Ionis Pharmaceuticals Inc (IONS) 2020 Q2 法說會逐字稿

Good morning, and welcome to Ionis Pharmaceuticals Second 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 begin.

Thank you, Ali.

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 measures better represent the economics of our business and how we manage our business.

We've 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 Gary, Executive Vice President of Development.

Additionally, joining us for Q&A are Onaiza Cadoret, Chief Corporate Development and Commercial Officer; and Eric Swayze, Executive Vice President of Research.

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

We will begin by making forward-looking -- 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.

The first half of this year was marked by numerous important achievements that position us well for success this year and in the future.

This has been a remarkable year for many reasons, but in particular, for the tremendous strength and dedication demonstrated by the Ionis team.

Our hard work has enabled us to remain on track to meet our key 2020 goals and achieve great success for years to come.

And as we enter the second half of this year, I believe we are stronger than ever.

Our Phase III programs are on track with 5 studies in progress and 2 additional registration studies expected to start this year.

Our mid- and early-stage medicines are making excellent progress with additional proof-of-concept data for several programs due later this year.

We continue to make -- we continue to grow and expand the scope of our clinical pipeline with new medicines advancing rapidly to treat many new diseases, for which effective treatments are lacking.

We also continue to grow the Ionis-owned pipeline, while in parallel, developing our commercialization strategy and support of this pipeline, and we continue to advance and expand the reach of our technology at a record pace.

Looking ahead, we remain on track to achieve our 2020 financial guidance, and we have the financial resources, the people and the commitment to execute on our agenda.

My vision for Ionis is to lead our industry in bringing transformative medicines to patients suffering with devastating diseases.

Consistent with this goal, we anticipate and are on track to deliver 10 or more marketing applications for a range of devastating diseases through the end of 2025, which we expect to result in a number of new commercial medicines.

Our recent accomplishments, including those made this year, position us well to achieve our goals.

I'll now turn the call over to Beth to review our financial performance, followed by Richard, who will discuss our pipeline progress, and then I'll open the call up for questions after brief closing remarks.

Beth?

Thank you, Brett.

We ended the second quarter with net income on a non-GAAP basis, and we continue to be well capitalized with cash and investments of more than $2.3 billion at the end of June.

We remain financially strong as we enter the second half of this year with substantial resources to execute on our ambitious agenda.

As we noted last quarter, we are projecting increased revenue and earnings in the second half of this year.

With our first half results and our forecast for the second half, we are reaffirming our financial guidance for this year.

As we look at our commercialized medicines, SPINRAZA remains a foundation of care for patients with all types of SMA.

At the end of June, there were over 11,000 patients on SPINRAZA treatment worldwide, a substantial increase over last year.

New patient growth was driven by markets across all major regions and led to global sales of $495 million in the second quarter.

SPINRAZA's second quarter sales resulted in $72 million in royalty revenue to us.

Looking ahead, we with Biogen see opportunity for continued SPINRAZA growth in SMA patients of all ages and across many established and emerging markets.

Biogen now estimates that there are over 60,000 SMA patients in markets where Biogen has a commercial presence, a nearly 35% increase from previous estimates of 45,000 patients.

Additionally, new data continue to be generated that supports SPINRAZA's substantial benefit in estimated patients of all ages.

In the U.S., the SPINRAZA label was recently expanded to include new NURTURE data demonstrating unprecedented survival benefit in patients treated presymptomatically, with some patients treated for up to nearly 5 years.

And in several EU markets, new independent, real-world data demonstrated substantial and clinically meaningful benefit in adult and teen SMA patients is supporting broader reimbursement.

Additionally, Biogen plans to initiate the RESPOND post-marketing study early next year, which will evaluate SPINRAZA's benefit in patients with a suboptimal clinical response to Zolgensma.

Biogen is also conducting the DEVOTE study of a higher dose of SPINRAZA, which has the potential to bring even greater benefit across SMA patients of all agents.

Now turning to TEGSEDI and WAYLIVRA.

We are pleased to report that these medicines delivered another quarter of growth, with product sales increasing to $16 million in the second quarter, a substantial increase compared to last year.

Today, TEGSEDI is commercially available in 15 countries.

In the U.S., TEGSEDI's advantage as an at-home subcutaneous injection was further amplified as new patients continue to initiate treatment and existing patients were able to remain on treatment without disruption.

We attribute this success to a number of factors, including Akcea's world-class patient support program, Akcea Connect.

Akcea is continuing to broaden reimbursement in the U.S. and additionally 2,000 physicians have used Akcea's genetic testing program to date, resulting in a growing number of patients being diagnosed with hATTR.

Akcea is also making solid progress broadening TEGSEDI access outside the United States.

They have recently secured reimbursement in several new European markets, including Portugal, which is strategically important due to its endemic TTR amyloidosis population.

In Canada, multiple private payer agreements are now in place and government reimbursement negotiations are progressing well.

