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

Great pleasure that I'd like to welcome our guests today, Emil Kakkis, the President and CEO of Ultragenyx. Thanks so much for joining us, Emil. This is going to be a fireside chat format.

Maybe to start off for those who are new to the story, if you can provide a 1-minute intro to Ultragenyx.

Sure. I have to do that. Happy to be here in London again. Christmas already beginning. So Ultragenyx founded in 2010, we've been in business 13 years. We're a commercial company focused on rare diseases. We have 4 approved products generating $420 million, $450 million revenue this year. And we have 5 late-stage programs, Phase III programs and Phase II programs that are in a variety of indications. We've recently put out data at our Analyst Day on the 3 larger indications, the Angelman program, which I'm sure we'll get into in detail and antisense oligonucleotide that is increasing the developmental function of patients with Angelman syndrome. Another late-stage program now in Phase III for osteogenesis imperfecta showing a profound 67% reduction in fracture frequency and potentially transformative drug for osteogenesis imperfecta. Finally, we actually put out the first bit of data on our Wilson disease gene therapy showing that they are tablets in copper coming off their chelators in that disease and showing improvement in copper distribution, which we think could be a superior way to treat Wilson therapy from the current chelators. With those programs coming forward, we think as we look forward for the company, we see our burn decreasing further heading toward profitability in 2026. And we are, I think, at a really important inflection point as a company in terms of having a commercial global base as well as a rich -- probably the richest late-stage pipeline. And I think our view of everything right now that everything is working. And so I think we're in a very unique place to transform the future of rare disease medicines.

Got it. Yes, that's a great intro. And for commercial, you recently reiterated guidance for $325 million to $340 million on your third quarter. It looks like you're assuming that Crysvita is going to have a strong fourth quarter, and you've mentioned uptake in Latin America. Maybe talk a little bit about what metrics you're tracking in this region that gives you confidence?

Yes. So Crysvita -- continues to do well across $1 billion in global revenue last year. And the U.S. launch start forms increase are faster that they were last year. We have more people in the field since we're supporting, Kirin and ourselves both in the field in the U.S. And while the revenue numbers were always a bit lumpy for it, and there's always a bigger fourth quarter, we reiterated our guidance for the U.S. It continues to grow steadily. It's now primarily commercialized, driven by the work of our partner, Kirin [indiscernible] managed it fully for the first 5 years. We're still in the field working with them in promoting the product, and we'll continue to do so because of the importance. Latin America for Crysvita, we are continuing and will always be the commercial party, and it's really picked up well. In fact, the start form growth is similar to what the start-from growth was last year in the U.S. And we've crossed 500 patients on commercial drug in Latin America now. So it's becoming a significant contributor, and we own a bigger fraction of the P&L in Latin America compared to the U.S. So one Latin American script is kind of worth like 2 U.S. scripts in terms of value to us, right? So it's important to us and our growth. We're also getting some traction in Turkey finally. It's taken a little while, but we do -- we were given the truck. And we have other products in Turkey, so it's become a country of importance for us. They have a lot of metabolic disease in Turkey. So those are the factors. I think Crysvita still has ways to go in penetration. We have -- depending on how you calculate 40% of the pediatric patients, but maybe 15% of adults, there's still room to go, and we're continuing to find patients. And when we do the problem of getting on drug is very high, and people stay on the drug. Once they get on it, they feel better at changes in their lives. And so it continues to grow with a very good persistence rate. And I think -- it's a program, I think, to continue to grow, and I think continue to grow at the 20% a year kind of great for a while. So we're excited about Crysvita in long term, and it's an important part of our future.

Got it. And for Dojolvi, how is that going with education efforts needed for LC-FAOD and getting patients to optimized doses there? And how strong has demand been? And how much of the market have you penetrated for this program?

