Ionis Pharmaceuticals Inc (IONS) 2020 Q3 法說會逐字稿

Good morning, and welcome to the Ionis Pharmaceuticals Third Quarter 2020 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, Investor Relations, to lead off the call. Please go ahead.

Thank you, Brandon. 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 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, our Chief Executive Officer; Beth Hougen, Chief Financial Officer; Onaiza Cadoret, our Chief Corporate Development and Commercial Officer; and Richard Geary, Executive Vice President of Development. And joining us for Q&A, we have Eric Swayze, our Executive Vice President of Research and Kyle Jenne, Chief Commercial Officer of Akcea.

I would like to draw your attention to Slide 3, which contains our forward looking language. We'll 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, and good morning, and thank you for joining us on today's call. As we near the end of 2020, we are well-positioned to achieve our next stage of growth. Since our last update, we took the very important step of acquiring Akcea. We believe that together as one company we're stronger and more efficient with an even greater ability to achieve success today and well into the future.

This transaction also represents a significant step forward in the evolution and execution of our commercial strategy. By combining Akcea's commercial capabilities with the Ionis-owned pipeline we move closer to fully maximizing the value of these medicines. And we're very pleased with the excellent progress we're making across our Ionis-owned pipeline and our pipeline overall. Our 5 ongoing Phase III studies continue to progress well.

We also remain on track to begin our sixth Phase III study when we initiate Phase III testing of APOCIII-LRx in FCS patients later this year. We're also evaluating larger indications for this medicine with an additional pivotal study potentially starting next year.

Beyond our Phase III pipeline, we continue to make excellent progress with our medicines in mid-stage development. The Ionis-ENaC-2.5Rx data we reported last month provided additional support for our rapidly expanding platform of inhaled antisense medicines.

Vupanorsen, IONIS Factor XI-LRx and Ionis-HBVRx all advance further in development with each medicine entering Phase IIb studies. ION541, one of our 4 ALS medicines in development, entered a Phase I/II study in patients with nearly all forms of ALS regardless of family history.

IONIS-PKK-LRx has completed enrollment in a Phase II study in patients with hereditary angioedema, which is due to read out next year and is also under evaluation in a Phase II investigator study in hospitalized patients with severe COVID-19 complications in Brazil.

And we further extended the reach of our technology this past quarter through a collaboration with Genuity Science whose unique approach for new target identification is expected to enhance our already robust drug discovery and development capabilities.

With these achievements, we are closer than ever to reaching our goal of 10 or more marketing applications through 2025, which should result in a large number of new marketed products. Importantly, we remain financially strong and on track to achieve our 2020 guidance.

Coming up on December 7, we will be hosting our virtual Investor Day. During the presentation, we look forward to sharing our commercial plans, provide several development program updates and highlight some of the great progress we're making that is extending the reach of our technology. More information about this event will be released soon.

And with that, I'll hand the call over to Beth to take us through our Q3 financial results. Onaiza will then talk about the Akcea integration. And Richard, will review our recent pipeline achievements. After Richard, I'll wrap up our prepared remarks before taking your questions. Now over to Beth.

Thank you, Brett. As we approach year-end, we remain financially strong and well-capitalized, with the resources to achieve our goal of significant growth. Our acquisition of Akcea is one of the steps we have taken this year to achieve this goal. By integrating the 2 companies into one, our business is further strengthened in numerous ways, including improving our already strong financial position.

We now retain more value from Akcea's rich pipeline and commercial products. Additionally, we can use Akcea's current cash and future cash flows to advance our strategic priority. And beginning next year, we expect to realize meaningful cost synergies from our integration activities.

We delivered strong financial results in the third quarter, with revenues increasing by 10% compared to the prior quarter, and we earned operating income and net income, both on a non-GAAP basis.

SPINRAZA generated global sales of $495 million in the third quarter, resulting in $74 million in royalty revenue to Ionis. At the end of September, there were over 11,000 patients on SPINRAZA treatment worldwide, with growth driven by markets outside the United States.

With a significant number of untreated SMA patients across numerous established and emerging markets, together with SPINRAZA's proven efficacy and safety profile, we and Biogen continue to see opportunities for growth.

Biogen's DEVOTE study is progressing well. The study is evaluating the potential for higher doses of SPINRAZA to deliver even greater benefit to SMA patients of all ages. Enrollment in the open-label safety cohort is now complete with enrollment in the randomized pivotal cohort to follow next. And early next year, Biogen plans to initiate the RESPOND study to evaluate SPINRAZA's benefit in patients with a suboptimal clinical response to gene therapy.

TEGSEDI and WAYLIVRA continued to deliver growth in the third quarter. Product sales were $19 million, an increase of more than 15% compared to last quarter, and a nearly 60% increase over last year. We continue to see growth in the number of patients on TEGSEDI across North America and Europe.

We believe patients and physicians are choosing TEGSEDI, in part due to its subcutaneous self-injection, enabling patients to take their therapy at home. This is one of the important benefits of TEGSEDI, which has been especially important during the ongoing pandemic.

In the United States, patients are starting and remaining on therapy, thanks in part to the excellent service provided by Akcea's patient support program, Akcea Connect. We continue to see growth with Akcea's genetic testing program with over 2,200 physicians and an increasing number of tests conducted to date.

In Europe, we successfully achieved reimbursement and recognized revenue from multiple new markets, including Portugal, home to a large endemic hATTR patient population. And in Canada, TEGSEDI reimbursement is in place in the largest provinces and through multiple private payers. We also moved closer to achieving public reimbursement for all TEGSEDI patients in Canada. In Latin America, PTC Therapeutics is focused on new patient finding while continuing to negotiate pricing in Brazil.

