Isis Pharmaceuticals' CEO Hosts Annual Shareholder Meeting Conference (Transcript)

| About: Ionis Pharmaceuticals, (IONS)

Isis Pharmaceuticals, Inc. (ISIS) Annual Shareholder Meeting Conference Call June 7, 2012 5:00 PM ET


Stan Crooke - Chairman & CEO


Stan Crooke

Everyone, I am Stan Crooke. I am Chairman and Chief Executive Officer of Isis Pharmaceuticals. As I said earlier, I am delighted to see so many old friends and shareholders once again and to also welcome new members of the Isis family. We are particularly pleased to entertain you on our new facility. We are thrilled to be here and we look forward to showing it off to you. We think it’s made a significant difference.

The agenda is as follows: I just welcomed you. We will now, I know it wasn’t much but, then I will give you an update on all the things that have been going on of late. Then we will break and as usual then you will be invited to the Poster Session, where you will have an opportunity to interact with the people who are doing the work and to get into more detail about the work. And this year, we will also have after the Poster Session tours of our new facility and we certainly hope that all of you can join us on the tour.

We are pleased to have our Board of Directors represented here and of course we look forward to having the opportunity to interact directly with them.

The strategy at Isis has not changed since I founded the company 23 years ago. Our strategy has been to invent a new platform for drug discovery, antisense technology to demonstrate that it works, to use to create a large fleet of novel first-in-class drugs, license those drugs at the opportune moment in their development and then repeat that cycle. That is a cycle that we have repeated multiple times and every time that we repeated the value of the next cycle goes up.

So we are a company focused on innovation and we’re focused on the key task that the pharmaceutical industry needs to do, which is to discover and develop new antisense to bring value to patients and value to the Isis shareholder family.

We have demonstrated that antisense technology works and it’s broadly applicable and that it can be given by multiple routes of administration and this then allows us to have a very broad focus in terms of therapeutic areas. The broad focus in therapeutic areas gives us a great opportunity to balance our pipeline in terms of risk, in terms of opportunity, in terms of type of risk.

We have major programs in cardiovascular disease, metabolic disease and cancer and in the last few years we have expanded significantly into severe and rare diseases and over the next few years you will see a number of additional drugs that come out of our severe and rare disease program.

Antisense technology is unique in its efficiency and its ability to make drugs. It has significant advantages over the other technologies for drug discovery. It is the only direct root from genes to medicines. So if there is a genomic revolution and indeed there is, our technology is a technology that you need to take advantage of that genomic revolution. Our drugs are uniquely specific and we’ve demonstrated clearly that they are very broadly applicable.

Antisense drug discovery is dramatically more efficient at the discovery level and because all of our drugs have the same basic chemical structure, just difference in the genetic zip-code, we benefit tremendously in terms of success rate in early development. And as a consequence, our process for drug discovery and early development is dramatically more efficient than any other process. And the proof of that obviously is that little organization of 350 or so people has 25 drugs in development and we’ll be adding three to five drugs every year for the foreseeable future.

Moreover, because all of our drugs are made of the same chemicals, we can afford to invest more in the technology and all the processes, because all those investments are amortized across the entire pipeline that exist today and the pipeline that will exist tomorrow and net of that is the opportunity to generate 25 important first-in-class drugs in development and to recognize that we’ll be able to continue to do that an ever greener pipeline making better drugs by adding three to five drugs a year as we have for the several years and the years to come.

This is our pipeline. As you know, we have a significant investment in cardiovascular disease; KYNAMRO, we’ll be spending quite a bit of time talking about, obviously it is the flagship. But it is not the only cardiovascular drug. Our strategy of creating a separate drug for every significant lipid related risk factor for cardiovascular disease is being realized. We have apoC-III in the clinic today, we’ll Lp(a) in the next little bit.

We have broaden our focus beyond lipids and we have an entry into the inflammatory components of cardiovascular disease and we have now two specific drugs that are designed to create the thrombotic events that are associated with cardiovascular disease; Factor XI and Factor VII.

Our severe and rare disease program has come from essentially no drugs to now four drugs in development. Our partners at ATL are developing a drug to treat acromegaly those of you know something about giant-ism and the drugs that are used to treat it know how desperately a better safer drug is needed for these patients.

