Lynne Parshall – Chief Operating Officer and CFO
Isis Pharmaceuticals, Inc. (ISIS) Bank of America Merrill Lynch 2012 Health Care Conference Transcript May 15, 2012 5:20 PM ET
…one of the biotech analysts at BofA Merrill. It’s my pleasure to introduce Lynne Parshall. She is COO and CFO of Isis and here to give us an overview of the company. All yours, Lynne.
Thank you very much and thanks for coming this afternoon. I appreciate that everybody isn’t out by the swimming pool. Yet, it’s a little hot out there. But I’m happy to be here this afternoon and talk to you about Isis Pharmaceuticals. It’s a very exciting year we have in front of us. This year with our first systemic antisense drug in registration and hopefully about to go on market by the end of the year and so we’ve got a lot going on.
Of course, I’ll be making some forward-looking statements, as we look at things that are going to happen in the future and so the Board has asked me to remind you of that.
Isis is the leading company in antisense technology. We’ve really pioneered the company with the technology. We created a culture of innovations that’s allowed us to develop all the multifaceted aspects of antisense technology that are necessary to take a good biological idea and turn into a drug pipeline.
In creating that drug platform, that technology platform, we’ve shown that it’s a valuable platform by turning it into a pipeline of 25 novel drugs with multiple drug discovery programs sitting behind that. And we’ve built the unique business strategy around the technology platform that allows us to create a robust and growing pipeline.
Our goal at Isis is to create as many different drugs for as many different diseases to help as many different patients as we can, live healthier and more hopeful lives. So we created the technology platform and we’ve shown that it works, over and over again in multiple therapeutics settings in men and animals, and in-vitro and we control that technology.
We are one of the most innovative companies in the United States with over 1,500 issued patents and a large portfolio of patent applications. And we’ve used the efficiency of that platform to create, what we feel is really an unparalled pipeline with 25 drugs in development. We are adding to that pipeline three to five new drugs a year.
We’ve done all of this with a small focus to our organization, fewer than 350 people which allows us to maintain a manageable cost structure because of the unique business strategy that we’ve created around the technology platform.
Antisense technology is really the only direct route from genes to drugs that’s unique, at least specific, but very broadly applicable to many different diseases. Because it’s a true technology platform, our early drug discovery and development are very efficient.
Every advance that we make whether it’s in potency of our drugs, safety of our drugs, chemical composition, analytical methods manufacturing, every time we make an advance in one of those areas, we are able to take that advance and apply it across the Board to all of our different drug discovery programs. That allows us to amortize our investments in advancing the technology platform across all of our programs and continue to make improvements across the board.
So, if you think about it, when we identify a new drug discovery candidate, coming out of one of our research program and we need to make it, so that we can initiate IND-supporting [toxin and PK] rather than going through the creation of a manufacturing processor or manufacturing facility, new analytical method.
We picked the next slot in our manufacturing schedule and just flout the drug in. And typically in a matter of couple of months, we have the drug made ready to go into monkey studies to support an IND.
Because of the efficiencies of this platform, we are able to add three to five new drugs to the pipeline each year. And last year, we added six. We’ve added one already this year and we are well on our way to meeting that goal again this year.
Our pipeline is diverse, our core area is focused on cardiovascular disease, our Severe & Rare disease program which is one of our youngest but most exciting programs, metabolic disease with multiple different approaches to type 2 diabetes, oncology and then a wide variety of other programs, which we call Inflammation and Other, which are programmed, principally were partners of our targets to us that have been undrugable using other therapeutic modalities and assets to work together with them to create inhibitors that they can then move forward.
Our most advanced drugs and the drug that we think will be the first systematic antisense drug on the market later this year is KYNAMRO or mipomersen, as you might be familiar with it historically.
We filed last year in the EU to treat two different patient populations who were genetically predisposed to extraordinarily high LDL-cholesterol, but the homozygous familial hypercholesterolemic patients and the severe heterozygous FH patients.
