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

All right. Good day, everybody. My name is Ash Verma. I cover SMID cap biotech and spec pharma. And with us, we have PTC Therapeutics, Matt Klein, who is the CEO; and Pierre Gravier, who is the CFO. Guys, thank you for joining us.

Thank you, Ash. Great to be here.

So exciting time in the story with the launch of Sephience. Maybe if you can give a little bit of a high-level overview of the company, where the story has been focused on. And then we can take it from there.

Yes, absolutely. PTC is a global biopharmaceutical company focused in rare disease. We discover, develop and commercialize rare disease therapies. Our commercial portfolio includes 6 products that we market ourselves worldwide. We also have a robust R&D pipeline, including our small molecule splicing platform, which is the source of Evrysdi for SMA, which was the first-ever cell molecule splicing drug, also for Votoplam for Huntington's disease. And this is really a well-differentiated, validated, powerful platform. We just completed the third quarter, right at our third quarter earnings, very strong performance with $211 million of revenue, including contributions from Sephience, our PKU drug, which I'm sure we'll be talking about, which really got out of the gate quick and very strong. We also continue to be in a very strong financial position with about $1.7 billion on the balance sheet. So we're here at a time where we're launching a product that's going to be really -- provide us a foundation for future growth. We're in a strong cash position and a lot of exciting things coming out of our research platform.

Great. Awesome. Yes, exciting time in terms of the launch as well. So yes, I think with Sephience in PKU, just if you can kind of characterize what was the prep that you had going into the market. And as you've seen some of the early signs, where is the source of patients coming from, is it switches, naive, like what...

Yes. Just framing the opportunity first, I think this is a pretty unique rare disease launch opportunity. For PKU, it's about 17,000 patients in the United States. And there's newborn screening, so they're all identified. And while there have been 2 previous approved therapies, by and large, the vast majority of patients aren't served by those therapies, whether it's due to questions about efficacy or about safety and tolerability. And so we were able to bring Sephience, which is a small molecule -- oral small molecule, once-a-day drug, very strong efficacy profile that's highly differentiated, very strong favorable safety and tolerability profile, into the space. So you basically have a space that has a lot of the pillars for commercial success already there, with centers of excellence identified, a well-aggregated patient community, payers who understand the disease, understand that you could tie value to phenylalanine lowering and then -- and newborn screening, of course. And then we come in with a highly differentiated therapy, a commercial team that's very experienced in selling rare disease therapies, particularly in genericized and competitive markets. And when you put all of that together, you get really what could be a very large opportunity for us. When we think about the patient segments, they've broadly been broken into patients on therapy, patients who've tried and failed therapies and patients who are therapy-naive. And we've talked a lot about how, based on the mechanism of action of Sephience and the clinical data we have showing that we can have significant effect in lowering phenylalanine and allowing diet liberalization, even in the most severe patients, and the fact that we have a label that's inclusive almost of all ages, in the U.S., it's 1 month and above, we believe we can access all of these segments. And what we've seen in the early days of launch is really just that. We're getting patient start forms, we said, in the first 6 weeks of the launch, we had over 500 patient start forms, over 300 patients on drug, and $19.6 million of revenue globally. And with patients as young -- getting start forms, patients as young as 2 months of age, we have a 79-year-old adult who's on drug, patients who have classical PKU with real severe mutations, all of which are doing well on the drug. And I think this is really supporting the potential for Sephience to be a drug for -- really be the standard of care for PKU with broad adoption across all age groups and all disease severities.

Great. I mean were there any kind of early warehousing patients that physicians were doing, particularly at the center of excellence, I mean, if they knew that the drug was going to become available?

