Good morning, everyone and welcome to Ionis Pharmaceuticals 2018 Financial Results Conference Call. As a reminder, this call is being recorded. At this time, I would like to turn the call over to Wade Walke, Vice President, Investor Relations to lead off the call. Please begin..

Thank you, William. Before we begin, please note that we are now using non-GAAP in place of pro forma when discussing our financial results that exclude non-cash compensation expense related to equity awards. This is merely a change in the description of our adjusted results and not a change in the calculation.

As always, 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 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 that accompany our discussion today. With me on today's call are Stan Crooke, Chairman of the Board and Chief Executive Officer; Beth Hougen, Chief Financial Officer; Brett Monia, Chief Operating Officer; and Damien McDevitt, Chief Business Officer, who will join us for Q&A.

I would like to draw your attention to slide 3, which contains our forward-looking language statement. We will begin making forward-looking statements on this call, 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. With that, I'll turn the call over to Stan..

Thanks, Wade, and good morning, everyone. Thank you for joining us on today's call. Today we are in our strongest financial position to-date. With growth in every element of our business, we achieved an all-time high in revenue in 2018, enabling us to substantially exceed our 2018 non-GAAP operating income guidance.

And 2018 was our third consecutive year of operating income, enabling us to realize our long-term goal of sustainable profitability. Importantly, we achieved these strong results while investing in commercial activities and continuing to advance our pipeline of first-in-class medicines, as well as continuing to invest in our technology.

SPINRAZA's blockbuster performance in 2018 continued to be a major driver of our strong financial performance, with our revenue from SPINRAZA royalties more than doubling compared to 2017. SPINRAZA is a transformational medicine, fundamentally changing the lives of patients with SMA.

We continue to see that SMA patients live longer, grow stronger and do better the longer they are treated with SPINRAZA. And with thousands of patients on treatment and years of real-world experience, SPINRAZA is the standard of care for people with SMA.

Not so early, the TEGSEDI global launch is off to a strong start, thanks to the efforts of our affiliate Akcea. In the first partial quarter of launch, TEGSEDI generated over $2 million in sales with revenue coming from both the U.S. and the EU. We're pleased with the positive feedback from physicians and patients in both the U.S.

and the EU, who are excited about TEGSEDI's impact on these patients' quality of life. We and Akcea are aiming to make TEGSEDI available to hATTR patients globally. We're accomplishing that in part through our partnership with PTC Therapeutics in Latin America.

Late last year, PTC filed for marketing authorization for TEGSEDI in Brazil, in which landed priority review. As a region with one of the largest populations of hATTR patients, potential approval in Brazil is an important milestone for TEGSEDI.

We have numerous potentially transformative medicines across our pipeline that we believe will drive growth in 2019 and beyond. Today, we have more than -- we have 10 or more medicines with the potential to advance into pivotal trials before the end of 2020.

And all of these 10, we expect to have pivotal programs underway for at least four of these medicines by the end of this year. These include our LICA medicines targeting APO(a)-LRx, targeting APO(a), TTR, and neurodegenerative medicines for Huntington's disease and ALS, all of which have achieved significant value-driving catalyst already this year.

On Monday, we earned $150 million from Novartis when they licensed Akcea APO(a)-LRx. And the Novartis decision to advance this medicine is an important additional validation of our LICA platform.

As our most advanced LICA medicine, APO(a)-LRx demonstrates the potential of this game-changing technology to treat very large patient populations such as the millions of people with LP(a)-driven cardiovascular disease.

After meeting with the FDA, we and Akcea are moving rapidly to initiate the first Phase 3 study in the pivotal program for Akcea TTR LRx and which we plan to initiate in the second half of this year.

We earned a $35 million milestone payment from Roche as they enrolled the first patient in the Phase 3 study of IONIS-HTTRx in patients with Huntington's disease. Biogen licensed IONIS-SOD1 based on the positive data from the Phase 1/2 study in ALS patients with mutations in the SOD1 gene.

In addition, we expect Phase 2 data from numerous medicines this year, many of which could start Phase 3 studies next year.

In multiple therapeutic areas a number of roots of administration and diverse patient populations addressed by our pipeline are representative of the broad applicability and versatility of the technology that we at Ionis have invented.

And because of the efficiency of our technology coupled with our successful business model, we are executing on our global to grow revenue and earnings while continuing to be an innovation leader in RNA targeted therapeutics and progressing our very large and exciting pipeline broadly across many fronts.

Now, I'll turn the call over to Beth to provide our financial update..

