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

Welcome to the 2021 Wedbush PacGrow Healthcare Conference. My name is David Nierengarten. I'm a senior analyst here at Wedbush Securities. And today, we are kicking off the Miss Con-GENE-iality gene therapy panel for -- of experts here in gene therapy. And with us today representing various different companies, we have Emil Kakkis, CEO of Ultragenyx; Geoff Mackay, CEO of AVROBIO; Bobby Gaspar, CEO of Orchard Therapeutics; and Philip Gregory, Chief Scientific Officer of bluebird bio. And for those of you in the audience listening in, there should be a text box beneath a video screen that you can enter any questions you'd like to make this more interactive. And we will start off, though, with some questions and comments from yours truly and our panel members. So first off, maybe just a quick introduction and description of your focus for each of our panel members, starting with Emil, and of course, on the focus for the gene therapy component of your business.

Very good. Well, thank you, David, and I'm happy to be here with this group of gene therapy executives. Ultragenyx is a rare and -- a company focused on rare and ultra-rare therapies. And we have an AAV gene therapy group that's derived from an acquisition of a company named Dimension Therapeutics. And currently, we have 4 programs in the clinic. One is the hem A program partnered with Bayer. And we also have a gene therapy for ornithine transcarbamylase and one for GSDIa that have put out Phase I/II data in both cases successfully and are entering Phase III. And finally, we have Wilson disease gene therapy that is entering clinic this year as well. So we have a pretty broad AAV gene therapy portfolio, and particularly important is the HeLa platform that we've been developing, a producer cell line platform for large scale and more cost-effective, high-quality manufacturing of AAV, which we think is going to be a big part of the future and may be part of the discussion today.

Absolutely will be part of the discussion today. Maybe we can move on to Geoff in no particular order here.

Sure. Thanks, David. So AVROBIO is an ex vivo lenti gene therapy company. We leverage one engine, the lenti probe platform that we call plato. We've put a lot of energy into trying to optimize that platform, and we apply it to lysosomal disorders. So we have 4 or 5 of them. We break it into 2 waves. The first wave is in the clinic now, firmly in the clinic, and that's Fabry disease, Gaucher disease type 1 and cystinosis. And we are the first gene therapy in the clinic in all 3 of those indications. We've dosed 18 patients so far across those 3 diseases, with the furthest patient out now approaching 4 years. So we're very pleased with the early work. And right now at AVRO, the focus is multiple regulatory submissions towards the end of this year and spilling into early next year, where we hope to transition into multiple Phase III programs. And maybe the final point is that the second wave is now approaching the clinic, Hunter's disease, Gaucher disease type 3 and Pompe disease. We've completed all of the preclinical work and are at different stages of finalizing INDs and CTAs for those programs.

Got it. And maybe moving next door to Orchard. Bobby, if you could give a quick intro on what you have been up to over at Orchard.

Yes. Thank you, David. So Orchard Therapeutics, and again, I'd define us as hematopoietic stem cell gene therapy. So we're focused on modifying hematopoietic stem cells for some severe genetic diseases. We are modifying them using lentiviral vectors at present. But I say the technology is really around genetically modified hematopoietic stem cells because of their ability to differentiate into multiple cell types because of their self-renewal capacity, their ability to migrate into different cell types into different organs. So that gives us an opportunity to address many different diseases, and we have done that at Orchard. So we have programs in neurometabolic diseases, including an approved therapy in the EMA for -- in the EU for metachromatic leukodystrophy, MLD, which is launching this year. We have programs in other mucopolysaccharidosis, where there are limited treatment options. We have programs in immune deficiencies such as Wiskott-Aldrich syndrome. And with a look to the future, we're looking to use hematopoietic stem cell gene therapy for a series of larger indications as well because of the properties that I talked about. I think as a modification using the lentiviral vector is an important part of that. We treated over 160 patients, stretching back over 10 years now, and that is a testament to the durability, the efficacy, and importantly, the safety of the therapies that we have in the clinic. So thank you.

