Ultragenyx Pharmaceutical Inc. (RARE) Earnings Call Transcript & Summary

Everyone, my name is Matthew Holt, and I'm part of the JPM Biotech equity research team. It's my pleasure to introduce our next presenting company, Ultragenyx Pharmaceuticals. Presenting for Ultragenyx today will be the CEO and President, Emil Kakkis. And please note that following the presentation -- or it's actually at 1:30, there will be a breakout session in the Olympic room, which is to the left. So with that, I'll hand it over to you.

Thanks very much and good afternoon, everyone. I'm happy to be here to give you an update on Ultragenyx. This is our legal warning. Company now, I think, 2020, just coming close to 10 years from founding, is really positioned for significant value of growth. We have strong revenue drivers, with the Crysvita franchise, which is growing at exceptional rate in addition to other products, in fact, we expect to have 3 products and 4 indications approved later this year. With that, we have a diverse portfolio of early-stage clinical pipeline and current clinical pipeline, including gene therapy programs, generating data and generating value for us. And finally, we've -- our financial strength is in a very good place, with greater than $750 million in cash, and starting to turn the corner on burn with our significant 20% or greater decrease in our net cash burn for the year. So from a standpoint of revenue, portfolio and cash and financials, I think, we're in a tremendous position as a company 10 years after founding. If you look at the company in more detail, we've got -- we crossed $100 million of revenue this year, 2019, that was an important step in any company, and we've done it relatively quickly from standing start in 2010. Two products going to 4 later in the year, 2 commercial programs with multiple others on deck for IND filings and a 25,000 patient population. By 2025, we'll be -- we expect to approach $1 billion in revenue, 7 pros programs that are commercial, 5 clinical programs, maybe 150,000 patients potentially treatable. We expect to have more manufacturing base, including commercial gene therapy plant, in addition to the quality plant, we have already put together in addition to their network of CMOs to do our work for manufacturing. So our company on our way to becoming that larger and perhaps one of the most exceptional rare disease companies. If you dive into the revenue growth, particularly, Crysvita is forming the major base of that, but with Mepsevii and our next 007 program in addition to the TIO indication, we expect that to be a foundational growth of revenue going forward, heading toward $1 billion. And we'll expect the additional assets, including the FAOD product and some of the gene therapies and others to start adding to that growth in revenue. And we expect something like a 10x revenue growth in the next 5 years. So our company, on that trajectory, got that inflection point of becoming a commercial and profitable company. Now we put out our preliminary revenue in 2019, with $86 million to $88 million for Crysvita, including the European royalty. And then total company revenue, as I said, crossing $100 million. If you look at Crysvita for the coming 2020, we put out guidance for the first time with a couple of years of experience now in the marketplace. We're able to push out what we think are the numbers expected for the year in around $125 million to $140 million, which is substantial growth from where we were before. And we'll talk more about Crysvita launch dynamics in a few moments. Our cash position, I said, greater than $750 million. We did a $320 million royalty -- capped royalty financing. I think this deal allowed us to gain value from the royalty stream coming from Europe, where -- which was primarily driven off our partners work, but allowed us then to finance without dilutive -- diluting the company and put us in good position from a cash position going forward with enough cash runway to take us to 2023. When you combine that with the fiscal discipline we are applying, which is the reduced cash burn with a 20-plus percent decrease in cash burn, it puts us in very good position of turning the corner financially as a company. And we're excited about how that puts us in position then to drive the pipeline. Now the pipeline shown here, the top 3 bars that are green are products either approved are going to be approved, TIO indications coming, and it's been filed as we announced. The LC-FAOD program is filed, and those 2 should be moved over to approved by the end of the year. The clinical pipeline is right now is dominated by the 2 main gene therapy programs that we're running, but also there's a hemophilia program that our partnered buyer is running. In addition to that base of clinical pipeline, with 2 much larger indications of Wilson gene therapy and the Angelman program, both form product opportunities that are more on the par of Crysvita in terms of their potential and would help establish a broader base and a larger upside potential for the company going forward. And that is our plan in general to have a mixed risk return, smaller niche products that we can get, they're not competitive, that can allow us to get -- grow our revenue base. But we also will look for larger opportunities that can help build and grow value quicker as the blend of those will give us the best outcome. Here's the catalyst coming from the pipeline. We are expecting now to get in addition to the OTC data we just put out, we'll expect to get our glycogen storage disease Type 1 data this first half. In addition, the Angelman program will enter the clinic in the first half of the year. By the second half, we'd expect our review of LC-FAOD to be completed and PDUFA date is in July. With that, we also expect more data on DTX301 from the steroid cohort, we'll talk about in a moment. In addition, we'll get -- we'd expect additional data heading towards Phase III in DTX401, the other gene therapy program. So it's going to be a busy year, a very important catalyst, both gene therapy and other products and regulatory approvals. And