Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

ISIS Pharmaceuticals (NASDAQ:ISIS)

Credit Suisse Healthcare Conference

November 15, 2012 11:00 AM ET

Executives

Lynne Parshall -- COO, CFO

Unidentified Analyst

Good morning everyone, we're very pleased to have with us ISIS Pharmaceuticals and Lynne Parshall who's the COO, and CFO for the company.

Her purview is finance, legal, manufacturing, business development, patents, I’m not sure what you’re missing there Lynne, but obviously broad swath of senior management responsibility at the company. Has been with the company since 1991.

So it’s family I guess at this point. So Lynne and I are going to do a fireside chat without the fireplace. And She’s going to take a couple of minutes to first remind you about her company, and then we’ll go into Q&A.

Lynne Parshall

So I actually noted [ph] a fire place outside, so if we wanted to go out there, we could do it, but they probably wouldn’t broadcast us from there.

So thank you for coming. ISIS Pharmaceuticals is the leading company in a technology which we believe has the potential to be really the next revolutionary drug discovery technology, anti-sense technology.

ISIS has really pioneered the development of this technology over our 20-year history, and now have translated the advances that we’ve made in the platform technology into a very robust pipeline of 25 drugs and growing which represent a very wide spectrum of diseases because anti-sense is very broadly applicable to really, many, many diseases, including the opportunity to down regulate many targets that are undrugable, using traditional means.

So our pipeline of 25 drugs spans cardiovascular disease, metabolic disease, cancer, severe and rare neurological diseases, as well as a wide variety of other diseases that we’re working on with partners.

Our most advanced drug KYNAMRO is a drug that treat extra ordinarily high LDL cholesterol. So this is a drug that’s intended for people who are genetically predisposed to LDL cholesterol, in the homozygous form a thousand, so think about that, I mean 10 times higher than we all would like to have our LDL cholesterol.

And these are patients who on statins and other available therapies may be very successful in lowering their LDL cholesterol down to 400. So still, extraordinarily high and with very high cardiovascular risk.

The homozygous familial hypercholesterolemic patients have benefited tremendously from the statins. Their life expectancy used to be about 18 years, statins increased it to 33.

Obviously, lots of room in this patient population for making many more therapeutic gains in increasing longevity and decreasing cardiovascular risk.

KYNAMRO is partnered with Genzyme and Sanofi, and it’s right now, in front of both the US and the European regulatory agencies. We have a January 29 PDUFA date following a positive FDA advisory panel, and we’re expecting a CHMP opinion this year before the end of the year.

So this will be our first systemic anti-sense drug to put on the market, it’s supported by a very robust Phase 3 program, and I think really serves as really validation of the rest of the pipeline.

In addition to KYNAMRO though, we actually have five other drugs in our pipeline that we think have the potential to go on the market in the next five years.

Several of those are adverse, severe and rare disease program including our drug for spinal muscular atrophy, that’s partnered with Biogen Idec, that’s the drug that we plan to initiate Phase 3 clinical trials on at the end of next year.

Our drug to treat [inaudible] doses, the polyneuropathy form of the disease, that’s a drug that’s partnered with GlaxoSmithKline, we plan to start the Phase 3 program for that drug this year before the end of the year.

Our triglyceride lowering drug to target called APOC3, that’s initially intended for patients with extraordinarily high triglycerides, triglycerides over 880 milligrams per deciliter who not only have very high cardiovascular risk, but who also are at high risk of pancreatitis.

That’s a drug that’s in Phase 2 clinical trials that we’ll finish up early next year, we also plan on having that drug in Phase 3 clinical trials by the end of next year.

Our partners at Oncogenex are developing OGX-011 with their partners at TIFA [ph], that’s the drug where they expect to have their initial Phase 3 readouts in prostate cancer next year. And the fifth drug is a drug that’s being developed by Pfizer who bought a company that we helped found called the Excaliard, that’s a drug for the local treatment of scarring associated with surgery, an extremely large market, and really one where there’s no competitive therapies.

So technology platform that’s continuing to build a very large pipeline, KYNAMRO, we’re looking forward to having on the market next year, we’re partners in Genzyme and Sanofi launch following approval, and a large pipeline of drugs including some near term opportunities following behind.

