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

Good afternoon, everyone. I'm Ellie Merle, one of the biotech analysts here at UBS. Welcome to the UBS Healthcare Conference. Very happy to have PTC Therapeutics here with us for a fireside chat. Joining us from PTC, Matt Klein, CEO; Pierre Gravier, Chief Financial Officer. Thank you, guys. And yes, Matt, I mean, you look very, very happy. So why don't you share the data with us.

We're very happy to be here, Ellie. It's great to be here. And thanks. We -- I'm excited to share with everyone. We were just notified that our gene therapy for AADC deficiency was just approved by the FDA, which is great news. This is an incredibly exciting program. It is the first ever gene therapy approved in the United States that's directly administered to the brain using a surgical procedure. And the data have shown that this is really a transformative treatment for kids. Kids are born with AADC deficiency without the ability to really move at all because they lack the ability to make dopamine. We provide the gene therapy surgically into the part of the brain, the putamen, where dopamine is needed. We see dopamine levels increase, and then we see the children begin to gain motor milestones. And so this has been a team effort at PTC for many years, and we're incredibly proud to be pioneering another new approach to treating neurologic disease and to have this approval. Given that this is a rare pediatric disorder, the approval also came with a priority review voucher, which we will look to monetize, as we've said. So it's a really great day for us at PTC, incredibly proud of our team. And most importantly, I think a really important day for the children affected by AADC deficiency.

Absolutely. And congratulations. Yes. Maybe just in the near term, how do we think about the opportunity? How many patients are currently diagnosed?

So this is a really rare disease. We say ultra-rare. So there's not a lot of patients in the U.S. Now the label is broad. It includes children and adults with the disease and all severities are included. So we'll right now understand exactly what that opportunity looks like. We've said that this has really been a pioneering effort. We're proud to be able to bring a therapy to even a small number of patients in the U.S. We've been -- commercial preparations have been underway. We included the centers of excellence in our clinical study. So they're understanding how to do the surgical procedure and all the critical aspects of preoperative and postoperative care and long-term physical therapy. And obviously, the priority review voucher is an opportunity also that makes this valuable. I think for the company as a whole, this is also great. We've talked about 2024 being a year of execution. We have already submitted 3 approval applications to the FDA. All 3 have been accepted for review. This is the first one now that has been decided upon with an approval. We're looking forward to submitting a fourth application for approval for Friedreich's ataxia in December. And so I think this is also a testament to our ability this year to really focus and execute across all fronts and continue to build the company forward for a successful future.

Yes. Absolutely. What's the latest [ going ] rate for PRV?

I think the past...

Past [ 158 ] and 150...

Helpful context.

Yes. I think we think about as we closed the third quarter with over $1 billion of cash in the bank. Obviously, with the ability to monetize the voucher, we would expect that we would close the year with over $1 billion in the bank. And that strong balance sheet really is going to allow us to achieve all that we want to achieve, launch our sepiapterin for PKU next year, pending on approval, launch our other products as well and be able to move the company towards a cash flow breakeven.

Absolutely. Well, taking a step back, you have a lot of programs, both commercial and hopefully soon to be commercial. Can you provide an overview across the portfolio?

