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

Good afternoon, everyone. Thank you for joining us. I'm Tazeen Ahmad. I am one of the SMID biotech analysts here at Bank of America. It is my pleasure to introduce our next presenting company, Ultragenyx Pharmaceuticals. Speaking for Ultragenyx today is Emil Kakkis, President and CEO. Dr. Kakkis is the founder of Ultragenyx. He founded the company in 2010 to focus on developing rare and ultra-rare disease therapeutics. The company went public in January 2014, and today does have a diverse portfolio of approved therapies and product candidates aimed at addressing diseases with high-unmet medical need and a clear biology for treatment. Emil? Hello. Thanks for joining us today.

Thanks for having me, Tazeen. Happy to be here.

So for those on the webcast who may not be as familiar with Ultragenyx, maybe we could spend a couple of minutes providing a brief overview for the company, some recent highlights, and then we can go into specifics of future catalysts, if that's okay.

Sure. Happy to do that. As you noted, we were founded 10 years ago. And in our 10th year now, we've achieved our third and fourth drug approval, and that makes us a company with 4 approvals in the first 10 years of our existence. The first program approved a couple of years ago, Crysvita for XLH, was followed this year by an indication for tumor-induced osteomalacia. In addition, we have an enzyme therapy for MPS VII called Mepsevii. And this year, in June, we also got an approval for a drug called Dojolvi for long-chain fatty acid oxidation disorders. All these disorders are metabolic. The Crysvita and TIO are bone endocrine type disorders. And Mepsevii and Dojolvi are for inborn error type diseases. So our areas -- those are core areas for the company with the 4 programs. Commercially, we're launching in the U.S. for those. And we also have a global commercial organization launching some of those products elsewhere, depending on where we have the rights. In addition to that, we have a building gene therapy franchise with 2 programs reading out data, 1 for GSDIa and 1 for OTC, ornithine transcarbamylase. And those programs will read out more data later in the year as well. And we're heading into the clinic with Wilson disease gene therapy as well. Finally, in other early pipeline, we do have a program in partnership with GeneTx on Angelman and ASL that is currently in the clinic and reading out data early next year. Combined in the commercial with all the pipeline assets, we will have a very rich second half as well as first half of '21 and well positioned as a rare disease company, both with growing revenue, crossing more than $100 million last year, growing to perhaps $1 billion in the next 5 years. So we're at a great point in the history of any company, which is making the traction commercially and also continuing to build pipeline. So that's our story right now. I am happy to answer any of your questions.

Well, perfect. Thank you for the overview. So one thing that would be timely is to talk about COVID maybe for a few minutes. Can you specifically talk about the impact on overall operations, specifically maybe on the current launches underway for the Dojolvi and FAOD and Crysvita for TIO?

I think COVID's impact on commercial is certainly one that would be greatest concern. Fortunately for us, many of the aspects of our programs have allowed us to sustain products and continue to grow them despite the COVID situation. For Crysvita, in particular, more than 80% of the patients were getting treated at home from the beginning, based on our plan to be the most convenient treatment location for patients. And therefore, as institutions shut down, we did not have as significant of an issue to manage. What we did in the beginning of the Crysvita launch was have our patient services group call individually all patients on drug to try to find out their particular situation, their fears or concerns and to start dealing with those issues, were they concerned about a nurse coming to their home, do they have an institution that might be closed in a situation where they're on a Medicaid supported program. In any case, we found solutions with them, whether it's self-injection, a new site of care, a different nurse situation, whatever it was -- and kept the number of patients that might be not getting treated to a minimum, and that was really important and proactive activity. We've had a slowdown in the number of start forms from the pre-COVID era. We've started to build that back up, but it is difficult to do promotion virtually, and we're adapting as our doctors who are on the receiving end of our promotion. Dojolvi launch has gone well so far. Fortunately, for us, we're very familiar with those doctors, even inborn error doctors, about 160 centers. Because of that, they know the drug from the trials as well as the compassion use programming we have put forth. And because of Mepsevii and our gene therapy programs that makes it easier for us to do virtual promotion because of who we are, and they've met with us before. That program is going well so far. We still believe that Dojolvi will be a slow build. It will not be an instant launch like most rare disease programs. But we're excited about the potential of Dojolvi's added into our portfolio. Tumor-induced osteomalacia is going well as well. It's relatively small. It won't be a big add to the Crysvita program, but we'll add additional scripts as we head to the end of the year. So overall, COVID certainly provided some slowdown in our ability to promote and grow products, but we're able to sustain the people on and not lose ground, which I think was very important. And with all that put together, we put -- we maintained our Crysvita guidance of $125 million to $140 million for this year.

Okay. In relation to that, how are you thinking about preparedness if a second wave of COVID occurs in the fall and winter?

