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

Good afternoon, everyone. I'm Salveen Richter, biotechnology analyst at Goldman Sachs, and we're pleased to have Ultragenyx here with us today. And we have Emil Kakkis, CEO.

With that, Emil, maybe to start, you have multiple events set to play out this year with advancement of your gene therapy portfolio in addition to commercial launches. Could you just walk us through the catalyst path for maybe the next 12 months with regard to your portfolio?

Sure, Salveen. Thanks for speaking with me today, and I'll give you kind of an update of where the catalyst [ work ] for the coming year. It's already June of the year, and it's been quite a year, from COVID and everything else going on in the world. There's been a lot of distractions and pain and suffering. But fortunately, on the program front, we have been moving forward in many different areas, and I think we will have a good second half. First catalyst which should be coming up are the 2 PDUFA dates that we have for our UX007 triheptanoin program for long-chain fatty acid oxidation defects as well as a PDUFA date for the TIO indication for Crysvita. Our regulatory path is on track. We've -- everything has been done that needs to be done. And so we're comfortable that we'll meet or exceed the PDUFA date, and the FDA has been working diligently in that regard, and we see no barriers to completing on time those 2. So those will be the first couple events. We recently announced some data on our gene therapy programs which was positive both for the GSDI or DTX401 program as well as the OTC DTX301 program, showing both durable responses in OTC as well as strong responses in the third cohort of our GSDI program. We'd expect in the second half of the year to have some more extension data on how those patients are going. And we'd also expect to provide a regulatory update when we conduct our end of Phase II meetings at which we will verify the endpoints. In both cases, it will be glucose for GSDI and ammonia for our OTC programs and various ways of looking at glucose and ammonia will be part of the story. But we fortunately have 2 biomarkers that we can use that are validated and accepted by FDA as clinically meaningful measures for these diseases. So we're comfortable on that path and the regulatories will be, I think, real important. In addition to that, we will expect to have our gene therapy program for Wilson coming in the clinic. It is on track with regard to GMP manufacturing right now and the nonclinical work required in order to file the IND. Barring any COVID for the delays, we should be able to get that program also in the clinic. We're excited about it. It's also an area where there has been therapeutic development in the past, which means there are biomarkers that have been used and 4 approvals, which gives us an ability to design and execute a more rapid development plan for our Wilson program, and we're excited about reaching the clinic with that. So that would be another potential IND. In addition to that, our Angelman program, which is an ASO program, has continued to enroll. Now our data is not really expected until first half of 2021 at this point, but it is an open-label study. And we expect to enroll 20 patients who will get at least 4 doses of the ASO on a monthly basis and then go into open-label extension. That study is enrolling, and in fact continuing to enroll at our Chicago site, where our warrior investigator there continues to enroll despite what's going on in COVID. And so we're encouraged. She claims she can treat all 20 at her one site. We don't have other sites open at this point, but we expect them to continue to enroll Angelman patients, and within that 1-year period with Angelman data would be another thing coming. So if you look at the big picture, that plus Crysvita launch, which we have reaffirmed our guidance. And if you think about Crysvita launch continuing, combined with the new 007 program launch, TIO launch and then add on to that more gene therapy data and Angelman data over the next year period, I think you're talking about quite a year for us and a progression for the company.

That's fair. And you talked about the different modalities, I guess, you have from gene therapy to ASOs, as you mentioned, and others. How -- and you've done some BD here, so how do you think about the BD opportunities across both disease indications and therapeutic modalities? Are they -- are there any technologies that you want to have in your toolkit, I guess, as you go forward in this rare disease arena?

