To be hosting Beth Hougen, CFO of Ionis Pharmaceuticals. Is it Hougen? Have I been mispronouncing it for five years of covering the company?
No, you've actually got it right.
Okay.
Thank you.
I had a sudden moment. Well, Beth, it's good to have you.
Thank you.
You may be the only team that flew from better weather here to visit us in Miami. Before we go diving into details on pipeline, et cetera, let's talk a little bit on the balance sheet. I know this has been sort of an increasing topic, which is not surprising, as we approach one credit security on the balance sheet going into current status. Obviously, that's less of a concern for a company that has Ionis's fairly robust balance sheet, as well as sort of opportunities to access capital. It is something that comes up as, hey, how do you think about strategy, convert versus other types of debt, and sort of what the long-term complexion of the capital stack should look like?
That's a great question. Just as a reminder, we ended 2024 with $2.3 billion on the balance sheet, so a healthy cash balance, which I think is extremely important today as we look forward to the Tryngolza launch that's underway now, the Wainua launch that's entering its first full year, and a host of additional independently launched medicines over the next 12 to 18 months, all of which are, you know, requiring additional capital from the company. We have this healthy balance sheet. Thank you for asking about that. As we think about the convert, holding on to the cash is obviously critically important to Ionis. It's a capital-intensive business. We all know that. It's not easy to raise capital in these markets. Having the healthy balance sheet, I think, gives us tremendous flexibility as we think about the 2026 converts at 0% interest.
Now, the beauty is it's 0% interest, so I want to hold it as long as I can. I think you rightfully pointed out that nobody's really paying, you know, much attention to the fact that it could be a current asset. That's not a big—or a current liability, rather—that's not a big issue for folks. I am not particularly concerned that I need to do anything with that debt between now and April, you know, next month, if you will. I do think that it's important that we look at the ways that we can manage that debt, maintaining as much flexibility, maintaining our cash balance as long as we possibly can. I don't really want it to go into next year. I'd like to get that taken care of this year.
We've got some really important catalysts coming up that could be opportunities for us to think about a refinancing transaction. We've used convertible debt for a very long time, very successfully. We've had a lot of opportunities to manage that debt successfully over those years. You know, we'll probably employ some of those various different techniques, as we think forward. Long-term, as I think about the long-term capital structure for the company, we're projecting cash flow positive in the next few years or so as we bring a whole host of new medicines to the market. That will really drive the revenue growth that could drive our positive cash flow. At that point, we'll look at the balance sheet, we'll look at our convertible debt, and we'll make some decisions as to what is the right capital structure for the company.
It's going to be all facts and circumstances based, cost of capital based, just as we should be.
Let's slide from the balance sheet over to the income statement, operationally speaking. Let's talk a little bit about what we should expect from Tryngolza launch in terms of metrics as the launch progresses, both revenue, obviously, but also like how we should think about end market metrics, what you will be tracking internally, and what we should expect in your quarterly reports as we evaluate the speed of the launch, acceleration, et cetera.
Yeah. Tryngolza was approved on December 19th last year. It is a drug for familial chylomicronemia syndrome, so FCS. I think it's really our first independent launch. It's very exciting for Ionis to be a commercial stage company now. We've been working to this point for the last several years, and we finally have gotten into this new era for the company. That being said, I think the team is executing phenomenally on this launch. We had our first prescription on a Saturday, the day after approval, with a, you know, fully trained field team ready to go out into the market. Now, mind you, this is over the holidays. I think that's a tremendous success by the team. We also had drug in channel within two weeks.
Again, another really important metric to demonstrate just the commitment this team has to executing on our first independent launch. The other things to be watching are things like, are we getting to a broad range of physicians? So are the endocrinologists, the cardiologists, the lipidologists, the, you know, lipid specialists, the pancreatologists, are they, are they prescribing Tryngolza? And the answer is yes. Are we seeing this across a whole host of different physicians across the company, across the country? The answer is yes. Are we seeing repeat prescribers? Yes. That's a really important metric. And what's it look like in terms of reimbursement? Are patients who are genetically confirmed as well as clinically confirmed getting their drug reimbursed? And the answer, again, is yes. I think that's also really important.
