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

Good morning, everyone. Thanks for joining Jefferies Healthcare Conference in London. My name is Clara Dong, one of the biotech analysts here. So here sitting next to me, we have the team of PTCT Therapeutics, Matt Klein, CEO of PTC; and Pierre Gravier, Chief Financial Officer of PTCT. Welcome.

Thank you, Clara. Great to be here.

So it has been a really busy year for PTCT from commercial launch to clinical readouts. And before -- just before we go into deeper into the pipeline, why don't you give audience an overview of PTCT and tell us what have kept you busy for the past year?

Great. Thank you. So PTC is a global biopharmaceutical company focused on rare disease therapies. We have a robust commercial portfolio with 6 marketed products that we ourselves commercialize around the world. And we have an innovative R&D pipeline anchored by our validated splicing platform. As you mentioned, it's been a busy year for us, highlighted by the initial global approvals and global launch of Sephience, our oral therapy for PKU. As we've talked about, given the significant unmet need for patients with PKU, we expect this to be a multibillion-dollar opportunity for PTC. And as we shared at our Q3 earnings a couple of weeks ago, the launch is off to a fantastic start. I'm sure we'll get into a little bit more detail on the launch and what we see coming for Sephience over the course of the chat.

Great. And yes, definitely, we're going to spend a little bit of time on PKU and Sephience. And maybe before we talk about the drug about the launch, I think it's important for the audience to understand the disease itself as well as the background. Like what's the biggest unmet need in PKU and especially in the context of patients' dietary lifestyle? What do you see is the most important things for patients care?

Yes, absolutely. Look, there's -- there remains -- despite there being 2 approved therapies for PKU, there remains a significant unmet need. And this is a population of about 17,000 individuals in the United States, and we've said about 58,000 in markets where we intend to commercialize worldwide. And again, while there's 2 approved therapies, the vast majority of patients are not on these therapies, whether it'd be due to not having enough efficacy in terms of patients being able to have significant lowering of their phenylalanine levels or as important and in some cases, more importantly, the ability to liberalize their diet. Patients with PKU are born with an inability to metabolize phenylalanine, which is an amino acid contained in protein. And therefore, the standard of care is a highly restricted diet. So if an individual is not able to feel better in terms of having less brain fog, cognitive impairment and be able to take more protein, there's no added benefit to being on a therapy because already their basic care or basic standard of approaching their disease is being on a highly restrictive burdensome diet. So that's one reason why an individual may not be on one of the approved therapies. The other approved therapy for adults only has significant tolerability and safety issues, making it very difficult to get to a dose that's effective and then tolerate a dose that's effective. So in a way, this represented a very unique opportunity in rare disease where there's all of the benefits of having therapies been in the market already, that is, centers of excellence identified, well-aggregated patient communities, payers that understand the disease and understand that value can be drawn or tied to phenylalanine lowering. And there's also newborn screening, so patients are known at birth, yet without any of the disadvantages in that there's a significant unmet need, a significant desire for patients to be on the therapy that can be safe, well tolerated and bring the benefits of phenylalanine lowering and diet liberalization. And with Sephience, we have a highly differentiated small molecule oral therapy that's once a day and that has demonstrated significant efficacy in clinical trials, significant added benefit relative to the existing oral therapy in the head-to-head clinical study and also, importantly, showing the ability to allow individuals to liberalize their diet. In the open-label extension of our Phase III trial, 97% of patients were able to liberalize their diet. 2/3 of patients were able to get the levels of protein equivalent to the recommended daily allowance of protein intake for an individual who doesn't have PKU. And this includes these effects in the most severe patients. So what we have in Sephience is a well-safe, well-tolerated therapy that's able to significantly lower phenylalanine and for most patients, enable the ability to liberalize their diet. So it's really ticking all those essential boxes and meeting the unmet need for kids and adults with PKU.

So Sephience was approved in July this year. And maybe let's just talk a little bit more about this product. Fresh out of the gate, it put up a really incredible first partial quarter revenue numbers. So maybe just talk to us a little bit about what you've been hearing from physicians in the field about their experience. And then how does the narrative has changed for PKU treatment with the arrival of Sephience?