Well, for -- Dojolvi is treatment for long-chain fatty acid oxidation. They have terrible problems with their muscles and liver and so they end up in the hospital a lot. And this is -- so it's a horrible disease. But we've crossed 500 people on drug in the United States and more than 150 now in Europe on named patient sales. And we're tracking with a very strong beating expectations on start forms. The challenge that you referred to is that some of the doctors are using the dosing closer to what they used to do with MCT oil rather than the dose we prefer. We've provided some training material to help people understand the difference and why they should titrate up to get the maximum effect, and that's having some impact. We're seeing an improving dose titration going on for patients. But the uptake has been impressive. And one of the things with that product is once the doctor tries and puts a patient on and see they do, then they start adding. We just need to get those doctors to do their first scripts and get going. And once that happens, it grows. The European named patient work in France started with a couple of doctors treating 5 or 6 patients about 4 years ago, and it rapidly turned into 30 doctors treating 100 patients in France just through word of mouth. And once the patient got treated, they saw how they did, they started adding more. So we think it's a really valuable product. It has an important contributor to us because its margins are excellent for us. So we continue to drive the program forward globally. South America is slower. We've been focusing on Crysvita, but it will pick up. And we're looking at how to get it in Japan, and Japan being a new territory for us, where we have Evkeeza from Regeneron as well as Dojolvi our other programs.

Got it. And so looking ahead to 2024, what are specific programs, markets or market dynamics where investors should be focused and where you think there's potential room for upside?

Well, I think the big picture for us is you can't ignore Crysvita in the U.S. and it's continued to grow because it's a big piece of the total story. But the big highlights of improving action, I think our Latin America Crysvita and that continued growth there. I think the growth of Dojolvi globally, I think, will be an important piece. And Evkeeza, although small, is now in launch mode in Europe and Canada, and we'll go -- we'll start in Japan next year as well, expect to get approval in the first part of the year and launch in Japan. In all those territories, we have a high level of KOL interest, high demand for compassionate use. And Evkeeza is really the most potent reducer of cholesterol of any approved product and that 50% to 70% reduction in cholesterol is on top of everything they're on. 50% was from the trials, but that's on top of everything, still a further 50%. So it's very potent. And if you look in the most severe patients that have more pure genetic versions, they have to have 70% reduction. So we think it's something will become widely used in the very severe population of HoFH. While it's a narrow and it's not a huge product, it will be, I think, picking up and going next year. So it will start adding to our top line revenue.

Got it. And let's shift gears to Angelman Syndrome. At your recent Analyst Day, you showed encouraging longer-term Angelman data there. And you've guided to dose expansion data in the first half '24. In the update you mentioned, we should see ASA, Bayley-4 and MDRI data from 10 patients with longer data and then 20 patients with 6 months data and 30 patients worth of data of any type. Maybe talk about what you want to see in the first look at patients from the expansion cohorts and what a home run scenario would look like?

So the majority of that will be about the 20 patients that have at least day 170. The 10 patients will have day 254 worth of data. The day 170, we should be able to see the benefit of the load. So those -- the patients -- the data we just disclosed were titration patients that started at lower doses and titrated up. And the data we showed then was, I think, excellent improvement in Bayley cognition, Bayley gross motor and receptive communication, and we showed improvement on the engine severity assessment for sleep and behavior. And we'll focus on those domains again in this next data set, which were primarily driven by the 20 patients of day 170. But we added those other elements, and we'll show you other parts of the data. So our expectation is that we should be able to show equal or better results in the same time frames that we saw because the dose -- the average loading dose will be higher and the maintenance dose will go more directly to the maintenance dose, where the other data, we were titrating up maintenance over time. The other study was about figuring out dose, and this time, we're testing the dose that we would expect in Phase III. So I think you'll see what we saw before, but perhaps I think we would expect higher levels of improvement than we saw before. I think we will see many of the same emerging skills that you saw that we mentioned before in the emerging skills analysis. And what we will do is show how we would analyze this for Phase III. By that point in time, we'll have had some discussion with FDA about endpoints. So we can provide more color on the endpoint choice, although the final decisions on the endpoints for our Phase III program will depend on end of Phase II meeting. But we have scheduled the meeting with FDA, the late this year, early next year, we'll have a meeting with them to talk about the end points for Phase III. We have a lot of choice in front of us. We'll focus mostly on quantitative endpoints, and the MDRI or Multi-domain Responder Index is a way to analyze 5 endpoints together for clinical meaningfulness. It's, I think, a more effective way to look at the totality of the data. And we showed that analysis on Analyst Day to show you how powerful it was because you could see across 5 domains, how many patients had boxes that turned green, meaning they were positive. It just gave you a sense of the breadth of changes in all the patients. It tells you something of why this is transformative. It's not just one here, one there. It's many patients have 3 or more domains of clinically meaningful improvement. We think we also showed you video data and other types of data to help provide more color. And I think what you can see, for example, we talked about gross motor improvement. It's a little different when you see the couple of kids walking. And you can see how wide based their gates were and how narrow they are, how comfortable they are. If you imagine those changes happening in all these different domains at the same time, the same patients, it's an amazing result. And the FAST meeting was exciting, a lot of parents come up between who are in the trial or doctors who are seeing patients. And there's a growing buzz of how there's a possibility here with Angelman to really change their future. So that's what you'll hopefully see at that time. The end of Phase II would happen after our next disclosure and would be a place where we'd finalize endpoints. And our goal will be to get that done as promptly as we can so we can head to Phase III, which will start setting up in the second half.