Now turning to WAYLIVRA, where we are generating revenue from a growing number of EU markets. In the U.K., Akcea finalized pricing and reimbursement with NICE, and in Latin America, PTC filed for marketing authorization in Brazil earlier this year and is working to expand access in other Latin American markets. And in the United States, we plan to refile with the FDA next year.

During the third quarter, we earned R&D revenues of $65 million. This revenue included over $50 million from our neurological disease franchise, primarily driven by several Biogen partnered programs. We expect a substantial increase in R&D revenue in the fourth quarter, including the $75 million milestone payment from Pfizer.

Additionally, we recently obtained a favorable award in our arbitration proceeding with Alnylam. This award pertains to fees arising from Alnylam's agreement with Sanofi related to fitusiran and its TTR products. The final judgment has not been determined, but we expect it will add meaningful revenue in the fourth quarter.

Our non-GAAP operating expenses in the third quarter increased compared to last year, primarily driven by our Phase III program for AKCEA-TTR-LRx and progress with our other Ionis-owned medicines. With these results, we achieved operating income of $9 million and net income of $5 million for the third quarter, both on a non-GAAP basis.

Early last month, we used our strong balance sheet to successfully complete our acquisition of Akcea. Following the acquisition, we remain in a strong financial position with an estimated pro forma cash balance of $1.8 billion. Importantly, our entire cash balance is now available to us to advance Ionis' strategic priorities and to build value for our patients and our shareholders.

We also anticipate achieving meaningful cost synergies as we progress the integration activities, and our financial statements will be much simpler. For example, beginning next year, we will no longer include a non-controlling interest adjustment on our P&L or balance sheet.

With our third quarter results and our projections for increased revenues in the fourth quarter, we are on track to achieve our 2020 financial guidance of meaningful profitability. Our financial strength, including our substantial cash position, enables us to continue to invest in areas that we believe will accelerate growth. And with that, I'll turn the call over to Onaiza to provide an update on the Akcea integration and progress with our commercial strategy.

Great. Thank you, Beth. With the acquisition of Akcea now closed, our process to merge the 2 companies into one is well underway. The transition team, which is made up of cross-functional leadership from both companies is following an established playbook to achieve full integration while focusing on 3 primary goals.

Our highest priority is to ensure our patients continue to receive TEGSEDI and WAYLIVRA without interruption and with a high level of personalized support. Second, we are focused on ensuring our employees remain highly engaged and productive. And finally, we are looking to advance our commercial plans for the Ionis-owned pipeline with the addition of Akcea's commercial capabilities.

As we integrate the 2 companies, we are carefully reviewing all aspects of our business processes to ensure we are driving the greatest value for patients and shareholders. Through Akcea, we now have access to payer health economics and outcomes research, medical affairs and other capabilities to support our Ionis-owned pipeline. We look forward to adapting these capabilities and accelerating our go-to-market strategies as our medicines advance towards the market.

At our Investor Day next month, I look forward to discussing our commercial plans for our neurological and other rare disease programs as well as TTR LICA and APOCIII LICA. And with that, I'll turn the call over to Richard to discuss our key pipeline highlights.

Thank you, Onaiza. As Brett said, we continued to advance our pipeline in the third quarter with significant achievements across our neurological, pulmonary and cardiovascular disease franchises.

Starting with the neuro pipeline, the tominersen Phase III study in patients with Huntington's disease remains on track for data and potential regulatory filing in 2022. Ahead of the Phase III data, our partner, Roche, plans to provide an update from the Phase I/II open-label extension and natural history studies next year. The Phase III study of AKCEA-TTR-LRx in patients with TTR polyneuropathy also continues to progress.

Our ALS program has continued to grow with 4 medicines now in our pipeline for the treatment of ALS. The Phase I/II study of ION541, our first medicine designed to address nearly all forms of ALS regardless of family history, is underway. The Phase III study of tofersen in patients with SOD1-ALS is progressing with data expected in the second half of next year.

Also next year, Biogen plans to initiate a study of tofersen in presymptomatic SOD1-ALS patients with the potential to delay or prevent disease onset. The Phase I/II study of Ionis-C9Rx in patients with C9 ALS remains on track for data next year. And ION363, our first Ionis-owned ALS medicine for the treatment of ALS patients with mutations in the FUS gene remains on track to enter a registrational study next year. Looking beyond these programs, we continue to advance multiple earlier-stage programs for the treatment of ALS.

Now from our growing pulmonary franchise, we've recently reported positive IONIS-ENaC-2.5Rx healthy volunteer data, demonstrating significant and substantial reductions in ENaC levels in the lung with attractive safety and tolerability.

Importantly, these data also support inhalation as a viable route of delivery for antisense medicines more broadly, gives us greater confidence for positive results in our ongoing study in cystic fibrosis patients, and opens a path for us to broaden our pulmonary franchise to numerous new diseases of the lung, representing a significant opportunity for growth. In fact, we look forward to initiating a study of IONIS-ENaC-2.5Rx in patients with COPD later this year.

We also made significant progress in the development of IONIS-PKK-LRx. Enrollment in the Phase II study in patients with hereditary angioedema or HAE, is now complete with data expected next year. Earlier this year results from a compassionate use study with our PKK program were published in the New England Journal of Medicine, demonstrating its potential to reduce the frequency of attacks in patients with HAE.

IONIS-PKK-LRx also recently advanced into an investigator study in patients hospitalized with severe COVID-19 complications in Brazil. Designed to prevent the formation of bradykinin, this medicine has the potential to significantly reduce a cause of the severe complications characteristic of the COVID-19 virus.

Turning now to our cardiovascular disease franchise. The Phase III study of pelacarsen in patients with Lp(a) driven cardiovascular disease continues to progress with data expected in 2024. Our Phase III study of AKCEA-TTR-LRx in patients with TTR cardiomyopathy also continues to progress.

