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

Good afternoon, everyone. Thanks for joining us at the Bank of America Healthcare Conference. Of course, I am Tazeen Ahmad. I am one of the senior biotech analysts at the firm. It's my pleasure to have our next presenting company, PTC Therapeutics. Speaking for PTC this afternoon are several members from the management team, Chief Executive, Stu Peltz; Chief Financial Officer, Emily Hill; as well as Chief Development Officer, Matt Klein. Thanks, guys, for joining us. Good afternoon.

Thanks for having us.

Thanks, Tazeen.

So maybe, Stu, we could start with a brief intro of the company, maybe a couple of minutes for anyone on the line who may not be as familiar with your story. Just talk about what PTC does. And then we can go into a little bit more detail on some of your upcoming catalysts.

Sure. We're a rare disorders company. We have a multiple-platform technology where we discover, then develop and commercialize products to create value. So we -- and we do it as a consequence of both with internal discovery and development as well as looking for business development opportunities as well. So we have a diversified platform as a consequence of that. As you probably might have seen, we just recently acquired an asset, CNSA-001, from Censa, which is a lead indication for PKU. We'll probably talk a little bit more later. So that's -- we're 22 years old. We are currently commercializing 4 marketed products. We had $291 million of revenue in 2019 for our DMD franchise, that's Translarna and Emflaza. Interestingly, I think in this era of COVID, where all our marketed products can be administered at home, we recently reported DMD revenues of $68.2 million, which is a 28% growth year-over-year. So while -- during the first quarter and actually even looking at the weeks after, we're seeing robust sales there. We see the trends continue through that. We're in final negotiation to get TEGSEDI for hATTR, and expect that to wrap up this quarter. We're currently filing also for Waylivra and ANVISA as well that will be later in this year in the second half. And so I think you can see that we've built the company. We have a pipeline of products. Our goal really is by 2023 to reach $1.5 billion in revenue through the products that we currently have. You probably know that risdiplam royalties are expected or rose up to mid-teens. And there's about a $400 million of milestone payments that support us following the approval. And so we recently did -- also, you might have seen an exchange of $185 million of liabilities for stock. The liabilities are due some this year, some in 2021. So we sold 2.8 million shares at a premium to the current share price. So we think this is in this era of -- where we are as a country right now and a public company, we thought this was a great deal to remove that off of our balance sheet. So I think we're in a very strong position as a company in the sense of a strong pipeline, substantial capital and with products that we both discover, develop and commercialize internally as well as building a diversified pipeline through the combination of our own products and through business development. So that's sort of us in a nutshell. And so I think it's quite an exciting time for PTC at the moment right now.

One question, Stu, that I like to ask everybody is just given the current environment with the pandemic, can you just give us a quick update on any impact that you're seeing on your daily operations and ongoing studies? And maybe a bigger question to get it out of the way at the beginning is longer term, what kind of impact do you see the pandemic having for the company? Is there anything that you're changing in the way that you're doing business or the way that people are interacting with your company that you think is going to last even as we go back to some sense of normal?

Yes. That's, I think, a question that probably every company should be asking themselves. Our own view of this is that it's interesting that since they're all orally bioavailable compounds that can be delivered at home. And actually, what we saw with Emflaza is that some of the restrictions that are normally there and the step edits have been removed. And actually, people are even able to do instead of 1 month ordering, which is normal for high-value products that we've seen even 3 months of ordering during this. So in some ways, it's interesting that from a commercial perspective, at least for Emflaza, it's actually been doing quite well. I mean, the data we've had so far is pretty strong. And actually, even for Translarna has also been really quite strong. And we've been even able to get it to Northern Italy and Spain. Supply chain is good. So that actually remains strong as well. We have probably at least a year's product for both Emflaza and Translarna for almost every country. We have a long-term supply of API that can be made into drug product and package. So we're in pretty good shape in terms of that. We built -- we were actually -- we built a task force relatively early. I had to think about pandemics, and I've read a bit about that. So we changed our organization on February 25, where we shut down in terms of flying and allowing people to work from home. We've developed the system to be able to do that. We built the task force that could handle the daily safety of the -- health and safety of the employees. Another group that works on making sure that supply chain, commercial, other aspects of the company are moving forward well, and we're in the process of sort of doing what you're saying, asking us, what's the next thing? How do we operate in the COVID environment? My view of this is it's probably going to be longer term than we anticipated, then -- everyone wants to get back to normal relatively quickly. My view of this is it's going to take us a little while, so we better get used to the notion of people working from home or from a site. We have opened up the research aspects of the company, but put in strong elements of spacing and numbers of people. We've gone through shifts, so people come in at different times. We set up -- everybody is wearing gloves, wearing glasses, wearing masks, lab coat, even down to the bathroom where it's red and green lights that if someone's in, no one else can come in. Wiping down. All of situations. So all that's been worked out. And we even have -- we actually did rent more space that we were going to move everyone. So we're going to keep the space we have, so that you can even do more research, but have -- we have more space to be capable of doing that. So that will continue. And I think that we have that well worked out to make sure that that continues on. And then the other things, we just monitor and continue to work through new ways of doing things. Obviously, hospitals are hard, if not impossible to get into, but we figured out ways. We recently did for AADC a 200-person conference on patient awareness. And so -- but we've built a group to say, okay, if things are going to be different, how are they going to be different? And how do we react upon that? Do we actually -- and I think something -- we always say don't waste a good crisis and not figure out opportunities for the company. So what has been -- so I've asked everybody to think of multiple things that we could do different as a consequence of how we're operating now and what would we change as a consequence of this, even if we went back to normal. And so we're working through that to hopefully be more efficient and productive and how to do certain things digitally. So all that's ongoing within the company right now.

