On February 26, 2020 Ionis Pharmaceuticals, Inc. (Nasdaq: IONS) reported its financial results for the fourth quarter and full year 2019 and recent business highlights (Press release, Ionis Pharmaceuticals, FEB 26, 2020, View Source [SID1234554792]).
"2019 was an exceptional year. We achieved our goals across the business, including advancing four medicines into pivotal studies and growing our Ionis-owned pipeline. We also made significant progress across our broad pipeline, including in our neurological and cardiometabolic disease franchises, and further advanced our antisense technology through investments in new, complementary technologies. Together these achievements position us to deliver on our goal of ten or more new drug applications through 2025," said Brett P. Monia, chief executive officer at Ionis. "This year, our priorities include further growing and advancing our Ionis-owned pipeline, initiating additional Phase 3 studies, reporting clinical proof-of-concept results from six or more studies and further developing our commercial strategy to maximize the value of each medicine in our pipeline."
2019 Financial Results and Highlights
Nearly doubled 2019 revenues, driven by SPINRAZA’s continued blockbuster performance and increasing R&D revenue
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Commercial revenue from SPINRAZA (nusinersen) royalties increased by more than 20 percent to $293 million compared to 2018
Product sales from TEGSEDI (inotersen) and WAYLIVRA (volanesorsen) were $42 million
R&D revenue more than doubled to $771 million compared to 2018
Invested in commercializing TEGSEDI and WAYLIVRA and advanced the pipeline while remaining profitable
Operating income and net income significantly improved to $366 million and $294 million, respectively, compared to 2018, on a GAAP basis
Non-GAAP operating income and net income significantly improved to $513 million and $402 million, respectively, compared to 2018
Increased cash position to $2.5 billion; further strengthened balance sheet by refinancing a significant portion of the Company’s 1 percent convertible debt due in 2021
Extended maturity to 2024, achieved 0.125 percent interest rate, and significantly increased conversion price
Returned value to shareholders by repurchasing 2 million shares of Ionis common stock in late 2019 and early 2020 for $125 million
2020 Financial Guidance
The Company’s full year 2020 financial guidance consists of the following components (on a non-GAAP basis):
Guidance
Revenue
>$700 million
Operating Expenses
~$650 million to $690 million
Meaningfully Profitable
"2019 was also an exceptional year financially, with growth in both commercial revenues and R&D revenues. We delivered over $1 billion in revenue and more than $400 million in net income. Our revenue nearly doubled compared to 2018, driven primarily by nearly $400 million in revenue from licensing AKCEA-APO(a)-LRx and AKCEA-ANGPTL3-LRx, both of which could address very large patient populations. We achieved our third consecutive year of net income while investing substantially in our pipeline and technology," said Elizabeth L. Hougen, chief financial officer of Ionis. "This year, we expect to be meaningfully profitable. We expect growth in commercial revenues, with another strong year for SPINRAZA combined with growing revenue from TEGSEDI and WAYLIVRA as we expand into new countries. We also expect to achieve important milestones as we advance our medicines in development. Our projected increase in operating expenses reflects our plan to continue investing aggressively in all aspects of our business to generate substantial value, including growing and advancing our Ionis-owned pipeline and further advancing and broadening our technology. With a 2019 year-end cash balance of $2.5 billion, we have the financial strength to fully execute on these strategic priorities."
All non-GAAP amounts referred to in this press release exclude non-cash compensation expense related to equity awards. Please refer to the reconciliation of non-GAAP and GAAP measures, which is provided later in this release.
Commercial Medicines
SPINRAZA: a global foundation-of-care for the treatment of spinal muscular atrophy (SMA) patients of all ages
Worldwide sales increased to more than $2 billion in 2019, an approximately 22 percent increase compared to 2018
Worldwide patients on treatment increased to over 10,000, including patients in commercial, early access and clinical trial settings
In the fourth quarter, patients on treatment outside the U.S. increased by approximately 10 percent, driven by growth from existing and newly launched markets
In the fourth quarter, U.S. patient growth was driven by pediatric and adult SMA patients, with adults accounting for more than 50 percent of new patient starts
Biogen initiated the Phase 2/3 DEVOTE study evaluating the safety and potential to achieve increased efficacy with a higher dose of SPINRAZA in SMA patients of all ages, including adults
TEGSEDI: launched in multiple markets for the treatment of hereditary transthyretin amyloidosis (hATTR) with polyneuropathy in adult patients
Revenue increased for each quarter during 2019, driven by growth in patients on treatment
Total units shipped to U.S. patients increased by 17 percent in the fourth quarter
Commercially available in more than ten countries
Launching in Brazil through PTC Therapeutics
Launching in additional EU countries this year
WAYLIVRA: launched in the EU as the only approved treatment for adults with genetically confirmed familial chylomicronemia syndrome (FCS) at high risk for pancreatitis
