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Ionis Pharmaceuticals, Inc. (IONS) Q1 2021 Earnings Call Transcript

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IONS earnings call for the period ending March 31, 2021.

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Ionis Pharmaceuticals, Inc. (IONS 2.81%)
Q1 2021 Earnings Call
May 5, 2021, 11:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Ionis Pharmaceuticals First Quarter 2021 Financial Results Conference Call. [Operator Instructions].

I would like to turn the conference over to Wade Walke, Vice President, Investor Relations, to lead off the call. Please begin.

D. Wade Walke -- Vice President, Corporate Communications and Investor Relations

Thank you, Betsy. Before we begin, I encourage everyone to go to the Investors section of the Ionis website to find the press release and related financial tables, including a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today. We believe non-GAAP financial results better represent the economics of our business and how we manage our business.

We have also posted slides on our website in our discussion today. With me on today's call are Brett Monia, Chief Executive Officer; Beth Hougen, Chief Financial Officer; and Richard Geary, Executive Vice President, Development. And joining us for our Q&A will be on Onaiza Cadoret, Chief Corporate Development and Commercial Officer; and Eric Swayze, Executive Vice President of Research.

I would like to draw your attention to Slide three of our presentation, which contains our forward-looking language statement. We will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. And with that, I'll turn the call over to Brett.

Brett P. Monia -- Chief Executive Officer

Thanks, Wade. Good morning, and thank you for joining us on today's call. Last year, we introduced a new strategy to drive growth by developing and commercializing medicines from our Ionis pipeline. Since that time, we have taken a number of key steps that have advanced our strategy and moved us closer to successfully commercializing our own products.

Most recently, we expanded our Sobi distribution agreement and restructured our TEGSEDI operations. This transaction unlock significant resources that we are redeploying to advance our wholly owned pipeline and prepare for commercialization of our highest priority medicines, which include TTR LICA and APOCIII LICA. We are also using savings from the Sobi transaction to invest even more in our technology to further broaden the reach of our therapeutic capabilities. Turning now to our pipeline.

We were particularly pleased with the Phase II data from IONIS-PKK-LRx with hereditary angioedema or HAE. Based on these encouraging results, we're advancing into a Phase III study where we hope to further demonstrate the potential of this medicine as a best-in-class product that aims to standard of care for patients with this disease. We also recently initiated pivotal studies with two wholly owned neurological disease medicines, ION363 and ION373 for patients with FUS-ALS and Alexander disease, respectively.

Given the severe unmet certain need of these patients and the progress we have made with regulators, both medicines are on an accelerated path to the market. And we are pleased with the progress we're making across our rich Phase III pipeline with medicines for ATTR amyloidosis, FCS, Lp(a)-driven cardiovascular disease and ALS. These Phase III programs remain on track, with data from the Phase III VALOR study of tofersen in patients with ALS expected this fall. Positive tofersen results would demonstrate for the first time that a disease-modifying treatment is possible for patients with ALS.

A positive outcome in this study would also move tofersen in one step closer to becoming our next commercial product. And additionally, tofersen success would further solidify our leadership position in the development of first-in-class medicines for the treatment of neurological diseases. In support of our strategic and pipeline objectives, earlier this year, we launched a large capital project to expand our manufacturing and R&D capacity. This project apartment as we move our late and mid-stage medicines toward the market. It's also important as we advance our technology with new chemistries, including novel LICA chemistry and new routes of administration.

We have made significant progress in focusing our advancing our pipeline and our business strategy. Our financial results reflect our strategic investments and keep us on track to achieve our 2021 guidance. And importantly, we remain well positioned to have 12 or more marketed products in 2026. With that, I'd like to turn the call to Beth to review our first quarter financial results. And Richard will discuss recent pipeline updates and preview key upcoming catalysts through the rest of the year. After Richard, I'll wrap up our prepared remarks before taking your questions. So now on over to Beth.

Elizabeth L. Hougen -- Executive Vice President, Finance and Chief Financial Officer

Thank you, Brett. In February, we provided guidance for this year that reflects our new strategy to maximize the value of our wholly owned medicines. Focused primarily on commercializing our rare neurological and cardiometabolic disease programs. Our first quarter results of $112 million in revenue, $159 million in non-GAAP operating expenses. And a non-GAAP net loss of $45 million, reflected this new strategy and were in line with our expectations. Now to turn to our revenues. SPINRAZA generated over $521 million in global sales.

We earned $60 million in royalty revenue as a result, and virtually all of that revenue falls to our bottom line as profit. Our first quarter SPINRAZA revenue decreased slightly compared to the prior quarter because our royalty rate reset at the beginning of each year. As in prior years, we expect to reach the highest royalty tier by midyear. The response devote studies continue to progress well. These studies remain important elements of Biogen's ongoing efforts to enhance SMA patient outcomes and guide treatment decisions. We look forward to additional steps Biogen plans to take to further reinforce SPINRAZA's proven efficacy and safety in SMA patients of all ages.

SPINRAZA remains the SMA market leader and with over 11,000 patients on treatment and over 60,000 SMA patients in markets where Biogen has a commercial presence, we believe SPINRAZA will continue to be a foundation of care for the treatment of SMA. We also generated combined TEGSEDI and deliver revenue of $20 million. As a reminder, our guidance reflects a shift in revenue for TEGSEDI and WAYLIVRA due to the change in distribution under our with Sobi. We are pleased with the smooth transition of our TEGSEDI and WAYLIVRA operations to Sobi, which are now complete in Europe and well under way for TEGSEDI in North America. Under our new distribution model, our commercial revenues from these products shift from product sales to distribution fees based on Sobi's net sales. In the first quarter, our revenues reflected this shift in Europe.

