U.S. Markets closed

Edited Transcript of IONS earnings conference call or presentation 9-May-19 3:30pm GMT

Q1 2019 Ionis Pharmaceuticals Inc Earnings Call

Carlsbad May 21, 2019 (Thomson StreetEvents) -- Edited Transcript of Ionis Pharmaceuticals Inc earnings conference call or presentation Thursday, May 9, 2019 at 3:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Brett P. Monia

Ionis Pharmaceuticals, Inc. - Founder, COO, Senior VP of Translational Medicine & Director

* C. Frank Bennett

Ionis Pharmaceuticals, Inc. - SVP of Antisense Research

* D. Wade Walke

Ionis Pharmaceuticals, Inc. - VP of IR

* Elizabeth L. Hougen

Ionis Pharmaceuticals, Inc. - Senior VP of Finance & CFO

* Stanley T. Crooke

Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President

================================================================================

Conference Call Participants

================================================================================

* Benjamin Jay Burnett

Stifel, Nicolaus & Company, Incorporated, Research Division - Associate

* Chad Jason Messer

Needham & Company, LLC, Research Division - Senior Analyst

* David Neil Lebowitz

Morgan Stanley, Research Division - VP

* Eliana Rachel Merle

Cantor Fitzgerald & Co., Research Division - Research Analyst

* I-Eh Jen

Laidlaw & Company (UK) Ltd., Research Division - MD of Healthcare Research & Senior Biotechnology Analyst

* Jessica Macomber Fye

JP Morgan Chase & Co, Research Division - Analyst

* Rick Stephen Bienkowski

SVB Leerink LLC, Research Division - Associate

* Ritu Subhalaksmi Baral

Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst

* Yanan Zhu

Wells Fargo Securities, LLC, Research Division - Associate Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning and welcome to the Ionis Pharmaceuticals Q1 2019 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.

--------------------------------------------------------------------------------

D. Wade Walke, Ionis Pharmaceuticals, Inc. - VP of IR [2]

--------------------------------------------------------------------------------

Thank you, Gary. Before we begin, I encourage everyone to go to the Investor section of Ionis website to find the press release and related financial tables, including a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today.

We believe non-GAAP financial results better represent the economics of our business and how we manage our business.

We've also posted slides on our website that accompany our discussion today. With me on the call are Stan Crooke, Chairman of the Board and Chief Executive Officer; Beth Hougen, Chief Financial Officer; Brett Monia, Chief Operating Officer; and joining us for Q&A will be Damien McDevitt, Chief Business Officer; and Frank Bennett, Senior Vice President of Research. I would like to draw your attention to Slide 3, which contains our forward-looking luggage statement. We'll begin -- 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 Stan.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [3]

--------------------------------------------------------------------------------

Thanks, Wade, and good morning, everyone, and thank you for joining us on today's call. We've had a busy week of various calls, so thanks.

You may have noticed that this week, we unveiled our new brand. We think it better expresses our commitment to patients and the passion that we have for the science that creates life transforming of medicine.

It depicts and reinforces our culture, our technology, our business model and our position as a force for life. So now let's turn to Q1. We are off to a strong start, building on the momentum from last year.

Our first quarter financial results significantly outperformed the first quarter of 2018 putting us well on track to achieve or perhaps more likely, potentially, exceed our 2019 financial guidance.

Importantly, we achieved these strong financial results while investing aggressively and broadly in our business, including commercializing 2 medicines through early in next year and advancing our pipeline in technology.

SPINRAZA's blockbuster performance continued in the first quarter and continued to significantly contribute to our financial results. SPINRAZA has blazed new ground in -- of the -- and is the established standard-of-care in the treatment of previously fatal and untreatable disease, SMA. Even today, 2-plus years after marketing, Biogen is continuing to generate new results and gain further understanding of SPINRAZA's benefited patients with all forms of SMA.

Recent clinical experience continues to demonstrate durability of benefit in patients with SMA, with some of these patients having been treated for up to 6 years. With that, these results demonstrate that the benefit is not only durable, but is also increasing over time with the longer treatment resulting in even better benefit.

So in sum, all of the information that we have about SPINRAZA leaves us here. That is that if we treat infants before they become symptomatic, most of those infants seem to develop like normal, healthy babies. So the earlier we treat, the better. And the longer we treat, the better.

In addition, we are working with Biogen on follow-on medicines for SMA with the potential to offer the same exceptional benefit as SPINRAZA with less frequent dosing. We anticipate moving this new medicine into development soon.

Having completed the first full quarter of the TEGSEDI launch, we are encouraged by the initial sales and the feedback that we're getting from physicians and patients.

Payers in the U.S. have been receptive to TEGSEDI, and we are also seeing good progress in expanding access in the EU.

WAYLIVRA is now our third antisense medicine approved in just over 2 years. We and Akcea are very pleased that the EU recognizes the value WAYLIVRA can bring to patients with FCS, and we look forward to making this new medicine available to FCS patients who desperately need it. Our pipeline of Phase III and near Phase III programs also achieved significant value-driving milestones in this quarter. Our medicines targeting SOD1-ALS and Huntington's disease entered Phase III development. And new data from ongoing clinical trials of -- on these medicines continue to support potential of these medicines to improve the lives of patients with these fatal and debilitating diseases.

The next wave of medicines advancing toward Phase III this year include our LICA programs for LP(a)-driven cardiovascular disease and our LICA program for TTR amyloidosis. These 2 programs are examples of advances in our technology that have enhanced the performance of our medicines in the clinic and enabled us to broaden our pipeline to address, not only rare diseases but, many of the common diseases that affect millions of patients. Including these 4 medicines, we have at least 10 more medicines that have the potential to enter Phase III trials by the end of next year, and of course, that's a very exciting agenda for us and those patients. Now I'll turn the call over to Beth to provide us the financial update.