We submitted our NDA in March with the U.S. for our homozygous FH and our partnership with Genzyme and Sanofi, we’re preparing for commercial launch with the drag in Europe this year.
These initially line indications are just the beginning. We are investing in the future. We have a study that we have an SPA from the FDA on core focus of FH study. It is ongoing. It started last December and that study that designed to support expanding the U.S. indication to include the severe heterozygous patient population as well as to support some alternative dosing regimens so that we can provide different patients, different methods of delivering KYNAMRO so that every patient will be able to choose the method that works best for him or her.
Our initial markets represents very significant commercial opportunity, the homozygous FH and severe heterozygous FH, patient populations are about 40,000 patients in the U.S. and Europe. So it’s a rare Orphan indication but one that’s sizable when we think represents a significant commercial opportunity. And we think we have both the best drug and the best partners in this space.
KYNAMRO actually have the very unique competitive profile, when addition to reducing LDL-cholesterol, it reduces all of the key atherogenic lipids. So in this patient population, where multiple lipids disorders are likely to be found in a single patient, our patients can not only reduce their LDL, they can reduce their triglycerides, VLDL without any negative impact on their HDL. So it’s a drug that has a very nice profile for this population.
Our partners at Genzyme are focused on increasing disease awareness for the treatment, referral and treatment of these severe heterozygous FH patients some thing that Genzyme does extremely well. They are supported by the global, both regulatory and marketing and sales infrastructure, Sanofi. So we think we, kind of, have the best of both worlds in our choice of partners.
The rest of the pipeline obviously is very large and I’m -- you guys would stay for a couple of hours, I’d go through every single one of these drugs but I’m not going to. But we would love to see later and actually we can do that when you’d like.
But we’re really focusing investors on today. It’s not only the growth opportunity with KYNAMRO where we start with our initial indications and then plan to expand indications as we gain additional experience with the drug. So within the pipeline, we have substantial commercial opportunities in the next five years. So we have five drugs in the pipeline that we believe have the opportunity to be on the market in the next five years after KYNAMRO.
In addition, we have a number of drugs that we’re expecting to have robust Phase 2 data packages in the next two years to support potentially attractive partnership. Some of the drugs that we think our most advanced in terms of the time for market are our TTR amyloidosis drug. That’s a drug that’s partnering with GlaxoSmithKline.
We’ve completed a Phase 1 clinical trial with that drug and which we showed over 80% reduction in TTR Protein which is the basic -- basis for the polyneuropathy that these patients have. TTR is a disease that’s typically diagnosed between 30 and 50 years of age. The patients have about 10-year lifespan. After diagnosis, it’s a devastating disease that results in progressive neuropathy and wasting and actually typically these patients can die off loss of body mass which is pretty often.
We plan to initiate Phase 2/3 study later this year in terms of finding the most rapid route to get this drug to these desperately needy patients. Our apoC-III inhibitor is a unique triglyceride-lowering drug.
We are adopting a development strategy for this drug that’s very similar to the development strategy we use from a promotion. In other words, we are starting with the patients with the very highest triglycerides over 1000, who have not only high cardiovascular risk but are also at serious risk of acute pancreatitis attack which are very serious from a health perspective.
And then as we gain more exposure with the drugs, we will move down the risk profile to lower and lower triglyceride levels with the drug. This drug is in Phase 2 clinical trials. We expect to have data from those trials late this year or early next year. And then next year, we plan on initiating our Phase 3 program.
Our spinal muscular atrophy drug is partnered with the Biogen Idec and that’s a drug that’s in a single ascending-dose Phase 1 study right now. We have finished that study up this year, plan to initiate multiple dose Phase 2 study later this year, finish that up next year.
And then our plan is to go directly from that study assuming all these studies are positive into two parallel Phase 3 studies which we would start late next year or early 2014, one in type 1 SMA patient, the infant patient population and the second, in the Type II, III or childhood patient population.