Thank you, Stan. Good morning everyone. Throughout 2018, we continued to demonstrate the advantages of our successful business model by generating $600 million in revenue. Our 17% increase in revenue enabled us to deliver operating income of $70 million, substantially exceeding our 2018 guidance of non-GAAP operating profitability.

The significant revenue growth compared to 2017 was due in large part to increased commercial revenues from SPINRAZA royalties which more than doubled compared to 2017. Importantly, because of our operational execution efficient technology and novel business model.

We achieved these results and continued to increase our substantial cash balance, all while investing in commercial activities and advancing our pipeline and technology. Last year we provided guidance that our 2018 non-GAAP operating expenses would be in the range of $540 million to $600 million.

I'm pleased to say we met our guidance by finishing the year just below the low end of the range with $530 million of non-GAAP operating expenses. Our expenses increased compared to 2017, primarily due to our investment in commercializing TEGSEDI globally. Of particular note we ended 2018 with $274 million of net income on a GAAP basis.

Our substantial net income was primarily due to the one-time non-cash tax benefit we recorded when we reversed a large portion of the valuation allowance associated with our deferred tax assets. We believe it is likely that we will be able to use these tax assets to offset our future taxable income.

We are confident that this is the right time to take this important step due to our strong financial results over the past few years and our outlook regarding the continued growth of our business. In 2018, we earned nearly $240 million of royalty revenue from sales of SPINRAZA, which was more than double the $113 million we earned in 2017.

Worldwide net sales of SPINRAZA grew to $1.7 billion in 2018, driven by growth in the adolescent and adult estimate patient segment in the U.S. and from approvals in new markets outside the U.S.

As of the fourth quarter last year there were over 6,600 patients on SPINRAZA treatments around the globe including commercial patients as well as patients from the SPINRAZA expanded access program and clinical trials.

Additionally as of January of this year, SPINRAZA was approved in over 40 countries with three reimbursement in place in nearly all of these countries. Looking to 2019, Biogen expects continued worldwide sales growth. In the U.S. Biogen expects growth as more adolescent and adult patients begin treatment.

Older patients make up the largest patient segment, but only approximately 15% of these patients are now on SPINRAZA treatment. Outside the U.S. China and other Asian markets, the Middle East, Latin America, Canada and new markets across Europe represent opportunities for significant growth.

The launch of TEGSEDI is off to a strong start with more than $2 million in sales in its first quarter on the market. In the U.S. Akcea's drug treatment program Akcea Connect is helping patients and physicians to manage all aspects of their TEGSEDI treatment.

And as Stan mentioned, we are encouraged that patient's, physicians and payers are all responding favorably to TEGSEDI's subcu self-administration profile as well as the absence of additional cost and billings associated with TEGSEDI treatment. We and Akcea are committed to expanding TEGSEDI access to hATTR patients around the world.

In the EU patience in Germany are being treated and Akcea Connect is up and running. And in partnership with PTC we are expanding in Latin America with the first marketing application now under priority review in Brazil. R&D revenue from our successful collaborations continues to be a significant and sustainable source of revenue for us.

Importantly by prudently managing our expenses and leveraging the work our partners do to progress our pipeline, our R&D revenue funds, large portion of our non-GAAP R&D expenses. Last year we earned $345 million in R&D revenue.

Last year we earned $125 million from amortization of upfront payments including from our 2018 strategic collaboration with Biogen and our recent collaboration with Roche for IONIS-FB-LRx. In 2019, we project to have revenue from this component of approximately $35 million to $40 million per quarter.

License fees which fall directly to our bottom line as profit represents a significant element of our R&D revenue. Last year we earned approximately $100 million from numerous partners when they licensed our medicines.

For example, in the fourth quarter, we earned $35 million from Biogen when they licensed IONIS-SOD1Rx, our first medicine to treat people with ALS. Milestone payments we earned from our partners is another significant component of our R&D revenue, reflecting the value we create as our medicines advance.

In 2018, we earned more than $80 million from milestone payments. In the fourth quarter, we earned nearly $30 million in milestone payments from AstraZeneca to advance two novel medicines.

And the last component of our R&D revenue is generated from services we perform for our partners, primarily for manufacturing commercial and clinical supplies for them. Last year, we earned $35 million from this component of revenue. Now turning to this year.

We anticipate that our revenues and operating profit will grow this year, driven by growth in both commercial and R&D revenues. Consistent with Biogen's guidance for SPINRAZA product sales in 2019, we expect an increase in our SPINRAZA revenues ranging from the mid to high teens, together with growing revenue for TEGSEDI product sales.

