Praxis Precision Medicines, Inc. ($PRAX)

Great. So welcome, everyone. It's my pleasure to introduce the President and CEO, Marcio Souza; and the CFO, Tim Kelly, of Praxis Precision Medicine. My name is Kevin Strang, I'm one of the biotech analysts at Goldman Sachs. And yes, so welcome.

To start us off, maybe for those that are kind of newer to the story, would you mind giving a brief introduction and maybe what you view as your core competencies and philosophy as a company?

Yes, absolutely. I appreciate the invitation and being here today. I'm Marc Souza. Tim Kelly, our CFO, is here with us. I think what we're trying to do right now, right, and arguably done part of this and going to be hopefully finalizing the next part and then [indiscernible] and so on is [indiscernible] like a fairly large number of markets in CNS. When you think about like essential tremor, for example, which is our arguably largest part of this, has really been nothing. And maybe Tim can talk a little bit about the size of the market and I'll go back and talk a little bit about the science and so on. And everything else [indiscernible] when you think about ET, but, yes.

So when we talk about essential tremor, it is one of the largest movement disorders, roughly -- a prevalence of roughly 7 million patients in the U.S., about 2% to 3% of the population. And there's never been a drug designed for this population, which is staggering given the size of it. Another movement disorder, much better known, is Parkinson's, that has a prevalence of about 1 million. If you get a sense of just how large the essential tremor opportunity is, while there's a prevalence of 7 million, our initially addressable market is about 2 million. And we get to that number from a longitudinal claims analysis that we did a few years ago that the conclusion out of that was there's about 1 million patients currently on treatment, and propanolol is the only approved drug, they're taking a number of other things off label, and then an additional 1 million patients who have tried treatment but come off of it. And so when we look at as we're launching, we're not going after the full 7 million. We think there's definitely opportunity down the road to bring market share to that group, initially focused on those 2 million patients who are currently substandardly treated or have tried something and gone off. And then there's an additional about 200,000 patients who are diagnosed every year as well, particularly as this is an aging population and it is a disease that progresses with age as well. So we talk about 2% to 3% of the broader population, it gets to be about 6% to 8% of the 60-plus population also. There's quite a lot for us to focus on and target. And what I think we'll go through in the next few minutes is the strength of our drug ulixacaltimide to address this market. We are in a phase right now where that's under NDA review with the agency. And so a lot of what we're doing right now within the company is to prepare for the launch in the upcoming PDUFA date in late January of next year.

And I think why I wanted to talk a little bit about the numbers, right, and get Tim to speak about that is [indiscernible] starts with like the studies and like the FDA process and things like that, but in a sense, the reality is there is no other market where you have like 2 million, 3 million, I think we've been putting this on the lower end of 2 million or 3 million patients, and we have basically absolutely nothing for those patients. I think from a market opportunity perspective, it is completely different than any other market, when you think about like competency, as you said, we proud ourselves from really thinking very deeply about like new markets, as you probably -- as you just heard, not only on the understanding of the next phase, but before that, but there are reasons why on a market that large, no one but us up to this point succeeded. And [indiscernible] our relationships with the agency and making sure at moments like now, particularly in drug development, I think we have to be very thoughtful about how we engage with the FDA and with the other entities on top of all the work. Tim just mentioned about that we've done with physicians and understanding the market and so on. We have very deep understanding of the payer, like in how they view the drug, and therefore, like what kind of process and particularly support for these patients in each put in place. But there's no place we -- I would look into that does not result into a like very, very large. And I think sometimes when we put numbers like $10 billion [ peak ] revenue for this drug sounds, for some people, a little bit absurd because we just haven't had a lot of $10 billion drugs. But if you actually take the very simple mathematical way with like noncompetitors, millions of patients, like a drug that is very clearly effective and safe for these patients, actually becomes in a sense a conservative number, if I may.

So sort of to bookend that, 2 million is somewhat of a conservative number in that they've already been diagnosed and treated either currently on therapy or have come off. And so I guess for ulixacaltimide, can you talk at a high level about how you can address sort of this unmet need for those patients, the efficacy benefit that you're seeing? I guess we can start there.

