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

Okay. Hey, everybody. I am Marty Auster. I'm the lead SMID cap biotech analyst at Crédit Suisse. Welcome to the 29th Annual Crédit Suisse Healthcare Conference, First Virtual Conference. I'm happy to have PTC Therapeutics today. I've got Stu Peltz, CEO of the company, along with several members of the team. Stu, I was just about to say in the breakout. I was -- I had every best intention to kind of do this in front of a fireplace, and it's been like 70-plus degrees all week in Vermont and apparently warmer than in Phoenix. So I don't know what to say, but maybe next year, we'll actually get a fire. But let me hand it over to you to introduce who's all joining you today from the team. And maybe if you could also just make an intro kind of an overview comment about kind of the PTC vision.

Sure. Thanks for having us. Sort of nice to be in warm Vermont, I guess. I'm in rainy Florida right now on the West Coast. So I think it's going to miss the storm a little bit, but we'll get a heavy rain. With me today is Matt Klein, our CMO; Emily Hill, our CFO; and Kylie O'Keefe, our Head of Commercial Strategy. And so thanks for having us again. And I'll tell you a little bit about PTC. We're a biopharmaceutical company that both discovers, develops and commercializes therapies for rare disorders and high-met medical need. I -- besides being the CEO, I was the founder of the company where we started in 1998. We started for myself, and we're now today about 1,000 employees with employees in 25 countries and are selling products in over 50 companies. We've built a company on not only strong science, but it also has a strong commercial engine that's been doing quite well. We're commercializing Translarna in Europe, Brazil; Emflaza in the U.S., We are also selling Tegsedi and Waylivra in Brazil. And as you may know, that, obviously, in August, we had approval for one of our drugs, spinal muscular atrophy. This is a Evrysdi, which is partnered with Roche and the SMA foundation. So you can see we've done innovative products that come out of our laboratories with Translarna, SMA. We also have a very robust pipeline with a number of other products that are moving forward. We have a number of scientific platforms that are moving forward, not only in nonsense suppression and splicing, but also in gene therapy, where we have a Bio-e platform and inborn error of metabolism. So we -- the idea is that we've built the company really to have a number of development candidates that move forward through development that ultimately at steady state have a number such that will be continuous having a valuable set of compounds to commercialize -- therapies to commercialize. So that's been our game plan, and we've been building both the commercial engine as well as the discovery development engine.

So I guess I'd like to spend most of the time talking about your business and your pipeline. Obviously, Evrysdi has been such a big focus of the company and such a large part of the value, but it's now kind of a royalty stream with the success of the product coming to market. So I don't want to spend too much of our half hour on that. But if you could just kind of just walk through the economics. And obviously, you got a transaction with Royalty Pharma earlier in the summer this year that kind of provided you with some cash, also help you to retain a lot of the long-term value in Evrysdi. But kind of talk a little bit maybe about the kind of the economic share you have in that product, and then the kind of the rationale for that deal. And then we'll jump into the pipeline from there.

Sure. So obviously, as everyone knows Evrysdi is the orally bioavailable molecule that has shown transformative results in spinal muscular atrophy and all aspects of type 1, 2 and 3. So it's really an exciting therapy, especially in these times with COVID, by way of home delivery, easy to use. And so we've done -- and that product has been -- has had a very nice launch. And we have substantial royalties and monetized it. And once you go through a little bit of the royalties and monetization.

Yes. No, we saw that royalty monetization opportunity is a real win-win because as you mentioned, Marty, we were able to maintain about 60% of the royalty stream. And with Evrysdi up to such a strong start from the launch and particularly, benefiting from even the tailwinds of patients requiring an at-home therapy during COVID, we're happy to have maintained the majority of that royalty stream. And then the full royalty will revert to us once Royalty Pharma has reached a cap of $1.3 billion. So essentially, double the $650 million we received initially upfront. And that upfront cash really allows us to continue to invest in our pipeline and accelerate our other programs, including splicing and BioElectron platforms that we'll be talking about today.

Okay, super. Let's -- yes, let's jump in, let's talk about the splicing platform first, too. I know you guys had a kind of an R&D kind of webinar on this a couple of months ago. Maybe if you could highlight kind of how that's developed over time? Obviously, there's a couple of products that have kind of -- couple of splicing products that have kind of come to market out of PTC. And then kind of where do you see that? What you've learned, what you've applied and kind of what's in the pipeline that's exciting kind of in the near-term and the longer-term in your plans with that platform?

With the overall pipeline?

Yes. We'll start with splicing, and then we'll kind of move to gene therapy and -- yes.

