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

Good day, and thank you for standing by. Welcome to today's conference call CHMP opinion on Translarna. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Ron Aldridge, Senior Director, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to discuss the CHMP opinion on Translarna. I'm joined today by our Chief Executive Officer, Dr. Matthew Klein. Today's call will include forward-looking statements based on our current expectations, including with respect to PTC's plans for interactions with the European Medicines Agency and the outcome of any reexamination process. Please take a moment to review the press release that we issued this morning, which contains more information regarding forward-looking statements. 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 operations. 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 CEO, Dr. Matthew Klein. Matt?

Thank you, Ron, and thank you to everyone for joining the call today. As you've likely seen in our press release earlier today, the CHMP has unexpectedly given a negative opinion both on the conversion of Translarna, conditional marketing authorization to full authorization and on the annual renewal of Translarna. For EMA guidelines, we will request the reexamination of the conversion and reauthorization decisions. Our request for the reexamination process will follow a standard time line and will likely run through January 2024. Importantly, as we are requesting a reexamination, the CHMP's decisions will not impact the current authorization of Translarna in Europe. The product will remain on the market and boys will remain on the drug pending the outcome of the reexamination process. We expect the opinions following the reexamination procedure to occur at the time of the CHMP meeting in late January that opinion will then require European commission ratification within 67 days before becoming effective. The CHMP's decision is incredibly disappointing as it jeopardizes the only available therapy for boys with nonsense mutation DMD in Europe. As many of you know, the regulatory history of Translarna in Europe has been complicated. We have previously gone through the reexamination process to reverse an initial negative CHMP opinion and obtain initial authorization in 2014. In 2017, the renewal of the conditional authorization following the completion of Study 020, also required reconsideration by the CHMP. Hence, we've been down this path before with positive outcomes each time. The data from the most recently completed Translarna placebo-controlled trial, Study 041 as well as data from the 2 previous placebo-controlled trials, Study 007 and 020 for the basis of the CHMP's current review and decision. Additional supportive evidence of efficacy included robust meta-analyses, demonstrating highly statistically significant benefit on several key disease endpoints capturing different aspects of DMD including a Six-Minute Walk Distance, the North Star Ambulatory Assessment and Timed Function Test. In addition, analyses from the real-world STRIDE registry, which includes 300 boys with an average treatment duration of over 5.5 years, demonstrating that the long-term Translarna therapy delays the time to loss of ambulation by 3.5 years were included as part of the data package to confirm long-term meaningful treatment benefit. In addition, Translarna has shown a favorable safety profile with over 3,000 patients treated to date. Despite our disappointment and surprise, we will push ahead and fight to keep Translarna's authorization in Europe. We are certain that the patient and physician communities will similarly fight to keep a clearly safe and effective drug on the market. We'll now take any questions you may have on today's announcement.

[Operator Instructions] Our first question comes from the line of Kristen Kluska with Cantor Fitzgerald.

Sorry to hear about this news. I wanted to ask you, on the flip side of the data that you've collected showing the benefits across Translarna. And do you also have any studies or findings or sense of what would essentially happen to some of these effects if patients were to stop taking the treatment given there are very few options available for them.

Yes. Kristen, thank you very much, and that's a great question. We have not formally studied the effects of withdrawn therapy. That being said, over the years, we've collected many anecdotes that consistently share that once boys get off the drug for one reason or another, sometimes just to participate in other clinical trials, sometimes it's for other reasons, parents and the boys report a pretty precipitous decline in clinical function, losing muscle function, losing the ability to walk and such. So quite clearly the withdrawal of the therapy and discontinuation of therapy would have dire consequences for these boys.

Okay. And to that point, I'm wondering how you're going to think about collecting some of these anecdotes hearing from key thought leaders as you reengage with the agency over the next couple of months, especially as some of these patients, you're talking about over 5, 6 years on consistent therapy.

Yes, it's been -- for many of these boys, it's been on the walker for 9 years. And obviously, this is why this is so potentially devastating. But rest assured, we've got armies of teams, our customer-facing teams, our patient engagement team, our medical teams, everyone is very well connected across Europe with the patient community, and it's not even just in Europe, it's worldwide. And you could be sure that we're going to take every effort to capture every piece of evidence, whether it's hard data or whether it's important stories that need to be shared on what the consequences of withdrawal could be. That is why we believe, in addition to some of the particulars of how the reexamination process goes, that this education campaign in terms of educating authorities what the consequences of the decision could be -- could very well help and turn this around and reverse the decision in the reexamination process.

