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

I'm Tazeen Ahmad. I'm one of the Senior SMID biotech analyst here. It's my pleasure to have our next presenting company with us, PTC Therapeutics. Sitting next to me and presenting for the next 30 minutes will be Matt Klein, who is the CEO of the company; as well as Pierre Gravier, who is CFO. Gentlemen, good morning, thanks for coming over from New Jersey to see us.

Good morning. Thanks for having us, Tazeen.

So I've been starting off all the conversations with macro questions. I'll ask you in the order of most recently occurred macro events. Can you talk about the executive order that was announced yesterday to the extent that you can.

Yes. I think as you put very clearly in your note about the executive order, it was a lot of let's just say, bark without a lot a clear indication of what, if any ramifications there would be for companies. So this is going to be -- let's see what develops. I think from our standpoint, given again, as you also highlighted in your note, our current revenue is more ex U.S. than U.S. And then also as we think forward to our PKU launch, this is a product where for a rare disease, there's a disproportionate high commercial mix. And also, whenever we think about pricing and a launch, we think very carefully about a global pricing corridor to ensure that we can be commercializing the drug and maintaining the value of the product. So these are things we always think about. So all that is to say while there are no details now, if there would be any potential impact, we imagine very little, if anything were to evolve in terms of more specific MFH type pricing constructs.

Okay. So just to clarify, for PKU, are you expecting to price this at a narrow range?

So we will have a pricing corridor that will keep again, allow us to maintain the pricing that we've talked about and getting the value for the therapy.

Okay. And then can you talk to us about tariffs in general?

Sure. Again, a lot not known. And we think in any scenario, we're in a very good position. First of all, most importantly, the IP for our U.S. products is domiciled in the U.S. That means there's no issues in terms of transfer pricing. It's a U.S. owned product. So even for those that are manufactured or have raw materials, which come from outside of the U.S. at worse, you're talking about a tariff on COGS or a portion of COGS, which would be quite low. So really minimal, if any, impact to the bottom line.

Okay. And then lastly, on your interactions with FDA.

So we've had a lot of actions -- interactions with the FDA with 3 applications pending. And as we've talked about, we have seen no impact really of any of the FDA changes impact -- we haven't seen impact in terms of the people with whom we interact. We've also not seen any impact in terms of cadence of nature of interactions. Our PKU NDA, which is under review. We've talked about having the typical contact and back and forth with the agency. We've moved through most of the review. We held our late-cycle meeting with FDA last week on schedule, and it was clear from there that we are mostly through the review with just agreement and alignment on post-marketing commitments left. So for us, that's a really good sign that the review has progressed well, probably ahead of schedule and we remain confident of an approval, if not before the PDUFA date, certainly by the PDUFA date. And similarly, with Friedreich's ataxia NDA the interactions have been very typical in terms of the cadence and nature for a priority review application. Inspections are ongoing. So everything is looking exactly as it should look, which gives us, again, confidence that we have not going to have an impact of any changes that have occurred at the agency.

Okay. When we spoke on Zoom a few weeks back, there was one thing that you had mentioned about said all these things about hasn't really changed with FDA. But in relation to AdComs, you had made a comment along the lines of potentially the folks who arrange for advisory committee meetings might have been somewhat impacted by changes. Is that something that you've been able to get color on?

We have not gotten color on it. That was just based on our understanding of some of the changes in staffing that had occurred. In terms of our programs, there was never an expectation of an AdCom for PKU. When we had the application accepted for Friedreich's ataxia. The agency said they had not yet decided on the AdCom. They had given us the feedback in the mid-cycle meaning they don't anticipate an AdCom. And similarly, we do not anticipate an AdCom for the Translarna NDA just in part because I think the neurology division understands the disease quite well, understands the endpoints quite well.

Okay. So let's talk about Translarna as it relates to Europe. So it's a drug that doesn't exist but yet exists -- is what I'd like to say. So you continue to record sales, how are those sales occurring now?

Yes. So again, this is, once again, with Translarna, a unique situation. The negative opinion from the CHMP was formally adopted by the European Commission on March 28 as part of their adoption of the opinion, the commission as far as we can tell for the first time invoked the ability of countries to leverage a pathway known as Article 117 of the European parliament, which basically says that countries can import and sell a drug that's no longer licensed. And what that has allowed us to do is to pursue a strategy that we had long planned for, which was to try to work country by country to see if we can continue to commercialize the drug. Now to be clear, what Article 117 does is it enables the individual countries to find their own individual mechanisms by which the drug can be commercialized, and that can be in early access pathway and the patient pathway. And what we've seen thus far, I think Eric alluded to this on our earnings call last week is about 50% of countries have expressed an interest thus far and continuing to commercialize the drug. We have begun shipping the drug, receiving payments for the drug in several countries. And unexpectedly, we've also heard about interest in new patient starts. Again, which is something we didn't anticipate. And for -- as you said, for a drug that doesn't exist, the dollars or the euros are real, they exist. And we said, look, in terms of guidance, we said, look, we believe we can do somewhere around 25 -- achieve about 25% to 30% of European revenue the rest of this year. I think that's a number we're comfortable with for now. As we see how this evolves, we can certainly update that.

