Bulletin
Investor Alert

New York Markets Open in:

May 4, 2022, 5:15 p.m. EDT

10-Q: IONIS PHARMACEUTICALS INC

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Report on Form 10-Q, unless the context requires otherwise, "Ionis," "Company," "we," "our," and "us," means Ionis Pharmaceuticals, Inc. and its wholly owned affiliate, Akcea Therapeutics, Inc.

Forward-Looking Statements

In addition to historical information contained in this Report on Form 10-Q, the Report includes forward-looking statements regarding our business and the therapeutic and commercial potential of SPINRAZA (nusinersen), TEGSEDI (inotersen), WAYLIVRA (volanesorsen), eplontersen, olezarsen, donidalorsen, ION363, pelacarsen, tofersen and our technologies and products in development. Any statement describing our goals, expectations, financial or other projections, intentions or beliefs, is a forward-looking statement and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties, including those related to the impact COVID-19 could have on our business, and including those inherent in the process of discovering, developing and commercializing medicines that are safe and effective for use as human therapeutics, and in the endeavor of building a business around such medicines. Our forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report and described in additional detail in our annual report on Form 10-K for the year ended December 31, 2021, which is on file with the U.S. Securities and Exchange Commission and is available from us, and those identified within Part II Item 1A. Risk Factors of this Report. Although our forward-looking statements reflect the good faith judgment of our management, these statements are based only on facts and factors currently known by us. As a result, you are cautioned not to rely on these forward-looking statements.

Overview

We are a leader in RNA-targeted therapeutics. We believe our medicines have the potential to pioneer new markets, change standards of care and transform the lives of people with devastating diseases. We currently have three marketed medicines- SPINRAZA, TEGSEDI and WAYLIVRA. We also have a rich late-stage pipeline of medicines, primarily focused on our cardiovascular and neurology franchises. Our late-stage pipeline consists of six medicines in Phase 3 development for eight indications.

Our multiple sources of revenue and strong balance sheet enable us to invest in our strategic priorities to build our commercial pipeline, expand and diversify our technology and deliver new medicines to the market. By continuing to focus on these priorities, we believe we are well positioned to drive future growth and to deliver increasing value for patients and shareholders.

Marketed Medicines

SPINRAZA is the global market leader for the treatment of patients of all ages with spinal muscular atrophy, or SMA, a progressive, debilitating and often fatal genetic disease. Biogen, our partner responsible for commercializing SPINRAZA worldwide, reported that as of March 31, 2022, new patient starts in the U.S. reached a two-year high and initial uptake in China was strong as this was the first full quarter since receiving national reimbursement in China. Through March 31, 2022, we have earned more than $1.6 billion in revenues from our SPINRAZA collaboration, including more than $1.2 billion in royalties on sales of SPINRAZA.

TEGSEDI is a once weekly, self-administered subcutaneous medicine approved in the U.S., Europe, Canada and Brazil for the treatment of patients with polyneuropathy caused by hereditary polyneuropathy, or ATTRv-PN, a debilitating, progressive, and fatal disease. We launched TEGSEDI in the U.S. and the European Union, or EU, in late 2018. In 2021, we began selling TEGSEDI in Europe through our distribution agreement with Sobi. Additionally, in the second quarter of 2021, Sobi began distributing TEGSEDI in the U.S. and Canada. In Latin America, PTC Therapeutics International Limited, or PTC, is commercializing TEGSEDI in Brazil. PTC is pursuing access in additional Latin American countries under its exclusive license agreement with us. In the first quarter of 2022, we continued to progress into new and existing markets in Europe and Latin America through Sobi and PTC, respectively.

Index

WAYLIVRA is a once weekly, self-administered, subcutaneous medicine that received conditional marketing authorization in May 2019 from the European Commission, or EC, as an adjunct to diet in adult patients with genetically confirmed familial chylomicronemia syndrome, or FCS, and at high risk for pancreatitis. We launched WAYLIVRA in the EU in the third quarter of 2019. In 2021, we began selling WAYLIVRA in Europe through our distribution agreement with Sobi. Under our exclusive license agreement with PTC, PTC is working to provide access to WAYLIVRA across Latin America, beginning in Brazil. In the third quarter of 2021, the National Health Surveillance Agency (Ag�ncia Nacional de Vigil�ncia Sanit�ria), or ANVISA, approved WAYLIVRA in Brazil. In December 2021, PTC submitted an application to ANVISA for approval of WAYLIVRA for the treatment of familial partial lipodystrophy, or FPL, in Brazil. If approved, Waylivra will be the first approved treatment for patients with FPL in Brazil.