We also made excellent progress with our mid-stage cardiovascular disease pipeline. Pfizer recently initiated a Phase IIb dose-finding study of vupanorsen, which is expected to read out in the second half of next year. This study is being conducted in patients with dyslipidemia despite stable LDL lowering treatment, which is representative of its planned Phase III program focused on the over 6 million patients in the U.S. at high-risk for cardiovascular disease despite maximum LDL-C lowering therapy.

To support this strategy, Pfizer is planning 3 Phase III studies of vupanorsen, including a large cardiovascular outcome study and studies in patients with elevated triglycerides and severe hypertriglyceridemia. We expect all 3 of these studies to get underway in 2022.

We and Astrazeneca look forward to providing an update on progress with our medicine targeting PCSK9 for the treatment of cardiovascular disease at the AHA later this month. AZ's presentation at AHA will include updates from both the subcutaneous and oral formulations of this medicine.

And before the end of the year, we look forward to initiating a Phase III study of AKCEA-APOCIII-LRx in patients with FCS. These achievements move us closer into 10 or more marketing applications through 2025. And with that, I'll turn the call back over to Brett to close this portion of the call.

Thank you, Richard. In closing, I'm pleased to say that Ionis is stronger than ever. We are financially strong and have taken several important steps recently to further strengthen our financial position.

With the Akcea acquisition now complete, we are one company with one leadership team and one set of strategic goals, positioning us well for the future. We are achieving a great deal of success across the business. Our pipeline continues to advance well and deliver value for patients and investors. Our 5 Phase III studies are advancing with a sixth expected to start by year's end.

Furthermore, we look forward to numerous value-driving catalysts in the remaining months of this year and next year, including data from the Phase III study of tofersen in patients with SOD1 ALS in 2021. We believe that tofersen has the potential to be the first disease-modifying medicine approved for patients with ALS.

We have also made excellent progress in our mid-stage pipeline. We successfully completed several important Phase II studies, advanced inhaled delivery and initiated several important Phase II studies. Our success this year puts us in an even better position to achieve our goal of 10 or more marketing applications through 2025, which we expect will result in a large number of new marketed products.

We are also very proud of TEGSEDI, winning the Prix Galien USA Award for best biotechnology product in 2020. Our vision in the discovery and development of TEGSEDI was to improve the lives of patients living with devastating effects of TTR amyloidosis, a rare genetic disease that greatly impacts the lives of families over generations.

This is Ionis' second transformational medicine to win the prestigious award, the first being SPINRAZA, which transformed the treatment landscape for SMA, a leading genetic cause of infant death. This award is a testament to the hard work and dedication of our employees who work tirelessly to improve the lives of patients suffering with serious diseases. And with that, I'll open the call for questions.

(Operator Instructions) Our first question comes from Do Kim with BMO Capital Markets.

A question on the ENaC inhaled ASO, the Phase I data. Just wanted to get your thoughts on how the PK data tracked with the reduction of ENaC mRNA as the dose escalated. Do you think you saw a dose response? And whether you had any thoughts on why the highest dose at 3 times weekly didn't show much of a reduction?

So Do, I'll take -- and thanks for the question, first of all. I'll take a step down, and I'll toss it over to Richard to expand. So our Phase I data in which we -- in normal volunteers, in which we demonstrated excellent safety, tolerability in normal volunteers with dose-dependent reductions in ENaC was very consistent with what we expected based on a wealth of preclinical data.

The effects, as I said, were dose-dependent, and we achieved significant -- statistically significant reductions in ENaC that are well beyond the reductions that we expected -- that we expect to produce efficacy based on the preclinical data we've generated so far.

Now as we've said, as Richard highlighted, we're now in a Phase II study in patients with CF to demonstrate clinical benefit, which we hope to share next year. Richard, do you want to get into the PK relationship a little bit more in detail?

Yes. So we saw the dose-dependent reductions in ENaC, and that did track with our pharmacokinetics and the highest bolus dose which was given less frequently. Then lower doses given more frequently, did track -- PK did track with the effect we saw. And I think that is what has given us confidence as we've moved forward in the CF population and also on the verge of initiating the COPD study.

Great. That's very helpful. And just a quick question on the ION541 for most types of ALS. Do you think that that therapy will also be effective in the familial ALS, like SOD1 and C9ORF? And would you consider a strategy or Biogen would consider a strategy for a combo with the mutant specific therapies?

The ION541 is targeting ataxin 2 and for all forms potentially of ALS. And yes, we -- there is strong rationale for this target by knocking it down with 541 to show efficacy in genetic forms or regulatory forms of ALS as well as sporadic. Eric, more on that?

Yes, sure. So the mechanism of action of this drug is it modulates TDP43 pathology by down regulating -- by reducing the levels of ataxin 2, which has been shown to be important in that pathology and most forms of ALS involve some pathology of TDP43. So we'd expect that drug to work in any form of ALS that has that type of pathology and treat most all forms of ALS.

And your question about combination, yes, theoretically, you can envision a scenario in which combining a SOD1 with an ataxin 2 inhibitor, which provide even greater benefit. We'll have to see how the data shakes out in the clinic.

I mean SOD1, we think, is going to show great efficacy in the clinic, and we'll see how much better we can achieve beyond that in those particular patients. But from a mechanistic standpoint, you can see the rationale for added benefit, yes.

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

This is Gil on for Chad. A little bit of a more general question. So as to the Akcea platform and the new commercial capabilities, how transferable are they to -- across indications? Could you envision this platform being used, for example, to promote drugs in neurological indications?

