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

Good morning. Welcome to the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the senior SMid biotech analysts here. It's my pleasure to have our next presenting company with us, Ultragenyx. With me from Ultragenyx is President and CEO, Emil Kakkis. Emil, welcome back to Las Vegas.

Thanks for having me here.

So it's always good to catch up with you. Maybe just give us a 2-minute overview of the company and then we can go into the specifics of our questions.

Sure, Tazeen. Well, Ultragenyx is now 13 years in from founding. And in those years, we have 4 approvals and 3 products generating into the $425 million-$450 million revenue this year. So we're a real solid commercial company. We have a rich pipeline of rare disease products following, including 5 programs in more advanced stage of 3 gene therapies as well as a treatment for Osteogenesis Imperfecta and Angelman as well. I think we are a leader in the rare disease space in terms of designing and developing products. And I think we're in a great inflection point as a company, given the revenue growth, combined with new pipeline coming and the ability to get a number of different potential approvals coming in front of us. I think the big story this year or the main catalyst that I think you'll probably want to talk about, which is I believe our Osteogenesis Imperfecta program, the Phase II data, where we're at and the initiation of Phase III for that program. We're excited about the potential for OI. We can talk more about that. The Angelman program has been enrolling expanded cohorts of patients, and we're excited about the progress we've had so far with Angelman and expecting data later in the year from that. In addition to that, we have 3 gene therapies. GSDIa is completely enrolled and dosed and so that data is coming, we expect, by early next year and the OTC and Wilson program also enrolling. And so for those programs, it's more about execution this year, and then we'd expect to see some data coming in early '24. So this year, OI and Angelman will be the big drivers along with commercial progress globally.

Okay, perfect. So you have a commercial side and then you've got the pipeline side, as you've just mentioned. So maybe let's spend the first few minutes on commercial with one of your more mature assets, Crysvita. So just remind everybody about what it's approved in and how the sales trajectory has been. It's a pretty mature launch now and what you're expecting for this year?

Yes. So Crysvita is a monoclonal antibody against FGF23 for the treatment of X-linked hypophosphatemia as well as TIO. These are diseases where there's too much of this hormone, FGF23, causing low phosphate. And the low phosphate causes weak bones and bone fractures and other bone issues. The product was approved 2016, '17 and been 5 years since the launch. We've seen, I think, steady growth all those years and it continues to grow. The character of the launch has adapted over time. I think in the early days, we were 60% pediatric scripts, there's a pediatric form, XLH. 40% adult and now scripts are at -- from launch, the overall rate is 55% adults and 45% kids, but if you look at the first quarter, the new scripts were 65% adults. We are now penetrated about 15% in adults and nearly around -- almost 40% in the peds. So what we're seeing is there's still a large pool of adult patients for this to grow. Now what we're doing is going out and finding these adults. These adults had diagnosed like 30 years ago, right? And so they've gotten used to having no treatment, but they're still suffering and we have to go out and find them. The patient diagnosis part is really important. And in fact, 50% of the prescriptions for Crysvita, the new one, are from doctors that are first time, right? So that tells you how much of the volume is new finds. But we find these 1 or 2 patients scattered. We're out and we're trying to work through their connections and families, et cetera. But there's still a lot of searching that's needed, and that's where the growth will continue to come is finding more and more adults. Pediatrics, I think, I really think majority of kids should be on the drug. There is some history of some doctors who are stuck with the old way, phosphate. But the truth is many of those are guys who are starting to churn now as they start and they treat their worst kids with the product and see the improvements and they start changing their minds and move forward. So I actually feel the product is going to continue to move at a pretty steady pace going forward. It is transitioning to our partner. But 1 thing we're doing with this transition in the U.S. and Canada is that we're going to be in the field with them for a whole year overlapping. So nearly 100 people in the field in the U.S., which should help us assure a good transition and hopefully drive the franchise. One of the things that's really important about Crysvita is if patients get put on the drug, the persistence compliance is very high because it does change and they feel better and they do well. And so the key then it's worth investing in finding those patients if they're going to -- if they get diagnosed and the vast majority get prescribed when they're found and stay on drug. So we think launch will continue. It won't be kind of -- I don't think it will take some years to peak, and I do think we'll get to majority of peds patients. And we've always said maybe half the adult patients probably should be treated. So there's a lot of room for the growth. Last year, we did cross $1 billion in revenue and nearly $2 billion from over the 5 years since launch. So it's technically a blockbuster in that regard. And I'm more excited about the fact that how many of these families whose lives have changed and I get letters and cards because this is our X-linked. So you have all these people in 1 family talking about how their lives changed, whole family life has changed when they start getting the drug, and it's just great to see when you get a drug that's that effective and see what you can do with it.

