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

Good morning. Thank you so much for joining us. Really pleased to have with us Emil Kakkis, Founder, President and CEO of Ultragenyx. Emil, perhaps we can start here by just outlining how you think about the strategy for the company on forward and what we may see from the pipeline over the next 12 months?

I think the company now is an established commercial company with 5 approvals and 4 products globally launching with a steady growth in revenue crossing $500 million this year. So I think we're in a good place from a building a commercial business. Now layering on top of that, we have probably one of the richest pipelines in rare disease laying out data in a number of different programs. Of course, the big program osteogenesis imperfecta fully enrolled Phase III coming out with some more Phase II data later this year and then potentially going to interim or final assessment by the end of the year and some time in 2025 for the Phase III study. We think the data we've seen so far in line have been -- has been spectacular in the sense that the reduction of fracture is far greater than anyone thought would be possible for OI. And I think it changes the mindset of what's going on in OI. And these kids while they have defects in collagen, they're not making enough bone. And if we just fix that part of their problem, we can change their lives. I think the doctor has seen that, and that's why we're able to enroll. The Angelman program is the other big program. We've had good Phase II data readout in April. That program is coming to an FDA meeting. We have good conversation with the FDA. We feel very comfortable about agreement on a primary endpoint, likely daily cognition, secondary endpoints, including multi-domain Responder Index and the other 4 domains and likely doing 100, 120 patient randomized studies with likely 48 weeks length. That should get straightened out, and we hope to start that Phase III by later in the year. In addition to those 2 big programs, we've read out data for UX111 for Sanfilippo gene therapy showing good data, and we'll be reading out information from regulatory meeting about the possibility of filing from accelerated approval using the biomarker. We've made a lot of progress with the agency on that. Secondly, we read out Phase III data from GSDIa, which showed powerful statistical significance in reduction in corn starch and hit 2 to the 3 secondary endpoints as well. We feel like very good results. Of course, it's a blinded study. We think as patients continue to get treated, they will have further reduction in their corn starch from continued improvement as we've seen in the past. But we're happy to have a Phase III study completed, as 2 gene therapies successfully completed this year. In addition to those, we certainly have the Wilson program. We're out some early data, and that's continuing. We'd expect to have full 3 cohort data later in the year as well as OTC is fully enrolling Phase III. When you look through a pipeline like this with 2 large programs like Angelman and OI, I think, in a very good place, Phase III, late Phase II, combined with 2 likely filable gene therapy programs puts us in a strong position to have something on the order of 3 BLAs in a period of a little over a year. That's not done very often. And fortunately, we've been relatively experienced filing BLA, but even 3 at 1 is a challenge, but I know the team is up for it. But it puts us in a position as we think going from 25 to 26 of launching multiple products globally in addition to the base of commercial, I think it'll turn the corner into, I think, a very special place going forward of being one of the most productive rare disease biotechs.

As you mentioned, there's a lot of interest in setrusumab for OI, help us understand or contextualize the Phase II results and that we've seen to date and how to think about the read-through to the Phase III program.

So the Phase II results showed looking at the median, a 67% reduction in fracture frequency, but surprisingly, a large number of the patients had zero fractures, right? And so the median fractures it was zero. And that was kind of surprising to people. You had that many people not fracturing at all. And the question is that sustained. Does that continue, if you continue to watch these kids. The other part that was quite a surprising for many people is the fact that the patients were physically transformed to. But they're able to start doing things they weren't doing. We showed kid who's been a little bit longer on treatment who stopped using wheelchair, the walker and started running around. People have been in a car accident, fell downstairs and didn't have fractures anymore, right? So they're having a girl who love sports and stopped playing. Now she's gotten back and playing. Well it does create some risk as they start playing sports. So someone asked me that, well, is that going to be a problem, I said, there's no one in the world. I'm going to make someone feel good, so they could play sports than stop them. You just can't. But I actually don't worry about it because if bones are stronger, they're going to do well. And the more active they are, the better, the more strong the bones will be because your bones get strong by exercise, when you lay in bed that you actually get weaker. So we're pretty excited about the profound improvement in fractures because they've not had anything. And bisphosphonates is a competing treatment or 20% best fracture improvement. They're not really solving the problem. So the context is this is the first time they've had a transformative treatment and the doctors who felt that you had to fix collagen, finding out it's not really true. Inadequate production involving is at the core of what's going on. So we'll put out some more data on how they're doing. We'll just give you a sense of how they're feeling longer term as we treat them. Do we maintain the high fracture reduction. What does the bone mineral density do? That data will give you at least a readout how longer-term treatment goes. In the Phase III, we'd expect by end of the year, early next year, the first interim evaluated. And if not then a second interim that 0.01 [ per change fee ], and then 0.01 for the second interim, which is a few months later. And then if that doesn't hit a few months later, would be the 0.04 for the 18-month assessment. So I feel very good. I think we'll end early, but I don't know for sure, right? But I think based on the size of the trial, and the fracture reduction we're seeing, we should. But it highly depends on how many fractures are happening. That part is hard to predict. How many fractures are having the people enrolled? Are they going to be more careful or by being in a trial, will be inevitably have more fractures because they're transferring, they're going to the hospital, they're doing stuff they wouldn't have done. Sometimes that gives you more fractures. So we'll see how that goes. But the number of fractures will suddenly will determine a little bit how much power we have and whether we end earlier.

