Ionis Pharmaceuticals, Inc.

And welcome to the Ionis Pharmaceuticals Third Quarter 2020 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 Block, Vice President, Investor Relations, to lead off the call. Please go ahead.

Thank you, Brandon. Before we begin, I encourage everyone to go to the Investor section of the Ionis website to find the press release and related financial tables available. including a reconciliation of 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 have also posted slides on our website that accompany our discussion today. With me on today's call are Brett Monia, our Chief Executive Officer, Beth Haugen, Chief Financial Officer, Oneza Katare, our Chief Corporate Development and Commercial Officer, and Richard Geary, Executive Vice President of Development. And joining us for Q&A, we have Eric Swazier, Executive Vice President of Research, and Kyle Genet, Chief Commercial Officer of Axia. I would like to draw your attention to slide three, which contains our forward-looking language. We'll 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 to Brett.

Thanks Wade, and good morning and thank you for joining us on today's call. As we near the end of 2020, we are well positioned to achieve our next stage of growth. Since our last update, we took the very important step of acquiring Axia. We believe that together as one company, we're stronger and more efficient with an even greater ability to achieve success today and well into the future. This transaction also represents a significant step forward in the evolution and execution of our commercial strategy. By combining Axia's commercial capabilities with the Ionisone pipeline, we move closer to fully maximizing the value of these medicines. And we're very pleased with the excellent progress we're making across our Ionisone pipeline and our pipeline overall. Our five ongoing phase three studies continue to progress well. We also remain on track to begin our sixth phase three study when we initiate phase three testing of ApoC3 LRX in FCS patients later this year. We're also evaluating larger indications for this medicine with an additional pivotal study potentially starting next year. Beyond our phase three pipeline, we continue to make excellent progress with our medicines in mid-stage development. The Ionis ENAC 2.5 RX data we reported last month provided additional support for our rapidly expanding platform of inhaled antisense medicines. Lupinorsin, Ionis Factor XI LRX, and Ionis HBB-RX all advance further in development with each medicine entering Phase IIb studies. Ion 541, one of our four ALS medicines in development, entered a Phase I-II study in patients with nearly all forms of ALS regardless of family history. IONIS PKK LRX has completed enrollment in a Phase II study in patients with hereditary angioedema, which is due to read out next year and is also under evaluation in a Phase II investigator study in hospitalized patients with severe COVID-19 complications in Brazil. And we further extended the reach of our technology this past quarter through a collaboration with Genuity Science. whose unique approach for new target identification is expected to enhance our already robust drug discovery and development capabilities. With these achievements, we are closer than ever to reaching our goal of 10 or more marketing applications through 2025, which should result in a large number of new marketed products. Importantly, we remain financially strong and on track to achieve our 2020 guidance. Coming up on December 7, we will be hosting our Virtual Investor Day. During the presentation, we look forward to sharing our commercial plans, provide several development program updates, and highlight some of the great progress we're making that is extending the reach of our technology. More information about this event will be released soon. And with that, I'll hand the call over to Beth to take us through our Q3 financial results. Oneza will then talk about the Axia integration, and Richard will review our recent pipeline achievements. After Richard, I'll wrap up our prepared remarks before taking your questions. Now, over to Beth.

Thank you, Brad. As we approach year end, we remain financially strong and well capitalized with the resources to achieve our goal of significant growth. Our acquisition of Axia is one of the steps we have taken this year to achieve this goal. By integrating the two companies into one, our business is further strengthened in numerous ways, including improving our already strong financial position. We now retain more value from AXIA's rich pipeline and commercial products. Additionally, we can use AXIA's current cash and future cash flows to advance our strategic priorities. And beginning next year, we expect to realize meaningful cost synergies from our integration activities. We delivered strong financial results in the third quarter, with revenues increasing by 10% compared to the prior quarter. And we earned operating income and net income both on a non-GAAP basis. Spinraza generated global sales of $495 million in the third quarter, resulting in $74 million in royalty revenue to IONIS. At the end of September, there were over 11,000 patients on Spinraza treatment worldwide, with growth driven by markets outside the United States. With a significant number of untreated SMA patients across numerous established and emerging markets, together with Spinraza's proven efficacy and safety profile, we in Biogen continue to see opportunity for growth. Biogen's DEVOTE study is progressing well. This study is evaluating the potential for higher doses of Spinraza to deliver even greater benefit to SMA patients of all ages. Enrollment in the open label safety cohort is now complete with enrollment in the randomized pivotal cohort to follow next. And early next year, Biogen plans to initiate the response study to evaluate Spinraza's benefit in patients with a suboptimal clinical response to gene therapy. Texetti and Wayliver continued to deliver growth in the third quarter. Product sales were $19 million, an increase of more than 15% compared to last quarter, and a nearly 60% increase over last year. We continue to see growth in the number of patients on Texetti across North America and Europe. We believe patients and physicians are choosing Texetti, in part due to its subcutaneous self-injection. enabling patients to take their therapy at home. This is one of the important benefits of Txeti, which has been especially important during the ongoing pandemic. In the United States, patients are starting and remaining on therapy, thanks in part to the excellent service provided by AXSIA's patient support program, AXSIA Connect. We continue to see growth with AXSIA's genetic testing program, with over 2,200 physicians and an increasing number of tests conducted to date. In Europe, we successfully achieved reimbursement and recognized revenue from multiple new markets, including Portugal, home to a large endemic HATTR patient population. And in Canada, TXETI reimbursement is in place in the largest provinces and through multiple private payers. We also moved closer to achieving public reimbursement for all type study patients in Canada. In Latin America, PTC Therapeutics is focused on new patient findings while continuing to negotiate pricing in Brazil. Now turning to Alibra, where we are generating revenue from a growing number of EU markets. In the UK, Axia finalized pricing and reimbursement with NICE. And in Latin America, PTC filed for marketing authorization in Brazil earlier this year and is working to expand access in other Latin American markets. And in the United States, we plan to refile with the FDA next year. During the third quarter, we earned R&D revenues of $65 million. This revenue included over $50 million from our neurological disease franchise, primarily driven by several Biogen-partnered programs. We expect a substantial increase in R&D revenue in the fourth quarter, including the $75 million milestone payment from Pfizer. Additionally, we recently obtained a favorable award in our arbitration proceeding with Alnylam. This award pertains to fees arising from Alnylam's agreement with Sanofi related to Fetuceran and its TTR products. The final judgment has not been determined but we expect it will add meaningful revenue in the fourth quarter. Our non-GAAP operating expenses in the third quarter increased compared to last year, primarily driven by our Phase III program for Axia, TTR-LRX, and progress with our other Ionis-owned medicines. With these results, we achieved operating income of $9 million and net income of $5 million for the third quarter, both on a non-GAAP basis. Early last month, we used our strong balance sheet to successfully complete our acquisition of Axia. Following the acquisition, we remain in a strong financial position with an estimated pro forma cash balance of $1.8 billion. Importantly, our entire cash balance is now available to us to advance Ionis' strategic priorities and to build value for our patients and our shareholders. We also anticipate achieving meaningful cost synergies as we progress the integration activities. And our financial statements will be much simpler. For example, beginning next year, we will no longer include a non-controlling interest adjustment on our P&L or balance sheet. With our third quarter results and our projections for increased revenues in the fourth quarter, we are on track to achieve our 2020 financial guidance of meaningful profitability. Our financial strength, including our substantial cash position, enables us to continue to invest in areas that we believe will accelerate growth. And with that, I'll turn the call over to Aneza to provide an update on the Axia integration and progress with our commercial strategy.