we think trends value creation opportunity coming in this year. So let me dive deeper in the commercial programs and talk about where we're going in Crysvita, which is the main driver of our revenue. On the left, you can see the -- in the blue bars, you can see the Q4, the tentative numbers, about $30 million in the quarter. A little bit of a step-up from Q3 because of a small lumpiness in the shipment, but we can see Crysvita on track with the continuous growth in revenue. To put it in perspective, we put over -- we put worldwide net sales for Crysvita on the right panel in purple, those are the purple bars. And we've mapped top 10 rare disease launches, first 6 quarters, only excluding Spinraza it is the only one which is much higher. But I just put in perspective that Crysvita's launch is on par with the top rare disease launches ever. So I'd be clear of, as a company, first launching, we've done an exceptional job. And I'd point out to you that the pricing of Crysvita is probably half the pricing of the other products in that pool, which means with a smaller product price, but better penetration, we're actually achieving happy patients, happy payers, and a good company outcome. And I think that's very important as we think through hard about what we do in the rare disease model and sustainability, there are ways to do this, and we're being very successful doing it in Crysvita. Now 2 more launches coming. We expect the tumor-induced osteomalacia. We just had our discussion with FDA and agree on a supplemental BLA content in detail. It was filed in December, which is ahead of plan. And we'd expect to hear back in February about priority review status and the PDUFA date. For UX007, for FAOD, that PDUFA date's in July. We expect that program like a lot of inborn error products to build slowly and steadily. We know there's a lot of interest. We are getting a lot of name patient sales already from France in response to their request, with more than 30 doctors in France, for example. We think there's a lot of interest in this product, where there's a lot of FAOD patients are not doing well. So we expect there to be interest in the product, but it will take time to build, and around 8,000 or 14,000 patients developed world, and we own the product worldwide. So those are our 2 commercial programs adding to the Crysvita and Mepsevii story. Let's talk about gene therapy. And we put out some data recently in gene therapy, which is part of the basis for our rising stock price in the last week. Importantly, DTX301 is an AAV8 for OTC, ornithine transcarbamylase deficiency. It's a defect in the urea cycle. Urea -- the urea cycle is a way for your body to detox via ammonia. Ammonia gets produced in your body, you have to detox by making urea. That process is harmed in these patients, doesn't work effectively. The high ammonia levels leads to significant neurological problems, including potential coma, hospitalizations and death. Currently, this treatment's transplants are using scavenger drugs, they're incomplete, and there's a lot of room for improvement and something that could be potentially curative. The program data we put out, and this is from data from a Phase I/II study in 3 cohorts of patients, and we announced Cohort 3 data, and I'll tell you a little more about the total set of data. But the most recent data in Cohort 3 show we were getting responses really from all 3 patients. And this is -- means that, that higher dose is working better than the lower and middle doses and consistent with our belief that we needed to get to a higher dose in order to achieve the adequate level of therapeutic effect. We had another responder come out of the phase Cohort 2. They responded a little bit later in the time, but also with a significant benefit. Of all the patients so far who have gone enough time, we have 3 complete responders, that is they were able to get off all their drugs, all their diet and are doing well. And that, to me, is equivalent to a metabolic cure. And 2 of those patients never been on treatment in a couple of years. So this is a summary then of the 3 cohorts, Cohort 1, Cohort 2, Cohort 3. Cohort 3 is a new data we just put out with the responders and showing a more consistent response down in the Cohort 3. Cohort 1 and Cohort 2, complete responders are now a couple of years out and showing that the durability of their effect and their ability to stay off drugs and diet is continuing. So we feel good about both having a more complete response right now as well as long-term data showing benefit. Now one of the things we're diving more into is the ammonia story. The FDA has said the ammonia is really important as a clinical endpoint, they considered a valid clinical endpoint and they've approved other products for ammonia. So ammonia will play a big role in this clinical trial program. Not all patients have a high ammonia, because they may be on drugs and compliant with their diet. In the study in the last 4 patients, 2 of the patients had very elevated ammonias when you marker them over a 24-hour period, both of them, who had a response showed a sharp and dramatic reduction in their ammonia by 6 weeks, which was sustained during the trial. Among the other patients that started with a normal ammonia, patient 7 went off their drugs by week 7 -- I'm sorry, week 6, and they've continued normal -- in normal ammonias, despite removal of their diversion therapy. This is just a consistent part of the story, showing that we're changing the metabolic pathway of ammonia in these patients or changing the future of urea cycle patients who have ornithine transcarbamylase deficiency. So safety profile has been excellent, and we're comfortable that the Cohort 3 data at 1e13 is an appropriate dose from a safety perspective. They did have mild asymptomatic elevation of transaminases, which were manageable with, of course, as a prednisone. So we're comfortable with the safety profile e13. So where are we going from here with our OTC gene therapy? We'll enroll 3 more patients this first half, they'll be using -- treated with prophylactic steroids. We