Well, I think from a toolkit perspective, we have a pretty full toolkit. I've had some people say, "How can you manage so many different modes?" But we're not inventing mRNA mode or the ASO mode. Those are things that have been worked out, and we're basically taking advantage of technology. The one base we do have that's our own is the gene therapy base we've been establishing and continue to invest in, I think, is -- will give us certainly a lot of opportunities, both for partnering as well as for new products. When we think about the balance between the modes, we don't want to become a pure gene therapy company, and I would expect the gene therapy to be about 1/3 of our indications. With 3 in Phase III, we'll be -- and plus the Hem A program, which is partnered with Bayer -- that we'll have, by the end of the year, early next year, 4 gene therapy programs in the clinic. I think that's -- there's not many that have 4 different [ seeds ] that's simultaneously being operated. The Angelman program or the ASO is an example of a deal we might do in which we did bring in a new mode, antisense oligonucleotides, but the chemistry of those compounds, the contract manufacturing them, make them less onerous technically. We're not innovating ASO technology, we're trying to utilize existing technology on a new indication. And that's the kind of deal we might consider doing, where we can take advantage of some technology that's been developed and apply it to a unique situation. We're excited about the Angelman program and the potential. We think Dr. Dindot did excellent work there. So where we see excellent science, we're willing to do something new like an ASO, where we can see a particular solution to a particular disease that makes great sense. We also look at therapeutic areas; Salveen, like the -- we want to continue to invest in the bone endocrine space. We think there's other genetic disease in that space to follow on Crysvita in the established base and connection we have. So we are looking at things in that space from a BD perspective. We have a lot of inborn error products, and we have a few neurology-related products. So those are the 3 areas we will continue to look for and continue looking at ways maybe to leverage our commercial infrastructure as well, since we now have a global infrastructure and are able to potentially launch other products. So there may be opportunities to leverage a commercial build out of bone endocrine further and continue to be opportunistic when great deals present themselves.

And you recently did a deal with Daiichi Sankyo where you worked on an undisclosed program, but you followed that with a nonexclusive tech transfer agreement. Should we expect to see more of these tech transfer agreements?

Well, we think that there will be more of them. And the fundamental thing that -- which is one of the reasons I got excited about the Dimension acquisition originally -- was that they had some technological insights and developments that I think are going to be extremely valuable. And that is particularly the HeLa -- the HeLa platform, producer cell line platform, and the ability to make a clonal line that carries the AAV genes that you need that you can induce with a helper virus. That clonal line allows you to create 2,000-liter scalable manufacturing reliably. In our Wilson program as an example, what we ran at 50 and 200 liters ran at 2,000 the same, just perfectly overlying the curves, right? The fact you -- and we did that with Hem A as well. The fact you have a highly-scalable reproducibly produced AAV production system, I think, is very valuable. In particular, that this system can make AAV capsids that are AAV8s or 9s, not just AAV5 is the -- is the true baculovirus base system, so they have trouble making some of the other capsids. So because it can make a variety of capsids, and it's more of a native way AAV is made, we think it has some great potential as a key platform technology for manufacturing AAV. So the Daiichi deal, we had been working with them for a while, but they were interested in becoming a gene therapy company, and then their approach was we could help them do that through a nonexclusive license and a tech transfer, essentially a training. We're going to train them how to make vector and how to make lines. We think we can do certainly another one of those. And I think at some point, people are going to realize they really need something scalable that's not like a lab scale process. Triple transfection can work. We are doing it, too. But a true scalable, what I would say, commercial manufacturing process is going to be more like what the HeLa producer cell line can do. And we think that will become a dominant player as the cost of it and the reliability of it becomes the key features that get recognized.

Great. So moving to the gene therapy pipeline. We recently saw positive data from both 401 in GSDIa and DTX301 and OTC at ASGCT. Could you remind us just briefly of the data that was presented in [ at the start of this year and the ] ongoing trial?

