Isis Pharmaceuticals' Management Presents at Lazard Capital Markets 9th Annual Healthcare Conference (Transcript)

Nov.13.12 | About: Ionis Pharmaceuticals, (IONS)

Isis Pharmaceuticals, Inc. (ISIS) Lazard Capital Markets 9th Annual Healthcare Conference Call November 13, 2012 2:00 PM ET

Executives

B. Lynne Parshall - Chief Operating Officer, Chief Financial Officer and Director

Analysts

Joshua E. Schimmer – Lazard Capital Markets LLC

Joshua E. Schimmer

Okay, good afternoon. I’m Josh Schimmer from Lazard Capital Markets Team. It’s a pleasure to introduce ISIS Pharmaceuticals. ISIS is a leader in Antisense technology with a very deep pipeline that includes KYNAMRO, which recently received the FDA panel vote, also I think interior drugs, in the clinic including certain components if I can count correctly, and can I have for some intial prepared remarks and then Q&A from ISIS. It’s my pleasure to introduce Lynne Parshall COO and CFO, thank you.

B. Lynne Parshall

Thanks and thank you for coming today. Actually, not going to be my prepared detailed presentation and number of you looking out at in audience, I know you have seen it numerous times. So I will spend time doing some introductory remarks about Isis and then we can do a lot of question-and-answer which is I think more fun for you and certainly more interesting for me.

Isis the leading company in antisense technology. We’ve pioneered antisense and taken the technology platform that we created to create really an almost unparalleled pipeline. We have 25 drugs in our pipeline, spanning numerous different therapeutic areas both cardiovascular disease, metabolic disease, cancer, severe and rare disease and then a variety of other applications of antisense technology because you can use antisense technology really to drug almost any target. And certainly all of those targets that are viewed is being essentially undruggable by the pharmaceutical industry, our drug is that we can that we can drug. I think I will just actually put the pipeline fired up.

Our most advanced drug, Kynamro is a drug to treat extraordinarily high cholesterol patients with a rare genetic disorder that gets along the for all cholesterol in this as much as a 1000. So think about LBL as a 1000, that’s something hopefully nobody in this room has the opportunity to experience. Future patient that have extraordinarily high cardiovascular risk and in desperate need of new therapies. We’ve got positive FDA advisory panel and are looking forward to approval of Kynamro in the U.S and Europe late this year and early next year, with a January 29 PDUFA day.

Beyond that we have a pipeline that’s significantly maturing. Within the pipeline we have five different programs that have the opportunity to have drugs on the market in the next five years. Those are three drugs that of our severe and weird disease program. Our drug speaks spinal muscular atrophy, this interface two clinical trial that’s partnered with Bio Genetic, muscular atrophy is genetic disease that causes tremendous disabilities in children and in infant with type one SMA, it causes death towards their second birthday.

Our transthyretin amyloidosis doses program, that’s partnered with GlaxoSmithKline is to treat – to generate a neuron degenerative disease, patients diagnosed in their 30’s and 40’s who have once diagnosed that 10 year lifespan who have to live with aggressive neural degeneration and ultimately death frequently by wasting, just as their organ systems stop working. Our drug to treat high triglycerides, which targets APOCIIIRx, if the drug where we’re targeting patients who have extraordinarily high triglycerides skin similar to (inaudible) model, patients with triglycerides that are over 880 mg per deciliter, who not only have very high cardiovascular risk, but also are extreme risk of pancreatitis.

Our partners at OncoGenex are developing in Phase 3 clinical trials OGX-011, their most advanced Phase 3 study should readout next year in prostate cancer and our partners Pfizer are developing a drug for scarring that they got from a company that we helped co-found called Excaliard. And this is a drug to treat scars associated with surgery, so those terrible disfiguring scar that people have badly following surgery. When treated with the EXC 001, you can very nearly emulate that type of bad scarring and the surgical scarring market is a very, very large market, Pfizer estimated multiple billions of dollars a year and that drug will – it has a potential to be on the market also by 2017. So a large pipeline, a maturing pipeline, very strong partnership and our systemic antisense drug on the verge of going on to market early next year.

So with that introduction, I think I’d love to take questions.

Question-and-Answer Session

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

So we are expecting a decision by our PDUFA data of January 29. Genzyme is – whoever partners, Genzyme and Sanofi are actively working with the agency on the details of the REMS and will work with them on the details of the labels as well. And Genzyme is prepared to launch the (inaudible) approved.

