Q3 2019 Earnings Call

And welcome to the Akcea Therapeutics third quarter 2019 conference call. As a reminder, this call is being recorded I will not trying to call over the Kathleen Gallagher Akcea, Vice President of corporate Communications and Investor Relations Ms. Gallagher. Please begin.

Thank you say Hello, everyone. Thank you for joining todays call with me today or any mcdevitt, our interim Chief Executive Officer, Michael Clean, our Chief Financial Officer, and called today, our Chief commercial officer.

As a reminder, that copper constitutes forward looking statements regarding the financial outlook for Akcea actually get business and the therapeutic and commercial potential axiom products in development.

Any favorite subscribe to check your goals expectations financial or other projection intentions or beliefs, including the commercial potential impact study, we live right our pipeline of drugs.

Forward looking statement actually be considered an at risk.

Such statements are subject to certain risks and uncertainties, particularly those inherent in the process discovering developing and commercializing drugs that are safe and effective for years of human therapeutics, Adam the endeavor of building a business or outlets drugs.

I see your forward looking statements also involve assumptions, but if they never materialize accrued correct could cause results to differ materially from those expressed or implied by such forward looking statements.

Although wuxi as forward looking statements reflect the good faith judgment. Other matters. These statements are based only on Bakken factor is currently known by Akcea.

As a result, you're cautioned not to rely on these forward looking pretty much.

These and other risks concerning access programs are described in additional detail and I see as most recent quarterly report on Form 10-Q and in the most recent annual report on Form 10-K on file with the FCC.

Copies of these and other documents are available from a company.

In addition earlier today, we issued a press release and related financial tables, including a reconciliation of GAAP to our reported non-GAAP financial measures that we will discuss today.

I read that for me and to access the slides that accompany today's call. Please visit <unk> investors section of our website now I'll turn the call over to damage.

Thank you Kathy good afternoon, everyone and thank you for joining todays call.

I want to start off by sharing how excited I to lead Akcea <unk>.

I believe in our mission, our team and our innovative medicines.

Since being appointed interim CEO , a little more than a month ago I've worked alongside our dedicated employees and I've heard first hand, the real and positive impact we're having patients lives.

I have now seen the strong foundation that is being built here I'm impressed with the town and engagement across the organization.

I've also spent time with our key partners Novartis PTC, not Pfizer and I've been impressed with their commitment to our medicine.

Our strategy is to continue to execute on our two commercial launches as well as deliver on the transformational programs that we currently have in development.

I look forward to leveraging this infrastructure as we expand our pipeline and build upon our relationship with island.

As we announced when I joined Akcea, we have a firm commitment from my own us to license rare disease medicines that are complementary to our pipeline and we will continue to evaluate licensing additional third party assets.

To ensure we could successfully execute the strategy we've added a key member to our executive team.

I'm pleased to introduce our new Chief Commercial Officer College Jenny.

Causes seem with Axio since 2017, leading the U.S. commercial organization for both Tech savvy and way, Nebraska and has deep knowledge of the 80 to Youre an F.C.S. communities.

He brings a wealth of experience to his new role, including more than 20 years in the industry, which almost half were in the rare diseases space.

With the team we have in place we have the background and experience to drive our company's growth.

This quarter, we also entered into a worldwide exclusive licensing agreement with Pfizer for Akcea and PCL, three lrx to treat patients with certain cardiovascular and metabolic diseases.

Through disagreement Akcea my honest when received a 250 million dollar upfront license fee and are eligible to receive development regulatory and sales milestone payments of up to $1.3 billion and tiered double digit royalties.

Disagreement is still subject to hate for parents.

We were thrilled to announce the steel Akcea speech L. Three hour ex husband potential to treat very broad patient populations and advancing this medicine to patients is a task well suited for large pharma company.

Pfizer is the ideal partner for this program because of their expertise in both cardiovascular health and in commercializing.

Therapies targeting large markets.

Take study continues with steady progress.

We reported approximately $12 million in sales for the third quarter, which is an approximately 20% growth quarter over quarter.

We're seeing some promising progress in the market, which call will speak to in more detail.