Thank you. I'm not sure Philip or Andrew, if you'd like to introduce. Andrew -- thanks for joining us, Andrew. But -- sorry about that, but we missed introducing you.

No, that is my fault. Apparently, the 18 months of virtual has not taught me how to use it correctly. The -- so bluebird bio, I'm the President of the Rare Disease division of bluebird bio. I'm here representing the other company that was split off to be independent and maintain the name of oncology arm that will be separate, but today, we're going to focus on the rare disease side. So we are also an ex vivo LVV gene therapy company. We have 3 programs for adrenoleukodystrophy, cerebral adrenoleukodystrophy, thalassemia and sickle cell disease. We look forward to filing a BLAs this year for adrenoleukodystrophy and for thalassemia and follow-up, hopefully, in the near term by the sickle cell BLA. We have just recently announced as of Monday that we're focusing our efforts on the U.S. market. So we do have approvals for adrenoleukodystrophy and thalassemia in Europe where we will be seeing partners for those programs. I'll just mention quickly, we do have some very early-stage platform research as well in, in vivo LVV.

Great. So maybe the first question for everyone and will roll through kind of in a round robin fashion, if you don't mind. Is -- there have been several instances now in the past couple of years of kind of clinical and/or regulatory pushback from the FDA in terms of either requesting longer follow-up or additional data for various indications or various gene therapies. So a couple of questions here. So first off, is the FDA changing their requirements, changing their -- the way they view manufacturing or other clinical trial steps or outcomes? Are they -- is this just a natural consequence of some projects getting converted essentially from academic projects to an industrial or industrialized process? Maybe if you could give those opinions and maybe what you've learned from interacting with FDA from other conversations you have with folks who have interacted with the FDA on these questions? And maybe we'll start back again with Emil.

Very good. Well, I think it's both yes and no. I think when I look at what's going on with FDA on the CMC side, it's natural, the closer you get to commercialization that they start clamping down on the controls and the reliability and comparability of things that you're making. And particularly for AAV, there's just a lot of new assays and things that have to be developed and evolved. And it's just natural things get tougher. Now on the clinical side, it's also normal that they're easier getting into Phase I/II than they are completing Phase III and getting approval. No matter what -- whether it's gene therapy or any other drug, the things get tougher at a later stage and there's more questions and more difficulty. At the same time, I think there are a couple of things that have happened that have, I think, changed what they're doing. One of them, it's come from the BioMarin experience with AAV and hem A, where it looked like they were losing a lot of traction. We all are thinking of gene therapy as a lifetime effect, not one that's going to fade dramatically within 1 year to the next year to the next year. And so I think that rattled agency that what they're going to approve is not really a long-term gene therapy, but maybe something that would disappear. And I think that data put them in a position of having to be more conservative and particularly in the disease where there is a large population, but there's also an existing good treatment. So there -- I think that's the situation there clinically. I think that the other thing that's happening with CMC is that there's a lot of companies who are doing what you said. They're going from lab scale processes to get to slightly bigger and bigger. And as that changes are happening and they're starting to lose or having concerns, but the product is changing, particularly if it's happening later in development or potentially after Phase III. And I think that's causing them to tighten up the screws on certain types of things in AAV, particularly potency assays, for example, of -- protein activity type potency assays, for example, has been a real sticking point because they want to be highly confident that they actually can deliver the right active protein. So I'd say there are some parts that it's just getting later in stage, and some of it's a reaction to actual things that have happened.

Got it. And I know manufacturing has been central from day 1 for you, Geoff. So maybe you could talk a little bit about how you've thought about it and interacting with the FDA?

