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

Good afternoon, everyone. My name is Gena Wang. I'm a SMid-Cap Biotech analyst at the Barclays. It is my great pleasure to introduce our next presenting company, PTC Therapeutics. On the screen, on the Zoom with me, we have Matt Klein, Chief Development Officer. Also, we have Lisa Hayes, VP of Investor Relations. With that, I hand over to Matt to give a slide presentation.

Thank you very much, Gena. It's great to have this opportunity to share an update on PTC's many exciting activities. This presentation will contain forward-looking statements. For those of you who don't know PTC, we are a global commercial, diversified biopharmaceutical company focused on discovering, developing and commercializing innovative therapies to treat rare disorders. PTC started in New Jersey 22 years ago as a small science-based company. And over the past few decades, we have built a robust global research, development and commercial organization. Today, we have more than 950 employees with a footprint in over 50 countries. While we built this company on deep silence, we continue to maintain a strong commercial performance and capital position. In Q3, despite the challenging COVID environment, we reported a 15% increase in year-over-year revenue from our Duchenne muscular dystrophy franchise, which includes Emflaza in the U.S. and Translarna outside the U.S. A total of $82.7 million in total product revenue, a 16% year-over-year increase in net product revenue and we closed Q3 with a strong cash position of over $1.14 billion. PTC continues to discover and develop value-creating therapies for patients with high unmet medical need. We have a strong pipeline across a diverse set of scientific platforms, including splicing, gene therapy, Bio-e, metabolic and others, which provide a steady stream of new programs and products. Notably, we have several ongoing or soon to be initiated registration-directed trials, a few of which I'll highlight in the rest of this presentation. First, I'll begin with our splicing platform. We are incredibly proud of the FDA approval of Evrysdi in August. Evrysdi was the first compound developed from our splicing platform. Evrysdi launch is off to a strong start and has had a very positive response from physicians, payers and the whole SMA community. As a reminder, there remains a high unmet need in the SMA community with patients who are both treatment naive and others who have concerns with durability or the administration burden of current therapies. Evrysdi is the first at-home orally administered treatment for SMA patients 2 months of age and older and the ease of a home-administered oral therapy is particularly important during this COVID-19 pandemic. Our partner, Roche has reported that there have been uptake across all types of SMA patients, Type 1, 2 and 3, and they continue to make excellent progress in bringing Evrysdi to SMA patients globally with approvals already in Brazil, Ukraine and Chile and applications already filed in Japan and the EU. The next program from our splicing program -- splicing platform is PTC518, which is being developed for Huntington's disease. I'm excited to report that PTC518 will be entering the clinic this quarter. Analogous to how we developed Evrysdi, PTC518 was constructed to be an orally available molecule that effectively crosses the blood-brain barrier and is highly selective for its Huntingtin target. In preclinical studies, as shown on this slide, PTC518 reaches all areas of the brain and achieves a uniform dose-dependent lowering of HTT mRNA and protein levels. We've learned that these elements of selectivity, biodistribution and other crucial pharmaceutical properties are critical to successfully developing safe and effective splicing molecules. The Phase I trial is being performed in healthy volunteers with results expected in the first half of 2021. Similar to our SMA program, and because there was a direct correlation of blood and brain levels in preclinical studies, the results of this Phase I healthy volunteer study should allow us to demonstrate important evidence of target engagement and proof of splicing mechanism, in addition to the typical safety and pharmacology data one would get from a Phase I study to inform the dose of subsequent trials. Next, let me turn to our Bio-e platform. The Bio-e platform is based on a set of enzymes, oxidoreductase enzymes, a family of enzymes that have long been known to be critical to the generation and regulation of energy. We're able to utilize our novel library of redox after small molecules to selectively target these oxidoreductase enzymes and affect their biological activity. Our first 2 therapies, PTC743, which is also known as the vatiquinone and PTC857 target the enzyme 15-lipoxygenase, which is a key upstream enzymatic hub regulating the inflammation and oxidated stress pathways that are key to both mitochondrial disease and neurodegenerative disease pathology. We have recently announced the initiation of the registration-directed trial in refractory mitochondrial epilepsy. This is the highly morbid condition of refractory seizures in children with inherited mitochondrial disease. Approximately half of all children with mitochondrial disease have seizures, and these seizures do not respond to typical antiepileptic therapies for the simple reason that traditional anti-epileptic therapies don't target the energetic pathways that underpin seizures in these patients. In fact, many traditional antiepileptic therapies actually increase