Travere Therapeutics, Inc. (TVTX) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Retrophin Corporate Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Chris Cline, SVP, Investor Relations and Corporate Communications. Thank you. Please go ahead.

Great. Thank you, Jimmy. Good afternoon, and thank you all for joining us on short notes today to talk about our agreement to acquire Orphan Technologies and their OT-58 program. A copy of the press release announcing the agreement as well as slides that outline our discussion today are available on our website and as part of our webcast. Today's call will be led by our Chief Executive Officer, Dr. Eric Dube. Eric will be joined for the prepared remarks by Dr. Bill Rote, Senior Vice President of Research and Development; and our Chief Financial Officer, Laura Clague, will join us for the Q&A session. Before we begin, I'd like to remind everyone that statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statement. Please see the forward-looking statement disclaimer on the company's press release issued earlier today, as well as the Risk Factors section in our forms 10-Q and 10-K filed with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made, October 22, 2020, and Retrophin specifically disclaims any obligation to update such statements to reflect future information, events or circumstances. With that, let me now turn the call over to Eric. Eric?

Thank you, Chris, and good afternoon, everyone. Thank you for joining us today to talk about our recent announced agreement to acquire Orphan Technologies and their OT-58 development program. As many of you know, we have long-held the belief that we can be most successful in strengthening our position as a leader in the rare disease community by continuing to access external innovation and pairing it with our proven capabilities. In this approach, we adhere to criteria that allow us to remain disciplined and focus on opportunities where we have the highest probability of success. Within this framework, we get most excited about programs where we can make a difference, by addressing a significant unmet need for patients with a rare disease, where there is outstanding science that supports the potential to provide a meaningful treatment option for patients and where there is a clear strategic fit that gives us confidence in our ability to be successful and create value. OT-58 meets all of these criteria. Throughout our diligence, it has been clear that a significant unmet need exists for people living with classical homocystinuria, HCU. This rare autosomal recessive disorder caused by mutations in the cystathionine beta synthates or CBS gene results in a toxic buildup of homocysteine levels and reductions in cystathionine and cystine, which lead to serious complications for people living with HCU. The outcomes in HCU can be great. The literature suggests that approximately 25% of HCU patients by age 16 and 50% of patients by age 29 have thromboembolism, which can lead to heart attack and stroke. People living with HCU also face the risk of dislocating their eye lens and extreme nearsightedness, skeletal complications including osteoporosis and developmental delay. This is especially troubling because there are no approved treatments that specifically address the underlying genetic cause of HCU. The current standard of care aims to reduce homocysteine levels through a highly restrictive diet, combined with supplements, vitamin B6 and betaine. But many patients are nonresponsive to vitamin B6 or unable to maintain a consistent or normalized level of homocysteine. Not only are there available treatments inadequate, but patients also face challenges with compliance and adhering to a difficult low protein diet, especially as they age. This is particularly dangerous as periods of poor metabolic control have a cumulative acute serious effect and can result in lifelong risk of thrombotic events and cognitive impairment. There is a clear need for treatment options that can address the underlying cause of HCU. This is where we believe OT-58, supported by an established enzyme therapy approach and compelling preclinical data has great potential. Before I turn it over to Bill to walk through some of the scientific evidence that has been generated to date, I would first like to highlight the excellent approach the Orphan Technologies team has taken to advance OT-58 over the last several years and provide a bit of detail on the deal terms. Orphan Technologies is a small virtual biotech company whose mission has been dedicated to helping patients control their homocysteine levels. They have spent the last several years focusing on advancing their science and the field through listening to the patient and medical communities and applying those learnings to the OT-58 program. From the outset, they have integrated the patient voice and taken meaningful efforts, including the creation of an ongoing natural history study to expand the understanding of HCU and the needs of patients. We are excited to carry on this work. We're pleased that the Boards of Directors of both companies have approved the agreement. And subject to the satisfaction of customary closing conditions, we expect the transaction to close in the fourth quarter of 2020. Under the terms of our agreement with Orphan Technologies, we will make an upfront payment of $90 million in cash upon closing of the transaction. Orphan Technologies shareholders will also be eligible to receive up to 200 -- $427 million in additional cash payments contingent upon the achievement of key milestones in the development and commercialization of OT-58. And we will also pay a tiered, mid-single-digit royalty on future net sales of OT-58 in the U.S. and Europe. As of June 30, 2020, we had approximately $457 million in cash and marketable securities, so we're in a strong position to utilize our balance sheet to fund this transaction and maintain runway well beyond the data readouts from DUPLEX and protect. Let me now turn it over to Bill to go through some of the preclinical evidence that gives us confidence in OT-58's potential. Bill?

