Ionis Pharmaceuticals Inc (IONS) 2015 Q3 法說會逐字稿

Good day everyone, and welcome to Isis Pharmaceuticals' third-quarter fiscal results conference call.

Please note that today's event is being recorded.

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

Dr. Crooke, please begin.

Good morning, and thanks everyone for joining us on our call today to discuss the third-quarter financial results and recent business highlights.

On the call today, Beth will walk you through our financial results.

Lynne will discuss the business highlights for the quarter.

Paula will give you an update on Akcea activities, and then I'll close by focusing on how the advances we're making in our technology translate into real value on our pipeline today.

Our solid progress in all areas of our business is reflected in our strong financial results.

In the first nine months of the year, we reported a pro forma net profit of $25 million and we ended the quarter with more than $800 million in cash.

These are both significant increases, compared to last year.

We have 38 drugs in development, with the potential to fundamentally change the way a wide range of diseases are treated.

We have a pipeline of first-in-class or best-in-class drugs, on many of which we have reported positive clinical data already this year.

We have potential near-term commercial opportunities in our three drugs that are completing Phase 3 and the large pipeline of drugs in Phase 2. We expect to complete enrollment in both the Phase 3 studies we're conducting for ISIS-SMNRx in the next several months.

Now that the generic name for SMNRx has been approved, going forward, we'll refer to the drug as nusinersen.

Last week, we presented positive data from two clinical trials on our Phase 3 drug, ISIS-TTRRx.

These data provide additional support for the broad development plan that we and our partners at GSK are conducting for ISIS-TTRRx as a drug to treat all forms of TTR amyloidosis.

We also provided more details on GSK's plans for the Phase 3 TTR cardiomyopathy study, and on GSK's progress on its pre-commercialization activities.

We plan to complete enrollment in our ongoing Phase 3 study in FAP patients this year.

We also expect to complete enrollment in our Phase 3 study of volanesorsen in patients with FCS this year, and we're making solid progress in FPL.

Yesterday, we reported that in a Phase 2 study, ISIS-APO(a)Rx demonstrated significant reductions in Lp(a), which is a key driver for cardiovascular disease, and the results were equivalent whether the patients had significantly elevated Lp(a) or extremely elevated Lp(a).

In addition, we observed a more than 30-fold increase in potency with ISIS-APO(a)LRx, our LICA version of our APO(a) drug.

Of particular importance is that we observed no ISRs or flu-like syndromes in patients treated with this new drug.

These data support the potential to dose this and our other LICA drugs weekly, monthly, quarterly, or even less frequently with a small and conveniently administered dose.

This profile should open up much broader patient populations for all of our LICA drugs.

We'll discuss each of these developments in more detail during the rest of the call this morning.

Joining me on today's call are Lynne Parshall, Chief Operating Officer; Beth Hougen, Chief Financial Officer; Sarah Boyce, Chief Business Officer; Paula Soteropoulos, Akcea Chief Executive Officer; and Wade Walke, Vice President of Corporate Communications and Investor Relations.

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

Thanks, Stan.

In reminder to everyone that this conference call includes forward-looking statements regarding the financial outlook for Isis, Isis' business, the business of Akcea Therapeutics, and the therapeutic and commercial potential of Isis' technology and product and development.

Any statement describing Isis' goals, expectations, financial and other projections, intentions or beliefs, including the commercial potential of volanesorsen, ISIS-SMNRx, nusinersen, and ISIS-TTRRx is a forward-looking statement, and should be considered an at-risk statement.

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

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

Otherwise, such forward-looking statements reflect a good faith judging 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, 2014, and its most recent quarterly report on Form 10-Q, which are file with the SEC.

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

Now, I'd like to turn the call over to Beth.

Thank you, Wade.

We ended the third quarter in a strong financial position, with a pro forma operating income of $29 million and pro forma net income of $25 million.

Our operating results in the first nine months were significantly improved over the same period last year, in which we reported a pro forma net operating loss of $35 million and a pro forma net loss of $47 million.

We also ended September with more than $800 million in cash.

Our financial results reflect the successes of our drugs in development, which have generated nearly $300 million from our partners so far this year.

During the first nine months of this year, we earned $232 million of revenue, which was an 80% increase compared to the same period in 2014.

Our revenue in 2015 was largely comprised of the $91 million we earned from our license of ISIS-FX1Rx to Bayer and $90 million of revenue from milestone payments.

