Transparency and credibility are very important for any given management team. This is arguably more important in biotechnology companies, given that the level of science is so high that most investors cannot honestly believe that they could look at raw data and derive an investment thesis.
We are thus dependent on management teams giving us not only transparency but an accurate assessment and interpretation of the data. This sometimes can be good, and sometimes this is bad. I follow many companies in the space and during my year-end review of companies, I was struck by the number of inconsistencies, selective omissions, and misrepresentations of recent data and events from Ionic Pharmaceuticals (NASDAQ:IONS).
While I have been intrigued by their technology and pipeline (congratulations to Biogen (NASDAQ:BIIB)/IONS to getting a drug approved for an SMA), I have never been able to get past a lot of basic questions due to, in my opinion, their interpretation and commercial analysis. The purpose of this piece is to discuss some recent comments that have been made over 2016, which I believe could be significant red flags for the future.
Commercial Analysis: Will volanesorsen be just like mipomersen?
I believe that history may be preparing to repeat itself again. IONS's CEO Stanley Crooke (so aptly named) and team are not very good at commercial analysis. As a reminder of his acumen, watch this interview between Crooke and Matthew Herper (Forbes) where Crooke discusses the commercial potential of Kynamro. Stanley is quite a bit off. Despite having been approved several years ago (and returned to IONS from Genzyme), the company has never disclosed sales of this product, despite claiming his belief that the drug would be a blockbuster.
As a reminder, Kynamro is a drug that lowers cholesterol through the elimination of ApoB. The hope at the time was that the drug would start in ultra orphan indications - homozygous familial hypercholesterolemia (HFoH) - and eventually move down in risk groups. This never happened, even for patients who might have heart attacks in their teens. The reason was that, despite what the company said, the drug is very poorly tolerated.
The primary issues were painful injection site reactions (ISRs) and flu like symptoms. IONS, when they eventually did somewhat acknowledge this situation, told everyone that they had figured this out and all future products would have minimal to no ISR.
Fast forward to today, the company has volanesorsen for high triglycerides. This is a pretty analogous market situation compared to Kynamro, back in the day. This is another lipid lowering drug - this time triglycerides instead of cholesterol. The company is again focused on the ultra orphan population, though they have spoken about the potential of moving down in less severe patients. The drug does lower triglycerides, much like Kynamro did for cholesterol. The big question is whether volanersorsen has "solved" the Kynamro tolerability issue, as IONS seems to imply.
If you look at the FDA medical review for Kynamro, one sees on page 144 that in pooled Phase 3 trials that "5% (13/261) of all mipomersen-treated individuals discontinued due to a ISRs in these 6-month trials." Please note that while many more patients had injection site reactions, the actual dropout rate in the first 6 months was 5%. These ISRs continued with time, so as the trials ran longer, patients continued to drop out due to this same adverse event over time, but the 6-month number is 5%.
Now if you look at the press release for the COMPASS study, you see that this 6-month Phase 3 study for volanesorsen, the dropout rate for ISR is 13%. This is almost triple that of the much-maligned Kynamro. IONS tries to spin this by saying the subset of patients who had familial chylomicronemia syndrome (FCS) did not drop out. However, you have to notice that the number of patients with FCS that got the drug was a whopping N=5.
Either way, one has question whether this drug is actually even worse tolerated than Kynamro. IONS's management states in their annual meeting deck (see here, slide 27) that the drug is well tolerated with "infrequent injection site reactions." It just turns out that the ISR dropout rate is almost 200% higher than Kynamro. If so, this drug will have about the same potential of Kynamro in HFoH, which is pretty much nothing. If the company can't convince HFoH patients to use this drug, good luck with FCS. Someday, IONS bulls will eventually ask whether this is simply a class effect for their technology.
IONS is also trying to distance themselves from the current 2.0 technology already (without acknowledging that there is a problem) by promoting their LICA technology. The problem is that their current pipeline is the 2-MOE gapmer technology, which is virtually everything in clinical development. Moving everything to LICA would be pretty close to pulling an Arrowhead Pharmaceuticals (NASDAQ:ARWR) and starting from scratch. The supposed advantage of LICA is higher potency, allowing the use of less drug product. This may be fine, but how do you know that increasing certain properties will solve the problem? Particularly a "problem" that the company won't acknowledge exists or knows the cause.
Lastly on this topic, there is actually vanishing small amounts of long-term follow up for any of their products. Most of IONS's trials are measured in weeks, with 6 months being the "long" trials. I was very much looking forward to seeing the results of the FOCUS FH trial, which the company press released in 2015. This is a placebo-controlled trial with significant duration - we are still waiting to see the real data. All we know is that Genzyme gave back the drug after the "successful" trial. IONS is a company that has about 10 analyst days per year, so it is telling that the company has yet to present this data 2 years after declaring success.
