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

Hi, good afternoon. This is Liisa Bayko, biotech analyst at Evercore ISI. Very pleased to be joined by Ultragenyx, a great company, work on rare diseases and taking all sorts of different approaches. I feel like you have almost every treatment modality under the sun from gene editing to mRNA to -- well, gene therapy, to mRNA, to small molecules, et cetera, antibodies. Emil Kakkis started the company quite a while ago and has done a great job leading the charge.

So I think we'll just jump right in because we only have 20 minutes, and I hate to hammer on Angelman because I feel like that's all you get asked about. So let's just ask a couple of questions there and get that off the way and then move on to some other stuff. I guess we're looking for data sometime soon in December. What would you be looking for in the upcoming sort of update to feel kind of confident the program can move forward?

Well, we've been dosing patients as we announced to the Street, and we're looking for first-off safety that we can give multiple doses to patients that not have any issues, which we believe will happen based on our knowledge of what happened before and the dosing we're using. So that's the first thing, it's certainly a verifying safety. We'd expect to need the full loading of 3 or 4 doses to get to the efficacy level that we're think -- looking for. And the patients will get a certain dose level and then step up and get 2 more doses at a little bit higher level. And we're looking to see what 4 doses at that level will do. And in addition, we're going to be stepping up a little further, if necessary, to achieve the level of efficacy we saw before. But we're confident we'll be able to talk about safety, and we'll have some early hints of what's going on, on the efficacy side. But based on what we've learned before about what doses caused improvements, we're comfortable that the -- that a loading area of around 13 to 20 milligrams is going to get us to a place with reasonable efficacy. And so we should be able to see something with what we're doing, and we're excited about being back in the clinic again with Angelman.

Yes. So are you going to give us data then this month from like all, sort of, all 4 of those doses and into all 12 patients?

We'll give you an update of how many doses have been given, how many patients and kind of the status of that. Because I realize everyone is very intimately interested in the fine details. We won't tell you when their appointments were or how far they had to drive or other details, but we'll give you a little bit of update of how many doses people have gotten, how we're doing. And what I want to do is guide people to the fact that getting day 128 data, which is the data you see after 4 loading doses, right? 4 loading doses will get you up to the drug level, we think, would be required. And that will come a little more toward midyear next year. That will be a more important statement because we'll have 12 patients, right? A real significant set of data with 4 full loading doses in hand, and that will give us a better handle of where we're going. But everything we know about it, we expect to see good efficacy and the safety we think will be managed by the alter dosing administration strategy.

So no news is good news, I guess, so far?

Right. We have said if we were having a lower extremity weakness safety event, we would announce it. So we have not seen it.

Okay. And are you going to make us work in the holidays? Or any more granularity on when we can expect that data?

I'd like to keep you guys guessing. But we want to allow enough data to -- enough doses to pass, right, to make it meaningful, right? So it's -- unfortunately, it's coming towards the end of the year. We had hoped to start a little earlier, right? But logistics and various other things kept us going as it is. But we're on our way, Liisa, we're on our way, and I feel very excited about Angelman as an indication for Ultragenyx.

Right. In terms of the competitive landscape, who do you really have your eye on? What's the bar?

Well, I think in the ASO area, which I think is the most probable way to successfully treat Angelman in the current environment of technology, I think we have the best setting, and I'm not really that concerned about what Roche or Biogen Ionis are doing. The main reason is that the region they're in is just not as potent. We've studied it, it's not as potent. The region we have patented that's distinct is at the forefront end of the message, and we know this is a far more potent area. And judging by Roche's anal data, and we don't have much else to go on, but hence our regard to the dosing used in the clinic, we're on the order of 10- to 20-fold more potent. So I think the differential between the different regions is substantial. And we think then that we have the best position in terms of an ASO. With regard to gene therapy, obviously, we could do gene therapy, too. I think that the strategies are complicated because you need to get a lot of neurons, you need the right amount of UBE3As. So if you just give -- deliver UBE3A and it gives the wrong amount, that has potential complications, right, an unregulated amount. When we do ASOs, we induce -- enable regulated expression of UBE3A. That's why it's on a neuron-by-neuron basis a smarter strategy. If you're doing it in a vectorized antisense approach, you still have to hit enough neurons. And the truth is that gene therapy is not quite hitting enough neurons to be sure that you're actually going to have the effect you want. It's been successful, for example, with Zolgensma, but there's no evidence that it's actually hitting every neuron in Zolgensma either, right? You're hitting some neurons and you're having a good effect. But the truth is, we've been studying neurons and it's hard to get enough neurons. Whereas I think ASOs have an advantage there that we can get a much deeper, broader distribution, and we've shown that in the monkey model, at least, that we're getting distribution and expression. This is the work of our genetics partners. So that's why we think we're in the best position right now. I don't see another strategy competing effectively at this point.

