Isis Pharmaceuticals' CEO Discusses Q4 2011 Results - Earnings Call Transcript

| About: Ionis Pharmaceuticals, (IONS)

Isis Pharmaceuticals, Inc. (ISIS) Q4 2011 Earnings Call February 29, 2012 8:30 AM ET


Stan Crooke - Chairman and CEO

Lynne Parshall - COO and CFO

Beth Hougen - VP, Finance

Kristina Lemonidis - Director of Corporate Communications


Jim Birchenough - BMO Capital

Eric Schmidt - Cowen & Company

Laura Ekas - Collins Stewart

Ted Tenthoff - Piper Jaffray

Carol Werther - Summer Street


Welcome to Isis Pharmaceuticals' yearend financial results conference call. Leading the call today from Isis is Dr. Stan Crooke, Isis Chairman and CEO.

Stan Crooke

Good morning, and thanks everyone for joining us on today's conference call to discuss our yearend financial results. Lynne will walk you through our financials for 2011 and our guidance for 2012, after that I'll focus on what looks like a very busy year that we have ahead for us and our key goals for 2012.

Joining us on today's call are Lynne Parshall, COO and CFO; and Beth Hougen, Vice President of Finance; and Kristina Lemonidis, Director of Corporate Communications. Kris, will you read the forward-looking language statement please?

Kristina Lemonidis

Thanks, Stan. Good morning everyone. A reminder to everyone this webcast includes forward-looking statements regarding Isis' business, the financial outlook for Isis business, therapeutic and commercial potential of Isis technology and products in development. Any statement describing Isis' goals, expectations, financials or other projections, intentions or beliefs including the planned commercialization of KYNAMRO is forward-looking statement and should be considered an at-risk statement.

Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing and commercializing drugs that are safe and effective for use in human therapeutics, and in the endeavor of building a business around such drugs. Isis' forward-looking statements also involve assumptions that, if never materialize or prove correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements.

Although Isis' forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Isis, and as a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Isis programs are described in additional detail on Isis' annual report on Form 10-K for the year ended December 31, 2010 and its most recently quarterly report on Form 10-Q , which are on file with the SEC. Copies of these and other documents are available from the company.

And with that, I'll turn the call over to Lynne.

Lynne Parshall

Thanks, Kris, and good morning everyone, and thank you for joining us. On today's call I want to review our 2011 financial results and discuss our 2012 financial outlook.

2011 was another successful year in which we achieved many accomplishments. Most important of which was Genzyme submission of the marketing application for KYNAMRO in Europe. We maintained a strong financial position with nearly $344 million in cash and a pro forma NOL of $61 million.

Had we received the $25 million milestone payment related to FDA filing of the KYNAMRO NDA, we would have significantly exceeded our guidance and ended the year with nearly $370 million in cash and a pro forma NOL of approximately $36 million. The NDA submission is on track for this quarter, so we expect to earn this milestone shortly.

Our continued financial strength is the best evidence of our unique and successful business strategy, which provides us with numerous ways to generate cash and revenue, while prudently managing our expenses.

First, I'd like to focus on revenue. As a reminder, our revenue consists of separate components including amortization of upfront fees we received from our partners, R&D revenue we earned from our collaborative relationships, milestone payments and the sale of drug to our partners.

In 2011, we had new revenue from all of these sources, including new revenue from the amortization of fees from GSK for expanding that collaboration to include a fixed target and some CHDI for extending that partnership. We also earned revenue from milestones from GSK, as we advanced our TTR drug into Phase 1 studies and our alpha-1 antitrypsin drug into development. And we received almost $6 million from Genzyme for the sale of drug and preparation for the KYNAMRO launch. In total we earned revenue of nearly $100 million.

As you can see our business strategy provides us with many opportunities to generate revenue and cash, as we form new partnerships and advance partner drugs. This provides us with a consistent and predictable revenue stream. In 2012, we expect our revenue to increase by more than $30 million, driven primarily by the $50 million in KYNAMRO milestone payments.

