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

Ladies and gentlemen, thank you for standing by, and welcome to the conference call to discuss PTC299 for the potential treatment of COVID-19. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Alex Kane, Executive Director of Investor Relations. Thank you. Please go ahead, sir.

Thank you, and good morning to everyone joining us. Welcome to the PTC Therapeutics conference call to discuss PTC299 for the potential treatment of COVID-19. Joining me on today's call is our Chief Executive Officer, Stuart Peltz. In conjunction with today's call and webcast, we have posted slides that will be referenced throughout the call, which can be found on the Events & Presentations page under the Investor Relations section of PTC Therapeutics website at www.ptcbio.com. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. Please take a moment to review the slide containing our forward-looking statements included within the posted slides. Our actual results could materially differ from these forward-looking statements as any and such risks can materially and adversely affect our business and results of operations. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent quarterly report, Form 10-Q and annual report, Form 10-K filed with the Securities and Exchange Commission as well as the company's other SEC filings. I will now pass the call over to our CEO, Stuart Peltz. Stu?

All right. Thank you, Alex. Good morning, everyone, and thank you for joining us. Earlier today, we announced our plans to initiate a Phase II/III clinical trial of PTC299 for the treatment of COVID-19 in the coming days. The COVID-19 pandemic is truly the defining public health crisis of our era, affecting the lives of millions of people across the globe with speed and impact that has not been observed since the H1N1 flu pandemic in 1918. It has been inspiring to witness the biopharmaceutical industry and broader health care community respond to this unique challenge. We at PTC wants to be part of the solution. One of our clinical compounds, PTC299, has the potential to be an important treatment to combat COVID-19. As such, the development of PTC299 as an orally administered treatment for COVID-19 is now an important priority for the company to help solve and end COVID-19 pandemic. COVID-19 is a complex disease that includes 2 distinct phases: an initial phase characterized by viral response and high viral infection rates and a later phase that is characterized by an overreactive inflammatory response, commonly referred to as a cytokine storm. Clinical symptoms typically start with a fever and a dry cough in the initial phase and are often followed by shortness of breath as the illness transitions to the later phase. In the inflammatory response phase, symptoms can progress to acute respiratory distress signals, or ARDS, systemic inflammatory response syndrome and sometimes cardiac failure. Roughly 30% of COVID patients develop severe disease with progressive lung damage and in part due to cytokine storm causing the uncontrolled inflammatory response. As outlined on Slide 3 of the presentation, the enthusiasm surrounding PTC299's potential for the treatment of COVID-19 is based on the compound's mechanism, which give us the potential ability to address both phases of this disease. The strong and well-differentiated value proposition of PTC299 that I want to highlight is as follows. First, PTC299 has a novel, dual mechanism of action that includes antiviral activity associated with the initial phase of the disease. In the later phase of the disease, the selective attenuation of the immune response calms the cytokine storm. Both of these effects observed by 299 have been demonstrated preclinically. Second, PTC299 targets the cellular enzymes of dihydroorotate dehydrogenase, or DHODH. Targeting DHODH has 2 key advantages. One key advantage is targeting an enzyme coded by a cellular gene, so-called whole-cell vector. Cellular genes don't rapidly mutate as opposed to viral genes, which tend to allow for higher rate of mutations. Thus, PTC299 should reduce the likelihood of resistance to therapy arising from viral mutation. Another important aspect of inhibiting DHODH is that many other RNA viruses require the same building block as SARS-CoV-2, which explains why PTC has demonstrated broad-spectrum antiviral activity in preclinical studies. Third, PTC is an orally administered small molecule available in tablet form, which provides the benefit of patient convenience as it allows for outpatient treatment, alleviating the potential of additional burden on our health care system. Importantly, as a small molecule, PTC299 has the potential to be rapidly and reliably manufactured in large quantities to address significant demand if required. Fourth, more than 300 subjects have been previously treated with PTC299. The compound has a well-established safety profile. Importantly, results from clinical trials demonstrate that PTC299 directly inhibits the DHODH enzyme, showing that the drug is on target and causes the appropriate pharmacodynamic changes. Finally, we are rapidly initiating a PTC299 Phase II/III clinical trial, which is positive to support registration. The FDA has authorized the initiation of the 2-part