PTC Therapeutics, Inc. ($PTCT)

Welcome, everyone, to our chat with PTC Therapeutics. It's my pleasure to host Matt Klein, CEO; and Pierre Gravier, CFO. Thanks so much for joining us.

Thank you, Joe. Glad to be here.

So Matt, can you start us off with a quick level set and briefly touch on your recent accomplishments and goals for this year?

Yes, absolutely. We're coming off a very strong 2025, which was highlighted by the initial global approvals of Sephience, our drug for kids and adults with PKU as well as a strong start to the launch. We had over $111 million in revenue in just the first 5.5 months. And that performance really speaks to the highly differentiated profile of Sephience, the significant unmet need for a safe and effective therapy in the PKU community as well as our team's ability to execute our experienced customer-facing teams around the globe. Overall, in '25, we had a strong revenue performance, exceeding guidance. Our expenses also came in below guidance, and we ended the year with approximately $1.95 billion in cash, which sets us up well to continue to support our commercial and R&D portfolios as well as to continuing to build the company forward the way we wish. We also talked about this year being a year of revenue growth driven by Sephience. We expect continued strong momentum in the U.S. and so that by the end of the year, we expect to have commercial patients on drug in 20 to 30 countries. We explained that with our revenue guidance and expense guidance, we're in a position to potentially be cash flow breakeven this year, which would be a significant milestone for the company. We also made significant advances in our R&D portfolio, including our oral small molecule splicing platform, which first brought forward Evrysdi, followed by votoplam for HD, and now we have a number of programs in earlier stages of development. So overall, we're really well positioned for continued growth and continued success.

Great. Okay. Thanks. So at this stage, how much Sephience demand is coming from different patient segments? And how do you expect that mix to evolve over the next 4 to 6 quarters?

Yes. I think one of the early strong signs from this launch has been its breadth. We've seen breadth in terms of patient age with kids as young as a few months old, adults as old as 80 getting on drug. We're seeing broad uptake across all patient segments, including those who are therapy naive, those who have tried and failed previous therapies and those switching from existing therapies. I think one of the early surprises in the launch is that we are seeing a number of patients who are naive and adults who were thought to be lost to follow-up and people wondered if they'd ever get on drug. And if so, it would probably be later in the launch. I think there was this belief that the early momentum would be driven by switches, and that's not been the case, in fact, we've seen lower number of switches and rather, it seems like centers are putting an emphasis on trying to get patients on drug who currently on one -- who aren't on one before doing switches. Nonetheless, we have seen some switches, both from Kuvan and Palynziq, but early on, this has been about patients who tried and failed previous therapies. I'd also say we're seeing breadth in terms of center participation. We shared by the end of Q4 last year, we had more than one prescription from over 80% of the centers of excellence. Again, that's unique at this point in the launch. Usually, it's a small number of centers and you have to work to get other centers on board. But at this point, we have 80% of centers and whom we can continue to penetrate as we move deeper and deeper into the launch.

Okay. And what are the most important data points you're tracking internally to determine whether the Sephience franchise is shaping up to be durable and not just another switch cycle?

Yes, absolutely. Look, I think by all measures, $111 million in 5.5 months for a rare disease launch is outstanding. And that was a tremendous early performance. And as we've talked about, we really see us being in a period of sustained momentum as we continue to move forward. And part of that, again, is this breadth, right? We're seeing patients with classical PKU who are more severe patients who are getting tried and staying on drug. We're seeing patients who, again, were therapy naive or tried and failed others coming and staying on drug. And the fact that we haven't seen a large number of switches yet from Kuvan and all of our data show that if you have a response to Kuvan, you're going to have a much greater response to Sephience. Those are patients who tend to do quite well on our drug and tend to be adherent. Those -- we haven't even begun to go into that segment yet. So all of that suggests we have a very long way to go in this launch. You consider a population of 17,000 patients in the U.S., 58,000 worldwide in markets in which we would commercialize and hearing feedback from prescribers that their intention is to try all their patients on the drug, we've got a very, very long way to go. And we're seeing very high rates of adherence, large very high rate of prescription refills. So again, all signals suggest that we -- we're off to a strong start, and there's continued momentum, and we have a very long way to go and which is why we've been quite clear that we see this as at least a $2 billion-plus global opportunity at peak.

And how do you expect responsiveness to look in the real world relative to your clinical experience?