believe that could enhance the potency and their prevalence of expression and provide attention more consistent expression. And we want to look at something so simple as that to see if it would optimize the gene therapy. We'll look at that data. And if looks solid and we're impressed, we will then proceed and do another 3 patients. While that process, of course, is going on, we will be engaging with the regulators in discussing the design of the Phase III as well as the endpoints, but we are very comfortable with ammonia being part of the story. And the history of ammonia and our data we have to date that this is a product that's going to -- get to Phase III, and we believe will be a life-changing treatment for OTC patients. So let me touch on the Glycogen Storage Disease Program. We have not put out new data, we had data out in later last year. Glycogen Storage Disease Type Ia is a defect in the enzyme in your liver that releases glucose to the bloodstream. If you can't release glucose to the bloodstream, you get severe hypoglycemia, which can be lethal. You can die during your sleep, if you, for example, go low. It is treated currently by giving patients frequent doses of corner starch every few hours all day long. And some of the patients in the trials have been doing this for 20, 30 years starch. Now you might think, well, that's not hard. But it is hard if you think -- if I missed your starch dose, you're going to die. And if you look at the quote from Dr. Weinstein, this is a serious disease and patients like in it to having a gun to your head all the time. If you missed your math, you mess up your starch, you don't wake up, your alarm doesn't wake you up that you could die or your child would die. And so that stress is incredibly potent problem for these patients. And even with the starch management, which helps them, they're not normalized. They're not doing well. They're surviving, but they're not doing well. We think this is a very important disease. And we think that the biologist disease, I think, is well suited to gene therapy, where a small amount of enzyme, just 3% of enzyme, should be sufficient to reverse the problem and cause their liver to release glucose and achieve glucose -- independent glucose control. We put out data in the first 2 cohorts at 2e12 and 6e12, GC per kilo, all 6 patients respond. All 6 patients have responded, and even low-dose cohort have been weaning off their starch treatment showing that their livers are actually adequately producing glucose and that the need for cornstarch can be dramatically reduced. In Cohort 2, we think we saw more profound effect. And this shows you one of the examples of why we think it's a more profound effect. If you look at the green color in the baseline scan that green color indicates a high fraction of glycogen storage in the liver. And you can see at 24 weeks after the gene therapy, the color changes to blue because, in fact, the glycogen has been resorbed very evenly across the liver. These data and other data on glucose control and lactic control gave us confidence that the Cohort 2 data -- group treated with 6e12 was an adequate dose for effective treatment, and we've enrolled another 3 patients. So this is a summary of that data showing the both delivered glycogen results. So we're comfortable that this dose is a good dose. We're doing another 3 patients. One of the things we're looking at, though, is understanding how to test the time to hypoglycemia. The use of starch for these patients can confound that test. The next 3 patients will be tested without starch during that test, which will allow us to see more precisely what their liver can do without any support of treatment. And then we'll see what the gene therapy does without any starch in the background. We think this will make a cleaner result. And so the next cohort data comes out will be without the starch in the time to hypoglycemia testing. We think that will allow us to tell more exactly what the liver is doing and our confidence right now is that this will improve our assessment of what's happening. But our view of everything that's going on with these patients is that they have greatly improved glucose control. They're weaning down their starch requirements, and we think we have a treatment that could change the future for Glycogen Storage Disease patients. So next steps, we'll confirm this cohort. We'll get that data out this first half with the changes I've just mentioned in the starch regimen. So hopefully, your seat belts are fast, and we keep moving along. New gene therapy program coming ahead in Wilson Disease. Wilson Disease is a much larger disease, maybe 10x the size of some of the other disease we're working on. It is a disease of copper and metabolism these patients livers can't properly metabolize and detox via copper. It ends up filling up the liver, injuring liver, getting into the bloodstream, getting to the brain and causing tremendous injury. There are treatments, including key layers to help bind the copper, but they don't solve the problem of copper and metabolism, they help reduce the amount of free copper and the injury it can cause with this. By no means, a cure and no means sufficient for treating Wilson disease patients. We have been developing a gene therapy and shown down in the knockout mouse model, a very beautiful effect on reducing liver inflammation, reducing serum-free copper, reducing liver copper and improving the loading of copper on the Ceruloplasmin an important part of the biology of Wilson Disease. All of these factors tell us that we have the potential with this gene therapy to improve Wilson Disease. That program is currently setting up, we're heading to the clinic. We'll be using our 2,000 liter HeLa cell manufacturing process, which will allow us to go commercial and go straight through, and we hope to, of course, maximize our efficiency in development of this program with the experience we've had in the other programs. So I mentioned the HeLa system, the HeLa manufacturing system is the largest, scalable mammalian manufacturing system, involves using HeLa cells, creating