Beginning in the second quarter, TEGSEDI sales in North America will also reflect this shift In addition, we earned nearly $30 million of R&D revenues in the first quarter, which we generated from multiple sources related to our partnered programs Our non-GAAP operating expenses were $159 million in the first quarter, which represented a modest increase compared to the same period last year and was in line with our guidance The increase was driven by higher R&D expenses related primarily to advancing the Phase III studies of TTR LICA and APOCIII LICA and development activities for multiple programs across our wholly owned pipeline As expected, our SG&A expenses decreased in the first quarter.

Primarily due to cost efficiencies we realized from the integration of Akcea and the restructuring of our European operations. An important element of our new strategy is our focus on investing internally for growth, and our first quarter results sighted this aspect of our strategy. With our first quarter results, we remain on track to achieve our 2021 guidance of a net loss of less than $75 million on a non-GAAP basis. We expect our revenues in Q2 to be similar to the first quarter. And we're projecting an increase in revenue in the second half of this year, driven in part by increasing R&D revenues as we achieve key milestones for our partner programs. Already in the second quarter, we achieved a $10 million in Biogen for ION541, our medicine targeting ataxin two for the treatment of ALS. We project operating expenses to increase over the course of this year as our mid- and late-stage medicines advance in development.

We expect our R&D expenses to increase as the Phase III studies of TTR LICA and APOCIII LICA progress as we initiate the APOCIII LICA Phase III study for patients with severely high triglyceride. And as compared to advance KKL into a Phase III study. We expect our SG&A expenses to decrease further in the second half of this year. As we realigned savings from our Sobi transaction. Last month, our balance sheet when we completed a $630 million convertible notes offering. These notes carry a 0% interest rate. We completed this transaction to accomplish two primary goals: to refinance the $310 million of 1% convertible notes due in November; and second, to fund a large capital project we recently initiated. We evaluated multiple financing options to achieve our goals.

And ultimately, with a 0% interest rate, we determined that the low-cost of capital we secured through the convertible debt offering was our best financing option. Importantly, we maintain a strong balance sheet to support our wholly owned pipeline and our technology. With the portion of the proceeds from our debt offering for a large capital project to expand our manufacturing and R&D capacity. We expect this multiyear project to cost between $250 million and $350 million. We anticipate project in 2024, and once complete, we will have the manufacturing capacity to support the future needs of our wholly owned pipeline.

Additionally, we will increase our capacity to bring forward novel chemistries, including new LICA chemistry, continued critical functions as we advance our wholly owned pipeline to the market. This project enables us to build on our leadership in development chemistry and manufacturing of oligonucleotide therapeutics and to ensure we have the infrastructure we to achieve our strategic objectives. As you can see, we have taken important steps already this year to drive growth and to position us to achieve our goal of 12 or more marketed products in 2026. And with that, I'll turn the call over to Richard.

Richard S. Geary -- Executive Vice President, Chief Development Officer

Well, thank you, Beth. We continued to execute on our pipeline goals this quarter, achieving a number of successes and advancing toward significant value-driving catalysts. We're particularly pleased with the positive Phase II results from Ionis KLRX, our once-monthly subcutaneously administered medicine for the prophylactic treatment of hereditary angioedema, or HAE. Ionis Pkk-LRx demonstrated a mean reduction of up to 97% in HAE attacks, together with favorable safety and totality.

We look forward to reporting these Phase II results in greater detail later this year. We are now advancing Ionis Pkk-LRx into a Phase III study. We hope to further demonstrate its potential to be the best-in-class prophylactic treatment for patients with HAE. We look forward to sharing our Phase III plans with you later this year. We also continue to be pleased with the progress of our Phase III pipeline, including our partnered programs, Tele Carson and tofersen as well as our wholly owned programs.

Ionis TTR-LRx remains on track in our studies in patients with TTR neuropathy and TTR cardiomyopathy. And APOCIII LRx also remains on track in the Phase III study in patients with FCS. We expect to begin a second Phase III study of a APOCIII LRx later this year. The second Phase III study in patients with severe hypertriglyceridemia, of over three million patients in the U.S. We also entered our late-stage pipeline with the initiation of pivotal studies for ION363 in patients with FUS-ALS. And the ION373 in patients with other disease. Because of the strong efforts of our development team, both of these medicines for rare, fatal diseases are on accelerated paths to patients. From our mid stage pipeline, just this week, positive data from the Phase II study of Ionis AGT LRx in patients with resistant hypertension were published in the Journal of American College of Cardiology.

We also plan to present these data at the ACC conference later this month. Based on these encouraging these Phase II results, we've advanced Ionis AGT-LRx into a larger Phase IIb study in patients with hypertension on three or more anti-hypertensive medications and a Phase II study in patients with chronic heart failure with reduced ejection fraction. In a Phase IIa study of Ionis GHR-LRx in acromegaly patients poorly controlled on somatostatin analogs, we achieved substantial reductions in growth hormone binding protein which is a surrogate marker for GHR-LRx inhibition, together with favorable safety and tolerability. We plan to discuss these results in greater detail, together with interim results from our ongoing open-label extension study, later this year.