In addition to bolstering our financial results, the milestone payments we earned reflect the significant progress our partnered programs have achieved this year.

In the third quarter, we earned a $22 million milestone payment from Roche for initiating the Phase 1-2 study of ISIS-HTTRx, and $11 million of milestone payments from Biogen for advancing the Phase 3 studies of nusinersen.

Furthermore, we earned $50 million of revenue through September 30 of this year, primarily from the amortization of upfront payments from our partnerships.

Consistent with our guidance, our year-to-date pro forma operating expenses increased by about $40 million over the same period last year, primarily because four of the Phase 3 studies we are conducting are nearly fully enrolled, and have entered their most expensive stage.

In addition, our expenses this year have increased as Akcea has begun to prepare to launch and commercialize volanesorsen.

As we look at the fourth quarter, we've already earned $16 million in milestone payments, and we have the opportunity to earn additional milestone payments as our partnered programs continue to advance.

We are projecting a continuing increase in our operating expenses, as our Phase 3 programs progress, and we're also expect Akcea's expenses to continue to increase as they make progress on the Phase 3 study of volanesorsen in patients with familial partial lipid dystrophy, and build the commercial team and infrastructure to prepare to commercialize volanesorsen globally.

As a result of our strong financial results so far this year, we expect to improve upon our revised guidance of a pro forma net operating loss in the low $30 million range, and cash of more than $750 million.

We plan to provide estimates of our 2015 year-end results in early January.

And now, I'll turn the call over to Lynne.

Thank you, Beth.

We have reported encouraging data on all of our Phase 3 drugs this year, substantially derisking these programs.

These data demonstrate that our drugs have the potential to fundamentally change the way diseases are treated.

Any one of these events would have made 2015 a successful year for Isis.

The culmination of all of these events further illustrates our growth trajectory.

Our SMA program is progressing well.

We expect to complete enrollment of both of our nusinersen Phase 3 studies by early next year.

Data from our open label Phase 2 studies suggest the drug may bring significant benefit to patients with spinal muscular atrophy.

Importantly, since our last data cutoff in April of this year, there have been no new events of death or permanent ventilation reported in the Phase 2 open label study, in infants with SMA.

This means that we have had only one event in over a year in this study.

Over 70% of the infants who enrolled in the 12-milligram cohort remain on study, and these children are all over 21 months old, with an average age of well over 2 years.

In fact, in the study we now have a child with type 1 SMA who is older than three years of age.

SMA is a heart breaking and fatal disease in its most severe form, with no approved therapies.

As we've recently said to the SMA community, we're doing everything we can to advance nusinersen through development and approval as rapidly as possible.

An early and important step that's helped us move more rapidly, was receiving fast track designation from the FDA.

This has facilitated our positive interactions with the FDA.

Our communications with regulators in both the US and EU are going well, and we continue to engage in regular and productive discussions with health authorities.

Our goal in these conversations is to achieve the most expeditious path to the market for nusinersen.

These conversations take time, but they have our absolute focus and commitment.

We and Biogen are actively working on preparations for regulatory filings so that we'll be ready to file at the earliest possible date, and we're particularly pleased that Biogen is already working on pre-commercial activities with nusinersen.

We're very excited about the rapid progress in our TTR program.

As Stan said, enrollment should complete by the end of the year in our Phase 3 study in patients with FAP.

Our program focused on cardiomyopathy is also advancing well.

Just last week, Dr. Merrill Benson presented data from his Phase 2 study, in which he observed stabilization of disease in patients with TTR cardiomyopathy treated with ISIS-TTRRx.

Based on Dr. Benson's natural history study, one would expect significant disease progression over a 12-month period if these patients were not treated.

While our Phase 2 data are early, they increase our confidence in the outcome of the Phase 3 study GSK is initiating.

Of particular importance, we and GSK have decided Phase 3 program for ISIS-TTRRx, spanning all forms of TTR amyloidosis.

In addition to our study in FAP, in which enrollment is completing, GSK is initiating a Phase 3 study in patients with TTR amyloid cardiomyopathy, including patients with FAP, and patients with wild type TTR amyloidosis.

Obviously, this broad Phase 3 program significantly expands the potential market opportunity for ISIS-TTRRx.

The new GSK Phase 3 study is very robust, measuring clinical outcomes intended to provide a wealth of definitive data to support the value of the drug.

We believe that these data, if positive, should be compelling to payers, treating physicians, and patients.

