PTC Therapeutics, Inc. (PTCT) Earnings Call Transcript & Summary

All right, great. We'll get started here. I'm Eric Joseph, senior biotech analyst at JPMorgan. And our next presenting company is PTC Therapeutics. It's my pleasure to introduce Stuart Peltz to tell us a little bit about the company. Before we begin, I just want to remind the audience that the breakout session, the breakout Q&A is going to be across the hall in the Georgian room. With that, Stu?

Okay. Well, thank you all, both here and on the web, for coming today. And what I want to do is just tell you about PTC. We will be making some forward-looking statements, so I'll refer you to our SEC filings. So I thought I'd start to say, who are we? We're a global commercial diversified biopharmaceutical company that's focused on innovative therapies for rare genetic disorders. And I thought what I'd do today is to dissect that for you a bit, break it down. So you understand the parts of the company and how we're looking to create value, not only this year, but also for the subsequent number of years after that you'll see. So we're a global commercial company. We were founded in -- I founded it in 1998, we're in South Plainfield, New Jersey. We started in that one building and we now -- and now have a number of buildings there as well. We have also in -- we also have international headquarters in Dublin, medical and marketing in Zug, and São Paulo is our Latin America headquarters. We have ability to distribute drug in greater than 50 countries. We have 20 offices around the globe, and we have about 800 employees. I always say, we're a company that -- we're not geared to revenues, and we use this quite a bit to help create innovation. This year, we had $306 million of total net revenues, $291 million were -- was from the Duchenne franchise that's been Translarna and Emflaza. We also anticipate this year's revenues for the franchise will be between $320 million to $340 million. And while we don't guide to new launches that -- for revenues that are occurring, we do -- we'll get revenues from our sales in Latin America as well as with our partnership royalties from risdiplam this year as well. We are building, and we say, well, we anticipate revenue is about $1.5 billion by 2023, and where OpEx to get to that is for this year between $545 million and $575 million of OpEx expense. We will get substantial milestones this year from the SMA program with risdiplam, with regulatory -- predominantly regulatory milestones as well as for sale milestone, greater than $42 million. And if you look both regulatory and sales-based milestones are nearly $400 million of milestones left and where the royalties are up to a mid-teen royalties. So in terms of the company, I think we've always been an innovative science company. I'm the CEO, but I'm also the founder of the company, and it was based on initial work I had done previously at the university over 20 years ago. And what we've done really in the company is built a number of platforms where we have underlying that a number of programs that are ongoing, both in research, clinical and commercial, these are both platforms and programs that can be both internally driven or have been brought in. But I think, as a company, what we do is to continue to innovate as we bring in new platforms and programs. And so you can see where it's a robust program. And then you can see both on the commercial engine, we have a number of products that we're selling worldwide as well. So the way we think about things is that we're innovative science company where we then obviously internally flipped into revenues. And you can see, we started our first product with -- for nonsense mutation Duchenne muscular dystrophy, began selling in 2015 and have been percolating up in terms of our splicing program with -- that ultimately became risdiplam, and we continue to grow that, as you can see, such that by 2019, we added also Emflaza for the anti-inflammatory aspects of Duchenne muscular dystrophy and selling that in the U.S., such that by 2019, the Duchenne franchise, that being Emflaza and Translarna, was $291 million of revenue. And you can see, though, the continued innovation, where we had a number of programs that you can see that have continued to grow and be innovative, such that by 2020, you could see we have the DMD franchise continuing to grow between $320 million and $340 million, but there'll also be revenues from risdiplam as well as the products that we're selling in Latin America, and we expect an approval for our gene therapy AADC program. And so you can see we're well positioned such that, really, what we have today and as it grows, in itself, that could be $1.5 billion of revenue by 2023. But I think what's really interesting is there's products that we have -- that you see on the innovation line before, we'll be flipping up to commercial products. And as we go, so we anticipate substantial growth of revenues beyond 2023. So you can see it's chock-full of potential, and we had a strong 2019, they're really set up for a very robust 2020 with multiple value-driving events here. And so what I want to do for the rest of the talk is to go through the -- what we think are important value milestones. And so you can see, let's start with the nonsense mutation Duchenne franchise. And so