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

So the label that was proposed by – the label that was described and patient populations that were described in the REMS by the FDA, with no need for genetic testing because these patients are diagnosed really phenotypically rather than genotypically and then that the physician had to certify that the patient had appropriate medical need. I think in our experience talking to doctors, the way to treat these patients, know who the homozygous FH patients are, they know based on how high their initial presenting LDL is, they know based on what age at which they present – with that very high LDL and sometimes they are physical manifestations, lipid build-ups, and the xanthoma that are disfiguring, lipid build-ups underneath the skin and so – and obviously, family history.

But I think the key is that no genetic testing will be required and the agency has acknowledged that, but there are different patient population, and so again you need to think about it as a continuum, but the patient is at the bottom of the continuum, the severe heterozygous patient maybe controlled on status with LDL’s of 200 with other risk factors. So that patient who presents today 45 or 50 with an LDL of 200 that they can’t get down on status, this is a different patient then the nine year old with an LDL of 800, who is desperately in need of treatment.

Unidentified Analyst

So then for the suitable patient population, how many patients have been identified in the U.S. so far, where are you in kind of that launch-ready mode?

B. Lynne Parshall

So the estimate of homozygous patient in the U.S. is about 3,000 patients. Genzyme has identified a large percentage of those through the work that they’ve done with lipid specialist and most of these patients are being treated in lipid specialty clinics or by lipid specialist.

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

Sure. We are expecting a CHMP opinion this year. In Europe, we filed for both homozygous familial hypercholesterolemia as well as severe heterozygous familial hypercholesterolemia. No decision has been made on our ultimate label, but what we said most recently in our earnings call was it may end up – that our label ends up being more like what we’ve asked for in the U.S. and it could be that it is not as broad as what we initially asked for.

To support expansion of our label in the U.S., we have an ongoing study that we’re doing under a SPA from the FDA called the FOCUS FH study, and that’s in the severe heterozygous patient population. And our plan in the U.S. was to get homozygous FH is our initial indication and expand the indication in the 2015 timeframe based on the data from the FOCUS FH study. If our label is more narrow than what we’ve initially asked for in Europe, our plan in Europe would be the same.

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

Sure. The FOCUS FH study is a one-year dosing study double-blind, placebo controlled randomized study. It’s about – a little bit less than 500 patients and it actually includes two different sets of patients, it includes the severe heterozygous patient and the criteria for that are LDL cholesterol over 200 with a cardioavascular risk factor or LDL over 300 without any other independent cardiovascular risk factor.

In addition to that half of the patients are the patients in the next level of risks. So they are patients with LDL between 160 and 200 to fill out the breadth of the safety database in the study. As with the other Phase III studies that we have done with KYNAMRO, it’s once weekly dosing, a single 200 milligram at-home injection and this is a drug that – that isn’t injectable drug, but it’s a little (inaudible) just one needle, so it’s a small volume, small subQ injection.

And I addition to looking at the once weekly dose, we also have incorporated into this study our SPA, an alternative dose regimen. So in the alternative dose regimen rather than once weekly 200 milligram is three times a week 70 milligram, so the same weekly does just divided into three. And the reason that we’ve done that is that the principal adverse event that we see with KYNAMRO is injection site reaction. And they’re mild-to-moderate, they are principally cosmetic, but the fact is some people don’t like them. And for the people who don’t like them, we want to be able to expand our market opportunity and also (inaudible) alternative, and so we think the three times a week dosing will offer an alternative that should produce fewer and less significant injection side reactions for patients who would like a choice.

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

Yeah, so we’ve actually done studies with other antisense drugs where we looked very closely at different dosing regimens and we have seen that the injection side reactions are less frequent, smaller and resolve more quickly. I can’t quantify that for you because these are small studies and they are very qualitative rather than quantitative, but based on – looking at data across really the technology platform in a wide variety of programs, we have reasonable level of confidence that in fact we will see fewer less severe injection site reactions.

In addition, in our KYNAMRO ongoing up in label stage, we are actually learning a lot about managing the injection site reaction. So what we are seeing is even with the once weekly dose injection site – the incidence of injection side reactions is going down. We are learning about heat and cold and massage and things like that, which really help – ameliorate the injection side reactions.