In addition to that we have two drug being developed by partners OGX-011 being developed by OncoGenex and Teva for prostate cancer. It’s in the Phase 3 clinical trial. They’ll update it next year which could successful support filing and EXC-001 that’s a drug originally developed by company that we started called the Excaliard that was bought by Pfizer and that’s a drug to topically treat scarring associated with surgery.
The Phase 2 data from that drug were really quite amazing. And we’re very excited to have Pfizer’s development and commercial market behind that drug to move that forward into Phase 3 clinical trial.
On the horizon, in terms of robust Phase 2 packages, we have our first anti-clotting drug, Factor XI drug that works through a completely unique mechanism that we think has the opportunity to have the benefits of the Factor XA inhibitors in terms of clotting properties without the bleeding that even the Factor XA inhibitors are seeing based on pre-clinical data.
A broad anti-inflammatory drug in our CRP inhibitor, obviously, our ApoC-III which I spoke about, our EIF4E drug for cancer and three different approaches to type II diabetes, all of which will have robust Phase 2 data packages on in the next two years.
So in summary and before we go to question and answer, we got commercial revenue from KYNAMRO on the horizon. That’s very exciting position for us to be in as a younger biotech company. Our business strategy continues to support the company. We have a solid cash position, a great set of partners who are helping add tremendous value to the programs that we’re working with them on.
Our broadening, expanding and maturing pipeline, we’ve already added one new drug to the pipeline this year. We plan on adding to deploy more drugs before the end of the year. And as with -- as you would expect with 25 drugs in our development pipeline, lots of exciting data events coming out, not just on KYNAMRO as we go through the year but our numerous other drugs in the pipeline.
We’re continuing to move the technology platform forward. We’ve put our First Generation 2.5 in demand. We now have two in the pipeline and we expect more as we go through the year.
And so with that, I think I’d be happy to take questions.
Raise your hand, if you want the mike. I have a couple for you, Lynne. What are your aspirations commercially and what is your commercial opportunity with KYNAMRO?
With KYNAMRO, all the drugs will be marketed by Genzyme and Sanofi. We don’t have commercial feed on the street participation. We do have commercial participation from an economic point of view and that transaction is a profit-sharing transaction. So we will start with 30% of the profit from KYNAMRO sales and our profit share increases up to 50%. When we hit $2 billion a year of annual sales and that increases in 2% increment as revenue, commercial revenue grows.
In terms of the rest of the pipeline, we do have pretty unique business strategy. We think what we do best at ISIS is to be innovative. And to be innovative, we think you need to be focussed on R&D and you need to be relatively small so that we make sure that all of our people -- MDs that are all talking to the research scientist and everybody is working closely together are making sure we make best drugs for the right diseases to take best advantage of the technology.
So our business strategy is we don’t intend to market and sell drugs. We intend to continue to build the largest pipeline possible and work together in the later stages of development and commercialization with partners. That being said, as we look at KYNAMRO revenue on the horizon, our business strategies were revolutionary.
A number of years ago, we used to partner our drugs when they were in pre-clinical development. We did that for the reasons all biotech companies do it as we didn’t have enough money to take them forward.
We’ve been able to use that strategy to become extremely well funded. And so now we’re doing a lot more of the development work ourselves. And as we do that, we’re able to trade that for much larger license fees milestones and portions of the commercial upside, so much bigger royalties.
And as we move forward and as we bring in KYNAMRO commercial revenue, we intend to do that even more. In other words, we want to keep larger and larger pieces of our drug as we move forward. So that could include anything from holding onto the drugs longer before we partner, contributing more to development even in a partnership, holding the drugs through Phase 3 if there are attractable Phase 3 program and looking at geographic transactions, the distributorship transaction, even the sales force rental transaction.
So we view the business strategy as being unique for each drug. Obviously, for our drug like the CRP drug where we’re looking at 10 to 12 different potential therapeutic indications of wanting a partner to do parallel Phase 2b programs to really fully explore this. We’re talking about a big expensive program. That’s a good partnership opportunity.
