Akcea Therapeutics, Inc. (AKCA)
Q1 2019 Earnings Call
May. 8, 2019, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon, and welcome to your Akcea Therapeutics First Quarter 2019 Conference call. As a reminder, this call is being recorded. I would now like to turn the call over to Kathleen Gallagher, Akcea's Vice President of Corporate Communications and Investor Relations. Ms. Gallagher, please again.
Kathleen Gallagher -- Vice President, Investor Relations & Corporate Communications
Thank you, Nova. Good afternoon, everyone, and thanks for joining us today. With me on today's call are Paula Soteropoulos, our Chief Executive Officer; Sarah Boyce, our President; and Mike MacLean, our Chief Financial Officer.
As a reminder, this conference call includes forward-looking statements regarding the financial outlook for Akcea, Akcea's business and the therapeutic and commercial development of Akcea's products and development. Any statement describing Akcea's goals, expectations, financial or other projections, intentions or beliefs, including the commercial potential of TEGSEDI, WAYLIVRA and our pipeline drugs is a forward-looking statement and should be considered an at-risk statement.
Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics, and in the endeavor of building a business around such drugs.
Akcea's forward-looking statements also involve assumptions that if they never materialize or prove correct could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although Akcea's forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Akcea. As a result, you're cautioned not to rely on these forward-looking statements.
These and other risks concerning Akcea's programs are described in additional detail in Akcea's most recent quarterly report on Form 10-Q and in the most Annual Report on Form 10-K on file with the SEC. Copies of these and other documents are available from the 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. To read this release and access the slides and the company's today's call, please visit the Investors section of our website.
Now, I'll turn the call back over to Paula.
Paula Soteropoulos -- Chief Executive Officer
Thank you, Kath. Good afternoon, everyone. Thank you for joining us. We had a highly productive start to 2019. WAYLIVRA's approval earlier this week officially makes us a multi-product global commercial company. So far in 2019, along with a conditional approval for WAYLIVRA in Europe, we have completed our first full quarter of the TEGSEDI launch. We successfully licensed AKCEA-APO-LRX to Novartis and $150 million and we continue to make progress on our pipeline.
It's amazing to think that just 12 months ago, we brought the TTR franchise to Akcea. By the end of 2019, we will have two commercial products, two programs in Phase 3 development and two drugs nearing Phase 2 data. With this and the commercial capability that we have built since our founding, (inaudible) we are closer than ever to realizing our vision of delivering innovative solutions that improve the lives of those affected by serious and rare diseases. Today, we'll be talking about the positive momentum we are seeing in TEGSEDI's launch and our plans for WAYLIVRA in Europe. We've reported $7 million in sales for TEGSEDI in Q1.
We consistently hear physicians and patients recognizing the benefits of TEGSEDI's strong efficacy coupled with the independence of subcutaneous injection where patients can treat themselves on their own terms. We are working to make TEGSEDI in additional countries in Europe throughout the year as well as working closely with PTC Therapeutics to make TEGSEDI available to patients in Latin America. We will also touch on our launch plans for WAYLIVRA in Europe. WAYLIVRA is the only drug for patients with FCS. FCS is a devastating disease. Take Diane for example. She has spent the last -- by suffering from the burden of FCS. Diane has come close to death several times because of the life threatening consequences of pancreatitis. She has had more than 30 surgeries on her stomach and multiple hospitalizations that are taking her away from having normalcy in her daily life. Because of stories like Diane, the patients and physician community across the globe have shared their excitement and relief that WAYLIVRA will be available to patients in Europe. This outcry of support reinforces the importance of WAYLIVRA and the impact that it can have for FCS patients.
In addition, we continue to execute on our pipeline program. We're thrilled with the Novartis partnership and believe they are the right partner with the depth and reach to develop AKCEA-APO(a)-LRx to the millions of patients with risk of cardiovascular disease due to Lp(a). For AKCEA-TTR-LRx, we are confident in this program and focus on expanding our commitment to the TTR community including patients with wild type and hereditary cardiomyopathy. We and Ionis are looking forward to sharing data from the ongoing Phase 1/2 study of AKCEA-TTR-LRx in the second half of this year as well as initiating the Phase 3 program this year.
We also recently completed enrollment in both Phase 2 studies of AKCEA-ANGPTL3-LRx and AKCEA-APOCIII-LRx and we continue to expect data from both programs in the first half of next year. Our team continues to deliver on our ambitious agenda. As we look to the rest of 2019, we will continue to execute on our launches and our pipeline as we deliver these important therapies to patients.
I'll now turn the call over to Sarah.
