Luca Issi (00:00):
Hello everybody, and thank you for joining us for another episode of Pathfinders, a podcast from RBC Capital Market. It explores the fast moving world of biopharma. My name is Luca Issi, and I'm a senior biotech analyst here at RBC. And today it is our great privilege to have Beth Hougen, CFO of Ionis to talk about ESG. As many of you know, ESG is becoming increasingly more important to all key stakeholders in biotech, and the goal of today's conversation is to unpack the Ionis strategy and understand how the organization is making an impact for patients and the world more broadly. So Beth, welcome to our podcast and thanks so much for joining us.
Beth Hougen (00:57):
Thank you for having us. I'm happy to be here.
Luca Issi (00:58):
So maybe, Beth, let me kick it off with a big picture question. Can you maybe talk about the high level ESU strategy for Ionis and how that approach fits the broader corporate strategy at Ionis?
Beth Hougen (01:11):
Absolutely. So as you know, Luca, Ionis was founded over 30 years ago to pioneer antisense as a new approach to drug discovery, and today we have three products on the market. We have Spinraza, our blockbuster medicine that has changed the lives of patients living with spinal muscular atrophy, and two other medicines for rare diseases. So we did this, we founded the company and we're pioneering antisense technology really by putting patients at the center of our mission.
Beth Hougen (01:39):
We hired leading scientists and business professionals to advance our vision, and then we cultivated a culture of innovation with the patient at the center. And so our culture statement starts with “we know sick people depend on us...”, and this is the foundation for all that we do at Ionis.
Beth Hougen (01:57):
Our approach to corporate responsibility into ESG is embedded in how we conduct our work. We recognize we have an important opportunity today to communicate that more broadly and as such, we're looking forward to publishing our inaugural report later this fall on our corporate responsibility efforts. This report is really just the beginning for Ionis. We're looking forward to advancing our efforts in this area. We're looking forward to feedback from all of our constituents. And we're committed to reporting annually on our progress with transparency, which also we realize is really our first step.
Luca Issi (02:33):
That's great. Thank you, Beth. So maybe circling back, when you think about the next two to three years, what are the top priorities at Ionis? What do you think are some of the issues around ESG that you'd like to tackle here?
Beth Hougen (02:46):
I think for us, we're really in an evolution for the Ionis business as we move from a company that's really excelled in research and development to a more fully integrated organization. And what that means is we really need to be focused on how we bring forward more and more best in class and first in class medicines to markets around the world, ensuring that we have the diversity and the patient access in all of the medicines we're bringing through to the market, both ourselves as well as with our partners.
Beth Hougen (03:21):
I think that's a very critical objective for us as we think about the next few years. I think continuing to have a diverse and inclusive and equitable workforce across the organization. And that will begin at the board, as we've already made some important steps there, and continue down through the leadership team and into the organization.
Luca Issi (03:41):
That's great, Beth. I think you mentioned the word diversity a couple of times here in this conversation, so we'd love to maybe double click a little bit and go a little bit deeper on that front and maybe what are the policies in place that will allow you to ensure a diverse, equitable, and inclusive workforce going forward?
Beth Hougen (04:02):
I think at Ionis we have really built the organization with a culture that has innovation and science at the core, with patients as really our driving force. And to be able to execute on the agenda that we set out 30 plus years ago, we really have to focus on recruiting the most qualified candidates who we know will thrive in our corporate culture. And then we need to provide them with every opportunity to meaningfully contribute to our mission.
Beth Hougen (04:34):
From the very beginning, we had a very equitable, from a gender perspective, approach. About half of our founding team were comprised of some of the most highly accomplished female scientists in the industry and their contributions, frankly, have been instrumental to where Ionis is today in advancing our technology as well as in building our pipeline, including our leading cardiovascular franchise.
Beth Hougen (05:02):
We continue to have this deep commitment to a diverse workforce. Really when you're a small organization with a very large agenda, every single individual matters a lot so it's really important for us to have the very best talent we possibly can regardless of race, gender, or any other differentiating factor. I think one of the most important things, as I said, is it really needs to start at the top of the organization, and so I'm pleased to bring to everyone's attention the fact that we have continued to advance our efforts in that regard. We have several women on our board now and recently brought on to our board Allene Diaz. She brings a very unique perspective, has a very extensive background in commercializing and marketing medicines. She also has a deep background in strategic and portfolio planning at big pharmaceutical companies like GSK and Merck, as well as in smaller companies.
