Ionis Pharmaceuticals Inc Q2 FY2020 Earnings Call

Good morning and welcome to Ionis Pharmaceuticals Second 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 Walke, Vice President, Investor Relations, to lead off the call. Please, begin.

Thank you. Before we begin, I encourage everyone to go to the Investors section of the Ionis website to find the press release and related financial tables, including a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today. We believe non-GAAP financial measures better represent the economics of our business and how we manage our business. We've also posted slides on our website that accompany our discussion today. With me on today's call are Brett Monia, Chief Executive Officer; Beth Hougen, Chief Financial Officer; and Richard Geary, Executive Vice President of Development. Additionally, joining us for Q&A are Onaiza Cadoret, Chief Corporate Development and Commercial Officer; and Eric Swayze, Executive Vice President of Research. I'd like to draw your attention to slide three, which contains our forward-looking language statement. We will begin by 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. Good morning and thank you for joining us on today's call. The first half of this year was marked by numerous important achievements that position us well for success this year and in the future. This has been a remarkable year for many reasons, but in particular, for the tremendous strength and dedication demonstrated by the Ionis team. Our hard work has enabled us to remain on track to meet our key 2020 goals and achieve great success for years to come. And as we enter the second half of this year, I believe we are stronger than ever. Our Phase 3 programs are on track with five studies in progress and two additional registration studies expected to start this year. Our mid and early-stage medicines are making excellent progress, with additional proof-of-concept data for several programs due later this year. We continue to grow and expand the scope of our clinical pipeline with new medicines advancing rapidly to treat many new diseases, for which effective treatments are lacking. We also continue to grow the Ionis selling pipeline, while in parallel developing our commercialization strategy and support of this pipeline, and we continue to advance and expand the reach of our technology at a record pace. Looking ahead, we remain on track to achieve our 2020 financial guidance and we have the financial resources, the people, and the commitment to execute on our agenda. My vision for Ionis is to lead our industry in bringing transformative medicines to patients suffering from devastating diseases. Consistent with this goal, we anticipate and are on track to deliver 10 or more marketing applications for a range of devastating diseases through the end of 2025, which we expect to result in a number of new commercial medicines. Our recent accomplishments, including those made this year, position us well to achieve our goals. I'll now turn the call over to Beth to review our financial performance, followed by Richard, who will discuss our pipeline progress, and then I'll open the call for questions after brief closing remarks. Beth?

