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

All right. Good afternoon, everyone. Thank you for joining us today for our last session of the day. My name is Daniele Drago. I'm one of Tazeen Ahmad's associates here at Bank of America, and I have with me today, Matthew Klein, Chief Operating Officer; and Kylie O'Keefe, SVP of Commercial -- Global Commercial and corporate strategy from PTC Therapeutics. So welcome, guys. And maybe we can start by -- you guys can introduce yourself and maybe you can give us a brief overview of the company and key catalysts for the year.

Sure. So thank you very much, Daniele. For those of you who might not be familiar with PTC Therapeutics, we're a global biopharmaceutical company with multiple platforms each built on pioneering science. We are focused on discovering, developing and commercializing innovative therapies for rare disorders while delivering significant value to all of our stakeholders. We've built a robust pipeline of therapies that moves us towards our goal of delivering new therapeutics in a steady stream for patients with high unmet medical need. Let me first discuss our commercial business. We recently reported a very successful first quarter with total revenues -- total net product revenue of $130 million, which represents a 42% growth over the first quarter of 2021. Our net product revenue from our Duchenne muscular dystrophy franchise was $128 million, demonstrating continued success of Emflaza and Translarna. The success of Q1 comes on the heels of a very successful 2021 where we reported record net revenue of $539 million, including $423 million from our Duchenne muscular dystrophy franchise. In addition to our DMD franchise, we also have revenues in LATAM from Tegsedi and Waylivra and generate collaborative and royalty revenue from Evrysdi. We're very proud of the success of Evrysdi, which is the first therapeutic from our splicing platform. Evrysdi remains the most prescribed disease-modifying SMA therapy with over 20% market share in the United States and over 30% market share in Germany. Moving to our pipeline. We recently announced the successful completion of SAG and oral explanation meetings with the CHMP for our first gene therapy product for AADC deficiency. We now expect an opinion from the CHMP this month. And if approved, our AADC deficiency gene therapy would be the first ever direct administered to the brain gene therapy approved. The gene therapy approval package is built on 3 clinical trials, which demonstrates significant meaningful benefits for all treated patients and importantly, demonstrates durability of clinical benefit out to 6, 7, 8, 9 and even 10 years following the administration of the gene therapy. This durability is particularly important for a single administration gene therapy for a highly morbid and fatal disease. Our commercial teams have been preparing for launch and are ready to execute on the launch following the opinion -- positive opinion and approval in Europe. I'd also like to discuss some of our near and value-driving catalysts for the year. We have a number of expected readouts on our registration-directed trials across our platform. First, let me start with Study 041, which is the placebo-controlled trial for Translarna for nonsense mutation Duchenne muscular dystrophy. This is our commitment for post-marketing study for the European conditional marketing authorization of Translarna, and we are expecting results from this study in the second quarter of 2022. From our Bio-e platform and the first compound from the Bio-e platform, vatiquinone, we have 2 ongoing registration-directed trials, one in children with mitochondrial disease associated seizures, the MIT-E trial and the other in Friedreich ataxia, the MOVE-FA study. We expect results from the MIT-E trial by the end of 2022 and are expecting results from the MOVE-FA study in the second quarter of 2023. We're also very excited about our PKU program and the ongoing Phase III registration-directed AFFINITY trial of PTC923 in PKU patients. We're very excited about the market opportunity for PTC923, given the well-established centers of excellence, identified patients and the fact that there's still a large number of patients with unmet medical need despite there being 2 approved therapies. In addition, the study design of AFFINITY allows us to really increase the probability of success of the trial given the fact that we can enrich the study population for patients identified as being responders to PTC923 during the run-in phase. We also recently announced the initiation of the Phase II PIVOT-HD trial, which is the study of PTC518 in Huntington's disease patients. The PTC518 Huntington program comes from our splicing program and follows on the heels of the successful development of Evrysdi for SMA. We've basically used the playbook for Evrysdi in designing PTC58 (sic) [ PTC518 ] in the preclinical optimization and preclinical studies as well as for the recently completed Phase I study of PTC518 in healthy volunteers in which we were able to demonstrate important evidence of target engagement and splicing activity in healthy volunteers. In the study, we were also able to confirm CSF exposure and lack of efflux of PTC518, critically important components for the development of a drug or a CNS disease like Huntington's disease. The study will be -- the PIVOT-HD Phase II study will be a 12-month placebo-controlled study in 2 parts. The first part will be 12 weeks in which we'll focus on pharmacology, pharmacodynamics and pharmacokinetics, and then the second 9 months of the placebo-controlled trial will focus on blood-based, CSF and radiographic biomarkers confirming activity of PTC518 in Huntington's disease patients. We have reported -- we have said that we'll expect to have results from this 12-week portion of the study by the end of 2022. Finally, we have also recently initiated 2 additional registration-directed studies, one with PTC857 for ALS patients and the second with unesbulin for patients with leiomyosarcoma. So we're looking forward to a very exciting and what should be transformative 2022 for PTC with continued growth in our commercial organization from -- in both existing and new territories, expected potential approval of our first gene therapy product and readouts from a number of our registration-directed trials.