Sure, right. So yes. So we learned a lot about how to manipulate splicing with the orally bioavailable small molecules, and what are the types of targets to go after. And so we've been working hard on that, both on many aspects of it the platform itself, so we can rapidly identify and look at splicing -- effects on splicing, not only on the individual molecule, but also on the overall RNAs within a cell or organism. So we could really look at lots of things all at once. And improved our -- the chemistry and our ability to look for small molecules to do so quite rapidly. And then one of the things where the next program -- and we've shown it actually to work in a number of -- [ if they can ] show a proof of principle for [ resolve ] as well as Huntington's disease. And Huntington is probably the next most of interest. It's obviously a triple nucleotide repeat disease. And we've shown that we are able to use our splicing technology in a very innovative way where we can modulate the splicing. And in this case, instead of repairing it, we can actually cause pseudoexon, that's within an intron of an RNA that normally doesn't get put into the RNA, to be spliced into the RNA that would have a premature stop codon that would then allow it to actually get rid of both the RNA and the protein. Therefore, lower those levels of both RNA and protein of the Huntington RNA and the Huntington protein. And we've shown we can do that quite successfully with an orally bioavailable molecule. And what we've learned over the time, it's not only can we modulate the efficiency of splicing, but going after CNS and things within the brain. It's very important also to actually get it right in terms of having the pharmaceutical properties such that not only does it pass the blood-brain barrier, but that it doesn't e-flux. And what I mean by that is that what the brain does quite well is actually kick molecules out, it passes -- pushes them out. And so what you really have to do is not only work on the pharmaceutical properties that allow it to pass to blood-brain barrier that prevented from being rapidly e-flux out of the brain. And so we've been able to learn how very nicely to not only make these molecules be efficient in terms of affecting splicing, but also to make sure that they can get to the right place and stay there. And so our molecules now in this one will be -- we're very excited about the Huntington's program. That indeed that we can lower Huntington with a small molecule that have kept the pharmaceutical properties that we were excited about. And this is as we said, we anticipate that to be starting any moment in terms of our Phase I in healthy volunteers. The exciting aspect of that and being able to go to healthy volunteers is that you could rapidly escalate the dosing, so you're going to find the right exposure. And then in the healthy subjects because of -- and this is analogous to what we did in SMA, is we could show that it lowers the Huntington RNA in blood, and we know from all our work that you could see a similar reduction within the brain that was measured in CSF. So -- and that's important because what you see in the blood and what you can then say is happening within the brain gives you very good confidence that you'll be actually lowering it in the right places. So we're really...

And the healthy volunteer study, will you be measuring the plasma HTT lowering or the CSF also? Or...

Both.

Both. Okay. Excellent. And then from the animal models, so how do you see the distribution? Is it 1:1? Are you getting dispersion throughout the spinal column as well as in the deep brain structures, obviously Huntington's is kind of starts in the stride on basically that area and kind of expands out in terms of where the neuronal death impact is observed.

Yes. And ultimately, we talked about the strain on the cortex, but it really is a whole brain disease when you look at this. And so the mere fact that it's an orally bioavailable molecule that is delivered and exposed from the blood is, I think a really major advantage in that it gets to all brain cell types, right? So that -- and I think that's really one of the major advantages that we have is that its distribution exposure can be seen throughout the brain, and then we've seen that in animal models. So we feel pretty comfortable that we have a small molecule that can actually get to the right places because of the brain and therefore gets good distribution, and we'll get good HTT lowering as a consequence of that.

Okay. And you've -- from your from preclinical studies, then you've been able to kind of demonstrate this, I know, in mice. Have you -- can you also kind of assume your dose like primates or other large animals in some of your tox studies? Do you see the same relationships there as well?

Yes. In the rats, nonhuman primates, and we look at CSF as well. And we see equal levels, both in blood -- free drug in both the blood and the brain. So we feel pretty good about what we define and see as the exposure in blood is what we'll see in the brain. So it allowed us to pick the right dose that gets us to the right exposure, that we can then reduce the 1 of the Huntington protein and RNA for that matter to the right levels.

Great. And what level of HTT lowering are you targeting? And how -- kind of what's your view of the safety of kind of lowering that because obviously, patients have mutant as well as kind of normal wild-type HTT protein?

Yes, that's right. And so our anticipation usually is somewhere -- shooting for approximately 50% lowering. I think there's a fair amount of evidence that shows that you're pretty -- you're fine to see lowering of those levels. I mean most of it obviously was embryonic greenfield in animals, but had less of an effective as animals get older. And I think there's a lot of data both in humans and animals that indicate that lowering probably somewhere between 40% to 60% should be fine, and actually be efficacious for the Huntington patients.