Can you just speak to that with regard to the Phase III study design, the powering assumptions and your expectations around the 2 interim analysis, the probability you assigned to it kind of hitting on that first or second one?

Well, we are assuming that the fracture rate was around 1 per year and we've assumed the 50% for the powering decision. And the 150 is adequate size for trials defined. We put the interims in because instead of 50% reduction, it looks like it's 67% or higher, which would make it possible to get -- to power than an earlier time point. And I think the hardest thing to know and trying to do probably is what the fracture rate and what the exact percent reduction. It also depends a little bit on what the mix of patients are because there are Type 1s, Type 3s and 4s. Type 3s and 4s have more fractures are more severe, lower bone mineral density, potential bigger ability to move, right, and improve, so the mix will have some impact. I think it's a little hard to predict. We've said less than [indiscernible] finishing on the first one. But I haven't said exactly what the number is because I don't really know the number precisely, but the idea of the interim is to say if our assumptions are wrong for the trial and things are way better than we thought in early, right? So it's a little hard to know what that percent should be. But right now, I'm feeling I think we've made the right decision. The FDA has agreed to those interims, which is good. They've agreed that we can stop early if we hit 0.01 on the first 1 and the other 2. So I think they're on board because I think that the results are important and impressive to them. They've never thought very much of bisphosphonates or OI. They made that very clear to us. They think they're not good for bone structure. The mechanism of anti-sclerostin is really a much better mechanism. So I think the FDA is on our side here. So we're more encouraged. I think there's a possibility, but I still put it less than [indiscernible].

You spoke to how there could be factors just because of how active these individuals become, how does the FDA think about that in the context of quality of life because that has to have some value here?

It's one of those things you're not going to get credit for because we can't quantify it perfectly well. We have anecdotal information, but we're not quantifying exactly how many sports everyone's playing. Hence, It's a little hard to do that. And how do you relate some of the playing [indiscernible] versus something else? So we have volleyball player with [indiscernible]. So it's one of the things that parents are going to know, right? Families trying to make their decision or know that they had a friend who went back and he is doing great, and they wanted to get that too. So it will have an important impact on launch. Just like in Crysvita. Crysvita patient-to-patient was very, very important. They want to know, and we have, for example, a lot of little girls who are starting to do gymnastics and they can never do them. They talked to all the other moms with the little girl someone want to do gymnastics, right? They all found out they can do it afterwards. So we started getting all these videos of kids doing gymnastics. So that's how it propagates. I think in a while it will be similar. People see what's going on with their families. That will help drive it. But right now, it's been pretty exciting to see people doing stuff they couldn't do before. And sometimes it might cause a fracture, but you know what, better they live and have an occasional fracture because right now, they're not. They're sitting at home. They're just alive, but not living.

Could you speak to the launch strategy here or how you think about commercial footprint, recognizing that you have an existing sales force behind Crysvita?

