Ionis Pharmaceuticals Inc (IONS) 2021 Q1 法說會逐字稿

Good morning, and welcome to Ionis Pharmaceuticals' First Quarter 2021 Financial Results Conference Call. (Operator Instructions) As a reminder, this call is being recorded.

I would like to turn the conference over to Wade Walke, Vice President, Investor Relations, to lead off the call. Please begin.

Thank you, Betsy.

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 financial measures that we will discuss today. We believe non-GAAP financial results better represent the economics of our business and how we manage our business. We have also posted slides on our website that accompany our discussion today.

With me on today's call are Brett Monia, Chief Executive Officer; Beth Hougen, Chief Financial Officer; and Richard Geary, Executive Vice President, Development. And joining us for our Q&A will be Onaiza Cadoret, Chief Corporate Development and Commercial Officer; and Eric Swayze, Executive Vice President of Research.

I would like to draw your attention to Slide 3 of our presentation, which contains our forward-looking language statement. We will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail.

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

Thanks, Wade. Good morning, and thank you for joining us on today's call.

Last year, we introduced a new strategy to drive growth by developing and commercializing medicines from our wholly owned pipeline. Since that time, we have taken a number of key steps that have advanced our strategy and moved us closer to successfully commercializing our own products. Most recently, we expanded our Sobi distribution agreement and restructured our Tegsedi operations. This transaction unlock significant resources that we are redeploying to advance our wholly owned pipeline and prepare for commercialization of our highest priority medicines, which include TTR LICA and APOCIII LICA. We are also using savings from the Sobi transaction to invest even more in our technology to further broaden the reach of our therapeutic capabilities.

Turning now to our pipeline. We were particularly pleased with the Phase II data from IONIS-PKK-LRx in patients with hereditary angioedema or HAE. Based on these encouraging results, we're advancing into a Phase III study where we hope to further demonstrate the potential of this medicine as a best-in-class product that could change the standard of care for patients with this disease. We also recently initiated pivotal studies with 2 wholly owned neurological disease medicines, ION363 and ION373 for patients with FUS-ALS and Alexander disease, respectively. Given the severe unmet need of these patients and the progress we have made with regulators, both medicines are on an accelerated path to the market. And we are pleased with the progress we're making across our rich Phase III pipeline with medicines for ATTR amyloidosis, FCS, Lp(a)-driven cardiovascular disease and ALS. These Phase III programs remain on track, with data from the Phase III VALOR study of tofersen in patients with SOD1-ALS expected this fall.

Positive tofersen results would demonstrate for the first time that a disease-modifying treatment is possible for patients with ALS. A positive outcome in this study would also move tofersen one step closer to becoming our next commercial product. And additionally, tofersen's success would further solidify our leadership position in the development of first-in-class medicines for the treatment of neurological diseases.

In support of our strategic and pipeline objectives, earlier this year, we launched a large capital project to expand our manufacturing and R&D capacity. This project is important as we move our late and mid-stage medicines toward the market. It's also important as we advance our technology with new chemistries, including novel LICA chemistry and new routes of administration. We have made significant progress in advancing our pipeline and our business strategy. Our financial results reflect our strategic investments and keep us on track to achieve our 2021 guidance. And importantly, we remain well positioned to have 12 or more marketed products in 2026.

With that, I'd like to turn the call to Beth to review our first quarter financial results. And Richard will discuss recent pipeline updates and preview key upcoming catalysts through the rest of the year. After Richard, I'll wrap up our prepared remarks before taking your questions. So now on over to Beth.

Thank you, Brett.

In February, we provided guidance for this year that reflects our new strategy to maximize the value of our wholly owned medicines, focused primarily on commercializing our rare neurological and cardiometabolic disease programs. Our first quarter results of $112 million in revenue, $159 million in non-GAAP operating expenses and a non-GAAP net loss of $45 million reflected this new strategy and were in line with our expectations.

Now to turn to our revenues. Spinraza generated over $521 million in global sales. We earned $60 million in royalty revenue as a result, and virtually all of that revenue falls to our bottom line as profit. Our first quarter Spinraza revenue decreased slightly compared to the prior quarter because our royalty rate resets at the beginning of each year. As in prior years, we expect to reach the highest royalty tier by midyear. The RESPOND and DEVOTE studies continue to progress well. These studies remain important elements of Biogen's ongoing efforts to enhance SMA patient outcomes and guide treatment decisions. We look forward to additional steps Biogen plans to take to further reinforce Spinraza's proven efficacy and safety profile in SMA patients of all ages.

