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

Hi, everyone. My name is Maury Raycroft, and I'm one of the biotech analysts at Jefferies. It's with great pleasure that I'd like to welcome Emil Kakkis, the CEO of Ultragenyx. Thanks for joining us today, Emil.

And thanks for having me, Maury.

And we're going to do a fireside chat format. But if anyone in the audience has questions, feel free to submit them online, and we'll try to incorporate them as we go. But maybe to start off, Emil, if you want to give a brief intro to Ultragenyx, your commercial products and your pipeline.

Sure, Maury. We're 11 years in as a company, and we have 4 approvals of 3 products: a monoclonal antibody for -- called Crysvita, for X-linked hypophosphatemia, our largest product; a new product, Dojolvi, for fatty acid oxidation, that is growing well; and Mepsevii, an enzyme replacement therapy for MPS VII. Those are approved in the U.S. and ex U.S. In the Crysvita case, we're partnered with Kirin. But we're excited about commercial progress we've been making. In addition to commercial products, we have 6 programs in clinical development, 4 of them in pivotal studies. This includes gene therapy for OTC for GSDI. And for Wilson disease and also a newer program for us, setrusumab for osteogenic imperfecta, which will also be entering a Phase II/III pivotal study. In addition to that, we have an mRNA platform with our first product entering clinic now for GSD Type III.. So we're very busy on the pipeline standpoint. We have close to $1 billion in cash. And we're in a very good position, I think, Maury, as -- good a position we've ever been as a company commercially, clinical development and growth.

Great. And I think that's a good overview. And this is a gene therapy editing conference, so let's start off with the gene therapy programs. You mentioned the GSDIa and OTC, those are both moving into Phase III soon. Can you talk about the technology involved in each one of those programs and also recap key data you've reported so far?

Sure. For GSDIa is -- Glycogen Storage Disease Type Ia is a deficiency of an enzyme needed to release glucose, and it's normally present in your liver. The technology is an AAV8 vector, which delivers well to the liver and other places but to the liver particularly well. And the AAV8 vector contains a transgene for this enzyme that's deficient, but it also includes 3 kilobases of the normal promoter region for that enzyme. And why that's important is your own endogenous G6Pase enzyme, that releases glucose into the bloodstream and maintains blood glucose, is highly regulated by hormones in your body, insulin, glucagon, cortisol and other things. And so what we've done is created a gene therapy that actually has a responsiveness to your hormonal situation. So the transgene that we're giving patients will respond to normal hormonal signals from your body about what's going on. That's unique in gene therapy. Instead of a constitutive promoter, it's now a promoter that's going to respond to normal signals. It's not the most powerful promoter, but it's going to be one that will regulate in response to signaling, which we think is a superior approach and is one unique piece about the GSDI program. We've recruited 12 patients so far. We've had 100% of patients respond with the 2 dose levels we've tried. And as times go on, we've shown durability in terms of reduction in corn starch needs, which is the way they maintain their glucoses without this gene therapy. We reduced those corn starches dramatically and the majority of the corn starch reduction. And the longer they go, the more reduction they get. We look at patients out 3 years now, the earliest treated patients. They're near off cornstarch or almost completely off cornstarch and have a much more normalized physiology. We're encouraged by the durability and the clinical meaningfulness of being able to get your glucose managed by your liver on its own rather than having the gun to the head of trying to maintain and keep your glucose all day and all night as these patients do. So that GSDI. I think it's gone well. The study is imminently starting, and we have a lot of patients lined up. I believe that program will enroll very quickly. In fact, it's a base 3 randomized 50-patient trial. And after 48 weeks, the 25 placebo patients will cross over on to drug. The primary endpoints, corn starch reduction with a secondary -- I'm sorry, a co-primary of continuous monitoring of glucose for control, good glucose control. So in other words, if we reduce your starch, we want to show your control of glucose is equal or better than what it was at baseline. So that's the GSDIa program going well. The OTC, or Ornithine Transcarbamylase, is a disease that affects the ability to convert or detoxify ammonia into urea. And that situation is also an AAV8 vector, but it's a constitutive promoter that produces the OTC protein. That protein gets transported into your mitochondria. So unlike the other, which operates in the ER, this one operates in the mitochondria. It accumulates there. And in that situation, it is able to help the first step in the detoxification cycle for ammonia to urea. Patients with urea cycle defects have to have highly limited protein and usually scavenger medications to get rid of nitrogen which is in excess, and they can't detoxify the ammonia. And what we're showing in the treatment patients we've done so far, which is another 12 patients, we've shown that we can -- in some of the patient response, particularly at the highest dose, we've been able to show that we can get them to come off their drugs and relax their diet and actually have good ammonia control. So we're encouraged with that program. We're going with the highest dose that we studied in that program. And it is taking a little longer to get started. It will probably end up being in the first part of the year partly because it has some complexities related to assays and that we've had to deal with regulators about some of those. UHS is asking other things. So those are the 2 -- those gene therapies are in Phase III. Did you want to talk about the Wilson program, too?

