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

Good afternoon. My name is Grant Watson, and I'm an analyst in the Jefferies Healthcare Investment Banking Department. It's my pleasure to introduce Stu Peltz, Founder and CEO at PTC Therapeutics, to present at the Jefferies Virtual Health Care Conference.

Thank you, and thanks for everyone coming. I appreciate it. So I'm going to tell you today about PTC Therapeutics, a company I started about 22 years ago now today. I just want to say that we will be making some forward-looking statements. So keep that in mind and look at our SEC filings. So let's talk. So who's PTC? Who are we? We're a global commercial diversified biopharmaceutical company that's been focused on really discovering, developing, commercializing innovative therapies to treat rare genetic disorders. We started in New Jersey 22 years ago as an idea and have since over the 22 years built a global company around the world where the global headquarters is in New Jersey, but we have headquarters around the world. We currently have offices now in 20 countries. We can distribute and deliver to over 50 countries drugs. We have greater than 850 employees, both in discovery, development and commercialization. We built the company, not only on core science, but also have a strong commercial performance, and we've built a strong capital position. Last year, with Translarna and Emflaza, the Duchenne franchise, was $291 million in revenues. We do have 2 other products, Tegsedi and Waylivra, that we'll be launching this year. So we don't include that into our revenue discussion yet. The first quarter was off to a good start with $68.2 million with the Duchenne franchise. That's done quite well even during COVID, a 28% year-over-year increase in net product revenue growth. And we've ended last year with $596 million. So we have a strong cash position. You could see here that we built a multi -- not only -- over the years, we've built a strong pipeline. It's -- not only is it a set of programs, but it's a strong set of scientific platforms that can continue to generate new programs and products that move forward. You can see on the left, where we begin the commercial aspect. On the right is those that are close. You can see SMA, AADC are next up for commercialization. And then really a whole pipeline of compounds, but from our various platforms that we're going to be talking about today. And so you could see here, we've built a commercial engine that continues to grow. And obviously, at our core, we're an innovative science company. And when you think about how we are thinking about becoming profitable, we really look at an innovative revenue cycle, where as we keep innovating, we'll continue to add revenues to it. And where we started in 2015 with Translarna, we have continued to create value with a number of programs that are continuing to grow. In that, you can see that we anticipate by 2023, we'll have about $1.5 billion of revenue by then with the products that we currently have with others moving up the pipeline. And that's actually a relatively important point. You could see those that are slightly faded out are in our projections for the $1.5 billion of revenue. What you can see in the red box is a good example of just the pipeline that continues to move up, that even within this period and shortly afterwards, there's a number of projects and programs that, we think, will get over the line that will continue to add revenue to that, so we will continue to grow. So I think what you can see is that we have a strong company that can not only have the commercial products that we're selling, but also the -- have a pipeline to continue to grow that. And so you could see that there is -- this year, there's multiple of value [ driving ] events that are going to occur in 2020 across the pipeline. So you see that it's actually quite exciting of what has been built and how the growth will occur quite rapidly. So let's go through some of them. And start with looking at first the splicing platform. And so there, you could see -- let's start with SMA -- or let's start with the splicing platform, first. And just -- we've developed over the, probably over a decade now, a strong splicing platform, where a lot of it has been functioned on modulating the 5-prime splice site with the U1 site. That lets us do either alternative splicing, exon skipping or reducing the level of RNA by doing stop exon inclusion. So we know a lot -- a substantial amount to be able to do this. And along with that, we built a technology that lets us rapidly to continue to do this, along with a proprietary RNA splicing targeted small molecule library that we've shown not only works in SMA, which is -- that demonstrated the ability to do this, but also with 2 others, and we'll be talking about Huntington as well. And we have a number of other targets that we'll be talking about as time goes on. But it's really the combination of both knowing the science and the unique library that we have that lets us to be able to identify molecules that targets splicing and be able to do this in many different targets. So we're quite excited about that. And then as you know, risdiplam, I think we've talked about the data quite extensively, where we've looked at Type 1 patients in FIREFISH and Type 2 and 3 patients in SUNFISH, and the data, as have you seen, has both been both statistically significant and quite clinically important. And in fact, we think this is probably some of the most competitive data that is for this program, and there's lots of exciting attributes to these molecules. First of all, it's a small molecule. So it's an orally bioavailable molecule that actually distributes throughout the body, including passing the blood-brain barrier and going into the brain and the CNS. Importantly, especially in this era of the COVID pandemic, it's a simple at home administration. You don't need to go into a hospital. You simply need a prescription and can get it then to you. So that's really quite important, especially in this era. It's been shown to be highly functional, all the SMN2 RNA in the body is transitioned to SMN1 like messenger RNA, and it does so durably throughout the CNS as well as peripherally. And so we know that it's not only the CNS that's affected, but the muscle, bone, pancreas, liver, they're all affected organs. And the fact that risdiplam can actually treat these is actually quite important. It's really the only drug