Commercial patients on therapy in Germany
Patient enrollment underway in France through the Temporary Authorization for Use (ATU)
Launching in additional EU countries this year
Potential approval in Brazil by the end of this year through PTC Therapeutics
Goal to refile for marketing authorization in the U.S. this year
Neurological Disease Franchise
Ionis-owned programs:
Initiated the Phase 3 NEURO-TTRansform study of AKCEA-TTR-LRx for the treatment of hATTR polyneuropathy
Advanced two new Ionis-owned neurological disease medicines into development:
ION716 for the treatment of Prion disease
ION283 for the treatment of Lafora disease
ION373, for the treatment of Alexander disease, granted orphan drug designation by the European Medicines Agency (EMA)
Partnered programs:
More than $55 million for licensing and advancing IONIS-MAPTRx for the treatment of Alzheimer’s disease
$10 million for advancing the Phase 1/2 study of IONIS-C9Rx for the treatment of C9ORF72-related ALS
$10 million for advancing ION581 into development for the treatment of Angelman syndrome
$30 million for advancing four new neurological disease programs toward development
Cardiometabolic Disease Franchise
Ionis-owned programs:
Initiated the Phase 3 CARDIO-TTRansform cardiovascular outcomes study of AKCEA-TTR-LRx in patients with hereditary and wild-type ATTR cardiomyopathy
AKCEA-APOCIII-LRx achieved its primary efficacy endpoint and demonstrated a favorable safety and tolerability profile in a Phase 2 proof-of-concept study
Partnered programs:
Novartis began enrolling patients in the Phase 3 HORIZON cardiovascular outcomes study of AKCEA-APO(a)-LRx in patients with established cardiovascular disease
AKCEA-ANGPTL3-LRx achieved its primary efficacy endpoint and demonstrated a favorable safety and tolerability profile in a Phase 2 proof-of-concept study
Received $250 million from Pfizer upon closing of the license agreement for the development and commercialization of AKCEA-ANGPTL3-LRx for the treatment of patients with certain cardiovascular and metabolic diseases
Key 2020 Catalysts
Initiate a Phase 3 study of AKCEA-APOCIII-LRx in patients with FCS
Report clinical proof-of-concept results from six or more studies, including IONIS-GHR-LRx, IONIS-PKK-LRx, IONIS-ENaC-2.5Rx and an orally delivered medicine
Reported positive topline results for AKCEA-APOCIII-LRx and AKCEA-ANGPTL3-LRx in January 2020
Initiate ten or more Phase 2 studies
Advance five or more new medicines into development
Revenue
Ionis’ revenue increased by more than 85 percent in 2019 compared to the same period in 2018 and was comprised of the following (amounts in millions):
Operating Expenses
Operating expenses increased for the year ended December 31, 2019, compared to the same period in 2018 principally due to Ionis’ investment in the global launch of TEGSEDI, the EU launch of WAYLIVRA and advancing medicines in the Company’s pipeline.
Loss on Early Retirement of Debt
In December 2019, Ionis refinanced a significant portion of its 1% convertible senior notes due 2021 (1% Notes) for new 0.125% convertible senior notes due 2024 (0.125% Notes). Ionis significantly reduced its interest rate, extended the maturity to December 2024 and increased the conversion price. As a result of the early refinance of the 1% Notes, Ionis recognized a $22 million non-cash loss in 2019.
Income Tax Expense (Benefit)
Ionis’ income tax expense in 2019 was primarily because the Company generated U.S. federal and state taxable income in 2019. The tax benefit in 2018 was due to a one-time non-cash tax benefit recognized in 2018 related the Company’s deferred income tax assets.
Net (Income) Loss Attributable to Noncontrolling Interest in Akcea
At December 31, 2019, Ionis owned approximately 76 percent of Akcea. The shares of Akcea third parties own represent an interest in Akcea’s equity that Ionis does not control. However, because Ionis continues to maintain overall control of Akcea through its voting interest, Ionis reflects the assets, liabilities and results of operations of Akcea in Ionis’ consolidated financial statements. Ionis reflects the noncontrolling interest attributable to other owners of Akcea’s common stock in a separate line called "Net (income) loss attributable to noncontrolling interest in Akcea" on Ionis’ statement of operations. Ionis recognized net income attributable to noncontrolling interest in Akcea in 2019 compared to a net loss in 2018. Ionis had net income attributable to noncontrolling interest in Akcea in 2019 primarily because Akcea earned significant license fee revenue from Novartis and Pfizer in 2019 which led to Akcea having net income for 2019.
Net Income Attributable to Ionis Common Stockholders
Ionis’ net income attributable to Ionis’ common stockholders and basic and diluted earnings per share increased in 2019 compared to 2018 primarily due to the significant increase in Ionis’ revenue. Somewhat offsetting this increase was income tax expense the Company recognized in 2019 compared to a one-time non-cash tax benefit recognized in 2018 related to the Company’s deferred income tax assets.
Balance Sheet
Ionis strengthened its balance sheet, ending 2019 with cash, cash equivalents and short-term investments of $2.5 billion, compared to $2.1 billion at December 31, 2018.
Webcast
Today, at 11:30 a.m. Eastern Time, Ionis will conduct a live webcast to discuss this earnings release and related activities. Interested parties may access the webcast here. A webcast replay will be available for a limited time at the same address.