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

Good morning, everyone. Thanks for joining us for another session at the 44th JPMorgan Healthcare Conference. I'm Brian Cheng, one of the senior biotech analysts here at the firm. At the podium, we have the CEO of PTC Therapeutics, Matt Klein. I'll now pass the mic to Matt for a short presentation, followed by a live audience Q&A.

Thank you, Brian, and thank you, everyone, for joining us this morning. Last year, I stood on this stage and talked about how 2025 was going to be a year of focus and execution for PTC, positioning us for future success. We set a number of objectives for the year, including gaining the first approvals for Sephience for the treatment of children and adults of PKU, ensuring a strong start to the Sephience global launch, continue to drive revenue and effectively manage expenses as we continue to move the company towards cash flow breakeven and advance our innovative early-stage programs, including the votoplam Huntington's disease program. I'm pleased to report that we achieved all of these objectives. We gained approval for Sephience in the U.S., Europe, Japan and a number of other countries in just 6 months' time. The Sephience launch is off to a strong start with broad uptake across all key patient segments. We had another year of outstanding revenue performance and effective expense management and closed the year with over $1.94 billion in cash. And last May, we shared the positive results from the PIVOT-HD Phase II study of votoplam in Huntington's disease patients, as well as advance a number of our early stage programs, including those from our RNA splicing platform. Overall, 2025 was a year of many significant successes. This morning, I'll review our 2025 performance and provide an outlook for what we expect to be a very exciting 2026. As I'll be making forward-looking statements this morning. I refer you to this slide as well as our recent SEC filings for a full explanation of risks and uncertainties. I'll start with our 2025 revenue performance. Our revenue for the year was $823 million, exceeding our guidance of $750 million to $800 million. This outstanding revenue performance included $588 million of product revenue, driven both by our Sephience launch revenue as well as our more mature products. For Sephience, in the fourth quarter, we achieved $92.5 million in net revenue, bringing the total since launch to $112 million. As of December 31, we had 946 patients on commercial therapy worldwide. And in the U.S., we had 1,134 patient start forms with a payer mix of approximately commercial. We continue to see contributions from every patient segment as well as the full range of age groups from infants to older adults, as well as the full spectrum of disease severity. In addition, while still early days, we're seeing very high prescription refill rates and very low discontinuation rates with low single-digit percent in the U.S. This strong start to the Sephience launch reflects both the highly differentiated safety and efficacy profile of Sephience as well as the outstanding performance of our field teams and our PTC Cares case management team. I'll be providing more details on the Sephience launch and the overall market opportunity later in the presentation. As we move into 2026, we're providing revenue guidance of $700 million to $800 million. We expect the majority of this to come from Sephience as we continue the strong launch momentum with smaller contributions from our more mature products. I want to emphasize that our product revenue guidance for 2026 does not include Evrysdi royalty revenue as we sold the remaining portion of the Evrysdi royalty for $240 million in milestones to Royalty Pharma as we shared in December of 2025. This product revenue guidance represents a 19% to 36% year-over-year growth from our product revenue of 2025. In terms of expenses, we're providing OpEx guidance of $680 million to $720 million. The midpoint of this guidance represents an approximately 6% decrease from the midpoint of OpEx guidance in 2025. Looking at product revenue guidance and OpEx guidance, it's clear that PTC has the potential to reach cash flow breakeven in 2026, which would be a significant milestone for the company and position us for the potential of sustainable profitability in the future. In 2026, our main focus is going to be continuing the strong sufficed global launch momentum. We also look forward to continued progress in the votoplam Huntington's disease program as well as to a number of our early-stage R&D programs. We'll also continue to work to move the company towards reaching that significant cash flow breakeven milestone. Let's dig deeper into this 2026 outlook, starting with Sephience. As we've discussed, Sephience is the foundational product for PTC's near-term growth. The launch is off to a really strong start, with over $112 million in revenue and over 940 patients on drug within just the first 5.5 months. And every sign points to this strong momentum continuing into 2026 and beyond. One of the factors supporting the broad uptake of Sephience and its potential to become the standard of care for PKU is its highly differentiated dual mechanism of action. This dual mechanism of action allows for the benefit in the -- for the full spectrum of PKU patients. even those with more severe subtypes known as classical PKU. The first mechanism of action is Sephience's ability to serve as a precursor