Great. Thank you. Thanks for that overview. I think definitely lots of things happening at the company and lots of things to talk about. So I was thinking maybe you can start with the commercial side. And so recently, you talked about the performance of Translarna and Emflaza and your DMD franchise. So I was just wondering maybe you can tell us about how you're thinking about expansion of Translarna and the DMD franchise? Is that going to be driven mostly by geographic expansion or expansion in your current markets? And maybe what are the things you're considering as you think about reaffirming your guidance for the year?

Yes, absolutely. So I think as we look at our DMD franchise, we're particularly proud of the continued year-over-year growth. And if we look at Translarna, it's been year-over-year growth 8 years post launch. And we've worked very hard to build a strong global infrastructure that allows us to have a globally robust and diversified business when it comes to Translarna. And this has been really important in driving that year-over-year growth. If we look at 2021, I think we saw growth coming from existing geographies as well as geographic expansion. And if we look at the existing geographies, that was coming both from new patients and continued high compliance. If we look to the outlook for 2022 and what's driving the revenue guidance there, it's a similar approach in the sense that we're looking at an acceleration of our footprint in new markets and continuing optimization of our business in the existing geographies. So growth coming from both aspects. We're looking to continue to expand in regions like Asia Pacific, and there's good growth coming from those markets as well as markets like Middle East and North Africa. And we've mentioned on the recent earnings call, we've done a number of filings in Mexico and expecting further growth from Mexico and other Latin American countries. So I think if we look at revenue contribution, while we still see a good proportion or majority of revenue coming from our existing geographies, we do expect that to shift over time as some of these geographical expansion countries have further uptake in penetration and come online in a broader sense. And so while we do see that majority coming from existing geographies, over time that will shift. And in particular, we're seeing a good proportion of growth coming from these geographic expansion countries.

Okay. Great. So I think that's a great segue to talk about Study 041 and the potential use of that study for approval in the U.S. So I was just wondering maybe you can start by giving us maybe a little bit of the background on that study. The implications of that study for regulators in the U.S. and Europe and maybe what the expectations are ahead of the readout?

Yes, sure. So as I mentioned in my opening remarks, Study 041 is our post-marketing commitment for our conditional marketing authorization in Europe for Translarna for our nonsense mutation Duchenne muscular dystrophy patients. This was -- is a 144-week study. The first 72 weeks, it's a placebo-controlled phase, followed by 72 weeks of open-label extension in which all subjects remain blinded to their initial treatment. We're expecting readout at the end of Q2 of the 72-week portion of the study. This was, again, designed leveraging a lot of the experience we have in our years in the Duchenne muscular dystrophy space. The primary endpoint is the 6-minute walk distance with key secondary endpoints, including North Star Assessment as well as time function test. We are expecting results by the end of the second quarter. We have a commitment to the European regulatory authorities that will provide them with the results of this study by the end of Q3. And obviously, we'll be able to meet that requirement based on the results of the study. We'll also plan to meet with the FDA and discuss a path to the NDA once we have the data at hand.

Okay. And so what have your conversations with the FDA been like surrounding this study? And what gives you confidence that the FDA will approve the results from this study?