oxidative stress, which exacerbates the mitochondrial disease pathology. This quarter, we will be initiating a Phase III trial in Friedreich ataxia. This trial is going to incorporate a number of the key learnings from our Phase II program, including the observation that treatment with vatiquinone reduced disease severity and improved overall disease progression over a 2-year period. So both of these vatiquinone registration-directed trials are leveraging strong scientific rationale and previous data from a number of clinical studies that we've conducted in both indications. The Phase I trial for our second compound for the Bio-e platform PTC857 is underway, and we expect to complete dosing in both the SAD and MAD cohorts by year-end. PTC857 is being developed for GBA Parkinson's as a first indication, and this indication selection was based on a large set of both in-vitro and in-vivo data collected to date on PTC857 in different Parkinson's disease models. Turning to our metabolic platform. We are very excited about the upcoming Phase III trial with PTC923 for patients with PKU. Despite there being 2 approved therapies for PKU, there remains a large unmet medical need. The PKU marketplace is well-defined with newborn screening, for both -- for PKU in the U.S. as well as maybe other geographies around the globe and centers of excellence and well-established pathways for drug development. We believe that PTC923 is well differentiated relative to existing therapies. In a Phase II study, in which PT923 was compared head-to-head with Kuvan, 50% more patients demonstrated a response to PTC923 than Kuvan. And those patients that demonstrated a response to both Kuvan and PTC923, there was a greater than 2x reduction in phenylalanine levels in patients treated with PTC923 relative to Kuvan, providing very good proof of concept that will be able to reach those patients for whom there is still an unmet medical need. We are now in the process of completing the necessary gating pharm/tox studies and anticipate that we will initiate the Phase III pivotal trial in mid-2021. Next, I want to highlight our progress in completing the Translarna dystrophin study from our nonsense mutation platform. As we announced on our Q3 earnings call, we have now completed the final study, muscle biopsies from all 20 boys enrolled in the study. Just as a reminder, this study was an outcome of our discussion with the FDA about potentially securing an accelerated approval for Translarna in the U.S. Analysis of the muscle biopsies is now underway. And in accordance with the protocol, we're going to remain blinded to all results from those biopsy analyses until all analyses are concluded. The primary outcome of this study was basically an increase in dystrophin expression over baseline and the dystrophin levels are being assessed by a special ECL or electrochemiluminescence assay that we developed in close collaboration with the FDA and the idea was to develop a particularly sensitive assay, more sensitive than western blot to detect the full life dystrophin protein. And we are now obviously transfer the methods to those analyses to our third-party CROs, and we expect to have the data from the 045 study in Q1 of 2021. Finally, I want to provide an update on our gene therapy programs. As a reminder, our gene therapy strategy emphasizes a targeted approach, wherein we target a specific anatomic location with low turnover cells and anatomic area that's known to be key to disease pathology. This approach is really exemplified in our AADC program with where our gene therapy replacement product is infused directly into the putamen, which is the keysight productivity for dopamine neurons. By using this targeted approach, we're able to administer low dosing levels, which has a number of potential advantages, including patient safety because it's lower viral exposure and also lower manufacturing cost. Our lead program in AADC deficiency, for that, our MAA has been filed. We're expecting the final CHMP opinion in the first half of 2021, and we plan to submit the BLA also in the first half of 2021. The AADC data package is strong. It includes clinical data that demonstrates not only significant neurological and neuromuscular effects in treated children, but also demonstrates the durability of response over 5 years and more. And in terms of durability, we're able to detect sustained dopamine levels in the children who were treated as well as continued improvements in the achievement of milestone and continued improvements in neuromuscular function. This long-term durability is obviously an important consideration for any gene therapy program, and it's an important component of this AADC package. We also continue to make progress in our pipeline programs in Friedreich ataxia and Angelman syndrome, and continue to move these programs towards the clinic in the near future. So in summary, we have a number of upcoming potential value-driving events over the next months. We have initiated or will be initiating registration-directed trials for our Bio-e and metabolic platforms. We expect a readout from the dystrophin study in Q1 2021 that can support an application for accelerated approval for Translarna in the U.S. We'll be initiating our first-in-human studies with our HD splicing molecule, PTC518, in the very near future. And we also expect a number of other important regulatory milestones. So we look forward to sharing all of these updates with you as they become available. And I thank you all. And thank you, Gena, for this opportunity.