The profile of ISIS-TTRRx continues to look very attractive in ongoing studies.

To date, 100% of the patients who completed the Phase 3 FAP study have elected to continue in our open label extension study, and our retention rate in the parent study is also very high.

We're seeing a low incidence of injection site reactions, no flu-like symptoms, and patients on ISIS-TTRRx do not need to be pre-treated with steroids or antihistamines.

In addition, the drug is quite convenient, with one subcutaneous injection once a week.

Patients appreciate the convenience of at-home dosing of our drug.

Having one drug and one product presentation provides significant benefit to the development and commercialization plans for ISIS-TTRRx.

Because TTR amyloidosis is a multi-organ disease, there's significant overlap in symptoms of each manifestation of the disease.

Having one product will streamline the regulatory process, physician education, and the sales effort.

GSK has begun NDA planning and preparations, and is well along in planning activities to support the global launch of ISIS-TTRRx.

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

We have believed all along that GSK is the right partner to maximize this commercial opportunity.

This is even truer now that the opportunity for ISIS-TTRRx is expanding to include all forms of TTR amyloidosis.

Before I turn the call over to Paula, I'd like to provide an update on our Factor XI program.

Earlier this month, we initiated a Phase 2 study of Isis-FXIRx, which if positive, should set the stage for Bayer's first Phase 3 study.

We showed in our initial Phase 2 study in patients undergoing total knee replacement surgery that Isis-FXIRx may be an effective and safe anti-thrombotic.

This is a drug that may, for the first time, decrease thrombotic events, without increasing bleeding risk.

Patients in our Phase 2 study were fully anti-coagulated with Isis-FXIRx before, during and after their surgery, with no increase in bleeding, something that cannot be safely done with any other anti-coagulant today.

The unique profile of ISIS-FXIRx may allow it to be used where currently available anti-thrombotics cannot, such as in patients who cannot tolerate any bleeding risk.

This opens up significant opportunities.

For example, it's well-known that end stage renal disease patients receiving chronic dialysis have a significantly increased risk of thrombotic events.

Despite their need for drugs to prevent blood clots, traditional therapies have limited efficacy in these patients.

The newer anti-thrombotics such as Factor 10A inhibitors are also not good therapeutic options, because they expose these patients to unsafe bleeding risk.

Based on its initial profile, Isis-FXIRx could be a novel, safe and effective drug for these patients.

In fact, patients with end stage renal disease is an initial population that Bayer is planning to pursue.

To support Bayer's efforts in this population, we have initiated a 50-patient double-blind placebo-controlled Phase 2 study in patients on dialysis.

In this new patient population, we're evaluating the safety and efficacy of Isis-FXIRx in preventing blood clots using 200 milligrams or 300 milligrams dosed weekly for 12 weeks.

We're also evaluating the effect of dialysis on drug distribution and half life.

We expect to complete this study in the second half of 2016.

When we complete the study successfully, we'll be eligible to earn a $55 million milestone payment from Bayer.

We're looking forward to Bayer's initiation of additional clinical studies of ISIS-FXIRx in 2016 that could further broaden the drug's potential.

Now, I'd like to turn the call over to Paula.

Thank you, Lynne.

At Akcea, we are building a high-caliber development and commercialization Company.

Our focus is to bring transformative medicines to patients through our robust lipid portfolio of targeted antisense drugs.

Akcea's first priority is to realize the significant near-term commercial opportunity that volanesorsen presents.

We are conducting two Phase 3 studies in two distinct ultra rare genetic diseases.

Both Familial Chylomicronemia Syndrome, or FCS, and Familial Partial Lipodystrophy, or FPL, are life threatening, chronic rare diseases that are associated with significant morbidity and premature death.

The Phase 3 study in patients with FCS is progressing according to plan, and we expect to complete enrollment by the end of the year.

The FPL Phase 3 study has also begun and is progressing well.

Our pre-commercialization activities are under way and momentum is building.

Among those physicians who understand and have treated FCS and FPL patients, there is an acute sense of unmet need.

Our focus is to further identify sites of care throughout the patient journey.

We plan to work with centers of excellence and leading KOLs to increase the medical understanding of both of these rare diseases.

In this way, we will significantly raise disease awareness that should lead to earlier diagnosis, and earlier and aggressive treatment.

Our growing commercial organization is also working closely with the development group to assure optimal regulatory and reimbursement assets for volanesorsen.

