Earnings Labs

Ionis Pharmaceuticals, Inc. (IONS)

Q1 2017 Earnings Call· Tue, May 9, 2017

$71.53

-0.98%

Key Takeaways · AI generated
AI summary not yet generated for this transcript. Generation in progress for older transcripts; check back soon, or browse the full transcript below.

Same-Day

-5.77%

1 Week

-3.97%

1 Month

+6.58%

vs S&P

+4.92%

Transcript

Operator

Operator

Welcome to Ionis Pharmaceuticals First Quarter 2017 Financial Results Conference Call. As a reminder, this call is being recorded. Leading the call today from Ionis is Dr. Stan Crooke, Ionis' Chairman and CEO. Dr. Crooke, please begin.

Stanley Crooke

Management

Good morning and thank you for joining us on today's conference call to discuss our first quarter 2017 financial results and business highlights. 2017 is off to a great start. Biogen reported sales of SPINRAZA of over $47 million in the first quarter, significantly exceeding consensus estimates. Biogen received a positive CHMP opinion for SPINRAZA, recommending a broad indication, puts the drug on track for approval in the EU shortly. We received $75 million from Bayer to advance both IONIS-FXIRx and its LICA follow-on, IONIS-FXI-LRx. Importantly, this expands the opportunity for our FXI franchise (inaudible) forward. And the collaboration with Novartis worth up to more than $1.6 billion plus royalties help in commercialize new AKCEA drugs for large indications. As part of this collaboration, AKCEA initiated a Phase IIb dose-ranging study for APO(a)-LRx in patients with high Lp(a). We reported positive Phase III data from the volanesorsen APPROACH study in patients with FCS. And we continued our strong financial performance, ending the first quarter with a pro forma operating income of $35 million and pro forma net income of $24 million. With the SPINRAZA launch gaining momentum, volanesorsen moving toward the market, Phase III data for IONIS-TTRRx imminent, a large and growing pipeline supported by our efficient technology platform, we believe we have the elements in place to achieve sustained, long term financial growth. Joining me in today's call are Lynne Parshall, Operating Officer; Beth Hougen, Chief Financial Officer; Sarah Boyce, Chief Business Officer; Paula Soteropoulos, Chief Executive Officer of Akcea; Wade Walke, Vice President of Corporate Communications, Investor Relations. And now Wade, will you please read our forward-looking language statement?

Wade Walke

Management

Thanks, Dan. A reminder to everyone that this conference call includes forward-looking statements regarding financial outlook for Ionis, Ionis' business, the business of Akcea Therapeutics and the therapeutic and commercial potential of Ionis' technology and products in development. Any statement describing Ionis' goals, expectations, financial or other projections, intentions or belief, including the commercial potential of SPINRAZA, IONIS-TTRRx and volanesorsen is a forward-looking statement and should be considered an at-risk statement. Such statement is subject to certain risks and uncertainties, particularly those inherent in the process of discovery, developing and commercializing drugs that are safe and effective for use as human therapeutics and any endeavor of building a business around such drugs. Ionis' forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although Ionis' forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Ionis. As a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Ionis' programs are described in additional detail in Ionis' annual report on Form 10-K for the year ended December 31, 2016 which is on file with the SEC. Copies of this and other documents are available from the company. And now I'd like to turn the call over to Lynne.

