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

Okay. Let's go ahead and get started. My name is Chris Raymond. I am one of the senior biotech analyst here at Piper Sandler. It's my pleasure to introduce Ultragenyx, which is our next presenting company. We have the company's CMO, Eric Crombez; and also CFO, Howard Horn, on the stage with me today. So just like kind of go over the format here. This is a fireside chat. It's meant to be very informal. So if there are any questions in the audience, please raise your hand. For folks on the webcast, feel free to e-mail me, actually, if you have any questions. I'll be monitoring this, which is an interesting feat while asking questions, but I can do that. And I'll be sure to get your question into the Q&A queue. So we've got about 24 minutes or so here remaining in our time for Q&A. But maybe before we do that, if I could ask the folks from Ultragenyx to maybe level set the conversation, maybe for folks who don't know the story, a little bit of an overview of Ultragenyx and the premise and the setup going forward. And then we'll jump into Q&A.

Do you want to take Ultragenyx, then I'll dig into the programs?

Sure. At the highest level, we're a rare disease-focused company. We've been public for about 10 years. We've been highly productive. We have commercial portfolio that should hit $530 million to $550 million in revenue this year. And we have an exciting late-stage pipeline of potential blockbusters that we look forward to bringing out in the next 12 to 18 months. So I guess the other important thing from the CFO's chair is we're on a pathway to profitability, which is a nice turn of events. We're looking into the 2026 time frame to have a GAAP profitable quarter. And that's driven by the current commercial programs we have as well as the -- a couple of launches should get us there.

Excellent. Okay. So maybe let's dive into the pipeline. Setrusumab, obviously, is top of mind. This is -- when I speak to investors, everyone asks about this, so -- for osteogenesis imperfecta. So you announced earlier this year, maybe Eric, you'd fully enrolled the Cosmic study and then the Phase III portion of the Orbit study. Maybe for those who aren't maybe familiar with this program, just give us a quick overview here of OI and the setrusumab sort of unmet need, the value proposition.

Yes. Great. I mean first, it's great to have osteogenesis imperfecta being top of mind. It is a very big value driver. It's been an important program for us, and we've had a lot of success. So that's great. So osteogenesis imperfecta, it is a rare bone disease with high unmet medical need. It's driven by genetic changes and genes coding collagen. So you really have an abnormal collagen matrix which allows for the abnormal laying down of bone, which really has these patients with low bone mineral density resulting in a lot of fractures. No real effective, certainly no approved treatments there. Some people are using bisphosphonates, which kind of helps lock in bone. It does offer some strength there and offers a little bit of benefit. But surely, with the fracture rates, we're seeing patients on bisphosphonates coming into our studies, some real high unmet medical need with a lot of fractures continuing with these patients. And with setrusumab really allowing for the laying down of new better bone, increasing the bone mineral density and therefore, reducing the annualized fracture rate.

And so you've provided 14-month data from Orbit, that's the Phase II portion of the study. Maybe speak to how these data evolved since the previous update before that. And help us understand how this sort of has a derisking perhaps potential for the Phase III.

Yes. No, it's an important to remember that Orbit is a Phase II/III study. So when that study was designed, we really were designing the Phase III, the pivotal part of that trial. At the same time, we were designing the Phase II part of it. And at that point, we really only had data from adult patients available to us. And certainly, once we started enrolling and treating younger patients in the Phase II part of this, we really saw a big increase in the rate and increase of bone mineral density and the reduction in fracture rate. I think when we think about bone growth in children, bone remodeling in both children and adults, you would think that, that would really take quite a bit of time to happen. But the results we've seen today in that Phase II study have been remarkable. We haven't done an additional formal analysis with the data set, but we're still continuing to hear from the treating community and the principal investigators in these studies that these kids are really having falls that would have normally always resulted in traumatic fractures. They're having x-rays and they're not fracturing bones. And then that really allowed us to have -- gave us the opportunity to relook at the Phase III design and allowed us to really look at the powering of that study. We realized it was a really overpowered study, and that's resulted in the 2 interim analyses that we have planned for this study now.

Yes. Let's talk about that setup because I get you a lot of questions on that. So you've got a really high p-value bar in the first interim analysis. The second one, I think, is a p-value of 0.01, and then you got -- you go on to the final analysis at the end of next year with 18-month data. Just maybe talk about the setup and the, I guess, the next -- the sequencing of events as you go through those interim opportunities and into the data, the final data.