Yes, absolutely. So there are very few times, I think, in drug development, particularly when you are looking for a new indication, that you not only have like a large indication, as you just talked about, but what do you measure and what patients actually are asking for the same thing, right? So when we're talking -- you can imagine we talk to thousands of patients at this point in time, including a very recent survey we put a little bit in our corporate deck. And we're really trying to understand what do you expect from the drug, number one, and how does this condition affects you. Because it's so common, I think one of the biggest features, unfortunately, I may say, of essential tremor is that people just try to hide. As you go through life, the vast majority of the patients start having as soon as they're teenagers. That's one of the misconcepts, like most people think about like an old people disease, but it's actually very early life that it starts. 70% of them have family members. So that's normally second or third or fourth person in the family has it. But then it does slowly progressed on losing functions. And the reason why that's important is it's an increasing disability disease, right, where you are like feeling some internal tremor and then a lot more external, and then like you can't write very well and progress to, full blown, not being able to do anything, like no dressing, no eating, no -- of course, never leaving the house to socialize and things like that. So the FDA gave us a very strong advice a few years back that they had no interest in a sense on measuring the tremor itself. It's very wise. And at the time, we didn't think was so wise, but now we realize why it was. Because it varies a lot [indiscernible]. But what it does not vary is the impact in life. Like it would be incredibly difficult for those patients to be like here and like drinking their coffee as we are, or even having the breakfast as you had this morning. That's not possible for them. Like compound that with age, right, and then you see like this really big problem with an aging population as we have in the U.S. The results of the [ ESSENTIAL 3 ] program, we had anywhere between, like, I would say, the mean on about 5 functions on the AGL [indiscernible] to all the way to 0, like meaning the AGL goes to 0, no function effect. Right? When look into the American Academy of Neurology, we had the plenary meeting for like clinical research, over 20% of the patients had more than 12 [indiscernible]. Like when you put that together when we're talking about the size of the market, this is not a small change. Even if -- I would argue that even if it was small, it would be quite important with to judge what's important for our patient. So those are very large change on their lives every single day that gives independence in a sense to some of those patients.

Got it. That's helpful. And you've highlighted sort of the distinction between tolerability and safety when it comes to the profile of the drug. Can you characterize the tolerability profile that you're seeing?

Yes. So the drug acts on an incredibly important part of the brain, primarily, right on the thalamus. And I think what we learned as well is there are certain patients, like about 70% of the patients, you can go very quickly to maximal efficacy and they tolerate the drug really well. But for about 30% of the patients, it's a little bit too much to go that fast. Of course, we could just say, let's ignore like this 30% or so, because with a market of a multimillion number of patients in the U.S. from an overall like financial perspective, irrelevant. But that's not how we think. Every single one of those patients important to have the drug. So why we didn't have any safety concerns, and I think it's incredibly important to highlight this when you're studying up a patient that the average age is on their 70s, in our study was 68, you're concerned about major like safety issues, right, like hepatic, renal, like you name it, that we don't have any of that. But we did have a lot of dizziness that led to discontinuation, on about like 30% of the patients. When you take a step back from that, our understanding very clearly now is that if you keep the patients for a few more days, they tend to basically stay so it goes away, the dizziness. One of the conversations we had with the FDA when they proposed for us that we kind of try to come up with a label that, and analysis supporting the label, of course, that would allow for a lower number of patients to have discontinue on dizziness. We did propose something for them based on the Phase II, where discontinuation was about 10%. So we have that knowledge. We're able to propose, and it's actually incredibly simple, at least a priority, where you keep the patients for a longer period of time at [ 20 ] milligrams and they tend to resolve. So we give them the opportunity to, one, not to have like the dizziness that leads to discontinuation on this. I'm going to call it small just because it's a minority of the patients [indiscernible] of the patients. And at the same time, give the best possible benefits once they continue on the drug. So again, a great outcome in general [indiscernible].

And sort of where would you say you are in terms of that strategy, your confidence in being able to implement that. And then what flexibility do doctors have in the real world [indiscernible]?