Thus far, it seems to be lining up very well. Of course, we don't track it as much in the real world as we do. So the idea that it's tracking -- it's doing well is what we're seeing and hearing from prescribers as well as patients. I think there's nothing more gratifying and probably no greater statement of support for the potential transformative value of Sephience in social media posts where we see kids talking about being able to have meals with the rest of their family, the same as the rest of their family for the first time, having pizza at a party, trying steak off the barbecue for the same time, parents being able to say they're having the same meals with their kids, getting reports of people having better brain fog, not needing the GPS to get home from work. All of those things are suggested that we're seeing the continued benefits observed in the trials in the real world.

Okay. So then what kind of a response rate metric would that entail?

So in our trials, we had about a 70% to 75% response rate in terms of pure quantified Phe lowering. We know that benefit is defined by both payers and prescribers in different ways. There's Phe lowering where the percentage threshold -- the percentage to define response may vary based on your baseline Phe because clearly, 15% to 20% or 30% lowering for someone who has a phenylalanine of 1,200 looks a lot different than someone who has a phenylalanine of 400 at baseline, for example. We know the ability to increase protein intake is really important. We know for others, the numbers matter, but just feeling better, having less anxiety, having clear cognitive function, clear executive thinking, that's a real benefit that really matters to the patient and in fact, we've talked a bit about how we've gotten policies from payers that are covering about 200 million lives, so about 2/3 of the population in the U.S. And there's been no step edits required and response has been defined as quantitative lowering of Phe or increased protein intake or overall medical benefit. So we're seeing these different definitions of response being applied broadly.

Okay. And how are -- how is uptake and persistence comparing in pediatric versus adults?

So it's early days, and I know you've heard me say this before. We said by the end of Q4, we were seeing low single-digit discontinuations, which, again, it's early days, and we don't know that it will stay that low, but we expect there to be a high rate of adherence. It seems to be fairly consistent between adults and pediatric patients. I think we've said that the main reason that we were seeing withdrawals tended to be concerns about taste and texture of the medication from adolescents. So that was sort of the one early sign that stuck out. But across the board, we're seeing very good adherence and consistence. And I'll also say that we also have been working on as part of life cycle management, getting towards a tablet formulation as well. So ultimately, we'll be able to address any concerns someone might have with the formulation.

Can you go into that a little bit more? What are your plans on that front?

So clearly, when you have a product that has the potential of Sephience and the success we've had, we're actively thinking about life cycle management and life cycle management involves thinking about evolving formulation. We've guided that we have IP protection out to 2039. But of course, we're always looking to expand the IP portfolio and get greater duration. So those are just very standard life cycle management things that you would do when you have a valuable therapy like Sephience.

Okay. And at what point will you be able to -- or will you be able to detect from like refill rates at some point. What the response rate is tracking in the real world relative to the clinical experience?

Yes. I think we're going to have to get a little further into the launch. As we've said early on, we're seeing the low discontinued rates and very few of them have been cited as lack of response. So I would imagine we're going to need to be at least a few more months into this to get to a real hand on it. But again, all signs now still looking like very high adherence rates and refill rates.

Yes. Okay. Great. And then can you talk a little bit about the payer requirements for staying on therapy? I think unlike BioMarin, you're not providing drug for free during the trials. So people jump through all those hoops upfront. On the one hand, that might like lower the the desire to switch after they've gone through all that effort. But on the other hand, I'm just wondering what payers are requiring.

Yes. The payer feedback has been very positive. And part of that is because they understand that you can tie value to lowering and to have been able to enter payer discussions already having in hand the AMPLIFY study, which shows as all of our other studies did that 100% of patients who responded to Kuvan respond to Sephience better. And we quantified that as having an average of 70%, 7-0 percent, greater lowering in phenylalanine with Sephience relative to Kuvan. With those data, we've not had the requirement imposed any of the policies of a step edit because it's very clear that there's significant greater benefit with Sephience. Furthermore, about the testing, if you look at the Kuvan data in their studies, they did a response as we did to identify responders and the responder rate in that study is about 20%. For Sephience, we were closer to 70%. And so that is why we didn't feel it's necessary to give free drug. When you have 4/5 of patients not responding, you may need to give a free test. But when you have the vast majority of patients responding as with Sephience, we didn't see that need to test to prove that it's going to work because it does for the majority of patients, including both classical and nonclassical patients.

Okay. And what other data will you be generating either in the clinic or in the real world going forward?