So is there a difference between the dynamics for XLH versus TIO?

They're different because while sometimes it's the same doctor, as TIO is a relatively rare condition and it's mysterious. And so a lot of the patients go on for years and diagnosis is not made because it's tumor-induced but they often don't have a visible tumor. So it's mysterious. It's like a mysterious little tumor. It can be a size of a pea somewhere in their jaw or in their bone. And they start having pain and weakness. People think it's psychosomatic, but until someone checks a phosphate and realize, no, this is problem with phosphates not on any panel. So what ends up happening is people take years. So the problem with that is sort of the mystery. It takes time just to get to find. Once they find it, and if the tumor can be found or removed, there is no reason for Crysvita, but very often you can't find the tumor, at least half the cases or it's worse, you can't remove it. It's in a place where you can't remove. And so it's still a small piece of the Crysvita business but it is a very different kind of effort. We're -- the grand scheme of things are so many more XLH adults, for example, to find compared to TIO that our focus has been on treating adults.

Okay. Maybe let's move on to Mepsevii. That's also a maturing launch, relatively recent but now starting to mature. You did have spectacular results sequentially reported for the first quarter. You talked a little bit about that, but maybe you can give us a little bit more detail versus what you had on the quarterly call.

Yes. I think that was a little bit more of a onetime variation of ordering patterns actually. So I wouldn't expect that rate to continue. It's a relatively small product and we're operating it as lean as possible right now. We got to turn that into a profitable franchise. We are running it profitable. But it's -- I wouldn't look at that as a trend of a future, but...

Is there seasonality in that?

It has to do with more Latin America ordering patterns. They order in chunks, and so depending on which month the order landed or quarter, then you end up with a rise. We're actually getting sales in Mexico, some place in Brazil, some other place in South America. So I'm encouraged we're actually seeing revenue even from Mexico as well, which has been difficult in the past. So there's a great desire. And MPS VII seems to be more common in the Latin American countries, even in the U.S. too.

How does pricing work in LatAm?

Well, it's very similar. There, we work out agreements with people but with the various payers, but it's not too far different from what it is in the U.S. And if you remember, we didn't price it higher than other ERTs. It's very similar even though it's much rarer. And it was our view that ERT is a pretty expensive chronic therapy, and we decided not to press it. As a product for us, it's a piece of a story but it is not an important piece in how we get to where we need to go.

Right, okay. Now I guess we should talk about Dojolvi, before we move over to the pipeline. How are you thinking that, that launch is going? And can you give us any color on what you expect for that?

Well, from a standpoint of start forms and scripts, it's gone -- it's exceeded our expectations. So we have like more than 400 -- I think 400 people now on reimbursed therapy. And that, to me, has been terrific. What's kind of held back the revenue number is that the doctors are not using the -- the drug dosing is a little bit below where we had been operating in the trial because they're sticking to dosing that they had to use for MCT. And so that dosing thing is part of the differential. The challenges that we think from the history of the studies have been done, that you do need to be a bit higher for to get optimal effect. And so we're working on materials so the doctors are aware of how the studies were conducted and what the dosing should be. But from the standpoint of launching during the pandemic, because it was during pandemic, no field -- no one out in the field, to be able to get 15%, something like that, 15-plus percent of the entire FAOD population, for [ presumed ] population on drug in a year or so, actually it's good. I mean, it's a pretty good penetration. So we're encouraged. There's a lot of people getting good results, and I think that we just need -- we keep managing the titration. But I feel like it's already exceeded our expectations, and it's already several fold above what I was told we first did the deal would -- its peak revenue would be.