Thank you, Eric, and good afternoon. As Eric mentioned, we became excited about the potential of OT-58 in what was part of a clear scientific rationale and a striking preclinical efficacy data package that the team at Orphan Technologies has generated. [indiscernible] HCU is due to a reduction cystathionine beta-synthase enzyme activity, resulting in a toxic buildup of its normal substrate homocysteine, and a reduction of the downstream products cystathionine and cysteine. OT-58 is a PEGylated, modified recombinant truncated human enzyme designed to address this underlying genetic cause of HCU, by introducing the CBS enzyme into the circulation. Replacement and CBS enzyme is a highly rational approach for this disease and the potential of enzyme replacement treatment in similar metabolic indications has been well established. For the design of an enzyme replacement strategy, native CBS does not remain stable when dosed directly into the system. The design of OT-58 solves this challenge and provides for this candidate to be administered subcutaneously. The hypothesis underlying this approach is that OT-58 can safely reduce both intracellular and plasma homocysteine levels. Safety and pharmacokinetic studies have been conducted in multiple animal models of CBS-sufficient HCU. From a safety perspective, we've been encouraged by the successful toxicology studies in mice and nonhuman primates, which have enabled entry into the clinic. Pharmacokinetic studies have demonstrated that OT-58 remains active and stable in plasma, demonstrates high bioavailability following subcutaneous injection and has a long half-life, all of which are consistent with the potential for patient self administration. Importantly, administration of OT-58 in mouse models of HCU resulted in up to 70% to 90% reduction of plasma and tissue homocysteine levels. It's important to note that the native CBS enzyme exists in tissues, while OT-58 remains predominantly in circulation. However, OT-58 has demonstrated in multiple animal models, the ability to reduce homocysteine in both plasma and tissues. This effect is believed to occur by decreasing extracellular homocysteine levels and creating a metabolic sync. The metabolic sync phenomenon suggests that by lowering homocysteine levels in the blood and given the ability of homocysteine to move freely across cell membranes in the blood-brain barrier, OT-58 creates a concentration gradient that causes homocysteine to move from areas of high concentration, specifically in tissues, to the circulation where it has been metabolized. These preclinical mouse study data have a clear fit with a hypothesized mechanistic rationale and give us confidence that OT-58 should meaningfully reduce homocysteine levels in patients. Simply put, these patients lack a critical enzyme, and the preclinical data shows that OT-58 replaces it. As Eric mentioned earlier, common symptoms from living with HCU are risk of life-threatening thrombotic events as well as skeletal complications including osteoporosis, dislocation of eye lens and extreme nearsightedness. Patients with HCU can also suffer from significant cognitive deficiencies as a result of this disease. In additional preclinical research, OT-58 prolonged survival and prevented loss of bone mineralization and fat content in the neonatal lethal knockout mouse model of HCU. And OT-58 also showed an ability to preserve ocular fiber integrity and prevented the degradation of those structures that secure the lens of the eye in place. The totality of this early evidence supports our belief in the potential of OT-58 to ultimately become the first disease-modifying therapy for HCU. OT-58 has been granted rare pediatric disease status and has received fast track designation from the FDA, as well as orphan drug designations in both the U.S. and in Europe. The compound is currently advancing in a Phase I/II dose escalation study to assess its safety, tolerability, pharmacokinetics, pharmacodynamics and clinical effects in patients with classical HCU. And pending further impact of COVID-related disruptions to enrollment, we anticipate data should become available from this important proof-of-concept study next year. Let me turn the call back to Eric for his closing comments. Eric?