Yes. I wouldn't say traditional warehousing in the sense -- first of all, with newborn screening, the patients were identified. There's 104 centers of excellence in the U.S., probably 80-plus percent of patients are tied to those centers. We didn't know that there were a number of centers that had waiting lists of patients really interested to get on the drug. But I'll also add, it wasn't like we had an expanded access or an ongoing clinical trial where a lot of patients rolled out of. We had our open-label extension study from our Phase III, which had about 10 patients still in it. So this was really about, yes, a lot of interest, broad interest, across the full spectrum of the patient population. And we've had basically participation of basically almost all the centers of excellence. 3/4 of them have submitted more than 1 start form. So what we're seeing, again, is just very broad uptake and broad interest in the drug.

Got it. Yes, I think -- and then just having launched in August, just the month-over-month, have you seen that type of a trend that, yes, early -- the drug becoming available and then sort of more reaching at a stable state? I don't know if you've commented about October.

Yes. What we shared at earnings last week was that clearly strong start, over the 500 patient start forms in the U.S., and that we were seeing continued momentum in October. And we expect that momentum to continue. Of course, it's still early days in the launch. We've got Thanksgiving, Christmas holidays and such. But what we're seeing so far is really consistent momentum and, again, a great deal of enthusiasm. And we're hearing from a lot of physicians, many of whom tried the drug for their first patients where they're more severe patients. And seeing these more severe patients respond, we're now hearing things like "I'm now going to try all my patients on the drug," which is really what is great to hear. Because if you think about this opportunity with 17,000 patients, the key really is to have a wide funnel and to have prescribers being -- thinking about trying all of their patients on the drug. And that's how this can become really a very big opportunity.

Yes. We've heard from some KOLs that the -- had hosted calls previously, that they want to try it on all of the patients. And I think like as you're seeing the focus from the physicians, like right now with the 500 that you mentioned, how many physicians is that coming from and how does that expand over time?

Yes. What's interesting is -- so a couple of things. One is, one of the dynamics in this launch is we're getting prescriptions from physicians, also from nurse practitioners. We spent a lot of time before the launch getting to understand the centers. And part of the mapping of the centers of excellence is understanding who are the touch points within the clinics for patients and also who are the prescribing decision makers in the clinics and who writes the prescriptions. And in PKU, certainly, you have physicians. But you also have nurse practitioners that do a lot of the day-to-day care. And in fact, as I said, the majority of our start forms have come from nurse practitioners. And also dietitians, who play a very important role for the PKU patients. Because in the absence of a therapy, the main stay of care is a modified diet that is low-protein diet, and that requires a lot of interaction and management from dietitians. So it may very well be that patients -- it is the case that many patients don't have -- aren't in touch with the doctor who's prescribing something for them, but their point of contact is the dietitian. So having been able to map all that out and build relationships with all of those key folks has really helped the launch. And so we're seeing, as I mentioned, PSF from across all the centers of excellence, some prescribing more. But all that gives us the confidence that we can have a sustained momentum.

Right. And is there any dynamic from like when you're converting the patient from Kuvan versus like naive, in terms of the physician monitoring and the level of involvement that they need to take care of?

Yes. I think we've heard a lot and we fully expect patients who are on Kuvan, either branded or generic, to switch over to Sephience. And that's just a data-driven decision. We had a head-to-head study, the results of which we shared recently, where it was a crossover study, so individuals with PKU got both Sephience and BH4 or Kuvan generic. And we showed that we had a 70% greater reduction in phenylalanine in these patients. That's in addition to data from our Phase III trial where we had, again, significant reduction -- additional reduction of phenylalanine for those who came into the trial on Kuvan branded or generic. And so if you basically are on a once-a-day oral therapy and you could switch to another once-a-day oral therapy that has an equivalent safety and tolerability profile, but much greater efficacy in terms of lowering phenylalanine and less likely allowing greater diet liberalization, that becomes a very easy switch. So we expected early in the launch to see a number of these switches. We are seeing some. But what we're also seeing is a desire by physicians and nurse practitioners to prioritize those who aren't on a therapy, which makes sense. And that's why we're seeing some of the more severe patients get tried first. And it's great to hear that those individuals are getting significant benefit from Sephience. So we expect to continue to see contributions from those therapy-naive or tried and failed patients. But we also fully expect to continue to see patients who are on Kuvan branded or generic to switch because, again, they're swapping one once-a-day oral therapy for another and getting a lot more efficacy.

