Ionis Pharmaceuticals Inc (IONS) 2006 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the first quarter financial results conference call for Isis Pharmaceuticals. [OPERATOR INSTRUCTIONS] As a reminder, this audio conference is being recorded today, Tuesday, May 2nd, 2006.

I would now like to turn the conference over to Dr. Stanley Crooke, Chairman and Chief Executive Officer.

Thank you, and thanks everyone for joining us on today’s conference call to discuss the financial results and highlights from the first quarter of 2006.

Participating with me are Lynne Parshalle, Executive Vice President and CFO, Beth Hougan, Vice President of Finance and Navjot Rai, Assistant Director of Corporate Communications.

As all of you know, we’ve had quite a bit of news of late, so we’ve had a number of press releases and conference calls and webcasts, and tomorrow we have our annual meeting and the informal presentation that I make at the annual meeting will be also webcast.

So we are going to keep our comments very brief today and focus principally on topics that we haven’t covered in the previous webcasts and the webcast tomorrow, as well as the financial results.

This has been an important quarter for us.

We continue to realize the beneficial results of our reorganization.

We ended the quarter significantly stronger financially and we are continuing to make, in my view, great progress with regard to our drug pipeline.

Of course the focus of recent news, both scientific and financial, has been on our exciting lipid lowering drug, ISIS 301012.

And to assure that we have the resources to aggressively develop and control ISIS 301012, we completed the transaction with Symphony to form the Symphony GenISIS collaboration.

This provides us $75 million to develop ISIS 301012 through phase IIb and [sets] in the development of syndication for familial hypercholesterolemia and to expand our pipeline with 2 exciting diabetes drugs.

The value of staying in control of 301012 and continuing to own all of 301012, I think demonstrated amply just last week, when we presented the results of first Phase II clinical trial for the drug, which demonstrated really exciting efficacy and great safety.

So, having covered a great deal of this in recent times and we’ll also cover it a bit tomorrow, on today’s call Lynn will briefly review our financial results as described in the press release we issued earlier today, and then she’ll follow that with a review of recent business highlights.

I’ll then focus on some of the recent additions to our drug development pipeline and some of the progress that we’ve made in commercializing IR IBIS T-5000 biosensor system.

And by the way, the IBIS T-5000 biosensor system is now the new name for what we used to call TIGER.

We changed that name as we were approaching commercialization and it’s just another step along the way towards commercialization.

So that will be the focus of the conversation today and as I say, I think this conference call can be relatively brief.

When we finish that, of course we will be happy to answer whatever questions you may have.

Now Jo, if you can provide the forward-looking statements please?

The webcast includes forward-looking statements regarding our business, the financial position of Isis Pharmaceuticals, and the therapeutic and commercial potential of Isis' technologies and products in development.

Any statement describing Isis' goals, expectations, intentions or beliefs is a forward-looking statement, and should be considered an at-risk statement, including those statements that are described as Isis' goals.

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 developing and commercializing systems to identify infectious organisms that are effectively and commercially attractive, and in the endeavor of building a business around such products.

Isis' forward-looking statements also involved 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 Isis' forward-looking statements reflect the good-faith judgment of its management, these statements are based only on facts and factors currently known by Isis.

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

These and other risks concerning Isis' programs are described in additional detail in Isis' annual report on Form 10-K for the year ended December 31, 2005, which is on file with the SEC.

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

And now here is Lynne.

Thanks, Navjot.

I’m assuming that you’ve all had the opportunity to read the press release that we issued earlier this morning and I’m not going to reiterate what’s contained in the release.

This quarter reflects the continued benefit from the restructuring we completed early last year and our focus on our key drugs, most notably, ISIS 301012.

We’re now at a run rate that we believe is stable and sustainable.

We’ve enhanced the productivity, commitment and enthusiasm of our organization, while we’ve substantially reduced expenses.

We expect in 2006 a full-year of benefit from the focus and expense reductions we implemented last year.