Yes. I'm going to start by the last part there, Kevin, if that's okay. The irony is that when we present this to a very large number of doctors, they say, oh, this is just like have the drug I have every single day in neurology, and I'm just going to figure that out and I'm going to titrate them to effect when they need to. So they were never the actual issue here, and doctors are going to do what doctors do when the drug is available in the market. I think it's important as well that we have as much data to inform, and the label to inform, those prescriptions and to inform the proper use. And the combination of the Phase II, as I just mentioned, understanding that -- how the tolerability is significantly better if you just slow down on some of those patients. with the FDA really, I would say, supporting at this point in time, including that in the label, of course, it's going to be a matter of label review in the coming weeks as we're entering that phase with the agency. But it seems to be a very good setup right now.

One other thing I may layer in, when we talk to physicians as well, and the neurologist population in particular, they're very aware of the disease, and also that they have been able to -- they've not been able to treat their patients efficiently with the existing drugs, propanolol being the only thing that's approved. But the other things that they're using, it's not enough for what they want to do to provide their patients some relief. And so a lot of awareness about the disease and a lot of interest in ulixacaltimide as a therapy for these patients as well. .

Got it. And I want to talk about what you're assuming for sort of long-term persistence on the drug in the real world setting. What are your assumptions going to that? What data points do you have in how long patients could actually stay on this drug? Is there sort of like a benefit threshold that they need? Just how do you think about that? Because I assume it's a factoring into your $10 billion assumption.

It is. [indiscernible] take a step back here as well, I find it super interesting. When you go back to these studies, right, and the way we've done these studies was understanding that no one succeeded before, what were the key features we needed here. And we made this incredibly simple for our patients to come in to the study, which, at the same time, made it incredibly easy for them to leave this study. So that was one factor here. When you look into the number of patients right now on drug, right? And this -- at the end is, of course, last year, we reported the results [indiscernible] it's pretty much everyone that completed, like of course, there's some life goes on, again with age and so on. But it's a very, very high number of patients that were on the drug at that point in time are still on the drug right now. We have patients for years now receiving ulixacaltimide hydrochloride, which is, in our view, incredible. But maybe quite importantly as well, we really haven't had like discontinuations that, due to lack of effort to -- directly to your point, right? But whether or not they were for [indiscernible] then the patient then report, of course, they cannot attach to that. But in a lot of studies, you see this, right, like lack of efficacy as one of the main reasons. So the patients really see the effects. In our rather limited but important open-label extension from the previous study, we see an increase in the response as they stay for 3 more months at the end of this when we measure that, which is very encouraging. Of course, we're talking here about the progressive disease on their 70s. The fact that we are seeing multiple functions regained is nothing short of like fantastic, I would say. But the fact that they see that response, they tolerate the drug well after the discussion we just had about how to get to that point, and they stay for multiple years, it's fantastic. Are we counting for any of that on the forecast? No. Because I think the -- like again, I said simple math before, but if you actually go and do the simple math, this is not [indiscernible] like $20 billion dollars. So we are taking a conservative approach, and I know it sounds oxymoronic to say conservative and $10 billion on the same sentence, but it is. So we're taking the clinical study discontinuation rate as kind of the worst case that you're seeing so far, even though that we can do better than that. That was without support. We're using the lower end of what the pricing can be. Maybe even less than the lower end, one could argue here, and in a slower curve to get there. In the recent work that Tim mentioned we did with a few thousand physicians in the U.S., we haven't done a lot of work in the fields, as you know, in terms of like we didn't have like a large MSL group and going there and exchanging information with these physicians. It was incredible to see, one, the level of awareness [indiscernible], right, things that we haven't really talked to them, so how much they know. But in the second [indiscernible] was the most fantastic for us was day of launch intention to prescribe is about 2.5x our peak intention to prescribe expected. So I think we're in a very good territory when we think about the forks in general. Now your next question could be, do you actually have supply for all of this, right? And that's something we've always been very careful in building the inventory to make sure we can, on a one would call like a best case scenario, not drawing to inflate, launch expectations. Quite the opposite. I think we have to be responsible on what we are seeing. But it is, I would say, using all of this, as you can see [indiscernible] markets, we're very happy with how things are shaping up.

Got it. I just wanted to -- a quick question before we get to that commercial aspect. But just to bookend the label and how you're thinking about it, where do you anticipate from now on the most discussion with the FDA? And I guess, just how should investors think about the titration language, warnings, contraindications? Like what should they be looking for in the label? What are your expectations?