Thank you, Matt. So this will bring -- I will start with the question. Maybe I'll start with AADC gene therapy program. So FDA was asking for safety around the commercial SmartFlow cannula. I'm just wondering if you can -- I think previously you commented that was not approved for the gene therapy used in the U.S. So any additional color you can share regarding what FDA concerns are around the safety? And how do you mitigate those concerns moving forward?

Yes. Thank you for the question, Gena. Maybe just by way of background. So the idea of a cannula. The cannula is the device that actually delivers the gene therapy to the right spot in the brain. So the way these surgeries are conducted is using stereotactic guidance, which means prior to the gene therapy administration procedure, the surgeons will use MRI or MRI and CT to basically kind of get a Google maps route that takes you from the outside world directly into the brain to the exact location in the case of AADC, to the putamen, which is where we infuse the gene therapy product. So obviously, it's very important that you have a route that gets you to the right place and also one that sink. So they'll do the surgical procedure, make a hole in the skull and get down to that correct space, and then they introduce the cannula which is really [wet] through -- the device through which the gene therapy is delivered. We want to use a device that is well-designed for this purpose and also one that is MRI compatible so that the surgeons during the procedure while administering the gene therapy can take a picture with the MRI while they're doing the procedure to make sure they're going in the right direction, make sure they're still on that map, getting to the right place, avoiding blood vessels and things like that. The SmartFlow cannula which is made by ClearPoint Neuro who's really a leader in stereotactic guided procedures, has been CE marked in the EU for gene therapy procedures. It's been approved in the U.S. It's been cleared as FDA clearance for a number of neurosurgical procedures. It is actually very similar to the cannula that we use in our clinical studies. They actually have the same shape, the same specs. We've actually done benchtop comparability showing they're very similar. It's been used in a number of gene therapy clinical trials, and ClearPoint is really a leader in developing cannulas with gene therapy procedures. And so what the FDA wanted was some experience with our specific gene therapy product being administered to our patient population. So it's really that last little piece because we've done all the other work in demonstrating comparability with the gene therapy product that are benchtop comparability between the device use in the clinic, benchtop comparability with what we use in the clinic with what we're going to use commercially, and of course, the device has been used safely for gene therapy administration into the brain, and it's been cleared in the EU, which is why this wasn't a gating issue.

Okay. Very helpful. Any other aspects you need to align with the FDA before the BLA filing?

Yes. So obviously, we've had a number of meetings with the agency over the years, and they've had really -- I think, for most copies, very consistent feedback in what that package needs to look like. We are very -- as I mentioned in my presentation, I think the clinical package has a strong data showing significant effects across the children who were treated, durability effect that 5, 6, 7, 8 years they had asked us previously to provide a natural history comparator, we've actually done that work. That's also obviously part of the MAA submission, where we've been able to get -- do a robust natural history analysis using the existing literature to get basically patient level data so we can do what they would say basically the apples-to-apples comparison showing what would have happened to our kids have we not treated them. And not surprisingly, what we found is that in all the natural history subjects, there's no evidence of spontaneous milestone improvement over time. And then we're able to show how we were able to achieve milestone achievement in our treated patients. So that was one other key aspect. Obviously, we'll complete the treatment studies, we'll obviously have a final BLA meeting before submission. But again, we believe we have the critical elements of the package based on our previous discussions with the agencies.

