Ionis Pharmaceuticals Inc (IONS) 2019 Q2 法說會逐字稿

Good morning, and welcome to Ionis Pharmaceuticals' Second Quarter 2019 Financial Results Conference Call.

As a reminder, this call is being recorded.

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

Please begin.

Thank you, Nicole.

Before we begin, I encourage everyone to go to the Investors section of the Ionis website to find the press release and related financial tables, including a reconciliation of the GAAP to non-GAAP financials, the measures that we'll discuss today.

We believe that non-GAAP financial results better represent the economics of our business and how we manage our business.

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

With me on today's call are Stan Crooke, Chairman of the Board and Chief Executive Officer; Beth Hougen, Chief Financial Officer; Brett Monia, Chief Operating Officer; and Damien McDevitt, Chief Business Officer, who will join us for Q&A.

I would like to draw your attention to Slide 3, which contains our forward-looking language statement.

We'll be making forward-looking statements, which are based on current expectations and beliefs.

These statements are subject to certain risks and uncertainties, and our actual results may differ materially.

I encourage you to consult the risk factors discussed in our SEC filings for additional detail.

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

Thanks, Wade, and good morning, everyone.

Thank you for joining us on today's call.

In the first half of 2019, we achieved a substantial number of value-driving successes across our business, further strengthening our financial position as we enter the second half of this year.

We finished the first half of the year with revenues of $460 million (sic) [$461 million].

This is an increase of more than 75% compared to last year, putting us on track to deliver our fourth consecutive year of operating income and a third consecutive year of net income.

We achieved these strong financial results while continuing to invest as aggressively as it makes sense broadly across our entire business, including commercializing 2 medicines and advancing our pipeline and technology.

SPINRAZA's blockbuster performance continued into the first half of this year.

SPINRAZA remains the worldwide standard of care and the only therapy approved for the treatment of SMA patients of all ages and all SMA types.

Having now treated some SMA patients with SPINRAZA for approximately 7 years, we now have patients who began treatment as adolescents and are now young adults.

I'm particularly gratified to think about these young adults who, before SPINRAZA, would have faced a life of progressive weakness and increasing dependence.

Today, they are able to live longer, more independent and more productive lives.

And that's just the beginning.

Babies with SMA are now being treated before becoming symptomatic, and the vast majority of those babies are maturing like normal healthy children and can look forward to a life of independence and productivity.

Our commercial affiliate, Akcea, has now completed the first 2 quarters of the TEGSEDI launch and reported $10 million in product sales in the second full quarter of launch.

That is 40% increase compared to last quarter.

While it is still early in the launch, we are receiving positive feedback from TTR patients and from physicians about the positive benefit that TEGSEDI is having on patients' lives.

WAYLIVRA is the only approved medicine for the treatment of patients with the severe triglyceride disorder, FCS.

We are launching WAYLIVRA in Europe this quarter through Akcea and looking forward to expanding into Latin American market through PTC Therapeutics later this year.

In the U.S., we and Akcea are encouraged by our recent productive discussions with the FDA to clarify a path to patients in the U.S. (inaudible) the recent BROADEN study in WAYLIVRA in patients with FPL, another rare triglyceride disorder characterized by metabolic abnormalities, including very high triglycerides in the plasma and liver and extreme insulin resistance as well as abnormal distribution of body fat.

In the BROADEN study, WAYLIVRA achieved its primary end point, dramatically and statistically significantly reducing plasma triglyceride levels.

WAYLIVRA also achieved an important secondary end point with the reduction of liver fat along with good safety and tolerability observed in the study.

We look forward to presenting the detailed data from this study at a future medical meeting and in publication.

Now let's look briefly at more recent value-driving catalyst from our pipeline.

Our late-stage pipeline of Phase III and near Phase III programs is advancing as planned.

Our Phase III medicines for Huntington's disease and SOD1-ALS are in Phase III studies, both with the potential for rapid pass to patients.

Our 2 late-stage LICA medicine, one, to treat patients with Lp(a)-driven cardiovascular disease and the other to treat patients with all forms of TTR amyloidosis are on track to begin Phase III studies this year.

And our mid-stage pipeline is advancing on schedule as well.

Our partner GSK reported that our HBV program achieved positive results.

We are completing our Phase II study of IONIS-FXIRx in patients with end-stage renal disease as well as a Phase I study of the LICA form of [Factor X1 Rx].

And we believe that the completion of this study will set the stage to rapidly advance one or both of these medicines into later-stage development.

We're pleased with what we are seeing in these studies, and we look forward to presenting the results of these studies after they're fully completed and analyzed.

Additionally, we recently initiated 2 Phase II programs.

We initiated the first Phase II study of IONIS-FB-LRx for the treatment of people with complement-related or mediated diseases with studies in additional complement-mediated disease indications planned as well.

We also initiated a Phase II study of IONIS-PKK-LRx for the treatment of patients with hereditary angioedema and plan to move forward in additional -- with regard to additional indications involving abnormalities of the PKK pathway.

We are the leader in RNA-targeted drug discovery and development, and I'm pleased to tell you that the technology continues to advance in an ever-increasing pace.

Our pipeline is full of potentially transformative medicines that are advancing rapidly, and we're doing all of this while continuing to achieve sustainable profitability.