And in Latin America, PTC Therapeutics is working to expand TEGSEDI access into new countries and to secure pricing in Brazil.

We anticipate that expansion into even more new countries will help drive TEGSEDI growth this year.

Now turning to a WAYLIVRA.

WAYLIVRA is on the market in Austria, Germany, Greece and in France through its ATU, a reimbursed early access program.

In Latin America, PTC recently filed for marketing authorization for WAYLIVRA in Brazil and is working to expand access in other Latin American markets.

Akcea plans to launch in additional EU countries this year, and we are preparing to refile with the FDA.

We're pleased with the performance of our commercial medicines and continue to see opportunities for growth, as each of these transformational medicines reach more patients in new and existing markets.

Our partnered programs across each of our therapeutic franchises remain a substantial and sustainable source of revenue for us with continued opportunities for growth.

Many of our partnered programs achieved important catalysts this year, which is reflected in the more than $55 million in R&D revenue we earned in the second quarter.

This amount included over $25 million from our neurological disease franchise, including several programs under our Biogen collaboration, $14 million from our oncology franchise, including a license fee from AstraZeneca for ION736 and more than $10 million from our cardio-renal disease franchise, including partner programs with AstraZeneca and Pfizer.

We remain on track for significantly higher R&D revenue in the second half of this year compared to the first half.

And we have already generated $35 million in milestone payments in the third quarter, including payments from Biogen for progress with IONIS-MAPTRx and the initiation of a Phase I/II study of ION464 in patients with multiple system atrophy.

Driven by our Phase III program for AKCEA-TTR-LRx and the progress of other medicines in our Ionis-owned pipeline, our Q2 non-GAAP operating expenses were slightly higher compared to last year.

With these results, we achieved net income of $8 million for the quarter on a non-GAAP basis, an increase compared to our first quarter results.

Our first half results and projections for the rest of this year enable us to reaffirm our 2020 financial guidance.

In the second half of this year, we project increasing revenues with numerous opportunities to earn significant R&D revenue on top of our strong commercial revenues, and we continue to execute on our strategic objectives for this year.

We expect higher non-GAAP operating expenses compared to the first half of this year.

Our financial strength is a fundamental pillar enabling broad success across our business.

With more than $2.3 billion in cash and investments, we have the financial resources to execute on our near and longer-term strategic priorities.

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

Thank you, Beth.

Our pipeline of over 40 medicines targeting a broad range of diseases achieved numerous catalysts in the first half of this year.

And we're looking forward to a significant number of additional catalysts in the coming months.

I'll start with highlights from our world-class neurological disease franchise.

As we highlighted in our recent neurological disease pipeline webcast, this is a robust and growing franchise with 15 programs in development and many more in various stages of research.

With so many programs today, I'll focus only on those with recent highlights.

But I urge anyone who missed our neuro webcast to listen to the replay to learn more about these exciting programs.

Tominersen and tofersen, our late-stage neurological disease programs are positioned to be our next commercial medicines.

Tominersen in Phase III study in patients with Huntington's disease is fully enrolled and on track for data and potential regulatory filing in 2022.

Tofersen Phase III study in patients with SOD1-ALS is on track for data late next year.

Data from toferson Phase I/II study in patients with SOD1-ALS were recently published in the New England Journal of Medicine.

These data demonstrated promising signs of efficacy after only 3 months of treatment, providing hope for patients with this devastating disease.

Results from the Phase I/II study also support the potential for our growing ALS franchise, which today includes medicines in development to treat all forms of ALS.

ION541, our first medicine in the treatment of sporadic ALS, which accounts for approximately 90% of the ALS patient population, is expected to enter a Phase I/II study soon.

ION541 is a potent inhibitor of ataxin 2 designed to modulate toxicity resulting from inappropriate localization of the TDP43 protein which is thought to contribute to motor neuron toxicity.

And we recently added ION363, our first Ionis-owned ALS medicine in the pipeline.

ION363 is designed to treat FUS-ALS, another familial form of this disease caused by mutations in the FUS gene.

This program could have a rapid path to the market, going directly into registration study later this year or early next year.

Biogen also recently initiated a Phase I/II study of ION464, our medicine targeting alpha-synuclein for the treatment of multiple system atrophy, a rapidly progressing neurodegenerative disease with no therapeutic options.

And importantly, our Ionis-owned medicines for the treatment of Alexander's, Lafora and Prion diseases continue to progress well and remain on track to enter clinical studies in patients late this year and next year.

Turning to our cardio-renal and metabolic disease franchises.

The Phase III study of AKCEA-APO(a)-LRx is progressing well and the trial readout is expected in 2024.

AKCEA-APO(a)-LRx was recently granted fast track designation by the FDA, underscoring the significant risk for cardiovascular events in the millions of patients with Lp(a)-driven cardiovascular disease.

Additionally, our Phase III studies of Akcea-TTR-LRx, both neuro transform and cardio transform are progressing well with data expected in 2023.