Sure. Yes, we can talk about Wilson, too. I guess let's see. Yes, you recently started that -- you announced that you started this study. And for Wilson, you mentioned that you screen enrolled multiple patients in the baseline monitoring period prior to dosing. I guess, well, yes, let's -- why don't you talk about the setup for that study first?

Sure.

And then -- okay.

Well, whether it's Wilson or the other two, the agency -- regulatory agencies asked us to do these baseline monitoring periods, have enough time to show that whatever standard of care they're on, that they're stable, and they're at a certain situation. In the Wilson case, they're on chelator drugs or zinc or both. And they want us to monitor them for 4 to 12 weeks to demonstrate over a minimum time that they're in good control and that they are stable so that when we add the gene therapy, we can see what's happening. So well, we've enrolled the 3 in the baseline monitoring period, and then we'll continue ahead and start dosing. The regimen of the program basically has a Phase I/II and a Phase III portion to it. They're hooked together directly. In the Phase I/II portion, we'll treat 9 patients at 3 doses, 5e12, 1e13, 2e13. And we'll treat 6 patients with drug, 3 with placebo in each cohort. But we have to enroll in a very stylized manner, not -- we have to enroll separating over time. They don't want us enrolling too quickly, it's just part of first-in-man kind of study. We'll treat the 27 patients and with that information determine the dose and then roll right into the Phase III program because we've already established the trial design and the endpoints from the regulatory standpoint. So we just need to pick our dose. Once we've picked, we can then move into the Phase III portion of the trial. We expect possibly by the end of next year to get the Phase II data on dosing determined. And that would enable us to initiate the Phase III portion. So the endpoints in there, we're looking at urinary copper as the primary endpoint. But we're also going to look at the ability to remove copper chelator therapy and maintain copper levels. So it's just like in GSDI and OTC, there is existing treatments that work somewhat, and so we're going to treat them and then show we can remove those other treatments and maintain their function. With Wilson, one of the things that's unique and different is that we're also looking for the increase in ceruloplasmin, which is copper loaded ceruloplasmin is how your copper is normally distributed in your body. Chelator drugs bind free copper that's loose and floating around, which helps to remove the toxicity of free copper. But most -- all the patients have actually decreased in total copper level. That's because they're not loading copper on the ceruloplasmin. And that's the form that delivers to the brain copper in the proper way. So when you think about Wilson, you could think about this excess free copper for detox, fine, but it's also inadequate copper distribution. The problem then with the chelator is you bind the free copper, but you also prevent the copper from getting anywhere, and so you can lead to copper deficiency at the same time that you're trying to reduce copper toxicity, if that makes sense. The good thing about gene therapy is that causes a proper detoxification method, pumping the copper into the bile, which is where your body normally gets rid of excess copper, and is also loading copper under ceruloplasmin, so that it can deliver to the brain and elsewhere the copper it needs but in a very protected way, bound to a protein that's designed for that purpose. So we're going to correct the underlying defect with Wilson gene therapy. And I think that, that will be a superior approach than using chelators, which have kept people alive all these years, Maury. But I believe we'll learn a lot about the value of copper distribution when we finally do gene therapy experiments.

Got it. That makes sense. And can you talk a little bit more about the enrollment for the Wilson study and the types of patients that you're going to enroll into the study? And what are your plans for disclosures to the public?