to BH4, which is the cofactor for phenylalanine hydroxylase, the enzyme implicated in PKU pathology. Now if one were to give BH4 itself, whether in the form of KUVAN, branded or generic, it gets oxidized in the GI tract and a lot of it gets excreted. So there's very little that is bioavailable to the cells. This is not the case for Sephience. Sephience is rapidly absorbed from the GI tract intact, actively transported into the cell where it's converted into BH4, achieving very high levels of intracellular BH4. This is the reason why we continue to see in all of our clinical studies, that any individual who has a benefit from KUVAN, either branded or generic, has a much greater benefit from Sephience. The second mechanism of action is Sephience's ability to serve as an independent chaperone, binding to the phenylalanine hydroxylase enzyme and stabilizing its shape which then augments enzyme function. It's this second mechanism of action that allows Sephience to have meaningful benefit in individuals with what is known as non BH4 responsive mutations such as those associated with classical PKU. The evidence for the broad meaningful benefit that Sephience can provide continues to grow. We recently shared the results from the AMPLIFY head-to-head study comparing Sephience with BH4. In this study, as in all of our previous studies, we again see that any individual who has a benefit from KUVAN, branded or generic, has a much greater benefit from Sephience. In this crossover study, Sephience provided in over 70%, 7-0%, greater lowering in phenylalanine as compared to BH4. These results not only resonate with prescribers, but are also very important to payers and HTA authorities. We've also recently shared the continued evidence of Sephience's ability to allow for diet liberalization. Probably the most meaningful endpoint for individuals with PKU. In the fee tolerance protocol of our affinity long-term extension study, virtually every subject was able to increase protein intake while maintaining control of phenylalanine. 69% of participants were able to reach or exceed the recommended daily protein intake for an individual that does not have PKU. Now why these numbers sound great, and they certainly are great, perhaps even more meaningful are the stories we continue to see on social media of kids and adults with PKU being able to enjoy foods they never had before, like hamburgers and pizza and steak. We even see stories of moms who say, for the first time, they're able to have the same breakfast with their child. These are incredibly impactful stories and probably provide no greater endorsement of the potential transformative benefit that Sephience can provide for individuals of PKU. We're also continuing to see important effects on other meaningful aspects of disease, including improved cognitive function and mood as well as improvements in a number of different aspects of disease-related quality of life. Importantly, all these meaningful benefits are being delivered in the context of a consistent safety and tolerability profile, which is quite favorable. When one considers the highly differentiated Sephience mechanism of action, the evidence of meaningful treatment benefit across all age groups and disease severities and the consistent favorable safety and tolerability profile of Sephience, it's clear that Sephience has the potential to address each key segment of the market including individuals currently on treatment, those that have tried and failed existing treatments and those that are therapy-naive. Thus, the total addressable market is nearly the entire population of PKU patients, which is 17,000 in the U.S. The evidence of early penetration into each of these segments thus far in the launch, supports that physicians similarly see the potential for Sephience to be first-line therapy for PKU and become the standard of care. This market size, the significant remaining unmet need for PKU patients, even though they are approved therapies and our commercial team's ability to execute all add up to a very large potential commercial opportunity for Sephience. In 2025, our launch efforts are really focused in the United States and in Germany. And as we move into 2026, we expect to significantly expand the global Sephience footprint. We're expecting to launch in Japan in Brazil as well as a number of other countries around the world and will also continue to leverage early access programs where possible. Our customer-facing teams around the world stand at the ready to be able to deliver Sephience to any individual with PKU who may benefit. So in summary, the Sephience launch is off to a really strong start. We see no evidence of this momentum slowing as we move into 2026 and beyond. We also expect a number of activities from the votoplam Huntington's disease program in 2026. Votoplam is the leading oral disease-modifying therapy in development for Huntington's disease. Votoplam is a highly differentiated molecule that was discovered from PTC's splicing platform and was partnered with Novartis in December of 2024. In May of last year, we shared the results from the positive PIVOT-HD Phase II study of votoplam. The study met its primary endpoint with durable dose-dependent lowering of blood Huntington protein levels. Favorable and dose-dependent clinical effects were demonstrated at month 12 relative to placebo. And at month 24, we demonstrated dose-dependent significant effects relative to a well matched