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

[Audio Gap] Health Care Conference. I'm Tazeen Ahmad. I am one of the senior SMID biotech analysts at the bank. It is my pleasure to have our next presenting company on stage with me, PTC Therapeutics. I've got several members from the management team. Specifically sitting next to me are Matthew Klein, who is Chief Executive Officer; Pierre Gravier, who is Chief Financial Officer; as well as Kylie O'Keefe, who is Chief Commercial Officer. Good morning, everyone. Thanks for coming over from New Jersey.

Tazeen, thank you. Great to be here.

So maybe, Matt, you can, for the folks who may not be as familiar with PTC, just give us an overview of the company, sort of the main platform and some of the recent events that have occurred. And then we can go into some more detail around those.

Terrific. For those of you who don't know PTC, we are a global bio-pharmaceutical company that discovers, develops and commercializes therapies for patients with rare disorders. We have a robust commercial portfolio with 6 products, 5 of which we market ourselves all over the world for a number of different rare diseases, and the sixth product is commercialized by Roche from which we derive collaboration and royalty revenue. We have a robust R&D portfolio with programs in a number of different rare disorders, particularly with focus on neurology and metabolic disease. And we have 2 scientific platforms, one in splicing, being that we are the pioneers of small molecule splicing; and ferroptosis, where we're also pioneering therapies there. We're looking forward to a very exciting year. We came into 2024 after making a number of changes to strengthen the company. We went through exercises to focus our R&D portfolio as well as to right-size the company so that we could reduce our operating expenses and put the company on a trajectory to cash flow breakeven. We, recently in Q1 earnings, reported an excellent revenue performance, beating consensus by over 20% and are also making significant progress on a number of regulatory submissions this year. We're on schedule to submit for-approval applications to the FDA, including one for our PKU program, which we've described as easily being $1 billion-plus peak revenue opportunity. We also have 2 important data readouts scheduled for this year, one for our Huntington's disease program, which is regarded as the leading Huntington's disease program right now. And again, we're expecting data from that in the second quarter. And in the fourth quarter, we're expecting top line results from our ALS trial, which is a registration-directed study of our drug, utreloxastat for ALS. So it's really shaping up to be an exciting year with a number of important milestones, all of which are on schedule.

Okay. Perfect. Yes, there's a lot going on. And one of the topics that every investor, I think, is interested in hearing more about is Translarna, which was your first approved drug. It's been approved in Europe now for multiple years. And based on a review that occurred, I can't even remember how many months ago, the most recent update was that CHMP had recommended removing the product from the market because of the results of a confirmatory study that occurred. I think everybody who follows PTC had maybe assumption that, that was the end of the story, but it appears it is not. The drug is still on the market. And maybe, Matt, can you just give us a quick summary of the saga that we all know as Translarna? Because I think it's important because it's meaningful revenue that people were assuming would go away, which if it doesn't go away, does have a meaningful impact for the company.

Absolutely. And quite frankly, it already has in many ways. And so as you pointed out, Tazeen, Translarna was the first ever approved therapy for Duchenne muscular dystrophy. It received conditional marketing authorization in Europe in 2014, subject to confirmatory studies, the most recent of which was Study 041, which while demonstrated statistical significance on all key endpoints in the overall ITT population, did not reach significance in the prespecified primary subpopulation. So it is very, say, unique situation, which many of the -- what I'm going to discuss with Translarna is also unique, but it was a unique situation in which a smaller subgroup didn't achieve significance, but the overall population did. And of course, the study also demonstrated, as expected, that Translarna continues to be safe and well tolerated. The CHMP took a very strict view and said that since this was a confirmatory study and a primary analysis population, while being just a subgroup of the overall enrolled population, didn't meet significance, then we did not sufficiently confirm benefit and issued a negative opinion. That negative opinion was issued following a reexamination in January. And what typically happens is when the CHMP issues an opinion, then it only becomes official once the Central European Commission adopts it. And that typically happens within 67 days of that opinion being issued. So as you pointed out, most expected that coming end of the first quarter, the product would be withdrawn for the market. And this would have been the first time that a product that was safe and well tolerated was withdrawn. Went to the European Commission. And what we do know is that procedure to remove the drug was stopped. There was at least one country that voiced objection, which stops the procedure. And then a meeting of the Standing Committee of the European Commission is convened to discuss the matter. We know that, that meeting was held the week of April 27. We have not heard anything further. So what does that mean? That means the drug remains on the market. The opinion of the CHMP was not adopted thus far. We know that there was a tremendous outpouring of support to keep the drug on the market from patients and physicians all over Europe. And so this, very well, may be a situation where you have patients and physicians saying, look, here's a drug that's safe, there's clear evidence of benefit. The review at CHMP may have been overly conservative, particularly given the unmet need for patients with nonsense mutation DMD in Europe. And we are -- await to hear what happens next. But for us, it's really been business as usual. We were commercializing the drug in Europe and in many places all over the world. Physicians continue to prescribe it. Patients continue to want it, and we continue to generate revenue.