Any update on IP?

On IP? Well, our patents have published and people can look at the details of our patents, but we are comfortable that we'll be issued patents. These are the genetics patents, excuse me, the ones we're licensing from our partner.

Yes, okay. You announced that you started, I think, treating patients with your mRNA product for GSDIII. Can you maybe talk a little bit about that program? What you're hoping to accomplish there? Timing on data?

Yes. Well, it's the mRNA LNP strategy is one we licensed in from Arcturus and the work they were doing. We've had great success in animal models with mRNA LNPs in terms of being able to express very large amounts of a protein, including larger proteins that wouldn't fit into AAV. And the GSDIII enzyme is a complicated enzyme that has 2 enzyme activities, and it's very large. It doesn't fit in the AAV. And because you needed to get into every hepatocyte because of the toxic accumulating glycogen there, you need to clear that glycogen, the abnormal one. And therefore, the strategy of mRNA will get more of the hepatocytes cleared. We should be better at clearing the liver's injury and restoring glycogen metabolism. It works very well in mice in 24 hours. We've been doing it in other species, and we feel good about the strategy. There's still -- it's a new technology. There's still issues we have to manage but we're excited to be treating patients for the first time. It's the first-ever study in GSDIII.

You just released some new data on your gene therapy programs, DTX401, DTX301. And I kind of looked through. I guess my takeaway was there is a durable response. Am I missing something? Or is that the key takeaway there?

Yes, that is the key takeaway, that the effect on OTC for those patients are almost about 4 years now and is sustained which is a good thing. And those early patients now that are lasting their effect, I think, is really important so that if we complete our Phase III successfully, we will have a lot of years of exposure in those early patients, which will help reassure the agency and other regulatory authority that ourselves, that the fact we're seeing is something durable. Since the amount of enzyme required to fix OTC or GSDI is really a few percent, right, abnormal, it's not so surprising that we can get enough enzyme in there to keep a durable effect for a long period of time. So for both of them, they're durable. For GSDI, the benefit seems to improve over time as the patient's physiology starts to adapt better to their liver functioning normally. Most of those patients have been on heavy cornstarch dosing for 20 years. That does something to your body, right? It's like being a Type 2 diabetic for 20 years. You've been loading starch and glucose into your bloodstream every few hours right? You know how that feels now, right? If you do that, imagine doing that for 20 years. Your role of physiology, hormonal thing is very disturbed, and we've learned that. And so we can take down the starch pretty quickly but then you got to wait for their insulin to settle down and other things. And that's what's happening during the later part of the first year. But the people that are out 3 years, their hormones start to look really good, they're all splendid. So if anything, with GSDI, it looks better at 3 years than it did at 1 year, actually. They get better and better. So we're very encouraged with both programs. I think we have successful gene therapies in there, and we feel good about the Phase III prospects for both of those.

Okay. I'm going to turn to your program in osteogenesis imperfecta, setrusumab. Can you explain the mechanism of action this antibody?

