Ionis Pharmaceuticals Inc Q1 FY2021 Earnings Call

Good morning and welcome to Ionis Pharmaceuticals First Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. As a reminder, this call is being recorded. I would like to turn the conference over to Wade Walke, Vice President, Investor Relations to lead off the call. Please begin.

Thank you, Betsy. 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 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, Chief Executive Officer; Beth Hougen, Chief Financial Officer; and Richard Geary, Executive Vice President of Development. And joining us for Q&A will be Onaiza Cadoret, Chief Corporate Development and Commercial Officer; and Eric Swayze, Executive Vice President of Research. I would like to draw your attention to Slide three, which contains our forward-looking language statement. We will 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. Good morning. And thank you for joining us on today's call. Last year, we introduced a new strategy to drive growth by developing and commercializing medicines from our wholly-owned pipeline. Since that time, we've taken a number of key steps that have advanced our strategy and moved us closer to successfully commercializing our own products. Most recently, we expanded our Sobi distribution agreement and restructured our TEGSEDI operations. This transaction unlocked significant resources that we are redeploying to advance our wholly-owned pipeline and prepare for commercialization of our highest priority medicines, which include TTR LICA, and APOCIII LICA. We're also using savings from the Sobi transaction to invest even more in our technology to further broaden the reach of our therapeutic capabilities. Turning now to our pipeline. We were particularly pleased with the Phase 2 data from IONIS-PKK-LRx, with hereditary angioedema or HAE. Based on these encouraging results, we're advancing into a Phase 3 study where we hope to further demonstrate the potential of this medicine as a best-in-class product that could change the standard of care for patients with this disease. We also recently initiated pivotal studies with two wholly-owned neurological disease medicines. ION363 and ION373 for patients with FUS-ALS and Alexander disease respectively. Given the severe unmet need of these patients, in the progress we have made with regulators, both medicines are on an accelerated path to the market. And we are pleased with the progress we're making across our rich Phase 3 pipeline with medicines for patients with ATTR amyloidosis, FCS, LP little age driven cardiovascular disease, and ALS. These Phase 3 programs remain on track with data from the Phase 3 VALOR study of tofersen in patients with SOD1-ALS expected this fall. Positive tofersen results would demonstrate for the first time that a disease-modifying treatment is possible for patients with ALS. A positive outcome in this study would also move tofersen one step closer to becoming our next commercial product. And additionally, tofersen success would further solidify our leadership position in the development of first-in class medicines for the treatment of neurological diseases. In support of our strategic and pipeline objectives, earlier this year, we launched a large capital project to expand our manufacturing and R&D capacity. This project is important because we move our late and mid-stage medicines toward the market. It's also important as we advance our technology with new chemistries, including novel LICA chemistry, and new routes of administration. We have made significant progress in focusing and advancing our pipeline and our business strategy. Our financial results reflect our strategic investments and keep us on track to achieve our 2021 guidance. And importantly, we remain well-positioned to have 12 or more marketed products in 2026. With that, I'll turn the call to Beth to review our first quarter financial results, and Richard will discuss recent pipeline updates and preview key upcoming catalysts through the rest of the year. After Richard, I'll wrap up our prepared remarks before taking your questions. So now, I'll turn it over to Beth.