Thank you, Brett. We ended the second quarter with net income on a non-GAAP basis and we continue to be well capitalized with cash and investments of more than $2.3 billion at the end of June. We remain financially strong, as we enter the second half of this year, with substantial resources to execute on our ambitious agenda. As we noted last quarter, we are projecting increased revenue and earnings in the second half of this year. With our first half results and our forecast for the second half, we are reaffirming our financial guidance for this year. As we look at our commercialized medicines, SPINRAZA remains a foundation of care for patients with all types of SMA. At the end of June there were over 11,000 patients on SPINRAZA treatment worldwide, a substantial increase over last year. New patient growth was driven by markets across all major regions and led to global sales of $495 million in the second quarter. SPINRAZA's second quarter sales resulted in $72 million in royalty revenue to us. Looking ahead, we and Biogen see opportunity for continued SPINRAZA growth in SMA patients of all ages, and across many established and emerging markets. Biogen now estimates that there are over 60,000 SMA patients in markets where Biogen has a commercial presence, a nearly 35% increase from previous estimates of 45,000 patients. Additionally, new data continue to be generated that supports SPINRAZA's substantial benefit in estimated patients of all ages. In the U.S., the SPINRAZA label was recently expanded to include new Nurture data, demonstrating unprecedented survival benefit in patients treated presymptomatically, with some patients treated for up to nearly five years. And in several EU markets, new independent real-world data demonstrated substantial and clinically meaningful benefit in adult and teen SMA patients, supporting broader reimbursement. Additionally, Biogen plans to initiate the respond post-marketing study early next year, which will evaluate SPINRAZA's benefit in patients with a suboptimal clinical response to Zolgensma. Biogen is also conducting the DEVOTE study of a higher dose of SPINRAZA, which has the potential to bring even greater benefit across SMA patients of all ages. Now turning to TEGSEDI and WAYLIVRA. We are pleased to report that these medicines delivered another quarter of growth, with product sales increasing to $16 million in the second quarter, a substantial increase compared to last year. Today TEGSEDI is commercially available in 15 countries. In the U.S., TEGSEDI's advantage as an at-home subcutaneous injection was further amplified as new patients continue to initiate treatment and existing patients were able to remain on treatment without disruption. We attribute this success to a number of factors, including Akcea's world-class patient support program, Akcea Connect. Akcea is continuing to broaden reimbursement in the U.S. and additionally, 2,000 physicians have used Akcea's genetic testing program to date, resulting in a growing number of patients being diagnosed with hATTR. Akcea is also making solid progress broadening TEGSEDI access outside the United States. They have recently secured reimbursement in several new European markets, including Portugal, which is strategically important due to its endemic TTR amyloidosis population. In Canada, multiple private payer agreements are now in place, and government reimbursement negotiations are progressing well. And in Latin America, PTC Therapeutics is working to expand TEGSEDI access into new countries and to secure pricing in Brazil. We anticipate that expansion into even more new countries will help drive TEGSEDI growth this year. Now turning to WAYLIVRA. WAYLIVRA is on the market in Austria, Germany, Greece, and in France through its ATU, our reimbursed early access program. In Latin America, PTC recently filed for marketing authorization for WAYLIVRA in Brazil and is working to expand access in other Latin American markets. Akcea plans to launch in additional EU countries this year, and we are preparing to refile with the FDA. We're pleased with the performance of our commercial medicines and continue to see opportunities for growth as each of these transformational medicines reach more patients in new and existing markets. Our partnered programs across each of our therapeutic franchises remain a substantial and sustainable source of revenue for us, with continued opportunities for growth. Many of our partnered programs achieved important catalysts this year, which is reflected in the more than $55 million in R&D revenue we earned in the second quarter. This amount included over $25 million from our neurological disease franchise, including several programs under our Biogen collaboration. $14 million from our oncology franchise, including a license fee from AstraZeneca for ION736, and more than $10 million from our cardiorenal disease franchise, including partner programs with AstraZeneca and Pfizer. We remain on track for significantly higher R&D revenue in the second half of this year compared to the first half. And we have already generated $35 million in milestone payments in the third quarter, including payments from Biogen for progress with IONIS-MAPTRx and the initiation of a Phase 1/2 study of ION464 in patients with multiple system atrophy. Driven by our Phase 3 program for AKCEA-TTR-LRx and the progress of other medicines in our Ionis home pipeline, our Q2 non-GAAP operating expenses were slightly higher compared to last year. With these results, we achieved net income of $8 million for the quarter on a non-GAAP basis, an increase compared to our first quarter results. Our first half results and projections for the rest of this year enable us to reaffirm our 2020 financial guidance. In the second half of this year, we project increasing revenues with numerous opportunities to earn significant R&D revenue on top of our strong commercial revenues, and we continue to execute on our strategic objectives for this year. We expect higher non-GAAP operating expenses compared to the first half of this year. Our financial strength is a fundamental pillar enabling broad success across our business. With more than $2.3 billion in cash and investments, we have the financial resources to execute on our near and longer-term strategic priorities. And with that, I'll turn the call over to Richard to provide an update on our pipeline.