Great. Okay. And then can you maybe talk a little bit about like the access? How is that developing? I think you said that like in terms of the patient start form versus how many patients are on therapy, there's a little bit of a lag, I'm assuming. Just any kind of medical exception process that they're going through while the coverage is being determined?

Yes. It's going very well. We've said that from start form to drug, in many cases, we're getting that done in less than 2 weeks. On average, it's been 2 to 4 weeks. Mostly prescribers are being asked to have a prior auth, but it's prior auth to the label. We're not seeing step-throughs from Kuvan or Kuvan generic. And we've also had policies now from a couple of payers, including a very large -- one very large payer that's basically no step edit prior auth to the label and criteria for renewal being basically either a diet response, phenylalanine response or medical benefits. So really what we're seeing play out is what we expected based on the extensive discussions we had with payers prior to and in the early days of the launch, which is they appreciate the differentiated qualities of Sephience, that -- and we were also able to provide them head-to-head data, which is really nice to say, "Look, there's clear superiority to the other oral therapy that's been in the market that's now genericized," and also be able to show them, based on mechanism of action, we have benefit in patients who have mutations, what were called non-BH4 responsive mutations, that never thought would be responsive to Kuvan. So when you have those data in front of you, it becomes very clear that there may not be a need for a step.

Great. Okay. And then just on like the U.S. versus Europe dynamic, so what have you seen from the launch ex U.S.? And how do you expect that to shape up?

Yes. So we were in a, at least for rare disease launches, in a kind of a unique situation that we launched in the U.S. and Germany almost simultaneously. We launched in Germany on July 15 when the price was listed in Lauer-Taxe. We're in that 6-month free pricing period. We've talked about how PTC has always emphasized maintaining rigid narrow pricing corridors, particularly in these early days of launch. And of course, with the more macro discussion of MFN, we wanted to be sure to have pricing parity where possible, so the German price and the U.S. price are on par. We expect to bring Japan on soon; we expect approval there by the end of the year and launch there in the first quarter, where traditionally the PKU therapies have been at a premium in Japan to the U.S. So we don't see any issues with the pricing corridor there. But back specifically to the dynamic in Germany, that's where we did set up compassionate use program prior to launch. Because in Germany, the law says when you launch, if you're in that compassionate use program, you automatically switch to commercial therapy. So we had about 30 or so patients in that compassionate use program. So that got a small number of patients who right away got onto the drug. But importantly, it also allowed us to get the drug in the hands of the major centers in Germany. So while they didn't put all of their patients in the compassionate use program, they got used to prescribing the drug and got to see the benefits early on. So that when we did launch, we're seeing a lot of uptake, both in the larger centers of excellence in Germany as well as some of the smaller centers. So we had $19.6 million of revenue in the first -- in the third quarter that we read out. $14.2 million of that came from the U.S., the remainder was from Germany. So we're seeing some nice contributions from Germany. We'll continue to see contributions not only from Germany, but from other countries in Europe where they have early access programs or named patient programs, which will allow us to get patients on drug, paid drug, while we go through sometimes more lengthy pricing and reimbursement discussions in a number of those countries, and that includes in Southern Europe, Eastern Europe as well. And then we're starting to see named patient requests from Middle East to North Africa as well as Latin America. So while we're getting approvals in certain countries and getting pricing reimbursement there, we're also getting patients on drug through named patient mechanisms that, again, allow us to maintain that rigid pricing corridor.

Great. So I guess, I mean, early launch success. That's great to see. And yes, anything -- I'm curious to understand, like is there any good analogs that you would suggest? Or I don't know if you've talked about setting either any mid, near-term or long-term goals on ultimately what is the potential here?