Thank you, Brett. In February, we provided guidance for this year that reflects our new strategy to maximize the value of our wholly-owned medicines focused primarily on commercializing our rare neurological and cardio metabolic disease programs. Our first quarter results of $112 million in revenue, $159 million in non-GAAP operating expenses, and a non-GAAP net loss of $45 million reflected this new strategy and were in line with our expectations. Now turning to our revenues, SPINRAZA generated over $521 million in global sales. We earned $60 million in royalty revenue as a result, and virtually all of that revenue falls to our bottom line as profit. Our first quarter SPINRAZA revenue decreased slightly compared to the prior quarter because our royalty rate resets at the beginning of each year. As in prior years, we expect to reach the highest royalty tier by mid-year. The respond to those studies continue to progress well, these studies remain important elements of Biogen's ongoing efforts to enhance patient outcomes and guide treatment decisions. We look forward to additional steps Biogen plans to take to further reinforce SPINRAZA's proven efficacy and safety profile for SMA patients of all ages. SPINRAZA remains the SMA market leader with over 11,000 patients on treatment and over 60,000 SMA patients in markets where Biogen has a commercial presence. We believe SPINRAZA will continue to be a foundation of care for the treatment of SMA. We also generated combined TEGSEDI and WAYLIVRA revenue of $20 million. As a reminder, our guidance reflects a shift in revenue for TEGSEDI and WAYLIVRA due to the change in distribution under our Sobi agreement. We are pleased with the smooth transition of our TEGSEDI and WAYLIVRA operations to Sobi, which are now complete in Europe and well underway for TEGSEDI in North America. Under our new distribution model, our commercial revenues from these products shift from product sales to distribution fees based on Sobi's net sales. In the first quarter, our revenues reflected this shift in Europe. Beginning in the second quarter, revenue with TEGSEDI sales in North America will also reflect this shift. In addition, we earned nearly $30 million of R&D revenues in the first quarter, which we generated from multiple sources related to our partner programs. Our non-GAAP operating expenses were $159 million in the first quarter, which represented a modest increase compared to the same period last year, and was in line with our guidance. The increase was driven by higher R&D expense related primarily to advancing the Phase 3 studies of TTR LICA and APOCIII LICA and development activities for multiple programs across our wholly-owned pipeline. As expected, our SG&A expenses decreased in the first quarter, primarily due to cost efficiencies we realized from the integration of Akcea and the restructuring of our European operations. An important element of our new strategy is our focus on investing internally for growth. And our first quarter results support this aspect of our strategy. With our first quarter results, we remain on track to achieve our 2021 guidance of a net loss of less than $75 million on a non-GAAP basis. We expect our revenues in Q2 to be similar to the first quarter. And we're projecting an increase in revenue in the second half of this year, driven in part by increasing R&D revenues as we achieve key milestones for our partner programs. Already in the second quarter, we achieved a $10 million milestone from Biogen for advancing ION54, our medicine targeting DGAT2 for the treatment of ALS. We project operating expenses to increase over the course of this year as our mid and late-stage medicines advance in development. We expect our R&D expenses to increase as the Phase 3 studies of TTR LICA and APOCIII LICA progress and as we initiate the APOCIII LICA Phase 3 study for patients with severely high triglycerides. Additionally, we expect our SG&A expenses to decrease further in the second half of this year as we realize savings from our Sobi transaction. Last month, using our balance sheet, we completed a $630 million convertible notes offering. These notes carry a 0% interest rate. We completed this transaction to accomplish two primary goals. To refinance the $310 million of 1% convertible notes due in November. And second, to fund a large capital project we recently initiated. We evaluated multiple financing options to achieve our goals, and ultimately, with a 0% interest rate, we determined that the low cost of capital we secured through the convertible debt offering was our best financing option. Importantly, we maintain a strong balance sheet to support our wholly-owned pipeline and our technology. We used a portion of the proceeds from our debt offering for a large capital project to expand our manufacturing and R&D capacity. We expect this multi-year project to cost between $250 million and $350 million. We anticipate completing the project in 2024, and once complete, we will have the manufacturing capacity to support the future needs of our wholly-owned pipeline. Additionally, we will increase our capacity to bring forward novel chemistries, including new LICA chemistry. Continued critical advancements will enable us to advance our wholly-owned pipeline to the market. This project enables us to build on our leadership in development, chemistry, and manufacturing of oligonucleotide therapeutics. And to ensure we have the infrastructure we need to achieve our strategic objectives. As you can see, we have taken important steps already this year to drive growth and to position us to achieve our goal of 12 or more marketed products in 2026. And with that, I'll turn the call over to Richard.

