2-year Phase III/IV, that product, what specifically will be the primary clinical efficacy endpoint?

So the clinical endpoints are now -- or have been disclosed by Roche.

They're going to involve both cognitive measures, motor function measures, some ergonomic measures of neurological function as well as MRI scans of brain size and those sorts of things, quality-of-life measures.

It's a composite scoring system that they're using in the U.S. and the EU.

It is slightly different in U.S. and EU and -- but it's now been fully vetted through the FDA, the EMA, and it's been posted.

Okay.

Great.

And last one from me is just Novartis made some comments yesterday that they're not especially focused on combining splice modulators with gene therapy and SMA.

So just curious, as the leader in SMA, what was your reaction to that view?

Well, we are leaders in SMA.

And we do think that there are opportunities in the future to use a variety of agents in combination.

Whether a gene therapy agent would add any value to SPINRAZA, given the results that we have is hard for me to know today.

So we're watching the progression of the gene therapy as well as small molecules.

And if there appears to be some spot in which SPINRAZA doesn't bring really sort of remarkable value, I'm sure that Biogen and others will look at combinations.

There's nothing to preclude any combination with any of the drugs that are in development that we're aware of.

Our next question comes from Jim Birchenough with Wells Fargo.

This is Yanan in for Jim.

So first question regarding SPINRAZA revenues.

Could you describe the driver for the growth?

Is it patient number or some other factors such as change in the early patients building schedule versus longer intervals in the previously enrolled patient?

So any color on...

It's patient numbers.

There hasn't been any change in dosing schedule.

So what's happening is that more patients are being treated, and the patients that have been treated are continuing to be treated.

So it's -- I think just correlates with benefit.

More patients are being treated, and more patients are being treated longer.

Got it.

And you had described an increase in adult patients.

Would you be able to comment whether the pediatric patients, whether that portion of the market is stable?

It continues to grow.

Got it.

And you were just talking about the combination -- potential combination, the possibility with gene therapy between SPINRAZA and gene therapy.

I thought Novartis mentioned a price tag of $4 million to $5 million for their gene -- potentially, for their gene therapy.

How does that -- what's your view on that?

And how might that impact the ability to combine the 2 drugs?

Well, I think it's early days.

And I think I'll let Novartis discuss their pricing and its impact on whether patients of any sort use the drug and whether it would make sense to combine it.

At that price, obviously, any combination would have to show extraordinary benefit compared to SPINRAZA.

That's going to be very difficult to do, given the fact that the vast majority of presymptomatic patients who were treated are developing like normal children.

How do you do better than that?

Got it.

And last question on the Huntington's disease trial, Phase III trial designed by Roche, would you be able to comment on whether the Phase III study, would -- the 660-patient study, would that be a controlled or uncontrolled study?

It's 660 and it isn't a controlled study.

Yes.

And our next question comes from Vincent Chen with Bernstein.

Great.

So I guess one question about SPINRAZA and sort of the future of the SMA market.

How are you and your partners at Biogen thinking about defending against Roche's oral compound in SMA?

For example, whether that's next-generation agents with more competitive profiles building out the data for SPINRAZA, trying to demonstrate areas of potential superiority, whether with SPINRAZA or a follow-on potentially using some of the novel biomarkers, et cetera.

Could you just provide us with more color on how you think about a market defense strategy here?

Well, I think the first order of business is to continue to learn more about SPINRAZA.

And to date, the more we learn, the better the drug appears to be in all patients.

Second, of course, we are collaborating with Biogen to look at a new -- that is follow-ons to SPINRAZA that might have lower doses or might have less frequent dosing.

I think it's -- what I think needs to happen now before we comment on whether oral agents might be used, might be used in combination and how they might be used is one, to watch how SPINRAZA does over the next year and continue to watch that.

And then second, to evaluate these -- the clinical trials that are in progress both in terms of benefit and safety.

I think there's not very much yet really known about the small molecule drugs, and we're looking forward to seeing the data.

And our next question comes from Ritu Baral from Cowen.

Going back to the Huntington's endpoint, the Phase II endpoint that we were talking about before.

I think you guys mentioned it was a composite cognitive, motor function, autonomic, MRI volume and quality of life.

How are those weighted within the composite?

Is there any requirement for one element to show certain threshold effect for that composite endpoint to be positive?

Because -- how does that primary endpoint work?

Yes.

Ritu, I'm -- well, that's a -- I don't have those details in front of us on how the various components to the composite score are weighted.

Why don't we get back to you on that?

Sure.

And then a quick follow-up on WAYLIVRA.

Can you -- in Europe.

Can you remind us where you are on that process?

Have you received like the 120-day questions that their progress -- has there been progress made between 120 and 180?

Any details that you can share?

We're late in the process, Ritu.

We've had a number of meetings and conversations and responses to a variety of questions, 120-day and others.

So we're late in the process, and we're looking forward to bringing it to a conclusion here in the next little bit.

Got it.

And apologies if I just wasn't writing fast enough here.

You do have commercial patients on TEGSEDI.

I know you have German commercial patients treated.

Do you have U.S. commercial patients treatment already started?

Or is that going to be imminent given Accredo just got its license?

Yes.

Thanks, Ritu.

We have patients and physicians that are certified through REMS and registered on Akcea Connect.

And we have specialty -- our specialty pharmacy is certified through REMS as well and it's up and running.

And we held meetings with physicians and their teams, and we received the first set of scripts.

That's where we are today.

Got it.

Okay.

That's helpful.

And then I guess last question is the end-of-Phase II meeting that you and Novartis will have on LP(a).

Given that we're all expecting just sort of a really plain vanilla boring maze endpoint Phase III, are there other topics to discuss any aspect of the compound or LP(a) that are worth noting outside just the pure relatively boring Phase III design?