Yes. So we have the open-label extension from the Phase III AFFINITY study, and we recently shared an interim cut of those data, which showed patients are able to liberalize their diet. We reported that 97% of patients in the Phe tolerance protocol were able to increase protein intake. 70% of those patients were able to get to the recommended daily allowance of protein at some point in the protocol. Those are really compelling data because we know that ability to loosen the diet is so, so important to patients. We also had an early look at some of the QOL data showing the ability to have improved executive functioning, decrease anxiety and increased mood symptoms. So those were good early data points, and we're going to be continuing to look at those over time. We have a separate study looking at neurocognitive function that's being done as part of the pediatric investigator plan agreement with Europe and then a number of investigator-sponsored studies looking at different things like response rates as well as some of these other important aspects. So we look forward to having continued data that are supporting really the value of Sephience for patients.

Okay. And then what data do you have to demonstrate that patients can get to certain levels of Phe? And how robust is the ability of Sephience to get patients to meaningful levels, meaningful improvements where their Phe is really under control?

Yes. And I think that was one of the most important data points from the Phase III study that 84% of patients were able to get to below 360 micromolar per liter, which is really the target Phe level and the level at which most feel comfortable starting to increase protein intake. So 84% is a very high number, and that included a number of patients who started with Phes at 800, 900 and 1,000. So we're seeing this, again, for the full spectrum of patients. And then within that substudy, as I mentioned, once you got below 360, we were seeing that 97% of those folks were able to increase protein at all. And 70% were able to get to a level of protein intake that would be recommended for you and I, someone who does not have PKU, that's a lot of protein. And if you think about the lives of people with PKU, being able to even have one meal or one part of the day where you could have increased protein intake is transformative. A kid who can go to school and have lunch with the other kids or go to a birthday party and have what the other kids are eating, an adult who can go to the office and have lunch with other folks and not have to have their restrictive diet. That's life changing. And that's where a lot of the adherence here comes from is the ability to really favorably affect people's lives in a meaningful, meaningful way.

Yes. That was impressive clinical data. I think there were not that many patients with classical disease and very high levels of Phe. I think they were a little bit lower than what we saw in the Kuvan studies, for example. Are you going to be generating any more data, so we can understand how well Sephience works in the classical population, which makes up the majority of patients?

Yes. Well, absolutely. So I think we can debate numbers majority and break down. We had capped the enrollment in the study at 20% classical and saw a very good response in those patients. I think you did a great interview with the KOL who had pointed out that they were initially skeptical and put one of their most severe patients on who had severe classical and had a 90%, 90% lowering phenylalanine right away. And that's really what had everyone understanding they need to try all their patients on the drug. And we'll be publishing very soon our mechanism of action paper, which is showing the ability to affect the non-BH4 responsive, these classical mutations, both in vitro, in vivo and in the clinic. And what's really interesting about the Phase III trial, Joe, is if we take the metabolic definition of classical, you're right, the numbers were low in the trial because we capped at about 20%. But it turns out 70% of those carried a mutation that's associated with non-BH4 responsiveness. We've gone back to the genotype data, which is the purest way to understand a classical presentation of disease and actually had a very, very high percent of the "non-BH4 responsive classical mutations " So that will all be coming out soon and really establishes that if you look purely at the genetics that we are having very strong responses in a lot of these classical patients.

Okay. Good. I look forward to that. So then I guess, longer term, how are you thinking about defending the Sephience franchise some new approaches emerge that might work in even more patients?

Yes. I think let's be careful. We don't -- everything looks good early on. So I think what's well understood -- first of all, the launch is getting off to a strong start. We expect very strong penetration before any therapies reach the market. And I think the next therapies in line are some of the kidney-directed therapies, which are still a bit early in terms of having broad efficacy and safety demonstrated and understanding what their role can be. The feedback we've gotten from a lot of folks in the community is people think we're headed towards a cocktail approach where you're going to be able to have more than one therapy to get folks even closer to complete diet freedom. In fact, I think if you look at the Otsuka trial with the first kidney-directed therapy and their inclusion criteria allowing folks who are on an oral therapy to stay on it, which already anticipates the fact that this is something that's going to be added on top of therapy for a lot of patients.

Okay. Great. So assuming Sephience becomes a solid backbone for the company, which pipeline program has the clearest path to becoming the next meaningful source of value creation?

