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

Thank you for standing by, and welcome to the MOVE-FA top line results. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Dr. Matthew Klein, Chief Executive Officer. Please go ahead, sir.

Thank you all for joining this afternoon's call. We had a number of updates today, and we wanted to take this time to discuss the top line results of the MOVE-FA study and the announced portfolio prioritization decisions. Before I begin, I refer you to our forward-looking statements on this slide, which are also posted on our website as well as our Risk Factors section in our most recent 10-K. The MOVE-FA study was a 72-week placebo-controlled trial of vatiquinone for the treatment of Friedreich ataxia patients. As we have previously discussed, the trial was designed to focus on pediatric patients, given the strong safety profile of vatiquinone established in children, the natural history data demonstrating that younger FA patients tend to have more rapid disease progression and the fact that there were no approved therapies or other therapies in development at the time for children with FA. Accordingly, the primary analysis population included Friedreich ataxia patients 7 to 21 years of age. In addition, we enrolled a small cohort of subjects over the age of 21. The study enrolled ambulatory patients only who had a baseline Modified Friedreich Ataxia Rating scale, or mFAR score, of 20 to 70. The study primary endpoint was changed from baseline to week 72 in the total mFAR score. Other secondary and exploratory endpoints included the FA-ADL scale; 1 minute walk test; the upright stability subscale of the mFARS, given its correlation, future loss of ambulation; and the Modified Fatigue Scale, given that fatigue has been described as the most burdensome symptom of patients with FA. The mFARS is a composite scale used to assess neurological signs and symptoms of the disease. The mFARS include 4 domains that assess different aspects of disease, including bulbar function, upright stability, lower limb coordination and upper limb coordination. And the scale has been used to longitudinally assess disease progression over time. The FA community has established a robust longitudinal natural history data that includes a large volume of mFAR scores over time in both adults and pediatric patients. Based on this natural history database, mFAR scores worsen on average by 2 to 3 points per year in pediatric patients. The total enrollment in the primary analysis population of the study was 123 patients and an additional 20 patients over the age of 21 were included in the overall analysis population. I'll note that we overenrolled the study due to both patient and physician interest as well as the fact that the study was conducted during the COVID-19 pandemic and the anticipated potential pandemic impact on the study. The average agent in enrollment in the primary analysis population was 14.6 years, and in the overall study population, it was 18.7 years. Other key characteristics of the treatment of placebo groups were well balanced, including baseline mFARS and geographic origin. Looking at the results. Let me first point out that higher scores on the total mFARS and subscales reflects higher disease severity and are, therefore, worse and lower scores are better. Unfortunately, the study did not reach statistical significance in the primary analysis population for the primary endpoint of total mFAR score change from baseline to week 72. However, strong vatiquinone treatment benefit was recorded in 2 key disease subscales, bulbar function and upright stability, in the primary analysis population with nominal p-values of 0.044 and 0.021. Similar magnitudes of treatment benefit were recorded in the overall study population. On this forest plot, we demonstrate that a consistent favorable vatiquinone treatment benefit was recorded across the mFARS and several other endpoints, confirming that vatiquinone impacts several different aspects of disease. There are significant nominal p-values on several endpoints and a trend towards treatment benefit in the primary analysis population and overall study population on others. I want to highlight the benefit recorded on the Modified Fatigue Scale, given that fatigue is one of the most burdensome symptoms of Friedreich ataxia. And at the FDA external patient-focused drug development day for FA patients, fatigue was identified as the #1 symptom patients want a therapy to target. As I mentioned earlier, this study was enrolled and conducted in the midst of the COVID-19 pandemic. Given its reality and the 72-week duration of the study, we prespecified a sensitivity analysis to include subjects who completed the study protocol on their assigned treatment without dose disruption. Indeed, there were a number of patients not included in the completer analysis who