Under our distribution agreements with Sobi, we retained the marketing authorizations for TEGSEDI and WAYLIVRA in major markets. We will continue to supply commercial product to Sobi and manage regulatory and manufacturing processes, as well as relationships with key opinion leaders. We will also continue to lead the TEGSEDI and WAYLIVRA global commercial strategy. In connection with the agreements, we restructured our European operations in the first quarter of 2021, and we restructured our North American TEGSEDI operations in the second quarter of 2021.

Medicines in Phase 3 Studies

We currently have six medicines in Phase 3 studies for eight indications, which include:

? Eplontersen: our medicine in development for ATTR

o In the second quarter of 2022, we achieved our original enrollment goal and increased the study size and duration in the Phase 3 CARDIO-TTRansform study in patients with ATTR cardiomyopathy, or ATTR-CM, with the aim to ensure a highly positive outcome and generate an even more robust data set to successfully compete in this growing and dynamic market. We expect data from this study in the first half of 2025

o Enrollment is complete in the NEURO-TTRansform Phase 3 study in patients with ATTRv-PN. We expect data from this study in mid-2022

o In the first quarter of 2022, the U.S. FDA granted orphan drug designation to eplontersen for the treatment of patients with ATTR

? Olezarsen: our medicine in development for familial chylomicronemia syndrome, or FCS, and severe hypertriglyceridemia, or SHTG

o Enrollment is ongoing in the BALANCE Phase 3 study in patients with FCS and the CORE Phase 3 study in patients with SHTG

o We published positive data from the Phase 2 study of olezarsen in patients with hypertriglyceridemia and either at high risk for or with established cardiovascular disease in the European Heart Journal

o We initiated a study of olezarsen in patients with hypertriglyceridemia to support the broad Phase 3 program

? Donidalorsen: our medicine in development for hereditary angioedema, or HAE

o Enrollment is ongoing in the Phase 3 OASIS-HAE study

o We presented positive data from the Phase 2 study of donidalorsen in patients with HAE at the American Academy of Allergy, Asthma and Immunology annual meeting

? ION363: our medicine in development for amyotrophic lateral sclerosis, or ALS, with mutations in the fused in sarcoma gene, or FUS. FUS-ALS is the most common cause of juvenile-onset ALS

o Enrollment is ongoing in the Phase 3 study in patients with FUS-ALS

? Pelacarsen: our medicine in development for lipoprotein(a), or Lp(a), driven cardiovascular disease

o Enrollment is ongoing in Novartis' Lp(a) HORIZON Phase 3 cardiovascular outcome study in patients with established cardiovascular disease and elevated lipoprotein(a), or Lp(a)

? Tofersen: our medicine in development for superoxide dismutase 1 ALS, or







        SOD1-ALS
        


o Biogen plans to present new data from the ongoing VALOR open-label extension, or OLE, study at the European Network to Cure ALS meeting in June 2022

o Biogen remains engaged with regulators to identify a potential path forward for tofersen

Index

COVID-19

As a company focused on improving the health of people around the world, our priority during the COVID-19 pandemic is the safety of our employees, their families, the healthcare workers who work with us and the patients who rely on our medicines. We are also focused on maintaining the quality of our studies and minimizing the impact to timelines. While the COVID-19 pandemic has impacted some areas of our business, we believe our mitigation efforts and financial strength will enable us to continue to manage through the pandemic and execute on our strategic initiatives. Because the situation is extremely fluid, we are continuing to monitor the impact COVID-19 could have on our business, including the impact on our commercial products and the medicines in our pipeline.