Platelet Issues: IONS continues to be inconsistent in discussing the problem
As everyone knows, IONS was hit pretty hard when GSK refused to start CARDIO-TTR pending full analysis of the NEURO-TTR data. IONS's Crooke claims in the analyst conference call on May 26, 2016 that they saw "less than a handful of patients" in NEURO-TTR trial with serious declines in platelets. Crooke waves his hands and blames the disease, other medications, etc. In addition, he stated, "we've never seen previously, any types of serious platelet declines in the study or in our commercial or clinical experience."
This seems to be quite a strong statement - leading investors to conclude that IONS's antisense has no impact on platelet levels, but if there was actually a smart sell side analyst, she/he probably would need to ask Crooke what "serious" actually is. Incidentally, real scientists rarely use the word "never."
Less than 2 weeks later, IONS released a corporate slide deck dated June 3, 2016, presumably at their annual corporate meeting. On slide 11, IONS states that serious declines in platelets are "not a class effect." Furthermore, the slide now states, "Serious platelet declines in only two of more than 15 second generation drugs." Slide 11 also stated that the platelet declines were not due to drug-dependent anti-platelet antibodies (last bullet, slide 11).
However, in the VERY SAME DECK, on slide 20, the company writes that the current hypotheses, "Interaction between IONIS-TTRrx and disease, resulting in anti-platelet antibodies." How can the point in slide 11 and the point in slide 20 co-exist? How can Crooke say less than 2 weeks earlier that they "never" see serious platelet impact then release slides that now say only 2 out of 15 show serious platelet effects.
I think the NEURO-TTR study will be very important, in that this will be the first study where we can see long-term tolerability of IONS's technology (since they aren't ever going to release the FOCUS FH data). We will see if they have solved the ISR problem - like they solved it for volanesorsen (sarcasm). In addition, I will wager that at least one patient has died due to their decline in platelets - essential death due to bleeding. I have no direct knowledge of this information, but Crooke's answer to JP Morgan's Jessica Fye in the May call is telling.
Fye astutely asks whether there were any bleeding deaths due to thrombocytopenia (low platelets). After first ignoring the question - making Fye ask it again "And can you confirm if there have been any bleeding deaths due to thrombocytopenia?" - Crooke states, "No, I won't. No…I don't know want to give you speculation that could change tomorrow as well." On the one hand, Stanley was quite willing to state that they had never seen "serious" platelet drops in all their clinical experience before, but not even two weeks later state IONS noted that they had "only" seen it in 2 programs (IONIS-TTRrx and volanesorsen).
In a victory for IONS, the FDA approved Spinraza for SMA. This is great, but the warning on the drug is very interesting. For a drug directly delivered into the brain, infrequently, and in small amounts (12mg/quarterly), the label advises to monitor platelets. The label notes that in their trial, "6/56 (11%) SPINRAZA-patients with normal or above normal platelets at baseline developed a platelet level below the lower limit of normal, compared to 0 or 28 sham-procedure control patients."
I wonder if this is considered serious? Based on how Crooke counts adverse events, this is probably not "serious" nor does this count against the 2 they have previously noted. Crooke never defines what he considers "serious." It might be useful to consider that the Common Terminology Criteria for Adverse Events (CTCAE) which gives standards for adverse events and defines grade 3 (<50,000-25,000) or grade 4 (<25,000) as "serious."
IONS's clinical knows this because you see in slide 12 of the annual review they show no patients with grade 3 or 4 platelet levels. However, they just told us that 2 programs had patients with "serious" platelet declines. How can you, on the one hand, show data that demonstrate no grade 3 or 4 platelet levels in 1,516 treated patients, yet also state there are 2 programs with serious platelet declines? This seems to be inconsistent. Where are those patients in slide 12?
IONS is a company that seems to be full of inconsistent statements. I've taken the time to highlight just a few that I have found in my recent review of their data and presentations. Biotechnology companies can make what appear to be contradictory statements over time, but this is only natural as new data is examined and is how science is done. Simply put, innovative companies are pushing the boundaries of new biology, so as more data is revealed over time, conclusions can change. This is normal.
However, IONS seems to release an extraordinary amount of conflicting comments and data at virtually the same time - even in the same presentation. I would guess that this is a conflict between the scientific and medical group that is trying to present that data honestly, going against the investor relations and management group that want to send a message that all is well. This type of behavior has dogged this company over the years (exemplified by the Herper interview), and I believe that the truth will eventually come out for IONS in 2017.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.