Great. Thank you, Beth. With the acquisition of Axia now closed, our process to merge the two companies into one is well underway. The transition team, which is made up of cross-functional leadership from both companies, is following an established playbook to achieve full integration while focusing on three primary goals. Our highest priority is to ensure our patients continue to receive Tecseti and Waylivera without interruption and with a high level of personalized support. Second, we are focused on ensuring our employees remain highly engaged and productive. And finally, we are looking to advance our commercial plans for the IONIS-owned pipeline with the addition of Axia's commercial capabilities. As we integrate the two companies, we are carefully reviewing all aspects of our business processes to ensure we are driving the greatest value for patients and shareholders. Through Axia, we now have access to payer health economics and outcomes research, medical affairs, and other capabilities to support our IONIS-owned pipeline. We look forward to adapting these capabilities and accelerating our go-to-market strategies as our medicines advance towards the market. At our Investor Day next month, I look forward to discussing our commercial plans for our neurological and other rare disease programs, as well as TTR-Leica and APAC-3-Leica. And with that, I'll turn the call over to Richard to discuss our key pipeline highlights.

Thank you, Anisha. As Brett said, we've continued to advance our pipeline in the third quarter with significant achievements across our neurological, pulmonary, and cardiovascular disease franchises. Starting with the neuropipeline, the Tomah Nurse in Phase III study in patients with Huntington's disease remains on track for data and potential regulatory filing in 2022. Ahead of the Phase III data, Our partner, Roche, plans to provide an update from the Phase I-II open-label extension and natural history studies next year. The Phase III study of Exia-TTR-LRX in patients with TTR polyneuropathy also continues to progress. Our ALS program has continued to grow with four medicines now in our pipeline for the treatment of ALS. The Phase 1-2 study of ION541, our first medicine designed to address nearly all forms of ALS, regardless of family history, is now underway. The Phase 3 study of Tofersen in patients with SOD1 ALS is progressing with data expected in the second half of next year. Also next year, Biogen plans to initiate a study of Tofersen in pre-symptomatic SOD1 ALS patients. with the potential to delay or prevent disease onset. The Phase 1-2 study of Ionis C9-RX in patients with C9-ALS remains on track for data next year. And Ion363, our first Ionis-owned ALS medicine for the treatment of ALS patients with mutations in the FUS gene, remains on track to enter a registrational study next year. Looking beyond these programs, we continue to advance multiple earlier stage programs for the treatment of ALS. Now from our growing pulmonary franchise, we recently reported positive Ionis ENAC 2.5 Rx healthy volunteer data demonstrating significant and substantial reductions in ENAC levels in the lung with attractive safety and tolerability. Importantly, these data also support inhalation as a viable route of delivery for antisense medicines more broadly, gives us greater confidence for positive results in our ongoing study in cystic fibrosis patients, and opens a path for us to broaden our pulmonary franchise to numerous new diseases of the lung, representing a significant opportunity for growth. In fact, we look forward to initiating a study of Ionazine Act 2.5RX in patients with COPD later this year. We also made significant progress in the development of Ionis PKK LRX. Enrollment in the phase two study in patients with hereditary angioedema, or HAE, is now complete with data expected next year. Earlier this year, results from a compassionate use study with our PKK program were published in the New England Journal of Medicine. demonstrating its potential to reduce the frequency of attacks in patients with HAE. Ionis PKK-LRX also recently advanced into an investigator study in patients hospitalized with severe COVID-19 complications in Brazil. Designed to prevent the formation of bradykinin, this medicine has the potential to significantly reduce a cause of the severe complications characteristic of the COVID-19 virus. Turning now to our cardiovascular disease franchise. The phase three study of Pelacarcin in patients with LPA-driven cardiovascular disease continues to progress with data expected in 2024. Our phase three study of ExiaTTR-LRX in patients with TTR cardiomyopathy also continues to progress. We also made excellent progress with our mid-stage cardiovascular disease pipeline. Pfizer recently initiated a phase 2B dose finding study of buprenorphine, which is expected to read out in the second half of next year. This study is being conducted in patients with dyslipidemia despite stable LDL or in treatment, which is representative of its planned phase 3 program focused on the over 6 million patients in the U.S. at high risk for cardiovascular disease despite maximum LDL-C lowering therapy. To support this strategy, Pfizer is planning three phase three studies of buprenorphine, including a large cardiovascular outcome study and studies in patients with elevated triglycerides and severe hypertriglyceridemia. We expect all three of these studies to get underway in 2022. We in AstraZeneca look forward to providing an update on progress with our medicine targeting PCSK9 for the treatment of cardiovascular disease at the AHA later this month. AZ's presentation at AHA will include updates from both the subcutaneous and oral formulations of this medicine. And before the end of the year, we look forward to initiating a Phase III study of Axia ApoC3 LRX in patients with SCS. These achievements move us closer to 10 or more marketing applications through 2025. And with that, I'll turn the call back over to Brett to close this portion of the call.