Yes. So we're looking at patients who are stably on -- who have been stably decoppered and are on method treatment. Naive patients are just starting -- are complicated because they have a lot of copper and they have toxicities and are variable. And so we're trying to get people who are already established and have been on chelators for a while, which is the larger population of patients out there. So they have to be stable on current chelator, zinc or both. And it doesn't matter what regimen, they just need to be on whatever that is and show that they're stable to be enrolled. We can't have people with significant liver -- like very significant liver disease. They can have some but not terrible liver disease. And some patients with Wilson can have problems with liver. And particularly, we're talking about for Phase I/II, where we haven't studied safety at all, right? It's a first in man. From the animal model, we believe that the gene therapy should improve liver function, reduce liver injury because in the mouse model, which has significant liver injury, the livers get better in just a few weeks. So we believe it will have that benefit. But in the beginning, you want to take -- [ pour not too thick ] at the edge. From a standpoint of disclosures, we would disclose when we get through the Phase I/II portion, where we have 27 patients treated -- oh, excuse me, well, it will be 18 treated and 9 are placebo. And with that information, then we'd make the decision on we would disclose to the public that we've arrived at a dose and that we're heading into Phase III. And we'll put out some information on the study, which we have to get agreement on with the agency just to make sure we're not doing anything that would hamper the Phase III. But the population analysis for Phase III will be separate from the Phase I/II. They won't be combined. There will be a combined analysis, but the primary analysis will be a separate set of Phase III patients. So that disclosure we expect could be by the end of next year, but it's in that time frame.

Got it. Okay. And how much emphasis will be on neurocog benefit for this study?

Well, we're valuing neurocog function and benefit both for safety and for efficacy. It will be a fraction of the patients, though, that have neurological things. We haven't required neurological problems to be in the study. So it will be a subset that we'll look at. But the truth with the CNS is hard to know what is reversible and what's already irreversible damage. And we can't obviously be expected to reverse things. The other problem is what degree is copper deficiency causing neurological symptoms. That's also hard to know. And there's definitely been more appreciation that you can add too much chelator and actually make someone copper deficient, which can cause other neurological problems. So we'll look at neurology. However, it's only a fraction of patients who are affected neurologically. And so we wouldn't be powered to look at those things, but we should be able to get enough information to know are we having a benefit with the gene therapy over what they're currently on.

Got it. Okay. And for OTC, GSDIa and Wilson's disease, if you can talk about the commercial opportunities for each one of these programs and are there general peak sales estimates that you've commented on.

Yes. Well, I don't know if Mardi is listening, but she would never allow me to put out peak revenue estimates at this early stage of our lives as a company and of these products. So Wilson disease is a larger opportunity. It is at least 50,000, could be more. It's one of the disease can be difficult to diagnose, but it's a large population of patients. We don't necessarily think that all 50,000 -- I'm talking about developed world patients -- would be accessible or addressable. Some fraction of them will be addressable, and we don't really know that until we get deeper and know what the safety, efficacy profile looks like. But it is a large population, much larger than the other diseases we've been working on. And we think if you have a good treatment, it works well, I would expect diagnosis to improve even further. And the fraction addressable will depend on our outcomes. For GSDI, there's probably somewhere in the 6,000 to 8,000 kind of range in developed world. So -- and I usually estimate it's about 1/4 of that would be in the U.S. So it's a relatively more rare disease than obviously Wilson or even OTC. But the one thing about GSDI is about 80% of the patients have no mutations. And so the majority of these patients are severe, vast majority is severe, very much smaller fraction that are mild. So I think the addressable population of GSDI will be the majority and nearly all the patients will have addressable disease. So that's one thing about GSDI. So we see a significant market opportunity. We think the fact that 100% of patients respond, right, and then we've had durable results, I think, bodes well for the ability to change the future for GSDI, and we'll see how the trial comes out. For OTC, it's around 10,000 late onset patients, around that range. It's a more heterogeneous population because there are females who are basically heterozygous and for whatever reason, they're not able to manage their ammonia. And then there are intermediate males that have -- basically have a mild or intermediate kind of mutation. The null males, the real severe OTC, are patients who die as newborns or need liver transplants and usually do not survive if they're not cared for in that way. But we're talking about patients who are going to be older, 8 to 12. And so these are more of the intermediate males or females. So the variability, I think, will be a factor. And it will probably be hard to enroll, but of the 10,000, there'll be a significant fraction that will be addressable. Some patients may be well -- doing well on their meds and are really comfortable. A lot of patients find the protein-restricted diet onerous and difficult and can't maintain their ammonias in good control. And therefore, those patients would be ones where this would be a great benefit. If you're having crises particularly, you certainly would -- crises are usually -- result in significant brain injury every time they occur. So it's definitely a scary disease if you have it and you're thinking like in the COVID era, that getting COVID or getting anything could put you in the ICU and potentially brain damage. So that's OTC, more heterogenous but a bad disease. And we've had good results so far, so I'm encouraged by our ability to change the future for OTC.

Got it. And any thoughts on the competitive landscape for OTC and for GSDIa? And you mentioned the chelators for Wilson.