For some drugs that may come out of our rare disease program in the future, those might be things we’d hang onto longer so that we could make sure we kept bigger pieces of the economic upside and so we view our strategy not only as being evolutionary – wanting to keep more and more as we become economically more [severe]. But also as by having a large pipeline and looking uniquely at it, each different drug and figuring out the particular strategy that makes the most sense for each particular drug.
And I have kind of a high-level question. So you have mipomersen for LDL and you have APOCIIIRx triglycerides and then you have an earlier stage product Lp(a). How do you view those in terms of what level of, say orphan disease status wouldn't -- would -- you'd be able to go through filing and approval without an outcome study?
I think mipomersen is a great example. I mean where we've got an orphan patient populations that we've identified in our first two indications, both homozygous FH patients and severe heterozygous FH patients, that are small extremely high, unmet medical need patient populations.
Of course both in the US and Europe there will be L-cholesterol has been unaccepted surrogate endpoint by the regulatory agencies, and so you know, we're in an area where – we both have an accepted surrogate endpoint in patient populations that are – acceptable.
I think when you're and similarly with APOCIIIRx for triglycerides, I mean obviously there are other drugs out there that have been improved with triglycerides as the approvable endpoint and so we're not charting new territory.
I think the interesting question and I'm not going to give you a very good answer to it, because we're going to have to sub-chart new territories here as what do you do with something like Lp(a).
Our Lp(a) drug is another independent cardiovascular risk factor. It's actually one that's probably more well accepted, in Europe than it is in the US although you know US cardiologists are beginning to sort of line up behind that.
And certainly people who we talk to who work in this area say yeah, I've got patience I can get there, LDL down on statins but they've still got high Lp(a) and I know that those patients have cardiovascular risks, even if I could get, their Lp(a) down as well.
So when you start looking at an endpoint like that but there isn't concrete data that you can take out of studies to directly tie, your endpoint to cardiovascular risks then you know to your point being the issue is, identifying a high unmet medical need patient population so that you can go to the regulators and hope to prove the point yourself using a surrogate endpoint.
That is our strategy, as we'd be able to see three drugs where, again we've got an endpoint that is better accepted but start with the highest need patients, and use that as the basis for our initial regulatory filings and then expand with additional exposure and additional knowledge about the role of the endpoint.
So I think we can do that, as we look at this lipid space, within our research programs as well we have several late-stage drug discovery programs, looking at other aspects of dyslipidemia and we view sort of a toolkit that we're hoping to create for lipidologists as being – you know, really building a true franchise in the lipid area.
Can we have the mic up here. And just a follow-up on your question on the triglyceride, the APOCIIIRx. So there are individuals that have a dysfunctional lipids and they have high triglycerides for a genetic reason, if we – is it logical that you would pursue that as the target population, like there are certain geographic areas in the world where that is more prevalent?
Absolutely. And certainly when you look at places like, India, there's a – there are found populations with the genetic mutations where it's much more prevalent. So we are looking both at the homozygous and heterozygous LPL deficient patient populations as well as just the broader group of patients who have high triglycerides for a variety of reasons, that – those reasons could be genetic too, it's just not as close a genetic link and then some of them it's much [style] or other just generally that's physiology. But yeah, we are working at that.
And could you talk a little bit about mipomersen and to pass then to Aegerion with the market opportunity there, how do you see that's playing around.
Sure, of course, in both the US an Europe, we and Aegerion have filed for homozygous FH, in Europe, we filed for a broader indications which includes, so homozygous FH is our small indication in Europe, it's about 3000 patients, another 15,000 patients are represented by the sever heterozygous in Europe.
In the US our initial indication that we filed for is homozygous FH, but we're conducting the FOCUS FH study to support expansion to include the severe heterozygous patients. So we look at the Aegerion drug and we – something that we'll co-paid, you know in our initial indication for a couple of years than in the US but not a broader indication in the US.
