Analyst Conference Summary


Ionis Pharmaceuticals

conference date: May 6, 2020 @ 8:30 AM Pacific Time
for quarter ending: March 31, 2020 (Q1, first quarter 2020)

Forward-looking statements

Overview: Slow revenue quarter, but making pipeline progress.

Basic data (GAAP):

Revenue was $133 million, down 73% sequentially from $494 million, and down 55% from $297 million year-earlier. However, revenue from drug sales was up.

Net income was negative $59 million, down sequentially from $204 million, and down from $90 million year-earlier.

EPS (diluted) was negative $0.35, down sequentially from $1.28, and down from $0.62 year-earlier.


Projects meaningful profitability for full year 2020. On track to achieve prior 2020 guidance.

Conference Highlights:

CEO Brett Monia said "Our commercial medicines continued to perform well, led by Spinraza. Our late-stage pipeline continues to advance, and we are particularly pleased that the tominersen Phase 3 study is fully enrolled, bringing us closer to potentially delivering this medicine to patients with Huntington's disease. Additionally, AKCEA-APO(a)-LRx was granted fast track designation in the U.S., underscoring the significant value this medicine could deliver to the millions of patients with Lp(a)-driven cardiovascular disease... We plan to initiate the pivotal study for AKCEA-APOCIII-LRx in patients with FCS, bringing us to six pivotal studies underway this year. We also plan to refile the Waylivra U.S. NDA and report additional proof-of-concept data from several of our programs this year. Our significant financial strength enables us to invest in our highest priorities, including advancing our Ionis-owned pipeline and our technology, and strengthening our commercial capabilities. Together, these achievements keep us positioned to deliver NDAs for ten or more of our medicines through 2025."

Spinraza sales by Biogen were $565 million, up 9% y/y.

Waylivra (volanesorsen) was approved in the EU for the treatment of adults with genetically confirmed familial chylomicronemia syndrome (FCS) at high risk for pancreatitis. Akcea sales in Q1 2020 were lumped in with Tegsedi. Launched in Germany by Akcea in Q3 2019, to be followed by other EU nations in 2020. Will refile for marketing authorization with the FDA in 2020. PC Therapeutics wil file for approval in Brazil.

From partners: $10 million from AstraZeneca for ION532. $7.5 million from Biogen for IONIS-MAPT. $5 million from Dynacure for IONIS-DNM2-2.5Rx

Tegsedi (Inotersen) sales were $15 million, up sequentially from $12 million, and from $7 million year-earlier. Tegsedi is licensed and sold by Akcea. Tegsedi was approved in the EU for polyneuropathy in adults with hATTR (hereditary transthyretin amyloidosis). Now commercial in moe than 12 countries, with additional EU launches planned for 2020.

Ionis sales and royalties, $ millions
therapy Q1 2020 Q4 2019 Q1 2019 y/y
Spinraza $66 $81 $60 10%
Tegsedi + Waylivra 15 13 7 114%
R&D collaboration 49 na 229 -79%

There is a wave of Ionis medicines heading to Phase 3 this year. We have at least 10 medicines with the potential to enter Phase 3 trials by the end of 2020.

SMA population treatable with Spinraza is larger than originally estimated, more than 45,000 patients in markets already established.

Huntington's and ALS therapies are in Phase 3 studies partnered with Biogen.

A Phase 1 study of ION224 for NASH was initiated in Q1 2020.

Akcea revenue and expenses are included with Ionis's, as consolidated P&L. Ionis owns 76% of Akcea. Except inter-company transactions like licensing fees. Ionis is licensing drugs to Akcea. Ionis plans to introduce 8 new drugs to the Akcea pipeline in 2020.

Non-GAAP numbers: net income negative $15 million, down sequentially from $212 million, and down from $127 million year-earlier.

Cash ended at $2.4 billion, down sequentially from $2.5 billion. Debt was $710 million convertible senior notes. Ionis repurchased 1.5 million shares of common stock for a total purchase price of $91 million.