--------------------------------------------------------------------------------

Elizabeth L. Hougen, Ionis Pharmaceuticals, Inc. - Senior VP of Finance & CFO [4]

--------------------------------------------------------------------------------

Thank you, Stan. In the first quarter of this year, we significantly outperformed the first quarter of last year.

Our total revenues more than doubled to nearly $300 million, resulting in operating and net income on both the GAAP and non-GAAP basis. Our non-GAAP operating and net income in the first quarter were $167 million and $126 million, respectively. In addition, we further strengthened our balance sheet by ending the fourth quarter with $2.3 billion of cash.

Given our strong financial results, we are optimistic that we are on track to achieve and possibly exceed our guidance of non-GAAP net income.

And as we gain more clarity on the rest of the year, we may update our guidance, as we have in previous years.

With multiple medicines on the market, our commercial revenue continues to grow. In the first quarter, our commercial revenues were $68 million compared to $42 million last year.

Our increased commercial revenue was driven by substantial SPINRAZA royalties and the contribution of TEGSEDI product sales.

We are encouraged by SPINRAZA's better-than-expected global sales of $518 million in the first quarter.

Global sales increased by 10% compared to the fourth quarter and 42% compared to last year.

We earned commercial revenue from SPINRAZA royalties of $60 million, a 46% increase compared to last year. As a reminder, while our SPINRAZA royalty rate reset at the end of each year, because of SPINRAZA's strong first quarter performance, we have nearly reached the highest tier. Worldwide sales growth was driven by multiple factors, including adolescent and adult SMA patients initiating treatment in the U.S. and increased penetration in major geographies outside the U.S.

At the end of the first quarter, there were over 7,500 patients on SPINRAZA treatment around the globe, including more than 7,000 commercial patients from over 40 countries, as well as patients from the SPINRAZA expanded access program and clinical trials.

Biogen believes the global SMA patient population is significantly larger than initial estimates, which supports their expectation of continued growth from patient uptake in new markets. In the U.S., continued penetration among this adolescent and adult SMA patients is expected to be a significant driver of growth.

The TEGSEDI launch continues to show strength with $7 million in sales in the first quarter and $9 million since the launch began late last year. In the U.S., physicians and patients are motivated by the potential benefit of TEGSEDI treatment. Patients on TEGSEDI are primarily being treated by cardiologists, neurologist and hematologist.

Akcea is seeing good progress with naive patients starting TEGSEDI treatments. Patients are also transitioning to commercial drug from the Early Access Program and open-label extension study. Notably, we are seeing patients switching to TEGSEDI from both competitive medicines in the U.S. and EU.

We and Akcea are committed to expanding access to TEGSEDI for hATTR patients around the world.

Last month, the first reimbursement process in the EU is completed with NICE issuing a positive recommendation for TEGSEDI in England.

Reimbursement discussions are also ongoing in other EU countries.

In addition, PTC Therapeutics is continuing to work with Brazilian regulators towards approval. With the recent approval of WAYLIVRA, Akcea is preparing to launch in the EU with Germany expected to come online next quarter. We anticipate the launch of WAYLIVRA to roll out across the EU in a similar sequence to TEGSEDI with additional EU countries launching next year. And in Latin America, PTC is laying the groundwork to deliver WAYLIVRA to patients there.

In recognition of the EU approval of WAYLIVRA, we earned a $6 million milestone payment from PTC.

R&D revenue continues to be a significant and sustainable source of revenue for us. It is a particularly important element of our financial strength because it funds a large portion of our non-GAAP R&D expenses.

In the first quarter, we earned $229 million in R&D revenue from our successful collaborations, which accounted for 77% of our total revenue. Our significant R&D revenue in the first quarter was driven in large part by the license fee we earned from Novartis.

For the full year, we expect the mix of commercial and R&D revenue to be more balanced.

In the first quarter, we earned $36 million from amortization of upfront payments and milestone payments we earned from our partners reflects the value we create as our medicines advance.

For example, we earned a $35 million milestone payment from Roche in the first quarter when they advanced IONIS-HTTRx into Phase III development for Huntington's disease. License fees are an additional significant element of our R&D revenue, as demonstrated by the $150 million we earned from Novartis when they licensed AKCEA-APO(a)-LRx.

We also earned license fees when companies license our technology to their partners. For example, last month, Alnylam announced a partnership in which they licensed our technology to Regeneron.

Once this transaction closes, we expect to earn $20 million from Alnylam. Our non-GAAP operating expenses in the first quarter increased slightly to $130 million compared to the same quarter last year.

This increase was primarily due to our investment in commercializing TEGSEDI globally. The fact that we can prepare to commercialize TEGSEDI and advance a pipeline of over 40 medicines with such a modest increase in expenses, clearly sets us apart from our peers.

We also recognized $31 million of income tax expense during the quarter. The increase in our income tax expense was primarily due to our expectation that we will generate U.S. federal and state taxable income this year.

Our income tax expense has 2 components. The first component relates to our federal taxes. We expect to use our deferred tax assets to fully offset our U.S. federal taxable income and therefore, we don't anticipate paying our federal income taxes with cash.

The other component of our expense relates to the estimated taxes we will pay in cash for our state income taxes.

Although we are recording the expense this year, we will not have to make the majority of the payment for this liability until the first quarter of 2020.