Thank you, Beth. Our pipeline of over 40 medicines, targeting a broad range of diseases, achieved numerous catalysts in the first half of this year, and we're looking forward to a significant number of additional catalysts in the coming months. I'll start with highlights from our world-class neurological disease franchise. As we highlighted in our recent neurological disease pipeline webcast, this is a robust and growing franchise with 15 programs in development and many more in various stages of research. With so many programs today, I'll focus only on those with recent highlights. Tominersen and tofersen, our late-stage neurological disease programs, are positioned to be our next commercial medicines. Tominersen in Phase 3 study in patients with Huntington's disease is fully enrolled and on track for data and potential regulatory filing in 2022. Tofersen Phase 3 study in patients with SOD1-ALS is on track for data late next year. Data from tofersen Phase 1/2 study in patients with SOD1-ALS were recently published in the New England Journal of Medicine. These data demonstrated promising signs of efficacy after only three months of treatment, providing hope for patients with this devastating disease. Results from the Phase 1/2 study also support the potential for our growing ALS franchise, which today includes medicines in development to treat all forms of ALS. ION541, our first medicine in the treatment of sporadic ALS, which accounts for approximately 90% of the ALS patient population, is expected to enter a Phase 1/2 study soon. ION541 is a potent inhibitor of Ataxin 2 designed to mitigate toxicity resulting from inappropriate localization of the TDP43 protein, which is thought to contribute to motor neuron toxicity. And we recently added ION363, our first Ionis-owned ALS medicine in the pipeline. ION363 is designed to treat FUS ALS, another familial form of this disease caused by mutations in the FUS gene. This program could have a rapid path to the market going directly into a registration study later this year or early next year. Biogen also recently initiated a Phase 1/2 study of ION464, our medicine targeting alpha-synuclein for the treatment of multiple system atrophy, a rapidly progressing neurodegenerative disease with no therapeutic options. And importantly, our Ionis-owned medicines for the treatment of Alexander's, Lafora, and Prion diseases continue to progress well and remain on track to enter clinical studies in patients late this year and next year. Turning to our cardiorenal and metabolic disease franchises, the Phase 3 study of AKCEA-APO(a)-LRx is progressing well and the trial readout is expected in 2024. AKCEA-APO(a)-LRx was recently granted fast track designation by the FDA, underscoring the significant risk for cardiovascular events in the millions of patients with Lp(a)-driven cardiovascular disease. Additionally, our Phase 3 studies of Akcea-TTR-LRx, both neuro transform and cardio transform, are progressing well with data expected in 2023. And coming up, we look forward to providing a comprehensive update from our cardiorenal disease franchise. We plan to present the full positive Phase 2 data set for our LICA medicines, AKCEA-APOCIII-LRx, and vupanorsen, our medicine targeting ANGPTL3, at a medical conference later this month. Next month, we plan to host an investor webcast and to provide an update on these two programs and a number of other programs in our cardiorenal franchise. Please stay tuned for details and timing for these events. We continue to make significant progress with a number of programs partnered with AstraZeneca. This collaboration continues to be very productive with numerous cardiorenal, metabolic, and oncology programs underway. Later this year, we and AstraZeneca look forward to providing an update on Ionis-AZ4-2.5-LRx program for the treatment of cardiovascular disease, which includes both subcutaneous and oral formulations. AstraZeneca is also making good progress with the ongoing Phase 1 studies with ION839 targeting PNPLA3 for the treatment of NASH, and ION532 targeting APOL-1 for the treatment of chronic kidney disease. Turning to our oncology programs. AstraZeneca recently returned our STAT3 inhibitor, Danvatirsen. We are reviewing data from the Danvatirsen clinical program and forming our plans for the continued development of this medicine for the treatment of cancer. And we're pleased that AstraZeneca recently licensed ION736, our antisense medicine that targets FOXP3. ION736 is our first antisense medicine working purely through an immuno-oncology mechanism of action. We look forward to this program entering clinical studies in patients shortly. We're looking forward to providing updates from our advancing and expanding pulmonary franchise as well. Later this year, we plan to report pulmonary delivery proof-of-concept results from the healthy volunteer cohort from our Ionis-ENAC-2.5Rx Phase 1/2 study. And early next year, we expect to have data from the fully enrolled cystic fibrosis patient cohort from the Phase 1/2 study. Also, later this year, we look forward to initiating a Phase 2 study of Ionis-ENAC-2.5Rx in patients with COPD. This study broadens the ENAC development program and further expands our pulmonary franchise to diseases beyond cystic fibrosis. Along with Ionis-ENAC-2.5Rx, we have ION663 in development today for an undisclosed pulmonary indication with multiple additional new drugs to follow in the near future. Also coming up in the second half, we plan to report proof-of-concept results from our HAE, acromegaly, and hypertension programs. We look forward to initiating registration studies with AKCEA-APOCIII-LRx in patients with FCS, and with ION363 in patients with FUS-ALS. We plan to initiate a Phase 1/2 study of our Ionis-owned cancer medicine targeting IRF4, ION251, to be evaluated first in patients with multiple myeloma. I'm extremely pleased with the progress we are achieving with our pipeline today and look forward to providing further updates as the year progresses. I want to take the opportunity to acknowledge the continued trust and commitment of the patients, families, investigators, and medical staff participating in our studies during this time. And I want to point out that it is because of the hard work of our dedicated and resilient employees that we have continued to successfully adapt to the evolving global pandemic and continue to execute on our goal to deliver transformational medicines to patients. And with that, I'll turn the call back over to Brett to close this portion of the call.