In the third quarter, we launched we never in Germany.

We live right is the only treatments approved for patients with FCS and we're now treating are first patients with commercial drugs.

We've made a lot of played rests with the pipeline, which I will discuss later in the call.

There's a strong sense momentum across the company even in my short tenure, we've had several positive achievements.

Commercially we've launched pick study in additional countries and we've had success with a number of European pricing negotiations.

We had further validation of our like a technology with the recent Pfizer licensing vaccine and Peach L. Three lrx I'm are progressing quickly towards the start of the phase three program for Akcea TTR Lrx.

Also we have added experienced leaders to our team and we have a strong balance sheets that allows us flexibility to continues to build the business.

Together these events and this momentum our positioning us for a promising future.

I'll now turn the call over to call to discuss our commercial efforts for the quarter.

Thank you Damian and Hello, everyone.

It's a pleasure to be here I'm looking forward to meeting with you in person very soon.

Over my last couple of years that Akcea I've had the opportunity to build the U.S. commercial team launching tech setting.

I've had the pleasure working with the Akcea team to build the foundation that will support the future launches for way Liberal and additional medicines that receive regulatory approvals.

Focus has always been on ensuring that patients have access to texadian way Liberal and we have done that through building partnerships with physicians patient advocacy organizations and payers.

I believe and listening to the patient and physician communities to understand how we can best serve them.

We'll lead with that core philosophy as I take on this new role.

Last month March one year since we launched tech setting, we're seeing steady progress looking back at the last year. The team has executed well in an unprecedented competitive environment for a rare disease launch.

Q3 that said he has generated revenue from the you Essen, Germany and is now commercially available and seven additional countries.

In the U.S., we continue to have success with market access for tech setting.

We continue to help patients gain access to our treatment through broad reimbursement coverage from commercial and government payers importantly patients are being treated with tech study with low out of pocket cost.

We have continued to focus on raising awareness of the disease. We are seeing our efforts paid off with both neurologists and cardiologists better understanding the urgency to treat the polyneuropathy of EG TTR amyloidosis, and the importance of starting treatment earlier.

Our strategy to focus on academic centers and community based physicians and institutions has resulted in an increase in new physicians prescribing tech setting.

We're also seeing this increase in diagnosis from our genetic testing program AG TTR Compass, we now have over 1000 physicians using the program.

Compass allows physicians to diagnose patients locally and tech said he allows them the independents to treat patients locally as well. This means physicians can treat patients in their local practice and patients don't have to travel far distances for diagnosis or treatment.

This is especially important for patients who are experiencing the debilitating symptoms of autonomic neuropathy, which makes travel incredibly difficult.

This past quarter more than 40% of our new prescriptions were from first time prescribers importantly, prescriptions from both cardiologists and neurologists are growing and we are seeing repeat prescriptions from physicians, who have experience with tech setting.

Coupled with new and repeat prescriptions, we are pleased with patients compliance and persistence rates.

Outside of the U.S., we have completed the initial repricing period and finalized pricing negotiations in Germany.

We have received acceptance by both nice and the Scottish Medicines consortium.

With access in all four UK countries, we are now treating patients there with tech setting.

In addition, we successfully completed our reimbursement negotiations in Sweden, and Austria and have launched in both countries.

As expected we are following the typical launch sequence in Europe , and anticipate launching an additional countries in 2020.

Akcea connect is now global program. We believe we are providing the highest level of patient and physician support across all commercial geographies. We continue to hear feedback that the akcea connect team our strong partners for both patients and physicians.

In the countries, where we are pursuing reimbursement we have early access programs up and running our partners in Latin America, PTC Therapeutics recently announced the approval in Brazil.

We are pleased to be the first approved are in a targeted therapy for patients with the polyneuropathy of AJ TTR amyloidosis in Brazil, and the only ha TTR therapy globally for patients suffering with Polyneuropathy. So quality of life mentioned in the indication statement.

PTC immediately started launch activities for Chegg study in Brazil.

Our partnership strategy has been a great way to accelerate the delivery of tech savvy to patients in Latin America, and they are working toward additional approvals and reimbursement and other countries.

