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

Good day, and thank you for standing by. Welcome to the PTC Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kylie O'Keefe, Chief Commercial Officer. Please go ahead.

Good afternoon, and thank you for joining our conference call today. I am joined by PTC's new Chief Executive Officer and President, Dr. Matthew Klein. As announced in a press release earlier this morning, Founding CEO, Stuart Peltz, has announced he is retiring after 25 incredible years of building and leading PTC. This transition is effective immediately. Today's call will include forward-looking statements based on our current expectations. Our actual results could materially differ from these forward-looking statements. As such, statements are subject to risks that can materially and adversely affect our business and results of operation. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent annual report on Form 10-K filed with the Securities and Exchange Commission as well as the company's other SEC filings. With that, let me pass the call over to our new CEO, Matt Klein. Matt?

Thank you, Kylie, and thank you, everyone, for joining the call today. Let me begin by saying I am incredibly proud and honored to have been selected to succeed to as CEO of PTC and help lead the company into its next quarter center. Under Stu's leadership, PTC has grown from a research organization with expertise in the control of RNA processes to an integrated global biopharmaceutical company. PTC team and patients and families around the world have benefited tremendously from Stu's scientific expertise and leadership. Despite a change in company CEO, PTC's mission and unwavering commitment to deliver innovative therapies to patients worldwide will not change. We are fortunate to have a long-standing team at PTC with deep expertise and focus on growth. We remain well positioned for a transformative 2023 with projected revenue up to $1 billion, and we continue to expect results from 4 clinical studies in the second quarter, 3 of which are registration directed. As we celebrate the 25th anniversary of PTC's founding this month, Stu's retirement provides us the opportunity to proudly look back on what has been a tremendous journey and look forward to the next quarter century as we continue the important and impactful work that will remain the foundation of the PTC story. I will now turn the call over to the operator for Q&A. Operator?

[Operator Instructions] Our first question comes from the line of Eric Joseph from JPMorgan.

This is Hannah on for Eric. So first, can you guys characterize Stu's role and engagement with the company moving forward? And then further, should we anticipate any other changes in senior leadership as the CEO role, one that you would look to replace in the future?

Great. Thank you, Hannah, very much for your call and question. I think as everyone has seen, PTC has been working towards this transition for quite some time now. We talk a lot internally about the importance of succession planning and my appointment as COO in 2022 was very much an intentional move to prepare me for this ultimate transition. And of course, at the JPMorgan conference, I had the privilege of giving the company's presentation, which obviously very clearly was another step in this well-thought-out transition plan. And so today is the day that it occurred. It is consistent with the timing of our 25th anniversary as PTC was founded in March of 1998. As mentioned in the press release, Stu will continue in a role of the company. He'll be a consultant and a member of our Scientific Advisory Board. And we, of course, look forward to the contributions he can make in that new capacity. At this time, we will not be replacing the COO role, but rest assured that all of my previous responsibilities have been appropriately delegated. Of course, as there was succession planning for the CEO role, as part of that was planning for the transition of my responsibilities as COO to others in the organization who are highly qualified and well positioned to ensure that there is absolute continuity in all of our activities.

Our next question comes from the line of Kristen Kluska from Cantor Fitzgerald.

First, wishing Stu the best in his retirement, and he should feel very proud of all the patients who benefited from what PTC has created. And Matt, wishing you the best in your new role. Congratulations on the promotion. So Matt, I wanted to ask, I think you brought a really unique perspective coming from the COO role as you were very engaged with not just the investor community, but also the medical community and made it a priority to be in front of the different patient advocacy groups even at the smaller more focused medical conferences. So maybe the question is just moving forward with your expanded role, how you plan to balance kind of working with both communities, and what the key priorities there will be?

Yes. Kristen, thank you for the question, and thank you very much for your kind remarks. PTC from its beginning has been a patient-focused company. That's where we started. That's where we are today, and that's where we'll be tomorrow. And I think Stu set an incredibly important precedent as CEO of this company that we never get away from that, and that includes involvement with patient organizations and the patients. They're our #1 customers, and we can never lose sight from the top of the organization throughout every part of it with that connection. So I plan to obviously continue that, but I'm also incredibly fortunate to have such a strong experienced leadership team by my side. And -- obviously, I'm transitioning as CEO, but I'm incredibly fortunate to have the same leadership team in place that has helped guide PTC over the past years and help continue to guide us forward. So I -- again, to answer your question, I continue to see my role -- expanded role as still being, of course, connected with patients, connected with our research, connected with our important clinical activities as well as critical commercial activities of the company and of course, working with the investor community and a benefit in those efforts by having such a tremendous leadership team by my side. And of course, a team of people at PTC, who are similarly patient focused and dedicated to our mission.