We also anticipate growth in R&D revenues. We are projecting 2019 revenue of more than $725 million, making this our eight consecutive year of revenue growth.

And we're already off to a strong start, with the $150 million we earned when Novartis licensed AKCEA-APO(a)-LRx and the $35 million we earned from Roche when they advanced the Phase III program for IONIS-HTTRx.

We are projecting R&D expenses in the range of $360 million to $390 million and SG&A expenses in the range of $260 million to $290 million, both on a non-GAAP basis. We plan to continue to invest in commercializing TEGSEDI and advancing our pipeline and our technology.

In addition, based on our strong potential for significant revenue growth and modest increase in expenses, we are projecting to end this year with non-GAAP operating income of more than $100 million, making this year our fourth consecutive year of non-GAAP operating income.

Over the last several years, we have achieved sustained operating profitability. And today, we are taking the next important step. We are projecting to be profitable on the bottom line on a non-GAAP basis this year and into the future.

The strong financial performance, I have just described, results from the power of our efficient technology coupled with our business model, together enabling us to invest aggressively and commercializing and developing our medicines, while leveraging our partners' expertise and resources.

For example, consider the opportunity that AKCEA-APO(a)-LRx represents. There are more than 8 million patients worldwide with Lp(a) driven cardiovascular disease. Accessing this market will require a large cardiovascular outcome study that Novartis will conduct and fund. A substantial global commercial organization is also required.

For these reasons, AKCEA-APO(a)-LRx is a good example of the type of medicine for which partnering provides the most efficient route to patients in need. Further, AKCEA-APO(a)-LRx represents our success in optimizing Ionis' commercial participation for the medicines we choose to partner.

In addition to the $150 million license fee Novartis paid us for AKCEA-APO(a)-LRx, we can earn up to $600 million in milestone payments and tiered royalties on commercial sales ranging from the mid-teens to the low 20% range. With more than $2 billion of cash at the end of 2018, we are well positioned to invest in our technology and our pipeline.

In doing so, we project that we will end 2019 with approximately $2 billion in cash. We are confident our investments have the potential to create substantial value for patients and our shareholders in the near and longer term.

We also plan to continue investing in Akcea as demonstrated by our choice to take our 50% portion of the $150 million license fee from Novartis in Akcea stock. In summary, we ended 2018 in our strongest financial position to date substantially exceeding our 2018 guidance and beginning this year with significant momentum.

And we achieved this financial strength while investing aggressively in launching TEGSEDI, advancing our pipeline and our technology, an achievement that clearly sets us apart from our peers. We have the financial strength and flexibility to continue maximizing the value we deliver to both our patients and shareholders.

And with that I'll turn the call over to Brett to provide an update on our pipeline..

Thanks, Beth. As you can see from this slide showing our key recent achievements, 2018 was an eventful year with numerous successes throughout the business. As Beth just discussed, our financial performance was strong. SPINRAZA continued to drive growth and we added revenue from TEGSEDI sales from its first quarter of launch.

Now turning to our pipeline, the successes we achieved across our pipeline in 2018 positioned us for numerous meaningful clinical and regulatory catalysts this year, next year and beyond.

As we have discussed, we expect to have at least four medicines in pivotal programs before the end of this year including AKCEA-APO(a)-LRx, AKCEA-TTR-LRx, IONIS-HTTRx and IONIS-SOD1Rx. Now let me give you a brief update on each of these.

AKCEA-APO(a)-LRx has the potential to address the millions of patients with cardiovascular disease caused by elevated Lp(a) levels. And so we are pleased that Novarti's preparations to initiate the cardiovascular outcomes study are already underway.

The Phase 1 study is well underway for our next-generation medicine for TTR amyloidosis, AKCEA-TTR-LRx and we are moving rapidly to initiate a pivotal program in the second half of this year.

We plan to initiate a Phase 3 study in patients with hereditary TTR amyloidosis with polyneuropathy first followed closely by a second Phase 3 study in patients with wild-type and hereditary TTR cardiomyopathy also planned for this year. Last month, Roche began enrolling patients in the Phase 3 study of IONIS-HTTRx.

The world's first study to measure patient outcomes for a medicine that directly targets the cause of Huntington's disease.

Roche is also conducting a natural history study while continuing the open label extension study in patients from the Phase 1/2 study to complement the ongoing Phase 3 study which will serve to generate a robust data set to get this medicine to patients as rapidly as possible.

Additionally, Roche plans to report data from the open-label extension study this year.

You may recall that in the Phase 1/2 study in patients with Huntington's disease, we were encouraged to see trends in clinical benefits associated with new Huntington lowering in patients with this slowly progressing disease after only three months of treatment supporting the potential of IONIS-HTTRx to slow or perhaps halt disease progression.

