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

Good afternoon. I'm Salveen Richter, Biotechnology Analyst at Goldman Sachs, and we're pleased to have with us Ultragenyx with Emil Kakkis, CEO and Mardi Dier, CFO. Thanks for joining, Emil.

And maybe to start here, I was going to ask some big platform questions, but I might start with Angelman just given the news that, that hit. So you reported this morning that the U.K. Medicines and Healthcare products Regulatory Agency approved the CTA for the Phase I/II study in pediatric patients. And you've also received clearance to enroll patients in Canada. And -- I believe, and you're expecting to enroll them in the second half of this year with clinical data for some patients by year-end. Maybe help us understand what this means to start and then we can walk into next steps?

Well, it means now that 2 other regulatory authorities have looked at the data, safety and efficacy and felt that the program should move ahead with the modified dosing approach we've taken. I think we've gotten great feedback from regulators and from patient groups about their excitement, about the opportunity to get this thing going and they're able to work with us on a good plan. So the Canadian plan and the U.K. plan are the same in terms of protocol, allowing us to treat 12 kids, half of that will be less than 8 and half over 8, and with a low dose that will titrate up. This is described in the release. This will allow us to explore the therapeutic window at a dose level where we've seen the excellent knockdown of the message and the improvement in expression in the non-human primate, but also in our clinical program. And so we feel very confident that we can find a dose range that will have a benefit in these patients. And by altering the administration method, we think we can produce the risk for local inflammation of the drug right where the drug is applied, which should help allow us to get the efficacy we've been seeing, which was profound we felt and helped reduce or mitigate the risk of any of the local inflammation events that we were seeing.

Perfect. And can you give us the strategy here for the regulatory path going forward? And what else needs to be signed off on and understood?

In the Canada and the U.K., we need to get the ethics approvals and the local site approvals, right, to move ahead. And that process is already beginning. So we had some sites already identified and operate in Canada, U.K. we've added sites. There are several very good sites that are interested and the process has already begun. And so we need to go through those local, but we don't anticipate any issues with doing that for this program. In the U.S., we also talked about we had a progressive or productive discussion with the agency and potentially provide a path forward for getting the trial started in the U.S. in those patients that have been treated before, allowing us to retreat them and at least gain some information on their safety and potential efficacy in those patients too. Our hope would be to treat them after we get the FDA's approval of the protocol change, and then take the additional data from naive patients treated in Canada, U.K. and together toward the end of the year then bring the new approach into the U.S. as well to treat more naive patients. And that will get us moving toward expanding a Phase II study and exploring the dose we've determined based on that early study and help us start lining up the process for a Phase III. So we're excited to get this going. It's taken a little while longer than we had hoped, but we feel like we have a plan now with 3 countries potentially in play together to find the answers.

And then what data will you release as we look to year-end? And how are you going to evaluate that updated data in the context of what we've seen already?

Sure. Based on the response rate we saw before, we were seeing much improved changes in patients within 3 doses of drug. So -- 2, 3 doses, really. So we would be expecting to see significant improvements after 3 or 4 doses of drug in some patients. Our expectation is we'll be treating 6 below 8 and 6 above 8. It will be -- there are some modest staging going on there, but we expect to see a good number of those -- all those patients should have been treated, and at least some of them should have had 3 or 4 doses worth of drug by year-end. And so we should be able to assess whether we're seeing the pattern of benefit we've seen before.

And you also announced this morning that GeneTx will submit an amended protocol to the FDA following the meeting, the main meeting. Can you discuss the nature of the issues the FDA is requiring yourselves and the partner to address here? And what would be included in this amended protocol?