Okay. That's a lot. And maybe related to that, if we do end up moving out of the pandemic and find ourselves in a recessionary environment, how do you think about contingency plans for your business? And is there any opportunity maybe for cost controls if you need to have that plan in place?

Yes. I think so. We've always -- I think you always -- the good news about disease is you always need treatment. You can imagine there can be controls that we have to worry about. And as such, I think there's always contingency planning. We think we're in a pretty good shape right now in terms of where we are. And so I think what we do is we -- so what I always say is we plan, we work, we make new plans based on how things go. We react to those plans and execute, and then monitor and see if those were successful. And so we built teams to be able to do that and be able to see through what happens if and when, and then also have options and scenarios. That's what a lot of the teams are trying to do is make sure we have all the potential planning and scenario planning for best- and worst-case scenarios and somewhere in between. And if...

So one other thing.

Go ahead.

I was going to say one of the exercises that we completed recently of prudent stewardship in the face of a potential recession was we were able to exchange with the former Agilis shareholders about $185 million of milestones owed next year for PTC stock. So that alleviates some of the liabilities on our balance sheet and gives us a bit of additional runway.

Okay.

And then also, the other thing is that the dollars that we have -- there's -- I think with -- and we said this last year when we did our raise was to give us opportunities to do business development that we thought there's a potential recession that could occur prior to the election. While we didn't predict it would be this bad or this would happen, we did sort of make sure that we were well funded. And with every sort of crisis, there's also opportunities where not everyone planned like this. And so our job is to figure out how we can take advantage of that situation as well.

Okay. So I guess keeping up with recent events and maybe moving away from contingency for COVID, maybe we can talk about a recent business development update. You -- last -- recently announced your acquisition of Censa Pharma. And I wanted to just get a little bit of detail from you, Stu, and maybe also from Emily about why do you think that this was a good strategic fit as a next step for PTC?

Sure. So when we were thinking of what we were looking for is we wanted some more late-stage assets that would come to fruition in the near term. If you think about Emflaza probably be of exclusivity in 2024. So something that would hit within that range we think is important. Because you can see what we've built. We've built with Translarna, Emflaza, TEGSEDI and Waylivra multiple products. So we're no longer a binary company with one single product. And we want to continue to diversify. This is a product that we saw -- CNSA-001 is an orally bioavailable molecule that tackles PKU, where 60% of the patients aren't really well managed with the existing treatments. And so when we looked at the Phase II data, there was a clear differentiation relative to other treatment options. And then in fact, that trial was a direct head-to-head comparison with Kuvan. And we saw that really as quite an opportunity where it showed 50% more patients demonstrated activity on CNSA-001 versus Kuvan. And those patients not only showed greater activity, but a greater drop in phenylalanine. So at the end of the day, we like this because we thought about phenylalanine as a biomarker that's validated. You can get approved on this. It's not something that you learn to do. It's a simple procedure, so that you get the same results everywhere. So we believe the data. The market itself -- yes, it's -- there's clearly a need for other products, but the patient identification is well-known to newborn screening. So you know the whole patient population. It's an active drug. And so you have all the good things that you need for development, which is, we think, would be a straightforward in commercialization. And there's 50,000 patients. So while it's rare disease, it's a fair number of patients. There's some manufacturing that we have to do and finishing up a longer-term toxicology study to do that. But the trial itself would be relatively straightforward. We already have an agreement with the FDA on that. It would be completed in the time frame when Emflaza would be coming off exclusivity. And if you said that you get 10,000 patients on or -- whatever you want to say -- and I'm not defining price. Let's say, it's $150,000 per patient. That's between $750 million and $1.5 billion revenue. So even if we're wrong by a bit, it's still pretty substantial in terms of a revenue generator on a product that we think is more effective than the current standard of care. And so this would be, we think, a great product. We have the ability -- we have a strong commercial engine where we sell drug in over 50 countries. And we don't think that it actually had been commercialized very well in Europe. BioMarin had partnered it out. It wasn't really commercialized. So there's a real opportunity there as well. So we think all in all, it's a really good deal. We're able -- and maybe Emily, you want to talk a little bit about the deal structure that you guys did?