Sure. So we presented data on DTX401 and GSDIa, and that was the third cohort. We treat 3 patients at 6e12. And what we show now by using continuous glucose monitoring, which will give us more insight into what's happening, is that soon after the gene therapy, these patients have a surge in hyperglycemia which wasn't fully appreciated when you weren't doing monitoring. And with that meant that you really need to start decreasing their starch pretty quickly in order to avoid them having insulin reactions to this high glucose. By doing that, we're able to achieve a 57% reduction in cornstarch in 12 weeks, and even that probably could have been faster, and they continue to move down. So we were very encouraged by the degree and rapidity of cornstarch reduction, which means that their livers are able to make the sugar they need. We've had time to hypoglycemia improvements in all 3 patients as well. And 2 out of 3 had managed the inflammatory reactions, very little on one end, some inflammatory reaction. So the earlier application of steroids also helped improve cohort 3 results. If you look at the early 2 cohorts that have now been moving out between 24 and to 78 weeks of therapy, we're seeing continued declines in starch utilization, and 4 of the patients are below 85% reduction. And we're seeing more consistent glucose control. We're seeing patients being -- sleeping through the night at home by the continuous monitoring. So we can tell they're not going hypoglycemic, and they're able to sleep night after night, through the night without having to need starch and not have hypoglycemia. So we're comfortable that what we're doing right now should get us to a point where patients are able to get off cornstarch and actually be able to maintain their glucose without the need for it. So that's the GSDI program. We're heading to the regulators talk about Phase III design and endpoints. When we talk about OTC, we showed some extension data from the third cohort of patients who are in -- from the data we saw in January, and we showed that all 3 patients now at the e13 dose are responders, with patient 9 now achieving 188% reduction at 24 weeks. So we feel comfortable now that e13 is getting us full response across all patients and that those responses we have seen have been sustained and -- patient 7 is off all drugs and meds, off drugs and all diet, and the others are starting -- patient 8 and patient 6 are titrating now, and patient 9 will start to titrate. So we feel good about OTC showing that we've got the dose. The one thing we're doing then going forward is looking at the steroid -- prophylactic steroid cohort, which we hope to do in parallel while we seek discussions with FDA about Phase III. So we expect the second half of those Phase III discussions. But we feel good about having both those programs working. And the third thing I'd point out -- not those 2 programs, Salveen -- but our partner, Bayer, has been putting out some of their EMA data as well, which we do own significant milestones and royalties on, which was based also the first program in the HeLa platform that's in the clinic, showing excellent safety, very modest inflammation and now getting really excellent Factor VIII results, which -- at a lower dose than some of the other programs. So we think that the Hem A program, DTX301, actually has the potential to be a player in the hemophilia field as well. So that makes, for the programs we acquired, 3 out of 3 successful gene therapy programs from that acquisition, and we feel good about where Wilson is going to go to make that 4.

So for both the programs [ DTX401 ] and the OTC, you talked about the -- how you're determining endpoints on one hand and then also there may be aspects where you're looking at prophylactic steroids when you go forward into Phase III. Could we just talk about what you're thinking of in terms of Phase III for both these programs right now?

For both programs, we're thinking of approximately 40-patient studies, randomized control with a 2:1 ratio. We haven't discussed this with the regulatory authorities, I'm giving you a kind of prospective plan. Based on our powering, there's many different ways to do the endpoints. For the OTC program, it's clear from the FDA discussion they want to see ammonia in there. We can look at decreases in ammonia, because if we enroll patients that have more elevated ammonias -- right now, we've selected people who don't have elevated, and though some still do -- but if we have a variety of patients with different elevation of ammonia, we'd look for that -- the ones that are high to come down, and that would be one way of looking at ammonia, just decreasing from baseline in ammonia. Some patients may have normal ammonia, but also important is the ability to maintain ammonia: after you get off your drugs and diet, can you stay stable? And so that's an endpoint we might do at week 48 after we've removed their drug and diet and show that they can retain ammonia without the prior treatment. That's a little bit more like the RAVICTI strategy of being noninferior to the existing treatments. But the combination of being able to show improvements in ammonia as well as long-term ability to switch off the ammonia diversion drug as well as diet control, we think would be appropriate ways to assess efficacy. We're also going to look at certainly clinical things in the program, like cognition and quality of life and measures that we've been -- developed. Now for DTX401, the time to hypoglycemia is clearly important, but the fact that the patients have to have their cornstarch reduced immediately provides a confounding element because of changing their starch constantly, right, where their glucose are high. What we're looking at now is the reduction -- cornstarch reduction is so profound and so rapid, it actually might make a better primary endpoint because it will allow you to capture efficacy very quickly in the program. And we think since cornstarch is basically oral glucose replacement, the removal of the need for oral glucose replacement can only happen if your liver is making glucose now to survive. Because the patient clearly needs glucose and they're not going to stop needing glucose to survive. So the cornstarch reduction is one possible endpoint to consider. Time to hypoglycemia is another. The third is to look at continuous glucose monitoring, because we can look at their glucose during the night, during the day, number of events and how long they sleep during the night, by watching those monitors. And the monitors are accurate enough now that we think we can use that kind of data as well to help support efficacy. And what we're seeing in patients who have been on -- had gene therapy some time ago and now are in the sort of second 6 months since their gene therapy, we're seeing them being able to sleep through the night and manage their glucose without bottoming out and without getting starch. And 4 of the patients are more than 85% reduced in their starch. And the other thing you see is their glucose variation is tightening, meaning they don't go high and don't go low as much as they used to, right? And that happens because the liver is now regulating glucose the way it's supposed to. So we're encouraged of the ways you might use CGM, both in doing a home kind of hypoglycemia test, right, essentially happening every night, or -- and using it to assess the quality of glucose control. And while it might not be a primary endpoint, I think it would be important for physicians and potentially payers to look at how the drug is changing the care of these patients. We'll of course in GSDI also have a quality of life and symptom score-type endpoints to provide evidence of clinical benefit.