Okay. Okay. Very helpful. And then for the launch prep, you identified 200 patients so far. Just wondering what was the effort -- like where have they been identified mostly through, what kind of effort you have -- you put lots of effort in many different grounds like the cerebral palsy clinics, blood testing, newborn screening. So like where was the main driver for these 200 patients identification? Or where do you see future driver for the new patient?

Yes, great question. So this has been a tremendous effort, and I think I really want to make sure I complement our commercial teams who've been doing really incredible work in the patient finding endeavors. We're working in a number of countries around and we're obviously very focused in the U.S. and in the EU, obviously, EU will be the first launch. And so we've been taking a number of different approaches. Obviously, we've had screening programs in cerebral palsy clinics where because kids are often misdiagnosed as having cerebral palsy. We also have -- doing work in epilepsy clinics. We've recently announced our new initiative, which is PTC Pinpoint, which is basically a genetic panel for -- we have AADC as part of neurotransmitter genetic screening panel. And so we're -- we just started rolling that out. And the other key component to all of this has been physician education because really we want heightened awareness of pediatric neurologists about AADC deficiency. And actually, it's been one of the interesting, unexpected good consequences of the COVID epidemic, which is we've been able to have incredibly well-attended master classes around the globe. Sometimes with over 1,000 pediatricians attending these master classes. And this really -- this education component and bringing people's attention to AADC as a potential diagnosis, coupled with all of the different screening initiatives now we have available to these positions, is proving and we expect will continue to prove very fruitful in identifying patients as we continue to use.

Okay. And then for the -- how fast do you think you can penetrate the initial 200 patients once the drug got approval?

Yes. So we're working very hard on that as well, right? And so launching a gene therapy is a little bit more complicated than launching an oral therapeutic or even an IV therapeutic because we need the surgical procedure. So for this gene therapy, it's administered through a neurosurgical procedure. So what we need to make sure is that we have centers of excellence identified that they're well trained, they have all the necessary supplies and staff and ready to do these surgical procedures on very small children. So obviously, we've been undertaking a large effort in the U.S. and in Europe, identifying these treatment centers of excellence, making sure all the preparatory ground work is done so that as soon as the approval comes in, we're going to be able to move right ahead and conduct these treatment procedures.

Okay. Helpful. And I wanted to quickly touch upon Friedreich ataxia and Angelman syndrome gene therapy. So first, what kind of AAV are you planning to use for these 2 indications? And what kind of route of administration you are going to do?

Yes. So we haven't talked much about the AAVs yet or -- well, we have talked a little bit about the administration and the FA program because, obviously, this is our next closest program to the clinic. And so again, in this concept of targeted approach, we're going to be targeting the dentate nucleus of the cerebellum, which, again, this concept of low turnover cells and anatomic area that's known to be very important to a particular aspect or key aspect of Friedreich ataxia, the cerebral dysfunction or the ataxia. And the way we think about Friedreich ataxia at PTC is, of course, we have the gene therapy program, but we also have our oral small molecule PTC743 or vatiquinone, which we're now initiating the pivotal trial. And we believe this combination approach is integrated approach using the gene therapy to target an anatomic location that we really know is particularly critical to disease, coupling that with an oral therapy that can be made -- it's bioavailable to the rest of the brain because the rest of the brain is affected in FA as well as other organ systems, such as the heart, which we know is a key aspect of that very morbidity and mortality risk, we believe is a very strong and rational approach to tackling a multisystemic and multifaceted disease such as Friedreich ataxia. And so the Phase III trial for vatiquinone should be starting very soon. We think it's going to start in Q4. We're looking forward to moving forward with getting the FA program to IND stage in 2021. And we're really excited to be able to offer both of these therapies for patients with Friedreich ataxia.