This will result in a net operating loss, excluding non-cash compensation expense and restructuring costs, in the high $50 million range.

We expect expenses to be flat compared to the annualized rate of the last two quarters of 2005, or approximately $88 million, which includes increases in spending on ISIS 301012 and the two new metabolic diseases in the Symphony GenISIS collaboration.

We’ve entered 2006 building on its focus from 2005, with continuing successes in all areas of our business.

Our two most important assets ISIS 301012 to treat patients with high cholesterol, and ISIS 113715 to treat patients with Type 2 diabetes, are both progressing well.

The data announced last week from our Phase II single-agent study of ISIS 301012, continue to support the therapeutic potential of this drug to produce statin-like reductions in LDL, with concomitant reductions in triglycerides.

This is the third study in which we’ve has confirmed this potential and we’re very excited about this drug.

We will have additional data this year and next year, on the higher doses in the single-agent study, from the studies in which ISIS 301012 is being combined with statins, and from our studies in familial hypercholesterolemia.

Maintaining control of the development of ISIS 301012 was a key motivation for our recently announced transaction with Symphony GenISIS.

Obtaining $75 million to support the development of ISIS 301012, along with two promising preclinical-stage metabolic disease drugs, helps to ensure that ISIS 301012 will be aggressively developed and supports the development of two new novel diabetes drugs to clinical proof of concept.

We believe that as we continue to make progress with ISIS 301012 and the two diabetes drugs, we will continue to create shareholder value by maximizing the value of each of these assets.

Specifically, the financing will support ISIS 301012 through the completion of registration-supporting clinical studies in patients with familial hypercholesterolemia, and the completion of Phase IIb clinical trials in patients with high cholesterol.

The transaction with Symphony allows us to accelerate and expand our development pipeline while retaining full ownership of these drugs.

We believe that this will result in more lucrative licensing transactions in the future and minimize both dilution and financial risk.

The transaction represents an attractive alternative to partnering these very promising compounds.

In contrast to working with a pharmaceutical company, we retain control of the development of these drugs.

Based on reasonable assumptions from new sources of revenue and cash, including the new funds from Symphony GenISIS, we believe we have sufficient resources to meet our anticipated requirements through at least the end of 2008.

As we continue through 2006, we’re looking forward to additional progress in our clinical pipeline as well that of our partners, and to increasing news from the IBIS Division on commercialization of the IBIS T-5000.

I’ll turn the call back over to Stan now, so he can update you briefly on some of our assets beyond ISIS 311012.

Thanks, Lynne.

All of the financial steps we’ve taken in 2005 and 2006, culminating in the Symphony GenISIS transaction, provide the resources that we need to exploit the assets that we’ve created, to create new assets and to provide maximum value long-term to our shareholders.

Because we’ve had so much news and there’s been so much attention focused on ISIS 3101012 and the Symphony GenISIS transaction, I think some of the additions to our pipeline, which broaden the applications of our technology and enhance the potential value that we can create, may have been overlooked.

So in the next few minutes, what I want to do is just describe several of the new additions to our pipeline, both our partnered and our unpartnered pipeline.

And of course I’ll talk about the new drugs that we’ve added to our pipeline, the pipeline that we are developing ourselves.

Thanks to Symphony GenISIS we can now fund the development of ISIS 325568, which is a generation 2.2 antisense drug that targets the glucagon receptor or GCGR.

Reducing the expression of the glucagon receptor with ISIS 325568, reduces liver glucose production and increases the production of glucagon-like protein-1 or gluc-1.

This suggests that it will have dual pharmacological activity, that is, reduced glucose because of inhibiting the glucagon effects and perhaps being pancreatic-sparing.

So we consider this drug a very very exciting drug and certainly in animals it has an exciting profile.

We hope ISIS 325568 in clinical trials late this year or early next year.

