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

Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Ultragenyx with CEO, Emil Kakkis. Welcome, Emil. For those who may not be as familiar with Ultragenyx, can you provide a brief introduction?

Sure. Happy to do that. Ultragenyx was found in 2010, and we've been on the public market since 2014. Since being on the public markets in the last 10 years, we've established a global commercial business in rare disease therapeutics, with estimated revenue this year of $530 million to $550 million, which we recently raised. In addition to that, we've been developing multiple different modes of therapies that have 6 late-stage programs, including gene therapy programs in GSD1a, UX -- sorry, MPS 3, Wilson and OTC, and we have a program in Osteogenesis Imperfecta, that's in Phase III, and another program in the Angelman Syndrome, it's also entering Phase III. So we have a big late-stage portfolio in addition to our commercial business. And I think we've been leading the future of rare diseases medicine in terms of designing trials, picking end points, advancing policy on biomarkers and other things. And I think that's been an important part of our success factor as a rare disease company going forward. Going forward, we expect to get to a run rate profitability in 2026, growing revenue from the existing base as well as what we expect to have as 3 BLA filings within the coming year period. So we're in a good position to the company, both from the number of products, number of modes and in revenue growth to be a successful rare disease company.

Great. Let's start with setrusumab. Can you just talk about what you saw on the Phase II portion that gives you confidence in the program?

Setrusumab data in Osteogenesis Imperfecta, I think, are paradigm shifting because most people felt that in Osteogenesis Imperfecta, the bones couldn't improve in terms of fractures because they make bone that people think it's bad, "bad," but the truth is the bone is not so bad. The real bigger problem is they're not making enough bone, rather than the [ collagen ] deficient. This is the misunderstanding of what's going on. What we're able to show with setrusumab is that we can readily advance the production of bone in these patients and dramatically reduce fracture incidence, which was surprising. 67% decrease in the median number of fractures, strong statistical significance with just 24 patients and with results happening within 3 to 6 months tell us that these patients are not making enough bone and thereby simply making more bone, we can change their medical future. And that was surprising to the experts who felt the mutated collagen was not fixable, but it turns out, maybe you don't have to fix it, maybe you just need to make sure that they -- their bone dysregulation is solved and they make enough bone. The animal model said this, but no one read that data to understand what could happen. So we're excited about the potential that we'd have patients who, now after being in a year of treatment, do not have fractures, even though they are active and even though they may be falling, and that they're improved in their physical functioning and well-being in a way that I think will be transformative. So we're excited about setrusumab being a real next-generation treatment for OI and maybe transforming our understanding of the disease as well.

And you said that more detailed 14-month data will be presented at a future medical meeting. What other aspects of the data should we expect to see or look out for?

I think what we put out was like the main body of data, the bone mineral density, different ages and the fractures. We'll probably put more detail on individual case example, longer-term treatment for some of the kids that are much longer out that will help provide color on understanding the clinical meaningfulness of the treatment. I think the big main numbers we put out, but the other color will help you understand how, what would it mean for OI patients, and I think that's something that come out in the future.

And for the Phase III Orbit study, how should we be thinking about the fracture rate reduction that we've seen in the Phase II translating to the Phase III and what will be clinically meaningful?

Well, we saw a fracture rate reduction around 67% for the median. For some patients, they had even larger fracture reduction. And so I think we would expect to see that kind of fracture reduction or better in the Phase III. The Phase III trials enrolled more Type IIIs and Type IV patients who do have more fractures and more than we saw in those, say, the Phase II study. So that means we're enriched for a more high fracture population, which gives us the better chance of showing fracture reduction. And so we think we're well set up to be able to replicate what you saw in Phase II -- in a Phase III format, given what we know so far about the patients [ enrolled ].

The setrusumab is also being explored in an open-label Phase III Cosmic study in pediatric patients, randomized setrusumab or bisphosphonates. Can you just remind us what the bar is in terms of an existing treatment effect achieved by bisphosphonates?