Spinraza remains the SMA market leader and with over 11,000 patients on treatment and over 60,000 SMA patients in markets where Biogen has a commercial presence, we believe Spinraza will continue to be a foundation of care for the treatment of SMA. We also generated combined Tegsedi and Waylivra revenue of $20 million. As a reminder, our guidance reflects a shift in revenue for Tegsedi and Waylivra due to the change in distribution model under our agreement with Sobi. We are pleased with the smooth transition of our Tegsedi and Waylivra operations to Sobi, which are now complete in Europe and well underway for Tegsedi in North America.

Under our new distribution model, our commercial revenues from these products shift from product sales to distribution fees based on Sobi's net sales. In the first quarter, our revenues reflected this shift in Europe. Beginning in the second quarter, Tegsedi sales in North America will also reflect this shift. In addition, we earned nearly $30 million of R&D revenues in the first quarter, which we generated from multiple sources related to our partnered programs.

Our non-GAAP operating expenses were $159 million in the first quarter, which represented a modest increase compared to the same period last year and was in line with our guidance. The increase was driven by higher R&D expenses related primarily to advancing the Phase III studies of TTR LICA and APOCIII LICA and development activities for multiple programs across our wholly owned pipeline. As expected, our SG&A expenses decreased in the first quarter, primarily due to cost efficiencies we realized from the integration of Akcea and the restructuring of our European operations.

An important element of our new strategy is our focus on investing internally for growth, and our first quarter results highlighted this aspect of our strategy. With our first quarter results, we remain on track to achieve our 2021 guidance of a net loss of less than $75 million on a non-GAAP basis. We expect our revenues in Q2 to be similar to the first quarter. And we're projecting an increase in revenue in the second half of this year, driven in part by increasing R&D revenues as we achieve key milestones for our partnered programs. Already in the second quarter, we achieved a $10 million payment from Biogen for ION541, our medicine targeting ataxin-2 for the treatment of ALS.

We project operating expenses to increase over the course of this year as our mid and late-stage medicines advance in development. We expect our R&D expenses to increase as the Phase III studies of TTR LICA and APOCIII LICA progress as we initiate the APOCIII LICA Phase III study for patients with severely high triglyceride and as we prepare to advance PKK-L into a Phase III study. We expect our SG&A expenses to decrease further in the second half of this year as we realize savings from our Sobi transaction.

Last month, we strengthened our balance sheet when we completed a $630 million convertible notes offering. These notes carry a 0% interest rate. We completed this transaction to accomplish 2 primary goals: to refinance the $310 million of 1% convertible notes due in November; and second, to fund a large capital project we recently initiated. We evaluated multiple financing options to achieve our goals. And ultimately, with a 0% interest rate, we determined that the low cost of capital we secured through the convertible debt offering was our best financing option.

Importantly, we maintain a strong balance sheet to support our wholly owned pipeline and our technology. We used a portion of the proceeds from our debt offering for a large capital project to expand our manufacturing and R&D capacity. We expect this multiyear project to cost between $250 million and $350 million. We anticipate completion of the project in 2024. And once complete, we will have the manufacturing capacity to support the future needs of our wholly owned pipeline.

Additionally, we will increase our capacity to bring forward novel chemistries, including new LICA chemistry, continue critical functions as we advance our wholly owned pipeline to the market. This project enables us to build on our leadership in development chemistry and manufacturing of oligonucleotide therapeutics and to ensure we have the infrastructure we need to achieve our strategic objectives. As you can see, we have taken important steps already this year to drive growth and to position us to achieve our goal of 12 or more marketed products in 2026.

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

Thank you, Beth.

We continued to execute on our pipeline goals this quarter, achieving a number of successes and advancing towards significant value-driving catalysts. We're particularly pleased with the positive Phase II results from IONIS-PKK-LRx, our once-monthly subcutaneously administered medicine for the prophylactic treatment of hereditary angioedema or HAE. IONIS-PKK-LRx demonstrated a mean reduction of up to 97% in HAE attacks, together with favorable safety and tolerability. We look forward to reporting these Phase II results in greater detail later this year. We are now advancing IONIS-PKK-LRx into a Phase III study. We hope to further demonstrate its potential to be the best-in-class prophylactic treatment for patients with HAE. We look forward to sharing our Phase III plans with you later this year.

We also continue to be pleased with the progress of our Phase III pipeline, including our partnered programs, pelacarsen and tofersen, as well as our wholly owned programs. IONIS-TTR-LRx remains on track in our studies in patients with TTR polyneuropathy and TTR cardiomyopathy. And APOCIII-LRx also remains on track in the Phase III study in patients with FCS. We expect to begin a second Phase III study of APOCIII-LRx later this year. This second Phase III study will be in patients with severe hypertriglyceridemia with an estimated prevalence of over 3 million patients in the U.S. We also expanded our late-stage pipeline with the initiation of pivotal studies for ION363 in patients with FUS-ALS and of ION373 in patients with Alexander disease. Because of the strong efforts of our development team, both of these medicines for rare, fatal diseases are on accelerated paths to patients.