Got it. And for that meeting with FDA by end of this year or beginning of next year, what type of meeting is that? And would you do some sort of an update after you get the minutes from that meeting?

Yes. It's what they call a Type C meeting. The FDA told us at the last meeting we had that they're open to having it, and they've agreed and we've actually set up the meeting. So it's not an expected meeting on the normal milestone set of meetings. So it's an extra meeting, and they're willing to have it because they know how important it is. I don't know that we'll provide an update. It depends -- we'll provide an update that we've had it in progress, but it's likely going to start the discussion about what we're going to work on. And the main thing for us is to learn from FDA, what do you need in the final package to get comfortable, right? Because what happens sometimes, if you make that first discussion in the Phase II, then you spend several months chasing down stuff they want. So by doing it earlier with the data in hand, it will give us a chance to chase down all those bits and pieces to make sure because there are so many endpoints because they're first ever in a disease. Our team -- we have a whole team of the company, a very special thing in our company. This is an endpoint development team that actually focus on endpoint development. It will give them a chance to lay out what do they have to do, so we come back with a fulsome package and get agreement promptly with FDA when we have the full data. So we'll have enough data to talk with them so that they'll see what it looks like. And we'll provide an update on our progress, but I wouldn't necessarily expect final decision on endpoints until we get to the end of Phase II.

Got it. Makes sense. And you haven't disclosed the exact doses you're using for Cohorts A and B in the expansion. When are you going to disclose more information on dosing?

Well, because it's a competitive program, we've decided to be a little more reticent to give all the information. What we have said during maintenance dosing that we're dosing between 10 and 14 milligrams. So that should allow you to calibrate to some degree. The other companies haven't said what they were doing it, but they are dosing at much higher doses than that. The dose loading is lower than the original cohorts 4 and 5, and they will be loading through -- cohorts and we are loading 4 of those doses and then titrating into the 10 to 14 range quickly. So it will be, let's say, within day 170 time frame that we're showing you data, they will have had more drug on board than what we just showed you, okay? So the exposure should be higher. So far, we've treated 30-plus kids, and we're doing well. We're not having -- no significant safety issues. We're doing well.

Got it. And you mentioned the FAST meeting, which was pretty recent. And Biogen Ionis also had the first update there from their clinical study, it was a pretty high-level update, but what are your perspective on what they reported and anything new there?

They reported very vague data in the sense that they said that a majority of patients had some improvement in their EEG and improvement in wave frequency in the EEG, but didn't say what improvement that was, how much, but just had some, which meant it could be in a little bit. And then they had some improvement, some fracture [ patient ] had an improvement in Bayley, but not how much. The problem with the Bayley is that up and down 2 or 3 points is kind of like within the [indiscernible]. So you kind of really know if you're crossing thresholds. Since they knew what our data was since we presented ours at Analyst Day several weeks before, they certainly had the opportunity to show what they had. They didn't -- my guess is based on their design that they probably couldn't beat what we have right now. But I think it does say that their drug works, that there's an activity. So I think just like Roche's, I think it was working, but I think their efficacy is not as great as ours is. And I think the main reason for that is the targeted [ region ] is we have and it's patented. It's far more potent, manyfold more potent than the other the region. So that's why we think we have a particular scientific edge that they won't be able to overcome.