That's a great question. We're very excited about the reacquisition of Akcea because, as Onaiza said in her discussion earlier, it really accelerates. One of our top priorities is to build out our commercial capabilities, and we think that -- and we're building our strategy for that.

And as she said, we're planning to share some details on that strategy in December at Investor Day. And we do believe it will be broadly applicable, these capabilities, to areas that we want to invest in, including neurological. Onaiza, would you like to expand on that?

Sure. Yes, great question. Building out any kind of rare disease capabilities that are some that are transferable and leveraged across therapeutic areas, right? We think about these things as our health economics capabilities, the payer space, our access hub as it is adapted to the therapeutic area are areas where we see that the capabilities can be applied and really build a very customized approach to neurology as well as to the lipid cardiology space that the team has been in.

But as you know, that -- when you look at more of the marketing and salespeople, that will obviously be based on kind of customer types, and we wouldn't see a lot of overlap there. But with polyneuropathy as well as going into our neurology portfolio, we're looking to see whether we're finding some good customer-facing synergies there as well. So hopeful that gives you good flavor?

That's very helpful. And maybe a question for Richard on ENaC. Just to remind us, is there something special in the ENaC agent chemistry for this ASO that makes it more absorbable and a lot -- just a little bit of color on that.

So as far as cell uptake, oligonucleotides delivered to the lung by aerosol are well taken up in multiple cell types. So the general state of cell uptake, there's nothing really special about the chemistry for uptake. However, ENaC is a 2.5 or a cEt bicyclic sugar modification, which makes it very much more potent than the 2-prime modifications. And so we've increased potency, and we have the similar distribution within the lung.

All right. Excellent. And just one last question from me. So you mentioned this post-marketing study with SPINRAZA in gene therapy studies. I'm assuming this is taking forward of a label expansion. Is that the right way to look at it?

Biogen has not talked about how assuming a positive outcome in the response study would impact a label change or that sort of thing. So we don't want to get too far ahead on that. But we are feeling pretty confident that SPINRAZA will demonstrate a benefit -- significant benefit to patients who are performing suboptimally on gene therapy.

As I'm sure you're aware, Gil, there is anecdotal -- quite a bit of anecdotal news, information out there on patients who don't perform well -- as well as desired on gene therapy being moved on to SPINRAZA. And what Biogen wants to do is take that anecdotal information and turn it into a controlled trial so that they can prove it.

And obviously, they're doing that to enhance the value of SPINRAZA to patients and to shareholders. So I wouldn't put that outside the realm of possibility, but I don't want to get too far ahead it either.

Our next question comes from Jim Birchenough with Wells Fargo.

Congrats on all the progress. I guess the first question is just related to the integration of Akcea and the synergies and how you see that affecting your ability to remain sustainably profitable and cash flow positive. And then I have a couple of questions on the pipeline.

I'll let Beth take the first one, Jim.

Jim, so I think -- so the way I would think about the Akcea integration is it absolutely moves us down the path of being closer to commercializing our Ionis-owned pipeline ourselves. And of course, you know that pipeline continues to expand in advance. It has been a key focus of ours certainly throughout this year and will continue to be as we go into the future years.

We will see meaningful synergies, cost synergies from the integration, certainly putting 2 public companies together. There is some obvious low-hanging fruit in that we won't have to sustain cost structures for 2 public companies going forward.

And then as far as sustained profitability, our focus is really on our Ionis-owned pipeline and building that pipeline, expanding that pipeline, building these commercial capabilities off of the -- combined with the capabilities that we've now acquired wholly from Akcea and also looking for ways to invest to expand -- extend the reach of the technology. And so there -- that's our highest priority. Profitability is still important to us, but it is not our first and top priority.

Got it. That's very helpful. And then maybe just on ION449 and the AHA presentation. I know it's embargoed. But how should we think about what you're hoping to show vis-a-vis the subcu? And then if you've got a successful oral approach, what other candidates make most sense for the technology?

Yes, you're referring to the -- thanks, Jim. You're referring to the PCSK9 programs.

Right.

And we have (technical difficulty) formulation. And the other is the oral program, both in clinical testing, as I said. At the AHA, we're going to have data, clinical data on the subcu program showing reductions in PCSK9, LDL cholesterol that we are very excited about. That we think have the potential to really differentiate this drug from all other drugs that are in development or on the market today as a potential best-in-class medicine.

The oral program will also be updated at American Heart Meeting. We'll principally focus on the rationale, the strategy, the preclinical data supporting the clinical testing in which the conclusion from that oral program will be that we think that we've solved commercially viable oral delivery as a once-a-day tablet that will drive reductions in target, in the liver like PCSK9 to levels comparable to the subcu program I just referred to.

There may be also some clinical data from the oral program but, in the abstract, it's focused entirely on the preclinical data so far. But I also want to expand on that a little, Jim.

In addition to the PCSK9 program for oral we have prioritized several programs here at Ionis for oral development that we think will provide a significant advantage, differentiating -- our ability to differentiate from competition. And we're planning on touching on the Ionis-owned oral programs a little bit at Investor Day in December.

Great. I guess the final question is just on time lines for the neuro rare disease programs. What's the earliest we could see data from one of those Prion disease before Alexander disease? Is that more of a 2022 dynamic? Or could we see some data from that next year?

So we're excited about starting several of those clinical trials next year. And really -- some of them in the first half, early next year. And as you know, because they are rare diseases and severe diseases, we are expecting a very fast clinical building path, some of them just one study.

So we'll be providing an update on the initiation of those studies and our development strategy next year early on. But I would expect the time frame that you're thinking of is about right for clinical data.

Our next question comes from Joel Beatty with Citi.

This is a follow-up to the last question on oral PCSK9. Just to clarify, for the biomarker data on like PCSK9 and LDL lowering for the oral molecule. Is there a potential for that to come at AHA? Or how -- if not, how much later could that come?