I mean it could be higher.

Sure. Look, again, I think it's sort of this moment where you say with the fact that we're talking about revenue for the longer authorized drug is incredible. And from our standpoint, we have really talked about wanting the European business as well as Emflaza business to really bridge us to the PKU launch, which is done. And now we're in a situation where we're getting ready for the global launch of sepiapterin, which will be significant revenue for us and really the foundation for future growth and yet this bridge still gives. I mean we're continuing to garner revenue, which is great and being able to provide patients with a drug because there really is nothing else in terms of therapy for nonsense mutation boys. So it's a great situation to be in, and we'll continue to bring the drug to as many patients as we can.

Okay. So you talked about PKU, and that would have a large commercial contribution, both dollar-wise in terms of how it's reimbursed commercial payers. DMD on the other hand, does have a significant Medicaid component, right?

Yes. I think that's a higher Medicaid population due to the disability of the patients.

So then if approved, would that complicate the U.S. launch as it relates to the first question we started off with on MFM?

I think very hard to know. Again, I think one of the questions that has come up is if there's -- first of all, we welcome the opportunity to launch in the U.S., and we've said we have about 150 boys on drug now that we can convert to commercial drug very quickly. And with our Emflaza database, we have insights into additional nonsense mutation, boys and young men that we can get on the drug. And obviously, our team knows the community very well. So that will be a very meaningful opportunity. In terms of a potential impact of MFM look, I think it's unclear whether there would be anything for whether it be Medicare Part B, whether it be Medicare, Medicaid and Medicare Part B. And if it's Medicaid, what's not really clear is would this basically when you end up charging the same amount as you would now take into consideration discounts. So it's -- because there's a rebate that we do now for Medicaid patients. So it's unclear if there'd be any impact.

Okay. Got it. So then how should we be thinking about expectations you've talked about the strength of the Translarna data. We -- I go back with Translarna in the very beginning...

Before my time right now.

And so if this makes it this last attempt to get it approved, does get it approved, how should we be thinking about investments of resources from PTC into this launch?

Yes. So look, we believe the data set, as we talked about it last year, we've talked about it that we believe it supports approval. And I think the functional data for the drug are stronger than any Duchenne drug that's been approved by the FDA and the safety record is very clear. We've also been very clear that we're realistic. The history is long, it's challenged. And we -- you're certainly not seen any of us running out saying, this is a high probability event. This should be your investment thesis in PTC. We see it as a very valuable free call option because if it is approved, we know the community quite well. Our infrastructure is in place. There's nothing more we would have to do. We'd be able to ramp quite quickly having 150 patients on drug that we can convert to commercial drug. We understand their payers. We understand how that works. We're very well connected with the Duchenne community. And I think right now, in the Duchenne community due to recent developments, there really is an increasing desire. It's always been there, but the desire for a safe therapy that's known has shown to be effective and durable I think, is a very important -- those are very important factors to the patients and families in the community.

And what about the comments that Dr. McCarrey has made about continuing to focus on rare disease. Do you find that encouraging for Translarna's prospects as well.

Yes, it's a funny. I mean it's, again, a long road. But yes, I mean, the short answer is yes. And I think even -- I think Dr. Prasad's comments, which geared a lot of people when they first made and his subsequent comments softened quite a bit. But I think there is this desire to get safe therapies out to patients with rare diseases where there's unmet needs. And I think that's important for Translarna. I think that's important for vatiquinone as well where you have an unmet need and a drug that has a strong safety record for children.

Okay. So let's move on to the PKU launch, which is a much more traditional launch for the company. Can you just remind us on where you are with that?