And now I'll turn the call over to Beth to provide our financial update, followed by Brett, who will update you on our pipeline progress.

Thank you, Stan.

Our financial results for the first half of this year continue to build on our multiyear growth trajectory.

We ended the first half with total revenues of more than $460 million, a more than 75% increase over the same period last year, driven by growth in both commercial and R&D revenues.

Our significant revenues resulted in continued growing profitability with operating income of $190 million and net income of $162 million for the first half of this year, both on a non-GAAP basis.

We also maintained our substantial cash position by ending the quarter with $2.3 billion, even while investing broadly across our business.

In the first half of 2019, SPINRAZA generated over $1 billion in worldwide net sales, a nearly 30% increase compared to 2018.

These strong results put SPINRAZA well on track to significantly exceed 2018 revenue.

Reflecting SPINRAZA's strong performance, our royalty revenue also increased by more than 30% to $130 million.

Notably in the second quarter, we reached the highest royalty rates.

The number of SPINRAZA patients on treatment worldwide increased by approximately 12% compared to last quarter and now approximately 8,400 patients are being treated with SPINRAZA.

In the U.S., the number of patients on SPINRAZA increased compared to last quarter.

Adult patients, which make up the largest patient segment, continued to be a significant driver of growth in the second quarter.

Outside the U.S., the number of patients on SPINRAZA also increased, in this case by approximately 17% compared to last quarter.

This growth was driven by new patients in larger, mature markets along with rapid uptake in more recently launched markets, including in Asia and Latin America.

Biogen continued to increase reimbursement for SPINRAZA around the world in the second quarter.

Formal reimbursement is now in place in over 35 countries with the addition of the U.K., Ireland, Brazil and Argentina in the second quarter.

We believe that SPINRAZA's thorough clinical development program and its continued outstanding performance with long-term treatment account for SPINRAZA's broad acceptance by payers around the globe.

Biogen now estimates that the global opportunity for SPINRAZA is much larger than initial estimates, with more than 45,000 patients in markets where Biogen has a direct presence.

With new patient growth expected to continue, we believe SPINRAZA will remain a global foundation of care for the treatment of patients with SMA.

We earned $10 million in commercial sales from TEGSEDI in the second quarter, a more than 40% increase over the first quarter.

And as you would expect with a rare disease medicine, Akcea continues to focus on disease education and patient identification with particular investment in community centers where hATTR patients can benefit from TEGSEDI treatment close to their home on their schedule.

Outside the U.S., we look forward to the launch of TEGSEDI in additional EU countries as well as the potential approval and launch of TEGSEDI in Brazil through PTC Therapeutics.

Akcea is launching WAYLIVRA this quarter, beginning in Germany, with additional EU country launches planned for next year.

In recognition of WAYLIVRA's EU approval, we earned $6 million from PTC.

PTC is actively preparing to provide WAYLIVRA to patients in Latin America.

R&D revenue in the first half of this year nearly doubled compared to 2018 to more than $300 million.

This growth demonstrates that R&D revenue is a significant and sustainable source of revenue for us.

R&D revenue we earned in the first half of this year was primarily driven by the following significant components: $75 million from amortization of upfront payments; $52 million in milestone payments from our partners as our medicines advanced.

That included more than $13 million in amortization of milestone payments we received from Biogen for neurology programs we are advancing.

And $35 million from Roche for advancing IONIS-HTTRx and the third component, $173 million in license fees, which included $20 million from Alnylam when they licensed our technology to Regeneron.

To date, Alnylam has paid us nearly $100 million, which includes royalties on commercial product sales, and we expect this amount to grow as medicines based on our technology advance.

And $150 million from Novartis for licensing AKCEA-APO(a)-LRx in the first quarter.

Our non-GAAP operating expenses in the first half of this year were $271 million, an increase compared to last year.

We are investing broadly across our business, including investing in commercializing TEGSEDI globally and preparing to launch WAYLIVRA in the EU.

We also recognized $24 million of income tax expense during the first half of this year.

We are incurring income tax expense because we project that we will generate U.S. federal and state taxable income this year.

During the second half of this year, we anticipate earning significant commercial revenue and R&D revenue.

If we do not achieve another large revenue item, like the $150 million license fee we earned from Novartis in the first quarter, we are projecting our revenues in the second half of the year to be generally in line with the first half of this year.

We also anticipate higher operating expenses in the second half of this year due to our continued investments in commercializing TEGSEDI, launching WAYLIVRA and continuing to advance our pipeline.

In particular, we are on track to initiate the Phase III program for AKCEA-TTR-LRx before the end of this year, which we expect will increase our development expenses.

With all of that, we are on track to meet or improve upon our financial guidance for this year.

We are also on track to achieve our fourth consecutive year of operating income and our third consecutive year of net income, both on a non-GAAP basis.

Our strong results are a testament to the productivity and efficiency of our platform technology, coupled with our novel business model.

Looking to the remainder of this year and into the future, we have confidence that we can continue to deliver sustained financial strength while maintaining our focus on increasing innovation to drive value to patients in need.

And with that, I'll turn the call over to Brett to provide an update on our pipeline.

Thanks, Beth.

Today, we have 3 recently approved medicines and a pipeline of over 40 medicines advancing through development.