Sure. Look, so our commercial portfolio consists of 6 products, 5 that we commercialize and then Evrysdi for SMA, which was discovered from PTC splicing platform, for which we enjoy a collaboration and royalty revenue. We have our DMD commercial franchise, which consists of Translarna, which is commercialized in over 50 countries around the world as well as Emflaza, which we commercialize in the U.S. And as we shared recently in our Q3 earnings, really continued strong revenue performance of both products. We commercialize in Latin America, 2 therapies that were developed by Ionis, Tegsedi and Waylivra. That's leveraging the unique expertise our team has in both regulatory and commercial execution in Brazil and the rest of the Latin America region. And then our gene therapy for AADC, which was approved previously in Europe. It's approved in the U.K., recently approved in Brazil and in Taiwan, where the disorder is endemic, there's a founder mutation in Taiwan. We then move into the development portfolio. And as I said, we're obviously gearing up to move a lot of programs to the commercial stage. Let me start with our PKU program with sepiapterin, which is an oral small molecule that has demonstrated in our Phase III trial to be highly differentiated from the available therapies. We had highly statistically significant findings of efficacy across the full spectrum of PKU, including classical PKU patients as well as the full age spectrum of disease. We've been able to demonstrate in our open-label extension study, the ability for patients to begin to liberalize their diet. So patients for the first time can enjoy regular meals with protein like a hamburger or a piece of pizza and still maintain Phe levels. And that's really the holy grail for patients with PKU. So to be able to develop and provide such a transformative therapy that's been shown so far to be safe and highly efficacious really sets us up for a large opportunity. There's roughly 17,000 to 20,000 patients with PKU in the United States alone. And while there's 2 approved therapies, it said that only about 10% are currently served by those therapies. And that's what's led us to believe that we can -- that the sepiapterin opportunity can be $1 billion, we've said globally, but we also think we can reach $1 billion in the U.S. with even modest penetration given that we have an efficacy package that would really support differentiation and premium pricing. We have our Huntington's disease program, PTC518, which comes from our splicing platform, and it follows on the heels of the successful discovery and development of Evrysdi for SMA. With our Phase II data -- interim data we read out in June, we demonstrated evidence of important biomarker effect by lowering -- showing dose-dependent lowering of huntingtin protein, which is the disease-causing protein. The drug is showing to be safe and well tolerated. We also had early evidence of dose-dependent benefit on clinical scale. So that package of safety biomarker effect and early clinical effect really puts PTC518 in the lead of disease-modifying Huntington's disease therapies. And so we're excited to continue development of PTC518 and be able to deliver a first-ever disease-modifying therapy for patients with Huntington's disease. We have our vatiquinone program with -- for Friedreich's ataxia. And that, as I mentioned, will be the fourth NDA we're planning to submit this year. Vitiquinone has demonstrated efficacy and safety, particularly in pediatric and adolescent patients for whom there's no approved therapy. And so we look forward to being able to bring vatiquinone to not only pediatric and adolescent patients, but also adult patients as well by offering a therapy that's safe -- that's demonstrated to be safe and well tolerated and has important findings of both short-term and long-term disease modification in our studies. We've mentioned as well, obviously, the AADC gene therapy we talked about. We've also -- Translarna, which is one of our Duchenne therapies, which we commercialize outside the United States. We've recently resubmitted the NDA for Translarna, and that has been accepted by FDA, and that package is now under review for approval as well. We also have 2 research platforms that we've focused on, really areas of science where PTC has unique expertise to open up new avenues for therapies for significant disorders. One is our splicing platform, which we've talked about, which has already yielded Evrysdi, now PTC 518 and we have a number of preclinical programs now looking at a number of different disorders. We believe that the splicing platform can be an important source of PTC developed and commercialized therapies, but also a source of partnerships for noncore or large disease areas where PTC may not have an interest itself in developing those therapies. But certainly can provide very valuable and innovative therapies for a number of large disorders. And our ferroptosis and inflammation platform as well, which leverages our expertise in redox chemistry and the pathway of ferroptosis, which is a pathway of cell death, which is becoming increasingly recognized as a key pathway for not only CNS disorders, but oncology and a number of other organ systems. So that's just a quick tour around all the different exciting things we have going on at PTC, but they're all unified by really our continued ability to use innovative science to develop impactful therapies for patients with rare disorders.

Yes, absolutely. It's a huge year ahead for you guys. exciting. Maybe starting with PKU and the commercial opportunity, assuming an approval and potential launch in the second half of the year, how should we think about the cadence of uptake? I mean there's all the patients who tried Kuvan that didn't respond. Could there be a bolus?