Yes. So I think, obviously, as part of any drug development process, you have a lot of interactions with authorities. Obviously, we've had discussions with the European authorities. We recently announced our eighth annual renewal of the conditional marketing authorization, which has been based on our continued evidence of benefit with Translarna, mostly gained through our STRIDE registry, which is a real-world evidence registry in which we've been able to show significant impact on time to loss of ambulation, delaying loss of ambulation and propensity match control group by 5 years, over 5 years with Translarna as well as delaying loss of pulmonary function. Loss of pulmonary function, loss of ambulation are really the 2 key morbid events in Duchenne muscular dystrophy, so being able to show in a real-world setting that long-term benefit that regulatory authorities want to see in understanding the potential long-term impact of the therapy has been driving force behind the annual renewal as well as the continued safety of the product. So we expect the data from 041 to join this totality of evidence, the real-world evidence that evidence in previous trials of the benefit of Translarna for patients with Duchenne muscular dystrophy. On the FDA side, we similarly have discussions about the development program, what would be important to endpoint. It's very clear that the agency is interested in demonstration of functional benefit in boys with Duchenne muscular dystrophy. We expect that we have set up endpoints appropriate to capture that with both the walk test and the North Star assessment. And we've also obviously had discussions with them about the statistical analysis. We -- it's obviously very important to make sure we're aligned with the agency on how they want us to analyze the data. And so those are really on the bulk of the conversations with the agency. And as I mentioned, we will turn the cards over in the trial and have a conversation with the agency not only with Study 0401 results in hand, but also the real-world evidence we've been able to generate throuh the STRIDE registry, which, again, we think provides that important evidence of long-term impact on key aspects of the disease.

Okay. And so as you think about achieving permanent authorization in Europe, and you think about the results from Study 041. You also mentioned the STRIDE registry results that you recently published or presented. So what would happen if Study O41 was not positive? Do you think the totality of the data that you mentioned before, would that be supportive of getting full approval in Europe?

Yes. I think when you think about the European regulatory framework, what the European regulators talk about is demonstration of favorable benefit/risk ratio. And that favorable benefit risk is demonstrated through the totality of evidence. Obviously, the conditional marketing authorization was reached after our first study, Study 007, and we've been able to achieve the annual renewal based on our ability to continue to show that favorable benefit/risk ratio. So again, we expect the data from Study 041 that will sit along the existing data and continue to demonstrate that benefit/risk ratio that will support the ongoing approval in the EU.

Okay. Perfect. So I think now maybe you can switch gears and maybe talk a little bit about some of your other programs. So you also mentioned PKU, so you have 923 reading out later this year. You also mentioned there's 2 approved drugs for PKU currently. So I was just wondering maybe you can tell us a little more about what you're thinking about the market opportunity there and what the unmet medical need is given that there are already approved drugs?

Yes, absolutely. Kylie?

Yes, absolutely. So I think one of the things that's a little bit different about PKU is we often talk about pioneering, pioneering in DMD, pioneering in AADC. In PKU we're actually not pioneering, which is a good thing, and I'll explain why in just a moment. So first and foremost, there's a well-defined patient population, and this is through newborn screening. So we know there's roughly around 58,000 patients globally. In addition to that, there's well-defined treatment centers of excellence. So we know who the patients are, we know the physicians that are treating these patients and so where to go to engage those physicians and patients. In addition to that, if we look at the path to registration, it's a well-trodden path. It's been walked before, as you said, by 2 therapies. And so not only is it a blood-based biomarker, but in addition to that, in the AFFINITY study, and this was done in other studies as well, we have an increased probability of success with an enriched population by having a run-in responder analysis. And so from that perspective, coupled with the fact that we do think that there's substantial unmet need, despite these 2 therapies, it is a really unique opportunity. And thinking about unmet need, why do we say there's unmet need, right? So if we look at the patient population in PKU, roughly 1/3 of the patients or roughly 30% of the patients are still therapy-naive. And this includes the classical PKU patients, which are more severe and very difficult to treat, and Kuvan has showed no benefit in those patients. The other sort of 70% of patients that have been previously treated with Kuvan, you see a high majority of these patients either initially failing or being poorly controlled over time. And this is obviously an opportunity that is a low-hanging fruit for PTC923. And if you look at the Phase II head-to-head data against Kuvan, you see that not only did we have an increased responder rate, but we also had an increased reduction in fee levels, and we were able to demonstrate a benefit in the classical PKU patient that's been previously untreated. So across the board, we see a unique opportunity that we're able to capitalize on as we look to read out.