Yes. Look, it's still early days so it's hard for us to provide overall guidance. I think the way we've always thought about this opportunity is very much in line with what you'd expect from a highly differentiated rare disease therapy, right? So you have 17,000 patients, and a differentiated rare disease therapy can often get to peak penetration rates in the 40% to 50% range. And I think that's something we think about as a potential for Sephience. But obviously, we're still in early days. We'll be able to give much more exact guidance and idea as we get further into the launch. I think we're just excited in these early days have seen a broad uptake, the message from physicians about the desire to treat all of their patients, trial their patients on the drug. Because those are the things we believe are important to have in place if we're going to try to have that very wide penetration into the large accessible market.

Great. So moving on to just like other topics. So I mean, we've seen some of the updates from a regulatory standpoint for the NDA for vatiquinone. So you have like the priority review acceptance in February, but then got a CRL. So I know that there is a lot going on with the FDA and just we can talk about it in like more specifics. But just based on your current interactions with the agency, where do you think the review process is?

For just in general or?

For vatiquinone.

Okay. So we got the CRL in August. So that was a pretty clear decision. I think we felt -- going into that review, we knew the main question would be whether they would provide approval based on upright stability, which was a specific subscale of the disease rating scale. We had prespecified the whole disease rating scale, the modified Friedreich Ataxia Rating Scale as the primary endpoint. And what was learned while we were doing in the trial is that different subscales have different relevance based on the age and stage of the patients. And for the specific pediatric and young adult patients enrolled in our Phase III study, it was determined while we were doing the study that the upright stability subscale was the most relevant. And of course, when we read out the trial, we had highly statistically significant effects on the upright stability scale, which was the most relevant, but again, had prespecified the entire scale. So the question for the review was: would the FDA be willing to approve the drug, show the flexibility based on the fact that we had significant effect on the only part of the scale that mattered, and that there's a significant unmet need for children and adolescents with Friedreich's ataxia? The only approved therapy is for 16 and above. With the CRL and the fact that the CRL, which is public, was very clear. It was a statistically driven decision that we couldn't establish substantial evidence of effectiveness because we -- the prespecified primary endpoint didn't hit. So we will take advantage of the opportunity to meet with the FDA. We said that meeting will occur in the fourth quarter. That will be a meeting where we'll talk about potential paths to resubmission, whether there's a more accelerated pathway available just given the unmet need. Is it a clinical trial? So what does that clinical trial need to look like? And then for us, it will be a matter of making the decision, if it's a trial, what does that trial cost? What do we think the market opportunity is? What is the probability of success? And make a data-driven decision about the next steps.

Got it. Yes. I mean, I guess have you talked about in terms of in the range of scenarios that can play out, are there some roads that you don't want to go down the path? Or is that...

Look, I think there's basically a couple of paths here. For us, we understand the FDA has very much wanted to try to be flexible for rare diseases where there's unmet need. And I think the reason you have these meetings after a CRL is just to hear directly from them what are their concerns, and in a productive discussion, figure out how best could you meet those concerns, and whether the only route is through a clinical trial or if there's other routes. And those are the kinds of things we'll discuss.

Yes. I think there is a lot of just focus on the investors community on these external data cohort based regulatory pathways. And I mean, we've talked about this before just with what has happened with some of these other companies as well. It seems that there is some positive. It's not that the FDA is shut for business from that aspect. So if you can talk about like how your application or data or approach is different from some of the ones that we -- generally like Stealth, Biohaven, QURE?