Sure. Yes. I mean I think as far as the deal structure, it was what's becoming the typical PTC successful business development transaction, where we have very little up-front and more success-based milestones. So as we announced, we paid about $10 million in cash up-front and 850,000 shares of stock. And I think the potential for that product, as Stu mentioned, is -- well exceeds a very high NPV valuation.

Okay. So what are the next catalysts from this acquisition in terms of PKU?

So this will be -- we'll be completing the toxicology -- long-term toxicology experiment start next year, the Phase III trial. It's about a 6-week per person in the trial. So we think that would be done by 2024 with safety data. We'll have probably data earlier than that, that we would announce. But we have to complete the 1-year safety data and then file in 2024. So we think this is exciting. So you can see starting the Phase III next year, data probably the year after, filing the year after that.

Okay. So we'll look out for that. So maybe let's move on to SMA, which for some time, I think, has been a focus for PTC. We've now seen data from SUNFISH and FIREFISH, and we're getting ready towards, hopefully, a launch later this year. How are you and your partner, Roche, thinking about that market? We were talking about preparations around COVID. And let's say that risdi does launch into a continued COVID environment, how should we just be thinking in general about the cadence of the uptake in patients overall and maybe to the extent that you can talk about Type 2, 3 versus Type 1?

Sure. I'd say that we were -- obviously, we were very proud of the results that we've gotten both in FIREFISH and SUNFISH, both Part 1 and Part 2. And where SUNFISH Part 2 really showed that in real-life patients that we should see that the drug was effective in a broad range of patients. And the FIREFISH data, which is probably more comparable to -- well, not directly all the same or apples-to-apples compared to other trials, just how well the data came out on the Part 2 data, we think, was incredibly strong and demonstrated that really it is the most competitive product out there. We think that it will take Type 2 and 3 market very -- that, that will be the -- those patients will want to be on this drug. It's orally bioavailable. It's easy to get a prescription and could be distributed to the house. We also think it's potentially strong in Type 1 as well. The data looks great and that patients have a real option of both at the beginning or later to be on type -- to be on risdiplam for Type 1 patients. So -- and unfortunately, I would say that -- is that in the COVID environment, the fact that people have been shut out of going to hospitals and getting treatment, having an orally bioavailable compound will probably be heartening for patients that they can get and distributed to them even if their clinics are closed.

Right. Right. So there's other studies that are still ongoing for risdi, like RAINBOWFISH and JEWELFISH and -- how important are those studies do you think, Stu, for uptake? When should we expect to see any of those data updates?

Yes. So I think we'll continually be presenting -- Emily, what's the conference...

So Cure SMA has just provided that they will be conducting their conference in June virtually. So we would expect the data update at Cure SMA.

Okay. When is...

So those -- in end of June, I think. I think it will be reported. So that will be -- and we'll probably continually report about RAINBOWFISH and JEWELFISH over time.

Okay. Great. And maybe before we [ leave this stage, ] just in terms of going back to the launch, how involved will PTC be? Obviously, Roche is going to be managing the commercial aspects of it. Is there going to be continued input from your team? Or at this point, you kind of let them take control and do their thing with launching the drug?

Yes. I mean, we're very impressed with the team that they've put on. It's a really great team. There still is a joint steering committee, so we have input. Still, we know the clinical community quite well. So I think we can be really quite helpful there, and our team has been helpful to them. And they're very open to help as needed. But they're -- it's really they're in charge now with that. So we look -- so we think they're mainly in charge, but we're still involved.

Okay. Great. So the other thing that I've been getting a lot of questions on recently is Translarna. So after several years of not being clear on what the future path for the drug in the U.S. could be, we now find ourselves awaiting data from the study that you're doing about dystrophin expression. Can you just remind us how that came about? Is that data -- I think you now say it's due in 3Q. What does that really need to show in your minds in order to give you a good chance of being able to get the drug approved in the U.S.?