And so what is the reason why 1/3 of patients are treatment naive, is it because patients are not seeking treatment? Or are they not diagnosed?

No, they're well diagnosed, as I mentioned, well defined through newborn screening. I think there's a number of reasons why they're not seeking treatment in many cases. But often, it's because, as I said classical PKU patient more severely affected and there just isn't benefit churn in Kuvan. And if we look at sort of Kuvan and Palynziq, Palynziq is for adults, and as we know, has many sort of side effect complications that are associated with it, and you need to step through Kuvan. You need to be treated with Kuvan before you were treated with Patanziq. And so if you're in the classical space, more severely affected, you're not able to get access to Kuvan, you won't get through to Palynziq often. And then in addition to that, I think, in some cases, patients are just choosing not to go into therapy because they might not be confident with the therapy that's available. But hopefully, as we said, with our Phase II package and hopefully with the data that we'll be reading out at the end of this year, then we will look to capture those patients over time.

Okay. And so what would be positive data? What are your expectations for that readout at the end of the year?

Yes. So this is a placebo-controlled trial. As Kylie mentioned, we have the advantage of being able to enrich the study population by first taking all patients who are screened and Kylie mentioned, this is a trial for kids and adult patients of all ages, all genetic subtypes, including the most severe forms of PKU. They'll get basically exposed to PTC923 for 2 weeks, and we asked a simple question, do we respond? And we're seeing a significant lowering of phenylalanine. If the answer is yes, then those patients will get randomized to receive either PTC923 or placebo for 6 weeks, and the primary endpoint is a reduction in phenylalanine blood levels through a blood test. Again, it's much different than a lot of our other studies where we worry about placebo effect, duration of the study and such being able to have a blood test which is precise and not given to placebo effect is obviously a compelling part of the story. But basically, at the end of 6 weeks, we'll ask -- we'll compare the reduction of phenylalanine and treatment versus placebo in a statistically significant reduction in phenylalanine is the primary endpoint. And this study really follows on our previous Phase II study, which was a head-to-head comparison of PTC923 and Kuvan, where we sought to demonstrate that having a more bioavailable cofactor, which is what PTC923 is, can deliver a single -- a significant benefit and begin to address the unmet need that Kylie discussed. Basically all patients, which are treated with PTC923 for Kuvan. So it's crossover study, and we have 2 really important outcomes in that study. First, 50% more patients responded to PTC923 than to Kuvan, demonstrating that we can deliver a benefit to patients not be benefiting from Kuvan., And this included those classical PKU patients that Kylie mentioned who are the most severe patients who have greater than 1,200 micromole liter phenylalanine baseline. Second observation was -- important observation was that in the patients that did respond to Kuvan, they also responded to 923 and had significantly greater reductions in phenylalanine with 923 versus Kuvan, 200% greater of reduction. So that's saying that even if there is some benefit from Kuvan, we were able to demonstrate a much greater benefit in phenylalanine reduction of 923. So that really set the stage for this placebo-controlled trial where the bar for success is simply demonstrating a significant reduction in phenylalanine relative to placebo.

Okay. And so as the year -- as the end of the year approaches, have you started preparing for a potential launch? And what do you think the timeline for that would be?

Yes. I think from a launch preparation point of view, as I spoke about earlier, it's a little bit different in the sense that after leading up to launch, you're identifying patients, you're trying to engage KOLs, et cetera. So I think with a well-defined patient population and treatment centers of excellence, we know who to go to, and we're already going -- we're already reaching out and engaging with them. So engaging with the patient community, engaging with the KOL community, engaging with the payer community, to help lead up to launch preparation. From a timeline point of view, I think if we look at readout by the end of this year, obviously, the team is planning to move -- assuming positive results, the team is planning to move as quickly as possible to a filing and then launch post that. So we haven't guided to launch time lines yet, but it will be moving as quickly as possible.

Okay. And so do you expect to be able to leverage some of your current commercial infrastructure for the launch of 923?