With Ionis-Enac-2.5-Rx, we recently learned of a finding in a long-term preclinical toxicology study. While we believe we would have been able to work through this finding doing so would impact our time lines. As a result, we have reevaluated the totality of available data and decided to continue further development of Ionis-Enac-2.5-Rx. We have a number of late-stage research programs in our pulmonary pipeline, which we are now prioritizing and continuing to evaluate for further development. Now to upcoming catalysts for neurologies pipeline. We're very pleased with the progress of IONIS-MAPTRx, our medicine designed to reduce protein associated with Alzheimer's disease.

We were encouraged by the top line results from IONIS-MAPTRx Phase I/II in patients with Alzheimer's disease Biogen reported earlier this year. IONIS-MAPTRx demonstrated durable time and dose-dependent reductions in CSF tau protein and was generally well tolerated in this study. Biogen plans to report these results at the Alzheimer's Association International conference in July. Our ALS program is also advancing well. Tofersen has the potential to become the first disease-modifying treatment for ALS and fundal change the ALS treatment landscape.

We believe tofersen may also have the potential to slow progression or even delay the onset of disease, in presymptomatic side one ALS patients similar to the profound effects demonstrated in presymptomatic SMA patients treated with SPINRAZA. Biogen recently initiated the ATLAS to address this question. And hopefully demonstrate a similarly profound effect with tofersen in presymptomatic AOS patients. And with the programs for FUS-ALS, C9 ALS and for the broader causes of ALS, we are addressing essentially all forms of this disease. Importantly, with our pipeline progress to date and our key upcoming data throughout this year and over the next few years, we remain well positioned to achieve our goal of 12 or more marketed medicines in 2026, including potentially six or more wholly owned medicines. And with that, I'll turn the call back over to Brett to close this portion of the call.

Brett P. Monia -- Chief Executive Officer

Thank you, Richard. In the first quarter, we took important steps to maximize the value of our wholly owned pipeline. We continue to advance and expand our Phase III pipeline with Ionis-TTR-LRx and APOCIII LRx advancing as planned and through the initiation of a pivotal ALS and Alexandra disease. We also delivered positive results for IONIS-PKK-LRx in HAE and are planning to advance this medicine into the Phase III study.

We have taken important steps to strengthen and streamline through our acquisition of Akcea and the restructuring of our TEGSEDI and way liver operations. We have accelerated our commercial strategy, retaining key commercial and unlocked significant resources that we are reinvesting in our wholly owned pipeline ology and the build-out of our commercial capabilities.

Importantly, we are financially strong and on track to achieve our 2021 financial guidance. We're using our strong balance sheet to invest in our strategic priorities and execute on all of our calls. I'm proud of the progress we have already made in these areas, and we look forward to sharing more this year as we advance our medicines and move closer to our goal of 12 or more marketed medicines in 2026. And with that, we'll now open it up for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Luca Issi with RBC. Please go ahead.

Luca Issi -- RBC -- Analyst

Fantastic. Thanks so much for taking my questions. Maybe two here. One, maybe on Huntington disease here, for you or Richard. I think we saw the full data last week from Roche. It looks to me that at least the high dose may have unfortunately, accelerated the disease given the higher those actually increase in triple volume over time versus the low dose and placebo. Wondering if you share the same view here? And whether such data substantiate the hypothesis that bearing the wild-type may matter here, so again, any thought there would be helpful?

And then second on HAE, congrats on advancing the program into Phase III. So again, wondering if you could give us some color on how you're thinking about the Phase III design? Will there be placebo controlled? Will you need to run a head-to-head trial versus? Are you exploring monthly dosing or bimonthly dosing? Again, I thought there would be great. Thanks so much.

Brett P. Monia -- Chief Executive Officer

I guess I'll take the Huntington question and then kick it over to Richard for a much more entertaining PKK answer, I hope. On Huntington, yes the data was at CHDI, and we basically reinforced what the IDMC had, and it was the same data set that the drug wasn't working. And providing a benefit. It's true if you look at the absolute numbers that the more frequent dosing was descending a little faster than placebo, but all of those curves were within the bounds of natural history.

As to what it means, I think it's premature to tell. Bosch had some hypothesis that they discussed, all of which are valid and makes sense to investigate, but I think we really need to unpack the data and do their analysis and see what we can learn from the study. We really don't know at this point.

Richard S. Geary -- Executive Vice President, Chief Development Officer

So on the HAE question, just a quick pick up front that we have some regulatory meetings over the next couple of months, and we will be bringing details the Phase III program at later the at this point, we're moving forward with those regulatory and then into a Phase III program.

Brett P. Monia -- Chief Executive Officer

Yes. Luke, let me just add to that a little bit. So -- and what I think would be very helpful for Onaiza to provide some of her thoughts too on why we are so excited about the market opportunity for this drug because we really do think it has a potential idea very best-in-class. It will certainly be a placebo-controlled study.

I mean, that's what is expected in Phase III trial designs and there's precedent for that with TEG-0 and other drugs as well. And certainly, monthly dosing is what we're planning to do right now in the Phase III study, which offers a significant advantage, we believe, over therapies, which is -- we turn over to Onaiza.

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Yes. Yes, I'd be happy to add some color over here. I think going back to your question, Luca, is it going to be placebo-controlled or head-to-head? Certainly a question for us as we went into the marketplace to kind of test out the profile of our PKK product and we look at versus current treatment options, including TEG-0.