So we've been planning for this. We're ready. We're ready for the global launch. We talked about how the CHMP opinion was a great first step. We expect adoption within 60 days. We will launch first in Germany to take advantage of the 6 months of free pricing. So we expect shortly after adoption of the price we publish at [ Lax ] and we'll begin commercialization to accelerate launch in Germany, we initiated an early access program. That's been very successful both in terms of getting patients in Germany on drug who by law as soon as its commercial get turned over to commercial drug? But it's also been great to get us into the top centers in Germany, increase physicians aware get their use of the drug, all of which will allow us to ramp quite quickly in Germany. We're also exploring other countries where we can avail ourselves of early access. In terms of infrastructure, this is the Translarna infrastructure. They can easily handle PKUs. There's a lot of center overlap. And I think based on our earlier discussion, there's no question about the ability of this team to execute under the most challenging circumstances with a data package that probably is not as strong as the PKU data package. So I think all that bodes really well. In the U.S., we have built the team. We've -- it's in place. We have everything ready to go not only in terms of the sales team in terms of our patient services team. This is a really important component of what we do. People have asked us, how have you been able to maintain Emflaza revenue in the face of generics and also other competitors, non-generic competitors. And one of the secret sauces, if you will, is this patient services team that's well integrated with the patients and the families and the physicians walking them through prior edits, walking them prior auth, walking them through step edits. All -- and that team we bulked up and is ready for PKU. And on the medical side, we've been working not only with the commercial teams to map the 103 centers of excellence in the U.S. understand the dynamics at those centers who are the decision-makers. It's often not only the physician but also nutritionists and dieticians. We've added them nutritionists to our medical team. So we can do a lot of peer-to-peer interactions and support appreciating how important those folks are in the decision-making, understanding at each center, how are the teams at those centers viewing the priority for launch? Is it the existing Kuvan patients since they know that we're going to have a superior effect in terms of fee lowering based on our data. And so it's basically switching a one once-daily therapy to one that should be much better for patients. Or is it the therapy-naive patients, who are classical patients who we believe we can treat based on our data to date, the trial and our mutation data. And so just understanding where each of those centers want to go. So this is way down the road. And in fact, we've said if the approval were to come early, we're ready.

Now can you talk to us about the competitive landscape as in like what do patients currently take and we'll talk about some potential advantages.

Yes. Absolutely. So there's about 17,000 individuals with PKU in the U.S. It's newborn screening, so there's no patient identification. These are patients are diagnosed at birth. There's the 2 therapies. There's sepiapterin, which is basically giving BH4 directly. It's both the branded form of Kuvan and how the generic forms, which are available. an Palynziq, which is indicated for only for adults, which is an injection, which has become, I thought of it as a second line or last line of therapy. What we understand is at about 10% to 15% of patients most are on one of those therapies. So you're talking about 85% to 90% of patients not on those therapies.

And why is that?

For any number of reasons. I think first, for patients with PKU, the goal is to be able to liberalize diet. To be able to get off or at least have a break from their highly restrictive low-protein diets. And so if you're going to take a therapy, it's got to be able to bring you a benefit in terms of dialiberalization. And our understanding is the experience with sepiapterin either branded or generic hasn't been such that it's allowed patients to do that. And so that's why not a lot of patients are on that. And then in terms of Palynziq, first of all, it's adults only and it's -- while it has efficacy that's been shown, its tolerability profile is challenging. I think all patients have to carry an EpiPen with them due to the high risk of anaphylaxis. I think somewhere between 80% and 90% of all patients have adverse events with the drug. It can sometimes be a 2-year period for titration to actually get to maximal therapy. And so it's a very hard drug to use and so then when you think about Sapiens or sepiapterin, this is an oral drug once a day, well tolerated with very strong evidence of fee reduction and high liberalization. So it's all there in terms of what the patients would want in a therapy.

Yes. So as you describe it, this seems sort of like a layup in terms of launch. So but nothing over right? So what is it that you're focusing in on? Are you trying to switch patients from the 2 drugs that you just mentioned initially or are you trying to get to those, let's say, 85% of patients that are not on anything?

So the short answer is yes. And so I think if you think about this launch, and we've talked a lot about the opportunity and believing that it could be $1 billion plus opportunity because of the size of the population, the percentage of patients on drug a therapy currently, which is quite low, so a significant unmet need. The strength of our data set in terms of showing that anyone who's been on sepiapterin by the brands that are not and had a benefit, those patients consistently have 50-plus percent later benefit on our drug. And the team, we talked about the team's ability to execute in a competitive and genericized environment, which we can do. And we think we have the data support our ability to penetrate each of those segments. And we've heard some physicians say, look, for us, the switches will be the easiest thing to do, patients who are on sepiapterin can switch very easily and into every once a day therapy. It could be that large segment of those who've tried and failed didn't get enough benefit so that they can liberalize their diet. Those patients want a drug and the therapy naive who are typically the classical PKU patients are those with what are known as non-BH4 responsive mutations, mutations that don't allow them to have a benefit from sepiapterin and we've shown in our trial, most recent data from our pivotal trial that over 70% of the patients in that trial had those types of mutations. And of course, we have a tremendous response rate and magnitude of response. So each of those are playing out as groups of patients that the physicians want to treat and the patients themselves are speaking. We see them on social media, we hear their feedback of wanting to try. So exactly which will be the first segment to get on drug is going to vary center by center in a position by position, but we know we have the data to support each of those segments are going to work -- obviously, work to get as many patients on as quickly as possible.

