Ionis Pharmaceuticals Inc (IONS) 2011 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Isis Pharmaceuticals third-quarter financial results conference call.

Leading the call today from Isis is Dr.

Stan Crooke, Isis Chairman and CEO.

Dr.

Crooke, you may begin.

Good afternoon and thanks, everyone, for joining us on today's conference call to discuss our third-quarter financial results.

Lynne will discuss our financials, and after that, I will give you a brief update on our activities for the rest of the year.

Joining us on today's call are Lynne Parshall, Chief Operating Officer and CFO, and Kristina Lemonidis, Director of Corporate Communications.

Kris, will you read our forward-looking language statement, please?

Sure.

Thanks, Stan.

Good afternoon, everyone.

A reminder to everyone that this webcast includes forward-looking statements regarding Isis's financial positions and outlook, Isis's business, the planned commercialization of mipomersen and the therapeutic and commercial potential of Isis's technology and products in development.

Any statement describing Isis's goals, expectations, financial or other projections, intentions or beliefs to the forward-looking statement should be considered and 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.

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

Although Isis's forward-looking statement reflects a good-faith judgment of its management, these statements are based only on facts and factors currently known by Isis, and 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, 2010 and its most recent quarterly report on Form 10-Q, which are on file with the SEC.

A copy of these and other documents are available from the company.

With that, I will turn the call over to Lynne.

Thanks, Kris.

As usual, I will assume that you have read the details of the third-quarter financial results in our press release, then I will, of course, be happy to take questions at the end of today's call.

We continue to make excellent progress this year.

Our most notable success has been the submission of the mipomersen, or rather, Kynamro, marketing application to the EMA.

With this submission, we're one step closer to commercializing Kynamro.

And our more recent activities continue the momentum following the EMA submission.

The three upcoming Kynamro activities that you should focus on are first, Genzyme remains on track to file an NDA this month.

Second, Genzyme is actively preparing to launch Kynamro next year in both the US and Europe, including expanding its already leading commercial launch team.

Third, Genzyme has reached an agreement with the FDA through a Special Protocol Assessment on the design of the FOCUS FH study.

This 12 month study will start this year and is designed to support the following goals.

Expansion of the FH population in the US to include severe heterozygous FH; offering an alternative dosing regimen of 3 times a week dosing so that we can offer our patients different dosing options; and potentially broadening the FH indication beyond severe in Europe.

We are enthusiastic about the opportunity to invest to expand the Kynamro profile in its potential markets.

In addition to Kynamro, our progress this year is also evident in the maturing of our pipeline.

We initiated clinical development on five drugs, added two new drugs and continue to report encouraging data for many of the drugs in our pipeline.

We're just beginning a busy fourth quarter, in which we will be reporting clinical data on a number of our drugs.

And Stan will provide more information on that in his part of the call.

We believe that this fourth quarter will be an exciting time for Isis, and we look forward to sharing these successes with you.

Now let's take a few minutes to look at our financials in more detail starting with our 2011 revenue.

As you probably heard me say before, our revenue consists of several different components, including amortization of up-front fees we receive from our partners, R&D revenue to support our collaborations, milestone payments, license fees, plus revenue we earn from other miscellaneous transactions.

For example, our revenue in the first nine months of 2011 included more revenue from GSK compared to 2010 due to the timing of the amortization of the upfront fee from GSK, which began in April 2010.

However, the increase in revenue from GSK was offset by less revenue from BMS and Alnylam, as the amortization of up-front fees from these collaborations ended in 2010.

As our partner drugs advance in development, we earn milestone payments from our partners, but the timing of these payments fluctuates.

This year so far, we have earned approximately $11 million in milestone payments compared to $13 million at this time in 2010.

And we will record the $5 million payment from GSK related to our alpha-1 antitrypsin drug in the fourth quarter.

Our expenses for the first nine months of 2011 are right where we projected.