Yes. So the second study is studying bisphosphonates versus setrusumab head-to-head in a randomized trial in patients that are aged 2 to 4 years old, so little kids. In that population, they have a higher fracture rate. They're probably more enriched for type III and type IV patients that get diagnosed when they're young. And in addition to that, because they're young, they will grow bone, create bone much faster. So we expect them to respond faster. We'd expect the fracture reduction to be at least as good, if not better, because we think their bone production will be at least as good, if not better. And I'd expect the bisphosphonates fracture reduction historically has been around 20% at best. These patients will have been on bisphosphonates already. So they're not adding it from not having had it, they will have had it. So they'll continue it, or they'll cross over onto our drug. So this bone fracture reduction rate is so much higher, and these patients have a higher baseline fracture rate. We think we'll be able to show a very significant difference between the groups. And we think it will help cement the idea that bisphosphonates are no longer standard of care, even though they're off label. And that setrusumab is really the right answer, and we hope to then essentially eliminate bisphosphonates as a good choice. We think the mechanism behind setrusumab, which is enhancing bone anabolism or bone production, is a healthier weighted produced bone by not stopping resorption. The bisphosphonates stop resorption, also stop remodeling and proper bone metabolism. And I think the [ anabolic ] approach is a more healthy way of building bone, but not interfering with normal bone maintenance processes. I think it'll result in a long -- better long-term outcome, too. So we hope that study will end bisphosphonates as a treatment strategy and put setrusumab and anabolic agent is the right way forward for bone strengthening in OI.

Now there are 2 interim analyses plan starting by year-end or early next year. Can you just remind us of what the analysis consists of and what might be formally announced?

The 2 interim analyses in the Orbit Phase III, which is a study in 5- to 25-year-old placebo-controlled study, were designed to be able to look and determine whether we're seeing sufficient fracture reduction to hit, at first interim, a p-value of 0.001 or better. If the study was that far along and there had been enough separation, we didn't want to continue treating children with the drug that wasn't working and being able to end early. We had to balance that interim with the idea of having enough safety data, enough [ exposure ] and information. Together, we came with the plan that would allow us to look at towards the end of this year. And by early next year, have the answer and determine can the study stop. If it's going to stop, we'd announced only that the DMC has said the study has hit the interim and that we would then complete the study through the last visits, which might take another couple of months to get everyone in and finish the study in an orderly fashion, clean and lock the database. If that interim doesn't hit at the 0.01 level, we'll go to the next interim, which is less stringency, better chance of hitting all the patients will have a year of treatment at that point. So it will be further along. If it doesn't hit there, another few months later, will be the 18-month time point and that the majority of the alpha spend is still there. We feel pretty comfortable certainly the second interim is a good place where it could end. Could it end during the first interim? It could if the fracture rate is higher than expected, and we maintain the same fracture reduction. But we don't know what the fracture rate is, and we're not monitoring how many fractures are happening.

Great. Let's shift to GTX-102 for Angelman Syndrome. You recently had a successful end of Phase II meeting. Can you provide some highlights on the data that you presented to the FDA?

The data we presented for FDA was what we had presented also at ASF recently. And based on the data you saw mostly from the April, we had a little bit more data in some longer-term patients at day 338. I think it was 10 or 11 patients through day 338. So that data set was similar to what you saw in April and at ASF, I think is what FDA saw. I think what they saw is that we were able to replicate the effect we saw in the first 13, 14 patients that were in the dose titration phase in another set of 24 patients, and that we're able to see the same pattern of domains response in multiple domains. In addition, they followed those 13 or 14 patients continuing on treatment for longer periods of time, continue to gain ground into double-digit range of improvements in Bayley score, and that those numbers and the magnitude of effect now is well beyond what anyone could imagine for placebo. And I think the issue of this being placebo has gone from people's minds. It's not true. It's clearly a major and substantial improvement in cognition, receptor communication, fleet, behavior and motor function. So I think they were pleased with that. I think they agreed with us on the primary endpoint being cognition. They agreed with us having a key secondary, which is a Multi-Domain Responder Index analysis of 5 endpoints, which is an important step forward. It gives us more ways for the study to be successful and allowed the same secondary endpoints, including our choice for endpoint. So we had really no debate. We were expecting some feedback from the clinical outcomes assessment group, the COA group at FDA. And they'll have some feedback, but I think the division has given us support for the plan and the design. We discussed also this year using a placebo versus sham and the [indiscernible] at FDA feels that we should do sham. We are more interested in doing placebo. We think it's a better study. But if the [indiscernible] is going to say to us, it's not -- that they think it's not ethical to give placebo, we basically didn't want to battle over this issue because it's not just FDA, we'd have to deal with all the regulatory authorities elsewhere. So this issue to come up over and over again, we delayed the program having that debate. But going to sham and eliminates the debate, we get on with it. We'll have the right controls in place to ensure that any unblinded people are not affecting the assessments that are being done for the program.