So most recently, you talked about just general ideas about pricing. You talked about pricing at a premium to Palynziq. So to me, that was a little bit on the new side relative to what you've been talking about historically. So I guess, what's changed that gives you the confidence that, that kind of price premium is justified and would be reimbursed?

Yes. I think the -- talking about it came as a result of our discussions with payers and the payers realization that for payers, it's all about the value. And for PKU, it's a known entity and phenylalanine lowering equates to value for the payers. And when you look at our data showing 63% lowering in the pivotal trial in the overall population, 69% lowering in the classical patients, 84% of patients coming in to guideline of target phenylalanine level of less than 360 micromoles per liter. That's value. And when you take that efficacy along with the safety and tolerability profile that packaged together supports the pricing at a premium to Palynziq.

So if you do the math, I mean you only need like low double-digit percent penetration into this population to be not that far away from $1 billion and so.

Yes. And that's why we've said we obviously will be more granular about pricing once we get the label and approval. But that's why we said we believe this could be a potential $1 billion plus opportunity in the U.S. alone because if you do the math on the size of the population, what would be typical penetration for a differentiated orphan product, multiply that by price and know that we have a team that's able to execute those numbers become very real, very quickly. And that's the U.S. alone, and then you say, look, we have a global commercial infrastructure. We're going to be very thoughtful about launch sequence and pricing corridor. We've talked about what we're doing in Europe. We have the JNDA for Japan pending in -- we expect approval in December of this year, which would enable a Q1 Japan launch of 2026. And that's a very valuable market as well. You start appreciating that the global opportunity here is very strong.

And how are you thinking about -- what is the IP estate for this as well?

Yes. So we've guided that we have IP out to 2038 and then with patent term extension, even conservatively to 2039 potentially beyond and we're continuing to build it.

And how has the population split U.S. and ex U.S. Is it equal?

So it's about 58,000 globally in markets where we commercialize. We said it's about 17,000 in the U.S. For our own forecast, we've said we believe the ex U.S. revenue opportunity could be close to 50% the U.S. opportunity.

Okay. Are you going to be ready to launch on day 1 after approval?

We're going to be ready to go. We -- again, this is a lot having the experience of the teams and understanding what we need to do and how it start forms look like prior ops might look like in the cases where there are payers who are going to ask for step edits, how that can look and we're ready for it.

Okay. So maybe let's move on to PTC518, which actually a lot of people say, if you're excited about PTC, this is the reason to be excited. So would you agree with that comment?

I think there's a lot to be excited about. I think if you're talking about a product, the size of PKU and the opportunity PKU and our commercial engine. That's a revenue level for a company like us, you should be very excited about. And I think PTC518 is a product of our splicing platform that could be the first ever disease-modifying therapy approved for Huntington's disease. I'd be excited about that, too. So I think there's a lot to be excited about.

Can you maybe just talk to us about -- there are several companies that are trying to do treatments for Huntington's and it's kind of been a graveyard, it's a challenging disease to really drug. So can you talk to us about the data that you've presented so far? And the most recent data set, do you think that there was did the market not appreciate certain -- to a certain level, what you were going to show versus what they expected you to show?