And coming up, we look forward to providing a comprehensive update from our cardio-renal disease franchise.

We plan to present the full positive Phase II data set for our LICA Medicines AKCEA-APOCIII-LRx and vupanorsen, our medicine targeting ANGPTL3 and a medical conference later this month.

And next month, we plan to host an investor webcast to provide an update on these 2 programs and a number of other programs in our cardio-renal franchise.

Please stay tuned for details and timing for these events.

We continue to make significant progress with a number of programs partnered with AstraZeneca.

This collaboration continues to be very productive with numerous cardiorenal, metabolic and oncology programs underway.

Later this year, we and AstraZeneca look forward to providing an update on IONIS-AZ4-2.5-LRx, our program for the treatment of cardiovascular disease, which includes both subcutaneous and oral formulations.

AstraZeneca is also making good progress with the ongoing Phase I studies with ION839, targeting PNPLA3 for the treatment of NASH and ION532 targeting APOL1 for the treatment of chronic kidney disease.

Turning to our oncology programs.

AstraZeneca recently returned our STAT3 inhibitor Danvatirsen.

We are reviewing data from the Danvatirsen clinical program and forming our plans for the continued development of this medicine for the treatment of cancer.

And we're pleased that AstraZeneca recently licensed ION736, our antisense medicine that targets FOXP3.

ION736 is our first antisense medicine working purely through an immuno-oncology mechanism of action.

We look forward for this program entering clinical studies in patients shortly.

We're looking forward to providing updates from our advancing and expanding pulmonary franchise as well.

Later this year, we plan to report pulmonary delivery proof-of-concept results from the healthy volunteer cohort from our IONIS-ENAC-2.5Rx Phase I/II study.

And early next year, we expect to have data from the fully enrolled cystic fibrosis patient cohort from the Phase I/II study.

Also later this year, we look forward to initiating a Phase II study of IONIS-ENAC-2.5Rx in patients with COPD.

This study both broadens the ENaC development program and further expands our pulmonary franchise to diseases beyond cystic fibrosis.

Along with IONIS-ENAC-2.5Rx, we have ION663 in development today for an undisclosed pulmonary indication with multiple additional new drugs to follow in the near future.

Also coming up in the second half, we plan to report proof-of-concept results from our HAE, acromegaly and hypertension programs.

We look forward to initiating registration studies with AKCEA-APOCIII-LRx, in patients with FCS and with ION363 in patients with FUS-ALS.

And we plan to initiate a Phase I/II study of our Ionis-owned cancer medicine targeting IRF4, ION251 to be evaluated first in patients with multiple myeloma.

I'm extremely pleased with the progress we are achieving with our pipeline today and look forward to providing further updates as the year progresses.

I want to take the opportunity to acknowledge the continued trust and commitment of the patients, families, investigators and medical staff participating in our studies during this time.

And I want to point out that it is because of the hard work of our dedicated and resilient employees that we have continued to successfully adapt to the evolving global pandemic and continue to execute on our goal to deliver transformational medicines to patients in need.

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

Thanks, Richard.

Our business today is stronger than ever.

Thanks to the dedication and hard work of everyone at Ionis.

As Beth discussed, we remain financially strong with the resources and people we need to continue executing on our very ambitious agenda.

And as Richard just highlighted, our pipeline continues to advance and expand in new and exciting ways, keeping us on track to deliver 10 or more marketing applications for a range of devastating diseases through the end of 2025, which we expect to result in a number of new commercial medicines.

I'm very excited about the progress I see for the rest of this year, including advancing our Phase III studies and starting 2 additional registration studies for patients with FCS and ALS, reporting clinical proof-of-concept results for several programs, expanding and advancing the Ionis-owned pipeline with the expectation to initiate clinical development for several new Ionis-owned medicines this year, building our commercial capabilities and strategy and broadening the reach of our technology, which is advancing at a record pace.

As we achieve these and the multiple additional goals and objectives that make up our ambitious agenda, we move closer to becoming the leader in delivering transformational medicines to patients in need.

An aspiration that with our pipeline, technology, people and financial resources, we are well on our way to making a reality.

And with that, I'd like to open the call for some questions.

(Operator Instructions) Our first question will come from Jim Birchenough with Wells Fargo.

Congrats on all the progress.

A few questions.

I guess, first, just on the inhaled program.

Maybe you could give us a sense of what level of knockdown you're targeting in the normal volunteer part of the study.

And what gives you confidence that you can overcome the physical barriers to getting adequate drug penetration in patients with CF to start with.

And then on the oral, just assuming success towards year-end, how quickly could you move some of your other programs forward in an oral formulation?

Thanks, Jim, for the questions.

So as you know, each pulmonary program, each disease area will be unique in the level of knockdown of a specific target that will produce benefit in patients.

Specifically for our ENaC program, which is the program we're going to read out from our pulmonary franchise later this year from the Phase I normal volunteer study, and we'll provide an update on the CF study as well.

