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

Okay. I think we're going to go ahead and get started. Thanks, everybody, for being here. My name is Chris Raymond. I'm one of the senior biotech analysts at Piper Sandler. Pleased to introduce our next presenter, which is Ultragenyx. Emil Kakkis is with us, the President and CEO. We've got about 25 or so minutes for an informal Q&A just to go over sort of the format. I'd like to keep this as informal as possible. So if anybody in the audience has any questions, just raise your hand. Let me know, I'll make sure your question gets asked and answered. Before we dive into Q&A, Emil, for the folks who might not be completely versed on the Ultragenyx story, maybe just walk us through the elevator pitch, if you will, and then I'll dive into my questions.

Sure, Chris. Happy be here with you again. Ultragenyx is now 13 years in from founding. And in that time, we've built a next-generation rare disease company. We have 4 products generating $420 million to $450 million revenue this year. We have 5 late-stage programs, Phase III gene therapies as well as an Angelman program [indiscernible] perfector. They're both large market opportunities for us. It's early an important inflection point, growing revenue heading toward profitability, but also putting in play a large number of high-value rare disease products coming to launch. And I think looking at anywhere from 3 to 5 launches in the next 3 to 5 years, I think we're in an important inflection point for the company heading towards profitability and I think the best rare disease pipeline in the business.

Awesome. Okay. So maybe we'll just sort of go stepwise through the commercial push poles and then we'll jump into the pipeline. So maybe just on Crysvita. I know the Q3 print was a little lighter than maybe people were expecting negatively impacted by a onetime decrease in channel inventory. I think it was [indiscernible] change. But are there any other sort of challenges or headwinds, Emil, that we should be thinking about moving forward?

I think Crysvita is actually doing really well from a demand perspective. So with more people in the field with us, our people and our [indiscernible] partner who took over commercialization in April, we have more people in the field. And if you look at the start form generation, actually was stronger this year. So demand is there. They're taking over. There were some changes in the NDC product and pipeline. That stuff we think is all temporary. We also have had very strong fourth quarters in general. If you look at every year past, a lot of catch-up happening in the fourth quarter. So we felt good reiterated guidance on Crysvita. And I think the product is doing well. I think the part that is also important is our Latin American business continuing to grow. The pace of start forms this year was as good as it was last year in the U.S. So we're at 500-plus patients on treatment and growing in Latin America. So I think since we owned that business for quite a long time, I think it's going to do very well. We're also starting to get revenue from Turkey, which we also manage. So I think Crysvita is strong. I think our partner is doing a good job, and we're collaboratively working with them in the field and getting it done. So it's expected to have some temporary things. But I think the question is, is there demand? The demand is strong. We feel very good about the product.

And sort of a last-minute question here today, there were some news from NICE. I got a few questions from some folks on this decision. It was not exactly a rejection, but just maybe contextualize the news from the U.K. and NICE that came out this morning.

Which news are you talking about?

NICE to have an opinion on if you got that wrong.

Crysvita just got passed by NICE, first time it went by, but that was a while ago.

Okay.

Was there another opinion?

Yes. I guess I missed that. All right. So Evkeeza, I wanted to quickly follow up and touch on that. So a couple of weeks ago, we saw an EMA update on the label to include HoFH patients 5 years and up, but sort of help us think about the launch moving forward?

