Yahoo Finance Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) Q1 2024 Earnings Call Transcript
Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) Q1 2024 Earnings Call Transcript May 7, 2024
Ionis Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning. And welcome to Ionis' First Quarter 2024 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, Senior Vice President of Investor Relations, to lead off the call. Please begin.
Wade Walke: Thank you, Keith. Before we begin, I encourage everyone to go to the Investors section of the Ionis Web site to view the press release and the related financial tables we will be discussing today, including the reconciliation of GAAP to non-GAAP financials. We believe non-GAAP financial results better represent the economics of our business and how we manage our business. We've also posted slides on our Web site that accompany today's call. With me this morning are Brett Monia, Chief Executive Officer; Kyle Jenne, Chief Global Product Strategy Officer; and Beth Hougen, Chief Financial Officer. Richard Geary, our Chief Development Officer; Eric Swayze, Executive Vice President of Research; Eugene Schneider, Chief Clinical Development Officer; and Jonathan Birchall, Chief Commercial Officer, will also join us for the Q&A portion of the call.
I would like to draw your attention to Slide 3, which contains our forward-looking language statement. During this call, we will be making forward-looking statements that 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 contained in our SEC filings for additional detail. With that, I'll turn the call over to Brett.
Brett Monia: Thanks, Wade. Good morning, everybody, and thanks for joining us today. 2024 is off to a great start for Ionis as we continue to execute on our vision to bring better futures to people with serious diseases. With the recent US launch of our first Ionis co-branded medicine, WAINUA, Ionis discovered medicines are now reaching even more people living with serious diseases. And we're on the cusp of independently delivering a steady stream of new transformational medicines to patients beginning with our planned launches of olezarsen and donidalorsen. By uniting groundbreaking science and technology with a relentless passion to discover, develop and deliver new transformational medicines to people in need, we believe Ionis is well positioned to unlock next level value.
Renewal launch for ATTR polyneuropathy is on track in the US with our co-commercialization partner, AstraZeneca. While it's early days in the launch, we're pleased with the collective team's progress. With approval decisions in Europe and Canada expected later this year and additional regulatory submissions already completed, we expect to soon bring WAINUA to even more patients around the globe. And based on WAINUA’s strong efficacy profile, together with the freedom of simple at-home monthly self-administration, we believe WAINUA is poised to become the therapy of choice for ATTR patients. We continue to advance our CARDIO-TTRansform study of WAINUA for the larger ATTR cardiomyopathy indication with the potential for data as early as 2025.
As the largest study ever conducted in this patient population, the landmark CARDIO-TTRansform trial is on track to deliver the most comprehensive and robust data set. We expect the data we generate will enable physicians and payers to make informed treatment decisions in this dynamic treatment landscape. And with AstraZeneca's global leadership in the commercialization of novel cardiovascular treatments, coupled with our leadership in TTR amyloidosis, we believe we are well positioned to bring WAINUA patients in the US and around the globe. Our next planned launches for olezarsen in FCS, a severe rare disease with no approved treatments in the US. Olezarsen is also in development for the much larger SHTG patient population with more than 3 million estimated patients in the US alone.
By addressing these two indications, olezarsen represents one of the most meaningful opportunities in our pipeline today. Last month, we presented and published very positive Phase 3 results for olezarsen in FCS. In the Phase 3 BALANCE study in patients with FCS, olezarsen showed substantial triglyceride reductions. Importantly, for patients, physicians and payers, olezarsen also demonstrated substantial and clinically meaningful reductions in attacks of acute pancreatitis as well as a favorable safety and tolerability profile. BALANCE is truly groundbreaking as it is the first trial to demonstrate that reducing triglycerides can reduce the incidence of acute pancreatitis. In addition to the Phase 3 BALANCE study, we presented and published positive data from the BRIDGE study in patients with high cardiovascular risk and moderately elevated triglycerides.
In this study, 93% of patients with moderately elevated triglycerides at baseline achieved normal triglyceride levels, reinforcing our confidence in olezarsen's potential for success in FCS and SHTG. I'm pleased to report that we submitted the NDA for olezarsen and FCS with the FDA last month putting Ionis one step closer to our first independent launch. Assuming priority review, we're on track for a potential US approval by the end of this year. We're also preparing to file for regulatory approval in Europe later this year. Olezarsen is poised to be the first approved medicine for FCS in the United States and our strong results to date further increase our confidence that if approved the olezarsen could be the standard of care for both FCS and SHTG.