Yes. Very good questions. I think your premise Tazeen is exactly right. There's a hard, hard therapeutic area, and it has been a graveyard. And when we started the PTC518 program, we believed that this could be a promising therapy because we have a drug for neurodegenerative disease that is targeting the cause of the disease. That's very rare in neurodegenerative. First for it's rare and in a neurodegenerative disease that we actually know what causes it in the majority of patients. And in this case, it's a toxic mutant huntingtin protein and we have a drug that can directly address that. So that was a very promising start. When we designed this program, it was really about saying, look, this is going to be tough. And as we move through the development program, let's make darn sure that each step of the way, we're learning the things we need to learn to increase our probability of success. And when we design the PIVOT-HD study, this was all about understanding does the drug work? Does it do what it's supposed to do in terms of lowering cellular huntingtin protein. Does the drug go where it needs to go to have that effect? In other words, are we seeing CNS exposure that we need to see for it to work in the brain. Three, is it's safe and well tolerated, and that's been a big question in Huntington lowering therapies. And fourth, can we learn how to study it? What is the optimal population because when we started this program, we said, gosh, a lot of therapies are going really late in Huntington's disease, and it's hard to think about modifying the disease if it's been churning along for 50 years in the patients at end stage and so we set this up studying Stage II patients who we thought would be the optimal population, adding a cohort of early stage III patients to really test the hypothesis. And so when we look at the data readout, including last week, we've ticked all those boxes. And this is a data set now that's shown that the drug is working how it's supposed to work with dose-dependent cellular huntingtin protein levels. We're getting exposures in the CSF greater than in the plasma, great. It's safe and well tolerated and the data at the 24 months shows that. We have early signs of clinical effect at 12 months seeing things move that should move in the stage 2 patients. We learned that probably Stage 2 is the right population. And I think people's reaction to those data were, "Oh my God, it doesn't work in Stage III there is no way. No, that's actually an incredibly valuable learning and what you need to learn in Phase II, who to study the drug in. And so we actually -- that was a great learning for us and our partner, Novartis. And then when we got out to 24 months, we say, wow, we're seeing continued trends of clinical benefit first natural history. We're seeing NFL a well-acknowledged marker of neuroprotection going in the right direction in a dose-dependent fashion. And so we walked away from this saying, we did everything we needed to do in Phase II to give us confidence of Phase III. I think a lot of people were looking at these data as a mandate on accelerated approval. We all would like to get this approved as quickly as possible. And I think -- we have to bear in mind is a hard disease. But I think in many ways, it was underappreciated. This data set gives us more options to think about evidence that Huntington lowering is having an impact. We continue to see early 12-month dose-dependent clinical signal we saw earlier. And now we're seeing stuff at 24 months that not only shows in probably the optimal patient population stage 2. We're having clinical benefit, but we're also having clear objective biological evidence of neuroprotection, which is absolutely supportive of what we think Huntington-lowering needs to do if it's going to ultimately be efficacious.

Yes. You brought up Novartis that's your partner in this program. I guess given the timing of when that partnership was announced, some had thought that was based on maybe Novartis feeling a sense of confidence, if you will, on an accelerated path being a highly likely scenario. Novartis was -- where was that in the mix outside of them looking at the science and trying to understand the product.

Yes. I don't think -- our understanding was this was a deal done based on the base case being a full development program. Novartis had a therapy in branaplam which was an oral small molecule splicing agent that had a lot of issues in terms of lack of selectivity and specificity which we know is really important for splicing. They clearly with Zolgensma have had a front row seat to Evrysdi and the potential for oral small molecules for CNS diseases. And so for them, they were interested in having a safe Huntington lowering drug. That's what they are diligence focused on, that's what they paid for, and that's what they have. I think the partnership, the joint development committee is continuing to think about how we can look at accelerated approval pathways. I think that's still there. That's all on the table as we move forward and think about Phase III. But this was a deal done -- we believe by Novartis, believing that this is a potential first-ever disease-modifying therapy for Huntington, assuming that the standard Phase III trial would be the base case and accelerating to be a great upside.

Okay. And so how do you just to wrap things up, think about the competitive landscape for HD? If you have to take a traditional path to approval versus accelerated, how does that change where this product could be relative to the competition?

Yes. So I think probably when we think about the competitors that could be in a position for earlier approval if an accelerated path is open, which, Again, I think the accelerated path for the gene therapy is based on 24-month natural history in FFL, which by the way, our data set now has in addition to the peripheral biomarker. But if they were to get ahead first, I continue to believe that having an oral therapy that gets to the entire brain that has durability. You can't redose a gene therapy is going to be safe and well tolerated. I think we'll always be in a more attractive therapeutic option for this very large population. Keep in mind, in HD, you're talking about 40,000 diagnosed patients. There's multiples of that, that are undiagnosed that are earlier stage. And that's really where there's a significant opportunity and having an oral small molecule that can be given to individuals in their very early stages, maybe even further showing symptoms, that's what the physician say would be the holy grail for the patients and with the patients want, I don't see that ever being a population where gene therapy is going to go. And then when you add on top of that, there's always a concern with gene therapies even when infusion in the brain, which we clearly know a lot about, the durability long term is a serious question, you can't read dose. So I think this therapy would still really be able to be the leader in terms of disease-modifying therapies.

And bear in mind, this will be commercialized by Novartis. This is a bone-crushing machine, right? So good luck getting against them.

Okay. With that, we're out of time for today. So thank you for joining us on stage. Everybody in the room. Thanks for listening, and we'll talk soon.

Thanks.