Thanks, Bill. I would be remiss if I didn't highlight that October is HCU Awareness Month. And thus, it is a fitting time for us to begin our work in earnest to help raise awareness as we plan for the continuation of the Orphan Technologies team's efforts to ultimately bring a new treatment option to this community. There's a clear unmet need in HCU, and there is a strong scientific support for OT-58 to potentially fill the gap by addressing the underlying cause of the disease. Strategically, there's a clear fit with our mission and our approach to accessing external innovation to strengthen our position as a leader in rare disease. This transaction will expand our clinical stage pipeline beyond [indiscernible] and pair a promising first-in-class program with our late-stage development and commercialization capabilities. In doing so, we believe we will increase the potential for OT-58 to become an impactful new treatment option for patients with HCU and build upon our growth potential in the years ahead. Importantly, we will be adding OT-58 in an exciting time for our company. Our pivotal Sparsentan programs are making sound progress and both remain on track. We continue to expect the interim data readouts from the DUPLEX study in FSGS during the first quarter and PROTECT study in IgA nephropathy in the third quarter of next year. As we have done with Sparsentan, our plan is to continue the development work of OT-58 with the highest quality and at the urgent pace that these patient communities deserve. Let me now turn the call over to Chris for Q&A. Chris?

Great. Thanks, Eric. Can we go ahead and open up the lines for Q&A, please?

[Operator Instructions] Our first question comes from Maury Raycroft with Jefferies.

Congrats on the update. First question is just if you can talk more about what you've seen on the clinical side and how you're, I guess, what you've seen that's justifying the upfront for $90 million and what are some of the assumptions behind that? And is one of those assumptions that the drug is going to be a disease-modifying drug?

Thanks, Maury. Certainly, I think what we see is, first and foremost, the opportunity within the homocysteine urea patient population where there is a high unmet need, where there is a lot of work that's now emerging within the natural history of this disease, where homocysteine levels may be predictive of these outcomes that are so [indiscernible] with DUREX studies patients. I'll ask Bill to share a little bit more about what our evaluation has been of the preclinical and the clinical data, and we believe that the value of this deal is very much in line with those within the rare disease space of late. Bill?

Yes. Yes, certainly. I mean, we've been watching this program for some time. And one of the things that really impressed us was the fact that the approach goes right at the mechanism of the disease. And that allows it to restore the metabolic defect that these patients have. You've got an intersection of 2 biochemical pathways where you have an enzyme defect, and that defect causes the metabolite upstream of that to be accumulated and downstream to be deleted. So the -- it really we saw the data in the preclinical models, in multiple models that were very consistent. And as we mentioned in our prepared remarks, lowered homocysteine, both in plasma and in tissues and had pharmaceutical properties that were amenable to home self-administration, look like a very attractive overall package from the early days and continues to do so.

I think the other thing, Maury, that we'll add is that this is -- the approach is a very established enzyme replacement therapy approach in a disease where we consistently see evidence that elevated homocysteine levels are deleterious. And a reduction, as we've seen, as Bill mentioned, in the animal models, and then -- and of course, within the Phase I, Phase II, which remains blinded, will test that hypothesis. And what we've seen thus far on a bonded basis gave us the confidence. But now it's the right time for us to transition this asset into the next phase of development.

Got it. That's really helpful. And then probably still early days for this, but I guess what can you say about a path to a pivotal study, the timeline to potentially get to that study and maybe even get to market? And what would end points for a pivotal study look like?

Sure. So it's early in terms of our assessment of that Phase III program in terms of what we would communicate externally. We'll certainly share more once the deal has closed. And what we can say right now is that we expect to have this Phase I/Phase II data sometime next year, but then we'll give a very clear pathway to further development and then, of course, the regulatory pathway. And as I mentioned, we'll be looking for a way that we'll be able to ensure high-quality and high probability success with moving very quickly in the developments here.

Our next question comes from Scott Puckhaber with Bank of America.

You know the toxic levels of the homocysteine can be -- can lead to cardiac events of heart attack and stroke. So just wanted to quantify that a little bit more, what levels are you referring to here as toxic? And then how comfortable are you that the reduction of these homocysteine levels are correlated with the prevention of cardiovascular events? And then I have a follow-up.

Thanks, certainly. Bill?