And again, we believe that will enhance our diabetes franchise, as well as the overall pipeline that we have.

With Symphony GenISIS we have a second anti-diabetes program that is now developable, because we have the funds to do it.

And that’s an antisense drug targeted to the Glucocorticoid Receptor, or GCCR.

In this program we take advantage of the natural distribution properties of antisense drugs, which primarily accumulate in the liver and do not get into the central nervous system or the adrenals.

Thus, we have a drug that naturally is a liver-specific Glucocorticoid Receptor antagonist.

This is something that has been sought by the pharmaceutical industry for many years, because it’s very obvious at inhibiting the effects of Glucocorticoid would have significant benefits on diabetes and obesity.

And the central challenge has been to avoid the side effects that are principally a result of interactions in the central nervous system in the adrenals.

We hope to have a drug ready for development from this program and in early clinical trials sometime next year.

In addition, in the first quarter we also added an important drug to our cardiovascular pipeline.

That’s 3 new major drugs added to our pipeline in the first quarter.

ISIS 353512 is a generation 2.2 antisense drug that targets the C-reactive protein, or CRP.

CRP is a protein that’s produced in the liver and it results in inflammation throughout the body and has been implicated in many many diseases.

Excessive levels of CRP have been linked to inflammatory diseases throughout the body and excessive levels of CRP have been associated with very poor outcome for patients with cardiovascular disease.

We believe that the opportunity to have a selective inhibitor or CRP is exciting, both from a cardiovascular and an anti-inflammatory perspective and look forward to the development of this product for a variety of indications.

Now only have we strengthened our unpartnered pipeline, we’ve also strengthened our partner pipeline.

We announced that the ALS Association is providing funding for its first CNS drug, ISIS 333611.

This drug is a second-generation antisense drug, and is being developed in collaboration with investigators at the Center for Neurological Study and the Ludwig Institute at the UC, San Diego through the funding of the ALS Association.

The ALS Association is funding both safety studies in monkeys to confirm the safety of ISIS 333611 and to support initiation of clinical testing.

This drug targets a target that is associated with very poor outcome in ALS and that’s called SOD-1.

And it’s a drug that will be administered directly in the central nervous system as antisense drugs do not cross the blood-brain barrier.

Recently, we announced the licensing of our drug ISIS 5320 to ImQuest.

ISIS 5320 is a drug that has been shown in-vitro and in-vivo to be a potent and specific inhibitor of HIV, the virus that causes AIDS.

ImQuest plans to develop this drug with a focus on third world countries and the prophylaxis of AIDS.

Additionally, our partners at ATL have re-initiated their Phase II trial of ATL1102 for patients with relapsing-remitting multiple sclerosis.

Remember that this drug targets VLA-4, obviously a target that has been validated as an effective target in the treatment of this disease.

We’ve continued to expand its satellite company relationships by licensing our proprietary aminoglycosides program to Achaogen, for $1.5 million plus milestones and royalties, and entering into a joint research collaboration with Rosetta Genomics, to discover and develop antisense drugs that regulate microRNAs for the treatment of the most prevalent type of liver cancer, hepatocellular carcinoma.

These satellite company relationships are a key strategic component in our ability to build a very large pipeline of attracting drugs and to work with high quality partners and maintain our leadership position in antisense technology, both driving it forward and driving it laterally, to involve antisense drugs as broadly as possible in as many diseases as possible.

Now, just a minute on IBIS.

Let me just remind you again that we changed the name of TIGER biosensor system to the IBIS T-5000 system as a part of getting ready to commercialize it.

Thanks to the continued funding from our government partners, we continue to advance the development of specialized application kits to identify a variety of infectious diseases, both bacterial and viral.

And that work there is going very very well.

In addition, we continue to gain experience in the management of the IBIS biosensor system, as we deploy prototype systems to a variety of laboratories.

For example, just recently we delivered our third instrument to the Naval Health Research Center for infectious disease surveillance.

