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

All right. Welcome, everyone, to this session of the Morgan Stanley Global Healthcare Conference. I'm Judah Frommer, one of the Smid biotech analyst here. We're very excited to have Matthew Klein and Pierre Gravier with us from PTC. I'm just going to read a quick disclosure, and then we'll get started. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. So with that, welcome again, guys. Between your commercial products and pipeline, there's a lot to talk about. Before we dive in, maybe give the audience just a quick intro to the company for those who may be less familiar with the story and how PTC has evolved over the last few years?

Absolutely. First, Judah, thanks for having us. Great to be here. PTC is a global rare disease company that discovers, develops and commercializes innovative therapies for diseases of high unmet need. We have a robust commercial portfolio with 6 marketed products that we deliver to patients around the world as well as a broad R&D portfolio, including 2 scientific platforms, including our oral small molecule platform, which has already demonstrated to be quite valuable and well validated. So far in 2026, we're off to a great start with the continued strong momentum of the Sapin's launch that continues in the U.S. and worldwide. And we remain on target to achieve the important milestone of being cash flow breakeven this year. So I think that really is an important milestone for the company, and it's something that we've been working for over the past couple of years as we transform PTC into a diversified, sustainable, profitable rare disease company.

Great. It's been a big evolution that we've noticed -- so maybe we'll start with that finance launch. We're a little over a year in. So finance revenue is already annualizing above what we've seen for Kuvan and Palynziq in the PKU space. So what's made this launch different from prior PKU and rare disease launches -- and have there been any surprises along the way for you?

Yes, absolutely. Look, we're incredibly excited about the success of Sefine thus far and we remain incredibly bullish on the overall opportunity and we're very much on track to reaching that $2 billion-plus level of revenue we've been talking about. I think there have been a number of surprises for everyone. But I'd say, first and foremost, what we're not surprised about is the success. I think this marketplace was quite misunderstood. And there was a belief that since there were 2 approved therapies, that didn't reach that $1 million mark, it was hard for PKU therapy to get there, and that's simply not true. The success is really attributable to a number of important factors. First Sapians, the drug itself. It's a differentiated molecule with a dual mechanism of action. -- that uniquely allows it to have benefit for the full spectrum of PKU patients regardless of severity, it's classical and nonclassical underlying mutation regardless of age. As well as being oral, convenient and having a very favorable safety and tolerability profile. That's differentiated. Second, is the fact that all the pillars for commercial success were there is newborn screening. There are centers of excellence. It's a well aggregated community. All that was missing was a therapy that could address the broad 17,000 patients in the U.S. and 5,000 patients in global markets where we could commercialize. Next is our team. I mean we are an experienced team in terms of delivering rare disease therapies to patients not only in the U.S. but globally. We have a patient services team that's very well accustomed to helping manage through a competitive landscape, providing necessary patient support. And quite simply, we are very good at executing on commercializing rare disease drugs. So when you put that combination together of the landscape -- the marketplace the quality of the product and the execution of our teams that this is what you get.

Right. Okay. Great. And you guys had a significant presence at the SSIEM meeting last month, where you shared some new data and analyses for suppliance including data on a fee normalization -- what were the highlights from your data? And what do they mean for PKU patients in the real world?