Yes, happy to. If you look in the literature, ther have been a few publications where they've really worked at trying to quantify that. And they looked retrospectively around the time period as treatments emerged and looked across a range of patients, some that were well controlled and some that were not. And they were able to draw distinctive differences in and around those patients that had less than 120 micromolar concentration of homocysteine, that's still well above normal. But those patients that were held below that, especially in the vitamin B6 nonresponsive patients, had dramatically lower rates of adverse events, whether it was the cardiovascular events or lens dislocations. We also can see a clear distinction in IQ and cognitive abilities and executive function for those that are maintained below 100. So that's really widely seen throughout the treating community as a reasonable line there. So that -- I think that was the first half of your question. The second was really around end points going forward. I think that there still needs to be work done to describe the linkage between levels of homocysteine and overall outcomes. And supporting that, Orphan Technologies has started and very early days, and began a natural history study. Some of the patients in this study have been in there for 3 years, and they've tracked 4 events as well as homocysteine levels and that correlation can -- and some of that work has been published and it's ongoing. And that will be supportive of our regulatory efforts as well.

Got it. Okay. And then you guys say about 3,500 patients from the U.S. and a similar number in the EU. But maybe you can help us characterize how many of these patients that are on current synergy standard of care would be eligible. And given these potential smaller patient numbers, any initial thoughts on insurance coverage versus standard of care? How many patients would have to progress for coverage to get the therapy? Would be helpful, just thinking of market potential.

Certainly. So based on the best estimates that we have seen, that's right, about 3,500 patients within the U.S., there is certainly a lot more work that we will do to ensure that we understand specifically who would be at risk and would benefit from it OT-58 based on the in depth EPI work that was conducted by Orphan technologies, looking through claims data as well as the genomic analysis. That analysis and that research suggest that the true equivalence could actually be higher. So that's where we would be looking at additional work. What we do know in terms of those patients that would be considered vitamin B6 responsive or are treated, they're less than half of the homocystinuria patients are considered vitamin B6 responsive. So we believe that there is a substantial proportion of the market that could benefit. And even for those patients that are responsive, oftentimes, we see that they're not effectively controlled in their homocysteine levels. And so we believe that this could become the standard of care for these patients, not only because of the proportion of patients that could be controlled, but also because, again, it goes directly at the defect, the enzymatic defect of these patients.

And our next question comes from Michelle Gilson with Canaccord.

Could you maybe elaborate a little bit about the patient journey for homocystinuria? What -- how are patients diagnosed? Is there a lot of overlap in the physicians that treat patients with Thiola or any of the other therapeutic areas that you are active in? And could you maybe talk a little bit about these vitamin B6-treated patients? And if you alluded to that, some of them not being effectively well controlled, how early in the -- how early do these patients need to be treated? And how much opportunity is there to expand into those responsive patients?

Certainly. So Michelle, thank you for your questions. I'll share my perspective and I'll invite Bill to provide any further information. We do know that the patient journey, as it's often with rare disease, it is quite broad. Many of these patients are, in fact, diagnosed through a newborn screening that -- because it's a genetic disorder. These patients can be effectively diagnosed early. However, newborn screening does not test exactly for homocysteine levels. And so some of these patients that don't have elevated homocysteine levels at birth do actually progress in childhood and may be diagnose later when they start to have issues with eyesight and lens dislocation. Others may be diagnosed in teenage or early adult years where they start to have thromboembolic events or sight problems. And so early diagnosis as is often the case with genetic disorders, is absolutely critical. And that's precisely where we believe we'll be able to help once commercialized, given the proven commercialization capabilities that we have, particularly within our bile acid portfolio. Many of these patients who are in care or being treated by pediatric geneticist. And with our bile acid portfolio with cobalt, we do have relationships and work very closely with the majority of pediatric geneticists here in the U.S. So we'll be looking to expand those capabilities in order to bring OT-58 to market.

Great. Could you also on -- sorry.