Lynne Parshall

Management

Thank you, Wade and good morning. SPINRAZA has brought a life-changing therapy to patients with SMA, their families and the physicians who treat them. We're proud to have brought this therapy to patients who need it. We continue to be pleased with the dedication, passion and commitment of our partners at Biogen. SPINRAZA sales for the quarter totaled over $47 million and we earned over $5 million from these sales. Patient demand is high and physicians are motivated to prescribe SPINRAZA which are both important factors as the launch builds momentum. We believe this strong start sets up for continued growth in the SPINRAZA launch trajectory. Biogen has already been successful in streamlining access to treatment at the 40 to 50 SMA centers in the United States, with additional U.S. centers beyond these specialty centers now treating patients. As of April 21, there were 88 sites across 36 states administering SPINRAZA and 203 sites had submitted start forms. Additionally, Biogen reported coverage on more than 165 insurance plans, including commercial and Medicaid plans as of April 21. Biogen estimates that 75% of commercially insured patients are covered by a plan that has an established policy for SPINRAZA, half of which have a policy with broad access. And today, while the majority of patients treated have been Type 1, Biogen continues to seek coverage approvals for patients with Type 2 and Type 3 SMA. And many patients covered by plans without stated coverage or with policies restricted to Type 1 SMA have, nevertheless, been approved for reimbursement. At the end of April, Biogen received a positive CHMP opinion for SPINRAZA, recommending approval with a broad label in the EU. We're looking forward for approval in the EU shortly. Biogen also expects approval in Canada and Japan this year. Biogen has submitted…

Elizabeth Hougen

Management

Thank you, Lynne. In the first quarter, we continued our strong financial performance from 2016 and made further progress toward our goal of achieving sustained long term financial growth. We ended the first quarter with pro forma operating income of $35 million and pro forma net income of $24 million. We also reported GAAP operating income and net income. With the approval of SPINRAZA late last year, Q1 was the first full quarter in which we added commercial revenues to our substantial base of R&D revenue. The launch of SPINRAZA is off to a strong start. And as a result, we recognized $5.2 million of commercial revenue from SPINRAZA royalties in the first quarter. The addition of commercial revenue from SPINRAZA builds on the $324 million in R&D revenue we have already received from Biogen and the $90 million in approval milestone payments we anticipate receiving upon approval in the EU and Japan. We're pleased with SPINRAZA's early launch results in the U.S. and the potential for future growth not only in the U.S., but also in other markets. Importantly, we're tiered royalties on SPINRAZA sales. This means that as sales of SPINRAZA grow, so will our portion of those sales. In contrast, the nominal third-party royalties we pay are fixed, not tiered. This means that as SPINRAZA's sales increase, our profit margin on those sales will increase. The addition of commercial revenue is a reflection of the evolution of our business and our progress towards sustained profitability. Our financial statements now reflect this progress. You'll notice that we have modified the revenue section of our P&L to break out our commercial revenues from our R&D revenues. In addition, we've renamed the G&A line of our P&L to SG&A to better reflect the character of our expenses. Our strong financial…

Stanley Crooke

Management

Thanks, Beth. Just one point to clarify a bit. Beth referred to $324 million in payments we received. Those are $324 million specific to SPINRAZA. Of course, we received substantially greater funds -- payments from Biogen for the entire sets of collaboration. So SPINRAZA has given patients and families benefiting -- or suffering from SMA a life-changing therapy. This is the most important of the many reasons we're excited about SPINRAZA. Clearly, with first quarter sales of over $47 million, the launch is off to a strong start. We're confident that SPINRAZA has blockbuster potential. Moving ahead to the remainder of 2017 and into 2018, we have multiple near term commercial opportunities and key upcoming date events. Moving on to strong initial sales of SPINRAZA. We look forward to continued expansion of the SPINRAZA launch in the U.S. With a positive CHMP opinion received for SPINRAZA recommending a broad indication, we believe that SPINRAZA is on track for a rapid approval and launch in the EU, further expanding SPINRAZA's near term commercial potential. Biogen also expects approval in Canada and Japan this year. Akcea plans to submit regulatory application for volanesorsen in the U.S., EU and Canada in the third quarter, preparing the launch of volanesorsen in 2018. We plan to report pivotal Phase III data from the NEURO-TTR study of IONIS-TTRRx this quarter. We and GSK are hard at work at writing the regulatory applications to file by the end of this year. Later this year, we plan to provide updates on IONIS-TTRRx currently in a Phase I study. IONIS-HTTRx is the first potentially disease-modifying drug to be evaluated in patients with Huntington's disease. We also plan to report additional clinical results for multiple programs as the year progresses. We plan to initiate studies on several novel drugs throughout the year, including Phase IIb studies on FXIRx and AKCEA-APOCIII-L Rx and Phase I studies on IONIS-TMPRSS6-LRx in patients with beta thalassemia, IONIS-MAPT Rx and anti-tol antisense drug in patients with Alzheimer's disease, partner with Biogen. 2017 will continue to see our pipeline advance and deepen in both severe rare diseases as well as in diseases that treat -- with larger patient populations. We also plan to extend the pipeline by addressing new diseases such as beta thalassemia. The addition of commercial revenues from SPINRAZA royalties, coupled with our strong and growing base of R&D revenue, we're in the strongest financial position in the company's history. Well positioned to achieve our goal of sustained long term financial growth. Both are drivers of revenue and efficient technology and a strategy that maximizes near- and long term potential of our drugs. We're now closer than ever to our goal of becoming a profitable multiproduct company delivering first-in-class and best-in-class medicines in patients with serious diseases. And now with that, Kate, if you can set us up for our question and answers, please.