Question-and-Answer Session

Unidentified Analyst

That’s a great backdrop. Lynne, just thinking again, just in the most kind of painting the picture for where your company has been and where you’re going, the mission has really been in terms of developing drug, realizing partnerships, and then benefiting from the economics of those partnerships to then invest in future development, do you see that as continuing your strategy, your progression of some of the projects that you have in late stage, might you revisit that strategy?

Lynne Parshall

So our strategy, our business strategy is unique. And we think focusing on what we do well which is research in early stage development is what allowed us to be successful in really pioneering a noble technology.

And so our strategy has been to do that, to license our drugs when they get to proof concept at important value and flexion points, work with partners and use the cash from that to continue to build both the technology platform and the pipeline.

So the strategy has stayed the same, the implementation of the strategy has changed dramatically, over the last several years and we expect it to change dramatically again over the next several years.

So initially, we use to do partnerships, early stage, preclinical, drug discovery, and we did that because we had to, we didn’t have the money to take all these assets forward, and we wanted to make sure we were robustly exploiting the technology platform by building a large pipeline.

today, the transactions that we’re doing with the partners like GlaxoSmithKline and Biogen Idec, while they garner us some money upfront earlier on in the program, they’re option transactions.

So the partner takes an option to the program, gives us money over the early stages of the program to maintain their option. And at the time that we create a significant value inflection point, for example, clinical proof of concept.

The partner licenses the drug and by virtue of that, we get what I would call, much later stage economics.

So much bigger license fees, much bigger milestone payments, and double digit royalties as opposed to what you would expect in earlier stage licenses.

ISIS is very well financed. We’ve got over $300 million in the bank, and by virtue of our strategy, we’re able to keep our operating expenses relatively modest particularly in light of the number of different drugs that we have moving forward, but with KYNAMRO revenue on the horizon and continued success from our business development efforts.

And our goal is to change the business strategy so that we’re able to keep larger and larger share of the commercial revenue that’s coming from our drugs.

That doesn’t necessarily mean that we’re going to have our own marketing and sales forces, but our goal is to use our financial strength and the value of the pipeline to increase overtime as we have done historically our commercial participation in the drugs.

Unidentified Analyst

And how should we think about your R&D budget in that regard and the evolution, you’re way structuring deals in terms of wanting to have a bit more piece of the action in the future, but yet, planning the management R&D expenses to many projects in the company?

Lynne Parshall

So in the next couple of years, we expect our expenses not to change dramatically. Our overall expenses last year to this year, we’ve guided to 7% increase and we’re right on track for meeting that. And we wouldn’t expect 2013 or 2014 to be dramatically different.

But as we go forward, with KYNAMRO revenue coming in continuing into invest larger amounts in development in partnership with pharmaceutical companies would be part of our strategy.

Unidentified Analyst

Maybe we should move to KYNAMRO. And so, obviously, a lot of excitement, recent FDA advisory board support and then your action date is January 29th in the U.S. for [inaudible]. So I wonder if you could just comment whether you think that that will met as a target by the FDA. Or is there any risk that there are some gaining steps that just might push that out a little bit further? We’ve all been there in terms of realms, and so forth. So, can you comment on that?

Lynne Parshall

Yes. I don’t think you could ever talk about the FDA without saying there’s always risk. As I said, there was no risk that people would laugh at me. But there’s nothing at all that happened in the process so far that cause us to believe that the FDA at the ad panel put up the realms that they were advocating for the drug that there would obviously been discussions about that with Genzyme in advance, and it’s a very reasonable proposal.

So I don’t, today, see anything that’s going to get in the way of meeting that date.

Unidentified Analyst

Fair enough. Could you elaborate on what kind label you’re expecting in terms of block box or restrictions on what might end up with?

Lynne Parshall

So, what we had always expected, but I know that there were some questions on Wall Street with how the patient population for the initial U.S. label would be defined.

Our patient population is home with, I guess you’re familiar, with hypercholesterolemic patients. Now, that is a term that sounds genetic, and it sounds like maybe you would need genotyping. We’ve always been confident that that would not be the case because this is a disease that’s treated in diagnosed phenotypically. And patients are rarely genotype and patients are rarely genotype for good reason.