And we really got the feedback based on the profile that we have that this is -- has the potential to be a best profile and really, placebo-controlled study will be more than sufficient to really demonstrate that. If you take a look at kind of the trifecta efficacy data that we are able to deliver on this, prevention of attacks, the fast onset of MAX clinical efficacy and the reduction in kind of acute treatments, that's a trifecta efficacy that's very using and attractive for the HCPs in the marketplace.

So that, along with the more convenient administration is just a very highly valuable and competitive profile. So we're feeling very great about what this is going to bring to the unmet need for hereditary angioedema patients in prophylactic treatment.

Brett P. Monia -- Chief Executive Officer

Thanks, Onaiza. And as Richard said, we'll provide deep more details on the Phase III design later this year.

Luca Issi -- RBC -- Analyst

Got it. Got it. Fantastic. Thanks so much. [Indecipherable] thank you.

Brett P. Monia -- Chief Executive Officer

Thank you.

Operator

Our next question comes from Yaron Werber with Cowen. Please go ahead.

Yaron Werber -- Cowen -- Analyst

Thanks for taking my question. I have a question specifically to start with on acromegaly. It sounds like the -- if you recall correctly, the study was fully enrolled in December. It's a two week study, but plus is an open-label extension. And it looks like you're planning on releasing the data in the says plus the OLE.

Any medical meetings that we should be aware of where this could be targeted? Or is this going to be in the press release? And then any thoughts about what's the next steps for this program, given what you know from the Phase I data already? Thank you.

Brett P. Monia -- Chief Executive Officer

Sure, Yaron. So we are wrapping up the study now. And we'll be going through the data. And it's going to -- the analysis of that data will take us into second half of the year. I've mentioned in his statements earlier. And then we're going to share the data as soon as we can. We'll probably will not wait for a medical meeting to share the results of that study because we don't have one targeted right now, although we'll look for such a place so we can share the data in detail.

But we'll figure out a way this summer to get the data out along with the open-label extension data, which has accumulated more and more data, which is -- it's a rich data set that we didn't want to we sit up that review. Remember that we also have a second study in progress for our GHR LICA medicine acromegaly, which is in frontline monotherapy. Phase II, which is getting off the ground now and getting started.

I think we're going to want to look at all the data before we can make a decision on the next steps. For either the patient population in the somatostatin treated patients that are poorly controlled versus monotherapy and then make decisions on what the next steps for the program would be.

Yaron Werber -- Cowen -- Analyst

Great. And then also, any update on the potential Phase I or IND filing for Angelman syndrome? Thanks so much.

Brett P. Monia -- Chief Executive Officer

Yes. We're hoping to get the clinical study started this year.

Yaron Werber -- Cowen -- Analyst

So you've definitely selected a construct and you're planning on filing an IND? I mean, have you made a decision definitely to go forward?

Brett P. Monia -- Chief Executive Officer

Yes.

Yaron Werber -- Cowen -- Analyst

Thank you [Indecipherable].

Brett P. Monia -- Chief Executive Officer

You got it. Thank you, Yaron.

Operator

The next question comes from Yanan Zhu with Wells Fargo. Please go ahead.

Yanan Zhu -- Wells Fargo -- Analyst

Hi. Thanks for taking my question. I just have a first question on the update from the program. I wanted to -- if you could share a little more about the findings from the toxicology studies long-term tox study? And whether the tox is specific for the pulmonary route of administration? And whether it's related to the target? Or generally speaking, this the ASO presence in alone? Thanks.

Brett P. Monia -- Chief Executive Officer

Sure, Yanan. So I want to just emphasize that the clinical data for our ENAC in Phase I/IIa gave us very encouraging results. It has nothing to do with clinical data. We demonstrated target engagement in Phase I and good safety in cystic fibrosis patients as well as in patients with COPD. And the cystic fibrosis data will be presented at ATS later this month.

We don't -- the preclinical finding as part of the long-term talks, as Richard stated in his statements. It's going to take us time to figure out what that's about. And due to the delays that are just associated with those types of investigations, we took a look at our emerging pipeline in pulmonary diseases. And we think we have better targets to invest in that will bring greater value to the company.

And to the patients going forward. And we do not believe that this is read through to the platform for pulmonary disease at all. It's a -- this is something that happens in preclinical tox study sometimes, and we're going to work through it.

Yanan Zhu -- Wells Fargo -- Analyst

Got it. That's very helpful. And then a question on the TTR LICA program. Alnylam recently reported with vutrisiran Phase III study in TTR polyneuropathy. I was just wondering your take on their data and their every three months frequency of administration? And how you see that product profile? And whether there is an opportunity for the TTR LICA to position against that profile? Thanks.

Brett P. Monia -- Chief Executive Officer

Sure. I completely respect the question, Yanan, but it's not our position to comment on other people's data. What we are very much -- we like our drug a lot. And the Phase III study in polyneuropathy is enrolling very well, and we're looking forward to the results of that study next year.

In the cardiomyopathy study for TTR rolling very well. In addition, on Asia, we've done quite a bit of market research on frequency of administration and the value that brings to the marketplace. And I would love to have Onaiza maybe comment on that.

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Yes, sure. Would be happy to, I think your question was monthly versus quarterly in general, I would say, most kind of market conditions, particularly from a patient perspective as well as HCP clinician perspective. There are definitely some improvements in profile when you go from a daily to a weekly and weekly to a monthly.

