Praxis Precision Medicines, Inc. (PRAX) Earnings Call Transcript & Summary

Thank you, everyone, for joining us for the Praxis fireside chat here at the TD Cowen Healthcare Conference. I'm covering analyst Ritu Baral, and joining us from Praxis, We have Marc -- come back, Marcio. We have, to my right, Tim Kelly, CFO, and Marcio De'Souza, CEO, who I'm sure you guys all know. Let's start right away. I know right. Well, thank you guys for doing the breakfast this morning. We were really able to get into some of the nitty gritty, and we'll just keep briefing off of some of that. But let's start sort of higher level. It's going to be an enormously busy year for you guys. We'll start with the main driver is Ulixa for Essential Tremor, but you have NDA submitted both for that and Relutrigine. You filed as we started off this morning at breakfast, you filed and will not be requesting priority review. So you are anticipating for Ulixa, a standard review process. Can you remind us of the factors that guided this decision and especially addressing keeping your relationship with FDA as strong as possible?

Perfect. The multiple factors, right? I think there's a major economic factor here that has definitely drove a lot of the decision to file earlier this year, the NDA as a standard review and the fact that, we strongly believe with the market being as large as it is for Essential Tremor, addressable at launch over 2 million patients at peak, much larger than that, that it would eventually be subject to the IRA mandated negotiations and so on. And at that point in time, which is anywhere between like 7 years for the negotiation, 9 years for the full implementation, as we all know, it would be pretty close to the peak of the drug, if not at peak. And therefore, the impact of the negotiation will be the highest one would have in terms of revenue. By the current negotiation calendar -- by calendar year of the approval. So an approval in December, takes 1 year away from the negotiation. So it's very important for us to preserve that since it would come pretty late in the year. So it's more economically viable to do it in the beginning of the year. I think the second that you touched upon, which is quite important as well, why we take a different view of what's happened on the FDA than most people out there, meaning a less dramatic view, right? We actually believe that for the most parts, it's been pretty similar to how the agents operated before. In our specific case, has been, I'm going to call peaceful, meaning as expected, several meetings, several discussions, 2 NDAs filed, as you just heard. We are very cognizant about the reduction in the staff of the agency. And particularly, when you think about the Office of Neuroscience and the Division of Neurology 1 and 2, there's a lot of applications. There's a lot of stuff on the review. So when you put the two and two together here, the fact that it economically make a lot of sense for us and then from the agency, its just simpler. That was the choice we made to preserve these on both ends of the spectrum.

Investor focus has obviously been on staffing at the FDA and meeting time lines. In your review team in particular and in the division, can you talk about turnover or any change in leadership and change in your work -- main relationships?

Yes. So ulixa or ulixacaltamide, as we call ulixa internally is on [ GN1 ]. It's being always on [ GN1 ]. All the movement disorders are on [ GN1 ]. The -- since the end of Phase II meeting was in June 2023 until today, there's no change in staff, which is kind of important. I wouldn't say it's as fundamental as a lot of people talk about, but it's quite important to have continuity. We had very recent interactions, meaning like December interactions with them outside of the regular interactions like submitting the NDA, receiving the acknowledgment letter and the other things like formal meetings. And it's good to see the same faces. As you probably know, at the pre-NDA meetings where kind of first time meets the entire review team, right? It's a little bit of -- we don't know who are the review team to that point, a couple of people. It was good to see that was really everyone kind of renewed from previous interactions as well. So very good continuity on that. On the [ DN2 ] side, that is the epilepsy part of the business, there was one change last year. You probably know Dr. Lee left the agency. The good news, I would say, for us is that the replacement was actually the Director of [ DN1 ].

Sorry, Dr. Lee is...

Paul Lee -- Emily [indiscernible] being on board. So now she's [ DN 1 and DN 2 ]. So in a sense, increases the interactions with the same person with the same overall leadership, allow us to understand a little bit more what they're looking for, how they're operating. I would say, for the most part, on any major requests, they met or exceeded the time lines getting back to us. And from time to time, there was a few day delays, which I actually consider -- I definitely do not submit all my expense reports on time. So I understand when there are a few like documents that don't get returned to us on time, if they are not consequential, like things that can take a little bit more time, but nothing consequential has been delayed. So I don't know if it's luck or if it's really the actual division, but I'll take either. And definitely, our experience has been quite positive.

