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

Hello, everyone. Thank you for joining us at the 44th Annual TD Cowen Healthcare Conference. I'm Joe Thome, one of the senior biotech analyst here on the team at TD Cowen. And it is my pleasure to have with me today the team from PTC Therapeutics. We have CEO, Matthew Klein; CFO, Pierre Gravier; and CCO, Kylie O'Keefe. Thank you all very much for joining us.

So maybe just to kick this off before we dive into some program-specific questions. Matt, maybe you want to give us just a brief overview of the company's recent progress, maybe some of the highlights to look forward in 2024?

Yes, absolutely. Thanks, Joe. Thanks for having us here. So 2023 was an eventful year for PTC. We celebrated our 25th anniversary. And while we had a good opportunity to acknowledge all of the significant accomplishments the company has made over the past quarter century, it was also a time that we realized we had to make some significant changes in order to position us for future success. And so we did. We made a number of important changes to our leadership team, some of which you're seeing here. We also undertook a significant portfolio prioritizations that we could focus our R&D efforts on, therapeutic areas where we had a high probability of not only technical success, but commercial success. And importantly, we also did a lot of work to significantly strengthen our balance sheet, including reduction in workforce to rightsize the organization, reduction in OpEx that's manifesting itself at about 30% OpEx reduction, [ full ] run rate 2024 and also importantly, monetizing our Evrysdi revenue so that we could get off the balance sheet a debt facility that was not only costly in terms of the interest rate, but also in terms of the fact that it significantly limited our financial and operational flexibility. So we had done all of that and really closed out 2023, an incredibly strong position in terms of focus, strategy and strength of balance sheet to position us well for a successful 2024. And we have a very exciting year ahead of us. We have a number of important regulatory milestones coming up. We have -- we're going to initiate this quarter, the global regulatory submissions for our PKU program with sepiapterin, which we clearly view as a potential $1 billion-plus opportunity. We'll be submitting a marketing authorization to Europe this quarter and submitting the NDA to the FDA no later than the third quarter. We expect to submit the BLA for our gene therapy, Upstaza, this quarter to the FDA. We're also having important -- some important regulatory meetings with FDA as well this quarter. We're also making significant progress on our pipeline programs. We are planning a readout from our PIVOT-HD study of PTC518 for patients with Huntington's disease, which is being increasingly recognized as probably the most promising therapy in development for Huntington's disease. And then we have a readout planned in the fourth quarter from our registration-directed study of utreloxastat for the treatment of ALS. And finally, as we shared recently at Q1 -- Q4 earnings, rather, we have made significant progress in our discussions with FDA and expect to submit an NDA for vatiquinone [indiscernible] of pediatric and adult Friedreich's ataxia patients by the end of the year. So a lot going on and excited to dig deeper with you on these programs.

Perfect. Maybe we'll start with the commercial franchise and then kind of dive into some of the pipeline programs. But obviously, you've issued your [ financial guidance ] of $600 million to $680 million on revenue for the year. Maybe if you could dive into just maybe some of the key components to hitting that. And then maybe in light of the recent Translarna decision in Europe, how that kind of factored into your goals?

Absolutely. Kylie, do you want to [indiscernible]?

Yes, absolutely. So as you remember, Joe, we set the original guidance at JPMorgan, and we had, I would say, a rather wide guidance. And that was done intentionally because we were ahead of the CHMP opinion. So we wanted to make sure that we were able to set a guidance that gave a worst-case scenario and a best-case scenario, with both scenarios taken into consideration, negative and positive. So we -- unfortunately, we're in the situation where we received a negative CHMP opinion, and as we said, we updated the guidance at Q4 earnings. So there's a number of key factors that have gone into that guidance. Obviously, growth across the portfolio in Evrysdi, in Upstaza, in Tegsedi and Waylivra but also continued revenue for Translarna outside of Europe post Q2 or Q2 to Q4. As we've talked about, the opinion is not ratified until March, April time frame. And so first quarter will be continued business as usual. In addition to that, we've also talked about our ability to protect the Emflaza business post [ LOE ], and that's also a component of the 2024 revenue balance. So growth across the portfolio in 4 products and then ensuring that we're continuing that revenue on Emflaza and Translarna outside of Europe.