Operator

Operator

[Operator Instructions]. The first question comes from Eric Schmidt of Cowen and Company.

Eric Schmidt

Analyst

Maybe on SPINRAZA. I know that Lynne mentioned that patients can get broader access if they have Type 2 or 3 disease. But in the weeks since the CHERISH data were presented at AAN, have you seen any payers change their blanket policy coverages?

Stanley Crooke

Management

Lynne, do you want to answer that?

Lynne Parshall

Management

Eric, there have been some. It's probably a better question to ask -- because these things, obviously, are changing on a day-to-day basis, it's probably a better question to ask Biogen. But Biogen is making all those data available to payers and we do expect that to be a successful offer.

Eric Schmidt

Analyst

Okay, that's great. Maybe I can just sneak in a quick science question perhaps for Stan. I think there was an article just last week and I can't remember now if it's nature or science on CAG repeats and the potential for the wild type repeat to actually be beneficial to protein trafficking targeting for destruction. I just wondered if you have a view on that. I think some of your competitors have suggested that the Ionis targeting compound only going after -- well, I guess, going after indiscriminate wild type and mutant repeats might be disadvantaged relative to others in the field.

Stanley Crooke

Management

That's a really complicated question. And I think to some extent, it will depend on CAG repeats and the context of the CAG repeats and the biology that's involved. With regard to HTT, we're confident that we look carefully at the role of HTT normal and mutant. We're looking at reduction of mutant HTT in our studies and so we're optimistic that, that drug is going to bring significant benefit as we move forward.

Operator

Operator

We'll move on to the next question. Yale Jen from Laidlaw.

Yale I-Eh Jen

Analyst

From the NURTURE study that -- on presymptomatic SMA patients, you have a very encouraging data. I just wonder whether you will start to see patients of -- presymptomatic ones that are seeking for treatments. And how would you see the potentials or reimbursement landscape for this one given the drug initially was approved for all symptomatic patients?

Stanley Crooke

Management

We certainly do think that it's appropriate to treat SMA patients as early as possible. And we would expect, given the data, that others, including payers, would agree I think for the specifics of what's going on right now. I would recommend that you ask Biogen more details.

Yale I-Eh Jen

Analyst

Maybe just one more question for volanesorsen. That you're also currently running a Phase III study for FPL. I know you had -- may anticipate to complete patient enrollment toward the end of this year. But so far, do you have any sort of update in terms of that study? And any colors on that?

Stanley Crooke

Management

Well, the study is obviously a blinded Phase III study, so I really can't disclose -- I don't have any information to disclose about the performance of the drug in the study other than to say the study's going well and safety and tolerability appear to be effective.

Yale I-Eh Jen

Analyst

And would that be -- the recruitment was to anticipate to complete toward the end of the year or early next year?