There are over 2,000 mutations in the LDL receptor gene alone and there are multiple different gene mutations of multiple different genes that can contribute to homozygous FH. And so, there really isn’t a test. There wouldn’t be a test that one could use the genotype. And the FDA at the panel acknowledged that and said, “No, they’re not expecting genotyping as part of what’s going to have to be done that diagnose these desperately needy patients.”

We aren’t expecting black box warnings in the label. One of the other questions, and it’s a question that is still to be worked out is what type of liver monitoring will be required? As everybody probably know -- well, many people probably know because there are probably many people in the room who have been on statins.

On statins required blood testing initially every month. And subsequently, as the experience based with statins have grown and will move to six months, not only just recently. They took that requirement away.

So it’s possible that some type of pre-dictated monitoring for liver enzyme elevation. We’ll part of the label. Genzyme doesn’t believe that that will be an issue that will be viewed as being restrictive at all.

Unidentified Analyst

What do you expect as far as the addressable market size in terms of what the label would imply? You said that you don’t expect genetic evaluation of the patient. Are we talking about 3,000 that you value that of each patient or --?

Lynne Parshall

That’s right. That’s what Genzyme’s estimates are. There were about 3,000 patients in the United States.

Unidentified Analyst

And how many of those patients have you -- and Sanofi Genzyme have identified already? You know where they are. How tricky are they to find?

Lynne Parshall

So they aren’t very tricky to find. And these are patients who have a family history. They’re frequently diagnosed in childhood. Often, they’ll present with symptoms or lipid deposits under the skin and have very high LDL when diagnosed.

So Genzyme has identified a large number of patients in the United States, patients who they know the patient and the treating physicians. And they’ve been working on that identifying patients. For quite a long time, Genzyme is very involved in patient advocacy. That’s one of the things that they do so well, and they’ve been very involve, for example, with the National Lipid Association for quite some time working with both lipid specialist as well as other physicians who might treat these types of patients who want to build a specialty in lipids.

Unidentified Analyst

Can you put in contact? Obviously, the recent American Heart Association meeting, I mean, there’s a lot of attention put on the PCSK9 class. And I’m just wondering if you can put in perspective how you see KYNAMRO impacted by success or not of that and where they might be overlapped.

Lynne Parshall

The PCSK9 inhibitors I think are very exciting entrance. And I know a little bit more about the Regeneron 1 because our partners have Sanofi, of course, have both KYNAMRO and Regeneron PCSK9 inhibitor. I know that they’re viewing them as being very complementary with KYNAMRO coming in and initiating building their lipid franchise and the Regeneron drug being complementary to that.

Our drug is principally focused on those patients who have the very highest LDL cholesterol. So homozygous FH patients and the very severe heterozygous FH patients, patients who may not have inherited the disease from both parents but still have LDL cholesterol in excess of 200. And that’s the principal market that we’re focused on. In other words, a rare orphan market.

The primary market that the PCSK9 inhibitors are looking at is the next level of severity. In other words, patients in general from LDL, as low as 120 up to 180 or so. So I would call that kind of an Ezetimibe replacement type of market. So, a very large market in terms of patient population, but one in which the price less just be of demand is probably quite different than in the market that we’re looking at.

Biologically, one would expect, and I’m not an MD, so I’ve just been told this, but biologically one would not expect the PCSK9 inhibitors to work as well in patients who have dysfunctional LDL receptors which many of the severe and homozygous FH patients too because PCSK9 interferes with your production of LDL receptors. So if you inhibit PCSK9, you can make more LDL receptors. But if the LDL receptors that you’re making are dysfunctional, making more dysfunctional LDL receptors doesn’t do you very much good.

So within the homozygous in severe patients, there are various gradations of levels of functionality of LDL receptors. So there may be patients in there for whom PCSK9 inhibitors will work and there are going to be many patients in there for whom PCSK9 inhibitors will not work just because of the basic biology.

So we actually think it’s a great strategy for Sanofi to have both of these drugs in their lipid franchise and we think they do, too.

Unidentified Analyst

And then for ongoing clinicals for KYNAMRO, there’s a focus study, if you could talk about when that will read out and what that will address.