We absolutely think there could be a bolus. And this is a really exciting opportunity because if you think about all the pillars for successful commercial launch and execution, they're all there for PKU. There's newborn screening. So the patients are all identified. They're for the most part, affiliated with expert centers. There's expert centers where we know where we can find the patients and access the patients to treat them. There's a very well-aggregated community with -- that's tied together and is in close contact with each other as well as with their health care facilities and the disease is known for payers. So all that's missing is a therapy that can serve the majority of the population. And so we've talked a lot about the different segments that we could be targeting. And certainly, there's those patients who've tried the current therapy such as Kuvan and failed. There's also a large segment of therapy-naive patients, patients who were never even try on the therapy because there was a belief that they wouldn't benefit. And for PKU patients, benefit takes a few different important forms. One is the ability to lower their phenylalanine levels so that they feel better. They don't have the brain fog and neurocognitive issues that come with having elevated phenylalanine. That's one. But the second is to be able to liberalize their diet. For patients who have PKU, they get their protein from really not pleasant tasting medical foods and formulas that are hard to adhere to, taste terrible. And certainly, when you think about kids and adolescents who go to school, it's highly stigmatizing. They can't have the lunch that other kids have. They can't go to parties and have cake and pizza. So to be able to -- so if there's not a drug that's going to change that, there's no reason to try. So that's a pretty large segment. And then there's the patients on current therapies. And so we have heard from the KOLs we've been talking to around the world that they believe that we can readily access all 3 of those segments. And one -- certainly, those who are currently on Kuvan or BH4, whether it's branded Kuvan or generic, our data continue to show that if you have a response to BH4, you have a much, much greater response to sepiapterin. And that's what's led a lot of the physicians we've spoken to say, look, we're going to switch these folks right away. We know it's going to work. And if a payer says we need a step at it, that's no problem because we have the documented phenylalanine effect on BH4. And then a week later, we can find out what happens on sepiapterin. And again, just based on the mechanism of both drugs, it's it supports why we say if you have a response to Kuvan, you're certainly going to have a much greater response to sepiapterin and the ability to liberalize your diet. So all that is to say, everything is in place for us to be able to have a bolus of patients. And then the other really important component is our commercial infrastructure. We have a very experienced global commercial infrastructure for rare disease, particularly in the United States. This is a team that most recently has been working on our Emflaza franchise, very used to working in a rare disease community, very used to working in a genericized environment, very used to dealing with payers and having to deal with potential step edits. Although this time around, I think it's going to be a lot simpler than it is for something like Emflaza in DMD, where it may take many, many months to understand if there's a therapeutic benefit. In the case of PKU, it's a week or 2, a patient can be put on the drug and right away have the necessary documentation to enable reimbursement.

Absolutely. And I know you've spoken about it could potentially be $1 billion in peak sales even just in the U.S. But can we break that down into segments like even if you only penetrated, say, the patients who failed Kuvan, like what proportion would that make up? And then if you have, say, the switches from Kuvan and then probably the much larger is how do you bring all the people into care that are not currently actively managed?

Yes. I think if you access any of those segments and had high penetration in any of those segments, that would get you to the number you need to get to that level. That's why since we believe we can easily penetrate each of those segments is why we have confidence in being able to reach that level of revenue in the United States. You alluded to another group of patients, who are patients who typically are maybe adults who have not been as closely tied to their clinics. And for PKU patients, there's their relationship with their doctor, but they're -- and even if they're not on the treatment, they often have ties to the clinic because they are in communication with the dietitians or nutritionists who help manage their diet. And we believe that if we have a therapy that is easy to use oral safe and is effective and can make a difference in their life. I think we have a chance to access that segment of patients, too, who have been characterized as sort of disconnected from the system because they haven't seen a need to be on a therapy because they don't perceive that there's a tolerable therapy for them that's going to change their life in the way that we believe sepiapterin can based on what we've seen in the clinical studies.

And lastly, the PKU community is very tight. So not only there's going to be a push, but a pull as well. So when you have these kids who all of a sudden under our trial are reading a [ burger's hastag ], sepiapterin PTC923, it's actually a testimony to our drug and the benefits and the diet liberalization is really what you want in a disease. There's a high unmet need for that, and that's why we believe we can achieve these sales numbers.

Yes, absolutely. And in terms of competition from Palynziq, and I understand these are very different profiles and probably patient populations as well. But as Palynziq potentially moving into the younger ages in the coming years, how do you think that affects your opportunity? And maybe just broadly, like -- I mean, you kind of alluded to it, but how you're thinking about like the opportunity in younger versus older?

Yes. So I think we don't see a potential impact. I think that the Palynziq, which is currently approved for adults only, my understanding is the uptake has been fairly limited just because of tolerability issues. There's a high amount of adverse events, risks of anaphylaxis and also very difficult in terms of using it. It could take up to 2 years to titrate a dose to get something that's effective and it's an injectable. So I think for adults and certainly for adolescents, an oral therapy that is effective at lowering phenylalanine and allowing diet liberalization should always -- should be an easier choice of therapy for the patients and probably the ease of use would help with the physicians, too. So we really don't see that as impacting our trajectory.