Our financial results in the first quarter put us on track to achieve and possibly exceed our 2019 financial guidance. In large part because of the payment we earned from Novartis in the first quarter, we have already achieved approximately 40% of our full year revenue guidance of more than $725 million. We are also on track to meet and possibly exceed our guidance of non-GAAP operating income of more than $100 million and to be profitable on the bottom line on a non-GAAP basis.

We continue to project that we will have approximately $2 billion in cash at year-end. We have accomplished these strong results by continuing to successfully leverage our efficient platform technology and our partner's resources to advance both partnered and Ionis-owned medicines. And looking to the remainder of this year and into the future, we have confidence that we can continue to deliver sustainable financial growth while maintaining our focus on ever-increasing innovation to drive value to patients in need.

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

--------------------------------------------------------------------------------

Brett P. Monia, Ionis Pharmaceuticals, Inc. - Founder, COO, Senior VP of Translational Medicine & Director [5]

--------------------------------------------------------------------------------

Thanks, Beth. As you can see from this slide, 2019 is already off to a strong start with numerous successes and important value-driving achievements across the business.

Just this week, we and Akcea were extremely pleased to announce the European approval of WAYLIVRA to treat people with genetically confirmed FCS, who are at high risk for pancreatitis. Because TEGSEDI and WAYLIVRA share much of the same infrastructure in Europe, preparations to launch WAYLIVRA are well under way. And in Germany, Akcea's commercial team is already in place.

And in the U.S. and Canada, our discussions with regulators continue as we pursue a path forward to expand WAYLIVRA access to Akcea's patients worldwide.

Turning attention to our neurology programs.

We believe antisense technology is the leading drug discovery platform to treat a range of devastating neurological diseases.

As such, the AAN conference is an important opportunity every year for us and our partners to highlight the progress of our neurological disease programs. This year, Biogen presented data from ongoing studies of SPINRAZA and the Phase I/II study of IONIS-SOD1Rx, which we now refer you as tofersen.

In addition, Roche presented data for IONIS-HTTRx and Huntington's disease, and Akcea presented data from the neuro TTR open-label extension study for TEGSEDI.

SPINRAZA data from the SHINE open-label extension study and the ongoing NURTURE study continue to show increased benefit with longer SPINRAZA treatment with no change to the established, favorable safety profile, reinforcing SPINRAZA's place as the trusted choice in the treatment of all patients with SMA.

In the SHINE open-label extension study in children and adolescent SMA patients, the long-term SPINRAZA treatment continues to demonstrate durability of benefit with some SMA patients now treated for up to 6 years and the benefit is not only durable, but it also increases over time with longer treatment resulting in greater benefit.

Additionally, these data further enforced SPINRAZA's established and highly favorable safety profile. In the NURTURE study, we continue to see that when SPINRAZA treatment is initiated in presymptomatic infants, most patients are developing and achieving motor milestones like their healthy counterparts. Switching gears, data presented by Biogen from the Phase I/II study of tofersen in patients with SOD1-ALS demonstrated marked reductions in SOD1 protein, which were associated with benefit in measures of ALS disease progression after only 3 months of treatment.

Based on these data along with the positive safety profile, Biogen has initiated a Phase III study by adding a new patient cohort to the existing study protocol.

This study could potentially support an accelerated path to regulatory approvals.

Moving on to our Huntington's program. As a reminder, data from the Phase I/II study of IONIS-HTTRx in patients with Huntington's disease demonstrated for the first time substantial reductions in mutant huntingtin protein, a known cause of the disease. Results from the study were published this week in the New England Journal of Medicine, underscoring the medical community's excitement for IONIS-HTTRx and its potential to treat patients with this devastating disease.

We and Roche are encouraged by the performance of IONIS-HTTRx to date in the open-label extension study. Data from this study presented at AAN demonstrate how long-term treatment produces sustained reductions in the mutant huntingtin protein, and that these reductions are maintained with bimonthly dosing. The 9-month data from this study provide support for Roche's decision to change the Phase III study protocol to explore less frequent dosing regimens.

We believe this change will greatly simplify the operation of the Phase III study as less frequent dosing is more manageable and desirable for patients and physicians.

Although this introduces a slight delay in the study initially, by easing the burden on study sites in patients with less frequent dosing visits, we don't expect this delay will extend the study and may even accelerate the time to completion.

In total, Roche has established a comprehensive clinical program that provides the potential for a rapid path for patients.

We look forward to additional data from the OLE study later this year or early next year. Also at AAN, data were presented from the NEURO-TTR open-label extension study of TEGSEDI.

These data demonstrated long-term efficacy in hATTR patients with polyneuropathy.

Patients who initiated TEGSEDI treatment during the blinded portion of the Phase III NEURO-TTR study before entering the OLE, demonstrated long-term benefit in both neurological disease progression and measures of quality of life.

Moreover, patients treated with placebo in the NEURO-TTR study who went on to receive TEGSEDI in the OLE achieved rapid and sustained benefit as well.

And importantly, safety and tolerability continued to be easily manageable with no new safety concerns identified in this study.

We also have 2 LICA medicines advancing towards Phase III studies this year. AKCEA-APO(a)-LRx for treatment of millions of people with LP(a)-driven cardiovascular disease worldwide is our most advanced LICA program.

With our partner Novartis, AKCEA-APO(a)-LRx is advancing towards a Phase III cardiovascular outcomes study later this year with patients expected to begin enrolling early next year.

We're pleased with the progress Novartis has already made, including opening an epidemiology study to more precisely estimate the prevalence of patients around the world of the LP(a)-driven cardiovascular disease.

Importantly, Novartis' commitment to this program including their decision to license AKCEA-APO(a)-LRx is further validation of our game-changing LICA technology to treat very large patient populations.