Yes. We were certainly excited to have 17 presentations to be able to continue to reinforce the differentiated nature of SEPHIENCE as well as to bring forward real-world evidence that's substantiating that SEPHIENCE has been able to deliver meaningful benefits, not only in terms of phenylalanine lowering but diet liberalization increased protein intake in the full spectrum of patients. And I think a couple of things I want to point out. One is we're still early in this launch. And I think when we think about all the success we've had to date, we still believe we have a very, very long way to go just given the size of the population and the market opportunity. And the SSIEM and these kinds of conferences are part of the launch playbook. You basically come in a year into the launch and be able to continue to support product differentiation and help foster uptake for the large number of patients who we believe can benefit from SEPHIENCE. So I'd say -- some of the key data points were the fact that we -- people have asked, well, we know that any -- your data shows that any individual who is on Sapreter and Acuvia brand in a generic has a much better response with SEPHIENCE whether in terms of feeling or die libertization. But what about more severe patients in your trial -- we had an abstract that showed that in all of our studies, individuals who came in with an over 900 micromole per liter penalyline level had the same response rate as those who had lower. So really addressing that question. We then had real-world evidence showing that severe patients with classical PKU were able to enjoy significant fee reductions and liberalized diet with significant protein intake. That was really important. So it's just these opportunities to show again and again why SEPHIENCE can be important therapy for the full spectrum of patients and also to support the Kuvan switching to reinforce the fact that if you're on Kuvan and getting any benefit, switching over to SEPHIENCE bring greater benefit. And then finally, you mentioned the normalization abstract. That was really pulled out from some of our clinical trial data where we showed in those patients who respond, the majority of them are getting to normal general hillinelevel. So we know that lower is better in PKU and just being able to have presentations, not only by us, but by KOLs doing their own independent analysis of their data just further strengthen the value proposition of the therapy.

Okay. Great. And heading into the launch, you estimated about 70% of PKU patients had tried Kuvan, and you've seen supine uptake among both treatment experience and treatment-naive patients, including in adults. So how much of the of the PKU population do you think SEPHIENCE could ultimately reach?

It's a good question. So that segmentation is something we did early on. And I think a couple of very important things to note there. First is the fact that 70% of our estimate of 70% of patients trying Kuvan tells us that, that we should expect -- that's why we say we got a long way to go on this launch in the U.S. and worldwide. But what's also notable -- and to your first question about surprises is early on, we had a number of patients from the naive bucket, that other 30% who have been tried on the therapy. And I think that was a little bit of a surprise because a lot of KOLs who were interviewed prior to the launch said, "Oh, these naive patients are the more challenging patients, many of them are remote to clinic, and we don't anticipate that they're going to come back to clinic and we ourselves believe that we could help these patients, we thought that we'd be penetrating that segment a little later in the launch. That's not what happened. We actually had about 30% of patients to date have come from that therapy-naive bucket who tend to be the more difficult to treat patients, classical patients. That's what they're therapy naive because it was believed that based on their genotype, of having BH4 nonresponsive mutations or classical mutations, they were not likely to respond to saprotarin. So therefore, they weren't tried. So I think what we're seeing thus far, the data we see and what we're hearing continue to support that SEPHIENCE can be a drug for the full spectrum of patients. And we're seeing this and we're hearing from prescribers saying that this is moving to become first-line therapy and standard of care. We're also now seeing physicians thinking a lot about saying, okay, we have newborn screening for PKU. Maybe we should be now moving SEPHIENCE to be starting shortly after birth. We had a very young child start in the U.S. recently with a severe mutation with great result. We know in Germany, recently, there was the first patient who went from newborn screening directly to SEPHIENCE therapy. So Again, this is all really exciting for us and reinforces the value of -- the potential value of SEPHIENCE across the full spectrum of patients, whether you bid them by severity by age or previous treatment experience.

Okay. Excellent. And you've achieved, I think you've said 100% penetration across the original 100 or so centers of excellence in the U.S., and you've seen prescriptions from other centers as well. So how much of the PKU opportunity is contained within these original 100 centers? How should we be thinking about penetration from a center perspective.