Makes sense. And maybe pivoting to Huntington's on the clinical side of things...

Pivoting was the right word.

Okay. Yes. which is mindful that you are soon meeting with the FDA and could potentially establish a pathway to have a biomarker for accelerated approval, which would be massive for the States. What are the reasons why the FDA might accept mutant Huntington's and your level of confidence in the ability to have a biomarker? Because here, we know it's connected to the disease, but also we understand that there's wild-type huntingtin's protein as well that's being lowered.

Yes, absolutely. And look, I think as you alluded to, being able to get a disease-modifying therapy for patients with Huntington's disease would be an enormous step forward for a community that desperately needs effective therapies. Huntington's disease provides a pretty unique circumstance when we think about neurodegenerative diseases because it's monogeneic results from a mutation in the Huntington gene leading to a mutant huntingtin protein that injures, destroys cells and leads to neurodegeneration. We know it causes Huntington's disease. We can't really say that for the vast majority of patients with Alzheimer's, with Parkinson's, with ALS. And so just having a monogenic disorder where you know the protein is implicated, and by the way, that's what we're targeting, really puts you in a position to talk about having biomarkers that are likely to predict clinical benefit. And that's really the name of the game. If you read the regulatory guidelines of what is desired for a surrogate endpoint that could support an accelerated approval, it's having a biomarker that's relevant to the disease that is if it improves that there's evidence, scientific evidence that shows that changing that biomarker is likely to have clinical benefit. And the scientific evidence also has a certain specified quantity or threshold for changing that biomarker to lead to said clinical benefit. And when you put all that together, lowering mutant huntingtin protein fulfills all of those criteria. It's a disease of mutant huntingtin protein, we're lowering it. There's a robust scientific literature that includes in vitro, in vivo and epidemiologic data in humans showing that if you can lower huntingtin protein, the mutant protein 20% to 50%, it's been associated with disease modification. I think one of the most elegant studies is an epidemiologic study in patients who, due to a genetic alteration make 50% less mutant huntingtin protein. And they have a delay in disease onset of about 9.5 years and a modified disease course. So the ability then to have an oral therapy like PTC518 that we've demonstrated is safe. We've demonstrated lowers mutant huntingtin protein and at the 2 dose levels we have in development right now between 20% and 50%, we're there. We believe this puts us in a position to have a constructive discussion with the agency. And so we've scheduled that meeting in December. We expect to use that opportunity to talk with the agency about how we meet their specific criteria for a surrogate marker and then understand what would a data package have to include for an accelerated approval. Now as you know, we're doing the PIVOT-HD study now. We had a data readout in June with the first 30 or so patients. We'll have the complete study readout in the second quarter of 2025 with a total at that point of 150 patients or so, which we believe could be a sufficient data set to substantiate the ability of PTC518 to safely lower huntingtin protein in that range of 20% to 50% and be able to also potentially show that that's correlating with benefits on clinical outcomes. One of the -- as I mentioned earlier, one of the really pleasantly surprising findings on just that small number of patients in June is that we were already seeing dose-dependent benefit on the cUHDRS scale, which is the disease rating scale on the total motor score. So if those types of trends continue, we believe we could have a data package that could support accelerated approval. But the first step is to have this conversation with FDA and make sure we align on them on what they would want to see.

Absolutely. And just on the safety front, how do you think about the maybe long-term implications of lowering the wild-type protein as well?

Yes. And this has been -- there's been a general concern about Huntington lowering because some of the earlier therapies had safety issues, but those were either due to the modality, for example, ASOs, which had their own toxicity or previous oral splicing molecule, branaplam, which did not have the specificity. It was repurposed from SMA, which tells you right away that you're going to have a risk of lack of specificity and then get into problems with toxicity. And so we're very excited to have the safety profile we've established now. You raised the point of the fact that we lower both the wild type and the mutant. And I think most agree that you can safely lower wild-type protein probably 50% to 75%. I mean there's even studies in nonhuman primates showing that you can lower wild-type protein 89% without any effect. But I think the proof is really in the clinical data we're collecting, which is as now we're getting patients out past a year and beyond, we're seeing a consistent profile of safety and tolerability.

