Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) Q4 2023 Earnings Call Transcript
Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) Q4 2023 Earnings Call Transcript February 21, 2024
Ionis Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.06, expectations were $-0.78. 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 the Ionis Fourth Quarter and Full Year 2023 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, Megan. Before we begin, I encourage everyone to go to the Investors section of the Ionis website to view the press release and related financial tables we will be discussing today, including a 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 website that accompany today’s call. With me this morning are Brett Monia, Chief Executive Officer; Richard Geary, Chief Development Officer; and Beth Hougen, our Chief Financial Officer. Eric Swayze, our Executive Vice President of Research; Eugene Schneider, Clinical Chief Clinical Development Officer; and Onaiza Cadoret, Chief Global Product Strategy and Operations 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. At Ionis, we are proud of our scientific heritage. We have united groundbreaking science and technology with a relentless passion to discover and develop new transformational medicines. And now that we have validated the broad applicability of our RNA-targeting platform, we’re on the brink of independently delivering our medicines directly to patients. Over the next several years, we expect to successfully launch multiple medicines on our own, while continuing to expand our technology so that we can address the needs of even more patients. This will be a key driver of our next phase of growth, and we’re committed to investing in all capabilities needed to accomplish this.
Last year was a remarkable year for Ionis, and we’re already off to a great start in 2024. In fact, just yesterday, the FDA granted Breakthrough Therapy Designation to olezarsen for FCS. This is a very important outcome as Breakthrough Therapy designation is designed to expedite development and review of therapies intended to treat serious conditions that have preliminary clinical evidence showing that the therapy may offer substantial improvement over available treatments. Before we get to all the other exciting things planned for this year, I’ll first recap some of our key achievements in 2023. First, we received 2 FDA approvals for Ionis discovered medicines, QALSODY for SOD1-ALS, and WAINUA for ATTR polyneuropathy. QALSODY is the first drug approved to treat a genetic form of ALS.
It was granted accelerated approval in the U.S. early last year for patients with SOD1-ALS. And we are also pleased to cap off a highly successful year with the approval of WAYNUA for ATTR polyneuropathy in late December. The WAINUA launch is well underway in the U.S. through our co-commercialization partnership with AstraZeneca, and we’re executing on our strategy to bring WAINUA to patients globally with additional potential approvals in Europe and Canada this year and more regulatory submissions and approvals on the way. Based on its strong overall profile, including highly positive Phase 3 data, which we reported last year, together with the freedom of simple at-home monthly self-administration, we believe WAINUA is very well positioned to become the therapy of choice for ATTR patients who remain underserved by current therapies.
With a larger ATTR cardiomyopathy indication, we continue to advance our CARDIO-TTRransform study as planned. As the largest study ever conducted in this patient population, CARDIO-TTRransform is positioned to be a landmark study designed to deliver a very rich data set. We expect the data we generate to 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 very well positioned to bring WAINUA to patients in the U.S. and around the globe. We also recently delivered positive Phase 3 top line data readouts for two additional important medicines: olezarsen in FCS and donidalorsen in HAE.
In the Phase 3 BALANCE study in patients with FCS, olezarsen showed significant triglyceride reductions, substantial reductions in acute pancreatitis events and a favorable safety and tolerability profile. We remain on track to file for marketing approval in the U.S. and EU this year, positioning olezarsen for potential approval in the U.S. by the end of the year, assuming we get priority review. With this timing, we expect olezarsen to be our next approved medicine and our first independent launch. We were also pleased with the positive top line data we reported last month from the Phase 2 OASIS HAE study of donidalorsen for the prophylactic treatment of hereditary angioedema. In the Phase 3 study, donidalorsen met the primary endpoint with a statistically significant reduction in the rate of HAE attacks in patients treated every 4 weeks or every 8 weeks, along with a favorable safety and tolerability profile.
With these positive data now in hand, we’re preparing our regulatory submission to the FDA, which will include both every 4-week and every 8-week dosing. We expect donodolorsen to be our second, independent U.S. launch. Additionally, our partner, Otsuka, is preparing to submit for marketing improvement in Europe. Based on our Phase 3 results and a durable efficacy and favorable safety data seen long term in the ongoing Phase 2 open-label extension study, we believe donidalorsen could be an attractive new treatment option for patients with HAE. We look forward to presenting the full Phase 3 data for both olezarsen and donidalorsen later this year. We also made significant progress expanding our rich Phase 3 pipeline. Last year, we began the year with 6 medicines in Phase 3 development.
