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

Okay. Okay. Thank you. Good morning, everybody. I'm Eric Joseph, senior biotech analyst with JPMorgan. Our next presenting company is PTC Therapeutics and CEO, Matt Klein, is going to be talking us through the story. There's a Q&A after the presentation. Just raise your hand, we'll get a mic over to you. And for folks that are tuning in via the webcast, feel free to submit a question via the portal. And yes, we'll pick them up. With that, Matt? Thanks for joining us.

Thank you, Eric, and good morning. Last year, I stood on this stage and talked about how PTC had made a number of significant changes and shared ambitious 2024 plan for building the PTC of the future. Now I realize a lot of people didn't believe that we could achieve all that we said we would and so quickly transform the company, but we did. And I can proudly report that the future is now. This morning, I'll review a number of our 2024 accomplishments and share our plans for 2025 and beyond. Before I get started, I refer you to our forward-looking statement slide as well as to our SEC filings for a description of risks and uncertainties. 2024 was a year of outstanding execution across every part of the company. We achieved all clinical and regulatory milestones on time, including submitting 4 approval applications to FDA, setting us up for the possibility of having 4 U.S. commercial launches within 12 months. We had another year of outstanding revenue performance exceeding guidance, which, along with our effective OpEx management, gives us line of sight to being cash flow breakeven in the near future. We built a strong cash position, $2 billion pro forma to adequately fund our planned commercial and R&D activities and allow us to engage in meaningful business development to accelerate revenue growth. And through our efforts to focus our R&D pipeline on our highly differentiated scientific platforms, including splicing, we're preparing the next wave of innovative PTC products. Let me dig deeper into these 2024 accomplishments. We submitted 4 approval applications to the FDA, 1 for our AADC gene therapy, Sepiapterin for PKU, Translarna for nonsense mutation DMD and Vatiquinone for Friedreich’s ataxia. Our AADC gene therapy KEBILIDI was approved in November and became the first ever direct-to-brain administered gene therapy approved by FDA. The Sepiapterin and Translarna files were accepted for review, and those reviews are ongoing and for Friedreich’s ataxia, we expect to hear from the FDA in February about the filing decision. 2024 was another year of outstanding revenue performance with total unaudited revenue of $814 million, exceeding our revenue guidance. This revenue performance was driven by our in-line products, including our DMD franchise in spite of significant headwinds for both Translarna and Emflaza. This revenue performance is a testament to our commercial team's ability to effectively execute around the globe even in genericized and competitive markets. With this revenue performance, effective OpEx management, our rapid and robust monetization of the priority review voucher received as part of the KEBILIDI approval, we closed 2024 with over $1.1 billion in cash. This strong cash position enables several important things. It allows us to reach cash flow breakeven without additional capital. It also supports all of our planned commercial activities, including our commercial launches and allows us to invest in our R&D programs, and it gives us capital to participate in business development activities that can complement both our commercial and R&D portfolios. In addition, when we consider the uncertainties in 2025 on a more macro level, having this capital allows PTC to control its own destiny. In addition, in 2024, we continued to build out our highly differentiated research platform including splicing and inflammation and ferroptosis. We now have a number of preclinical programs that will look to advance towards the clinic in 2025. In addition to being a source of PTC developed and commercialized therapies, we plan to leverage these platforms as a source of strategic partnerships for noncore therapeutic areas. I'm incredibly proud of all that we accomplished in 2024, and we're just getting started. In 2025, we expect another year of strong execution and success. We have a number of potential value-creating milestones expected including the global launch of Sepiapterin, the data readout from the PIVOT-HD study of PTC518 and a number of regulatory decisions, both in and outside of the U.S. We're providing a wide initial revenue guidance for 2025 of $600 million to $800 million, given the number of pending regulatory actions that could impact revenue. For OpEx, we're providing guidance of $730 million to $760 million, including expenses associated with the ramp-up of commercial material in preparation for our Sepiapterin launch as well as costs associated with ongoing clinical studies. I'll now share our 2025 plans for our key programs, starting with our Sepiapterin PKU program. We're preparing for the global launch of Sepiapterin in 2025 and our teams and the PKU community couldn't be more excited for this launch. As we've discussed, despite there being 2 approved therapies for PKU, there remains a significant unmet need for PKU patients as the vast majority of patients are not well served by available therapies. Sepiapterin has demonstrated the potential to address this unmet need. Sepiapterin has a dual mechanism of action. First, as a available and highly potent cofactor that can provide greater lowering of phenylalanine than administering BH4 itself. The second mechanism of action is as a chaperone that allows for treatment benefit in patients who are considered nonresponsive to BH4 therapy. This potential for benefit across the full spectrum of PKU patients has been confirmed in our clinical studies. In Phase III APHENITY