We have demonstrated preclinical models that as little as 50% reduction in the ENaC messenger RNA and protein produces actual reversal of disease in models of cystic fibrosis and other models of mucus related pulmonary diseases.

So that's our target.

That's our target for the clinical studies.

We're confident we'll probably go beyond that and we'll get even greater reductions in target expression for ENaC.

We -- we're quite confident in our ability to penetrate the unusual architecture of a cystic fibrosis lung, for example, or a COPD lung, which can have big mucus linings in covering the epithelium.

We've generated quite a bit of data preclinically.

In models that are a type of cystic fibrosis.

And we have shown really good, excellent, attractive uptake into cells, in the epithelium broadly throughout the lung, with knockdown that's really comparable to that in normal lungs.

And we've also replicated it not in CF models, but in normal monkeys similar knockdowns following inhalation of a -- of our ENaC -- of our drug and for other programs, for other drugs as well in our pulmonary program.

So -- and this delivery is in simple saline solutions.

We're not using any sort of delivery vehicle to penetrate the epithelium.

Regarding the oral program, yes, we're looking forward in sharing an update on this program, both the subcutaneous formulation and the oral formulation later this year with our partner, AstraZeneca.

And as we're moving other programs forward, we're already doing that.

We're confident in the oral platform, and we're not sitting still.

We're continuing to develop new formulations, even go beyond what we have in the clinic already today.

And we're already moving forward several programs preclinically, and we're prioritizing those programs that will -- to move into the clinic orally based on where we think it would have the greatest impact.

So stay tuned for that, and hopefully, we'll provide an update at that time when we provide an update on the current oral program.

We'll give a peek into what else is coming later this year.

And Brett, maybe if you'll allow me one more just quickly for Beth.

When we think about the uptick in R&D revenue in the second half of the year, how should we think about that as a run rate for longer term, do you have enough visibility in terms of future milestones and the cadence of various partner programs to give us some sense of whether that's a sustainable level of R&D revenue?

Or how do we think about modeling that going forward?

That's a great question, Jim.

Thank you.

So I think as you've seen over the last quite a few years with the company, we have continued to increase our research and development revenues and build on top of that, obviously, a very strong base of commercial revenues.

And what I see as I look out into the future, are a number of factors that I think could continue to sustain and potentially grow our R&D revenues.

And that is one just the strength of our existing partnerships, the sheer number of partnered programs under those partnerships and the fact that those partnered programs will continue to increase, particularly as you think about the Biogen collaboration, and the very productive relationship that we have, just the number of medicines that we are continuing to bring forward in the neurological space working with Biogen.

And then as all of those medicines advance in development and you see greater and greater dollar values of milestone payments and licensing fees reflecting the increased value that we are creating as our medicines advance in development.

So I think those factors together give us real confidence in the ability to sustain and potentially grow our R&D revenues into the future.

Our next question comes from Ellie Merle with Cantor Fitzgerald.

And I appreciate all the updates.

Just a broader strategic one as you guys have so many assets in the pipeline, how are you thinking about -- you've done sort of the Akcea [real] relationship.

How are you thinking about long-term potentially strategic vision as you develop franchises and focus in areas such as neurology, cardiovascular and various focuses there?

Thanks for the question, Ellie.

We have such a prolific drug discovery engine here that we validated here at Ionis and established.

We -- it sets us up very well with many different options to maximize the value of each of our medicines for Ionis shareholders, for patients.

Taking advantage of this engine, this drug discovery engine, we will continue to partner strategically where it makes sense in the future.

That -- one way to think about that is for your broad large indications like we did with Pfizer last year for a large cardiovascular indication with our vupanorsen program, or like we did with Lp(a) with Novartis.

We will hold on to those drugs longer to command even greater economic upside for Ionis, not partner so early.

And that will continue.

In addition to that, we are prioritizing certain assets, certain franchises within the Ionis-owned pipeline and building our commercialization strategy alongside the Akcea strategy, and we're prioritizing the pipeline.

One area that we're particularly focused on to bring through Phase III into the market is our rare neurological disease pipeline.

We think that, that brings great value.

We already have 5 or more drugs in the Ionis-owned neuro pipeline.

We touched on the FUS-ALS program already in this webcast, but also drugs like Alexander's disease and prion's disease in Lafora disease and others are coming.

And I think that this will be a priority for Ionis to bring through the finish line ourselves.

So you're going to see a balance of -- continue to see a balance of strategic partnering, driving attractive economics to the company, while we also build our own pipeline of medicines.

Onaiza, do you want to talk at all about our neuro pipeline and how we see -- what we see the value in that, taking to the finish line?

Sure.

So as Brett just said, we are investing in the Ionis-owned pipeline and comparing our business strategy.

And among the many rare diseases in the portfolio, we have prioritized neurology as an initial focus.