From our mid-stage pipeline, just this week, positive data from the Phase II study of IONIS-AGT-LRx in patients with resistant hypertension were published in the Journal of American College of Cardiology. We also plan to present these data at the ACC conference later this month. Based on these encouraging Phase II results, we've advanced IONIS-AGT-LRx into a larger Phase IIb study in patients with resistant hypertension on 3 or more antihypertensive medications and a Phase II study in patients with chronic heart failure with reduced ejection fraction.

In a Phase IIa study of IONIS-GHR-LRx in acromegaly patients poorly controlled on somatostatin analogs, we achieved substantial reductions in growth hormone binding protein which is a surrogate marker for GHR inhibition, together with favorable safety and tolerability. We plan to discuss these results in greater detail together with interim results from our ongoing open-label extension study later this year.

With IONIS-ENAC-2.5Rx, we recently learned of a finding in a long-term preclinical toxicology study. While we believe we would have been able to work through this finding, doing so would impact our time lines. As a result, we have re-evaluated the totality of available data and decided not to continue further development of IONIS-ENAC-2.5Rx. We have a number of late-stage research programs in our pulmonary pipeline which we are now prioritizing and continuing to evaluate for further development.

Now to upcoming catalysts for neurological disease pipeline. We're very pleased with the progress of IONIS-MAPTRx, our medicine designed to reduce tau protein associated with Alzheimer's disease. We were encouraged by the top line results from IONIS-MAPTRx Phase I/II in patients with Alzheimer's disease Biogen reported earlier this year. IONIS-MAPTRx demonstrated durable time and dose-dependent reductions in CSF tau protein and was generally well tolerated in this study. Biogen plans to report these results at the Alzheimer's Association International Conference in July.

Our ALS program is also advancing well. Tofersen has the potential to become the first disease-modifying treatment for ALS and fundamentally change the ALS treatment landscape. We believe tofersen may also have the potential to slow progression or even delay the onset of disease in presymptomatic SOD1-ALS patients similar to the profound effects demonstrated in presymptomatic SMA patients treated with Spinraza. Biogen recently initiated the ATLAS study to address this question and hopefully demonstrate a similarly profound effect with tofersen in presymptomatic ALS patients. And with the programs for FUS-ALS, C9-ALS and for the broader causes of ALS, we are addressing essentially all forms of this disease. Importantly, with our pipeline progress to date and our key upcoming data catalysts throughout this year and over the next few years, we remain well positioned to achieve our goal of 12 or more marketed medicines in 2026, including potentially 6 or more wholly owned medicines.

And with that, I'll turn the call back over to Brett to close this portion of the call.

Thank you, Richard.

In the first quarter, we took important steps to maximize the value of our wholly owned pipeline. We continue to advance and expand our Phase III pipeline with IONIS-TTR-LRx and APOCIII-LRx advancing as planned and through the initiation of pivotal studies in FUS-ALS and Alexander disease. We also delivered positive results for IONIS-PKK-LRx in HAE and are planning to advance this medicine into a Phase III study. We have taken important steps to strengthen and streamline the business through our acquisition of Akcea and the restructuring of our Tegsedi and Waylivra operations. We have accelerated our commercial strategy, retained key commercial expertise and unlocked significant resources that we are reinvesting in our wholly owned pipeline, technology and in the build-out of our commercial capabilities.

Importantly, we are financially strong and on track to achieve our 2021 financial guidance. We're using our strong balance sheet to invest in our strategic priorities and execute on all of our goals. I'm proud of the progress we have already made in these areas, and we look forward to sharing more this year as we advance our medicines and move closer to our goal of 12 or more marketed medicines in 2026.

And with that, we'll now open it up for questions.

(Operator Instructions) Our first question comes from Luca Issi with RBC.

Fantastic. Maybe 2 here. One, maybe on Huntington disease here for Eric or Richard. I think we saw the full data last week from Roche. And it looks to me that at least the high dose may have unfortunately accelerated the disease given that the higher dose actually increased ventricular volume over time versus the low dose and placebo. Wondering if you share the same view here and whether such data substantiate the hypothesis that sparing the wild-type may matter here, so again, any thoughts there would be helpful.

And then second on HAE, congrats on advancing the program into Phase III. So again, wondering if you can give us some color on how you're thinking about the Phase III trial design? Will it be placebo-controlled? Will you need to run a head-to-head trial versus Takhzyro? Are you exploring a monthly dosing or bimonthly dosing? Again, any thoughts there would be great.