So your NDA submission included the standard titration schedule from Essential3. But you also requested that the approval be for clinicians to maintain the 20-milligram dose for an extra week if -- if tolerability issues were seen. So this is sort of like a suggestion to hold that 20 milligram for an extra dose. Are there any other titration schedules that are alluded to in your work -- and is this a labeling discussion? Or is it like a material -- a review issue for the mid-label? Like will you have clarity on this by the time of the mid-cycle review?

Likely. So maybe it's important to reflect on the genesis of the discussion, right? So when you give ulixacaltamide to a patient with Essential Tremor, 7 out of 10 of those patients do really well during the titration, from a tolerability perspective by week 2. By day 14 is the first time we assess their tremor impacted in their life, and they are basically at full efficacy at that point in time. If you look into the results we've shown publicly, you're going to see more of that at [indiscernible]. So very fast, very effective, relatively safe since we always call generally safe before a drug is approved, right, in the U.S. at least. For about 30% of them, the impact of dizziness can be problematic from a tolerability perspective. And some of them are discontinued the drug because of that, not because they're not in the way or getting efficacy, but because of the tolerability. So when we were with the agents, the discussion was kind of we like the fact that the vast majority of the patients have good tolerability and good efficacy. But it would be ideal in a population that is completely underserved, right? Really nothing works here from a pharmacological treatment perspective, to extend to its maximum, the ability for patients to respond. And the agents had suggested that we should think about it maybe for later in the future, after approval to do something. But we have a fair bit of data from the Phase II study and for patients who didn't discontinued the treatment, that gives us the, I would say, knowledge, of course, impression on the case they have to review that keeping the patients at 20-milligrams would actually resolve this for virtually all of them. So we had this discussion with the agency. They said, well, if you believe that, that would suffice for us to review, including the submission, including the proposal and the label, which we did. We included in submission, we include the proposal and the label, and we included a new titration pack as an alternative form, in case that happens. So this is going from 70% of the addressable population launch to like close to 90%, 100% depends on how it's going to look. So it's our joint objective as a company, and the FDA to try to help as many patients as possible here. Now it's always a matter of review, right, to the last later part of your question. So the agent is going to review, they're going to agree or not, going to have a discussion or not. But it's a fairly solid scientific proposal and would be ready to support that.

I think the only thing, -- if I can just add quickly, too, this is an issue of tolerability, not safety. I think that's a really, really important distinction in there. And one of the things that you don't have a chance to do in a clinical trial setting is for a physician to interact with the patient, say, this is what's typical of this drug. Here's how you're going to feel. If you don't feel great, call me. That doesn't exist in a clinical trial setting, but it does in the real world. And so I think that's going to also be part of our launch and our medical communication as well that we're working with the physicians on how they can best administer ulixacaltamide also.

One of the things that we've discussed with KOLs is the idea of the daytime dosing, like the fact that in the trial, the protocol demanded daytime dosing. So as we think about like dizziness and brain fog, is nighttime dosing just something that patients and doctors can just do? Does it need to be -- do you want it to be part of the label? Can it be helpful?

So it was done exceptionally in the clinical study and mostly for shift workers, since we actually dictated morning, as you said, or under approval of the sponsors. And we did approve a bunch of those during the study. So we do have actual data to substantiate, if that is the request from the agents. This is the kind of thing that physicians, as you are hearing, you're incredibly comfortable in making the choice themselves, even if it's not the exact recommendation, [indiscernible].

Prelaunch activities. as we discussed this morning, they're well underway. What specific operational milestones need to be achieved over the next 6 to 12 months to ensure that you are fully ready for the Ulixa launch? We're talking disease awareness? Are we talking about endpoint awareness, like the meaningfulness of the endpoints? Is it prescriber identification, the index of suspicion about who your sales force is going to target and then obviously, sales force hiring, buildup, et cetera.

Yes, I would say -- take a shot, I think the answer is yes.

All the things.

Exactly. We are very excited about the potential of the drug, but also there's a huge amount of work to go into ensuring it's successful. I was an economics undergrad. So I think in terms of supply and demand. On the demand side, we have talked a lot about how we identified over 200,000 patients with Essential Tremor interested in participating in the clinical trial over the 15-months, when we were doing the recruiting. We want to get that number up to be multiples of that by the time we get to launch. And so things like disease awareness or the type of activity we can continue doing, we were very successful with a particular form of targeted advertising, we want to maintain and not really invest in quite a bit more so that by the time of launch, there's even more patients who are aware that there is a therapy for disease that...