We are very excited when we are talking about Spinal Muscular Atrophy and TTR amyloidosis as we proceed in the presentation and just recently we promoted our first (inaudible) drug with our partner GSK to development status as well. Our metabolic portfolio is a very interesting portfolio; we have three different drugs that work through three different mechanisms designed to bring benefit to patients who have Type 2 diabetes; what we believe will be a safe insulin sensitizer and a glucagon receptor drug. We have the first peripherally acting anti-obesity agent that increases entity utilization, works on fat cells directly to increase energy utilization. We believe this is the way to treat obesity not by lowering appetite, but by increasing the use of the energy that you consume. That drug is in Phase I trials now and we are very excited about that.

And then finally, our first drug to treat Non-Alcoholic Steatohepatitis or fatty liver. We are very excited about this particularly because we've learned by the studies that we've done with KYNAMRO that it’s actually fairly easy to measure liver fats really and as a consequence it becomes a straightforward development process for us.

And in addition cancer, we have four anticancer drugs, OGX-011 in Phase III which we will be talking about and being developed by our partners OncoGenex and Teva. And then two drugs in Phase II with OGX-427, our partners at OncoGenex are reporting very encouraging data at this last week’s meeting of cancer doctors. And our first Second Generation 2.5 drug or STAT3 drug, a general anticancer drug that's also in patients now.

And the finally, of course we have different routes of administration and drugs to treat a variety of other disease and probably the two most important things to point out are Alicaforsen which is an old first generation drug, our partner Atlantic is now marketing that drug in Europe on an in-patient named doctorate basis for pouchitis, a severe condition that happens in patient with ulcerative colitis.

And real focus on and real focus on EXC 001 which we think is a very exciting drug, the first and only drug to bring benefit to people who have bad scarring and we will be talking about that in a little while. So that's a large pipeline and it’s going to get larger and it’s a pipeline that is matured and it will continue to mature and one that we are very excited about and proud of.

About half the drugs in our pipeline are already partnered and have generated significant value, but equally importantly about half aren't. And we expect the drugs that aren't partnered to generate the kinds of value that KYNAMRO generated as we move them along.

So again just to recapitulate our strategy, first create antisense, solve the problem, show that it works, use it to create a significant pipeline of exciting drugs, control the technology broadly and we think our 1500 plus issued patents gives us control, we think our 3400 applications will allow us to extend our control of the RNA drug discovery space to perhaps as long as the 2040s.

We are intending to stay small and focused on science and innovation that brings productivity. It is exactly what the world needs. It also gives us a cost structure that's more manageable. And then this unique business strategy, tied to the efficiency of antisense technology. Allows us to maximize our long-term returns, minimize risks, sustain our financial strength and of course retain a simple nimble innovation focused, innovation centered, innovation driven company.

We think that can lead to a prolonged cycle of innovation that can last decades and bring value to many, many, many patients, and of course value to our shareholders. As we matured and we become less needy to raise cash through partnerships, our partnering strategy has changed. We are much more fastidious about the types of partnerships that we will do today and also much more fastidious about assuring that we do the right partnership at the right time for each of the drugs.

Our active type of partnering is a preferred partner transaction where we gain a willing partner who is knowledgeable and ready to license the drug, we provide that partner an option and the partner pays for that option and the early development.

But we are certainly thinking as KYNAMRO revenue is generated, we got other options to keep our drugs longer to potentially do distributorships and even possibly setup independent commercial company. So all of this is available and as we progress certainly you should not be surprised if we develop a several strategic relationships which is just a slightly larger sort of preferred partner transaction. We think that will give us the best mix of knowledgeable partners’ opportunity as well as cash.

So the bottom line is that we are committed to doing the right transaction at the right time with the right partner for each of the drugs in our pipeline and each drug is unique, each drug has a unique partnering strategy. 2011 was a really great year for the company; we of course filed for approval for the first indications in both the European and US agencies.

And we began the investment for the long-term future of KYNAMRO with the start of the FOCUS FH study to study the designed to give us the next set of indications. We had eight drugs complete critical clinical trials in 2011. All eight were extremely positive; it is a rare experience in any pharmaceutical company that you are eight for eight. And I mentioned just three of them TTR, apoC-III, Factor XI each of these we’ll be talking about in more depth but broadly the pipeline the drugs booked and demonstrated value.

Moreover, we continue to be successful on our partnering exercises. The GSK partnership is off to a great start. Pfizer’s acquisition of Excaliard validates the satellite company strategy, validates Excaliard, validates the target, validates the opportunity for significant commercial revenues in the treatment of spine and of course when we announced earlier this year the Biogen Idec deal with regard to Spinal Muscular Atrophy, great year.