And our fourth anticipated Phase 3 start for this year is IONIS-SOD1Rx. In December, Biogen licensed SOD1Rx based on positive data from the Phase 1/2 study in patients with SOD1-related ALS.

This study demonstrated substantial and statistically significant reductions to SOD1 protein levels and cerebral spinal fluid which was associated with the slowing of clinical decline as measured by the ALS functional ratings scale revised.

SOD1Rx is the first medicine directly targeting a well understood cause of ALS and demonstrates the potential to have a meaningful impact on the lives of people with ALS. Based on these exciting results, Biogen plans to advance this program towards potential rapid registration by adding an additional cohort to the ongoing study.

With a pipeline as large and diverse as ours, we always have a steady stream of data events in the queue and 2019 is no exception.

In the coming months, we expect AstraZeneca to complete a Phase 2 study of danvatirsen in combination with the anti-PD-L1 antibody durvalumab in patients with head and neck cancer, putting danvatirsen on track to potentially enter Phase 3 this year.

In addition, we completed an enrollment in a Phase 2 study of IONIS-FactorXIRx in patients with end-stage renal disease late last year and we're looking forward to sharing data from this study mid-year this year.

FactorXIRx is the first anti-thrombotic agent that selectively targets the intrinsic coagulation pathway as a novel strategy to demonstrate the potential value of separating antithrombotic activity from the risk of increased bleeding.

We're also looking forward to healthy volunteer data from the Phase 1 study of the LICA follow-on IONIS-FactorXILRx also around the midyear. Following these studies, Bayer has the opportunity to advance one or both of these programs forward. WAYLIVRA is currently under regulatory review in the EU.

In the U.S., we're continuing to work with the FDA to confirm a regulatory path forward. Additionally, we plan to report data from the study of WAYLIVRA in patients with familial partial lipodystrophy or FPL around the middle of this year.

And later this year, we plan to report Phase 2 data from our acromegaly beta thalassemia and cystic fibrosis programs as well. And in the coming months, we're planning to host two investor webcasts. In the second quarter, Frank Bennett, our Head of Research will host a webcast focused on our neurology pipeline.

And later this summer, Stan will lead a deep-dive into recent advances in our technology demonstrating how we are translating continued advances in the technology into better-performing medicines and expanded therapeutic opportunities.

We invite you to participate in both events which we believe will provide important insights into the future of the company. Watch for details to be announced soon. And now I'll turn the call back over to Stan to close this portion of the call..

Thanks Brett. For 30 years now Ionis has been the leading innovator in RNA-targeted therapeutics and I'm extremely confident that we'll continue to be the leader for the foreseeable future. Based on that innovation, we have built a strong foundation with our efficient technology, novel business model, and a culture of yes.

We are now a multiproduct sustainably profitable company delivering value to patients and shareholders. Throughout our history, we've maintained our commitment to innovation. In fact today, our technology is advancing at a more rapid pace than ever.

We've demonstrated that as we advance our technology, we can rapidly apply those advances to our pipeline resulting in better performance and greater commercial opportunities. Because of the advances in our technology, today we have SPINRAZA and TEGSEDI two transformative commercial medicines that represent drivers of near-term value.

We have at least 10 late-stage medicine advancing to our pivotal trials with four expected to be in pivotal programs by the end of this year. With more than 40 medicines in development, we're in an excellent position to continue to increase revenue and earnings not just today not just in the near term but also in the mid and longer term.

And we have a healthy cash position gives us the financial wherewithal to successfully develop and commercialize our medicines and advance our technology.

Most importantly, due to our business successes and financial strength, we have the confidence that we can continue to deliver value to our -- for our patients and shareholders for the foreseeable future. Before we open up the call for Q&A, I wanted to mention that we are celebrating Rare Disease Day tomorrow.

In recognition of this important event, I want to thank the patients, families and advocates who have been our partners in developing transformative treatments for rare diseases.

We hope you'll join our team tomorrow in celebrating with the rare disease community and our tireless efforts to raise awareness for these serious rare and devastating diseases. And with that, I'll turn the call over to -- for Q&A.

William, if you can set us up for Q&A please?.

Thank you, sir. [Operator Instructions] And the first questioner today will be Chad Messer with Needham & Company. Please go ahead..

Great. Thanks for taking my question and congrats on a great 2018.

My question's about SOD1 and what we might expect to hear additionally from that -- at a scientific formal or elsewhere this year? Is it just more follow-up? Are there more patients? What should we expect?.