So DTC disease awareness in advance of the launch?

We call it GSC, but yes.

What is DTC...

Like dizzy state, like education and all the parts that's done right now, after AAN, I didn't mean to interrupt, Tim, and then you pick it up again. After AAN next month, you're going to see our GSC platform really taking off, like AAN is like a device...

Am I going to get like the Instagram target...

You will...

But yes, you can see how important that is. And what we found in the study is the average patient had the disease for 30 years. And so if you can imagine that, that's now a lot of what people have accepted in our life and to say that there's something coming, that's a really important activity for us to build up that demand. On the supply side, then we've got the medical community. And it's not only the physicians who we need to ensure we're targeting and finding the right ones, educating them. That's why AAN is so important for us. We're starting with neurologists, and that's where they're all going to be. So a hugely important meeting. But we also need to work on ensuring that the pharmacies are ready, that the channel is ready, that we're preparing things like Patient Hub Support. So we're putting all of these things in place.

Will you do specialty pharmacy distribution? And what's the parameter of the Patient Assist Hub that you guys are thinking?

We'll tag team this one. I think given the -- and we'll probably talk about pricing in a moment. I think given where we're looking at pricing that a specialty pharmaceutical -- or pharma channel does look appropriate for it. And then in terms of hub, we want to ensure that patients are not having any issues. If there is step through, we've conservatively assumed that all patients will need to step through for [indiscernible]. So we want to be sure that, that's streamlined any issues they may have with prior authorization. We want to be ready to go and proactive so that this is a very positive experience for them.

When you look into the scale of this launch, right? So imagine that nothing changed between now and the time of launch, in a few months. There are about 1 million patients being seen by neurologists every year in the U.S. for Essential Tremor prescriptions, not treatments, just to actually get prescription for something. It's about 1 million that was just seen. So nothing else. Markets don't stay static, but ignore that for a minute, take that 2 million patients that are like seeking treatment right now and then apply, whatever assumptions you want for the first quarter of launch. It's a large volume of patients. I want to make sure they have the best possible experience getting ulixacaltamide. That's why, Tim was just mentioning, we're going to do, I would say, special pharmacy and hub support can be completely full white glove, like as you do in a gene therapy for a rare disease.

Which you'll do for like...

Relutrigine. It can be a middle of the road where you're actually taking all these barriers away. We're helping the office when they need, but it doesn't burden the system as much either. And that's where we are picking right now, the design. And that is going to facilitate the launch without creating an extra financial burden on us or in the system or on the physician, that is prescribing. When you're testing this with providers in general, they think this is great, and facilitate dramatically how they're going to get these patients in. But it also gives us control of the experience, which is quite important on the first few months of launch, right? There is no neurologist in the country who has one patient. This is not the kind of disease that it goes like, oh, I only have one patient. They have 10, 20, 30, hundreds. Some of them have hundreds of it, they just see. So we want to make sure those first few patients are really going really well so they can maximize the drug. Because when we ask physicians having advisory boards, having a lot of research, being done with them, because the data is so consistent amongst all the subgroups, a priority, they don't have a way to pick what patients would respond. So the conversation we're hearing back from physicians is like, I will talk to all my patients about this drug. It becomes even more important to have the proper parameters education, when that is the kind of launch we're going to have.

Right. So how should we think about this? Because like myself, I think -- or Athena, we're going to be breaking out your 2027 quarters pretty shortly. So as we think about out of the gates, how do you think about going broadly and doctors wanting and having a lot of patients to go to, but also tightly controlling for a good experience so that the reputation of the drug is positive. So you filed in February. We're thinking standard review. How should we think about 2Q, 3Q, 4Q of '27? Do you want to limit it? Or are you just going for it?

No. That's why we're putting a little bit of this -- we are building expectation in a sense maybe more than we should around AAN, right? So AAN is the first time, number one, the data is going to be presented in a scientific audience, right? So we have multiple presentations at AAN. AAN is the most important neurology meeting in the country, arguably in the world. Virtually every large practice or important neurologists in the country is attending. It's a really concerted effort to get the first wave of knowledge of the data, which exists in several thousand now, but not only 13,000 or so thousand neurologists that would be the target at launch. From that point on, there is a split. There is a lot of towards patients and I would say, reactivating patients, which we did quite exquisitely for the clinical study. So we think it's more, a build on what we've done before, was a lot of builds with the physicians, right, for the MSL conversations, for leadership conversations and just general education between the next quarter. I think when we turn to Q3 and Q4, then there's a lot more certainty on the timing of the approval, right? That's beyond or around mid-cycle call, like we'll have an idea -- that's where the deployment becomes like full force towards really the kind of support is going to be given, education. That's where the last payer discussions start happening as well.