Thank you, Richard. In closing, I'm pleased to say that IONIS is stronger than ever. We are financially strong and have taken several important steps recently to further strengthen our financial position. With the XE acquisition now complete, we are one company with one leadership team and one set of strategic goals positioning us well for the future. We are achieving a great deal of success across the business. Our pipeline continues to advance well and deliver value for patients and investors. Our five phase three studies are advancing with a sixth expected to start by year's end. Furthermore, we look forward to numerous value-driving catalysts in the remaining months of this year and next year, including data from the phase three study of Tofersen in patients with SAD1 ALS in 2021. We believe that Tofersen has the potential to be the first disease-modifying medicine approved for patients with ALS. We have also made excellent progress in our mid-stage pipeline. We successfully completed several important phase two studies advanced inhaled delivery, and initiated several important Phase II studies. Our success this year puts us in an even better position to achieve our goal of 10 or more marketing applications through 2025, which we expect will result in a large number of new marketed products. We are also very proud of Txeti, winning the Pre-Gallion USA Award for Best Biotechnology Project in 2020. Our vision in the devastating effects of TTR amyloidosis, a rare genetic disease that greatly impacts the lives of families over generations. This is Ionis' second transformational medicine to win the prestigious award, the first being Spiraza, which transformed the treatment landscape for SMA, the leading genetic cause of infant death. This award is a testament to the hard work and dedication of our employees who work tirelessly to improve the lives And with that, I'll open the call for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Our first question. comes from Doe Kim with BMO Capital Markets.

Please go ahead.

Hi. Thanks for taking my questions. A question on the ENAC inhaled ASO, the phase one data. Just wanted to get your thoughts on how the PK data tracked with the reduction of ENAC mRNA as the dose escalated. Do you think you saw a dose response? and whether you had any thoughts on why the highest dose at three times weekly didn't show much of a reduction.

Thanks for the question, first of all. I'll take a stab at that, and then I'll toss it over to Richard to expand. So our Phase I data in normal volunteers in which we demonstrated excellent safety, tolerability in normal volunteers with dose-dependent reductions in ENAC was very consistent with what we expected based on a wealth of preclinical data. The effects, as I said, were dose-dependent, and we achieved statistically significant reductions in ENAC that are well beyond the reductions that we expected. that we expect to produce efficacy based on the pre-clinical data we've generated so far. Now, as we've said, as Richard highlighted, we're now in a phase two study in patients with CF to demonstrate clinical benefit, which we hope to share next year. Richard, do you want to get into the PK relationship a little bit more in detail?

Yeah, so we saw the dose dependent reductions in ENAC, and that did track with our pharmacokinetics. And the highest bolus dose, which was given less frequently than lower doses given more frequently, did track, PK did track with the effect we saw. And I think that is what has given us confidence as we've moved forward in the CF population and also are on the verge of initiating the COPD study.

Great. That's very helpful. And just a quick question on the ion 5, 4, 1 for most types of ALS. Do you think that therapy will also be effective in the familial ALS like SOD1 and C9-ORF? And would you consider a strategy or might you consider a strategy for a combo with the mutant-specific therapies?

The ION541 is targeting Ataxin-2 and for all forms potentially of ALS. And yes, there is strong rationale for this target by knocking it down with 541 to show efficacy in genetic forms or hereditary forms of ALS as well as sporadic.

Eric, more on that? Yeah, sure. So the mechanism of action of this drug is it modulates TDP43 pathology by down-regulating, by reducing the levels of Ataxin-2, which has been shown to be important in that pathology. And most forms of ALS involve some pathology of TDP43, so we'd expect that drug to work in any form of ALS that has that type of pathology and treat most all forms of ALS.

And your question about combination, yeah. Theoretically, you can envision a scenario in which combining a SOD1 with an ataxin-2 inhibitor would provide even greater benefit. We'll have to see how the data shakes out in the clinic. I mean, SOD1 we think is going to show great efficacy in the clinic, and we'll see how much better we can achieve beyond that in those particular patients. But from a mechanistic standpoint, you can see the rationale for added benefit, yes.

Great. Congrats on the progress and thanks for taking my questions.

Thanks, Joe.

Our next question comes from Chad Messer with Needham and Company. Please go ahead.

Hello, everyone. This is Gil on for Chad and thank you for taking our questions. Maybe a bit of a more general question. So as to the Axia platform and the new commercial capabilities, how transferable are they to across indications? Could you envision this platform being used, for example, to promote trucks and neurological indications?

That's a great question. We're very excited about the reacquisition of Axia because, as Onesa said in her discussion earlier, it really accelerates. One of our top priorities is to build out our commercial capabilities, and we think that, you know, And we're building our strategy for that, and as she said, we're planning to share some details on that strategy in December at Investor Day. And we do believe it will be broadly applicable, these capabilities, to areas that we want to invest in, including neurological. Aneza, would you like to expand on that?