Got it. Makes sense. And at your Analyst Day, you also showed EEG data that looked very good. How important are these data to certain key Angelman investigators as it relates to enrolling patients in your studies? And how could this factor into a pivotal study? How does FDA view this?

Well, I think the EEG data was more important to investors, actually, at least that's who really was interested in because they wanted to see something objective because people think that maybe the Bayley scores change without objective. But actually, the Bayley scores are very hard to change in open label, [ there are ] a lot of studies that rarely move at all. So when you see movement in Bayley, it's hard to get, guarantee you. But the EEG just tells you that there is an underlying biological mechanism ongoing that you're actually changing brain waves. It tells you something fundamental happening, and we showed statistically significant reduction in the 1 through 4-hertz Delta waves. That shows you their brains are starting to speed up in how they're signaling, right? The wave is essentially a measure neuronal communication that they're actually speeding up that less of the really slow high amplitude waves. So then we showed how [indiscernible] with their cognitive scores improve in a proportion of how the delta wave, it shows you that we're changing brain function in a fundamental way that's predicting very significant improvements in cognition. From the parent's perspective, what the doctors listen to is what the parents tell them, which is my kid is a kid is actually a kid now. Actually my kids wake and alert, my kid -- is lights are turned on. He can follow instruction, 1 or 2-step instructions. Usually, they don't even recognize their name or a language. So you talk to kid, they don't hear anything. They don't -- it's just gobbling to them. And now they start being able to hear language and understand, oh, that's my name, you want me to look at you or stop doing something. So when parents tell the doctors, this what happens is when they're seeing it, they're sending the doctor's videos to what the kids can do. And so that's what's contributing to the excitement among the doctors are seeing stuff that you just don't see. And obviously, in the history of drug development in RARE or anything, how many times have we taken some of the severe developmental delay and actually start improving normal function, right, in multiple domains of function, right? This is something very special. So there's no question about enrollment. We have no issue about enrollment, more about people upset. We don't have sites in every country, wherever one is. So I had everyone button holding me on come to Poland, come to Argentina, come to wherever. We are trying to cover as many countries as possible. But right now, we got to make sure we get a Phase II completed and hit Phase III on [indiscernible]. But I think the buzz is very positive, and I think people want to be part of it. And that's what's driving the enrollment. Patients are lined up. The bigger problem is too many patients that want to get enrolled. So now this is for an intrathecal therapy, and there's no doubt that's pretty invasive, but if you've ever known anyone or had a kid that [indiscernible] and they start doing stuff they couldn't do before, like start feeding themselves, potty train -- some of them have potty train, walking without falling, not pulling the hair of their siblings or a day care. These -- if you add that up all happen at the same time, it's a change of life for these families. So there is a huge drive to do this.

Yes. Makes sense. And my last question on Angelman just if you talk about your understanding of the total data that you have and the natural history data. What's the optimal amount of time you need to treat patients in order to see efficacy? And then talk about what a registrational study could look like in that context?

Yes. We showed for all the end points kind of a growing separation between the 2 lines. And day 254 kind of look like the really good spot in terms of the maximum change and the EEG change was -- really became more maximal 250 compared to day 170. So I mean, day 254 seems like a place where the separation is the greatest. You have to imagine this is intrathecal, and we're doing a double-blind placebo-controlled trial, how many placebo injections do you want to put kids through, right? When you tell a family, you going to roll with a study, how long is that going to be? We think 8 months is, I think, close to limit where we would see the effect we want to see and to try to limit the number of placebo injections a kid with development delay has to take without any benefit. So that's where I think day 170 is possible, but it's a little shorter. So between those 2, somewhere in there is the right spot, I think. Going -- I think regulatory authorities will always want longer because they have no idea what people go through and what it's like. So I just think doing too many placebo injections don't make sense. And fundamentally, I'd rather enroll more patients and have a little bit shorter study and get done to give them the comfort. And the other thing I would say is once you prove that the groups have separated on a placebo-controlled trial, you've proven the cause and effect of the drug, you can still continue to follow those occasions at open label to say, is it still progressing? Because you've proven this effect is the drug. And then it's possible to continue to follow that effect and not have to reprove that at every stage. So the other question is on safety, I think 8 months is long enough in safety to have enough injections to be able to show what it looks like and what happens with regard to all the lab tests and everything else, right? So I think there's enough time. Our expectation is to have 100 to 120 patients in that range. It's, let's say, it's 8 months. It would be randomized placebo-controlled, not sham, placebo because I think doing sham opens the door to things being discovered and not perfect and not type 1 evidence. And if you have a transformed therapy, the last thing you want to do is deal with an HTA somewhere saying, well, that study is not really the right design. We're going to yield a lower score. And I just think doing one high-quality, fully randomized study is the way to go with something that's important and large as this one.