This is Eric. I guess I'll take the Huntington question and then kick it over to Richard for a much more entertaining PKK answer, I hope. On Huntington, yes, the data was presented at CHDI and it basically reinforced what the IDMC had, and it was the same data set that the drug wasn't working and providing a benefit. It's true if you look at the absolute numbers that the more frequent dosing was descending a little faster than placebo, but all of those curves were within the bounds of natural history. As to what it means, I think it's premature to tell. Roche had some hypothesis that they discussed, all of which are valid and makes sense to investigate, but I think really need to unpack the data and let them do their analyses and see what we can learn from the study. We really don't know at this point.

So on the HAE question, just a quick upfront that we have some regulatory meetings over the next couple of months, and we will be bringing details of the Phase III program later this year. At this point, we're moving forward with those regulatory and then into a Phase III program.

Yes. Let me just add to that a little bit. And I think would be very helpful for Onaiza to provide some of her thoughts too on why we are so excited about the market opportunity for this drug because we really do think it has the potential to be the very best-in-class. It will certainly be a placebo-controlled study. I mean, that's what is expected in Phase III trial designs and there's precedent for that with Takhzyro and other drugs as well. And certainly, monthly dosing is what we're planning to do right now in the Phase III study, which offers a significant advantage, we believe, over therapies. Let me turn over to Onaiza.

Yes. Yes. I'd be happy to add some color over here. I think going back to your question, Luca, is it going to be placebo-controlled or head-to-head? Certainly a question for us as we went into the marketplace to kind of test out the profile of our PKK product and we looked at it versus current treatment options, including Takhzyro. And we really got the feedback based on the profile that we have that this has the potential to be a best-in-class profile and really a placebo-controlled study will be more than sufficient to really demonstrate that. If you take a look at kind of the trifecta of efficacy data that we are able to deliver on this, prevention of attacks, the fast onset of max clinical efficacy and the reduction in kind of acute treatments, that's a trifecta of efficacy that's very pleasing and attractive for the HCPs in the marketplace.

So that, along with the more convenient administration is just a very, a highly valuable and competitive profile. So we're feeling very great about what this is going to bring to the unmet need for hereditary angioedema patients in prophylactic treatment.

Thanks, Onaiza. And as Richard said, we'll provide more details on the Phase III design later this year.

Our next question comes from Yaron Werber with Cowen.

I have a question specifically to start with on acromegaly. It sounds like the, if I recall correctly, the study was fully enrolled in December. It's a 12-week study, but plus it's an open-label extension. And it looks like you're planning on releasing the data in the second half and it says plus the OLE. Any medical meetings that we should be aware of where this could be targeted or is this going to be in a press release? And then any thoughts about what's the next steps for this program given what you know from the Phase I data already?

Sure, Yaron. So we are wrapping up the study now. And we'll be going through the data. And it's going to, the analysis of that data will take us into second half of the year. Richard mentioned in his statements earlier. And then we're going to share the data as soon as we can. We probably will not wait for a medical meeting to share the results of that study because we don't have one targeted right now, although we'll look for such a place so we can share the data in detail. But we'll figure out a way this summer to get the data out along with the open-label extension data, which has accumulated more and more data, which is, it's a rich data set that we didn't want to lose sight of that review.

Remember that we also have a second study in progress for our GHR LICA medicine in acromegaly, which is in frontline monotherapy. Phase II, which is getting off the ground now and getting started. I think we're going to want to look at all the data before we can make a decision on the next steps for either the patient population in the somatostatin treated patients that are poorly controlled versus monotherapy and then make decisions on what the next steps for the program would be.

Great. And then also, any update on the potential Phase I or IND filing for Angelman syndrome?

Yes. We're hoping to get the clinical study started this year.

You've definitely selected a construct and you're planning on filing an IND? I mean, have you made a decision definitely to go forward?

Yes.

The next question comes from Yanan Zhu with Wells Fargo.

I just have a first question on the update from the ENaC program. I wanted to, if you could share a little more about the findings from the toxicology studies, long-term tox study and whether the tox is specific for the pulmonary route of administration and whether it's related to the target or generally speaking, this the ASO presence in the lung.

Sure, Yanan. So I want to just emphasize that the clinical data for our ENaC in Phase I/IIa gave us very encouraging results. It has nothing to do with clinical data. We demonstrated target engagement in Phase I and good safety in cystic fibrosis patients as well as in patients with COPD. And the cystic fibrosis data will be presented at ATS later this month.