Upon the FDA's acceptance of KYNAMRO NDA submission, we will earn a $25 million milestone payment from Genzyme. Genzyme plans to submit the NDA this quarter, so we expect to earn this milestone in the first half of 2012. Genzyme also plans to request priority review for KYNAMRO, so that we can get this drug on the market rapidly in the U.S. for patients who are in desperate need.

Priority review would create an opportunity to approval on launch this year and that is what Genzyme is planning for. Upon U.S. approval of the NDA, we will receive a second $25 million milestone payment from Genzyme. Although, the two KYNAMRO milestone payments will be most significant source of revenue for us in 2012, we have numerous opportunities to earn milestone payments from many of the other drugs in our pipeline.

The nature of our business strategy and partnerships ensures that we have a steady stream of milestone opportunities each year. Although, year-over-year they come from different sources. Otherwise several years we've earned between $10 million and $15 million in milestone payments each year as we and our partners advance drugs in our pipeline.

For example, last year we earned $10 million in milestone payments from GSK for our TTR drug and our alpha-1 antitrypsin drug. In 2012, we plan to initiate a clinical study of our TTR drug in patients with familial polyneuropathy. We also plan to begin a Phase 1 clinical study of our alpha-1 antitrypsin drug.

Upon achievement of these two events we will earn $15 million in milestone payments from GSK. And of course we anticipate we'll have other milestone events. While it's difficult to know which specific milestone payment we made or in any given year, this year we're projecting that we'll earn non-KYNAMRO milestones payments in the $15 million range consistent with the amounts we've earned in the last several years.

Because of our successful implementation of our partnership strategy, enlarging predictable component of our revenue year-over-year is the amortization of our upfront fees from our partners. In 2011 we recognized new revenue from the amortization of fees we received from GSK and CHDI.

Already this year we've got amortizing to $29 million we received from Biogen Idec when we entered into a new collaboration with them in January. So this year we project revenue from the amortization of upfront fees of over $40 million. This compares to $75 million in 2011 which was higher because it contained a full year of amortization from our Genzyme collaboration.

Our progress in 2011 positions us for another busy year. In 2011, we advanced eight drugs into first and main clinical studies. We initiated a Phase 2 program on our CRP drug and we entered six new drugs to the pipeline.

We reported positive clinical data on eight drugs demonstrating with regards to performing consistently across many disease areas and we plan to advance five drugs including our TTR ApoC-III and factor 11 drugs in the Phase 2 or Phase 2/3 studies this year.

You may recall that we presented data demonstrating that these drugs were does as we expected and were well tolerated at our R&D Day in January. We also plan to initiate two more first in human studies and bring three to five new drugs into our development pipeline. With all this work for 2011, we're still projecting only a nominal increase in our operating expenses approximately $10 million which is a better 7% increase over 2011. The increase is primarily in development because drug development gets more expensive as drugs advance into later stages of clinical trials.

We believe that this additional investment is valuable to maintain a strong adverse pipeline of drugs in many different therapeutic areas and to ensure that we can quickly move these important drugs to clinical proof of value positioning them for licensing opportunities. At the same time, we're carefully looking at every drug in our pipeline to ensure that it's an asset worthy of the next level of investment.

In years passed KYNAMRO was a significant portion of our development expenses as we completed the Phase 3 studies to support the initial regulatory filings. In 2011, these KYNAMRO-related development expenses decreased by almost 50% compared to 2010.

In addition, in 2011 we met our $125 million funding obligation so that going forward we will share development expenses 50-50 with Genzyme until KYNAMRO is profitable.

In 2012, we expect our KYNAMRO-related development expenses to continue to decrease. The development cost of KYNAMRO that we will be sharing with Genzyme will be primarily related to the FOCUS FH diabetes to support expansion of the KYNAMRO market beyond our initial indication.