We predicted a modest increase in our expenses in the second half of 2011, primarily due to the drugs in our pipeline advancing into and through clinical studies.

As we begin longer and larger studies, the costs associated with the continued development of these drugs increases.

Moving these assets to key value inflection points is a large part of our business strategy.

With this strategy, we've remained financially strong in today's economy.

We now have over two dozen drugs in our pipeline, and by the end of the year we will have more.

Many of these drugs already are or will be moving into Phase 2 studies next year, setting us up for an exciting 2012.

With so many of the drugs in our pipeline entering late-stage clinical development next year, we expect our expenses to be modestly higher.

We're close to meeting our $125 million spending obligation for Kynamro.

And once that happens, external development costs for Kynamro will be shared 50-50 with Genzyme.

So although we are expecting an increase in our expenses next year, our costs for Kynamro will not contribute to this increase.

Also, it's important to note that Genzyme is currently paying for all marketing and sales costs and will continue to do so until there is Kynamro revenue, which will be used to cover Kynamro expenses.

You will recall that one component of our revenue and cash projections for 2011 is the $25 million that we will earn when the FDA accepts the Kynamro NDA filing.

Genzyme plans to file the NDA this month.

If the FDA takes the full 60 days to accept the filing, that milestone could be achieved very early next year as opposed to late this year.

Obviously, this would not represent any real change to our financial position, but it could affect our 2011 NOL and cash guidance.

So, we have done everything we set out to do this year, including submitting the marketing application for Kynamro in Europe and very soon in the United States, and the year is not over yet.

By the end of 2011, we will have made significant advances in many of the drugs in our pipeline.

Plus we identified our next generation technology and move the drug into development that incorporates this technology.

And finally, we've been very successful with our partners.

We have advanced drugs into development in our GSK collaboration, earning $13 million in revenue from GSK this year.

So with that, I will turn the call back over to Stan.

Thanks, Lynne.

Our primary focus in 2011 has been and remains moving mipomersen toward the market.

We've completed the submission for marketing approval in the EU, and as Lynn mentioned, Genzyme and we are finalizing the US submission.

And the US submission will be filed this month.

The interactions we've had with both the US and EU regulatory authorities have been productive and give us confidence that our filings are appropriate and approvable for the indications we are seeking.

We believe we have a comprehensive registrational regulatory dossier.

Mipomersen is focused on patients with an obvious, severe, unmet medical need.

FH is a fatal cardiovascular disease.

We've completed four randomized Phase 3 trials.

Each study showed compelling efficacy and an acceptable safety profile.

Each study demonstrated that mipomersen has a unique lipid lowering profile.

Kynamro was the only drug that lowers all atherogenic lipids.

Our long-term open-label extension study has demonstrated continuing efficacy and consistent safety.

Our preclinical dossier is robust and other parts of the filings such as CMC are very strong.

Recently, circulation published an article written by Dr.

Frederick Roll and colleagues.

In this article, they reported the effects of lipid lowering drugs and the life expectancy of homozygous FH patients.

The study showed that a mean reduction of 26% in LDL cholesterol was associated with delayed cardiovascular events and prolonged survival in homozygous FH patients.

This answers a question that we have been asked quite a number of times.

And that is, can the linear relationship of LDL cholesterol to cardiovascular risk be extrapolated in patients with extremely high levels of the LDL-C, and in particular, extrapolated to homozygous FH patients?

The answer is an unequivocal yes.

In this group, a 26% reduction in LDL cholesterol extended the average patient's lifespan from 18 years to 32 years.

Imagine dying a cardiovascular death at 18.

Now you will recall then in our studies, we have shown in the range of 26% to 37% reduction in LDL cholesterol.

And we get that, of course, when we add mipomersen on top of the reductions produced by statins and other drugs.

It's exciting to think then about what the addition of Kynamro means for these patients.