It demonstrates that the broad label that we achieved with our Tryngolza approval is actually playing out in the market and that patients, payers, excuse me, are actually reimbursing this drug regardless of whether it's genetically diagnosed patients or clinically diagnosed patients. That time to fill is very favorable to the drug and to the patient. All of those things are working exactly as we would expect. That's what you should, you know, be paying attention to as the launch progresses.
While we're on that topic of patient populations, this is not the last patient population you're going to be studying here. Obviously, while FCS is tremendous on that and needing a lot of good to be done, the different price point than the eventual SHTG population. How do you think about price when you're looking at two very different populations, price to value, what the metrics are, and operationally how you transition from one model to another?
Yeah. FCS is really the tip of the pyramid, if you will, in severe high triglycerides. Those are the patients that have extremely high triglyceride levels. I think our phase three study, the baseline demographics were, you know, 2,300, 2,400, 2,500 mg/dL . Very, very high triglyceride levels. Severe high triglycerides are patients who have triglycerides 500 mg/dL or higher. The most severe of those severe high triglyceride patients are the 880 and above patients. We are talking about that entire patient population when we sit down and talk with physicians and when we sit down and talk with payers so that both physicians and payers understand that there is a much broader patient population here in need of therapies to bring those triglycerides down to a level that will significantly reduce the risk of acute pancreatitis. That's the risk that these patients face.
Those can be very, very severe attacks. They put these patients in the hospital sometimes for a week or more, take them off of all food, potentially could be fatal. That is what we're trying to drive to is a significant reduction in acute pancreatitis. We saw that in our FCS phase three study. When we sit down and have the conversation with physicians and payers, we start there and then we whittle down to what is FCS specifically as a subpopulation of SHTG. What that means from a payer perspective is they now understand that we are going to target that broader patient population, assuming our phase three studies are positive and we get approval from the regulatory agencies, and that we're going to reduce the price significantly to match the patient population and the significant increase in patient population.
They know going into FCS that they're not going to be signing up for a price for a very large patient population that's starting out with a very small patient population. That's how we're approaching it. Once SHTG is approved, we'll drop that price down in the, say, $10,000-$20,000 annual cost of therapy range, and we'll be targeting a much broader patient population.
You do have a competitor who's sort of following on in both these indications, that is likely to be in FCS fairly briefly before you transition to the broader indication. How do you think about contracting, price as a competitive lever, in a world where you have an FCS and SHTG indication versus a competitor who is early on in an FCS launch?
Yeah. No, it's a great point. Just to maybe round that out a little bit for folks, we'll be launching, we're in the market right now with FCS, with a rare disease price, very commensurate with the patient population in FCS, as you would expect. We've got about a one-year first mover advantage before the other nearest competitor brings their product to market at the end of this year. At that point, we will be very close to bringing our drug to the market for the broader SHTG patient population. That's a significant difference in size of population from about 3,000 potentially in the U.S. to, you know, hundreds of thousands of patients that will be addressable with our drug. At that point, they will be just launching into FCS and we'll drop that price down to the $10,000-$20,000 range.
They are going to be at a very significant disadvantage as they are trying to build a market for a very, very small patient population with a price that is significantly lower than what that would necessarily command. We think that puts us in, obviously, a very favorable position, and we are looking forward to, frankly, being in that position. We probably will have one to two years first mover advantage over this competitor in severe high triglycerides. We will have a long period of time to be developing this market. That is what we need to be doing right now. We need to be developing this market. We need to make sure that these physicians understand that this is a much broader patient population over time, and basically building brand loyalty to Tryngolza.
I want to take this exact sort of dynamic, well, a similar dynamic, and move it to a different indication where you are not first. We are playing, we are more of a fast follower second-third-to-market dynamic in TTR. Wainua has been launched as an injectable self-administered at-home therapy, competing with a market leader, which is an approved in-office subQ in Amvuttra. Obviously, Amvuttra is priced for polyneuropathy and has done quite well, for on my own for some time, presuming approval at the end of this month for cardiomyopathy. How do you think about potential price competition contracting? And how is this analogous or not analogous to the Tryngolza dynamic for you looking forward?