Our ongoing Phase 3 studies for SHTG continue to progress well. I'm pleased to also report that we have now completed enrollment in two of the three Phase 3 studies in SHTG, CORE in ESSENCE. With our remaining study CORE2 expected to complete enrollment very soon. This puts us on track for SHCG Phase 3 data mid next year. Following closely behind olezarsen and FCS is our next expected commercial launch with donidalorsen, our potentially first-in-class prophylactic treatment for hereditary angioedema. Early in the first quarter, we reported positive top line data from the Phase 3 OASIS-HAE study. Donidalorsen met the primary endpoint with a statistically significant reduction in the rate of HAE attacks in patients treated every four weeks and patients treated every eight weeks.
The study also met other important secondary endpoints and had a favorable safety and tolerability profile. We're looking forward to presenting data from the Phase 3 OASIS and OASIS Plus studies in the late breaker oral session at the European Academy of Allergy and Clinical Immunology Congress, the EAACI Congress at the end of this month. OASIS Plus includes an open-label cohort for patients rolling over from the Phase 3 study and a separate cohort that we refer to as the SWITCH study. SWITCH study is a first-of-its-kind study evaluating patients who have transitioned to donidalorsen from other prophylactic HAE medications. We plan to hold a webcast in conjunction with the clinical data presentation at the EAACI. With these positive data in hand, we're working to finalize our regulatory submission to the FDA, which will include both four week and eight week dosing options.
Additionally, our European commercial partner, Otsuka, is preparing to file for marketing approval in Europe. Based on our Phase 3 results and the long term efficacy and favorable safety data seen in the ongoing Phase 2 open-label extension study, we believe donidalorsen, if approved, could evolve the HAE prophylactic treatment paradigm. Beyond our near term opportunities, we have made important progress in advancing additional areas of our rich pipeline, including our leading neurology franchise. Our leading neurology pipeline today includes 12 medicines and we remain on track to have six wholly owned neurology medicines in clinical development by the end of this year. We just recently added one of these medicines to our neurology pipeline with the initiation of the Orbit study, our first inpatient study for ION356, targeting PLP1 for PMD, a rare X-linked recessive leukodystrophy.
In addition to our neurology franchise, we also reported positive Phase 2 data for ION224, our medicine targeting DGAT2 in development to treat metabolic dysfunction associated steatohepatitis or MASH. These data provided clinical evidence demonstrating for the first time that targeting DGAT2 to reduce hepatic fat production can improve NASH histological endpoints, including improving fibrosis. Study met its primary and key secondary endpoints while also demonstrating that ION224 was safe and well tolerated. These results support advancing this program to the next stage of development. Since this program is outside of our key focus areas, we intend to license ION224 to maximize its value for the millions of people living with NASH today. Our accomplishments this year and the investments we're making over the next few years move closer to achieving our goal of bringing a steady cadence of new transformational medicines to patients for years to come and generating next level value for all Ionis stakeholders.
With that, I'd like to introduce Kyle Jenne, who recently rejoined Ionis to lead our global product strategy and spearhead our next phase of growth. With his extensive commercial and biopharma leadership experience and familiarity with our programs, Kyle hit the ground running and has already seamlessly added value to our commercial and medical organizations during this very important time. After Kyle provides a brief update on the WAINUA launch and the status of our go-to-market activities for olezarsen and donidalorsen, Beth will review our financials, including our first quarter results. And then I'll wrap things up before taking your questions. And with that, over to Kyle.
Kyle Jenne: Thank you, Brett. I'm excited to be back at Ionis, working with a highly accomplished team with deep commercial experience who are ready to bring our important medicines to patients in need. Over the last four years, we have approached our commercial build in a thoughtful and purposeful manner focusing on hiring the right roles at the right time. We now have a team in place executing on the co-commercialization of WAINUA with AstraZeneca and preparing for the upcoming independent launches of olezarsen and donidalorsen. The capabilities we've established include medical affairs as well as commercial expertise and marketing, market access, patient services, commercial operations and sales. We also recently appointed the first Ionis National Sales Director to the team and are beginning to hire our field organization in preparation for the FCS launch.