Phase II/III clinical study, and we expect to dose the patient in the United States within the coming days. Let me now expand on these points. The image on the left side of Slide 4 describes the role of the mitochondria in de novo production of pyrimidine ribonucleotide. PTC299 acts by inhibiting DHODH, leading to 2 distinct actions: the first is the inhibition of SARS-CoV-2 replication; secondly, pyrimidine levels are important for the synthesis of stress-regulated cytokine. Low levels of pyrimidine production selectively attenuates the uncontrolled immune response or calm the cytokine storm through the inhibition of stress-induced inflammatory cytokines as shown by the image on the right. I want to take a minute to review the role of DHODH. DHODH is located on the inner membrane of the mitochondria and plays a key role in the de novo synthesis of intracellular pyrimidine nucleotide, as I discussed earlier. As seen on Slide 5, DHODH catalyzes the conversion of dihydroorotatic acid to orotatic acid, leading to the generation of uridine monophosphate, or UMP. UMP is subsequently converted to uridine and cytosine triphosphate to supply the cellular pool of pyrimidine nucleotides. Now under normal conditions, pyrimidine nucleotides are supplied via both the mitochondrial de novo pathway I just described as well as the salvage pathway in which ribonucleotides enter through cellular channels. Under many circumstances, the salvage pathway is sufficient for growth. In virus-infected cells, however, the de novo pathway becomes more important. The salvage pathway recycles 3 existing nucleotides for food or other extracellular sources and does not appear to be sufficient to support rapid viral replications needed for the progression of the infection. As shown on Slide 6, viruses like SARS-CoV-2 require a large intracellular nucleotide pool to support rapid replication. Inhibition of DHODH disrupts viral RNA synthesis via the de novo pathway and blocks viral replication by depleting this pool. Through inhibiting DHODH, PTC299 blocks the biosynthesis of the pyrimidine nucleotides, which are building blocks necessary for viral production and replication. PTC299 has demonstrated preclinical antiviral activity against SARS-CoV-2, supporting this mechanism. The results on Slide 7 demonstrates that PTC299 inhibits SARS-CoV-2 viral replication in vitro. The chart on the left demonstrates in vitro efficacy in the reduction of SARS-CoV-2 virus as determined by PCR analysis. The results show that a 2-hour pretreatment demonstrates a significant viral inhibition. At 250 nanomolar potency, PTC299 resulted in a 3-log reduction in SARS-CoV-2 titer in cellular assays as compared to vehicle. Importantly, results from experiments in which PTC299 treatment was added either at the same time or 30 minutes after viral infection also demonstrated antiviral activity. In order to confirm that the result was due to DHODH inhibition, both uridine and PTC299 were added to the cell culture infected with SARS-CoV-2. As shown in the middle chart, uridine addition bypasses the requirement of de novo pyrimidine synthesis, allowing viral replication. The addition of uridine negates the need for DHODH and the de novo pyrimidine pathways and is consistent with PTC299 acting from DHODH inhibition to block viral replication. PTC299 is a highly potent compound and has demonstrated SARS-CoV-2 inhibition of viral replication when treated at low nanomolar potency. As shown on the chart on the right, the PTC299 EC50 was shown to be 2.6 nanomolar. The results show that in preclinical studies, PTC299 is highly potent and efficacious against SARS-CoV-2, especially when compared to the EC50 of other compounds that have been evaluated in the clinic. The results on Slide 8 show additional evidence of the reduction of viral infection. The ability of PTC299 to inhibit SARS-CoV-2 replication in Vero cells was evaluated by immunofluorescence microscopy using an antibody to the N protein of SARS-CoV-2. Viral levels were determined by staining cells using the N protein antibody as reflected by green fluorescence. Increasing the PTC299 concentration led to greater reductions of SARS-CoV-2 compared with untreated control. However, the viability of the cell, as reflected by the blue stains, remains unaffected, showing that PTC299 is not cytotoxic. Furthermore, as we described earlier, PTC299 targets DHODH, a cellular gene. Targeting enzymes produced from a cellular gene like DHODH has the advantage of cellular gene to not rapidly mutate so that it's less likely that the virus will become resistant to PTC299, especially compared to compounds that target the product of a viral gene. Preclinical results demonstrate the requirement for excess pyrimidine ribonucleotides for SARS-CoV-2 viral replication, which is why PTC299 can be an effective viral inhibitor. The need for excess pyrimidine ribonucleotides is important, not only for SARS-CoV-2 replication, but for other RNA viruses as well, suggesting that PTC299 can be a broad-spectrum antiviral inhibitor. We tested this hypothesis by assessing PTC299 across a number of positive and negative-sense RNA viruses. The results are shown in figure 9 and demonstrate that PTC299 inhibits viral replication of 7 viruses tested including West