Thank you, Beth. We continue to execute on our pipeline goals this quarter, achieving a number of successes and advancing towards significant value-driving catalysts. We're particularly pleased with the positive Phase 2 results from IONIS-PKK-LRx, a once-monthly subcutaneously administered medicine for the prophylactic treatment of hereditary angioedema, or HAE. Ionis PKK-LRx demonstrated a mean reduction of up to 97% in HAE attacks, together with favorable safety and tolerability. We look forward to reporting these Phase 2 results in greater detail later this year. We are now advancing IONIS-PKK-LRx into a Phase 3 study and hope to further demonstrate its potential as the best-in-class prophylactic treatment for patients with HAE. We also continue to be pleased with the progress of our Phase 3 pipeline, including our partnered programs Pelacarsen and togersen as well as our wholly-owned programs. IONIS-TTR-LRx remains on track in our studies in patients with TTR polyneuropathy and TTR cardiomyopathy, and APOCIII-LRx also remains on track in the Phase 3 study in patients with FCS. We expect to begin a second Phase 3 study of APOCIII-LRx later this year. This second Phase 3 study will be in patients with severe Hypertriglyceridemia, which has a prevalence of over 3 million patients in the US. We also expanded our late-stage pipeline with the initiation of pivotal studies for ION363 in patients with FUS-ALS and ION373 in patients with Alexander disease. Because of the strong efforts of our development teams, both of these medicines for rare fatal diseases are on accelerated paths to patients. From our mid-stage pipeline, just this week, positive data from the Phase 2 study of Ionis AGT-LRx in patients with resistant hypertension were published in the Journal of the American College of Cardiology. We also plan to present these data at the ACC conference later this month. Based on these Phase 2 results, we've advanced Ionis AGT-LRx into a larger Phase 2b study in patients with resistant hypertension on three or more antihypertensive medications and a Phase 2 study in patients with chronic heart failure and reduced ejection fraction. In a Phase 2a study of Ionis GHR-LRx in acromegaly patients poorly controlled on Samantha stat and analogues, we achieve substantial reductions in growth hormone binding protein, which is a surrogate marker for GHR signaling together with favorable safety and tolerability. We plan to discuss these results in greater detail, together with interim results from our ongoing open-label extension study later this year. With Ionis ENAC-2.5Rx, we've recently learned of a finding in a long-term preclinical toxicology study. While we believe we would have been able to work through this finding, doing so would impact our timelines. As a result, we have reevaluated the totality of available data and decided to discontinue further development of Ionis ENAC-2.5Rx. We have a number of late-stage research programs in our pulmonary pipeline, which we are now prioritizing and continuing to evaluate for further development. Now to upcoming catalysts in the neurologic disease pipeline. We're very pleased with the progress of Ionis MAPTRx, our medicine designed to reduce tau protein associated with Alzheimer's disease. We were encouraged by the top-line results from Ionis MAP-TRx Phase 1-3 in patients with Alzheimer's disease that Biogen reported earlier this year. Ionis MAP-TRx demonstrated durable time and dose-dependent reductions in CSF tau protein and was generally well tolerated in this study. Biogen plans to report these results at the Alzheimer's Association International Conference in July. Our ALS program is also advancing well. Tofersen has the potential to become the first disease-modifying treatment for ALS and change the ALS treatment landscape. We believe tofersen may also have the potential to slow progression or even delay the onset of disease in presymptomatic SOD1-ALS patients, similar to the profound effects demonstrated in presymptomatic SMA patients treated with SPINRAZA. Biogen recently initiated the Atlas study to address this question and hopefully demonstrate a similarly profound effect with tofersen in presymptomatic ALS patients. With our programs for FUS-ALS, C9ALS, and other broader causes of ALS, we are addressing essentially all forms of this disease. Importantly, with our pipeline progress to date and our upcoming data catalysts throughout this year and over the next few years, we remain well positioned to achieve our goal of 12 or more marketed medicines by 2026, including potentially six or more wholly-owned medicines. And with that, I'll turn the call back over to Brett to close this portion of the call.

Thank you, Richard. In the first quarter, we took important steps to maximize the value of our wholly-owned pipeline. We continue to advance and expand our Phase 3 pipeline with IONISTTR-LRx and APOCIII-LRx advancing as planned. Through the initiation of pivotal studies for ALS and Alexander disease, we also delivered positive results for IONIS-PKK-LRX for HAE and are planning to advance this medicine into the Phase 3 study. We've taken important steps to strengthen and streamline through our acquisition of Akcea and the restructuring of TEGSEDI and WAYLIVRA operations. We have accelerated our commercial strategy, retained key commercial expertise, and unlocked significant resources that we are reinvesting in our wholly-owned pipeline technology and the build-out of our commercial capabilities. Importantly, we are financially strong and on track to achieve our 2021 financial guidance. We're using our strong balance sheet to invest in our strategic priorities and execute on all of our goals. I'm proud of the progress we've already made in these areas. We look forward to sharing more this year as we advance our medicines and move closer to our goal of 12 or more marketed medicines in 2026. With that, we will now open it up for questions.

First question comes from Luca Issi with RBC. Please go ahead.

Thanks so much for taking my questions. Maybe to hear one, maybe on Huntington disease here for either Eric or Richard. I think we started full data last week from Roche. And it looks to me that at least the high dose may have unfortunately accelerated disease given a bit higher dose actually increased ventricle volume over time or some of the low dose and placebo, wondering if you share the same view here. And what are such data substantiate the hypothesis that fair and a wild type may matter here. So again, any thought there will be helpful. And then second on HAE, congrats on advance to the program into Phase 3. So again, wondering if you could give us some color on how you're thinking about the Phase 3 study design? Will it be placebo-controlled, will you need to run a head-to-head trial versus Exciro? Are you exploring monthly dosing or bi-monthly dosing? Again, any thoughts there will be great. Thanks so much.