We and Akcea are also making excellent progress in advancing AKCEA-TTR-LRx, our LICA follow-on medicine, to treat people with all forms of TTR amyloidosis. The Phase I/II study of AKCEA-TTR-LRx is proceeding well and will be wrapping up shortly. And in the second half of this year, we plan on presenting results from this Phase I/II study and to initiate the Phase III study in patients with polyneuropathy, due to their hereditary TTR amyloidosis followed soon after by a Phase III study in patients with wild-type and hereditary TTR cardiomyopathy.

In addition, our mid-stage pipeline continues to perform very well, setting us up nicely to potential have at least 10 medicines in Phase III studies by the end of next year.

Looking to near-term upcoming catalysts. In the coming months, we expect AstraZeneca to complete a Phase II study of danvatirsen, our Generation 2.5 antisense therapy targeting STAT3.

AstraZeneca recently stated that they anticipate advancing danvatirsen into pivotal studies.

Additionally, we completed enrollment in a Phase II study of IONIS' Factor XI Rx in patients with end-stage renal disease late last year, and we're looking forward to data from this study around the middle of this year.

IONIS' Factor XI Rx is the first anti-thrombotic medicine that selectively targets the intrinsic coagulation pathway as a novel strategy to achieve reduced clotting without the risk of increased bleeding.

As a reminder, data from our Phase II study in approximately 300 patients undergoing total knee replacement published in the New England Journal of Medicine, demonstrated the IONIS Factor XI Rx is the first anti-thrombotic agent in development to demonstrate robust reductions in Factor XI activity and anti-thrombotic activity superior to the standard-of-care low-molecular-weight heparin without significant risk of bleeding.

We believe our antisense medicines targeting to Factor XI have the potential to be used broadly in patients at risk for thrombosis, especially patient populations with additional risks for bleeding.

We also look forward to sharing data from the phase I study of the LICA follow-on IONIS Factor XI Rx around midyear.

Following these studies, Bayer in advance one or both of these programs further into development. And later this year, we plan to have data from additional clinical programs, including HPV and acromegaly as well as from our first generation 2.5 LICA program.

Also, Biogen recently selected a new target for a fatal neurological disease identified under our broad 2018 research collaboration. This program is another excellent example of the productivity of our collaboration with Biogen, which we established to fully exploit our technology to identify even more innovative antisense medicines for neurological diseases.

We look forward to this program in other novel medicines moving into development in the future. And now, I'll turn the call back over to Stan to close this portion of the call.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [6]

--------------------------------------------------------------------------------

Thanks, Brett. This year, we are celebrating our 30th anniversary. I'm proud of the value that we have delivered to patients and to shareholders and I'm also proud of the way we have done it. And looking to the coming years, we are confident that we have many opportunities for value creation that far exceed the substantial value that we have delivered thus far. Intent to continue to build value for patients and shareholders as we continue to deliver revenue and earnings growth, advance, broaden and expand our mature pipeline and continue to advance our technology platform.

We are particularly excited that in addition to advancing one of the largest rare disease pipelines in the industry, we also have a substantial pipeline of medicines in development focused on bringing benefits to patients with more common health issues. AKCEA-APO(a)-LRx for LP(a)-driven cardiovascular disease and IONIS Factor XI-LRx for clotting disorders are excellent examples of the potential transformative medicines addressing more common diseases that are advancing in our pipeline. Unlike others, who follow, we are creating substantial value by being leaders. We have led and we continue to lead in advancing RNA-targeted drug discovery. We have led and we continue to lead in creating maximum value for patients by addressing novel molecular targets that have potential to revolutionize the treatment of many diseases. And we are leading and focusing on maintaining our long-term innovation and identifying the optimal organization to commercialize each of the medicines in our pipeline, treating each medicine as the precious asset than it is. Because of our business model, today, we are substantially profitable -- sustainably profitable, while launching 2 new medicines, advancing our pipeline of more than 40 novel medicines and continuing to advance our technology. We are committed to continuing to lead the industry in innovation. In aggregate, these attributes separate us very clearly from our peers and are the foundation of our growing competitive advantage. With that, I'll -- I'd like to turn the call over for Q&A. So Gary, if you could set us up, please?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question comes from Chad Messer with Needham & Company.

--------------------------------------------------------------------------------

Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [2]

--------------------------------------------------------------------------------

One thing we learned at AAN, just sort of hanging around the posters and talking to people, is the idea or I guess it's a hypothesis that SOD1 reduction would be beneficial perhaps, even in patients that are -- do not have SOD1-driven disease. Just wondering what you guys' thoughts on that are? And whether it's possible in the future if we saw that pursuit clinically by Roche?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [3]

--------------------------------------------------------------------------------

We agree with the notion. There are a variety of lines of evidence that suggests that lowering SOD1 could bring benefit in patients who have other forms of ALS. And I would reserve their response to the second question, Chad, for our partners in Biogen.

--------------------------------------------------------------------------------

Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [4]

--------------------------------------------------------------------------------

Biogen, yes, Biogen.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [5]

--------------------------------------------------------------------------------

Did I say Biogen?

--------------------------------------------------------------------------------

Elizabeth L. Hougen, Ionis Pharmaceuticals, Inc. - Senior VP of Finance & CFO [6]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Brett P. Monia, Ionis Pharmaceuticals, Inc. - Founder, COO, Senior VP of Translational Medicine & Director [7]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [8]

--------------------------------------------------------------------------------

I misspoke earlier. I misspoke earlier, sorry.