we're very proud that within the EU5 that we have about 90% of nonsense mutation Duchenne patients on Translarna with about a 85% compliance since they've started in late 2014. So quite exciting that we've been able to capture this. We also recently reported a registry data that really demonstrated strong efficacy data, where, as a consequence, of patients being on Translarna. You could -- we saw substantial improvement, years of improvement in the ability to be able to maintain walking, continue to being able to rapidly get off the ground, and quite importantly, in maintaining pulmonary function. And that's critical because these patients die of cardiac and pulmonary function. And you could see that patients on -- who are on Translarna, only a little more than 2%, have FECs below 50% compared to those who weren't on it, it was greater than -- that was 32%. And the reason that's important is that if you're -- for Duchenne patients, those patients that are less than 50% have a mortality of potential within 3 years. So this is incredibly important. So you can see with Translarna, good growth. It continues to be good growth, wherever you think about 15% CAGR by 2023. We continue to see increased penetration in markets around the world. We're doing also geographic expansion. We continue to do the bread and butter of what's required in terms of commercialization, in terms of finding patients earlier diagnosis. There's also a potential upside this year with -- where the dystrophin study will be completed this year with a potential then of an NDA submission. We realized that Translarna has had a complicated regulatory path in the United States, but we think this is really potential upside for all our stakeholders. We've had $190 million of revenue this year from Translarna sales. The other product for Duchenne muscular dystrophy patients is Emflaza, that continues to grow nicely as well. This year, we had an expansion of the label for 2- to 5-year olds. We're also working hard, it turns out, because patients who were previously on prednisone, they have lower -- less optimal doses than they should be, and we're working to get that patients on the appropriate dose. There are a number of publications last year, demonstrating the results, demonstrating the benefits of being on Emflaza over prednisone. That's helped quite a bit for reduced -- getting payer restrictions off. But actually, most recently, there's another paper that came out that showed not only consistency that Emflaza -- patient benefit more on Emflaza than prednisone, but there's a recent paper that just came out that showed the benefits of initially taking prednisone patients and then switching them to Emflaza as well. So there's a large number of data showing the benefits of Emflaza. Here, we had $101 million of revenue this year. We anticipate -- or we had $291 million of revenue this year, and we anticipate, again, $320 million to $340 million of revenue. So this is exciting that continues to add to PTC in terms of its revenue. Let me switch now to our splicing platform. And that, I think many people are aware in terms of risdiplam, but we -- over -- well over a decade now, we've been working on looking for orally bioavailable small molecules that modulate splicing. And we've been successful that we can target many different types of splice sites. And we've built, I think, a sophisticated technology, proprietary technology that lets us look quite nicely at a large number of different splice sites to get molecules that are selective, specific and potent, and where we can look at large numbers of targets at one time. We can even also module -- look at the whole transcriptome to be able to look at just how selective these molecules are. And I think, with our partnership with Roche and the SMA Foundation, risdiplam really demonstrated its selectivity and specificity, and we'll be talking about that in a moment. But we have 2 other compounds that we've shown, we can identify orally bioavailable molecules that are selective and specific. I'll be talking a bit about Huntington's. The thing that we haven't talked as much about is, over the years, we've built this proprietary chemical library that allows us to be -- more rapidly identify molecules that are more potent. So we've been able to actually -- it's something we've always wanted to do is be able to move from target to target in building selectivity and specificity and have compounds that are more efficacious from the start, so you can more rapidly optimize those compounds. We feel we've -- in this platform, we've been able to achieve that. And we're working hard on a number of other programs that we'll be talking about. And there'll be a Science Day at June 16, that we'll be talking more about this as well. So let's go to risdiplam. It's an oral agent to treat SMA patients. Patients have mutations in the SMN1 gene and that -- what risdiplam does, it takes the inefficient splicing of exon 7 and makes it efficient so that all the RNA that's SMN2, which normally doesn't make the correct protein, now is capable of doing so. And this is important because all of the RNA is transferred to the right form. And that -- we've seen this in clinical results, where, both for type 1, 2 and 3 patients, where we've seen in the most severe form, substantial improvement in