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

Thank you, everyone. My name is Gena Wang. I'm a smid cap biotech analyst at the Barclays. I first hope everyone stay healthy, and I would like to thank all the participants, investors, companies and especially our event team and corporate access team who made this virtual health care conference possible. With that, I would like to introduce our next speaker, Shalini Sharp, Chief Financial Officer from Ultragenyx. Shalini, I'll hand over to you.

Okay. Well, thank you, Gena, and thanks for being dynamic at Barclays to adapt to the situation. We appreciate that, and thanks for having us. So I believe everybody has slides from us, and I will tell you what page number we're on, and we'll just do a few brief comments and then jump into Q&A. So starting on Slide #2. Ultragenyx is obviously a rare disease company. We feel we now have 3 very strong pillars heading into 2020. First of all, our revenue and commercial business is growing, and our first launches have gone very well, and we have additional indications and launches expected for 2020. We also have an extraordinary pipeline of clinical -- preclinical and clinical programs. We have several modalities, including small molecules, biologics, gene therapy and mRNA. And we are entering 2020 with $760 million in cash and investments as of the end of 2019 and expected reduction in net cash burn as a company as well. On Slide 3, you can see what our vision is shaping up to look like for 2025. So significant, roughly 10x revenue growth potentially by 2025, moving from 2 to 7-plus commercial products, moving from 2 to 5-plus clinical programs and being able to address something like 150,000 patients as opposed to the 25,000 we address today. We also currently use contract manufacturers. In the future, we also expect to have a GMP gene therapy manufacturing facility, which we're planning to kick off this year. On Slide 4, you can see a little bit more of a pictorial around our expected revenue growth. And one important thing to note here is that a lot of this revenue growth is coming from products that are already on the market. And so totally de-risked from an investor perspective. And we also have a lot of engines for growth here. So we have new indications and new programs as well, including FAOD, GSDIa, OTC, Wilson and Angelman. Moving to Slide 5, a little bit more detail on the financial front for the company. So we didn't disclose obviously our year-end 2019 results on the revenue front with total revenue of over $100 million, and then we provided 2020 guidance for Crysvita revenue only. So Crysvita in Ultragenyx region, we're guiding to revenue in the range of $125 million to $140 million, which is significant revenue growth and it excludes the European royalty for Crysvita, which we monetized in Q4. So you'll see, as a result of that monetization of $320 million in Q4, we have a cash balance -- cash and investments balance at the end of 2019 of $760.4 million combined with in 2020 an expectation of reducing our net cash burn by over 20%, both through revenue growth and through modest increases in operating expense. So overall that provides us a cash runway into mid-2023. So we feel we're in extremely strong financial position. Moving to Slide 6. You can see a little bit more detail on the Crysvita launch. On the left side, you'll see the quarterly total sales for the product as well as start forms and reimbursed patients. And on the right side, an interesting analysis that shows you total revenue for this product over the first 6 quarters of launch compared to these dotted lines, which represent the other rare disease launches that are similar over the last several years of a certain size. And essentially, all but one outlier, we are able to show that we compare very favorably, and that is despite the fact that we are priced at half to 1/3 of what some of the other rare disease products are priced at. So I think we've shown a phenomenal execution in the commercial part of the business. Moving on to Slide 7. You can see our pipeline of just clinical programs. There are additional 15-plus preclinical programs that we're not showing you here. We have at the top of the slide, a few of our commercial products or close to commercial products. The DTX301 and 401 are gene therapy programs, both of which expect data this year. We have a partner program for hemophilia A and gene therapy as well with Bayer, and we expect an IND for Wilson disease and gene therapy later this year. We also have an IND already accepted for an ASO for Angelman syndrome with our partner Genetics. So you'll see on Slide 8, and this is our final slide, just the anticipated catalysts for the year. So for Crysvita, we do expect a decision, a PDUFA date of June 18 for a new indication called tumor-induced osteomalacia. For UX007, we have a PDUFA date and on July 31 for long-chain fatty acid oxidation disorders. For DTX301, we've had cohort 3 data in the first half of 2020. We expect cohort 4 data, which is the same dose of prophylactic steroids in the second half of 2020. For DTX401 and GSDIa, we expect cohort 3 confirmatory data, so same dose level as cohort 2 in the first half of this year, and initiation of a Phase III program by the end of the year. As I mentioned, we filed the IND for Angelman syndrome and we expect Phase I initiation imminently. And finally, we expect an IND submission for Wilson disease gene therapy by the end of this year. And with that, I'll turn it over to Gena to see if there are any questions.

Thank you, Shalini. That's very helpful. And maybe I will just start with Crysvita. We've seen quite some impressive quarter-over-quarter growth, especially in the U.S. Could you just highlight the key drivers of the growth in the U.S.?