Is there a situation where countries can order product and keep inventory in the event that something occurs officially where it says after this day, you can no longer order more product or anything like that?

Yes. So we were preparing different approaches to keeping the drug available by leveraging individual country processes, whether those be named patients or other access pathways. That still remains in the background. But of course, the benefit of where we are right now is just continue to commercialize as if it was last year. So none of that has changed. So we do have that as a backup change -- backup plan should it come to pass that this opinion gets adopted and the drug is withdrawn.

Can you give us a sense of what level of penetration you have in Europe market was?

Yes, sure. Kylie, do you want to talk about the dynamic?

Yes. Look, absolutely. I think one of the things we've talked a lot about, Tazeen, is our approach with Translarna preceding the situation was Europe was definitely our first market, right? So we started in Europe, and we've been able to ensure across many of our European markets to have pretty deep penetration. What we then looked at is that, okay, to grow the business substantially, we need to continue geographic expansion. So we looked at a number of markets across the world that we started to geographically expand into. And I would say these have been probably our bigger growth driver markets, whereas Europe has been a bit more stable in that regard. We've still talked about definitely finding new patients in Europe, and we've still continued to penetrate. We're not at max penetration. We are at high penetration, but we're not at max penetration. So we still continue to find new patients in Europe. We still continue to put new patients on drug. It's just where we see larger growth rates in some of these earlier markets that we've started to geographically expand into.

Okay. And during the 10 years or so that this drug has been on the market, how has price impacted uptake, if at all?

Not at all. I think one of the things that traditionally is believed, especially in Europe, that over time, as you see a product enter the market at a certain price point, over time, that tends to degrade. One of the things that we've been able to do across the board in all of our markets is hold a very tight pricing corridor. And this has been something that we've been heavily focused on to balance the business. And I think it's been something the team has done an incredible job of managing.

Okay. And how have you managed the need for infrastructure in terms of marketing and sales?

So one of the things we talked about as this situation started to unfold is the fact that we have a PKU launch just around the corner. And so what we had always intended to do, and we talked about this, was we built infrastructure around the world that was not only fit for delivering and executing on the business that we have today but also being ready for tomorrow's business. And tomorrow at the time was PKU, which is now today. And so we did not touch the infrastructure. We've kept it whole. We've kept it in place. And this has obviously been a huge benefit as this situation has continued. And we -- as Matt said, we have Translarna remaining on the market, and we don't see a situation changing anytime soon. So from that perspective, with regards to that, the infrastructure is focused on ensuring that we meet the needs of patients and physicians for Translarna as well as preparing for PKU.

Okay. So Matt, does the European Union have any obligation to tell you, the company, about what's going on at a certain point?

We assume that we will be -- and we expect we'll be notified once there is a clear path. Now what has to happen, the way it works in Europe is the CHMP, which is part of the European Medicines Agency, is responsible for the scientific and technical evaluation of a product. They do that evaluation. They then send that opinion over to the central body, the European Commission, that then makes a decision on that to adopt it or not. So you can imagine in this period, it's entirely possible that there's ongoing discussions between the 2 bodies about next steps and such. And we expect that once there's clarity, we'll hear. I think for us, we did a lot of work last fall and winter to prepare for the withdrawal of the drug. We strengthened our balance sheet. Hence, we're in a strong position to build forward all of our other programs this year. So this is really a situation where it's pure upside where we had set the company up for success based on what's coming with PKU, based on HD, based on all of our other programs and had the cash to execute on all of those. And now we're in a situation where something we didn't expect is occurring, but it's upside, which is a great situation to be in.

So presumably, you've tried to figure out the different scenarios of outcomes here through consultants or experts who know the European rule system. Is there any kind of outline you could provide for us on what could happen? I mean the obvious is they decide to keep it on the market as is or pull it from the market. But is there in between scenarios?

Certainly. Look, I don't think there's any expert here who can weigh in because we're in a bit of an unprecedented situation. The only precedent of which we're aware where there was a CHMP opinion that the European Commission did not adopt is the case of Glybera in 2012, which was the gene therapy being developed for lipoprotein lipase deficiency. And what happened at that point was there was a negative opinion. It went to the European Commission. They did not adopt the opinion. It went back to the CHMP, and 6 months later, the CHMP made -- changed their opinion to positive, which was adopted then by the European Commission. So I think we have the range of options. I mean certainly, the commission could decide we're just going to adopt a negative opinion and it goes into effect. But what could also happen is it could go back to CHMP. They can either look at changing the opinion to positive. If they could say, look, this was a conditional authorization, we'll maintain that subject to additional work being done. And you can imagine as that -- those discussions happen, that even getting to that point could unfold over several months.