Yes. I think, look, as we said, we're enthusiastic about Sephience. We believe that alone can get us to cash flow breakeven potentially even this year and certainly to sustainable profitability. I think looking at our existing portfolio now, in addition to the commercial products we have, with the recent feedback we've gotten from FDA on the vatiquinone program and the potential to be -- to have additional data to support resubmission coming from an open-label natural history controlled study, I think, would be something we'd look forward to doing. We were very clear that we'll meet with the agency to get alignment on that protocol and analysis plan before initiating the study. But I think we would view that as a very high probability of success study and also very clearly could be a significant revenue contributor given the unmet need for pediatric and adolescent patients with FA and I think the clear need for alternative therapies or additional therapies for adults with Friedreich ataxia. I think we also see the votoplam HD program, while we partnered with Novartis, the economics of that deal have significant upside for us with a 40% profit share in the U.S. And I think that clearly can be a very meaningful revenue contributor either through an accelerated pathway of available or a standard approval pathway.

Yes. Great. So let's touch on both of those. And I guess on vatiquinone, you've elected to move forward with a new trial following that regulatory feedback you alluded to. What specifically gives you confidence that the -- that this incremental investment makes sense? And what is similar or different in the design or degree of regulatory alignment that you have now versus previously?

I think our confidence comes from the MOVE-FA study where we showed over 72 weeks in a placebo-controlled study, significant effect on the upright stability scale, which was the only subscale of the mFARS on which the placebo group progressed over 72 weeks. So basically, you're saying the only place you could have shown significant slowing of progression, we did. And then when we look longer term after 3 years, that same approximately 50% slowing of progression we saw over 72 weeks was maintained after 3 years when looking at a well-matched natural history control. So being able to take those data and all the learnings we've made and apply it to a study, again, if we're able to align on the protocol and analysis and setup of that natural history match external control study gives us a lot of confidence. We know very well how a natural history control group should progress. I think part of the reason FDA has traditionally supported the use of the Friedreich ataxia registry as a source for external control data is the fact that there's a very clear, consistent predictable rate of progression of roughly 2 to 2.5 points a year. So knowing how your control arm is going to perform removes one of the major questions you have going into a clinical trial. And so knowing that and what we've seen in terms of vatiquinone's ability to slow progression over a similar time period that is -- if we see what we saw before in the study, that should set us up very well for success.

Okay. And how do you feel, given the use of external synthetic control arms are a little bit of a hot topic nowadays at the FDA. Does that give you any pause heading into a strategy that might emphasize that?

So I think it's always important to have alignment with the agency before you start a study, how you're going to design it, how you're going to match things and how you're going to analyze it. That's straight out of the FDA guidance for 2023 on the use of external controls. So I think that's why we want to be super sure that we're aligned with the agency on both the essential elements of the protocol, how a match cohort would be identified and how the analysis would be done. I think it's also important to note that this would be being done on top of a placebo-controlled study that showed benefit, and the study is being offered to provide additional data that would support resubmission. So while we're always wanting to be sure that we're aligned with FDA in writing align and clear, what we're going to be doing, I think the context here is also very different from some of the recent discussions that have gone on regarding external controls.

Okay. Great. And then given -- that's probably a good segue to my next question, given what's been going on in Huntington's disease, does that -- do those events influence your views at all about your Huntington's program that's been partnered with Novartis.

It is the recent experience with the gene therapy and FDA. Yes. Look, we've said all along that we have a very different program in terms of mechanism. We've had a very different development program where we've been able to provide objective evidence of target engagement and mechanism of action. We've had a placebo group. We've prespecified in the protocol, the intent to use an external control group long term to contextualize clinical benefit. So I think we're in a very different context. We're in a different part of the FDA. I think the one thing that remains consistent is what has been very clear as a significant unmet need from a patient for a patient community that very much wants a therapy that can be safe and effective for them. So I think that's where things are consistent, but I think the programs are very different. The data packages are very different. And I think both our partner, Novartis, and we look forward to availing ourselves of an accelerated path if we believe the data warrant that.

So then just following up on that a little bit more, what would you hope to see that could make that -- bring that closer to reality?