Yes, absolutely. That's a great question. So as I mentioned earlier, we've built a really strong global commercial infrastructure. And the reason for doing that is not just for the existing DMD business, it's not just for the AADC business that we're at the precipice of hopefully potentially a positive CHMP and an approval but also for the near-term value drivers as well, whether it's PKU, whether it's mitochondrial disease associated diseases or FA. So we have built a very strong foundation of the core capabilities that we need for each of those different areas. So each area will only require if anything, very small incremental headcount, but we're really leveraging that strong infrastructure we've built.

Okay. Perfect. So I guess you mentioned AADC too, and we're on the bench of finding out the CHMP opinion coming this month. So you also mentioned before, patient identification as being a key in the launch of any new drug. So can you tell us about how your efforts for -- to identify new patients and AADC are going? And what geographies you're seeing more patients in and how you're preparing for that ahead of the CHMP opinion?

Yes, absolutely. So as a reminder, AADC deficiency is a highly morbid and fatal pediatric disorder. We're estimating around 5,000 patients globally, so it's ultra orphan. I think we had set out to identify roughly 300 patients at launch. And I think as we started to sort of move into the pandemic, we had planned a number of traditional face-to-face activities and needed to pivot very quickly to the more at-home saliva-based testing programs and more digital activities driving testing, educational webinars via digital pathways instead of those phase to face. And I think what we were also looking at is defining those enriched populations where we expected to find patients, whether that be cerebral palsy or epilepsy as an example, where we see common misdiagnosis of AADC deficiency in patients. And so we also looked at expanding the reach of these programs. So we initiated over 100 different programs in over 20 different geographies, geographies where we have access -- where there it's access and reimbursement to gene therapy because that's obviously important to the long-term commercial success. I think what we also looked at was how to learn from these programs and what programs were yielding more patients that we were identifying. And then ultimately, as we learn from that, how do we refine the programs focused on the high yield. So we've really seen an acceleration of patient finding coming out of the back end of 2021 into 2022. And I think it's really just the beginning from that perspective. I think we will continue to see an acceleration, particularly as we see the first potential therapy being approved for this disease-modifying therapy. I think that drives a completely new motivation for parents and caregivers to want to correct the diagnosis of their child and secure a potentially transformative therapy for these young kids. So there's a lot more work that's ongoing and more work to come. I think from where we're finding these patients, I think what's been really reassuring for us is we have really been finding them in almost every country and region that we've been looking, right? As I mentioned, ones that have access and reimbursement to gene therapy. And I know there's been a little bit of a myth that there is this founder effect predominantly out of Asia. But I think, as I said, we've been finding patients in every country and every region. And we'll look as we move towards a potential launch to see how we can get these patients on therapy as quickly as possible.

Do you have an estimate of how many patients you've identified in those 20 regions you're focusing on?

Yes. So we have -- we did say that we were planning to identify 300. Earlier this year, we did say that we have identified approximately 300 were at where we wanted to be. But as I said, we're not stopping there. We're continuing, and we hope to even further accelerate as we secure the CHMP and then we see ratification from there.

Okay. And so I guess you mentioned before, PTC AADC would also be the first gene therapy that's directly delivered to the brain. And so I'm assuming that requires some kind of specialized skills for a doctor to be able to perform the procedure. So how are you thinking about trajectory of the launch? And would that be focused around centers of excellence? And do you think that would be sort of a caveat or sort of a rate-limiting factor for the launch in terms of how many people can actually perform the procedure?

Yes, absolutely. So I think equally as important is patient identification and our launch preparation has been identification and preparation of these neurosurgical treatment centers of excellence, as you're alluding to. And so that's really understanding where these patients' positioned and how do we set up a number of centers in the country that would cover the spread of these patients. And that's not just obviously the pediatric neurologists that identifies diagnosis and manage these patients, but also the pediatric neurosurgeon that's going to be performing the surgery. So making sure there's a clear understanding of what happens prior to the surgery, what happens during the surgery, post the surgery and making sure there's that mock surgery that's taking place. They understand how to handle the treatment and obviously, what happens with the patient and caregiver once that's all completed. And so that's been an integral part of the launch preparation that the commercial teams have been doing. And we have a good representation of numbers of centers of excellence that we have in the different geographies that we expect to hit the ground running quickly after launch, whether that be through commercial access or whether that be through early access programs to make sure that as I said, we can get these patients on treatment as quickly as possible post approval. We don't see it as rate limiting at this stage. I think it's making sure that we engage with the payers on a country-by-country basis in Europe and making sure we secure that. And then we have these centers ready to go. So as Matt said earlier, we've been working hard behind the scenes while regulatory has been ongoing to make sure that we are ready to execute when that's finalized.