If you add mipomersen's effects, which is what we are doing -- we're adding mipomersen to existing maximum lipid-lowering therapies, you can imagine that these patients will live until they see their children graduate from college.

This analysis of homozygous FH patients over the last 40 years highlights the importance of early diagnosis and the need for new drugs to be added to existing drugs to extend and to improve the quality of these patients lives.

Although the initial indications alone for mipomersen represent a significant commercial market for Kynamro, we also have our eyes on the future.

We think there is a great opportunity for significant long-term commercial growth for Kynamro.

That's why we're excited about getting the FOCUS FH study underway.

We now know exactly what we need to do to achieve expanded patient populations.

As Lynne said earlier, Genzyme reached an agreement with the FDA on the design of the next Kynamro study through a Special Protocol Assessment or SPA.

This study is designed to achieve three goals -- support the expansion of the FH population to include severe FH in the US, support an alternative dosing regimen of 3 times a week.

We think providing patients this option should have a positive effect on compliance.

And to support -- and the study is designed to support potentially broadening the FH indication in Europe beyond severe FH to the next level of heterozygous FH patients, those with LDLs in excess of 160 milligrams per deciliter.

As we said, this will be a 12 month study with fewer than 500 patients.

It will include both severe and less severe heterozygous FH patients, and it will include statin-intolerant patients.

This study is planned to begin by the end of this year.

We're also pleased with the preparation and progress being made at Genzyme and sanofi to launch Kynamro.

There is a great deal of work to be done necessary to expand awareness of the disease and get these patients into the hands of lipidologists.

This is the main focus of the marketing group at Genzyme as they work with the National Lipid Association and other patient advocacy groups to increase awareness of this devastating disease.

An important objective of the NLA and other groups is to ensure that FH patients are diagnosed earlier and treated more aggressively than they are today.

So that's mipomersen.

Now let's look at our pipeline.

This has been a year of exceptional growth and a lot of positives across many therapeutic areas in our pipeline.

It's been our strategy to create a cardiovascular disease franchise comprised of drugs that target all the key components of cardiovascular disease, such as various atherogenic lipids, inflammation and thrombosis.

And we're doing exactly that.

We already know that mipomersen has a great effect on LDL cholesterol and all the other key atherogenic lipids.

Our CRP inhibitor -- a significantly reduced CRP in a Phase 1 study in normal volunteers, becoming the first selective CRP reducing agent to be shown active in man.

A 70% reduction and normal volunteers is really remarkable.

Because CRP levels are increased in many inflammatory conditions, the potential therapeutic benefit of a selective CRP lowering agent could be very significant in cardiovascular and many other diseases.

And our broad Phase 2 program is underway.

Our APOCIII drug is particularly exciting.

APOCIII and triglycerides are both independent cardiovascular risk factors.

Our drug we hope will be a very potent, selective inhibitor of APOCIII and will reduce triglycerides.

Like mipomersen, we will know in Phase 1 -- with our Phase 1 data -- whether we have an effective drug.

We are measuring both levels of APOCIII and triglycerides in blood repeatedly.

And we will report the data from this study next month.

Similarly next month, we will announce Phase 1 data on our Factor XI drug, a great addition to our cardiovascular franchise.

Again, we will know in Phase 1 whether our drug lowers Factor XI, and if it is likely to cause any bleeding.

Don't forget that this drug in preclinical studies demonstrated potent anti-thrombotic activity with no increase in bleeding.

And human beings who are -- have no mutations for Factor XI don't bleed.

So there's a lot of reason to believe that this drug could become an ideal agent to treat unwanted thromboembolic events.

Our metabolic disease franchise has also matured significantly this year.

We now have four drugs to treat Type 2 diabetes progressing in clinical trials, and we will soon initiate clinical trials on our first anti-obesity drug that targets FGFR4.

Early -- very late this year, early next year, we will also report on SGLT2.

We continue to expand our cancer franchise.