We are building a dedicated team that can deliver this transformative drug to our patients.

They are scientific and clinical experts, who have proven expertise in selling rare disease drugs.

We are also bringing in the right talent to support our patients, ensuring long-term compliance.

At Akcea, in addition to the near term rare disease indications that present opportunities for volanesorsen, we have a deep pipeline of medicines targeting additional lipid and cardiovascular diseases, and this weekend at AHA we heard a lot of excitement among physicians about our pipeline, in particular volanesorsen, and we also heard a lot of buzz about Lp(a).

Elevated Lp(a) is a major driver of cardiovascular disease.

Today, there's no specific medicine to specifically or substantially lower Lp(a).

We believe addressing Lp(a) is the next important horizon in lipid focused cardiovascular disease treatment.

Just yesterday, we reported data from two different drugs in our Apo(a) program, both showing unprecedented specific reductions in Lp(a).

Our LICA conjugated drug, ISIS-APO(a)LRx demonstrated more than a 30-fold increase in potency under the unconjugated form of the drug, and this means that we could dose ISIS-APO(a)LRx weekly, monthly, quarterly, or less frequently.

We also observed no ISRs or flu-like symptoms, which significantly enhances the tolerability profile of the drug.

Given the remarkable profile of ISIS-APO(a)LRx and our clear understanding of the next studies, which we would need to conduct with either drug, we are moving forward with the LICA drug ISIS-APO(a)LRx for all disease opportunities, without losing any time in the overall development program.

This means that we can initiate our Phase 2 studies in two distinct populations of patients with elevated Lp(a).

The first in patients who also have recurring cardiovascular disease, and the second in those with calcific aortic valve stenosis.

We remain on track with our development time line, which means we plan to start two Phase 3 studies in 2017, early 2018.

We are aggressively moving ISIS-APO(a)LRx forward for all disease indications, including the broader market opportunity, and we plan to commercialize ISIS-APO(a)LRx using the expertise we are building for volanesorsen.

And now, I'd like to turn the call over to Stan.

Thanks, Paula.

It is certainly very exciting to see the progress that's being made at Akcea.

And couple that excitement to the advances in the pipeline, the first-in-class drugs to reduce under treated lipid causes of cardiovascular disease.

Perhaps the highlight of the quarter is the clinical performance of ISIS-APO(a)LRx.

This has important implications for our LICA platform, and for the seven other LICA drugs that we have in our pipeline today.

Given how potent our current Generation 2+ drugs are, we hope we might see as much as a 10-fold increase in potency by adding LICA.

The fact that we achieved more than a 30-fold increase in potency in humans with superb tolerability is potentially another game changer that once again suggests broad and enhanced opportunities for our platform.

Just to put this in perspective, a greater than 30-fold increase in potency supports our ability to potentially dose with ultra-low volumes, making the subcutaneous injection almost unnoticeable.

This also supports the potential to dose weekly, monthly, quarterly, or even less frequently.

So with our LICA technology, we've created a platform, a technology platform that brings value, enhances tolerability, improves the convenience and ease of administration, and provides the flexibility to optimize treatment schedules to support uptake and adherence in different patient populations.

Since we have eight LICA drugs in development with more on the way next year, this advance is much more important than just improving the performance of the single drug.

In the coming months, we will have additional clinical data from a number of the LICA drugs that we have in development, and as Paula said, we'll be getting the Phase 2B program under way on ISIS-APO(a)LRx.

We have a great pipeline of first in class drugs that are performing very well.

We are reaping the rewards of years of effort with the enhanced potency and potential for very infrequent dosing with our LICA, and our Generation 2.5 drugs, dramatically increasing the value that we can create going forward.

Remember that LICA and Generation 2.5 chemistries increase potency through different mechanisms, so when combined, we now believe that we can create a drug that is orders of magnitude more potent than our already potent Generation 2+ drugs, and we expect to put our first Generation 2.5 LICA drug in development next year.

Clearly, our first priority is to focus on our Phase 3 drugs.

As Lynne mentioned, we and Biogen are focused on advancing nusinersen through development and approval as rapidly as possible.

Together with Biogen, we've engaged in important discussions with regulatory agencies in both the US and Europe, to work toward that goal.

These conversations take time, but they have our absolute focus and commitment.

In the meantime, we continue to be very encouraged with the performance of nusinersen in our open label studies, and the pace at which our Phase 3 studies are progressing.