Sure. Yes. So I think if I showed the quarterly sales data for Crysvita and you can see there was a little bit of a timing shift of some revenue from Q3 into Q4 just because of the timing of shipments. But overall, we're very pleased with the growth rate in the U.S. and really, this is driven by all parts of the funnel. I think at the end of the funnel, it's improvement in the rate of conversion of treated patients to reimbursed patients. We've also I think, been very successful at converting identified patients to treated patients, and we're very focused on identifying new patients at all times, and we can talk about that a little bit further in the discussion. The other piece that I think is going to be interesting and helpful here, and this happened in Q4 as well is we have improved labeling for the program. So we have longer-term adult fracture healing data, and we have Phase III head-to-head pediatric data compared to oral phosphate. So that was just starting in Q4, but we do expect to see some impact of that heading into 2020 as well.

Great. So do you think that that was the reason causing a little bit of uptake of adult patients where you start to see the breakdown of the ped versus adult from previous 60 to 40 now turning to 55 and 45?

That could be part of it. Yes. I mean we do expect to see potentially more adults on treatment moving forward because the prevalence of this disease is such that there are about 3,000 U.S. patients who are pediatric patients and about 9,000 adults. So just numerically, there are more adults to treat. We have seen a shift in the proportion of, like you said, 60-40 peds to adults to now more like 55 to 45 peds to adult. And the adult market is interesting because they don't necessarily have a standard of care. So they're often lost to follow-up and they're treated more symptomatically for pain. So they're on opioid medications and other pain relief medications. They have frequent fractures, rods, pins and other surgeries associated with that. They have dental abscess surgeries and spinal fusion surgeries and things like that. So we are using a multipronged approach to find adult patients. We have a 30-person patient diagnosis liaison field force out there looking for new physicians and adult patients and pediatric patients. We are doing pedigree analysis because it's an X-linked dominant disease with a strong inheritance pattern. So when you find one patient, they often have other relatives who have the disease as well. There are a lot of data analytic strategies that the team uses. We do have disease education programs, and we have very strong advocates who are patient ambassadors and patient groups as well who are helping us. It is a very unmet medical need for adults. And I think the seriousness of the disease in adults was not fully appreciated. And the data in adults is really compelling. We've set big improvements in fracture healing and phosphate, et cetera. And the feedback from the adults that have been treated, including at our Analyst Day, we had a couple of patients come and talk. Their results have been really phenomenal anecdotally. So we have stories of patients who are returning to work after many years and have improvements in their relationships and ability to exercise and travel. And so the patient investor program is particularly powerful.

Okay. Great. Very helpful. So for the peds patient, what is the roughly percentage of the patient you think that you already penetrate?

It's probably in the neighborhood of 25% to 30% of the pediatric patients we think we've already penetrated. And we just added the head-to-head data onto the label in Q4. So we think that could be helpful as well.

Okay. And then the future growth, you provided the 2020 guidance. So where do you see the major driver? Do you think that from the peds perspective -- where do you think -- like how much more you think you can improve in terms of the penetration? And then certainly, adult will be a major driver. Just wondering like in terms of the trajectory-wise?

Yes. I mean I think both are going to continue to be important to this market. I think for pediatric patients, our KOLs tell us they believe all pediatric patients should be eligible for treatment. Now no drug achieves 100% penetration. So we don't expect that for pediatric patients, but we do expect to continue to penetrate more patients. With adults, like I said, with the prevalence being as it is and the fact that this is weight-based dosing and things like that, we do expect to see significant additional growth from the adult population. That being said, I believe KOLs think something more like half of adults should be eligible for treatment with Crysvita. So we wouldn't expect the same total penetration at the very end of the day in adults, but still because there are so many adults in this weight-based dosing, we do expect a lot of growth in the adult population.

Okay. So how well are the -- for the peds patient, how well -- how -- in terms of the patient identification, like, are most of the patients already identified from the peds perspective?

Most of them are diagnosed. So it's not that difficult to diagnose this disease. Typically, patients when they begin weight-bearing, they might have some bowing and then they have very standard testing done, urine and blood test. And it's not hard to figure out what they have. In terms of patient identification, finding new patients in our database and finding new physicians to target, we're constantly working on that. So we do, but we haven't disclosed specific numbers because that's the number that's very dynamic and changes daily because we have an active effort on that front. But we do -- we think this is a well-diagnosed disease. And again, because of the strong inheritance pattern, it's often not the first time that a family is seeing the disease, too. I think 70% of the time, it's not a de novo mutation.

Okay. I'm just a little bit surprised of the percentage or the uptake. When we see other genetic disease, if they are well, like all the patient registry already in place, the uptake seems very quick. Wondering like what additional effort you can put in to improve the penetration? Like how long do you think it would take, say, for the pediatric patient population, you can penetrate, say, 50% or 70%?