Now KYNAMRO, KYNAMRO is a drug designed to be used in combination with other drugs that lower lipids to treat patients who have severely high cholesterol. These patients are referred to as FH patients, familial hypercholesterolemia.

These are people with a fatal cardiovascular disease and if they don’t get their LDLs down, their likelihood is that they would die in a few years of the cardiovascular event. In fact, in the four Phase III trials that we did for KYNAMRO, the average number of previous cardiovascular events prior to entering those trials was 2.2 more than two heart attacks or strokes per patient in all of those trials.

As I mentioned, we filed in the EU, the European authorities have told us that the existing database we have and the safety database that we have should be sufficient to achieve an approval for both homozygous and severe. In the US, we filed the NDA and the FDA has indicated a little more cautious approach that they will approve the drug or consider approval of the drug for Homozygous FH only.

Genzyme is doing a great job of getting ready to launch KYNAMRO. We've been very pleased with the contributions from Sanofi and the commitment of Sanofi since the acquisition of Genzyme and in addition we began Focus FH study. Focus FH study is a 450 patients one year study in which we'll ask KYNAMRO to do what its done 20 times already lower LDL but what it really does is provide one year of additional 450 patients safety experience. When we have that we believe that we will be able to see broadening the indications in both the US and Europe.

So KYNAMRO has a bright future and we have several steps along the way that we think we'll expand its commercial opportunity but today let's just focus on the first set of indications. The first set of indications are very exciting and certainly going to make this progress significant commercial success. In the US and EU about 40,000 patients have severe or Homozygous FM, and because the European agencies have said that they will consider a broader label, remember that the European market is significantly larger than the US market.

KYNAMRO of course is the first drug to lower ApoB-100. And because it lowers ApoB-100 our expectation was that it would lower all atherogenic lipids and in fact that’s the reality. It lowers apo-B which is an independent risk factor, it lowers the LDL, IDL, VLDL, it lowers [astragalus thyroid] and we just recently showed that it lowers Lp(a).

So Lp(a) is another independent cardiovascular risk factor. And in our Phase III trials, KYNAMRO either increased HDL the good cholesterol or had no effect on HDL. So there is no drug that has the profile of KYNAMRO, lowers all atherogenic lipids and has no effect or increases HDL. It also has no drug-drug interaction so it could be used in combination with other drugs because remember most people with cardiovascular disease are taking 10 or 12 drugs.

So it is a remarkable profile and when we talk about the benefit that it brings and we focus strictly on LDL, we are really not considering all the value that this drug can bring. It's lowering apo-B, LDL, Lp(a) and slightly increasing or having no negative effect on HDL, unique profile.

So it is an important first in class opportunity and we've studied it thoroughly. We know that it has great long-term potential for growth as we broadened the indications and we are underway there with our Focused FH study. We've studied it and demonstrated that it works.

We have four positive placebo-controlled Phase III trials with a fixed dose of 200 mg. remember in Phase II we went up to 400 mg and at 400 mg we took many patients to undetectable levels of apo-B. So this is sort of a little dose, 200 mg in every one of those trials the drug met all its primary, secondary and tertiary end points. We have more than 800 treated subjects. We have a significant number of people out two to four years now and so we have good experience with long-term treatment with the drug.

We believe that the robust efficacy, the unique profile and the safety data that we have today supports the use of our drug and patients who otherwise have no options other than another product. This is a slide that we will repeat a time or two in the coming minutes. What it shows in black line is the projected revenues for KYNAMRO. And in the boxes the various steps that will take place that allow that sales curve to continue to go up.

For example, we will finish our FOCUS FH study, and that will give us the opportunity to go get severe in the U.S. and a broadened indication in Europe. We're also looking at three times a week dosing, and we will eventually develop a daily dose so that we will be able to offer patients the choice of how they'd like to give the drug. Do they want to give a large dose Sunday night or would they rather give several smaller doses during the week. All of that we think will continue to expand the market.

Of course, geographically the market is also expanding as Genzyme; Sanofi launched the drug in various countries around the world. One of the hidden values of a staged parameter development process is you get years and years more organic growth as you broaden your indications, but significantly more than KYNAMRO. And as every biotech company knows, that as soon as you have a major product, the next question is well, what's next. And we think we have great answer to what's next, and we will focus on that in the coming slides.