The preclinical finding was part of the long-term tox, as Richard stated in his statements. It's going to take us time to figure out what that's about. And due to the delays that are just associated with those types of investigations, we took a look at our emerging pipeline in pulmonary diseases. And we think we have better targets to invest in that will bring greater value to the company. And to the patients going forward. And we do not believe that this is read through to the platform for pulmonary disease at all. This is something that happens in preclinical tox study sometimes and we're going to work through it.

Got it. That's very helpful. And then a question on the TTR LICA program. Alnylam recently reported vutrisiran Phase III study in TTR polyneuropathy. I was just wondering your take on their data and their every 3 months frequency of administration and how you see that product profile and whether there is an opportunity for the TTR LICA to position against that profile.

Sure. I completely respect the question, Yanan, but it's not our position to comment on other people's data. What I can say, we like our drug a lot. And the Phase III study in polyneuropathy is enrolling very well, and we're looking forward to the results of that study next year. And the cardiomyopathy study for TTR are enrolling very well in addition. Onaiza, we've done quite a bit of market research on frequency of administration and the value that brings to the marketplace. And I would love to have Onaiza maybe comment on that.

Yes, sure, would be happy to. I think your question was monthly versus quarterly. In general, I would say, most kind of market conditions, particularly from a patient perspective as well as HCP clinician perspective, there are definitely some improvements in profile when you go from a daily to a weekly and a weekly to a monthly. But after that, I call it, there's just law of diminishing returns on more extended frequency, particularly for a subcu. And we've found that here for TTR as well. We've done some extensive market research to understand that dynamic a little bit more because it's really one of our key products that we're bringing forward to commercialization. And we're not seeing really a big difference between the monthly and the quarterly at all. I think rightly so, physicians are more excited about the profile of the product as well as the large clinical trial that we have ongoing in cardiomyopathy and really looking forward to seeing our data with and without standard of care. I think that's going to be the place of big differentiation here.

The next question comes from Yale Jen with Laidlaw & Co.

We understood the failure of the Huntington disease trial, but I believe you guys have a very great confidence on the tofersen in the ALS. So would you might just maybe compare or contrast a little bit between these 2 and besides they are different diseases and where your confidence seems to stem from for the VALOR trial.

So I'll open up, and then it's a very good question, Yale. And then maybe Eric can expand. So we're confident in our neurological disease platform. We think it's leading in the industry in many ways. Spinraza and then tofersen coming right behind that and FUS-ALS and a whole host of other drugs. All of the drugs, and there are quite a number now, not all have been presented yet. All of the drugs that we took into clinical trials have shown target engagement and robust target engagement in our trials. So we know we're hitting the root causes of diseases or what we're going after to test our clinical hypotheses.

And SOD1-ALS, tofersen is no different than that with some very nice reductions in SOD1. And based on the Phase II data that was published in The New England Journal of Medicine that we presented, our confidence is high in tofersen. And our confidence is, and it lends us even greater confidence for ALS in general because if tofersen is successful and like I said, the preliminary, not preliminary, but the Phase II data was very encouraging, it bodes very well for the rest of our ALS franchise, which we have 4 drugs now in clinical trials, 2 in Phase III.

The other part of your question, I think, had more to do with being able to target different regions of the brain. How is ALS compared to Huntington as compared to other drugs in our pipeline for neurological diseases. And there, I'll ask Eric to jump into the weeds a little bit deeper.

Yes, sure. Brett alluded to the great things with tofersen in the data package is that we have real evidence in The New England Journal paper for improvement in disease. We didn't have that in Huntington and all we had was target reduction and decided to look at it in the Phase III.

As far as targetability, we've talked about this at length before. I think our treasure trove of preclinical data has done a good job of teaching us where we can target throughout the brain. And we have a high level of confidence that we can target all the regions that are affected in ALS. And we have a high level of confidence that we can target much of the brain regions that are affected in Huntington's disease. And Roche has talked about these extensively at medical meetings and presented a lot of the data. It is true that regions like the caudate are less susceptible, but a case that makes sense to us that we could target that region. So I have a very high level of confidence that, especially in programs like the tofersen program and our MAPT program and others that are targeting the whole brain and need to target the whole brain that we can engage those regions.

And as a reminder, Yale, as mentioned in Richard's statements earlier, the MAPT, the tau protein data will be presented in July, I believe, this summer. Yes. And I think that, that will lend even further confidence because, as Biogen has said, the reductions in tau have been substantial and durable.

Okay. Great. That's very helpful. And maybe just one more question here, which is sort of the forward-looking one. In terms of the HAE, you guys seem to sort of decide to move forward in Phase III. Let's just assume this is successful. Just curious whether this is a drug you guys want to potentially launch either by yourself or potentially to be partnered out at least at this early stage of the thinking.

