Analyst Conference Summary


Ionis Pharmaceuticals

conference date: August 7, 2018 @ 8:30 AM Pacific Time
for quarter ending: June 30, 2017 (Q2, second quarter 018)

Forward-looking statements

Overview: Because y/y Q2 revenue was up only 5%, emphasized y/y H1 revenue increase of 15%. Tegsedi approved in EU and Waylivra gets FDA advisory committee recommendation.

Basic data (GAAP):

Revenue was $117.7 million, down 18% sequentially from $144.4 million, and up 5% from $112 million year-earlier.

Net income was negative $40.4 million, down sequentially from negative $1.4 million, and down from negative $3.1 million year-earlier. This is the income (loss) attributable to shareholders.

EPS (diluted) was negative $0.29, down sequentially from negative $0.01, and down from negative $0.02 year-earlier.


Expects to end 2018 with over $1.8 billion in cash. On track for full year non-GAAP positive operating income. Spinraza revenue is expected to continue to ramp.

Conference Highlights:

CEO Stanley Crooke said " Ended the first half in a strong financial position and expect and even stronger second half."

Ionis' GAAP net loss increased in the first half of 2018 primarily due to increased operating expenses related to the commercialization of Tegsedi and Waylivra.

Elizabeth L. Hougen, Ionis CFO said "Our strong financial results were driven by a more than three-fold increase in commercial revenue from Spinraza compared to last year. Looking ahead to the second half of this year, we expect to continue to strengthen our financial performance as we add product sales from Tegsedi and potentially Waylivra to our growing Spinraza royalties. We also have the potential to earn numerous milestone payments from our partnered programs. We will have two full quarters of amortization from our expanded Biogen collaboration, providing further revenue growth. We are on track to achieve our third consecutive year of pro forma operating income even as we prepare to launch two new drugs this year. In addition, we expect to end 2018 with more than $1.8 billion in cash." R&D revenue has become a consistent and growing source of revenue.

Inotersen has been renamed Tegsedi. Volanesorsen has been renamed Waylivra. Tegsedi was approved in the EU for polyneuropathy in adults with hATTR (hereditary transthyretin amyloidosis), with the launch on track for Q3, starting in Germany. EU pricing will be announced at German launch. PTC Therapeutics will market Tegsedi in Latin America. Waylivra is on track for approval and launch in the U.S. and EU in 2018.

"Beginning in Q2 2018, Ionis' R&D revenue will include revenue from the amortization of the $500 million technology access fee and equity premium related to Ionis' expanded strategic research collaboration with Biogen."

In April 2018, Ionis received an additional 18.7 million shares of Akcea's stock from the license of Tegsedi and AKCEA-TTR-LRx to Akcea, increasing the ownership percentage to approximately 75%, up from 68%. $16.2 million of Ionis' net loss in Q2 was attributable to interest in Akcea.

Revenue consisted of: $57 million from Spinraza royalties; $0 million licensing and other royalties; $61 million R&D revenue from collaboration agreements, which included $12 million in milestone payments.

Spinraza is approved in the US, EU, Japan and Canada, with reimursement approved in 24 countries. Spinraza sales by Biogen were $423 million, up from $364 million in Q1. Royalties are tiered, so Q1 tends to be the low.

Akcea revenue and expenses, or 75% of them, are included with Ionis's, as consolidated P&L. Except inter-company transactions like licensing fees. Ionis is licensing 4 potential drugs to Akcea.

Non-GAAP numbers: net income negative $22.7 million, down sequentially from $27.0 million, and down from $18.2 million year-earlier. This excludes $33.9 million of non-cash stock-based compensation.

Cash ended at $1.98 billion, up sequentially from $1.04 billion. The increase was due partly to the consolidation of Akcea cash of $381 million, but mostly due to receipt of cash in the Biogen deal. Debt was $550 million in 1% convertible senior notes.

Inotersen (Tegsedi) is now under review in the U.S. for hATTR (hereditary TRR amyloidosis). Data shows a strong benefit. Believes will gain a significant market share if approved. The PDUFA date shifted out to October 6, 2018. Believes has significant commercial potential due to its once-per-week dosing. Licensed to Akcea, which is majority owned by Ionis.

Volanesorsen (Waylivra) is under review in the U.S., EU and Canada for FCS (familial chylomicronemia syndrome). It will be marketed by Akcea. Launch planned for mid-2018. Focus is on identifying FCS patients. Could expand label to other diseases, with a trial in progress.

IONIS-HTTRx was granted EU designation for possible accelerated assessment for Huntington's disease. Robust, dose-dependent reductions of mHTT have been observed in people with Huntington's disease treated with IONIS-HTTRx in Phase 2.

IONIS-MAPT was granted EU orphan drug designation for frontotemporal dementia.

AKCEA-APO(a)-LRx for CVD (cardiovascular disease) should report Phase 2 results in the next few months.

Ionis earned a $7.5 million milestone payment from Achaogen on FDA approval of zemdri for complicated urinary track infections.

Positive Phase 2 clinical data on five LICA drugs for liver diseases reported, demonstrating consistent, positive performance and sustained target reduction with potential for monthly or less frequent dosing.

Ionis has entered a new collaboration with Biogen to discover and develop a swath of neurological therapies.

In the future Ionis expects to launch trials of up to 13 new drugs.

Ionis has a pipeline of 45 potential drugs. A growing number are wholly-owned.

Operating expense was $168 million, consisting of $102 million for R&D and $66 million for selling, general and administrative. Operating income was negative $50 million. Investment income was $5 million, interest expense $11 million. Income tax benefit $0.4 million. Net loss attributable to noncontrolling interest in Akcea $16.2 million.

Investor day will be November 9.


PTC deal decision to partner in Latin America? We have a lot to do, we would have to postpone Latin American sales if not for the PTC deal. They have an infrastructure in place, we would need to build one.

Cardiologists for Tegsedi launch? Our field team is already engaged in education. We have found the cardiologists do have many patients with polyneuropathy. We will be using a specialty pharmacy to track our metrics.

Tafamidis? We will learn more later this month. There is nothing for wild type right now, so depending on their results they might get some of that. We expect to pick up this space when we get our LICA product to market.

Visibility of research revenue growth? We think it will continue to grow, and substantially, as it has the last six or seven years. We see it as very sustainable. We have a sizeable pipeline to commercialize ourselves and our affiliates. Others require a larger infrastructure, and so we will do with larger companies.

TTR LICA neural population follow on? The first TTR LICA clinical study will start this year with a rapid development strategy. A label like Tegsedi's would allow for quicker development. The wild-type label would be a longer path. We are discussing options with Akcea and regulators. It is a Tegsedi pro-drug.

We looked at a number of targets for NASH, including within pathways, and picked the mechanism, DGAT2, that we think will be most effective. We think the accumulation of liver fat is a very complicated process.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my blog and Seeking Alpha articles.

Copyright 2018 William P. Meyers