So on the competition front, there a lot of people that are studying OTC in various ways, but I think we're in control of our future. Of a single-shot AAV gene therapy gives you long-term protection from OTC, as we've seen in our first few responders who have been out 3 years. First couple of responders have been out 3 years, no diet control, eating -- some eating steaks sometimes, not on drugs, life changing. They're recently featured in -- I think a patient group featured them recently. That, I think, is going to win because any other strategy, I think, won't be as desirable as a single-shot, long-term outcome like that. So we're pretty solid about where we are in OTC. There's no other gene therapies, I think, that are close to where we are at this point. For GSDIa, there have been other people looking at GSDIa, but I think they're -- some of them, their strategies are not good strategies. And because of what I've just told you, you can't just make excess amount of that enzyme willy-nilly without control. You need to control it on a cell-by-cell basis, right? And therefore, our gene therapy with [ a known ] promoter will be a highly regulated gene therapy, and I think it's superior to other approaches who have not been using that. So I'm not sure -- aware of anyone in the clinic for GSDI at this point. For Wilson disease, the main gene therapy competitor is by that Pfizer partnership. They've been in the clinic about a year. But as far as we can tell, it does not appear that they've enrolled any patients yet. So we seem to be doing better having enrolled 3 already into our baseline. And we see -- we feel like we've got a good path forward. From a standpoint of their gene therapy and ours, I think they're using a different truncated version than ours. But their version we've also made and works, so I think either version can work. We think ours is better because we think it has better control features, but I can't tell you there would be a dramatic difference between the 2. And we're using -- our vector has shown really good results, so we feel pretty comfortable that we can get what we need done for Wilson disease with our vector. And our design, the Phase I, II, III design, allows us to cut out the year between Phase II and Phase III start. And this is possible when you can define the endpoints upfront, right? And so the idea is that -- and because we have a large-scale manufacturing system right off to get from commercial, it allows us to make -- like one run is enough to treat all the patients in the Phase I/II trial, right? So our productivity is much better. And so we could run the whole Phase III with just 2 runs of product probably, so -- depending on the dose. So I think we're in a very good shape to be able to push that program along in a very efficient way and get to the end. So right now, I feel pretty good about our competitive situation in all 3 of those. And I don't really feel -- I think our future is in our hands.

Got it. Okay. And yesterday, I was speaking with Jim Wilson. We're talking about gene therapy durability. And he's got a hypothesis that gene therapies could get inactivated by epigenetic changes. And he's mentioned he may have some preclinical data to support that. And just wondering what your thoughts are on that and how you think about that.

Oh, I think it's true, but he and I have talked about that before. I think the inactivation he's talking about is what I would call natural viral surveillance that your body does. Your body is constantly looking for viruses and has multiple techniques. The TLR systems can induce inflammation to get the cell eliminated, or you can have the cGAS-STING or other systems that [ nephrolate ] or inactivate genes. And that's one of the reasons why -- those systems are probably one of the reasons why we have to get such a large amounts of AAV to humans, is we're overcoming those systems, we're kind of saturating them. And what Jim has found that a number of cells can have the gene but not express it well, right, and that's what he's talking about. I definitely think our dosing strategies are about overcoming that by essentially putting enough copies in that they can't knock them all off, right? And I am sure there's ways we can do to prove the induction of those genes in order to improve their acceptance. And we are making some changes in how we design and optimize the sequence of our vectors to help reduce innate immunity. And are there ways to prevent inactivation of things or maybe additional improvements could happen. But right now, if you look at ours, we seem to be getting good long-term stable expression of ours. And I do think that CpG content as a TLR9 signaling story is something to think about for what he's talking about. But there's no doubt that we're in a battle of the innate immune system that's designed to protect you from viruses. And currently, for us, the gene therapy is working, so -- but I've no doubt, and Jim has been working with us for a long time, that we'll have to continue to improve as we move ahead.

Makes sense. And Emil, there is an announcement the other day about the Bespoke Gene Therapy Consortium from NIH. And I'm just wondering if you can talk about that a little bit and what the purpose is.