The oral data -- we -- as I said, we will be presenting with AstraZeneca, an update on both programs, subcutaneous and oral. The subcu will have pharmacodynamic data on PCSK9 and LDL lowering. These are on patients on top of statins.

And where the oral program will principally focus on preclinical data that will set up -- that will really provide the strategy, the justification for developing this platform for oral delivery. That will certainly include PD data on preclinical models. But the clinical data we're saving for next year, for oral.

Okay. Got it. And then thinking about the potential for oral technology more broadly, in your pipeline, could you talk a little bit about how broadly applicable the oral PCSK9 data would be for other agents? And also how quick that could be applied to other agents in your pipeline?

Yes. It's -- what we've engineered for oral delivery. Again, this is -- what we're looking at is a once-a-day tablet that will achieve target reductions comparable to any of our subcu programs that we've developed or are in development today. And it focuses on Gen 2.5 chemistry with LICA chemistry. So we get the potency of the 2 chemistries that really we think solves commercially viable oral delivery.

We're advancing forward several programs from the Ionis-owned pipeline now. We prioritized them, and we'll talk about them soon at Investor Day. And we're expecting to move 1 or 2 of these drugs into development next year for oral delivery -- in addition to PCSK9.

Our next question comes from Chi Fong with Bank of America.

This is Chi on for Jason Gerberry from Bank of America. I guess another follow-up on PCSK9, it looks like Ionis has already had some early PK/PD data with the oral formulation. Curious if you have a chance to review that with AstraZeneca and what kind of feedback you have heard from the collaborator?

And curious if there's any sort of initial conversation about advancing the oral formulation to further in development, maybe perhaps sometime next year? And then I have a couple of follow-up after that.

Sorry, Chi, I need to get a clarification on your question about -- the first question. What data are you referring to? We haven't shared data on our latest oral platform outside of what has been submitted to the American Heart by Ionis and AZ so far. Can you clarify?

Curious if you have seen any human PK/PD data with the oral formulation that would not be part of the AHA like internally, whether you and part of AstraZeneca have reviewed that. What's the initial feedback you've heard from your partner, and whether there's a thought of advancing the oral formulation in further development, perhaps sometime next year, even though you're not presenting the data ahead of time?

Absolutely. Yes. So sure. We have PK data from the oral program from clinic -- in the clinic already, and we're encouraged by it. It's just a question of whether or not that study will be completed in time to share at the American Heart, and the abstracts were submitted earlier this year. So really focused on the strategy, the rationale, the justification for commercially viable oral delivery focused on preclinical data.

But yes, we've seen -- we have clinical data on the oral program, and we have more clinical data on the subcu program, which is why we're -- there will be more data at the American Heart on subcu.

And as for -- I think your other question was really related to other programs. Yes, we're advancing forward additional programs using oral delivery as the route of administration focusing on the Ionis-owned pipeline. And we'll provide an update on those programs soon, and we expect one or more of those drugs to reach development next year.

The other thing I'll just add to that is that we continue to invest in research, in new chemistries and new formulations to further enhance oral delivery. So this isn't sort of our only stab at validating commercially viable oral delivery. We continue to prioritize this in our research group.

Awesome. I guess my follow-up on my -- another question would be on SPINRAZA. Curious, I think between Roche and Biogen earnings call, kind of alluded to maybe about 200 patients initially switched from SPINRAZA to risdi. Do you think that's more reflective of pent-up demand? Or do you think that's sort of like the rate of attrition that we might see for the next couple of quarters going forward?

And I guess another part of the question would be, you and Biogen. How confident are you with the SPINRAZA group profile? Do you expect SPINRAZA to have year-over-year growth for 2021 versus 2026?

I would say as far as Q3 results are concerned, I would -- we and Biogen believe that those patients were really a function of pent-up demand. We don't anticipate seeing that as a trend on a go-forward basis.

I think the way to think about growth on a year-over-year basis with SPINRAZA is to think about the efficacy profile and the safety profile that SPINRAZA has demonstrated in right now 11 -- more than 11,000 patients in the real world, in the commercial setting as well as in the clinic. And the fact that those efficacy and safety profile has been well-established across all types and ages of SMA patients and over many, many years.

We've been studying SPINRAZA in the clinic, and it's been on the market now combined for 8-plus years. So we've got lots and lots of data that supports the profile. And I think as you think about it, there's limited data in the competition right now, particularly the oral. And that data suggests that its benefit is limited in -- to really the younger patients. As you get older and your weight increases, you have less ability to take the medicine and see the benefit.

So we're really focused on the fact that SPINRAZA's efficacy and safety sets the bar, frankly, it sets a very high bar. And that, combined with the fact that there are more than 60,000 patients worldwide with SMA. And most of those patients are outside the United States in markets where Biogen has a commercial presence. So we think all of those factors bode well for SPINRAZA's growth trajectory in coming years, including next year.

And just to add to that, as Beth highlighted earlier on the call, we're also -- we also think that the studies that are in progress or planned for SPINRAZA bode well for SPINRAZA in the future, too, including the ongoing DEVOTE study in patients that have had suboptimal performance on gene therapy, which is to start next year, the RESPOND study as well as the DEVOTE study in progress, looking at higher doses of SPINRAZA to demonstrate even greater efficacy. So there's a lot going on to further enhance the potential growth of SPINRAZA.

Our next question comes from Luca Issi with RBC.

Two questions. One on the strategy and two on the competitive landscape, maybe. So on the strategy, can you just talk maybe high level of how the acquisition of Akcea and the $1.8 billion pro forma cash position changes your BD strategy?