And then we are getting some questions just around the other [ XAS ] approvals for Translarna. Obviously, Brazil and Russia are some of the larger areas. If you can touch on maybe why their approval decisions or process is different than what happened in Europe and why you're confident in maintaining those revenues?

Yes, I think first and foremost, those are 2 geographies that have independent regulatory authorities and pride themselves on their independence. We talked a little bit about Brazil and the fact that, that registration was occurred in 2019 and there was an expected 5-year review of the approval, which is due in 2024, 5 years later; we are confident in our ability to maintain authorization there based on a number of things. One, the independence of the Brazilian authorities, the strong support we have in country from KOLs and patient groups, which is very important in informing [indiscernible] decision. And then the strength of the data set. I think when Translarna was approved in Brazil in 2019, it was on the basis of 2 previous placebo-controlled studies, Study [ 007 ], Study 020. And now we can come to them with a very strong data set of Study 041 with statistically significant benefit in the overall population, which mirrors the indicated population in Brazil as well as our data from the STRIDE registry. So based on the regulatory framework in Brazil, where they're just basically having a review of their previous authorization, the fact that we can bring a much stronger data set, there's a wide uptake in Brazil and tremendous support in country, gives us a great deal of support. And as far as some of our other larger markets, Commonwealth of Independent States [ and otherwise ], there is no process for revisiting authorization at this point. I think it's business as usual there. And I think the one thing we are seeing consistently globally is each country is taking their own view of this and not reflexively follow the CHMP in any way, shape or form.

Perfect. Maybe last one on the top line. Kylie, you did mention some of the things that you can do to kind of protect against generic erosion for Emflaza. Can you just expand upon that a little bit?

Yes, absolutely. So I think, obviously, a loss of exclusivity wasn't a surprise. And so what we wanted to do is make sure that we put a number of strategic initiatives in place prior to loss of exclusivity to ensure that we can do what we can to protect the longevity of the business and keep patients on Emflaza. So there's a couple of key things that we've put in place prior to loss of exclusivity. This is including partnering with specialty pharmacies, partnering and contracting with payers. This is a heavy Medicaid population, and so access to care and having the patient support programs that we offer through our PTC Cares program drives a lot of brand loyalty to Emflaza, both on the patient front, but also on the physician front as well. And so making sure we really build out the robustness of these programs was really important and also continuing to [indiscernible] drive that clinical differentiation against prednisone, and ensuring we're not only protecting the patients that are already on therapies, but still driving new patient scripts. And we've seen that post loss of exclusivity already. So we're going to continue driving all of these initiatives. And from where we sit today, it looks like we will have a good proportion of the business we're able to [ project ] in '24.

Perfect. And maybe we'll jump into PKU and sepiapterin. Obviously, with the top line results driving over a 60% reduction in phenylalanine, I guess as you've been out there and talking to KOLs and having some time with the data outside of just Phe reduction, I guess, what are they responding to maybe overall in the clinical package?

I would say there's many aspects of that clinical package that are really, really strong. You mentioned, Joe, the mean reduction of 63% in the overall population. In the more severe classical patients, we had a 69% reduction in phenylalanine, and people see that, right? This is a traditionally difficult-to-treat population. Next, in terms of coming within guideline of therapy, we had 84% of patients come into guidelines. That's also pretty rare. And we had 21%, 22% of patients achieved normalization of phenylalanine levels, which is unheard of. And if you talk to patients, you talk to physicians coming down to normal even from 400 to 500, it's a huge, huge difference for patients and translates into really meaningful benefits. That's really important. And I think people have also taken note of the fact that the patients who came into the trial on Kuvan, got washed out and then placed on sepiapterin, had a mean further reduction of 48% in phenylalanine level. So that's telling you that patients are benefiting from Kuvan, they're going to get a much greater benefit from sepiapterin, as the data is showing. And I think that's led to what we've heard, and we had this in our commercial deep dive over the summer, physicians saying that even the patients who maybe served to some extent by existing therapies, they will now really look to switch over to what they think could be a more effective therapy. And then finally, the Phe Tolerance Data. I think that's incredibly important. As part of our Open-Label Extension, we're enrolling patients in a Phe Tolerance protocol that essentially looks at the ability of patients to tolerate increased protein or phenylalanine diet still maintain control. That's really the whole [indiscernible] for PKU therapy, and we were able to show -- we've shown in the most recent data cut at the JPMorgan meeting in January that we're seeing almost 60% of patients not only tolerate increased protein diet, they're tolerating levels of protein diet that are recommended for you and me, they are not affected by PKUs. So now you're saying that you can almost -- well, you can normalize diet [ even ] better and still maintain a controlled phenylalanine. So -- it's -- I wouldn't say it's one thing, it's the combination of all of these things, along with the safety and tolerability of the drug, which is why we believe that this can address the unmet need, the significant unmet need for PKU as well as offer an alternative therapy that the physicians are saying could be even better for the patients who are maybe currently served by therapies. And it's all that together along with our very strong commercial infrastructure that we see this easily as a $1 billion-plus opportunity.