Well, we reiterated with them the fact that the 5 patients had truly resolved, and we provided more data on their resolution. And we had our investigator there and a neuroradiologist at the meeting to go through the information that, one, the effect was localized and did not extend anywhere else in record. And second, that they are resolved and not even small increase or decrease as the doctor actually felt that some of the patients were clearly better than they were at baseline. So they were given the confident information that clinically the patients had truly resolved. And what came up with really looking at the safety margins and the thought of starting at a lower dose. And so we proposed that as a way forward to these patients starting at a lower dose. And it makes sense that, that might be a direction you would take. And I think we're very comfortable with the dose we're starting at ex U.S., but in this case, it's about accommodating the conservative views the FDA has about what is safe for the patient to start lower. But I believe because of the ability to accumulate drug in the brain over time that even if you start lower, you'll accumulate enough drug, that you should see good benefit if the benefit we've seen before is replicated.

And I guess, when do you think that the study here could resume in the U.S.? And is there anything additional the FDA is requiring from you?

Well, we don't know if there will be anything additional. We had discussion and focused on what we would use to retreat the dosing, et cetera. So we believe that's the core issue and the evaluations, which we've provided. So those changes we are aware of, we are not aware of anything else. So our expectation is to be able to file them in the protocol imminently and then work with them on assuring any other change is required. So we'd expect that within the next couple of months, we should get the protocol reviewed, accepted and then the IRB is a 2-week turnaround for us. So we should be able to get going here in that time frame, assuming the FDA accepts the protocol. The academic site in Chicago is very motivated to move ahead. So as soon as we can get the agreement, they'll put it to their IRBs and get that cooking. And it only takes 2 weeks there. So that's been great. And Dr. Berry-Kravis who's our PI there is a phenomenal, energetic PI. She has done a lot of great work in neuro in general, and she's anxious to get started again.

Right. I guess, overall, how are you thinking about the risk-benefit profile of the drug? And what's a tolerable, I guess, risk -- or tolerable profile on the safety side?

Well, I think if you think about what's going on with these patients, they really have no treatments at all right now. And the patients are sweet and fine, but they're not functional. They don't understand their name, they don't respond to their name. They don't follow instructions. They don't speak any words. They can't eat with utensils. They fall down all the time. So in terms of impairment of quality of life, it's profound for them. So there is a big deal there. And we don't want to see lower extremity weakness as a recurring thing, but we think it can be prevented, and therefore, I don't think we're going to have to take that compromise. But I would put you this way. Certainly, one of the families, [indiscernible] they'd rather have the kid in a wheelchair behaving like they were than to go back to where they were. That is being able to talk to your child having look at you when you say his name or follow instruction or to be able to eat with a fork instead of just with their hands and to be able to sit with the family and pay attention to the family, right, to be a social member. If you think is a parent, it's a big deal as opposed to having this child that's often in his own space running around when everyone's trying to eat. And one other patient example, sleeping through the night. He had not been sleeping through the night. Normally, he was up 3.5 hours every night. And I can make you imagine, Salveen, if your kid was up 3.5 hours every night, every night, like how does the rest of your life work? So there is fundamental issues, not just for the patient but the caregivers who have to -- who are on 24/7, taking care of kids. So we think this is something you push forward with. If you have to have a safe event, I prefer we're dealing with this type of safety event because it's a very local inflammatory reaction where you put the drug. It's like an injection site reaction. It is not a funnel action of the drug. It's just a local high concentration causing irritation. All we need to do is get it out of there, don't leave it. So we don't let it sit there too long. Get it to mix more rapidly, and I think we can reduce this effect. It's not related to the drug's action, otherwise, right? It's not like it's good thing it does neurologically and bad thing it does neurologically, it's completely irrelevant to what actually its action is. So to me, having the safety and efficacy being completely separate issues is a great situation because you can deal with the safety question, inflammatory response separately and not impact its efficacy at all. So I feel very comfortable we can get through this and not have to deal with that safety event.

Okay. Maybe just going broad for a little bit here. When you -- when we look to the remainder of 2021 and maybe early 2022, just help us understand what's going to play out in terms of launches and pipeline news flow?