Over the next 18 months or so, we will have data from all of our ongoing Phase 3 studies.

These studies, if positive, support marketing applications for nusinersen in patients with both the infant and the child forms of SMA, volanesorsen in patients with FCS and ISIS-TTRRx in patients with FAP.

These indications represent life threatening, rare diseases for which there are no therapeutic options today.

I think that's a remarkable lineup of first-in-class and best-in-class drugs moving quickly toward the market.

Then when you add to that, the exciting lineup of Phase 2 drugs that are in development, as well as the advances that we're making in the technology, I think you can understand why we at Isis are so excited about what the future holds for us.

Now with that, I'd like to turn the call over for Q&A, and I forgot to mention, Richard, forgive me, that Richard Geary is here as well, to answer any questions that you may have.

Please set us up for questions.

(Operator Instructions)

Our first question today comes from Jessica Fye from JPMorgan.

Please go ahead with your question.

First, I'm not sure if this is for Paula, but on APO(a)LRx for Lp(a), you have a few different sizes of the potential target patient populations you're going after, over time.

I think you're taking the LICA version forward for all of those groups.

It clearly looks better than the original version.

Can you talk about how you think about pricing for a product like this with those varying population sizes?

Sure, Jessica.

What we need to remember is that value creation is the most important thing.

So the product will be priced, in accordance with the value that it brings.

So starting with the rare disease, and then being priced according to the value as we expand the indication.

Okay.

Got it.

And just a couple more, if I can.

For TTR, a question about the FAP study end points.

I guess is there some scenario where you miss on the CV primary end point but for example show a clear benefit on six-minute walk and TTR knockdown, is that still a fileable study?

Is that still -- does that work for registration in your eyes?

We think so.

We think that is entirely feasible.

In fact, I think those are end points that are being used by others in an effort to get approval for FAP.

So yes.

Okay.

Got it.

And just last one on SMA, can you talk about when we might see the next conference presentation or next open label update for that Phase 2 infant study?

I don't want to be precise about that, because we have a good many conversations in progress at this point, and so what I'd like to do is to say that we remain highly encouraged by what we're seeing, and encouraged by the conversations that we're having with regulatory agencies, and that's our primary focus.

And we will of course share the information that we have, as soon as consistent with getting the drug approved in the most rapid way.

Okay.

Got it.

Thank you.

Our next question comes from Eric Schmidt from Cowen and Company.

Please go ahead with your question.

Maybe a follow-on question to Jessica's on nusinersen.

Lynne, I'm not sure you're going to have much of an answer for this one either, Stan or Lynne, I think Lynne mentioned that the conversations with regulators are proceeding well.

But that it just takes time.

I guess my question is when do you think we'll have clarity on a filing timeline or strategy here?

That sounds like a question that I should let Lynne answer.

I was hoping you were going to answer it, Stan.

The discussions are proceeding well, until they're finished.

We can't give you any more clarity, but I will say that we're working closely together with regulators, to be able, as rapidly as possible to make the drug available.

And one point I would make, and it's probably obvious to everybody on the phone, is that when you file is much less important than when you actually get approved.

We're working on a path that we and the regulators have confidence will be a positive path to approval.

Maybe just a --

I'd add to that, Eric, there is never a minute when the team at Isis is not aware of how urgent the need of these infants and these families to have therapy, and we're pushing as absolutely hard as we can, consistent with the outcome that's needed, which is approval at the earliest time, with the least amount of delay.

Okay.

There's, I guess, been speculation in investment circles that as you get closer and closer to the end of the Phase 3 studies, it makes it maybe more awkward to file for approval or receive approval, just months or weeks before you might be unblinding a pivotal trial.

Do you sense that concern at the agencies?

No.

No, we don't.

And I think it's speculation.

It has the time lines different from what were in our minds.

We haven't experienced any significant negativity or any concerns about any of that in our conversations, either in the US or the several countries in Europe with whom we've spoken.

And just last one from me, maybe for Beth.

You're going to hit a couple of milestones in terms of completing enrollment in nusinersen, the type 1 study in TTR FAP study.

Are either of those associated with milestones you can disclose?

We do have a number of milestones coming up in the fourth quarter, and also early next year, as we progress those studies, but the major next financial payments that come with both of those studies are going to be the licensing events, and we haven't disclosed timing of those, other than to say that they will happen after the conclusion of the Phase 3 studies.

Thank you.