        Financial Highlights
        The following is a summary of our financial results (in millions):
                                     Three Months Ended March 31,
                                       2022                2021
        Total revenue              $       141.9       $       111.6
        Total operating expenses   $       199.4       $       203.6
        Loss from operations       $       (57.5 )     $       (92.0 )
        Net loss                   $       (65.2 )     $       (89.9 )
        


Our financial results for the first quarter of 2022 reflected the cost-sharing provisions related to our eplontersen collaboration with AstraZeneca to develop and commercialize eplontersen for the treatment of ATTR. Under the terms of the collaboration agreement, AstraZeneca is paying 55 percent of the costs associated with the ongoing global Phase 3 development program. As we are leading the Phase 3 development program, we are recognizing as R&D revenue the 55 percent of cost-share funding AstraZeneca is responsible for in the same period we incur the related development expenses. As a result of the cost-sharing provisions in our collaboration, we will receive payments of $20 million from AstraZeneca related to development expenses incurred in the first quarter of 2022.

As AstraZeneca is responsible for the majority of the medical affairs and commercial costs in the U.S. and all costs associated with bringing eplontersen to market outside the U.S., we are recognizing cost-share funding we receive from AstraZeneca related to these activities as a reduction of our medical affairs and commercialization expenses, which we classify as R&D and SG&A expenses, respectively. In the first quarter of 2022, we recognized $0.4 million and $0.2 million of medical affairs expenses and commercialization expenses for eplontersen, respectively, net of cost-share funding from AstraZeneca. We expect our medical affairs and commercialization expenses to increase as our collaboration with AstraZeneca progresses.

The following is a summary of the financial impacts on our statement of operations of the joint development activities under our eplontersen collaboration with AstraZeneca:







         Collaboration        Financial         Impact of Cost-Sharing Provisions on our
           Activities      Statement Line               Statement of Operations
                             Eplontersen
                                Joint                  55% of Ionis' Phase 3 development
        Phase 3              Development     $20M    expenses, including internal+external
        Development:           Revenue                         costs & CMC costs
        Ionis leads and     (R&D Revenue)
        conducts
                             Development               100% of Ionis' Phase 3 development
                            Expenses (R&D    $36M                   expenses
                              expenses)
        


Our revenue in the first quarter of 2022 increased more than 25 percent compared to the same period last year. The increase was driven by significant partner payments across multiple partnered programs, including $20 million from AstraZeneca for its share of the global Phase 3 program costs for eplontersen and $40 million from Biogen for advancing several neurology disease programs, including investigational medicines to treat patients with spinocerebellar ataxia type 3 and Parkinson's disease, among others.

We completed the transition to Sobi of our TEGSEDI and WAYLIVRA commercial operations in Europe and our TEGSEDI commercial operations in North America in the first and second quarters of 2021, respectively. The decrease in TEGSEDI and WAYLIVRA revenue in the first quarter of 2022 compared to the same period last year was due to the shift from product sales to distribution fees based on net sales generated by Sobi. As part of the transition, we restructured our commercial operations in 2021, resulting in substantial cost savings.

Index

Our operating expenses, excluding non-cash compensation expense related to equity awards, increased in the first quarter of 2022 compared to the same period in 2021. Our R&D expenses increased due to our investments in advancing our late-stage pipeline, including our expanding number of Phase 3 studies, which doubled over the course of 2021 from three to six studies. Our SG&A expenses included our investments in advancing our go-to-market activities for our near-term commercial opportunities. However, these expenses were offset by the savings we realized from the operating efficiencies we achieved from integrating Akcea and restructuring our commercial operations for TEGSEDI and WAYLIVRA. We expect our operating expenses, excluding non-cash compensation expense related to equity awards, to continue to increase during the rest of 2022 as we continue to build our commercial pipeline, invest in expanding and diversifying our technology and advance our go-to-market activities.

As of March 31, 2022, we had $2.1 billion in cash and short-term investments and remain well capitalized with the resources we need to continue investing to drive future growth.