trial, we demonstrated highly statistically significant and clinically meaningful benefit across the full spectrum of PKU patients including classical PKU patients, those with the most severe form of disease. Over 80% of patients reached targeted levels of phenylalanine of less than 360 micromolar per liter, and 22% of patients achieved normalization of phenylalanine levels, something unheard of in clinical trials. In our fee tolerance protocol as part of the ongoing affinity extension study, we continue to demonstrate that patients are able to liberalize their diets and have greater protein intake then would be recommended for someone without PKU while still maintaining control of phenylalanine. These findings of fee tolerance benefit are incredibly meaningful to patients. While these clinical data speak volumes about the potential of Sepiapterin to meet the unmet need of the PKU community. The words of physicians and patients them sells strongly substantiates this potential. We've heard from a number of physicians such as Dr. Ania Muntau, how they're willing and ready to trial all of the patients, including those on current therapies on Sepiapterin once it's available. The potential of Sepiapterin to provide meaningful benefit to classical PKU patients, those most severe patients was recently highlighted by Dr. Harding in a commentary that accompanied the publication of the Phase III APHENITY results in the Lancet. Perhaps most meaningful are the words of patients themselves. Time and time again, we see anecdotes on social media from patients about being able to liberalize their diets and enjoy meat, fish, pizza and other foods that they were never able to enjoy before while still maintaining fee control. From a commercial standpoint, the clinical data support the potential for Sepiapterin to address all key PKU population segments, including patients who have failed current therapies, patients who are not worth controlled or tolerating current therapies and therapy-naive patients, including those of classical PKU. When one considers the size of the PKU population, the strength of our clinical data, the experience of our commercial teams and our ability to price Sepiapterin at a premium to Palynziq. We believe the revenue opportunity for Sepiapterin exceeds $1 billion, and we believe we could reach that level in the U.S. alone. Our customer-facing teams are in place, and launch plans are well underway. We've mapped centers of excellence and key opinion leaders. We're actively engaged with PKU centers including nurse practitioners and dietitians who play an important role in patient care, diet management and prescribing decisions. We've had ongoing discussions with payers and we remain close to the patient community, which is well aggregated and working with us to ensure that we can meet the needs of patients as Sepiapterin becomes available. Turning to the Vatiquinone program for Friedreich’s ataxia. In December, we submitted the NDA for vatiquinone for the treatment of children, adults with Friedreich’s ataxia. If approved, vatiquinone would be the first therapy for pediatric FA patients. The NDA includes evidence of efficacy from the placebo-controlled move FA study as well as the results of 2 long-term studies that demonstrate benefit in slowing the long-term progression of disease. We expect to hear from FDA about the filing acceptance in February and if priorities view is granted, we could have an approval decision by August of 2025. Here are some of the data included in the NDA supporting vatiquinone efficacy. In the 72-week placebo-controlled MOVE-FA study, statistically significant benefit was demonstrated on the upright stability scale, the most relevant and meaningful measure of benefit for the pediatric and young adult patients enrolled in the study. This slowing of decline on upright stability translates into a meaningful delay in time to loss of ambulation. In addition, the benefits on upright stability were supported by significant findings of benefit on the physical component of the modified fatigue scale as well as the evidence of benefit on the 1-minute walk distance. In addition, the NDA includes results from 2 long-term studies, both of which met their prespecified primary end points. The first study includes data from the long-term extension of the MOVE-FA study, in which patients treated with vatiquinone for 3 years were compared with a matched natural history population from the robust and well-respected FA natural history database. In this analysis, following 3 years of vatiquinone treatment there was a 50% delay in disease progression, a result that was not only highly statistically significant, but clearly clinically meaningful. In the second study, we analyze data collected from a study years earlier in adults, both ambulatory and non-ambulatory with Friedreich’s ataxia. In this analysis, following 24 months of treatment, there was a 4.8 point benefit on the mFARS scale, signifying again a significant and highly important delay in disease progression. When we take the placebo-controlled results and the long-term study results together, we clearly see that vatiquinone provides meaningful short- and long-term impact on disease progression for patients of all ages and disease stages. Despite the approval of SKYCLARYS, there remains a significant commercial opportunity for vatiquinone. In United States, there are approximately 6,000 patients, about 1/3 of whom are pediatric and for whom there is no approved therapy. In addition, there's a large number of adults in the U.S. and outside of the U.S. who are not currently on SKYCLARYS treatment for any number of reasons. When one considers the safety and efficacy data of vatiquinone, particularly in children, it's clear that vatiquinone can meet the unmet need of the pediatric population and become the treatment for patients under the age of 16 and provide a safe, effective and