Nile, RSV, Ebola, Rift Valley fever virus, Parainfluenza virus, Hepatitis C and Poliovirus. The cytokine storm associated with the later phase of COVID-19 dramatically complicates the course of infection in certain patients, resulting in ARDS and, in some cases, in death. Studies have shown that levels of a number of cytokines were found to be elevated in COVID-19 patients with poor prognosis, indicating that these cytokines may be specific markers of severe disease. As shown in the figure on Slide 10, pyrimidine and uridine, in particular, plays an important role in this process. Results from studies have shown the DHODH inhibition attenuates the production of pro-inflammatory cytokines. Thus, PTC299 has a potential to affect both aspects of COVID-19 viral infection and its overreactive immune response. As shown in the figure on Slide 11, PTC299 was particularly effective in activating the innate immunity and selectively inhibiting specific cytokines in the cellular co-cultures that model chronic inflammatory conditions driven by B-cell activation, antibody production and chronic T-cell activation and inflammation. Results from a BioSeek [ cell ] panel demonstrated that PTC299 selectively attenuates the production of these key cytokines that promote a stress-induced immune response. The results show that, as compared to vehicle control, PTC299 resulted in decreased levels of pro-inflammatory molecule, including IL-17A, IL-17F, IL-6 and TNF-a; decreased levels of inflammation-related molecules such as MCP-1 and IL-8; and decreased levels of proteins involved in tissue remodeling, such as soluble VEGF. As shown on the left panel on the figure on Slide 12, DHODH catalyzes the reaction that produces orotate from dihydroorotate as part of the pathway leading to uridine production. PTC299 inhibition of DHODH would prevent this reaction, leading to the accumulation of DHO. We were able to test whether PTC299 inhibits DHODH in humans by analyzing the DHO level in patients treated with PTC299. As shown in the middle panel, the results demonstrated that DHO levels were not observed in untreated patients while PTC299-treated patients showed increased levels of DHO in the blood. This is an important result as it demonstrated that PTC299 inhibited the DHODH enzyme at the dose given to the patients, leading to the accumulation of the upstream precursor DHO. It gives us great confidence that we know the required exposure in which PTC299 will be active in patients. Based on our hypothesis, we expect to see a reduction of viral replication in PTC299-treated patients. A schematic of the upcoming trial is shown on Slide 13. The Phase II/III FITE19 clinical trial will evaluate the efficacy and safety of PTC299 in hospitalized subjects with COVID-19. The primary objectives of the study is to evaluate the clinical efficacy of PTC299 compared with placebo assessed by the time to respiratory improvement. Secondary objectives will include respiratory functions, immune response, length of hospitalization, safety and mortality. The study design will be a randomized, placebo-controlled, double-blind multinational study with 2 stages and 380 subjects approximately. An interim analysis evaluating the safety will follow the first stage. We would expect completion of both stages of the trial in the first quarter in 2021. PTC will be working with regulators to explore potential registration pathways, including Emergency Use Authorization in addition to formal approval pending the success of the study. Slide 14 is our summary slide. To recap, in the coming days, we will initiate a potential registrational trial with PTC299 for the treatment of COVID-19. PTC299 is an orally administered compound that has a novel dual mechanism of action well suited for this disease. PTC299 targets the cellular enzyme, DHODH, which should reduce the probability of drug-related viral resistance to support broad-spectrum antiviral activity. Results from cell culture experiments demonstrate PTC299's inhibition of viral replication as well as the selective attenuation of cytokine essential to the uncontrolled immune response. Finally, PTC299 has a well-established safety profile with more than 300 subjects treated across multiple clinical trials and has demonstrated direct DHODH inhibition in patients. We look forward to dosing the first patient in this trial shortly. I want to make one last point. Our decision to move rapidly to investigate PTC299 in the clinical studies to treat COVID-19 is well in line with our core mission to discover, develop and commercialize therapies to treat patients with high unmet medical needs. I'm proud of PTC's ability to be entrepreneurial and to rapidly begin a trial to determine whether PTC299 can be an effective treatment to combat infections caused by RNA viruses like SARS-CoV-2, which has led to hundreds of thousands of hospitalizations and death across the world in only a few months. PTC is a nimble organization, which allows us to efficiently deploy existing resources without impacting our other programs. And we have the required scientific expertise and the essential R&D and commercial infrastructure to be a leader in the fight against COVID-19. Thank you for listening this morning, and operator, please open the line for Q&A.