And this year, we began with 9 medicines in Phase 2. These new Phase 3 additions include Zilganersen, our wholly owned medicine for Alexander disease and two partner programs, Bepirovirsen for chronic HBV and IONIS-FB-LRx for IgA nephropathy. We also continued to make great strides last year in advancing our industry-leading RNA-targeting technology. We advanced our first Bicycle-siRNA muscle-targeting LICA drug for a heart failure indication into preclinical development, which AstraZeneca licensed in the fourth quarter. And we expect to advance additional medicines utilizing our muscle targeting technology this year. We also made substantial progress in our efforts to deliver our CNS medicines across the blood-brain barrier. Most recently, we established a new partnership with Vect-Horus to utilize their novel protein-based approaches to systemically deliver our medicines to the CNS.
This adds to our multipronged approach to traverse the blood-brain barrier with our novel treatments to further strengthen our leadership position in treating CNS diseases. Our accomplishments throughout 2023 provide great momentum and position us well for a catalyst-rich 2024. Today, Ionis is at a key inflection point with the recent approvals of 2 medicines. Three positive Phase 3 readouts and numerous upcoming Phase 3 readouts expected over the next couple of years. And at the same time, we’ve also made great progress across the rest of our rich pipeline and advance our leading technology for our future medicines, all of which sets us up to bring a steady cadence of new transformational medicines to patients for years to come. We will continue to focus on building and advancing our wholly-owned pipeline, which will position us to deliver even more medicines directly to patients.
We expect that the investments we’re making over the next few years will drive an outsized opportunity to earn multibillion dollar revenue from our proprietary pipeline, generating next-level value for all Ionis stakeholders. And with that, I’ll turn the call over to Richard to discuss our recent pipeline progress. Next, Beth will review our 2023 financial results and provide our 2024 financial guidance. And then I’ll wrap things up before taking your questions. Richard?
Richard Geary: Well, thank you, Brett. We had many notable pipeline achievements in 2023, some of which you heard with the highlight being the approval in December of WAINUA in the U.S. for patients with ATTR polyneuropathy. WAINUA was approved based on the NEURO-TTRansform results in Week 35. In this study, WAINUA demonstrated powerful and sustained TTR suppression, stop neuropathy disease progression and improved neuropathy impairment and quality of life. These highly positive results were reinforced at Week 66 and 85 and as the only approved medicine for the treatment of ATTR-polyneuropathy that can be self-administered via autoinjector. We believe WAINUA is well positioned to reach newly diagnosed patients and patients who remain underserved by current therapies.
WAINUA’s robust profile also supports our confidence in the potential to benefit patients in the much larger ATTR cardiomyopathy patient population. Our conviction was reinforced with the data we presented at HFSA late last year, that showed improvements in cardiac structure and function in a predefined cardiac subpopulation of patients in NEURO-TTRansform. And in January, additional data was published in the Journal of American Heart Association showing encouraging results in a cohort of patients with hereditary ATTR cardiomyopathy from the NEURO-TTRansform study. With over 1,400 patients, CARDIO-TTRansform is the largest and most comprehensive study ever conducted in ATTR cardiomyopathy patients. We designed the study to generate a rich data set that we believe will be key for physicians and payers in this evolving and dynamic treatment landscape.
This includes generating data for key subgroups, such as patients on a stabilizer and those naive to stabilizers. We are also conducting advanced cardiac imaging substudies as part of our overall program. These include an MRI sub-study and a syntography substudy. We believe these data will generate even more valuable data about the potential benefits of WAINUA in cardiomyopathy patients by evaluating how WAINUA is affecting changes in the heart itself. The FDA recently granted WAINUA Fast Track designation for the treatment of ATTR cardiomyopathy, which can expedite the regulatory review process. Receiving this designation further reinforces our confidence in WAINUA’s potential to be a transformational treatment in this underserved and growing patient population.
With CARDIO-TTRansform fully enrolled, we remain on track for data as early as 2025. olezarsen is poised to be the first medicine we bring to market independently. With the positive Phase 3 results from the BALANCE study in patients with FCS, we are preparing our NDA and MAA submissions. Additionally, we’re pleased that the FDA has granted olezarsen both orphan drug designation and breakthrough therapy designation, which can help expedite the review of this new medicine for the treatment of FCS. As a reminder, in the BALANCE study, the 80-milligram dose of olezarsen demonstrated statistically significant reductions in triglycerides, robust target engagement and a favorable safety and tolerability profile. Most importantly, olezarsen demonstrated unprecedented substantial and clinically meaningful reductions in acute pancreatitis attacks.