Following the US approval at the end of last year for WAINUA, we started bringing this important medicine to patients in the first quarter. As Brett noted, WAINUA represents Ionis' first co-branded medicine and is poised to be the treatment of choice for hereditary ATTR polyneuropathy based on its efficacy and safety profile and the ability to self-administer. With an estimated 40,000 patients worldwide and fewer than 20% of patients on an approved treatment, patients with hereditary ATTR polyneuropathy remain significantly underdiagnosed and largely underserved. As a result, a high unmet need remains that we and AstraZeneca are uniquely positioned to address. Overall, the launch is tracking to plan based on predefined launch performance indicators.
We are seeing good uptake among patients, some of whom are new to this class of medicine and some of whom have switched from other brands. The cross-functional teams at Ionis and AstraZeneca are working well together and the early phase of the launch is benefiting from the expertise of both organizations. Under our co-commercialization partnership with AstraZeneca, we have a one customer team approach that's designed to drive broad uptake. We are leading the patient support aspect of the launch, while AstraZeneca is leading the other customer facing commercial and medical teams. The combined team is working together seamlessly with a shared goal to make WAINUA, the preferred choice for newly diagnosed patients with ATTR polyneuropathy. Prescribers and patients are recognizing WAINUA's strong clinical profile and value the ability to easily self administer WAINUA from their home.
We are pleased with the initial phase of the launch and expect to continue reaching a growing number of patients as more prescribers learn about the value that WAINUA brings. Establishing our co-commercialization partnership with AstraZeneca for WAINUA was an important step to efficiently prepare Ionis for our upcoming independent commercial launches of olezarsen and donidalorsen. We are developing olezarsen for two indications, the rare FCS indication and the broader SHTG indication with anticipated first mover advantage in both settings. We expect the approval of olezarsen for FCS by the end of this year, assuming priority review. Last month, we presented the positive FCS Phase 3 data, which were simultaneously published in the New England Journal of Medicine.
These data generated very positive feedback from key opinion leaders. They were especially impressed with the reduction in acute pancreatitis attacks. Additionally, they were encouraged that the reductions in triglycerides translated to substantial reductions in hospitalizations and inpatient hospital days supporting the potential for olezarsen to make a profound difference in the lives of people with FCS, and we expect that these data will also be very important in securing access with payers. And I'm happy to report that we recently initiated an expanded access program for olezarsen in the US, enabling patients to have access to treatment ahead of potential approval. Our launch preparations are well underway for FCS. We are building for this launch using the substantial capabilities we've already established for WAINUA.
Our medical affairs team has been out connecting with physicians for nearly three years, improving disease awareness and urgency around identifying and diagnosing FCS through disease education. We have conducted extensive market research to identify the physicians most likely to diagnose FCS and treat patients with olezarsen. These are the physicians that we will focus on initially after launch. Additionally, we aim to build meaningful relationships with patients and healthcare professionals through a differentiating omnichannel strategy. And by leveraging our omnichannel capabilities, we expect to efficiently broaden our access to a larger base of treating physicians and accelerate the patient journey process. We are building a world class patient and caregiver support team to help patients through every step of their treatment journey.
This includes helping patients to understand their disease, be informed about their medication and provide the appropriate support for access and reimbursement programs. The goal of this team is to provide a seamless customer experience that helps patients initiate treatment and remain on therapy long term. With our national sales director in place, we plan to hire our customer facing account champion team leading up to the launch. The team will be sized appropriately for this rare disease population and focus on FCS disease education, product information and reimbursement and access once approved. In addition, we are also expanding our market access capabilities with trade and distribution and account management teams to interact directly with payers, integrated delivery networks and other essential reimbursement channels.
