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

Okay. Welcome, everybody. I am your guide this next 30 minutes with Ultragenyx. I'm Marty Auster. I'm the lead Smid cap biotech analyst at Crédit Suisse. Welcome to our Ultragenyx fireside chat at the 29th Annual Crédit Suisse Healthcare Conference and the first virtual one. I've got Dr. Emil Kakkis here, the CEO and Founder of Ultragenyx. I want to thank everyone for joining us today. If anybody had any questions during this fireside, I'm happy to work those into the conversation. Shoot me an e-mail. There should be a tab on your screen to do so or just send me an e-mail straight through, and I'll check and get to them during the fireside.

Emil, let me hand it over to you, and let me start with -- I noticed when I was prepping questions for this, that you guys are a decade in as of this summer. I'm curious what you did to celebrate the 10-year anniversary? And then tell me about your biggest, your -- kind of your happiest achievements over the last decade and kind of kick off where Ultragenyx is now?

Yes. Thank you, Martin. Well, it's been an amazing 10 years. And I certainly didn't imagine we would have accomplished all that we have in those 10 years. So 10 years ago, really in April 2010, basically, we were -- myself and the secretary of the company, 2 people in a borrowed office, and with big visions of making a rare disease company. And in the 10 years, we've gone from 2 people to 850-plus from no products to 4 approvals and 3 products, to no gene therapy to a full pipeline of gene therapy products, and with a global commercial organization now selling products, both in U.S., Canada, South America, Europe and Turkey. So we've got a lot done, both from a development standpoint and a commercial standpoint. But I'm most proud of the fact that we're resetting the standards about how to do drug study design, analysis, commercialization strategy, how to do compassionate use in the right way and how to do commercialization in a way that allows for -- to achieve the majority [indiscernible] for our drugs. And so I feel that all of that is combined with the financial success of raising large amount of capital and creating company now over $7 billion in market value and with more than $1 billion in cash and basically a full pipeline of products to work on. We're working on more than 20 disease at the same time. And I don't think 10 years ago, I could imagine being able to do that and to be able to imagine that many treatments coming forward has been pretty exciting thing and certainly the pinnacle of my career as a drug developer. Most excited about all the people that are really interested in doing the right thing and getting things done in our rare disease space. And it has been amazing to build a company with a tremendous culture that's very passionate about patients and the collaborative non-siloed culture that's been incredibly effective. So Martin, very pleased with how it's gone and can't imagine going better really in those 10 years. Now celebrating on big on celebrations. We celebrated our first 2 accruals with a big black tie affair, and we had a big plan for another black tie affair in San Francisco with the company. And of course, that all got canceled, and we're now doing an online Zoom call like your conference today. But we'll plan to celebrate when we get back together. 10 years is a lot done and a lot to look forward to.

Okay. Sounds good. I actually remember reading the press release about the kind of the launch of the company 10 years ago. So it's kind of interesting that -- I don't feel like it's been that long. So there's -- you mentioned there's 20 programs you're working -- 20 diseases you're working on. I don't know exactly where to start. The most recent update you had was on GTX-102. I thought that might be a good place to jump off from. Maybe let's -- yes, if you could recap the interim data, I think there's going to be a fuller presentation of that data coming up in December. So maybe just to recap interim data and kind of what you'll be following up in terms of -- what elements that you'll be kind of adding incrementals to would be useful?