Hi, it's Eric, I guess I'll take the Huntington question and kick it over to Richard for a much more entertaining PKK discussion. Huntington, the data was presented at CHDI and basically reinforced what the IDMC had. It was the same data set and said the drug wasn't working and providing a benefit. It's true if you look at the absolute numbers that the more frequent dosing was descending a little faster than placebo. But all of those curves were within the bounds of natural history. As to what it means I think it's premature to tell both the existing hypothesis that they discussed, and all of which are valid and makes sense to investigate. But I think we really need to unpack the data and their analysis and see what we can learn from the study. We really don't know at this point.

So on the HAE question, just a quick up front that we have some regulatory meetings over the next couple of months. And we will be bringing details of the Phase 3 program that later this year. At this point, we're moving forward with those regulatory and then into a Phase 3 program.

Let me just add to that a little bit, I think it will be very helpful for Onaiza to provide some of her thoughts too on why we are so excited about the market opportunity for this drug. We really do think it has the potential to be the very best in class. It will certainly be a placebo-controlled study. I mean, that's what is expected in Phase 3 trial designs and there's precedent for that with Exciro and other drugs as well. And certainly, monthly dosing is what we're planning to do right now in the Phase 3 study, which offers a significant advantage, we believe, over therapies that require more frequent dosing.

Yes, we'd be happy to add some color over here. I think going back to your question, Luca, is it going to be placebo controlled, or head-to-head? Certainly a question for us as we went into the marketplace to kind of test out the profile of our PKK product, and we looked at it versus current treatment options, including comparators, and we really got feedback based on the profile that we have, that this has the potential to be a best-in-class profile. A placebo-controlled study will be more than sufficient to really demonstrate that if you take a look at kind of the trifecta of efficacy data that we are able to deliver on this: prevention of attacks, the fast onset of maximum clinical efficacy, and the reduction in acute treatments. That's a trifecta of efficacy that's very pleasing and attractive for the healthcare provider in the marketplace. So we're feeling very positive about what this is going to bring to the unmet need for hereditary angioedema patients in prophylactic treatment.

Thanks, Onaiza, and as Richard said, we'll provide more details on the Phase 3 design later this year.

Got it fantastic. Thanks so much, super helpful. Thank you.

Thank you.

Our next question comes from Yaron Werber with Cowen, please go ahead.

Great. Thanks for taking my question. I have a question specifically to start with on acromegaly. It sounds like if you recall correctly, the study was fully enrolled in December. It's a 12-week study, plus it's an open-label extension. And it looks like you're planning on releasing the data in the second half, and it says plus the OLE. Any medical meetings that we should be aware of where this can be targeted, or is this going to be in a press release? And then any thoughts about what's the next steps with this program, given what you know from the Phase 1 data already? Thank you.

So we are wrapping up the study now. We'll be going through the data and the analysis of that data will take us into the second half of the year as mentioned in his statements earlier. We're going to share the data as soon as we can. We'll probably not wait for a medical meeting to share the results of that study because we don't have one targeted right now. Although we'll look for such a place that we can share the data in detail. But we'll figure out a way to summarize to get the data out along with the open-label extension data, which has accumulated a rich data set that we didn't want to lose sight of. Remember that we also have a second study in progress for our GHR LICA medicine in acromegaly, which is in frontline monotherapy Phase 2, which is getting off the ground now and getting started. We're going to want to look at all the data before we can make a decision on the next steps for either the patient population in this metastatin treated patients that are poorly controlled, versus monotherapy, and then make decisions on what the next steps for the program would be.

Great. And then also any update on the potential Phase 1 or IND filing for Angelman syndrome? Thanks so much.

Yes, we're hoping to get the clinical study started this year.

You've definitely selected a construct and you're planning on filing an IND. I mean, if you made a decision definitely to go forward?

Yes. You got it. Thank you, Yaron.

The next question comes from Yanan Zhu, with Wells Fargo, please go ahead.

Hi, thanks for taking my question. I just have a first question on the update from the ENAC program? Wanted to understand if you could share a little more about the findings from the toxicology studies, long-term tox study, and whether the tox is specific for the pulmonary route of administration. And whether it's related to the target or generally speaking the ASO presence in the lung? Thanks.