And two, on the competitive landscape, I think we have seen Novartis receiving Orphan Drug designation for their oral splicing modulator for Huntington. Wondering if you have any thoughts on that approach? And maybe what are some of the implications for your program?

Yes. I'll take a stab at the first one and probably ask somebody to help me with that too. And then Eric, maybe you can talk about the Huntington program.

So the acquisition of Akcea is -- as we highlighted, is right in line with our strategy to build or prioritize the Ionis-owned pipeline and build our commercial strategy for the future. And this acquisition is -- it accelerates our path towards that.

Onaiza will -- and Ionis, in general, will talk about that strategy in more detail at our Investor Day in December, but it will focus on rare diseases, at least historically. And we'll talk about the types of rare diseases and which ones we're going to prioritize to bring those forward.

The Ionis platform, our technology is incredibly prolific. We continue to bring many new drugs into development each year. Some of those drugs will not conform necessarily to the commercial strategy that we're planning to initiate -- that we're implementing, I should say, now.

So we will continue to partner. Business development will continue to be a very important aspect of Ionis to maximize the value of our pipeline, our technology, maximize growth for the company. We're a hybrid. We're a commercial organization, and we're a partnering organization. And we think that that's the best strategy for maximizing the value to all of our stakeholders, and we'll continue to do so.

So I guess, I would say that the acquisition of Akcea and building our commercial capabilities and strategy will force us to partner less in rare diseases, but we'll still continue to partner in those areas that make most sense to Ionis. Eric, you want to take the Huntington question?

Yes. So I assume you're talking about Branaplam and with the Novartis Orphan designation. That's an older drug that's been around a while. It's been in Phase 2 trials for SMA also. So I'll let you draw your conclusions about something that modifies the splicing of 2 different genes.

I like our drug, tominersen is in the lead in the Huntington space. It is in the Phase III trial, as you know, scheduled to read out in 2022. Lowering Huntington directly, I think, is the best strategy to deal with Huntington's disease. And I'm perfectly comfortable and happy with our strategy with tominersen and Roche.

Our next question comes from Paul Matteis with Stifel.

This is Katie on for Paul. I just had a quick question as we wait for the HAE results. What are you mainly looking for, whether it be reductions in attack rates or to extend treatment duration with LICA? And also, if you could clarify the updated timing as well that would be super helpful.

Yes, Richard, why don't you take that one?

Sure. Well, of course, the endpoint is going to be attack rate focused. And it's also going to be on breakthrough in terms of attacks that occur while on treatment, which is one of the confounding issues with some of the existing products. So what we expect to see is a best-in-class response. That's the approach we're taking, and the study is designed to evaluate that.

In addition to the question that you asked, which is to extend frequency of dosing. One of the issues with some of the existing platforms is that if they broaden their frequency out to more than 2 weeks or 1 month, they begin to have these breakthrough issues.

So in our open-label program, we'll be looking at the ability for this medicine with its long half-life and long PD component to be able to be administered at even more frequent -- or less frequent more applicable kind of and competitive administration rates.

Our next question comes from Yaron Werber with Cowen.

I have a couple of questions. The first one is maybe just a follow-on to the last one. Maybe on PKK, is Takhzyro, do you view that to be sort of the most relevant competition because of potency and less frequent dosing? Or do you feel that there's other compounds that are kind of bigger competitors for you? And then I have a quick follow-on.

No, I think you nailed it. That's what -- that's our -- that's our hurdle to beat. And that's what we're aiming for, and the design of the study allows us to evaluate that.

Yes. And can you -- do you think you can dose it every -- I mean, it sounds like monthly potentially is certainly doable. What about less frequently, like every 2 months? Or is that a stretch based on what you see in PD?

No, the PK/PD actually supports every 2 months. And then it's just a matter of starting to get some experience with that regimen.

Yes. And whether, obviously, whether a bimonthly versus monthly regimen from a marketing standpoint is actually -- represents an advantage for patients. But as Richard said, if we feel it does, we have the ability to move there.

Yes. Okay. Great. And final question, just moving to GHR/LRx. If I remember correctly, that Phase II data, we should see that soon in acromegaly. That is looking at Somavert naive patients, right? I don't think you're enrolling failures, correct me if I'm wrong. And then what does that mean for potentially the Phase III program? Would it be naives? Or can you also go for the Somavert failures?

Yes. So the initial studies that we've conducted are on Somavert failures. You can call it that. It's patients who are on Somavert and uncontrolled biochemically. And then we have the second study that actually will report out next year in the naive patients.

We're covering the entire spectrum, starting with the Somavert uncontrolled patients. Did that answer your question?

Yes. So the data is right, so this is going to be the second study and that's in the naive segment. And then based on that, is the thought -- assuming based on the prior data, we're expecting positive results in this Phase II. Is the thought then in Phase III to do sort of a head-to-head against Somavert to go to the failures, maybe within a single-arm design or go to the naive. I mean, there's sort of 2 ways you can go there?

Yes. The teams are still working out the designs and the regulatory interactions are yet before us. So I would be, I think, premature in giving you a design at this point.

Our next question comes from Vincent Chen with Bernstein.

Congrats on [the result]. A couple of quick ones on the oral program and sort of oral delivery of ASOs. I guess the first would simply be I'm curious how would bioavailability for one of your ligand conjugated ASOs differ from another one if they're dosed orally? I guess what I'm thinking about is, would you expect bioavailability probably looks pretty similar between different LICA drugs or would there be meaningful differences?

And I guess the second related would be, you mentioned earlier, you're continuing to do research on new formulations and new chemistries to enhance oral deliveries. I was wondering, could you provide some color on what are some of the things you can do on formulation or chemistry to try to boost oral bioavailability?