And in a small piece of our initial indication in Europe, I think from a profile point of view, it's hard to make comparative statement, because we've got a robust Phase 3 data set where we've conducted four randomized placebo-controlled double-blinded pivotal trials, with over 300 drug-treated patients in them and Aegerion has found a single non-randomized, non-placebo, controlled study and I think I can get in trouble with the FDA and my partners if I try to make comparative statements when we haven't tested the drug heat-to-head.
But in general I think you can look at the drugs and say well maybe they work sort of equivalently, from a safety point of view, I think our drug has a very attractive, safety profile, we don't block fat absorption in the GI tract and so we wouldn't expect to have any and haven't had any gastrointestinal side effects associated with the drug. So we think it's got a you know there our – the KYNAMRO has very attractive risk-benefit profile for the patients who – for whom we're seeking registration.
You had a poster at ACC on mipomersen that had the water-fall chart of LDL reduction in it, it was – it ran the whole gamut, where some individuals had – modest benefit, other's had very significant benefit and it was – it ran everything in between is that – logical to you that it would not have a relatively comparable effect on all of the patients, but vary?
I think it's logical to e only because, I haven't ever seen a drug that didn't have that type of response, and so even when you' think you know exactly what your drug does and where it goes and everything else and you know for other targeted therapies, where people know that, the body is complicated and individual physiology is complicated and we know that the timing of response is a different in different patients.
And since you can't you know euthanize your patients and take them apart and look and figure out [why it's little hard] to answer than in animals, but I think just the history of all drugs tells us that different patients respond differently to different chemicals. And I think expecting something different from that -- from our drugs, it would be nice, but it's just unreasonable to expect.
Okay. You have been talking so far about KYNAMRO in the US and Europe, do you have any thoughts about outside of those?
Absolutely. That's actually one of the benefits of having both Genzyme and Sanofi, as our partner Sanofi's global infrastructure obviously supports multiple registrations in parallel outside of the US and Europe and Genzyme's plan is certainly to do that. And we have a Japanese strategy as well. We have already done the initial studies to support the initial Phase 1 studies that you do to show equivalence in Japan and we're planning on next studies to support Japanese approval as well.
That would be next region that you would look at outside of Europe?
No. Actually our -- for all of the places that you don't need to do separate studies, the plan is as soon as we get US and European approval to go and file globally. In Japan, you need to do separate studies and so we will do the studies to support that registration.
And that 30% profit share is a global?
That's an operating profit share?
It's an operating profit share. And it starts at 30% and it goes up to 50%. So increases in 2% increment as the revenue grows.
And the APOCIIIRx drug, either you hypothesize or you have seen some data where there is a benefit in insulin sensitivity, can you explain that?
So we actually have some work in animals, but one of the studies that we are doing is part of our Phase 2 program is in insulin sensitivity study. The literature would suggest and the mechanism of APOCIIIRx would suggest that it could play a role in insulin sensitivity.
Obviously in the metabolic syndrome patient population who frequently could have the beginnings were – not just beginnings insulin sensitivity as well as high triglycerides that would be a valuable benefit. So we are testing that in a small Phase 2 study in parallel with the APOCIIIRx reduction study, the triglyceride reduction study that we are doing.
This is probably obvious to you, but are there any non-target genetic material that is affected by anything or are you just always very [significant]?
So when we do our drug discovery process, one of the things that we do is screen and that's a nice thing about having all of the gene sequence information available. As we screen our sequences against all of the genomic information that's available out there to make sure that we don't pick a sequence that's going to down-regulate something that we are trying not to down regulate.
So that is a key part of our drug discovery effort to make sure that we have enough of mismatches between the next logical semi-complement or a gene target to keep there from being off target down regulation.
And any speculation about what might be the next lipid management target that you would look at, your developing quite an (inaudible)?
We've got a lot of exciting ones coming up and I don't want to sort of preannounced, but we have a lot of excitement in the lipid franchise. And I think it's an area of big focus for us, yeah.
Any questions out there? Okay. I think we are about out of time. Thank you very much.
Thank you very much for coming. Thanks, Steve.