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

Can you hear me all right?

Yes, David.

You talked about how this has been a road that you've gone down in the past. Could you compare the dynamic of this particular situation with what exactly happened in the prior situations just so we understand the deltas.

Yes. So David, just to -- in response to your question start. So as I mentioned in the presentation, in 2014, the CHMP delivered an initial negative opinion that we then to the reexamination process reversed. Again, the feeling at that point was the data did not support efficacy of the drug. I think the safety the drug has never been in question. As you know, in Europe, the way the framework through which they evaluate therapies is through what they call benefit risk profile. So you need to have a favorable benefit risk profile. And so in 2014, it was that benefit. Again, following Study 020, there was a concern that we had not hit the primary endpoint in the trial, which was the same as in Study 007, and there was a question about whether we had sufficient evidence of benefit given the failure to achieve the primary endpoint in the study. Again, further discussion about looking at the right sensitive populations helped turn that around. I think as we sit here today, obviously, we're in a situation again with Study 041, where we did not achieve the primary endpoint. But I think overall, we're in a much, much stronger position in terms of totality of data. First in Study 041 as we've talked about in the overall intent-to-treat population of 359 boys, we have statistical significant benefit across the Six-Minute Walk test, North Star, other endpoints, time to 10% loss of ambulatory function. And then we also have the ability to use meta-analyses given the strength in the primary -- I'm sorry, given the strengthening intent-to-treat population that are able to provide a precise and robust estimate treatment effect across the 700 boys in the clinical trials. That's really important because the main consideration when you miss a primary endpoint is whether the other benefits you're recording are due to chance or due to therapy and to be able to use the meta-analyses to provide really strong estimates of treatment benefit with very small p-values tells you that this consistent evidence of benefit we're seeing across the trial is not due to chance. And you wouldn't see what we see if it would do to chance. Furthermore, we also have the STRIDE registry. Now there were some questions in the CHMP discussions about the robustness of the STRIDE registry given that it's a natural history comparator group, which necessarily means lack the internal validity one would usually have in a placebo-controlled trial. So I think that nonetheless, we can address, we believe adequately -- more than adequately address any concerns of bias in a comparison and then be able to continue to offer the STRIDE registry as clear evidence of meaningful benefit in the long run. So I think the main difference here -- I'll say the similarities, David, is in each case, there's been a question about the efficacy of the drug, given the inability to hit the primary end point, but we come now stronger than ever with much larger data, much more extensive data and clear evidence of consistent effect as well as the STRIDE registry, which we obviously did not have back either at the time as we went through this process.

Got it. Towards that end, so will there be additional data that has been presented to them or reframed in these analyses when you come back to them in January?

Yes, absolutely. So a couple of important notes. One is in the reexamination process, we can't provide new data per se. But obviously, now having gone through some of the discussions, obviously, it's been a busy week back and forth and understanding the concerns allows us to be better equipped to proactively address them. The other important change that goes on in the reexamination process for those not familiar with it, is you assigned a new rapporteur the way the European system works is that each program has what's known as a rapporteur who's the person who is responsible for representing your product in terms of doing the evaluation of the data package as well as presenting their findings and their impression to the entire CHMP body. During the reexamination process, you are assigned a new rapporteur who is supportive of the product. So that assures you that you're having a, let's just say, a spokesperson or champion, if you will, in the room when things are presented. So in addition to reframing data in a way that addresses concerns that have previously been expressed, you also have some assurances that the person who will be presenting the data in the room and the expert in the room are your program is one who is also favorably inclined towards the product.

Our next question comes from the line of Alex Xenakis with Truist.

Unfortunately to hear about the data. We wanted to know, one, how does the results now affect the expansion strategy and the potential investment into SG&A and R&D going into new territories? And then looking into 2024, what type of leverage do you have on the bottom line? Are there any potential cost-cutting measures, either in SG&A or R&D that could be looked at?

Yes. Alex, thanks for the question. Obviously, we're quite new with this result. I will say in terms of our global expansion efforts, that doesn't change in terms of our priorities and continuing to get Translarna on the market in territories where it's not currently authorized, that doesn't change. Obviously, for now in Europe, the authorization doesn't change. The boys stay on therapy, and it remains on the market pending the outcome of this reexamination procedure. So any potential future impacts on any of the questions you had. Obviously, these are things we'll look at over time and share updates as they are needed.