Well, we expect there will be a surge. There's already sort of a surge happening just because of opening. I think what's happening now, you're starting to see a little bit more of a region-by-region management as opposed to global management. I think we'll have to consider continuing to do a lot of virtual promotion and virtual ambassador programs and other programs, speaker programs as a major way of moving ahead. We're also shifting and improving our digital footprint as well to accommodate that situation. I don't think that a spike or surge late in the year is going to have a substantial impact on the commercial business. I think it might have more impact on the clinical development programs where sites need to be open to enroll patients and where conflicting requirements for doctors treating sick people versus doing trials might become an issue, particularly in institutions where restricted rules get applied. So for right now, commercial, I'm less concerned, I think clinical development may be an area where there's still some delays. And we've already -- our program is already pushed out a little bit because of those delays in execution of what's needed to do clinical development.

Okay. Now a minute ago, you did say that you feel confident in maintaining Crysvita guidance for the year, $125 million to $140 million. Maybe can you talk through some of the metrics that are giving you confidence that range is the right range despite some of the potential pitfalls that can occur?

Well, if we look at the number of patients we've got on reimbursed therapy from the build early in the year because late last year, we had a pronounced effort to surge the number of patients on drug, which helped build up the number. So in the first quarter before COVID hit, we had built up our numbers. We feel pretty comfortable as long as we maintain our base and have the current growth rate, relatively slower growth rate. We're still well within the range. And I think it's just a matter of having done some work late last year, early in the year that kind of gave us an edge on staying within the range. Of course, if the number of new starts fell, that would be a problem. But even with some limitation on these starts, we should be able to be hit our range. So we think it's -- the fact that we were kind of ahead of the curve at the end of the year, early in the year that put us in a better position to manage the down movement of starts and some loss of patients temporarily in Q2. We need to maintain those patients on drug, but because the FDA has been so collaborative in managing things like self-injection, I think that's helped us a lot, and we've gotten better at adapting to individual patient needs to get them started on driving. The other thing I'll say to you, just from an individual patient standpoint is patients on Crysvita feel good. They want to stay on the drug. They have a high persistence. Therefore they will work with us to find a way to stay on drug that it's not something that doesn't matter them immediately. They start feeling the effects if they go off drug very quickly. So for them it's important to stand, drive, in terms of feeling well and being well, and we are there to help them to make sure that happens.

Right. Okay. So let's maybe talk about Crysvita for your next potential expansion. You're waiting a formal decision from the EC in the second half of this year about label expansion into adults. And can you talk about how significant of a market opportunity that could end up being?

Well, in the European Union, our partner, remember, Kyowa Hakko Kirin is the commercial entity there in marketing, and we did sell our European commercial rights in the debt deal. The -- we already received positive opinion for the adults. So we think that EC's decision really should be more of a formality in getting that done. The question is how will it build -- how it will impact reimbursement. We know in Europe, there's a lot of adults who are already on therapy from the trial who have been waiting. And the truth is the effect on adults is substantial. It's not subtle. It's substantial. And I think people didn't fully appreciate how sick XLH patients were in Europe, just like in the U.S. But as you start treating them, they start feeling better, they start realizing their doctors would be utilizing, how important the drug is. So we expect that the adult indication will achieve penetration similar to what we have in the U.S. and I Kyowa Hakko Kirin will have to manage both that and the pricing effects that might have when you get a new indication added to your label there in Europe. But we know the demand will be substantial, and there's a lot of patients waiting for the opportunity to get treated with Crysvita.

Okay. Very good. And then maybe for a minute or 2, let's talk about -- you've got so many potential drug launches happening. I do want to touch upon all of them and get us a little bit more detail as we go along. But Mepsevii for MPS VII, do you expect the potential EU label expansion to have an effect on prescribing patterns or market share as it relates to the inclusion of long-term data?

We think it's helpful to us, particularly in dealing with reimbursement, which we are still working through in some countries for Mepsevii. The reimbursement environment in Europe is, I think it's gotten tougher over the last few years as so many rare disease programs have come forward and the ministries in various countries are putting more barriers in their way with HTA. So the benefit of having long-term data is there to help supplement the trial data that was there and it should help us in the reimbursement process. We don't expect it to have a dramatic effect on overall use or penetration, but we do need to continue to pursue full reimbursement in certain countries to reach the potential for Mepsevii in Europe.

Now as we think about all of the different launches that you have underway now that Dojolvi is approved and Crysvita's label has expanded in TIO. Can you talk about the general strategy that you have for the launches for all of your drugs? And how you might tweak them specific to each drug, and maybe you can talk to the specifics of Dojolvi and Crysvita.