Well, it's as good as leverage, as you can imagine, because Crysvita and the XLH and the OI doctors are 90% overlapped. So they know us, we know them well. We'll probably launch with a very similar plan that we started with Crysvita, which was around 36 reps, dividing the states in the 36. We'll have patient diagnose Liaisons that will help identify patients around those centers to feed the funnel of patients. A lot of OI patients are going to major centers, but there still will always be patients who are living with their disease out and about, and we want to make sure we find them, more often than the once a year, they might go, once every 2, 3 years, they go to a center. So the patient diagnosis [ one piece ] will still be an important part of that. It really helped Crysvita to maintain its trajectory for a lot of years like linear and never put in plateau, it just continued linearly. So right now, even the team that we have working with Karen in the field, we have a team of 20 in the field. They're still finding patients. And they're still -- 50% of the scripts are still coming from new doctors, new patients, 50%. So clearly an important commercial effort, right? Half of the scripts come from finding those people. So everything we learned from that will set us up for OI and hopefully maybe do it even better because we learned on the fly. We had plan. It was a good plan, and we continue to adapt. But I think we're as well set up as anyone to launch the OI. I think the one thing I would say about OI is it's more urgent. It's more serious than even XLH and there's a little less like affection for bisphosphonates. In [indiscernible], a lot of people are comfortable with oral phosphate. We had to get them out of that. But in bisphosphonates and OI, I don't think there's comfort. I think people do it, but I think our effect will be larger. I think this is why it will help, and I think expect it to launch better even than Crysvita, which launched extremely well.

And how large is this Commercial opportunity in your territories?

Well, if you go to the major clinics in the U.S., most of the clinics will have 50% more OI than XLH patients. Our estimate on the population is around 60,000 in the commercial territories, so that includes Europe. But within the U.S. it really looks like the big centers have much more OI than XLH. It could be OIs just better diagnosed than XLH. XLH overall can be a little more difficult to diagnose, whereas fracture is right? It's easier to pick up as it being part OI. But -- so we think it should be a larger addressable population more readily accessed than it was with XLH.

Perfect. Let's switch over to Angelman Syndrome. You recently shared a data update and initial regulatory updates. How does this data inform your view of efficacy and the next steps here?

The Angelman data in April really told us that we can take now a set dose and treat a large number of people and see the same movement we saw and that in some endpoints, it was even faster and better. So it gave us great confidence that we can replicate the experiment with a whole newer patients on new sites in places, right, and get very comparable results. At the same time, when we look at the patients who are on drug for more time, they continue to gain ground over a year of continuing getting ground. So it gave us a sense not only that we could have a better response with the higher loading doses that we're using now compared to the earlier, but that we can actually see continued progression during the whole year, which tells you that going for, for example, a 48-week study would have benefit by the aim to separate the groups even better over time and ensure that we have the power. So I think the replication, the increased speed of response and the safety gave us confidence that we can do a study now in Phase III.

Could you touch on the adverse events that occurred and prior to the protocol amendments and how concerning or not concerning they may be.

Well, they were certainly concerning in the beginning when you see significant lower extremity weakness in the first 5. But we learned a lot since then. And now we're more confident and reassured that this is a manageable problem and not a problem if we stop the drug. Out of the 53 patients, we had 1, call it, half. The other patient had a response that was not noticed until almost afterward, that they had it. So with only 1.5 out of 53 who would receive the loading doses, it tells us the frequency is way less. Second, it was mild to moderate most, but relatively fast within a few weeks, it got better. So it wasn't like the first 5. We took more time. Thirdly, patients all want to stay on the drug. And if you had that event before you got back on the drug, you could be successfully treated without having it recur, which means that having event, if not an end of therapy, is just something to manage and we think it's about. It does tell us that technique matters and we do have to train well. But we feel comfortable now this is a manageable problem, not a big problem. And -- it's reversible, it's milder now, and it's not an end of therapy for anyone. And the FDA's response to us is fine. They're not asking for any more information. you've done all the heavy lifting on what is going on. And I feel pretty comfortable now this is more like a localized chemical irritation of the drug sitting in the one spot for too long in all the cases, even the recent ones. They had the same local information. So fundamentally, the drug must have been sitting there too long, whatever we said, that's what happened because you can see it on the MRI. So we just may reaffirm for people that they need to do this technique the right way. And if they do, they get the benefit without having that effect. What's important, though, beyond that particular lower extremity weakness is what else is happening. We have a very clean safety profile otherwise. We don't have any of the other things that people have been seeing now the kidney issues or platelet problems or severe headache problems. That others have observed -- when you give a lot of intrathecal ASO. So I feel good about the fact that it's one thing, and it's manageable. And this is one advantage of having a very potent drug that works at 5 to 14 milligrams that you lose a lot of the other side effects that relate to the chemistries of ASOs. It puts us in good position with Roche balling out, still unable to find a partner, which means there's issues, right? And with Biogen opting out instead of opting in, and I'm sure Chris [indiscernible] would have wanted a large neuro product that fits with us Spinraza franchise, right? The fact you didn't go means it wasn't as good. And in some way, Salveen by putting out our data we essentially were challenging others to show us what they've got. And I think Biogen kind of -- Biogen who gets clearly out muscle is in the commercial field and neurology decided that they wouldn't do it. So I think it puts us in position in Angelman and the position I thought we would be in, which is -- the science that Scott Dindot did was the most potent and smartest science. He figured out some no one else knew and that's opening the door to a really potent new therapy for Angelman syndrome, and we're the ones with it.