--------------------------------------------------------------------------------

Operator [9]

--------------------------------------------------------------------------------

The next question comes from Paul Matteis with Stifel.

--------------------------------------------------------------------------------

Benjamin Jay Burnett, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [10]

--------------------------------------------------------------------------------

This is Ben Burnett on for Paul. Just 2 quick ones. The first one on the TTR LICA program. Is there anything you can disclose, I guess, at this time with regards to the cardiomyopathy study that you're planning? And I guess have you made a decision internally about a comparator arm and could this include tafamidis?

--------------------------------------------------------------------------------

Brett P. Monia, Ionis Pharmaceuticals, Inc. - Founder, COO, Senior VP of Translational Medicine & Director [11]

--------------------------------------------------------------------------------

Sure, Ben. This is Brett. As I mentioned -- as we mentioned in the earnings call just now, we're wrapping up the Phase I study and the -- our LICA follow-on is looking great, and we'll present some of that data in second half of this year. And we're putting the final touches on the Phase III designs not just for cardiomyopathy, but also for polyneuropathy. And our discussions with regulators have gone very, very well. We're very pleased with how those discussions have proceeded. There's 2 things to think about when designing clinical endpoints, as you know. One is what it takes to get a drug approved and then second what it takes to get a drug successfully commercialized. And that's an important balance. Tafamidis has set a significant bar, and cardiologists like to see outcomes. They like to see hard survival improvements. And we think that, that will be of a very important component to the design of our Phase III study. We think it should be. We think it needs to be. Whether or not how tafamidis plays into that is to be determined. We're very pleased that tafamidis is approved, Biotech cardiac patients needed drug. There is nothing out there for them and we put Pfizer in bringing that to their finish line.

But whether or not we would do a head-to-head for -- against tafamidis or some sort of combination with it or those sorts of things we're just putting the touch -- the final touches on that and those discussions are ongoing with Akcea and with regulators.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [12]

--------------------------------------------------------------------------------

So Ben, it won't be too long before we're able to disclose with some precision what the -- what that study will look like.

--------------------------------------------------------------------------------

Benjamin Jay Burnett, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [13]

--------------------------------------------------------------------------------

Okay. Understood. That's great color. I guess just one other quick one on the acromegaly, you mentioned you have a Phase II readout coming up. I guess I was just wondering if you could provide a little color on this. And I guess what would constitute success here? And I don't know if you said it, but is this top line expected this year?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [14]

--------------------------------------------------------------------------------

The answer to the second question is, yes. We're excited about the growth hormone program. It too is a LICA form of the growth hormone drug. And while there are agents that are used in patients with acromegaly, they have very substantial limitations. And based on a fairly thorough examination of -- in animal models of various types, we believe that our growth hormone drug could have significant advantages both in side effects and efficacy compared to the existing agents. And that study is designed to give us initial guidance about whether our expectations are going to be achieved.

So it's an important study. It's -- it enrolled quite a bit faster than we expected. Blind to safety tolerability are pristine, like the rest of our LICA drugs. So we're looking forward to sharing the data with you. We are looking forward to having exciting results.

--------------------------------------------------------------------------------

Operator [15]

--------------------------------------------------------------------------------

The next question comes from Mani Foroohar with SVB Leerink.

--------------------------------------------------------------------------------

Rick Stephen Bienkowski, SVB Leerink LLC, Research Division - Associate [16]

--------------------------------------------------------------------------------

This is Rick dialing in for Mani. And congrats on all the data updates at AAN. I had a couple of questions about SOD1-ALS. My first is, today, how common is the genetic screening of ALS patients? I guess I'm trying to get a sense of how many patients with SOD1-ALS are currently identified today? And how easy or difficult it will be to identify eligible patients once tofersen is approved?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [17]

--------------------------------------------------------------------------------

Well, first of all, thanks for the kind comments, and I'll turn the question over to Frank.

--------------------------------------------------------------------------------

C. Frank Bennett, Ionis Pharmaceuticals, Inc. - SVP of Antisense Research [18]

--------------------------------------------------------------------------------

Yes. So in major medical centers that treat ALS patients, almost all the ALS patients are screened for genetic variants that cause ALS. That's largely driven by the C9orf72 mutations with there are a lot of new patients being identified. For those patients who have SOD1-ALS, it's been in their family for generations. And so many of the families now have seen a parent or a cousin or a brother succumb to the disease so it's pretty quickly, genetically identified that they're at risk for the disease. And I guess -- I would guess with this data, screening is going to be ramped up. And so I would anticipate that there are more patients that will be identified that have SOD1 mutations as a contributor to ALS.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [19]

--------------------------------------------------------------------------------

Do you want to comment on the number of patients that are currently identified as having a SOD1-driven ALS?

--------------------------------------------------------------------------------

C. Frank Bennett, Ionis Pharmaceuticals, Inc. - SVP of Antisense Research [20]

--------------------------------------------------------------------------------

So approximately 2% of the patients -- 2% of all the ALS patients have SOD1-ALS patients. So that's probably, in the U.S., close to 1,000 patients and the similar number in Europe. They are identified and they do anticipate that that number will increase with the data that we just announced.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [21]

--------------------------------------------------------------------------------

Thanks, Frank.

--------------------------------------------------------------------------------

Rick Stephen Bienkowski, SVB Leerink LLC, Research Division - Associate [22]

--------------------------------------------------------------------------------

That's very helpful. And just -- speaking more generally about the programs and ALS. Could you share with us if there have been any learnings or takeaways from the tofersen clinical data that are helping to shape the way you're thinking about the development of treatments for the C9orf (sic) [C9orf72] ALS?