natural history cohort. In addition, at month 24, dose-dependent effects on NFL were also recorded. Importantly, votoplam continues to be demonstrated to be safe and well tolerated with no evidence of NFL spikes. In the first half of 2026, we expect the next data update from the open-label extension of PIVOT-HD as all participants cross the 24-month time point. In the fourth quarter, an end of Phase II meeting was held with FDA where alignment was reached on the Phase III study of votoplam. This study can serve as a registrational trial or in the context of accelerated approval serve as the confirmatory study. The INVEST global HD study will be a double-blind randomized controlled study with target enrollment of approximately 770 participants from over 30 countries. The primary endpoint will be change in the cUHDRS scale from baseline up to 36 months and an interim analysis is planned for both efficacy and futility. Per the votoplam licensing agreement, Novartis will be responsible for the conduct and full funding of this study. At the end of Phase II meeting, we also discussed with FDA the potential for accelerated approval. As expected, FDA was supportive of the potential accelerated approval pathway given the significant unmet need for Huntington's patients. Based on the evidence of safety, early clinical effect and biomarker effect, we remain enthusiastic about the potential for votoplam to be the first approved oral disease-modifying therapy for Huntington's disease. I'll now provide a brief update on the vatiquinone Friedreich's ataxia program. Vatiquinone is an oral small molecule with demonstrated safety and efficacy in both children and adults with Friedreich's ataxia. The MOVE-FA Phase III study demonstrated a significant vatiquinone treatment effect on the upright stability score, the most sensitive and meaningful endpoint for children and adolescents with Friedreich's ataxia for whom there remains a significant unmet need. In the long-term extension study from MOVE-FA, significant effect was demonstrated on slowing of disease progression with a 50% slowing of progression relative to a matched natural history cohort after 3 years. Similarly, in the analysis of the long-term extension of an earlier placebo-controlled study in ambulatory and nonambulatory adults, vatiquinone similarly demonstrated a significant effect in slowing long-term disease progression. Following the CRL for the vatiquinone NDA, we held a Type C meeting with FDA in December to discuss the potential next steps in the vatiquinone program. Discussions with FDA are ongoing at this time as the agency has asked for additional data and information from the MOVE-FA study before providing guidance on the next steps. And finally, in 2026, we look forward to advancing our early-stage R&D programs. As we shared at our R&D Day in December, we have a number of innovative programs from our 2 scientific platforms, RNA splicing and inflammation and ferroptosis. PTC pioneered the field of oral small molecule splicing the success of Evrysdi for spinal muscular atrophy and the early successes of votoplam for Huntington's validate the potential for the splicing platform to produce highly impactful and valuable therapies for diseases of unmet need. Our teams have made a number of learnings from the early programs that have fortified our position as the leaders in small molecule splicing. Our learnings have allowed us to significantly expand the universe of potential small molecule slicing targets far beyond what was ever imagined. In addition, we've significantly enhanced our small molecule chemical library with what we consider splicing centric chemical motif. We've combined our decades of know-how the expanded list of potential splicing targets and our chemical library with advanced bioinformatics to develop PTSeek. PTSeek is a proprietary platform engine that will facilitate and accelerate the next set of small molecule splicing programs for a variety of indications. As we have discussed, we expect the splicing platform to be a source of both PTC developed and commercialized therapies as well as a source of strategic partnerships for noncore therapeutic areas such as oncology and larger neurodegenerative diseases. The PTSeek approach has already yielded a number of exciting and innovative programs that will look to advance in 2026, including our MSH 3 program for Huntington's disease and myotonic dystrophy and earlier stage programs such as our sickle cell disease program and neurodegenerative disease program. We also look forward to advancing programs from our inflammation and ferroptosis platform. As we discussed at the R&D Day in December, this platform includes a number of innovative programs with differentiated molecules that target aspects of inflammation in oxidative stress closely linked to a number of different disease pathologies, including our ferroptosis Parkinson's disease program, our NRF-2 activation program and our NLRP3 inflammasome program. In conclusion, over the last 2 years, we have transformed PTC into a strong, innovative execution-oriented global biopharmaceutical company. With our robust global commercial engine, including our foundational products, Sephience, our innovative R&D platforms, including our RNA splicing platform and our strong financial position with over $1.9 billion in cash and the potential to reach cash flow breakeven this year. We are well positioned for success in 2026 and beyond. Thank you.