And the Phe Tolerance Data are something that have been particularly interesting, I think. Can you talk a little bit more about how you're going to use that either in the regulatory filing or I guess, for reimbursement reasons? And does that change between the U.S. and Europe? Does one find it more important?

Sorry, maybe quickly on the regulatory, it's not going to be a driver on the regulatory discussions. So then jumping to payers, from that perspective, yes, there is a difference in how we'll utilize that U.S. versus ex U.S.. And that's driven predominantly by the fact that ex U.S., a lot of payers fund medical [ trends ] and formulas that are associated with the Phe-restricted diet that patients are on. So when you talk to payers ex U.S., they say, "Okay, well, hold on, I'm already paying for the elements that are related to a Phe-restricted diet. If I'm then going to pay for a therapy, how is a patient able to liberalize the diet so I can reduce those costs on that side?" And so that's where the Phe Tolerance Data becomes really important because we're able to say, well, as Matt was just talking to, not only are they able to relax the diet, but they're able to fully liberalize it, which is -- it's a huge step forward and not been seen before in PKU. I think across the board when we look at physician uptake, Phe Tolerance Data is incredibly important because while Phe reduction is, of course, very, very important when it comes to cognitive benefit, Phe tolerance is the ultimate holy grail of what patients want to do because their diet is incredibly burdensome for their life. When you think of kids and adolescents growing up, and they're different. They're only able to eat a banana, and they're only able to eat a bowl of rice, whereas everybody else is consuming normal food. So it's such an important driver for patients, which becomes an important driver for physicians. So Phe Tolerance is also important for physician uptake.

Right. And then you mentioned that the European filing is expected this quarter, the U.S. filing by Q3. Can you just remind us the preclinical study that the U.S. require because of the change in how you're submitting the package? And maybe, I guess, how clear is it from the FDA that this is kind of what you need to file?

Yes. So it was a mouse study. It was a 26-week mouse carcinogenicity study, which is a standard component of [ IB-1 ] submission. And that study started as planned in the winter, and we -- based on the timelines, and that's why we say we expect to submit the NDA no later than the third quarter and perhaps even we can bring it into the second quarter based on the timing and completion of that study. And our understanding, that's the gating item. I mean, the rest of the package is completed. That's why we were able to submit the MAA this quarter. And so we'll just look forward to getting far enough along in that animal study that we're comfortable with the submission.

Perfect. And then can you talk a little bit about the commercial launch? What would you need from a sales force perspective? Or maybe how can you leverage your existing force, especially given the Translarna news [indiscernible]?

Yes. So irrespective of the Translarna news, we'd always plan to utilize the strong commercial infrastructure that we have in place. It's -- they have a very comprehensive proven track record, as Matt talked about earlier. And so we want to utilize that engine to continue to drive forward. From a commercial launch standpoint, I think we're in a unique position, where there's a well-trodden path, but we have a differentiated molecule. So what does that mean? That means there's newborn screening in place, so we're not going to find the patients. They're there, they're diagnosed at birth. We have well-known treatment centers of excellence that have multidisciplinary care teams, so not just the pediatric metabolic specialists ex U.S. or the geneticist in the U.S., but also the dietitians that are crucial to managing that Phe-restricted diet. And if a patient isn't on therapy, still see that patient to manage that Phe-restricted diet. So that's really important. And then well-connected, well-coordinated patient advocacy community that we're already engaging with as well as the treatment centers of excellence. And then just a good understanding of disease pathology, which comes into play when we're talking to payers because you're not trying to connect what does a therapy do to the disease, but it's well documented, it's well connected and you're able to skip that education step. So a lot of the most important building blocks for a successful launch are in place. And then it's on us to differentiate. And as Matt just walked through the AFFINITY data, we think we have everything we need to be able to do that. And so then U.S., we'd expect fast penetration. And then as we work through the pricing and reimbursement country by country ex U.S., also fast penetration upon success there.