Lynne Parshall

Sure. The FOCUS FH study is a large ongoing study, principally focused on this severe heterozygous FH patient population. We’re doing the study under a spot from the FDA to expand our US market from just homozygous FH to also include the severe heterozygous FH.

And that’s a one year dosing study. It will be slightly under 500 patients and the end point is LDL cholesterol. So this is not an outcome study. The FDA hasn’t asked us to do an outcome study to support expansion of the market. In addition, the FOCUS FH study is looking at two different dose schedules.

So our current dose schedule in all of the Phase III trials that done and in our launch product presentation is once weekly subcutaneous injection. This is done at home with a needle that that’s one gauge bigger than an insulin needle. So it’s a little injector, pre-filled syringe, a little injection but our primary side effect with KYNAMRO is interaction side reactions. They’re mild to moderate. They resolve in a day to two days and then principally cosmetic, but some patients don’t like them. And so in order to provide those patients with an alternative in the of H-study [ph], we’re also looking at a three times a week dosing. So one-third of the dose given three times a week.

And that product presentation will produce fewer and milder injection side reactions. So the goal is to offer patients a choice between a more convenient dose regimen which is once a week and maybe a somewhat less convenient dose regimen but that produces fewer injection side reactions. And so we’re enthusiastic about -- and that is also covered under the spot. So we’re enthusiastic about the opportunity to expand the product offerings for KYNAMRO as well as to expand the patient population.

We expect the FOCUS FH to finish up in the first half of 2014 and that would mean it could support a potential label expansion in 2015.

Unidentified Analyst

And then lastly, on KYNAMRO, how do you expect the [inaudible] physician versus lomitapide.

Lynne Parshall

Lomitapide is another drug that’s focused on the same patient population in the US the homozygous FH patients. The two drugs work through very different mechanisms and so, at the highest level, they’re going to be different patients who respond differently to the two different drugs. Lomitapide is an oral drug that needs to be dosed both daily along with a handful of vitamin supplements. It works probably -- I mean, well, they didn’t do placebo controlled trial so it’s hard to know exactly how to compare the two drugs in terms of efficacy. But they probably work equivalently well in terms of lowering LDL cholesterol.

KYNAMRO in addition to lowering LDL cholesterol lowers all of the atherogenic lipids, Lp(a), apoB triglyceride. So it has a broad lipid-lowering profile that we believe is a significant competitive advantage. In addition, it increased in our homozygous FH study, HDL cholesterol or the good cholesterol were limited by a decreased ACL cholesterol. I think in terms of lipid profile, the drug has a better profile.

From a safety point of view, again, we think the KYNAMRO safety profile is an advantage. Both drugs work in the liver, so both drugs produce some amount of liver enzyme elevation as I talked about before, and some amount of changes in liver fat. KYNAMRO does all of those things less than lomitapide. But I think all of them, for both drugs really are quite manageable.

The principal side effect which the KYNAMRO mechanism avoids, the principal side effect to lomitapide is GI effects associated with blocking fat absorption, not only from the liver but also from GI track. And we think the benefit of KYNAMRO in not producing diarrhea or bloating or intestinal cytosis [ph], again will be quite valuable to some patients.

Unidentified Analyst

Probably just time for one more question. I want to make sure if anyone in the audience has a question, do something now. We have a microphone?

Unidentified Analyst

I was wondering if you could just talk to us more about the SMA drug and kind of the status of that at this point.

Lynne Parshall

Sure I’ll tell you the short answer and then we’re going to have a breakout and I’d love to talk to you more about it. But the spinal muscular atrophy is the leading genetic cause of infant death. It’s a program that we’re moving forward together with our partners at Biogen Idec, the drug just completed the Phase I clinical trials. It’s now in Phase II clinical trials. And our plan is to initiate two different phase, three studies. One in the infant patient population and these are infants who die before their second birthday. We planned on starting that study next year and the second Phase III study in the type 2, 3 patients or the childhood patients who are disabled frequently, limited to wheelchairs. And we plan on starting that study in early 2014.

Unidentified Analyst

Okay. There is a breakout room outside for us which is grand. So out the doors to the right, down the hall. Thanks.

Lynne Parshall

Thank you.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: ISIS Pharmaceuticals Management Presents at Credit Suisse Healthcare Conference (Transcript)
This Transcript
All Transcripts