We're very pleased with all we've achieved with tech steady in the past year and we're looking forward to growing the business in 2020 and beyond.

Turning to weigh liberal the team achieved a major milestone by launching and treating patients in Germany. This past quarter.

We have begun an 80, you which is a reimbursed early access program in France.

We have a strong aims program in the UK as well as a number of early access programs and other European countries as we pursue reimbursement.

Preparations are underway to launch an additional EU countries in 2020 and in Latin America with our partner BGC.

Our team is executing on both the Tech study and we liver launches and the foundation that we have in place internationally, the setting us up to commercialize additional products from our pipeline in the coming years.

I'll now turn the call over to Mike to discuss our financials.

Thank you Kyle and good afternoon, everyone.

For Q3, we had total revenue of approximately $21 million and an operating loss of approximately $36 million on a non-GAAP basis, including non-GAAP operating expenses of $57 million.

Our revenue includes approximately $12 million of product sales from Tech study, which as Dan mentioned is an approximately 20% growth on a quarter over quarter basis.

In addition, this quarter, we launched the way Lipper in Germany, where the maintenance price simply lever is approximately $429000 thousand euro per year for biweekly treatment regimen.

Liver will be sold as a single dose in Prefilled syringes price that 16500 euro.

Our market access team is now working with the German authorities to agree to reimburse the reimbursement price per way liver. After the first 12 months.

As Carl mentioned, we have an ATM program, probably liberal in France, we are billing and collecting for the product under the ATM program and once we finalize our price and perhaps we will be able to recognize revenue.

We generated substantial upfront payments of $250 million, when we liked and Akcea angiopoietin like three lrx to Pfizer last month.

While we split all the economics under this agreement 50, 50 with Ioannis, we will settle our obligation to rely on us with 6.9 million shares of Akcea common stock.

Resulting in an ownership bio units of approximately 77%.

Of the $250 million payment, we anticipate receiving from Pfizer, we plan to recognize substantially all as revenue and the fourth quarter.

Further PTC announced in October it that they received approval from Piccs ports taken study in Brazil.

With the approval, we earned a $4 million milestone.

60% of that amount will go to eye on as per the terms of our profit sharing agreement.

We ended the third quarter with $253 million in cash and short term investments.

When added to the $250 million upfront license fee.

From our worldwide exclusive license agreement with Pfizer expected upon completion of the HSR review.

We will have approximately $500 million and cash and short term investment.

With our substantial liquidity, we are well positioned to continue to execute on our strategy and broaden our pipeline.

I will now turn the call back to being.

Thank you Mike can call I'll, let me start with an update on we look right in the U.S.

We remain encouraged by the safety and efficacy profile demonstrate by way Liberal in Europe in the U.S.. We are continuing to work to find a path forward and we believe that our experience in Europe could be helpful and progressing our discussions.

We delivered phase three approach study was published in the August 8th issue of the New England during a medicine.

We were pleased to see the journal recognize the significance of the approach data and the potential of will leverage to address an area of significant unmet needs in the treatment of Fcs.

We also announced positive results from the broaden study and familial partial lipodystrophy or FPL on our last earnings call.

We continue to review the data with key experts in the field as we define our next steps.

Moving to Akcea, tsetse, or Lrx, Akcea and Ioannis presented data from the phase one clinical trial in a poster presentation at the heart failure Society of America annual meeting as well as at the European doses meeting.

Akcea teacher, Lrx is being developed with Ioannis and will be studied in patients with both the hereditary and the wild type forms of TTR amyloidosis or 80 T or.

The phase one data demonstrates an impressive and meaningful reduction in the kishore protein, while maintaining a positive safety and tolerability profile.

With monthly treatments, we saw a teacher reductions of up to 94% that's the highest dose.

Importantly, adverse events were miles with exception of one moderate headache.

No adverse events led to an interruption and treatment and there were no severe adverse events.

These results are encouraging as we expand our commitments to the teacher I'm like doses community through the development of Akcea TTR Lrx.

We continue to hear from physicians that the convenience of monthly self administration would represent a significant advantage for patients living with this debilitating and stable disease.