Yeah, it's a great question. Let me maybe start first by giving a little bit of background on how the Wainua launch is going in polyneuropathy. I think that's really relevant here. We launched with our partner AstraZeneca, Wainua in the early last year. Last year was a partial year, if you will, with Wainua on the market. We saw quarter over quarter increasing growth, so accelerating sequential growth quarter over quarter, last year. Q3 to Q4, we were capturing about 50% or more of the new patients in the U.S. that went on drugs. There was about $37 million of revenue between the Alnylam products and Wainua. In Q4, $19 million of that was Wainua. I think a really strong showing by Wainua early on in its launch.
We think those dynamics are going to continue, and we also think they will read through to cardiomyopathy. Where things are different, one, we're going to be very interested to see how Alnylam prices for cardiomyopathy. We'll be interested in understanding what their label looks like. We'll see all of that in the next few weeks or so. That will be very interesting. We'll have opportunity for the next, you know, couple of years or so to watch how the launch progresses, how their pricing dynamics progress. It's a little bit different because they're Part B and we're Part D in this space versus the Tryngolza situation where both drugs are Part D. That's a little bit of a difference, and that will have its own dynamics that we'll have to be, you know, paying attention to.
It's also different in that the overall market opportunity is substantially different. For severe high triglycerides, we think that Tryngolza for the broad patient population could be a blockbuster drug. And then as we expand out potentially, bigger than that, Wainua and TTR, just the overall TTR space is somewhere between a $15 billion-$20 billion market opportunity. Right now, there are four drugs in that market. There are two stabilizers and two silencers. We believe that we'll be bringing Wainua forward as the second silencer in the cardiomyopathy space, the bigger indication, here when we read out those data next year.
I think the difference is in a lot of ways, just the sheer size of that opportunity in, in ATTR and the fact that it could very easily support four drugs in a, with, you know, $4 , 5, 6 billion of annual peak revenues.
Let's talk a little bit about CARDIO-TTRansform, your ongoing pivotal phase three in that market. A little bit different of a design than HELIOS- B, which was Alnylam's study, and certainly a degree than ATTRibute , reflecting in part the fact that you have AstraZeneca supporting you. You have a different, it's a different level of resources than any of these other players. Talk to me about how the design of CARDIO-TTRansform informs the competitive position in the market you expect to launch into and into a partially genericized market.
Yeah. Let me start by saying that, and maybe expand on your comment about the design of our phase three study. One of the things that we identified as we were working through the enrollment for our CARDIO-TTRansform study, which is the phase three study of eplontersen in cardiomyopathy, we were hearing and learning that the demographics of the patient population had really been shifting over time, that these patients were being diagnosed earlier, they were younger, they were getting on drug earlier, so they were better managed. That was affecting the, could potentially affect the rate of events in this patient population. As a result, because we were not fully enrolled, we had the opportunity to significantly increase the size of our phase three study. We did that.
We increased it to 1,400, actually slightly more than 1,400 patients, at full, full enrollment, which is almost double the size of any other studies that were being conducted at that time. That gave us, I think, the opportunity to really, potentially have differentiating, differentiating data from that phase three study. With as many patients as we have, we have the opportunity to see subgroup analyses that could answer some questions around, what does this drug do on, by itself? What does this drug do in hereditary cardiomyopathy patients? What does this drug do in the wild type? What does this drug do as a combination therapy with tafamidis, for example? All of those things were important questions that were on our minds. We believed having robust comprehensive data would enable us to go into the market in a highly competitive position.
In addition, we're running a number of sub-studies that we think further expand the potential value of data coming out of the eplontersen phase three program. We're running an MRI study and we're running a scintigraphy study. Both of those studies are going to give us information on the function and structure of the heart as a result of the use of eplontersen as a treatment for cardiomyopathy. Now, what does that mean for Wainua or eplontersen as we think about tafamidis going generic? We think that that actually plays very favorably because as you think about adding a silencer on top of a stabilizer, particularly a stabilizer that's generic, the cost is very, is limited on the stabilizer because it's generic and you can put the silencer on top of that.