It's very complementary because we're leveraging really the deep neuro expert in drug discovery and development and then complementing that with building out the commercial capabilities needed to bring our rare neuro products to patients.

So it's really important to also know that the products we have deliver on significant unmet needs as they get to the root cause of the disease, and they have the potential to stabilize, reverse and/or prevent disease.

So we're very excited on that.

And as Brett already alluded to, we have not just us FUS for ALS, but we also have GFAP for Alexander's disease and prion disease, and these are kind of building upon each other relatively rapidly over the next year, getting into the clinic, and we expect a really strong accelerated path towards those.

So it gives us a good, good portfolio to start with.

And importantly, we also see other products in rare neuro that are beyond these that will fuel the business strategy, not just for the initial period, but for really for sustainable growth.

So based on that, it's an exciting time, and we're really building out the capabilities, commensurate with the clinical data readouts for commercial readiness.

Got it.

Very helpful.

And maybe just I'll ask and graph that more directly.

Maybe for Beth, just from kind of a corporate structuring financial relationship perspective, I guess, what are the pros and cons of kind of keeping all of these assets in Ionis itself versus potentially forming additional new subsidiaries, such as neuro subsidiary as you guys certainly have a very, very large pipeline.

So we think at this point, we are in the early stages of looking at our Ionis-owned pipeline, looking at the neuro assets.

I think we're making excellent progress along that path.

And I think Onaiza and her team working with the rest of us are doing a great job.

But as far as what exactly structure we would put in place, I think it's just really too early to say.

I think what's important is the key takeaway here is we're prioritizing our Ionis-owned pipeline.

And our intention is to retain substantial commercial value from our Ionis-owned pipeline.

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

Congrats on all the progress.

Maybe a little bit of follow-up to the prior kind of strategic question.

When you guys founded Akcea, I know at the time a lot of the dialogue along around the rationale was -- it enables you to retain better economics, develop some commercial capabilities, but kind of silo off sort of the culture of the sort of R&D culture that has helped create a fantastic discovery and development engine.

Appreciating that over time, your strategy sort of had to evolve and adapt, just wondering how important you view that today as you're growing your wholly owned pipeline, particularly in neuro, but other areas as well?

Great question, Chad.

The word evolved that you use is a great word to think about this.

R&D innovation, scientific innovation will always be the core of Ionis.

We think that we're among the leaders in innovation in our -- in the biotech industry.

Today, Ionis is -- and that will always be a priority.

However, evolution happens, and the company is in a very strong position, culturally today.

And very importantly, we've now proven the technology.

We've proven it in so many different ways.

We were in a different place when we founded Akcea 4, 5 years ago.

And it was a good strategy at the time -- it was a very good strategy at the time to maximize the commercial value of certain rare disease assets in the pipeline while preserving the innovation that is at our core at Ionis and proving and validating the technology, not just clinically but also commercially, which we've now done.

We're in a different place today.

And I think that the culture can endure and actually synergize with the creating of our own pipeline and building commercial capabilities to maximize the value of that pipeline.

Our next question comes from Paul Matteis with Stifel.

This is Alex on for Paul.

Just curious, as you're thinking about your PKK asset for HAE, how you're thinking about that market, sort of the place for an ASO and what is relatively a competitive market with some major drugs that are going generic?

Just curious to your thoughts there.

Yes.

Well maybe I'll ask Onaiza to touch on this, but she's been thinking hard about -- this is another Ionis-owned asset for rare diseases.

We're very excited about the prekallikrein program.

We're looking forward to sharing results in patients with HAE later this year.

Onaiza?

Yes, sure.

Yes, you're right.

It's actually competitive market, but we feel like we have a really strong competitive product.

We've done some early market research, and we still think there's opportunity and room for more players in here.

I think we've heard that they want prophylactic treatments that are more defined to prevent attacks rather than simply kind of treat the acute episodes of HAE, and we're seeing some room in there because they're feeling that with the current products that there are still breakthrough symptoms that are happening.

So we think we have differentiation there.

And certainly, we have differentiation from a dosing perspective as well with injectable administration with qweekly or qbimonthly as well as a possibility.

So those are some really great areas that we're focusing on to bringing the competitive differentiation.

And I'll just add to that, Alex, in addition to monthly or even less frequent dosing, this is another program that has the potential to develop an oral formulation, which would be a very meaningful competitive advantage.

So our first focus is to demonstrate no attacks or an attack rate in patients that's comparable to out drugs on the market we're beating.

And then think about what would be more convenient for patients, where patients would value a product like this going forward.

Our next question comes from Tyler Van Buren with Piper Sandler.

I just had a follow-up question on the ENaC program, which you touched on earlier.

So the Phase II study, can you -- or the Phase I/II study in CF patients, [sorry,] with data early next year, can you just outline exactly what type of data we'll be getting FEV1 and exacerbation and sweat chloride data?

And as we think about comparing it to another data center or another product, what product on market would be most appropriate?