And at your midyear end of Phase II meeting with the FDA, what are the items you plan to gain alignment on and what would be a best case outcome for you? And a likely outcome?

Sure. We feel pretty comfortable that getting alignment will not be difficult, we've already had some pieces. We already talked about 100, 120 patient randomized placebo controlled trial. You already know that, and that was fine. What we need to settle on is primary endpoints, secondary endpoints and length of trial. But we know from the past that 48 weeks is probably fine for them, and that's the number we're probably going to go with, which is day 331, but 48 weeks. Since there's a linear and continued improvement in separation going a little longer, in other words, 48 weeks instead of 32 weeks or something. It just gives us more power and more time on safety. So I think it would like that. So 48 weeks is one of the key questions. On the primary endpoint, I think they're more comfortable with the psychologists administered validated product like Bailey. There are a little more apprehensive about patient-reported endpoints, and we will have some of those, but they'll be more secondary and so based on what we've already heard, that's what we expect. MRI is a new thing for them. They're more comfortable with it. But we think we can build it in as a supportive secondary that help establish the by patient totality of the data effect to support the primary. So that's kind of what we will settle, primary endpoint, length of study. We'll also ask the question how to support the other indication. The main study will be for the 80% population, which is a deletion type. The question is what about the missense and UPDs and others and we think some of the smaller populations we'd like to support with an open-label design because we think one high-quality randomized in the severe population prove causing effects of the drug. Therefore, we can support the safety and labeling by setting other groups in open-label basket-type trial. We have to get some read on one that's doable or not. It may not be one conversation with them. But our goal in putting forth one primary [ VAR brand-wise trial ] to say that is the anchor for efficacy. And the other stuff will be supportive and we need not put multiple different types of aging patients who are placebo-controlled trials, right? See what's a big deal for these families. I've been talking to them for a while, but I think it's necessary to do one good one to end all questions, and we'll support the rest with others. So our goal would be to file ultimately for the whole indication and not for just one type.

How hard will it be to manage patient variability just given the heterogeneity of this population within a placebo-controlled trial?

Well, one of the key ways to manage variation is to stick to the deletion population. So that's why we're doing that. It is 80% of the population, but the deletion patients from an atrocity standpoint do not improve. Therefore, that's one of the big variables is what's happening with the placebo group someone have told me, well, how do you know Bailey doesn't have a placebo effect. We did, in fact, [indiscernible] help chase down a couple of studies and one study was a Levodopa study in the interim that has the Bailey, the Bailey in that study showed only 0.8 point difference over 48 weeks in the control arm, right? The treatment arm didn't work either so. But the point being that there was no placebo effect, essentially none, it was the same as the natural history. That's not so surprising, but if you can have a placebo effect, which involves you to make up cognition you don't have, right? Just because I feel like I might be treated, it doesn't make you want to think smart, [indiscernible], make good questions. I guess few think there might be biased in it, but the truth is it was 0. So we're very comfortable that by sticky deletions will keep the study clean. And if you have missense, [indiscernible] are variables, right, that will be harder to control and will create more noise. So that's part of the reason why we're designing it this way, we're designing it, prove it in the severe patients, a consistent population demonstrate it and then look at other cases and show them before and after. That way, each patient is their own control, and you don't have to deal with between patient variability. So there is a particular design choice in doing it that way.

And next here on the gene therapy in Wilson's disease. Can you frame expectations for the Stage 1 data expected in the second half and how you're thinking of validating the efficacy profile.

So what we're hoping to see later in the year would be what 3 cohorts data look like in terms of urinary copper reduction, standard of care withdrawal and their ability to sustain their copper control without standard of care. We showed some early data suggesting some improvement in standard of care. And we'll be mainly looking at those degenerative copper standard of care, removal. Now the third thing that's important to us is copper load through plasma, or through plasma oxidative activity. This is a measure whether copper is getting loaded on through plasma level. We think that's part of the potential benefit of gene therapy over chelators. So those would be the 3 things we'll look at. The goal would be then to design are we at the right dose, which choice is the best dose from a safety and efficacy standpoint and then head into Phase III. We've already agreed on the primary endpoint being urinary copper with FDA, but there certainly could be things we would adjust looking at it depending on what we see in this data set. But I think it's important that the FDA has agreed to the idea that copper management as an endpoint is appropriate. And therefore, we're not dealing with things like neurologic scores or other things, which would be very hard to do because people ask before, well, what about neuro scores and things, that the problem with neurology and Wilson is that some patients may have irreversible symptoms. Some may have reversible, they're all mixed up and only a fraction and then we'll have those problems. So it's very hard to power study, right? We're talking about 60-patient study, you can't power neuro study with 60 patients, really. So we're going to look at case examples of neurological problems if they improve. But in the end, the whole strategy has to operate on managing copper distribution and reducing the need for standard of care.