This decrease in KYNAMRO expenses was timed perfectly, as it allows us to increase our investments in the rest of the pipeline at a time at which we have so many exciting drugs to invest in without making significant changes in our cost.

We're keeping our research in support front essentially flat compared to 2011. Over the past couple of years, we've reached a steady state spending level that supports our research objectives of adding three to five new drugs to our pipeline every year in continuing our technology leadership. In fact, we added six new drugs to our pipeline in 2011, two of which were generation 2.5 drugs, including our first generation 2.5 drug, ISIS STAT-III, which will interface one any day now.

The key strategic point that you need to understand to put our financial performance in context is that our financial plan for the years prior to the launch of KYNAMRO was to manage our cash use so that we could progress KYNAMRO, the rest of the pipeline and the technology without having raise equity capital. This year, we're building on our successes from 2011. As we transition KYNAMRO from a development program to a commercial drug, we have the potential to earn a significant amount of revenue from milestones this year.

A shift illustrates the maturation of our pipeline. We'll continue to invest our resources in the areas that could provide substantial commercial opportunities. And we project that we can do all these activities with a cash burn at a significant lower than previous years. We're projecting to end 2012 with $300 million or more in cash and a pro forma NOL in the low-$40 million range.

As in the past, we've based guidance on a conservative projection of our financial results, which do no include any significant new transactions. We're meeting our objectives, moving our drugs forward and managing our cash. And as we look beyond this year, we expect to begin to realize the financial benefits from our share of KYNAMRO profit.

With that, I'll turn the call back over to Stan.

Stan Crooke

Thanks, Lynne. As I discussed in our R&D Day in December, we believe that 2011 was a year of successes across the board. Of course the continuing progress with KYNAMRO was key. We reported that we'll continue dosing in our long-term dosing study where we have dosed numerous patients now for three or four or more years, the efficacy of KYNAMRO continued. In the small fraction of patients who had elevations in liver fat, liver fat either stabilized or declined as these patients continued treatment with KYNAMRO.

Furthermore, with increased experience, we're seeing fewer and fewer drop-outs. Said another way, our patients are staying on the study and their estrogenic lipids continue to be reduced. Great news for KYNAMRO. Of course, filing of the MAA in the Europe and the progress on that registration were gratifying as we progress toward filing the NDA.

We also reported that we and Genzyme had reached agreement with the FDA on a Special Protocol Assessment for the study that is required for broadening the indication in the U.S., and it will support broadening the heterozygous FH indication in Europe. Like last year, we initiated that study.

The important point is that we believe with the first indication KYNAMRO will be a significant commercial success and we have a clear path for broader indications that should result in substantial growth in KYNAMRO revenues.

2011 was also remarkable with regard to the performance of our pipeline. We reported positive clinical data on eight different drugs. Based on these encouraging data, we and our partners initiated three new Phase II programs, all of which are moving along nicely, and we have a number of Phase II programs that we'll be initiating in the first half of this year.

This means if we ended 2011 with KYNAMRO and registration and continuing Phase III trials, second drug OGX-011 in Phase III, six drugs in Phase II and five drugs poised to move to Phase II this year. In other words, our pipeline is maturating.

Or this time next year, the pipeline will have shifted so that the majority of drugs currently in our pipeline will be in Phase II trials or beyond. This means that in our pipeline, there are drugs that could potentially reach the market in the years following KYNAMRO's launch. As the year progresses, we will be highlighting those for you.

The breadth of the pipeline and its maturity ensure that 2012 will be another important year for Isis. We've already announced a new partnership on our drug to treat spinal muscular atrophy with Biogen Idec. Our partners at OncoGenex announced positive data on OGX-427 in patients with prostate and bladder cancers. Of course, the most important events to come in 2012 relate to KYNAMRO.

In 2012, we look forward to KYNAMRO being approved for its first indications in both Europe and United States. The European filing is progressing well. The U.S. NDA will be submitted shortly, and Genzyme plans to seek priority review. Genzyme continues to make solid progress in preparing to launch KYNAMRO.