We believe that we have five drugs that can get to the market in the next five years in the time that KYNAMRO is growing. And as I'm going to show you, we have a significant number of drugs that are finishing critical clinical studies, that have very large Phase 3 study demand, that we intend to license. And so, that provides another great opportunity. Our satellite company strategy continues to work and support saying yes to challenging experiments for long-term opportunities at very little to no risk.

And of course, we continue to advance our technology every day. And every time we advance it, its utility becomes enhanced. So now let's have a look at the KYNAMRO sales curve again, and overlay on that the drugs that we think we can get to the market in the next five years. First is apoC-III, a tremendously important drug that lowers triglyceride. Then we have our TTR amyloidosis drug, our SMA drug, Excaliard EXC 001 and OGX-011. And now I'm going to walk you through some comments about each of those drugs.

Let's talk about TTR first. TTR amyloidosis is a genetic disorder. It occurs because you have a mutation in this protein called TTR that's made in the liver, and because of the mutation, the protein precipitates. It's no longer folded properly and so it's not soluble. And when proteins precipitate in tissues, that's called amyloid. There are many different kinds of amyloidosis. This is a very specific kind of amyloidosis, TTR amyloidosis. So we have a disease where the cause is known, mutated TTR, and we know that the patient numbers in this disease are roughly 40,000 or 50,000, and it can form two kinds of disease.

If the TTR precipitates in peripheral nose, it then affects mild neural function and it can lead to severe wasting and eventually death. It can also precipitate in the heart, in which case it leads to cardiovascular death. And it's a severe debilitating horrible disease. This is what an amyloid deposit actually looks like. It's this pink stuff, the material that's in that tissue there that stains pink. It shouldn't be there. And once you get the mutated form of the protein precipitated here, even normal protein will precipitate there.

And so, the problem becomes an accelerating problem once you've got the spot laid down to precipitate more protein. There are several ways you can think about treating this disease. What's known is that TTR, when engaged properly, forms a tetramer. So those are four little TTR molecules. And the problem with the mutation is that the protein is improper, and so the tetramer doesn't stay together and the protein precipitates. So you could imagine inhibiting the aggregation.

You could also imagine stabilizing the tetramers, and that's exactly what the drug (inaudible) does, which was recently approved in Europe and has just undergone a panel in the U.S. It stabilizes the protein. The problem with that mechanism is it's intrinsically in terms of its overall efficacy. You can only stabilize the protein so much. And even if you stabilize the mutated protein, you're having nothing to do with the non-mutated protein, which in later stages in the disease is probably as important as the mutated protein.

So what do we do? Well, we degrade the target RNA for TTR. That prevents the production of the protein altogether. You don't need the protein. You've got plenty of other proteins like TTR that control the need. And a as consequence, we get rid of both the mutated and the normal protein. And as a consequence, we believe that has the potential to actually reverse preexisting disease. Our drug works. We've shown it works in animals. And later last year, we showed that it worked beautifully in human beings.

This is the dose response curve in which we treated normal people with increased different doses of our TTR over the nucleotide or TTR drug. And you can see that a dose of 300 milligrams or 400 milligrams per week will reduce TTR by 80% or more, probably the maximum we could reduce TTR in this patient group. So it is highly effective. It's also extremely well tolerated. And as a consequence, we and our partners GSK have decided to move directly to Phase 3. We had originally planned to move to Phase 2.

We're now moving directly to Phase 3. We've visited with European regulators and U.S. regulators, and they are quite enthusiastic about our movement to Phase 3. We're finalizing the protocol and some changes in the deal that are required with GSK. So over the next few months we'll be able to give you much more detail about what that Phase 3 program looks like. A key point is it is a Phase 3 program and we believe that we can move very expeditiously to the market with this drug.

And remember, this is the part of our GSK transaction; we’ve got money already with options. We'll get more milestones and we have double-digit royalties. And let's just look then at the timeline. We have a drug that works. We have a target that we know (inaudible) the disease. And we have a drug that to-date is really very well tolerated. So achieving these timelines and achieving this commercial opportunity seems well in hand. Now, apoC-III. apoC-III is a protein involved in the management of triglyceride levels.

We know that in addition to LDL as a problem, triglycerides are a problem. It's a growing worldwide epidemic and excess triglycerides are associated with cardiovascular disease, non-alcoholic steatotic hepatitis or fatty liver. If you have too high triglycerides, you'll become insulin insensitive. In fact, in diabetics, triglycerides are a bigger problem than bad cholesterol. And the geographic opportunities that are unique. There is a significant fraction of the Indian population that is in India that has an apoC-III problem, and they have two greater triglyceride.