Well, we spent the last year kind of starting to launch sequence and then there is a sequence in Europe, picking countries, which countries you start and all that. So we've been working through that sequence. This 2024 will be where a lot of HTAs will be ruling and we'll end up getting price notification. We've negotiated some prices. We've started launch in Germany. And so it's picking up now. I think the really important part of the 5 to 12 segment is because a lot of those kids can't really do apheresis. And a lot of adults are on apheresis, but you can't do apheresis 2 times a week on little kids. So this drug will be far better for really little kids. So there is an important segment where we can pick up patients. We have already been doing compassionate use. There are kids with 5 years old that have cholesterol over 1,000, we're going to die by the time they're teenagers. Those are high unmet need. This is where this drug is going to be superior to anything they're on. And the reductions of 50% you see in the trial on top of everything doesn't tell you what happens in the most severe like double null types, those patients got a 70% reduction on top of everything, right? So there's no drug that's more potent at Evkeeza. So that younger segment, I think, will be the preferred option. And I think that will help galvanize growth of the product because everyone that's tried it finds the reduction is within a couple of weeks of starting the drug, and it's always on top of anything they're on. It's -- and there are very few LDL drugs that work on top of everything, right? So we're really I think the drug is going to be a really important drug for HoFH, and it's clinical HoFH, not just genetic; clinical, meaning all the variation of genetic types, not just LDL receptor homozygous, just to be clear, in the labeling in Europe. So that's a little bit larger population. So we're excited about it. I think it's a really good product. I think Regeneron did an excellent job in creating it. And the younger patients, I think, aren't opening the door to a stronger launch, I think.

And so maybe -- I know you guys haven't provided any 2024 guidance at this point. But just as we think about the specific programs, how do we think about the commercial set up in the next year, especially with the transition, your reps and Crysvita are -- there was an extension there and there's a transition that is going to be finalized. What's the setup?

Well, the transition is continuing to operate and it's possible that some people will persist afterwards. We do have the right to promote to medical genesis even after the end of the transition. But we're working with our partner collaboratively. We may have still some people helping promote during the -- after the next April. So it may not -- and we're talking collaboratively what it takes and what the benefits are. And I think so far, it's helped. I'd look at Crysvita continuing to grow. I think all of our pipeline has been growing in the 20%, 30% range, in that range is kind of what we're expecting. And so that's where we'd expect we'll put -- we usually -- what we usually have done is put the guidance out at the beginning of the year.

Yes. Okay. All right. So the pipeline. So Angelman obviously been a major topic of discussion for some time now. I know development here, it's top of mind among investors. You gave the Phase I , II extension date at your Analyst Day, I thought it was impressive. The next update is mid 20 -- one half 2024, I think you gave very specific timing around that. Just remind us Emil, I know that you've had a number of [indiscernible] you've provided in terms of data. But what should we expect to see? What's the setup? And I know there was some delay there, but maybe walk through that decision?