In the first half of 2019, we achieved numerous pipeline successes.

And through the remainder of this year and into next year, we look forward to additional programs, achieving significant value-driving catalysts.

SPINRAZA is the worldwide standard of care in the treatment of SMA patients of all ages and all SMA types, and emerging data from longer-term SPINRAZA treatment continue to demonstrate even better performance.

We continue to see that infants treated before symptom onset developed like normal, healthy kids.

This is demonstrated again in new data from the ongoing NURTURE study in patients treated throughout the 45 months and supported by new long-term data showing continued improvement in over 300 patients treated for up to 5 years.

The SPINRAZA label is recently expanded in Europe.

What is difficult to improve -- although it's difficult to improve upon SPINRAZA's efficacy and safety profile, we and Biogen are pursuing a follow-on antisense medicine, with the potential for reducing dosing frequency to once or twice per year, and we look forward to advancing a follow-on medicine into development potentially late this year or early next year.

As part of the ongoing launch of TEGSEDI, we and Akcea continue to present data supporting the benefit hATTR patients are experiencing with TEGSEDI treatment.

Earlier this month, we presented new data from the NEURO-TTR open-label extension study, demonstrating durable and substantial efficacy with long-term TEGSEDI treatment in patients with hATTR polyneuropathy with no new safety issues identified.

Moving on to WAYLIVRA.

In the U.S., we and Akcea continue to recognize the unmet medical need of FCS patients for a safe and effective medicine for this rare and debilitating disease.

And we are encouraged by our recent productive interactions with the FDA to clarify a path forward for WAYLIVRA in FCS.

A second indication we're evaluating with WAYLIVRA is familial partial lipodystrophy or FPL.

FPL is a rare lipid disorder characterized by an inability to store fat or triglycerides normally with excess fat settling in the liver, muscle and at very high levels in the bloodstream, leading to a range of metabolic abnormalities, including an increased risk of acute pancreatitis, premature cardiovascular disease and liver disease, which can result in cirrhosis.

Akcea, and we recently completed a BROADEN study with WAYLIVRA in patients with FPL.

We're pleased to report that WAYLIVRA achieved both the primary end point of reductions in triglyceride levels and the key secondary end point of reduction in liver fat.

We were also encouraged by the safety profile of WAYLIVRA in this study.

The most common adverse events were mild or moderate in severity, and no serious or severe decreases in platelets were observed.

We're continuing to review these results and discussing them with key experts in the field, which will help us determine the next steps for this indication.

We look forward to presenting these data at a future scientific conference and through publications.

Pivoting now to our pipeline.

Our late-stage pipeline of Phase III and near-Phase III programs continue to advance with the potential for significant value-driving catalysts in the near term.

The Phase III generation HD study of IONIS-HTTRx, also known as RG6042, in patients with Huntington's disease is progressing well with our partner Roche.

In addition to the Phase III study, the broad and robust HD clinical program includes the open-label extension study of IONIS-HTTRx in Huntington's patients, along with an ongoing natural history study.

Both studies are nearing completion, and we look forward to this data being presented at a future medical meeting.

These studies are part of a comprehensive clinical program Roche is conducting to potentially provide this medicine to patients as rapidly as possible.

The Phase III study of tofersen is also progressing very well.

As a reminder, Biogen recently reported data from the Phase I/II study of tofersen in patients with SOD1-ALS, demonstrating a positive safety profile and marked reductions in SOD1 protein, which were associated with clinical benefit in measures of ALS disease progression after only 3 months of treatment.

Based on these data, Biogen initiated a Phase III study of tofersen, which is expected to provide results in 2021.

Our late-stage LICA medicines targeting Lp(a)-driven cardiovascular disease and TTR amyloidosis are on track to start Phase III studies before the end of the year.

AKCEA-APO(a)-LRx, our most advanced LICA medicine, has the potential to transform the treatment of the millions of people worldwide suffering from Lp(a)-driven cardiovascular disease and is representative of the potential of our technology to treat a broad range of diseases, both rare and common.

Our partner, Novartis, recently shared the design of the Phase III study.

The study will enroll approximately 7,500 patients with elevated Lp(a) levels of 70 milligrams per deciliter or higher with cardiovascular disease.

We also continue to make important progress with our LICA follow-on medicine to TEGSEDI, AKCEA-TTR-LRx, which we're developing for the treatment of patients with all forms of TTR amyloidosis.

We're nearing completion of our Phase I study of AKCEA-TTR-LRx, and we look forward to sharing these data at 2 conferences this September: the European meeting for ATTR Amyloidosis in Berlin and then again at the Heart Failure Society of America annual meeting in Philadelphia.

And looking ahead, we remain on track to initiate a Phase III program with AKCEA-TTR-LRx this year.

This program will include 2 Phase III studies, including a study in patients with hereditary TTR polyneuropathy and a study in patients with wild-type and hereditary TTR cardiomyopathy.

In addition to the great progress we're making in our late-stage pipeline, our mid- and early-stage pipeline also continues to perform very well.

We're pleased with the progress being made in our hepatitis B development program.

Affecting over 200 million people worldwide, chronic hepatitis B is a potentially fatal liver disease, which can significantly increase a person's risk of cirrhosis, liver failure and liver cancer.