So I'll start with the first and thanks for the questions, Vince. And -- but I'll pass it on to Richard, who's one of the experts in oral delivery of oligonucleotides anywhere. But we believe -- we have shown that the oral delivery, oral bioavailability that we get with our LICA drugs is very similar to our non LICA drugs.

And what was very important to demonstrate was that the -- that bioavailability to be that, to be comparable to what we've shown previously with non-LICA drug, but also to be stable and be effective in target reduction, in the liver. And we've shown also that this is transferable across several, many different antisense drugs with Gen 2.5 chemistry and LICA. So it is directly transferable.

And Richard, maybe you could talk a little bit about what we expect on first pass and that sort of thing with the LICA drugs?

Yes, the LICA drugs, I mean, it really all comes down to potency. And that's why the subcu data that you're going to see is so important. It starts to give the justification for why a molecule that gives you 10% bioavailability or something like that can be a very clinically relevant dosage formulation.

So it comes down to cost of goods and potency. You asked the question about would a different LICA, a different chemistry, give you different bioavailability. Actually across our platform, the oligonucleotide bioavailability is fairly comparable across the chemistry types. The difference with the LICA is that you present to the liver first versus the subcu.

So you get a bit of a bang for your buck, if you will, by presenting first to the liver and allowing the liver to see the drug at low concentrations first. With millions of copies of the GalNAc receptor on the hepatocytes scooping up the drug as it passes through the liver first. So that gives you that extra over and above what you would get with an unconjugated oligonucleotide. Is that helpful?

And I would just add to that also, the fact that these drugs are so stable and so long-acting allows us to have -- they accumulate in hepatocyte. So 10% bioavailability for a drug that has a half-life of 24 hours or less is not very commercially viable because of the fluctuations you're going to get in bioavailability and all kinds of things.

But the fact that our drugs are so long-lasting allows that bioavailability to be very significant and very important and justify oral delivery with our platform. So that's a very important thing to also remember.

As far as the work we're doing on new formulations, stay tuned, Vince. We have a lot of work in progress, lot of irons in the fire. We're not sharing our strategies there. But obviously, we've tackled stability with our drugs. So we're really focused on penetration, getting more drug into the blood.

Our next question comes from Mani Foroohar with SVB Leerink.

This is Rick on for Mani. First, moving back to ENaC. Could you maybe broadly discuss what lessons were learned from the ENaC readout? There seems to have been good target engagement in the lung. So we were wondering what the main takeaways were and how you're thinking about target selection for any other inhaled ASOs that may be in development?

I would say the key lessons learned are that our Gen 2.5 chemistry is outperforming our Gen 2 chemistry for aerosol delivery in the lung. Based on the potencies that we get with that drug, that Richard referred to earlier. It's really the first time we've shown statistically significant and substantial reductions in target with an aerosol antisense oligonucleotide in humans. So that's a huge lesson learned, and we think that -- and that gives us confidence that in our emerging pulmonary pipeline overall, we have several other drugs in development in pulmonary diseases. One of -- at least one of which we expect to reach development next year or in development potentially clinical -- well, clinical testing next year or as a second drug. So -- and of course, the safety and the tolerability is a very important lesson learned. The third is the doses that we are seeing these effects give us confidence that the preclinical data is predicting what we expected to see in humans very, very well, which is very important, obviously.

Got it. Second question, just looking to see if there's any update on the status of recruitment into the Phase III studies for TTR LICA. Just are there any trends you've been seeing in enrollment over the last quarter? And how you're currently thinking about time to data for polyneuropathy and cardiomyopathy?

So we're -- the studies are enrolling. Sites are being activated for both polyneuropathy and the cardiomyopathy Phase III studies and they're moving well. We've had some impact of COVID-19 in getting sites activated and so on. But overall, we're not providing details. Obviously, a competitive situation that we're in. And -- but we're pleased with the enrollment that we're seeing so far in both Phase III studies and we like that. We like our clinical trial designs, which are, we think, are enhancing enrollment. There's no changes to what we've said publicly on cardiomyopathy data. We're expecting data readout from the Phase III study in '24 time frame and the polyneuropathy in '23 time frame for the full data set. And we also have an interim analysis baked into the polyneuropathy study. And if we -- and that data is due to come out in 2022.

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

The first one is regarding the vupanorsen phase II -- after the Phase IIb study by Pfizer, what's the -- could you elaborate more in terms of Pfizer's plans for the pivotal study? You mentioned 3 studies, but maybe a little bit more color on that.

Yes. That's a perfect pitch for Richard. Knock it out.

Yes, good question. So the Phase IIb study is in this epidemic patients with a cardiovascular disease, high-risk profile and it's in direct preparation for Phase III program that includes a cardiovascular outcome trial. Much will be learned because these patients are hypertriglyceridemic as well, much will be learned about dose selection also for the severe hypertriglyceridemic platform. And so it is a dose range finding study that will set up the finalization of protocols for those 2 programs in those 2 populations.

And is there a third one, which is you will use the cardiovascular outcome as a endpoint? And any color on that study?

Yes. The cardiovascular outcome trial is one trial and then the severe hypertriglyceridemic population, there's planned a couple of Phase IIIs for that.

Okay. Great. That's very helpful. One more question. One more question, in terms of Akcea acquisition at this point? I know you will give more color at the Investor Day. But any other thoughts, at least on the 10,000-foot angle in terms of -- is there any additional elements or changes in elements need to be added after this acquisition?

Not really, Yale. We'll talk more about it as mentioned at Investor Day, how this is a key step towards our building our commercial strategy for the future. But really, I wouldn't say that there's any additional elements than what we've said today or what we've put out when we announced the closing of the acquisition. We're very excited about this. We think this is a very important strategic step in the growth of Ionis for many reasons that we've highlighted that both financial as well as based on efficiencies and based on building our commercial plans for the future. So that's a lot right there. And we're -- and we'll talk more about it in December. I really can't expand more than that on your question.