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

So we actually we did very rigorous Phase III study, so we remain in about as heard is possible on our patients to study on the studies. We had multiple weeks where you have to come in twice, before dosing and after dosing because we wanted to collect as much data as possible on the drug even with that in our two studies, in our target patient population, homozygous is a severe, the continuation rate was very positive. The cell in which we saw actually the honey’s drop out rate was a study in the least sick patients we tested and that was a study that we did, where the investigators were not principally lipidologist, they were principally cardiologist, and internal medicine specialist and the patients only needed to have LDL with 120 to get into the study.

These were patients who had to have another cardiovascular risk factor but they were principally high cardiovascular risk because they have Type II diabetes or because they were post demi or something else that with the primary contributing factor is –look at their LDL and said, 120, I need to get down to 100, it’s not so it’s not so bad and so for the hurdles that we put in front of those patients I think made it more difficult for them to feel motivated, to stay unsafe. We have learned a lot, we’ve also being able to manage injection side reactions and keep people from having negative reactions to what‘s principally cosmetic side effect has made a beg difference in terms of compliances as well.

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

So we are not doing that because these are not long-term studies, the FOCUS FH study is a one-year study and we do collect that data, but principally the data that we’re collecting tie, take advantage of the med analysis that you can do with a very larger LDL reduction studies and changes in cardiovascular risk and tying that to changes in hospital utilization rate. Because of the populations that we’re focusing on with this drug aware populations, getting the – doing the size of the study that would take to get those kind of outcome readouts really is impractical.

Unidentified Analyst

Thank you. I’m looking at the pretty chart and all the colors, looks like you’ve a lot shots and goals, I’m just curious, as a smaller company, because all those opportunity you guys see potentially how do you prioritize the investment as you always find that resources? Can you walk me through that?

B. Lynne Parshall

So, we do – we do that on an ongoing basis on a very formal way every year, at the end of the year and then we’re constantly looking at our progress. One of the benefits we have as a smaller company is these drugs aren’t being developed in (inaudible). There is sort of just us and so we spend a lot of time looking at each of the programs as it moves forward and assessing the data and looking at value.

But formally on an annual basis, we prioritize all of our progress for budget reason, but also as you said, it’s more than just dollar resources that we’re looking at. And what we look at is the competitive environment, where the drug is stacking up in the competitive environment, what we think the target product profile needs to be to be a successful drug and whether are there any changes to our development strategy or target patient populations that are necessary.

And so for example last year, we made decisions on two drugs in our pipeline that well we had just shown positive data from the programs. We decided not to move forward principally because the competitive landscape had changed. Our drug was not in front any longer and it may have looked as good as the competition, but not better and those are drugs where we think because we have so many other opportunities, we want to put our resources in the places where we can have a significant competitive advantage. And so we think we do a pretty vigorous job of doing this.

Unidentified Analyst

What kind of response rate do you get? The efficacy rate?

B. Lynne Parshall

It depends on our program. But for example, for KYNAMRO, two patients in our homozygous FH trial had positive responses to the drug, in other words got some amount of liquid lowering. Then really as with any drug, you see a variety of responses, some patients who have phenomenally large responses than other patients who have minus responses and I think that makes it look like many, many drugs, there are very few drugs that every patient responds to or that every patient gets the same response to because our bodies are all different.

Unidentified Analyst

Can you discuss price please?

B. Lynne Parshall

Pricing for KYNAMRO or pricing for all of the drugs?

Unidentified Analyst

No, no, KYNAMRO.

B. Lynne Parshall

Genzyme hasn’t set price yet. People have been using until – really until they get the final label in both the U.S. and Europe, they wouldn’t set price.

Unidentified Analyst

What ballpark are we talking about?

B. Lynne Parshall

The principle comparator that people are using as a surrogate for price, it’s the cost of the therapy that all of these patients are eligible for which is something called apheresis and it’s like dialysis, but it takes the lipid out of blood. Apheresis cost anywhere between $80,000 and $130,000 a year and that’s the general range that people are looking at in terms of setting a surrogate for pricing. And I think that’s a reasonable type of surrogate for pricing.

Unidentified Analyst

Do you have any comments on (inaudible) developing inhibitors I think PCSK9 (inaudible).

B. Lynne Parshall

Sure. In fact our partners at Sinofi are working with Regeneron on their PCSK9 inhibitor, and so that’s the drug I know the best, because that’s the drug that sitting in the Sanofi’s pipelines in a way that it’s very complementary with KYNAMRO. And so it actually, we’re very happy to be stort of the foundation of the lipid franchsie that Sinofi is building around both of these drugs.