Thanks, Richard. Our business today is stronger than ever, thanks to the dedication and hard work of everyone at Ionis. As Beth discussed, we remain financially strong with the resources and people we need to continue executing on our very ambitious agenda. And as Richard just highlighted, our pipeline continues to advance and expand in new and exciting ways, keeping us on track to deliver 10 or more marketing applications for a range of devastating diseases through the end of 2025, which we expect to result in a number of new commercial medicines. I'm very excited about the progress I see for the rest of this year, including advancing our Phase 3 studies and starting two additional registration studies for patients with FCS and ALS; reporting clinical proof-of-concept results for several programs; expanding and advancing the Ionis-owned pipeline with the expectation to initiate clinical development for several new Ionis-owned medicines this year; building our commercial capabilities and strategy; and broadening the reach of our technology, which is advancing at a record pace. As we achieve these and the multiple additional goals and objectives that make up our ambitious agenda, we move closer to becoming the leader in delivering transformational medicines to patients in need, and the aspiration that with our pipeline, technology, people, and financial resources, we are well on our way to making a reality. And with that, I'd like to open the call for some questions.

We will now begin the question-and-answer session. Our first question will come from Jim Birchenough with Wells Fargo.

Hi guys. Congrats on all the progress. A few questions. I guess first just on the inhaled program. Maybe you could give us a sense of what level of knockdown you're targeting in the normal volunteer part of the study. And what gives you confidence that you can overcome the physical barriers to getting adequate drug penetration in patients with CF to start with? And then on the oral, just assuming success towards year end, how quickly could you move some of your other programs forward in an oral formulation?

Thanks, Jim, for the questions. So, as you know, each pulmonary program, each disease area will be unique in the level of knockdown of a specific target that will produce benefit in patients. Specifically, for our ENaC program, which is the program we're going to read out from our pulmonary franchise later this year from the Phase 1 normal volunteer study, and we'll provide an update on the CF study as well. We have demonstrated in preclinical models that as little as a 50% reduction in the ENaC messenger RNA and protein produces actual reversal of disease in models of cystic fibrosis and other models of mucus-related pulmonary diseases. So, that's our target. That's our target for the clinical studies. We're confident we'll probably go beyond that and we'll get even greater reductions in target expression for ENaC. We're quite confident in our ability to penetrate the unusual architecture of a cystic fibrosis lung, for example, or COPD lung, which can have big mucus linings covering the epithelium. We've generated quite a bit of data pre-clinically in models that are types of cystic fibrosis and we have shown really good, attractive uptake into cells and epithelium broadly throughout the lung. We've knockdown that's really comparable to that in normal lungs and we've also replicated it not in CF models, but in normal monkeys with similar knockdowns following inhalation of our ENaC drug and for other programs, for other drugs as well in our pulmonary program. So, and this delivery is in simple saline solutions. We're not using any sort of delivery vehicle to penetrate the epithelium. Regarding the oral program, yes, we're looking forward to sharing an update on this program both the subcutaneous formulation and the oral formulation later this year with our partner AstraZeneca. And as we're moving other programs forward, we're already doing that. We're confident in the oral platform and we're not sitting still. We're continuing to develop new formulations even beyond what we have in the clinic today. And we're already moving forward several programs preclinically and we're prioritizing those programs to move into the clinic orally based on where we think it would have the greatest impact. So, stay tuned for that and hopefully we'll provide an update at that time. When we provide an update on the current oral program, we'll give a peek into what else is coming later this year.

And Brett, maybe if you'll allow me one more just quickly for Beth, when we think about the uptick in R&D revenue in the second half of the year, how should we think about that as a run rate for the long term? Do you have enough visibility in terms of future milestones and the cadence of various partner programs to give us some sense of whether that's a sustainable level of R&D revenue, or how do we think about modeling that going forward?

That's a great question, Jim. Thank you. So, I think as you've seen over the last few years with the company, we have continued to increase our research and development revenues and build on top of that obviously a very strong base of commercial revenues. And what I see as I look out into the future are a number of factors that I think could continue to sustain and potentially grow our R&D revenues. And that is one, just the strength of our existing partnerships, the sheer number of partnered programs under those partnerships and the fact that those partnered programs will continue to increase particularly as you think about the Biogen collaboration and the very productive relationship that we have, just the number of medicines that we are continuing to bring forward in the neurological space working with Biogen. And then, as all of those medicines advance in development and you see greater and greater dollar values of milestone payments and licensing fees, reflecting the increased value that we are creating as our medicines advance in development. So, I think those factors together give us real confidence in the ability to sustain and potentially grow our R&D revenues into the future.