We believe the most important step to take is to enhance awareness of FH and the need to treat it aggressively both in the physician and the patient population communities. Here again, the progress is very gratifying. Genzyme's efforts have been greatly enhanced by the strong emphasis recently placed on the disease by several organizations, including the National Lipid Association.

This is coupled with the strong physician support for KYNAMRO, as shown by the numerous favorable reviews written methodologists around the world. This gives us great confidence that KYNAMRO should be a significant success initially as you continue to grow substantially as added countries approve it and we gain broader indications. We look forward to adding our share of KYNAMRO commercial revenue to our financial performance.

Obviously in the near term, KYNAMRO is the key to our success, but with a pipeline of 26 drugs, we are prepared to answer the question what's next. In the near term, we hope to begin to have revenues from Ibis. Remember, we sold Ibis to Abbott, but we receive 5% of sales. And the progress at Ibis continues to be very impressive. So we're very excited about that.

We're also looking forward to the completion of OGX-011 Phase 3 trials, the rapid commercialization of our TTR and SMN drugs both of which are targeting severe and rare diseases, and the commercialization by Pfizer EXC 001 for scarring.

Additionally, we're pursuing the stage development path similar to the path we chose for KYNAMRO for ApoC-III drug. This is a path that we hope will bring it to the market relatively rapidly for patients with very severe hypertriglyceridemia.

Finally, of course we don't have to wait for commercialization of our drugs to begin to see revenues. Our business model is to license our drugs at optimal moment to generate immediate revenues, reduce risks, reduce cost and generate then more opportunities. As you can imagine, given the breadth of positive data that we have presented, there is strong interest across the board in all of our products.

So now let's take a closer look at what we hope to accomplish in 2012. First, KYNAMRO. We expect the NDA submission for KYNAMRO to occur in the very near future. Dr. Raul Santos will be updating our experience of long-term dosing of KYNAMRO at the end of March. We're very excited about what we're learning and we look forward to sharing that with you.

We will present data throughout the year at major U.S. and international lipid meetings. So we will have data to share with you about mipomersen several times this year. And we're very encouraged by all of the data that we're saying. Obviously we look forward to tangible progress on registrations in both the U.S. and Europe.

Now let's look at the rest of the pipeline. Our partners at OncoGenex have already reported encouraging data with OGX-427. With our partners at GSK, we're mapping out the development strategy through registration for TTR, and we look forward to sharing those plans with you in the very near future.

Our cardiovascular program should make great strides. We hope to have additional positive clinical data from our CRP drug this year. We will initiate Phase 2 studies on our ApoC-III drug and may have data from one of those studies this year.

We will initiate our Phase 2 program on our Factor 11 drug and we hope to initiate a Phase 1 trial on the next drug in our anti-lipid portfolio or Lp(a) agent late this year or early next year. And like ApoC-III and mipomersen or KYNAMRO and other drugs, we'll be able to know very early in clinical trials whether this drug is reducing Lp(a) and other anthrogenic lipids. So that's very exciting for us.

Our metabolic pipeline will also advance. We hope to report proof-of-concept clinical data on our novel insulin sensitizer, our PDB1b drug. Similarly, we hope to report proof-of-concept Phase 1 data with our glucagon receptor drug and our glucocorticoid receptor drug, both of which are designed to treat type 2 diabetes.

We plan to complete our Phase 1 study on our first peripherally acting anti-obesity drug, our FGFR4 agent. And finally, our DGAT2 drug to treat NASH will be completing preclinical studies necessary to initiate clinical program.

Our cancer-fighting drug is also progressing. In addition to OGX-427, we hope to report progress on Phase 2 studies for survivin drug and our EIS4E drug. We're initiating a Phase 1 study in patients with cancer on a STAT-3 drug. This drug is doubly important because it is the first of our generation 2.5 drugs to be dosed in men.