And remind us with these 2 programs, where you stand in terms of commercial-grade material and in house manufacturing?

Yes. So we've developed the commercial material for both programs. And I think the -- that work had been already ongoing before. Part of what we invested in when we came into the Dimension acquisition was to actually invest in the people and development work to move up the quality. The -- both those programs are transfected products, though, and for the GSDIa program, we do have a HeLa cell -- HeLa platform system also for it. But we'll probably make that change post marketing, rather than pre, to avoid any interference to the time line, not create a delay. With regard to the Wilson program, it's coming to the clinic with commercial process, straight to clinic, so that there would be no issue of process development or improvement, we should be able to go straight to commercial product and end up hopefully accelerating.

And there you're looking to file an IND by year-end '20, and you have noted that the FDA endpoints are already established here. So could you just talk about the program here and how you see that playing out?

Yes. So our plan in the Wilson program, because so many [ chelators ] have been approved that the non-ceruloplasmin copper, or it's called NCC or free copper, in serum is kind of the marker that most of the chelators they've been using, to assess their benefit, and they're binding up that copper and getting excreted in the urine. In our case, we'd be looking for the liver to be pumping out its copper into the bile and essentially absorbing the excess copper instead of leaching it into the bloodstream. So the non-CC or free copper will be one of the ways we measure that ties into how the chelators have been done. The one part that's different is in the copper-loaded ceruloplasmin. Ceruloplasmin is a normal protein that carries copper in the bloodstream. And Wilson patients do not have high total copper in the blood, their total copper is actually low. And the reason it's low is they can't put copper on ceruloplasmin anymore, which is the normal way of distributing copper. The copper that is and the blood is free, and that's low, but it's high compared to what it normally is. See normally, all your -- you don't [indiscernible] free copper in circulation, you only have copper-loaded ceruloplasmin. So we'll be able to look at copper-loaded ceruloplasmin as well as free copper and to show that we've reduced free copper and increased ceruloplasmin loading of copper, which would show that the liver function of the transporter is now being restored, right? So it actually gives us 2 markers that we can show that we're changing the abnormal copper distribution physiology of Wilson disease. We'll also be able to look at things like transaminase as neurologic function as well, to try to assess clinical effect on those parameters, and those are obviously very important for Wilson. But we think the focus on free copper and ceruloplasmin will give us kind of a sense for the biochemical efficiency of the gene therapy.

Emil, when you were talking about manufacturing earlier in regard to the Daiichi deal, you talked about the HeLa platform and the advantages here. Could you just maybe talk about how it confers advantages over the other manufacturing programs?