well-tolerated alternative therapy for adult FA patients. Our teams have begun launch preparations and we continue to work closely with the FA patient community with whom we've enjoyed a long-term relationship. We're again working closely with the community to be ready to meet all the needs of patients as we move closer to a potential launch. Turning to our PTC518 HD program. In the second quarter of this year, we plan to provide the complete 12-month results from the PIVOT-HD study. PTC518 comes from our splicing platform and follows the successful discovery and development for Evrysdi, which is now the largest global SMA therapy. PTC518 is a highly differentiated Huntington lowering therapy. It's orally bioavailable, highly selective and specific for its HTT target, achieved excellent and broad CNS exposure and allows for a uniform Huntington lowering in every region of the brain. In addition, in our clinical studies, PTC518 has been shown to be safe and well tolerated without evidence of NFL spikes. It's this unique combination of characteristics that makes PTC518 one of the most promising, if not the most promising disease-modifying therapy in development for Huntington's disease. In June of last year, we shared the interim results from the PIVOT-HD study on the first approximately 30 patients who completed 12 months, and this data readout met all key objectives. We demonstrated dose-dependent and durable lowering of mutant Huntington protein in blood and demonstrated dose-dependent lowering of CSF mutant Huntington protein levels in line with what was recorded peripherally. In addition, we demonstrated dose-dependent benefits on several clinical scales, including the total motor scale and the cUHDRS and again, importantly, PTC518 was shown to be safe and well tolerated. In the second quarter of this year, we plan to share the results from all patients at the 12-month time point. These results will include safety and tolerability data, biomarker data, including Huntington protein and other biomarkers as well as data on clinical scales and include both Stage 2 and Stage 3 patients. Based on our discussions with FDA, the results of this study could support Huntington lowering as a surrogate endpoint for accelerated approval. In December, we had a Type C meeting with FDA and there was alignment with the agency on the potential of Huntington lowering to be a surrogate endpoint, including the scientific rationale and FDA asked that we buy additional data such as those we're going to be reporting out from the PIVOT-HD study that show a link between changes in Huntington lowering and clinical scales. Late last year, we announced our new collaboration with Novartis for the development and commercialization of PTC518. And I'm proud to report as of this past Saturday, that deal has officially closed. As part of the agreement, Novartis will assume all development and manufacturing and commercialization of PTC518 following the completion of the placebo-controlled portion of the PIVOT-HD study in the first half of this year. And per the agreement, PTC will receive $1 billion upfront, up to $1.9 billion in development, regulatory and sales milestones. PTC will have a 40% U.S. profit share, double-digit geared royalties on ex U.S. sales and Novartis will fund all future development activities, including the Phase III trial. PTC is proud to have pioneered the field of splicing therapies, and we're well positioned to continue to lead it. The team is responsible for the successful discovery and development of SMA and HD programs have only gotten smarter. We've made a number of key learnings that have expanded the set of potential druggable splicing targets, and we've streamlined key processes that are part of the discovery plan, one such advance is PTC. PTC is a proprietary screening engine that allows for rapid and reliable identification of potential hits for specific splicing targets. PTC has significantly accelerated elements of our preclinical time lines. We now have a number of active splicing programs both CNS and non-CNS indications that will look to bring forward closer to the clinic in 2025. We've also made significant progress on our inflammation and ferroptosis platform. This platform focuses on targets that are key to the inflammation and oxidative stress pathways known to underpin a number of different diseases. We have several active programs targeting both CNS and non-CNS indications that we'll work on in 2025, including a Phase II-ready DHODH inhibitor, which will be developing for neuroinflammatory conditions. We have an NLRP3 program that we're going to be moving towards IND-enabling studies in 2025 as well as preclinical programs targeting alpha synuclein and NRF2 activation that we'll look to bring forward in 2025. We are proud to have built PTC into a strong, innovative and well-capitalized company. As we look to 2025 and beyond, we have line of sight to being cash flow breakeven. And we've set as an objective having a path to reaching $2 billion of top line revenue, which we could reach with our current programs pending 2025 regulatory decisions. In addition, with the PTC518 collaboration agreement with Novartis, we are well positioned to enjoy a potential significant financial upside based on PTC518 commercial success. From an R&D standpoint, we have 2 highly differentiated and validated scientific platforms that can be a continuous source of innovative therapies for PTC and possible strategic partners. And as we build the company forward, we'll continue to use business development to accelerate revenue growth to that $2 billion mark and beyond. In conclusion, we entered 2024 with an ambitious agenda to position PTC for future success with the many outstanding achievements of 2024 and our demonstrated ability to effectively execute across every part of the business. I can confidently state that a future is bright and the future is now. Thank you.