Could they ask you to do yet another confirmatory study?

They could. And we will obviously welcome any opportunity to keep the drug on the market and make it available to boys in Europe.

Okay. So if that continues to be business as usual, is there any change to your expectations for expenses this year though?

No change for expenses. As Kylie said, the infrastructure is the infrastructure. And the important point is no change for expenses to maintain Translarna, and we weren't expecting any change to expenses to prepare for the PKU launch. So that was all set.

Okay. So that's Europe. Let's talk about the U.S. and where you are with your application.

Yes, absolutely. As you're well aware, it's been a long history. And I know a lot of people are saying, I wouldn't bet on this one because it's such a long history. But I think a lot has changed. I think first of all, and I believe this is also supported by what's going on in Europe, Study 041 provides a very strong data set of efficacy in an overall ITT population, which is something that really hasn't been seen for a genetically directed therapy for Duchenne muscular dystrophy. Having significance on walk test, North Star test, Timed Function test, all of those is really, really important if the therapy is safe. We also have the STRIDE registry, which is an important source of confirmatory evidence showing long-term benefit in terms of delay of time to loss of ambulation. You know very well the long history between FDA and PTC on Translarna. And I think we can clearly say that in our recent discussions, there's really been a reset in the relationship. I think the players have changed on both sides, and I think I'm happy that we've had very collaborative, productive discussions with the agency about how we can use these data to support a resubmission. And we made it very clear to the agency that we are not going to go down this path, if there's an RTF waiting for us. And what feedback we got from our pre-submission meeting was that if there's any questions left, they'd be a matter of review, which is what we needed to hear to move forward with the submission. We've also talked about just even looking at [ Cedars' ] recent review of givinostat and looking at how they looked at the data for givinostat in terms of some of the analyses their statisticians did at FDA. And those were all things they asked from us prior to advising us on the submission and doing all those analyses also -- they all support the robustness of our finding of significant benefit across these endpoints. And also any -- some of the issues that the review teams have previously raised around real-world evidence, we're able to easily satisfy. So while there is a long history here and it makes it difficult for anyone to be too bullish on the therapy getting approved by FDA, I think we're in a strong position to provide a dossier that has a persuasive evidence of benefit and necessary confirmatory evidence. And the FDA has demonstrated to us their openness to review this package.

Which committee would be reviewing?

This is in neurology.

And of the people that PTC would have interacted with over the last several years, how many of them are the same?

So as you know, Billy Dunn, who oversaw the division, has left. And Teresa Buracchio is now the Head of the Division of Neurology Products. And with Teresa, she's been in all of these meetings where we've had these discussions. And the review team's obviously changed and things change over time.

Okay. So if I'm understanding you correctly, you don't think you would get an RTF, so you're going to go ahead and apply. And assuming that you don't get an RTF, they will accept the application. What are your chances, do you think, of getting a priority review?

So since it's an NDA resubmission, technically, it follows a priority review timeline. So there's 2 months to accept the filing and then it should be 6 months from there. So we're planning to resubmit the NDA midyear. So we would expect then, according to that timeline, to have an outcome in the first quarter of '25.

Okay. And do you think an AdCom would be likely?

We don't know. We'll have to see what they decide. We welcome whatever comes in the review process.

And just remind us, what's new in the package that you would be submitting versus packages that they've seen before?

Study 041. I think being able to have a study in 359 boys that in the ITT population that was well controlled, standard steroid regimen, well stratified and having p-values less than 0.05 on all of the key endpoints is, quite frankly, something they've never seen in a DMD product before. I think the safety of the product has always been there. And then they've never seen data from STRIDE because STRIDE didn't start until after the last submission. So to be able to provide real-world evidence on over 280 boys over the course of 5 years of data collection and having a robust propensity match comparator, natural history population against whom we showed that we slow loss of ambulation by 3.5 years, slow loss of pulmonary function by over 1.5 years, is again something they've never seen in DMD and something the FDA has increasingly said are things that they want to see to try to understand what the benefits over the long term could be in horrific diseases like DMD.

Okay. I asked about the AdCom because I'm curious. You did mention that for Europe, for example, there was a long -- there was a strong advocacy coming from physicians as well as parents of patients. We do know that there is, in general, a strong advocacy for DMD in the U.S. vis-a-vis parents of these boys. Why wouldn't an AdCom be a good opportunity for these parents to voice to FDA? Why it would be important presumably to have access to this drug?