Yes, there's a lot of things going on. I don't know if there some of this, Mardi, you would want to do too. The news flow, I think from a clinical trial standpoint, there is going to be, of course, the Angelman data late in the year. On the gene therapy front, there will be 3 programs starting their trials, but there won't be data, except maybe some extension data coming from the other patients who have been treated. The 3 new trials, pivotal trials starting. In addition, there should be a fourth pivotal study starting for our setrusumab for osteogenesis imperfecta starting. The fifth program, the mRNA for GSDIII, glycogen storage disease type III, should read out some data, I think, by the end of the year on the first few patients treated, at least that's my expectation. So in the other bit of data that we should come forth, we probably will have an update on the Duchenne program and where we're at on making a new vector with the HeLa 3.0 system productive vector and showing the functionality of that vector and nonclinically we'd expect. So that was a fair amount. But in terms of clinical data, it's going to be more Angelman, a little GSDIII and maybe extension genetic data. On the commercial side, we'll obviously have launch. I don't know if Mardi, you want to talk about commercial growth and catalysts for the year.

Yes. Great. And I think you did cover that clinical catalyst. One other thing I might bring up is on our platform is later in the year, we'll have additional data with our HeLa gene therapy manufacturing platform as well, which could be very interesting. Going from -- we've gone from 1.0 to 2.0, then we'll go at 3.0 and some of that data may come out towards the end of the year. But on the commercial front, so with Crysvita with -- in the Ultragenyx territory, we had talked about in Q1 that we're maintaining our guidance for the year of $180 million to $190 million. We reconfirmed that. So we see pretty significant growth continuing with that program, which we're pretty excited about. And then, of course, we're the third quarter -- fourth quarter into the launch of Dojolvi as well. So commercially, we see a lot of strength in the 2 lead programs. And then Mepsevii is also approved. A smaller program, but we continue to get reimbursement in a number of European countries. So we're pretty excited about that. But we should see continued growth in the top line as well. So the combination with the commercial and development programs. Certainly, a lot going on for this year.

Emil and Mardi, I guess another question is when you look at your company, your portfolio spans, gene therapeutic biologics, rare neurological diseases to metabolic disorders, you're extremely broad from a pipeline and modality approach versus deep in any one vertical. How do you think that benefits you as you prioritize or think about indications and diseases on the forward?

Yes. We are broad, and I think that's an important observation. But when we've taken on technology, Salveen, we try to focus on things that we felt were closer to being ready-to-use, right, that we could apply to a product as opposed to building maybe from scratch ourselves. There were things that were at the clinic stage and moving ahead. Our general attitude has been to take platforms when they're ripe and ready rather than earlier and so that's -- to try to mitigate the risk profile. So that's kind of one of the pieces. One of the key reasons we like the breadth is it allows us to pick the right answer for different diseases and situations. For example, if you're treating XLH, Crysvita is really the right way. There's no gene therapy strategy. It's really going to be reliable or safe in trying to control FGF23. I think monoclonal antibody is a perfect way to do that. For GSDI, you need highly regulated small amounts of enzyme to be made. So the gene therapy with the normal promoter on it allows your liver to control your glucose in a way that's dynamic and fast, that couldn't be done with the monoclonal antibody, right? You can't do anything or an enzyme therapy for [indiscernible]. You need something that's regulatable. So for GSDIII, we need -- it's a big protein. And it's a toxic protein. You need -- every single cell in the liver has to get it. So for this case, mRNA LNP look like a better strategy. And finally, for Angelman, there's an antisense RNA you need to knock down to release the expression of maternal chromosome, the antisense oligonucleotide is the best way. Now you say, well, what about gene therapy? But gene therapy won't hit every neuron reliably. And you can't give too much UBE3As, you can't have some neurons with 3x or 4x, and others with not much, right? That's not going to work. It's a highly regulated protein. So in this case, the antisense oligonucleotide, I think, is the best strategy. To do gene therapy, it will require a lot sophistication and design engineering and a very efficient process to hit more neurons, which ASOs will hit all the neurons, but gene therapy, not quite. So all of our choices are based on getting the right product and picking the best mode for that indication. Now the disease we pick are all about where the genetic diseases have still unmet need -- inborn errors of unmet need, but it's solvable, tractable unmet need, right? Problems that we can solve with a soluble enzyme or protein being made. Neuro, there's a lot of neuro diseases that are again deficiency kind of diseases, right? And Angelman even it is a neuro deficiency disease of an enzyme, right, and we're bringing out that enzyme. The same is true for the bone endocrine. Very often, these are either deficiencies or excess. And so the stories we pick, whatever mode we're in, is usually about too much or not enough of something, simple stories that you are genetically determined and we then pick the right mode to make that adjustment up or down as required.