Recent Business Updates

First Quarter 2022 Marketed Products Highlights

SPINRAZA(R): the global market leader for the treatment of SMA patients of all ages

? Biogen provided updates from the ASCEND, RESPOND and NURTURE studies of SPINRAZA at the Muscular Dystrophy Association (MDA) Clinical and Scientific conference and the American Academy of Neurology (AAN) annual meeting

TEGSEDI(R) and WAYLIVRA(R): important medicines approved for the treatment of patients with polyneuropathy caused by hereditary TTR amyloidosis and familial chylomicronemia syndrome, respectively

First Quarter 2022 and Recent Events

Advancing our near-term commercial opportunities toward the market ? Increased study size and duration in the Phase 3 CARDIO-TTRansform study of eplontersen in patients with ATTR-CM with the aim to generate even more robust data and ensure a highly positive study outcome to successfully compete in this growing and dynamic market. Data from this study are expected in the first half of 2025

? The U.S. FDA granted orphan drug designation to eplontersen for the treatment of patients with ATTR

? Published positive data from the Phase 2 study of olezarsen in patients with hypertriglyceridemia and either at high risk for or with established cardiovascular disease in the European Heart Journal

? Initiated a study of olezarsen in patients with hypertriglyceridemia to support the broad Phase 3 program

? Published positive data from the Phase 2 study of donidalorsen in patients with HAE in the New England Journal of Medicine

? Presented additional positive data from the Phase 2 study of donidalorsen in patients with HAE at the American Academy of Allergy, Asthma and Immunology annual meeting

Advancing our leading cardiovascular disease franchise ? AstraZeneca presented positive data from the Phase 2b ETESIAN study of ION449 (AZD8233) targeting PCSK9 in statin treated patients with dyslipidemia at the American College of Cardiology (ACC) annual scientific session

? Achieved full enrollment in the Phase 2b study of IONIS-AGT-LRx for patients with treatment-resistant hypertension, with data expected in the second half of 2022

Advancing our leading neurological disease franchise ? Roche plans to initiate a new Phase 2 study of tominersen in patients with Huntington's disease based on findings from a post-hoc analysis of the







        GENERATION-HD1 study
        


? Biogen initiated the Phase 1/2 study for ION260 (BIIB132) targeting ataxin-3 (ATXN3) in patients with spinocerebellar ataxia type 3 (SCA3), resulting in an $8 million milestone payment from Biogen

? Biogen advanced the Phase 1/2 study for ION859 (BIIB094) targeting LRRK2 in patients with Parkinson's disease, resulting in a $10 million milestone payment from Biogen

? Announced the discontinuation of IONIS-C9Rx (BIIB078) due to lack of patient benefit demonstrated in the Phase 1/2 study in patients with C9orf72-ALS

Index

Business Segment

We operate as a single segment, Ionis operations, because our chief decision maker reviews operating results on an aggregate basis and manages our operations as a single operating segment.

Critical Accounting Estimates

We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. As such, we make certain estimates, judgments and assumptions that we believe are reasonable, based upon the information available to us. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact our quarterly or annual results of operations and financial condition. Each quarter, our senior management reviews the development, selection and disclosure of such estimates with the audit committee of our board of directors. The following are our significant accounting estimates, which we believe are the most critical to aid in fully understanding and evaluating our reported financial results:

? Assessing the propriety of revenue recognition and associated deferred revenue; and

? Determining the appropriate cost estimates for unbilled preclinical studies and clinical development activities

There have been no other material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2021.







        Results of Operations
        Revenue
        Total revenue for the three months ended March 31, 2022 was $141.9 million
        compared to $111.6 million for the same period in 2021 and was comprised of the
        following (amounts in millions):
                                                  Three Months Ended
                                                       March 31,
                                                   2022          2021
        Revenue:
        Commercial revenue:
        SPINRAZA royalties                      $     53.8      $  60.0
        TEGSEDI and WAYLIVRA revenue, net              6.2         19.8
        Licensing and other royalty revenue           12.3          4.6
        Total commercial revenue                      72.3         84.4
        R&D revenue:
        Amortization from upfront payments            17.4         20.1
        Milestone payments                            27.2          5.2
        License fees                                   2.0            -
        Other services                                 3.1          1.9
        Collaborative agreement revenue               49.7         27.2
        Eplontersen joint development revenue         19.9            -
        Total R&D revenue                             69.6         27.2
        Total revenue                           $    141.9      $ 111.6
        


Our revenue in the first quarter of 2022 increased more than 25 percent compared to the same period last year. The increase in our R&D revenue was driven by significant partner payments across multiple partnered programs, including $20 million from AstraZeneca for its share of the global Phase 3 program costs for eplontersen and $40 million from Biogen for advancing several neurology disease programs, including investigational medicines to treat patients with spinocerebellar ataxia type 3 and Parkinson's disease, among others.