discontinued for COVID-related issues, noncompliance, dose disruption or other reasons. As a result, for the completer sensitivity analysis, there were 96 patients from the primary analysis population and 110 from the overall study population who met the prespecified completer analysis criteria. As you can see, the baseline characteristics of the completer analysis populations were similar to those in the primary analysis and overall enrolled populations that I showed earlier. Importantly, the number of impacted patients from the vatiquinone and placebo groups were similar so that the treatment and placebo cohorts were balanced to the completer analysis. Here are the results of the prespecified completers analysis. When looking at the results of the mFAR score, we see that there is a 2.31 point placebo-corrected difference in the score over 72 weeks, which is on par with the changes recorded in the Reata MOXIe trial over 48 weeks. This vatiquinone treatment effect translates to a 75% slowing of progression at 72 weeks. As in the primary analysis, we see nominal significant changes in the bulbar and upright stability subscales and the fatigue scale. In the completers from the overall population, we see a slightly smaller treatment effect on the overall mFAR score, which reached a nominal p-value of less than 0.05 and consistent benefit across disease subscales and secondary and other endpoints. This graph demonstrates the changes in mean mFAR score over time in the placebo and vatiquinone treatment groups in the completers analysis. Given the understood natural history of disease in pediatric patients, the 2.31 placebo-corrected point difference at week 72 signifies about 1 year slowing of disease progression after 1.5 years of treatment, which is clearly clinically meaningful. We also see that the placebo and vatiquinone curves appear to be spreading further apart from 60 to 72 weeks, suggesting a potential disease-modifying effect. In terms of safety, the vatiquinone and placebo patients in Move-FA had similar adverse event profile. The most common adverse events in the study were falls and COVID-19. The most common treatment-related adverse events for vatiquinone were GI symptoms, including nausea, diarrhea and abdominal pain, the majority of which were low grading. Overall, the favorable safety profile of vatiquinone in MOVE-FA was consistent with that seen in other pediatric studies of vatiquinone. Here, we present an AE table, which details the MOVE-FA safety data. As you can see, adverse event frequency for vatiquinone was generally similar to placebo, as were the study discontinuation numbers. The one death in the placebo group was due to suicide, and the one death in the vatiquinone group was due to cardiac failure, seemed to be disease related. These results demonstrate evidence of meaningful benefit on key aspects of Friedreich ataxia, particularly in pediatric patients for whom there remains a large unmet medical need. While the study did not achieve its primary endpoint, there are a number of important signs of benefit recording on overall mFAR score, confirming slowing of progression by 2.31 points in the completers analysis; on the upright stability subscale, which has been established as a key predictor of future loss of ambulation; on the bulbar subscale, which captures highly morbid functional senses such as loss of speech and swallowing; and on the fatigue scale, which was identified in the external FDA patient-focused drug development day as the most burdensome disease symptom and the #1 symptom patients want the drug to affect. Given the data demonstrating the vatiquinone treatment benefit, the well-established safety profile of vatiquinone in pediatric patients and the remaining unmet medical need for pediatric FA patients, given that SKYCLARYS is approved for patients aged 16 and older, we plan to share these study results with the FDA and EMA and discuss if there is a potential path to approval. In addition, today, we also announced that as planned, we have made some strategic portfolio prioritization decisions including the decision to discontinue our preclinical gene therapy programs and to suspend development for our IND and CTA stage gene therapy programs in Friedreich ataxia and Angelman syndrome. These decisions, along with associated reductions in head count, will result in an estimated 15% reduction in residual 2023 OpEx. We will plan to provide updated 2023 annual OpEx guidance at the Q2 earnings release. As we build the PTC of the future, we will continue to review strategic priorities so that we can ensure we are focusing our resources on programs that leverage the many unique strengths of PTC in R&D and product commercialization and can deliver a meaningful return on investment and value to all of our stakeholders. I will now turn the call over to the operator for Q&A. Operator?