We are looking forward to presenting the BALANCE study data at the American College of Cardiology Annual Scientific Session in early April. Based on these positive data, olezarsen is positioned to become the standard of care for patients with FCS. We’re excited to bring this important medicine to patients with olezarsen’s first potential approval late this year, assuming priority review. We’re also developing olezarsen for patients with severe hypertriglyceridemia or SHTG. Our ongoing Phase 3 studies for SHTG are progressing nicely, and we remain on track for data next year. Following closely behind olezarsen is donidalorsen, which we anticipate will be our second independent launch assuming approval. Donidalorsen has the potential to be an attractive new prophylactic treatment option for Hereditary Angioedema patients, many of whom continue to experience unpredictable, painful and severe attacks despite currently available prophylactic treatments.
In the recently reported Phase 3 OASIS-HAE results, donidalorsen demonstrated statistically significant reductions in the rate of attacks in HAE patients, treated every 4 or every 8 weeks. In addition, donidalorsen achieved statistical significance on the extensive set of secondary endpoints in the Q4 week dose group and key secondary endpoints in the Q 8-week group, which we expect to be key differentiators for donidalorsen in the prophylactic market. Donadolorsen also demonstrated a favorable safety and tolerability profile in the study. And additionally, we are encouraged the following completion of the treatment period in the Phase 3 study, over 90% of the randomized patients entered the ongoing OASIS plus open-label extension. These positive Phase 3 results build on the positive durable results we have seen in the Phase 2 and Phase 2 OLE studies.
In the Phase 2 open-label extension study, donidalorsen demonstrated substantial reductions in HAE attacks that were sustained and durable over 2 years in addition to a favorable safety and tolerability profile. We anticipate donidalorsen could evolve the HAE prophylactic treatment paradigm. And what I mean by that, based on the Phase 3 results, donidalorsen has the potential to extend dosing intervals to monthly or every 2 months using an auto-injector from the current standard of care, which is dosed every 2 to 4 weeks using a vial and a syringe, and with an attractive efficacy, safety and tolerability profile demonstrated in the OASIS-HAE Phase 3 study, we expect donidalorsen to be a treatment of choice for many HAE patients. We’re busy preparing the NDA, which will include both 4-week and 8-week dosing options.
Additionally, Otsuka is preparing to submit for marketing approval in Europe, and we’re pleased that we just recently received orphan drug designation for donidalorsen in the EU. We’re really looking forward to presenting the Phase 3 OASIS data at a medical congress by midyear, along with the Phase 3 results, we’re also planning to present results from the OASIS-PLUS study. The OASIS-PLUS study 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. The Switch study is evaluating patients who have transitioned to donidalorsen from other prophylactic HAE medications. Turning now to our leading neurology franchise, which today includes 3 marketed breakthrough medicines that we discovered and developed.
SPINRAZA, the leading medicine for the treatment of SMA; WAINUA, which was just recently approved for ATTR-polyneuropathy and QALSODY approved to treat SOD1-ALS patients in the U.S. last year. Behind our approved neurology medicines is a robust and growing clinical pipeline of medicines to treat both rare and broad neurological diseases. By the end of this year, we expect to have 6 wholly owned neurology medicines in clinical development including ION717 for Prion disease, which recently began clinical testing. Among our partnered neurology programs late last year, we completed enrollment in the Phase 1/2 HALOS study for ION582 in patients with Angelman syndrome. We also shared some encouraging initial observations from this study at the FAST meeting in November.
These data included a reduction in slow wave EEG delta activity in approximately 70% of patients and an increase in faster frequency rhythms in over 80% of the patients, both compared to baseline activities. While direct comparisons are difficult and should be viewed with caution, this improvement in EEG activities exceeds what is observed in natural history studies over the same time period. Also, a majority of patients in the study showed improvement compared to baseline and overall functioning on the total daily score, a direct measure of functioning across multiple domains. And on the Angelman syndrome CGI change scale, which captures clinical impression of the patient, we look forward to reporting more data from the [indiscernible19:35] study by midyear.