Sure, Yanan. I want to just emphasize that the clinical data for our ENAC in Phase 1-2a gave us very encouraging results. It has nothing to do with clinical data. We demonstrated target engagement in phase one and good safety in cystic fibrosis patients as well as in patients with COPD. And the cystic fibrosis data will be presented at ETS later this month. The preclinical finding was part of the long-term toxicology study as Richard stated in his statements. It can take us time to figure out what that's about and due to the delays that are just associated with those types of investigations. We took a look at our emerging pipeline in pulmonary diseases, and we think we have better targets to invest in that will bring greater value to the company and to the patients going forward. We do not believe that this is a read-through to our platform for pulmonary disease at all. This is something that happens in preclinical toxicology studies sometimes and we're going to work through it.

Got it. That's very helpful. And then a question on the TTR LICA program. Alnylam recently reported with tisserand, phase three study in TTR, polyneuropathy. Just wondering your take on their data, and the every three months frequency of administration, and how you see that product profile and whether there's an opportunity for the TTR LICA to petition against that profile? Thanks.

Sure, I completely respect the question. But Yanan, but it's not our position to comment on other people's data. What I can say is that we like our drug a lot. The Phase 3 study in polyneuropathy is enrolling very well, and we're looking forward to the results of that study next year in the cardiomyopathy study for TTR enrolling very well. In addition, Onaiza, we've done quite a bit of market research on frequency of administration and the value that brings to the marketplace and I would love to have Onaiza maybe comment on that.

Yes, I'd be happy to. I think your question was about monthly versus quarterly. In general, I would say, most kinds of market conditions, particularly from a patient perspective, as well as an HCP clinician perspective, there are definitely some improvements in profile when you go from daily to a weekly and weekly to a monthly. But after that, I call it, there's just a law of diminishing returns on more extended frequency, particularly for a less invasive option. We've found that here for TTR as well. We've done some extensive market research to understand that dynamic a little bit more because it's a really one of our key products that we're bringing forward to commercialization. And we're not seeing really a big difference between the monthly and the quarterly at all. I think rightly so, physicians are more excited about the profile of the product, as well as the large clinical trial that we have ongoing in myopathy and really looking forward to seeing our data, with and without standard of care. I think that's going to be the place of big differentiation here.

Got it? Thank you. That's very helpful.

The next question comes from Yale Jen, with Laidlaw and Co. Please go ahead.

Good morning, and thanks for taking the question. We understood the failure of the Huntington disease in those trials. And I believe you guys have great confidence in the tofersen in the ALS. So would you mind just maybe compare or contrast a little bit between these two and besides the different diseases and where your confidence seems to stem from for the better trials?

So I'll open up and then it's very good question, Yale, maybe Eric can expand. So we're confident in our neurological disease platform, we think it's leading in the industry in many ways with SPINRAZA and then tofersen coming in behind that. Plus, ALS and a whole host of other drugs. All of the drugs that we've taken into clinical trials have shown target engagement in robust target engagement in our trial, so we know we're hitting the root causes of diseases the top we're going after to test our clinical hypothesis. Tofersen is no different than that, with some very nice reductions in SOD1. Based on the Phase 2 data that was published in the New England Journal of Medicine and we've presented, our confidence is high in tofersen, and our confidence is it lends us even greater confidence in ALS in general because if tofersen is successful, preliminary but the Phase 2 data was very encouraging. It bodes very well for the rest of our ALS franchise, which we have four drugs now in clinical trials, two in Phase 3. The other part of your question, I think, had more to do with being able to target different regions of the brain, how ALS compares to Huntington and other drugs in our pipeline for neurological diseases. And there, I'll ask Eric to jump into the weeds a little bit deeper.

Yes, sure. And Brett alluded to great things, basically, the data packages that we have real evidence in the New England Journal paper for improvement and disease we didn't have that in Huntington. While we hadn't started reduction and decided to look at it in the Phase 3. As far as target ability, we've talked about this I think before, I think our treasure trove of preclinical data has done a good job of teaching us where we can target in throughout the brain, and we have a high level of confidence that we can target all the regions that are affected in ALS. And we have a high level of confidence that we can target much of the brain regions that are affected in Huntington's disease. Roche has talked about this extensively at medical meetings and presented a lot of the data. It is true that regions like the CART are less susceptible, but the case that makes sense to us that we could target that region. I have a very high level of confidence that especially in programs like the tofersen program, and our MAPT program and others that are targeting the whole brain and need to target the whole brain that we can engage those regions.