This year, we added our first-generation 2.5 chemistry drug, targeting STAT3 to our pipeline.

The two Phase 2 trials of our eIF4E drug are progressing nicely, and of course our partners at Lilly and OncoGenex continue to make progress on our partnered anticancer drugs.

Similarly, we're very pleased with the progress of our severe and rare disease franchise this year.

We announced a new development candidate from our GSK collaboration targeting alpha-1 antitrypsin.

We initiated phase 1 studies in normal volunteers on our TTR drug.

In fact, we will be reporting data on that Phase 1 study in the next quarter as well.

This, again, is a target that is readily measured in blood, so at the end of Phase 1, we will know if we have an active agent.

And as we move ahead working with our partners at GSK, we believe we have a very rapid route to the market with this drug.

We are very pleased with the progress of our neurodegenerative franchise.

We will begin our Phase 1 study in patients with spinal muscular atrophy very shortly.

And we continue to move forward on our SOD1 study in patients with ALS.

Finally, we plan on advancing three additional first-in-class drugs into our development pipeline by the end of the year.

And because of all this activity, we plan to have an investor call in December to talk about these exciting new entrants.

With all the progress that we have made this year, particularly with all of the data that we will be reporting in the fourth quarter on so many important clinical trials, we feel that it will be important to summarize that progress.

And to do that, we plan to host an R&D day on January 5 in New York to help you digest the significance of all these achievements.

So please save that date.

With mipomersen commercialization on the horizon and all these exciting new drugs moving through clinical trials and generating important data, the end of 2011 promises to be very important for Isis, and 2012 promises to be another full and exciting year.

With that, I want to thank you for joining us today, and we'll now open up the call for Q&A.

Kris, if you can set us up, please?

(Operator Instructions).

Salveen Richter, Collins Stewart.

Hi, this is [Yodi Marongo] sitting in for Salveen.

I wanted to ask about the reason for the change in dosing frequency to 3 times a week in Focus FH; and how do you see that affecting compliance and also the risk of ISRs?

And I had a follow-up question too.

We're not changing dosing.

This is part -- this is a continuing step -- a continuation of the plan that we laid out years ago.

We have weekly dosing.

We've already shown that daily and 3 times a week work.

And our objective is to both do -- in this study, we'll be doing weekly dosing as well as 3 times a week dosing.

And the objective with the 3 times a week dosing is to provide patients the option of using the drug weekly or more frequently and giving the patient as many options as possible with our drug to find the most convenient way to administer, for each patient being different, is, we think, is the right way to find the maximum in compliance.

So there is no change, no change at all in the plans that we have laid out.

We are just pursuing the plan as we described it over the last several years.

Thank you.

And how many arms will the study have?

It will have a once a -- once a week, 3 times a week and placebo arm.

Thank you.

And one quick follow-up question.

You mentioned on the last call and also today that Genzyme's remarketing strategies focused on educating physicians and patients.

What is being done to date on the physician education front, but also on the payor front?

Thank you.

I'll answer it briefly and then Lynne can provide more detail.

I think the most important thing that has happened over the last couple of years has happened independently of Genzyme and has also been facilitated by Genzyme.

And that is the identification of FH as a significant cardiovascular disease that's tremendously underdiagnosed.

If you look at the guidance that has been published by the National Lipid Association, you will see that it dramatically -- it encourages early diagnosis, cascade screening and the much more aggressive treatment as well as referral of the patients to the lipidologist.

In addition, Genzyme is engaged in quite a number of focus groups and other activities that are contributing.

And Lynne, you probably want to add some more to that.

Sure.

Genzyme has actually now for the last year and a half or two years, been -- had a significant presence at all of the major medical meetings focused on cardiovascular health and on lipids.

They have sponsored CME events.

And again, their focus in working both at medical meetings as well as the patient advocacy groups is on early diagnosis and aggressive treatment of these patients then identifying them and getting the patients into the care of lipidologists who are best suited to treat them.