Sure. Yeah, great question. You know, building out any kind of rare disease capabilities that are some that are transferable and leveraged across therapeutic areas, right? We think about these things as our health economics capabilities, the payer space, our access hub as it is adapted to the therapeutic area are areas where we see that the capabilities can be applied and really build a very customized approach to neurology as well as to the lipid cardiology space that the team has been in. But, you know, as you know that, you know, when you look at more of the marketing and salespeople, that will obviously be based on kind of customer types, and we wouldn't see, you know, a lot of overlap there. But with polyneuropathy as well as going into our neurology portfolio, we're looking to see whether we're finding some good customer-facing synergies there as well. Hopefully that gives you a good flavor.

Thank you. That's very helpful. And maybe a question for Richard on ENAC, just to remind us, is there something special in the ENAC agent chemistry for this ASO that makes it more absorbable in the lung? Just a little bit of color on that.

So as far as cell uptake, oligonucleotides delivered to the lung by aerosol are well taken up in multiple cell types. So the general state of cell uptake, there's nothing really special about the chemistry for uptake. However, ENAC is a 2.5 or a SEAT bicyclic sugar modification, which makes it very much more potent than the 2' MO modifications. And so we've increased potency, and we have the similar distribution within the law.

All right, excellent. And just one last question from me. So you mentioned the post-marketing study with Spinraza in gene therapy failures. I'm assuming this is taking forward of a label expansion. Is that a right way to look at it?

You know, Biogen has not talked about how assuming a positive outcome in the response study. would impact a label change or that sort of thing. So we don't want to get too far ahead on that. But we are feeling pretty confident that Spinraza will demonstrate benefit, significant benefit to patients who are performing suboptimally on gene therapy. As I'm sure you're aware, Gil, there is anecdotal, quite a bit of anecdotal, news, information out there on patients who don't perform well as well as desired on gene therapy, be moved on to Spinraza. And what Biogen wants to do is take that anecdotal information and turn it into a controlled trial so they can prove it. And obviously they're doing that to enhance the value of Spinraza to patients and to and the shareholders. So, you know, I wouldn't put that outside the realm of possibility, but I don't want to get too far ahead of it.

All right. I much appreciate the color, and congratulations on all the progress. Thank you.

Thanks, Gary. Our next question comes from Jim Bircheneff with Wells Fargo. Please go ahead.

Hi, guys. Congrats on all the progress, and thanks for taking the question. I guess the first question is just related to the integration of Axia and the synergies and how you see that affecting your ability to remain sustainably profitable and cash flow positive. And then I have a couple questions on the pipeline. Thanks.

I'll let Beth take the first one. Jim.

Hey, Jim. Good morning. So I think the way I would think about the Axia integration is it absolutely moves us down the path of being closer to commercializing our IOSM pipeline ourselves. And of course you know that pipeline continues to expand in advance and it's been a key focus of ours certainly throughout this year and will continue to be as we go into the future years. We will see meaningful synergies, cross synergies from the integration, certainly putting two public companies together There's some obvious low-hanging fruit in that we won't have to sustain cost structures for two public companies going forward. And then as far as sustained profitability, our focus is really on our Iona Zone pipeline and building that pipeline, expanding that pipeline, building these commercial capabilities off of the combined with the capabilities that we've now acquired wholly from Axia, and also looking for ways to invest to extend the reach of the technology. And so that's our highest priority. Profitability is still important to us, but it is not our first and top priority.

Got it. That's very helpful. And then maybe just on ION449 and the AHA presentation, I know it's embargoed, but how should we think about what you're hoping to show vis-a-vis the sub-Q? And then if you've got a successful oral approach, you know, what other candidates make most sense for the technology?

Yeah, you're referring to the – thanks, Jim. You're referring to the PCSK94. And we have... Formulation. And the other is the oral program, both in clinical testing, as I said. At the AHA, we're going to have data, clinical data on... you know, the SubQ program showing reductions in PCSK9, LDL cholesterol, that we are very excited about that we think have the potential to really differentiate this drug from all other drugs that are in development or on the market today as a potential best-in-class medicine. The oral program will also be updated at American Heart meeting. We'll principally focus on the rationale, the strategy, the preclinical data supporting the clinical testing in which the conclusion from that oral program will be that we've solved commercially viable oral delivery as a one-state tablet that will drive reductions in target in the liver, like PCSK9, to levels comparable to the sub-Q program I just referred to. There may be also some clinical data from the oral program, but in the abstract, it's focused entirely on the preclinical data so far. But I also want to expand on that a little, Jim. In addition to the PCSK9 program for oral, we have prioritized several programs here at IONIS for oral development that we think will provide a significant advantage, our ability to differentiate from competition. And we're planning on touching on the IONIS-owned oral programs a little bit at Investor Day in December.

Great. Thanks for taking that question. I guess the final question is just on timelines for the neuro-rare disease programs. What's the earliest we could see data from, you know, one of those Lyon disease before Alexander disease? Is that more of a 2022 dynamic or could we see some data from that next year?

So we're excited about starting several of those clinical trials next year. And really, some of them in the first half, early next year. And as you know, because they are rare diseases and severe diseases, we are expecting a very fast clinical development path. Some of them, just one study. So we'll be providing an update on the initiation of those studies and our development strategy next year, early on. But I would expect the timeframe for clinical data. Great. Thanks for taking the question, guys.

Thanks, Jay.

Our next question comes from Joel Beattie with Citi.

Please go ahead.

Hi, thanks for taking the question. This is a follow-up to the last question on oral PCSK9. Just to clarify, for the biomarker data on, like, PCSK9 and LDL lowering for the oral molecule, is there potential for that to come at AHA? Or if not, how much later could that come?

The oral data, as I said, we will be presenting with AstraZeneca an update on both programs, subcutaneous and oral. The sub-Q will have pharmacodynamic data on PCSK9 and LDL lowering. These are on patients on top of statins. Whereas the oral program will principally focus on preclinical data that will set up, that will really provide the strategy, the justification for developing this platform for oral delivery. That will certainly include PD data on preclinical models, but the clinical data we're saving for next year for oral.