That's exciting. When will we learn about what you hear from the FDA?

I'm going to live stream it now. No, we know a lot of people are really interested in understanding because it's -- as you mentioned, the thought that we could potentially leverage an accelerated approval pathway would be so beneficial to the field. And as we always say, we like to share regulatory updates once we have clarity. Sometimes you have clarity at the time of the meeting. Sometimes it's once you get the final minutes. Sometimes there's some back and forth afterwards. So I think as soon as we have clarity, and I don't mean to be vague, but once we're clear that we can share with everyone what the feedback is and what the next steps are based on that feedback, we'll do so. But again, we understand there's a great interest, and we'll try to share that information as soon as it's practical.

And in terms of the update next year in PIVOT-HD, but not pivoting away from HD in the conversation right now, sorry. What should we be looking for there in terms of validating mutant Huntington as a biomarker? Because you mentioned like there's a potential scenario where the FDA says, okay, potentially, we use this as a biomarker, but maybe we want to see more data correlating it with these clinical outcomes. So what do we look for in that data update?

So I think first things first, durability of Huntington lowering, I think, is going to be important. Now we did see in the 12-month data cut in June that out to 12 months, we're seeing durable reduction in huntingtin protein that appears to reach steady state at 6 to 9 months, but it will still be important as we move and get more patients out to 12 months that we substantiate that these are, in fact -- this is, in fact, the magnitude of Huntington lowering we can achieve at the 5-milligram and the 10-milligram dose level. Next, safety because, again, this is -- as you alluded to, there's always concerns about can you safely lower huntingtin protein. And we're really happy that, that has been the case thus far, but I think everyone will want to have the confidence with more patients that we're having the same safety profile that we've had so far. And then the correlations with clinical scores. So we are looking at things like cUHDRS, total motor score, total functional capacity. And so I think it will be good to see it would be hard in 12 months to say that you're going to have statistically significant clinical benefit because then we wouldn't be talking about accelerated approval. We're talking about approval. But the idea that you can see trends that in general, the fact that we're lowering huntingtin protein that in the early days of clinical observation, we're starting to see movement on things reflecting that this lowering of huntingtin protein is having a benefit.

Makes sense. And I could ask many more questions on that, but we'll move to Friedreich's ataxia. What drives your confidence in approval?

Yes. Well, look, I think we've talked with the FDA about our approval package and the fact that we had a 72-week placebo-controlled trial in pediatric and adolescent patients, that was the majority of the patients, and we were able to show a statistically significant effect on the upright stability component of the disease rating scale. And that's really important because it's now become well established that for younger patients, that upright stability subscale is the relevant and sensitive component of the disease rating scale, one, to capture disease progression, but then two, to capture treatment effect. In fact, when you look at the clinical trial data and you look at the placebo group on the other components of the disease rating scale, there's no progression, 0 progression. It's only looking at upright stability that you see loss of function and disease progression over the course of the study. And of course, that's where we have statistically significant benefit. Not only that, but it's now been well described, but those changes in upright stability scale predict that you're going to have a delay in loss of ambulation and using some of the algorithms that have been developed, the magnitude of statistically significant effect we observed in the placebo-controlled trial, translates to a roughly 9-month preservation or 9-month delay in loss of ambulation for 72 weeks of treatment, which is really, really good. We also have in that data set a correlation between the improvements in upright stability scale and improvements in the 1-minute walk distance. So again, another piece of data that bolsters the finding of significance in upright stability. And then when we look to the modified fatigue scale, we had statistically significant findings on that scale as well. And fatigue is the #1 symptom complaint of patients with Friedreich's ataxi -- and when asked, patients say, that's the symptom more than anything else we would want to address with a therapy. So when you put those data together from MOVE-FA, they're very compelling, they're robust and they're reliable. And they're gathered in the context of a therapy that has a very large safety dossier in pediatric patients going down to 1 year or 1 month of age. So putting all that together gives us a really strong basis for an approval application. And then we have the confirmatory events because FDA asked us to use the MOVE-FA data as the key source of efficacy, but they wanted supportive data. And they've asked for supportive data including a long -- an analysis of the long-term data. So what happens to the patients in -- after 72 weeks when they continue on therapy. And they asked us to do an analysis comparing 3 years of therapy on vatiquinone with an age and stage matched propensity matched natural history cohort from the robust Friedreich's ataxia natural history registry. Just for reference, this is the same request they had of Reata at the time for confirmatory evidence for SKYCLARYS. And we've recently completed those analyses, and we reported that after 3 years of treatment, we have a statistically significant 50% slowing of disease progression. I think the p-value is less than 0.0001. So as good as you could see in terms of slowing progression in the long term and confirming that what we observed in slowing disease progression over the abbreviated course of the clinical trial is manifesting over the long term as a continued meaningful slowing of disease progression. They also asked us to provide a long-term analysis from a study that was done many years ago before we acquired the asset, comparing 24 months of treatment with vatiquinone, again, compared to a natural history cohort using the Friedreich's ataxia database. And again, this is in an adult population that includes both ambulatory and non-ambulatory patients. And again, when we do that analysis, we have a highly statistically significant P less than 0.0001, 4.8 point treatment difference, which is equates to roughly 2-year slowing of progression in using the mFARS scale. So we have now with those 2 analyses that met their prespecified primary endpoint, checking the confirmatory evidence box. So we believe we now have a data package that has evidence of reliable efficacy from a placebo-controlled trial over 72 weeks. We have all the confirmatory evidence we need. We also have additional mechanistic studies, including some clinical biomarker studies and preclinical studies that show that we're having a relevant effect on biomarkers that relate both to the mechanism of action of vatiquinone as well as to biomarkers of the disease. And then finally, the safety profile. So when you put all that together, that's what gives us the confidence that we have a therapy that could fill a significant unmet need for Friedreich's ataxia patients.