We also presented the design of a phase three program for Akcea teacher Lrx.

The program includes two studies one in patients with their hereditary form of teach youre pulling your all fee and the other in patients with wild type and hereditary forms of TTR cardiomyopathy.

Hereditary pulling your obviously study will consist of 140 patients and we'll compare akcea teacher Lrx to the historical PC both from Tech studies Neuro TTR study.

The primary endpoint analysis of this study is at 66 weeks to align with the placebo group from neuro TTR.

The Cardium eye off the study is an event driven outcome study.

It will enroll approximately 750 patients and we'll compare akcea teach youre lrx against standard of care, including patients taking to five minutes.

In both studies were close to having sites up and running we anticipate that the first patients will be treated soon.

Finally, just touching briefly on the rest of the pipeline.

Novartis is initiating the Akcea April way Lrx phase three cardiovascular outcome study I continues to anticipate treating patients early in 2020 .

Phase two studies of Akcea April C Lrx and Akcea Angiopoietin like three Lrx are ongoing and we anticipate data from both early in 2020 .

What over 1100 patients treated across all like a programs. We are very impressed with a robust efficacy and with the safety and tolerability profile of the platform to date.

We are executing on our two commercial launches we are initiating our two phase three programs and we have two drugs nearing phase two data as we head towards the end of year.

With launches in additional countries on the horizon protect said in my leverage the commitment from my own as to license us additional rare disease medicines that are complementary to our pipeline and the progression of our current pipeline Akcea is well positioned for the future.

I'll now open up the line for questions.

Ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key on your Touchstone telephone. If your question has been answered all you wish to remove yourself from the Q. Please press the pound key.

Our first question comes from the line of Hill blown from Needham and company. Your line is open.

Hello, everybody and thanks for taking my questions.

So first one for Kyle.

We have an end to 10 of maybe the proportion of patients on study come from the community setting versus the academic.

Hey, first does Damian huh.

How do you get over to call. It go for comp.

Yes. Thanks for the question and definitely look forward to connecting with you in person here in the near future.

So our efforts have been split between the academic settings as well as the community settings as I referenced in my comments.

We're not going to get into specific numbers in terms of where those are coming from but we are seeing both community based and academic based physicians treating with tech study within the AJ TTR falling off the space. So we're excited about that Im pleased with the progress that we're making.

All right and a bit about so.

No.

Hi isn't really.

Some interesting numbers about diagnosis rate showing and wild type.

Here is that there.

Turning to a pretty significant amount of diagnosed patients.

I think that in a longer term since this is growing the overall TTR market.

Through the unexpected.

Yes. So we are seeing the market expand I think as Pfizer referenced we're seeing growth and not only in the wild type space, but we are seeing increased diagnosis and the hereditary space as well I.

I think it's a competitive marketplace, there's a lot of education around the hereditary forms of the disease and Polyneuropathy, specifically, we're seeing positions began.

To understand and diagnose patients earlier with Europe , neurologic symptoms and looking to treat patients with hereditary forms of the disease, a sooner than what we had expected prior.

Great and just just one last one I.

I know that the a of.

Comments coming up next weekend.

Acting any read through to your own.

Right lowering program.

I'm going to hand that thanks for the question again I handed over to cap.

Hey, good you know obviously, we're we're always watching the competitive environment I think you know our programming.

In a particular inhibitor I think as we think about the it must be three like a program. We're focused on a differentiator in fact that we'd be crude not only triglycerides, but I see three as well.

So we'll be watching as well, but you know where we're very focused right now on our own phase II data, which were expecting to come out early next year.

Gotcha.

Thank you very much for taking my questions.

Good luck.

Thanks, Phil.

Your next question comes from the line of del Kim from BMO capital markets. Your line is okay.

This is James then on for Doe, Thanks for taking my questions and congrats on the quarter.

So quick question on Angie PPL three what indications are you thinking about going after and how it talks been with Pfizer.

Thanks to the this is Damian here I'll take I'll take the question.