Right. So interim analysis 1, we've been saying around the end of the year. I guess that is where we're at. So that certainly has been initiated. We're working through that. And again, with the really rapid increase in bone mineral density. And again, we're seeing that fracture rate coming down by 67%, so quickly, we really wanted an early look at an early chance for overwhelming efficacy there. So that's exactly what we're looking at. And with the p-value at 0.001, we really are looking at that separation between the 2 treatment groups. We originally designed the study at 18 months to have greater than 80% power to see a 50% treatment effect. So that's all the way through 18 months. If we're taking these early looks, that means you need a much greater treatment effect to achieve that p-value early on. So that's where we are today. We're working through that. If that is not achieved, and again, that does not mean there's any problems with the efficacy of the drug, that just means that this is too early of a time point. Interim analysis 2, we've been saying is a few months later. Certainly, having both of these interim analysis, as you said, the primary analysis period planned for end of year, we'll be looking at a longer period of time, following longer with a lower threshold there. So quite a bit of confidence heading into interim analysis 1, again, a lot of confidence if and when we do need to go to interim analysis 2.

Okay. Excellent. Okay. So you also noted, I think, you won't provide baseline characteristics until you disclose the data. What we do know is the study has a population of about 50% have subtypes 3 and 4 which tend to have more fractures and therefore, you'd have a higher rate of fractures than you saw in maybe the Phase II. This would arguably have been part of the statistical plan, but maybe just talk about that dynamic?

Yes. Again, really following back to what we have been seeing in these patients. And sorry, can you repeat -- I just lost...

Sorry. You haven't disclosed the baseline characteristics, but I think you had mentioned that you've got a subtype 3 and 4 in there, which would tend to have higher fracture rates.

Yes, sorry. Yes. So -- and that was interesting to see. And again, there was some skepticism. This is -- it's an antibody taking out sclerostin here. So -- and it was interesting to see we didn't have all of that Phase II data yet, and we first started rolling the Phase III, we saw patients bringing in more type 1. Those are the less severe. They tend to fracture a little less frequency, but they are so fracturing on average at least one time per year. So we saw them starting to enroll and then once we started looking at that Phase II data and seeing these really compelling results, there was a lot of enthusiasm, anyone who was skeptical and really wanted to have a data-driven conversation was really impressed and that's when we saw a really big uptake in 3s and 4s, which was great to see. Those are the patients who are more vulnerable. Those are the patients who are seeing fractures that are called atraumatic and they occur during sleep. So that means the normal tension of rolling over in bed is resulting in a fracture. That's transferring from a wheelchair to the car fracturing. So for them, they needed to see this potential benefit for them to start coming into the study. Again, yes, they fracture quite a bit more than type 1s. And yes, that absolutely can help with getting to these 2 interim analysis.

Okay. Excellent. Maybe for Howard, so you're going to get this readout next year sooner or later, this would arguably be the perfect time to start market development, KOL development, trying to understand with your partner, Mario, how to really attack the commercial effort. Maybe just talk a little bit about the market prep efforts that you guys have ongoing right now in front of the data?

Yes, we are doing some of that. Maybe I'll use that as a way to also speak to what we think is the aggregate potential. So we have Crysvita as a currently marketed product in XLH. And we launched that program. We've now given over U.S. commercial rights to KKNA. But that doctor set and the doctor set for OI is about 90% overlapping. So we think, one, that this space is bigger than XLH, right? We think it's a blockbuster for sure. We already know those docs really well. So this is part of our familiarity with the space. The other thing that's encouraging is that there's about 20% more patients in OI than XLH and because they're more severe as Eric was describing, they tend to come to some of the centers. And so when you have a sales model, you can access more patients sort of easier. So for all those reasons, we're really excited about the space. And it's some of those relationships that we already have from salespeople in the field for XLH that are helping us set the groundwork for the launch.

Okay. Excellent. All right. Let's maybe pivot to Angelman, which actually, it's heartening to talk about something before Angelman, actually, for a change, but we have to talk about it. So obviously, that's still relatively top of mind, especially as you guys move into Phase III in that program. So you recently presented positive data from your dose expansion cohort and showed what I think is pretty impressive data that shows that it works. Maybe just let's talk a little bit about the Phase III study powering. So I think you said you expect the study to have greater than 95% power to detect a treatment effect. Help us understand how you arrived at this measure.

Yes. So it's really driven off the Phase II/I data we sent. And obviously, we took time there. We had originally the dose-finding cohorts, but took the opportunity to enroll the dose expansion cohorts to really understand dosing and effect here, what was going to be the primary end point and how we were going to administer this treatment. So powering was really based solely on there. And one of the things we really try to stick to as a guiding light is not introducing new things, new variables into pivotal trials. So we're sticking with the same population. We do think it's important to stick to a homogeneous patient population, both when you're trying to do dose finding, but then also for your pivotal trial. And that's why we've stayed with patients with full deletions. Those patients really have no activity there, so you're really going to see a consistency in phenotype in those patients will help you with signal detection with [ their ]. And then again, with the data we have shown today, there were choices with the primary endpoint. I think we could have achieved success with a lot of them. I really like cognition because cognition is really foundational to a lot of the other skills you lose -- you gain and acquire there. But again, with the data we've seen, there were choices there.