Yes, thanks. And so we agree. I mean it's almost a moot point if the FDA has gotten tough or not. They have high standards now. I don't think anybody is debating that on the CMC side. Our view is that if you had to generalize it, they've always been tough, it's just companies are reaching the stage where they've always been tough. But I think that we've done an analysis of looking at can you learn from all of these delays in the field of cell and gene therapy, and that you can start to bucket what has really led to the delays. And certainly, there's a whole bucket of just doing process changes, as been said, going from adherence to suspension, bioreactors, small to large bioreactors, academic to commercial stage vectors, fresh to cryo. So some of those things have to happen early and there have to be rigorous comparability to bridge and discussions with FDA ahead of time, agreeing on the data submitting. And then there's a whole other bucket of assays, qualified or validated assays, most notably potency assays not getting worked out appropriately. And I think that our whole field has been such a gold rush until recently that the clinical data is just so exciting that I think there might have been a perception by some or at least by some investors that FDA would yield on CMC analytics. And whether they change or not, what we know is they're not yielding on CMC analytics. And so it is a high bar, and we all have to take it really seriously. So that -- we have tried to invest very early disproportionately relative to the size of the company to get a lot of those things in place. The 200-liter serum-free suspension bioreactors, our optimized vector, the fully automated manufacturing approach and to invest as early as possible in program-specific potency assays. So we don't have the hubris to say that we've solved it. I think it's a high bar for us. It's a high bar for everybody. But certainly, we're putting a lot of energy in it.

And maybe a question leading into -- for both Orchard and bluebird, you both had an experience of getting your -- getting a product approved in Europe while you're still working on the FDA here in U.S. Maybe if you could compare and contrast how the EU is approaching or the EMA is approaching your therapies compared to the FDA? And maybe again, we'll start with Bobby and then move to either Philip or Andrew at bluebird.

Yes. Thanks, David. I agree very much with what Geoff and Emil both said about the bar at the FDA. I think there is -- the one thing that I would say is different between the EMA and the FDA -- and I'm not necessarily sure that it's about the standards or the kind of stringencies that they have. I do think it's -- you are able to have more conversations with the EMA. I mean there's a series of meetings leading up to file that allow you to explain your data. And these are kind of face-to-face meetings or, in the current climate, they are kind of Zoom meetings. But they're 2-hour meetings. It allows you to talk through this the issues that need to be addressed. There is more scope to explain what you're going to do. And so they get comfortable with that. You have pre-MAA meetings, you have [indiscernible] meetings, et cetera. So I think that makes for more, how can I put it, a sense of working together, especially when they can see this extraordinary clinical data that you come with, is there a way to make this approved for patients without necessarily compromising on quality or standard, et cetera. So I think that does help. With the FDA, I don't know, the COVID situation hasn't held, but it's been very difficult to have interactions with the FDA and to explain this kind of clinical data and to -- I mean just as a case in point, with our MLD program. For a long time, we weren't able to have any kind of interaction with the FDA. And then we got RMAT designation. We had a 1-hour conversation with them, which really changed the tone of our interactions to them being kind of supportive of the clinical data and can we find a way to take this forward because there's nothing else for these patients. And here, you've got something that's really making a transformative change. That doesn't say, we -- you change the standards, but it does allow you to at least have a path to move forward. So I think the interaction is a big. There are clearly kind of stringency differences as far as CMC is concerned. I'm just -- all I'm saying is that they're different, not necessarily one is higher than the other because I think they both have a high level of stringency. And I suppose one of the things is that the bar has -- just on the FDA, the bar has remained high. And when you're doing something for the first time, which we are all doing in this field of, for example, HSC gene therapy. There's no HSC gene therapy that's been approved by the FDA before. You are -- they have a set of standards that have been developed for biologics and other medicines, which are now being held for our new therapy. So we're having to try to find a way to address that when maybe the rules were designed for something different. So the rules were designed for certain medicines, and we're coming with a different type of medicine. And that -- and the rules haven't changed as such. And so we're trying to have to find a way to do that. I mean I'll just make one example is, for example, we've faced questions about potency assay for Wiskott-Aldrich syndrome. Now Wiskott-Aldrich syndrome doesn't have function in hematopoietic stem cells, but that's the cell type that we're correcting. So we're going to have to try and find a potency assay for that particular program because they ask for potency assays. And that's just a rule that they have, but it doesn't take into account the kind of medicines that we're developing. So we're wading through new territory. We're charting on -- through new waters as it were. And so that's just the way it is. And so my kind of final summation would be, look, what I think we're all developing are extraordinary medicines. They make lifetime changes for patients with very, very severe diseases. There has been fundamentally no concerns that we've had in that program is about durability, efficacy or safety. What we're doing is facing the challenges of process and production in order to be able to get these over the line. And it's taken longer than anticipated. Fundamentally, we will get there and it will make a difference, but obviously, everyone is impatient to make sure that, that happens.