Okay. How big is your total commercial organization now?

That's a question I don't have a perfect answer in my head actually, because it's all over the world.

Because you're lean.

We are lean. We don't have a huge organization. We run off relatively small numbers. And our general operating size is that within any territory, we should be profitable in 3 years. So that's our discipline on sizing, yes. So we wouldn't run a negative commercial organization on any product. So by holding that discipline and we've managed a relatively lean organization globally, but it is changing a bit -- in different countries, changing. We just opened a Japan subsidiary. Latin America has been growing because Crysvita has been growing really well in Latin America. Europe is starting to get going a little bit because of Evkeeza launch, which is -- we're working on there. But the rare model means having a smaller number of really talented people. That's how you make it work.

Okay. So let's move on to the pipeline. I think the one that's taken up most of everyone's interest over the last, I don't know, 2-plus years is Angelman's, of course. It's starting to have a bit of a long history, but can you just bring us up to speed on where we are today?

Sure. So the Angelman program was originally put in clinic development by a company called GeneTx, and we had a partnership with them, and we've acquired them now. And the program they developed an antisense oligonucleotide to a particular part of the Angelman locus. And it's targeting a part of this regulatory RNA that is distinct from where Roche, Ionis are. And that's what got us interested that they had a scientific understanding in a way to target it. They created a very potent antisense oligonucleotide. They put that in the clinic. It had rather exciting clinical results showing improvement in development function but also had a safety event. We've been overcoming that over the years. And what we've put out where we are today is that we've been treating patients during -- in these escalating dose cohorts over the last 1.5 years, and we now have a number of patients on drug and are seeing, and we're seeing dose- and time-dependent improvements in multiple domains, which are encouraging. And we decided we wouldn't go into any more dose escalation cohorts, that we'd take the information we have and now start confirming the dose by treating a larger number of patients with a dose that we feel gets us where we need to be. And so that -- those expansion cohorts will allow us to treat something like 40 patients below 8 -- 20 below 8 and 20 above 8 approximately. And the idea is to get enough data confirming the dose regimen and outcomes to be able to plan a Phase III study with that dose in regimen. And that's been going on now ex-U.S. in U.K. and Canada, but we've now added, I think, we're up to 8 countries where we have sites. And so that program in Phase II is going to expand to all the countries we think we might include in a Phase III program. And now we're also working with the U.S. and getting the U.S. open.

What's been the delay in the U.S.? I think we've all been surprised at the length of time it's taken just because it is rare. The profile of the drug seems to be pretty well known. What do you think is the main hang-up about FDA feeling comfortable just not only moving to higher doses but just allowing to redose on everything?

I think originally, we had a safety, then a lower extremity weakness, which in their mind was surprising but we think it was rather -- it's not a sophisticated problem. If you think we should localize inflammation from the drug. So we felt a simple change administration strategy was going to deal with it, which it has, I think, by large, it has solved that problem. So when the FDA gets turned in the direction, it takes them a while to turn them the other way. So we just had to collect data from ex U.S. and bring it back to the U.S. and you can talk to a lot of people who develop drugs. This is a common pattern that U.S. can be hyper-conservative and you just got to collect the data and bring it back in. And when we first had the event, by the way, I knew immediately, we would have to start ex U.S. because we just feel that it's often easier in those situations to get an agreement. We were able to get MHRA agreement and Canadian health care Agreement to get back in the clinic right away without any difficulty. Now 8 countries has accepted, so it's a little odd where we are. But we've had productive discussions with the FDA. So I feel like that's going to -- we expect to get resolved.