Okay, got it. And then thinking about the potential for oral technology more broadly in your pipeline, could you talk a little bit about how broadly applicable the oral PCSK9 data would be for other agents and also how quick that could be applied to other agents in your pipeline?

Yeah, it's, you know, what we've engineered for oral delivery, again, this is what we're looking at is a once-a-day tablet that will achieve target reductions comparable to any of our sub-Q programs that we've developed or are in development today. And it focuses on Gen 2.5 chemistry with Leica chemistry, so we get the potency of the two chemistries that really, we think, solves commercially viable oral delivery. We're advancing forward several programs from the ionosome pipeline now. We've prioritized them, and we'll talk about them soon in the best of day. And we're expecting to move one or two of these drugs into development next year for oral delivery.

Great. Thanks for the update.

Yeah, in addition to PCSK9. Thanks, Joel.

Our next question comes from Chi Fong with Bank of America.

Please go ahead.

Oh, hey. This is Chi. I'm for Jason from Bank of America. Thanks for taking my questions. I guess another follow-up on PCSK9. It looks like IONIS has already had some early PAPD data with the oral formulation. Curious if you have a chance to review that with AstraZeneca. and what kind of feedback you have heard from the collaborator. And, you know, I'm curious if there's any sort of initial conversation about advancing the oral formulation to further in development, maybe perhaps sometime next year. And then I have a couple follow-up after that. Thanks.

Sorry, Jay. I need to get a clarification on your question about the first question. What data are you referring to? We haven't shared data on our latest oral platform outside of what has been submitted to the American Heart by Ionis and AZ so far. Can you clarify?

I'm curious if you have seen any human PKPD data with the oral formulation that would not be part of the AHA, like internally, whether you and a partner at AstraZeneca have reviewed that. What's the initial feedback you have heard from the partner? and whether there's a thought of advancing the oral formulation in further development, perhaps sometime next year, even though you're not presenting the data ahead of time. Absolutely, yeah.

So sure, we have PK data from the oral program from the clinic, in the clinic already, and we're encouraged by it. It's just a question of whether or not that study will be completed in time. to share at the American Heart. And the abstracts were submitted earlier this year, so it really focused on the strategy, the rationale, and the justification for commercially viable oral delivery, focused on preclinical data. But yeah, we have clinical data on the oral program, and we have more clinical data on the sub-Q program, which is why there'll be more data at the American Heart on the sub-Q. And as for, I think your other question was really related to other programs. Yeah, we're advancing forward. additional programs using oral delivery as the route of administration, focusing on the ionosome pipeline, and we'll provide an update on those programs soon, and we expect one or more of those drugs to reach development next year. The other thing I'll just add to that is that we continue to invest in research and new chemistries and new formulations to further enhance oral delivery. This isn't sort of our only stab at validating commercially viable oral delivery. We continue to prioritize this in our research group.

Awesome. I guess my follow-up, another question would be on SpinRoth. I'm curious. I think between Broach and Biogen's earnings call, I kind of alluded to maybe about 200 patients you know, initially switched from Spinraza to RISD. Do you think that's more reflective of Pan of Demand? Or do you think that's sort of like the rate of attrition that we might see for the next couple of quarters going forward? And I guess another part of the question would be, you know, do you do UM Biogen? How confident are you with the SPM-RASA profile? Do you expect SPM-RASA to have year-over-year growth for 2021 versus 2026?

I would say as far as Q3 results are concerned, we in Biogen believe that, you know, those patients were really a function of pent-up demand. We don't anticipate seeing that as a trend on a go-forward basis. I think the way to think about growth on a year-over-year basis with Spinraza is to think about the efficacy profile and the safety profile that Spinraza has demonstrated in, right now, more than 11,000 patients. in the real world in a commercial setting as well as in the clinic and the fact that those efficacy and safety profile has been well established across all types and ages of SMA patients and over many, many years. We've been studying Spinraza in the clinic and it's been on the market now combined for you know, eight plus years. So we've got lots and lots of data that supports the profile. And I think if you think about it, there's limited data in the competition right now, particularly the oral, and that data suggests that its benefit is limited to really the younger patients as you get older and and your weight increases, you have less ability to take the medicine and see the benefits. So we're really focused on the fact that Spinraz's efficacy and safety sets the bar, frankly. It sets a very high bar. And that combined with the fact that there are more than 60,000 patients worldwide with SMA and, you know, most of those patients are outside the United States and in markets where Biogen has a commercial presence. So, you know, we think all of those factors bode well for Spinraz's growth trajectory in coming years, including next year.

And just to add to that, as Beth highlighted earlier on the call, We also think that the studies that are in progress or planned for spumaraza bode well for spumaraza in the future, too, including the ongoing devote study in patients that have had suboptimal performance on gene therapy, which is to start next year, the RESPOND study, as well as the devote study in progress looking at higher doses of spumaraza to demonstrate even greater efficacy. So there's a lot going on to further enhance the potential growth of spumaraza. Awesome, thanks.

Got it.

Our next question comes from Luca Issy with RBC. Please go ahead.

Oh, terrific. Thank you for taking my questions. Two questions, one on the strategy and two on the competitive landscape maybe. So on the strategy, can you just talk maybe high level of how the acquisition of Axia and the $1.8 billion pro forma cash position changes your BD strategy? And two, on the competitive landscape, I think we've seen Novartis receiving orphan drug designation for their oral splicing modulator for Huntington. Wondering if you have any thoughts on that approach, and maybe what are some of the implications for your program? Thank you.