And maybe the biggest update from the Q4 report was the vatiquinone news and Friedreich's ataxia and the feedback from the FDA there. So first, maybe if you want to just highlight what the FDA said? And then second, what about the clinical data package do they find most compelling?

Yes. I think [indiscernible]. So the MOVE-FA study, which was a 72-week placebo-controlled study of our drug vatiquinone in pediatric and adolescent, young adult patients with FA, had the important filing of a highly statistically significant benefit on the upright stability sale. The upright stability scale is part of the validated disease measure known as the mFAR Scale, which is sort of a global disease rating scale that has 4 parts. Standard approach is to have the mFARS as the primary endpoint as a whole. But what we found in our study was that in -- something that's not been shown in the literature, which is for the patients that we enrolled, children, adolescents, young adults who are ambulatory, the only part of that scale that moves over time or at least during the time of a clinical trial is the upright stability scale. It's actually a scale that's been shown to correlate with risk of long-term loss of ambulation. And it is part of that scale that changes in the earlier stages of disease. If you look at our data, that's corroborated by the fact that the placebo group in each of the 3 other subscales didn't change at all over time. So we were able to have a very productive discussion with the agency and say, look, on the mFAR scale, the only part where we could have registered a benefit, we registered a significant benefit, not only statistically significant with a p-value of 0.021 but clinically meaningful, at a 40-plus percent slowing of disease progression on the upright stability scale in the treatment group relative to placebo. If you take those data and use some of the predictive algorithms that they -- folks who work with the Friedreich's ataxia registry work on, show that we -- that in 72 weeks alone, we delayed loss of ambulation by 9 months, which is obviously very meaningful for young children. And then when you put that alongside with the safety -- the strong safety profile, vatiquinone, the unmet need for Friedreich's ataxia patients who are below the age of 16, I think it laid the groundwork for us to have a productive discussion with the agency around approval package. I think from the agency standpoint, they certainly are aware of and want to try to fill the unmet medical need for Friedreich's ataxia patients. I think once we had a chance to really explain to them how the upright stability scale finding was not a chance finding, but one that you'd fully expect if you had an effective therapy in this patient population and how we can support that by the sequence of changes in the specific items of upright stability scale, findings we had on the fatigue scale, the findings on the walk test, all of that together allowed us to have a package that had, as they would say, persuasive evidence of effectiveness. So we look forward to collecting some additional data that can -- providing that confirmatory data that would be an important piece of a submission package, and we're in the process of collecting those data and expect the submission late in '24.

And that was going to be my next question because I know you're going to use some of the Open-Label data ahead of the Q4 submission. I guess, so what is sort of the key data that you want to have amass before that submission? And would this be an accelerated approval? Or do we not know that yet?

Yes. So in terms of the approval type, we're still in discussions whether this would be accelerated, saying that the upright stability scale, since it predicts long-term loss of ambulation, could that be considered an intermediate clinical endpoint much in a the way that PFS and OS works in oncology? And it's an open question because certainly, it does predict a longer-term clinically meaningful endpoint, but the upright stability scale itself does also refill clinical benefits. So can it be both? I don't know when -- we'll let the FDA come back to us. Obviously, we're open to either pathway, accelerated approval or standard approval, whichever that may be. In terms of the confirmatory evidence, we're going to have 2 sources of Open-Label data. We had earlier placebo-controlled trial, where we had previously published a 24-month data, Open-Label data compared to natural history, compared very, very well. It's quite strong, highly significant benefit relative to natural history. We're going to rerun that analysis for the prespecified matching model, which would be appropriate to include in the regulatory submission, and we will also take the data we're collecting from the Open-Label portion of MOVE-FA and compare that to a natural history to show that the treatment -- patients on treatment are having a trajectory that is different from that would be predicted by natural history.