Sure. So a traditional triple transfection system that people use a 293 cell clone, it's the same clone for all our production, and they grow the cells up to a certain volume, let's say, 200-liter, 400-liter suspension, they make a mixture of the 3 plasmids and mix them in the cells. Once you mix them, they start expressing. The cell culture gets sick, and starts making AAV virus, it's like infected. But that triple transfection is a very delicate and touchy process and tricky to optimize and do reproducibly. Because you're taking all this plasmid DNA, and you have to get them stick to all these cells and get it in. The plasmids themselves are actually costly. The GMP plasmids are costly and cost -- maybe 1/3 of the production run cost is the materials for the run, which is unusual in manufacturing for raw materials to cost that much. So because of that and because of the variability of transfection in general, and the limited scale -- 200 liter, 400 liter -- where that can be done reliably, you basically have a process that's really like a large-scale lab process rather than a manufacturing process. So in HeLa cell system, the company, building off some of the work originally done by targeted genetics and then Genzyme, have -- and Sam Wadsworth, who's our CSO, came from Genzyme -- they basically are taking what was a sort of working system and created a better system, which you take a HeLa cell, which can tolerate and carry these genes without being sick. We basically place the genes for some of the plasmids permanently in the cell line and create a stable cell line. There's an art to it, and -- to create these stable cell lines, and that's what we've worked on and automated in order to scale up. Each cell line then, you can recover a virus in it by infecting it with a live adenovirus. The adenovirus infects the cell and induces the expression of the AAV genes and production of AAV. Because the cell line is a pure cell line, what we do in this case is we take a vial, we thaw it, we grow it up and inoculate ultimately in the 2,000-liter reactor, like traditional biologic manufacturing, right? You're just growing a cell line up to full scale. At 2,000-liter, though, we actually infect the culture with adenovirus, very similar to what you do with making a vaccine, right? You would infect the culture, that's the way they make vaccines today. The adenovirus is extremely efficient, very inexpensive compared to plasmid DNA for providing the helper functions. And so you can actually induce a very efficient and high-quality production where the particle fill rate that comes off HeLa will be 50% or better straight off the [ super name ], which is much lower usually in plasmid transfection systems. So you make a better quality product because you're replicating natural processes. So the scalability, reliability and the quality of the product coming off a 2,000-liter HeLa system is far better. And we've shown now with both Hem A and the Wilson that the production runs at small-scale run at 2,000-liter scale reproducibly. So with the Hem A program, that material has been in the clinic and shown excellent safety and quality and success. So I think it helps provide the first validation that you can make AAV this way and that it'll be a potent vector that will be successful in gene therapy. So we're confident that we can do potent, scalable, high-quality AAV manufacturing using the producer cell lines, and that technology base, know-how and patents that we've been developing is what Daiichi was accessing with the deal and which we think is going to become the core asset value of the gene therapy platform that we have.

And with regard to the Angelman syndrome program that's running, how many study sites are currently open and enrolling here? And what would be the bar that we'd be looking for to kind of understand how clinically meaningful this data set is when we see it in the first half of next year?

Sure. So currently, the Angelman program is running at one site. The other sites weren't able to open, but the one site that is open is continuing to enroll patients. And the -- I call her the warrior PI there, appears ready and able to enroll all 20, if we'll let her. So -- but we hope to have some other sites. But she is operating and enrolling more patients. So we've already been through the first cohort, she's in the second cohort and continues to do their monthly treatment. So each patient is getting a monthly treatment. At the lowest cohort, they dose-titrate every dose, and at the second cohort, they start at the next dose level up. And essentially by third and fourth cohort, they'll start at medium and high doses. There's 2 doses of which everyone will get to in their titration scheme. So what we are looking at is to see 20 patients with 4 doses worth of data, is what we'd expect to see. There may be some extension data for some patients by that point in time in first half of 2021. The study is open label, so we don't have a control group to compare it to. But we -- but that was because of FDA request not to do a control group, because we had it in the original plan. However, we will have at least 5 domains that we'd be looking at. Many of them we're doing video, which will allow us to have blinded readings and evaluations for scoring, for example, things like ataxia. But we also have seizures, sleep disturbances as well as language and cognition scores that will allow us to assess the efficacy. And we'll be looking at improvements across multiple domains. I think based on what we've seen in the animal models, it appears that multiple [ managed ] can improve. And that's by treating even older adult animals. The trial itself is in 4- to 17-year olds, so it's only in peds, which is probably the most malleable age group. And we'll be looking across those 5 domains to see improvements. It's hard for me to give you like a magnitude of effect. My hope is it will be a large enough effect that I won't have to explain to you whether it's important or not.

And then with regard to your commercial portfolio, how are you thinking about the trajectories here for Crysvita and Mepsevii and the impact on -- of COVID-19 on new patient identification efforts?