And as a consequence, that represents another major opportunity. Just like LDL, there are people who have a little bit of excess triglycerides. But there are other people who have severe triglyceride problems. There are about 3 million people in the U.S. and Europe who have triglycerides over 500 milligrams per deciliter. Normal, you certainly don't want your triglycerides -- you'd like them below 160, but you sure don't want them at 200. There are 200,000 or greater people in U.S. and Europe with triglycerides over a 1,000 milligrams per deciliter.

At 1,000 milligrams per deciliter, if you draw that person's blood, it will look like milk. In fact, that's the term, lactescent, plasma looks lactescent. So just like with LDL, there are these special people who have a really severe problem with triglycerides. Very different from the treatment of bad cholesterol is the drugs. With the treatment of bad cholesterol you've got very good drugs in statins, in Zetia and the like. In the treatment of high triglycerides, the drugs are not good. They don't work very well and they are unattractive, to be honest.

You've got Niacin. If any of your friends or you are on Niacin, no one likes taking Niacin. It makes you feel [rotten]. Fibrates have a set of problems and it looks that none of these drugs will sufficiently reduce triglycerides especially if someone who has a severe triglyceride problem. So this pyramid looks a lot like the pyramid I showed for years with regard to KYNAMRO, but it’s not; it’s focused on apoC-III and the triglyceride problem.

At the top of this pyramid is severe triglyceride patients with greater than 1,000 milligrams of triglyceride on maximum available therapy. These people have in addition to the cardiovascular risk, they are fatty liver risk and they are diabetes risk are much more urgent problem and that is that they can suffer pancreatitis. They have a much higher instance of acute pancreatitis; they have a much higher instance of chronic pancreatitis. Pancreatitis when it happens is a severe medical emergency and if it progresses it becomes a surgical emergency, if it becomes necrotic and can cause death. So we have a very clear path to a market to treat this patient with triglyceride greater than a 1,000.

Then we will continue as with evaluating drug and eventually move down to the patients with 500 and then in due course we will examine the opportunity in patients for slightly lower triglycerides particularly the diabetic patients. So this parameter of development process where we give the drugs first to the people who need it most, then do more work to understand the safety long-term and get it to patients who need it slightly less, as we know more about the drug is something that we are re-perpetuating.

I also want to emphasize that there are real geographic opportunities for our clinical trials both in the US and Europe and we are also doing trials in India. And India is a big opportunity for this drug because as I said they have this special problem. We know apoC-III is a good target it’s been worked out genetically and the mechanism is understood.

In the liver, the package triglycerides, that’s what these little octopus things are. They’re triglycerides in a particle called LDL. And then you export that particle into the blood where each particles are processed. Now the reason you do that is that when you’re exercising, you need extra energy for your tissues and so triglyceride is a much better energy source than sugar and so when you’re exercising you export triglycerides in to your muscle, adipose tissue and myocardium, so you can do the exercise that you want to do.

LDL, which also has triglycerides, of course is cleared principally by liver uptake. Triglyceride particles though are quite different. Therefore by an enzyme in the blood called lipase. So lipase sit in the blood and they look at the triglycerides and they clean this up and then there are little remnants are excreted in urine and feces. So here is the mechanism by which you clear triglycerides.

ApoC-III is a protein that you put on to your triglyceride particle in the liver and what apoC-III does is it blocks the effect of a lipase. So if you have excess apoC-III, your triglycerides in your blood will go up because you can’t metabolize; and of course what we do is we stop the production of apoC-III and your triglycerides go down. This idea works in animals, works in man and the genetics are carefully worked out as well.

So here is the study we did in man. You can see at the top dose here, we had most of the subjects below the level of the detection that we had for apoC-III and that's been translated to significant reductions in both fasting triglycerides shown here and post (inaudible) triglycerides shown in the blue. What you would like for a triglyceride barring drug is to reduce fasting triglycerides and then reduce the excursion of triglycerides after you have a milkshake or a big fatty meal or whatever you have. That's what our drug does.

It’s also wonderfully well tolerated and so we have a drug that works. It works in animals, it works in man; we know that we can inhibit apoC-III without outside effects because they are new to human beings that have no apoC-III, have very little cardiovascular disease and have no other problems. So it’s a validated genetically target as well as a proven target by our work.