Sarah Boyce -- President
Thank you, Paula. Patients and physicians are choosing TEGSEDI. This quarter we have seen prescriptions coming from both naive and patients coming from our early access and open label extension programs. In the US, the prescriptions are coming from cardiologists, neurologists and hematologists. We are getting deeper insight into the dynamics of the launch and the physicians treating hATTR. For instance, cardiologists tend to act with urgency to get their patients on treatment as they have seen their patients rapidly decline and pass away due to hATTR. In neurology, there is more variability. Some treaters are acting with great urgency while others require a lot of education on the importance of treating now as opposed to waiting a few months until the patient's next scheduled appointment. To underscore the urgency of treating this progressive disease, our field team is focused on showing the data from our open label extension study which shows that earlier treatment with TEGSEDI leads to better outcomes on measures of neuropathy progression and neuropathy related quality of life. These data were shared with the neurology community yesterday in an oral presentation by Dr. Brannagan from the Columbia Amyloidosis Center at the American Academy of Neurology or AAN annual meeting.
These data underscore why we are also seeing patients switched on TEGSEDI from both competitive drugs in the US and Europe. Along with education on the importance of treating early, the team continues to focus on disease education. Our genetic testing program, hATTR Compass is playing a critical role here, especially as we look at community physicians who are less familiar with the disease and are motivated to take advantage of a genetic test that can easily and quickly help diagnose their patients. We continue to see the hATTR Compass program and we now have over 550 physicians using the hATTR Compass program. The community physicians are important in the ongoing launch.
There are approximately 50,000 patients worldwide and only about 10% to 30% of those patients are diagnosed. The patients who are diagnosed are primarily treated in academic centers, but a significant number of patients remain undiagnosed. By educating the community physician, we are enabling faster diagnosis and allowing them to treat the patients in the local community with TEGSEDI subcutaneous delivery versus being referred to an academic center.
Finally, the community hospitals are not participating in the ongoing ATTR clinical trials including ours. We continue to see reimbursement from both private and public payers who have had a positive response to TEGSEDI as an efficacious drug administered under a pharmacy benefit. Outside of the US, we are working toward reimbursement in multiple European countries. We are continuing to work with agencies in France and Germany to attain the appropriate value for TEGSEDI. We have received a positive final evaluation document from NICE. This is fantastic news for patients suffering from polyneuropathy due to hATTR amyloidosis in England who have had very limited treatment options.
This is the first reimbursement process completed for TEGSEDI in Europe and we're pleased with the team's work there. The PTC team continue to work to facilitate access to TEGSEDI for patients in Brazil and Latin America. We continue to roll out Akcea Connect, our drug treatment programs across all geographies. Akcea Connect epitomizes our patient focused values coupled with our rigorous and robust approach to execution. We have heard from physicians and patients that Akcea Connect has been very helpful in building a monitoring routine and assisting patients and physicians as they go through the reimbursement process.
Earlier this week, we received conditional marketing authorization for WAYLIVRA in Europe, which is great news for patients with FCS. WAYLIVRA is indicated as an adjunct to diet in adult patients with genetically confirmed FCS who are at high risk for pancreatitis and in whom response to diet and triglyceride lowering therapy has been inadequate. There are approximately a thousand patients eligible for treatment in Europe. As you heard from Diane's story that Paula showed earlier, FCS carries a heavy disease burden. People suffering from FCS have extremely high triglycerides that put them at risk of unpredictable and potentially fatal acute pancreatitis.
In addition, they are at risk of chronic complications due to permanent organ damage including chronic pancreatitis and diabetes. On top of the physical symptoms, people living with FCS report major emotional and psychosocial effects. As we prepare for the launch, there is significant synergy with the infrastructure we've built for TEGSEDI and the team is ready to go. The physicians we plan to call on in Europe are lipid specialists which includes specialized endocrinologists and cardiologists. We anticipate that most patients will be treated in a few academic centers.
We are preparing to launch in Germany first and then we will follow a typical launch sequence with additional countries coming on board in 2020. In the US and Canada, our regulatory discussions are ongoing. We are excited to also leverage our great relationship with PTC as their team gears up to deliver WAYLIVRA to patients in Latin America. We are now focused on executing on multiple launches and our priority is to ensure access to TEGSEDI and WAYLIVRA for patients who need it. Now, over to Mike.