No, I think it's a great question. I think the good news is there's a lot of room for growth here. And we have all those tactics I mentioned in terms of data analytics and field force and pedigree and things like that that we're working on disease awareness and investor programs, all of that. We've constantly increased the number of resources we have on this from a field and in-house perspective as well. So that's been helpful. But I would sort of beg to differ a little bit with this penetration question because if you look at that bar chart that I talked about for the Crysvita launch compared to all the other rare disease launches, I think the launch compares very favorably. It outperforms all the other launches but one in the first 6 quarters, and that's at a much lower price, which means the penetration is actually stronger. So I think, ultimately, penetration might be higher. It just takes time to achieve that in rare disease. We're really talking about our first year-ish period of sales right now. And we think we compare really favorably. We are putting -- we're not -- we're going to pull out all the stops to keep finding more patients, obviously. There's always more that we can do, and we are looking to do that. But I would say that it has gone well and that the penetration compares favorably.

That's very helpful. And how is the reimbursement process going on for the -- in Latin America and especially in Brazil? And when should we start to see meaningful revenue contribution?

Well, we are seeing significant demand from patients in Latin America, and we're treating patients already in Argentina, Colombia and Brazil. We -- in Brazil, we received approval in March of 2019 for adults and children 1 year or older with XLH. We are right in the middle of the process of getting pricing and full reimbursement approval from the ministry in Brazil. That can take up to a couple of years. However, the first few patients have already been treated. And they're undergoing sort of a name patient processor judicial review process. And they can get treated through that process and they can get reimbursed through that process as well. So there are 2 different mechanisms, really. There's a short-term name patient type mechanism and we're working on that already, and patients are already being treated and reimbursed. And then we're going -- we're also in parallel working on this full reimbursement process, too. We also have strong support from patient efficacy groups. And we also have name patient treatment happening in Argentina and Colombia. And the feedback from there has also been very positive. So we do think there's significant potential in Latin America, and there's growing demand in many countries in Latin America, and we're just kind of growing -- we're blocking and tackling through these processes to get full reimbursement.

Okay. And regarding the TIO label extension from the sales perspective, do you need to hire new sales or you can leverage your current sales force for the TIO launch?

So TIO is a new indication for Crysvita, as I mentioned, with the PDUFA date on June 18. We expect about 1,000 to 2,000 U.S. patients, but about half of them, we think, are resectable with surgery. So the other half are eligible for treatment. They tend to be treated by exactly the same physicians who are treating XLH and they are sometimes confused between each other in terms of which disease does the patient have. So they're often treated by the same people, and therefore, we think there should be no change in the infrastructure field or back-office to support the additional indication. It's relatively small. It's the same call point. And so it's entirely synergistic with our current infrastructure.

Okay, very helpful. In your 2020 guidance, did you include the TIO indication?

We did include TIO. Yes.

Okay. Okay. And wondering what would be the assumption? I don't know how much color you can share.

Well, like I said, it's only about 500 to 1,000 eligible U.S. patients relative to something like 12,000 for Crysvita. So it's just -- it's quite a bit smaller. So it's in there, but I don't expect it to be a huge factor.

Okay. Okay, very helpful. Now switch gear to the launching FAOD, 007. So can you share with us any feedback from physicians -- physician feedback on 007 when compared to MCT oil? And did you see any major pushback?

No. I mean I think the physician response has been really encouraging. And in fact, most of the clinical experience we have with UX007 is in patients who are already failing to do well on MCT oil. So for example, in our Phase II study, I think all but one patient was previously on MCT oil and having major clinical events regularly. And then they went on UX007 and had a dramatic reduction in major clinical events. We've had a large number of compassionate use in emergency IND cases where physicians have tried everything, including MCT oil for patient, and they still end up on heart-lung bypass in the ICU and basically on death's door, and then they will contact us, and we've committed to provide UX007 within a 48-hour period to the patient. And we've had quite a nice series of cases where the patients have recovered and been discharged and are doing well. So there have been some phenomenal stories from physicians, and we're finding a lot of support from the physician community.

Great. And what kind of label do you expect to have for UX007?

Well, we don't have a final label yet for UX007. So I think one thing to remember is that there is no approved therapy for long-chain fatty acid oxidation disorders. And often, we have a label, which just says for the -- which has an indication statement saying for the treatment of XYZ, whatever the disease is. So that's always the -- what we aim for in these situations. I think the questions around the label have been have there been any -- are there going to be any limitations on severity, things like that. We are hopeful that there won't, but we don't have a final label negotiated yet with the FDA.

Okay. And the last question is the pricing. I think the sell-side consensus price is $100,000. Just wondering, what is your payer feedback regarding the pricing?