Yes. I mean, I think it's -- so I think it's very -- especially, it's very clear now with the 2 trials and also the STRIDE registry, the non-ambulatory trial that has been going on that the data -- that the compound is quite effective. In talking to Janet Woodcock some time back, it was very clear though that they want -- they had a regulatory hurdle that they had. They wanted to see dystrophin to do an accelerated approval. And so we realized that there's no arguing with them over this point and to go ahead and do the experiments. So that's where we got to. In talking with Janet, and it was very clear, if you look at the EXONDYS 51 data, there was very little about background in terms of activity. All that's really required is that it'd be statistically significant. So we worked with the FDA. We changed the assay to be an ECL rather than a western blot. So you're using -- you're measuring dystrophin in the liquid form. We think that will be better. And it's a more linear and sensitive assay. So we think that's good. So we positioned it to be as much in our favor to be able to see small levels of dystrophin. And as long as it's statistically significant by background, we would be able to get accelerated approval with the dystrophin data plus the current data that we have, demonstrating Translarna's benefit to DMD patients. And then the other study, Study 041, would then be part of the full approval study. So that's the path for it. And so we'll be -- the dystrophin levels. It's really -- in our view, anything about background that's statistically significant should be sufficient for approval.

And how confident are you that you'll be able to show this minimal amount? But how confident are you that it will be statistically significant?

We're excited to be able to do this. We think that we've shown it already previously with our Study 004 using the immunohistochemistry. So we feel pretty good that we should see a statistically significant above background.

And what kind of opportunities do you think you would have in the U.S. in terms of nonsense mutation patients? How many are there that you think you could capture?

I think the way to think about the numbers of patients is on the similarity that probably people have looked at and thought about for EXONDYS 51. It's about 13% similar numbers. So that sort of -- so we think it's quite an opportunity. We conservatively said it could be a $300 million market. But could it even be greater than that? Yes. And so you could think about what it's like for EXONDYS 51, and here would be a drug that has had 2 clinical trials that demonstrated efficacy along with the data shown in clinical endpoints, while not perfect, really shows that all of them showed improvement relative to placebo. And then with this data, along with actually the STRIDE data, which is the 5-year long-term study, the registry that we've done that shows increase in length of walking, getting off the ground, pulmonary function, but this is a pretty robust package of anyone we've looked at anything in Duchenne muscular dystrophy, looking at improvement. And Study 041, by the way, is well set up to really sort of focus -- while we've got a broad patient population, the ITT population is now really focused on the patient population that is -- that we know you can measure drug effect. So all in all, we think we're in a good position to get accelerated approval followed by approval.

Okay. And have you discussed this specific plan with FDA? I mean, before starting the study to measure dystrophin, is that what they told you was the rate-limiting factor?

Yes. That was done with Janet Woodcock, and then we worked with their dystrophin biomarker team at the FDA that -- where we actually validated the assay with them, going through -- I mean it's -- it was a substantial amount of work, but we demonstrated that as a linear sensitive assay that measures dystrophin protein, so -- to the point that I think they liked this assay quite a bit.

Okay.

The -- it is the assay that's probably the problem. It's the variability within the -- if there's anything I can always worry about is the -- you don't get to pick the right muscle part. And so that's always the variability of the muscle versus the assay more, I think now.

Right. Okay. Maybe we can squeeze in one more question. And maybe it could be about your splicing platform and specifically Huntington's. This is a question that we always get as well about when potentially you guys could show any kind of data from your Huntington's program?

Sure. The -- so just to remind everyone, this is part of the splicing platform, but it's actually quite interesting. It actually causes the inclusion of a stop exon that causes premature termination. So you don't make the protein and make the RNA go away. And it's orally bioavailable. It passes the blood-brain barrier, and it gets to virtually every cell in the brain. And that's a real advantage because ultimately, it's a triple repeat disease. And the consequence of that is that it causes -- in a sense, it comes up to cell and causes cell death. So we think we have a real advantage to have an orally bioavailable molecule to be able to -- that gets -- that expose -- that all cells are exposed to. So we think that's great. The first experiment is going to be in healthy volunteers. We're now doing safety tox studies that should be completed, and then our goal is to start in healthy volunteers by the end of this year. And that's important because even in healthy volunteers, you can measure huntingtin protein levels and huntingtin RNA level. So you can actually show that even in healthy volunteers, very much like we did for SMA, where we saw SMN transcript change, so we could see huntingtin RNA change. And so we should have on-target proof of mechanism even in the healthy volunteer studies. So very much like SMA, that would be the first step, then you know it's working. We also know about the level that allows it to work, and we know a lot about the ratio between blood and brain based on all the animal work that we do. So then we have a good dose that we want to get to, to get to a substantial level that would reduce the amount of huntingtin protein and RNA. So I think even early on, once you see that, reduction of HTT RNA, we feel pretty good about that. We know we're there.

Okay. With that, I think we are out of time. Stu, thanks so much for joining us, Emily as well, and Matt, you too. We look forward to hearing updates on all of your pipeline catalysts and we look forward to speaking with you again soon.

Thanks.

Thanks for having us.

Thank you very much.

Take care, guys.

Likewise. Stay safe.