Our next question comes from the line of Brian Abrahams from RBC.

This is Joe on for Brian. Both Brian and I wanted to pass along my congratulations to Stu and -- on your -- all of your accomplishments and everything you've done for patients over the past several decades and also congratulate Matt on your new role. So one quick question for Matt. How you -- company has historical expertise in supplies modulation and Matt you have deep experience in Bio-e platform and some of these readouts mechanisms. So I just wanted to ask if you have any -- if you have envisioned ways to potentially find more synergies in between the 2 or anything complementary going forward?

Joe, thank you very much for the question and the congratulation. PTC was built on pioneering science. Our mission was to use pioneering science to deliver transformative therapies for patients who desperately need them. We obviously, as you point out, have demonstrated expertise in pioneering drug development in several fields, including RNA biology with nonsense suppression, bioenergy, lysing and gene therapy. And as we move forward, we want to continue to leverage that unique expertise to continue to deliver transformative therapies for patients. I think we're in an incredibly fortunate position to have the robust R&D infrastructure that we have in place, the expertise, and we have scientists in our company who've been here for over 20 years. You don't get this expertise that we have overnight. I'd like to say we have a head start and and a significant first-mover advantage and a sustainable competitive advantage and being able to leverage the scientific expertise to continue to deliver transformative therapies.

Our next question comes from the line of Joseph Thome from Cowen and Company.

Congratulations, Matt, on the new role here. As you mentioned, this has been a consideration for a while. You will have quite a busy Q2 coming up. So maybe can you just give us a little bit impression as to why this was the right time to make the change here? And in terms of going forward, do you anticipate that you can bring any sort of differentiation in terms of how the company prioritizes either certain programs, or kind of what are you looking forward to bring to this sort of next level of PTC's growth?

Thanks very much, Joe, for the questions. As you alluded to, we've been talking a lot about transition planning and succession for quite some time. And I think the timing now is really about this being the 25th anniversary of PTC's founding. PTC was founded in March of 1998. And now as we sit on the date, the 25th anniversary, I think it was clearly viewed as a perfect time for a transition, where we can, obviously, with a great deal of pride look back on the past 25 years and pursue to pass the torch then with the beginning of the next 25 years. And so of course, we look forward to now leading PTC into its next quarter century. Of course, despite there being a change in the CEO, which is obviously a significant change, the mission and goals of PTC remain the same. And we look forward to continuing to deliver on the goals that we have set forth. And obviously, it's natural that over time, we will continue to revisit revenue and OpEx projections as well as plans, and how we continue to build forward this integrated biopharmaceutical company. So we look forward to continuing to share these updates with you as we move forward in the future.

Our next question comes from the line of David Lebowitz from Citi.

First, maybe I go with the congratulations to both of you on your next steps. And then just to follow up on the last question regarding overall strategy. Will there -- while the overall goals and mission remains the same, will there be any nuanced differences in strategy that we should expect going forward? And just to draw a little further, certainly, there's been some -- a lot of approvals in the neuro division. And of course, we are looking to see the potential of what ataluren can do when it be moved towards the U.S. again for another effort. Could we expect to see any shifts in that area as well?

David, thank you very much for the question. I think -- I want to emphasize that while this is a transition in the CEO role, our leadership team remains the same and a lot of the strategies and plans and goals for 2023 and the future that we've outlined really from the beginning of the year and continue to do on our calls with you all, the same team is in place, right? And those goals and the strategies and tactics were formulated with this team, and this team remains as does our strategy and how we plan to move forward. Obviously, we're looking forward to read out some 4 clinical studies in the second quarter, and we remain on track to that with the AFFINITY study in May and readouts from MOVE-FA, MIT-E and PIVOT-HD also occurring in the second quarter. That obviously is an opportunity for some important readouts that can be transformational for PTC. Since we obviously look forward to those readouts, and what could be a very important inflection for the company moving forward. We will obviously continue to provide updates at our earnings calls. We expect our earnings in Q1 to occur in the April, May time frame. And of course, we'll provide more updates at that time.

Our next question comes from the line of Robyn Karnauskas from Truist.

This is Alex on for Robyn. Robyn and I both wanted to say congratulation to Stu for all the hard work that he did for the company, and congratulations to you, Matt, for the new rule we're all excited to see. Maybe a quick one for me. We know that PTC has many promising programs in the clinic. And now that you are at the helm, what programs do you view as most underappreciated and given your background, which programs are you most excited about?

