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Isis Pharmaceuticals, Inc. (NASDAQ:ISIS)

Goldman Sachs 33rd Annual Global Healthcare Conference

June 03, 2012 4:20 PM EST

Executives

Richard S. Geary – Senior Vice President, Development

Moderator

Moderator

Thanks for joining us everyone. I’m Terence Flynn, one of Biotech Analysts here at Goldman, and we are very pleased this afternoon to have with us Isis. And today from the company we have Richard Geary, the Senior VP of Development. Thanks a lot for being with us. Definitely appreciate the time.

Maybe you can just start off with some of the kind of current Antisense Technology. Some of the hurdles that are left, and maybe just give us kind of a brief background and history. So where it’s been and what you guys have done since then and may be what’s left to improve upon. May be some to give it a fair amount of experience on the Antisense front?

Richard S. Geary

Okay, thanks Terence. It’s good to be here. Thank you for the opportunity to talk a little bit about the company and where we’ve been and particularly the technology. I’ve been with the company almost 17 years. So I’ve been through a number of generations and the chemistries and I was reflecting with my colleague earlier today that it mirrors what was happening back in the ‘80s and early ‘90s with the antibodies and how much technology had to happen and how much change in the technology and just the basic science had to advance to a point where that could be a success.

We strongly believe at Isis that RNA-based therapeutics has a great future in the pharmaceutical industry as a third arm if you will, if you count small molecules as an arm and antibodies and proteins as an arm and then Oligonucleotides based strategies as a third.

Back in the 90’s we were working with first generation chemistry and it was clear that the half-lives of these molecules, the biological stability, the potency of the molecules was such that they were not going to be suitable for chronic use. And it was at probably 2000, 2001 where we kind of turned the corner with second generation chemistries and the medicinal chemists had worked on literally hundreds of different modifications to these Oligonucleotides and it was clear that the two prime substituent, what we call 2'MOE second generation chemistry was going to be the future that would take us to a more stable product biologically and also a more potent product that would allow us to dose of course lower doses less frequently.

And so was then that we started the program, our second generations. In 2003 mipomersen was discovered in our laboratories and we began to bring that forward. It was kind of a novel idea in cholesterol lowering if you will. Thinking about the importance of apoB as a carrier of all Afrogenic Lipids. Thinking about how we might be able to bring value to an unmet area and that would be the familial hypercholesterolemia patients. And it was from there that as we progressed in the early dosing, it was very clear that we had a potent product that was working on production obviously and instead of clearance. So all the other medications are either involved in blocking absorption or taking out the cholesterol through clearance.

This is the first time we were actually targeting something that would stop synthesis of atherogenic particles and in doing so we found in the early going that every atherogenic particle actually was taken out. That’s not a terrible surprise. I think the biggest surprise was that LPa, which is another atherogenic particle was also being impacted. And so the rest of the story, I think many of you know we moved into Phase 3 in 2007 and have now put forward our filings in both the US at the FDA and in Europe last summer, the EMA.

Moderator

Great. Maybe just going back to the technology for one second. In terms of I guess if you look forward, in terms of the next iteration antisense technology. Can you maybe walk us through some of the steps you guys are working on, how you see that evolving over the next several years and then we’ll get to the pipeline?

Richard S. Geary

Yes, thank you. And I think it’s important to note and you allude to it, we continue to work on next generation and continue to work on improving potency and therapeutic index and more reliable dosing. And as we’ve done that, we’ve began to recognize a new chemical space, we call it version 2.5, but it’s essentially another 2'MOE modification that increases the potency of these molecules yet again tenfold. And it’s that generation that we are beginning to – while we have a very good modification with the 2'MOE second generations and really a pipeline built on that, we now have a new generation, we’re starting to bring that now into cancer, and some of the other rare disease areas where perhaps even lower doses or less frequent doses could be managed and would be very beneficial for that patient population.

Moderator

Okay, great. So maybe – and then in terms of just thinking about Isis as a whole. So you have a number of drugs that are partnered, but then as maybe some of those drugs come to the market and you start to have more revenue coming in, how do you guys think about retaining rights to maybe some of these products that are further in the pipeline? Is that something that the company would like to do or do you prefer to kind of out-license these products especially if you get into some of these orphan areas as you touched on?