Mike MacLean -- Chief Financial Officer
Thank you, Sarah. And our first full quarter of the TEGSEDI launch. We're pleased to see that our team is executing according to plan. For Q1 2019 due to the Novartis opting on AKCEA-APO(a)-LRx, we had a total revenue of $164 million an operating income of approximately $45 million on a non-GAAP basis including non-GAAP operating expenses of $119 million. Our revenue includes $7 million of product sales from TEGSEDI. As we discussed last quarter, we are recognizing revenue using the title model. Given the manner in which patients become eligible to receive commercial product, we are able to match demand for shipments which provide clear visibility into our distribution channel. We use this information to ensure that the sales into the channel are in line with the expected number of patients on therapy. Further, we sell TEGSEDI in packs of four. Each sales increment is recognized as revenue on that basis.
This is the first quarter of our profit/loss split with Ionis on the TTR franchise. Given this is the first time we are reflecting the impact of the profit/ loss split in our financial results, I would like to reiterate our presentation. From an accounting perspective, we report all product sales related to TEGSEDI and all expenses related to the commercial activities of the TTR franchise. For development activities, we report our share of the total development costs incurred by us and Ionis as research and development expenses. The impact of the entirety of the profit/loss share with Ionis is included in determining our operating income or loss.
We ended Q1 with $322 million in cash and short-term investments. This includes the $150 million in cash we received from Novartis in Q1 when they licensed AKCEA-APO(a)-LRx. As we have reported, Akcea retained the entire $150 million and settled the sub-licencee obligation to Ionis by issuing $75 million in common shares which slightly increased Ionis' equity ownership in Akcea to approximately 76%. Earlier this week, we announced the conditional approval of WAYLIVRA in the EU. That approval -- with that approval, we have earned a $6 million milestone payment from PTC, which we will split 50/50 with Ionis. That milestone payment will be recognized as Q2 revenue. And as Sarah said, PTC is actively working to make both TEGSEDI and WAYLIVRA available to patients in Latin America.
Turning to our financial guidance, with $322 million in cash at the end of Q1, we believe we have sufficient cash on hand to carry out commercial activities for our products as well as to fund progression of our current pipeline to decision events. We look forward to having two drugs commercially available and we will realize a high level of organizational efficiency with multiple products launching in the EU
Now I will turn it back over to Paula.
Paula Soteropoulos -- Chief Executive Officer
Thank you, Sarah and Mike. Before closing, let me touch briefly on how we are advancing our pipeline. Novartis is running the Phase 3 program for AKCEA-APO(a)-LRx, also known as TQJ230. They exercised their option at the end of February and they have rapidly moved this program forward. They have already opened an Lp(a) epidemiology study and initiation activities for the Phase 3 cardiovascular outcome study are under way. Novartis continues to show their expertise as a leader in the cardiovascular space and that they are the right partner to move this game-changing program forward. We and Ionis are working to initiate the Phase 3 program for AKCEA-TTR-LRx in patients with ATTR.
We plan to initiate two studies, one in patients with hereditary ATTR with polyneuropathy, and one in patients with both hereditary and wild type cardiomyopathy caused by ATTR. Our Phase 1/2 study for AKCEA-TTR-LRx is ongoing and we anticipate data from that study in the second half of this year. We have a number of other clinical data readouts throughout 2019 and into 2020. We are expecting data from our WAYLIVRA study in FPL in the middle of this year. In the first half of next year, we are expecting data from our Phase 2 study of AKCEA-APOCIII-LRx in patients with cardiovascular disease driven by high triglycerides, and our Phase 2 study of AKCEA-ANGPTL3-LRx in NAFLD with metabolic complications. Both of these studies are now fully enrolled. By the end of this year, we will have two commercial products, two Phase 3 programs initiated, and two Phase 2 products nearing data. We're executing on multiple markets. We have a solid pipeline and our experienced team is executing across our business. We are pleased with the TEGSEDI launch and we look forward to launching our next product WAYLIVRA.
And now I open up the line for questions. Nova, please go ahead.
Questions and Answers:
Operator
Thank you (Operator Instruction) And our first question comes from the line of Paul Matteis from Stifel.
Paul Matteis -- Stifel -- Analyst
Great. Thank you so much for taking my questions and congratulations on all the progress. I wanted to delve in a little bit to some of the TEGSEDI dynamics in the US. And then I had a question on LICA and a question on WAYLIVRA. But on TEGSEDI in the US, I was wondering if you could talk about how it's going with the monitoring and whether or not the majority of that monitoring is being done at home at this time? And maybe just speak qualitatively to some of those dynamics.
Paula Soteropoulos -- Chief Executive Officer
Sure, Paul. Thank you. So with TEGSEDI in the US, yes, the majority of the monitoring is being done at home, as you know, we offer patients the opportunity to do that monitoring at home or they could do in local lab. Many patients are taking that opportunity. They can put that up into their own schedule and that's going really well, we're pleased with how that support is going for patients and how easy it is for them to fit it into a routine.