Alex, thank you very much for the question and congratulations. Thank you to both you and to Robyn. Look, we're in an incredibly fortunate position to have such a robust pipeline and a robust R&D portfolio. And the fact that it's diversified really gives us such an important advantage. And this is a little bit of which of the children are my favorite question. Of course, there are no favorite children. We're incredibly excited about all our programs. They're all unique, and I think the diversity gives that portfolio such incredible strength. And so -- and very much look forward to being able to move all of these programs forward. In terms of what's underappreciated? Look, I think, we have so much going on. Sometimes it's hard for everyone to understand in detail all of our programs. But again, each one of them, I think, are incredibly important and most significantly hold incredible promise for patients. And so I think while others may not be getting as much attention now as time moves forward, we look forward to sharing the details of each of the programs because we're so proud of them, and each of them represent such important science and such important potential of the patient.

Our next question comes from the line of Sami Corwin from William Blair.

Congratulations, Matt. We're excited to see what you do in your new role. I guess considering your background and that you came from a company in which PTC acquired some assets from, I wanted to get your take on PTC business development initiatives going forward, and if you see any areas of prioritization there?

Yes. Thank you very much. I think PTC has done a tremendous job of integrating homegrown pioneering science with strategic business development transactions that help us move further in our mission of using pioneering science to develop transformative therapies for patients. As we've talked about, our strategy moving forward is to you continue to use a combination of our own internal scientific expertise along with business development to continue to build and drive the PTC engine so that we can deliver a new therapy every 2 to 3 years. Of course, business development is a long-term activity. We have obviously used it strategically in the past, and we will continue to do so in the future. Obviously, we have the ability to look at bringing in licensing commercial products that can tuck in nicely to our incredibly strong global commercial infrastructure. And of course, in the future, we continue to use business development to complement our robust R&D portfolio.

Our next question comes from the line of Colin Bristow from UBS.

Matt, congratulations on the role and all the best to Stu on such an incredible career of achievements. Matt, now you're in this seat. I presume at some level, you'll take a look at the pipeline, business development goals, et cetera, with a sort of fresh set of eyes. Is there a time period you have in mind in terms of this sort of review of the company from the new seat and then potentially enacting any subsequent change?

Thank you very much for the question and for the congratulations. As I mentioned earlier, the leadership team of PTC is stable. It remains intact. It's the same team that has helped formulate our strategy both in terms of internal commercial and pipeline planning as well as how we've been thinking about business development. And that will largely remain unchanged. Obviously, as you point out, taking over the CEO helm puts me in a position to maybe have a slightly different perspective on this. And my plan is to continue to work with our leadership team. And as we always do, continue to revisit our pipeline, review our portfolio and review our strategies. That's the natural thing that we do as part of responsible and thoughtful corporate leadership. And of course, as we're doing that, and we think about making adjustments that are appropriate at the right time, we'll, of course, share that with all of you through our earnings discussions as well as other opportunities.

Our next question comes from the line of Gena Wang from Barclays.

My best wishes to Stu and Matt, congrats on your new role. So since now you are -- as the new CEO of the company, I know you mentioned that leadership did not change, but do you have a going mind like in a particular year, you want PTCT to achieve profitable, and will you be focusing on growth potential, or will you be focusing on the earnings potential?

Thank you very much for your wishes, Gena. I think we're in an incredibly exciting time for PTC. As we talked about, we're projecting revenues up to $1 billion this year. And of course, the question of when are we thinking about profitability always lives. I think right now, as we've talked about, we're focused on building a strong revenue base so that when we reach the point of profitability, it can be a period of sustained and growing profitability, and that's how we'll continue to think about it going forward.

Our next question comes from the line of Paul Choi from Goldman Sachs.

Congratulations, Matt, on your elevation to the CEO seat. And my best wishes to Stu as well, and thanks for his contributions to the field. Matt, I want to maybe ask the question a different way, which is you and the team obviously have already implemented your 2023 operational plan. But as part of the CEO succession planning, can you maybe share with us maybe how the conversations with regard to sort of 1-, 3- and 5-year outlooks have possibly changed with your elevation to the CEO seat? And is there anything you would say in that time frame that you would perhaps want to emphasize or deemphasize whether from a pipeline or a profitability perspective that you might be willing to share today?