Good question. I think we had -- the estimates we had is about 80% of patients were tied to these centers. And then we found that we had additional centers were in the center of excellence. And again, this is -- this is what happens at a launch, right? You make new learnings. I think for us, some of the important factors getting to 100% COE penetration, this early in the launch is great because in every launch, you deal with early champions and those who are -- take a little while to get on. But being in every center allows you then to focus on a center-by-center basis and say, how do we penetrate deeper and deeper. And again, this is just stuff you do in the launch. We have an analytics team that now is able to say, okay, we're in 100 centers and we can now map within these centers, what are the key points to reinforce in center 1 and what about in center 6. And this is exactly the work we're doing in order to penetrate deeper and deeper into these different centers. And they've come in different sizes. And a lot of these centers, one of the other learnings we've made is that while physicians may be sort of the spokesperson for a center and the individual who gets interviewed all in many of these centers, particularly the larger centers. The prescription decisions are being made by nurse practitioners and physician assistants. And then you also have dieticians who are a point of contact for those not getting medical care. And so being able to understand that on a center-by-center basis helps us then cater our field tactics specifically to each center to help continue to drive penetration deeper and deeper and deeper and also understand, okay, in the center with 7 prescribers, fiber prescribing wire, the other 2. Okay, how do we -- what's the data now that our teams have to have to go in and get that. So not only do we think we're well poised to penetrate deeper into these centers, but we're -- I don't we're getting smarter in a way of actually what is that tactical map to achieve then.

Okay. That makes a lot of sense. -- heading into the second quarter earnings print, we sense a lot of consternation about discontinuation rates being at this point in the launch. But it seems like you guys clearly cleared your own internal borrowing, I think investors more as well on that front. So maybe talk a little bit about discontinuation rates you're seeing in the real world, how those compare to what you saw in clinical trials? And do you have any anecdotal cases of patients returning to SEPHIENCE after having discontinued?

Yes. So we said coming into the launch that in our clinical studies, if you look -- if you set a bar of about 15% penal Alan lowering, we had 75% of patients got to that level. So we saw it all along that in the real world, our discontinuation rate would be in that 25% neighborhood plus/minus. And we got to Q2, and we said we're about 20% which is really good for a couple of reasons. One is, we believe we're getting close to steady state. Two, as I mentioned early on, we've had a number of these more difficult classical patients. And be able to be having that level of adherence, said differently than the other side of discontinuation is really impressive in the most difficult patients. And we know now in the next phase of the launch, we expect to be penetrating deeper and deeper into the switch opportunity. And the switch patients, those who are on Kuvan have already demonstrated themselves to be adherent on a once-daily therapy. And so now you're basically going to be with individuals from a similarly tolerated once-daily therapy to a superior one that would potentially superior efficacy. And definitely, these should be more adherent patients. So all this gives us a lot of confidence that we're getting to that flat part of the discontinuation curve which is really great. I mean, especially in the disease like PKU, where patients -- first of all, you can objectively measure response, which you can't do in a lot of diseases. And second, patients therapy patients use very burdensome dietary supplements and diet restriction in the absence of medical therapy. So they're only going to come on a therapy if they perceive that there's going to be some benefit felt. It's -- again, so it's not the kind of thing where people are going to just stay on the therapy because they have nothing else. In terms of coming back on therapy, we do have that. And so again, this is one of the things we talk to folks who say, "Well, how much further can this launch go? We're in the first inning, right? And 1 of the things you do in a launch and our teams do is we make learnings. So we've had discontinuations of 2 main buckets. One is lack of efficacy, not we know that not 100% patients are not going to respond to SEPHIENCE. And then we had other things like patient preference, taste and texture and things you commonly hear. So we were able to take that data point and get a couple of folks on our patient services team to focus specifically on taste and texture. So now we have programs before individual prescribed SEPHIENCE, they can now talk about that. Talk about different foods, you can mix SEPHIENCE, and we've now had a number of patients come back on therapy. So I think that's just a great example of what an experienced customer-facing team can do as you go deeper and deeper into a launch, leverage learnings, bring that back and continue to drive adherence and penetration.

Okay. And maybe just the reimbursement component of compliance, has that been trending?

Very good. I mean, so the payer policies have been very favorable. A part of this is coming into the launch, we had the AMPLIFY study. The AMPLIFY study was a head-to-head study of sapreterin versus SEPHIENCE, and it was a crossover study. So we were able to say for each specific individual what we're seeing. And again, we saw that 100% of individuals who had a response, tusapriterin had a better response to SEPHIENCE. We quantified that it was 70%, on average, 70% greater final lowering had a 100% increase in protein intake. So to be able to go to a payer and have those data from a well-done study in hand goes a long way to addressing needs for step edits and things like that. And in terms of reauthorization criteria, we've seen it pretty broad. It could be phenylalanresponse, protein response and also medical benefit. And that's super important because what we're hearing quite often now is that individuals on SEPHIENCE are enjoying some of the cognitive benefits, less brain fog, less anxiety, improved mood that may or may not directly correlate with Penolon lowering. So this is another opportunity to capture benefit aside from the 2 quantitative factors like fee lowering or protein and taking.