Beth Hougen (06:00):
I think we've taken some really important steps to solidify our views on diversity and inclusion and equity at the board level, and we'll continue to do that, and then we'll bring that further down into the organization.
Beth Hougen (06:17):
One of the things that we have recently initiated at Ionis is something we call Employee Resource Groups, or ERGs. These are employee led groups that are funded by the company and they're focused on a particular dimension of diversity. They're designed to support our business goals to diversify our leadership teams, to build cultural awareness across the entire organization, to support talent recruitment, and to promote an inclusive and supportive culture.
Beth Hougen (06:48):
Today we have six of those ERGs, including one specifically for women, specifically for various different minorities, and also for the LGBTQIA+ community. We also have an ERG that engages our middle and high school students to really open their minds to what could be available to them in the life sciences space.
Luca Issi (07:10):
This is a great overview of some of the programs that are ongoing within the organization. I think you touched upon a few points, including gender equality. You touched upon ethnicity, you touched upon different backgrounds. Just curious about how you're thinking about compensation and equal pay. Have you identified any pay gaps at your company? Are there any measures or policy to ensure fair pay among all of your employees?
Beth Hougen (07:41):
Absolutely. We closely monitor our compensation practices and we look very carefully across the entire organization in a very structured fashion. We use lots of data sources, as other companies do, Radford being one that's primarily used across the life sciences industry, and we ensure that we are paying at at least the 50% to 75th percentile against these different benchmarks, and that we don't have any of these pay inequities across the organization.
Beth Hougen (08:16):
Where we see that we may not be paying competitively, regardless of who the individual is or what their race is or what their gender is or what their function might be at the company, we make adjustments immediately and make sure that we maintain that equity.
Luca Issi (08:32):
Got it. That's very helpful. And then maybe pivoting from the G of ESG to the E of ESG, so the environment. I would love if you can talk about manufacturing. It's my understanding you recently executed on a fairly large convertible note, and if I recall it correctly, some of the proceeds are actually being used for expanding your manufacturing capability. So can you maybe talk about that new facility and how is that facility implementing some of the ESG principles that you just articulated?
Beth Hougen (09:05):
Great question. We have a manufacturing facility here in Carlsbad that we have had for 25 plus years. It’s gone through a lot of changes over those years as our business has continued to grow, but it's now time for us to take that manufacturing facility to the next phase and to really find a new site and build a new facility that will enable us to support not only our growing and advancing pipeline, but also the advancement of our technology into new conjugates, into to new chemistries, new ways of drug discovery, as well as new pharmaceutical development and formulations that we need to do.
Beth Hougen (09:47):
It's a very large capital intensive project, as you can imagine, but what's exciting to us is it's going to give us the opportunity to really invest in the latest technologies to ensure that our new facility can really be as sustainable as possible, as friendly to our environment as possible, as safe for our employees as we possibly can make it.
Luca Issi (10:11):
That's awesome. I look forward to at some point maybe touring that facility or seeing a footprint of it at some point. That's awesome. I would love if you can expand on the safety, obviously, of your workforce. Manufacturing obviously has some intrinsic risk for your workforce. So can you just talk about how you're training your workforce to promote their safety and prevent any type of injuries?
Beth Hougen (10:36):
We have a really expert health and safety team whose responsibility is primarily around ensuring not only the environmental aspects of our buildings, but also ensuring the safety of our employees, and they do a phenomenal job. It’s something that, literally from the day that we hire somebody on, their first day at work they get an orientation into our health and safety practices and they get trained on all of the safety aspects of manufacturing and what is necessary just to even be in the manufacturing building, let alone in the manufacturing suites.
Beth Hougen (11:13):
Of course we, as an R&D organization in the life sciences space, we have to follow all of the GXP practices, and I'm proud to say that we have done an exceptional job of that. I can't even count how many times we have gotten through inspections and audits and so forth by regulatory agencies, as well as by our partners.
Beth Hougen (11:37):
We have a whole host of big pharmaceutical partners who have their own standards to ensure that we're following, and so what that has meant for us is we have had more days than I can actually even count of accident free, injury free, time at our manufacturing facility. I like to tell the story that we have a bulletin board that counts how many accident free days we've had in the facility and it goes up to 999, and then it has to start over because it can't go past 1000 and we've started that count over so many times, I can't even keep track any longer.