The short answer to your question is, Eric, is yes.

Yes, they'll each be associated with some milestones, undisclosed?

Yes.

Thank you.

Our next question comes from Stephen Willey from Stifel.

Please go ahead with your question.

I know yesterday at the triple meeting there was a presentation, I think, of a KRAS targeting that yourselves and AstraZeneca are working on.

Has that been formally announced, I guess, as one of the candidates to be moved forward as part of the collaboration?

And then can you just remind us how many targets are remaining under the AstraZeneca collaboration?

There are two collaborations with AstraZeneca, Steve.

The first is the cancer collaboration.

Then the second is the broader collaboration in cardiometabolic disease.

Right now, AZ is developing an antigen receptor, in STAT3.

KRAS is not yet formally a collaboration development candidate.

We're excited about the data, and I think our friends at AZ are excited about the data, and we're interested in the target, but it's not a development candidate yet.

On the cardiometabolic side, that program is brand-new.

I think we just had the kickoff meeting a few weeks ago, right, Richard?

And so it's a little early to talk about specific drugs and specific targets there, but that's a fairly broad collaboration in cardiometabolic disease, and we hope will generate several development candidates for us and AZ.

And then lastly, I know there was obviously a bit of reorganization of R&D priorities at Biogen, and they're still obviously highlighting SMA and I believe DMPK as well in terms of being priorities for them.

But just wondering if the reorganization there has any impact on the pace at which some of these new targets that are available under the broader collaboration get identified and moved forward?

Thanks.

We expect the pace to be quickening, if anything.

I think the effort with Isis was strengthened in the reorganization, and I think part of the reorganization was to assure that there was flexibility in managing all the opportunities that Isis is bringing forward in the Biogen relationship.

But Lynne, do you want to add or subtract anything from that?

I would just second what you said, Stan, which is, our programs are all in the key strategic areas that Biogen is focusing on, and as a result, there is an even greater emphasis on the areas in which we're working together.

Okay.

That's helpful.

Thank you.

Our next question comes from Yale Jen from Laidlaw & Company.

Please go ahead with your question.

Thanks for taking the questions.

The first one is for the LICA programs that you indicated yesterday, that's about 30-fold or greater 30-fold increase in potencies.

Do you see this range for all of the LICA programs you have right now, in terms of compared to an earlier version?

Or does the range of this potencies further enhancement.

What we've seen to date is very consistent behavior across the board.

Will there be some modest range in the potency gain?

I imagine there will be.

I think the number to keep in mind is 4.5 milligrams per week.

4.5 milligrams a week is the ID50 dose and my best sense right now is that we should see potencies, ID50 doses in that range for all of our LICA drugs.

That's based on all the information we have, I think that's a legitimate expectation.

Of course, as the next series of LICA results from the clinic are acquired, and there will be quite a number over the next few months, we'll have a much better sense of what the actual range would be.

But there's every reason to believe that the ID50 doses will be in the same range.

And the other thing that's important is that I think we're quite confident that the tolerability profile will be consistent, and it's both the increase in potency, the reduction in the volume, and the better tolerability that makes it such a powerful addition.

So no ISRs, and no flu-like syndrome.

Are we going to have absolutely zero forever?

No, you must know that if you're going to inject a drug subcutaneously, occasionally you might get a bruise because you hit a vessel or something like that.

We do expect the tolerability to be very consistent, and very attractive.

Great.

Thanks a lot.

Just one more follow-up.

For the TTR programs, you're heading for the two FAC and the wild-type TTR next year, for Phase 3 study.

My question is just for some reason if the study end point was met for one indication, one patient cohort versus the other patient, would that affect your filing for approval, or you can do that separately?

Thanks.

Richard, do you want to deal with that?

Of course.

Our plans, along with GSK, are to file as quickly as possible with the first indication, which is the polyneuropathy indication.

It is absolutely the case that success on one would support that particular very different manifestation or phenotype, and the plan is, therefore, to move forward with that, with that in mind.

Thanks.

Appreciate it.

Our next question comes from Josh Schimmer from Piper Jaffray.

Please go ahead with your question.

There have been now a few iterations of the antisense platform, and we're now onto the LICA conjugate version, which is looking pretty exciting.

Wondering if you think there's still room for improvement beyond LICA?

Are there still efforts to further optimize the platform, or do you feel like LICA is now at a stable point to move all the programs going forward to, and even rework some of the prior ones?