Our severe and rare disease franchise will also have an important year. In addition to the important steps that we will take with our TTR and SMN drugs, our partners at ATL hope to initiate Phase 2 trials on ATL1103, the growth hormone receptor antagonist for which they reported positive Phase 1 data last year.

We look forward to reporting our Phase 1 experience with our SOD1 drug to treat ALS. And finally, with our partner at GSK, we look forward to initiating a Phase 1 study on our alpha-1 antitrypsin drug to treat this rare liver disease caused by mutant alpha-1 antitrypsin protein.

Of course we'll continue to evaluate and balance the portfolio. We'll continue to invest in the drugs at merit investment. With our substantial drug pipeline, we can make the choice to invest only in drugs that really display strong efficacy where we can identify a reasonable development path and where we clearly have a competitive advantage.

We're investing in drugs that have substantial commercial markets, including severe and rare diseases where we may have read the timing to the market. And in general, we want to be first-to-the-market for these diseases. We want to be a leader. We want to work on targets amendable primarily to antisense technology. Additionally, we will advance three to five new drugs into our pipeline. And as always, we will continue to advance the technology across the broad front, including getting much more information about generation 2.5 chemistry, all of which will extend and broaden our path.

Timely, we will continue to execute our business strategy. Our model is to innovate, develop and license. This is a cycle that we've repeated many times. And every time we repeat the cycle, the value of the technology in the pipeline increases. Our business model assures that we focus on the highest value activities, which are innovation, innovative new medicines and early developed, while we retain a manageable cost structure and a small innovation-focused, innovation-driven organization.

So as you can see, this is a very exciting year we have ahead of us, not just with the commercial revenue from KYNAMRO on the horizon, but for the entire pipeline and the technology. We expect that this will be the year that KYNAMRO moves Isis to a new place and begins to demonstrate the enormity on the opportunity that we've created here at Isis.

With that, I want to thank everyone for participating. And we'll now open it up for Q&A.

Question-and-Answer Session


(Operator Instructions) And your first comes from the line of Jim Birchenough with BMO Capital.

Jim Birchenough - BMO Capital

Two questions, first just on KYNAMRO. I am wondering if you can update us on where we are at with the alternate dosing schedules that Genzyme is pursuing and whether we'll see any data this year for those alternate dosing schedules.

Stan Crooke

Yes, as you know, FOCUS FH includes three-times-a-week dose schedule. So we're progressing very nicely on offering patients alternatives. As you know, Jim, we believe that patients will vary in their preference, and our goal is to offer patients the opportunity to dose weekly if they prefer that or use small doses three times a week and eventually to offer very low daily doses. So all that work is progressing.

I don't think you will see any additional data on the alternative dosing regimens this year, because that will be studied in this FOCUS FH study, which is a one-year treatment study. But do remember that we've already shown that KYNAMRO behaves exactly as predicted. Of course, you can divide the doses into smaller portions and give the doses more frequently. And of course, we see the activity to achieve roughly equal and obviously you have slightly different levels of injection site reactions. So we're very confident it's going to work.

Jim Birchenough - BMO Capital

And then, Stan, just maybe quantifying the long-term experience a bit more with KYNAMRO, can you tell us how many patients are still receiving continuous dosing of KYNAMRO and then maybe walk us back in terms of how many patients have 18 months of dosing experience, how many patients have a year just so we can get a sense of the aggregate long-term dosing data you put in front of FDA?

Stan Crooke

I don't have the precise numbers in front of me. And of course the longer people continue dosing, those numbers change everyday. But, Jim, we have between 30 and 40 if I remember correctly that have been treated three years or longer. We have well over 100 that have been treated for longer than a year. So have quite a substantial experience. And this is the largest experience I think in history of following patients serially with MRIs to measure liver fat.