And at the same time, you have the GSDI and OTC gene therapy trials progressing here. One, which is heading to a regulatory filing.

And you explore Sanfilippo. So early in the year, we read out Sanfilippo data, which looked excellent. And we just read our GSD1a. I think both those are potentially fileable gene therapies. And we'd expect to be talking to the agency later in the year about filings for both of those. The GSD1a data, as we expected, the 48 weeks shows the group separating beautifully, but the true clinical outcome will take more time, all those patients continue to wean starch. In a blinded format, they didn't wean as much as you would like because the patients didn't know told by a doctor -- who was told by another doctor, now what the result was. It's a little hard take a medical action -- not telling what the result was that caused you to take it. So it's a little trickier. And so once they go into open label and people know what their results are, they'll be able to deal with it a little better. But we're happy to see the powerful results. So I think it shows that the drug really works. And GSDIa commercially is a much more urgent disease than, let's say, heme. -- it's more urgent because these patients are taking 6 or 7 vials of starch every day, every few hours. You don't forget what you're on, right? Every few hours, you're drinking slurry, it's like 300 grams starch pound. You imagine [ chart ] , drinking a pound of starch as a slurry every day. What do you feel like you feel terrible because like you have type of diabetes. They're [indiscernible] all the time, and they're making insulin. It looks like they're still terrible. Plus they're always sacred. Because you got to remember, they take it with them. They got to take it and going to take it and we give it a night, 2 arms. They miss, they might die. You have to kind of get in the mindset. I tell people it's like living with a gun to your head and as long as you keep drinking your corn starch it doesn't go off. But if you forget, gun goes off, right? You have to understand the mindset situation. When I talk to mom, taking care of their kids, is they're describing what was going on? You can see them start to tremor. It's like they have a PTSD response of the Adrenalin of thinking about their kid, every kid every day, every day, a few hours, right? This is very urgent. It is not just getting rid of the cost [indiscernible]. It's about living from the fear that at any moment, something could happen, you could die. And that's why we think people want to enroll the study and enroll well. Saying is true for USM11. Child is going to die if they don't get treated and they don't get treated early. It's just lot more like an in [indiscernible] by age 2, you got to get treated. And we've shown -- if you treated early, you have a very nice result and nearly all the patients have an excellent result. So those two, I think, will commercially do well. They're not as big as some of these other ones, but they'll do well, they'll get utilized. And so we're excited to bring those forth.

Just a last question here on how you think about business development, but also how you're thinking about the cash runway, recognizing you will likely get per...

[indiscernible] position partly because we raised the money recently, but we also have a growing revenue base and that puts us in a position to be on track to going profitable by 2026. Some of that contribution from the newest products. There are multiple potential PRVs in there. So that will certainly help us. We are looking at other business development deals that potentially as part of the thing. However, we're very averse in general to licensing out products commercially. Just historically, I've learned that the global commercial value is really best kept giving up territories you deal with a lot of upside. So if you know as most of our programs, we have full rights ones, we don't have ones that someone else had before we got them. So we are looking at our technology base and the license we can do there. But we'll want to consider what we'll do and be opportunistic on cash. We could potentially go all the way to profitability without raising cash, but don't really want to go too low. We want to have enough working capital. And we do have other business ideas, things we need to do. So we're going to look thoughtfully at being opportunistic on managing cash and I do feel like we can see the light end of the tunnel here in terms of getting through and getting the profitability. We've been very diligent on cost control, head count controls to allow our revenue to catch up and put us in a better position. But I feel like we're in a very good spot, but we'll be opportunistic as we move forward. It's exciting to be close to the end of that period where you're completely in charge. And if you imagine OI launching Sanfilippo, GSD1a launching, right, by the time Angelman coming will be in quite a different place right for the company. And I would say there's very few companies that have with many prospects of filable products in hand as we do.

Great. Well, with that, thank you so much, Emil.

Thanks Salveen.