But after that, I call it, there's just law of diminishing returns on more extended frequency, particularly for sub-q. And we've found that as well. We've done some extensive market research to understand that dynamic a little bit more because it's really one of our key products that we're bringing forward to commercialization.

And we're not seeing really a big difference between the monthly and the quarterly at all. I think rightly so, physicians are more extra excited about the profile of the product as well as the large clinical trial that we have ongoing in cardiomyopathy and really looking forward to seeing our data with and without standard of care. I think that's going to be the place of big differentiation here.

Yanan Zhu -- Wells Fargo -- Analyst

Got it. Thank you. That's very helpful.

Brett P. Monia -- Chief Executive Officer

Thank you.

Operator

The next question comes from Yale Jen with Laidlaw & Co. Please go ahead.

Yale Jen -- Laidlaw & Co. -- Analyst

Hello. Good morning and thanks for taking the questions. We understood the failure of the Huntington disease trial. And -- but I believe you guys have a very great confidence on the tofersen in the ALS. So would you might just maybe compare all contracts a little bit between these two and besides the different diseases? And where your confidence seems to stem from for the better trials?

Brett P. Monia -- Chief Executive Officer

So I'll open up, and then it's a very good question, Yale. And then I'll maybe Eric can expand so we're confident in our neurological disease platform, we think is leading in the industry in many ways. SPINRAZA and tofersen coming right behind that and plus ALS and a whole host of other drugs. All of the drugs, and there are quite a number now, not all have been presented yet.

All of the drugs that we took into clinical trials have shown target engagement and robust target engagement. In our trial. So we know we're hitting the root causes of diseases or the top we're going after to test our clinical hypotheses. And SOD1-ALS to presume is no different than that. With some very nice reductions in SOD one. And based on the Phase II data that was published in the New England Journal of Medicine and we presented and presented our confidence is high in to tofersen.

And our confidence is -- and it lends us even greater confidence in -- for ALS in general because tofersen is successful. And like I said, the preliminary -- not preliminary, but the Phase II data was very encouraging. It bodes very well for the rest of our ALS franchise, which we have four drugs now in clinical trials, two in Phase III. The other part of your question, I think, had more to do with being able to target different regions of rain. How is ALS compared to Huntington as compared to other drugs in our pipeline for neurological diseases. And there, I'll ask Eric to jump into the weeks a little bit deeper.

Eric E. Swayze -- Executive Vice President, Research

Yes, sure. Brett alluded to great things in the data packages that we have real evidence in the new in Journal paper for improvement in disease. We didn't have that in Huntington, and while we had this target reduction and decided to look at it in the Phase III. As far as targetability, we've talked about this at length before.

I think our treasure trove preclinical data has done a good job of teaching us where we can target and throughout the plan. And we have a high level of confidence that we can target all the reasons that are affected in ALS. And we have a high-level comments that we can target of much of the brain regions that are affected in Huntington's disease. And Roche has talked about these extensively at medical meetings and presented a lot of the data.

It is true that regions like the are less susceptible, but a case that makes sense to us that we could target that region. So I have a very high level of confidence that, especially in programs like the tofersen program and our MAPT program and others that are targeting the whole brain and need to target the whole brain that we can engage those regions.

Brett P. Monia -- Chief Executive Officer

And as a reminder, Yale, as mentioned in Richard's statements earlier, the MAPT, the data will be presented in July, I believe, this summer. Yes. And I think that, that will end even further confidence because Biogen has said, the reductions in town have been substantial and durable.

Yale Jen -- Laidlaw & Co. -- Analyst

Okay. Great. That's very helpful. And maybe just one more question here, which is sort of the forward-looking ones. In terms of the HAE, you guys seems to sort of decide to move forward in Phase III.

Let's just assume the successful. Just curious whether this is a drug you guys want to potentially launch it by yourself or potentially to be a partnered out at least at this early stage of thinking? Thanks.

Brett P. Monia -- Chief Executive Officer

It's a great question, Yale, and it's one that we're working through right now. We think this is a great drug. We really do. And whether or not we will this in it ourselves or not. We will provide an update that when we provide an update on the Phase III design later this year. We're moving into the Phase III study ourselves.

So just if you could just stay tuned on that. It's -- right now, and ASPs conducting a lot of market research and competitive better profiling work to make the business case or not. And if you just stay tuned, we'll give you an update in a little while.

Yale Jen -- Laidlaw & Co. -- Analyst

Okay. Great. Thanks a lot and again congrats on the quarter.

Brett P. Monia -- Chief Executive Officer

Thank you.

Operator

The next question comes from Paul Matteis with Stifel. Please go ahead.

Alex Thompson -- Stifel -- Analyst

This is Alex on for Paul. I guess I have two. The first one is a clarification on ENaC. It sounds like the preclinical talk with that, it may be related to knocking down ENaC long term.

Do I have it right that you're no longer pursue any ENaC program, either this program or another follow-on program in ENAC? And then secondarily, I was just curious if you wanted to give any thoughts on business development with all the cash you guys have now? Thanks.

Brett P. Monia -- Chief Executive Officer

So as I said earlier in the question that was posed, we're still working through the data preclinically, we don't have any evidence directly that this is related to ENaC inhibition. Let me make this point. This is a very important point. The observations we may have made preclinically.