So we will be reporting the update of that study in March. Dr. Raul Santo will be reporting that. And the only changes are that the drug looks ever better the longer we look. Dropouts declined. Liver fat declined. ALTs you can dose through and efficacy continues. And that's what we reported the last time we updated the analysis, and we are looking forward to reporting the updated analysis in March.


Your next question comes from the line of Eric Schmidt with Cowen & Company.

Eric Schmidt - Cowen & Company

In terms of the priority review on KYNAMRO, has Sanofi been told or suggested to by the FDA that it will get priority review?

Lynne Parshall

Genzyme is requesting priority review and they feel confident that they will get it.

Eric Schmidt - Cowen & Company

And then, Lynne, kind of a financial question with the joint sharing of KYNAMRO expenses going forward. Would we see R&D kind of take a step down in Q1 as they pay their share and then gradually ramp up through the rest of 2012 as programs in your pipeline advance or how should we look at that on a quarterly basis?

Lynne Parshall

I don't expect it to take much of a step-down because of the nature of the timing of different study starts and what not. I would expect the first quarter to look a lot like the fourth quarter and then to see the 7% increase that we are projecting as we go through the year.

Eric Schmidt - Cowen & Company

And then last question on TTR. Do you have a better sense what constitutes now a proof-of-concept endpoint and what the route to market might be for an FDA approval endpoint as well?

Stan Crooke

The TTR reductions in blood represent a proof-of-concept endpoint. And I think the endpoints are also straightforward in the polyneuropathy, which is the place that we will travel. And what I had asked, Eric, is just give us a little bit more time, because the plans we're working on everyday with our friends at GSK, and they're all moving wonderfully, and we'll share all of that in quite some considerable detail with you in just a little bit.

Eric Schmidt - Cowen & Company

I thought that just reduction in TTR wasn't enough to show a proof-of-concept under the partnership with GSK. Am I mistaken?

Stan Crooke

Maybe I am answering two different questions. I think the key step that we had to take was to demonstrate that there was a dose-dependent reduction of TTR in blood. We did that and of course we took TTR down tremendously and in a beautiful dose-dependent fashion.

Now, the next step is to move to Phase 2 or Phase 2/3 and the efficacy studies will include measures of disease progression. And what I would like to do is leave it there, because as I say, we're going to give you a pretty detailed plan in the very near-term.

Eric Schmidt - Cowen & Company

Okay. But just so that I'm clear, GSK has not yet been required to make an opt-in decision, because you have not yet achieved proof-of-concept under the relationship or is that incorrect?

Lynne Parshall

The proof-of-concept decision that triggers GSK's licensing is proof-of-concept in patients here. So you're correct. It will be the next study that will form the basis for that.


Your next question comes from the line of Salveen Richter with Collins Stewart.

Laura Ekas - Collins Stewart

It's Laura Ekas on behalf of Salveen. Just two questions; the first on the FOCUS FH study. How long do you expect it to take for this study to enroll?

Stan Crooke

I think we expect it to be substantially enrolled this year. If you remember, it's a one-year dosing study, and all we're doing is asking KYNAMRO, the lower atherogenic lipids as it's done in 20 studies before it. So it's a study we're very confident will meet its primary endpoints and secondary and tertiary.

Laura Ekas - Collins Stewart

And then just a question on the $15 million potential milestone payments from GSK. Do you have any clarity of whether that's a first-half event or a second-half event that you might recognize those?

Lynne Parshall

Those have to do with the start of the next TTR study and the start of the Phase 1 study for the alpha-1 antitrypsin drug, and both of those have been scheduled to happen in the second half of the year.


Your next question comes from Ted Tenthoff with Piper Jaffray.

Ted Tenthoff - Piper Jaffray

Does the guidance that you're providing assumed any profit share from KYNAMRO this year?

Lynne Parshall

It does not, Ted. Genzyme is planning to launch the drug in the fall in both the U.S. and Europe. But when you look at traditionally what the marketing and sales costs are pre-launch that a company expends, and Genzyme and Sanofi are doing a great job preparing for the launch of this drug, I don't expect that the revenue will ramp up so quickly in a very short period of time that will cover all of those expenses. And it is a profit share.