[Operator Instructions] Our first question comes from Tazeen Ahmad with Bank of America.

Just wanted to know, Stu, how long do you think it would take to enroll the study that you just announced? There's been ebbs and flows in the cases of COVID depending on geography. How many sites do you think you'll need all in? And then a second question is what other indications beyond COVID do you think that this therapy could be useful for? And do you have plans for studying those indications in the near term?

Yes. Thanks for the question. Appreciate that. So the number -- so I think we're working through opening up a number of sites. We want to do this as rapidly as possible. So we've been in -- we're going to be starting to dose patients within days at a site that we have, and we're opening up a fair number of sites, both in the U.S. as well as we're looking globally. So we anticipate the trial to be relatively -- to be able to relatively -- enroll this relatively quickly. So I think we're looking at a pretty fast time line in terms of being able to complete the trial.

Can you just clarify that a little bit more? When should we expect some data? Would it be this year?

So there's possibility. It's possible. It's hard yet because we're just studying it to give you a precise number. But we're looking forward to say either this year or in Q1 next year.

Okay. And then what other indications beyond COVID...

So as you know, the 299 is currently being studied in AML right now. In cancer, that's been going on for some time. The DHODH is important there as well. We don't have any anticipation to look at other antivirals at this moment.

Our next question comes from Joel Beatty with Citi.

Have you studied in vivo preclinical models for antiviral activity of PTC299? And if so, what have they shown?

Right. So we haven't looked at the animal models for that. So -- but we have looked at it in a number of different types of RNA viruses. It was highly potent in the cell-based assays in multiple ways, as you saw. So that's really, actually, quite important because I think it's pretty clear that the amount of pyrimidines for RNA viruses is actually important. But on another note, I think one of the things that differentiates this compound is not only is it orally bioavailable, and we know what it did with DHODH directly in the enzyme. As you saw in one of the slides that we had, that we actually demonstrated that in the clinic as well. So we -- in pretreatment versus posttreatment, we were able to show in the clinic, in patients, in blood, you could show that pretreatment, there was -- that you did see dihydroorotate in blood. In the after treatment, you saw increased level of DHO. So the important part of that is that DHO goes into orotate and DHODH causes that. So the fact that you see the precursor accumulate in the blood and the decrease of orotate, that you don't -- that you're not seeing -- that you're inhibiting the dihydroorotate. So we know that PTC299 is on target. It's affecting the DHODH inhibition. So -- and we know that in the cell culture that we're inhibiting viral load. So I think it's doing the job and now this experiment will show whether that's -- testing the hypothesis that inhibiting DHODH will inhibit viral replication. So it really demonstrated -- we already have the PD effect well established in the clinic.

Great. And then one other question. With hundreds of patients already treated with this drug in the clinics, could you give a little bit more detail on the safety characterization and how that fits for COVID-19?

Sure. So I think one of the key differentiating factors of PTC299 is that it's an orally bioavailable molecule. So it can be taken, both not only in the hospital, but also even outpatient. So we think that will ultimately be an advantage. And it's shown to be safe and generally well tolerated in the studies in more than 300 subjects to date with minimal effects that was seen in gastrointestinal when administered at higher doses for longer durations. We think that especially given that this is going to be for 14 days, the -- and at dose that inhibits DHODH, I think we're -- we think that we have a very good dose that the safety of these doses, we think, is going to be very good.