Well thanks, Chad. What I think you should expect is of course information on target reductions, safety and preliminary information that suggests benefit that of course led to Biogen exercising this option to license SOD1 and move toward registration as rapidly as possible..

Okay. Thanks, Stan..

You bet..

And our next questioner today will be David Lebowitz with Morgan Stanley. Please go ahead..

Hi. Thank you very much for taking my question.

Could you update us on the status of the -- you discussions on WAYLIVRA, where are they right now? And I guess, when can we expect them to make an update?.

They are in progress and really that's all I'm able to say today. The conversations are very active and both sides are fully engaged..

Sure. Thank you for that. And just jumping over to APO(a).

Could you run us through a potential design for the outcomes trial?.

Brett, do you want to?.

Sure, happy to Stan. So David, Novartis is obviously putting the final touches on the design of that study now. As we mentioned previously, we've had very good meetings with regulatory authorities both FDA and EU, so the study is well in place. But they will be describing that study in the near -- in the future later this year and provide some details.

Obviously, as we've presented before, this will be an outcome study and the exact size and -- cardiovascular outcome study. One example that you may look to is the REDUCE-IT study for Vascepa. It's a study that is -- might be exemplary for the type of study that Novartis may pursue. But more details on that will be coming out later..

Yeah, do remember that this study is in patients who have elevated LP(a), who had a prior cardiovascular event and have their other lipid risk factors under control. So, the patients in this study are precisely the patients we studied in our 283-patient Phase II study that resulted in such impressive results.

So the patient population then represents that 8 million number that Beth mentioned and those are -- and as an outcome study, obviously a secondary prevention study has some differences from a primary prevention study. So have a look at the study in that context. Clearly, Novartis is ready to go.

They've been preparing for this for quite some time with a large team. And obviously as an outcome study, it’s going to take a good number of months to actually get it in place and get that first patient enrolled. So we're looking forward to that exciting beginning as Novartis moves ahead..

Thank you very much..

And the next questioner today will be Tyler Van Buren with Piper Jaffray. Please go ahead..

Hey, good morning, guys. Thanks for taking the questions. The first one was with respect to the pivotal Huntington's program and the SOD1 program.

I understand that it's a little bit out of your hands, but can you give us any sort of rough guidance of when we could receive potential Phase III registrational data?.

Well, I think both Biogen and Huntington -- and Roche have indicated that they hope for very early registration. And I think both have said as early as next year, if I recall correctly, we believe that. And in the meantime, obviously, Roche is mounting a very large effort that over the long-haul I think will provide much more substantial data.

Recall that they are performing a natural history study that runs parallel with, I think, 600 patients Phase III study they plan and in the meantime continuing the open-label extension study which might serve as registration -- a basis for registration..

Great. That's helpful.

And with respect to TEGSEDI and the broader TTR franchise, can you first tell us when we could see Brazil approval? And what that opportunity could look like relative to Europe and the U.S.? And then secondarily, what we need to see in the TTR-LRx Phase I later in the year to have that program move in to -- forward to a pivotal?.

Well, answer to the second question, I think, based on information that I have, I would say, we are certain -- absolutely certain that this is a very potent effective drug that will move into Phase 3. There isn't any question.

And with regard to the Latin America opportunity, of course, I refer you to Akcea as the primary source of information about that. But the size of the population in Brazil and nearby countries is quite significant, because of the Portuguese migration. And so, it's a quite significant market opportunity in our mind.

And the registration is proceeding and I would just leave the timing there. If you want more detail then I suggest you talk to our colleagues at Akcea..

Great. Thanks for taking the questions..

You bet..

And our next questioner today will be Ritu Baral with Cowen. Please go ahead..

Hi, guys. Thanks for taking the question. I'm going to follow up on Tyler's original question and Roche's comment on Huntington's and a potential accelerating file -- accelerated filing which is very un-Roche like. I think the speculation is there, could be two strategies.

One, filing on biomarker data from the ongoing Phase 3 that just started, but also potentially, Stan, as you mentioned data from the open-label extension over 2019.

Could that additional open-label extension be more robust clinical data functional data? And would there be natural history data from the natural history trial concomitant to make that comparison by the end of the year?.

Well, as the conjecture is 100% correct. There are two, as being pursued. I think Roche has been fairly clear about that. And I think the behavior of Roche is consistent with the encouraging data. That's the way I'd look at that.

And the plan is, for that natural history study to serve as a quasi-competitor of that -- is contemporaneous with the open-label extension study. And as we've mentioned, we have seen significant reduction in HTT, in spinal fluid and encouraging trends in benefits.