That's the first time I've heard an outcome study described as relatively boring, but okay.

We're kind of excited about it.

And I think I'll just leave it there.

It's a good question, but it's a little more detailed than I think would be appropriate to go into here.

But the -- I'm sure that once we have the meeting, that's when we'll have the opportunity to discuss all that in a little more detail.

I will encourage everyone to make the Late Breaker that's coming this Saturday that Sam Tsimikas is presenting.

We are really, really excited about the data we have to share both in terms of the potency of the agent as well as the safety tolerability, and so we look forward to being able to share much more detailed data with the community.

And our next question comes from Yale Jen with Laidlaw & Company.

I think a lot have been answered.

I've got two here.

The first one is that for the NASH, you have 2 data releases later both regarding the NASH.

One is the DGAT2 and the other is the ANGPTL3.

Could you differentiate the -- so the specific indications that these 2 drugs may have a target there?

Yes.

That is a very interesting question.

We have quite a pipeline of different agents focused on either the lipid component of NASH or the fibrotic component of NASH or all of the above.

The way I think of DGAT2 is that it's highly specific to reduce triglycerides in the liver.

And so we think of it as a very specific reagent that should have a high -- a substantial benefit in liver fab without any of the sort of issues that plague some of the other drugs such as increasing LDL and that sort of thing.

With angiopoietin-like 3, that's a general dyslipidemia agent in our mind.

We know that it lowers LDL.

We know that it lowers triglycerides.

We know that it lowers apoB-100.

And so in the study that we're conducting, we're asking the question, "Does that translate to a significant reduction in triglycerides in the liver?" And then we'll look at the composite benefit that, that drug brings.

It could be a candidate for use as a general agent to reduce triglycerides in people with moderately elevated triglycerides.

It could be used to treat patients with a broad range of dyslipidemias, and it could be used to treat NASH.

And so if you think about DGAT2 is a very selective specific liver triglyceride drug, primarily.

And angiopoietin-like 3 is a more general dyslipidemia drug with NASH as an opportunity among the several that we will pursue.

That would be the way I think about it.

So would that be maybe more specific to say that was targeting too early disease process of the NASH, but not necessarily into the fibrolytic -- fibrosis -- progressed into the fibrosis condition?

Well, that's correct.

These are -- these 2 drugs are focused on the lipid, which is the driver of the disease.

And so we believe that as we lower the liver triglycerides, we will affect the progression of the disease and reduce the progression of the disease.

We have other agents that are coming that are focused on the fibrotic part of the process as well.

So what we are going to be doing over the next little bit is looking at the data that we have in each of these drugs and slotting them for the best patient population for each of the drugs.

We think this part of -- this component of our pipeline is really quite exciting.

And it also demonstrates the power of antisense.

And we can create selective drugs to target different targets, different parts of pathways, different parts of causes of these complex multifactor diseases, and then let the data speak and tell us where we should position each one of our opportunities.

And maybe one more question regarding to the Huntington disease.

You say there's 2 studies, and that the first study mainly focuses on the reduction of the huntingtin proteins.

And -- but does that study for the people, you're also monitoring some kind of symptomatic differences over times and then maybe have some sort of readout even before the second study is fully enrolled.

Is that the plan or does that...

No.

That's correct.

That's the open-label extension, and we are encouraged by what we've been seeing.

And as Brett said, we do believe that Roche will be providing updates on the progress in that study in 2019, although I can't speak for Roche in more detail.

And does the drug have a 2 different -- is the cohort A and B has a different level of the antisense to be administrated?

I think the open-label extension is going simply at the highest dose.

Correct.

And our next question comes from David Lebowitz with Morgan Stanley.

With respect to TEGSEDI reimbursement, could you run us through, I guess, what types of -- what pieces of information payers in the early run have requested regarding patients in determining the reimbursement process understanding that you haven't actually finished the whole process yet with patients?

And then beyond that, what is your expectation for turnaround time from when a patient initially meets with the doctor regarding potentially getting prescribed TEGSEDI to beginning the REMS process and eventually becoming paid and reimbursed and on drug?

I'm going to suggest that you address those questions primarily to Akcea.

There are a lot of detail in the process.

I can give you my sense of what I understand.

The -- I know that our colleagues at Akcea have met with many payers before and after launch.

And the focus of payers was sort of where you would expect it to be, the benefit versus the cost.

And as I understand it those conversations have gone extremely well.

And the Akcea Connect program is really very robust and highly focused on getting patients into treatment with the easiest process in the shortest time possible and facilitating the practitioners' entry into the treating of the patient and taking advantage -- and taking care of the time of the practitioner who manage these patients.

So it's short, but I can't tell you the exact time between start and finish.

And I suspect that we really won't know for a while just how it's all going to work until we get a lot more experience.

And I'm sure as we gain experience, we'll be able to even shorten it further.

If that is the last question, so I'd like to bring the call to a close.

Once again, thanks, everyone, for joining us today.

I very much appreciate your interest and the questions that you've asked.

We encourage you to stay tuned for the APO(a)-LRx data that will be presented in more detail this Saturday at the AHA.

And we look forward to seeing you at our Investor Day in New York in which we'll have the opportunity to provide a significant great -- a significantly greater update on essentially everything that we're doing.

What we are really excited about is that we're progressing to commercializing our 2 new drugs while SPINRAZA continues to perform well, advancing our pipeline, continuing to advance the technology.

We're witnessing the improvements in the technology being manifested in the performance of our drugs across-the-board, and we're doing all that while we're growing operating profits and we're cash accretive.

We're -- we think that's an exciting story, and we're looking forward to telling it in more detail at our Investor Day.

Thanks very much.

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