It's a great question, Yale, and it's one that we're working through right now. We think this is a great drug. We really do. And whether or not we will keep this and do it ourselves or not, we will provide an update on that when we provide an update on the Phase III design later this year. We're moving into the Phase III study ourselves. So just if you could just stay tuned on that. Right now Onaiza's team is conducting a lot of market research and competitor profiling work to make the business case or not. And if you just stay tuned, we'll give you an update in a little while.

The next question comes from Paul Matteis with Stifel.

This is Alex on for Paul. I guess I have 2. The first one is a clarification on ENaC. It sounds like the preclinical tox with that, it may be related to knocking down ENaC long term. Do I have it right that you're no longer going to pursue any ENaC program, either this program or another follow-on program in ENAC? And then secondarily, just curious if you wanted to give any thoughts on business development with all the cash you guys have now?

So as I said earlier in the question that was posed, we're still working through the data preclinically. We don't have any evidence directly that this is related to ENaC inhibition. Let me make this point. This is a very important point. The observations we may have made preclinically were not related to the same types of toxicities that were observed for small molecules systemically applied to ENaC inhibitors. We're not seeing hyperkalemia. We're not seeing effects in the kidney and that sort of thing. So this is separate. And again, I think we'll work through it. And we don't believe, based on the data, all the data we have, we don't think that this is a read-through to our pulmonary, our ability to go after pulmonary diseases. But what it does represent is a delay.

And we have a lot of drugs coming with other targets. And although we're not slamming the door closed on ENaC in the future, those targets will start approaching and catching up to ENaC pretty quickly. And we think that those are significantly better targets for pulmonary diseases. That in totality was really the basis for why we discontinued ENaC. We're really trying to focus on the programs that bring the greatest value. And I'll just leave it there.

Great. And just to be clear, it's really more of a pause on the ENaC development rather than a discontinuation?

No. We discontinued the ENaC, this program in favor of other programs.

The next question comes from Jason Gerberry with Bank of America.

Just have one quick follow-up on PKK and then an AGT question. Just on PKK, so it sounds like you view kind of a diminishing return on dose convenience beyond a month, but as it pertains to every 2 weeks versus the monthly that, I guess you would say that's a key point of differentiation as you think about you characterizing a potential best-in-class profile. Because it looks like dosing convenience is sort of the main feature that you'll be able to hang your hat on relative to the Takeda prophylactic agent. And then ahead of ACC, just wanted to probe a little bit just in terms of what we're hearing from physicians in terms of what they want to learn about the profile of this drug as it pertains to consistency and durability of impact on blood pressure. One thing, I think, we're hearing is that physicians just want to make sure there aren't dramatic spikes in blood pressure on a week-over-week basis. So curious if you could set the table if we'll get any data that might help us understand a little bit about that attribute of your ASO there.

Good questions. The attributes of our PKK LICA, certainly, the key attribute is the dosing frequency, but it goes beyond that. And again, I'll ask Onaiza to expand.

Yes. Be happy to. So yes, I think you're right. I think the important thing here, and I talk about these as each medicine has in the market that they're entering also has this. You have to actually look at dosing and convenience in there. And for the HAE market, as you know, with Takhzyro, it's a high-volume injection every 2 weeks. And most of the market research and the physicians said, as always, the efficacy is only as good as its compliance.

So we do believe that, that will be a big play, but we do think that is not the main thing we're going to hang our hat on, as you said. I think it goes back to what's really important for these patients in prophylactic treatment and goes to, again, prevention of attacks, the number of 0 attack rates that you get and the ability of our product profile to deliver on that with a faster onset of reaching max clinical efficacy. And the third prong of kind of an order of efficacy parameters is just the ability to reduce the number of acute medications that they take. So when you think about it, really, it's just all 3 parts of the efficacy paradigm that we're just winning on, along with the convenience that will, again, have patients take this on a regular basis, be compliant and deliver on the efficacy of the product.

Yes. That's great. And I think just to add to that, the Phase II study hit the nail on the head on all 3 of those. And we've got all those patients also rolled over into an open-label extension and looking very carefully at long-term lack of breakthrough, and that's also a very important component.

And then the AGT, could you talk a little bit about what is to be presented at ACC, but also the Phase IIb study and what we're hoping to get out of that.

Yes. I mean, you'll be able to actually go to the publication right now that's available in the, I believe it's posted in the Journal of American College of Cardiology. And then the other piece to that is the presentation that we'll be giving. And there have been no either hypotension or hypertension on recovery events. And absolutely, that's an extremely important piece to the puzzle. So the data is showing that, that's a very clean profile. And we've moved into a Phase IIb study that will further elaborate on those issues.