Our commercial revenue in the first quarter of 2022 decreased compared to the same period last year. We completed the transition to Sobi of our TEGSEDI and WAYLIVRA commercial operations in Europe and our TEGSEDI commercial operations in North America in the first and second quarters of 2021, respectively. As a result of our distribution agreements with Sobi for TEGSEDI and WAYLIVRA, our commercial revenue from product sales shifted to commercial revenue from distribution fees based on net sales generated by Sobi. As part of the transition, we restructured our commercial operations in 2021, resulting in substantial cost savings.

Index







        Operating Expenses
        Our operating expenses were as follows (in millions):
                                                                          Three Months Ended
                                                                               March 31,
                                                                          2022           2021
        Operating expenses, excluding non-cash compensation expense
        related to equity awards                                       $    173.1      $   159.0
        Restructuring expenses                                                  -            6.7
        Total operating expenses, excluding non-cash compensation
        expense related to equity awards                                    173.1          165.7
        Non-cash compensation expense related to equity awards               26.3           37.9
        Total operating expenses                                       $    199.4      $   203.6
        


Operating expenses, excluding non-cash compensation expense related to equity awards, for the three months ended March 31, 2022 increased compared to the same period in 2021. Our R&D expenses increased due to our investments in advancing our late-stage pipeline, including our expanding number of Phase 3 studies, which doubled over the course of 2021 from three to six studies. Our SG&A expenses included our investments to prepare for the launches of eplontersen, olezarsen and donidalorsen. However, these expenses were offset by the savings we realized from integrating Akcea and restructuring our TEGSEDI and WAYLIVRA commercial operations. We expect our operating expenses, excluding non-cash compensation expense related to equity awards, to continue to increase during the rest of 2022 as we continue to advance our mid- and late-stage medicines in development, invest in expanding and diversifying our technology and prepare for commercialization.

To analyze and compare our results of operations to other similar companies, we believe it is important to exclude non-cash compensation expense related to equity awards from our operating expenses. We believe non-cash compensation expense related to equity awards is not indicative of our operating results or cash flows from our operations. Further, we internally evaluate the performance of our operations excluding it.







        Cost of Sales
        Our cost of sales consisted of manufacturing costs, including certain fixed
        costs, transportation and freight, indirect overhead costs associated with the
        manufacturing and distribution of TEGSEDI and WAYLIVRA and certain associated
        period costs.
        Our cost of sales were as follows (in millions):
                                                                           Three Months Ended
                                                                                March 31,
                                                                          2022             2021
        Cost of sales, excluding non-cash compensation expense
        related to equity awards                                       $      4.0       $      2.4
        Non-cash compensation expense related to equity awards                0.2              0.2
        Total cost of sales                                            $      4.2       $      2.6
        


Our cost of sales, excluding non-cash compensation expense related to equity awards, increased slightly during the three months ended March 31, 2022 compared to the same period in 2021.

Research, Development and Patent Expenses

Our research, development and patent expenses consist of expenses for antisense drug discovery, antisense drug development, manufacturing and development chemistry and R&D support expenses.

Index

The following table sets forth information on research, development and patent expenses (in millions):







                                                                          Three Months Ended
                                                                               March 31,
                                                                          2022           2021
        Research, development and patent expenses, excluding
        non-cash compensation expense related to equity awards         $    142.0      $   111.3
        Restructuring expenses                                                  -            2.6
        Total research, development and patent expenses, excluding
        non-cash compensation expense related to equity awards              142.0          113.9
        Non-cash compensation expense related to equity awards               19.1           25.9
        Total research, development and patent expenses                $    161.1      $   139.8
        


Antisense Drug Discovery

We use our proprietary antisense technology to generate information about the function of genes and to determine the value of genes as drug discovery targets. We use this information to direct our own antisense drug discovery research, and that of our partners. Antisense drug discovery is also the function that is responsible for advancing our antisense core technology. This function is also responsible for making investments in complementary technologies to expand the reach of antisense technology.

Our antisense drug discovery expenses were as follows (in millions):







                                                                           Three Months Ended
                                                                                March 31,
        . . .
        


May 04, 2022

COMTEX_406702693/2041/2022-05-04T17:14:32

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2022 Cybernet Data Systems, Inc. All Rights Reserved

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.