Makes sense. And moving on to cetruzumab. Maybe talk about the fracture rate data that you showed there recently, which was impressive. And how is the Phase III enrollment going? And what are you hearing from investigators?

Yes. So one of the osteogenesis imperfecta is a defect of collagen. And as a medical genesis, I was trained like everyone else at that defective collagen made weak bone, but no one ever really proved that exactly was true. And when you actually test the physical strength of the bone, it's not really -- the collagen is not making it that much weaker. The truth is and this is very important about these results is that what's happening in OI is that there's bone dysregulation, they're not making enough bone. The Z-score of bone density is [indiscernible] below normal, right? So they're all -- the average is the fifth percentile. So the trouble is they don't make enough bone. And what we saw in the animal models, if you normalize bone density, just normal, the bone strength on a fracture test was normal. That's kind of mind-blowing even though the collagen is still mutated, right? So this is like a change of mindset. So most people didn't realize that if we just make more bone, that bone will be strong, and this way will stop fracturing. What that data finally allows to show to jaw-dropping surprise for all the people expert in the field is that you could have kids stop fracturing and have a 67% [indiscernible] clinically meaningful fracture. Only 4 did and half the fractures for the 4 were in the first 3 months, right? So after there's only a few fractures a little bit later and no one after 7 months had a fracture in the study. There were people there for a while. One kid with Type 4 with 17 months on study has not had a fracture in a year. And used [indiscernible] around, he's not in wheelchair. One of that was the case we showed and also has had fall so [indiscernible] would definitely should have caused fractures, but no fractures. So that's kind of a mind-blowing idea that maybe we can strengthen their bones that we don't have to fix the collagen, which is going to be very hard to do. And what we showed is a 67% reduction in the fracture frequency, but that's including even from the beginning of the treatment period, right? If you imagine on watching them longer when the fracture rate goes way down as their bones get strong. And if you're a pediatric patient showed a 19% increase in bone density in the pediatric age in 6 months, right, just a fundamental change in their bones. It's like their bones have been waiting for someone to turn them on, and we finally touch them and their bones to start making bone and the fractures go away. So I'm really excited about the potential. The high reduction rate tells you something is really profound going on. And I think that cetrizumab for osteogenesis imperfecta could be a transformative therapy for these kids. And we're excited about that because I think it's -- you don't have to fix the collagen, actually fix their bone problem.

Yes. Makes sense. And for the Phase III study, you've talked about interims for the study and potentially downsizing it too. What proportion of the 195 patients would be needed to conduct the interim analysis? And talk about some of the other triggers in the study.

The original assumption is that the patients had 0.67 fractures a year and a 50% reduction treatment effect size. The true fracture rate is probably much higher than that because that's based on reported to the doctor. And we found out the patients don't report most of their fractures. Whereas in the study, we're going to -- everything will get reported, right? So that number, even if you look at the data, we will go up to 0.7 or 0.75, just a little bit higher fracture rate and the higher reduction rate. The study has been much over powered. So we originally powered it to be 85% power to detect a 50% reduction with the 0.67 baseline. So right now, we haven't said exactly, but let's say, we think that the trial could enroll between 150 and 195, somewhere in there, could be more than enough with the power estimate we have now. I think the treatment size could be higher than 67%, but with that assumption, and I think with the true fracture rate being found, I think that we'll have more than enough power with a smaller study, and the interims we'll do will be based on when they get to a certain number of fractures at a certain amount of time to get to a certain number of fractures. And we won't announce the interims unless we stop the study and the DMC will be running that unblinded interims. We have the FDA acceptance, but I think we're going to have very strict result, p-value needs to be really small. So there'd be no question ethically, you really couldn't continue in the study. And those interims won't cost anything on power because it will be small enough p value change, you won't have to pay an alpha fee for that. So we will -- we'll do 2 interims and then the final, and that will hopefully give us a chance of ending the study early if the effect is what we think it is.