As a reminder, Yale, as mentioned in Richard's statements earlier, that MAPT data will be presented in July, I believe this summer. And I think that will lend even further confidence because Biogen has said the reductions in tau have been substantial and durable.

Okay, great. That's very helpful. And maybe just one more question here, which is a little bit more looking to the future. In terms of HAE, you guys seem to sort of decide to move forward with Phase 3? Let's just assume it is successful. Just curious whether this is a drug you guys want to potentially launch by yourself, or potentially, to be partnered out, at least at this early stage of thinking. And thanks.

It's a great question, Yale. It's one that we're working through right now. We think this is a great drug, I really do. And whether or not we will keep this and launch it ourselves or not, we will provide an update on the Phase 3 design later this year. We're moving into the Phase 3 study ourselves. So if you can just stay tuned on that, it's right now Onaiza's team is conducting a lot of market research and competitive profiling work to make the business case or not. Just stay tuned, we will give you an update in a little while.

Okay, great. Thanks a lot. And again, congrats for the quarter.

Thank you.

The next question comes from Paul Matteis with Stifel. Please go ahead.

Hey, this is Alex on for Paul, thanks for taking our questions. I guess I have two. The first one is a clarification on ENAC. It sounds like the preclinical talks with that, it may be related to knocking down ENAC long-term. Do I have it right, that you're no longer going to pursue any ENAC program, either this program or another follow-on program in ENAC? And then secondarily, just curious if you want to give any thoughts on business development with all the cash you guys have now? Thanks.

As I mentioned earlier in the question that was posed. We're still working through the data preclinically. We don't have any evidence directly that this is related to ENAC inhibition. Let me make this point: this is a very important point; the observations we may have made preclinically were not related to the same types of toxicities that were observed for small molecules systemically applied ENAC inhibitors. We're not seeing hyperkalemia; we're not seeing effects in the kidney, and that sort of thing. So this is separate. And again, I think we'll work through it and we don't believe based on the data, all the data we have, we don't think that this is a read-through to our pulmonary, our ability to go after pulmonary diseases. But what it does represent is a delay. We have a lot of drugs coming with other targets. Although we're not slamming the door close on ENAC, future, those targets will start approaching and catching up to ENAC pretty quickly. And we think those are significantly better targets for pulmonary diseases.

So just to be clear, it's really more of a pause on the ENAC development rather than discontinuation?

Now we just continue to ENAC this program in favor of other programs.

Thank you.

The next question comes from Jason Gerberry, with Bank of America, please go ahead.

Hey, guys, thanks for taking my questions. Just one quick follow-up on PKK and then a second question. Just on PKK, so it sounds like you view kind of a diminishing return on dose convenience beyond a month, but as it pertains to every two weeks versus a monthly, would you say that's a key point of differentiation, as you think about characterizing a potential best-in-class profile? Because it looks like dosing convenience is sort of a main feature that you'll be able to hang your hat on relative to the data on prophylactic agents. And then ahead of ACC, just wanted to probe a little bit in terms of what we're hearing from physicians in terms of what they want to learn about the profile of this drug. And it's has it pertains to consistency and durability of impact on blood pressure. One thing I think we're hearing is physicians just want to make sure there aren't dramatic spikes in blood pressure on a week-over-week basis. So you're curious if you could set the table, if we'll get any data that might help us understand a little bit about that attribute of your ASO there? Thanks.

Good questions, the attributes of our PKK LICA certainly key attribute is the dosing frequency. But it goes beyond that. Again, I'll ask Onaiza to expand.

Yes, I think you're right. The important thing here as I talked about, each medicine has to enter the market correctly and you have to actually look at dosing and convenience there. For the HAE market, as you know, with Takhzyro, it's a high volume injection every two weeks, and most of the market research suggests the efficacy is only as good as its compliance. We believe that that will be a big play. But we do think that is not the main thing we're going to hang our hat on. It goes back to what's really important for these patients in prophylactic treatment and goes to, again, prevention of attacks, the number of zero attack rates that you can achieve, and the ability of our product profile to deliver on that with the faster onset of reaching maximum clinical efficacy. The third prong of efficacy parameters is just the ability to reduce the number of acute medications they take. So when you think about it, really, it's just all three parts of the efficacy paradigm that we're just winning on, along with the convenience that will allow patients to take it on a regular basis, be compliant and deliver on the efficacy of the product.

And the AGT data I talked a little bit about what is to be presented at ACC but also the Phase 2b study and what we're hoping to get out of that.