We are in the process of 100 patient Phase II study in patients with triglycerides above 500, in this study the drug will be used as a single agent. It will also be used in combination with fibrates. Once we get that done and we hope that we can have it done by the end of the year or first part of next year, we will move directly to a Phase III program in which we evaluate the benefit that this drug can bring in people who have greater than 1,000 milligrams per deciliter triglycerides.

It’s a development process. It’s a process we know well, we know the physicians, we know the space, we know how to do this and we believe that the safety database that’s required for this will be perhaps a couple of 1,000 patients, all doable for us in a reasonable timeframe and it’s a pathway that's been tried by others. This is a pathway that's accepted by regulatory agencies around the world.

Spinal Muscular Atrophy; Spinal Muscular Atrophy is the leading genetic cause of infant mortality. There are about 30,000 to 35,000 of these poor children in the US and Europe and because of the inability to make the SMN protein these children then loose the ability to have good muscle and as a consequence most of these children never walk, never sit up and many die. In the severe form of the disease these children may die in infancy, but even in the less severe form of the disease these children do not walk, many of them never sit; it’s a terrible disease. The burden of this disease on the children and the parents who deal with it is just awful and there is nothing, nothing available to bring benefit to these poor children.

This disease on the other hand is now well known, well understood mechanistically. It turns out that you have two genes that are important; SMN1 and SMN2. When you have good SMN1 gene you make the SMN protein and as long as you have the SMN protein, you can make good muscle and you can be a normal person. It also happens that you a gene that shifts like SMN1 called SMN2. The problem with this gene is that there is a slight defect in its processing so it doesn’t make the protein.

So what we’re doing is taking advantage of the fact that you’ve got a perfectly good gene that would like to make the right protein and we’re driving the processing of the RNA so that it makes the protein and as a consequence we can replace the defective gene with an effective gene that’s already there. So this is a new application of antisense it’s called the splicing adaptor and it’s been a source of a great deal of excitement with publications and most of the major journals really exciting journals and it works really well in animals.

Now this is the drug that has to be administered directly in spinal fluid. Our drugs don’t cross the blood-brain barrier. So this is a drug that we are administering in children through spinal taps and we suspect that we are going to have to administer this drug perhaps once every six months may be three months may be nine months that’s something we have to sort out.

We are treating these children now. We will begin the Phase II part of the program and then we hope to begin a 45 patient Phase III study sometime next year which would mean that we can get this drug to these patients very rapidly and any benefit here will be seen as a positive. This is a subject of our relationship with Biogen Idec, we of course have received an option fee, we have milestone payment and we have double digit royalties.

So this is being done jointly with Biogen Idec. Biogen Idec brings much more than money to the partnership. They are very knowledgeable about neurological disease, they are a great group to work with and this collaboration is off to a wonderful start.

EXC 001. EXC 001 is a drug to treat unwanted pore scarring. It’s a drug that I felt had no chance of working, but the whole idea of the Isis is to say yes so we found a way to setup a company called Excaliard with the former Isis person. They developed the drug and I showed you last year that they had produced three Phase II trials that were extremely positive with this drug.

It turns out that there are more than a million plastic surgery here that resolved in bad scars. So you can imagine if you had gone to the trouble on the expense of having plastic surgery to look better, ending up with the scar that makes you look worse doesn’t make anyone happy.

It doesn’t make the plastic surgeons happy either because there is nothing to be done for if you cut the scar round, it just comes back worse. So this is significant opportunity. I think Pfizer, which bought Excaliard for this drug thinks it could be a multiple billion dollar product opportunity so do we. And it works and it’s the only drug that’s going to shown to have statistically significant effects on scaring.

It works because it blocks a tissue growth factor called CTGF and the drug is administered in tiny little doses at the time of the incision. So there is virtually no drug in the body. The study that was the most impressive of course was the scar revision study and this is a study in women who had breast augmentation, who develop bad scars.

What are you looking at is a single patient, one of the breast, the scar was fixed sized and no drug was administered. The other drug, the scar was fixed size and EXC 001 was administered. And you really don’t need statistics to tell you how dramatic those effects are. Of course they were statistics and it was on this basis that Pfizer bought Excaliard.

So we made significant money on the acquisition of Excaliard. We have meaningful milestones and we have single digit royalties on this drug. Pfizer believes they can get through this to the market in next five years and it can be very large market and of course it's no risk, no cost all up side for us.