Yes. So think about it like Page 1 or section, there is no expectation for contraindications here. So I'm going to be clear there. The warning that you would expect is the things we just talked about, right? Yes, people can get dizzy. It's important that they discuss that with their health care professional, particularly in general. I think the bottom line here of this indication as well, of course, we'd never be able to speak for the FDA, but we've been multiple times now in multiple conversations with them through all this program and December last year. After reviewing the final results, they went through those breakthrough designations. I think that point is important because all the safety, tolerability, the efficacy were there. It is incredibly hard for someone to look into the clinical results of this study, particularly the level of detail the agent has, and say, it's not bringing benefit for the patients. So then you turn to the other side and say, okay, this is harming patients, right, in any possible way, like in normally the major organ systems and particularly liver, here, and the answer is no. So the benefit risk has been and will continue to be, in our view, quite positive. So the discussions now that we are entering, as just said, pretty soon in terms of labeling, we'll likely focus on proper use. And we know because we asked for the advice from the agents and they told us that they don't want to trade off efficacy for tolerability. So they think that we can figure it out both of them tied together. And the proposal at that point in time is for a second titration, right? The original titration, the titration, the label is 20-40-60 1 week apart, milligrams per day. And the alternative one is 20 milligrams like staying for a long time. The good news there is that it's not that you have zero efficacy at 20 milligrams. So it's not something that you're just having anything. And when you switch to 40, you see basically the top of the efficacy there as well. So it's actually a pretty good benefit-risk for the patients in general. We are very optimistic about it.

Great. And you talked about pricing briefly. I think you've talked about maybe $50,000 as sort of an annual target price. Is that a target? Is that -- could that be a floor? And sort of what analogs are you putting into that?

Yes. So it is -- not going to be disingenuous here, I just said that it's a space there, right? It's more of a floor, the way we're looking. And the reason why is like we did a lot of analog work, number one. If you look into the initial population, right, where you're going for the kind of benefits the drug gives, but particularly what payers are telling us, because I think at the end of the day, that is going to be the how days are ramped up, I think there is basically no resistance or elasticity as we call, like between let's call it $50,000 and $100,000, or even maybe a little bit more than that. So then we have to ask ourselves like what is the best for the patient and what is the best for the company and our shareholders, and it's probably the number in between, and the kind of service that we believe we should be giving here, particularly like medical education. In terms of proper use of the drug, there's no expectation to have anything more complex than just the label. So there's no REMS expectation, there's no mandatory medication guide or things like that. But we do believe that we should be educating, those things cost like money as well so we have to support, and then the next development. So I think to guide between 50 and 100 is probably the place to be.

I guess some analogs too, when you look at the [ tartedyskinesia ] market, so a little bit smaller, but it is a movement disorder. There are a couple of players in that space and the price is in the low 6 figures. So it does give an analog. What we're talking about is a price that recognizes the value of the drug so we can support patients, but also gives a floor for where we can price.

Great. And on the commercial aspect and having [indiscernible] pricing, you talked about potential step-through requirements for propanolol, which is the only FDA-approved drug, can you talk about your expectations for how that will work? And then even though it is the only FDA-approved drug, not every patient is on it, how does that dynamic work in terms of getting access to the drug?

Yes. So I think when we're planning for uptake execution, it is more conservative for us to expect step-through with propanolol and then work with that upside if there's not as much there, so rather than be surprised by it. With that, we don't expect much friction there. So one of the issues with propanolol, it's a beta blocker. Given the age of this population, about half of them are contraindicated from it from the beginning. And then the other aspect of it is a number of them have already tried it. So what we might expect is maybe there is some type of requirement for how they tried in the last 3 years. And I think a part of what we're looking at in terms of our commercial execution and rollout is how do we use data and systems as well to help support things like prior authorization and step-through and accelerate that aspect of the process. And it would also be part of what our medical communication and information is as well, that we can support the physicians as they're going through this with all that's required there. So that if propanolol is required, we do that. But we get patients onto the drug that can really help them, which ulixacaltimide hydrochloride.