Our next question comes from the line of Kelly Shi with Jefferies.

And sorry to hear the surprising news. So I'm curious how does the CHMP opinion affect your ability to apply in the U.S.?

Kelly, thank you for the question. It doesn't. We're moving forward. We said we were going to have a Type C meeting with the FDA in the fourth quarter. That's still on track. I would say if we look historically, the FDA never followed Europe fleet in anything regarded to Translarna. But look, I think there are separate regulatory bodies. We -- again, I want to reiterate, this is a strong data package. We have clear and consistent evidence of efficacy of the product. We have a number of different pieces of evidence to bring forth to the FDA now including the data collected across the 3 clinical trials, the evidence of confirmatory benefit in the STRIDE registry, and we very much look forward to discussions with the agency in the fourth quarter and looking forward to a potential resubmission of the NDA.

Our next question comes from the line of Eric Joseph with JPMorgan.

Actually, Matt, you anticipated my question about sort of the personnel makeup and during the reexamination process versus the regular review cycle that just concluded. I wonder whether there are any opportunities as part of the reexamination to bring in outside advisers or I guess, any way in which the sort of discussion might be modified from your side of things?

Good questions, Eric. Look, we are -- we, to date, have always worked with first-in-class experts. We have folks who have experienced the CHMP process, who've been part of the CHMP, and we'll continue to work with them and any additional folks we can bring to this battle. We talked about this in a very short period of time. [indiscernible] we've got the opinion we're going to battle. The cause here couldn't be more important. It's the lives of boys in Europe with DMD who have no other therapy, and they're on a drug now that's safe and effective then we're going to fight and bring everyone to the battle we can to help us win and keep these boys on the drugs as a patient.

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

Can you hear me?

Yes.

Matt, sorry to hear about the disappointing results. If you are successful in reversing the CHMP opinion, how does that change your strategy in the future regarding submitting for full authorization? And is it possible to have conditional authorization indefinitely?

Yes, Sami, thanks for the question. So I will say it is possible to have additional authorization permanently. How the procedure will play out in terms of the processes being aligned as they are now, which was they looked at the conversion of full approval and the renewal together as 1 -- 2 different opinions but they were joined. They were inclined to not look at one without the other. And so obviously, we'll explore options as we move through the reexamination process. But as a separate point, historically, there have been drugs that remain conditional in Europe forever.

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

Sorry to hear the news. So in the past, CHMP found the STRIDE registry and the real-world evidence to be convincing and Study 041 clearly showed some positive signals. So I guess I'm trying to understand what happened here or what changed? Was there a change to the personnel or the rapporteur who -- and their perspectives, anything changed with regards to the STRIDE data itself or the underlying natural history comparators? And I guess I'm also wondering whether did you have an opportunity to address some of the CHMP's issues on STRIDE and 041 in sort of a rolling real-time basis during this review process? Is there any back and forth? Or was this unilateral and the opportunity to address these will come now in the reexamination.

Brian, thank you for your questions. This is part of the reason we were so surprised again, the strength of evidence in Study 041 quite strong, the STRIDE registry, which has been a reliable source during the renewal process. Those data only continue to get stronger over time as the length of follow-up grows. We now have 300 boys with an average follow-up -- with an average treatment duration of 5.5 years and the benefit in terms of delaying loss of ambulation is 3.5 years. I'll also say that the initial preliminary assessment report we received when this procedure started was supportive of a benefit -- of consistent benefit as shown in the past. So again, this is why this all became a bit surprising to us. We did have, as was made public by the CHMP, a SAG, Scientific Advisory Group as well as an oral explanation that allowed us for some discussions. I think part of this was a concern when they looked at the primary endpoint of the 3 studies, particularly Study 041, not achieving the primary endpoint in the subpopulation of boys with walk distance of greater than 300 in supine to stand time of greater than 5 seconds that they were -- there was a question of whether they could use a STRIDE registry with natural history comparative to overcome a failed primary analysis. And I think that's where a lot of the discussion was. I think we are quite confident that we can continue to a lay now maybe not in a reactive mode in terms of questions when you come before the CHMP and all explanation before in a proactive mode to demonstrate the rigor of this dry comparison and again, be able to reiterate the strength of the data from the clinical trials that the evidence of benefit in the ITT population cannot be overlooked. The consistency across endpoints in Study 041, the consistency across studies all speaks to the fact that the treatment effect is real reproducible and not due to chance. And so I think just to circle back to the spirit of your question, it was surprising to us, and we look forward to the opportunity to incorporate concerns that they voiced during our back and forth over these past days, weeks and bring them to bear as we go through the examination process.