We have some time for questions. And so if you have any, just raise your hand, we'll get a mic over to you. But just picking up on Sepiapterin and PKU with the approval and approaching approval decision and approaching launch. You commented on your pricing expectation here, anticipating payer support for a price point -- a premium to Palynziq. Can you just talk a little bit about sort of the just the feedback from payers, a little bit sort of the value proposition that you're taking to payers that gives you confidence in being able to support that premium price point they anticipate?

Yes. I think one of the things that's really important, Eric, with PKU is the clear understanding that the name of the game is lowering phenylalanine levels and doing so in a way that's safe and well tolerated for patients. And so when we can show payers the data that we have showing incredibly strong phenylalanine levels across the full spectrum of patients as well as our fee tolerance data, there's no question that we're able to really achieve superior results in terms of fee lowering. And then when you also consider the tolerability profile of Sepiapterin and its suitability for both pediatric adult patients, it's clearly a highly differentiated therapy that based on its safety and efficacy profile would support pricing at a premium to existing therapies, including Palynziq.

And once in the market, I guess, how to think about where new starts on drug will sort of originate? Is there sort of a low-hanging fruit opportunity that you expect to target first?

It's a great question. And I smile a bit because the short answer is yes. The longer answer is that low-hanging food varies depending on which physician you talk to. We've had a number of physicians such as Dr. Muntau, who is one of the leading global KOLs for PKU who said, "Look, I'm going to try all my patients on Sepiapterin." Based on mechanism of the data we have those patients who, for example, are well served on Kuvan. If you're getting a benefit on Kuvan, again, based on mechanism and our data, you're going to have a much more superior result with Sepiapterin. So for some docs, the low-hanging groups switching existing patients towards a potentially more efficacious and tolerable therapy. Others, of course, are keen to try those more severe patients, classical PKU patients who have not been served by existing therapies given how significant their high levels of phenylalanine are. So and then there's patients who fail current therapies who have documented Kuvan failures or generic BH4 failures who then could be easily transitioned to Sepiapterin where rapid exposure in blood test can shows superiority in terms of lowering phenylalanine which could support reimbursement. So the short answer is there's a lot of sources of low-hanging fruit. I think the important point here is that our data support our ability to address all patient segments and it may differ based on physician to physician in terms of which patients they target first, but our teams are ready and look, we're looking to get to any patient we could possibly help, which is obviously, we believe, is a large portion of the population.

Question over here?

Yes. I just wanted to ask about your thoughts on the accelerated approval using HTT as a surrogate endpoint and how you're thinking about that relative to the FDA's views on, for example, UniQure's therapy?

Yes. I think the important point here is the FDA has shown a willingness to leverage the accelerated approval pathway for neurodegenerative diseases for when I think are reasons. When we think about Huntington's disease, we're in a unique situation where we actually know what causes the disease in all patients. It's a mutation in the Huntington gene. And so when we go to have discussions with the FDA about we'll be a reasonable surrogate endpoint, there's certainly a wealth of scientific literature that supports that lowering Huntington protein has benefited. This has been shown in preclinical models and also very nicely in an epidemiologic study in patients who make less Huntington protein and have a delayed disease onset. So in our discussions with FDA, there was clear alignment on the scientific rationale and a simple ask was for us to provide some more data from the large readout we're going to have in a few months, that shows that what has Huntington is moving, there's some relationship with some of the clinical scores. So I think there's some misconception sometimes that there's the path for accelerated approval for Huntington disease. And I think from a regulatory standpoint, it's a path, a path in which you can provide the necessary evidence to support an endpoint to serve as a surrogate for accelerated approval. And the conversations we had with the agency were certainly encouraging that Huntington lowering could be one of those end points.

I guess in the analysis, you're proposing to the agency that would help support the relationship between mutant Huntington lowering and clinical scales. I guess, are there certain particular clinical scales at the agency wants you to focus on demonstrated improvement and relate those to mutant Huntington lowering. Just maybe a little bit of a sense of the analysis that you're going in with leading up to the additional 12 month readout later or this half?

So the agency was not prescriptive in terms of the specific but we know that the kinds of clinical measures we're using in PIVOT-HD are certainly appropriate to do that. And on the written feedback, they use words like associations, just show the things were associated there's movement in one that predicts movements in the others. So again, there was not a prescriptive analysis plan that was needed. It was more looking at the data holistically and saying, can we show some relationships between what we're observing in HTT lowering and changes in clinical scales which makes sense, right? The idea of accelerated approval is likely to predict clinical benefit not definitive evidence of clinical benefit, statistically significant clinical scales, but show that there's a relationship here that supports that as we're changing or as we're lowering Huntington protein we can believe that they'll ultimately, in the long term, be a clinically meaningful benefit to patients.