Yes. Well, maybe I can agree with what has been said on the panel so far. I mean I think that the pace of the clinical progression of these medicines in general, combined with the transformational outcomes that everybody on this panel is seeing and certainly in many of the patients that get treated, certainly means that there's not a lot of time to go from something that's an exploratory Phase I or something that might be effectively Phase III-ready. And I think that's part of it, right? It's just that the data is so transformative so quickly that there's not a lot of time to sort of take an assay that might have been acceptable for a Phase 1 and then turn it into a Phase III-ready, commercial-ready assay. With respect to your question about the differences between the EMA and the FDA, I would certainly second Bobby's comment that I think that there's a greater degree of flexibility in the communication for those. We've also seen, on the bluebird side, differences in how they view different starting materials as either requiring effectively full almost a biologic level of validation and potency versus the drug product itself, for example. So certainly, in the U.S., we were surprised by the requirement for an additional assay on the vector that effectively we're already covering for on the drug product, right? And that really comes down to that question of like how much validation you do of the vector around potency versus how much validation you do with the drug product. And so clearly, there was clearly a difference in perspective there. But I would say just the second thing very strongly what Bobby said, we actually want the FDA and the EMA to hold us to very high standards because in the end, we need to be able to deliver medicines reliably and reproducibly that impact these diseases. And -- like that's what they're trying to make us do. They're trying to make us do this over and over again. And our head of manufacturing is always telling me that you're not approved based on what you did, you're approved based on what you're going to do, right? And so like you need to do it again and again and again. And that's a really important bar for us all to be able to step over.

Maybe a question for everyone. A quick question on, do you see the FDA and EMA converging at all? Or are they kind of going to have these differences of opinion for certain potency assays and things like that? Just maybe a quick question for everyone. Let's start again with the EU folks. So maybe Orchard with Bobby and bluebird and then Geoff and Emil.

I think they may, but I they're not at the moment is what I'd say. They're not -- I mean just as an example, we recently -- for our MPS-I program, we had a proof-of-concept study and we want to move it to a pivotal registrational study. We were accepted for parallel scientific advice, which means we can meet with the FDA and the EMA simultaneously. But they're not obliged to give us the same feedback.

Yes, of course.

All you're doing is meeting with them simultaneously. So we present a study design to both agencies, simultaneously. But they give very different feedback. What is acceptable for the FDA may not be acceptable for the EMA and vice versa. They do hear each other. So there's some level of convergence, but they still have different views. And so -- and when you're in these rare diseases and you don't want to be doing multiple different trials, when you can't do multiple different trials, want to do one global study that can then lead to approval, both in the EU and in the U.S., it's important that you get buy-in from both agencies. And so you're trying to walk this fine line between -- to developing a study design that is acceptable to both when they both have different viewpoints. So it's -- again, it's a challenge where we think for the benefit of patients, it's better to do it with one study rather than having to do -- I don't think it's possible to do it actually with multiple different studies in these rare diseases. So I wonder whether the agencies, especially in these rare diseases, need to think about how they interact with each other because it leads to complexities, which I think in the long term isn't good for patients, I would say, for the development of what are, again, as Philip said, kind of very -- as we've all said, transformational medicines, and maybe the agencies do need to look at that.