And then in terms of manufacturing for AADC, are you thinking of doing that in-house? Or are you outsourcing that? And maybe I know this is not your only gene therapy products, maybe you can also comment on your gene manufacturing capabilities right now in your other programs.

Yes, absolutely. We announced last year we acquired Hopewell gene therapy manufacturing site, given the importance of having gene therapy material for our programs, both the development programs and preclinical programs. We've decided to take things into our hands and have our own facility, which we've been able to build. Now for the AADC program since the commercial manufacturing process had already been established and validated at a CMO that's being done exteriorly right now. In the future, that's certainly something we can bring in-house. But we are doing a GMP manufacturing for a number of our other programs. So we have the capabilities to do that.

Okay. Great. So I think we have only a couple of minutes left. So I did want to talk about 518 in Huntington's. So maybe you can just give us -- you recently announced you started dosing your patient or started dosing patients in the Phase II study. So maybe you can comment a little bit on that. And you've talked about the Goldilocks population. So I think that's a sort of a buzzword for neurodegenerative diseases. So maybe you can tell us a little more about how you're defining about population in Huntington's?

Yes, absolutely. So as we recently announced that we've initiated the PIVOT-HD Phase II trial for PTC518 in Huntington's disease. And the goals of this trial, as I mentioned in my opening remarks, is in the first part being able to demonstrate important PK/PD relationship with PTC518. And then the second part is really focused on biomarkers, both -- and including blood-based, CSF-based and radiographic biomarkers. But another really important component of this program was what you mentioned that Goldilocks population, right, having the right trial population, which is incredibly important in all trials, but especially in neurodegenerative disorders. And as we've looked at the field of Huntington's disease drug development, it was very clear to us that a number of previous trials were focusing on pretty late-stage patients, patients who had decline in what's known as the total functional capacity, which is an instrument that looks at things like ability to balance your checkbook, hold the job, comb your hair, really end-stage phenomenon in the disease. And if you look at the pretty consistent trajectory of Huntington's disease progression, you see that patients go through loss of brain volume, as they lose more brain volume, they lose motor skills and they lose cognitive function. And as they continue to decline, having lost a lot of their motor skills and a lot of their cognitive function, they start losing functional capacity. Well, it's pretty clear to us, especially when you have a therapy like PTC518, which is acting at the source of this disease, which is a monogenic triplet expansion repeat resulting in the formation of a toxic protein. If we're acting at that step, having declined in functional capacity is way too late. So that's sort of too late. We also wanted to make sure that we're not getting patients too early, right? It's very important in a clinical trial that patients are in a declining aspect of their disease and there's one thing we need to do is show a slowing of progression. So you need a certain amount of decline to mathematically be able to show a benefit with regard to disease progression. So we didn't want them so early or too early to they're not declining and too late that they're too far declined. So what we did is we availed ourselves of the robust natural history databases, including Enroll-HD and Track-HD databases, brought them in-house, partnered with the biostatisticians who've been running the HD collaborative statistics score for a number of years and said, "Hey, can we identify factors, patient characteristics, disease characteristics that can put us in that right spot, that sweet spot, that goldilocks spot." And the short answer is we did. And we took those factors there were a number of different factors and basically predictive factors and turn those into our inclusion criteria for the trial. So we believe we're enrolling a population that's really in that appropriate point. So one of the other key learnings we'll make from this trial in addition to seeing the PK/PD effects and biomarker effects is also really testing this population, which will be very important as we move into efficacy trials either as a post-marketing commitment for an accelerated approval or as a Phase III trial as part of the standard development program.

Okay. Great. I think with that, we're out of time, but thanks so much for joining us today and coming to the conference.

Thank you very much.

Thanks, Daniele. Appreciate it.