And as we prepare for the SHTG indication, we plan to further scale all of these capabilities to realize the full potential of olezarsen. Donidalorsen for the prophylactic treatment of HAE is our next planned launch after olezarsen. And just like olazarsen, we recently initiated an expanded access program for donidalorsen in the US so that patients have access to treatment ahead of potential approval. HAE is an attractive opportunity for Ionis. There are more than 20,000 patients with HAE in the US and Europe. Within the US, prophylactic treatment is well accepted by patients and physicians. We know where this concentrated base of treating physicians are and they are primarily located in large centers of excellence. Many patients with HAE are unsatisfied with their current treatments and looking for an option that reduces frequency and severity of attacks with attractive tolerability and convenience.
We plan to build an efficiently sized field team to reach prescribers and support the needs of these patients. Based on the Phase 3 results, we anticipate donidalorsen could evolve the HAE prophylactic treatment paradigm and address the unmet needs of patients. Patients tell us that they would welcome a medicine that provides strong efficacy along with an attractive tolerability and administration profile. And we believe that donidalorsen could be that medicine. Donidalorsen has the potential to extend dosing intervals to every four to eight weeks using an auto-injector. The current standard of care is dosed every two to four weeks using a vial and syringe. We're looking forward to the upcoming Phase 3 OASIS-HAE and OASIS Plus data presentations for donidalorsen at the end of this month.
The OASIS Plus presentations will include open label extension data in patients treated up to one and half years. In addition, we will be presenting data from the first-of-its-kind switch study, which we believe will be very informative for physicians and patients for two important reasons. First, we expect these data will assist physicians in understanding how to manage patients effectively when switching to donidalorsen. And second, these data will include a patient preference survey answering the important question, do you prefer donidalorsen or your prior treatment. With positive Phase 3 and long term Phase 2 OLE data, together with every four or eight week self administration, we believe donidalorsen could be an important new prophylactic treatment for HAE, if approved.
I'm pleased to say that we are right where we should be in preparing for our upcoming launches. Our commercial infrastructure is in place and we will be ready to begin delivering our medicines to people in need as these new therapies come to the market. This is a very exciting time for Ionis and I'm proud to be a part of it. Now over to Beth.
Beth Hougen: Thank you, Kyle, and I couldn't agree more. This really is an exciting time at Ionis as we launched our first co-commercialized medicine. And we are closer than ever to bringing a steady cadence of our own medicines to the market. Our first quarter financial results reflect our progress toward achieving this important goal. We earned revenues of $119 million in the first quarter. Half of our revenue was from commercial products comprised primarily of substantial SPINRAZA royalties. Our commercial revenue also included the addition of royalties from the US launch of WAINUA. The other half of our revenue was from programs under our R&D collaborations, reflecting the value that our pipeline and technology continued to generate.
Our non-GAAP operating expenses modestly increased year-over-year as we continue to invest our capital resources toward growth opportunities. As expected, our SG&A expenses increased as we and AstraZeneca initiated the launch of WAINUA in the US, and as we made investments ahead of the olezarsen and donidalorsen launches. Our R&D expenses also increased due to the timing of our late stage program activities. We expect our R&D expenses to stabilize this year as several late stage studies have ended. And we ended the first quarter with cash and investments of $2.2 billion. Our first quarter results keep us on track to meet our 2024 financial guidance. Looking ahead, we project our revenues in subsequent quarters to be modestly higher compared to the first quarter based on anticipated regulatory milestones, license fees and R&D funding from partners.
For example, we will earn $20 million if QALSODY is approved in the EU and $30 million if WAINUA is approved in the EU. Additionally, we expect our royalty revenues to grow as the WAINUA launch ramps up and as the QALSODY EU launch gets underway assuming approval. We continue to project our full year 2024 operating expenses to increase in the mid to high single digit percent range compared to 2023, excluding the impact of onetime costs last year. This increase will be driven primarily from SG&A expenses as we continue investing in our go-to-market activities to support our planned independent launches and our minority portion of WAINUA's sales and marketing costs, which are in the high teens to low 20% range. We expect to end the year with $1.7 billion in cash and investments.