On what aspects of the data do patients and caregivers find most meaningful?

It varies between patients. First of all, receptor communication and awareness or connection to the family is important, like the kids looking at you and listening to you and paying attention because a lot of the kids are kind of in their own world. And so the fact that they listen, can follow instructions that mom asks them to do, or that they can communicate with words in some cases, but in many cases, is simply being able to point. Like my mother was telling me about the fact that a kid had an ear infection. Normally, if the kid had an ear infection, they would cry and they wouldn't know what was going on. But the first time the kids pointing to their ears, their ears hurting, the ears -- telling mom about the ear. And they checked, it was an ear infection in that ear. So that was amazing, like kids telling me what's going wrong, and I now can figure it out. So those kind of things help family life. Being able to sleep, for example, for some kids, it's a dramatic thing. They don't sleep. They're up all night, keep parents up all night because they don't want to leave their kid awake. Whatever the situation is, they worry. When the kids sleep, parents sleep, family is happy. And so we had -- that was very transformative to people. We consider it really important. The behavior things also, the kids are calmer, they're less aggressive. It's one of the problems they have. They come over to someone's house and their kid will pull and scratch the another kid because they don't know how to communicate and they're frustrated. They don't mean to hurt, but that happens and it's very embarrassing for the parent to have to pull their kid off some kid doing that. But that seems to be settled down. They don't seem to do that. They seem to be more easier to visit people and so forth. So you combine all these things happening, plus motor, like walking, more stable, not falling down, and it's becoming life changing. All these things are changing the same kids. And I think that I would say it's hard to pick any one thing. And for different families, there's different things that make a big difference. But together, they mean a lot. And most of the patients have 2 to 4 domains of improvement. So it's multiple domains for most patients.

Okay. Now Ionis announced results recently from its program. How do you view that data? And are the differences between the 2 programs, more a function of the difference between LNA versus MOE chemistry?

Well, I think they presented some data that was a limited set of like a few months -- 6 months of data rather than we've presented data for the whole year. I'm not sure what happened to the rest of their data. They claim to be matching us in that limited data set, but I believe our data set is much broader and longer and I feel that data set there, then Roche kind of told me that we have the lead molecule, and we have the best molecule going forward. So the issue of the chemistry, I think there has been a lot discussed about MOE chemistry being safer than LNA. But in our hands, MOE is also much less potent, like 1/10, the 100th is potent. So if you take our oligo or other ones, you make the MOE version or the LNA version, it's 1/10, 100th is potent. So in my view, that's not a win because a really good placebo is not what we're trying to develop. So right now, we have a dose that works in the 5 to 14 range. And we know all the others are working in the -- more like the 40 to 150 range for Roche are in that range. So we know the potency of our drug is much higher, and that's the value of the LNA plus the targeting region, which we have patented. That combination gives us something which you need. And ASO to be successful, they need to be potent. All the good ASOs are really potent, highly specific and really potent. That's what distinguishes them. So we feel we have it, and we think we have the best molecule.

Now for the open label AURORA study, do you expect any differences in the way that GTX-102 functions in patients with other genotypes outside of deletion mutation?

Right, so we're -- the main Phase III study is called Aspire. That will be 4- to 17-year olds with deletion only replicating what we did in Phase II. That's 80% of the population. For the minority genotypes, we want to do a study to help verify. Rather than doing another randomized study in very small populations, we're going to do an open-label study to show safety and then demonstrate efficacy that's comparable in magnitude to what's in the double-blind randomized trial. We believe that should be sufficient to enable labeling, not confirmed, but we believe that will be based on history. So the Aurora study, then we'll look at non-deletion types between ages 4 and 17 that population. That means the missense patients, UPD, ICD, there's 3 different types. So we'll have a 4- to 17-year olds there, and we'll look to see how their efficacy and safety match what we see in Phase III. We'll look also look at adults of different genotypes that are above 18, and we'll also have a separate group of just deletion-only patients that are under age 4, the little ones. We want to be able to treat little ones, and we're going to focus on the main subset of patients because it's hard to assess them, and we want to have a more consistent genotype of the severe types in that young patient study. So those will be the 3 cohort areas for the program. It will help establish both young, old and other genotypes as appropriate for GTX-102 treatment.

Any updated thoughts on whether the loading doses will be reduced from 4 to 3?