Unlike currently marketed medicines that inhibit viral replication without clearing the virus, our HBV medicine has the potential to also clear the virus, which can provide patients with a functional cure.

GSK recently reported that its program achieved positive clinical results, which we and GSK look forward to presenting at a future medical meeting.

We also look forward to GSK's decision regarding licensing this program later this year, particularly given our enthusiasm for its potential value.

IONIS-FXIRx, currently in a Phase II study in patients with end-stage renal disease, and IONIS-FXI-LRx, currently in Phase I, are near completion, and we're very enthusiastic about the data we're seeing in both studies.

IONIS-FXIRx is the first anti-thrombotic medicine to prevent thrombosis without a significant risk in bleeding.

This conclusion was demonstrated in a study of over 300 patients undergoing total knee replacement surgery, which is published in the New England Journal of Medicine.

Based on our data from earlier studies, we believe our medicines targeting Factor XI have the potential to be used broadly in patients at risk for thrombosis especially those patient populations with additional risks for bleeding.

We and our partner, Bayer, look forward to sharing results from both of these studies at a future medical meeting.

We're also looking forward to Bayer's decision later this year to advance one or both of these programs further into development.

We recently initiated a Phase II study in our program to develop IONIS-FB-LRx for the treatment of a broad range of complement-mediated diseases under our collaboration with Roche.

In earlier clinical trials, we demonstrated robust dose-dependent target reductions and a positive safety profile.

The Phase II study of IONIS-FB-LRx will evaluate multiple dose levels in approximately 300 patients with geographic atrophy secondary to age-related macular degeneration, the first indication we and Roche are pursuing in the development program.

Patients will be treated for 1 year in our global Phase II study.

And in addition, we are gearing up to initiate a Phase II study evaluating IONIS-FB-LRx in a second indication.

As you can see from this slide, we have numerous value-driving events expected within the next 6 to 12 months, including both study initiations and data readout.

We're looking forward to discussing these with you more throughout the year.

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

Thanks, Brett.

We've built Ionis on a foundation of our efficient technology, a culture supporting maximum innovation and a business model that enables us to maximize the value of each of our medicines in our pipeline and that are being commercialized.

Our business strategy is succeeding.

And today, we are sustainably profitable, and Ionis is delivering more value to patients and shareholders every day.

With the approval of WAYLIVRA, we now have 3 medicines approved in the last [2] years or so.

Our medicines continue to advance in late-stage development.

We are on track to achieve our goal of 4 Phase III studies underway by the end of this year, and our mid-stage pipeline continues to advance as demonstrated by the numerous Phase II readouts since study initiations already accomplished this year.

Our technology continues to advance as well, and it's advancing at an even more rapid pace.

We look forward to giving you a glimpse of our exciting progress in the technology at a webcast focused on our technology later this year.

We have more than -- we have more and more Ionis-owned programs that we are developing for our own account, and we are continuing to maximize the value of our medicines by identifying the optimal commercialization path and retaining more economic value.

The business success and financial strength we've built give us confidence that we will continue to develop value for our patients and our shareholders in the short term and for years to come.

I look forward to updating you on our continued achievements throughout the rest of this year.

And with that, we will open up the call for questions.

So if, Nicole, you can set us up for questions, I'd appreciate it.

(Operator Instructions) Our first question comes from Tyler Van Buren of Piper Jaffray.

Congrats on the progress with this and the positive BROADEN study results.

And with respect to WAYLIVRA, can you remind us of the opportunity in FPL and the prevalence and the patient breakdown as we think about adding that on top of the existing FCS indication?

Yes, thanks.

FPL is rare indication, of course.

And the size of the FPL population, if I recall correctly, is about similar to FCS, maybe around 3,000 patients or thereabouts.

So we think of the opportunity as being roughly similar to the FCS opportunity, and we believe that the combination of the 2 will be an important contributor to our future revenues.

Okay.

That's helpful.

And then with respect to the Phase I-II TTR-LRx update in September, could you give us maybe a glimpse of what additional information we'll see at that meeting that could be meaningful for the pathway forward?

And then as a follow-up to that, what have you seen so far that gives you confidence that you could have a potential follow-on product that's dosed once or twice a year?

Sure, Tyler.

I'll take that.

This is Brett.

So yes, we're looking forward to sharing results of our Phase I study on TTR LICA.

We're very encouraged by the results so far.

Our TTR LICA is performing like all of our LICAs, with excellent potency, foreseen safety and durability, and we'll share that data.

We'll share the pharmacodynamic, the TTR lowering data, and we'll share all the safety data.

And we'll also give you probably a glimpse of what our Phase III designs are going to look like in polyneuropathy and cardiomyopathy since we're getting -- we're gearing up to start those studies.

We can dose the -- we can utilize -- we have lots of options for dosing frequency for our LICA strategies.

We can go monthly easily like we're doing for most of our programs.

We can go quarterly or even less frequent if we choose to.

We're settling on the exact -- and that's based on the wealth of data we have with all of our LICAs.

Just the durability of efficacy that we see, they're all the same.

We're settling on dose frequency right now.

The truth is, Tyler, we don't see a significant advantage to going less frequent than monthly from a patient convenience standpoint, and we think there are advantages to actually going to monthly as well.