Very good. So GTX-102 is the antisense oligonucleotide being developed to treat Angelman syndrome. And our partner, Genetics is a company that developed in Algo, and we partnered with them and are collaborating with them going forward. And the data we presented earlier involved the treatment of 5 patients through a few doses of drug. And we were able to show something very surprising. Our expectations originally were as it would take months, maybe a year to see neurological effects once you knocked down the antisense RNA and got expression of curve. What was surprising is that in some patients within one dose, and some within couple doses, we began seeing clinical effects very promptly. The data we put out, though, was on 5 patients, 2 of which receive 4 or 5 doses, 2 of which received 3 doses and 1 of which received 1 dose. And across those patients, what we're able to see is that all 5 had either much improved or very much improved scores on the CGI, clinical global impressions to the Angelman syndrome that we're operating and in 2 domains. And all 5 had improvement in -- at least minimal improvement in 3 domains of the 5 domains. So we're very impressed with how much change was being observed so early on. Particularly in common among all 5 were improvements in communication receptor than expressed communications. And the fact that some patients were actually speaking words had never spoken words before. Some were responding to their name and never responded to their name before. And these changes in occasion are very fundamental for families and one of the most important parts of what they look for in improving their patient. Clearly not reversing everything, it's very early on the program, but we're very excited about to see that multiple improvements in many domains in these patients. We also saw during -- as we ramped up doses to the highest dose level in the study at that time that we had a safety event, which was a lower extremity weakness which we associate now with some inflammation in the meninges and the nerve roots that are localized where the drug gets first applied in the intrathecal space, in the lumbar area, the lower back. And that effect happened week or 2 weeks after the last dose in 4 of the patients at the highest fourth level. And in one patient, the smallest patient at the dose before that, dose below that. And it's pretty clear that it looks like an inflammation type of pattern. There's an increase in CSF protein. Increase in CSF protein seen in the [HeLa] cells, but we think that the inflammation was relatively different. But the effect of it was the lower extremity weakness. It resolved -- the majority resolved in 2 or 3 weeks after the event, but it took time and has fully resolved in the patients at this point. The efficacy that we saw from the last time they were dosed, we continued now for -- generally for 3 months after the last dose. So we know the treatment effect can be sustained over a very long time, as you might expect for antisense oligonucleotides. So right now, we're on hold. We're not proceeding with dosing, in discussion with the FDA and our plan is get back to dosing. And the FDA is aware of the urgency of moving ahead, and we'll be -- we're talking with them and put together the information. We have the information that's required and a good plan going forward. And we'll hope to get that with them, move ahead on initiating dosing in new patients as well as redosing these current patients as soon as we can.

So what is the effect that you're observing? And what's -- maybe you can talk about a little bit about the summarized action of the drug? And then kind of what you've been able to measure or what you think you'll able to measure in the future to kind of align it from pharmacodynamic effect with the functional benefits that you're observing early on?

Yes. So the drug's mechanism is it basically is an antisense that knocks down expression of an antisense RNA. And the science behind this from Dr. Scott Dindot at Texas A&M, and he found a very specific region for the knockdown. That's very unique and different from what other companies are studying. And we think there's something very special about this region, it's highly conserved and he was able to show more potent knockdown of the antisense oligonucleotide there, even a few milligrams of drug in the monkeys can do that. So we are very impressed with the potency of it. That's the mechanism. When you do that, then you induce expression of this enzyme, UBE3A. That enzyme has an effect on the synapses and communications on neurons. Now you would think if you're knocking it down and that process is going on, and it might take a long time to show an effect. But surprisingly, that effect was happening within a few weeks to couple of months. And that's the good part. The same key effect we saw, we think, is unrelated to that effect. It appears to be local contact related, not related to knockdown at all. And therefore, that's why we think we can distinguish between treating and getting the knockdown effect in the brain versus the local contact inflammation that we're seeing.

Have you provided a clarity or will there be some provision of clarity in the data presentation around the dose levels that you're using at this point? Or is that going to stay under wraps until the program gets unveil further?

We we'll talk about the dose levels in the -- at the fastest symposium and provide the -- there's hopefully sufficient clarity on what we're seeing. There's nothing special about that. It's just our -- we hadn't discussed with our partner a little bit on the degree of disclosure of that information, but we expect to put it out in the [indiscernible].

And in terms of the adverse events that you've observed, do you think those are a function of dose or volume or kind of both? Or what do you know about it at this part? What do you suspect, I guess, because I guess you don't know yet, but maybe?