Our next question comes from Alethia Young with Cantor Fitzgerald.

I guess I just was curious a little bit about -- if you hypothesize who you might think this would work in the best. I mean since it kind of has a dual mechanism. And then also, can you just talk a little bit about any potential drug-drug interactions that you may see or have tested with any other medicines that are being used?

Yes. Thanks for the question. Yes. So obviously, we're going into patients that are hospitalized but not intubated. But we do see -- so we're starting with the moderate patients. But because of -- I think one of the other interesting points about this molecule is that it has -- if you think about the -- what the disease is in the first phase, you see a high viral replication and infection that then goes into the second phase that causes in the more severe patients a cytokine storm that leads to obviously more damage -- uncontrolled cytokine storm that causes problems. So at the end of the day, we think this actually has the potential to be able to be used, not only in the moderate patients, but also early on. So the fact -- and I think another important differentiation is that while we're studying the hospitalized, it can also be in the outpatient setting. So we think that could be an advantage. So the initial focus, obviously, in the Phase II/III trial is for patients with the high unmet medical need and so that we can demonstrate the treatment effect. But obviously, ultimately, we say we want to explore other opportunities to expand this should this be successful. Because it's -- again, it's an oral molecule and, therefore, can be used by all. So the drug-drug interaction, none that we're aware of right now. But we -- obviously, we'll continue to look into that.

Our next question comes from Gena Wang with Barclays.

I have a few questions. The first one is for Slide 7. Stu, like what cell system was that? Was that Vero [ infection ]? And then my second question is, did you also test the IC50? And then lastly, how is COVID-19 dosed compared to the oncology indication?

Sure. So yes, so these are Vero cells. And yes, we did an IC50. You could see, actually, on the slides where multiple time points were taken at various concentrations where the IC50 was 2.6 nanomolar. So that it's a high -- actually, I think it's the most potent DHODH inhibitor that we know of. And that the dose -- and we know quite a bit about 299 in the exposure, so we know a dose that we can be substantially above not only in the EC50, but the EC90 throughout 14-day treatment. And we know from that dose that, that dose will also inhibit dihydroorotate. And so as a consequence of that, I think we're in a pretty good spot to -- so this proves out our hypothesis that we'll be able to know that the dose is appropriate that we will have inhibited DHODH enzyme. And therefore, we would anticipate a reduction of viral load as well as its effect on cytokine -- attenuation of the cytokine.

And Stu, so I -- what I meant was IC50, not EC50. I saw you did test the EC50, that was 2.6 nanomolar. Did you test the IC50?

You mean in terms of cytotoxicity?

The inhibitory, the -- yes. IC50.

So that's the effective dose that gives you 50% reduction of viral load. That is the IC50.

I see. Okay. And how is the COVID-19 dosed compared to the oncology indication?

So the doses, it's probably within range of what the oncology dose is in terms of inhibiting the DHODH. We're looking for basically around 30-hour micrograms-per-mil exposure. And we think that -- so in our modeling and our understanding of the pharmacokinetics, we're in pretty good -- we're in very good shape to be able to be certainly -- and that dose, I think, is certainly above what we think is the dose required to inhibit DHODH. So we'll be taking a patient for the 200 mg tablet BID for 7 days, and then they go to 50 milligrams QD for maintenance. And they would certainly get to that dose -- to the dose and the exposure levels quite quickly.

Okay. So the oncology indication, what is the highest dose you tested?

So we had done probably substantially higher doses when we were looking early on at this compound, probably 5, 6x higher when we were looking at solid tumors in the early days prior to understanding its mechanism of action. And we know that based on the concentration and the exposure that we're getting now that you don't need to go that high, that this level of exposure will get us to be substantially above the EC90 to inhibit DHODH, which would cause a reduction in the viral replication.

Okay. So the dose you're using will be 200-milligram BID. Is that right? Did I get that correct? For 7 days?