Yeah, I'll take a stab at the first one, and I'll probably ask Dad or somebody to help me with that, too. And then Eric, maybe you can talk about the Huntington program. So, you know, the acquisition of Axia... is, as we highlighted, is right in line with our strategy to build our, to prioritize the IONIS pipeline and build our commercial strategy for the future. And this acquisition is, it accelerates our path towards that. Oneza will, and IONIS in general, will talk about that strategy in more detail at Investor Day in December. it will focus on rare diseases, at least to start with. And we'll talk about the types of rare diseases and which ones we're going to prioritize to bring those forward. The Ionis platform, our technology, is incredibly prolific. We continue to bring many new drugs into development each year. Some of those drugs will not conform necessarily to the commercial strategy that we're planning to initiate, that we're implementing, I should say, now. So we will continue to partner. Business development will continue to be a very important aspect of Iona's to maximize the value of our pipeline, our technology, maximize growth for the company. We're a hybrid. We're a commercial organization and we're a partnering organization and we think that that's the best strategy for maximizing the value to all of our stakeholders and we'll continue to do so. I guess I would say that the acquisition of Axia and building our commercial capabilities and strategy will force us to partner less in rare diseases, but we'll still continue to partner in those areas that make the most sense to Ionis.

Eric, you want to take the Huntington? Yes, I assume you're talking about Braniflam with the Novartis orphan designation. That's an older drug. It's been around a while. It's been in phase two trials for SMA also. So I'll let you draw your conclusions about something that modifies the splicing of two different genes. I like our drug. Tim Anderson's in the lead in the Huntington space. It's in the phase three trial, as you know. It's scheduled to read out in 2022. Lowering Huntington directly, I think, is the best strategy to deal with Huntington's disease. And I'm perfectly comfortable and happy with our strategy with Tominerson and Roche.

Super helpful. Thanks, guys. Thanks, Luther.

Our next question comes from Paul Mattis with Stiefel. Please go ahead.

Hi. This is Katie on for Paul. I just had a quick question as we wait for the HAE results. What are you mainly looking for, whether it be reductions in attack rate or to extend treatment duration with Leica? And also, if you could clarify the updated timing as well, that would be super helpful. Thanks.

Richard, why don't you take that one?

Sure. Well, of course, the endpoint is going to be attack rate focused. And it's also going to be on breakthrough in terms of attacks that occur while on treatment, which is one of the confounding issues with some of the existing products. So what we expect to see is a best-in-class response. That's the approach we're taking, and the study is designed to evaluate that. In addition to the question that you asked, which is to extend frequency of dosing, one of the issues with some of the existing platforms is that if they broaden their frequency out to more than two weeks or one month, they begin to have these breakthrough issues. So in our open-label program, we'll be looking at the ability for this medicine, with its long half-life and long PD component, to be able to be administered at even more frequent or less frequent, more applicable kind of and competitive administration rates.

Okay, I have your question. You got it, thank you. Yeah. Our next question comes from Yarin Werber with Cowan.

Please go ahead.

Yeah, hi, and thanks for taking that. I have a couple of questions. The first one is maybe just a follow on to the last one. Maybe on PKK, is Takizro, do you view that to be sort of the most relevant competition because of potency and, less frequent dosing, or do you feel that there's other compounds that are kind of bigger competitors for you? And then I have a quick follow-on.

No, I think you nailed it. That's our hurdle to beat, and that's what we're aiming for, and the design of the study allows us to evaluate that.

Yes. And do you think you can dose it every? I mean, it sounds like monthly potentially is certainly doable. What about less frequently, like every two months? Or is that a stretch based on what you see in PD?

No, the PKPD actually supports every two months. And then it's just a matter of starting to get some experience with that regimen.

Yeah, and whether, obviously, whether a bimonthly versus monthly regimen from a marketing standpoint is feel it does, we have to, we have the ability to move there.

Yeah. Okay. Um, great. And, and final question, I'm just moving to, um, GHR LRX. If I remember correctly, that phase two data, we should see that soon. Necromegaly that is looking at so some of our naive patients, right? Um, I don't think you're enrolling failures. Correct me if I'm wrong. And then what does that mean for potentially the phase three program? Would it be naive or can you also go for the somavert failures? Thank you.

Yeah, so the initial studies that we've conducted are on somavert failures. You can call it that. It's patients who are on somavert and uncontrolled biochemically. And then we have the second study that actually will report out next year in the naive stage. We're covering the entire spectrum, starting with the somavert uncontrolled patients.

Does that answer your question?

Yeah, so the data, right, so this is going to be the second study, and that's in the naive segment. And then based on that, is the thought, you know, assuming, you know, based on the prior data, we're expecting positive results in this phase two. Is the thought then in phase three to do sort of a head-to-head against some of her, to go to the failures, maybe with a single-arm design, or go to the naive? I mean, there's sort of two ways you can go there.

Yeah, the teams are still working out the designs, and the regulatory interactions are yet before us. So I would be, I think, premature in giving you a design at this point.

Okay, great. Thank you.

Thank you.

Our next question comes from Vincent Chen with Bernstein. Please go ahead.

Congrats on the progress, and thanks for taking my questions. A couple quick ones on the oral program and oral delivery of ASOs. I guess the first would simply be, I'm curious, how would bioavailability for one of your ligand-conjugated ASOs differ from another one if they're dosed orally? I guess what I'm thinking about is, would you expect bioavailability probably looks pretty similar between different Leica drugs, or would there be meaningful differences? And I guess the second related would be, you mentioned earlier you're continuing to do research on new formulations and new chemistries to enhance oral delivery. Asbury, could you provide some color on what are some of the things you can do on formulation or chemistry to try to boost oral bioavailability?