Ted Tenthoff - Piper Jaffray

And if I may, Stan, kind of a 30,000 foot question. With respect to the partnering strategy, you've been very successful in partnering drugs who I think articulate it clearly that your goal is to advance it to proof-of-concept and partner them. Can you give us a sense of where pharma is headed? I mean obviously it's a nice SME this year. Are they more interested in these (inaudible) type indications, is their excitement around TRP. Just kind of giving us some flavor if you can in terms of what's really catching potential partners' interest out there?

Stan Crooke

There is broad interest. There is certainly a lot of interest in severe and rare disease that's a current keen interest across the pharmaceutical industry, and we have lots of opportunities that we can present. But there is tremendous interest in the cardiovascular program with ApoC-III and Factor 11.

Everyone who is in the business understands that treating triglycerides is now the next big task in cardiovascular medicine and that while the Factor 10 inhibitors are better, they're not the answer, and Factor 11 looks very exciting. There continues to be significant interest in the metabolic program. We've delayed partnering conversations with metabolics, because we think we're going to have important clinical data on essentially all of our metabolic programs this year. But there is significant interest in that.

And as you might imagine in cancer, the interest is tied to how generation 2.5 performs and the performance of the drugs in Phase 2. Obviously, with Phase 1 experiencing cancer is not terribly relevant and Phase 2 experience provides modest direction.

So there is very broad interest in all of our programs. And as you know, we've been doing this successfully for 23 years. And the interest in what we're doing is octave or too higher than it's ever been as you might expect, because everything is working. I don't know, if I answered your question or not Ted? This is exciting time. This is a great time to be at Isis.


(Operator Instructions) And you do have a follow-up question from the line of Jim Birchenough with BMO Capital.

Jim Birchenough - BMO Capital

Stan, just wanted to follow-up on the spinal muscular atrophy program that you partnered with Biogen Idec. There was an interesting publication in the New England Journal of Medicine very recently looking at what seem to be an interesting finding that peripheral levels of SMN2 were perhaps a better predictor of improvements than CNS levels. And I know there is an intrathecal study going on right now. But I guess, do you have any explanation for why the peripheral levels in the liver of SMN2 might be predictive of a clinical benefit? And how quickly do you think Biogen Idec is going to be able to move into a systemically dosed program there?

Stan Crooke

Yes. This is very interesting. And I am by no means an expert. So, Jim, I think I'll answer it as best as I can and then I want to put you in touch with Frank Bennett, who really knows the disease and understands what's going on.

Just stepping back and this is all obvious but I'll say it anyway. Very often, you see diseases that are lethal or terribly progressive they are lethal and progressive, because of some effect in order or another in the case of SMA, its neurological and neuromuscular development. But the disease is usually body wide and multi system. And so as you improve the primary organ of dysfunction, then you uncover other manifestations of the disease. So it surprises if I think no one who is experience that SMA might travel that course.

Second, we have reported I think in maybe be science translational medicine or nature. Nature, I think it was. That our SMA drug in mouse model of SMA produced both when doses systemically produced a very significant reduction in the abnormal protein and that prolong life in those mice significantly. That was an important observation to us and to the many people in the field suggesting that systemic administration might have additional benefits over and that would go beyond just neurological deficits.

So I think there is lots of reason to speculate that both an intrathecal administration and a systemic administration could bring benefit. So our focus with Biogen Idec right now is to look intrathecal program a long as aggressively and rapidly as its prudent and that is really moving very nicely, enrollment is really very good. And so far the drug is performing well.

And as we understand the peripheral manifestations of the disease in more detail and we get a little more experienced with the drug then of course we are looking very actively at the potential of systemic administration as well. So again I think the notion of walk then run is a very at a notion for here and it's actually very real. We'd like to get these kids able to walk. And then we'd like to get them to be able to run.