[Operator Instructions] And our first question comes from the line of Robyn Karnauskas from Truist Securities.

I guess I have 3. So I appreciate the benefit that you have in the smaller -- the younger patients that we haven't seen before. I guess the question there is, you talked about the completers analysis being prespecified. What kind of points can you make that the FDA said that would give you confidence in this approval? And the second question is really taking a step back, and we've had many sort of confusing data sets or like not super clean data sets. Maybe give us some color around the departure of Emily Hill when I think she's very well respected at the company and investors use her a lot to sort of navigate these types of data sets. And someone like that leaves, it sort of brings into question if something else is going on. Just like to get your point of view on that -- on those 2 things and then I have a follow-up.

Sure, Robyn. Thank you for the question. So the first question regarding the data. Look, there's obviously what COVID impact and we anticipate those types of things in new studies and there's an FDA guidance, which we obviously follow. But we acknowledge that we failed the primary endpoint in the study. We also acknowledge that there's many pieces of evidence on things that really matter in the disease, including the bulbar scale and upright stability subscales, both of which is regarded as really the key functional aspects in terms of clinical meaning and the overall [ amplifiers ] and in particular, the upright stability being predictive of long-term loss of ambulation. And we see sign of effects on the fatigue scale as well. And that was true in both the noncompleters and the completers analysis. So look, we acknowledge we failed the primary endpoint. We also think there's many important signs of benefit, strong safety profile of the drug and a very strong line of medical need for kids with FA, and we look forward to discussing with the agency what they think the potential path to be. And we'll obviously follow up once we have those conversations with everyone -- with the agency on that. Regarding your second point. So look, this is rare disease, drug development data sets are usually messy. It's incredibly unique to be in a situation as we were last week with PKU, where in a rare disease, we have a primary endpoint, which is a blood test, and we think that provides clear and unambiguous transformative treatment benefit for a so large unmet medical rare disease need. Rare disease drugs and data sets tend to look more like we have today, where when you're developing drugs for populations that don't have this such as pediatric FA patients, there's always this task of sort of building a bicycle and riding at the same time. And that's why we're incredibly pleased to be able to have the pieces of clinical benefit in this study, both because it's the first time a dedicated pediatric FA Phase III study has been done. And second, because it was -- there was a COVID impact and we still had evidence of benefit shining through. In terms of your question regarding the departure of Emily, first, as you did, I want to acknowledge the great work that Emily has done for PTC over many years she's been with the company. After taking over as CEO, one of my jobs is to look very carefully at the composition and the roles and responsibilities of the executive team and any decisions we make such as this decision regarding Emily is done to ensure that we have the executive team in the best position to build PTC forward for its future. We're incredibly excited of all of the valuable assets we have in our people and our programs, and also I'm incredibly confident in my leadership team who's here today and our many team members across the organization to effectively develop drugs for rare disorders and navigate the challenging regulatory landscape that we know is globally for rare disorders, and be able to understand and clearly communicate the key value -- valuable pieces of data we get in studies like MOVE-FA and others to ensure that we can do the best we can to as best as possible deliver these therapies to patients around the world.

Great. That's helpful. And then -- I guess -- I'm not [indiscernible] questions because I know investors are going to go nitty-gritty on all the data, but what is your thoughts, given that you are very well knowledgeable about the mechanism of action here on the read to MDS, if there is any, for the data coming in June? And that's the last thing.

Yes, Robyn, as we've said, we've previously shared that we expect to share data from the mitochondrial disease-associated seizures as well as the PIVOT-HD study in June. I think as we talked about before, we had these data sets, we felt that there'd be probably very little read through from one to the other. They are very different diseases. They're very -- the patients are quite different. It's a very different disease state. I think what these data do show us is that by targeting 15-lipoxygenase, we are able to affect important symptoms -- CNS symptoms of disease such as bulbar function, which relates to swallowing and speech, which obviously important -- obviously is important in mitochondrial disease-associated seizures, where we're relying on the drug to reach the brain and affect brain pathology and mitochondrial disease. So I would say we stick to what we said before that we would see very little read-through from one study to the other. But obviously, this study provides encouraging data about the ability to target in a meaningful pathway and provide benefit on important CNS pathology.

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

So when I look at Slide 11, and this is also in your prepared remarks, it looks like the benefit from week 60 to 72 is perhaps where you're seeing the most robust trends. So I'm curious if you can comment on the open-label extension study enrollment to understand if you're looking at the effects between the 2 arms longer term beyond week 72. And if that is the case, how much data could you potentially have to bring to the FDA and the EMA when you intend to meet?