KYNAMRO is principally indicated for the patients at the very upper-end of LDL and Regeneron’s drug, and I forget what they call it, is principally indicated for – maybe what I would call the ZMI replacement market. So 120 to 180 LDL, so at the bottom end we have a little bit of overlap, at the top end of LDL, we have a little bit of overlap. And the reason for that is and only for PCSK9 mechanism to work, you need to have functional LDL – be able to make functional LDL receptors because what PCSK9 does is interfere with – interfere with your ability to generate your LDL receptor, so if you are down regularly PCSK9, you can make more LDL receptor.

But for a LDL receptor to begin with doesn’t work and you make LDL receptor that still doesn’t work, then it doesn’t – then PCSK9 isn’t going to work. So in the top-end of these patients who are very resistant to (inaudible) and have extraordinarily high LDL they don’t have normal functioning of their LDL receptor, even if you get rid of the PCSK9 problem. So those very severe patients we think are perfect candidates for KYNAMRO, but one severe patients I think is where Sanofi is principally going to focus through (inaudible).

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

Sure.

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

We did. We are very excited, that out plan is to start the Phase III study with TTR amyloidosis program this year and that phase right on track. Our deal with GSK is multi-target deals that are multiple drug programs in there and the way with the old structured that is that – development of the drug through a – the first clinical proof-of-concept study and then GSK has the opportunity to license the drugs and move them forward into the later stages of development, put them on the market.

We get paid as the drugs reach that licensing time point, various milestone payments that essentially more than pay us to do the work then once GSK licensed the drug it looks a pretty traditional biotech licensing where we get milestone – license fee milestone payment, double digit royalties and what not.

Acute care program is unusual in a very exciting way, which is we found very, very profound reductions in our Phase I study of TTR. So we’ve reduced TTR over 80% in the Phase I study with some of the patients getting below the limits of detection of the assay. Because of that very strong reduction, we went and talk to both the European and the U.S. regulatory agencies about the idea going directly into a Phase III program. And they agreed and that’s what we are doing, and I said, I am usually gets the drug in the market sooner, get the drug in the market cheaper and it’s just a great solution, but it didn’t quite fit into the way our deal with GSK was structured because they anticipated a more traditional Phase I, Phase II, Phase III, so we renegotiated that deal with GSK.

We are going to be conducting the Phase 3 trial over selves. GSK is going to pay us $2.5 million when we signed the amendment which we just did. Another $7.5 million when we start the Phase III study, which is planned for this year and then another $50 million worth of pre-licensing milestones which again will more than pay for the work that we need to do in the Phase III studies and because we’re taking the drug much further long towards, we’ve improved the subsequent economics as well with the license fee milestone payment and our commercial participation.

Unidentified Analyst

(Inaudible)

Unidentified Company Representative

Yes so this study is going to be probably under 200 patients who are doing it at about 20 sites globally. It’s 15 months of dosing at 300 mg once we fully dose and the end point is some modified neurological impairment scorings system or NISS scoring system and we’ve modified it to take into account things that we’ve learned from the trials that which components as the NISS scoring system fit best with the progression of this particular disease. So we’ve been able to learn from people who went before us and designed, it’s semi custom end points scoring system to use for the study.

Unidentified Analyst

(Inaudible).

Unidentified Company Representative

No it’s just one, once weekly one injection.

Unidentified Analyst

(Inaudible)

Unidentified Company Representative

Yes, it’s a good question, one of the things that we’ve done since we created KYNAMRO that’s reflected in a number of our more recent drugs like our APOC3 drug and the TTR drug is that we’ve developed a new screening system that we use in pre-clinical development that allows us to screen out sequences that are locally inflammatory. So we are seeing with this new crop of drugs actually fewer and milder injection side reactions than with saw with drugs that we’re making five, six, seven years ago.

So even within the same generation of technology, we continue to make technology improvements and that’s the nice thing about having a technology platform which is every time you make an improvement you can appoint broadly across all of your different program. So we are seeing the benefits of that in a number of different programs.

Unidentified Analyst

(Inaudible)

B. Lynne Parshall

We do – so we do have initial plans for a following product for KYNAMRO. We are still working out what we want the target private profile for that to be. But I’d really love and there is no guarantee that we are going to be able to do this, but what I’d really love is to use our gen 2.5 chemistry and think of that an oral drug because gen 2.5 chemistry has the opportunity because of it has a significant potency to support that. So that’s the direction that our researchers are really going in there and that will be an exciting follow on

Unidentified Analyst

Thank you very much.

B. Lynne Parshall

Yeah. Thank you.

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