Well maybe I'll ask Richard to just touch on the clinical study and what we're expecting to come out of it, for the ENaC program.

I can talk a little bit about the second part of that question.

Sure.

Yes, we're excited about it.

So the Phase I/II study, of course, is a short-term proof of concept.

And really, the focus is on the ENaC knockdown.

In other words, the pharmacodynamics of delivering the pulmonary drug and the pharmacodynamics within the lung, both in a normal lung initially and then in the cystic fibrosis lung.

So it's going to be PD, PK, safety and tolerability, which would then position us for further development.

So that's the clinical program, and that should be the expectation of the data coming out of that, relatively short term, 6-week dosing regimen.

Okay.

Okay.

Thanks, Richard.

And then positioning wise, ENaC has the potential to work in CF patients for all mutation types.

So it's not linked to any particular mutation, obviously, based on its mechanism of action.

So we see this drug working in combination with CFTR modulators.

They're already approved, and they're on the market today to provide even greater [bed] patients with cystic fibrosis.

In addition, we also feel very good about the potential of this target for other indications, pulmonary indications.

We're planning to start the Phase II study in COPD later this year, and we're exploring other indications, too.

So it's quite a versatile target that has a lot of upside for various types of indications.

Our next question comes from Joel Beatty with Citi.

The first one is a follow-up to that last question on the ENaC program.

Can you tell us a little bit more about how you'd actually be testing for knockdown in the lungs in that trial?

Yes.

We're going to be looking directly at ENaC RNA in the lavage fluid taken from patients that were -- that are treated with the ENaC ASO.

Terrific.

And then maybe another question on the oral lipid program.

Could you help characterize what level of knockdown would be a success?

And is the bar the same as it is for a subcutaneously delivered drug?

Or is the bar different for the oral approach?

Yes.

We have -- really, we can't comment on the level of knockdown that we're targeting in that program.

But the second part of your question is important.

We're targeting the same level as subcutaneous.

And we feel good about that based on the preclinical data, that the level of knockdown that we're getting subcutaneously is -- we can achieve that with oral based on our preclinical data.

And remember, this is a Gen 2.5 LICA.

So it's -- that knockdown is substantial.

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

Just a couple on PNPLA3 and the decision to go to Phase IIb versus doing a straight jump to Phase III.

What are you expecting to learn incremental through the Phase IIb?

Is it an issue of trying to figure out what's your lowest effective dose here as you look into go to a Phase IIb as opposed to the pivotal testing step?

And then secondly, can you help us think a little bit about positioning of ANGPTL3 versus Lp(a) with Novartis, how you see the therapies positioned differently, are they competitive?

Is it more of a multiple shots on goal for you?

Or do you think that they'll ultimately operate within segments of the market based on genetic background?

Richard, want to take that?

Yes.

So 2 parts to that question.

I'll start with the Phase IIb approach.

The Phase IIb -- because the Phase II study was not actually conducted in the patients that we intend to go into, there was a desire to make sure that we had the right dose before we went into 8,000 to 10,000 patients.

I think that makes sense.

And so there's additional work looking at dose and dose regimens going into that program.

It can be done very quickly because they've already set up the organization and the structure to do a very large Phase III program that was already in place.

So this just goes very quickly into a Phase IIb and can be enrolled rapidly.

So that's the front end of your question.

The second part of your question, which has to do with differentiating with Lp(a), they are completely different populations.

Lp(a), in general, the patient population that have elevated Lp(a) and cardiovascular disease are patients that have an Lp(a)-driven cardiovascular issue.

And most of these patients, it turns out when you look at epidemiologically do not have elevated triglycerides.

So they don't have a triglyceride problem.

Vupanorsen is targeting the triglyceride issue as -- or perhaps more significantly the remnant cholesterol component of the high triglyceride patient population.

So these are enriched with diabetics.

There are patients who have elevated triglycerides, not super high, but greater than 150, greater than the upper limit of normal for triglycerides.

And the intent is to drive down triglycerides and remnant cholesterol, and that's what vupanorsen does very well.

It's a pan-dyslipidemic drug that really takes down the lipids that are elevated in a dyslipidemic patient population like the patient population targeted here.

These are generally not high Lp(a) patients.

So there's a clear differentiation.

They're different patients.

With this residual risk that's very real in both of these populations.

Our next question comes from Yaron Werber with Cowen.

I have a couple of questions.

The first one is just a follow-up on the ENaC program.

Brett, I mean, it sounds like you're moving toward a Phase II in COPD, but you're still waiting for the Phase I/II in CF.

So it almost appears that there's slightly more conviction to move to Phase II in COPD than in CF and maybe just a little bit of an understanding kind of how you're thinking about that?

And then secondly, for acromegaly, maybe again, the same set of questions, what target knockdown do you need and what are some of the PD markers that we can expect from the Phase I/II?

Thanks for the question, Yaron.

So we feel very good about our ENaC program.

We're very confident in our pulmonary franchise overall.