I mean, you'll be able to actually go to the publication right now, and it's available in the Journal of the American College of Cardiology, and then the other piece to that is the presentation that we'll be giving. There have been no hypotension or hypertension or recovery events. Absolutely, that's an extremely important piece of the puzzle. So the data is showing that's a very clean profile. We've moved into a Phase 2b study that will further elaborate on those issues.

The Phase 2b study is really powered to nail down the magnitude of blood pressure control we expect to achieve in a Phase 3 study. It's a significantly larger study, it's a longer study, select dose for a Phase 3 study, and to really rule out any of those concerns hopefully that physicians have raised about spikes in blood pressure, hypotension, and so forth. So that's the intent of the Phase 2b study. But first, certainly the publication in the ACC presentation will support the safety and efficacy of this mechanism in this drug.

Got it. Thank you.

The next question comes from Jessica Fye with JP Morgan, please go ahead.

Hey, guys, good afternoon. And thanks so much for taking our questions. Not to belabor this, but just following up on the prior questions on ENAC. If the talks you've noticed is not related to the platform or exposure in the lungs, and it's not related to the target? What's your current thinking about what it might be related to?

Well, we don't know, Jess, that's the thing. We have to work through various toxicology findings. Sometimes findings happen in long-term studies, and it could be a sequence of related effects of that particular molecule. It could be something like that, but we really have to work through it. The confidence comes from our other experience with other drugs.

I think further, it's the clinical experience, I mean the clinical experience was absolutely clean. We were into longer-term treatment in the clinic. But timelines can get significantly impacted by a preclinical finding, and this was just one of those. We want to make sure that we're focused. We're early in development, and we've got a rich pipeline going with all of the products that have now moved into late-stage development. We just wanted to ensure that we're not spreading our efforts. We need to stay focused.

Got it, makes sense. Working to other questions just on the Alexander disease program, can you talk about some of the efficacy measures you have for ION373, is that gives you the confidence to advance that into a pivotal study, and the size of that opportunity, and just how well you think the product might be able to address the market?

We really haven't disclosed the full protocols or the endpoints for the Phase 3 program. We're very confident that we can engage this disease being the known genetic cause of the disease. It's a toxic gain function of the protein called GFAP. We're lowering it in our preclinical work. This has been published, and it's really a remarkable improvement in what I think are pretty good preclinical models of the disease. I think we have based on the preclinical data and the known pathophysiology of the disease — a very high level of confidence that we're in the right spot for this. Onaiza, if you can share programs.

Yes, we're looking at about 400 patients globally from a prevalence perspective. As Eric said, this would be the first and only therapy for Alexander's disease. I think the preclinical data and the models that we have suggest that we're going to normalize the production of access to GFAP, improve gross motor function, and reduce the significant symptoms that these patients are feeling both on the cognitive side and some of the GI side and really prevent disease progression.

Onaiza, it also be helpful if we talk a little bit about the rare disease neurological wholly-owned pipeline more broadly about how GFAP and FUS and all these synergize together as a franchise that we're planning to bring to the market.

Yes, no, absolutely, really good point. When we think about these rare diseases and conditions, we're looking at how we scale these collectively together to get the significant commercial synergies that will be really important in the marketplace. We have great products, Alexander's being one of them, but we also have just one for Lafora disease. Later on, we're looking at one more, and they're just servicing the severe pediatric diseases associated with epilepsy in the marketplace. We want to focus on that, and when we add in FUS and ALS, even though you wouldn't think there may be as many synergies, there's actually a pretty high overlap in the physicians treating them. So it comes together very nicely for us as a portfolio in neurology.

Got it. And maybe just a last question, going back to the comment about reaching the peak royalty tier for SPINRAZA around mid-year, similar to last year. Can you just unpack that a little some of the assumptions underlying that in light of the competition you're seeing in the U.S. from other.

So Jess, hi. When you look at the effective royalty rate on a quarterly basis over the past years, we get to our maximum royalty rate very quickly. The tiers are four tiers, and they very quickly. Therefore, our sense is that SPINRAZA will continue to perform as it has recently, and therefore, we would get into the highest tier on a similar path, similar timeframe as we have in the past few years. And that gets us up into that 15% very quickly.

Got it. Thank you.

Thanks, Jess.

Next question comes from Mani Foroohar with SVB Leerink. Please go ahead.

Hey guys, thanks for taking the question. I hate to beat a dead horse, but I'm going to beat the dead horse a little bit. So given that you're where you are on ENAC in some ways in the lead of your closest competitor in terms of maturity and data, is the right interpretation of what you're saying that it would have that going back and redesigning and moving forward with a different construct would have been requisite to feel comfortable and you're getting around this preclinical talks. And is that the right way to interpret what you said? I mean another, not getting a different question.