--------------------------------------------------------------------------------

C. Frank Bennett, Ionis Pharmaceuticals, Inc. - SVP of Antisense Research [23]

--------------------------------------------------------------------------------

Yes. I mean, what we identified with the SOD1-ALS is that, it's really the first drug to ever be put into patients that's on target. So we know what causes the disease. And it -- the drug directly targets the toxic protein that's being produced. And so that gives us a lot of confidence that for another genetic variant of ALS, the C9orf72 patients that by directly targeting the gene that causes the disease and reducing that toxic protein that we have a high probability of being successful, we still have to prove that in the clinical stage, but that gives us a lot of confidence.

There are some movements that we're learning along the process as far as what clinical endpoints are -- good solid clinical endpoints to use in the clinical studies. And we are incorporating those into the study and then we're eliminating some other endpoints that weren't that valuable for SOD1 patients in interpreting the data. So it's helping to streamline the C9orf72 for that program.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [24]

--------------------------------------------------------------------------------

And I think more broadly, it's just another manifestation of the value of having multiple entries in disease categories that are of strategic importance. That aggregate learning that one achieves by having multiple medicines for ALS, multiple medicines for Alzheimer's, multiple medicines for NASH and other problems, it's just tremendously valuable. And the other thing that we learn from every study since we have this integrated safety database that we publish all the time on is we learn a great deal about the safety tolerability of our agents as affected by disease and affected by the different sequences that are in those medicines. So specifically to ALS, a lot has actually been learned as is being learned, but more generically, that strategy we think is really paying important dividends for us, particularly, with the comments and behaviors of ASOs of similar -- of the same chemical class.

--------------------------------------------------------------------------------

Operator [25]

--------------------------------------------------------------------------------

The next question is from David Lebowitz with Morgan Stanley.

--------------------------------------------------------------------------------

David Neil Lebowitz, Morgan Stanley, Research Division - VP [26]

--------------------------------------------------------------------------------

I was just curious if you could remind us on the size of the EAP program for TEGSEDI? How many -- how big was the program? And I guess, how much of it has been transitioned thus far to commercial drug?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [27]

--------------------------------------------------------------------------------

Brett?

--------------------------------------------------------------------------------

Brett P. Monia, Ionis Pharmaceuticals, Inc. - Founder, COO, Senior VP of Translational Medicine & Director [28]

--------------------------------------------------------------------------------

Sure. David. Akcea has not disclosed details on the numbers of patients in the EAP nor how many of those patients constitute the sales that they presented yesterday. What we can say is that we have a very nice mix of patients on commercial right now from the EAP, OLE as well as a lot of new scripts as well. The scripts being written and the balance -- and we're pleased about the balance between them, the EU and the United States as well. But those details are still -- haven't been disclosed.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [29]

--------------------------------------------------------------------------------

Yes. To say it simply, the number of new prescriptions is key factor that we're watching and of that and what fraction of those come from our naive patients as opposed to those that have been previously exposed to TEGSEDI, and we're pleased with what we're seeing.

--------------------------------------------------------------------------------

Operator [30]

--------------------------------------------------------------------------------

The next question is from Jim Birchenough with Wells Fargo Securities.

--------------------------------------------------------------------------------

Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [31]

--------------------------------------------------------------------------------

This is Yanan dialing in for Jim. So first question is on SPINRAZA in adult patients. Could you talk about your experience in terms of efficacy, for example, for SPINRAZA in adult patients because it's a value driver due to the high prevalence? And also, I think, at SGCT, 1 doctor or presenter mentioned that some centers may not be treating adult patients due to control data. Could you talk about maybe the extent of that kind of situation?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [32]

--------------------------------------------------------------------------------

Of course, what we know is, does not derive from a randomized placebo-controlled trial. But what we have learned is the SPINRAZA appears to produce similar quality of responses and character of benefit in the adult patient as in the adolescent as in infants and the child with SMA. And I would refer you to Biogen for the -- to answer the second question.

--------------------------------------------------------------------------------

Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [33]

--------------------------------------------------------------------------------

Got it. Then on TEGSEDI. So just wondering, you commented that you have a preserved patient switching from competing medicines. Could you elaborate a little bit on that? For example, what drives patients to switch? And also perhaps, characterize a little bit more on your effort in increasing the diagnosis rate given that the vast majority of additional patients remain undiagnosed?

--------------------------------------------------------------------------------

Elizabeth L. Hougen, Ionis Pharmaceuticals, Inc. - Senior VP of Finance & CFO [34]

--------------------------------------------------------------------------------

Yanan, it's Beth. So on the question regarding conversion. What we are seeing are patients converting both in the U.S. and EU from both competitive products. And I think from our perspective and Akcea's perspective, TEGSEDI provides an important benefit in the independence that it allows these patients through the subcu once weekly administration, and we believe that, that benefit is being realized in the marketplace. So that's our view on the conversions.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [35]

--------------------------------------------------------------------------------

I think there's probably a great deal more information in the developing in patients who are converting. And there are issues with limited efficacy of perhaps one of the agents that's being used and there are real issues with IV infusion and that sort of thing that are certainly drivers. But I don't think we know enough to comment definitively on the factors that are driving these conversions.

--------------------------------------------------------------------------------

Operator [36]

--------------------------------------------------------------------------------

The next question comes from Ritu Baral with Cowen.