I think it's widely agreed, or at least has been, and I think that's still the case that the silencer mechanism should be a preferred mechanism because you're stopping the production of the disease-causing protein rather than stabilizing that once it's, you know, once it's already caused disease. We think we actually have the opportunity to have the most robust data and that should help us whether tafamidis or the other stabilizer are generic or still branded.
We're touching on a fairly controversial debate there.
Yeah.
Taking a step back, operationally, how does one reprice a higher price drug to a markedly lower price? And how is that different in an at-home administered drug or self-administered drug? This will say Part D.
Part D. Yeah.
versus something given in office, whether it's subQ, IV, any kind of Part B, like mechanistically, how does that work?
It's a great question. And we're actually looking forward to seeing how that's going to be, how that's going to be accomplished by Alnylam as a part B drug. It can be done. Our market access team have told me it can be done, but it's very difficult. And it's difficult because the part B model is a buy and bill model. So they're paying a higher price than what they may necessarily be reimbursed for. And that's something that's going to have to be managed very carefully. One of the benefits in this case of, you know, not being first to market is we'll be able to monitor how they're managing, their contracting, their rebating, their price dynamics, and we'll be able to respond accordingly. I think as a part D drug, it's much easier for us.
You know, it's just, it's much, much easier for us to manage those dynamics. You know, we'll be keeping a close eye on how this plays out over the, we'll know something here in the next few weeks, as I said, and we'll see where this goes over the course of the next year or year and a half or so.
Now, one certainly hopes so on behalf of patients.
Yes, agree.
I'm going to hop over to another large, but complex and competitive rare disease market that Ionis will be entering on a standalone basis, which is donidalorsen and HAE. I'm going to ask something that we talked about last night, which is based upon the work that you and your team have done, obviously in prep for the launch, deeply invested in this market. What is the churn rate for HAE patients on a prophylaxis therapy, prophylactic therapy to a different prophylactic therapy on an annual basis?
Yeah, it's a great question. I think if you had asked that question, you know, a few years ago, I think the answer you would have gotten is that there's very little switching going on in that market, that it was a very sticky market, and that when folks went from Haegarda or Takhzyro, that they stayed on those therapies. I think what we've learned with the introduction of Orladeyo into that market is that in fact, it's really not as sticky a market as anyone had anticipated. The market is actually much more of a switch market than anyone would have believed previously. We see between 20%-25% or so of patients switching on an annual basis, based on our data. What that tells us is that there's tremendous dissatisfaction with the existing therapies and opportunity for a preferred therapy to come forward.
There's three things that patients, who have HAE are looking for from their therapy. They want efficacy. They want a significant reduction in the attack rate that they have to, they have to be concerned about. These attacks are severe. They're painful. They come unexpectedly and they could be fatal depending on where they may occur in the, within the body. They're also looking for, ease of administration, tolerability. They want this, these drugs to be drugs that they can take without a lot of side effects or a lot of discomfort. And the third thing they want is they want the convenience of managing their disease. This is generally a young patient population. They're often diagnosed, as, you know, young children, 10, 11, 12 years old, and they live with their disease for their entire life.
They want to be able to grow up and to manage a life, a full life without really focusing on their disease. Right now, there is not a single therapy that offers these patients all three of those attributes. We believe that donidalorsen, in fact, could be that therapy. We've seen efficacy that demonstrates more than 95%, almost 96%, attack rate reductions in our long-term open label extension studies. We recently presented those data at the AAAAI Conference in San Diego a few weeks ago. We also believe that with an easy to take once monthly subQ small volume auto injector, which is what we're delivering this product in, answers the question about tolerability. They don't have GI side effects. They don't have painful, viscous injections that they need to take. It is about a 10-second injection. Very quick and very easy.
What we're offering as well is the ability to dose every four weeks or every eight weeks. We think that also is going to be beneficial right now. They either have to take a daily pill or they have to take an every two-week injection. Sometimes they can push that to every four weeks, assuming that the efficacy doesn't fall off and they don't have attacks. We think that means that there are, you know, three critical factors that these patients are looking for that we can offer them in Donidalorsen.