Our next question comes from Jessica Fye with JPMorgan.

Another one on vupanorsen. It looks like the dose is being studied in Phase IIb are generally higher than what was studied in Phase IIa. So thinking about the non -- very high triglyceride population, kind of the broader high CV risk group. I'm just curious, when you look at those higher doses, how much more efficacy you're hoping to achieve relative to the Phase IIa on endpoints like LDL-C?

Yes. Great question. Really, the primary endpoint is non-HDL-C, which is a group of lipid particles that are involved in atherosclerosis. So the increase is a combination of an increase on triglycerides, increase on VLDL-C and LDL. So it's not a single component look, it's basically the remnant cholesterol that remains in the circulation in patients with elevated triglycerides and cardiovascular disease. So I don't know if that answers your question. The -- it's a dose range finding study, and the doses are now being tested in patients with dyslipidemia and cardiovascular risk, which are -- is a different population than the population we studied in our Phase IIa study.

Yes. I think that's the key, Jess, is that it is a different patient population in the Phase II study. So Pfizer wants to get the dose right for the Phase III -- for the several Phase III studies that Richard mentioned that they're planning to initiate because it is a different patient population and the doses could be different and they want an optimal dose. So going to higher doses is just part of that strategy.

Okay. Makes sense. And just kind of sticking with this product, and recognizing the lack of support for benefit in drugs that increase HDL. What do you make of the declines observed with this product in HDL-C?

Let me take that, please?

Yes.

So we've looked at this very carefully. And you know that there is actually a genetic population that has a knockout of ANGPTL3. And in that population, they have extremely low HDL, extremely low LDL and triglycerides and they have no cardiovascular disease, and they have a very long -- a bunch of very long-lived individuals. Now this is a small population in the hill country of Italy. So now we're studying this in populations where we're actually knocking it down, not from birth. But in a selected population. So I guess what I would say is when we think about HDL, HDL is always -- has to be taken into consideration along with all the other atherogenic lipids. What's been shown is that HDL alone does not -- by raising HDL does not apparently improve the cardiovascular outcomes of patients. But what we know is if you take down cholesterol, if you take down remnant cholesterol that you do improve cardiovascular health of patients.

And we're running long, we'll take one more question, and then we'll have to close.

Our last question comes from Myles Minter with William Blair Company.

Just maybe one on something we haven't talked about the TMPRSS6 assets for beta-thal. Just wondering when we're going to see Phase II data next year, whether you've got clarity on that. And just in terms of the primary endpoint, can you maybe explain the clinical -- the clinical meaningfulness survey a 1 gram per deciliter increase in hemoglobin in this patient population and not the transfusion-dependent population?

Just trying to understand how to interpret that moving forward if this does go into a pivotal trial of some sorts?

Yes. I'll take a stab at that and maybe Richard can expand on anything worth highlighting beyond. So we're very excited about this program. We think the opportunity in beta-thal intermedia as well as other indications where -- that are plagued by low hepcidin levels are also very relevant for our TMPRSS6 inhibitor. As you know, Myles, in Phase I we not only showed good safety and tolerability. We showed significant increases in hepcidin levels and changes exactly in the direction based on our preclinical data that, that data would predict in iron and transferrin saturation.

In the intermediate patient population, there's 2 goals, right? One is to increase -- is to deal with the anemia and to increase hemoglobin to the extent that you highlighted, which is a very meaningful endpoint in these patients, a potential approvable endpoint in the intermediate patient population. But what this drug can also do is reduce iron load in liver and in heart and reduce toxicities associated with iron overload in those organs and other organs as well. So this is a very unique drug potentially that has the ability to not only affect the -- handle and improve and normalize potentially the anemia, but also the devastating effects of iron overload in various organs. And we have a wealth of preclinical data published in real good models of beta thalassemia. We're also exploring additional indications for this drug that are related, as I said, to miss dysfunctional management of iron due to low hepcidin levels. Timing for the study, we have -- I don't think we've disclosed that today for the Phase II study that's in progress. It is a novel design that we can share data as potentially next year from this study. But I don't think we've come out on that yet as to when exactly that data will read out, Myles.

Okay. Cool, that's helpful. Just -- yes, go ahead.

I was just going to add to Brett's point that we just actually completed a market research survey, and it shows that just from a clinician's perspective that the dual benefit of managing both anemia in iron overload with a single agent is very high. So we've gotten that 85% of clinicians out there are looking for an iron controlling product aside from the iron chelating agent. So the dual benefit continues to be a really unmet need.

Understood. Last quick one from me, and I may be wrong here, but is there any reason why for the chronic hepatitis B program that GSK is running, why they would have taken a non-LICA conjugated product in a Phase II as opposed to a LICA product?

Eric, go ahead.

Yes. I mean the reason there is that the reductions in the antigens that were shown in the trial were not really different with the LICA compound. And that the parent molecule was actually performing very well. And then the next question you'll ask me is why that is and the answer is truthful, we really don't know why that is. It's one of the -- it's the only program where we haven't seen that. But the specifics of that program is the parent molecule is performing better than the LICA and the LICA didn't get an advantage.

Yes. This is the only LICA where we have not seen a significant increase in potency with the LICA versus a non-LICA. We're actually -- we're trying to understand it, but GSK is very excited about the drug that they licensed from us as we are too, and I think that this is a potential -- has a potential for HBV cure in future, Myles.

And thank you, everybody. With that, I want to thank everybody for participating on today's call. Remind you again of our upcoming Investor Day on December 7, where we're really excited about some of the progress, a lot of the progress that we're making, we'll be sharing in more detail. And then finally, wish all of you a great day. Thank you.

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