So we're very very excited about the transaction with Pfizer French PTCL tree as you heard yeah, we're receiving $250 million upfront. This sets a new high watermark for medicine at this stage development with our technology, we're eligible to receive very significant.

Milestones development, Brightree and sales milestones of $2.3 billion, and we're getting tiered double digit royalties.

On sales and so Pfizer is you know.

Great partner for this medicine, because this medicine can address broad patient populations.

So we're looking at both cardiovascular and metabolic diseases and because this is pfizer's medicine, we're going to leave it to them to disclose which indications that going to congrats the medicine forward for.

Thank you.

Your next question comes from the line of Jim Birchenough from Wells Fargo. Your line is open.

Hi, guys and congrats on all the progress in the quarter a couple of questions. I guess first just with take study could you maybe comment on any leading indicators of continued growth.

Either with specifics or just general comments, if you think about patients in the queue patients that have been captured by Akcea connect patients that have been identified and you look at how those patients in prior quarters of flowed to becoming pain patients could you maybe comments on the trends if you can't give specific numbers. Thanks, maybe to follow.

Thanks, Jim Thanks for the question I'll hand, it over to call.

Yes look forward to meeting you as well and person here hopefully fairly soon.

As it relates to the progress that we're making leading indicators. Obviously, we're very pleased with progress we've got 20% quarter over quarter growth in terms of revenue. So we're starting to see the build and it's happening with existing prescribers, it's happening with new prescribers.

Happening across specialties in cardiology as well as neurology and we are obviously, a broadening and deepening the physician experience with Tech study. So we are optimistic about the repeat prescriptions that we're seeing and the growth that we've seen quarter over quarter in terms of revenue.

Yeah sure Mike here, I guess I'd, just add Kyle also pointed out that.

We are we are moving to the reimbursement cycle in the country. So those countries will start to come online here at least in my team and throughout 2000.

And then just any comments on you know if you'll look at the U.S. market in particular as you're heading into the fourth quarter are you seeing.

Good growth in patients identified and patience moving through the Akcea connect system, just trying to get a sense of those type of leading indicators.

Yes, and I'll speak specifically to the accomplished genetic testing program I think the fact that we have over 1000 physicians now utilizing that program and we're continuing to add new patients identified through that program and positive patients being.

Being found through that program are indicators that the education around diagnosis as well as the effort from the physician community to actually seek out hereditary forms of the disease.

Is working so from an education standpoint on the Akcea connect side of things, we're very pleased with the way that the program is operating in the United States, We're getting very good feedback from physicians and patients as it relates to the support that Akcea connect provides and the different said, it's making for them to be able to get on it stay on therapy.

And then maybe just a question for Damian just strategically as you think about your ability to bring it additional assets from either Ioannis for third parties could you maybe talk about the decision criteria you have for assessing an asset and whether you choose one from ioannis or from a third party.

Sure Jim Thanks for the question. So in terms of the Ioannis pipeline medicines. So we're having discussions with illness about their wholly owned content medicines, many of which I'm very familiar with having worked at Ioannis before.

Our focus is really on rare disease medicines that complements our infrastructure our pipeline on our business focus.

Well, we're yeah, we're keeping an open minds and as we work through the devaluation of the medicines with Ioannis.

As you know this will be this will be an arm's length.

Business development transaction, and where we're not giving sort of a timeline on this but we're making good progress on we'll announce when the transaction is completed in terms of third party medicines. We're looking again for medicines that will be complementary to our our pipeline are rare disease business focus.

We again are keeping a very open minds as you know the stage of the medicine, the modality of the medicine.

And.

We'll update you in due course on progress with that.

Maybe just to spread it around one final question for Mike could you just remind me.

My Das rather how revenues are booked in Brazil for PTC.

Yes, so for PTC.

The the way that that's going to work is theres an initial period so.

At that 25% royalty, but.

There's a.

There's a period at the time of the launch that goes to the.

Either 12 months or a $10 million so.

For the first 12 months, if they don't exceed $10 million, we do not get a royalty and and the first 12 months. If they go over $10 million, we get a royalty for the amount of 25% for the amount that over $10 million and then it kicks into just a regular royalty stream.

Great. Thanks for taking the questions.