Okay. And then that healthy volunteer study, it sounds like that it could start dosing pretty soon, over the next few months or so? Will there be -- do you anticipate having an update sometime in 2021 then on the healthy volunteers or early 22, maybe?

In the first half of the year, we should -- we're going to be doing single ascending dose and multiple dose, so would we look. And depending on half-life and what it looks like, we will be -- update in both of those. So we'll talk about that at the appropriate time. Let's look through the first half of the year.

Do you have a sense of how long you need to dose for to demonstrate reduction of the Huntington protein, MRNA?

Well, the reduction of Huntington RNA and protein, probably that's in animal models can see probably within a month. It always depends on what's the half-life in humans and how quick it goes down, right? Usually, when you think about half-lives, and reaching steady state, you give it 3 to 4 levels times to see where until it gets down to a steady state. So somewhere between, if it's a couple of days. It should be seen within a month for sure.

Okay. Great. I look forward to that. Maybe kind of switching over to the gene therapy programs. I guess maybe if you could kind of walk back to the acquisition of Agilis couple of years ago, which was kind of the base of your gene therapy efforts and kind of what you've kind of developed off that platform. Since then, obviously, there's some -- in addition to the ADC deficiency program, which has kind of made some nice progress. There's some earlier-stage programs that are going to start coming into clinic in the relatively near-term as well.

Yes. So we've been -- obviously, we've been working hard on our gene therapy programs, AADC, we put in already an MAA, which we said, which should get a result in the first half of next year, an opinion from the CHMP by the first half of next year. And that will also be having a BLA into the FDA within the first half of next year as well. So we're excited about that. Obviously, in the case of the AADC, which is a deficiency in dopamine. We think also those were transformative results that were quite exciting where you inject specifically into putamen, where dopamine is -- that may, and we've shown long-term production of dopamine. And there was a 5-year clinical study and then up to another 5 years of a follow-up. And of these kids who are developmentally arrested, many of whom were unable to even hold their head up or sit or stand. We're now capable over time to do those functions and be able to walk and stand. So really quite transformative results, so we're excited about that. So we've been -- that was the first of what we done of the program. And our thinking of the program of the gene therapy really was to start going into tissue types that had slow cell turnover, like the brain, [ eye, heart ] I think are good examples of that. We've been focusing on the CNS. And so this is direct injection to putamen. We're also looking at a FA. FA is our next 1 that we're working on Angelman's and a number of others that are being built. So we're -- and they're -- all of them with a focus of being able to do direct injection. Therefore, that would help in terms of manufacture -- smaller amounts of manufacturing and not needing as large samples for each patient. So we're excited about that. Matt, do you want to talk a little bit about where we're at in terms of those programs?

Yes absolutely. So in terms -- so as you mentioned for AADC, the MAA has been submitted. We're expecting the final CHMP opinion in H1 2021. We also expect to have a BLA submitted in H1 2021. We've been pushing forward with the FA and AS programs. We had some delays, really COVID-related, and I think people are well aware of the global shortage of nonhuman primates. In addition, some of the CMOs that we were using for manufacturing bioanalytical functionalities were impacted by COVID as they were now diverting all their resources towards producing vaccines and related COVID supplies. We're still happy to report that things are moving forward. We're incredibly enthusiastic about these programs. We're making very good progress and expect to be in the clinic in the very near future. As Stu mentioned for FA, we're excited. We have both the gene therapy program as well as our small molecule program, PTC743. And we see this as really an ideal approach, leveraging our order targeted gene therapy delivery strategy with FA as well as being able to treat the entire patient. So while we were doing for AADC direct injection to putamen, which is really the key location for dopamine neurons. In FA, we're giving direct injection to the cerebellum in particular dentate nucleus, which is really ground zero for a key aspect of the Friedreich ataxia neuropathology. And so by being able to provide for tax into that specific location, we're able to effectively target key aspects of disease. However, we all know that FA is a total brain and total body disease, and that'd be able to complement the gene therapy with our oral small molecule, which is entering a Phase III trial that will initiate before the end of the year. We're able to target other areas of brain. And also importantly, artery systems such as the heart, which is [ inside ] the CNS had a significant contributor to FA morbidity and even mortality risk.

And in terms of the IND filing and initiating clinical trial, let's start with the FA program, I know that's something that you mentioned there, there was some kind of COVID-related issues. Have there been -- has the challenge been in -- on the CMC side or in the preclinical study side? What are the gating steps to IND filing currently?