Well, we have a limited amount of information. But what we know is that it's not really cumulative dose because the amount of drug all 5 patients got was very different when they got the effect. It appears to be more important is the Cmax or reaching a threshold dose. Because the first 2 patients didn't get it until they got to the fourth dose or fifth dose, whereas the third group got it when they got to that dose and after 3 doses and the last patient got it after 1 dose. So -- and each dose cohort started at a higher and higher dose. So cumulative dose doesn't really correlate. It appears to be a threshold effect. We know from the nonhuman primate studies that the local constitution of drug is the highest, right, there in the spinal area. So -- and it's lower at the brain. So we believe that some administration changes will help the drug move -- mix and move north and stay, spend less time at a lower concentration locally, which could potentially reduce the local inflammatory effect of the drug.

And have other -- there's a number of intrathecal ASOs that are in clinic. Have there been other issues that you're aware of with some of the administrations around those? Obviously, Spinraza requires the most exposures and if so, kind of has there been any kind of learnings that you can take to kind of help manage issues that might pop up?

Well, from a standpoint of CSF protein, which I think is part of the inflammatory story, which is irritating blood vessels, which are going to release serum protein in the CSF space. That pattern has been seen with other ASOs out there. It's not unique to what we're seeing. The lumbar -- the weakness in the lower extremities is something more different from what others have seen. There have been cases of myelitis or inflammation with spinal cord observed with other ASOs. So it's not unheard, I have to see these kind of effects. And clearly, even with Spinraza, their dosing schedule involves several doses to get to load and then do maintenance rather than we expiate to a high enough dose to achieve the drug. So clearly, there is a pattern in general of the ASOs of loading below threshold, getting a cumulative effect and then going under maintenance. So we don't think it's all that unusual. And the dose range we're using is not all that unusual compared to where Spinraza was. But I do think that there's something different about what we're doing, but I also think a lot of it is similar, not unexpected. And -- but we believe by adjusting the dose administration strategy, we can still load the brain sufficiently. And escape the threshold effect of local toxicity.

Okay. Last one on the adverse events, I promise. The -- when you go through the nonhuman primate data and some of the other ASOs, I think you do see some lower limb weakness in some of the nonhuman primate studies. Was that something you observed within kind of the equivalent dose range in your NHP studies? Or was this kind of not predicted by those?

Well, what we have seen, we've seen Spinraza and other ASOs is a transient limb weakness more acutely within the first day. But that -- and that's dose-dependent. And we see that very similar to what we've seen with other ASOs in the nonhuman primate. The sort of later onset inflammatory spot we're talking about here, that response that we're seeing is not normally -- have not been seen -- was not seen in our nonhuman primate study. We did not have that effect. It's something different being seen in humans, it's is not seen there. So I think our safety profile in the nonhuman primates is very similar to what you see for other ASOs.

Okay. And just in terms of you mentioned the competitive profile of the ASO you're working with, you think, is unique and has some advantages. Could you just frame the competitive landscape sent over to few companies that are working in Angelman syndrome? Can you frame kind of where you think I received the lead in terms of getting in the clinic, but in terms of the differentiation around the approach and anything specifically about your drug do you think might produce a different profile?

Well, the 2 other companies are of importance, so ones that are very experienced in the ASO area or in neurology or Roche, who was in the clinic, I think, since August with their own antisense oligonucleotide arrangement. And then the Biogen Ionis collaboration. They have delayed their [indiscernible] clinic into January to change their lead molecule or early in the year 2021. So those are the 2 main competitors with regard to antisense oligonucleotides. There are other people looking at gene therapy strategies of small molecule drugs, et cetera. When we look at those deferent, I think the ASO competitors are closest to what we're doing. But we know that our place is different from theirs. So we are differentiated from Roche, and we believe so from Biogen Ionis. And therefore, we feel we do have an edge in terms of the target. However, those companies are very skilled in area of ASOs and I'm sure have done an excellent job in putting their programs together. And ultimately, we'll see what their molecules show. But I think what we're showing now, I would say, it would be hard to do better with regard to efficacy than what we're seeing. And the question is, what's the therapeutic window that you can achieve what advocacy and that's what's left to prove for us, but we feel good about the efficacy we're getting at this dose model.