Paul Matteis -- Stifel -- Analyst
Okay, great. Thanks Paula. And then on the LICA TTR program, what's Akcea's current thinking on the potential regulatory path forward in hereditary and cardiac disease and specifically in hATTR cardiomyopathy and wild type, what's your current thinking on an outcome study and whether or not that study would be placebo controlled or (inaudible) competitor?
Paula Soteropoulos -- Chief Executive Officer
So I think first on the hereditary, I think you can look to our neuro TTR study to get some guidance expectations there. With regard to cardiomyopathy, we're working through those details now and as we get closer we'll be sharing more of that detail at the time.
Paul Matteis -- Stifel -- Analyst
Okay. Thanks. And then maybe just one more quick question on just the WAYLIVRA operating infrastructure as it compares to TEGSEDI. Is there any way you could sort of quantify how much bigger your sales presence and spending might evolve into ex-US over say this year and the next couple of years? Maybe just any numbers you can kind of give us or anything you can offer that would be helpful in sort of understanding the operating leverage. Thanks so much.
Paula Soteropoulos -- Chief Executive Officer
Yeah. I'll let Sarah respond to that.
Sarah Boyce -- President
Yeah absolutely. You know Paul, one of the things that is great about TEGSEDI and WAYLIVRA is there is a lot of synergy from an infrastructure perspective as to what we've already built. So we can absolutely put to work on WAYLIVRA not just sort of our European infrastructure but also AKCEA CONNECT. We do anticipate and we'll look at each country on a case by case basis where we may add a few additional headcount, but what we're really looking to do is maximize the synergy that we have between those drugs. And I think that's something that puts us in a really unique position to be able to do that. And the team is ready to go.
Paul Matteis -- Stifel -- Analyst
All right. Thank you, Sarah.
Operator
Our next question comes from the line of Chad Messer of Needham.
Chad Messer -- Needham -- Analyst
Great. Good afternoon and thanks for taking my question and let me add my congratulations on all the progress. Two quick ones for me, one on TEGSEDI and one on WAYLIVRA. So for a TEGSEDI, you said that you got what you called final advice or final evaluation from NICE. I'm just wondering if that means we should expect to launch in England imminent or is there more to go through?
Paula Soteropoulos -- Chief Executive Officer
So, Sarah, do you want to take that?
Sarah Boyce -- President
Yeah absolutely. So firstly, Chad, as you say, it was great news to get the final appraisal document through from NICE. And the way the NICE process works is it then goes to an implementation phase where NHS England looks to implement. So our UK team is geared up and ready to start selling TEGSEDI in the UK pretty shortly. So all of that work's ongoing. So it's in the implementation phase right now.
Chad Messer -- Needham -- Analyst
All right, great, thanks. And then just on WAYLIVRA, obviously very pleased to see the approval in the EU for FCS, EU authorities clearly looking at the drug's risk benefit differently than than the US authorities at this point. I'm just wondering as we're waiting here for the script for the next readout in FPL, should we expect the US filing if that study is positive or is that something still under evaluation?
Paula Soteropoulos -- Chief Executive Officer
So firstly, I share your excitement about WAYLIVRA, so thank you for that Chad, it's so important for these patients that have nothing to work, we're pleased with Europe and as we said we're still working through with them in US. With regard to FPL, I mean the data will guide us, so we haven't (inaudible) readouts and so we are filing maybe differently depending on that data.
Chad Messer -- Needham -- Analyst
All right. Great. Thanks and congrats again.
Paula Soteropoulos -- Chief Executive Officer
Thank you, Chad.
Operator
Thank you. And our next question comes from the line of Do Kim of BMO Capital Markets.
Do Kim -- BMO Capital Markets -- Analyst
Good afternoon. Thanks for taking my questions. First, on WAYLIVRA, congratulations on the approval. I was hoping to get a little more of a sense of the launch in Europe. Could you tell us like how many patients are identified in Germany, maybe a little more detail on the post-approval study and the registry you have to keep for the conditional authorization. And remind us again what the marketing schedule is in Europe.
Paula Soteropoulos -- Chief Executive Officer
Sure, Do, thank you. So with regard to the launch in Europe, obviously we'll be starting with Germany and other countries, we'd rollout from there as already described and the team is ready to go. With regard to patients, we believe there's about all of Europe about a thousand patients or so and there's no specific founder effect in a country like Germany. So I think you could scale up from there. I think the important points to think about are these patients are likely going to be treated in key lipid centers, so they're not scattered throughout. But there's still obviously work to educate and find patients. It's a rare disease. Many of these patients have already presented many times in an emergency room because of the pancreatitis.