Yes. So we're expecting to have in the first half, the interim data analysis of the -- where all the participants from PIVOT-HD crossed 24 months in the open-label extension. What we've already learned is that the -- we believe the optimal responder population is that Stage 2 patient group. In fact, the Phase III INVEST-HD, which Novartis is working very quickly to get up and running is going to be really focused in that earlier stage group of patients. So what we would like to see now is in addition to already having hit the primary endpoint of Huntington lowering in these patients, seeing after 24 months continued evidence of dose-dependent effects on some of the clinical scales, including cUHDRS and the TFC subscale and also seeing in addition, if we can continue to see those trends in dose-dependent trends in NFL lowering, which provides some biological support that you're having a favorable effect. So I think it's -- again, it will be a package where we'll be looking at the effect on Huntington lowering combined with the clinical data at 24 months.

Okay. And it seems very important to the FDA that things are prespecified in order to be able to allow them to entertain whether or not they'll entertain having conversations around a potential accelerated path. So what's your strategy on that front?

Well, I think it's a strategy that started before we started the study. So right, the initial PIVOT-HD study was clear and prespecified Huntington lowering as the primary endpoint. There was an analysis plan, that endpoint was hit with statistical significance. The protocol for the open-label extension specified the intent to compare the cUHDRS and the subscales to external control registry, the natural history registry. And before the study is unblinded, there's a statistical analysis plan that outlines the strategy for modeling and matching as well as the analysis plans.

Yes. Yes. I know there's a ton of data out there available to sponsors in Huntington's disease to be able to do really rigorous comparisons. And what have you seen as far as the correlation between the Huntington lowering and the functional changes?

Yes. I think what we've seen, which has been very compelling is the fact that we're seeing these dose-dependent changes on the clinical scales. We saw that at 12 months in the placebo-controlled phase. We're seeing it out in the first data cut of the Stage 2 patients out at 24 months. That was about 1/3 of the patients where we saw those dose-dependent effects on cUHDRS on TFC, on the single-digit modalities test, which is the cognitive scale. I think in these smaller patient numbers, being able to see that dose-dependent function is really valuable because it suggests that if you're lowering Huntington protein twice as much, you're seeing greater clinical benefit, which I think really supports the concept that Huntington lowering could provide long-term clinical benefit.

Okay. And then let's talk some more about the rest of your efforts given you held a nice event recently to talk about the deeper pipeline. What's your strategy there going forward?

Yes. You're referring to our R&D Day in December, which we were really excited to present. And in part, we wanted to spend some time talking about a lot of the advances we've made in the splicing platform. I think the RNA splicing platform is a highly differentiated validated platform as being incredibly valuable, again, yielding first Evrysdi, which is now the leading therapy for SMA and the HD program, which is the leading oral disease-modifying therapy in Hunting -- for Huntington's disease patients. And we've made a lot of advances just in understanding how many more potential splicing targets there are. We've been able to integrate our knowledge about these potential targets, the biology of these targets, our proprietary library to develop something we call PTSeek, which is sort of a high throughput way we can match these and both facilitate and accelerate the discovery and development of splicing molecules. We were able to share a number of the programs, preclinical programs in splicing that are moving forward, including our MSH3 program for Huntington's disease and DM1 for which we expect the development candidate this year. We also spent some time talking about our inflammation platform, where we have our NLRP3 program, which we expect to be entering Phase I in the second quarter of this year, our Ferroptosis Parkinson's program where we expect the development candidate this year as well as our Nrf2 activator program. So a lot of exciting programs targeting aspects of biology known to be very important in diseases and doing so with highly differentiated molecules, whether as a function of specificity or potency or in the case of the splicing platform, leveraging our decades of expertise in splicing molecules.

Yes. And what's the strategy for taking them forward on your own versus would you be open to partnering any in particular? How are you about that?

Yes. We've been very clear that certainly things that are in the rare realm certainly fit very well in our capacity to develop and commercialize, and we'll definitely look to do that. There'll be other therapies. I think Parkinson's disease is one where we're certainly very comfortable taking that into Phase I, looking at different biomarkers to get an early read on important pharmacodynamic effect. But that's really something that I think would be better suited for a partner who has the muscle that you really need to do a Parkinson's disease program well. We've also talked about having an interest in using the splicing platform also as a source of earlier-stage partnerships where there's certainly splicing targets that could be very valuable in larger neurodegenerative disease or oncology spaces where PTC is unlikely to be developing and commercializing, but nonetheless, our science can play an important part. So we think a lot about sort of these dual tracks where we can identify promising therapies that we can develop and commercialize, but then also still leveraging the potential of partnerships for noncore therapeutic areas.

Okay. Great. Well, thanks for the update. It looks like we're about out of time. Appreciate it.

Thank you, Joe.