Stanley Crooke

Management

We hope so. Recruitment is moving along. It -- there are very substantial protocol requirements. So again, I think we're on track and we believe we'll be able to meet our recruitment goals. But I think you'll just have to stay tuned and we'll keep you posted as the study progresses.

Operator

Operator

And the next question comes from Stephen Willey of Stifel.

Stephen Willey

Analyst

Just a question on the SOD1 program. Can you maybe give us a little bit of an indication as to when we might see some initial data coming out of this? And I guess, just given the FDA's recent regulatory activity on an ex U.S. product kind of fast-tracking approval in the states, just curious if there's any intention, perhaps, on either your or Biogen's part to maybe seek some regulatory guidance as that data starts to come in.

Stanley Crooke

Management

Steve, I don't remember exactly when we think we'll have data on SOD1. Lynne, do you happen to remember?

Lynne Parshall

Management

Yes. So we expect to have data next year on that. And we and importantly, Biogen have a very strong relationship with this division and would certainly expect to have an ongoing dialogue with them about this and our other neuro programs.

Stanley Crooke

Management

Remember that we had some encouraging data with an earlier SOD1 that we had, so this is a program that we're hopeful and optimistic about.

Stephen Willey

Analyst

And then just a follow-up on the cardiorenal collaboration with AstraZeneca. I think there's been one target identified out of that to date. Should we anticipate potentially hearing about another target by the end of this year?

Stanley Crooke

Management

Yes. I think things are moving along in that collaboration very well.

Operator

Operator

The next question comes from Jessica Fye of JPMorgan.

Jessica Fye

Analyst

Two quick ones. So I'm wondering if you can refine when in the quarter we'll see the NEURO-TTR top line and whether or not we should expect the press release to call out results from the cardiac subgroup. And then separately on volanesorsen. As you prepare that filing, can you comment on whether you expect an AdCom for that product?

Stanley Crooke

Management

No, no and no comment. No, we can't provide more precise timing and we'll provide the top line data once we have them at an appropriate level of detail as we discuss all that with our partner. And that's really all I can say today. And I think it's too early to speculate about whether there will be an advisory panel for volanesorsen or not. I think the next step is get our dossier together, meet with regulatory agents -- agencies, as we have been doing in Europe and will be doing in the U.S. and then go from there. Sorry, I can't give more -- provide better information, but that's what I can say today.

Jessica Fye

Analyst

That's fine. Just to clarify the question on whether we'll get the cardiac subgroup, I mean, kind of detail in the top line press release. Was that a definitive no, we will not or no comment? So maybe...

Stanley Crooke

Management

A highly definitive no comment.

Operator

Operator

The next question comes from Paul Matteis of Leerink Partners.

Benjamin Burnett

Analyst

This is Ben Burnett in for Paul Matteis. I wanted to ask about the Huntington's program. I guess just maybe some clarification on the time line that we can expect to get an update from this program. And also, I guess, what kinds of data do you -- can we expect from this update? And maybe just any color as to what you would view sort of as success here or maybe a certain percentage of knockdown. Or I guess, how should we be thinking about success here?

Stanley Crooke

Management

Yes. We're measuring as a primary indicator of whether we have the correct dose reduction of Huntington's proteins in CSF. And we will want to see a meaningful reduction of that protein. We're also looking at other measures, but that's the key measure. And I think we said that we hope to have information about this by the end of the year or early next year. I think that's what we said. Is that right, Wade?

Wade Walke

Management

That's correct.

Lynne Parshall

Management

Yes.

Stanley Crooke

Management

We remain encouraged by what we're seeing in the clinical trial of -- in terms of tolerability and safety and are looking forward to working with our partners at Roche over the rest of the way.

Operator

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Dr. Crooke for any closing remarks.

Stanley Crooke

Management

If there are no further questions, I want to thank everyone for their interest and attention. And we think 2017 is off to a strong start financially and in all the other ways and look forward to keeping you posted on the progress that we make as the rest of the year unfolds. Thank you.

Operator

Operator

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