Well, the number of loading doses in the program, it's a little confusing because we're talking about 3 to 4. But there were 3 or 4 monthly, and then we started in every third regimen. Our expectation is to have 3 monthly and then one, 2 months later and then another 2 months later and then every 3 months. So it's a little bit more staged dosing strategy for Phase III.

Okay. So for UX701 in Wilson disease, you plan to report data from Stage 1. What should we expect to see and how many patients will be included in that readout?

So there are 3 cohorts, the dose cohorts. There's 5 patients for each cohort, and the doses are 5e12, 1e13, 2e13, and we'll look at the data both in urinary copper, serum free copper as well as standard of care withdrawal. In addition, we'll look at copper through plasma activity as measured in copper distribution from the liver. And so those biochemical measurable, the primary things we'll be looking at and safety, of course, in the 3 cohorts.

And so what are the main considerations for dose selection? As you go higher in dose, what kinds of potential safety concerns might arise?

Well, so far, we've not had any significant safety issues. Our dose level remember, only 2e13 is way below the ones where you've seen [ 89 ] issues, which were more like 2e14 or 3e14. So we're less than 1/10 of that dosing. So we think we're in a very safe range. We're not expecting a lot of issues. Wilson is a liver disease, does that make them susceptible? We haven't really seen anything to suggest at these dose levels. So right now, we don't have any specific concerns. We'll monitor for safety, but we're not seeing anything that's meaningful at this point.

And what is your current thinking on the design of Stage II? I guess besides the placebo arm and the selected dose, are there other adjustments that you might make from Stage I?

There could be. We have agreement on the endpoint and the design. It is placebo-controlled, and it does involve using urinary copper. We could use our Phase -- Stage I data to help mend that with FDA if we wanted to. The design gives us the opportunity to make those changes if we want to make any changes. But I think, we're comfortable that the size of the study, which is to do another 63 patients, makes sense and given the size of the indication and the powering we need. And I think will it need to be blinded? Standard of care withdrawal in blinded patients is challenging. And so that may be one of the questions. But because of most of the endpoints are biochemical in nature, I think you could do that in a randomized trial with blinding and still be due a quality study. So we'll look at that. Standard of care withdrawal is just people are afraid of doing that because they don't know if they have neurological problem, could it be as severe and could be irreversible problem. And that just creates uncertainty for people. So we'll look at the issue of blinding in Phase III. Currently, it's expected to be blinded, but we'll understand what the experts want to do and understanding about chemical end points of all, maybe there is a way to not have blinding. But it will be randomized control because I think that's necessary. There may be other things we look at, as we always do in our gene therapy programs. Each gene therapy program as we go through Phase II, we've learned bits and pieces and titrated. I think what's important with Wilson that we've already shown that the construct we've created in the vector can deliver active transporter and actually have an effect that tells you that this can work. So now we just need to tune out how do we make it work. So the majority of patients get a kind of effect we'd want to see removal of standard of care, good copper control and hopefully, copper distribution improvement.

Great. Maybe a couple of questions on UX111. Can you just remind us of the data that you've seen and the correlations between CSF heparan sulfate and cognitive function?

Yes. So data on UX111, which is a gene therapy for an enzyme deficiency and MPS IIIA, has been very compelling in terms of the fact that heparan sulfate reduction and the reduction in the area end of the curve of heparan sulfate exposure correlates well with cognitive outcome, as we've done more and more time. And the data we presented at the Reagan-Udall earlier in the year and at WORLD shows that heparan sulfate exposure, that is the levels over time, can predict what happens in terms of cognitive function in the Bayley score. And we presented that. I think it was quite compelling that there is a strong statistically-significant correlation between those. And that was helpful combined with the other information from other companies and academics on the heparan sulfate relationships that the FDA is now considering heparan sulfate acceptable biomarker [indiscernible], which is a big win for the patients and the industry to be able to do something for those diseases. And we certainly have had our meeting with FDA at CBER. I heard Denali announced they had data on their meeting with CEDAR. I think it's a big step and it's also important for gene therapy in general that if we have more biomarker-based approvals accessible. It means relatively smaller, more rapid programs could be done, which will take this gene therapy technology, which allows us to change the future and actually use it in a way for a whole bunch of diseases. So if that starts to move, as Peter Marks wants it to move and if the FDA is taking things forward, I think we can enter an era of surging interest in gene therapy, particularly for neurologic disorders.