And as we invest in the substantial opportunities before us today that we expect will unlock next level value. So as you can see, we delivered a solid first quarter. And now I'd like to provide you with a compelling financial vision of our clear path to drive increased value. With a rich pipeline that includes a growing number of wholly owned programs, we have a clear path to positive cash flow, powered by sustained revenue growth. To fully realize the opportunities before us, we will continue to make significant investments over the next few years. We are investing efficiently in four key areas. First, as you just heard from Kyle, we are making significant investments in the launch of WAINUA in the United States. To execute on a successful launch for this important medicine, we built key commercial functions and are gaining important experience that we can leverage as we prepare for our upcoming launches for olezarsen and donidalorsen.
As we prepare for these launches over the next couple of years, we will scale our capabilities and increase our go-to-market activities in line with the combined multibillion dollar revenue potential that these medicines represent. Second, we will continue to invest in advancing our late stage medicines. We expect that our level of investment in this area will be relatively stable over the next few years. Because, first of all, all of our large Phase 3 studies today are at or near full enrollment, which is the heaviest period of investments. And we have concluded several studies recently and are now able to reallocate R&D resources from these programs to our third area of investment, our earlier stage wholly owned program. Our investments in advancing these programs set us up to deliver our next wave of medicines to patients.
And finally, we are investing in cutting edge technologies to ensure we continue to deliver innovative medicines with competitive profiles. With these investments, we have an outsized opportunity to deliver medicines to patients in need, which in turn positions us to earn multibillion dollar revenues and achieve positive cash flow on a sustained basis. This slide depicts these opportunities. And as you can see, we have many medicines that can power our revenue growth. Beyond our upcoming launches for olezarsen for FCS and donidalorsen for HAE, we have several additional wholly owned medicines in development that could reach patients over the next several years. This includes our planned launch of olezarsen, our wholly owned medicine for the treatment of severe high triglycerides that has blockbuster potential.
Additionally, we have a growing pipeline of potential groundbreaking disease modifying neurology medicines we expect to bring to patients over the near to midterm, including zilganersen for Alexander disease, which is currently in Phase 3 development. We also have multiple partnered programs that are poised to provide substantial future royalty revenue and sales milestones assuming continued advancement. These include pelacarsen, a first-in-class investigational medicine that Novartis is developing to address the millions of patients with Lp(a) driven cardiovascular disease. Data and a regulatory submission for pelacarsen are planned for next year. Bepirovirsen, an investigational medicine that GSK is developing in a large Phase 3 program to treat the millions of patients with HBV infection.
And of course, we have WAINUA with the ATTR polyneuropathy launch on track and our landmark CARDIO-TTRansform study progressing well, we believe that WAINUA has the potential to become the preferred treatment for ATTR in the substantial and growing market. All of these programs combined could generate up to $6 billion in milestone payments, and that's in addition to royalties up to the mid 20% range. And all of this is on top of our substantial and sustainable current revenues. So as you can see, over the next few years, we plan to make strategic investments in our commercial opportunities in advancing our rich pipeline and in our technology. We expect these investments to power strong revenue growth and positive cash flow as our medicines reach more patients in need, positioning us to deliver next level value for all Ionis stakeholders for years to come.
And with that, I'll turn the call back to Brett.
Brett Monia: Thank you, Beth. Indeed, Ionis is well positioned to continue building on our positive momentum as we execute on all our strategic priorities. We have arrived where we are today by being focused on a clear vision and a clear set of strategic objectives, which include building and advancing our pipeline and delivering medicines that we conceive, discover and develop directly to patients. We've established Ionis as a leader in oligonucleotide therapeutics with several approved drugs and one of the richest mid and late stage pipelines in the industry. Our pipeline is delivering. We achieved multiple marketing approvals and positive key data readouts over the past year and are poised to build on the strong momentum in the near term.
We've prioritized building our wholly owned pipeline and we expect to advance several of these medicines into clinical development this year. In parallel, our partner programs are progressing on track with key Phase 2 data readouts planned this year and important Phase 3 readouts next year and beyond. We're extending our leadership position in oligonucleotide therapeutics by expanding and diversifying our technology, further optimizing our capabilities for existing therapeutic areas and opening up new areas for drug discovery. All of this sets us up to continue bringing a steady cadence of new medicines, transformational medicines to patients for years to come. We're looking forward to sharing our progress as we build on our recent achievements and accomplish all our strategic objectives.
And with that, I'll now open the call up for questions. Steve, we can take questions now.
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