a producer cell line from which you can recover AAV virus at large-scale is more akin to vaccine manufacturer, and we think is going to be a very high-quality reproducible commercial manufacturing for AAV and can produce multiple different types of capsids not restricted as you might be with baculovirus. We've been successfully doing this. We're doing it in the Wilson program, and it's also already been in the clinic in the Hem A program. The OTC and GSDI programs are using 293 transfection currently. The GSDI program will convert to HeLa post marketing. But the ability with the HeLa system, we think, is to greatly improve the scale and reduce the cost of goods, I think will be a standard for us going forward on our gene therapy programs. So the HeLa system, we think, has gotten some validation recently because our partner buyer has put out the first data from the Hem A program, which we partnered with them. And that showed a curative effect in the first 2 patients, this is one of the patients shown here, achieving 17% to 20% of normal and a bleed-free post. The important thing is that this dose, 5e12 is 1/10 the dose used by the BioMarin gene therapy program, 1/10 the dose, achieving curative effect. And no steroids were -- the patient was treated with no steroids in the 2 -- first 2 patient of that dose. So the safety profile, we think, was excellent. And we think there's great potential then for this. The HeLa cell system to reduce high-quality AAV and get highly effective gene therapy results. So we're encouraged to look forward on this program and how it continues to release data this year. Our interest is in -- we have milestones in a high single to low double-digit royalties on the Hem A program. The last program I want to talk about is a new program for Angelman. We did a last year -- a deal last year to partner with GeneTx, a company formed by a patient groups, with very expert parents who basically contract and developed a treatment for their patients. And that treatment, I think, the work they've done is exceptional, and we partnered with them to move forward on a -- an ASO, an antisense oligonucleotide to treat Angelman syndrome. Angelman syndrome is a neurologic disease, but it has a diverse set of problems, affecting both cognition, speech, seizures, ataxia sleep. And it's related to a problem and how their neurons functioned. But the neurons are all present. They don't lose neurons, they just don't function as well. And the potential then is that they can reverse this disease through the use of antisense oligonucleotide, which I'll explain. So the nature of this disease, we think, makes it one of the better diseases in neurology to treat or to be reversible. There is a Phase I/II study that's being planned for the antisense oligonucleotide, and I'll explain the mechanism of that drug. But that's expected to start this half with basically titration dosing of pediatric patients. And we're excited to see that work get going. Our GeneTx team is running that work. And we have an option to acquire this product, assuming they are successful. The science behind this is simple, yet complex, the UBE3A gene is the main gene that's deficient in these patients. But it's deficient because of a deletion, usually, most commonly in the female copy, the mother's copy. The male or father's copy is turned off. So the idea is if mother's copy is deleted, can we turn on the father's copy. But it turns out the father's copy is turned off with an antisense regulatory RNA that shuts down the gene. So by adding an antisense oligonucleotide to bind that antisense, the repressive RNA, we turn on the paternal copy of the gene that's already present in those cells. And by doing that, restore production of UBE3A and potentially other genes in the area, which we think will be -- is a powerful and very specific way than ASO, we think, could be the best strategy for treating this disease. The data so far, we were very impressed with and has shown that you can get the induction in a dose-dependent way of the UBE3A protein while suppressing the antisense RNA, which is shown on the left. And we've shown, most importantly, in monkeys that you can see induction of UBE3A in the cortex of monkeys, with doses in the 3- to 5-milligram range, which are well within the safety profile of the product. So we think they've come up with a very potent and specific antisense oligonucleotide, and we're excited to partner with this group and end up in the clinic soon. So be looking for Angelman. So where are we at as a company? 2010, 2019, we've founded, formed, built the pipeline, went public 2014, 59 employees. At 2020, we're now 750 employees. We've got 2 products approved, 2 more coming. We have revenue crossing $100 million. We have a gene therapy franchise. Two indications in play and others coming. An Angelman product program, a whole series of other early pipeline. We've become a diversified, rare disease company. In addition to that, in part, we haven't gone through is we are innovating how you design trials, how you design endpoints, and we're continually do -- improve how you can commercialize or how you post-marketing monitory patients, managing the cost structure by shortening the time and the post-marketing costs through various designs in our post-marketing programs and working the regulators on trying to establish a more efficient model for how drugs get developed. I think that's some of the special things we're doing as a company, and why we're an exceptional rare disease company. By 2021, 2025, we expect to get to 10x growth, be $1 billion -- have a $1 billion in revenue, multiple approved products, globally commercialize gene therapy programs and other pipeline, I think to be one of the -- probably the most, except for a rare disease company. So I'm excited about the work, and I want to thank all the employees and all patients that have helped us get to that point. So Q&A will be after a gap in time at 1:30 because there's some speaking session. At about 1:30 in the Olympic room, we'll do Q&A, and happy to answer your questions there. Thank you very much.