Sure, I can do that. I'd like to explain a little bit of the mechanism of disease first because it's something we are learning, Liisa. And it's something that's not fully appreciated. We all have been trained to believe that defective collagen is why type III and type IV OI patients have weak bones, right? The collagen's defective, it's weak, it comes apart. It turns out that's probably not exactly correct. Collagen may be weaker. But the bigger problem is how the bone responds to the weak -- to the bad collagen, it over resorbs and tries to fix the bad collagen, but it keeps laying down more bad collagen. The net effect of that is not enough bone anabolism of bone production and too much bone resorption. The bones then are low density, which makes them fragile. Now what we've known in animal models with anti-sclerostin is that it recruits osteoblast to become osteocytes, which is good, more bone making cells and then makes those osteocytes produce more bone. Liisa, that's the best one-two-punch you can imagine in OI, right, bring more cells to the action and make more bone. In animal models with anti-sclerostin, normalizes bone strength in a few weeks, in a few weeks without changing the collagen. Which starts to question, well, how can the bones have normal strength but still have abnormal collagen, just tells you what we understand about the disease is not quite right. And we know now because of OI type VI, where there is no collagen effect yet the same phenotype, that this is more about bone biology regulation. And anti-sclerostin is really the best way to restore proper bone production so that the bone can lay down, you lay down where the bone is weak not just preventing resorption, but enhancing the production of strong bone, where it's needed in the bone. So we think it's the right mechanism. We've gotten more supportive of the strategy. We're very deep now in Hawaii, and we're very strong in our belief that anti-sclerostin is by far a superior approach in terms of producing bone compared to other ones that are out there. And so we're really excited about the potential because it's a larger population of patients than in XLH and they're more severe. Liisa, they're more severe. So I think the ability to treat that disease, especially when they're young, could be dramatic, right? It could change the future for them. And I've seen a lot of OI patients in a macro channel, right, they are, especially type IIIs and IVs, it's a miserable life if your bones are breaking all the time. And if we can fix that, especially in the young ones, you see their lives change. I think it's...

You're kind of -- mechanism and hinted with strong bones.

Yes. Well, it will work in any bone because the recruitment of osteoblast to osteoblast pressure bone happens in a child or an adult, it's all part of the same biology that curves throughout. It's not growth plate dependent, it's not -- XLH is somewhat growth plate dependent, this is not. So our fracture study will include children and adults together. We're looking at people who have a lot of fractures that have the most medical need, and we're going to treat them -- we're going to optimize the dosing just to make sure that we're treating kids with enough drug to get an optimal effect because sometimes kids need more antibody than older kids, so in older kids or adults. So we'll learn a little about in the first part of the study on optimizing the dosing algorithm and then enroll another couple of hundred patients and look at fractures. And based on how many patients are out there, it shouldn't be a problem to find them based on what we're including in the trial. So we'll do another study in younger patients, the really young ones. And the study will have to be different because you can't do a placebo-controlled trial in very young patients, right, it's just not an ethical thing to do. So we're going to do another trial. But by looking at the really young ones who have a lot of fractures, I think that's the kind of data that will help sort of see the future for OI in an environment with an effective bone production agent like setrusumab.

How do you see this mechanism and vis-à-vis competition? I know Amgen and Sanofi both have programs. I think Amgen might have 2 programs, if I'm correct? And so what's the bar that's been set there? And kind of...

Well, I don't really know if Amgen has a program exactly. What they have is a remo, which is good anti-sclerostin antibody. It is a productive antibody. But its primary focus for them is osteoporosis. The program they're doing, we believe, is completion of a pediatric investigational plan, or PIP, for the European authorities, which was a commitment made at the time the product got approved. We don't think they have any particular interest in the indication and they wouldn't -- the labeling for OI could adversely affect their osteoporosis labeling, right? If you think about how many fractures and problems are occurring and adverse events and such. So I really don't think that they're that interested in the implication. But they're just executing what they have to. Keep in mind, they have a 12-month limitation, and they're not going to optimize dosing right, and dosing regimen. Well, we're going to optimize dosing regimen. We're not stopping after 12 months. And I think in the end, we'll create a product that will be more honed to the needs of OI and that's why we'll be where we are. I think Sanofi's program is not anti-sclerostin. I think it's another it's -- maybe TGF-beta target. We think that could help, but we don't think it's going to be nearly as potent as anti-sclerostin.