Yes. Well, we are participating in the Bespoke Consortium. And Peter Marks and CBER has been one of the people instrumental in putting that together. I'm not a big fan of the bespoke name because it reminds me of Savile Row kind of suit makers and just kind of like -- the idea is that some of the ultra-rares will not be commercially viable to do single-shot gene therapy, so how are we going to do it? The real benefit for this is to get government, industry, academia together to talk through how we're going to take this technology we have and actually apply it in a sensible way, right? And to have FDA at the table there is really important because that sensibility, we think, could translate into how other things -- how they regulate in general these gene therapies, right? That is, if we want to come up with real standards, we want to manage how we're -- the cost of therapy because if we're going to expect all the bells and whistles of traditional development for the bespoke, it will never work. So they're going to have to come up with smarter ways to do what you need to do. And those smarter ways, I think, could translate into improvements in the overall regulatory process for gene therapies. And so we look at this as an opportunity for us as a community of -- and an ecosystem of industry, FDA and academia to put our heads together and get something smart done, that we all can benefit and help us help patients more efficiently. So we look forward to helping support that effort and to see some of our technology become useful to more diseases than just the ones we're working on. But Maury, we're working on 20 diseases at Ultragenyx right now at the same time. So we're working on a lot of diseases, so I just hope the Bespoke can kind of get traction and really address some of the ultra-rares where the gene therapies just ready to help them and make sure that happens. So we'll be -- we'll do everything we can to make sure it's successful.

Got it. Okay. And we're running out of time, but it would be great if you can talk a little bit about manufacturing and whether we could expect additional deals like the Daiichi one and potentially even your collaboration with Solid Bio as an example.

Yes. So we are working toward doing another technology deal. The deal with Daiichi is the transfer is almost completed, and it's gone very well. They're very happy, and they're running the technology now. And what we have been doing is doing some improvements on it to continue to improve the productivity. The quality of the vector we make with the PCL platform is very high. The fill ratios are in the 60%, 80%, right, or higher, and so you get a really high product coming off the reactor. And because it has no [ classic ] contamination and the other things, it's actually a better product, we think. The key question now is can we up the manufacturing productivity further. And we have some genetic wins we've established to enhance productivity severalfold more. And with that, it takes us in the range of doing high-dose gene therapies like Duchenne. So the solid deal with Duchenne, on Duchenne, was really about taking advantage of our PCL platform and the -- what we believe is the next-generation higher productivity that we can achieve and use it as a demonstration project but also treat those patients with a -- that have a high dose, high vector load need. And by having a highly scalable, even higher productivity method, we can bring the cost of manufacturing of the product down substantially and which we think will put us in a position of being able to cost efficiently develop a Duchenne indication. And to also feel the fact that the world is going to have some trouble paying for multiple $2 million therapies, right? Right? This is not going to be simple for diseases like Duchenne to treat a lot of people. And so we're going to work hard toward coming up with a credible solution that can achieve access for Duchenne, and the platform is one of those ways we can do that. And I think you're going to hear more and more talk about manufacturing because the closer you get to commercial, the more of the question of this is how this is going to work. And the PCL platform, we think, is going to be the way that we'll take over because it's growing a single cell, you grow it to 2,000 liter, it's very simple. And the quality of the product come off is better, and the productivity is better, is kind of why would you do something else? And the cost of materials is dramatically less than triple transaction, where you have to pay for plasmas and other things, which will always be expensive. We can never get that cheap because of the fact you have to make a reagent that's sophisticated, complicated, positive. So we think it will take over, and we hope to do another technology deal with a major company that wants to get in the space. They may have larger indications in mind, right, where scale and costs start to become really big factors, right? For a lot of [ companies ], you can't deal with $200,000 or $300,000 COGS, right? They're going to have to find a way to get them way down, and I think that's where the PCL platform will shine.

Makes sense. And Emil, we're pretty much out of time. A lot we didn't cover. But maybe in closing, if you can highlight some of the key events ahead that investors should be focused on.

Well, one of the key events, of course, the Angelman program that's not a gene therapy, but is entering the clinic, and we're dosing it again. And we're happy to be able to do that. And hope to see 12 patients worth of data. Day 128 by midyear next year, I think that's going to be the big point of time where we get a chance to show our Angelman program. The osteogenesis imperfecta program for setrusumab is entering the clinic in a pivotal study. It's a Phase II/III design. And that will be a really big important driver for us. It's a monoclonal antibody. I think it's the right mechanism to treat diseases bigger than XLH. So it's a great follow-on program for us in -- a follow-on to our Crysvita program. Combine the 3 Phase III gene therapies and mRNA program in the clinic, Maury, we're pretty full up in terms of pipeline and commercial and growth globally. And I feel good about where we're at as a company and in our whole life. 11 years in. I think we're in a great place, and I'm looking forward to the next. This next year should be a great year.

Likewise, looking forward to the updates. Well, thanks again for joining us today, Emil. Good seeing you.

Thanks for having me, Maury.

Thanks.