I Just want to cover the second half of your question, Michelle. The B6-treated patients, and you asked some about their control and how early are they treated. Just about everybody is trialed with B6. And the responsiveness is determined simply by whether or not they see a reduction in homocysteine. There's about 160 different genetic mutations that can impact the function of the CBS enzyme. And some of those are amenable to B6 supplementation. So you're adding the cofactor back that helps us a crippled enzyme work better. But many of those patients do not, a little over half. And so that's where B6 comes in. Most of these patients are going to be on it, whether it's very effective to them or not. So there's really an opportunity to improve care. And I think the other thing that's really important, those that are diagnosed early and remain on treatment do pretty well. But every time that they lose control because of diet, excursions or going off therapy, the damage that's done is cumulative. And there's not a way to get that back. So a more effective therapy that hold them under control and in a safe zone, from a homocysteine concentration standpoint, would have lifelong benefits to those patients, regardless of which category they might fall in or how responsive they may or may not be to B6. So I think that there's application for this broadly.

And is there a spectrum of response to be B6? Or -- and I guess, what is kind of the level reduction where physicians would consider them controlled on B6?

Well, for -- you'll find in the literature, some people will create a cutoff for B6 responses that they like to see them get below 50. And if you can't get them below that, they're either unresponsive or partially responsive. And it's somewhat of an arbitrary classification because you've hit it. It is a spectrum of response, depending on the location and the impact of the specific mutation in that patient.

Okay. And I guess, could you also maybe address the competitive landscape and why OT-58 is the brand that you decided to acquire and move forward?

Certainly. So as we understand it, there is not another clinical stage program. There is another company that has indicated that they are initiating a Phase I/II study in homocystinuria. But as far as we know, they have not yet dosed. And so we're not aware of any other program that's in the clinic. And so we believe that OT-58 is a lead program and would be first-in-class for the treatment of homocystinuria. There are differences between that other program and OT-58 in mechanism of action that really led us to prioritize this as an opportunity.

Congratulations on the deal.

And our next question comes from Gena Wang with Barclays.

This is Dave on Gena. Congratulations on the deal. So I have a question. A couple of questions actually. So the first question is on the half-life of OT-58. You mentioned there's a long half-life, can you just provide some more additional color on the half-life and those efficiency in those patients?

Yes. the clinical trials are still underway, so I can't comment at this point on human data. But in animals, probably the best surrogate was nonhuman primates where the half-life was between 3 and 4 days. In mice, it was over 24 hours. So when you scale that up, it suggests a very attractive half-life for infrequent dosing.

Got it. And then for the -- if this went to steady, just your enrollment in 2018. Can you just talk about the current progress on enrollment, including how many patients have enrolled? And was there any challenges in terms of patient enrollment and ostentation?

Yes. There -- it's a multi-step dose escalation study, multiple cohorts. The study has been progressing very well and has gone through multiple DMC reviews. There have been challenges with COVID and the ability for new patients to enter the study. Many of the sites have not been open to new patients. The desires to take -- to keep rare disease patients out of a dangerous place like the hospital. For those patients that were already in the study, Orphan Technologies was able to transition to home visits to continue to collect data to maintain the progress of the study but also to preserve the safety of the trial participants.

Got it. And then last question is just talk about the first dose, your dose estimation Phase I/II trial. Can you just talk about where exactly is that dose level? And is that dose level within the window based on the animal studies?

So I don't believe that the individual dose specifics have been released at this time, it's probably premature for us to get into that level of detail.

Importantly, as we look at the -- when we would expect to have data that would be next year. And so David, we'll be able to share more detail in terms of the data, the safety and the dosing next year. We'll be able to share much more detail with regard to that in the coming months. But I think importantly, as it relates to your question around the current status of the study, we're on track to be able to provide those data next year.

And our next question comes from Do Kim with BMO Capital Markets.

This is TK on for Do. Congratulations on the deal. And just a couple on my end. The first one, this -- it might be early days to answer this, but from a clinical trial perspective and what you've elucidated in terms of the best time to treat these patients, which is as early as possible. Given that the current trial, at least enrollment is 12 years of age and older, would that mean you're going to potentially have to run a full Phase III or you can start dosing patients that are in a younger bracket just to kind of, just capture the entire pediatric population? And then my second question to that, again, I understand that you don't have much data from a clinical perspective or can't talk about it much. But from a -- also preclinical standpoint, has there been any due diligence done on the potentiality of accumulating PEGylation of this drug, lead to some type of toxicity? From I understand, I think some of the regulatory agencies, specifically EMA, could be quite scrupulous when they're evaluating drugs for pediatric population that has PEGylated formulation. So if you're able to opine on either of these questions or both, that would be very helpful for us.