Jim Birchenough - BMO Capital

Any sense, Stan, if systemic study might be initiated this year or do you think that's more going to be next year?

Stan Crooke

Next year. I don't think we'll do it this year. We've got our hands full in just getting the intrathecal study going. And don't forget that there is a lot of work going on to understand in more detail the natural history of the disease in modern times. And so there is a lot of basic science going on that will inform us about the right systemic study and the right parameters to use. So I think there is real value in getting intrathecal moved aggressively and continue to advance the science so that we design the right systemic study when we do this systemic study.

Jim Birchenough - BMO Capital

And just a final question, Stan, just on the ApoC-III program, is there a fast-to-market strategy there? And if there is can you may be describe that and when do you think you could initiate the study that could support regulatory approval. It seems like it's much like mipomersen. You see triglyceride reductions that are pretty predictable. So how quickly do you think you can move to a registration enabling study and what is that fast-to-market strategy.

Stan Crooke

We are in the process of really finalizing all of that more detailed planning today and considering the variety of options to be sure that we try to retain as much of the backend of this product and all of our products. Our approaches to licensing become quiet different as well. So the simplest way to think to about it is that just as there are severe LDL problems there are severe triglyceride programs. Severe hypertriglyceridemia is typically defined as greater than 500 mg/dL, some people think a 1000 mg/dL.

Those levels of triglycerides are associated with a acute pancreatitis and consensus opinion is that the acute pancreatitis had happened and happens in those patients is more severe than the acute pancreatitis that happens in others. And then these people get recurrent pancreatitis and they can't get their triglycerides down. So there is a clear differentiation between severe and less severe high triglycerides and we believe a clear route toward an approval process that focuses initially on severe.

There is also a genetic abnormality in which you have the mutation and the enzyme that is used to degrade triglycerides in blood, LPL, and there are homozygous LPL people and heterozygous LDL people just like there are homozygous and heterozygous FH patients. And so again, that's another opportunity for us.

So we think there are lots of opportunities to create an attractive stage development process. And we also think there are geographical opportunities as well where approval criteria in Europe and other places may differ from the U.S. So it's a little complicated. We'll go through it in more detail. In the meantime, the initial Phase 2 work is getting underway both in first and people with high triglycerides and some of these genetic defect patients. And then in addition, we're also going to be looking at the potential value the drug can bring in diabetes.

Don't forget, long range triglycerides typically is thought to enhance insulin sensitivity. So we're going to have Phase 2 quality answers to a lot of those types of questions and be ready to talk about a rapid move to the market in various parts of the world by the end of this year I would say.


Your next question comes from the line of Carol Werther with Summer Street.

Carol Werther - Summer Street

Are we expecting an advisory panel for KYNAMRO? Can you just discuss why the filing has been delayed?

Stan Crooke

I can't add anymore information to what we described in December. There is a routine assay that needed some additional validation. And unfortunately, that assay wasn't completed and validated on schedule. And that caused the delay. That's very disappointing and greatly frustrating to all of us.

But I will say the benefit is that it allows a few more months to make an even stronger filing, especially the opportunity to update the long-term open level dosing experience, which I think as we hoped to show you is very encouraging.

So that's the delay, and we're operating on the assumption that an advisory panel will be required. Certainly that is the indications that we have seen from the FDA. But of course, no one can know until the FDA decides whatever it decides.


There are no further questions at this time. I would now like to turn the call back over to Dr. Crooke for closing remarks.

Stan Crooke

If there are no further questions, just to sum up, we have an exciting year and we expect KYNAMRO to be commercialized. You'll be seeing additional data on KYNAMRO throughout the year. In addition, our pipeline is going through long and many, many data events that I have described for you. And we're on track to finish with sufficient cash so that we don't need to do considerable financing and look forward to KYNAMRO revenues making us financially a very attracting place.

Thank you very much.


Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect. Have a great day.

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