Thank you, Matt. Thanks so much for the presentation. Let's start off with the Q&A. For those who are in the audience, if you have any questions, feel free to raise your hand. For those joining us virtually, you can submit questions on the portal. Matt, I want to start off with just the fourth quarter number for Sephience. Where are we now in the launch? What is in line with what you expected before the launch? And were there any surprises now that you're looking back at the third quarter and the fourth quarter performance?

Thank you, Brian. Let's make no mistake about it. This launch is off to an incredibly strong start with $112 million in just 5.5 months. Now we understood from the beginning that there was a significant opportunity for Sephience. As we've discussed and shared in the presentation, PKU in the United States, there's a population of approximately 17,000 individuals. While there are approved therapies, both have significant limitations such that there remains a significant unmet need for PKU patients. Our data package substantiates what we understood to be true from the mechanism of action that we have the ability to provide benefit to the full spectrum full spectrum of PKU patients, including those with more severe forms of the disease as classical PKU. I go back to this slide on mechanism of action, which nicely explains how based on the ability to be a more bioavailable precursor we're able to provide superior results than just giving BH4 alone. And then we have the second mechanism which then allows us to address more severe mutations, including those that have the most severe genotype, phenotype scores. And then importantly, this is an oral once-a-day therapy that's very well tolerated, easy to use and has a strong safety profile. And I'd say the last part, Brian, is our team's demonstrated ability year-over-year to successfully commercialize, let's just say, more challenging products that don't have the efficacy differentiation of Sephience. So when you put that all together, we believe this could be a big opportunity, and we still do, and we're off to a strong start. And look, we see no evidence of this launch momentum slowing. And I'd say in terms of surprises, I think only -- I'd say the only thing we're seeing now that maybe we didn't expect to see right away is the uptake by adult therapy naive patients. We knew that, that's a significant unmet segment. We knew ultimately, we would penetrate that segment, but I think we're seeing that earlier in the launch than we thought. And so when you think about those segments, I highlighted those on existing therapies, those that are therapy naive those that have tried and failed. We're penetrating each of these segments. And the fact that we're penetrating each of these segments, and we're hearing time and time again from physicians their desire to try every 1 of their patients on Sephience tells us that we're just at the beginning of this launch, and we've got a long way to go in penetrating each of these segments, and that's what gives us the confidence that this momentum is going to continue far into 2026 and beyond. And that's true for the United States. And as we continue to launch in more and more countries around the world and that global footprint increases, again, that's why we say we see this as a very significant potential revenue opportunity.

Great. I think we should just go ahead and address one of the most frequently asked question this morning from their press release. Can you walk us through your thinking behind the guidance that you have laid out for 2026? I think there's certainly that question of what do you expect coming from the DMD franchise for 2026? And certainly, there's also a question of whether there's a different way of thinking in terms of your way of guiding for 2026 versus how you guided for 2025. So maybe just walk me through those pieces so that people understand how you're thinking about the guidance number as we're heading into 2026.