Okay. And then maybe jumping over to Huntington's because we'll see those data in the second quarter here. Maybe just broadly, what should investors be looking for in this update? What are you going to show in terms of biomarkers? And it is a 12-month endpoint, so maybe set expectations a little bit for MRI or function or those kind of aspects as well.

We're very -- we remain incredibly enthusiastic about this program as to the patient and physician communities. I think we've been -- we've talked a lot about how the development of PTC518 from our splicing platform follows a successful development in [indiscernible] understanding how does one design a small molecule that can favorably affect the full brain disorder like Huntington's disease [indiscernible]. And that everything we've seen so far in the program is supportive of the promise of the therapy, including the -- what we even saw at 12 weeks with dose-dependent lowering of [ 100gm mRNA ] and protein and blood cells getting the CSF exposure necessary to starting effect, actually having greater exposure in the CNS than in the blood, which is really, really important in terms of forming dosing and confirming that the dose levels we have right now in PIVOT-HD at 5 and 10 milligrams should be sufficient to provide us with both safety and efficacy. As we move towards reading out the first set of 12-month data, and that's going to be in a limited number of patients, the patients of whom we shared the initial 12-week data last summer; I think it's going to give us the first glimpse of treatment effect on biomarkers like plasma and CNS, NFL levels, CSF Huntington [ mutant ] protein levels or [ geographic ] imaging and obviously, importantly, continued safety. And that becomes important, given that failures of other therapies, to have long-term safety, which led to their discontinuation. So what we've seen so far is the drug continues to be safe and well tolerated, and we're really looking forward to seeing the signals that we can register on a smaller number of patients at 12 months on any of these different measures. I think it's going to be a learning for the whole community because there has not yet been a safe and effective Huntington's therapy. So I think we look forward to what signals we can see at 12 months on the biomarkers as well as potentially some early clinical signs. And then we'll, of course, have more data coming for you from the remainder of the patients in the trial. And also, I'll point out that all the patients in PIVOT-HD continue on an Open-Label Extension. So we're going to continue to harvest biomarker data. So we look forward to seeing signals of divergence on these biomarkers relative to the placebo at 12 months, which will give us confidence in the dose levels we have and then be able to follow those patients over time.

And we've seen some drugs approved on NFL seemingly as a biomarker, obviously, in ALS, not Huntington's. Is NFL a good marker in Huntington's? Do we know that for sure?

I think we know a couple of things. We know that NFL is a very good measure of neuronal injury inflammation. We know that in patients with Huntington's disease over time, NFL levels gradually rise, as they do in other neurodegenerative disorders, including ALS. We know that the accelerated pathway -- accelerated approval pathway is quite rational for neurodegenerative disorders, where it may take many years and very large trials to confirm clinical efficacy. And we will certainly use these data as well as what's known about the natural history of the disease to help inform discussions with the agency about potential pathways for accelerated approval. I think this is a newly trodden ground, but we're comforted by the fact, as you said, Joe, that we've seen NFL be used in ALS as a marker for accelerated approval. We've also seen a great deal of openness by the agency to leverage the accelerated approval pathway to try to get a drug to patients with neurodegenerative disorders without other approved therapy.

And can you talk a little bit about dosing in the U.S. with PTC518, maybe where you stand there and potentially if the agency has given you any guide on how the 12-month data could be incorporated in their decision?

Yes, absolutely. I think we had a very productive discussion with the agency in the fall. We shared data from 12 weeks, the safety data for the 12 weeks, which they had indicated could be sufficient to allow the trial to go on if we're only 12 weeks in the U.S. They said to get it the full study, the full 12 months, they would like to see 6-month data in those patients. So we look forward to being able to get those safety data and provide them. And as we said, thus far, everything we've seen is that the drug continues to be safe and more tolerated, so we look forward to providing those data to the agency that we believe should satisfy their -- any concerns or their needs in order to lift the partial hold.

And then the other improved product, Upstaza, that we haven't touched on too much. But obviously, at least in terms of gene therapy approaches, a ton of long-term follow-up data, looks pretty active. I guess, first, how is the therapy launching in Europe, if you can provide any detail there, and the progress towards the U.S. submission?