So kind of what are the next steps for you now? When are we going to see some data program?

Well, the program is getting started right now and we've completed our regulatory discussions. We're getting a program started hopefully, get the first patient in soon. I expect next year that we'll have some Phase II dosing data outcomes like what -- how does the dose compare and young kids and old kids. So we'll get a little bit of dosing data on biomarkers and potentially some bone marrow density. That will tell us a little about how to optimize dose and then the Phase III portion will initiate. So next year, you'll hear something about the OI program and where it's at. But the fracture study will take more time. It is a variable length study depending on number of events, and we'll look and see how many fractures we're getting, right, which will help drive the analysis. But our expectation is to have a 50% reduction in fractures or better. And just to compare, bisphosphonates are about 20% better in -- and so it's much better, we believe than bisphosphonates.

Okay. And just turning to the commercial opportunity, can you sort of describe how you're seeing that?

Well, we think it's a perfect fit for us. It leverages our skills and experiences. 90% of our XLH PIs are also OI doctors, right? So the overlap is very large. In fact, it's almost the same people. So we've worked with them before, and that really helps us in a lot of ways. When we go to those centers, especially the bigger centers that have a lot of XLH patients, they usually have 50% to 100% more OI patients, right, than they do XLH patients. So because we're combining type Is, type IIIs and type IVs, all of which respond to the drug, because remember the drug doesn't depend on the underlying collagen mutation, it's improving bone production. Whatever the underlying mutation doesn't matter, right? So it's X in all the types, which is a nice benefit. When you add those up, it's much more patients than XLH, so we'd expect that opportunity to be substantially larger.

You provided some guidance a couple of years ago of reaching about $1 billion by 2025. Does that still hold? And what are sort of some of the key assumptions underlying that?

Yes, it still holds. I think the primary driver is -- were the existing products, Liisa, so the ones we already have. It was only toward the end of that period dependent on some new products. So the majority of the lift toward that target is with the existing programs. It depends on us, of course, continuing to grow Crysvita whether in our hands or in transition to our partners and also in Latin America driving Crysvita. But we've got the 3 products approved in 4 indications. And I think we're doing well and moving in that direction. In addition, of course, some of the gene therapy work would need to produce some of the effort in Angelman and Crysvita or others that could contribute toward the end of that if we're particularly diligent in driving the development forward. In addition to that, of course, there could be business development activities, Liisa, we have a lot of people interested in working with us as a commercial partner because we've established our reputation as a company that takes care of business, takes care of the patients and get some work done. And that's been gratifying to see people who want us to be their partner, particularly. And so we're looking at those opportunities. From a development standpoint, we're pretty full right now. But commercially, we probably could handle some more effort.

Yes, you've got a very rich pipeline. So speaking of that. What do we look forward to in 2022 in terms of like data readouts, catalysts, other milestones?

Well, I think the biggest one people are looking for is sort of the midyear in Angelman catalyst. That's the one that's going to move us the most. I think we feel very solid about that going our way and that we're going to be able to help Angelman patients with our ASOs. The second thing, of course, is that we'll get some data from the OI program, which will tell us a little about dosing and how that works. That will be later in the year. Thirdly, we should see some data from the mRNA LNP, at least a single dose, a single ascending dose, peak period of the study. We should have some of that data and how that's working. So that would be exciting. The gene therapy programs will be mostly about the progression and the enrollment and the Wilson program, gene therapy, probably end of the year, early '23 before we have the first cohort data. So it's going to be a little bit further out. But -- and I want to say, in the first quarter, I mean the dosing part of that Wilson study. And then there will be the commercial growth and milestones approvals and extension of our commercial opportunities. So I think it's a full rich number of catalysts, I think above all, Angelman it's probably going to be on top of mind.

Wonderful. Well, Emil, we're excited for next year and just love your portfolio of compounds. So a real pleasure to be able to cover you guys. Thank you for your time today, everyone. Thanks for joining. Thanks, Emil, for your time, and have a good rest of your day.

Thank you, Liisa.