Yes. The Phase IIb study is really powered to nail down the magnitude of blood pressure control we expect to achieve in a Phase III study. It's a significantly larger study. It's a longer study. We'll have those for a Phase III study and to really rule out any of the concerns, hopefully, that physicians have raised. You mentioned spikes in blood pressure, hypotension and so forth. So that's the intent of the Phase IIb study. But certainly, the publication and the ACC presentation will support the safety and the efficacy of this mechanism and this drug.

The next question comes from Jessica Fye with JPMorgan.

Not to belabor this, but just following up on the prior questions on ENaC. If the tox you noticed is not related to the platform or exposure in the lung and it's not related to the target, what's your current thinking about what it might be related to?

Well, we don't know, Jess, that's the thing we have to work through. Spurious tox findings sometimes happen in long-term tox studies. And it could be a sequence-related effect of that particular molecule, could be something like that, but we really have to work through it. The confidence comes from other experience with other drugs.

Yes. And I think further, it's the clinical experience. I mean, the clinical experience was absolutely clean. And we were into longer-term treatment in the clinic. But no, time lines can get significantly impacted by a preclinical finding. And this was just one of those. And we want to make sure that we're focused. We're early in development and we got so, we got almost, the riches are beyond what we should be looking at when we have so many targets, and some of these targets are really impactful in particularly COPD and some of these other very interesting areas that we want to focus on.

So we took a step back and we're looking very carefully at this and focusing what we do in the midterm. At the same time, we've got this incredibly rich Phase III program going with all of the products that have now moved into late-stage development, and we just want to make sure that we're not diluting our efforts and we're focused.

Got it. Makes sense. If I can work in 2 other questions. Just on the Alexander disease program, can you talk about some of the efficacy measures you have for ION373 that give you the confidence to advance that into a pivotal study and the size of that opportunity and just how well you think the product might be able to address the market?

We really haven't disclosed the full protocols or the endpoints for the Phase III program. We're very confident that we can engage this disease being the known genetic cause of the disease. It's toxic gain of function of a protein called GFAP, and that's what we're lowering. And our preclinical work on this has been published, and it's really remarkable improvements in what I think are pretty good preclinical models of disease. So here, I think we have, based on the preclinical data and the known pathophysiology of the disease, I think we have a very high level of confidence that we're in the right spot for this.

Onaiza, do you have anything to share on prevalence?

Yes. We're looking at about 400 patients globally from a prevalence perspective. And again, as Eric said, this would be the first and only therapy for Alexander disease. And I think the preclinical data and the models that we have suggest that we're going to normalize the production of excess GFAP and improve gross motor function, reduction of significant symptoms that these patients are feeling, both on the cognitive side and some of the GI side and really prevent disease progression.

And Onaiza, it would also be helpful if we talk a little bit about, if you don't mind, Jess, about our rare disease neurological wholly owned pipeline more broadly and about how GFAP and FUS and all these synergize together as a franchise that we're planning to bring to the market?

Yes. No, absolutely, really good point. So when we think about these when we see a prevalence for an individual disease and condition, we're really looking about how we scale these collectively together to get the significant commercial synergies that will be really important in the marketplace. And we have them with 3 products. Alexander is being one of them, but we also have just one for Lafora disease. And later on, we're looking at, I don't know if we've disclosed one other, but we have one more. And they just are servicing kind of the severe pediatric diseases associated with epilepsy in the marketplace. And they really come together as a whole. And then when we add in FUS in ALS, even though you wouldn't think there may be as many synergies, there's actually a pretty high overlap in the physicians who are treating that as well. So it comes together very, very nicely for us as a portfolio in neurology.

Got it. And maybe just a last question. Going back to the comment about reaching the peak royalty tier for Spinraza around midyear, similar to last year. Can you just unpack that a little, some of the assumptions underlying that in light of the competition you're seeing in the U.S. from Evrysdi?

Sure, Jess, it's Beth. So I think as you can see when you look at the effective royalty rate on a quarterly basis over the past years, we get to our maximum royalty rate very quickly. The tiers, there are 4 tiers, and they move very quickly. And therefore, our sense is that Spinraza will continue to perform as it has recently. And therefore, we would get into the highest tier on the similar path, similar time frame as we have in the past few years. And you know that, that gets us up into that 15% very quickly.

The next question comes from Mani Foroohar with SVB Leerink.

So I hate to beat a dead horse, but I'm going to beat a dead horse a little bit. So given where you are in ENaC, in some ways in the lead of your closest competitor in terms of maturity of data, is the right interpretation of what you're saying that going back and redesigning and moving forward with a different construct would have been requisite? You feel comfortable to be getting around this preclinical tox? Is that the right way to interpret what you said? And then I have another not beating a dead horse question.