We're not related to the same types of toxicities that were observed for small molecules, systemically applied ENaC inhibitors. We're not seeing hyperkalemia. We're not seeing effects in the kidney and that sort of thing. So this is separate. And again, I think we'll work through it, and we don't believe, based on the data, the data we have, we don't think that this is a read-through to our pulmonary our ability to go after pulmonary diseases.

But what it does represent is a delay. And we have a lot of drugs coming with other targets. And although we're not slamming the door closed on ENaC in the future, those targets will start approaching and catching up to ENaC pretty quickly. And we think that those are significantly better targets for pulmonary diseases. And that was really that in totality was really the basis for why we discontinued it. We have really trying to focus on the programs that bring the greatest value. And I'll just do it there.

Alex Thompson -- Stifel -- Analyst

Great. And so just to be clear, it's really more of a pause on the ENaC development rather than a discontinuation?

Brett P. Monia -- Chief Executive Officer

No, we just continued to ENaC this program, in favor of other programs.

Alex Thompson -- Stifel -- Analyst

Thank you.

Operator

The next question comes from Jason Gerberry with Bank of America. Please go ahead.

Jason Gerberry -- Bank of America -- Analyst

Hey, guys. Thanks for taking my questions. Just one quick follow-up on PKK and then ATT question. Just on PKK, so it sounds like you view kind of a diminishing return on dose convenience beyond the month, but that pertains to every two weeks versus a monthly that, I guess you would say that's a key point of differentiation as you think about you characterizing a potential best-in-class profile. Because it looks like dosing convenience is sort of the main feature that you'll be able to hang your hat on relative to the Takeda prophylactic agents?

And then ahead of ACC just wanted to probe a little bit. Just in terms of what we're hearing from physicians and what terms of what they want to learn about the profile of this drug and it has it pertains to a consistency and durability of impact on blood pressure, one thing, I think we're hearing is that physicians just want to make sure there aren't dramatic spikes in blood pressure on a week-over-week basis. So curious if you could set the table if we'll get any data that will help us understand a little bit about that attribute of your ASO there? Thanks.

Brett P. Monia -- Chief Executive Officer

Good questions. The attributes of our PKK LICA, certainly the key attribute is the dosing frequency, but it goes beyond that. And again, I'll ask Onaiza to expand.

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Yes. Be happy to. So yes, I think you're right. I think the important thing here, and I talk about these as each medicines has in the market that they're entering also has. Just you have to actually look at dosing and convenience in there. And for the HAE market, as you know, with TEG-0, it's a high-volume injection every two weeks. And most of the market research and the physician said, as always, the efficacy is only as good as it's compliant.

So we do believe that, that will be a big play, but we do think that is not the main thing we're going to hang our hat on, as you said. I think it goes back to what's really important for these patients. In prophylactic treatment goes to, again, prevention of attacks, the number of 0 attack rates that you get. And the ability of our product profile to deliver on that with a faster onset of reaching MAX clinical efficacy.

And the third prong of kind of an order of efficacy parameters is just the ability to reduce the number of acute medications that they take. So when you think about it, really, it's just all three parts of the efficacy paradigm that we're just winning on, along with the convenience that will, again, have patients take this on a regular basis, be compliant and deliver on the efficacy of the product.

Eric E. Swayze -- Executive Vice President, Research

Yes, that's great. And I think just to add to that, the Phase II study hit the nail on the head on all three of those. And we're -- and we've got all those patients also rolled over into an open-label extension and looking very carefully at long-term lack of breakthrough, and that's also a very important component.

Brett P. Monia -- Chief Executive Officer

Right. And then the AGT, I could talk a little bit about what is to be presented at ACC, but also the Phase IIb study and what we're hoping to get out of that.

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Yes. I mean you'll be able to actually go to the publication right now that's available in the -- I believe it's posted the Journal American College cardiology. And then the other piece to that is the presentation that we'll be giving. And there have been no either hypotension or hypertension on recovery events.

And absolutely, that's an extremely important piece to the puzzle. So the data is showing that, that's a very clean profile. And we've moved into a Phase IIb study that will further elaborate on those issues.

Brett P. Monia -- Chief Executive Officer

Yes. The Phase IIb study is really powered to nail down the magnitude of blood pressure control we expect to achieve in a Phase III study. It's a significantly larger study. It's a longer study. And collect those for a Phase III study and to really rule out any of the the concerns, hopefully, that physicians have raised, you'd mentioned spikes in blood pressure, hypotension and so forth. So that's the intent of the Phase IIb study. But certainly, the publication and the ACC presentation will support the safety and the efficacy of this mechanism in this drug.

Jason Gerberry -- Bank of America -- Analyst

Got it. Thank you.

Brett P. Monia -- Chief Executive Officer

You're welcome.

Operator

The next question comes from Jessica Fye with JPMorgan. Please go ahead.

Jessica Fye -- JPMorgan -- Analyst

Hey, guys. Good afternoon. Thanks for taking our questions. Not to belabor this, but just following up on the prior questions on ENaC. If the talks you notice is not related to the platform or exposure in the lung, and it's not related to the target. What's your current thinking about what it might be related?

Brett P. Monia -- Chief Executive Officer

Well, we don't know, Jess, that the thing we have to work through Xperius tox finding sometimes happen long-term tox studies. And it could be a sequence related effect of that particular molecule could be something like that, but we really have to work through it. The confidence comes from other experience with other drugs.