Yes, absolutely. So look, we start 2026, what do we know to be true. We know that and we fully expect continued momentum from the Sephience launch continued linear growth as we're seeing in the Sephience launch. And we are also expecting to unfortunately see some continued erosion in the DMD franchise. Emflaza now has 6, 7 or 8 generics in the market. I'm very proud of the revenue that we've been able to maintain probably a level of revenue that people didn't expect. And similarly for Translarna. I mean we had the withdrawal in Europe that happened at the end of the first quarter in 2025. And we've since seen an erosion of revenue not only in Europe but in areas outside of Europe, and we fully expect then erosion to continuing the DMD franchise. What I can't say for sure is how quickly that erosion is going to occur, what's the extent of that erosion and also what's going to be the upward trajectory in the Sephience launch. We're 5.5 months in, we're still relatively early. And I think that's why most folks don't typically guide for revenue -- product revenue in the first year of the launch. We have to understand the dynamics better. But again, what do we know for sure? We see no signs of slowing in the Sephience launch. We see the evidence of the ability to continue to penetrate all those key segments and for this to be a very, very large opportunity, and we expect to see continued erosion in the DMD franchise. So the specific product revenue guidance of $700 million to $800 million reflects sort of what the knowns and the unknowns. And as always, as the year goes on and we learn more and understand where we find guidance. U.S. had as compared to last year. If you remember, in 2025, give really wide revenue guidance because, again, we sat there at the beginning of the year, expecting a significant decline in the DMD franchise that, quite frankly, didn't materialize as much as we thought. And if that's the case this year, then look for us to adjust revenue up. But again, we can only deal with what we know to be true, which is the strong potential for Sephience and the declining contributions of the DMD franchise.

And how much potential erosion could we expect from the DMD franchise? And how does that balance out with -- the -- I think you said that there's no evidence of the launch momentum slowing. So how do we estimate both of those?

Yes. Again, we gave the guidance of $700 million to $800 million. I'm not going to be able to give you any more exact numbers. For Emflaza, we said all along that rare disease drugs typically don't fall off a cliff. They have a slower erosion, but we're starting to see sufficient numbers of generic entrants that, that could slow more. And I don't know that anyone has heard of a drug not being licensed in Europe and still having the revenues that we're having with Translarna, which makes it really hard to predict what's going to happen next. As we said, we expect that could decline over time. We expect generic entrants in other regions of the world, we can see continued decline. We don't have exact numbers on that. Brian, I think our range was the best effort to understand there's going to be puts and takes in the revenue. We're going to continue to do our best and get it, as we always do, to drive revenue as far and as fast as possible. And as we learn more -- as we move into the year, we'll continue to refine the guidance.

And then when it comes to the fourth quarter number, can you talk a little bit about the holiday impact that you potentially saw. Was there a holiday impact? Because I remember that coming out of the third quarter, that could be one of the swing factor when we think about the number. So what did you see in the fourth quarter?

We did see impact. We did see some impact because for the obvious reasons, right? Clinics in the U.S. tend to close the week of Thanksgiving and the 2 weeks around Christmas and the New Year. We also heard that there were a lot of dietitians and physicians who said, look, there's so many meals and holiday things. This is not the context in which to introduce a therapy, we'll wait until the new year. So I think what makes the revenue performance in all the more impressive is it's in spite of those small holiday headwinds. Again, which is why we're confident that we're going to continue to see growth and success in 2026 and beyond.

Okay. In your prepared remarks, you said that the payer mix is currently at 70%. I remember last year, you have guided around 65% to 35%. That's the mix ultimately you think will land at for the Sephience franchise. Can you comment on the gross to net here? And are we still moving towards that 65%, 35%? And when do you think we'll ultimately get there?

Yes. The short answer is yes. We are still moving towards that 2/3, 1/3, which is the payer mix profile for PKU. And then again, we'll expect the gross to net to move into that neighborhood that you typically see somewhere in the 20% to 25% range. We're clearly not there yet, but that's where we think we'll be when we reach steady state.

Any questions from the audience? Okay. There is a question about whether -- how we should think about the trajectory? I think there's always a question of, is there a bolus effect. What's your take on that? It's -- I know that we only have 2 data points, right? So -- and what's your take on that? I'm really curious how we should think about that.