With the successes we’ve achieved to date and the breadth of the pipeline in development, it’s clear that our neurology franchise sets IONIS apart as a leader in this space. The Angelman study is one of several mid-stage data readouts we have planned for 2024 that if positive, could further add to our rich Phase 3 pipeline and bolster our ability to deliver a steady cadence of transformative medicines to patients for years to come. This year, we’re looking forward to many key catalysts, including detailed Phase 3 data presentations and regulatory submissions for olezarsen and donidalorsen, several expected marketing approvals, decisions for WAINUA in various countries and potential launch of olezarsen assuming priority review and approval late this year.
We will keep you updated on our progress throughout the year. And with that, I’ll turn it over to Beth.
Beth Hougen: Thank you, Richard. 2023 was a strong year underscored by similarly strong financial results, in which we delivered substantial revenue, while simultaneously advancing our pipeline and preparing to bring WAINUA, olezarsen and donidalorsen to market. As a result, we delivered a non-GAAP operating loss of $247 million, a significant improvement compared to 2022 and our 2023 guidance. By significantly, we significantly exceeded 2023 revenue guidance by more than $200 million, earning revenues of $325 million and $788 million for the fourth quarter and full year, respectively. . Revenue more than doubled in the fourth quarter of 2023 and increased 34% for the full year, both compared to the same periods in 2022. These increases were primarily driven by increased R&D revenue, resulting from the business development successes we achieved last year.
We earned $479 million of R&D revenue in 2023, which included revenue from our new collaborations with Otsuka, Roche and Novartis. In addition, we earned significant payments from AstraZeneca, including $50 million for the U.S. approval of WAINUA for ATTR-polyneuropathy and $36 million for the licensing of ION826, a drug nearing clinical development designed to treat heart failure, both of these in the fourth quarter. The substantial R&D revenue we continue to generate reflects the value that our pipeline and technology are creating as numerous partnered programs advance. We also earned $309 million in commercial revenue with the majority coming from SPINRAZA. The sales of SPINRAZA and our associated royalties were comparable year-over-year.
And while fourth quarter sales were impacted by the timing of shipments in certain markets, SPINRAZA remained the global market leader in SMA. Importantly, with WAINUA’s FDA approval and recent launch, we look forward to adding WAINUA to our commercial revenue streams, which currently includes SPINRAZA, QALSODY, TEGSEDI and WAYLIVRA. Our non-GAAP operating expenses of $1.35 billion were slightly or approximately 4% above guidance, primarily due to certain one-time costs, including the non-cash charge associated with the lease exit and the license fee we paid to Vect-Horus in the fourth quarter. Excluding those one-time expenses, our operating expenses were within our guidance range at $994 million. As expected, our operating expenses increased for the full year compared to 2022 as we continue to advance key programs in our pipeline.
The increase in our R&D expenses was due to increased clinical study costs, which were higher because our Phase 3 studies were fully enrolled or nearly fully enrolled throughout last year. For the next several years, we expect our R&D expenses will stabilize near the current level as we move numerous wholly owned medicines through development. Also, as expected, our SG&A expenses increased year-over-year as we invested ahead of the WAINUA, olezarsen and donidalorsen launches. We expect our SG&A expenses to increase as we invest in our commercial infrastructure to support the launches of our Ionis-owned and co-commercialized medicines. In addition, we exceeded our 2023 cash guidance by ending the year with $2.3 billion in cash and investments.
Our ending cash was higher than projected, primarily due to the significant payments from the business development transactions we completed last year and the successful convertible note refinancing we opportunistically completed last June, which provided us with cash earmarked to repay the remaining convertible notes due this year. We expect to carry the positive momentum generated by our strong 2023 performance into this year by deploying our capital resources towards growth opportunities to unlock next level value. This is the foundation for our 2024 full year financial guidance, which we’re pleased to announce today. We project to earn more than $575 million in revenue. Our total expected revenue for 2024 includes a sizable base of commercial revenue with SPINRAZA as the cornerstone.
We expect the resilience SPINRAZA has demonstrated to continue at our royalties to reflect that. We’re excited that WAINUA is on the market, and the launch is off to a good start. AstraZeneca is responsible for booking product sales, and we will earn royalties in the mid-20% range on the U.S. sales. With significant focus on patient identification and education, we are looking forward to adding initial WAINUA royalty revenue this year. And as more new patients are identified and the launch ramps up, we expect revenue to grow. We project meaningful R&D revenue from our partnered programs this year, although we anticipate R&D revenue will be lower than it was last year. Notably, a significant portion of our R&D revenue in 2024 and approximately $150 million to $175 million will consist of non-cash amortization from partner payments we received in prior years.