Luca issi (12:13):
Got it. That's very helpful. One last question on manufacturing before we pivot to a different topic. Renewable energy obviously is also a big topic of discussion on ESG. Can you just give us a sense of the energy consumption at Ionis? What percentage of that energy consumption actually comes from renewable energy, and what is the organization trying to do proactively to increase that percentage over time?
Beth Hougen (12:40):
Actually, we've taken some really important steps, starting with when we built our headquarters about 10 years ago. At that time we actually put a relatively small solar farm on the roof of the facility, and then shortly after that, put in place a very large solar farm. It's absolutely gorgeous actually at our facility, the way we've been able to structure it on a hillside. And it started out with the objective of providing about 40% of the energy usage in our headquarters and primary research and development facility here in Carlsbad.
Beth Hougen (13:17):
Over the last 10 years, as our business has expanded and our activities have grown, that has dropped down, so it's now around 25%.
Beth Hougen (13:49):
We're continuing to look at other technology and infrastructure investments that we can make to get back up to that 40, 50, or even more, percentage for renewable sources, and we're obviously going to include those in new buildings that we're going to construct for manufacturing, and potentially a new lab building here in Carlsbad.
Luca Issi (14:10):
That's very helpful color, Beth. I want to make sure we pivot to the blocking and tackling of an organization like Ionis that obviously runs a lot of clinical trials. Can you just maybe talk about what are the steps in place to make sure that both countries with lower income, as well as maybe historically under-represented demographics, are included in your clinical trials. That's a common struggle. So just curious if Ionis is doing anything there to make things better.
Beth Hougen (14:46):
I think your point is a great point. It hasn't been really front of mind for the industry at large, and I'm really happy to see that that's changing now. And I'm really excited about some of the things that we're doing here at Ionis with a pipeline of 40 or so medicines in development, not only by Ionis, but also by our partners. We're conducting clinical trials across the world, so it's really important that we ensure that we reach patients who need our therapies as we advance these trials, and that we can advance our trials to completion as quickly as possible. And so that also means ensuring that you are finding the patients in need so that you can enroll your studies as quickly as possible with the patient populations who are most in need of your medicines, and that will give you the most opportunity to get to the market quickly and hopefully successfully launch your products.
Beth Hougen (15:44):
What we try to do more and more now is to really match the diversity of our clinical trials to the demographics of our study patient populations. I'll use our Eplontersen Phase 3 program as an example, because that's really one of our more recent successes. We've really been able to ensure access and diversity with a number of things we've put in place with that program.
Beth Hougen (16:08):
As you know, the polyneuropathy indication and trial has fully enrolled now, and we're looking forward to that trial reading out mid next year. Through working closely with not only our clinical operations group, our clinical research organizations, but also with patient advocacy groups and our corporate communications teams, we've been able to put a whole host of initiatives in place that are allowing us to recruit patients who really more closely resemble the patient population for whom this treatment is going to be most beneficial.
Beth Hougen (16:43):
We're taking that even further now in our cardiomyopathy Phase 3 study, and actually think that this may be one of the most diverse clinical trials we've ever conducted. And so the work that we're doing with Eplontersen has created a foundation, if you will, and established a whole host of efforts that we can now incorporate into our clinical trials broadly.
Luca Issi (17:08):
We touched upon clinical trials, but you also have products that are approved on the market, and you mentioned obviously Spinraza being a blockbuster. So we'd love to talk a little bit about that. Obviously patient safety comes first. Can you just talk about pharmacovigilance here? What are some of the platforms that you use to ensure the proper side effects? Obviously clinical trials have only a small number of patients, but when the molecules actually are used in the clinic, you have a much, much larger pool, so it's important to report those side effects. So we'd love it if you can maybe educate us on what are you doing on that front to make sure your approved molecules are safe?
Beth Hougen (17:49):
It's a great question, and it really has two parts, because Spinraza and Tegsedi and WAYLIVRA are marketed by companies other than Ionis. They're really marketed by, in the case of Spinraza by Biogen, and in the case of Tegsedi and WAYLIVRA by Sobi and PTC in various different markets around the world. And so we have different relationships with our commercializing partners for our marketed products.