Thanks.

Thanks for the question.

I think the thing that makes this moment in history for us so exciting is that we have drugs in Generation 2 that are excellent drugs and work, and now we have LICA and 2.5 in the pipeline, now 11 drugs in the pipeline, or 12 drugs in the pipeline if we add 2.5 and LICA up.

And so the benefits of those endeavors are tangible, and being felt in the pipeline immediately today, but the progress and the basic research is accelerating.

The things that we're learning in what we call core antisense research today are just amazing to me.

And they're already beginning to translate into new mechanisms, not just better potency doing the same thing we are doing, but new things that we can do.

And we'll be talking about several new mechanisms in the coming months that we've invented, that open horizons that no one ever dreamt, including me, that antisense would have.

This is the most exciting time in the basic anti-sense platform expansion that we've experienced.

Nothing compares to it.

You haven't even begun to see the tip of the iceberg of the things that are coming.

As to the specific question as to whether LICA represents a stable platform to now fully advance, or do you think you'll have additional improvements on the --

No, we're working on the different LICAs, if that was your question.

Is the current LICA construct for improving liver activity likely to be fairly consistent?

Yes.

But are there new LICAs that we're working on that improve other characteristics and entry into other organs?

Yes, there are.

So it's a little early to predict when and exactly what those are going to look like, but while the liver LICA form that we have, that chemistry's pretty well stable.

Other approaches are emerging in research that look very exciting to us.

Got it.

Thank you.

Our next question comes from Jon Eckard from Barclays.

Please go ahead with your question.

Thanks for taking the question.

Most of mine have been asked, but with regards to LICA, if you could just remind us of the -- you say you have seven or eight that are in the pipeline are coming out now.

Of the other existing collaborations that may not have a LICA to date, do these collaborations provide automatic access to the LICA technology if the partner chooses, or would that be an extra add-on payment to those collaborations?

Lynne, do you want to answer that?

So all of our collaborations provide our partners with the opportunity to access follow-on drugs for their programs.

So for programs that are liver-targeted, the current version of LICA could produce an attractive LICA-based follow-on.

Of course, in order to come up with that we have to do work, and our partners would pay us to do work, and to the extent that those follow-on drugs represent franchise extensions and continuation to build on the marketing and commercialization work our partners have done, they're very valuable, not only to our partners, but also to us.

Great.

And then yesterday, I remember the question came up about how to best strategically work with some of the new agents such as the APO(a).

And the question about partnering came up.

I think the answer was, we'll assess that and maybe do it at the right time.

I guess with a lot of these agents you have, especially in the lipid space, is it reasonable to think that going after the orphan spaces is something that would be a standalone setting, and then if you ultimately get opportunities to broaden into larger places, that those would be the settings?

I guess, how do you view keeping some of these strategic assets inside most effectively?

Well, we took this, for us, long planned, hoped for and important step in forming Akcea, for exactly that reason.

And so we see Akcea as the commercial arm for the lipid drugs.

And certainly, Akcea will commercialize the rare disease forms, but I wouldn't want to limit Akcea to just the rare diseases.

We think Akcea will be able to over time expand to larger indications.

For the very, very large indications, there, I think we're much more willing to consider partnerships, because partners bring value.

They bring the muscle to do outcome studies and large outcome studies and they bring a sales force that is much larger and different from the kinds of sales force that Akcea wants to create.

So I do understand that it's complex, and that we can't give you a definitive here's our way of partnering on all of our pipeline, or this part of our pipeline.

But please understand that deciding to form Akcea was a big decision for us, and it is a commercial arm of Isis, that we expect to see commercialize the initial indications for these exciting lipid drugs.

Paula, do you want to add anything to that?

Just consistent with what you've said is that, of course, our initial focus to build out commercialization in a rare disease, but we also look to participate in the development and commercialization as we broaden, but then also consider partnerships to really augment our ability to develop those very large diseases and increase the reach of those very large diseases.

I guess we really are feeling very good about the way the strategy has evolved, and the flexibility it gives us to maximally take advantage of the commercial opportunities that are on our plate today.

Great.

Thank you very much.

Our next question comes from Michael Schmidt from Leerink.

Please go ahead with your question.

I just had a follow-up regarding the hereditary discussions that you and Biogen are having on the SMA program, and I was wondering, do those discussions filter around the type 1 infantile form of the disease, or potentially both types?

Lynne, do you want to handle that?