So I think you could take those comments and then probably answer the latter part of your question..

Got it. That's helpful. And then, a follow-up question on your like a TTR design for the cardiac Phase 3 that you mentioned, where you would go after both the hereditary and the wild-type population. How are you thinking about that design right now? And the timing, just given the potential for tafamidis approval in the U.S.

and how that might change the paradigm, the treatment paradigm?.

I'm going to not answer that question. It's a competitive space. We are excited about our plans and we will discuss those at a time that's appropriate to manage this highly competitive space. We have obviously planned for -- so we know that's coming..

Got it. Fair enough. All right. I'm going to stick at a substitute then. If you could--.

Give me one I can answer..

Can you take us through a little bit of the maturity of the promised data that we should get some time later this year on the -- you said acromegaly beta-cell and CF data, what's the nature of those program -- the data that could emerge from those programs?.

Target reduction and evidence of benefit..

Across all three? Got it..

Target reduction and with some benefit. Yes that is -- yes, that's a question I can't answer..

Great. Thanks for taking the questions..

Okey-dokey..

And our next questioner today will be Paul Matteis with Stifel..

On SOD1 I was wondering if you could talk more about the potential regulatory path there.

And then just separately from a market opportunity perspective what do we know about the incidents of SOD1? And do you have any sense of where we are today with patient identification rates?.

Well I can't go into more detail than we have on the regulatory path. For that I think you're just going to have to be patient and chat with Biogen. Patient identification is so far proven to be pretty easy. The study enrolled very rapidly. So, these are patients who know they have a problem are highly motivated to seek treatment.

And so at least to-date, there has been very -- there really hasn't been an issue in identifying patients. Clearly, as Biogen moves forward they will be getting ready for the market and sure participate in all those sorts of things you would expect including going out and identifying where the patients are and all of that.

But with regard to clinical trial, it enrolled actually remarkably rapidly. And the SOD1 mutants represent a small fraction, but I don't remember the exact..

2,000 patients..

2,000 patients. About 2,000 patients my colleagues tell me..

Okay. Is that U.S.

or worldwide?.

Worldwide..

Okay, thanks. And then one other follow-up on the TTR LICA program path forward and I understand if it's not time yet to answer it. But one thing that surprised us with patisiran was Alnylam pursuing a non-outcome study as a path forward for cardiac -- for a cardiac indication.

At least at this stage is that an interesting strategy to you? Or do you feel like to credibly compete with tafamidis or to kind of level the playing field in the market where tafamidis has outcomes data that a CVOT is really the only credible way to go here?.

I'll answer the latter. I think getting approval is a first step. Getting approval for a drug that you can get priced and sold is the goal. And I think having sufficient data to demonstrate value will be very important in the marketplace.

Brett do you want to amplify?.

That's exactly right, Stan. And we have to keep -- also keep in mind that Pfizer has set a bar. They've conducted an outcome study with Tafamidis and that's what I think people are going to be looking for to show real benefits for a drug to treat TTR cardiomyopathy. Of course we're taking all of this in.

We're taking in all of the information that's out there available to us, all of the information that cardiologists are providing to us. Functional readouts are very important. They’ll be part of our study.

We believe outcomes will also be a very important part -- needs to be a very important part of the study, not just to get approval but just also as Stan mentioned from a commercialization standpoint. So we're taking all that in. And it will be part of our study and the final touches on the design are coming together now..

One item that people may have forgotten is we do have an ongoing study still in patients with cardiac manifestations of the disease in Dr. Benson's site. That study continues to go well. And if you recall, the data were really very encouraging.

And I think that study will be updated sometime this year as well right Brett?.

Absolutely. We're going to present some data as the patients now go beyond three years of treatment in both wild type and hereditary cardiomyopathy. And these folks are getting better..

And that study also is informative in our thinking about how we want to conduct the outcome and the Phase 3 development. So stay tuned for those data, we're looking forward to presenting them..

Okay. Thanks very much..

And our next questioner today will be Do Kim from BMO Capital Markets. Please go ahead..

Hi. This is Neil [ph] filling in for Do. Thank you for taking the question. I was wondering if we could go back to danvatirsen.

And if you guys could just give a little refresher on what we can expect to see with the Phase 2 data? And then what other additional opportunities there may be beyond head and neck cancer and how you're thinking about pursuing those? Thank you..

Brett, will give the definitive answer, but I'll just begin by saying what we've seen of danvatirsen both with regard to benefit and safety are very, very encouraging and it is broader than head and neck..