Richard S. Geary -- Executive Vice President, Chief Development Officer

Yes. And I think further, it's the clinical experience. I mean the clinical experience was absolutely clean. And we were into longer-term treatment in the clinic but no time lines can get significantly impacted by a preclinical finding. And this was just one of those and we want to make sure that we're focused. We're early in development, and we've got sold at almost a -- the riches are beyond what we should be looking at when we have so many targets, and some of these targets are really impactful in particularly COPD and some of these other very interesting and areas that we want to focus on.

So we took a step back, and we're looking very carefully at this and focusing what we do in the midterm. At the same time, we've got this incredibly rich Phase III going with all of the products that have now moved into late-stage development, and we just want to make sure that we're not diluting our efforts, and we're focused.

Jessica Fye -- JPMorgan -- Analyst

Got it. Makes sense. If I can work in two other questions. Just on the Alexander disease program, can you talk about some of the efficacy measures you have for ION373 that give you the confidence to advance that into a pivotal study? And the size of that opportunity? And just how well you think the product might be able to address the market?

Eric E. Swayze -- Executive Vice President, Research

We really haven't disclosed the full protocols or the endpoints for the Phase III program. We're very confident that we can engage this disease being the known genetic cause of the disease. It's toxic gain of function of a protein called GFAP, and that's what we're lowering. And our preclinical work on this has been published, and it's really remarkable improvements in what I think are pretty good preclinical models of disease.

So here, I think we have -- based on the preclinical data and the known as the physiology of the disease, I think we have a very high level of confidence that we're in the right spot for this.

Brett P. Monia -- Chief Executive Officer

Onaiza, do you have anything to share on prevalence?

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Here, we're looking at about 400 patients globally from a prevalence perspective. And again, as Eric said, this would be the first and only therapy for Alexander's disease, and I think the preclinical data and the models that we have suggest that we're going to normalize the production of excess GFAP and improved gross motor function, reduction of significant symptoms that these patients are a feeling both on the cognitive side and some of the GI side and really prevent disease progression.

Eric E. Swayze -- Executive Vice President, Research

And one would also be helpful. If we talk a little bit about, if you don't mind, Jess, about our rare disease neurological whole one pipeline more broadly and about how GFAB and FUS and all these synergies together, as a franchise that we're planning to bring to the market?

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Yes. No, absolutely. Really good point. So when we think about these when we see prevalence for an individual disease and condition, we're really looking about how we scale these collectively together. To get the significant commercial synergies that will be really important in the marketplace. And we have them with three products. Alexandra is being one of them, but we also have just one for Lafora disease. And later on, we're looking at -- I don't know if we've disclosed one other, but we have one more.

And there -- they just are servicing kind of the severe pediatric diseases associated with epilepsy. In the marketplace that really come together as a whole. And then when we add in FUS in ALS, even though you wouldn't think there may be as many synergies, there's actually a pretty high overlap in positions were treating that as well. So it comes together very, very nicely for us as a portfolio in urology.

Jessica Fye -- JPMorgan -- Analyst

Got it. And maybe just a last question. Going back to the comment about reaching the peak royalty tier for SPINRAZA around midyear, similar to last year. Can you just unpat a little some of the assumptions underlying that in light of the competition you're seeing in the U.S. from?

Elizabeth L. Hougen -- Executive Vice President, Finance and Chief Financial Officer

Sure, Jess, it's Beth. Hi. So I think as you can see, when you look at the effective royalty rate on a quarterly basis over the past years, we get to our maximum royalty rate very quickly. The tiers, there are four tiers, and they very quickly.

And therefore, our sense is that SPINRAZA will continue to perform as it has recently. And therefore, we would get into the highest tier on the similar path, similar time frame as we have in the past few years. And you know that, that gets us up into that 15% very quickly.

Jessica Fye -- JPMorgan -- Analyst

Got it. Thank you.

Brett P. Monia -- Chief Executive Officer

Thanks, Jess.

Operator

The Next question comes from Mani Foroohar with SVB Leerink. Please go ahead.

Mani Foroohar -- SVB Leerink -- Analyst

Hey, guys. Thanks for taking the questions. Okay. So I hate to beat a dead horse, but I'm going to beat a dead horse a little bit. So if you -- given that you're -- where you are in ENaC, in some ways in the lead of the closest competitor in terms of maturity of data, is the right interpretation of what you're saying that it would -- that going back and redesigning and moving forward with a different construct would have been -- would have been requisite to feel comfortable to be getting around this preclinical tox, is that the right way to interpret what you said? And then I have another -- not opting a bit this question.

Brett P. Monia -- Chief Executive Officer

We don't have an answer to that first question because we're still going through the data. Trying to figure out what the best path forward is. So yes, it might require a different drug or it might not. But we think we have we think that there are better targets out there that we're working on to bring great clue and the epithelial sodium channel. That was our lead drug that was furthest along, but we have others that we think will be more -- provide even greater benefit to broader disease indicate an ENaC.

Mani Foroohar -- SVB Leerink -- Analyst

Okay. That makes a lot of sense. And then on HA, obviously, you have a really exciting data set. Optically, it's superior to what's on the label for any of the approved therapies, although obviously, crestal comparisons are fraught by nature. When you think about commercialization, obviously, the quality of therapies available have improved from the time kind of the lead asset.