Great. Thanks for taking the questions, guys.

Our next question comes from Ellie Merle with Cantor Fitzgerald.

Thank you for the updates. I have a broader strategic question regarding your extensive pipeline of assets. Following the recent escalation with Akcea, how are you envisioning your long-term strategic direction as you expand franchises and concentrate on areas like neurology and cardiovascular health? Thank you.

Thanks for the question, Ellie. We have such a prolific drug discovery engine here that we validated here at Ionis and established we. It sets us up very well with many different options to maximize the value of each of our medicines for Ionis shareholders and for patients. By taking advantage of this engine, this drug discovery engine, we will continue to partner strategically where it makes sense in the future. One way to think about that is for broad large indications like we did with Pfizer last year for a large cardiovascular indication with our IONIS program or like we did with Lp(a) with Novartis. We will hold on to those drugs longer to command even greater economic upside for Ionis, not partner so early. And that will continue. In addition to that, we are prioritizing certain assets, certain franchises within the Ionis selling pipeline and building our commercialization strategy alongside the Akcea strategy, and we're prioritizing the pipeline. One area that we're particularly focused on to bring through Phase III into the market is our rare neurological disease pipeline. We think that brings great value. We already have five or more drugs in the Ionis or neuro pipeline. We touched on the FUS ALS program already in this webcast, but also drugs like Alexander's disease, Prion's disease, Lafora disease and others are coming. And I think that this will be a priority for Ionis to bring through the finish line ourselves. So you're going to see a balance of – continue to see a balance of strategic partnering driving attractive economics to the company, while we also build our own pipeline of medicines. Onaiza, do you want to talk at all about our neuro pipeline and how we see – what we see the value in that taking it to the finish line?

Sure. So, as I just said, we are investing in the Ionis-owned pipeline and comparing our business strategy. And among the many rare diseases in the portfolio we have prioritized neurology as an initial focus. It's very complementary because we're leveraging really the deep neuro expertise in drug discovery and development and then complementing that with building out the commercial capabilities needed to bring our rare neuro products to patients. So it's really important to also know that the products we have deliver on significant unmet needs as they get to the root cause of the disease and they have the potential to stabilize, reverse, and/or prevent disease. So we're very excited on that. And as Brett already alluded to, we have not just the FUS ALS but we also have GFAP for Alexander's disease and prion disease and these are kind of building upon each other relatively rapidly over the next year, getting into the clinic, and we expect a really strong accelerated path towards those. So it gives us a good portfolio to start with. And importantly, we also see other products in rare neuro that are beyond these that will fuel the business strategy not just for the initial period but really for sustainable growth. So based on that, it's an exciting time and we're really building out the capabilities commensurate with the clinical data readouts for commercial readiness.

Got it. Very helpful. And maybe just – I'll ask in a more direct way. Maybe for Beth, just from kind of a corporate structuring financial relationship perspective, what are the pros and cons of kind of keeping all of these assets in Ionis itself versus potentially forming additional new subsidiaries such as a neuro subsidiary as you guys certainly have a very, very large pipeline?

So, I think at this point, we are in the early stages of looking at our Ionis-owned pipeline, looking at the neuro assets. I think we're making excellent progress along that path. And I think Onaiza and her team, working with the rest of us, are doing a great job. But as far as what exactly structure we would put in place, I think it's just really too early to say. I think what's important is the key takeaway here is we're prioritizing our Ionis-owned pipeline. And our intention is to retain substantial commercial value from our Ionis-owned pipeline.

Got it. Thanks so much.

Thanks.

Our next question comes from Chad Messer with Needham & Company.

Great. Thanks for taking my questions and congrats on all the progress. Maybe a little bit of follow-up to the prior kind of strategic question. When you guys founded Akcea, I know at the time a lot of the dialogue around the rationale was – it enables you to retain better economics, develop some commercial capabilities, but kind of silo off the culture of the sort of R&D culture that has helped create a fantastic discovery and development engine. Appreciating that over time your strategy sort of had to evolve and adapt. Just wondering how important you view that today as you're growing your wholly owned pipeline particularly in neuro but other areas as well?