Yes. We can certainly talk -- yes. Look, I think in both -- I would say, both in our Huntington's disease program with Votoplam as well as our MOVE-FA Phase III clinical trial, we have placebo-controlled data, right? And I think that in neurological and neuromuscular disease is, of course, the most -- for FDA, the most interpretable data for them is placebo-controlled data. They're very used to seeing that. They're always concerned in these types of diseases that there could be practice effect on endpoints, that there could be, if it's a patient performance measurement, different things can contribute to the performance that's other than the drug. And in their minds, the best way to eliminate confounding is to have a randomized placebo-controlled data. So what we were able to do, certainly in MOVE-FA, and again, we're having placebo-controlled data in our Huntington's program -- Phase II Huntington's program with Votoplam, is to be able to say, "Okay, here is evidence of benefit relative to placebo." In the case of our FA program, we did use long-term open-label extension data to confirm a longer-term benefit in patients treated for 3 years with vatiquinone and we're able to show a significant effect over time. Importantly, we were able to show there that the slowing of disease progression in the placebo-controlled trial was consistent with the rate -- with the benefit of slowing progression longer term, which I think connects the data in a nice way. But look, it's always hard for open-label -- for external controlled data convince the agency that you have apples-and-apples and -- apples-to-apples comparison. That's something we try to spend time making sure that we account for any potential source of confounding because we know that's what's going to be front of mind. But I think being in a situation in the FA program and HD program to have placebo-controlled data, in the Huntington's disease program as well, to be able to have bio -- pharmacodynamic measurements and we have evidence of dose-dependent Huntington protein lowering in cells, those things are helpful to give them confidence that the drug is working from a biological standpoint the way it's supposed to work in order to have clinical benefit. It's just helpful for them to understand, okay, if you have to first lower Huntington protein before you have clinical benefit to be able to tick the Huntington lowering box, I think it gives you more confidence that the clinical effects you're observing are indeed related directly to the drug and not some other external or confounding factor.

Yes. And like we were discussing this before, it's a little bit difficult to establish imaging data-driven evidence in this case.

Yes. I think -- in Huntington's disease?

Yes...

Yes. Well, I think -- one of the -- in Huntington's disease, the imaging data change slowly over time. Also something I think that was observed in the Alzheimer's trials was the concept of pseudo-atrophy, that if you have a therapeutic effect in the brain and you're decreasing brain inflammation, you may, in fact, have a lowering of volume that's a reflection of a favorable therapeutic effect. So I think in the long term, certainly a disease like Huntington's disease, which is characterized by loss of brain volume, I think brain imaging is helpful. But in shorter 1 to 2-year trials, I'm not sure that the techniques we have are reliable for ascertaining what could be very small and meaningful evidence of clinical effect.

Great. I wanted to talk about a couple of the other commercial programs. So just like the latest on Translarna dynamics. So you've shown pretty reasonable sales despite several generics that have entered the market. So just curious, do you think that this continue on the same trajectory or any potential changes on that?

Yes. So this is for Emflaza in the U.S., which we have the 6 generic entrants into the market. We lost exclusivity in '24, but yet we still are having pretty strong revenue performance. Look, I think we're of the belief over time that should erode. But the erosion dynamics in a rare disease market are different than larger drug markets, right? You have smaller populations. You don't have the price/volume trade-off that a generic could have in a larger market. So there's not a motivation -- a great motivation for generics to come in and significantly cut the price because they can't make it up in volume. So I think that's part of the reason. The other thing is we've been -- our patient services team, our company has been very well integrated in the Duchenne space for a long time. There is a great deal of brand loyalty that's there. Our patient services team provides support to the families, not just in getting Emflaza, but a lot of the other issues that families navigating Duchenne face. So I think there's a drive to stay on Emflaza because you want to continue to have the benefits of those patient services. I mean we've even had boys, a young man, who switched to generic and then came back to Emflaza, because for whatever reason they said they didn't feel benefits as much or tolerability issues that arose with the generic. So I think there's many factors contributing to the stickiness. Clearly, we're getting to the point with 6 generics in the market that we will see some more erosion over time. But I think what's so exciting for the company is that we were really looking forward to the Sephience launch given the significant potential we believe it has. And to be able to still get meaningful revenue from our legacy products like Emflaza, like Translarna, while we're ramping up the Sephience numbers, is really a great place to be.