Well, we've reaffirmed our guidance for Crysvita for us at $125 million to $140 million. So what we're saying is that the net of everything we're looking at, we think we'll be able to be on track. There's no question that patient diagnosis has slowed up. But where it kind of went down, we've actually started coming back again as we've adapted our strategies for virtual patient diagnosis. More doctors have gotten comfortable with doing remote meetings, and we've had some fairly large speaker events now that are run off of a Webex-type platform. So it's pretty clear that you can do that kind of work that way and it's starting to get better for us. But we do think patient diagnosis will be improved by when things open up. So far, from a start form perspective, we've had a slowing of start forms to some degree, but sufficient to maintain ourselves within the range of what we're expecting. And among the established base of patients, more than 80% were already getting their treatments at home from the beginning; we'd set out from the beginning to focus on convenience for patients. But that was fortunate because that meant most of those patients were not even going to the institutions. So they didn't -- they weren't impacted by institutions. We've had to convert some people to self-injection and gotten FDA's help in doing that. We've had changed set of care or changed home nurses in some cases. So it's a handful of patients that we've had issues that we've had to manage. But overall, the established base has gone well. And that's why overall, we feel like we're on track from a commercial perspective for both Mepsevii and Crysvita. We are starting to get more traction in South America in named patient sales, and we're hoping Turkey gets going. They've had a lot of delays there, but I'm hoping the Turkey group gets going. Canada has been continuously exceeding expectations for us, which is, I think, a very unusual thing if you're in the rare disease space, to see Canada exceeding expectations. But -- so far, we're pretty good about the base. I think the UX007 launch will be different in the COVID environment, but the positive part of that story is the fact that we've been already talking to those doctors before. The same docs that do Mepsevii, same doctors that treat OTC, GSDI and all our patient diagnosis, MSLs, everyone has already been talking to all these doctors. So we feel like we have a really good relationship with them. And with 160 centers, we should be able to promote the UX007 product in a reasonable way. And because so many have already touched the product through the trials or through compassionate use access we've provided, I think -- we feel we should have a reasonable start there. However, like all rare disease products, it will be a steady build in accumulating patients.

And with regard to these launches here for UX007 that you just mentioned, then Crysvita for TIO, do you think that you can fully leverage the infrastructure that's in place? Or is there anything else that you have to add up on this front, or is there anything on the education front that has to be done here ahead of these launches?

Right. Well, with TIO, we would not hire anyone. We'll build that with the Crysvita plan, there'll be none at all. For the UX007 launch, our expectation is maybe to need maybe 10 hires. And some of them are field, some are dietitians to help support. But we don't need a really large team to cover the 160 centers, but maybe 2/3 of them are the main ones. So you don't really need the size of the team we have for Crysvita. So we'll be able to leverage a little bit of the Crysvita infrastructure like the hub and other things, but the size of the team here won't be nearly as large as we're using for Crysvita, because Crysvita, we had more than 1,000 targets, right? In this case, it's a much narrower and much more connected set of sites that we already have good relationships with. So that should allow us to be fairly efficient in leveraging our already built infrastructure in commercial.

Great. And maybe one last question here, Emil. I mean you've got a good amount of programs launching and in the pipeline. I guess as you look to the pipeline, though, where are you most excited here about the new programs that are entering the clinic?

Well, I think one of the things that's been important to us in the last couple of years is to bring forth some programs that have the size and heft that would allow us to accelerate our value creation as a company. Crysvita is obviously a strong leg. And even though we only own 1/3 of it, I think over the coming years, we expect to get to $1 billion in revenue for all of our programs; a good fraction of that is Crysvita, our portion of Crysvita from global. So what we are -- we look to do is to bring a couple of things in that would be larger. So one of those is the Angelman project, which we took opportunistically and [indiscernible]. That's one layer. I think the Angelman program could become a very important value driver for the company. I think could be transformative if it works as we hope it does. Secondly, I think we've made the choice to go into Wilson gene therapy because it's fivefold, maybe 5- to 10-fold larger than the other gene therapy programs we have, which I think put it in a different space in terms of how -- the potential for that program. I think those are a couple of the things we've done to try to provide what I'd call a commercial follow-on to Crysvita that's on par with it. That's not to say we won't continue to do some of the smaller ones where we can be first to market and be basically in a noncompetitive situation. We will do those, but I do want to make sure we're paying attention to acquiring and having in our portfolio large value drivers that can help improve the value of the company and deliver therapy to a larger number of rare disease patients.

Great. Well, with that, thank you so much, Emil, for joining us today. Really appreciate it.

Thanks for having me, Salveen. Good to talk with you.

Yes. You too. Bye.