Well, first of all, as a rare disease company, we plan to keep commercial rights wherever we have them. For Crysvita, it was really KHK's program. So the rights we have are what we got in the deal. But for Mepsevii and Dojolvi, we certainly own global rights. We don't have an Asia Pacific entity at this point. And our Mepsevii will probably commercialize with someone else but a relatively small indication. But in general, our strategy is to maintain the global regions ourselves through small smart groups in Europe, Turkey, Latin America, including the major countries in Latin America and to continue to build out the global footprint and commercial potential. Many people don't realize that 80% of rare disease patients are outside the U.S. So if we're too U.S.-centric, we will limit the long-term potential of our program. So our goal would be to get to maximally commercializing all the territories we can ourselves rather than using partners or seeking partners. Within each territory, there's a lot of differences for what you can do. In some cases, we're using -- we're responding to named patient sales requests. Currently in Europe, for Dojolvi, for example, we are responding to named patient requests in France and Italy. And with the U.S. approval, we can expand named patient sales to other countries, whether we can file in Europe is not yet determined. But in the meantime, we can continue to respond to named patient requests across Europe. In France, there are more than 70 patients on the FAOD, on treatment already, treated by something like 30 doctors, so the recognition of the products already there, and we will pursue named patient sales there. South America, for Dojolvi, we were using named patient sale responses, particularly in Argentina and in Colombia. And In Brazil, right now, most of the cases are getting treated -- are getting treated through the injunction process. In that process, both for the central government or the regional governments, it's starting to pick up, and we're starting to get more approvals for reimbursement. But that will definitely be a day-by-day process until we get a full-reimbursed approval with Brazil, which takes substantially more time. So those areas are important to us. I think one area that's been surprising and excellent upside for us has been Canada. Canada historically has been very slow to adopt rare disease products into reimbursement. But lately, they have -- with their new insurance -- supplemental insurance scheme, more than half of Canadians are on or have supplemental insurance. And those patients can get treated just like in U.S. patients, and we have a substantial number of Crysvita patients on drug. And we have also filed for approval for Dojolvi there as well. And we think Canada will actually come out as a bigger win for us than we would have normally thought of based on this new insurance scheme, the ability to get reimbursement for Canadians, which is a good thing because Canadians have often been delayed in ever getting access to rare disease drugs. So this is that. Mepsevii is a program that we got approved, and we'll continue to find patients one by one, but it can't be a major commercial effort. We have to run it lean and smart for a program that small. So our main focus will be on Crysvita and Dojolvi globally and we'll support Mepsevii and continue to grow where we can, which will be steady and slow. But with 3 working programs like that, I think it gives us tremendous robustness and strength to leverage our investments and to gain ground in terms of becoming more accretive. We're also well set up with that to be able to launch gene therapy products or any products that we come -- we bring in through business development deals, a global entity for rare diseases like ours is desirable for our partners as well. And that's something I think we can also leverage and be able to add products to the portfolio and build on the leverage investment we've made in global commercial.

Okay. You did mention gene therapy. So let's spend a couple of minutes on that. You've got the 401 program for GSDIa. Can you talk about that particular disease for a minute and then remind us of what data we should expect to see in the second half of this year?

Sure. So Glycogen Storage Disease Type Ia or von Gierke disease is a disease in which an enzyme, glucose-6-phosphatase is missing in the liver, and this enzyme is responsible for the ability of your liver to release glucose to the bloodstream. So when you're not eating between meals, sleeping, your liver is releasing glucose to maintain your blood glucose level. That's a system that exists to keep you going. These patients don't have that enzyme, 80% of them are no. Without that enzyme, their glucose falls like a rock when they're not eating. What happens is that they can go very low, end up with seizures or even die suddenly. Prior to the advent of cornstarch therapy, patients with GSDI died as kids, they were in terrible condition. Some decades ago, then people began recognizing you could give uncooked oral cornstarch, which would slowly digest in your GI tract and act as an oral glucose replacement therapy. And you take that after meals to kind of give you a little bit of glucose release between the meals to keep you from going low. And you give it just before bed. And use an alarm to wake-up in the middle of the night because if you don't, you would go too low while you're sleeping, potentially have a sudden seizure or die. So that became the standard, every 3 or 4 hours taking a swig of cornstarch. Now it's not a little bit. In fact, it's often 300 grams of starch a day as a -- like a water -- a water slurry, is not subtle, is a major part of your life. And we had a picture from one of our patients showing a suit case like a little roller like suit case, he's going on a 10 day-trip, the entire suitcase is filled with boxes on cornstarch. That's what he has to take with him to go for just 10 days. Now the treatment we're providing is a gene therapy that gives that enzyme, under control the normal promoter, so something that will regulate in response to your own glucose needs and hormonal indicators and will allow them to essentially regulate glucose like they normally would. We've treated 9 patients, all 9 have responded, and we've determined the optimal dose and are working now on planning to move towards Phase III for the GSD1a program. What we've been able to show is that after treatment with the gene therapy, patients have a rapid decline in the amount of cornstarch oral glucose replacement therapy they need, indicating how much the liver now is able to release glucose. We've shown that and the most recent cohort 3, a 57% reduction within the first 12 weeks, a very rapid decline. We've looked at the durability of the treatment long term. And the patients from the first cohort that are out longer term, now almost 2 years, have continued to improve over time. And so we feel very good about the policy of this gene therapy and its durability and the ability to change the future for patients with GSDIa, eliminating the life or death situation of maintaining glucose through taking oral cornstarch. And I think that will be a profound change of life for these patients. And we're excited to get -- negotiate with the FDA later this year and head into Phase III next year.

And what would a Phase III program potentially look like? Do you think how many patients, give us a range of possibilities here? And what would be meaningful endpoints to want to follow?