Yes, absolutely. So as I mentioned in my previous comments, we had this backdrop of significant unmet need and a highly differentiated therapy. And I'll also add that we have an experienced commercial team that's demonstrated success in marketing rare disease therapies, especially in competitive and genericized markets. So we had time to prepare for this launch. We have mapped out all the centers of excellence, had been well integrated with the patient community, a very strong understanding of the decision-makers at the specialty centers, whether that be physicians, whether that be nurse practitioners, the importance of building strong relationships with dietitians who are often the point of contact for PKU patients. So we were able to set all that up. And so once we had approval, we were able to get the launch off the ground quite well. In the first 6 weeks or so of the third quarter, we reported $19.6 million in revenue, broad penetration in terms of number of prescribers, touching all the specialty -- all the centers of excellence in the U.S. We also got the launch initiated in Germany as well, again, with close ties to key specialty centers there. And what we're hearing from physicians and the patients is a strong desire to get on the therapy. We're getting feedback from a lot of the key physicians that they expect to try all of their PKU patients on Sephience regardless of whether they are on existing oral therapy, regardless of their severity. And that's exactly what we've seen in the early days of the launch. We shared at our earnings call that we've seen the full spectrum of patients, including patients as young as 2 months of age being prescribed Sephience. We have patients as old as 79 years of age being prescribed Sephience and also seeing the full range of severity. We're hearing a lot of reports from physicians of them wanting to try their more severe patients on drug first with very good results, classical PKU patients who are seeing, in some cases, 80% to 90% reduction in phenylalanine. And what this is doing is just driving that desire of the physicians to try all of their patients on PKU. And so that really supports the notion that Sephience will become the standard of care for PKU patients.

And I also want to touch the point you mentioned earlier about the broad clinician specialties prescribing Sephience. And are you seeing any trends among physicians, nurse practitioners and dieticians in terms of like what's the mix look like? And are their experience consistent?

And what we're seeing is that at the specialty centers, and again, I mean, there's 104 centers of excellence in the U.S. that there's prescriptions coming from physicians. We're seeing more prescriptions actually come from nurse practitioners and, again, being able to also tie in the dietitians who are at the centers. There's -- not surprisingly, if there's individuals who are not on an existing PKU therapy, they're not seeing the doctors frequently because there's very little being offered to them by the physicians at the center. However, since diet is the mainstay of therapy, they are in touch with the dietitians and nutritionists at these centers. So this is, again, part of the important work you do prior to a launch, which is understanding the dynamics at each center, who are the decision-makers of each center, how are they in touch with individuals at the center and understanding that on a center-by-center basis so that we can provide direct support. I'll also add an important part of our building out our customer-facing teams for the launch was adding a number of dietitians to the PTC medical field force. And the reason for that is we want to be able to provide peer-to-peer support and also understanding that as individuals get on Sephience, management of diet and the diet liberalization process becomes very, very important because we want to ensure that once an individual starts therapy, there's not this rapid increase in dietary protein, but rather a gradual measured approach so individuals are set up for success in their diet liberalization process.

So do you get a sense of what percentage of the existing PKU patients haven't been gone on any therapies or what percentage have tried approved therapies, but ultimately discontinued? And I mean, we've done our own survey and it tells us physicians would like to prescribe Sephience really across the full spectrum of patients. But just maybe based on what you've seen so far, any patient segment would you think as like the lowest hanging fruit in your view?