Yes. And Neil, as you probably recall late last year, AstraZeneca presented at ESMO in patients with refractory head and neck cancer. Some very impressive responses and response rate. We had complete responses that were shown very durable partial responses in this patient population.

And this year that study's essentially ramping up and that's the data you'll see in head and neck cancer. And that is the data that AstraZeneca will use to make a decision to go pivotal or to expand on the Phase 2 study this year.

In addition, they've announced that they're also now moving into lung cancer with this combination; remember this is a combination with their PD-L1 durvalumab. And I believe that they have also referred to other cancers too, but they are expanding even beyond these two indications. So this is turning into a broad program in cancer.

And again and just as a reminder, this is our most advanced Generation 2.5 chemistry for cancer or for any indication. And it's going very well excellent safety, tolerability and impressive efficacy..

We're excited about it and I think our colleagues at AZ are quite excited about it too..

Great. Thanks for answering the question. I appreciate that..

You bet. Thanks..

And our next questioner today will be Jessica Fye with JPMorgan. Please go ahead..

Hey guys. Thanks for taking my question.

I was wondering if you there's any color you could provide on your expectations for the shape of the ramp-up for TEGSEDI? Whether there are additional patients that could come online more in a bolus versus sort of more kind of steady going? And then second question switching to SMA, can you just talk about your latest thinking as it relates to potential competition coming online from risdiplam?.

With regard to the TEGSEDI ramp question, Jessica, I don't feel I can provide more information than was provided by our colleagues at Akcea yesterday.

And at least as I look at what's going on I am -- it's very early days, but I'm encouraged and cautiously optimistic about both TEGSEDI's position and its position and fraction of the market that it's likely to command.

And I'm very impressed with the work that Sarah Boyce and her team did to -- be as a standing start years after they should've been and get the organization up and running and have such a high-quality system to manage the patients and physicians who -- and practitioners through the process of getting access to the drug and managing it.

So we're encouraged, but it's early days. And that's really all I can do there.

And can you remind me what the second question was?.

Just how -- your latest thinking on kind of potential competition emerging from risdiplam and SMA?.

Well we are of course watching all of them, but SPINRAZA is standard of care. I think if you look at the data -- the NURTURE data and the total experience in treatment prior to symptoms, it's hard to beat healthy. The vast majority of these infants treated are developing like normal healthy children. We think that's quite an achievement.

And we think the vast amount of information we have, the strength of the information, the fact that the longer we treat the better these patients get makes SPINRAZA standard of care that's going to be very, very, very difficult to displace. So we're very optimistic about the future of SPINRAZA and I think our colleagues advising are too.

We're also of course watching the small molecules and again we'll see how they proceed. But I think all in all, it's good news that additional drugs for these patients are coming and we're proud that we blazed the ground. We like the fact that people follow us where we go..

Great. Thank you..

And our next questioner today will be Mani Foroohar with SVB. Please go ahead..

HI. This is Rick filling in for Mani. Thanks for taking our questions. The first question is a bit of a broad one.

How are you currently thinking about the commercial opportunity in Huntington's across different geographies? And what are you thinking about the potential tempo of the launch after approval of HTTRx?.

I'm sorry, the first question, was it about TEGSEDI?.

I'm sorry.

The Huntington's program and HTTRx?.

The commercial opportunity?.

Well, I can't add much to what we've said and Roche has said when we -- when they exercised the option.

Damien do you want to add anything to all that?.

No, we know there is 40,000 patients worldwide, so it's a very significant commercial opportunity and that's consistent with Roche's view..

All right. Great. That's helpful. My second question is, when thinking about the approval of WAYLIVRA in geographies outside of the U.S. and EU, should we think about approval in the U.S.

as a gating factor for approval in other geographies? Or could approval potentially follow regulatory approval in the EU?.

U.S. is not a gating and it's not gating really for much of any drug anymore. I think an EU approval will give us access to most of the other markets. Clearly, we think -- strongly believe that WAYLIVRA should be approved in the United States and we fully intend for that to happen. We're working today with the FDA to confirm a path for that.

So the EU is an important consideration for us obviously, the market itself and it opens up additional markets..

Great. That’s all. Thanks for taking our questions..

Thanks..

And the next questioner today will be Jim Birchenough with Wells Fargo Securities. Please go ahead..

Hi. Thanks for taking the questions. This is Yanan dialing in for Jim. We have three questions, if we may. So first, we'd like to get your thoughts on capital allocation strategies with $2 billion in cash. Would you consider acquiring complementary assets in RNA therapeutics or gene therapy or gene editing? Thanks. .