We could talk more in detail about that maybe in the presentation, but we have options monthly, quarterly what we want to do, but I think we're settling on monthly right now.

So Tyler, the question that you asked about once or twice a year may have been related to the follow-on to SMA and to SPINRAZA.

In that case, obviously an intrathecal administration -- for most of our intrathecal drugs, we give them quarterly or a little less frequently.

And across the board, we're working on new molecules that we think will allow us -- will support much less frequent dosing.

There, I think there's real value in maximizing the space between doses because it's obviously a procedure that requires meaningful effort.

So the way I think of it is that for systemic administration, we're in position to provide the patient dose frequency that makes sense.

We've looked through our pipeline, and we've talked to patients, we've talked to providers.

And our conclusion is that by and large, monthly dosing is the easiest thing for patients and providers to work with.

For intrathecal administration, our intention is to have drugs there that can be dosed as infrequently as possible, and we're making great progress there.

Yes.

But I wouldn't want people to confuse -- we're not seeking to make annual dosing systemically.

We don't think that's the best.

Or even semi-yearly, we don't think that's the best solution for most patients.

Very different from intrathecal.

Our next question comes from Jim Birchenough of Wells Fargo.

Congratulations on all the progress.

A couple of questions.

I guess the first one is just on Huntington that's becoming a very high profile program.

There's been some attention on neurofilament light chain increases that appear transient and ventricular volume increase and a bit of speculative backfill on it maybe being related to wild-type knockdown or to ASOs in general.

And so could you perhaps address that directly and more meaningfully address whether -- and maybe just address this directly, whether Roche's extension to every 4-month dosing had anything to do with either of those phenomena.

I think it would be helpful just to have you speak to that.

Jim, I'll take that.

This is Brett again.

So the attention, enthusiasm for our Huntington program, which Roche is warranted for sure.

I mean this is a very exciting program.

Patients are in desperate need for this medicine, and Roche is doing a great job in developing this drug.

And we're looking forward to continuing presenting data on the open-label extension this year or early next year.

So regarding the data that was presented at the AAN earlier this year and published in New England Journal of Medicine, as you indicated, with continued dosing of our Huntington medicine, we saw a transient increase in NFL and left ventricular volume that was coming back down to baseline and was essentially at baseline with continued dosing.

And with that continued dosing, of course, huntingtin levels are continuing to be driven down further, which that data by itself indicates that has nothing to do with huntingtin reductions because you would expect the -- if it was related to that, that there would be continued increases in neurofilament, but we don't see that.

So it's clearly not related to huntingtin reduction in the sense of a toxicity.

With respect to the dosing frequency and the changes to that, early on in the Phase III study, we had just begun the Phase III study when data was coming out from the open-label extension, looking at huntingtin reductions by both monthly and bimonthly dosing.

And what was clear in the open-label data was that the bimonthly dosing and even potentially a triannual dosing was getting us well below the threshold that was necessary for huntingtin reductions to produce potential benefit based on all the preclinical data we had.

Since Roche had just begun that study, they wanted to offer greater convenience to patients with bimonthly and triannual dosing to considering the drug is being administered intrathecally.

So they made that decision, and it really had very little impact on the Phase III study, including when the expected readout is expected.

But in no way was it related to any adverse events or SAEs that we were seeing, and that correlated in any way with the transient NFL changes that we saw or left ventricular volume that we -- changes that we saw in the study.

Simplest explanation is the decision was consistent with our goal to maximize the time between intrathecal injections.

As much we had data that told us that we could do [have], we did it.

With regard to the question of whether it's related to ASOs in general, let me say that at Ionis, we have more experience with intrathecal administration of RNA-targeted therapies than the rest of the world combined and multiplied by 10.

And we are very confident that ASOs administered intrathecally are safe and well tolerated.

And I'm sure investors are as well.

All they have to do is look at 7 years of experience with SPINRAZA.

That's helpful, Stan and Brett.

Just following up on the Factor XI opportunity and the data update that we'll get.

I guess just if you could remind us what the -- if there's an opt-in milestone payable if Bayer moves forward with one or both of those.

And maybe comment on your level of confidence that they will move forward with a Factor XI-directed antisense approach.

Jim, yes.

There's a milestone payment for their decision to move forward in the development.

And right now, Bayer is reviewing with us the data from both the Phase I LICA drug as well as the Phase II study in end-stage renal disease patients.

And in that study, of course, we have safety, tolerability, Factor XI reductions, evidence of prevention of thrombosis as well as bleeding.

Bayer is very excited about Factor XI as a program and our antisense medicine, in particular.

They've made a strong commitment to this pathway, into Factor XI specifically, and I'm feeling very good about their likelihood of moving forward with this program based on all the enthusiasm that they've shown.

I mean the data that we've seen so far is very encouraging as has been the data that we presented previously from our knee replacement study and published in New England Journal of Medicine.

It's a very exciting program and it's -- again, it's a program that has a potential to treat millions of patients at risk for thrombosis who are also at risk for bleeding.

Everything we see from these drugs teach us that they are really important assets in our pipeline.

So speaking not for Bayer, but for us, we are really excited about these products, and we'll be developing them through Bayer or other ways.