Got it. Okay. Great. And maybe -- maybe can you help orient us on the progress ex U.S.? It's kind of been fast and furiously. So how many countries has SEPHIENCE launched in thus far? And where are we in terms of access and reimbursement there as well?

So like we said this was going to be a true global launch -- and we had the benefit of already having global infrastructure with the exception of Japan, where we built that team, and they were ready and did a lot of market development work. So we were able to be in a pretty special position that within 6 months, we had European approval, U.S. approval in Japan approval. The ex-U.S. launch has gone great. We started in Germany. We're still in the process of finalizing pricing and reimbursement there, but the launch continues. And Germany represents a pretty large opportunity for us. We expect that once we have a final agreement on the price that we probably will see another inflection in patients because there's a number of folks there who are waiting for an agreed-upon price before putting patients on SEPHIENCE because they worry that the companies unhappy, they may pull out, and they certainly don't want to start patients at it. We're in named patient programs in a number of countries in Europe, including the France AP2 program and some of the countries in Southeast -- Southeastern Europe, we're in pricing and reimbursement discussions are starting them in a number of the larger markets in Europe. We started the launch in Japan at the end of Q1. So I think some of the growth that focus on Q2 came from the -- that strong early trajectory in Japan. And that's a great market. While there's maybe about 1,000 PKU patients there. We have an agreed-upon price for the next 10 years, that's on par with the U.S. net price. So that's actually great value for us. We have named patient programs going on in Latin America. We have -- getting ready to launch in the Middle East and North Africa. We have patients on in Canada. Brazil, we got the approval. As you know, the Brazil access procedure takes a long time. But you also know that our teams are very experienced. Currently markets 3 therapies in Brazil. We know very well how that system works. We've already laid the groundwork to get the first injunctions, which will lead to the first group purchase order. So we expect a number of these other markets to really start kicking in, in 2027.

So I guess on with that mention near term, is ex U.S. expansion the most important driver for new patient starts? Or what would you say is most important in the U.S. versus ex-U.S.

It's all important and we expect global growth. We said that we expect the growth in the U.S. to be steady and consistent. Again, we've gotten over 2,000 start forms, the 17,000 patients in the U.S. patients were tried on Kuvan has been a long way to go in the U.S. And we expect that switch dynamic to start coming into play more and more as we go deeper. I think growth outside the U.S. is going to have -- it's going to be steady with a number of inflection points. each time we gain access in the market, you're going to see an inflection of a larger number of new patients coming on. So again, we expect growth globally to continue for a long ways.

Okay. So maybe tying this success with SEPHIENCE back to the raised guidance that you provided for the full year. I guess, how much of that is the SEPHIENCE versus the legacy DMD franchise maybe speak to high and low ends of the guide as well?

I mean when we came into the year, we were very clear there was a lot of unknowns for the year. We were very confident that the SEPHIENCE is going to do well, but we were a quarter into the launch. And we had the DMD franchise, which we know is declining. We just didn't know what REIT. And so we were very clear that as we move through the year that we would continue to raise guidance. And now we're at $850 million to $950 million and obviously, a lot of that is SEPHIENCE and our confidence in continued SEPHIENCE growth. It's -- we still don't have clarity how much more we're going to get out of the DMD franchise for the rest of the year. We're looking at it from Plaza, there's 10 generics. So it's just a matter of time before someone drops that price and then you get a race to the bottom. That doesn't happen, we'll continue to tick along. And so that's sort of been where we are with the D&B franchise, but our confidence in the top and the guidance really comes from our continued confidence in SEPHIENCE.