Finally OGX-011 another drug developed by our satellite company OncoGenex. This drug is in Phase III for prostrate cancer and non small cancer in the lung. In the Phase II study and with refractory prostrate cancer the data were very encouraging OGX-011 clearly improve survival in this patient group. On that basis Teva acquired rights to the drugs and OncoGenex and Teva are currently finishing the Phase III program. We expect the Phase III prostrate cancer to unwind next year if it's positive then they would go forward to commercialize it around the world and again we have significant milestones and 7% royalty on this drug.

And again we are paying nothing for it. So those are the five drugs that we believe can get to the market in the next five years. Certainly we have encouraging data on all of them and certainly I think the probability that it had three or four or five of those who get to the market is quite high and are all significant commercial opportunities.

But that’s not all. We also have a set of drugs shown here that will be completing significant clinical trials either this year or next year and these drugs all have the need for very large Phase III trials hundreds and million of dollars on Phase III trials. So these are drugs that we will partner in the next few years. Of course Factor 11 is perhaps the most exciting our CRP drug, APOC3 of course we have interesting and a cancer drug and three type II diabetes drugs, all coming to place where we will be ready to license.

We are very optimistic that we will be able to do as well or better as we did for KYNAMRO. We remember that KYNAMRO we got $350 million upfront after Phase II study. Let's just focus on two of them, Factor XI. Factor XI is an anti thrombotic. It’s a clotting factor that's involved in propagation of clot. It's not involved in the laying down of the first step in the clot but the propagation of the clot by platelets and other factors.

We know that Factor XI is involved on both the arterial and the venous side, and we know that our drug works on both sides. So we believe our drug can produce benefit both on the arterial side, strokes, heart attacks and unlike and on the venous side pulmonary embolism, deep vein thrombosis and unlike.

And what we did with this program is what we do with every program which is we use the power of antisense to give us the data to pick the best partner. We simply made selective antisense inhibitors to everyone of the critical clotting factors. Factor XI is shown here. These blank spots on these are where the proteins used to be and that shows you how specific they are and then we take those, put them into various animal models and ask which one looks best and Factor 11 jumped to the top as clearly the drug of choice.

It’s the drug of choice because it works, it alters thrombosis on the arterial and venous side and unlike Warfarin which produces bleeding at the dose that you get anti-thrombotic activity or even Factor XA inhibitors which are better but still cause bleeding at no dose, at no level of reduction of Factor XI did we see any increase in major or minor bleeding in each [animal]. That was reproduced in multiple animal models and then we went to man. And this is the dose response curve in our first human study.

In fact, we had planned to do a 400 milligram dose, but the drug was so potent we stopped at 300 milligrams. And at 300 milligrams we had taken these normal humans below the level where you would want normal humans to be. But even at these doses and even at this remarkable reduction in Factor XI, we saw no significant side effects and we saw no evidence of bleeding of any sort, no bruising, no weeping around in injection, and certainly no large bleeding.

So Factor XI is what Factor XA inhibitors would like to be. We are completing a study in 400 patients who are getting total knee replacement, where we're comparing it to another anti-thrombotic drug. Once we have that completed, then we will license this drug. And we have an already significant interest in this opportunity, as you can imagine. One more drug that I'll highlight is CRP. CRP is elevated in many diseases.

And in every disease where you have elevated CRP, the outcome is worse. So we believe that by lowering CRP, we may bring benefit to many, many diseases. Some of the diseases where CRP appears to be involved is all the cardiovascular diseases, but there are also diseases like rheumatoid arthritis and Crohn's disease and ulcerative colitis where it also seems to play a role.

So it is a big opportunity. Our drug works. It's the first selective CRP lowering drug ever to be in man. And in our initial trial, it lowered CRP in normal people by 70%. This drug is progressing. We have three trials planned this year. One in progress. The first is in patients with rheumatoid arthritis. The second is the most important because it's likely to be the first indication, atrial fibrillation.

Atrial fibrillation is a situation in which the hearth flutters. It doesn't beat properly. There are people who have recurrent bouts of this atrial fibrillation, and these people have a lot of trouble. It's known that people who have elevated CRP have worst atrial fibrillation and they have more bouts of atrial fibrillation. So our goal is to reduce CRP, make atrial fibrillation less bad, and make the recurrences of atrial fibrillation less frequent.

And of course, that means you don't have to go into the hospital and get electric shock to your heart to convert the rhythm, and you have a lot less trouble. In addition, we're doing a study in a severe circumstance in which people have endotoxin shock like syndrome. So by the end of this year, early next year, we'll have data from these studies and we believe then CRP will be a very exciting option.