There's still an education work to move the patients, the understanding that they actually have this genetic disease. One thing that is good in Europe probably different than the US there is more genetic testing. So I would say more patients are genetically already confirmed in Europe but that's part of the you know a rare disease commercialization is educating, finding patients. And so obviously we started that and we will continue to do that.
With regard to the post-approval commitment, it really is a registry. So we're committed to collecting information about the patients on drug and in terms of their safety et cetera. So that's something that -- we would -- would have somewhat willing to do anyway a registry which works out well for us because we have the plans somewhat drafted, and with regard to monitoring, the monitoring starts every two weeks and there's an algorithm there that if a patient's platelet level drops, the monitoring could go to weekly for now.
Do Kim -- BMO Capital Markets -- Analyst
Great. Thanks for all the details. And on TEGSEDI, now that tafamidis is approved, perhaps you could give us your thoughts on how the hATTR market will play out and any feedback from cardiologists on how tafamidis will be used?
Paula Soteropoulos -- Chief Executive Officer
Yes, Sarah, you want to give some color there?
Sarah Boyce -- President
Yeah, so one of the things though of course we were anticipating the approval of tafamidis as well as their indication. You know obviously for TEGSEDI, TEGSEDI is indicated for patients with symptoms of polyneuropathy. So there's a very clear differentiation between the two drugs and between how they were used. One of the things that we have today is we have cardiologists writing prescriptions for TEGSEDI and they're writing prescriptions for TEGSEDI today because of those debilitating symptoms of polyneuropathy that their patients are experiencing. So we don't really anticipate much change from an aspect of that dynamic.
Do Kim -- BMO Capital Markets -- Analyst
Great. Thank you for taking my questions.
Operator
And our next question comes from the line of Ritu Baral from Cowen.
Subbu Nambi -- Cowen -- Analyst
Hi. This is Subbu Nambi for Ritu Baral. Thank you for taking my question, and like everyone said, really congratulations on great progress. My question is, what's the mix now that we are full quarter into TEGSEDI, what's the mix between the prescribers, mainly neurologists versus cardiologists that you were -- you were not -- would you be able to give us more details on that?
Paula Soteropoulos -- Chief Executive Officer
So we have prescribers that come from cardiology, neurology and hematology, so we're seeing excitement from all of these physicians and importantly seeing the benefit of TEGSEDI as a powerful drug for these patients with important subcutaneous injection advantage. And so we see a mix from all of those three physician groups.
Subbu Nambi -- Cowen -- Analyst
Are you giving the divide percentage yet or --
Paula Soteropoulos -- Chief Executive Officer
No, we're not giving that detail percentage.
Subbu Nambi -- Cowen -- Analyst
And how fast is the REMS certification, like what are the timelines for REMS certification for centers?
Paula Soteropoulos -- Chief Executive Officer
Sarah, I want you to talk about that.
Sarah Boyce -- President
Yes, the REMS certification process has gone extremely smoothly. One of the things that many of these physicians, they're used to and familiar to prescribing drugs with REMS program. So that's something that has been done very quickly and it's important so that they have the right education and information to then go ahead and prescribe to be able to them prescribe TEGSEDI. So from a timeline perspective, it's been something that's been short and it's not in any way for those impacted patients starting on TEGSEDI and getting that whole process done. It's been very smooth.
Subbu Nambi -- Cowen -- Analyst
Got it. Thank you.
Paula Soteropoulos -- Chief Executive Officer
Thank you, Subbu.
Operator
Thank you. And at this time, this concludes our Q & A session.
I'd like to turn the program back to Paula, your CEO, for closing remarks.
Paula Soteropoulos -- Chief Executive Officer
Well, thank you for your time today. We're pleased with what we've been able to accomplish so far this year and we're looking forward to keeping you updated as we continue to execute on our ambitious agenda. Have a great afternoon.
Operator
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the call, you may now disconnect. Everyone, have a wonderful day.
Duration: 31 minutes
Call participants:
Kathleen Gallagher -- Vice President, Investor Relations & Corporate Communications
Paula Soteropoulos -- Chief Executive Officer
Sarah Boyce -- President
Mike MacLean -- Chief Financial Officer
Paul Matteis -- Stifel -- Analyst
Chad Messer -- Needham -- Analyst
Do Kim -- BMO Capital Markets -- Analyst
Subbu Nambi -- Cowen -- Analyst