But I'm entirely in agreement with Brett that we're optimistic that Bayer will move forward rapidly with these agents.

Yes.

Our next question comes from Paul Matteis of Stifel.

This is Nate on for Paul.

Congratulations on the WAYLIVRA data.

And I hear you on the positive interactions with the FDA for FCS, and if you could provide any details there, that would be great.

But I'm assuming you're limited there.

And could you touch on the regulatory path specifically for FPL in the U.S. and then just the overall U.S. strategy there?

Well, you're right.

We can't add any comments further to what we've said about our interactions with the FDA.

And I'm hesitant today to get into details on FPL because we just have the data.

And so what we're going to need to do is finish the analysis of the study.

It's actually a fairly complicated analysis of lots of different kinds of data.

And then take the opportunity to sit down with regulators and see what sorts of criteria they're going to want us to meet to achieve a path to commercial opportunities with the FPL, given this -- again, the rare size of this disease population.

So I think you're just going to have to give us a little time to get more information from regulators about the process.

Got you.

That makes sense.

And then maybe just one more on the earlier-stage pipeline.

Could you touch on the Phase II you initiated for the prekallikrein program in HAE?

Sure.

Happy to.

So it's a LICA drug and PKK LICA.

And we are -- and it's performing like all of our LICA drugs, with excellent potency and tolerability, safety, durability.

We are actually pursuing multiple indications for our PKK LICA drug.

The first drug, which is in a competitive environment, hereditary angioedema, and we're starting that study in HAE patients now, and we're looking forward to providing benefit in the -- as measured by reducing frequency of attacks, HAE attacks in these patients.

This has a potential to be a very convenient drug for these patients, a very effective drug.

We know we can reduce PKK reduction or levels and reduce the activity of the kallikrein pathway substantially, 80%, 90% range or so.

And we think that, that, based on everything we've seen, is going to really have a positive impact on HAE.

In addition, we haven't disclosed the indication yet, but we're also now exploring multiple other indications that are relevant to the kallikrein pathway.

And one in particular we'll share some information on maybe later this year or early next year, an indication that we think is even broader than for HAE, and news on that will be coming soon.

It's a competitive area and so we're not willing today to discuss the various indications that we're pursuing or considering to pursue.

But we're excited about the product.

Our next question comes from Chad Messer of Needham & Company.

And congrats on both the clinical and the financial results.

For Factor XI, you mentioned you and Bayer will be deciding to take one or both of the LICA and the older-school antisense forward.

Can you describe a situation when -- or sort of a scenario in which bringing both forward would make sense?

Well, in principle, it will generally relate to timing.

And in the case of the parent, we already have a very significant Phase II experience of a very positive data in the total knee replacement and earlier data in patients with end-stage renal disease.

This study is really a confirmatory study in those patients as a larger study.

So I think the equation that needs to be written in all of these cases where we have a LICA form as well as the parent that are being developed really boils down to timing and dollars.

And APOCIII is exactly analogous and there, of course, we went ahead and developed WAYLIVRA because it was close to the market, and we thought it could provide benefit to patients who had rare diseases.

And now we're following up with the APOCIII LICA.

And of course, we're tremendously excited about that drug because of its -- it being a LICA and its breadth of utility.

So we'll sit down with Bayer, and we will write that equation and look at the value and make a financially and patient-centered decision that makes sense.

All right.

Yes, that makes sense to me.

And then just one more.

I'll just -- I kind of can't help myself here because I'm really excited about this.

I understand we may be getting an oral antisense into the clinic soon and probably have to wait to get a lot of details on that.

But can you share what you can about that now and maybe talk about what sort of technical advances made that possible?

Well, I'm not sure where you have heard that.

But before I get to comment about that, I do want to return to this interesting challenge that we face and have faced and I think fairly successfully.

And that is that technology is not static.

It's constantly evolving.

And in our technology webcast, I hope we get a chance to demonstrate to you the breadth of advances that are taking place.

And as those advances take place, we see improvements in drug performance.

And so the way we have managed the conversion of Generation 2 to Generation 2.5, the conversion of both of those to LICA, is a pathway that we'll be pursuing in the coming years as these new advances come forward.

And yes, it is an interesting challenge to manage, but it's a great problem to have, to be constantly making better and better drugs.

So we're excited about it.

With regard to oral, these are the things I'm prepared to say today.

If you go back and look at KYNAMRO, we showed in human beings in a Phase I study that we got sufficient oral bioavailability to reduce apoB-100 and reduce LDL.

So that demonstrated that it's really more of an engineering issue.

And the challenge there is to find a solution where you have a potent enough drug that the size of the pills and the cost of the therapy and all of those things are reasonable.

So just as we've been making advances everywhere else, we've been working steadily on taking that basic observation that we can do this and now making it a commercially attractive opportunity.

And we discuss advances in our technology when we think they're ready to be incorporated into drugs and when we have absolute conviction that we're right.

And so we will follow that course with oral.

You will hear from us as soon as we're confident we have achieved what we meant to achieve.

We hope that, that can be in the near future.

All right.

Well, I'll certainly stay tuned on that.

Yes, it's a lot of words to say nothing, I know, but okay.

Yes.

And anyway obviously very game-changing in terms of the indications it will allow you to consider.