We'll give you like 2 data points there. So one, in our forecast, we assumed everyone [indiscernible] through propanolol. So we'll think about how conservative we are being there. And then Tim just mentioned half of them cannot medically even do that. And the second is we want to -- the private payers, right, and we ask like [indiscernible] going to enforce any restrictions and here is the population, expecting, well, that all of them are going to say, yes, at day 1. It was less than half that said yes to that, understanding their population, right? We're talking about numbers, like think about the like UnitedHealthcare life, there's like a lot of those patients, for example, which was surprising, to be honest. And I think it's just looking into how much utilization of the system these patients end up having with ancillary support and [indiscernible] really needing a lot of care in what the drug can give. Delaying the treatment is probably not wise on a drug that gives its maximum treatment. It's starting around 2 weeks. So it's like incredibly fast to get there as well and to help these patients. So it was another interesting potentially upside here in general.

Sort of on the commercial readiness front, you've talked about maximizing your investment upfront in terms of maximizing the commercial opportunity. So can you talk about that investment, what that entails in terms of sales force and sort of education perspective? I know you shared some awareness campaigns. Can you talk about where you are today versus where you want to be in January?

Yes. So I would say we're more than halfway through it, our launch readiness expectations in Q4. Like some place in Q4, and I'm not going to give the exact numbers, so [indiscernible] trying to be ready by January -- like the end of January as the PDUFA, but actually by relatively early in the fourth quarter. So we have to be pretty advanced right now in order to be there. One, things can always be accelerated with the agency. I know we normally think on the other direction, but we need to be ready for the bolder actions. And the second is just making sure we understand this market as much as possible. We start with a base of like over like 217,000 patients that were in our database, right? That's where we're starting from. And those all have like physicians linked to them. And then as Tim just mentioned, we just refreshed the claims data sets, which we were able to like really understand who in the last 12 months, 24 months, 36 months actually seen on those patients were the largest concentrations. When you put all of that together, it is about 13,000 to 15,000 targets in the U.S. or like accounts that we want to cover. When you back-calculate all of those things, we are about like 200 to 300 sales reps to cover that. I think most companies would start at 200. And I think we're making a decision that we start with 300 because then we can cover everything we just talked about, the potential upside [indiscernible] middle of the country particularly that is [indiscernible] so there's a lot of large PCP practice covering the space for neurologists and they need attention as well. And as we discussed as well, we want basically no patient left behind in a sense. So we want to make sure the physician is prescribing, understand the drug and can guide the patients. So the wave one of the launch is going to be neurologist, and the top decile for PCPs on this disease.

Yes, I think we're fortunate with the balance sheet that we have right now, we can invest heavily upfront into the commercial launch. The other thing I would say is ulixa in January is our second launch over the next 3 quarters. So we'll have a little bit of time maybe to get relutrigine, where we have that coming at the end of September as well. So there's a lot of activity internally right now.

That was my next question actually, because I know we can talk about that all day, but moving to relutrigine. This is actually the potentially your first approved drug in -- with the September PDUFA date. Can you talk about the opportunity in the initial genetic indication and then how you're preparing commercially for that? And then we can move on to potentially the broader opportunity.

So the SCN2A, which is intended to be like the first approval here coming up, September, I think my guess is on the 25th, just because the 27th is a weekend. But you can tell me I'm wrong when we get there and they actually do on Monday instead of on Friday. We'll see. We are preparing next month launch readiness date for us. We want to be launch-ready in a few weeks. It's progressing incredibly well with the FDA. I think the reason why we focus a lot on ET is really people not even grasp the surface on ET. And I think it's a little easier on relutrigine to talk about that. The first launch itself, and we should always think about the first indications like over like billions of dollars in potential revenue here for 2 reasons, right? So one, 5,000 to 10,000 patients in the U.S., all of them need better drugs. Like this is not a matter of like who is doing well, who is not doing well. No one is doing well on this condition. It's going to be the first approved drug for indications ever, once again, just like we're discussing before. And when you go back, again, to payers and so on, then we're talking about not really having an upper limit. And then we're just wanting to understand what maximized access here in general. The choice we took was to actually cover a little bit more than the centers of excellence, I'm going to call, at time of launch. So going to hear us talking more and more about numbers, but you could easily cover this market with about like 30 or so like sales, like reps or personnel in the field and maybe like about 1/3 of that in MSLs. We're probably going to go a little bit higher end. As you can see, this is thematically how we're going for this. We're not believers that every 3 or 6 months just say I'm going to increase, I'm going to increase [indiscernible] chasing the demand is the appropriate way to launch drugs anymore. But rather to get the best possible experience from the get-go, maximize the launch. And remember, we have Emerald coming up in Q4 as a result, which expands the indication about 10 to 20-fold, depending on how it wants to see here. We're incredibly confident about the clinical profile and what we are seeing from a blinded view on that study and what we're getting for the patients who already rolled out to the open-label extension. So when you consider we should never launch for the second indication, but I think we have to be ready for the fact that physicians are going to feel confident and we're going to start wanting to have conversations with the MSLs and so on about that, and we need to be there for them. They want to talk about it.