Bobby, the one thing I would say is I worry about what the convergence is and what they converge upon.

Yes.

Because I always said, when you get 2 regulatory authorities together, you get the worst common denominator of both. And that honestly, we've used the differences to help advocate for what needs to happen, whether it's gene therapy or I would mention our Mepsevii program where the EMA set of a biomarker primary endpoint is the only way the program could be done when the FDA said you can't use it. Well, I got EMA advice first purposely knowing they'd be more practical and accommodating. When I told the FDA we're doing primary endpoint, urinary GAG, they did not like the biomarker endpoint at all, right? But we struggled to a place where we did the same study, but we had 2 different stat plans. But in the U.S., they wouldn't accept the biomarker, and they decided they would just look at our clinical data in totality and make a decision.

Yes.

But what I'm saying to you there is I use the differences as a way to get the practical solution achieved and then negotiate with the other authority. And I would say that's happening a lot. Different authorities, different positions, we find our way forward. And I actually am a little more averse to actually creating one entity because I just feel like it's going to end up being the worst of both. That would be the fear right now.

I would echo that. And I think the experience of the European payers where you have the joint evaluation of France -- sorry, Benelux, Belgium and Netherlands or the Nordics. And we want to do exactly that, a discussion that raises the bar across all criteria and then each country goes off and tries to negotiate by themselves. And so I worry if the FDA and the EMA got together, you'd be in a similar circumstance.

Yes.

Right. Fair enough. Maybe since you've brought up reimbursement there, Andrew, obviously...

What questions could you possibly have?

Yes. Just a few hundred. But maybe we could -- I mean you're leaving Europe because they aren't going to provide a reasonable reimbursement scheme that would support a franchise, I think, is a fair way to put it. I mean is there any way around that? Would you ever be able to reduce your cost of goods in sense some future world where it would make sense to go back to the EU? Is that kind of a permanent issue with the EU on trying to negotiate prices you mentioned? You end up with leading, for example, in Germany, which has their own reimbursement system, hoping other countries follow to a certain extent. But then they do have their own opinion. It's kind of -- it's basically, is there any hope for the European market as a basically a rational market for these kinds of therapies for gene therapies?

So I think yes, right? So our first step is actually just to look for a home for these products that we can put on top of an existing infrastructure where there's already people, there's already some know-how of quality and manufacturing capability and it has a regulatory infrastructure. Because those products, whether they're all in the group or separated out one by one, they could -- the economics couldn't work layered on to an existing infrastructure. Just carrying that infrastructure ourselves going forward wasn't possible. And we would get to a place over time, and we can see 2 things changing: number one, costs coming down over time; number two, some of these governments are starting to flex. They just haven't flexed enough yet. And I think there's discussions going on in the U.K. about a very esoteric term of discount rate. And in terms of the pathway that we went down, which is STA. And you -- the German government is going to be having discussions. It's just unfortunately COVID slowed a lot of these down. And we've just run out of time. We've been trying to get reimbursement for 2 years. So part of it is just an issue of patients. I think Bobby has had experience with the HST pathway in the U.K., and it's going through that now. That's a more flexible pathway for gene therapies. We unfortunately got put down the STA pathway, right? These are acronyms that basically just mean -- one means for super-rare diseases. The other one is for everything, including hypercholesterolemia. And so when you put down gene therapy down a pathway that you're also evaluating hypercholesterolemia through, it's a tough -- that's a tough way to go. So I do think that there are pathways in Europe. I do think that there will be changes. I do think that these costs will come down. So I do see a path forward for these gene therapies in Europe. It's just not now for bluebird. We couldn't -- simply could not just put a -- it could not afford it going -- we didn't care of that way going forward.

Yes.