Yes. It's for 7 days and then 50 milligram once a day following that. So what we're doing is we're rapidly getting to the dose that we -- to the exposure that we want and then maintain that for the subsequent total -- with a total treatment of 14 days. 7 days on 200 milligrams treatment and then 7 days on 50 milligrams. So the treatment is only for 14 days of treatment.

And next question comes from Robyn Karnauskas with SunTrust Robinson Humphrey.

Just some clarity on -- this is Slide 7. It's kind of hard to tell by going between the 300 nanomolar and 3 micromolar. So it looks like that's where the CC50 occurs, if -- I guess if you kind of confirm where the cytotoxic concentration at 50% is for the first question. And secondly, on the slides as well. At Slide 11, can you talk a little bit about the context and relevance in the reduction of the cytokine? And as you noted on the slide, can you talk about in these patients on CRS, what is the level they go up by, and how does this compare and, I guess, expectations around those -- around there? And then just a quick follow-up question after.

Sure. I think you're talking about where we went up to 3 micromolar on the dosing there on Slide 7, which is [ vehicle ] and then uridine prevented that. Those doses, so went up to -- it's not really one that you would get the IC50 on. That's not one that you'd get the IC50 on. We had done a more -- we use escalating dosing. And so we were able to -- be able to show that the IC50 was around 2.6 nanomolar, IC90 around approximately 50 nanomolar. So -- and that's titration curve with multiple points on that. So in terms of cytotoxicity of within the Vero cells, we went well above that. We went even at 10 micromolar. These experiments did not demonstrate any cytotoxicity level within the treatment of the cells. So it was -- so the -- in terms of cytotoxicity, it showed a very big window in these cells -- in the Vero cells compared to its ability to inhibit the viruses there. And what was your other question on that?

Can you just put a little more context around, I guess, Slide 11 on the log reduction that you guys saw into the cytokines? How does that relate to during CRS in these COVID patients or during the second phase of infection? How much of these patients see an increase in their cytokines? And how does this assay compare to that? What's -- I guess can you help us just understand that probably a little more in the context of patients?

Sure. These are BioSeek where we're looking at a number of different cell types to be able to see the effect on various of the cytokines. So you could see here that we were able to see inhibition of these. They tend to make them the inhibition down to sort of the level of what's seen -- it isn't -- they don't necessarily inhibit completely, they sort of get to the endogenous levels usually. So it's somewhere around -- somewhere between either a 40% reduction or more. But it doesn't actually knock it out completely. It just attenuates it. So we're seeing, for instance, I think, if you look at like IL-8, it was reduced by about 30% in -- around 30%, 40%. So it's a pretty substantial reduction of the cytokine.

Great. And then a last one. On the Phase II study, the trial that you guys have going, I guess, can you talk a little bit more about those expectations or assumptions that you guys have in the time reduction to respiratory improvement? And then for the interim analysis, what is the sort of bar that you need to meet to get passed to go on to stage 2?

Yes, sure. So in terms of the trial design, it was really in discussions with regulatory authority. And so what we saw there in the discussions with them, it was the notion of let's look at safety first within the -- with 40 patients within -- I mean, yes, with 40 patients within the trial in this population that's powered enough to see any safety signals. And therefore, after that, it would then go on to the 340 patients following that. In terms of the -- again, it was in discussions in terms of the endpoint. It was -- the treatment effect was thought through assuming the minimum of 5 days of improvement over standard of care. So it was powered based on that.

Our next question comes from Joseph Thome with Cowen and Company.

Just to clarify on the last question between stage 1 and stage 2. I guess what is your disclosure strategy? Are you going to indicate when you advance to stage 2? And I guess do you remain blinded between the 2 stages, so we shouldn't anticipate any sort of efficacy read at that point? And then my second question is just on the standard of care use in the study. What is the standard of care? And is there any sort of regulation between the randomization arms into what patients can get in addition to PTC299?

Yes. Yes, we -- I would anticipate that we would tell everyone that we were going to the second phase. It does remain blinded to us. Only the DSMB will unblind that to us. So we won't know that. So there's -- we won't know the interim in terms of that. We just know that we will continue on.

Okay. Great. And then...

Is that helpful?