Michael, of course our regulatory strategy and dialogue includes all of the opportunities for registration of the drug, but being able to make the drug available to the infants with type 1 SMA who have rapidly degenerative and fatal disease is our highest priority.

And should there be the opportunity to obtain early access for patients, how would that affect your relationship with Biogen, if at all?

Lynne?

I'm not sure I understand the question.

Do you mean if the drug gets approved early, how -- what happens to our contract with Biogen?

Exactly.

My understanding is that they can opt-in right after the full Phase 3 data.

So we amended our contract with Biogen about a year ago to anticipate exactly that situation.

So now, in addition to having opt-in rights at the completion of the first positive Phase 3 study, which is what the original contract said, they also have the rights and the obligation to make an opt-in decision upon acceptance of our first regulatory filing.

Upon filing?

Upon acceptance by the regulatory agency of the filing, yes.

Not approval of the drug but acceptance of the filing.

Yes.

Sorry, thank you for clarifying, Stan.

Okay.

Great.

Thank you so much and congrats on the progress.

Our next question comes from Doug Adams from Tocqueville Asset Management.

Please go ahead with your question.

I have two questions.

The first is, last week I noticed that Shire is acquiring Dyax for $5.9 billion plus, which was close to your market cap basically for hereditary angioedema, which I understand you have a drug in Phase 1, and I was wondering how your prospects for that drug will change, based on this acquisition?

You're right, we do have a drug for hereditary angioedema, and we think the profile of that drug is very attractive and competitive with the Dyax drug.

So we don't -- we're not changing our strategy based on the acquisition by Shire of Dyax.

Maybe the question should be how are you trying to accelerate the development of that asset, in light of how large they consider that end market?

We're moving along.

Our focus is primarily to make sure that our drug is significantly more attractive.

I think that's the key, rather than -- we're not going to catch up, but are we going to have an agent that offers significant advantages to the Dyax drug?

And that's where our focus is, Doug.

Okay.

I have another question on Lp(a) and it seems like the FDA's breakthrough designation has accelerated the regulatory time lines for those drugs with that designation, and Lp(a) certainly looks like the kind of drug that should qualify for it.

Are you expecting to apply for that designation?

Lynne, do you want to handle that one?

Actually, when you look at the studies that have been done, breakthrough doesn't particularly accelerate.

What you hope the breakthrough gives you is an opportunity for more real-time discussions with the FDA, and more access.

So far, we don't think we have a problem with access, but this particular division has not been forthcoming.

Most of the early breakthroughs that you see, of course, are in the oncology division.

So it is -- that's a long-winded answer to the fact that, yes, it is something that we're looking into, but the most important thing is we do have a regulatory strategy to begin to have access to the FDA to educate them about this target and the patient populations, and we believe we're going to be able to do that, with or without breakthrough.

Okay.

Thank you.

And ladies and gentlemen, at this time we've reached the end of today's question-and-answer session.

I'd like to turn the conference back over to Dr. Crooke for any closing remarks.

Well, thanks everyone for your interest.

We think we've had an exciting year so far, and just before we close, maybe a quick addition from Wade that just will remind you of a few upcoming events.

Thanks, Stan.

As you can imagine, with a pipeline as large as ours, we have a constant flow of important data releases and study initiations.

Of course, we'll continue to provide updates on our TTR program from the open label cardio cardiomyopathy study that Dr. Benson is conducting.

You'll see that coming up next year.

And we anticipate giving you updates on our DMPK program, which is currently in Phase 1-2 in patients with myotonic dystrophy.

In addition to that, of course, we'll have data from about four Phase 1 programs with three of those being LICA drugs.

And of course with study initiations, we'll have a number of Phase 1 initiations, with three of those being LICA programs, as well.

So we've got a lot going on in our LICA platform.

Additional study initiations next year include Phase 2 for HBV, of course the Phase 3 study in cardiomyopathy patients that GSK will be conducting.

And some others that we'll give you more details on, as the year goes on.

You'll also be hearing about technology advances that I think are really quite important to us.

And obviously, you'll be hearing about study completions, a lot of study completions that are important.

So we think we have a lineup of news that will continue to be flowing over next year, that we hope will continue to be exciting to people.

With that, why don't we bring the call to a close.

We very much appreciate everyone's interest, and thank you once again for participating.

Ladies and gentlemen, that does conclude today's conference call.

We do thank you for attending.

You may now disconnect your telephone lines.