Thank you Jim.

Your next question comes from the line upon the piece from Stifel. Your line is something.

Hi, Thanks for taking the question. This is Nate on for Paul.

On the Cardium, obviously phase three study for TTR like I.

It was that's on top of standard of care.

I just wonder how are you going to handle the feminists usage do you have a cap on the number of patients second half based on usage any requirements around the duration of therapy prior to enrollment.

So thanks for the question. They yeah. So this this study is a large studies 750 patients I'm looking at cardiovascular death, and cardiovascular clinical events, its got wild type and hereditary a mature patients and they're going to be as you mentioned on available standard of care.

There.

And then where half of them are going to to.

Kishore like that the other half gonna have to see though added and then it's 122 week or read as on us.

So.

The design of the study that's what we're you know we set up ready to go.

Maybe just talk just following up on I think Verizon a cap on the number of patients that that can be onto habitat.

Hi, Thanks, Chris study design, what we're excited about standard of care arm is that we'll get a number of different read outs from this study so well see some combination data well see some direct head to head data and that is part of the design because obviously it will be hearing a study and a number of countries, where if amadeus is available and it never countries workout.

So I think that is really part of the sign that we're really excited about.

Got you that's helpful and then for both of Phase Threes can you guys talk about powering I have you.

But what's the story there.

No we haven't gotten better get empowering yesterday, and you know I'm sure we'll be sharing more on the study not inside powering, but we'll be sharing more in the study I said actually launching here imminently.

Gotcha, alright, thanks, guys.

Again, ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key on your Touchstone telephone.

Your next question comes from the line of retail for Ross from Cowen. Your line is open.

Good afternoon, everyone. Thanks for taking the questions.

First one I guess Damian can you just a follow up on Jim's question.

Right.

The pipeline.

And then that you think is ideal.

Value proposition and even more specifically within.

Are you guys thinking about.

Synergies with the existing promotional effort or are you willing to.

Strikeout into new direction, and then I've got a follow up.

Okay. Thank you re too for the question.

Yeah, I mean, I think where we're keeping an open mind to the stage stage of development. Obviously, you know closer to the market is more interesting and with the Ioannis pipeline. We're looking at their their mid stage pipeline of wholly owned assets with them together.

In terms of yes, you know, where we were staying focused on rare diseases, that's where our strength is that's where our mission is and looking for medicines that will complement our infrastructure or commercial capabilities and the business focus.

I.

Think about your like a TTR phase three Sophie Sep.

I think.

Yes.

Are there sort of our there element.

From a commercial assets.

Yes.

Like a TTR.

Other knockdown HM.

Are there any secondary end point, where you believe.

Contributes to a differential.

Let me, let me start on that the if I understand the question rise around teach you or like a phase three so I think what I would say is that we're excited about the fact that it's a monthly injection.

And you know we've heard from physicians community that monthly is most convenient for patients.

Also what we're very excited about is that it's it's basically take said he would have gone back and get out and that gives us great confidence given the positive improvements we've seen for patients taking take study.

Got it as far as secondary endpoints or anything within the trial design anything to differentiate it some wonderful.

Okay.

Whether we're talking TTR red shirt.

Okay, Coperion I've come to handle that.

Our hybrid too.

So I don't think there's anything specific in there too I mean to some degree these are.

[laughter] studies are with they are I think whats important is that we bought all of our collective learning no. At this point, we had a lot of knowledge on TTR and we can take everything that we've learned especially from you know the patient experience.

And we can put that into the study in a way that yeah.

Typically rare disease, we didn't have that information when we launched the merit TTR study and so I think that bears interest in a.

Pretty good position of strength going in.

Thinking about quality of life metrics and really thinking about what are the important things that we're looking out.

Which I think you know in general as a community we've learned more over the last few years.

The kind of strength can be future trial design.

Got it thanks for taking the questions.

And that concludes acuity session I would love to turn the conference that you think David Devon.

Thank you for joining today, we look forward to keeping you updated on our progress as we continue to execute on the tech savvy and way liver launches and build upon the strong foundation Alexia have a great afternoon.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.