Again, ENaC is the first of several pulmonary drugs that are developing or marching or getting close to development with new clinical studies for other targets expected soon.

We don't believe that the CF study is the outcome of the Phase II study in CF patients is gating for us to move into COPD.

We've already seen enough that gives us confidence that as a platform we can achieve our goals of target engagement.

And we believe in the target.

So we're moving on to other indications.

And so it's not -- the CF study is not gating.

We've seen enough.

As for acromegaly, there's a proven -- there's a validated biomarker that is -- can be used for approval as IGF-1 levels.

And our objective is to normalize IGF-1 or get close to normalization for IGF-1.

I don't know, based on our preclinical data, what level of knockdown of growth hormone receptor is needed to achieve that, Richard.

Do you do you have that on your fingertips?

No.

I don't.

The preclinical model, I mean -- because you don't really have an elevated IGF-1 model, it's not something you can really directly look at -- you don't have acromegaly models to go directly into that.

But that is our focus is IGF-1 is the biomarker.

And in addition, we're looking at measures of how patients feel, quality of life.

We are also examining growth deformities, like ring size in patients in the study as well.

In addition, we are also carefully looking at additional options.

This is a study in patients that are not well controlled on somatostatin analogs.

And we're also considering the possibility of initiating a study as a monotherapy in patients with acromegaly.

We think that the populations are quite unique.

They're different.

And one may not be gating for the other.

The only thing I would add to that is that on ENaC, going back to that, we've been able to move forward with COPD because we're very confident with the data that we're getting from the Phase I/II.

But that doesn't mean we're leaving CF behind.

CF will continue, and we hope to be able to move into even other mutations that don't have good drugs to control their CF and move into those quickly.

And for the acromegaly program, have you -- if I remember correctly, the preclinical data showed about a 60% knockdown.

Is that sort of what you're expecting in the human study?

And if I remember correctly, this is a LICA program.

Is that correct?

And -- because I think some of the prior analogs weren't LICA.

Yes, that's correct.

It is LICA.

And you bring up the previous analogs, we do have data that shows that 50%, 60% reduction begins to bring down the IGF-1.

But this is going to be with a LICA infrequent dosing, again, low volume once a month and bring forward, I think, a very good product.

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

You guys are going to move the APOCIII LICA into Phase III.

So could you guys provide some time line in terms of the sort of development of this program.

Would that be of the similar time line (inaudible) development time before.

So thanks, Yale.

So we are planning and on track to initiate the Phase III study for APOCIII LICA in FCS patients this year.

We're also looking at other potential opportunities to develop this drug.

For other disease indications involving high triglycerides and also other aspects related to broader populations with [cards] suffering from cardiovascular disease, but the FCS study is due to readout this year.

We're hoping that we can achieve -- our objective is to get to the filing for WAYLIVRA and potentially market next year.

I mean it depends on the regulatory -- the time of regulatory review and the timing for all that and in their acceptance of our data set.

So WAYLIVRA -- if things work out, WAYLIVRA will be commercially available in the U.S. as we launch in Latin America PTC as well as the ongoing EU launch several years ahead of LICA medicine.

Okay.

Great.

Maybe one more question, again, a little bit on the strategic side, a little bit narrowing to that.

Are you guys still potentially speaking for BD collaboration with some of the large pharma.

I don't know who is still left at this point or that's not necessarily something you will pursue going forward?

So Yale, we have so much interest externally in our technology by pharma companies and so on.

We're very selective in the types of partnerships we do today.

We feel that they really have to bring strategic value.

We don't do deals anymore just for the money.

It's really what strategic value they bring to Ionis, what expertise they bring, whether they can -- they have the resources to develop the drugs and commercialize them for very large populations and so on.

So we will continue to partner strategically as we build the Ionis-owned pipeline in parallel.

We have the luxury of having, if you will, our take in unit 2. We have own pipeline and we have the ability to partner strategically when and where it makes sense.

Those could be licensing transactions after we bring drugs through Phase II proof-of-concept or through some level of proof-of-concept as we did with Pfizer last year.

Or they could be potentially strategic relationships in areas like we've done with Biogen, if they make sense to do.

So we think we're planning to do all of that.

Our next question comes from Luca Issi with RBC.

Luca Issi from RBC Capital.

Congrats on all the progress.

Two quick questions here.

One is on risdiplam.

I think the PDUFA date is actually 2 weeks from Monday, so I was actually curious if you can share what's your latest thinking on the label in term of what could be like a base case to the area, downside case scenario and an upside case?

And maybe -- I think you already alluded to it, but I'd love to add a finer point here on APOCIII.

I think your competitor recently pivoted from a monogenic disease like FCS to a polygenic disease like MCM given that the indication is actually 10x larger than FCS.

Are you planning to do the same?

And if not, maybe why?

Thanks for the questions, Luca.

It's not appropriate for us to comment on our competitors and what we -- our projections are what we see as what would be in their label or what their strategies are and so on.