out there that can does that. And then in the clinical studies, both Type 1, 2 and 3, it's been really meaningful results that have been shown and done in a wide patient population, from newborns to 60 years of age, clinically meaningful data. And in particular, risdiplam is the only drug that's shown that we can do it in the broadest of populations, even those patients that are, in a sense, like real-world patients where they'll be weaker, they'll have scoliosis, they'll have contractures. And even in those clinical trials, it's shown to be clinically beneficial. Probably the best data, I think, we've seen out there. It has a strong safety profile as well and we anticipate there's a PDUFA date in August 24, 2020. So I think this sets it up really nicely to be one of the best comers that we expect will be launched and will do quite well. There's, obviously, for PTC quite a number of benefits as greater than $400 million of both regulatory and sales milestones to be obtained with a very healthy royalty up to the mid-teens on blended royalties that should create a very valuable royalty stream for us. So it's really quite exciting. And again, what I -- as I alluded to previously, is that you can see here really quite nicely that this is baseline versus risdiplam-treated in multiple different clinical trials or in healthy volunteers studies. And what's important here is that you see it gets up to levels that are at or even above what's seen in healthy volunteers. So you really get to normal levels. And what was important is that we were able to see this in Phase I healthy volunteer studies where you see increased levels of that in patients -- in healthy volunteers. So we knew early on, that we're on target and that we're seeing increased levels of SMN protein. And the reason we're able to do that is we can measure this level in blood, and we've shown in numerous animal models the amount that you see in blood is equivalent to what changes in the brain. So it allowed us to pick the right dose to treat, and it allowed us to show early on that we have proof-of-concept and that the drug does what it's supposed to do. And this sets us up nicely for our Huntington's protein. And for those, just to remind you, Huntington is -- the Huntington's disease is a disease of triplet nucleotide repeat that causes aggregation and as a consequence of the aggregation causes extensive neural cell death in the brain. You could see this quite well in the pictures here in this right hand, the cortex, you could see on the -- compared to the healthy brain versus a Huntington disease patient brain, just the destruction that occurs as a consequence of the brain cell death. And while the striatum and cortex is shown here, where you're seeing the larger holes, you can see it throughout the whole brain. So it really is, in a sense, a whole brain disease. And so we're identifying orally bioavailable molecules to treat Huntington program. And this is a little bit different than SMA where you want to go from SMN2 to SMN1. In this case, you want to reduce the level of the Huntington protein. And you could see here, what happens is there's a triplet repeat in the exon 1 that leads to a normal splicing situation, the production of a messenger RNA that encodes a toxic HTT protein, and that causes that neuronal cell death. What we've done is we realized, based on our understanding of splicing, that there was, in a sense, a stop exon within the intron that's normally not spliced into the messenger RNA. But because of our understanding of how that modulates splicing, we're able to include the stop exon, such that it gets put into the messenger RNA, causes a premature stop to occur, that leads to rapid degradation in the RNA and a reduction of the protein that's being made. So I think it's a very clever way to be able to reduce the level of Huntington protein, and we could do so with an orally bioavailable molecule. On the next slide, it shows you in an animal model that has the -- that's a mouse model that includes the Huntington triplet repeat gene. You could see that it's a dose-dependent reduction of the Huntington protein that can occur. And you see that we can choose the concentration. The dotted line represents the 50 percentile. And that I think this is also really critical here, is when you can look in the different aspects of the striatum, cortex and cerebellum, for example, we could choose the dose that goes to 50% reduction. And you could see that's indeed the case, you go into the striatum, cortex and cerebellum. And that with treatment you saw, we chose a dose that gives approximately 50% reduction. And then you could see on the right, what's true is that the level in whole blood, that's the WBC, is basically equivalent to the reduction -- the reduction in Huntington in the whole blood is equivalent to the reduction that's observed in brain. So there, now you have a biomarker. Well let's just say what happens in blood happens in brain. We know it crosses the blood-brain barrier. It's titratable. We currently have toxicology studies that are ongoing that allow us to go, first, in humans that we'll then do in healthy volunteers in which we can actually, even just analogous to what we did in SMA, allowed us to say, doesn't work in healthy volunteer patients where we could show the reduction of that in a short period of time. So that's -- we anticipate that to occur by the end of the year. So that's really quite exciting. Let me switch gears for a moment and talk a little bit about our gene therapy platform, and we have a number of programs that are ongoing. The -- when we thought about gene therapy, we're a rare disease company. And obviously, monogenetic disorders, or at least a subset of those, we think, can be tackled by gene therapy. But we thought about the things that we wanted to do at least that put our -- when we were going into gene therapy because we know AAV doesn't or can be lost is that we wanted to have direct injection into tissue, and we wanted to make sure that we could do it in cells that had low turnover. Let's, for instance, example of the brain or the heart or eye, the cells don't turn over very well. So you have a little chance of losing it. The other advantage of direct injection into tissues of interest is that it lowers the manufacturing burden that's required in order to treat patients. And so we have a pipeline where our AADC program already has -- the MAA has already been submitted. We anticipate to put