Great question, Chad. The word evolved that you use is a great word to think about this. R&D innovation, scientific innovation will always be the core of Ionis. We think that we're among the leaders in innovation in our field in the biotech industry. Today, Ionis is – and that will always be a priority. However, evolution happens and the company is in a very strong position culturally today. And very importantly, we've now proven the technology. We've proven it in so many different ways. We're in a different place. We founded Akcea four, five years ago. And it was a good strategy at the time, it was a very good strategy at the time to maximize the commercial value of certain rare disease assets in the pipeline while preserving the innovation that is at our core at Ionis and proving and validating the technology, not just clinically but also commercially which we've now done. We're in a different place today. And I think that the culture can endure and actually synergize with the creating of our own pipeline and building commercial capabilities to maximize the value of that pipeline.

Great. Thanks and congrats again.

Thanks, Chad.

Our next question comes from Paul Matteis with Stifel.

Hey, thanks for taking the question. This is Alex on for Paul. Just curious, as you're thinking about your PKK asset for HAE, how you're thinking about that market sort of the place for an ASO in what is relatively a competitive market with some major drugs that are going generic? Just curious to your thoughts there. Thanks.

Yeah. Maybe I'll ask Onaiza to touch on this, but she's been thinking hard about this. This is another Ionis-owned asset for rare diseases. We're very excited about the prekallikrein program. We're looking forward to sharing results in patients with HAE later this year. Onaiza?

Yeah, sure. Yeah, you're right. It's actually a competitive market, but we feel like we have a really strong competitive product. We've done some early market research and we still think there's opportunity and room for more players in here. I think we've heard that they want prophylactic treatments that are more defined to prevent attacks rather than simply treat the acute episodes of HAE, and we're seeing some room in there, because they're feeling that with the current products that there are still breakthrough symptoms that are happening. So we think we have differentiation there. And certainly, we have differentiation from a dosing perspective as well with injectable administration with QVC or bi-monthly as well as the possibility. So, those are some really great areas that we're focusing on to bring the competitive differentiation.

And I'll just add to that, Alex. In addition to monthly or even less frequent dosing, this is another program that has the potential to develop an oral formulation, which would be a very meaningful competitive advantage. So, our first focus is to demonstrate no attacks or an attack rate in patients that is comparable to what drugs on the market are achieving. And then think about what would be more convenient for patients where patients would value a product like this going forward.

All right, great, thanks.

Our next question comes from Tyler Van Buren with Piper Sandler.

Hey, good morning. I have a follow-up question about the ENaC program that you mentioned earlier. Regarding the Phase 2 study, or the Phase 1/2 study in CF patients, can you clarify what specific data we will receive early next year? Will we have information on FEV1, exacerbations, and sweat chloride levels? Additionally, as we look to compare this data with other products, which product on the market would be the most relevant?

Well, maybe I'll ask Richard to just touch on the clinical study and what we're expecting to come out of it, for the ENaC program. I can talk a little bit about the second part of that question.

Sure. Yeah, we're excited about it. So, the Phase 1/2 study, of course, is a short-term proof of concept. And really the focus is on the ENaC knockdown, in other words, the pharmacodynamics of delivering the pulmonary drug and the pharmacodynamics within the lung, both in a normal lung initially and then in cystic fibrosis lung. So, it's going to be PD/PK safety and tolerability, which would then position us for further development. So, that's the clinical program and that should be the expectation of the data coming out of that. Relatively short-term six-week dosing regimen.

Okay. Okay. Thanks, Richard. And then positioning-wise, ENaC has the potential to work in CF patients for all mutation types. So it's not linked to any particular mutation, obviously based on its mechanism of action. So, we see this drug working in combination with CFTR modulators that are already approved and on the market today to provide even greater benefit to patients with cystic fibrosis. In addition, we also feel very good about the potential of this target for other pulmonary indications. We're planning to start the Phase II study in COPD later this year, and we're exploring other indications too. So it's quite a versatile target that has a lot of upside for various types of indications.

Okay, great. Thanks for taking the question.

Our next question comes from Joel Beatty with Citi.

Hi, team, thanks for taking the question. The first one is a follow-up to that last question on the ENaC program. Can you tell us a little bit more about how you'd actually be testing for knockdown in the lungs in that trial?

Yes. We're going to be looking directly at ENaC RNA in lavage fluid taken from patients that are treated with the ENaC ASO.