And ahead of the filing, can you share some color from the recent FDA meetings?

Sure. So we've had a few different FDA interactions, the most recent of which was our pre-NDA meeting. And the pre-NDA interaction centered around confirming the evidence package we were going to provide to support efficacy, including the fact that we -- using the regulatory language, we'd be finding persuasive evidence of effectiveness from the placebo-controlled trial, along with confirmatory evidence from those open-label studies. We aligned the amendment on a lot of the formatting of the NDA, how we were going to pool data from different safety studies because the drug has been studied in a number of different studies in a number of different populations. And we were all aligned on the content and the format of the package, which is really the last regulatory check-in before we go ahead and submit.

And how do you think about the commercial opportunity, particularly in the context of the competitive landscape?

So the current approved therapy is for patients 16 and older. About 1/3 of the population is below 16. And actually, that part of the population is growing. One of the things that typically occurs when a rare disease therapy is approved is diagnosis increases. Disease awareness increases, diagnosis increases. The patients getting diagnosed are the younger patients. It's actually moving earlier and earlier. So in fact, the unmet need for pediatric and adolescent patients is growing. So that we would be the only approved therapy for that age group. And then, of course, as I referenced, we have data in adults as well. In MOVE-FA, there were adult patients. And in the earlier study, they are both ambulatory and non-ambulatory patients. So I believe we can be highly competitive with a safe, tolerable and efficacious drug for adults. And then, of course, we're the only ones right now for the pediatric and adolescent patients.

Makes sense. And heading into your ALS data, how are you thinking about that?

Yes. So as we mentioned in earnings last week, we're sort of in that zone now of data. So we're not taking questions on it because we're close, but we look forward to sharing those results.

I got it. Maybe just coming off the back of earnings, you alluded to the commercial performance across the board was stronger than I think a lot of us anticipated. Translarna and Emflaza for similar or different reasons, I guess, are kind of challenging to model. Can you walk us through how to think about this cash flow stream from here?

Yes, absolutely. So Pierre, do you want to take that?

Yes, absolutely. I mean for the rest of the year, we're very pleased to update our guidance for the rest of the year to $750 million to $800 million, which our team continues to obviously execute really we lay across the board and globally. And to Matt's point earlier, it will be the same team commercializing PKU, right? I mean we're ready for it for next year. As you know, these brands, I mean, Translarna, we talked about Europe, and it was 46% of our 2023 sales, but there's also an opportunity globally. So let's see how that goes. And Emflaza, we keep on fighting. There's one generic, but you saw sales are only down 15%, right? So again, we know how to commercialize in a genericized market, and the team continues to execute.

Great. Well, I think we're out of time, but thank you so much for joining us.

Thank you very much, Ellie.