Certainly, yes, thanks for the question. I think your first question was really around do we have to complete the Phase III trial before we can advance to pediatric patients younger than 12? I'll preface my remarks that we haven't had a chance to discuss any of this with the agency, so that this is a theoretical. But strategically, we would -- in many of these pediatric diseases, you'll start with the older pediatric cohort. And that's really the 12 to 18, by definition, both in the U.S. and in Europe. And then as you develop a better handle on safety tolerability profiles versus exposure, then you can widen that inclusion criteria to include lower-aged patients. And that is what we anticipate would be the strategy going forward. The current study, as you correctly outlined, as patients both in the 12 to 18 range as well as those in the dose-ranging study, so that we do get experience across that range. And as we get additional clinical experience, we will widen that. It's not anticipated that you would complete Phase III and then start working down into the earlier pediatric groups, and we would anticipate building that into a Phase III strategy. Your second question was around PEGylated molecules and their overall safety. Clearly, in a diligence process, that would be something that we would pay specific attention to. And without getting into the details of the nitty gritty of that, we were satisfied looking at tox reports on the overall safety program that this was a very well tolerated therapeutic and that there weren't liabilities there that gave us undue pause, and that includes anything specific to pegylation.

And our next question comes from Tim Lugo with William Blair.

This is Lachlan on for Tim. I was sort of interested in the natural history study as well, both in terms of sort of when does symptoms start? What's the diagnostic pathway like? It sounds like there is new bond screening, but maybe it's incomplete or you haven't captured all the patients. So what's that like and the symptom progression? And then how do you see this playing into future development? Would you envision it sort of being a control arm or would it just help you inform clinical end points?

Yes. So certainly, we were very pleased with the natural history study as it was started in, I believe, 2017, really providing a further understanding of the disease progress. And what we do see is, as I mentioned, many patients are diagnosed and caught on the newborn screening, but there's a large proportion of these patients that go undiagnosed until they start to see the clinical symptoms emerge. And I think what we'll be looking to do is to continue that natural history study to make sure that we continue to further understand the age of onset of these symptoms. But also, as Bill mentioned, the connectivity and the predictive nature of homocysteine levels and these clinical sequelae. I wouldn't be able to comment at this point on the potential design of the Phase III and whether the natural history study will be used as a control arm. But certainly, they will be used to support the overall package and the direction of how we will design the Phase III. And as you know, in rare disease and particularly in diseases that begin early, we want to make sure that we're moving as quickly as possible in leveraging the natural history data in such discussions with regulators.

And can you -- are you able to say how many patients are in the natural history study at the moment? And maybe when we could expect to see the next readout of data, I guess, at the moment.

So Lachlan, we've not disclosed much more detail about that, but that's certainly something that we'd be looking to provide further updates in the near future. Bill, is there anything that you'd like to add?

There over 50 patients in that study. And there has been one presentation of some of the preliminary data coming out of that from one of the members of Orphan Technologies. So and as you say, Eric, we can provide further updates in the future.

And our next question comes from Laura Chico with Wedbush Securities.

I guess, first question maybe. I just wanted to clarify. My apologies if I missed this, but I'm wondering if you can help us understand exactly what you're looking for in the Phase I/II results in 2021. And I guess, specifically on efficacy, but also in terms of safety, just maybe getting a little bit more granular. Obviously, Pegvaliase has had some tolerability issues there. So I guess, it sounds like from the blinded data, you're not seeing necessarily similar dynamics as we saw with Pegvaliase, some of the safety dynamics. But wondering if you have any more color that you can verify in terms of what we should be looking for in 2021.

Certainly, Laura, thank you for the questions. Yes, on a blinded basis, we have been pleased with the studies thus far. Certainly, we want to look at safety and tolerability, that's the primary objective of the Phase I/II. We will be looking at dosing to ensure that we have clarity of dosing as we go into a pivotal study. And then, of course, we would be looking not just at levels of homocysteine and lowering, but also in any potential clinical end points that we see in terms of bone density, ocular symptoms, cognitive function, et cetera. And so that's something that we will be looking at very closely as we conclude that study next year. Is there anything else that you'd like to add there?