Got it. And then just broadly on your gene therapy portfolio here. With Wilson disease, that's expected to initiate early and, I guess, I'd be curious on whether that's on track with the initiation time lines here. But you're pursuing a seamless Phase I, II, III trial design. Can you discuss how this would accelerate the development path and when we could see first data here?

Yes. So the seamless design means you have to get agreement with FDA upfront of what all the endpoints are, right? All the criteria. And that helps, but it's helped by the fact that Wilson disease has approved treatments and endpoints the FDA already accepts. That is what makes it possible to do this, is that you can get agreement on endpoints upfront on what the right answer is. And these are biochemical endpoints. Therefore, our power for measuring is great. So we don't have to worry about what the power is because we have plenty of power to see those changes. Therefore, we don't need a Phase I/II to really figure out how to design Phase III, we can figure it out. We just need to pick the dose. The rest of the understanding already is in hand. So the trial will have a Phase I/II element where we're hitting 3 cohorts increasing dose. And after that dose is determined, we'll go straight to Phase III. Now normally, you would have taken that data, included a certain amount of safety information from it, wrote up a package, requested in the Phase II meeting, went to the meeting, had feedback, then amended the protocol and then submitted a protocol. When you put all that time together, it can be a year of time. That year is gone now. If we get to our dose, we basically proceed right into Phase III enrollment. Saving the year, that is a big deal in drug development. And in terms of value, it's a tremendous savings in value. And I think as a company, we focused on time, time from IND to launch as being a key factor in our business and how we manage the business. So where the FDA offers up the opportunity to simplify and go straight through, and in this case, where you can do it. By the way, not every disease could you do this design because if you don't know enough about the disease as we often don't, you can't pick at the endpoint for Phase III right from the beginning, then you wouldn't know which one to pick.

And I guess could you apply this path for any of your other gene therapy programs?

Well, we're thinking about it for the Duchenne program. And the question for Duchenne is whether we will need to figure out the endpoints or not or whether we'll have certain other endpoints. I'm not a big fan of the NSAA, North Star. I think it's not an optimal assessment scoring system at all. And so we'd rather do something different. So the question is, can we get agreement on an endpoint and how to power it. But it would be a situation where it would advantageous to be able to go straight through if we can figure out dosing and then create through figuring out how to measure the patients. I think there will be other situations where this will come up when we know enough about the disease to be able to make the call on how to measure it for Phase III. For GSDI, for example, we didn't know for sure what the biology was. We didn't know what the response is going to be like or how to -- what the endpoint would be because it's never been done before. So that one would have been hard. We're doing CDKL5 program also, that's in neurologic disease, never been studied really formally, at least not for the multiple domains that we would be looking at. That's the study where I think we're going to have to run the Phase I/II and figure out something before we can hit a Phase III. A little harder then to go faster. Even so, we'll always work on managing the white space in the trial and development because it's so valuable. And the RARE model really requires you to run efficiently. If you can't run efficiently, it's hard to make the RARE model work well.

Sure. And then anything you can give us on the Duchenne program apart from the endpoints, maybe the construct and how you're thinking about differentiated versus what's out there?