So, you know, I'll start. Thanks for the questions, Vince. But I'll pass it on to Richard, who's, you know, one of the experts in oral delivery of organocutides anywhere. But we believe, you know, we have shown that the oral delivery or bioavailability that we get with our Leica drugs is very similar to our non-Leica drugs. And what was very important to demonstrate was that by availability to be that, to be comparable to what we've shown previously with non-Leica drugs, but also to be stable and be effective in target reduction in the liver. And we've shown also that this is transferable across several, many different antisense drugs with Gen 2.5 chemistry and Leica. So it is directly transferable. And Richard, maybe you can talk a little bit about what we expect on first pass and that sort of thing with the Leica drugs.

Yeah, the Leica drugs, I mean, it really all comes down to potency. And that's why the sub-Q data that you're going to see is so important. It starts to give the justification for why a molecule that gives you 10% bioavailability or something like that can be a very clinically relevant dosage formulation. So it comes down to cost of goods and potency. You asked the question about, you know, what a different like of a different chemistry give you different bioavailability. Actually across our platform, the oligonucleotide bioavailability is fairly comparable across the chemistry types. The difference with the Leica is that you present to the liver first versus the sub-Q. So you get a bit of a bang for your buck, if you will, by presenting first to the liver and allowing the liver to see the drug at low concentrations first. with millions of copies of the GalNac receptor on the hepatocytes scooping up the drug as it passes through the liver first. So that gives you that extra over and above what you would get with an unconjugated oligonucleotide. Is that helpful?

And I would just add to that also, the fact that these drugs are so stable and so long-acting allows us to have, you know, they accumulate. in the hepatocyte. So 10% bioavailability for a drug that has a half-life of 24 hours or less is not very commercially viable because of the fluctuations you're going to get in bioavailability and all kinds of things. But the fact that our drugs are so long-lasting allows that bioavailability to be very significant and very important and justify oral delivery with our platform. So that's a very important thing to also remember. As for the work we're doing on new formulations, stay tuned, Vince. We have a lot of work in progress, a lot of irons in the fire. We're not sharing our strategies there, but obviously we've tackled stability with our drugs, so we're really focused on penetration, getting more drug into the blood.

I see. I'll stay tuned then. Thanks for taking the question, and I appreciate the insights, and congrats again on all the progress.

Thanks, Vince. Our next question comes from Manny Stovuvar with SVB LeadRank. Please go ahead.

Hi, this is Rick Dialing in for Manny. Thanks for taking our questions. First, moving back to ENAC, could you maybe describe broadly discuss what lessons were learned from the ENAC readout. There seems to have been good target engagement in the lungs, so we were wondering what the main takeaways were and how you're thinking about target selection for any other inhaled ASOs that may be in development.

I would say that the key lessons learned are that our Gen 2.5 chemistry is outperforming our Gen 2 chemistry for aerosol delivery in the lung. Based on the potencies that we get with that drug, that Richard referred to earlier. It's really the first time we've shown statistically significant and substantial reductions in target with an aerosol antisensory nucleotide in humans. So that's a huge lesson learned, and we think that gives us confidence that in our emerging pulmonary pipeline overall, we have several other drugs in development for pulmonary disease, at least one of which development next year, or in development, potentially clinical, well, clinical testing next year, the second drug. So, and of course the safety and the tolerability is a very important lesson learned. The third is, you know, the doses that we're seeing these effects give us confidence that the preclinical data is predicting what we expect to see in humans very well, which is

Got it, thanks for that. Second question, just looking to see if there's any update on the status of recruitment into the phase three studies for TTR Leica. Just are there any trends you've been seeing in enrollment over the last quarter and how you're currently thinking about time to data for polyneuropathy and cardiomyopathy?

So, the studies are enrolling. Sites are being activated for both polyneuropathy and the cardiomyopathy phase three studies. And they're moving well. We've had some impact of COVID-19 in getting sites activated and so on. But overall, we're not providing details. It's obviously a competitive situation that we're in. But we're pleased with the enrollment that we're seeing so far in both phase three studies. And we like our clinical trial designs, which we think are enhancing enrollments. You know, there's no changes to what we've said publicly or cardiomyopathy data. We're expecting data readout from the phase we study in 24 timeframe and the polyneuropathy in the 23 timeframe for the full data set. And we also have an interim analysis baked into the polyneuropathy study. And if we, and that data is due to come out in 2022.

All right, perfect. Thanks for taking our questions. You got it.

Our next question comes from Yale Jen with Laidlaw and Company. Please go ahead.

Good afternoon, and thanks for taking the questions. The first one is regarding the propanoicin. After the Phase IIb study by Pfizer, could you elaborate more in terms of Pfizer's plans for the pivotal study? You mentioned three studies, but maybe a little bit more color on that.

Yeah, that's a perfect pitch for Richard. Knock it out.

Yeah, good question. So the Phase IIb study is in dyslipidemic patients with a cardiovascular disease high-risk profile, and it's in direct preparation for a Phase III program that includes a cardiovascular outcome trial Much will be learned because these patients are hypertriglyceridemic as well. Much will be learned about dose selection also for the severe hypertriglyceridemic platform. And so it is a dose range finding study that will set up the finalization of protocols for those two programs and those two populations.

And is there a third one, which is you will use the cardiovascular outcome as an endpoint in the color zone, that study?

Yeah, the cardiovascular outcome trial is one trial. And then the severe hypertriglyceridemic population, there's planned a couple of phase threes for that.

Okay, great. That's very helpful. I'll give you one more question. One more question in terms of XDR acquisition at this point. I know you were given more colors at the investor day, but any other thoughts, at least on the 10,000 foot angle in terms of any additional elements or changes elements need to be added after this acquisition?

Not really, Yale. We'll talk more about it. It was mentioned at Investor Day how this is a key step towards building our commercial strategy for the future. But really, I wouldn't say that there's any additional elements than what we've said today or what we've put out when we announced the closing of the acquisition. We're very excited about this. We think this is a very important strategic step in the growth of IONIS for many reasons that we've highlighted that are both financial as well as based on efficiencies and based on building our commercial plans for the future. So that's a lot right there and we'll talk more about it in December. I really can't expand more than that on your question.