These government sites are crucial in effect, Beta sites.

And they are crucial for preparing for broad commercialization of the IBIS biosensor system.

We’re gratified that our government partners are acquiring systems and supporting this as we gain this valuable experience.

The experience we’re gaining encompasses all of our initial commercial markets.

These include biodefense, forensics, disease surveillance, hospital-associated infection control and of course, pharmaceutical and biotechnology process control.

In addition, we’ve strengthened the IBIS organization.

We recently hired a new Vice President of Sales and Marketing, who’s already had a significant impact on our commercialization plans.

And you’ll be hearing, I think over the next few months, a great deal more about IBIS, certainly as the year unfolds.

So, we’ve had a busy quarter.

We think we’ve taken both important financial and technical and business steps and we think ISIS 301012 has delivered wonderfully on its promise to date.

We think that the pipeline is expanding and all of that is important good news, as IBIS also continues to make great progress.

So we hope that you agree that the progress that we’re making is meritorious and we hope to see many of you tomorrow at our annual shareholder’s meeting, where I’ll make a general presentation about ISIS.

But our shareholders have the opportunity to interact directly with many scientists who will present posters that relate to these product opportunities and many other exciting elements of our business.

As always, we look forward to keeping you updated on our progress.

We appreciate your continued support.

And we are prepared to answer any questions that you may have.

[OPERATOR INSTRUCTIONS] Mark Monane of Needham & Company.

Thanks for taking my question and again, congratulations on all the recent progress.

A couple of questions for you.

First, actually for Lynne please.

Could you please go over with us again how you plan to recognize the $75 million from Symphony and any other future payments you will get?

The $75 million are all of the payments that we’ll get from Symphony GenISIS and those will be consolidated.

So the $75 million will show up on our balance sheet and the expenses associated with the development of 301012 and the 2 diabetes drugs will show up on our P&L.

Terrific.

Thank you, that was good, Lynne.

Speaking of consolidation, Stan, could you step back for us and help us understand how you think the second generation antisense chemistry is going to sit potentially in the real world and experimental models you have to show for the FDA, the independent effect, but we know that all these drugs are used in combination.

Do you see one particular type of therapy, like a small molecule, an antibody being the better partner for an antisense molecule?

And do you think sequencing of such drugs is going to be important?

How do you think about these themes in drug development?

I think second generation antisense drugs are ideal to use in combination, because we’ve already demonstrated that they don’t have drug-drug interactions that are related to cytochrome P450 interactions or plasma protein interactions.

We think that’s very important, because in most diseases, polypharmacy is the standard practice.

I think it’s estimated that the average number of drugs a cardiovascular patient is on these days is somewhere around 10.

Given the fact that there are no significant drug interactions that we’ve identified to date, we think these drugs can be used without regard to sequencing or worries about the order or direction for the vast majority of indications.

And of course we have quite a bit of experience using them in combination, both in cancer and now we’re beginning to see combination data in cardiovascular and metabolic disease, and in anti-inflammatory diseases.

So unless there’s something specific about the targets that demand a specific sequence of administration, there would be nothing about the technology that would require it.

So you could imagine, for example in cancer, where you might want to sequence an antisense drug, because you’ve got a small molecule on antibodies working against a particular target and you want the order to be appropriate to the most selective in the killing of cancer drugs.

But unless it’s target specific, there’s no other reason that I can imagine that it would be required.

And Lynne, thanks for the added information.

Again, congratulations.

[OPERATOR INSTRUCTIONS] Dr. Crooke, there appear to be no further questions at this time.

I will now turn the call back over to you.

If there are no additional questions, tune in tomorrow for the webcast or come visit us at our annual meeting.

We look forward to seeing many of you at our Investor Luncheon in New York on May 9th at 11:30.

Thank you very much.

Ladies and gentlemen, that does conclude the conference call for today.

We thank you for your participation and ask that you please disconnect your line.