And as you alluded to, obviously, as we formulated those 1-, 3-, 5-year plans, we were all part of those discussions. The team was part of those discussions. But we obviously believe we have a path to profitability in the future. And as I mentioned, in Gena's question, we look forward to building our revenue base so we can move along that path to achieving, not just profitability, but sustained profitability. Even though we established goals and strategies and operational plans for the years, we're always in the process of continually reviewing those throughout the year, including making important decisions about portfolio prioritization based on new information that we get and also changes in the external landscape that can influence the -- or perhaps put us in a position that we want to revisit some of the decisions that we made earlier in the year. That's something we've always done, and I assure you that's something that we're going to continue to do, look at the plans for the year, look at the portfolio, look at our strategy and as new information comes in, review it and say, okay, there are important changes that we need to make based on this new information. So as I mentioned, we will continue to do that practice, and we'll continue to share, obviously, as appropriate updates with you all.

Your next question comes from the line of Judah Frommer from Credit Suisse.

Matt, I'll echo everyone's congratulations and the same best of luck to Stu in his next role with the company. Just to kind of dig further on the potentially registrational program that we'll have readouts in Q2, are you able to characterize Stu's kind of involvement with the later-stage clinical development, specifically of those programs? Or is it fair to assume that other members of the team were handling the programs that will have those readouts in Q2?

Judah, thank you very much for the congratulations and for the question. Just to -- I guess, first, obviously, we have the 4 studies that we've talked about having readouts in the second quarter, the AFFINITY study, which was readout expected in May. And then obviously, data from MOVE-FA, MIT-E and the PIVOT-HD studies. Just to be clear, we all remain blinded to those data. The last patient -- for these registration-directed studies of AFFINITY, MOVE-FA, MIT-E as we previously shared, last patient last visit was scheduled for March and all of those time lines remain the same. With my role at PTC as COO primarily was to oversee the development part of the organization in addition to the many other important responsibilities I had, including working alongside Stu in terms of the overall corporate management of the company. But my role was clinical development programs and regulatory, and I singly sat on top of that. So actually, that was my role much more so than it was Stu's. Obviously, Stu was a trusted adviser for me, mentor and a friend, given his tremendous expertise that he has accumulated over 25 years of leading this company. But those were the roles and responsibilities that were really mine, and I'm incredibly proud of the team that we have in place that is going to continue to do this work and continue to obviously work with me in my capacity as CEO to ensure that we bring these programs forward and bring these programs to success if possible.

Our next question comes from the line of Tazeen Ahmad from Bank of America.

Congratulations, Matt, on -- this is Daniel on for Tazeen. And congrats on the new appointment and our best wishes to Stu on his retirement. I guess one question from us is, I guess, the company has been traditionally focused on neurology, but you're starting to expand into metabolism and maybe oncology later this year. So I just wanted to get your thoughts on how you view the company expanding into these new therapeutic areas and maybe the appetite to explore other new therapeutic areas, where you're not really looking into right now?

Daniel, thank you very much for the question and congratulations. As we talked about at the beginning of the year at our JPMorgan presentation, we are well positioned to leverage our scientific expertise in the areas of RNA biology nonsense suppression, splicing Bio-e gene therapy and use them to apply -- and apply them to develop therapies in those 3 therapeutic areas that you pointed out in neurology, in metabolism as well as oncology. And we have built the infrastructure, not only from a research standpoint to allow for the discovery and early development, but also have done some in the development organization and the commercial organization. And we are right sized today to develop -- discover, develop and commercialize globally in neurological and metabolic therapies. Obviously, we have the SUNRISELMS trial ongoing now and look forward to building out the appropriate oncology infrastructure pending the results of that study.

Our next question comes from the line of Joe Schwartz from SVB Securities.

This is Beth on for Joe. Congrats to both of you. Matt, you came from the company that developed the Bio-e platform. I was just curious if you could provide any thoughts on why you think vatiquinone is somewhat of an underappreciated program relative to your other pipeline programs, and what gives you confidence in the likelihood of success for the upcoming pivotal readouts in MDAS and Friedreich's ataxia?

Beth, thank you very much. I guess that answering this question is CEO on this day of transition, my answer won't change to what we've talked about in the past. I think we, as a company, are very excited about the Bio-e platform and the ability to apply our expertise in bioenergy to develop important therapies for CNS disorders and potentially disorders in other therapeutic areas such as metabolism and oncology. Again, as is frequently the case of pioneering science, having the first ever therapy in vatiquinone that directly targets the enzyme 15-lipoxygenase, it takes a little bit of time for people to understand the story. But what is clear is that we have for both Friedreich ataxia and mitochondrial disease associated seizures, a strong scientific rationale and mechanistic rationale as well as clinical data collected to a number of previous studies that we believe position us very well for success in both of these programs. And of course, we look forward to reading out these studies in the second quarter and sharing results with you all.

I would now like to turn the conference back over to Matthew Klein, Chief Financial Officer, for closing remarks.

Thank you, everybody, for joining us today. That now concludes the call. Have a wonderful day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.