So those are just two examples of that list. All of the drugs on that list are really quite exciting drugs. So we have five drugs that we believe we can get to the market during KYNAMRO's growth period. We have another seven or eight drugs that we think are going to get to places where we can command significant licensing revenue from them in that same period of time or even shorter.

And we have a large, exciting, maturing pipeline. Of course, KYNAMRO, we hope to launch this year and next year. CRP, Phase II data in 2012-2013. ApoC-III, Phase II data late this year, early next year. Factor XI, Phase II data in next year, Phase II beginning now. Our next entry into the list of disorder program, Lp(a) (inaudible) Lp(a) entering Phase I trial.

And then finally, our next anti-thrombotic drug, Factor VII, which is a generation 2.5 drug, we hope to get into the clinic in 2013 or early 2013. A great pipeline. Our severe and rare disease franchise is going to have an exciting few years too. With our partner ATL beginning Phase II programs to treat patients with acromegaly. As I discussed, our SMN drug with Biogen Idec moving from Phase I to Phase II to Phase III.

Our TTR drug already working and now moving directly to Phase II with our partner GSK. And our drug to treat alpha-1 antitrypsin liver disease getting ready for Phase I trials today. Our metabolic pipeline are FGFR4. We'll finish its first test in man to see if it can be an anti-obesity agent. And we should have good data to tell us whether it can be, because we can measure a specific factor that it should cause to go up if it's going to work.

And then, we have all of our Type 2 diabetes drugs, each completing critical clinical trials this year that will tell us whether we have a safer insulin sensitizer, a method of lowering the effect of glucocorticoids that cause diabetes, and the effect of glucagon which should preserve the pancreas and enhance glucose control. And finally, our (inaudible) inhibitor to make liver fat better. OGX-011 finished its prostate cancer trial.

We should have data from that in 2013. [REF4e] general anti-cancer drug is progressing very nicely in the clinic and we are confident we're going to have interesting data from prostate and lung cancer trial. OGX-427 with our partner OncoGenex already this year showed very positive Phase II data. And our STAT3 generation 2.5 drug progressing in initial clinical trials, and we'll be able to report some of that information too.

So a great pipeline and a mature pipeline, and an exciting pipeline. 2012 is a seminal year for us. We expect to begin to get commercial revenues from KYNAMRO. Our business strategy continues to be successful in the Biogen Idec transaction, the continued success of GSK. We have a solid cash position. We're broadening and expanding our pipeline into interesting and new areas.

And we have lots of data events in 2012, in addition to the data events that we've already shown you for KYNAMRO we'll continue to show. Our first generation 2.5 drug is in man. That should give us a ten-fold increase in potency, which could even enable oral administration of our drugs for some diseases. And we'll add three to five new drugs to the pipeline this year.

So we have a technology that's really working. We have a technology that's generating drugs that are exciting, working and have excellent safety profiles. We have more than 6,000 patients or thereabout 6,000 patients treated with second generation antisense drugs today. At the same time, the understanding of the breath and the roles of the RNA world is exploding.

And every day new RNAs are discovered and new roles for RNA are discovered. Micro-RNAs and our partner Regulus is just an example of that. All of these RNAs are available and they're available only to us as targets. So we sit in the (inaudible) seat with the technology that you would like to have as these new targets emerge. We know our drugs work.

This is a table that I really enjoy showing. It's now 14 drugs to 14 different targets in multiple organs with multiple roots of administration, multiple measures of activity where we have unequivocal proof of antisense activity in man. So our drugs would work broadly. It can be administered by multiple routes of administration. And many of these have many, many more than one clinical trial that's positive, even more than one (inaudible).

For example, KYNAMRO, we finished 20 clinical trials with KYNAMRO and it worked in every one of it. That's very exciting. So we are looking forward to KYNAMRO becoming a commercial success. We're looking forward to bringing our five additional drugs to the market in the near-term. We're looking forward to bringing our licensing candidates forward.

We're looking forward to continuing to advance antisense technology, and to generate value for our patients and our shareholders in the coming years that is based on our invention and our control of this space of enormous opportunity. Obviously, I've made a good many forward-looking statements and you're cautioned to consider all the risks associated with those forward-looking statements.

And with that, I'll thank you for your attention and we'll plan on breaking for the Poster Session. Thanks very much.

Question-and-Answer Session

(No question-and-answer session for this event)

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 All other use is prohibited.


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