Sure. Well, we have a large number of patients who have been on drug for a significant amount of time that have been -- went through a low dose starting dose and titrated during loading as well as during maintenance, and that's the group of data we put out, just to show you what happens over 504 days of treatment. And what I think was important to show you is that even starting at a very low dose load and titrating up, we had efficacy that was, I think, was exciting, changing their lives, really fundamentally changing lives. If you look at the type of things we showed. We tried to show some videos of those that were in the room for that meeting. We showed walking to show you how they're walking has improved, that these wide-based unstable gaits become narrow. And you could see how kids could feed themselves where they couldn't feed themselves. They can understand their name and follow instructions. They couldn't understand language at all. But if you call their name, they wouldn't understand you were talking to them. They couldn't understand it. But imagine now a child that doesn't know how to interpret any language can hear instructions and actually follow instructions. For many parents it's like their child is suddenly a real child, whereas before, it was almost like having someone who is like an animal that they couldn't really talk to, that couldn't understand them. And so they really -- it's been quite transformative. And if you add up all the various domains improving and put them now into the same kids, we show using the [indiscernible] heat map approach, it allows you to see all different domains in all different patients. You can see why this is a transformative treatment. Now we delayed putting out the expansion data. With the expansion data, we use the first part of the studies to titrate patients and figure out what's a good, safe and effective dose. We said, "All right, we've got an idea about dosing. Let's go ahead now and treat a whole bunch of patients at that dose." The one that's going to be for Phase III and see what that shows us. We just want to verify what is -- what is data that would look like a Phase III look like in terms of size efficacy. That data, we didn't want to go out with 8 or 10 patients worth. And so we held out because it turned out if we held off another couple of months or so, we would end up with 20 patients of data, just that's how the enrollment went. And 20 is just way better than 10 -- 8 to 10. So we expect to have 20 patients of data that have had at least day 170 -- sorry, about 6 months of treatment. We'll have probably 10 that have gotten to do a 254. And this will give you a better sense of the dose effect of the higher doses that we're using. So I think we'll put that data in context. Between now and then, we expect to have our meeting is scheduled with the FDA, we'll have a meeting to talk about endpoint. FDA has been very open about having just a separate meeting to simply talk about endpoints alone, which is good, it's encouraging. It means they're leaning forward with us into the next step. And there are a lot of endpoints and many people explained about the complexity, but look -- I look at it as a positive thing. When you have multiple domains improving, this is a meaningful drug. So if there's confusion, it shouldn't be. It's -- we have so many things we can measure that work and a change. I mean that's -- that's a beautiful situation. And we're looking at using a multi-domain responder index a way of capturing efficacy across 5 domains because it's a far better representation of what's going on in the disease and it gives weighting to all the different things that improve. And sleep, for example, improving is very important for some families, but not all of the kids have trouble sleeping, but for those that do, sleep alone, is transformative, for the kid and for the family. For other kids, walking was their issue more than other things, but having communication, having better behavior on top of all of that. If you put that together, that's the way to characterize Angelman, not in any one domain. So we'll have that discussion with FDA, and when we come out with the data, we'll have at least -- we'll have made progress in that direction. And our expectation then is to set up for an end of Phase II meeting where we have a more finalized plan so we can turn into Phase III quickly in the second half. But we're excited about the Angelman program and Roche has pulled out, Biogen owners put out a little bit of data. But since we presented our data at Analyst Day well before that, I think if they had better data, they would have put something out, but I don't think they have it. The truth is the region of we're targeting for our ASO is far more potent. We showed that with Roche. They didn't have the potency, right? So what we said was correct, and I think the same is going to be true for [indiscernible] there. They are using much higher doses and I don't think they'll have the same potency. Both those products did work, do have some fact. So the mechanism works, but I think we're in the best position of having a highly potent molecule that's what's going to differentiate us.

And so just maybe to clarify, you mentioned having met with the FDA to talk about just endpoints. And then you'll have your data early in the year and then your data in mid-first half. Will you be able to articulate what that Phase III development plan looks like at the time of your data? Or is it after the end of Phase II meeting? What's the sort of sequence of [indiscernible].

When we show you the data, we will have some concept of what Phase III might look like. And we'll try to present the data in a format that looks like what we might do for Phase III. I don't believe our meeting with the FDA will finalize the end point, but we'll have a good feeling for what direction can go in, and we'll try to use that as a launching pad for just putting forth what our data looks like. Because I know what everyone wants to know is from that data is -- is this a power of a study that can be powered to be successful in Phase III. So we'll make sure to put that together in such a way that people can interpret it.

Okay. So you highlighted your Multidomain Responder Index at your Analyst Day. Maybe just talk about the validation work that's required for this index. Specifically, I guess, is there any sort of validation work for the -- that needs to be a MDRI ahead of the registration.

Well, let me explain one thing about MDRI. It's not really -- it's really a composite of different endpoints. The endpoints are validate individually, like the Bailey receptor communication, has a lot of validation behind it. So each of the underlying end points for our domain are individual known endpoints, they're not. So if there are new endpoints, they would have to be validated certainly. The biggest thing with MDRI that we have to do is verify what's the minimally important clinical difference. What's an important clinical difference in the magnitude of change on an endpoint that we're going to score the wind that's what we have to provide the data to support that win and get FDA's agreement. That will be defined upfront with the agency. For the Baileys, we are doing that work. There's a lot of historical data. We think the MID is close to what the statistical significant change we showed as we showed the number of 5 or 6, depending on which Bailey you're talking about. For the Angelmann's severity scale, whether we use the scale or not or we use another instrument for behavior and sleep, there's 2 end points we have for behavior and so we could use alternative endpoints. We'll figure out what we need to validate. But we will need to figure out what's an important difference so we can score it. And that will be something FDA will want to see. Now we can do that from our own data by looking at CGI scores and the endpoint, CGIs for a domain, are you better by say, 1 plus or 2 plus? You can use that to calibrate how much change do they see in the endpoint and try to calibrate. Hey, if you see 10-point change in that endpoint, then 70% of the patients show a plus 1 or plus 2, let's say, in their CGIs cause that makes sense. So there's a technique for creating and validating what the MID should be. And we'll -- I have an entire team, Alison Skrinar heads that, does endpoint development strategy. It's one of the unique departments Ultragenyx has. We started from the beginning because when you're doing rare disease that have never been studied before, the endpoints become the biggest factor. And so that's why we created that department so the team of PhDs who actually do endpoint up only. That's the own job.