The last payer discussion?

Absolutely. Like that is a little bit of a misunderstanding. Most medical directors and payer systems don't even get you through the door, if you don't have a PDUFA defined because it's a waste of their time, right? So you'd have preliminary discussions right now. We have reasonable discussions when the PDUFA is given, which is soon for us. But we really don't have discussions until they run their numbers on their claims and then you can sit down and talk about impacts and everything else, which...

So you need a PDUFA rather than the label to start discussions?

Yes, we absolutely don't need a label to start discussions. To launch a drug, we're going to need the label. But that's -- in a sense, it's too late to have the conversations with most of those entities. And then, of course, after launches, full deployment, commercial campaign, then we're not talking about educating anymore, about the disease or a potential. We're talking about what is in the label and what's consistent with the label since that's the current legal standards, consistency with the label.

So you mentioned pricing. Does that mean you're -- what price will -- give it a whack today?

Yes. There's still definitely a lot for us to be looking at. I think what we have been considering is, you're looking at a price that reflects the innovation of what this drug is, the great data that we saw, the safety that it brings as well. I think we have a good analog when we look at some of the tardive dyskinesia drugs who are kind of at the low 6 digits. We've got a lot of range. If we want to go that high, we definitely probably could. I think there's a place more in the midpoint to say as a starting point, that gives us a place that -- a good place to start from. And I think when we go into a future world with IRA, the way discounting is probably going to be done, it's better for us to start at a higher place where data can inform, if we need to take any discounts rather than start low and expect annual inflation increases. Those days are probably waning. So we look at a little bit more, at that midpoint to start.

And thoughts on the size of the sales force?

When you do -- we did preliminary sizing, I'm going to do like final sizing now we just refreshed our -- you asked the question before, we didn't properly address. Because this market has been, from a patient perspective, established for so long that for a drug, there is no drug, you can literally map patient to NPI, right? So you know who has been seeing these patients for the last...

NPI is...

Like the identification number for any prescribing physician. Chart is there, has one. Everyone here who is prescribing, has their number by heart...

You're so on, right there.

That's what I call out because he's a practicing neurologist. And so you can just go and run these numbers. This is public. Well, we buy them and you can just see. So we know who has been seeing these patients because we're not going through -- as you know the disease, we don't know. So we have to run these algorithms to extrapolate. Here's pretty simple. It's a one-to-one relationship, antisense ICG-10 to an NPI. So we know the concentration. The number would say that we should stay around 200 or so to cover well. The country, we will go higher than that. And it's a little unusual for companies to say they're going to go higher at the time of launch, but we're going to go higher for multiple reasons. One, there are a few adjacent, like very large practice outside of neurology that need coverage. So one. The two is, we wouldn't want this launch to be limited by not being able to generate the demand on the prescriber perspective. So we've seen multiple launches, particularly in neurology, where the company takes the opposite approach, right? So we need 200, we start with 100. And then in quarter 1, it's 125. And quarter 2, it's 200. And you're always chasing the market versus actually rightsizing for the success case. So you should expect 300 or so that would cover well, the U.S. would cover well.

And are you going to hire them earlier so you can deploy them for a disease awareness? Or is this sort of like a conditional offer upon approval, PDUFA date?

So the beauty of all here is that we have some flexibility with both drugs, right? And...

And also your balance sheet.

Well, yes, but we're always very careful with the -- because money is there until it's not. So you have to continue being incredibly responsible. I think it's important to properly invest. But at the same time, the more the certainty increase on the timing, it's not if, it's when, for the approval of these drugs. that we can deploy more and more, but it can be sequential. So we don't have to do a one size fits all here. You're going to see a lot more people in the field before for us and then a few months before launch, it has to be fully deployed. You can't wait for the day that you have certainty to actually deploy, it's too late.

I do have to spend a few minutes on relutrigine because that one is going to get approved first. And with the priority review also filed, so that PDUFA is probably Q4. Are you currently building out the rare epilepsy sales force? We talked at AES about a separate targeting effort. Do you need to build disease awareness here? And how much do you have to address this issue of the utility of stacking sodium channel drugs in this population? Because like you weren't supposed to be able to do it at all. Some people said it was going to make it worse and now it's making -- anyway?