Our next question comes from the line of Joseph Thome with TD Cowen. Our next question comes from the line of Jeff Hung with Morgan Stanley.

You touched upon this but can you remind us about your decision for designating a different primary analysis subgroup and Study 041 then subgroup in studies 007, 020? And what gives you confidence that the EMA may ultimately find the argument compelling?

Yes, Jeff, thanks for the question. So just to walk back in time and discuss the etiology of the subgroups. So following Study 007 and Study 020, which both had is the primary analysis population, the overall intention to treat population, it became quite clear that the Six-Minute Walk Distance, which was the primary endpoint in both studies really did not detect differences similarly across all different patient subgroups as an all neurodegenerative or degenerative neurological disorders, patients progress at different rates. And if we're going to be able to demonstrate treatment benefit in terms of delaying disease progression, we're going to -- we're going to need to find those boys who enroll in the trial who aren't so early in their disease that they don't progress at all during the clinical trials so that you can't demonstrate benefit relative to placebo. And we found that, that was too for boys with the baseline walk distance of over 400 meters. Similarly, there are patients who are so far in their progression that they declined too rapidly towards loss of ambulation, again, making it very difficult to capture treatment benefit, and those are boys who had a walk distance of under 300 meters of baseline. So that became what we talked about as the "300- to 400-meter subgroup" those that were not too early and not too late, in whom the Six-Minute Walk Distance was most sensitive to treatment effect during the course of a clinical trial. And that's really key because obviously, all boys will pass through that stage at some point in their disease course but we're really in a time-limited situation with a clinical trial, and we need to make sure that boys in the placebo group are going to move at the right rate so that we can record a treatment benefit relative to placebo. So this is -- this was demonstrated when back then on Study 007 and Study 020 in that 300 to 400 subgroup, there was nominal significant benefit and a -- and again, the largest magnitude of effect in that subgroup. We -- obviously, we believe Translarna has a benefit for all boys with DMD. This is really just a question about magnitude of effect over the course of a clinical trial. So the idea then was in Study 041 to test the hypothesis that the 300 to 400 subgroup that sensitive population would demonstrate not only statistically significant benefit but also capturing the magnitude of treatment effect over the course of a clinical trial. The decision was made as Study 041 was being set up to modify that 300 to 400 based on some data from 007 and 020 that suggested that additional disease measurement could be introduced to further optimize that sensitive population. And the decisions need to replace the upper balance, the 400-meter with the second disease variable supine to stand time. So the primary analysis population for Study 041 became boys with a baseline walk distance of over 300 meters and a supine to stand time of greater than equal to 5 seconds. Unfortunately, that was not the most sensitive population. That is why we did not achieve significance on the primary endpoint. In fact, the magnitude of change in that group was smaller than the ITT population. Once again, though, the 300 to 400 group did demonstrate itself to be the most sensitive population with the greatest magnitude of treatment effect in Study 041 as well as a nominally statistically significant treatment effect. Obviously, the primary analysis -- the primary analysis was the concern to the CHMP. I think we will continue to -- in our discussions and reexamination emphasize that in this particular situation that the lack of statistical significance on a subpopulation does not mean lack of efficacy. In fact, when you look at the consistent evidence of benefit in the overall population, which is most consistent with the indicated population as well as the population that was the primary analysis group for the other two studies and is not a select post-tox subgroup but it's rather the superset of all patients, this ITT population. I think that that's a very compelling argument, and we look forward again to having a discussion around the value of that population as being more worthwhile and more informative in fact than the subgroup that was the primary analysis population.

Our next question comes from the line of Joseph Thome with PD Cowen. Our next question comes from the line of Danielle Brill with Raymond James.

This is Alex on for Danielle. We actually wanted to ask about different continent, about Brazil. Will this decision trigger any rereview in Brazil or do you expect that they will act in parallel with the EMA? And also, if so, what do you expect the timing? Just walk us through the regulatory process there if it would happen after any formal decision in January.