Yes. We have 2 data points that make a very nice line that we're intent on continuing that trend. Look, I think bolus means different things to different people. Did we see a lot of enthusiasm early on because there's a lot of individuals wanting to get on a therapy that could safe, well tolerated and allow them to change their lifestyle? Absolutely. But to me, a bolus means you had a shot of patients in and now it's going to just die down. And that's not what we're seeing at all. I think we saw a lot of early enthusiasm and we're seeing continued enthusiasm. Look, I go back to this observation that we're seeing penetration into each of these segments in a really nice -- and we haven't given the exact numbers. I think it's still too early to do so. But the fact that we're touching each segment now, and we're seeing very high refill rates and patients staying on the drug suggest we have a very long way to go in penetrating each of these segments. And again, we're also hearing from so many physicians their intention to trial all of their patients on Sephience. That's becoming the first-line therapy. That doesn't mean all our patients are going to get tried on therapy tomorrow or in January. It means this is going to be a long goal of continued penetration with what we're seeing is very high compliance adherence rates, which makes us bullish about the overall opportunity over time.

On Slide 17, you have this fantastic slide. You're comparing the geographical expansion of the Sephience franchise compared to 2025. Outside of the U.S. Just when you look at the international contribution, which geographical region do you think will make the most sense for investors to focus on? Which one has best potential to give you maximum growth potential?

I think, honestly, Brian, the strength is in the breadth and the fact that we have demonstrated capabilities in so many different countries and regions. So clearly, if you think about rare disease markets, the 3 largest countries are thought to be the U.S. Germany and Japan. I think those will continue to be important markets for us. But we've also done very well with our other products in Latin America and in Brazil, in Russia and the Commonwealth of Independent States, Middle East and North Africa. And we've got teams in each of these countries that are well experienced in both regulatory in regulatory, commercialization and dealing with governments and payers. And that's why we're attacking this from 2 different angles. One is, okay, where are countries where we can get approvals launch quickly and we think can be very valuable markets, such as the U.S., such as Japan, such as countries in Europe, where can we leverage early access mechanisms where we can get patients on maintain the narrow pricing corridor that we've already said very clearly is a priority while pricing and reimbursement discussions are ongoing. So again, yes, there's -- again, I would say the most valuable markets are likely to be the U.S., U.S., U.S., and then Japan and parts of Germany and other areas in Europe. But the strength here is in the breadth and our demonstrated capabilities to really execute and commercialize therapies worldwide. And I'm very proud of what the company has been able to do over the years with Translarna, but I'd point to that and say that's not an easy out. And the success that we've had with Translarna globally, we're putting Sephience to the hands of those same teams and that just bodes really, really well for the global prospects.

I have a question in my e-mail inbox. That question is related to your Huntington's partnership. How should we think about the accelerated approval path? You could be at an early stage of understanding what the agency wants. But help us maybe paint a little bit about what we could expect.

Absolutely. I think the first point, which is probably clear to everyone, is that the agency is, of course, interested in leveraging these types of pathways for significant diseases of unmet need. We had talked about before this FDA meeting that our expectation was the neurology division, which has leveraged this pathway for other severe diseases like ALS, like Alzheimer's, would likely be open to doing so for Huntington's and that's what we confirmed in our meeting. Now FDA knows and we know that there's the next data readouts coming in the first half of the year. And I think both the PTC and Novartis teams remain similarly enthusiastic about the potential for accelerated approval and remain committed to trying to get votoplam to patients as quickly as possible. We'll clearly undertake the analysis in the spring, look at the data that we have in terms of evidence of target engagement with the dose-dependent blood Huntington protein lowering, having evidence of placebo-controlled benefit in the short term, then being able to have evidence in the long term against natural history, which was a strategy that was prespecified in the study protocol. Bringing that all together as well, quite honestly, is the legacy of Evrysdi, which was another oral small molecule splicing therapy that came from our platform that's well known to the agency and being able to provide a safe and efficacious therapy for severe disease. So that's how we think about it. And I know the Novartis' team's comments have been very clear. They're enthusiastic about starting the INVEST-HD study as quickly as possible. Why? Because if we're thinking about an accelerated pathway, getting that price potential confirmatory trial started is really smart. And in the event that the accelerated approval portal isn't open with the PIVOT long-term extension data there will be interim analysis in INVEST-HD that could allow for accelerated approval. And then, of course, just starting that study sooner gets to the finish line sooner if there's no accelerated path.

Great. Well, that's all the time we have. Thanks for joining us. Thank you.

Thanks very much, Brian.