Okay, great. Thanks a lot. I really appreciate it, and congrats on the progress. Thank you.

Our next question comes from Jessica Phi with J.P. Morgan. Please go ahead.

Hey, guys. Good morning. Thanks for taking my question. Another one on lupinarsin. It looks like the doses being studied in Phase IIb are generally higher than what was studied in Phase IIa. So thinking about the... the non-very high triglyceride population, kind of the broader high CV risk group. I'm just curious, when you look at those higher doses, how much more efficacy you're hoping to achieve relative to the phase 2A on endpoints like LDL-C?

Yeah, great question. Really, the primary endpoint is non-HDL-C, which is a, you know, a a group of lipid particles that are involved in atherosclerosis. So the increase is a combination of an increase on triglycerides, increase on VLDLC, and LDL. So it's not a single component look. It's basically the remnant cholesterol that remains in the circulation in patients with elevated triglycerides and cardiovascular disease. So I don't know if that answers your question. It's a dose range finding study, and the doses are now being tested in patients with dyslipidemia and cardiovascular risk, which is a different population than the population we studied in our Phase IIa study.

Yeah, I think that's the key, Jess, is that it is a different patient population in the Phase II study. So Pfizer wants to get the dose right for the several Phase III studies that Richard mentioned that they're planning to initiate because it is a different patient population and the doses could be different and they want an optimal dose. So going to higher doses is just part of that strategy.

Okay. Makes sense. And just kind of sticking with this product and, you know, recognizing the lack of support for benefit in drugs that increase HDL, what do you make of the declines observed with this product in HDLC?

Let me take that.

Yeah.

So, we've looked at this very carefully, and you know that there is actually a genetic population that has a knockout of AngPTL3. And in that population, they have extremely low HDL, extremely low LDL, and triglycerides, and they have no cardiovascular disease, and they have a very long, you know, bunch of very long-lived individuals. Now, this is a small population in the hill country of Italy. So now we're studying this in populations where we're actually knocking it down, not from birth, but in a selected population. So I guess what I would say is when we think about HDL, HDL always has to be taken into consideration along with all the other atherogenic lipids. What's been shown is that HDL alone does not, by raising HDL, does not apparently improve the cardiovascular outcomes of patients. But what we know is if you take down cholesterol, if you take down remnant cholesterol, that you do improve cardiovascular health of patients.

Got it. Thank you.

Thanks, Jess.

We're running long. We'll take one more question, and then we'll have to close.

Our last question comes from Myles Mintar with William Blair Company. Please go ahead.

Hi. Thanks for taking the questions. Just maybe one on something we haven't talked about, the temporary six asset for beta cell. Just wondering when we're going to see phase two data next year, whether you've got clarity on that. And just in terms of the primary endpoint, can you maybe explain the clinical meaningfulness of a one gram per deciliter increase in hemoglobin in this patient population and not the transfusion-dependent population? Just trying to understand how to interpret that moving forward if this does go into a pivotal trial of some sorts. Thanks.

I'll take a stab at that and maybe Richard can expand on anything worth highlighting beyond this. So we're very excited about this program. We think the opportunity in beta-foul intermedia, as well as other indications that are plagued by low hepcidin levels, are also very relevant for our TMPR6 inhibitors. As you know, Miles, in Phase 1, we not only showed good safety and tolerance, It can increase this in hepcidin levels and changes exactly in the direction based on our preclinical data that that data would predict in iron and transparent saturation. In the intermediate patient population, there's two goals, right? One is to increase, is to deal with the anemia and to increase hemoglobin to the extent that you highlighted, which is a very meaningful endpoint in these patients. but what this drug can also do is reduce iron load in liver and in heart and reduce toxicities associated with iron overload in those organs and other organs as well. So this is a very unique drug, potentially, that has the ability to not only handle and improve and normalize potentially the anemia, but also the devastating effects of iron overload in various organs. And we have a wealth of preclinical data published in real good models of beta thalassemia. We're also exploring additional indications for this drug that are related, as I said, to dysfunctional management of iron due to low hepcidin levels. Timing for the study, I don't think we've disclosed that to date for the Phase II study that's in progress. It is a novel design that we can share data potentially next year from the study, but I don't think we've come out on that yet. When exactly that data will read out, Miles.

Okay, cool. That's helpful. Go for it.

I was just going to add to Brad's point that we just actually completed a market research survey and it shows that, you know, just from a clinician's perspective that the dual benefit of managing both anemia and iron overload, you know, with a single agent is very high. So, you know, we've gotten that 85 percent of clinicians out there. are looking for an iron controlling product aside from the iron chelating agent. So the dual benefit continues to be a really unmet need.

Understood. Last quick one from me, and I may be wrong here, but is there any reason why for the chronic hepatitis B program that GSK is running, why they would have taken a non-lyca conjugated product in a phase two as opposed to a lyca product?

Eric, go ahead. Yeah.

I mean, the reason there is that the reductions in the antigens that were shown in the trial were not really different with the lichen compound. And that the parent molecule was actually performing very well. And the next question you'll ask me is why that is. And the answer is, truthfully, we really don't know why that is. It's the only program where we haven't seen that. But the specifics of that program is the parent molecule is performing better than the Leica, and the Leica didn't give an advantage. Yeah.

This is the only Leica where we have not seen a significant increase in potency with a Leica versus a non-Leica. We're trying to understand it, but GSK is very excited about the drug that they licensed from us, as we are too, and they think that this has a potential for HPV cure in future models.

Fair enough. Thanks for speaking to me, and I appreciate it.

Thank you, Miles, and thank everybody. So with that, I want to thank everybody for participating on today's call, remind you again of our upcoming Investor Day on December 7th. We're really excited about some of the progress, a lot of the progress that we're making. We'll be sharing in more detail. And then finally, we wish all of you a great day. Thank you.

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