Yes. Alex, thanks for the question. Let me be clear that the Brazil rightly prides itself of being an independent regulatory body. And I'll also point out that the authorization in Brazil is full authorization. It's not conditional. It's not contingent on Europe. It's a fully independent -- it's an independent assessment resulting in a full market authorization. So we do not anticipate impact in the regulatory sense from certainly not at this point in time given the fact that the CHMP opinion is now on hold given -- pending the reexamination process. So there'll be no decision now on Translarna in Europe, so we go through the reexamination process, which will complete in January. And then that opinion still have to go through centralized EC adoption of the opinion. So I think it's premature for us to think that things are over in Europe. But certainly, when we look to other countries like Brazil that, as I said earlier, acquire themselves on independent regulatory processes and they have a full approval, not subject to re-review, as a conditional would be, we don't see any impact here.

Okay. If I could sneak in one follow-up. How much of your revenues are coming from Brazil?

As you know, Alex, we don't actually break out country-by-country revenue. I think last year, we had a total of $288 million of Translarna revenue. While the commercial revenue started in Europe, we actually has done an excellent job of diversifying revenue sources and it's got geographic expansion beyond Europe to include Brazil, other countries in Lat Am, Middle East, Commonwealth of Independent States. And now as we're moving into Asia Pac, gives us a very broad base of revenue contribution from geographies worldwide.

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

Can you hear me?

Yes. I can hear you.

Okay. Great. Sorry for the update. I was just curious, Matt, if you could tell us what the current penetration is for Translarna in the addressable European population? And what your thoughts might be for any new patients that might be starting therapy during this period between now and January, whether or not you think doctors would have a harder time getting those patients on just given this result.

Yes. Thanks for the question, Tazeen. We've not given penetration numbers in the past. We've said that we are not near peak penetration in Europe. There's still absolutely room for growth there. As we talked about, we look at growth both within existing territories like Europe as well as geographic expansion beyond Europe. In terms of new patients and patients on drug, I think, look, this is on a physician level, this is the only drug they have for their patients. This is not like this may not be available. I can give them this other drug over here. And we've -- actually, even in the short period of time since we've had the opinion this morning, we've heard from a number of our physicians who are similarly in no way, shape or form, looking to discontinue their patients and are going to look to continue to add new patients because they realize that this is a therapy that's safe, this is a therapy that's beneficial, and there's no other alternatives. I will say that, of course, a great amount of effort on our part is going to go on in the next few weeks to support our positions in this process to clarify any confusions that could arise from a CHMP negative opinion and reassure them that nothing has changed in terms of the authorization status or their ability to prescribe this drug for new patients. So obviously, we'll take a lot of efforts to ensure that. But I think it's going to fall on very receptive ears as physicians who prescribe Translarna and believe in its safety, believe in its efficacy and want to be able to offer something to these boys who have a fatal disease with no other treatment option.

Okay. And then as it relates to countries outside of Brazil, what are the ones that tend to make their decisions based on what the European status is? So for example, I was just curious about Germany as a stand-alone and any other large countries.

Yes. So I think the countries within the European Union at this point all follow the centralized procedure, which is a fall of CHMP. Now if we walk down the road and go through reexamination, negative opinion and EC ratification later in the first quarter of 2024 could individual countries reference an existing authorization like MHRA or some other country and say they're going to approve it in Europe. We'll look at that if -- as a contingency if we were to get to that, but in terms of countries outside of Europe that aren't under the jurisdiction of the European Medicines Agency, none of them are contingent on the European approval, they're all independent.

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

Can you hear me?

Yes.

Yes. It's Tony on for Gena. So -- with regards to the process for withdrawal if in the event that the CHMP does hold its negative opinion, what are the steps and time lines look like for that? And then how does that really happen?

Yes. So Tony, thanks for the question. I think we're a long way from that. Obviously, we said that this reexamination process, if it follows [Audio Gap] Can someone get me on?

Yes, they're connected.

Thank you. Can folks hear me?

Yes, we can hear you.

Okay. Sorry about that. There was some power failure here. So just to finish the question, Tony, I believe it's -- we're a little too soon in the process to be going through with those time lines. We look forward to focusing now on the reauthorization -- the reexamination process.

That concludes today's question-and-answer session. I'd like to turn the call back to Dr. Matthew Klein for closing remarks.

Yes. Thank you all again for joining this morning. Obviously, this news was surprising and quite disappointing to us. Our teams are now 100% focused on going through the reexamination process. We are looking to the past and see that we've been through this before and successfully. We believe we're armed with much stronger data than we've been in the past and very much look forward to the reexamination process to keep this drug on the market for the boys in Europe. So thank you for joining the call today, and we look forward to speaking with you at earnings.

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