Yes. Kristen, that's a great question. And clearly, while we see in week 36, 48 out to 60, we're seeing separation in those curves and clearly differential treatment response. We're really seeing, obviously, that greatest point difference over time. So obviously, when you look to the open-label data when they're available to understand to what extent we're seeing continuation of these trends. And obviously, that will be an important piece of data to discuss with the regulatory authorities. I will point out also one important point of this data set that's shown nicely on Curve 11. We said when we enrolled this study, we were focusing on pediatric patients who tend to have a more rapid and uniform disease progression, and we're certainly seeing that over time. They're losing a little more than 3 points over the 72-week duration of study, which is very much in line with natural history. So I think what we're really getting a very good demonstration of is the drug effect in the context of a placebo group that is moving a lot like the natural history of the disease. So to see less than a point worsening over the same 72 weeks in the treatment group, I think, is a very important piece of data that speaks to the potential for the drug to really modify disease progression.

Great. And then last question is just on that note, when you look at the different subscales in the primary endpoint analysis like bulbar function and upper limb benefits where you saw some clear benefits, I'm curious over time if that tends to happen with these patients. I know we don't have a lot of like treatment experience but just even like from a natural history, like if typically, these patients would benefit on all at once? Or is there really kind of like a natural progression that perhaps some of these endpoints become more clear with intervention over time or even just slowing down when you're not on any treatment?

Kristen, that's a great question. There was actually a paper published in Neurology in October 2022 by Christian Rummey, who's a well-established FA researchers and others, who very nicely looked at the robust Friedreich ataxia natural history data to say, "Okay, which of these subscales are most relevant to the disease, at which time?" And it is good to know that in the patients in this trial, mostly those 7 to 21 year old, the subscale that seems to move the most in that period is the upright stability scale. That's part of the reason, and there's been a separate paper by Dr. Rummey that was published, I believe, in 2020, that clearly correlates changes during these age groups in the upright stability over time with risk of loss of ambulation. And that's why this is now being more -- that particular portion of the subscale is particularly relevant in these patients. It moves a lot in this period and the rate at which it moves can predict risk of loss of ambulation, which, of course, is a common morbid point in disease for all FA -- virtually all FA patients. So seeing the changes that we're seeing in upright stability in this population, it's the right subscale to look at. I'll also point out that bulbar seems to move throughout the course of the disease, so is relevant in this age groups. Conversely, upper limb coordination tends to be something that's seen more later in disease, particularly in adult population. And understood that on upper limb, in younger patients, you might have just some improvement over time just because of their maturation and gain of strength in coordination that occurs from childhood into adolescence. So it's a very important question and understanding what you expect on all the different subscales. And again, I think that's what's encouraging to see that the one that's most relevant in this age group and the one that may be most predictive of future loss of ambulation is one we're seeing a very clear and strong treatment benefit.

And our next question comes from the line of Eric Joseph from JPMorgan.

Matt, you mentioned how you want to seek a meeting with the FDA about a potential NDA filing path forward. I guess if that doesn't materialize, I guess, can you -- should we think about a potential follow-on Phase III program, given that it seems like MOVE-FA perhaps failed? It was a design that failed the drug, not so much vatiquinone not being clinically active. And if that is the case, can -- I guess, could a Phase III study perhaps be run more efficiently for a long and more efficient time line? And then I have a follow-up.

Thanks, Eric. It's a good question because I think despite not hitting the primary endpoint, I think we clearly see an active drug here. You see that on the forest plots with activity across a number of the different endpoints. And obviously, on some of the key subscales, seeing pretty meaningful effect. Look, I think the key right now is let's take one step at a time. We'll meet with the regulatory agencies, gain their view points and obviously, the content of that discussion, including their views towards the viability of an NDA submission at this point will play into our decision-making process. So I'd say right now, we're going to focus on the task at hand. Let's get the analyses completed. Let's go to the agency, see what those discussions are and then make a decision about future development pending those discussions.

And just with the pipeline prioritization, I guess it makes sense as part of a portfolio and evaluation process now with you at the helm that -- and we'll get updated OpEx guidance next quarter. But I'm just wondering whether with respect to the revenue outlook, is there anything new, any changes there that might be driving some streamlining of the R&D spend? I guess, should we expect a reiteration of revenue guidance near term?