So maybe just a question on safety. It seems like the modification of the dosing protocol have solved the lower extremity weakness issues that you saw early on. Is there some sort of length of follow-up that FDA or the EMA, what might be looking to have to support filing? Or are they...

Well, I think it's always an important issue, it's intrathecal, so it's just a more invasive procedure than like a typical treatment. Because of the lower extent weakness, certainly, there's an important bar we'll have to go over. Part of the reason for expanding Phase II, some people said, why not go straight to Phase III. Well, part of the reason for expanding is to quickly get a large enough patients who are on therapy. So with the original patients plus the expansion patients, we'll have something on the order of 60, 70 patients on drug that will have been on drug year -- 2 years longer than the Phase III patients. I think the 2, 3 years of data, I think, will be enough safety data. That's one of the reasons to do the expansion is to get as much data. So while Phase III is going, the idea is that Phase III is, let's say, a 6- to 9-month study or around in there, that we would have enough patients with 3 years plus of data to give them comfort that we do have long-term safety. We've been very happy with the long-term safety because it was a very important issue as if we change the acute onset of this issue, but if you keep dosing them with this problem to accumulate and come later, but clearly, that's not true. So it has not to do with accumulation. What it has to do with the acute inflammation, irritation of the meninges. And so very simply, putting the patients laying down and put -- giving the flush just keeps the drug from settling in the local part of the supply, and we're able to solve that problem.

And is there any reason to think FDA might think differently about this?

Well, FDA has been more conservative. But I will say also, since our last meeting, they have come around quite a bit on the program. They've been very collaborative. They've been very open and the tone has changed a lot. So I'm actually feeling pretty comfortable that we're going to be -- go well, we'll go find with that -- and the fact they've accepted another meeting in the middle of development even, right, which they didn't necessarily have to accept, but they came through on what they committed to, I think it's good. EMA, there are going to be some differences for sure, but they're often very different. But fundamentally, the FDA is going to end up defining what will happen in Phase III, and we'll have to manage what EMA want and what we do. I would put to you that the Phase III study is maybe the main pivotal study for proving efficacy, but it's not the extent of all work. We will look at doing some open-label studies in some of the other subsets and to figure out ways to measure them objectively. So there will be some ways to fill out the data set with some of the other information we will collect.

One final Angelman question. I know you talked at length about the demand that you're seeing from families for clinical trial participation. This might be an early question to ask, but assuming you find a pivotal path that's expedient, you get a positive readout in launch. Just what's the thinking around the setup for commercial launch in terms of access to IV to transfusion capacity, training around the actual intrathecal administration, drug supply, all that kind of stuff. What's the -- what are the major pinch points, I guess, that you're thinking about?