What I can say is we're very excited about the future of SPINRAZA.

SPINRAZA is now in more than 11,000 patients around the globe.

The prevalence of SMA is much larger than was originally anticipated.

And Biogen continues to do extremely well in bringing this drug to patients around the globe.

And we don't see that change.

We see continued growth for SPINRAZA, despite the pandemic, despite the competition.

And nobody Ionis Biogen is sitting still, as Beth talked about in her readings today, the Biogen has launched the DEVOTE post commercialization study to show even greater efficacy (inaudible).

They're about to initiate -- they announced, and they will start a clinical study soon to treat patients who are not getting adequate treatment -- suboptimal treatment in gene therapy with Zolgensma.

And in addition to all of that, we're working on follow-on medicines for SMA that we think can get us to every 9-month dosing or every 12-month dosing, single intrathecal administration.

So -- and with the pristine safety profile that SPINRAZA offers, that is what enables us to be able to go to higher doses to demonstrate efficacy.

All that is what other competitors are going to have to prove to compete with SPINRAZA.

Same for the competition on APOCIII LICA, for not to comment on what competitors are doing as followers to us, and they are following us.

But I did mention earlier that in addition to FCS, we are looking at other indications involving triglyceride -- patients with high triglycerides.

You referred to that as MCS.

We're very familiar with the indication, and we're building strategies around other triglyceride indications such as MCS and others.

And we're also not only looking at those indications, which are really metabolic indications, we're also looking at cardiovascular indications, so large indications in which we can reduce the -- which our goal would be to reduce the risk of cardiovascular deaths in patients, heart attacks and cardiovascular related deaths.

All of that is on our agenda.

FCS is just the first.

Our next question comes from Vincent Chen with Bernstein.

Maybe just one on the oral program.

So thinking about the oral program, you have some sense for the bioavailability with oral dosing, which you'll further reinforce with the upcoming data.

And you have a lot of experience with what dose levels necessary for different indications for the subcu.

Do you have a sense for what portion of your currently marketed drugs or pipeline programs may be indeed amenable to oral dosing?

Is there some dose level, for example -- is there some subcu dose level you could point to and say, I think that anything that's dosed at this level or below is probably feasible for conversion to oral dosing.

And maybe in a couple of particular examples, if I think about things like the TEGSEDI follow-on, PCR, LRx or your Lp(a) program, are these indications that you might be able to switch to oral dosing?

Thanks, Vince.

We believe that a substantial portion of the pipeline, particularly our liver targets would be amenable to an oral strategy once we crack commercial viable oral dosing.

The program we're working on in the clinic right now, we want substantial reductions.

So we're not talking about 20%, 30%, 40% reductions would make this a commercially viable product.

We're looking at large reductions that we want to achieve.

So that would be applicable to anything in the pipeline, whether it be TTR or Lp(a) or angiopoietin-like 3 or APOCIII LICA, I can go on.

And as I mentioned, I think earlier, we're not sitting still.

We're already prioritizing drugs for -- that we think would benefit the greatest from an oral sort of opportunity for them and we're moving those forward.

The chemistry is Gen 2.5 chemistry, coupled with LICA.

And it's the potency that this combination brings to us that we think it's getting -- having somewhere around 10% (inaudible) availability in humans, which we've already demonstrated previously with Gen 2 chemistry could get us to commercially viable oral delivery.

So we're not talking -- our objective is not to show a small impact on target, our objective is to -- and when we refer to commercial liability, we're speaking about reductions that are comparable to some of our best subcu drugs today that we've shown.

When might we expect to see some additional oral candidates move into?

I guess, when might we expect to see some insight into what's going to be the next oral candidate?

And when does it move into the clinic?

And kind of what's the gating factor on that?

Is it just a matter of waiting for the current data and just verifying -- checking the box these look similar?

Or yes, what else needs to happen before you say -- before you come out and say, here's the next things we're moving or switching over to an oral platform?

So we -- as I said earlier, we're not sitting still.

We are screening now for certain targets, some programs for the Gen 2.5 chemistry with LICA.

And we're just going through that process.

So it's -- obviously, there's going to be some gating factor.

We don't want to see the data we're not holding.

We're not sitting still waiting for that data, things are moving forward.

This year, we want to provide an update on the oral strategy overall, not just a clinical study, but what is the rationale for our oral program, where do we think the opportunity -- the biggest opportunities could be for the for current molecules as well as future molecules.

And I think we're going to do that probably at Investor Day this year, if not sooner.

Okay.

Well I think that's our last question.

I want to thank everybody again for joining us today.

Before we close today, I would like to take this opportunity to remind you of our investor webcast focused on our cardiorenal franchise next month, as well as our Investor Day, which I just referred to earlier, planned for December.

We plan to provide details for these events soon.

So stay tuned for all the details.

Thank you again, and have a great day.

The conference has now concluded.

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