Yes, that's perfect. And then in terms of standard of care, is it standardized between the randomization arms? Is there anything limiting what patients can get in addition to 299?

Yes. So I mean sort of like -- obviously, the standard -- it's not standardized, but if patients are on remdesivir standard of care versus PTC299, so there'll be no steroids or IL-6 in the treatment. Remdesivir, hydroxychloroquine will be stratified though. So we're taking that into account, although probably less so now for the hydroxychloroquine.

Our next question comes from Raju Prasad with William Blair.

Yes, just a follow-up on that. Do you anticipate patients being on dexamethasone as well on the standard of care arm? And then on Slide 7, it seems like for the efficacy bar chart or graph, it seems as though 250 was -- showed a significant log drop, but there was no additional increase at 500 or 1,000. Any thoughts on that and the mechanism behind that?

Yes. I think what you're seeing is sort of an infection that occurs that then leads to inhibition of the viral replication. So seeing a 3-log drop is pretty substantial within that time. So the virus is -- it takes some time for the PTC299 to function. There's some replication going on that then gets inhibited as a consequence of PTC299. So I think that's what makes sense for why that's going to be the case in terms of the inhibition of the virus. So we think that really a 3-log drop is really quite extensive and very exciting. It actually does so at a low and potent concentration. So when you put it together, I think we -- the mechanism is well understood. It's a unique mechanism because it hits the cellular target. And I think this is somewhat what you would expect as a consequence of reducing the level of the uridine and then seeing the inhibition of the viral load.

And potential use of dexamethasone? And also, I guess as initial -- when do you anticipate ex-U.S. countries up and running? And do you think that -- I mean how does that impact standard care across countries?

Yes. So I think, obviously, we'll have to consider dexamethasone. We're not actually necessarily going into the more severe patients where dexamethasone seem to have its best function. So we obviously have to think about that within the range of the clinical trial. We're going into more moderate patients. We'll look like we'll be outside the U.S. probably by July. We've been working to look at various places in Europe, Brazil, other places as well. So the interesting point here, obviously, also is that 299, in addition to being able to inhibit viral replication, we think one of the differentiating aspects of this drug is that, not only does it inhibit viral replication as a consequence of reducing the ribonucleotide levels for viral replication, but it also demonstrated the anti-inflammatory effect that was observed. So we think it'll be even -- it has its own in a sense anti-inflammatory action.

Our next question comes from Brian Abrahams with RBC Capital Markets.

Three quick ones from me. First off, how much is known about the biodistribution of the drug, in particular, to the lung? Secondly, will you guys be looking at viral load? And if so, how important might that be as a leading indicator of treatment effect, especially in that smaller first stage of the study? And then lastly, on monetization, can you talk a little bit more about your strategy for recouping potential manufacturing and trial costs? Is this something that you plan to ultimately sell at cost? Would you be donating this, focusing on generating profits from this sale commercially or to governments for stockpiling? How should we think about that longer term?

Yes, sure. So with -- in terms of viral load, obviously, we've been -- obviously, we think -- we've been thinking about that. And we'd love to be able to utilize that. It's probably not ready yet for prime time in clinical studies. That's one of the reasons why it might be harder to study this at the moment in outpatient settings in terms of looking to viral load. We will be looking at it, obviously, as a secondary endpoint. So that will be interesting within the current trial. So again, that's because it treats both aspects of the disease. We've looked actually in the past in terms of the studies previously, and the 299 was able to distribute well within tissues as well. So it showed very good distribution. And obviously, in terms of what our plans for what would happen is, I think one of the things, obviously, the focus here is to establish its efficacy on that, the fact that it can work probably in a broad population because of the dual mechanism of both the antiviral and anti-inflammatory and the fact that it's oral, we think, will clearly be a benefit here as well. I think it's probably too early to discuss how we would price it. But obviously, it takes many elements in consideration. And obviously, we would do responsible pricing when the timing is right, after we understand the activity and value of the product. So our intent really is to make sure that the treatment is available to as many patients as possible. And in terms of -- obviously, we have a footprint. The company could sell -- we have been selling drugs in over 50 countries, but we would obviously consider collaborations or partnership opportunities to ensure that we get global -- if successful, that there'd be global distribution of this to meet the needs of everyone who would be needing to take that. In the case of -- when you think about distribution, we think about this that will be predominantly through -- both purchases through and buy up through the government and specialty pharmas as well as hospitals. So we have certainly a lot of experience in being able to do that within the countries that we currently operate in. So I think that's been our thinking, but we're thinking, obviously, in terms of being able to distribute and being able to manufacture. It's a small molecule, it's relatively few step. And so we have -- it has the potential to be very much rapidly, reliably manufactured in bulk, in large quantities. So we think we can address the demand on demonstrating its efficacy.