Here we are. And we are wrong again in cycles, right first time. The -- it's not an issue whatsoever. I would say patients did really well in this study, both on safety and on efficacy. So I think if anything, the community is incredibly excited about this, very different dynamic that we're discussing on ET, very, very different dynamic. So there are two major drivers here. So one is the number of centers differently from ET, very concentrated. So about 10 centers in the U.S. -- are a referral for the patients. So they're very well characterized. They don't see all the patients, but they definitely consult on a lot of those patients, a very good relationship with pretty much all of them.

And that's all you need to target those 10 centers?

That is not all we need to target, but definitely, they are the ones that between now and midyear, we spend most of the time. So they have all, like the understanding of the data and most of them have already. It's just like complementing a little bit. Then the second wave is really the community neurologists that been caring on the day-to-day for these patients, right, pediatric neurologists, particularly just connecting with them. There's always a smaller number. It's only a few thousand patients, like 5,000 to 10,000 patients addressable at time of launch here.

For the SCN2A?

Yes for SCN2A, and then the last one after that, patients who were born in the last 10 years in the U.S., which are most of the addressable here, they all have genetic diagnosed. There's like sometimes people talk, oh, the identification is being pretty much solved in the U.S. right now. But the previous ones don't. So really getting that referral to make sure they get diagnosed, that's the second wave of the launch. It is important that we start earlier as well. So we know you're responsive to certain sodium channel blockers. So it's likely, but you haven't done a gene panel, it's important for that as well. We do see -- when you, in this case, triangulate medical record, EMR with other data that there are far more patients that don't have the final. We are not currently including them on the TAM, but...

The final genetic diagnosis?

Yes for the 8A. And then most importantly, right, it's like we're running the EMERALD study. It's going really well. That will expand the market fopr the larger deal...

And by how much?

By 20-fold.

20-fold. And that's going to need expansion of the sales force at that point?

Yes, absolutely.

Next data catalyst is POWER1, though, and that's vormatrigine for focal. That data is due Q2. Let's talk about expectations around what median seizure reduction rate you're going to show with top line and what your expectations for placebo are?

If you look into the last 10 years or so of epilepsy drug development, not the narrative, the actual data, it's been pretty stable, placebo, and it varies anyway between 0% and 20%. 20% is probably the most conservative someone should pick, and that's why we picked. That's why others pick as well to calculate. So I think that's a good point to start with a drug showing anywhere between like, I would say, double of that to -- at the lower end to triple of that on the higher end. So anywhere between 20% and 40% -- 40% and 60%, sorry. I don't know basic math. That would be a reasonable here. So we use 30% placebo adjusted as the target. But nothing wrong. I know others in this space have been talking about their drugs that read out soon possibly being as low as 40%. I don't think it's a problem actually. I actually think I agree that would be a good benchmark for them and it's a good benchmark for us. But everyone is looking for the 50s as they go to here. Very large markets, like over 2 million Americans with [indiscernible] seizures, the majority of them by far having breakthrough seizures every year, not a minority as some of the literature tends to refer to. In our very extensive research using Electronic Medical Records, claims analysis, tokenized data, it's over 60% of the patients that have breakthrough seizures, require medication change in a given year. So 1,2, 3, 10 drugs new in this space, they all do really well. This looks a lot more like DMS markets than the historical epilepsy market, where there's a space for several drugs, several modalities, several ways to do it. We just think, very excited about the new wave of epilepsy drugs in development, but particularly for vormatrigine.

Great. Last question, I can't forget about Elsunersen. That Phase III pivotal is ongoing. How is enrollment going?

Good. So you might recall that last month, I guess, last quarter now, passed very quickly. The FDA suggested we remov the sham, was originally sham-controlled. They strongly suggested that we removed, we actually strongly agree with them, and we removed the sham from that study, made an emergency amendment to the protocol, so the patients could be switched and it's going well. We also have a proof-of-concept study, I would say, proof-of-concept plus reading out in Q2, which has 9 additional patients on a sham-controlled cohorts that we've done. That would further, in our view, de-risk this opportunity for elsunersen between later in the year, beginning of next year, we should have the results of the Phase III. So we'll be filing for another NDA, hopefully, in the next 12 months as well.

Great. With that, we are over time. Thank you, Marcio, who wasn't supposed to be here.

Thank you, Ritu.