--------------------------------------------------------------------------------

Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [37]

--------------------------------------------------------------------------------

I wanted to ask you about another specific comment you made during the TEGSEDI launch. You mentioned that cardio -- you're using cardiologists, neurologists and hematologists prescribing. Is that sort of the rank order of the distribution of prescribing physicians that you're seeing? And how is that mix as well as payer coverage of all being with continuing conversations with the payers and insurance plans?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [38]

--------------------------------------------------------------------------------

Well, we don't -- we're not going to answer exclusively the question of the number of -- the ratio of physicians of certain various specialties because that number's going to change all the time. What I can say and I would again encourage you talk to our colleagues at Akcea for more detail, what we can say is that we are pleased with the kinds of specialties that are involved in prescribing TEGSEDI. And Beth, did you want to handle at a question?

--------------------------------------------------------------------------------

Elizabeth L. Hougen, Ionis Pharmaceuticals, Inc. - Senior VP of Finance & CFO [39]

--------------------------------------------------------------------------------

In terms of -- absolutely. In terms of payers, Ritu, we've got -- we're in -- under contract with the top 10 payers in the country. We have relationships with all of the payers. We've got the vast majority of covered lives under contract. And so we're not seeing reimbursement as any of a detriment to TEGSEDI's commercial acceptance. We're having no issues there whatsoever. So we're very pleased with our relationships with payers.

--------------------------------------------------------------------------------

Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [40]

--------------------------------------------------------------------------------

Are you finding that you're having conversations about value-based outcomes or agreements or any other conversations on prior authorization or separate with certain plans?

--------------------------------------------------------------------------------

Elizabeth L. Hougen, Ionis Pharmaceuticals, Inc. - Senior VP of Finance & CFO [41]

--------------------------------------------------------------------------------

It's -- we're more than happy to enter into value-based agreements with payers, but in our conversations, they just haven't been interested in that. Our -- their view is that for the patient population for TTR amyloidosis with polyneuropathy, that value-based agreements are just not meaningful. And so while we're open to the idea and continue to be open to the idea, we're not seeing that being requested from payers. And as I said, we've got TEGSEDI covered by the top -- at least the top 10 and relationships with all the rest.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [42]

--------------------------------------------------------------------------------

Which, again, I would refer you to our colleagues at Akcea for more definitive answers.

--------------------------------------------------------------------------------

Operator [43]

--------------------------------------------------------------------------------

The next question comes from Ellie Merle with Cantor Fitzgerald.

--------------------------------------------------------------------------------

Eliana Rachel Merle, Cantor Fitzgerald & Co., Research Division - Research Analyst [44]

--------------------------------------------------------------------------------

Congrats on all the updates at AAN. So just another question on the SOD1 program. At the 100 mg dose -- if I'm looking at the poster correctly, it looks like you're seeing about, like, a 37% reduction in the SOD1 protein. I guess -- what's your plans of the dose level going forward? And I mean, do you have plans to dose escalate further to, I guess, increase the SOD1 reduction? And I guess just to pose the question, like, why not try to maximize the reduction of SOD1?

--------------------------------------------------------------------------------

C. Frank Bennett, Ionis Pharmaceuticals, Inc. - SVP of Antisense Research [45]

--------------------------------------------------------------------------------

Yes. So it's fair to recognize that the measurement is SOD1 in CSF, not SOD1 in CNS tissues. And so the SOD1 in CSF underestimates the amount that's being reduced in spinal cord and motor cortex in the case of ALS. And so we've identified that, that was a dose that was more than adequate to produce clinical benefit in preclinical models, I should say. And so we're very happy with the doses that we've identified, and I don't anticipate us exploring higher doses for the studies.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [46]

--------------------------------------------------------------------------------

I think even more important than that is how profound the evidence of benefit that was observed in 3 months study in the initial work that we've done. So optimizing dose in rare diseases is always a challenge and we think we've got a very effective dose, and I wouldn't preclude over time that other doses and schedules that we study, but we're very pleased with the sort of responses we've gotten with this dose. We're going to continue to use it.

--------------------------------------------------------------------------------

Eliana Rachel Merle, Cantor Fitzgerald & Co., Research Division - Research Analyst [47]

--------------------------------------------------------------------------------

Got it. That's very helpful. And then, I guess, just on Huntington's, could you help us think about what we should expect in terms of further updates on the program as we progress through the year? I know you guys -- it looks like you're scheduled to have a presentation at the Huntington's meeting in late June. I guess, how should we think about what we might see at that presentation?

--------------------------------------------------------------------------------

C. Frank Bennett, Ionis Pharmaceuticals, Inc. - SVP of Antisense Research [48]

--------------------------------------------------------------------------------

Yes. So the Huntington's meeting in June is a patient meeting. And so they'll have a presence where they're presenting to the patients, but I would not expect the scientific update. We're looking for medical meetings in the latter part of the year or early next year to provide a next update on the open-label extension. And then the Phase III study, of course, that's a blinded study, so there will be no updates on that.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [49]

--------------------------------------------------------------------------------

And once again, I'll refer you to Roche.

--------------------------------------------------------------------------------

C. Frank Bennett, Ionis Pharmaceuticals, Inc. - SVP of Antisense Research [50]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Operator [51]

--------------------------------------------------------------------------------

The next question from Jessica Fye with JPMorgan.

--------------------------------------------------------------------------------

Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [52]

--------------------------------------------------------------------------------

Maybe just a first one just following up on the acromegaly LICA product. What's the dosing frequency there? Is it comparable to the SST depot injections? And then what's the target reduction of growth hormone receptor? And how does that translate to IGF-I reduction?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [53]

--------------------------------------------------------------------------------

Well, it's a weekly dosing like -- no, it's monthly dosing like all of -- like we're using for all of our LICA drugs. And as we have indicated for the rest of the LICA family of drugs, if we thought it would be better for the patient to go to quarterly dosing, it would be very simple for us to do it. Of course, we're reducing directly growth hormone receptor and in animals, we showed that there was an almost direct correlation between growth receptor reduction and you measure that with growth hormone binding protein in blood and IGF. Of course, we don't know yet what that relationship is in patients that's going -- that is one of the primary questions we're asking in the study, which we -- and we expect to have preliminary answers to that question and lots of others later this year.