Our next question comes from Vincent Chen with Bernstein.

Just a couple of quick ones for me. So leflunomide is another inhibitor of DHODH, which has also been applied in COVID-19, and I think it's been tested both in some trials and I imagine there's also patients who are already on the leflunomide who may have been infected with COVID-19. So just a couple of questions on that -- along that. One is, what's your sense for what has been seen from these trials of leflunomide in COVID-19 to date, or from real-world experience in patients who are infected with COVID-19 who happened to be on the leflunomide? And what do you infer from that about the potential uses, mechanism in the disease? And the second is, how do you think the profile of PTC299 would compare to leflunomide?

Yes. So I think it was -- so one -- I think one of the nice advantages of 299 is from our work in looking at its efficacy and ability to inhibit dihydroorotate dehydrogenase. It's a very good inhibitor of that enzyme. And so we know what's unique is that really, it gets to a concentration at the exposure level that we know we would be inhibiting DHODH throughout the 24-hour day period. And so I think really, that's really one of the major advantages of this is that -- and one of the things you want to do is to really prevent the -- have that throughout the exposure to prevent the enzyme activity. I think when you look at the leflunomide, what you're talking about is, it's not nearly as potent as PTC299 is. So we think that's a real advantage of being able to be able to take it orally, be able to get to exposure level and maintain it throughout the 14-day period.

And I guess what do you think of the -- or what has been shown so far in COVID with leflunomide? And what do you infer from that about the potential for the mechanism?

In terms of -- so I think the way -- well, we're going to have to obviously wait and see the results in here. I think one of the advantages of what we have, again, is the -- obviously, that it's oral to be taken to get to 24 hours exposure around that. So I think at the end of the day, we're going to await the result to be able to do the precise comparison. Otherwise, it's difficult for now to be able to say.

Our next question comes from Eric Joseph with JPMorgan.

Really, just a quick one for me, which is on -- based on your understanding of the tolerability profile of 299 from the prior oncology studies, is there -- do you see any potential for use in perhaps a less severe outpatient population? And to the extent that it's possible, would there be the opportunity to -- at that stage to explore efficacy outside of the hospitalized setting in addition to that?

Yes. Thanks for the question. I think that's an important one. Obviously, what we've been doing so far is we're taking what we think is the fastest route to be able to demonstrate efficacy of the patients in the population that I think we can actually most control and understand. So what we want to do is this would allow us to establish efficacy first and rapidly. But clearly, the fact that, I think, one of the differentiating factors could be, upon showing efficacy, that this would be really good for outpatient settings. Because most patients don't necessarily enter the hospital that they -- that 299 because it's -- the tablet would be very good, very convenient for outpatient settings. So we're looking that once we begin to establish some efficacy to think about how we can do -- demonstrate efficacy in more mild patients. Obviously, what we'd like to do is be able to look at viral loads and others. But clearly, right now, the FDA is not -- doesn't think that the technology is -- or the assays themselves are good enough to actually get approval on right at the moment. But people are constantly improving that. And so we'd like to think about the cohort of outpatients in an outpatient setting to monitor this at some point. So we look to do that once sort of Phase 1 is complete. I have at least a team thinking about how we can do that.

And I am currently showing no further questions at this time. I'd like to turn the call back over to Stuart Peltz for closing remarks.

Okay. Well, thanks, I appreciate you taking the time. I hope you see that 299, just because of how much we know about it, is perfectly positioned to be a -- to potentially be a real player within the treatment, and we look forward to talking to you about this more in the future. Thanks for your time for listening to us. Have a good day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.