motor function, but also in developmental milestones, which they normally don't achieve, such as being able to hold their head up, sitting and standing, they're now capable of doing. We also saw improvements in the type 2 and 3 patients. We previously reported out that the part 2 of this program will show statistically significant results, and this data will be presented this quarter as well. The NDA has been filed, and the PDUFA date is May 24. So we're really quite excited about this. The other, I think, important point is I told you that it converts all of the RNA to make the correct SMN2 protein. And here's the examples of looking at the SMN protein from type 1, 2 and 3 patients, from FIREFISH, SUNFISH, JEWELFISH. And you can see on the left is baseline on the right is treated patients, and you can see you get a substantial amount of SMN protein made. And if you look at, on the left, the purple, that's a baseline from healthy volunteers. So you could see that risdiplam was able to actually get to levels that are seen in healthy volunteers, if not greater. So you're really -- and because people often ask us, could you add another splicing modifier to this. And the answer is, you don't really need to because all the RNA has been transformed and you're getting levels to which is seen as -- in healthy volunteers. So it's really quite exciting. So this in the sense is an important medicine that's orally bioavailable, I believe is, important for SMA patients, but it also demonstrated the ability to be able to do this. So let me tell you about a second program for Huntington's disease. And this is, again, a triplet repeat disease. That's really a whole brain disease, but it's for the striatum and cortex. And you can see here -- and it causes neuronal cell death. And you can see on the left, really compared to the -- on the right compared to the left, the fact of the consequences of cell death. And it's quite extraordinary, and it's due to -- the reason is that, in the Huntington gene where there's expansion of the triplet repeat, that actually causes an RNA, which in itself might be toxic, but also a toxic protein that ultimately forms, aggregates and causes cell death, and so what you want to do is lower the level of the toxic protein. So we've -- I think I have done a relatively clever idea where we realized within one of the entrants of the Huntington -- RNA, there's what we call a stop exon, but it's inefficiently spliced, it doesn't get into the RNA. But it had the noncanonical U1 element that allowed us to think that we can identify a molecule where we can induce this RNA to get into the messenger RNA, and it has a premature stop. And that causes rapid destruction of the RNA, and you don't make the protein. And so that's, I think, a clever way to reduce huntingtin's protein. And indeed, we found that to be the case. Here is an example of a mouse model of where orally bioavailable molecule was given to the HD mouse model, and you could see a nice titration in the inhibition of huntingtin protein within the brain. And this is, again, an orally bioavailable molecule that was given. And the other important aspect of this, because it's a neurodegenerative disease, is that in the absence of treating any given brain cell, if it's not treated, you'll lose -- that cell ultimately will die. So the nice aspect of having the oral molecule is that every brain cell will get this -- will achieve that. And you could see, not only do you see it in the brain, but if you look at the striatum, cortex and cerebellum, you get nice reduction of HTT all throughout the brain. And so every cell will do that and we think that's really quite important. The other aspect, and this was important when we did SMA, is that the reduction observed in the blood is the same that we saw in the brain. So it's a very good surrogate to let you know that you're seeing a reduction, and that's the reduction. It allows you to choose the appropriate dose to get the appropriate lowering, and we're able to titrate that to the appropriate dose. So we're really quite excited about this program, and this will -- we anticipate that, that -- the Huntington's will move into an IND by the end of this year. Let me now switch to our gene therapy program -- platform. And here, we thought hard about this, and we wanted to go into the gene therapy, but we want to do local administration where we directly target into the tissue of interest that we think will lower systemic immunogenicity and reduce exposure to the large volumes of virus. We also wanted to go into cells that are low turnover so that you'll improve durability. And we all know manufacturing can be a problem, so this allows you to manufacture lower levels of the virus. We've built a pipeline of products, where the first AADC deficiency we already submitted to the European agency, we moved the BLA that we expected to be in 2020 this year. FA, the Friedreich ataxia, we are planning to go into the clinic by the third quarter this year with Angelman going to next year, and we have a number of other programs that are working internally to move forward. We also recently have a lease. This is a gene manufacturing facility so we can begin in-house manufacturing in 2020. Our approach was we realized that BMS, which had recently renovated a biologic facility in