Yes. I think that part of what's distinctive and a clear differentiator with a strategy like Pegvaliase, this is a human enzyme. So you aren't taking a molecule from different species. It's a human enzyme, it's truncated and PEGylated, which should reduce immunogenicity and the signal to the immune system. Which I think is one of the key liabilities with the compound that you referenced. So certainly, that's an area of interest to continue to monitor and one of the key objectives of the study.

Okay. Great. And then I just have 2 clarifications. One, there were some prior questions around the newborn screening. And I think you're kind of getting at the more intermediate HCU versus Class HCU. So I just want to make sure we're -- I'm correct here, but you're focusing primarily or only on classical HCU, is that correct? Or is there an opportunity for OT-58 to be applied to more intermediate cases?

Thank you, Laura. At this point, we're focused in this program on classical HCU. And certainly, 1 of the things that we will be looking at is whether there are other opportunities for further development. But that's something that we can update at a later date.

Okay. Great. And just one last clarification. I know you have rare pediatric disease designation. Would this actually qualify for a priority review voucher just given -- I'm not sure about the distribution between pediatric and adult patients.

Yes, we believe that, that is an opportunity for this asset.

And our next question comes from Joseph Schwartz with SVB Leerink.

Congrats on a very interesting deal. Just to ask you to expand a little bit about a couple of the questions that have gone towards the potential for immunogenicity. I was wondering, since it seems like there has been some reactogenicity to not just the enzyme, but also the PEG component of things like Pegvaliase and PEG Uricase. How have you -- how is OT-58 PEGylated? And how have you gotten comfortable that the PEG component is not likely to promote immunogenicity? And then is the -- is any of the development milestones oriented towards potential gating factors that would be aligning with your ability to gain some insight into the potential for the drug to be safely and tolerably administered?

Sure. Bill do you want to take the first part?

Yes. Let me take the first part around the immunogenicity. The PEGylation, the group at Orphan Technologies initially looked at different lengths of PEGs, different sizes of PEGs and different configurations, branch versus linear and different attachment moyes. They screened quite creatively in a paradigm in mouse models that were a repeated challenge, designed to identify those that were recognized by immune system. And there, you'd see a reduction in exposure on subsequent doses, and hence use that as a screening tool to pick PEGylation strategies that were less perturbing to the immune system. And keep in mind, this is human enzyme going in the mouse. They settled on a linear 20 kilodalton PEG as the one that was the optimal model from both an immunogenicity and animals perspective as well as some of the PK and pharmaceutical properties. It's certainly important to note that immunogenicity in animals doesn't necessarily always predict what you see in humans. But it's certainly a good initial screen. And we'll need to wait and see the results of the clinical investigations. What we've seen to date is there are no issues that we've seen to date. And we're -- I've been quite satisfied with the way they're surveilling it, which was one of the things we looked at in diligence. You can set up immunogenicity screens that are designed in such a way where you really don't see much. This one's really done well and quite robust. Very satisfying.

Thanks, Bill. And to your second question around the terms and milestones, we've not disclosed the specific terms around future milestone payments. What I can say is that the payments are tied to the typical milestones. And so if we are not able to advance because there are safety issues that emerge or other challenges, it certainly would limit the payments. And as Bill mentioned, what we've seen thus far has given us confidence that there would be a pathway for further development.

Okay. Great. And then if I could just follow-up a little bit. Sorry if it was asked already, but can you talk a little bit about how OT-58 is being manufactured currently? And what the plans to scale up manufacturing are?

Certainly, it's done, as you can imagine, with a virtual biotech company through contract manufacturers, expressed in E. coli. And then once expressed, spent. The scale right now is a 100-liter scale and the tech transfers underway and the funds are there to scale it up to thousands 1000 [indiscernible] show that should be a [indiscernible] market. We'll be looking that to confirm whether that's where we are or do we want it to be larger. But very concise, well-designed program for basic E. coli eruption. No issue in our first data.

And I'm showing no further questions in the queue at this time. I'd like to turn the call back to Chris Cline for any closing remarks.

Great. Thank you, Jimmy. And thank you, everybody, for joining us today on short notice to talk about OT-58. This concludes our call. We look forward to speaking with you again very shortly here on November 5 for our upcoming 3Q earnings call.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program, and you may now disconnect.