In addition, of course, both in the US and in Europe, Genzyme is working with the various payer agencies.

They have a very strong infrastructure to do that, augmented of course now by the sanofi infrastructure and that's been an ongoing effort for quite some time.

Eric Schmidt, Cowen and Company.

Good afternoon and thanks for taking my questions.

Lynne, in terms of the potential for the Kynamro acceptance milestone to slip into Q1, if it does, should we just assume that you will fall a little bit short, $25 million short of the net operating loss guidance and cash year-end guidance that you've previously given?

Is that how we should think about that?

Yes, I think that's a fair way to think about it.

Okay.

And then, Stan, on the SPA, what does it say exactly you need to achieve in this 12-month trial in order to get the broader, less severe label for heterozygous FH in the United States?

You just need to lower cholesterol or achieve a certain reduction or have some kind of safety --?

(multiple speakers) yes, Eric, all we're doing is the same thing that mipomersen has done in four previous randomized trials and in the long-term open-label study.

It boils down to lowering cholesterol in exactly the way we did before and getting additional safety experience.

Is there anything about mipo's profile to date safety-wise that makes this a risk in terms of the upcoming trial?

I'm as confident as I have ever been in a clinical trial that this will be 100% successful.

So just simply showing the same safety profile we've seen in the previous four pivotals that would enable you to get approval in the broader population?

Yes.

And that's exactly what I've been saying for some years at -- is the message we got from the European authorities.

And now we have agreed with the FDA on specifically study design and numbers of patients, and the requirements for meeting the FDA's needs as well.

And if this trial is --

It's all good news.

It's all really good news.

Clearly.

If this trial then provides the expected result, how much broader could the European label become in terms of less severe heterozygous FH?

Well of course, nothing is certain until you actually sit down and negotiate the label, but I think I mentioned that we would hope that we would achieve any heterozygous -- or any patient who had greater than 160 LDL cardiovascular events on maximum lipid lowering therapy.

Okay.

And last question -- I just not sure I heard the date of the R&D day in January.

Was that the 5th or 25th of the month?

January 5, right after the 1st of the year.

The reason for that, Eric, is we just have so much important data coming out right in the fourth quarter with APOCIII, Factor XI, TTR, SGLT2, all the other things, we just think it's going to be a lot of information for people to digest and we're going to have to help you understand it.

Will you be top-line press releasing some of that, or will we wait until January to see all (multiple speakers)?

We'll be putting out press releases on most of it probably -- yes.

You will see a [stead] of press releases coming.

Okay.

Thanks a lot.

Lynne, do you want to add anything or to subtract anything from what I said to Eric?

No, no.

The only thing I just wanted to -- I think you said it clearly, Stan, but Eric, the primary end point for the FOCUS FH study is LDL cholesterol just as it has been in all of our other Phase 3 clinical trials.

And the FDA has not asked us to do any additional safety monitoring or anything like that, so it's going to look very, very much like our -- the other Phase 3 trials we have conducted except that it's a twelve-month dosing trial.

The FDA wanted us to treat more patients with the drug, reflecting the very much larger market that's represented by the severe FH patient.

So -- but the study looks very, very much like all the other studies that we have completed.

I'm probably going to push my luck with this last question, but is there any kind of expected timeline for enrollment and gathering data from the trial, or is it too early to say?

I think it's too early to say.

Once we start enrolling patients, I think when we get a few months into the enrollment, we will have a much better handle on it, but I would hate to project right now.

I will say that there's a lot of enthusiasm for mipomersen and the trial.

And so it's getting underway.

And you don't need to listen to me.

All you have to do id is look at all the reviews that have come out about mipomersen over the last couple of years, and you can get a sense of how interested the cardiovascular community is in the drug.

Thanks and good luck.

Great news.

That's the bottom line.

Great news.

[Eileen Flowers], Jefferies & Company.