We have the potential to earn cash generating revenue for regulatory milestones such as the EU approvals of WAINUA and QALSODY, license fees and R&D funding from our partners. Our 2024 operating expense guidance reflects our commitment to independently bring our medicines to patients while also continuing to exercise sound fiscal stewardship. As a result, we expect our 2024 operating expenses to increase in the mid-single-digit range compared to 2023, excluding the impact of one-time costs last year. Our planned expense growth will come almost entirely from increases in our SG&A expenses. With the WAINUA launch underway, our SG&A expenses will include our minority portion of WAINUA’s sales and marketing costs, which are in the high teens to low 20% range.
After having built our commercial capabilities over the last couple of years, we now have a fully integrated commercial organization capable of delivering Ionis own medicines to patients except of course for the necessary field team. Today, our commercial organization is enthusiastically preparing for our first independent launch, olezarsen for FCS. Assuming approval, we expect to add the olezarsen FCS field team later this year. We’re also scaling our capabilities as needed ahead of bringing donidalorsen to the market next year, also assuming approval. Our projected R&D expenses reflect the important investments we are making to grow our wholly-owned pipeline and advance our next wave of opportunities. We believe it’s important to make investments today in our wholly owned programs because of the potential multibillion dollar revenue opportunity these programs represent for us.
And we can make these pipeline investments while keeping R&D expenses steady. Because in several of our late-stage studies then, we can reallocate resources toward our earlier-stage programs as they advance into later stages of development. With meaningful revenues and modest expense growth, we are projecting a non-GAAP operating loss of less than $475 million. Additionally, we project a year-end cash balance of approximately $1.7 billion. The vast majority of the projected year-over-year change in our cash reflects the investments we are making in our pipeline and our commercialization activities. In addition, we have $45 million earmarked to address our remaining 2024 convertible notes that are coming due late this year. Looking beyond 2024, we expect to continue making significant investments in our commercial infrastructure to support our goal to expand our proprietary pipeline and independently deliver our medicines to patients.
As more and more of our Ionis own medicines come to market, we expect the proportion of product revenue to increase significantly. We estimate that the programs in our pipeline today have a combined multibillion dollar peak sales potential. And following behind these are additional attractive opportunities coming from our prolific research engine. Finally, we plan to continue to invest in technology that will enable us to expand our therapeutic opportunities and optimize delivery of our medicines. Our investments in 2024 and for the next few years reflect our plan to strategically deploy our resources to achieve the robust revenue growth and positive cash flow that we believe our pipeline can deliver. And with that, I’ll turn it back to Brett.
Brett Monia: Thanks, Beth. We are very proud of the remarkable progress we made last year, and we’re very much looking forward to building on this positive momentum this year. We have arrived where we are today by being focused on a clear vision and a clear set of strategic objectives to achieve our vision, building and advancing our pipeline and delivering medicines that we conceive, discover and develop directly to patients is a top priority for Ionis. We have established Ionis as a leader in cardiovascular and neurology drug discovery and development with one of the richest mid and late-stage pipelines. Our pipeline is delivering. We reported multiple positive key readouts over the past year and are positioned to deliver additional important results in the near-term.
We also expect to add more wholly owned medicines to our pipeline this year and for many years to come. We are pleased that our first co-commercialization launch of WAINUA is off to a good start, and we’re very much looking forward to our upcoming independent launches for olezarsen and donidalorsen. In parallel, our partner programs are progressing on track with key Phase 2 data readouts planned this year, an important Phase 3 readouts next year and beyond. We’re extending our leadership position in oligonucleotide therapeutics by expanding, 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 and potentially transformational medicines to the market for many years to come.
As I mentioned at the start of this call, Ionis is at a key inflection point. We have great momentum and a substantial number of upcoming value-driving catalysts. To support all of our strategic priorities we will continue to make the necessary investments to ensure success and drive next level value for Ionis stakeholders with financial responsibility and discipline. We’re really looking forward to an outstanding year and sharing our progress along the way. And with that, we will now pause and open the call up for questions.
Operator: [Operator Instructions] Our first question will come from Jason Gerberry with BofA. Please go ahead.
See also 10 Countries with the Most Military Drones in the World and 12 SUVs With the Highest Resale Value in 2024.
To continue reading the Q&A session, please click here.