Well, fortunately for us, the launch of Spinraza has trained a large number of centers to do intrathecal ASO treatment, a large number of centers to do it routinely. That has really opened the way for us because that hadn't happened and there would be a much bigger lift so we're not that worried about the lift, there's a lot of centers that have experience and there may be some that have to do it. But because there's a nice established set of centers that really are comfortable, the launch will be pretty easy, I think. We'll have to work on adding some other centers, but I do believe the majority of these pediatric neurologists are doing [indiscernible] ASOs already. So that really helped us a lot. With regard to -- I think it's a traditional rare disease launch. I don't think there's anything substantial. I don't think that a very large field team is needed. I think there's a lot of awareness in the community and their set of doctors or very specialized doctors, who will be doing the treatment. So I think a relatively typical lean, smaller field team, specialized field team would be launching. And from a patient diagnosis part, we usually have a patient diagnosis program team that also goes in the field to define patient's... I don't know if that's going to be as big an issue here because it seems like the diagnosis of Angelman has really gotten a lot better in the last years. And right now, there seems to be a lot of patients already identified. So we don't see the same issue as we would have seen, let's say, 15 or 20 years ago, where Angelman diagnosis was far less efficient.

Got it, okay. So maybe let's transition to setrusumab. So impressive fracture reduction data from your Phase II study, it seems, at least in our view, that the Phase III is derisked pretty substantially. So you've guided to full enrollment of the Phase III by the end of the first quarter of next year, I think. How much did that fracture data sort of impacted the demand for physicians enrolling patients? Was it a major determinant?

Well, I think it will be. I think the challenge with a placebo-controlled trial in this population is they are getting bisphosphonates treatment, which they would not be able to get during the period. So that is a challenge. They have to come off the bisphosphonates. The FDA would not let us put our drug on top of bisphosphonates, okay? So that was the reason for this. The bisphosphonates lasts in their bone at least a year, but that's still a challenge going to placebo where you have someone who's very fragile, a lot of fractures, coming into a placebo-controlled trial. So what the Phase II data said to them is there is a real upside here that setrusumab is not just like another bisphosphonates, setrusumab could actually substantially improve their fracture reduction. Bisphosphonates in 5 randomized studies have had only 2 positive studies, and the treatment effect size is about 20% reduction. So 67% reduction represents a dramatic improvement. The other thing that's important, and if you looked at patients after 6, 7 months, there weren't any patients with fractures after 6 or 7 months. Half the fracture, even the 67% rate includes fractures from the beginning of the study, right, Chris, [indiscernible] have the fracture over the first 3 months. And then it was scattered. So the truth is that effect was very surprising to doctors. Because they didn't think that making more bone in these patients was going to strengthen their bone that much, but that is what the mistake. The mistake was thinking that the collagen makes their bones weak. And the truth is their bones are weak because they're not making enough bone. And in that setting, making bone, which has a mutant collagen that is actually not bad bone. It's good bone, maybe not perfect bone, but it's still good bone. You could actually transform your life and have a kid like the one kid with Type IV, who is the longest treated 17 months, who stopped having fractures, who came out of a wheelchair running around like a normal kid now, who has had falls and not fractured like he used to. That's a change of life. So when you put that in front of patients, then that does bring in the doctors, first of all, I have to kind of grip the reality that they didn't understand their own disease. They've been studying all this time. I talked to the -- we had an investor conference at ASBMR and I talked to them. And I challenged them that this is hard for those like different than they were thinking. So it's much about getting them to understand that this drug is doing something that they need. And so now they need to kind of think about how important it is. And they admitted this was a change of thinking in their mind of that this isn't just a little bit better to be much, much better. So it is going to pick up the enrollment. Enrollment is going fine. I think we're always -- in all rare disease, we always battle enrollment right? Enrollment always is battle because you're always trying to find patients. The challenge with this disease is that really fragile patients. I mean they get fractures transferring from their wheelchair into the car and come in to the hospital. So those guys, it's a big deal to go on a trial. So patients are randomized 2:1 to drug. So the patients do have a better shot at being on drug. And if we end the study early enough, they'll all get crossed over under drug. So if you're in the placebo arm or in the other arm, you have a much better shot at getting treated at least 2, 3 years before anyone else. So in our view, it's a must do, and we believe we'll get this fully enrolled.

Okay. Great. Well, I've got a bunch of other pipeline assets that I wanted to talk about, but unfortunately, I'm getting the high sand that we're out of time. But thanks very much for that great presentation. You have a lot going on next year. Thank you.

Thank you.