Hi, it's Eileen dialing in for Eun Yang this evening.

Can you talk about whether you anticipate a 10-month standard review for mipomersen at the FDA?

Thanks.

Did you understand the question, Lynne?

Yes.

The question is what is the length of the review.

I think until we file and have a chance to talk to the agency about the review time, we -- it's probably premature to contemplate that.

Okay, thank you.

Ted Tenthoff, Piper.

Great.

Thank you very much on all the good news update.

Looking forward to a busy fourth quarter.

I'm actually out in San Francisco at the liver meeting, and one of your competitors, Santaris, is going to be reporting some data on miR-121 in HCV.

And it made me think, maybe you could give us an update on what the litigation there is and also on the good news that's been coming out of Regulus of late.

There's no update on the litigation.

It is our belief that the miR-122 drug, we own -- we and Regulus and that's based on the patents that we have.

So we're quite excited to see the positive data that Santaris is generating.

And we will pursue -- we will pursue the appropriate steps to ensure that our patents are enforced, as we always have.

That's fine.

Thanks.

And we saw that nice paper out of Regulus recently.

Any other updates from that side of things?

Making good progress.

Understanding how the drugs work beginning to understand the microRNA pathway and how to exploit it to get a therapeutic index that's appropriate.

So we are very pleased with where Regulus stands and we're very pleased with the patent position that we hold.

Great.

Thanks for the update.

It has been exciting progress.

Yes.

And as Lynne mentioned, I think we're very excited to see the NDA going in this month for Kynamro.

That's another big event for us.

So it makes for an exciting fourth quarter to end a great year for us.

Lynne, do you want to add anything to the question about litigation?

No.

(Operator Instructions).

Charles Polsky, William Harris Investors.

Hi, Lynne and Stan.

Thanks for taking the question, and it's a small question.

So, as relates to dosing mipomersen 3 times a week, is there any accumulated data on patients in other trials maybe who have been dosed 3 times a week?

And does the smaller dosing aliquot tender result in less injection site reactions in whatever accumulated patient treatment you have so far?

Yes, Charles, we did a study where we compared daily 3 times a week and weekly dosing for both Apo-B100 reduction and LDL reduction and other lipid reduction, as well as tolerability and injection site reactions.

And as you would expect, as you go to lower doses, you have less injection site reactions.

We are not very concerned about the injection site reactions period -- weekly or whatever.

So, yes, as you go to lower doses, administered more frequently, you have less injection site reactions, but of course you're giving more injections.

And so it's a balance.

We think some people will like giving themselves smaller injections 3 times a week, and we think some will like giving themselves a larger injection once a week.

That will just depend on the patient.

The whole goal here is to provide improving presentations of the drug and additional options for patients and so that each patient can find his best way of giving the drug.

We are not doing daily in this study because we want to continue to look at the proper presentation of daily administration, the right injector and all that, and so that's taking some additional time.

But eventually I would expect that we will also offer daily injections as well.

But the data are very clear, as you would expect.

The pharmacokinetics of the drug support weekly administration at 1 dose, twice-weekly at another dose and daily injection at a 1/7 of the weekly dose, just as the pharmacokinetics would tell you.

Thanks, Stan.

We have no further questions at this time.

I would now like to turn the call back over to Dr.

Crooke for any closing remarks.

Thank you very much.

We think that we are in a very exciting moment for Isis.

And in this call, we have told you that Genzyme and we will be filing our NDA this month for Kynamro.

We have told you that the FDA has approved our Special Protocol Assessment for the study that we believe will allow Kynamro to advance to much larger markets.

We've told you that we will be reporting data -- important clinical data on multiple drugs over the next quarter.

And we look forward to providing all of that information to you as this next quarter unwinds and to summarize it and contextualize it for you on January 5 in New York.

Thank you very much.

Ladies and gentlemen, that concludes today's conference.

Thank you so much for your participation.

You may now disconnect.

Have a great day.