Richard Geary

So I think one of the beauties of Isis is this discovery engine that allows us to really bring three to five new entities into development each year. Our business plan of course is to license these once they reach a kind of a critical inflection point if you will of value and that’s generally speaking after a proof of value or proof of concept Phase 2. We’ve built some of our partnerships on that. To answer your question more specifically, as we move forward and we see kind of in the near term value, our number of products they are near term. Two of those are partnered in rare disease, SMN and TTR which is an amyloidosis product.

Two of those are partnered and moving into Phase 3 either this year or next year. One of those is un-partnered and that’s APOC3 and APOC3 is an exciting target once again in the cardiovascular space focused on very high triglycerides. And the APOC3 program we believe is only going to be properly valued once we advance it much further long and if not properly valued outside of Isis, it is one that we would consider taking a long way. The reason for that is because there is a very nice pathway regulatorily to a high unmet need population. Relatively small, but larger than some of the genetic populations. But a pathway that allows us both in Europe and the US to move forward rapidly.

Moderator

Okay, great. And maybe back to mipomersen, the lead product here. So it’s under review at both FDA and EMA. Can you just walk us through the near term market opportunity and the long term market opportunity in the different patient populations? It’s because I think there’s something that maybe we are a little less familiar with.

Richard Geary

Sure. So in the US the current application is for homozygous familial hypercholesterolemia. These are patients who have mutation on both the Olio [ph] for the LDL receptor or they have a mutation in PCSK9 or apoB that eventually or actually in a very early age causes their bad cholesterol to be over 500 milligrams per deciliter without treatment. So that population is a genetically defined population. The estimate is there are probably 3,000 in North America or in US. In Europe, the application is for a little broader population. It’s for homozygous and severe heterozygous. On the heterozygous side, you have patients who have a mutation on one of the Olios [ph].

So they are missing about half of their capacity to clear cholesterol from the body and this is a sliver of that whole heterozygous population. It’s a small part of that population that are unable to control their cholesterol, to get their cholesterol levels below 200 if they have cardiovascular disease or below 300 if they do not. So they still have a very high burden of bad cholesterol uncontrolled by current therapies. Total population size in the European Union with both of those combined is about 20,000 patients. So these are relatively small populations but more a larger population in Europe than in the US.

Moderator

And if you look at the severe hetero population in the US. What does that bring that 3,000 number to?

Richard Geary

I don’t remember the exact numbers, but I believe it’s close to the same numbers as you have in Europe, 15,000, 16,000 additional patients who are in that severe heterozygous market and currently conducting a FOCUS FH study. It’s called FOCUS FH, kind of an acronym as a large study that is of NSPA with the FDA to allow us to then expand the label into their population here in the US.

Moderator

Okay. And what in terms of I guess differences between Europe and US in terms of why they made the decision, why US you had to go a little more narrow and Europe they let you have a broader – it’s not label yet, but the broader application. Where there different pieces of the data they considered or why did they come to those different decisions about filing population?

Richard Geary

So I really think that the European Union doesn’t stratify this quite so tightly as has the US. There really was not an appreciation even in the US that there were a number of heterozygous that aren’t controlled today on statins and it wasn’t until we brought the data to the agency and showed them that this population actually exists in the US, that is there are heterozygous patients out there who are not controlled with current therapy.

It wasn’t until then that they realized this was an actual slice. In the European Union for a number of years, particularly in the Dutch community and also in Spain, there have been efforts by the government to better understand familial hypercholesterolemia. And in doing so, they have a very good understanding of the continuance or the prevalence of that population across all of the genetic disease. And so there’s just I think a broader understanding of the genetics in the European Union at this time for this disease.

Moderator

Okay. And can you just remind us of your economics on the deal and how that’s split across the two geographies?

Richard Geary

Yes. No. I’m not sure that I can specifically divide all of those numbers. I think Joe may be able to get those numbers.

Moderator

That’s okay. We can circle back on that later. But I guess in terms of thinking about expanding the label more broadly, maybe beyond these two patient populations. Could you guys take it a step further and make this a larger drug or are those going to be the kind of primary two patient buckets you are going to focus on?

Richard Geary

So it’s always been our intention that this would be the first population that we would gain safety and experience with the drug in this population and both Sanofi and Genzyme obviously see this as a very good opportunity in the current population. However, they also see opportunity for growing the drug in the future both with FOCUS FH in Europe, allowing for expansion of label as well as bringing forward either more convenient or more choices in the way the drug is given to expand penetrance into the current population. So there are a number of ways that are strategically positioned to grow the revenue on the drug.