Okay. So maybe let's talk about the enrollment dynamics. So the Aspire study, you're looking for 120 patients aged 4 to 17. And with the enrollment criteria. Do you foresee being any sort of impact to enrollment dynamics given, like you said, it's relatively similar to your previous patient population?

Yes. So a lot of demand. I mean, again, we've tried to be good partners with the patient community that's not just in the U.S., that's globally there. We've tried to be transparent with the data we have seen. And I think they've appreciated that. We have said we want to initiate that study before year end. Again, that's where we are here. So we are very, very deep into site selection around the world, and we're seeing a tremendous amount of demand there. We just recently attended the FAST meeting in Florida. And again, you have a lot of global representation there. And patients are very, very specifically -- parents are very, very specifically trying to understand where these sites are and how they can participate in this study. So a lot of -- I think a lot of demand there.

And especially with -- you're not the only company trying to enroll patients of this population. So you're feeling relatively confident?

Yes. We -- so again, we did put a lot of countries and sites in play for the Phase I/II that really gave them the opportunity to learn how to do in this, learn administration but also the assessments we're doing, build the team we need. So we are trying to pull forward as many of those sites that have experience as possible. We are expanding our footprint to some degree, but really depending on centers who understand intrathecal administration, they understand Angelman. And then again, if you are in a competitive environment, it's nice to have a head start. And we think with where we are, we likely, probably have a good 6 months where we have the opportunity to enroll these patients.

Okay. So maybe on safety. So the modifications, I guess, to the dosing protocol seem to have addressed the lower extremity weakness issues that you observed in this -- early on in the study. But maybe talk about the sort of follow-up, I guess, from regulators that you think that they're going to be looking for?

Yes. So we -- we are heading into dosing the study, which means we had an end of Phase II meeting with the FDA. We've also had scientific advice with Europe. So we have full buy-in with our Phase III design study duration. It's a 48-week study. We've had a lot of discussion with the lower extremity weakness with the agencies leading into this. It actually was not a topic of conversation for end of Phase II. So I think they're very comfortable with the plan we have in place and the data we've seen today.

So this is a question I get a lot. Ionis had their data. If you look at the efficacy sort of measures, they seem, at least from our vantage point, relatively comparable. And then, of course, the 582 drug did not have the AEs, especially that you saw early on. Just -- obviously, that's just a snippet. There's many other attributes to the drug, but maybe just talk about the competitive setup specific to that drug. I'm not asking you to throw shade necessarily at them, but as you're having this discussion with an investigator who's looking at enrolling in one of the 2, how do you make that argument?

Yes. So I think safety is important. But to your point, we understand this lower extremity weakness. We put a mitigation plan in place, and all of it resolved without sequelae. These patients are doing fine, and all of them wanted to get back on treatment. And to me, that is the most compelling argument. So to me, I think it's going to come down to efficacy. Again, we've tried to be very transparent with what we've seen. And really for a neurologic disease, you really rarely get the opportunity to allow these patients to develop and gain new skills. So yes, it's great if both drug works. But to me, I think it is going to come down to efficacy. We like the potency. We think with the work we've done in the Phase I/II, we do understand the right way to dose this. So again, to me, I think it is going to fall to efficacy.

Okay. And then maybe for Howard, another commercial question. So this is not the most straightforward administration. There's training involved. You also have infrastructure for transfusions, drug supply, other stuff. Maybe talk a little bit about as you get closer to the readout, the pivotal readout, the commercial sort of preparation activities.

Yes. This was part of -- I'll build on Eric's point, this is part of why we went broader in the Phase II than we needed to, and we went global, is that we wanted people to have experience with the drug and the way that it is administered. I think we're also standing on the shoulders as it were of SMA and Spinraza. People are more familiar with intrathecal administration now. So I think our strategy with the trials is a good way to get us ready for the commercial space.

Okay. All right. Maybe let's pivot to the Wilson Disease program, which I think is a very interesting program. So this is obviously you're in the midst of a Phase I/II/III program. And I'm getting more and more questions, but we actually heard some chatter from investigators and patients that were in your trial, there seems to be some, I guess, some more, if you will, I guess, inconvenience may be involved with the immunosuppressive regimen and the requirements to -- in preparation for the therapy. I don't know, any sort of feedback you might have on that in your patient experience so far?