We don't have an answer to that first question, because we're still going through the data. Trying to figure out what the next what's the best path forward is. So that might require a different drug or it might not. We think we have better targets out there that we're working on to bring greater value to the company and to the patients going forward.

Okay, that makes a lot of sense. And then on HA obviously you have a really exciting dataset, optically superior to what's on the label for any of the approved therapies. Obviously, cross-trial comparisons are fraught by nature. When you think about commercialization, obviously, the quality of therapies available hasn't improved from, you know, the time group enough to kind of the lead asset, how do you think about openness and a willingness to switch? In commercialization, would you see this primarily as a switch market versus other existing prophylactic therapies? Do you see newly diagnosed patients as the lowest hanging fruit? How do you think about commercialization strategy, presuming you continue to have what appears to be a best-in-class event reduction profile?

Onaiza.

Yes, I'm happy to take that one. Really great question here. I think that when you're on prophylactic treatments, as we think about entering the market over here, it's clearly for new patients. This is the best choice, right? So for new patients, we, we've kind of tested this, we have the best-in-class profile, that's where it's going to go. For patients who are already on therapy, I think, you know, they're in will be, how do we get switches in the marketplace? We're really thinking of this in a variety of different ways. Are there breakthroughs happening? There definitely would be a sense of patience; there are patients who are not compliant on the full set of therapies that there are, so there's an opportunity there. I believe that we're looking at particularly a switch design in our Phase 3 as well, although it's not confirmed, we're definitely evaluating whether that will be actually nice added benefit to our design as well.

That makes sense to me. And do we have a sense of where what proportion of patients you think are modern and on the most modern prophylactic therapy effects? what proportion of them based on your cable conversations, interactions, clinicians' clinical trial experience? What portion of those patients see meaningful enough breakthroughs to fall into that early share switch early adopter population for you guys.

Yeah, hard to give you percentages over here on that. It's a really good question. I think we're going to do some claims database analysis and do a retrospective look to get a better sense of that. So it's definitely on our list to help evaluate, but you would give, again, the most profound part of the research and insight for us was that the compliance piece, right? Given Takhzyro requires high volume every two weeks, there are a lot of patients who actually wouldn't comply and as a result, would have breakthrough attacks. As to quantify that I think it's going to take a little bit more work on our part before I can give you a better sense of where that is.

That makes a lot of sense. Thanks. And I'm going to hop back in the queue. I know there are a lot of people waiting.

Maybe Betsy we'll take one more, and then we'll have to close it out.

The next question comes from Myles Minter, from William Blair. Please go ahead.

Hi, thanks for squeezing me in. Just a question on Biogen sort of pushing for a higher dose for the program. Just wondering whether that's got any read-through or whether there's any room to maybe push the dose afterwards kind of in a SPINRAZA-like scenario. And for the FUS programs and the Ataxan programs that are earlier stage, is it likely that we'll see a push in dosing in those early clinical studies?

The plan is that the drug is very well tolerated. Biogen is very committed to ALS, in particular C9 ALS as well as SOD1 ALS. And so before moving into Phase III, you want to make sure you get those right. They wanted to get more data and examine a higher dose. So I don't really think that the read-through is anything more than that the new era. It's really that the drug is very well tolerated and they want to get more experience before taking the plunge for Phase III. I didn't quite get your FUS ALS question. We have selected doses and we have a single dose level for Phase III that we're evaluating the program. So we're not planning to look at multiple doses in FUS ALS, we think we have the right dose and we're plowing ahead; we don't plan to escalate dosing or de-escalate.

Okay, I guess that was my question. Just like why the same on off programs specifically? They're testing a higher dose. I know they're not involved in the FUS program, but even the Atax program like why wouldn't you just go with a higher dose here? Is there a risk of overshooting the knockdown of this protein?

No risk of on-target toxicity, or overdosing or anything like that. Each drug is different, so Myles for C9 we do have an illegal selective drug, and only because of the nuances of the way the transcripts are processed, our drug only lowers the pathogenic, expanded C9ORF72. So we don't look for the non-pathogenic C9.

Okay, cool. Thanks for the questions.

Thank you, Myles. And with that, I'd like to thank everybody who joined us on our call today. It's been a highly eventful start to the year and we look forward to more throughout the remainder of the year and sharing those results with you. So with that, thank you and have a great day.

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