Terrific. And then maybe another question on the oral lipid program. Could you help characterize what level of knockdown would be a success? And is the bar the same as it is for a subcutaneously delivered drug, or is the bar different for the oral approach?

Yes. We cannot comment on the specific level of knockdown we are aiming for in that program. However, the second part of your question is important. We are targeting the same level as the subcutaneous approach, and we are confident in this based on our preclinical data, which suggests that the level of knockdown achievable subcutaneously can also be achieved orally. Remember, this is a Generation 2.5 LICA, so that knockdown is significant.

Sorry guys. Thank you for taking my questions. Just a couple on ANGPTL3 and the decision to go to Phase IIb versus doing a straight jump to Phase III, what are you expecting to learn incrementally through the Phase IIb? Is it an issue of trying to figure out what’s your lowest effective dose here as you look into going to a Phase IIb as opposed to the pivotal testing step? And then secondly, can you help us think a little bit about positioning of ANGPTL3 versus Lp(a) with Novartis? How you see the therapies positioned differently, are they competitive? Is it more of a multiple shots on goal for you, or do you think that they'll ultimately operate within segments of the market based on genetic background? Thanks.

Yes. So two parts to that question. I'll start with the Phase IIb approach. The Phase IIb because the Phase II study was not conducted in the patients that we intend to go into. There was a desire to make sure that we had the right dose before we went into 8000 to 10000 patients. I think that makes sense. So, there's additional work looking at dose and dose regimens going into that program. It can be done very quickly because they've already set up the organization and the structure to do a very large Phase III program that was already in place. So this just goes very quickly into a Phase IIb and can be enrolled rapidly. So that's the front end of your question. The second part of your question, which has to do with differentiating with Lp(a), they are completely different populations. Lp(a) in general, the patient population that have elevated Lp(a) and cardiovascular disease are patients that have an Lp(a)-driven cardiovascular issue. And most of these patients, it turns out when you look at epidemiologically do not have elevated triglycerides. So they don't have a triglyceride problem. Vupanorsen is targeting the triglyceride issue as or perhaps more significantly the remnant cholesterol component of the high triglycerides patient population. So these are enriched with diabetics. There are patients who have elevated triglycerides, not super high, but greater than 150, greater than the upper limit of normal for triglycerides. And the intent is to drive down triglycerides and remnant cholesterol and that's what vupanorsen does very well. It's a pan-dyslipidemic drug that really takes down the lipids that are elevated in a dyslipidemic patient population like the patient population targeted here. These are generally not high Lp(a) patients. So there's a clear differentiation. There are different patients with this residual risk that's very real in both of these populations.

Thank you very much for taking the questions. Maybe just one on the oral program. So thinking about the oral program, do you have some sense for the bioavailability with oral dosing, which you'll further reinforce with the upcoming data? And you'll have experience with what dose levels necessary for different indications for the subcutaneous. Do you have a sense for what portion of your currently marketed drugs or pipeline programs may be amenable to oral dosing? Is there some dose level for example, is there some subcutaneous dose level you could point to and say, I think that anything that's dosed at this level or below is probably feasible for conversion to oral dosing? And maybe in a couple of particular examples, if I think about things like the TEGSEDI follow-on TCR LRx, or your LPLA program, are these indications that you might be able to switch to oral dosing?

Thank you, Vince. We believe that a significant part of our pipeline, especially the liver targets, could be suitable for oral dosing once we establish a commercially feasible oral delivery method. In our current clinical program, we aim for substantial reductions, not just 20%, 30%, or 40% that would make the product viable. We are focused on achieving larger reductions that apply to all pipeline assets, including TTR, Lp(a), ANGPTL3, and ApoC-III. Additionally, we're actively prioritizing compounds that could benefit from an oral approach and advancing those initiatives. The chemistry we are using is Gen 2.5, and we believe this combination could provide around 8% to 10% bioavailability in humans, which we've shown with Gen 2 chemistry could lead to commercially viable oral delivery. Our goal is not to produce a minimal effect on the target; we aim for reductions that are competitive with some of our best subcutaneous drugs today. So, I think we're going to do that probably at Investor Day this year, if not sooner. I want to thank everybody again for joining us today. Before we close today, I would like to take this opportunity to remind you of our investor webcast, focused on our Cardio Renal franchise next month, as well as our Investor Day, which I just referred to earlier planned for December. We plan to provide details for these events soon. So stay tuned for all the details. Thank you again. And have a great day.

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