Got it. Makes sense. And I think we're pretty much almost out of time. And we haven't talked about a couple of important programs from your gene therapy pipeline. Maybe highlight some of the key points for those programs and the events ahead that investors have been focused on.

Wilson program gene therapy. We presented some really intriguing data of patients coming off their chelators from the first cohort at the lowest dose, which we were surprised how well they were doing and the fact that their copper distribution going up, which means that the gene therapy is functioning even at the lowest dose. So we will, in the first half next year, show you data from the second cohort, which is already dosed and the third cohort, which is being dosed now, which will give us data through these 15 patients sometime in the first half. Give us a chance to see what the right dose is for Phase III and then trigger the initiation of Phase III, so that data will be important. If we continue to see and patients seem to feel really good, physically well, I hope is be able to show with these data that there's a benefit to improving copper distribution, not just copper classification, which I've always said, these patients have both deficiency as well as toxicity at the same time. And if we can show that it could be that the Wilson upside is much higher, greater. The MPS IIIA program for Sanfilippo is a very urgent indication. We are talking to FDA. We have all the patients treated that we plan to treat. We're just trying to negotiate the timing of filing whether they want to for a certain level of clinical data or can we file for an accelerated path using the biomarker data, but that's moving along. We're getting the CMC part straight. We were essentially tossed that program from Abeona. It was working. I felt the responsibility to not let it drop because I think it's a gene therapy for a terrible disease segment. I've been personally involved in 4 out of approved MPS therapies, but I haven't done a Sanfilippo, so we're going to do this one, not let it go. So those 2, and then we have OTC -- GSD1 will unblind in the first half of the year. That's for glycogen storage disease. It's -- by the way, gene therapy, urgency is what matters. Glycogen storage disease patients are living every day, taking starch every few hours with a gun to their head, they're going to die if they miss. And people ask, why would some gene therapies launch well and some don't have to do with the urgency. These people want to be in the study. They want to get off this treadmill they've been running on this, every day think about dying if I don't take my starch saying, it's a crazy way to live. The parents are stressed out too. So that program is urgency. And I think if that's successful, I think people will want that gene therapy, just like MPS III, where they're going to -- it's like SMA. If they don't get treated in the first couple of years, they're going to die and parents know it. So those are a couple where I think there's higher [ chances ] I feel. Commercially, I think they will be successful if they get through. So that's a lot of Phase III programs all at once. And we've built our own plant, and we have a complete gene therapy program. And I think we're doing the right things to bring the cost in the line as a company, get our burn down, and we're projecting continues to [indiscernible] burn. That means we did put some programs that were early stage, 2 INDs on hold that are waiting and one program GSDIII mRNA that we paused because we just couldn't invest in everything to manage the burn efficiently. We restructured some groups, tightened up and then put the heads in the clinical development area that we need for the Phase III and the priority programs. So with those disciplined actions, our burn came down this year a lot from last year. It will come down further next year. And we said 2026, we expect to get in the range of being profitable and mostly driven off the 4 commercial products we have, but the beginning launches of some other programs at that time. So I think we're at a really important inflection point as a company, having commercial product growth, multiple products in late stage and a team that knows how to do it. And if you look at the 2013, '14 IPO class, how many people have 4 approvals in that time frame, right? What we showed as our data on one slide, I look at look how many products we're going to have, we think approved 8 to 12 in our first 15 years of company. I tell you that the team knows how to develop things, get improved and launch them.

Very good. Thanks so much for joining us today, Emil. Good [indiscernible] begin with you.

Good to see all of you.