We think we have a number of places for differentiation. First, the solid microdystrophin that we're licensed that we think is still a superior dystrophin. Everything we've done looked at it from -- even from the time of the deal gives us confidence that it's a superior microdystrophin and probably a better one and long-term -- for long-term productive expression. The vector we're using, we know producers and delivered to all the muscle. And we know we can make it in our HeLa platform. So we're working in optimizing that. This year, we'd expect to get to a HeLa 3.0, the new version, which should give us 5 to 10-fold more productivity than the old version we have, which -- and a very high-quality product that's 60% to 80% full right off the reactor. So having a high fill ratio is very important for Duchenne, right? Because you don't want a lot of free caps and it's just antigen. So having a high-quality loaded product with 2,000-liter scale and a 5 to 10-fold [indiscernible] will bring the cost of goods for Duchenne more in line with other gene therapies and potentially put us in a position to have a far better commercial manufacturing solution than triple transfection approaches. That all said, there is some room for improvement in administration strategy, and we think that delivery to muscle is always a challenge and optimizing that will be another place. So we think there could be some improvements possible. So we'll be exploring that as well. I'm trying to put together basically from microdystrophin to capsid to manufacturing, administration strategy and management of patients into a tight follow-on package that we hope will start to catch up with the other programs, but I think ultimately provide a product that could be priced and accessible globally. And for some of these really high dose larger indications like this, it would be a tragedy to come up with a solution and then have only people with the best commercial insurance in the U.S. getting access and no one else in the world, right? To me, it's not a good solution. And all of us in biotech need to find solutions that are going to actually be applicable globally and to push for them. So HeLa 3.0 gives us that edge and other improvements we think in the process will allow us to make a Duchenne therapy that will, we think, be more applicable. But microdystrophin is still a first step. It's not a complete cure either, right? But if we can get it, then some of these kids could live 2, 3 decades longer and still be functional, right? And that will give us an opportunity then for the next stage of improvement.

And your GSDI Phase III study is expected to start in the second half of this year. And the primary endpoint, I think, is reduction in oral glucose replacement therapy. So cornstarch levels essentially, but -- and while looking at maintaining glucose control. Can you discuss how glucose control is defined and how stable you'd expect that to be post treatment, just the variability that could come from this aspect?

Yes, the CGM, we're using the Dexcom 6 continuous glucose monitor, which works well in GSDI because of its specificity, the quality of the measuring. And what we've managed in looking at our current patients is that during the time of treatment in the second half of the 6 months that we can reduce their variation, the time saying normal is between 60 and 120 over a continuous period of a month monitoring. And we can improve generally on average, maybe 10% better, tighter control than what they were achieving. But because the doctor has been monitoring their control, he's going to adapt a cornstarch to achieve control, right? So the control piece is actually built into the protocol, sort of self determined, right? They're not going to reduce the cornstarch and have them in poor control because that would not be monitoring. So the continuous glucose control part is almost self-fulfilling, right, we're working to manage it. The question is how much cornstarch introduction can you get to? Well, we've seen in patients that they're getting into the 60% to 80% range, some even above 80% reduction range. And that continues to improve as time goes on as their body physiology starts to adapt and their insulin production starts to wane because they're making too much insulin in the beginning because of sometimes several decades of starch use. And so, getting your body to wean off starch and insulin production is part of what has to have in this disease. So the cornstarch introduction is very profound, very well powered. The CGM is somewhat self-fulfilling by the design that we should be maintaining tighter control, which we see as achieved, particularly in the second 6 months once they get through the early adaptive phase of their gene therapy.

And with Crysvita and Dojolvi, maybe help us understand how the patient identification and education processes are playing out globally there with the launches?

Yes. I think it's going really well with COVID. And I'm wondering, Mardi, maybe you can describe it, I think we've gotten past some of the COVID depression of patient identification. It is starting to pick up, and maybe Mardi, you can talk through the commercial products.