Moderator

Okay. And how about on the competitive landscape there. I think Aegerion is one company that’s developing – they have an oral drug I think for the homozygous familial, and then there are some PSCK9 inhibitors in development. Can you help us think about the competitive landscape here?

Richard Geary

Yeah. So, Aegerion has just filed in the EU and also filed about the same time as we did here in the US. The Aegerion – I can’t make any direct comparisons because the populations and the way these studies were conducted was very different. We don’t see Aegerion as necessarily a competitor directly, but rather if both were approved in both areas with homozygous, both would be used. These patients you have to realize are so far from goal, even with full dose or the maximum labeled dose of statin plus zinamide plus bile acid sequestrants. Everything you throw at these patients and they’re still at an average above 400 milligram per deciliter LVL. So these patients need – they don’t need 30% reduction, they don’t need 50%. They need 100% reduction to get their levels down into a range where they’re fully controlled. While we have a number of patients that are on mipomersen added to their lipid lowering strategy have gotten them down near goal and Aegerion also has a handful like that. It’s going to take both. For most patients it’s going to take more than one product. So there’s room in that population for more than one product. I think for when you think beyond that…

Moderator

Do you think physicians would just mix these without any combination data? Or do you think there would have to be combination data first before they would try that? Like how much data do you think they’d want to see before they start to put these together?

Richard S. Geary

It’s going to be – so there are requirements for the Aegerion product to actually have them on much lower fat diet and that may require only a few – or only certain patients. I would say a few but it’s only certain patients that are going to be able to maintain the diet that’s required for that. And so I think it will be the docs deciding how to handle this. I don’t think there’s going to be a requirement for combination studies as there weren’t requirements for the other lipid lowering therapies in this particular population. I think as speaking to the PCSK9 products, just a couple of things. One, PCSK9 is a very exciting target and I think everybody who’s out there and looking at this sees this as a very exciting target. It’s probably not a target that’s going to work particularly well in the homozygous. Early data in heterozygous shows that these compounds do have activity. I think that’s the more recent data that’s come out with the PCSK9 compound that Sanofi is developing.

So I think with PCSK9 what you’re going to see is a focus primarily on heterozygous. Probably not the worst heterozygous who aren’t responding to statins because remember statins work on the clearance and as well and they haven’t worked very well in that sliver of the population. So I think the competition is going to be in the heterozygous who are relatively well controlled, but they’re not severe but they’re not to goal and that’s a pretty large population of heterozygous. And I think that’s where we know that Sanofi is targeting that population and Sanofi Regeneron are going to be the first ones to market it looks like with that application and of course they have KYNAMRO and there’s going to be room for both of these in those populations.

Moderator

Maybe it’s too far in the future but would Sanofi use same sales force to market both products?

Richard S. Geary

I really can’t speak to that.

Moderator

Okay. Maybe in terms of the pipeline. You guys have a very deep pipeline at this point. Maybe just walk through your thoughts on some of the key programs. You touched on a couple of them briefly, but maybe walk us through a couple of the key programs and what to expect over the next 12 months or so in terms of Katalis [ph] and where you think people haven’t focused enough.

Richard S. Geary

Great. I think I’ll focus on TTR, APOC3 and SMN and those are really the products that are a near term value in that TTR will be starting a Phase 3 program this year. This is the compound that is partnered with GSK, partnered pre-licensed and so they have an option to license at the end of proof of concept. The phase, going directly into the Phase 3 allows us to then get to a product that is marketable in the 2016 timeframe and the license deal would have to take place prior to that. And so there are metrics built in to the way this trial is designed to allow for those decisions to be made. So that’s TTR and I think what you’ll see is the study will get started this year and by 2015 we’ll start rolling out data from that program.

With APOC3 we’ve started the Phase 2 work. The Phase 1 completed last year and we reported that out with robust triglyceride lowering as well as trends in HDL going the right direction. And so this initial population in very high triglyceride is going to be kicking off this year. It’s already started and so that’s one is enrolling patients and we expect to have data from that study early next year. By mid next year we hope to roll into a very focused, very high triglyceride population focused Phase 3 program and once again 2016 is the target for a rollout – our natural launch of that product given the current plan.

Moderator

And you guys own that?

Richard S. Geary

We own that one outright. SMN then…

Moderator

How do you think about keeping that versus partnering it? What stage do you think there becomes – partnership interest would become relevant or is it pre Phase 3 or do you really want to run the Phase 3 yourself and then partner it after that?