Yes. So there's probably 3 broad segments of patients, those who are on therapy, which we've said is quite small. Those who've tried and failed, which is a bit larger, it's estimated about 70% of patients have tried the oral therapy, but again, very few remained on it. And then there's a bucket of patients or segment of patients who are "therapy-naive." And those are often patients who are a bit more severe for whom most physicians believe there'd be no benefit of going on the oral therapy, so they were never tried. In terms of the "low-hanging fruit" in the launch, it's interesting. What we've heard is different things from different centers of excellence. So I had mentioned before that we've done some head-to-head studies with the existing oral therapy and found in our most recent study, the AMPLIFY study that we were able to provide on average 70%, 7-0 percent, greater lowering of phenylalanine compared to giving BH4 alone. And that really supports what we know based on the mechanism of Sephience, which is if there is an individual who has had some benefit from taking sepiapterin or BH4, they will have a much better response to Sephience. So if they have a little bit of lowering of phenylalanine, there should be much greater lowering of phenylalanine and the ability to liberalize diet. We also know that individuals who have mutations that are known as non-BH4 responsive mutations or quite simply ones that are not expected to respond to giving BH4 or sepiapterin, whether that's Kuvan generic or branded, they too are able to have benefit from the therapy. And so what we're seeing is at some centers, the prescribers are prioritizing those who are already on the oral therapy and saying this is pretty straightforward. I'm going to switch one once-a-day oral therapy to Sephience, a much more potent and more effective oral therapy. In other cases, we're seeing physicians want to get those therapy-naive patients or more severe patients who currently don't have a therapy and said, "Okay, well, I could always switch the patients who are on the oral therapy, why don't I prioritize those who don't have something right now and get those individuals on drug?" And again, that's exactly what we're seeing. But the most important point, Clara, is the one that you mentioned is that what we're hearing time and time again is the desire to try all patients on Sephience, whether those come at the early -- at the start of the launch or as we get further into the launch.

And I also want to talk about the market access. I mean you've mentioned very positive payer feedback and a minimal restrictions. So like what kind of efforts are you making to make sure this remain consistent moving forward? And maybe just talk to us about the typical prescription journey look like for PKU patients as well when their journey to get reimbursement?

Absolutely. So there's 2 important factors here. One is, as I mentioned, the fact that there have been previous PKU therapies. So payers are familiar with the disease. They're understanding that you can tie value to reductions in phenylalanine. And two, we have a lot of experience in commercializing rare disease therapies. So we spent a lot of time prior to launch meeting with payers. We will continue to do so after launch and being able to provide the differentiated characteristics of Sephience, specifically the Phase III data as well as I mentioned, this head-to-head study, AMPLIFY, being able to arm with head-to-head -- being armed with head-to-head data and showing a payer the superiority you have relative to the existing oral therapy goes a long way in not having to have step edits or step throughs because you show clear superiority and clear differentiation. And again, that's what we're seeing. We have -- we're still in early days. We do have a few payers who have already written their policies, including one very large payer. And they are basically wanting just authorization relative to the label, which is quite broad in terms of age and severity. And we're not seeing step edits and very reasonable criteria to keep individuals on therapy. So that's really a good sign. In the early days of the launch in terms of the journey, it's really been -- if there's been any pushback or requirements, it's really mostly been prior authorizations to the label. And again, the label in the U.S. is 1 month of age and older, full spectrum of patients. In Europe, it's all age groups, no age restrictions. So prior auth to the label is quite inclusive. And again, as we get more and more policies coming on board, we'll, I think, continue to expect to see very few limitations in access.

And you've mentioned about the Europe launch. So how are you thinking about the reimbursement dynamic outside of the U.S.? And how do you see the revenue opportunities for Sephience shaping up in those regions?

We have always talked about in all of our rare disease launches, the importance of maintaining a narrow pricing corridor. And so a lot of what we think about in terms of the launch outside of the U.S. is about sequencing the countries and sequencing the launches in a way that we can maintain that rigid pricing corridor. That's something that has always been very important to us, and I think is even more important today with all of the discussions of most favored nation pricing. So we went -- we initiated the European launch in Germany, roughly concomitant with the U.S. launch. As you know, in Germany, we have the 6 months free pricing period and the price is on par with the U.S., so quite consistent. We've also been able to provide drug through -- to countries where there's early access or named patient pathways where, again, we can get the drug to individuals in the country, but also dictate the price and keep the price consistent with the U.S. We've also begun our formal pricing and reimbursement discussions in Europe. And again, it's very, very helpful for these discussions to be able to have head-to-head data against sepiapterin and also have evidence of diet liberalization because in Europe, medical foods and formulas, which are part of the standard of care for PKU patients are reimbursed. So being able to show that getting on Sephience will lessen the burden on the payer system to continue to provide medical foods and formulas. We've also mentioned that we plan this year to have approvals in Japan and Brazil. Again, we will be initiating launch shortly thereafter in Japan, in particular. We expect that launch to be in the first quarter. And for the existing PKU products, the pricing in Japan is actually higher than in the U.S. So again, this will be another country where we'll be able to maintain our pricing corridor.