Yes. So with Crysvita, specifically, 80-plus percent of the patients actually get administered the drug at home. So that helped us during the COVID year, last 18 months as well. And what we said in 2020, we came in at the high end of our original guidance range, which, of course, was given before COVID hit. And then for 2021, we're still maintaining the guidance of $180 million to $190 million for the Ultragenyx territories for Crysvita. So things are going well there. Of course, there's a lot of focus on the patient find and finding the adult patients. And that too continues to go in the direction that we wanted to. So we had said that it was -- first we were finding the ped patients. So the balance was more peds than adults. But I think we've crossed that threshold now, that we're now finding more adult -- having more adults on drug than peds, that's great, and that's the process that we want to continue. That we've done a lot of work with the genetic counselors and genetic testing, defined families of patients with XLH, which has been very successful as well. So we continue to penetrate beyond just the endocrinologists and the specialist centers, but really getting into the community hospital or some of these adult patients have been treated for years and to identify them. So it's an ongoing process, but it's going in the right direction for sure for XLH and Crysvita. Then Dojolvi has been great. So we're in our fourth quarter of launch. All 80 patients that were on the Phase II study have transferred into reimbursed -- most of the patients, if not all, have transferred to reimbursed drug on the commercial front, and they will continue to find new subscribers. I think we're well over 100, 115 new subscribers, and we had, last quarter, announced 230 patients with new start forms. So things continue to trend very well with Dojolvi as well.

And then maybe 2 last questions here. One is when you look at your earlier stage pipeline that we didn't discuss, is there anything that you really want to highlight there that we should be monitoring? And 2, you talked about going from your HeLa 1.0 to 2.0 to 3.0 platform. And how are you supporting -- I guess, how are you integrating that with the programs as you take them into the clinic? And are you still looking for -- I mean, partnerships, the way you did at the earlier one, I guess? Would you partner on your abilities?

So let me start with the second part. So the HeLa 3.0 is new. We developed the sciences last year, the team did a phenomenal job of figuring this out. It was presented at ASGCT. It would be incorporated into the Duchenne program as kind of the lead demonstration project. For the Wilson, it is 2.0 and the productivity there is sufficient to do well there with -- so we don't really need to make 3.0 for Wilson in terms of the productivity we have achieved at this point. For CDKL5, we will probably -- it will either be 2.0 or 3.0. But we wouldn't necessarily go back and convert everything. We want to use it where it's particularly advantageous. But we could, for example, do it on Wilson or the others through the way we can actually take the existing cell lines that we produced and edit them to create the new line. So it actually is a relatively efficient thing to do to convert to a HeLa 3.0 line. So we'll look at that carefully with each one where it makes sense because remember, if you do this, you have to go through the regulatory process, so you have to decide what is it worth it or not? What's the business case? In terms of early pipeline, I guess the other program we didn't talk about was setrusumab for osteogenesis imperfecta. It's not necessarily early, it's early for us. We're starting our first study later in the year, but we're really excited about setrusumab because we believe the anti-sclerostin mechanism of increasing bone density will improve fracture strength -- fracture healing or reduction in fractures in the OI patients. And it is mechanistically in animals works beautifully. And we think knowing what we know now about OI, we think it's the right move to try to strengthen their bones, potentially to achieve almost normal bone strength as possible. So we're encouraged by getting that program going into the clinic, which will help build on our Crysvita franchise. Beyond that, we haven't spent a lot of time talking about the earlier ones other than the GSDIII. We have a number of early-stage pipeline. We don't normally talk about them until we're kind of ready to go to IND just because there's already a pretty long list to talk about, right, if you look at the whole list of things. So one thing I could say is, I mean, we're very productive as a company, right? We've got a lot going on. We have highly dedicated small teams that run these programs. And I think we have a good process for how to do that. Our plan is to keep 68 programs in the clinic. And so we could potentially add one more with time, but we'll see later this year if we're going to do that. But right now, we need to get 3 Phase III gene therapies running, we need to get OI running, we need to get Angelman running. Honestly, that's a full plate for almost any company, even a big one.

Perfect. Well good luck with all the progress here. Thank you so much, Emil and Mardi, really appreciate the time today.

Thanks, Salveen.

Thanks for having us, Salveen. Good to see you.

Take care.