Got it. And can you share what you're seeing in a blinded fashion that gives you confidence?

Yes. I think there's -- I'm going to call a shape of the distribution that gives you more or less confidence. We always have to be incredibly careful about [indiscernible] like we've all been burned before, I have for sure. But there are certain like distributions, I would call, that they are just clinically impossible on a population that is so refractory. So the more to like very high response rates, I would say, in a large number of patients in the study, the more confident one should feel. Particularly when that is associated with very good safety, as we are seeing on this study. We enrolled more than we're expecting initially on 160 patients here. I think we talked about it. We use very, very high-quality pediatric sites, with pediatric condition. We wanted to make sure we have those patients there. And we wanted to make sure as well that there's no overrepresentation of some cohorts, particularly the ones we know that is efficacy-ready, like [indiscernible] and we accomplished that. And I would say having -- basically looking to this every day for many weeks, that I'm as confident as one can get to what we are seeing.

And is there anything in terms of the -- like how do you think about execution risk from going from that concentrated population to a more genetically diverse population?

So the good news here, twofold. So one, prescribers are the same, right? So when you're talking about promotionally about SCN8A, if they have a question, we can get that to our medical team to answer the questions about the broader. So we are right in front of them, which makes it incredibly easy. They are already coming to us and actually asking questions right now. And then on the second, of course, we're going to be pricing this thinking about SCN8A and. And what we are hearing from payers in general is that we probably have 2 to 3 years to make adjustments if we need to. So it allows for that very successful financial ramp on the following, like 3 to 4 -- 2, 3 years here without having to start considering price adjustments and things like that. So when you're looking for recent products on the rare [indiscernible] on drugs, they actually have competitors, which is not the case here, we're talking about anywhere between like $450,000 to $650,000 per patient per year, I think that's a good place to start here as well.

Great. And I want to touch very briefly, you had a recent update, vormatrigine in focal onset seizures. Can you just -- what can you say about that at this point in terms of that program and where do you go from here?

Absolutely. So we just have the results from the POWER1 study last week for vormatrigine. I think a couple like good news and a couple of bads there, right? So the bad news is that it's not the profile we wanted for that population. So we did not meet the expectation from the reduction that we wanted. There was positive on the responder rates on the 50%. So that's one of the good news. I think there's a lot of other good news here, right? So we see the drug at either 20 or 30 milligrams being really well tolerated, like sub-10% discontinuation, really no idiosyncratic events. A good dose response between 20 and 30, which gives us what to go from here, and allow us to take a little bit of a step-back right now and ask again what is the drug for. And I think more we look into this and the distribution of the patients and [indiscernible] the closer it gets to the original profile of the drug, that is really a great drug for the 60% or 70% of the patients, and that's probably where we should be focusing the development moving forward. And yes, it's going to be used in the hyper-refractory patients, that's why the study was the highest seizure burden ever in a study, that was the POWER1, which is accomplishing the fact that we got a lot of very severe patients, but also talking about the limitations of getting their severe patients. So a few things to tighten up for the next studies. But we are quite optimistic about how to move forward here.

Great. Well, Marcio, Tim, I didn't even get to [ elsinersen ] and the rest of your pipeline. So I apologize for that. But next time. So thank you very much for being here.

Thank you. Appreciate it.

Thank you for having us. Appreciate it.