Yes. Let me say, absolutely not. This is not based at all about any -- by any changes to revenue. As we discussed the Q1 earnings, we had a very strong record first quarter that positions us very well to meet our targeted guidance of $940 million to $1 billion. In fact, it's very important -- it's an important question. This had nothing to do with any changes in expectations or future prospects. In fact, it's really with the strength of our revenue base, the strength of the PKU data, the clear market opportunity that we discussed, both the U.S. and ex U.S., for PKU that it really became the important time to undertake this exercise. Look, we understand that we took an approach where we said that we're going to invest heavily in R&D. We're going to take a lot of shots on goal. And once we had some -- turned some cards over in clinical trials and had some results, it will be time to now focus in. And part of that focused exercise is saying we need to look to reduce OpEx and carefully focus our spending on R&D programs that deliver meaningful return on investment. And obviously, any time that you make a decision about your portfolio is always very difficult. We're incredibly proud of all of our programs. We're incredibly proud of what we've accomplished in gene therapy, particularly with Upstaza. But I think you can look very clearly in our annual report, you see the OpEx dedicated to our preclinical gene therapy programs over the past 3 years. I think it's on the order of $570 million, which is a lot of spending. And when we take a step back and we look at what we now understand to be the likely time lines for potential approval, the likely investment that's going to require to get these programs there and the uncertain commercial landscape that will occur many years later at those times, it became a decision that for us was one of deprioritizing these programs and focusing our efforts and focusing our resources on the many other highly valuable R&D programs and opportunities that we have. So this is not anything coming from a position of reduced revenue or weakness. This is actually a decision made from a position of strength and how we can continue to strengthen our balance sheet to position us well to enjoy all the future successes we believe that are ahead of us.

And our next question comes from the line of Brian Abrahams from RBC.

Two for me. First off, on the secondary endpoints. It looks like you reported fatigue as well as ADL. There were 2 other secondaries that were listed in the clinical trials listing 1 minute walk and falls. I was wondering if you could give us any sense of what you saw there? And maybe just how many secondary endpoints you looked at overall in the study and what the trends look like. Did most of them trend in a favorable direction or not? And then I have a follow-up.

So Brian, thanks for the question. So I think what we saw in the primary and all endpoints, secondary and then exploratory as well, we saw a trend towards benefit, I think, across all of them, except for I believe falls, which was not much of a difference between active and placebo. But we were seeing a trend towards vatiquinone benefit. A lot of those endpoints are highlighted in -- on the forest plot on Slide 7. Fatigue scale was an exploratory endpoint that [indiscernible] endpoint of FA trial, but obviously, it's an incredibly meaningful endpoint to FA patients. So we were actually very happy to see, one, that it works very well and capturing treatment benefit in an FA trial and also that we clearly recorded a magnitude of benefit for patients with an overall reduction in the key burden over the course of the trial when it was clearly worsening in the placebo group. And if you look at publications from -- there was a recent publication a few years back from [indiscernible] that looked at fatigue scale over time and what we're seeing is that the placebo group behaved a lot like the natural history in terms of that we're seeing. So again, we're reporting an important treatment benefit with regards to -- as something that really matters [indiscernible] natural history.

Got it. That's super helpful. And then just as a follow-up, it looks like you -- the sensitivity analysis that was prespecified for the completers, you showed that data in the slide deck. Can you talk about just, I guess, how many overall prespecified analyses that you guys conducted? And are the p-values that you're showing here for the completers analysis adjusted for multiplicity?

Yes, absolutely. So let me answer the second question first. So there -- given that we failed the primary analysis, we didn't do any adjustment on -- for multiplicity. That's why we're basically framing them as nominal p-value. We had -- as typical, when you have a number of different analyses, obviously, we had the primary analysis population, we had the full analysis [ set ], we had a safety population and then again, had this sensitivity analysis as one of per protocol analysis we conducted. This was the one that we really wanted to ensure that we did really based on FDA's guidance regarding how you handle COVID impact on clinical trials where they say that you should clearly in your analysis plan have a prespecified approach to how you handle the impact of the pandemic on the trial.