Hopewell, New Jersey, decided to move to Boston and we quickly leased this building. We also had a donation of all the equipment there. So it's about 185,000 square feet, a 15-year lease that will support our research part of the manufacturing and has -- manufacturing suites as well. We're also able to get most of the people who worked there previously. So we already have a highly qualified staff of people who know how to operate this facility. Let me now talk to you a little about our first program for AADC Deficiency. This is a mutation in the DDC gene that leads to dopamine deficiency to severe disease where patients lose the -- have arrested developmental milestones. There's about 5 cases of patients globally. They really -- you can see that they'll be flaccid. Patients have been identified around the world, Asia, U.S. and Europe, there's over 50 alleles and again, we think there's about 5,000 patients commercially available. Here's an example of an AADC patient on the left, you can see they're unable -- nonmovements, they may have -- sometimes they move an arm, but they're not able to move their head or arms. You can see post-treatment, after an injection, this is approximately 2x the lentiviral particles total into that. And about a year later, you see the dramatic transformation of this child being able to sit up, about 1.5 years later, capable of walking. We now have actually -- where we know that they're going up steps as well. So you see substantial changes within the developmental milestones of that. We've also -- you can see by motor milestones, we're using the Peabody scale, all patients improved regardless of age. And you can see one in 5-year improvement, you also see biomarker data using PET scanning for dopamine as well. So really quite exciting program where we anticipate approvals this year and commercialization next year. So we've been working hard in patient identification. Again, I think it's something we do quite well where we increase awareness, early diagnosis and genotyping, we've set up, so you can look for precursors of dopamine. So if you have high levels in the blood of a precursor, that's a good indication you have AADC, where we can then gene-sequence. We're also looking at protocol-driven, looking in cerebral palsy clinics, in particular, those patients who have normal MRIs. There's somewhere between 100,000 and 150,000 patients there. And we're going to screen through there to look for patients. And then for infant patients, we'll be doing newborn screening, where we anticipate more than 1 million newborn screened by the end of 2021. So we're working hard to find patients. We've also -- we've already found -- 200 AADC patients have been identified around the globe, the U.S., EU5 and Latin America. We're looking to have 300-plus patients by the time we launch, at least 300 patients. So that's quite exciting, getting ready for the launch. We're also working hard on Friedreich ataxia. Again, this is a triple repeat disease that causes loss of frataxin and mitochondrial function. It's obviously -- there's about 25,000 patients. There's obviously a debility they deem life-shortening disease, was really nothing for it. We have a gene therapy for that. We've shown that injection into the brain of both porcine in a nonhuman primate model, you can see substantial amount of protein being made. This will be an IND of this year, [ as you enter 320 ]. So let me just go to the redox, which is our most newest platform and that's to treat oxidative stress. In particular, there's a key mediator, 15-lipoxygenase, that is a key regulator in inflammation, alpha-synuclein aggregation and oxidative stress that leads to glutathione depletion and membrane damage. The -- and this enzyme is key in oxidizing the arachidonic acid, which is a lipid mediator for this. And you could see what we have is 2 molecules that modulate LO activity and inhibits it. There are 2 compounds. We have 743 and 857. 743 is more advanced. We have proof-of-concept on its effects in reducing seizures in mitochondrial epilepsy. We plan to start a registration trial this year, it will be about a 6-month trial for completion and potential approval next year. There's about 5,000 to 6,000 patients here. We also have proof-of-concept of -- in Friedreich ataxia. We'll be starting the trial again this year with a completion next year, and this is also a potential registration trial. And so the second one is PTC857, this has different pharmaceutical properties. And we'll be starting the Phase I trial that will ultimately go into a GBA Parkinson. So I think it's quite exciting in that we're now coming back to our Latin America commercial efforts where we're selling TEGSEDI and Waylivra. TEGSEDI, in Latin America, has already been approved. In Brazil, it's for hATTR, polyneuropathy, there's about 6,000 patients in Latin America. And we're selling this with our partner, Akcea. We'll also be selling Waylivra with an approval condition -- that has a conditional approval, and we'll be selling that in Latin America as well. So we're quite excited, and I think you can see the 2020 milestones are chock-full with, I think, value creation that sets us up well for this year and multiple years thereafter. So I thank you for your attention and look forward to any questions you might have in the breakout.