How do you think about openness and willingness to switch? And in commercialization, would you see this primarily as a switch market versus other existing prophylactic therapies? Do you see chatting newly diagnosed patients as the lowest hanging fruit like? How do you think about commercialization strategy, presumably you continue to have what appears to be a best-in-class event reduction profile?

Brett P. Monia -- Chief Executive Officer

Onaiza?

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Yes. I'm happy to take that one. Really great question here. So I think that when you're on prophylactic treatments, as we think about entering the market over here, it's clearly for new patients. This is the best choice, right? So for new patients, we've kind of tested this. We have the best-in-class profile, that's where it's going to go.

For patients who are already on therapy, I think therein will be how do we get switches in the marketplace. So we're really thinking of this in a variety of different ways. Are there kind of breakthrough attacks happening? There definitely would be a sense of patients, there are patients who were not compliant. On the full set of therapies that they're on.

So there's an opportunity there. And then I do believe that we're looking at, particularly a switch design in our Phase IIIs as well, although it's not confirmed, we're definitely evaluating whether that will be actually a nice added benefit to our design as well.

Mani Foroohar -- SVB Leerink -- Analyst

All right. That makes sense. That is to me. And do we have a sense of where -- what proportion of patients do you think are moderate on the most modern prophylactic therapy, etc., etc.? And what proportion of them based on your cable conversations, interaction with clinicians, clinical trial experience, what proportion of those patients see meaningful enough breakthroughs to fall into that early share switch early adopter population for you guys? Just ballpark, I know we're far from being a commercial asset quite yet.

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Yes. Hard to give you percentages over here on that. It's a really good question. I think we're going to do some claims database analysis and do a retrospective look to get a better sense of that. So it's definitely in our list to help evaluate. But given, again, the most -- I think, profound part of the research and insightful for us was that big compliance piece, right?

And given TEG-0 at two weeks four weeks, there are a lot of patients who are actually trying to stretch this out over the four weeks just because it's a very high-volume administration. So we're do seeing a lot of people who are not compliant and as a result, then have breakthrough a tox rate. As to quantify that, I think it's going to take a little bit more work on our part before I can give you a better sense of where that is.

Mani Foroohar -- SVB Leerink -- Analyst

You know, that makes a lot of sense. Thanks. I'm gonna hop back in the queue [Indecipherable].

Brett P. Monia -- Chief Executive Officer

So maybe Betsy take one more, and then we'll have to close it out.

Operator

The next question comes from Myles Minter from William Blair. Please go ahead.

Myles Minter -- William Blair -- Analyst

Hey. Thanks for squeezing me in. Just a question on Biogen sort of pushing forward a higher dose for the C9ORF program. Just wondering whether that's got any read-through to Valor and whether there's any room to maybe push the dose afterwards kind of in a spin like scenario? And for the FUS programs and the ataxin programs at an earlier stage, is it likely that we'll see a push in the dosing in those early clinical studies?

Brett P. Monia -- Chief Executive Officer

So the read is that the drug is very well tolerated. So -- and Biogen is very committed to ALS and in particular, C9-ALS as well as ALS. And so before moving into Phase III, you want to make sure you get the dose right. So they wanted to get more data and examine a higher dose. So I don't really think the read-through is anything more than that with you.

It's really that the drug is very well tolerated, and they want to get more experience before taking the plunge for Phase III. And I didn't quite get your first ALS question. We have selected those. We have a single dose level for Phase III that we're evaluating the program. So we're not planning to look at multiple doses in FUS-ALS. We think we have the right dose and we're plowing ahead. We don't plan to escalate dose or deescalate.

Myles Minter -- William Blair -- Analyst

Okay. Yes. I guess that was my question, just like why the C9ORF program specifically they're testing a higher doses? I know they're not involved in the FUS program, but even the ataxin program, like why wouldn't you just go with a higher dose here, is there a risk of overshooting the knockdown of this protein?

Brett P. Monia -- Chief Executive Officer

No. There's no risk of on target that toxicity, overdosing or anything like that. Each drug is different. So Myles for C9, we do have an allele selective drug. It only because of the nuances of the way the transcripts are processed, our drug only lowers the pathogenic expanded C9ORF72. So we don't look for a non-pathogenic C9O.

Myles Minter -- William Blair -- Analyst

Okay. Cool. Thanks for taking the questions.

Brett P. Monia -- Chief Executive Officer

Thanks, Myles. And with that, I'd like to thank everybody who joined us on our call today. It's been a highly eventful start to the year, and we look forward to more throughout the remainder of the year and sharing those results with you. So with that, thank you, and have a great day.

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

D. Wade Walke -- Vice President, Corporate Communications and Investor Relations

Brett P. Monia -- Chief Executive Officer

Elizabeth L. Hougen -- Executive Vice President, Finance and Chief Financial Officer

Richard S. Geary -- Executive Vice President, Chief Development Officer

Onaiza Cadoret-Manier -- chief Corporate Development and Commercial Officer

Eric E. Swayze -- Executive Vice President, Research

Luca Issi -- RBC -- Analyst

Yaron Werber -- Cowen -- Analyst

Yanan Zhu -- Wells Fargo -- Analyst

Yale Jen -- Laidlaw & Co. -- Analyst

Alex Thompson -- Stifel -- Analyst

Jason Gerberry -- Bank of America -- Analyst

Jessica Fye -- JPMorgan -- Analyst

Mani Foroohar -- SVB Leerink -- Analyst

Myles Minter -- William Blair -- Analyst

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