And then just on like the Huntington's going back. So you have like a meeting schedule with the FDA for the fourth quarter. Yes, just like trying to understand like what are the -- ultimately, what are you trying to get alignment on with that?

Yes. So the program is partnered with Novartis, so we announced that partnership last year. It was $1 billion upfront, $1.9 billion, in development and sales milestones. 40% profit share in the U.S., double-digit tiered royalties ex U.S. And Novartis will assume all Phase III and future costs with the program. And so at this point, the program is over with Novartis. Yes, we're still working closely through our joint development committees and the companies are very well aligned. It's been a very productive and collegial partnership. And so this meeting with FDA is 2 objectives. The main objective is to align with FDA on the design, the key design elements of the next efficacy trial, whether that efficacy trial is the confirmatory study in the context of accelerated approval or whether it's the registrational study if there's not accelerated approval. And there's a desire to obviously get that study going as soon as possible because it's going to be helpful in either context. We'll also discuss the potential for accelerated approval. But we have data coming -- additional data coming in the spring, all trial participants will cross the 24-month time point, which will be a pretty important time point. And we know that and FDA knows that. So this is not really a meeting where we're going to go and say, "Can we file?" It's more of a meeting to say -- confirming the openness of the neurology division to accelerate approval, get some discussion on what they think will be helpful to see in a data set that could support accelerated approval, knowing that we'll turn the data card over, be able to do an analysis and then come back and have the more specific discussion.

Great. Just as a side comment for the audience in the room, if you have any questions that you want to submit, feel free to do that through the QR code and I can bring it back here. So yes, I guess if we think about the next like 12 to 18 months, maybe you can talk about just what are the key milestones that you're looking for. Obviously, the Sephience launch and then some of the pipeline developments.

Yes. I would say we've really been on a journey the past couple of years, I've been CEO for 2.5 years, and we've -- and Pierre is with me, he's been our CFO for a little over 2 years, and we've been very focused transforming PTC and positioning us for future success. And I think we're at the point in time now where we got to what we thought would be the key moment, which is the launch of Sephience, to be able to be there with a strong balance sheet, as I mentioned, about $1.7 billion of cash, and having a foundational product that can be as successful as Sephience will be, we've really outlined a series of steps. Really the next for us is to get to cash flow breakeven and profitability. Sephience, we believe, can get us there in the very near future. We then establish the next lily pad being getting to $2 billion top line, and then continue to grow the company from there. So in the next 12 to 18 months, the goals are execute on the Sephience launch, continue to make sure we're keeping that funnel wide and we're driving revenue forward as strongly as possible. Continue to bring things forward from our R&D platforms. We're hosting an R&D Day on December 2. We're going to pull back the curtain on some of the things that we've been working on. Understandably the attention of the company over the past year or so has really been on late-stage clinical, regulatory, commercial things. But we've been spending a lot of time bringing the same focus and discipline we've been bringing to the later-stage programs to our research, particularly our splicing platform. As I mentioned, this is really valuable platform that's already yielded Evrysdi, which is the largest SMA drug, the HD drug. We have the same team that brought those drugs forward, have been at this for over a decade, and we've been working on innovating the platform. We have a whole new set of preclinical programs that we look forward to sharing in the R&D Day. As well as our inflammation and ferroptosis program, where we have 2 clinical stage programs that we'll be talking about. So it's going to be driving those programs forward, continuing to work with Novartis on the HD program, whether that's accelerated approval or that's a standard development program. And then, of course, with our cash, we have the ability to do BD to complement either the commercial or R&D portfolios. And that's something we are very thoughtful about. We don't have to do anything, but we'll continue to be very thoughtful and strategic about any business development we do participate in.

Great. With that, we can wrap it up. Thank you so much for your time.

Thank you very much.