--------------------------------------------------------------------------------

Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [54]

--------------------------------------------------------------------------------

Okay. And then when we think about the TEGSEDI number reported for the quarter, it seems like share was about 20% just based on sales. I'm curious, if you're seeing signs pointing to better share over time, maybe based on like feedback you're getting from Akcea? And if so, can you talk a little bit about what the leading indicators might be there?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [55]

--------------------------------------------------------------------------------

Yes. Again, as we think about the launch of TEGSEDI versus our competitor, we remembered that we are [about] a quarter behind. And so we compare that $7 million to the $12 million that was reported in the first quarter of this year. And so in that sense, we're very pleased with the market share that we have. I think it's still far too early to draw firm conclusions about what market share TEGSEDI will have versus others. I would let the numbers tell that as the year progresses.

--------------------------------------------------------------------------------

Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [56]

--------------------------------------------------------------------------------

Okay. Great. And maybe just the last one. I think Novartis on their call was highlighting the durability of benefit with Zolgensma and I guess while acknowledging that maybe parents still want to do that all they can to treat kids with SMA. So I'm curious if you expect any disruption in type I new starts on SPINRAZA when that product launches? Just any -- or any kind of, like, lag in starting SPINRAZA in patients, can they go on gene therapy?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [57]

--------------------------------------------------------------------------------

I do think that the data Roche presented are encouraging data -- on Novartis, sorry. But I -- the way I think of this is not about that drug or any other drug, but about SPINRAZA. SPINRAZA is proven to work and proven to work extraordinarily well. There are 7,500 patients on treatment. We treated patients for more than 6 years.

We know -- absolutely know that if we treat SMA patients before symptom onset that most of the infants mature and develop like normal healthy children, it's really hard to be healthy and we also know that we have great benefit and the longer we treat, the better in older patients. And finally, we have an established, essentially pristine safety database with many thousands of years of patient treatment. So as a parent, if I had a baby diagnosed with SMA, there is no way I would use another less studied agent with unknown levels of durable efficacy and side effects on my baby in place of SPINRAZA. So that's speaking for myself, but I can't imagine many parents to feel any other way.

One more question, and then we'll close.

--------------------------------------------------------------------------------

Operator [58]

--------------------------------------------------------------------------------

And that question comes with I-Eh Jen with Laidlaw & Company.

--------------------------------------------------------------------------------

I-Eh Jen, Laidlaw & Company (UK) Ltd., Research Division - MD of Healthcare Research & Senior Biotechnology Analyst [59]

--------------------------------------------------------------------------------

Congrats on the progress. Just a follow-up on the tofersen that data release at AAN that Biogen provided some clinical data there including rating scale and lung function improvement. So would you mind comment a little bit more or more details on what you see that data and how would that potentially translate to the ultimate benefits of the patients?

--------------------------------------------------------------------------------

C. Frank Bennett, Ionis Pharmaceuticals, Inc. - SVP of Antisense Research [60]

--------------------------------------------------------------------------------

Yes. So the ALS FRS is standard rating scale for ALS. It's what all companies use for determining whether there is an improvement or a decline in ALS patients' outcome. And generally, untreated in the general population, there's about 1 to 1.5-point drop per month in the disease. And over 3 months, that's a 4.5-point drop, which I think is what they saw in the study as well for the general population. And in the rapidly progressing patient populations, it declines even faster. And what we observed is we stabilize the disease in these patients over 3 months. There essentially was no decline, which is truly remarkable in ALS patients. Generally, they're trying to ferret out small changes in the slopes of these declines and they are just not powered well enough to determine that effect. This is really the first study to show stabilization of the disease and more impressively, it stabilized the most rapidly progressing form of the disease in these patients. So I don't know if you were at the posters at the meeting, but you had to kind of swim through to the crowd of participants there, that's one of the more exciting things that's happened in the ALS in the last 20, 25 years.

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [61]

--------------------------------------------------------------------------------

And I think it's a little too early to comment on the various components of the rating scale, but at least at preliminary first blush, it looks like the improvements are occurring pretty much across-the-board.

--------------------------------------------------------------------------------

I-Eh Jen, Laidlaw & Company (UK) Ltd., Research Division - MD of Healthcare Research & Senior Biotechnology Analyst [62]

--------------------------------------------------------------------------------

And just curious, do you anticipate or do the people anticipate the drug to get approved if the current trends, or at least short-term trend continues or maintain?

--------------------------------------------------------------------------------

Stanley T. Crooke, Ionis Pharmaceuticals, Inc. - Founder, Chairman, CEO & President [63]

--------------------------------------------------------------------------------

Yes.

Well, first thanks everyone for your attention and interest in the work that we're doing. I want to close by emphasizing our financial performance. Our business model is working and our first quarter financial results were very impressive and very impressive in the context of aggressively spending across the Board in every single element of the business. And so we think that puts us in a uniquely strong position to continue to expand and invest and we have great things to invest in. We have technology that's generating medicines in an extraordinarily efficient way and medicines that are truly transformational. And so this is indeed the beginning of another extraordinarily exciting year for Ionis, and we'll be telling you about it. We look forward to talking about it in the coming months. Thanks.

--------------------------------------------------------------------------------

Operator [64]

--------------------------------------------------------------------------------

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