Beth Hougen (18:15):
In the case of Spinraza, the pharmacovigilance sits squarely in Biogen's areas of responsibility, and with over 11,000 patients on drug in more than 60 countries around the world, and the safety profile that we've seen from Spinraza, I feel very confident that Biogen is doing an exceptional job of ensuring the safety of those patients.
Beth Hougen (18:39):
In the case of Tegsedi and WAYLIVRA, with Sobi in particular, we are retaining the marketing authorization at Ionis and therefore the ultimate responsibility for pharmacovigilance and the safety of our patients on drug, sits with Ionis. And so we have an exceptional pharmacovigilance team.
Beth Hougen (19:00):
As we think about pharmacovigilance for our clinical trials, that's a critical aspect of the company, and it's partly because we have a platform technology. So we learn a lot about our medicines and the profile of our medicines, and a lot of those learnings actually translate across different drugs and into different therapeutic areas.
Beth Hougen (19:26):
Many, many years ago we established an integrated safety database that we maintain for all of our medicines and also our partners contribute to that, so all the data that they collect through clinical trials in particular, feeds into this integrated safety database. And we've actually reported off of that and published findings from that database.
Luca issi (19:50):
Thank you, Beth, and I'm glad you brought up that dichotomy between a wholly owned program versus partner program because obviously the responsibilities there are different.
Luca Issi (19:59):
Then maybe in the last few minutes we have, I think we've talked about the E and the G of ESG, and now let's talk about the S of ESG, which is probably the most inspiring, especially for an organization like yours, that has tried to make an impact for patients. So can you just maybe talk about n-Lorem? I think you have a very strong relationship with that foundation, which obviously has the goal of providing RNA targeted medicine to patients that have really ultra-rare diseases. Can you talk about that relationship and why that's important, not only for patients, but for you as an organization?
Beth Hougen (20:33):
n-Lorem was really a goal of our founding CEO, Stanley Crooke. He was the founder of Ionis and really, in a lot of ways, the father of antisense technology, if you will. He has always believed that our technology is uniquely able to address these very ultra-rare genetically based diseases. When he left Ionis as CEO, he formed the n-Lorem Foundation. We are contributing to n-Lorem's mission, not only financially, but also with in kind activities. It’s the antisense technology, if you will, that we use to look for therapies for these patients who may be the only one, or maybe one of only a handful of people, in the world with a particular genetic mutation, and so we use our research capabilities and our technology to find medicines for these patients.
Luca Issi (21:41):
I'm sure another event that you're particularly proud, we actually checked it out a while back, but you're hosting this annual community event called Surf Away SMA. Can you just maybe talk about that event and why that's important for you, for the patients, for the family of the patients, for the caregivers, all the stakeholders involved in this devastating disease.
Beth Hougen (22:07):
Surf Away SMA is one of the most fun experiences you're ever going to have. And so inspiring. It's run by volunteers from Ionis and really it's an opportunity for SMA patients and their caregivers to come out to the beach at Carlsbad, right here in sunny Southern California, and be able to surf and experience what it feels like to have the freedom of the ocean and the waves and the sun on your face. And they get to surf with the local surf celebrity dog, Ricochet.
Beth Hougen (22:39):
We love to be able to do this. The smiles on these kids' faces and these patients' faces, and the sheer joy that they get from being able to be out in the ocean and the sun, it warms your heart and it makes what we do so meaningful that we can actually have created a drug and Spinraza that could give these patients the ability to live a more normal life, to live more free of their disease, it really makes what we do so much more meaningful.
Luca Issi (23:06):
That's fantastic. It's very inspiring, and probably one of the reasons why all of us have decided to be in biotech, at the end of the day we're all trying to make an impact for patients.
Luca Issi (23:15):
Beth, this was a great conversation all around. We really, really appreciate the time and all of your insights.
Beth Hougen (23:22):
Thank you for having me. This was truly enjoyable. We look forward to continuing our corporate responsibility efforts.
Luca Issi (23:28):
Thanks again, for the time. If you'd like any additional information here on this episode, please contact us directly or visit us at rbccm.com/biopharma for more insights. We hope you enjoyed the episode and we'll speak to you soon. Thanks again.
Outro (23:54):
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