Richard S. Geary

I wouldn’t say we wouldn’t run the Phase 3. We’re fully prepared to do that. I think the beauty of the timing of APOC3 is that it would actually complete Phase 3 and be moving into a launch position about the inflection point for when KYNAMRO retail sales are really picking up. And so we’d have real value generator right at a time, right in an inflection point where superb growth could be put on top of our KYNAMRO product that is just taking off. So we see it as an opportunity for Isis and it will be something that we will – that is at very high priority for us.

So APOC3, if we find the right partner we would of course partner it. But it’s got to be the right deal and the right partnership and it’s got to be significant. So that’s APOC3 and then SMN, if we have a little bit of time, SMN is of course targeted to a childhood population of children, really babies in a type one form. SMN or SMA, SMN is a target SMA as a disease is a fatal disease in very young children in the type one form and it’s really a significant genetic disease in that a gene is actually missing in these kids that allows for the motor neurons to actually fly and to inter phase with the muscle. And so this atrophy that occurs is a progressive atrophy. Most of these kids don’t live to two years of age. They need sustenance with respiratory care in order to continue to thrive and it’s just a devastating disease to families.

Biogen Idec has picked up partnership on this product and we are targeting to complete a phase 1 trial, single dose Phase 1 trial in SMN type 2 kids in the third quarter of this year and then move into multiple dosing, safety study and into Phase 3 next year. So we have a very streamlined development plan being developed with our partners at Biogen Idec that allows this again to be targeted for launch around the 2015, 2016 timeframe.

Moderator

Are there any efficacy endpoints in this Phase 1 single dose study or is it such that you only focus on safety just given it’s the single day exposure or dose exposure?

Richard S. Geary

It’s really focused on safety and getting to those – it’s a dose escalation study. So getting to those doses that are known to be active in the animal models, making sure that we’re getting the exposure with the pharmacokinetics. But there is of course an opportunity here to gain data on efficacy. And so there are all of the muscle activity endpoints are built into this study to begin to tell us whether we’re getting effect in these type twos. The greatest effect is expected to be seen in the type ones obviously because what we’re doing is turning on a protein that is nonexistent in the type ones whereas there actually is a small amount of the right protein available in the type twos and we’re just boosting that level.

Moderator

Okay. In terms of the I guess competitive landscape, is anyone else working in this area? Are there any other ways people are pursuing this?

Richard S. Geary

So there are some other companies working in SMA. We don’t think any of them based on the programs that we’ve seen and the patient group folks that we’re working with, none of those are as advanced as the SMN product that we’re working with. None of them work directly at the gene level to turn up the appropriate protein and none of them have shown in pre clinical models the robust efficacy that we’ve shown with really complete turnaround of a phenotype that is fatal.

Question-and-Answer Session

Moderator

Okay, great. Do we have any questions from the audience? Maybe last one for me, just is there anything else in the earlier stage pipeline that you’re really excited about or any other new targets that you guys are going after that maybe you think you’d focus us on given how close you are to the R&D side?

Richard S. Geary

Yes. So I probably won’t go that deep into the R&D because I think there’s at least seven compounds in development right now, very early development. Nevertheless in development that will be reaching proof of concept either next year or 2014 which will be high value drivers for the company because they will be then available for marketing. And so those include Factor XI which is our anti-thrombosis drug. The Factor XI program as well as eIF-4E and CRP. Those three are probably finishing up their Phase 2s this year, early next year. So we’ll have proof of concept and looking at moving those drugs into partnerships next year.

So those are really value drivers and near term value drivers as well as three or four – I guess there’s three major metabolic products, PTP1B which is the insulin sensitizer, antisense that targets the phosphatase and the PTP1B program is moving into Phase 2 late this year. GSGR, our glucagon receptor and glucocoid receptor. Those three programs we’re moving into Phase 2 early next year, late this year and therefore finishing up in the 2014 timeframe and again opportunity for another three products which are at that stage for marketing deals. And then finally there’s eIF4E which is the Lilly Isis discovered program for cancer and that’s in full Phase 2 this year. Should finish up Phase 2 near the end of this year and again have proof of concept in castrate resistant prostate cancer as well as non-small cell lung cancer early next year.

Moderator

Great. Well, thank you very much for your time. We appreciate it.

Richard S. Geary

Thank you, Terrence.

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