Yes, the payer feedback has actually been very supportive. And I think part of it has to do with the nature of the end points that we look at in fatty acid oxidation disorders. So when you look at major clinical events, essentially, we're talking about hospitalization and hospitalization days. And so from a pharmacoeconomic perspective that's very powerful for payers. And so we have not had any concerns in terms of our discussions with payers and their expectations around pricing.

Okay. Switch gear on gene therapy and other programs. For the GSDIa that -- the -- could you have the quick -- we will have like data first half this year, now is almost -- 1Q almost done. Is it fair to say the data will be second quarter, we will see the cohort data?

We haven't been more granular in the time frame in terms of our guidance on timing for data from this program. So we're still saying first half of 2020.

Okay. Okay. And then I think you modified the cornstarch test from 30-gram to 10-gram. So can you share some color on what makes you confident that 10-gram cornstarch should stop the hyperinsulinemia response?

Yes, that's a good question. So just to back up a little bit, we do a test where we're measuring the time to hit glycemia in a fasting challenge, which happens in the hospital. So very closely monitored. And initially, that test is being conducted, where the patient was given a bolus of 35 grams of cornstarch at the beginning of the test. And then we would measure their time to hypoglycemia in a fasting challenge. So once they hit 60 mg per deciliter, they would then have to be rescued essentially. What happened was in cohort 1, that seemed fine. In cohort 2, the patients had such a strong expression of the transgene that once they had the full cornstarch administered, they would then also have a spike in insulin, something like a 20x spike in insulin, and that would cause their blood sugar to crash, and that, of course, happened exactly at the time that we were measuring their blood sugar. So it's a confounding effect. And so now the change in this test is going forward that we'll be allowing physicians to give up to 10 grams of cornstarch. And it's more calibrated to what these patients are normally doing. So for example, in cohort 1, we had one patient who was 100% off of cornstarch and yet whenever he had this test, he had to take 35 grams of cornstarch. That doesn't really make sense. So going forward, the physicians will be able to calibrate what patients get and give no more than 10 grams of cornstarch. And the goal is then that we shouldn't see the insulin spike at the beginning of the test and that shouldn't confound the blood sugar levels.

Okay. So when we see the data, if we didn't see a good correlation between time to hypoglycemia and dose level, but we do see dose-dependent trends in metabolic end points so like how would you do for the next steps and also the testing? Do you need to do further modification and then also thinking about primary end point? And is there something you would need to also change?

Great question. I mean I think one of the interesting things we saw was the difference between cohort 1 and cohort 2 on the other end points that we look at, which we hadn't talked about yet. So that includes cornstarch reduction, that includes a measure of liver, glycogen by MRI, lactate levels, glucose levels, things like that, all of those actually look stronger in cohort 2 versus cohort 1. So between that and the higher expression of the transgene, that's why we feel the cohort 2 dose might be superior to the cohort 1 dose. Now I think in terms of our discussions with regulators, this is a Phase I/II study. So part of the purpose here is to look at all these different end points and figure out which one is going to be the best in Phase III in a pivotal setting. And if it turns out that it has to be cornstarch or continuous glucose monitoring, which is another change that we've made to this protocol, we're now getting CGM data from all the patients. If it's one of these other end points, that's fine too. We're collecting all of this data, and we're prepared to have that discussion with FDA about what should be primary and what should be secondary or exploratory.

Okay. Great. And quickly on Angelman syndrome? Wondering if you can share a little bit more color on potential end points? And then what kind of ball markers you will be collecting? And are you also collecting some neuro functional data.

Sure. Yes. So in Angelman, and this is public. There's a listing on ClinicalTrials.gov. There is a study that should be starting imminently. The IND was already accepted, it's anticipated to enroll 20 pediatric patients. And it is -- it's the first-in-man study. So primary measures are going to be about safety in terms of adverse events, SAEs, et cetera. Secondary will be PK, but we are then looking on an exploratory basis, all sorts of other end points. So we'll be looking at the protein levels in the spinal fluid. We'll be looking at motor function, development, communication, seizures, sleep, and various measures of behavior as well as sort of a global clinical impression scale. So this is really an exploratory trial where we'll be looking at all of these things in order to determine what combination of them makes the most sense in a pivotal setting.

Okay. And then if you start trial imminently, when do you think about how you will share the data with us? And then likely at what stage do you think it will be sufficient to share data with us?

Yes. I mean I think with 20 patients and the time that we're thinking about for enrollment and follow-up, et cetera, it's likely to be first half of 2020 when we have data from the study. But it is open label, so it's possible that there might be other data within that time frame.

Okay. First half 2021, right, next year?

Sorry, 2021, yes. Thank you.

Yes. Okay. Well, thank you very much, Shalini. And I think we are running out of time. Thank you, and then certainly, we will miss you. Congratulations on all the progress. And then we will miss you in the future.

Thank you, Gena. Thanks for today and for all the great questions, and I will miss you, too.

Thank you. Thank you, everyone, for dialing. And this concludes our call.