Now on the BLA, can you just share whether you've met with the FDA yet for the pre-BLA meeting and any feedback that you received? And is there anything that outstanding that's required for the BLA filing later this year or early next year?

We've had both -- we've had RMAT meetings as well because we're RMAT designated. So we feel on track both CMC and clinical data, the [ BLA meeting ] is coming. But right now, we feel pretty much clear what we need. And we're proposing what the accelerated proof will be based on and what would the confirmatory trial being. And so that will be some of the discussion of pre-BLA. Right now, we feel like because of the RMAT meetings, we've kind of have already read on what the plan would be. And that puts us in a good position. The pre-BLA should be more about administratively checking through the issues and confirming our understanding and making sure we put in the BLA exactly what they want. But I think so far, they've been very accommodating. FDA has been accommodating and managing how much CMC information we need in order to file, how much later. And I feel very good about the attitude the FDA is taking that this stuff matters, and they want to help us get their comp promptly.

Great. Maybe some questions on some of your other programs. I guess for DTX401, you've had positive top line results. What should we expect to see -- like following the positive topline results, what should we expect to see in the full 48-week data that was not revealed?

Well, when we present the data, we'll probably have both the 48-week data. I mean we'll go in a little more detail what we show, but we'll also probably have some crossover data as well, I'd expect of the patients crossing over from placebo as well as some extension data to show the cornstarch reduction, which we're encouraged. We think it's doing well. And I think the strength of the data was persuasive statistical significance in primary and secondary endpoints to put us in good position and see patients continuing to get better I think gives us confidence of what's going on with that program. So we'll put out some more data later in the year. We haven't said exactly when, but we'll put out some more on how it's going with GSD1a. But we are preparing for filing mode. We are running the lots at our manufacturing plant now, the PPMs have gone well, and our expectation is to get to a filing toward mid next year, we'll have all the pieces put together by then.

Great. So for Crysvita, can you just talk about the progress in Latin America? And how should we think about the geography over the next couple of years?

Well, Crysvita is doing really well in Latin America. We treated some first few patients based on judicial order cases in Brazil a couple of years ago. What's happened in those doctors doing that, seeing how the kids are doing or telling other kids and other families are telling other families. So it's starting to pick up as it has everywhere it's gone, the family did get excited and they start telling everyone. And so we're seeing a surging interest in Latin America for Crysvita, and I went down for another meeting this year. I went to the first meeting where there was interest, but not enthusiasm. At the last meeting was everyone had their own stories of transformation. And once they get that -- once they get the feel for what that's like, right, then they want to treat as many kids they want because that's why they got to be doctors. I mean they're in the medical genetics and they want to treat bad disease and see them get better. So this is exciting for doctors as well as for the families. We're also doing well in Turkey. Turkey has done really well lately and picking up for Crysvita as well. So it's helping add to the story with regard to our ex U.S. business.

Great. Maybe one last question. What excites you most about the other early-stage pipeline programs?

Well, we have a lot of programs first off. I just -- we just talked about 6 programs, right? Phase III, late Phase II to Phase III because very few companies have that much going on at once. But in addition to that, we have a gene therapy of CDKL5 deficiency, which is going to come to IND, which I think is pretty exciting. I think it will be a really good type of neuro indication, and it's a [ severe ] disease, and I think that will be the main focus of that program. We have another molecule for creatine transporter deficiency. We made a [ project ] for creatine that's been waiting in the wing going, but we've had to manage our burn expenses. So we haven't put it in play, but we're real excited about it as a potential treatment for a pretty large indication. We have a project for GNE myopathy that will go forward, but based on support from a patient group, a patient -- individual patient effect. And in addition to all that, we have some things that we're working on in the translation research group that we are excited about. And really, the next couple of years will put us in the financial position of being able to advance more things forward as these -- we burn through these Phase III studies. So we filed 3 BLAs as we start going to launch mode. We'll be able to continue then that innovation that we've created and put more and more products into play to keep [ 6 to 8 ] programs in the clinic at a time. And with the additional 3 approvals coming and the revenue from that and the peer-review, et cetera, will put us in a position then to be able to continue that pipeline generation. I think we'll be one of the best in business. If you look at our investor deck, we talked about how many patient products have gotten approved, how many will get approved in the time frame. There's no one will beat our record on that topic.

Great. Thank you so much for your time, Emil.

Thank you.