Yes, absolutely. So starting with Europe and then we can go to the U.S. So I think. As we've talked about, we have a centralized process from a regulatory point of view, but then once approved, then we go through individual country pricing and reimbursement negotiations. So we start off immediately with early access programs, and we've been able to have a number of those come online very quickly through the likes of, for example, France, the AP program, 326 program with Italy and a number of other programs. In addition to that, we've also been looking at cross-border opportunities. So we've had some patients treated in France, for example, from the Middle East that don't have treatment centers set up there yet. In addition to that, we've also been working through formal pricing reimbursement negotiations, and we've talked about a positive nice recommendation. And there's been a number of other countries that we've had recent success with, and we'll be sharing more details about that at upcoming earnings. And that's allowed us to incrementally treat more patients in a number of different countries. And we'll continue to focus on that as time progresses. As we also mentioned at Q4 earnings, we're also looking outside of Europe to grow. And so as an example, we've been moving forward with countries in Asia Pacific, and we filed in a number of countries in that region. And then we also had recent approval in Israel. And that sort of growth strategy, similar to what we've done with Translarna, is around geographic expansion, so start in Europe coincidentally and then move out. And that's going to be some of our biggest growth drivers as we look to markets in Latin America, Asia Pacific and Middle East or [indiscernible] Africa are some of our bigger growth drivers.

Perfect. And then in the U.S., if it is an accelerated approval, I know you touched a little bit on -- typically, there's a confirmatory component of the accelerated approval; I guess how do you balance maybe enrolling a confirmatory study with also having a strong commercial launch in the U.S.?

I would say, the BLA, which we're planning to submit in March, what we're doing is we're giving biomarker data from an ongoing study. So the biomarker data is an earlier cut of the data where we're able to show in a congenital disease or congenital enzyme deficiency, inability to make dopamine, we showed the dopamine being made, and we will be submitting data on these same patients already treated over longer term, where we start showing the functional benefit. So the study is enrolled, and we're collecting the data, and that study was enrolled principally with patients from outside of the U.S.

And then we are having another readout from the redox platform towards the end of this year in ALS, hasn't been a ton of focus, I think, on that program quite yet, but maybe if you could just set the stage. I know you said it could be registrational, is this one registrational study or all you need for registrational? Do we know that?

Yes. So the feedback we've gotten, at least in the U.S., is that this study, if positive, could stand for approval. And that's consistent with other studies in the U.S. that have had a similar design, 6-month placebo-controlled with the primary endpoint of the disease rating scale, the ALS FRS, along with endpoints around mortality and respiratory function. And we're obviously very excited about this program, given what is becoming increasingly recognized as an important mechanism in ALS, Theraptosis and our ability [indiscernible] target that, a lot of work we've done preclinically benchmarking utreloxastat therapy with edaravone, which is approved, where we've been able to show 25x, 30x potency in a number of different preclinical models, that gives us a lot of confidence that we have a highly effective model -- a molecule. And then, of course, we're plugging into a well-established clinical study framework.

And then on the splicing platform, maybe we can jump there. Obviously, you had good success in the partnership with Roche to bring every Evrysdi to market. I guess maybe just overall for the profile, are you thinking about additional BD? And how do you figure partnerships? Obviously, you have a lot in the pipeline. It seems like always areas for help from others was successful in the past, how do you think about that?

Yes, absolutely. So I think the way that we're looking at BD is twofold, both in-licensing opportunities and out-licensing opportunity. So starting with the first, I think as we've talked about, we have a very strong commercial engine around the world with a proven track record. So the more we can do to put into that to drive top line, the better. And we're not at capacity there, even with PKU launch coming around the corner. And so we're specifically looking at opportunities from an in-licensing perspective that cassette directly into this infrastructure. So not sort of outside of that, but how do we then keep the sort of OpEx static and drive the top line. And so that's what we're focusing on from an in-licensing perspective. Out-licensing, we talked earlier in the year about reprioritizing and deprioritizing some of our early-stage gene therapy assets. And so we've shared that we're looking to partner those. As we continue to make those prioritization decisions, we will also look to partners for some of those other assets. But to your point around splicing platform, there are a number of areas where the splicing platform and the ferroptosis and inflammation platform is viable, but PTC is not interested in. And so that's a new focus area for us in business development, is to now say, "Okay, how do we build those partnerships to help drive nondilutive capital for the company as well?"

Perfect. Awesome. And with that, I think we're ahead of our 30 minutes. So thank you for joining us, and thanks, everyone online and in the room.

Thank you, Joe.