So we'll stay...

It is, and it's the -- it's actually the last frontier for antisense.

We now have demonstrated that we can give these medicines by every single route of administration that's ever been tried, I believe, including enema for local colon disease.

And so oral really is the last hill to climb, and we've been climbing it, and we look forward to getting to the top.

Our next question comes from Ritu Baral of Cowen.

As we look forward to the LICA TTR Phase I/II data release, what level of TTR knockdown are you guys targeting?

What would make you happy?

I understand that's a dose-ranging study.

How should we think about that dose-ranging data?

And what you guys feel you need to move the needle on to get a clinical benefit?

And then as you think about that Phase III program, Brett, I understand you wanted to give more detail later, but should we be thinking about it significantly differently than the vutrisiran HELIOS program?

Especially, I think HELIOS-A was allowed to use the control group from the original technology APOLLO study.

Are there sort of creative ways around long, extended studies for the potential LICA TTR Phase III?

With regard to the first question, Ritu, I think you just referred to APO(a)-LRx and all the other LICAs.

Bottom line is that we can dial in pretty much whatever reduction by one.

And so we have the ability to make that choice just by picking the dose.

And we already know the level of reduction that gets us the kinds of results we've gotten with TEGSEDI, and we have a very clear idea of the level of reduction we want out of the LICA so that it's maximally competitive.

And I'm going to leave it there.

With regard to the Phase III trials for polyneuropathy and then for the cardiac indication, I'll turn that over to Brett.

Sure, Stan.

So yes, we have had very productive and essentially completed our discussions with regulatory agencies and are settling on the final design of the studies.

I mean let's face it, we all talk to the same regulators, the same divisions, and we have the option to do the type of study you referred to for polyneuropathy if we chose to.

We're thinking through that to think if we can be even more creative and to bring this patient -- this drug to patients as rapidly as possible.

But that's certainly an option, the open-label type of study that you referred to for polyneuropathy.

For the cardiomyopathy, our discussions have also gone very well with regulators.

Pfizer has done an outstanding job with tafamidis in the study they conducted.

And the outcome of tafamidis for patients in desperate need, particularly in the wild-type cardiac patients, they set the bar.

I mean to me, an outcome study is not just important for approval, but I think an outcome study is important for payers and for patients who want to get the drug.

So that will certainly be an important component to our cardiac study, but we're also thinking of -- creatively on ways that we can bring this medicine even faster to patients, and I think we'll share some of that data in September at the Amyloid meeting.

Got it.

That's helpful.

My next question was on the complement program.

When could we expect the geographical atrophy program -- sorry, trial data?

And how are you thinking about the next indication and the different markets?

Do you guys prefer to go into sort of the more competitive complement space, the less competitive space?

And how are you thinking about potential differential pricing or differential profile as you look across to complement disease landscape?

Well, we're reducing [complement B].

And what we believe is that, that is a really valuable way to alter the complement pathways in general.

And we're very confident that as a LICA, that the overall performance of the drug will match up because anything out there that reduces complement system activity.

So we look at the opportunity as very broad, and we're planning to enter some interesting indications as well as those that have been well trod and are competitive.

We think we've got a winner.

The study in the eye is a large, longer-term study.

It's just getting underway.

So it's going to be a while before we'll be able to talk about those data, and I'd like to see how the enrollment goes for a bit more and how the overall study appears to be performing before I start handicapping what -- on a date when we're going to have some information about that.

Got it.

When do you think you might announce the next indication for FB-LRx?

Once again, given the breadth of interest in the complement pathway and a number of companies involved and the number of drugs, we think the clinical plan that we have is a competitive advantage.

And so we're going to be fairly precious about what we're willing to tell people, and we're very precious today.

I'm not willing to tell you anything.

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

Add my congrats for the progression so far.

Maybe just have 2 quick ones.

The first one is that HBV program you have with GSK, I know you have some data report earlier by GSK.

But just give us a little more detail in terms of what the target is.

And also you also have a LICA version of that.

And what do we anticipate from these 2 programs going forward?

Yale, this is Brett.

Yes.

As we mentioned in the webcast, we're very excited about this program as is GSK, and GSK will be presenting data with us later this year at a medical meeting.

As you know, one of the things that hinders current medicines, nucleoside analogs that target HBV is that they can block polymerase and replication of the virus but they don't eliminate the virus.

And that causes -- turns the disease into a chronic disease that causes -- that still causes problems for -- many important problems for patients.

Our strategy, using an antisense mechanism, is to be able to target all the transcripts that are produced from the HBV circular DNA, which there's basically 4 transcripts, right?

There's the polymerase, there's the core protein, there's the S-antigen, and our mechanism targets all those transcripts.

And that gives us a significant advantage because that potentially allows us to not just block the replication but to eliminate the virus entirely, essentially causing a functional cure.

We have to prove that, of course, but so far, the data is very encouraging.

More on how we're targeting the transcript, we're going to keep that to ourselves for a little while.

And on the LICA and parent, we're just -- we're collecting data on both.

The parent is more advanced, of course, and so it's another one of those situations sort of like APOCIII, like Factor XI, within which we'll look at the performance of both, and we'll look at the time advantage of one versus the other.

And in this case, GSK will make all those decisions.