And our next question comes from the line of Peyton Bohnsack from TD Cowen.

Sorry to hear about the results. So I guess my question is kind of more how the people that were part of the prespecified analysis, which particular -- if you could give us any more color on how those -- which patients actually dropped out, why they dropped out? And then is there any geographical differences between the study sites in terms of just baseline or other characteristics?

Thanks for the questions, Peyton. We didn't see much difference across study sites in terms of the impact. But the -- just to give you an example of some of the dropouts we had, we had patients who dropped out for sort of travel concerns. Obviously, during the pandemic, traveling was an issue. We had a dropout for patient family who didn't want to have to wear a mask in a study site. We also had others that dropped out for other reasons, including fatigue or refusal to comply with study procedures. So that was sort of the nature of the types of dropouts that we saw during the procedure. Then that was in the primary population. In the overall population, which had more adults, we've got a few more instances where there was refusal to come to the study site because of concerns about travel and refusal to comply with study procedures. So those were the types of things that we saw in terms of the noncompleters.

And our next question comes from the line of Kelly Shi from Jefferies.

This is Shawn Tan on the call for Kelly. So just wondering, in the prior conversations with the regulators, have you discussed the cases where the trial misses on primary endpoint but shows treatment benefit? I also have a second question. So in light of the planned OpEx reduction, is there a better clarity on the timing of breakeven?

Thank you for the questions. On the first one, we are -- we have not, with regard to this trial, had any discussion with the agency on different scenarios. I think historically, the FDA has shared their view with us and others regarding the mFAR score, and I think this came up a lot in the discussion around the past with SKYCLARYS to approve it. As traditionally the FDA had concerns, but as a composite score, the mFAR is a conglomerate of signs and symptoms, and it's somewhat -- sometimes difficult to interpret what specific changes in the overall score need. They have commented previously that of the 2 of the 4 subscales, the 2 that they believe are most interpretable in terms of meaningful benefit are upright stability because of what I discussed its ability to capture things like gait and balance and also the potential predictive value in terms of [ time for ] loss of ambulation as well as bulbar because it's measuring speech and swallowing, which I think, are quite clearly measurements of clinical effect over the course of the trial. So I would say that we've not had a discussion of our specific scenario, but rather have, based on our discussions and their general feedback, them wanting to understand more than the overall score, what's going on within those subscales, particularly the ones that may have more meaning with regard to direct benefit in how a patient feels their functions in everyday life. In terms of a view towards breakeven, as we talked about on our CEO transition call back in March, that's something that our teams are committed to looking at. Obviously, one of the first steps in that process that we talked about on that call was doing a portfolio review and starting to look at where we can focus our resources. We said that we would undertake that exercise once we started turning over cards in those clinical trials, which we've done. The next step is to continue, obviously, to look at the overall OpEx impact of the decisions we need today, which we said we'll provide more detail on at the Q2 earnings and then also look to future revenues. So over the course of the next period of time, we can begin to clarify what a path towards breakeven could look like. So we look forward to continuing to undertake the process that we started and said we started a couple of months ago and continue to provide you all updates as we move forward and have more clarity on the timing and what assumptions will underlie achieving that breakeven.

And our next question comes from the line of Brooke Schuster from William Blair.

This is Brooke on for Sami Corwin. So our question was, could you provide more details on how the compliance was determined or what the exact cutoff was?

Yes. So the compliance typically in these studies are based on drug log sheet and drug dosing diaries and return drug. For the completers analysis, we eliminated folks who were off drug for a period of time that would not have been in -- that were not consistent with the definition of compliance in the study, which is 80% of drug taken over any interval of time. So that would be, if you didn't meet that, you wouldn't meet the study definition of compliance in the study. And that's a fairly standard definition of compliance.

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

Can I ask one on the financials? When you talk about residual OpEx, how should we be thinking about that for the rest of the year as it relates to the discontinuation of some of these earlier-stage programs for your R&D line item? And then how should we think about the trends in OpEx on a go-forward basis? I know you're not providing longer-term guidance year-by-year. But just trend-wise, should we be expecting to still see uptick in expenses because you do like to have several programs in the clinic at any given time? And I just want to get a better sense for that.