We had a fairly stable duopoly. There were some older therapies for HAE, but were frequently had supply issues because of plasma derivation. We had what was a fairly stable duopoly, which became a higher switch market with the introduction of a differentiated product, in this case, an oral. Now we are having a second differentiated product, a less frequently administered product with a different MOA in donidalorsen. Looking out beyond that, you know, we have a gene editing approach currently in a pivotal study, as well as your own editing partnership with Metagenomi, which includes equity ownership.
Talk to me how you think about, you know, not just the disruptive and churn driving opportunity that the introduction of donidalorsen offers, but also how you expect to participate in the eventual introduction of potentially, potentially one-time aspirationally functionally curative. I'm trying to be careful here and not use the C word dangerously, genetic medicines into this market. How do we think about that sort of life cycle generational management of what's going to be a meaningful franchise for Ionis?
Yeah. One of the things that we did that I thought was very innovative as we were sitting down together and thinking about the phase three design for Donidalorsen, and this is where the value of having a fully integrated R&D and C organization comes into play. We designed the first prospective switch study and ran that switch study. That switch study was so important for multiple reasons. What we were able to learn through that study was just what mattered to patients and how we could help them switch effectively and safely to a new therapy. Some of the data that came out of that switch study, we learned that while these patients thought they were well controlled on their existing therapy, they got an additional 64% reduction in their attack rates by being on Donidalorsen.
That was really important to them because, as I said, efficacy and the ability to manage attacks is a critical attribute for them in their managing their disease. We also learned that they had a very strong preference for Donnie. We surveyed these patients and of those patients that were surveyed, 80%, actually more than 80%, said that they preferred Donidalorsen and have stayed on Donidalorsen in the switch study. Again, very important data. We are going to bring all of those data to bear in the marketing efforts, and really drive the switch market in favor of Donidalorsen. That is not where it stops for Ionis. For Ionis, we have a deep pipeline of partnered and wholly owned medicines, and we are committed to really holding onto the leadership role in those medicines.
That means thinking forward to the follow-ons and the life cycle management of those medicines. To your point, we have follow-on programs for all of our late-stage medicines right now, designed primarily to look at extended dosing frequency. There is a real push right now in the market for less frequent dosing, and we are able to bring that forward with the advanced chemistries that we have been working on at Ionis. We have one of the leading medicinal chemistry organizations in this entire space, and we are bringing it to bear to be able to bring forward these follow-ons. Additionally, to your point, we are also looking at gene editing as an opportunity even further down the road to maintain our leadership in these various different franchises.
We're coming down to the end of our allotted time. We've talked about a lot of different elements of the pipeline. We didn't get to Angelman. We didn't get to, I know it's, it's the pipeline is deep.
I love Angelman.
Let's talk about exactly that dynamic, the profusion of other assets, which realistically would take a ton of capital to all move into phase three. How do we think about early and mid-stage assets that live inside the Ionis pipeline that should perhaps be partnered? And how do you decide what to partner, what not to partner, you know, and to what extent does that bleed into our very first question around managing sources of capital?
Yeah. You know, the beauty of partnering for Ionis today is that it does enable us the financial flexibility to focus on our wholly owned pipeline. It also enables us to have the resources to focus on our wholly owned pipeline because we no longer have to put those resources towards programs that our partners are executing on, from a development and commercial perspective. That is very, very important for Ionis. Partnering will still be an important aspect of the company, but it will be for those reasons, not as a core business model for the company as it's been in the past. We're focused on our wholly owned pipeline, and we've really spent the last four or five years focusing that pipeline, particularly in the areas of neurology and cardiology, where we believe we have the ability to lead, particularly in neurology.
I'd love to spend more time talking about that at another time. Our focus is ensuring that our resources, our capital, and our people are brought to bear on the wholly owned pipeline and that we're building that wholly owned pipeline for that revenue growth, and for the, you know, the strong cash flow that that revenue growth is going to drive going into the future.
Great. I would love to continue this for another half hour, but we are very late. Thank you so much, Beth. Looking forward to continuing the conversation again soon.