Got you. Okay. Well, let's pivot off that over to gene therapy. Remind me of when you -- the Dimension transaction was 2017?

Yes.

So one of the -- kind of one of the greatest value-creating M&A transactions in the last 5 years that I can think of off the top of my head so far for you guys. If you could maybe just kind of walk through what caught your eye and kind of what you've done with it? And if this is exactly what you expected or if you're exceeding expectations at this stage in terms of what you've been able to develop off that? And there's some news, I think, yesterday morning about kind of your gene therapy expansion plans?

Well, as a company, we started out without a platform, and I did it because they didn't want to burn up too much capital. We focused on translation products that were existing that didn't have sophisticated platforms. So there's no doubt that gene therapy is going to play a big role in treatment of genetic diseases. So we needed to eventually get there, but we are waiting the right moment. And that came with the Dimension announcement that they were getting acquired by REGENXBIO. We decided to do a topping there because I knew the company from my work on their Scientific Advisory Board, the products were in-borne air products, which I knew very well. And while some people might have thought them not as severe as things like Duchenne or SMA, they're severe and life threatening. And they had the beauty of having biochemical markers as endpoint that you can measure. And that's always a great plus, and that was one of the reasons we picked it. I also knew from the science that there's, I think, a high probability of success since only a few percent are normal for those enzymes to get a treatment effect. So I felt that the biologic situation was good, and I had the comfort that the AAV vectors are making were at least the same as others. The part that was special with the HeLa platform, which was still had just been developed and was heading to the clinic with Hem A. That platform looks very exciting, but it was early stages yet. And it did look like a truly reproducible, scalable platform, which I know from -- we're going to AAV. I've worked in AAV for a long time. You may not know that, but I worked with Avogen and other companies early on in the '90s, in fact, on AAV for MPS-I. So I was very familiar with AAV. I thought that what they were doing, their, manufacturing was truly special and that they've done some great development work. So with the acquisition, we're able to get 2 programs right in the clinic and the third coming to clinic shortly and a good portfolio of earlier-stage programs and a technology base and a highly motivated population of employees. So we thought it was a great deal, and that cost us, I think, of around $120 million for the acquisition. So obviously, in terms of gene therapy acquisitions, that was a great deal. And since then, we've shown the Hem A program looks competitive now in terms of the level of efficacy for Hem A with potentially sustained Factor VIII levels, and that's still thin in terms of amount of data, but interesting and important. We have good data on TC and GSD1, both showing that they work, which was somewhat predictable because you don't need very much enzyme to make them work. So the threshold for succeeding was lower, and that was one of our insights. And then we have a Wilson gene therapy program, which had some great nonclinical data, which I think is also very exciting and a bigger opportunity for us. But with all that, an advancement of the HeLa platform, including the new HeLa 3.0 information, which was put out at ASGCT, we have the opportunity to even work on larger indications where you need a high dose. And that is partly where the solid deal came in is to take our high-quality, high large-scale manufacturing system, a capsid that's a little bit more like the Sarepta capsid in terms of being AAV8, and we think having a good immune profile. And that capsid added to FAOD excellent, best-in-class microdystrophin and now into a high dose indication where the scale and quality may exactly -- starts to matter, right? Can you make a highly filled, high-caliber product, in large enough scale to do a high dose therapy, and I think our platform is perfect for that. So it's a good leverage of our existing technology base. With all those gene therapy programs going, we are building a plant. We announced yesterday that we've invested in land and already broke ground on the plant in the Bedford area of Massachusetts. We've been looking at the site for a while, looked at a number of sites in Massachusetts, and that site has great opportunity for us. We will own the land and build the building, and it will have 2 suites sufficient to do 30 runs, and it will have the ability to expand in an adjacent building to double that further. So it's giving us what we need in terms of growth and flexibility and management costs for our gene therapy franchise. We'll still use contract manufacturers, no doubt, in a hybrid. But the plant itself gives us that additional capacity and flexibility, which will be required to meet all of the needs that we have of our gene therapy franchise.