the BLA in the second half of this year. And then we have a pipeline of other programs such as FA, Angelman are ongoing right now and a number of other programs that are percolating up through the pipeline. We also have a manufacturing facility. We had decided that really, if you're going to be in this field, in order to control your destiny and control cost, you need your own facility to manufacture. We were fortunate enough to find a facility in New Jersey. BMS had decided to move from New Jersey to Boston for its manufacturing. And so we leased it from them for over 15 years and got a very good deal with all the equipment needed. So we had a real advantage there that really had a highly qualified staff that we've been able to bring in a large number of them to help be ready to run the facility. So I think we're in good status with that. The [ first ] program is a remarkable program. It's an AADC deficiency that lacks dopamine. It's amazingly similar to SMA in the sense that babies that are born fail to thrive. They don't have their normal developmental milestones, such as being able to pick their head up, sit or stand. And so it's a rare progressive disease. They never achieve these milestones. And the severe form is somewhere between 4 and 8 years of age. And there's patients that are found every -- in virtually every country that we looked in, and there's approximately 80 different alleles that's already been identified. So we think there's, again, 5,000 patients, and this has such a strong profile in where we've demonstrated, very much like SMA, that the children, like here is an example, you can see age 2, where that child can't move, stays like that throughout his life span and ultimately dies far too early. And after a single treatment a year later, you see that they're sitting and even about 1.5 years later after that, he's standing. And every patient tested has demonstrated activity. And you could see -- so now here, the game really is to identify as many patients as possible. We've talked about finding 300 patients. And even during the pandemic, we've implemented unique ways to be able to continue to find patients and have been quite successful in terms of using the virtual education and patient-finding initiatives. We've been quite successful in holding patient -- or disease-focused conferences as well as education supporting this. So it's all been mentioned -- been going quite well as a consequence of that. Let me now just -- we have a couple of other programs, the FA and Angelman, that are moving forward as well. Let me just now switch gears and talk a little bit about our Bio-e program. This is really a unique platform that allows us to target oxidative reductive enzymes. Those are enzymes that control oxidative stress, and it's involved in a large number of different diseases, in particular mitochondrial function. It's really -- it's at the intersection of electron transfer. The advantage is we took these sets of enzymes, there's about 100 of them, and very much like a -- the same idea is to be able to key into a lock, but it also has electron transfer biology. And we have a unique library, about 20,000 compounds, that do both of that. So we have a lead -- a validated mechanism of action that we have now for PTC743, which targets 15-lipoxygenase. It's at the hub that regulates inflammation and oxidative stress, and there's an extensive safety and exposure history with that. It's already evaluated in over 500 patients, mostly children with long-term duration. And then there's a number of other targets that are available for us as well. And the first target is for 15-lipoxygenase. And that's a key [ regulator ] for both glial cell activation and inflammation. It also is involved in aggregation, in particular, alpha-synuclein, which is for Parkinson's and then glutathione oxidation, depletion and oxidative stress that leads to damage. And so by having an inhibitor, and we have 2 of them, 743 and 857, which inhibit the electron transfer and controls the regulatory elements like arachidonic acid, which turns on these pathways, and if you can reduce that as a consequence of inhibiting 15-lipoxygenase, we think that this is going to be quite important in a number of different diseases. And that we have 743 that's being now tested in pivotal studies for mitochondrial epilepsy and Friedreich ataxia. There's substantial number of patients in there. We have early data that demonstrates that in PTC857, which is going to be for GBA Parkinson's disease to inhibit alpha-synuclein oxidation. So really quite exciting. We also have the PKU, which allows us to -- it's really a better Kuvan. It actually has it's -- and we like this, and we recently brought this on because we think it's a significant commercial opportunity with 58,000 patients. Defined market, patients are already known and that 293 actually does quite well in terms of compared to Kuvan. We know that it inhibits or it uses -- it's a better BH4 than Kuvan is. And the data here shows it quite nicely. If we compare Kuvan to the dose that we'll be using, it's -- about 50% of the patients do better. And there's about twice as -- there's 50% more patients with about twice as much reduction of phenylalanine. So we think this is going to be a quite valuable product. We're also having U.S. dystrophin, is ongoing right now. It's a study that's going on as well. And Translarna is doing quite well with approximately 90% of the patients that have been treated with Translarna. The data looks really quite good. It's the -- the value of the product continues to grow as has Emflaza, where we [ raised ] $291 million. And we're going to continue to control Translarna and Emflaza with increased penetration, expansion into new territories and the submission of dystrophin in the U.S. to get that in as well. And so there's an open-label dystrophin study that's ongoing that we'll have in the second half of this year that we hope will allow patients in the U.S. to have that. And then we're selling also products with Akcea, partner in Latin America. We think this will be quite valuable for us and it brings patients to them. And so you can see, as a consequence of all of this, that there's many milestones that will occur in 2020 that will continue to build the company, and that's shown here. So I think we're quite excited about the next several years of what we have moving forward. So I thank you for your attention, and I look forward to talking to you further.