Yes. So I mean, we are in what we're calling Stage 1 of this ongoing Phase I/II/III study. And this is where we want to understand dosing, understand initial efficacy and obviously, establish safety there. And it's not surprising to us, and this is different than GSD1a and OTC with the type of enzymes they are. I mean this is a transporter and we did suspect and I think we are seeing it play out in the data that with a transporter, you need to have this transgene taking up shop in the cell, producing protein, but then this transporter needs to set up shop in the cell membrane there. So it's not surprising to me that it's taking a little bit longer for this transporter to start trafficking copper in a normal way. So I think that's okay. And with a one-and-done, if you will, type of therapy, I think, taking that opportunity, taking that time to bring these patients off of chelators worthwhile. I think with immunosuppression, I mean the immune system is meant to respond to foreign proteins, and that's what these capsids are. So we think really with a more robust immunomodulation platform here. And again, that will be for a relatively short duration of time when you think about the potential benefit there. And especially, again, compared to chelators that sometimes you're taking multiple times a day, some with food, some without and the inconvenience there. We think that initial burden would -- is worthwhile if we can get the majority of these patients off of chelators.

And to your statement on one-and-done, there's always a question on long-term durability with any gene therapy, right? I mean we've seen this with a commercial gene therapy in hemophilia with one of your cohort companies, where that is a real sort of barrier, I guess, to uptake. But what are you guys doing to sort of address maybe that concern if it comes from investigators or patients about really how long is this runway of benefit? I know you need to have the clinical data, but is there anything you can do with preclinical work that sort of helps give a picture of how long the durability picture is going to look?

Yes. I mean preclinical data is great, and it's always important to inform this in the beginning. I think we all know for AAV gene therapy, if we all responded like mice, we would have cured a lot of these diseases. But I think importantly, and it's not just us with our OTC and GSD1a programs, but really just looking at the field broadly, these patients are getting to 5 year and beyond. And I think initially, a lot of people probably would have said 5 years is the minimum bar there. We are seeing durability holding up there, and that's great to see. I think there's a lot of pieces to this with nonintegrating gene therapy, and that's why dosing is important and that's where we've landed in the E13 range, you want to get to these transgenes to as many hepatocytes in these cases as possible. So when you have the vision of these hepatocytes, you're not losing all these transgenes there. And then immune modulation, again, if you're losing some of those hepatocytes that have taken up the transgene early on with that type of immune response, if you can really control that immune response in the immediate post-dosing period, you're going to hold on to more of those hepatocytes. So I think all of that really comes into play with durability, and I think durability is an important question.

Okay. Great. So maybe one question on DTX401. This is your AAV8 gene therapy for GSD1a. Sort of a new, I guess, in your last earnings presentation, you guys talked about a crossover patient cohort that -- it's kind of got our attention. It looked like these patients did maybe a bit better than -- actually a lot better than the original treatment arm. Is there a hypothesis for why this happened?

Yes. And I don't know if I can even call it a hypothesis at this point because we were concerned about it. It's the blinding. These patients prior to the use of cornstarch were dying from this disease. It really was considered universally fatal here. So I'm a biochemical geneticist by training and treated these patients previously and you have this whole treatment team and these parents telling these patients and children, you cannot miss a dose of cornstarch, it can be life-threatening for you. So then to say, in a blinded fashion, you don't know if you're on placebo, you don't know if you received the gene therapy, we're going to start taking that cornstarch away. So the treating physician PI doesn't know the patients, doesn't know the parents of these children, don't know. So that's a very hard thing to do in a blinding setting. We did see some important movement there in the blinded period. But then again, once that blind was removed, everyone knew everyone was on gene therapy, they could reduce this cornstarch with this information available, and you saw that come down very quickly and very consistently with what we saw in the Phase I/II.

Okay. Maybe if I could switch to -- back to the commercial setting. A couple of questions there. Howard, I heard your commentary around path to profitability 2026. And I know you're not in a position to maybe give 2025 guidance just here. But just maybe talk about the setup as we get go in this 2025, obviously, a very important year if you're talking about GAAP profitability the year after. Just talk about in broad terms sort of the setup as we get into next year.

Yes. We have been growing historically at double-digit rates, and we haven't given guidance for next year, but I would imagine that would continue. Really, we are now globally commercial. And so the setup in almost every region is great, right? Thinking about Latin America, where we still control all of Crysvita. It's been doing tremendously, and we're launching some of other programs there. Europe, we've had a great launch with Evkeeza. Also in Japan, we've recently launched Evkeeza and we hope to have Dojolvi there with a JNDA mid next year and then a launch subsequently. So we really feel great about how everything is setting up for next year. And again, our guidance for this year was $530 million to $550 million.

Excellent. Okay. Lots going on, but we're out of time. So anyway, thanks for the great presentation.

Thank you, Chris.