Obviously, we are optimistic that GSK would choose to move forward with the program, but we would be delighted to have it back.

And if it were our choice, then we'd use the same sort of equation that we've written for these other drugs as well.

Okay.

Great.

And maybe just one follow-up question here.

You mentioned that you have great expertise in the intrathecal injection, and so the next-gen product, basically, is even more less frequent dosing.

Just in general, without revealing your trade secrets, what are the sort of typical sort of either formulation or other aspect that will enable this type of even less frequent dosing sort of potential?

It's not a change in formulation.

I mean these medicines, like all of our medicines, except for oral, are just basically formulated in saline.

It's a change in the chemistry, and that supports then longer duration and also higher dosing if we choose to go there.

So it's fairly straightforward sort of engineering challenge.

And then the art form here is to make sure that we've got a molecule that's going to give us at least every 6-month dosing but really hope for much longer than that.

I think we're almost there.

And so we look forward to moving that forward.

And obviously, as that experience teaches us how to do it, as we learn how to do it, then that is something that we can apply to all of our intrathecal programs, just as the LICA program and generation 2.5 can be applied to all of our systemic programs.

Think of it in an entirely analogous way to what we've done in the rest of the body, Yale.

So ultimately, you could have, for instance, most of your antisense product maybe in 2 years in almost in yearly dosing possibility if that's the best sort of treatment paradigm for the specific indication.

Well, I certainly am not ready to say we're going to have all that accomplished in the next couple of years, but we are making very good progress toward far less frequent dosing in the central nervous system, and we are optimistic that we're going to be able to bring that to the clinic here and then prove that what we've seen in animals, we can see in humans.

And once we have that obviously then we'll be converting our intrathecal administration to those kinds of forms going forward.

So stay tuned.

I think we're going to be excited about what we're able to share with you.

Our next question comes from David Lebowitz of Morgan Stanley.

Quick question on TEGSEDI.

To this point after several quarters on the market, is there a specific profile of patient that typically chooses TEGSEDI versus the other options out there at this point?

Not that we have yet.

And our hope is, of course, that patients of a wide range of types pick TEGSEDI because of its convenience of administration and the freedom from -- the freeing up of limitations of the disease.

But I think it's too early to make judgments about that today.

Fair enough.

And understanding that it's approved for a differing indication, is there any feedback or commentary you're hearing anything on tafamidis from the doctors?

Damien or -- do you want to comment on the other?

Brett?

So in terms of impact on TEGSEDI, I mean we were still -- we haven't seen much of an impact.

We're still getting increases in prescriptions from cardiologists, neurologists and hematologists.

We have a 50% increase overall in prescriptions in the U.S. in the last quarter.

As you heard during the call, that the earnings was $10 million, which is 40% increase over the first quarter.

So we haven't -- it's early still, but we haven't really seen much of an impact.

Our next question comes from Jessica Fye of JPMorgan.

Following up on the earlier question on Huntington's, what do you expect physicians will be focused on when that OLE data is presented?

Well, Jess, I think the physicians will be focused on lots of things.

I mean they're going to certainly be focused on the durability of mutant huntingtin reductions in the OLE, which will be out to -- it will be 15 months or longer patients will be on drug.

And the -- and how the patients are getting on with their -- the dosing, the safety and tolerability.

And we don't know for sure yet what's going to be presented.

But I think we would expect that, considering there'll be 15 months of data with natural history in parallel and publish naturally [free] data, I think you'll -- we'll expect to see some signs of clinical end points, some aspects of clinical results in that update as well.

And I think that's what the physicians will be looking for.

We've described the end points that are going to be measured for efficacy and the Huntington end points.

So we'll be analyzing the data with regard to those end points of safety, tolerability and all that.

Our next question comes from Jim Birchenough of Wells Fargo.

Just a couple of follow-ups.

I guess, Stan, just maybe at a high level.

You've had tremendous revenue growth, and you've had several years of profitability.

Just from a financial perspective, are you at the point where we should start focusing on earnings growth?

Or is the goal here to continue to grow the top line, reinvest in the business and stay cash flow positive but not necessarily get people too focused on earnings growth?

Or are we at that point?

Well, first of all, Jim, thank you because poor old Beth is sitting next to me, and she's about to go to sleep.

And I'll give you my answer and then Beth will give you the correct answer, if that's necessary.

We're excited about where we are financially, and we see continued growth in revenues and continued growth in earnings and continued increasing investment while we do all that.

And for us, that's just a really exciting moment.

So I would say, you focus on earnings growth.

We are an earnings story today and have been with an extraordinary pipeline and an opportunity to create value that's statistically increasing as the pipeline advances.

Exciting to us, and we welcome that kind of focus.

I completely agree.

As the first time.

Okay.

I -- with that -- and Jim, thanks for asking a financial question.

I really do mean that.

With that, I think we've completed the Q&A.

I want to thank everyone for your thoughtful attention and the excellent questions.

We look forward to keeping you apprised of the progress.

We expect, as the year progresses, to continue to report financial successes as well as pipeline and commercial successes.

And that puts us at an extraordinarily exciting moment in our history, and we look forward to sharing it with you.

Thank you.

The conference has now concluded.

Thank you for attending today's presentation.

You may now disconnect.