Ionic plans to initiate a Phase 3 study of AKCEA-APOCIII-LRx in patients with FCS some time in 2020. Granted Fast Track designation by FDA.

In Q2 2020 Roche completed enrollment of patients in a Phase 3 study for IONIS-HTTRx (now Tominersen). It had been granted EU designation for possible accelerated assessment for Huntington's disease. Roche released data from the OLE study of IONIS-HTTRx in patients with Huntington's disease and changed dosing to once every four months.

AKCEA-APO(a)-LRx for CVD (cardiovascular disease) initiated its Phase 3 study. Novartis licensed this. Phase 2 results were publishing in the New England Journal of Medicine.

Tofersen (IONIS-SOD1Rx) Phase 3 study continues for ALS patients with SOD-1 mutation.

Positive Phase 1b/2 data for danvatirsen (IONIS-STAT3-2.5Rx) in combination with durvalumab were presented at ESMO 2019, demonstrating a response rate approximately double that of durvalumab alone, based on previous studies in patients with refractory head and neck cancer. Ionis earned a $17.5 million milestone payment from AstraZeneca. A separate undisclosed oncology program with AstraZeneca earned a $10 million milestone payment.

IONIS-C9Rx for the treatment of C9orf72-ALS was granted Fast Track designation by the FDA in Q1 2020.

IONIS-DNM2-2.5Rx for centronuclear myopathies advanced into a Phase 1/2 study in Q1 2020.

Ionis and Akcea initiated the Phase 3 study for the AKCEA-TTR-LRx in Q1 2020.

Ionis is in a collaboration with Biogen to discover and develop a swath of neurological therapies. The first patient was dosed in the Parkinson's study in Q3 2019. An Alzheimer's therapy was licensed in Q4 2019. Biogen plans to initiate a first-in-human study of ION541 in patients with sporadic ALS.

In the future Ionis expects to launch pivotal trials of up to 10 new drugs by the end of 2020.

Ionis continues to develop technologies that allow RNA therapies to almost any part of the body, including inhaled agents.

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

GAAP Operating expense was $194 million, consisting of $3 million for cost of goods sold; $116 million for R&D and $75 million for selling, general and administrative. Operating loss was $61 million. Investment income was $10 million, interest expense $11 million. Income tax benefit $3 million. Net income attributable to noncontrolling interest in Akcea $11 million.

Q&A summary:

Internal commercialization vs. licensing? We are prioritizing building the Ionis-owned pipeline. We do look at commercialization options. We will talk more about high-level strategy at the investor day in the fall.

CF (cystic fibrosis) timeline? Moving forward to complete enrollment this summer, to report out later this year. Enac inhibitor will also be in Phase 2 trials for other lung indications.

R&D trajectory? Revenues tend to be lumpy, but Q2 will look like Q1, then growth in the second half.

Most exciting readouts coming? Objective was 6 in 2020, with 2 successes already. Acromegaly. Hereditory angioedema. Hypertension. Potential for beta-thalessemia, but that could slip to 2021. CF program already meantioned.

ALS readouts are due next year. There are several causes of ALS, and two basic types, with sporatic the dominant type. Our candidate could address a majority of that majority. With Biogen we are looking at all the forms and mechanisms of ALS.

Waylivra refiling in US? We have collected additional data with Akcea. Our confidence has grown with the data and with meetings with the FDA.

APOCII-LRx? Phase 3 will focus on pancreatitis, enriching for that. Otherwise a lot like the Phase 2 trial.

Share repurchases? Given our expansion priorities, and the uncertainty in the environment, we are currently holding onto our cash.

Oral program? Looking to complete a phase of the study that will provide ample proof of concept. Bioavailability and PK, plus biomarkers. We have a subcutaneous version of the drug to make comparisons with.

We don't expect significant impact on trial timelines from the pandemic.

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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 2020 William P. Meyers