We don't have an answer to that first question because we're still going through the data, trying to figure out what the best path forward is. So it might require a different drug or it might not, but we think that there are better targets out there that we're working on with great need. And the epithelial sodium channel, that was our lead drug that was furthest along, but we have others that we think will provide even greater benefit to broader disease indications than ENaC.

Okay. That makes a lot of sense. And then on HAE, obviously, you have a really exciting data set, optically superior to what's on the label for any of the approved therapies, although obviously cross-drug comparisons are fraught by nature. When you think about commercialization, obviously, the quality of therapies available had improved from the time Ruconest was kind of the lead asset. How do you think about openness and willingness to switch? And in commercialization, would you see this primarily as a switch market versus other existing prophylactic therapies? Do you see attracting newly diagnosed patients as the lowest hanging fruit? Like how do you think about commercialization strategy, presumably you continue to have what appears to be a best-in-class event reduction profile?

Onaiza?

Yes. I'm happy to take that one, really great question here. So I think that when you're on prophylactic treatments, as we think about entering the market over here, it's clearly for new patients. This is the best choice, right? So for new patients, we've kind of tested this. We have the best-in-class profile. That's where it's going to go. For patients who are already on therapy, I think therein will be how do we get switches in the marketplace. So we're really thinking of this in a variety of different ways. Are there kind of breakthrough attacks happening? There definitely would be a set of patients there. Patients who are not compliant on the full set of therapies that they're on. So there's an opportunity there. And then I do believe that we're looking at particularly a switch design in our Phase IIIs as well. Although it's not confirmed, we're definitely evaluating whether that will be actually a nice added benefit to our design as well.

All right. That makes sense. That makes sense to me. And do we have a sense of where and what proportion of patients do you think on the most modern prophylactic therapy, Takhzyro, et cetera? And what proportion of them based on your KOL conversations, interactions with clinicians, clinical trial experience, what proportion of those patients see meaningful enough breakthroughs to fall into that early share switch, early adopter population for you guys? Just ballpark, I know we're far from being a commercial asset quite yet.

Yes. Hard to give you percentages over here on that. It's a really good question. I think we're going to do some claims database analysis and do a retrospective look to get a better sense of that. This is definitely in our list to help evaluate. But given, again, the most, I think, profound part of the research and insightful for us was that the compliance piece, right? And given Takhzyro is at 2 weeks and 4 weeks, there are a lot of patients who are actually trying to stretch this out over the 4 weeks just because it's a very high-volume administration. So we do see a lot of people who are not compliant and as a result, then have breakthrough attacks, right? I have to quantify that. I think it's going to take a little bit more work on our part before I can give you a better sense of where that is.

The next question comes from Myles Minter from William Blair.

Just a question on Biogen sort of pushing forward a higher dose for the C9ORF program. Just wondering whether that's got any read-through to VALOR and whether there's any room to maybe push the dose afterwards kind of in a Spinraza-like scenario? And for the FUS programs and the ataxin programs that are earlier stage, is it likely that we'll see a push in the dosing in those early clinical studies?

So the read is that the drug is very well tolerated. And Biogen is very committed to ALS and in particular, C9-ALS as well as SOD1-ALS. And so before moving into Phase III, you want to make sure you get the dose right. So they wanted to get more data and examine a higher dose. So I don't really think the read-through is anything more than that. Wouldn't you, Eric? It's really that the drug is very well tolerated, and they want to get more experience before taking the plunge for Phase III.

And I didn't quite get your FUS-ALS question. We have selected the dose. We have a single dose level for Phase III that we're evaluating in the program. So we're not planning to look at multiple doses in FUS-ALS. We think we have the right dose and we're plowing ahead. We don't plan to escalate dose or de-escalate.

Okay. Yes. I guess that was my question, just like why the C9ORF program specifically they're testing a higher doses? I know they're not involved in the FUS program, but even the ataxin program, like why wouldn't you just go with a higher dose here? Is there a risk of overshooting the knockdown of this protein?

No. There's no risk of on target that toxicity, overdosing or anything like that. Each drug is different.

So Myles, for C9, we do have an allele-selective drug. And only because of the nuances of the way the transcripts are processed, our drug only lowers the pathogenic expanded C9ORF72. So we don't look for the non-pathogenic C9ORF.

And with that, I'd like to thank everybody who joined us on our call today. It's been a highly eventful start to the year, and we look forward to more throughout the remainder of the year and sharing those results with you. So with that, thank you, and have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.