Well for quite -- a little while, I think, we've mentioned this on a couple of calls that we have a very active capital allocation planning process. It's been underway for a while. And our primary investment is in our pipeline, in commercializing our medicines that will be commercialized through commercial affiliates and advancing our technology.

We think that's the highest leverage for our dollars. On the other hand, there are other opportunities out there that will -- that could facilitate the development of our antisense drugs that could potentially enhance identification of ways of even better delivery to certain tissues like muscle.

And so, those are all areas where we're actively exploring. And over the long haul, of course, our intention is to be the people who bring the next big platform. And so we're looking at all those things as well.

So we are in the luxurious position of being able to invest as aggressively as we think is sensible in absolutely every area of our business and still grow profits. And we'd be pretty flat -- foolish if we also didn't look at opportunities to expand those investments and we're doing it..

Got it. That's very helpful. And then the remaining two questions are on pipeline. One is on TTR LICA. Just wondering about your thoughts on prospects using TTR lowering as a approval endpoint for that development? And the other pipeline question is on the newer program targeting complement in Geographic Atrophy and dry AMD.

Do you have any timeline for data? And could there be earlier interim? Thanks..

Well with TTR LICA, I think the standard has been set with the reduction of TTR that was demonstrated by TEGSEDI. We certainly will meet or exceed that. Remember that we can with LICA dose to reduce target just about whatever level we want.

And with AMD with the CFB that's a good size study that's just getting underway and so I'd like to defer answering questions about timing of all that for a little bit until we get a little more information about how that enrollment and study is going..

Got it. Thank you..

You bet..

And our next questioner today will be Gena Wang with Barclays. Please go ahead..

Thank you for taking my questions. Just two very quick ones. The first one is regarding TEGSEDI revenue. I don't know how much you can share with us regarding -- the initial first quarter revenue breakdown in Europe and the U.S.

and also the inventories stocking?.

Beth, you want to handle that?.

Sure. Hi, Gena, it's Beth. So for TEGSEDI revenue in Q4 that revenue came from both Europe and the U.S. and we do have visibility into the channel and so feel confident that we can manager inventories appropriately..

Can you share with us like inventory stocking how much contribution to this $2 million?.

We haven't given that level of detail but I can tell you particular given that it's a rare disease medicine that we have very good visibility into the channel and we are monitoring that carefully and managing that very carefully..

Okay..

In general for these kinds of medicines they're sort of just-in-time ordering..

Okay..

It's not -- at least the little bit that I know it's handled quite differently from say a large patient population drug..

I see.

So like one to two weeks inventory stocking that's pretty reasonable right?.

We simply aren't going to answer that. We've answered it as much as we are going to answer it. So you can go ahead and ask it again and I'll respond..

Okay..

I appreciate your persistence. We are very, very familiar with perseverance..

Okay, Beth maybe I ask one more question.

So what is your current cumulative NOL?.

Our cumulative NOLs that we have available for -- as tax assets is somewhere in the sort of $500 million range. We've got more than enough to offset future taxable income beginning in this year and into the future for the next several years.

So we feel like we are positioned very favorably from a tax perspective and to be able to continue to grow earnings both at the operating line, and now that we've begun giving guidance at the net income line on the net income line going forward..

Great. Thank you..

Thank you. We are going to take one more question, and then we'll have to bring the call to an end. We do appreciate all your interest..

And that question will be from Yale Jen with Laidlaw & Company. Please go ahead..

Thanks for taking the questions, and congrats on the year. The first question is about Huntington HTT program. First of all, in terms of the open-label study, I believe it's probably over a year.

Is that the sum sort of data will be reported at the usual report data of that timeframe? As well as the second question here is that for the open -- for the natural history study, would that be a gating factor before they could file for -- potentially file for approval maybe early next year?.

There of course is great knowledge about the natural history of Huntington's. So in some senses, the added natural history study is icing on the cake. Here with this disease in contrast to some relatively rare diseases that there is a lot of information.

And the open-label extension study, which -- in that setting would serve as the basis for filing has been running for quite a little while those patients..

Okay, great. Maybe just one, quick one.

In terms of SOD1, did I get it clear that the Biogen maybe filing for that in next year, if the current study -- the extended study show positive outcome?.

Yes. We're excited about that, and as is Biogen..

Okay, great. Grateful thought and again congrats on this..

Thanks very much..

Well, thanks everyone for your interest. I think you can tell from the words and our efforts that these are really exciting days at Ionis that we're thrilled to be sharing with you. We think last year was an important and very successful year.

We're off to a great start in 2019, and we look forward to sharing lots of important events with you as the year proceeds. Thank you..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines..