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

All right. Let's go ahead and get started. Welcome, everyone, to the 43rd Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I'm one of the senior biotech analysts at JPMorgan. I'm joined by my squad, Priyanka Grover, Malcolm Kuno and Rati Pinge. Our next presenting company is Ultragenyx and presenting on behalf of the company, we have CEO, Emil Kakkis.

Thank you, Anupam, and good morning, everyone. It's certainly have to be in a sunny and not raining San Francisco this year. Of course, a lot of people in Los Angels, I know we're having horrible time, but we're happy to be here today and talk to you and give you an update on Ultragenyx with our forward-looking statements. Ultragenyx is a next-generation rare disease company. I think this is the year we've really, really arrived as a company. We've been developing ways of doing drug development, ways to change the regulatory process, ways to commercialize and putting that together with everything we learned from the past, we're creating a next-generation rare disease company that is now at the point moving toward profitability, generating revenue with multiple products and globally achieving that. I think it's an important moment in time as a company in what I call a next-generation rare disease company. Now if you look at our -- what's special about us? There are a number of areas, and I'll highlight just 3 areas. But one is, what do we work on? How do we pick? People ask me that question, what's the secret to picking high success? We look for potent biology in a bad disease where you're treating the underlying cause. That is our whole secret and we look at different size of population, less important in finding high potential. It's whether the drug is going to be a transformative change. So even a smaller number of patients can be an important product opportunity or a large one, but you really want things that are going to change the future in a big way. We're also agnostic on modality. That doesn't mean we do any modality. But among the modalities we pick, we try to pick the best modality, which means that you're going to be in the best position to have a product that will last for a reasonable period of time. Now once you pick a product, you have to get it developed and that's another area where we specialize how to accelerate the time line to go from a nonclinical result to an actual clinical study and approval. We develop adaptive trial designs, how we manage dosing. We look at seamless designs. We develop novel endpoints, both clinical and biomarker type endpoints. And the unmet need will be the driver that helps accelerate enrollment but how we find patients and how we bring them to the table, how we support them in the trial is all big part of accelerating and managing time to time and acceleration is the best way to create more value. The focus on that is a key part of drug development. Finally, how we commercialize. One of the key aspects of this is knowing that finding patients and supporting them well in the rare disease space is both the privilege and responsibility of our business model. And you can do that with a lean high-caliber commercial team, not a giant team and a leaner, high-caliber commercial team, provide that insight and to use modern tools on how to find patients and bring them forth to commercialization. Our goal is to get majority access wherever we commercialize. And one of the key elements of how we are successful is to manage post-approval R&D costs. It is one thing I learned early on is a burden on all rare disease programs, too many post-market commitments burning up money for several years with very little benefit often to the product or patients. And we designed a single design trial that will cover all needs that FDA might want, a single trial sponsored trial, but based on commercial drug, the disease monitoring program. That means our R&D costs fall, and we put the money where it delivers value and allows us to turn our spend to the next product. These are part what makes us special about finding opportunities, driving them to an approval and commercializing efficiently. Now what has that led us? We've created 4 approved products in our first 10 years and now have 3 more approvals coming, bringing us to something like in the 7, 8 products, potentially 9 if the Angelman program were to hit in a period of time where I think -- I don't think there's anyone who can beat that from a rare disease or almost any other disease area. And that's how this -- the methods are coming together and generating product approvals and revenue. This is Avery and Addison, a couple of kids with osteogenesis imperfecta one of our -- are really important drivers going forward. I'll talk a little bit about more of those after we look through the pipeline. If you look at our pipeline, we focus on 3 therapeutic areas. These are the areas where the knowledge and understanding is there and the unmet need is present. Inborn errors have been a core area where the biology is really amenable to a successful treatment. We have multiple products, 3 products approved in that space, 4 products coming. We can develop and leverage our knowledge on these and our commercialization skills and team. We've been building out the bone endocrine space where our biggest product, Crysvita has been going, and we're following that now with OI, an opportunity to redo the same type of indication in the same doctor space, a 90% overlap. And so that will leverage everything we learn with Crysvita in that program. Newer in the neurogenetics space. We have an Angelman program. We have several other neurologic neurogenetic disorders. These are disorders, which are complex, but totally untreated, many of them with large opportunities like Angelman syndrome, and that program is entering Phase III. So these are the 3 areas we've been focused in and where we are leveraging our commercial as well as our development teams in developing new products. Now I'll talk a little bit more about value creation in 2025 in 3 particular areas. We'll talk about the osteogenesis imperfecta program. The Angelman program. And then we'll look at the new programs that are coming to filing and launch and on top of our commercial-based business. Osteogenesis imperfecta is a very important indication to us Certainly, I trained with it in UCLA, where it was a very big part of the skeletal dysplasia world and a big part of what they did there. Osteogenesis imperfecta is a defect in collagen, which results in fragile or brittle bones but more importantly, it also caused a significant decrease in bone mineral density. And the combination of weak collagen and low bone mineral density makes these patients have tremendous problems with fractures. If you take the 3 main types: Type 1, 3 and 4, 60,000 [ developed world ] patients and very high unmet medical need, no approved products. What we're working on now is an anti-sclerostin antibody, which basically is taking on the normal mechanism of turning on bone production and dialing up bone production in these patients, which is unfortunately depressed. By dialing it up, we increased bone mineral density substantially in a very short time, and I'll show you some of the data for that and start -- and basically strengthen the bones. And in fact, in the animal models, you can bring the bone strength to normal, even though they have a mutated collagen. So we're excited about the potential. This is a fundamental treatment for osteogenesis imperfecta. The recent update, we have an Orbit Phase III trial that's been ongoing. We did have an interim assessment that was done early in the year on that trial. The goal of the interim assessments is to accelerate the time line. We originally talked about a 2-year time line for this trial to get enough fractures but based on the treatment effect size that we saw in Phase II, we are looking at ways to accelerate. IA1 did not hit. We were not informed of hitting the 0.001 stringent threshold. Now we're coming up to IA2 mid-year and final assessment towards the end of the year. So we expect Phase III data this year in 2025. And we're confident in the program. We know the trial is going well, progressing well, and that safety is the same as it has been in Phase II. So we feel comfortable about where that program is and we know [ newer ] products is going to change the future for OI. We're currently investing in the commercial supply because we know that demand will be high. And we're doing the other work to look at how to prepare for a launch of this product, assuming we get our data this year, then we'll be able to file and look toward a launch next year. It also is a priority review voucher eligible. I think it's been exciting to see in patients with this disease that fragility fractures as noted here by Dr. Gottesman have stopped. They don't see them anymore. And we had -- after a few months, we've seen kids have no more fractures and are active and running around. And it's just -- it's amazing that you could figure out something like this in that terrible disease but I thought it would never be treatable. And yet here we are with something may be profound and transformative. So we're excited about OI. It's obviously an important driver for our company. The data from Phase II showed a substantial fracture reduction, 67% and a very strong result. The median fracture incidence was 0 after treatment. And kids like this child with Type 4 had transformative effects where they're mostly wheelchair or walker bound before treatment and are now running around and don't use the wheelchair or walker any longer. The bones are stronger, they can run around and maintain it. It's actually quite transformative and excited to see this kind of thing. This is why we get in this business for all of you out there is what we live for, is seeing this kind of result in life. So another program, a big driver of the Angelman program. That program Angelman itself is a severe neurodevelopmental disorder, a number of different problems, again, a significant population at 60,000. We initiated a Phase III trial of antisense oligonucleotide GTX-102 in December, on target when we planned, and we're planning to enroll this and get it done here probably by the early second half midyear. That trial is a critical important one, but it will allow us to look at now the ability to take an antisense oligonucleotide and alter the expression of UBE3A in the brain of these patients, a very precise scalpel change to gene expression. This is where the future of neurogenetic disorders is going to be this kind of treatment, not just tickling the neurons with some small molecules. When you do this kind of thing, you're going to have fundamental changes in biology. And what is the most amazing is that you can take kids aged 4 to 17 and have their brain start developing, gaining functions that they didn't have that all those years in stagnation can be turned on in their brains and the patients can start -- the lights can turn on as some of the parents say, the kids start learning and having judgment and communicating, nothing more transformative than that for people in the field as a medical geneticist to be able to do that change the future of developmental function in a kid. So we're excited about that program. Our ASO is the most potent ASO clearly, and we think we will be the best-in-class. The Phase III Aspire study is enrolling about 120 kids. We will push to get that enrolled as promptly as possible. We're going to add on another study, the Aurora study, which will be in the other genotypes and other age groups to cover the full label, and we expect that study to get going early in the year. This study will be a 1-year study. So this year will be about enrollment, getting study conduct, and we'd expect data coming for this next year. The Angelman program, we put out data earlier on the Bayley cognition score, which will be the primary. This is the GSV version of the score or the [ RASS ] score showing very similar, but the powering of the study is excellent. We're able to detect this Bayley change. But in addition to that, if we look at multiple domains, let's say, in the multi-domain responder index, we can see improvement across cognition, communication, sleep, behavior and gross motor. And I think to be able to see all these developmental functions and many of them happening in the same patient, I think, is an amazing thing. So that's the Angelman program. Now if we get to where we are in adding new products and new revenue, the Sanfilippo syndrome program is a really important one. I've been working in the MPS field for a long time. I am -- that is one of the major areas I'm known for, certainly, working with MPS. And the Sanfilippo program, which was at Abeona that was going to get dropped because of difficulties with the regulatory process. We decided to pick it up because we felt it was time to fight for this and get it done, and we've been able to do that. There's an AAV9 gene therapy for a fatal lysosomal disease that primarily affects the brain, which these kids get diagnosed at 2 to 6 degenerate. By the time they're teenagers, they may be bedridden and nonresponsive and spend years before they die. The therapy is simply an IV therapy at not a particularly high dose that is able to deliver enough enzyme, which cross-corrects other neurons in the brain that showed a substantial improvement in heparan sulfate. And that heparan sulfate basically is a correction of the underlying biochemical defect. We were able to get the FDA along with our other companies through a conference to accept this biomarker for accelerated approval. But though we were seeking accelerated approval, and we did file the filing in December, we have the clinical data to show the clinical benefit as well, which will help us down the stream with reimbursers. I'll show you that data in one moment. We are investing in the commercial supply to have product available. This is an urgent indication. These kids are going to die. It's a lot more like SMA. And we know the parents have no other choice, and this is a thing, and they've been waiting and are so relieved that something is finally coming for Sanfilippo IIIA. The data we already have in hand shows you here persuasive statistical significance showing the difference between the treated patients and the natural history. As you can see, there are a 22.7 point difference, strong persuasive statistical significance. If you look across several different clinical endpoints, they're all very positive. So we feel we have a great case of showing how this biomarker predicts clinical outcome and hopefully transform the field, not just for Sanfilippo or MPS, but maybe for all the other neurogenic disorders, which have been stuck and many of which -- many of those programs which have been canceled. Our next program is coming to file is DTX401 for glycogen storage disease. This is a horrible disease of glucose metabolism. These kids absolutely are struggling to survive with using cornstarch. These kids' livers can't release glucose from their liver. So it builds up as glycogen in their livers. But that seems like a small thing, but it turns out if you can't regulate your glucose, it means you don't have that safety net that keeps your body and your brain from crashing when you don't eat or something happens. And the only way these kids survive is by taking a slurry of cornstarch. An example of that young girl, this is what she takes every day on just showing you what it is. It's 7 glasses. It's about -- the average patients take is about a pound of raw starch as a slurry, a pound a day. Just imagine doing that. But it's more than just taking starch. It's taking starch with a gun to your head, knowing that if you mess up the starch, you don't take the starch, gun could go off and you get hurt or die. It's that kind of stress level. So when people tell me this is not urgent, you're just trying to replace starch. It's about not feeling like every day, you're worried about dying. And one of the parents at the Rare Fair last night never been away from her 3-year-old kid with this. and she has 3 caregivers going 24/7 in shifts to take care of the kid when she's not there, but she's the 3 caregivers on 24/7 shift, all right? Just so you understand the intensity and fear of this thing. And that's why the trial is enrolled because patients want to get out of this dangerous when they're surviving, but they want to get off this treadmill, they want to put the gun down. We -- I'll show you the data in a moment, but we're expecting to get the BLA submission mid this year. We're manufacturing in-house now. We moved it in-house, which gave us some delay, but it allows us to control it and reduce our costs. And this program is also PRV eligible. It will leverage along with the Sanfilippo program, our inborn error franchise. We showed persuasive statistical significance, a reduction in cornstarch intake and a number of other secondary endpoints, which I won't go into. More importantly, when you look at these patients, when they know that they've gotten the gene therapy and they get their glucose values, they're able to titrate even better. And the crossover patients who know they are treated or able to get access because you couldn't give them access during a blinded study, are titrating their sugars twice as fast even as in the controlled trial. So we feel good about where this is going. We have strong data, and we think we'll be -- this will be an approvable product in our mind. And we also think it will be transformative to be able to know that I'm not going to die tonight if I forget something. And many of the patients don't have to take starch at night any longer. And their liver, as we can show on their tracings stabilize instead of falling like a rock to 0, they just turn the corner and they stabilize. That's what we all take for granted. But for them is matter of life and death. So when you take those 2 gene therapy products, well, Sanfilippo this year, our expectation on top of a base business, we've been showing steady growth. This year, we're putting out somewhere in the $555 million, $560 million revenue, which beat our guidance, which was updated in August, heading to what we expect next year to be $640 million, $670 million and with enough revenue growth to put us on path to our profitability. So this revenue growth is based on a number of factors. Of course, the U.S., Crysvita and North America has been very, very important. But now we're building out our Latin America business with Crysvita revenue in Latin America being a really important contributor from Canada, from Turkey as well. with other products like Dojolvi, which is both Canada and Europe through named patients and now Middle East contributing to that product. And Evkeeza in Japan, in addition to Evkeeza in Europe are also adding to the revenue flow by having 4 products now in multiple territories, pulling revenue and it started to accumulate out, and we continue to grow our revenue, I think, at a terrific rate steadily now for multiple years, putting us in a great position, I think, for the future. And if you look at where we're headed, we're heading toward full GAAP profitability in 2027. And that's what I mean by arriving. When you can finally see that, that you're going to get there, you mean control of your future, I think it's an exciting thing. But we're not just going to go across. We're going to have fairly large products arriving in our portfolio, which will put us in a position to grow past profitability and really soar past it. Of course, in the meantime, working hard on expense management. We have a number of INDs we have teed up but haven't put into play to manage our burn, but they're there and ready to go. We are making investments in manufacturing for all the products are headed toward launch because we want to make sure we have adequate supply to drive those approvals and commercial launch. Overall, in cash, year-on-year net cash use is going down, as you'd imagine. And we will also have potentially 3 PRVs. Although the PRV law did not get reauthorized, these PRVs will be -- we expect to be approved before the grandfather so we'll still get these. They don't depend on reauthorization to get, which should give us a significant amount of nondilutive capital. We have $745 million in cash. $745 million, combined with the PRVs that we have, puts us in a position to get to profitability without doing a follow-on offering. We also do not have any debt. We're proud of that. So what do we expect for 2025? Well, UX143 is obviously the big news. Phase III result. We're very confident in the program and what it's doing for patients and it will be a transformative product. So sometime this year, we'll be getting Phase III data for UX143. GTX-102 will head to fully enrolled study, initiation of the Aurora study, and that will be -- come to a data result we expect next year. So that's [indiscernible] exciting stage. UX111 was filed December. We'd expect to have a PDUFA date middle of this year, and that will lead to potential approval in the second half, which would give us a product we will be launching. We know that, that product needs special care and launch, and we're going to be developing a proactive therapeutic approach in our medical affairs group to be able to be there, help and drive. And we'll also have work extensively on the reimbursement strategies to make sure that we don't get hung up with reimbursement for that program. 401 is at the BLA filing stage would become a 2026 approval. And we have other programs, 701, 301 in Phase III. Still work to be done there. But I would say 143, 102, 111, 401 are the big movers of the year. So where are we at? We have had outstanding commercial and clinical execution as a company. There are very few companies that have the high success rate we have in this time frame. In the last 10 years, with the year ahead, we will -- having on the order of 7 approved products would be, I think, is extraordinary for the 2013, '14 IPO class. We have a number of near-term catalysts, which we've gone through, 3 potential approvals in the next year or so. And revenue growth, a base business that's growing beautifully, combined with expense management put us in a position of getting the GAAP profitability in 2027. So I think as a company, Ultragenyx arrive, next-generation rare disease company and changing future for rare disease patients. So thank you.

Thanks, Emil. You want to introduce who's on stage?

Yes. Let me introduce who's with me today. Howard Horn, is our Chief Financial Officer and Eric Crombez, our Chief Medical Officer.

Just want to remind...

Top talent. They're very important in all of this.

I just want to remind everybody that there's kind of 3 ways to ask a question, right? Old school, raise your hand, I'll call on you. You can submit a question to the portal and -- or you can just e-mail me and I can ask on your behalf. But I guess Emil I'll start. There's this thesis out there now that you've gone past the first interim to the second interim that somehow the probability of technical success is now different for the Orbit study. Do you agree with this? Where would you push back on that?

No, no, I completely disagree. The idea of the first interim was simply try to see if we can accelerate further had nothing to do with that. I think the time frame and how much time of exposure was the question, how fast they can separate. They need a very extreme rapid separation. But the truth is that we know what will happens between 6 months and 1 year of exposure, we already have that data and we present it to people. So we feel really comfortable that this is going to be a successful product. The question is how fast we can accelerate. Remember, it was originally a 2-year type design, and we've been pulling it up. So it's really more about -- not about PTS, it's about how fast we can get to the success point. So we feel very comfortable that either the mid or the end of the year, we'll be hitting the trial. We know the drug works very well. And so we're confident in it.

Question in the audience.

[indiscernible]

Well, so the question is, is the rare disease model a good business model? Is it scalable? And I think it is scalable, but there are certain features to what you have to do. One, you got to manage the time line. You have to be aggressive on the time line. You can't spend 8 to 10 years in developing of an indication. The biggest hit to rare disease models if you take too long. If you take too long, then the return for these smaller products may not be enough to make up the loss of time. So what we do when we analyze projects is we look at not just cash spend and budget, we look at NPV. We make a decision, if someone says, I'm going to save $50,000, but I'm going to lose $10 million NPV, that's not a good trade. And so you have to look at value and time and how it affects it. And that discipline is very important. So that's why I talked about, I'm showing you this because here we are, we were -- we went public in 2014, we had our first approval in 2, 3 years after, 2 approvals, in fact, and now have 4 products approved and 3 more coming. So in a period of -- from '17 to '24, a 7-year period, we'll have 7 approvals is our expectation. That's what you have to do. You do have to be really efficient and think about time. I think the other thing is understanding the true choices of need. So a lot of people focus on things that look like a lot of patients, but then again, the unmet need is complex because of commercial competitors and things, you need a big field force, something. We focus on mostly first-ever treatments because the high unmet need is high and you don't have a lot of other competition, other factors to deal with, which gives you a greater probability of success in the model. So those are a couple of features. I think the other thing you've got to be really good at regulatory. I'm involved in a lot of regulatory work. You have to be really smart about regulatory and understand when the FDA says something, you don't say yes. You understand why they're saying it and you come up with the right answer. Sometimes, I was at yesterday's Rare Fair, someone -- I told them, if FDA doesn't agree to your Phase III doesn't mind. If it's a good Phase III, just conduct it because what they're asking you to do is impossible. So instead of doing impossible, do what's right. And when you come back to them with data, they said, well, then they said it was okay for approval. I said, that's the way it works. They won't give you approval of that program upfront. So that's hard for people. You have to be very bold in rare. If you're not bold, you're conservative, it gets hard to do. So those are some factors, but I do think it's a good model. I'm putting -- I went back on this slide to say, well, there's the model. Is that a good model? I think most people will be happy with double-digit continuous growth over multiple years and multiple approvals. So I think we can efficiently turn capital into returns. And the truth is our failure rate is very low, so we rarely put money in something that blows up completely. So far, 4 out of 6, but the next 3 hit, that would be 7 out of 9 successes. In my own career, out of 13 programs that entered the clinic, 11 approved, $2.5 billion, $3 billion at least of revenue, all right? So it can be done. Sorry, I went along...

Go ahead a question in the audience.

[indiscernible]

Yes. So the reimbursement environment for genetic gene therapies, right, is just different, right? It's single shot, large value. So you have to spend all the time on the value story upfront and being able to put that story together. And you'll need a lot of people in the field to know how to work with payers. Just like we've done our other launches, we'll go to payers pre-approval with pricing ideas and discussion, understand their issues and put together a plan that will make sense and we answer the questions upfront and understand what they need from us. And we're good at listening and we're adapting to what we hear so we get to there. I think those are some of the things we're doing. I think the other thing is we have to work at the regional areas because every state will have its own situation, every Medicaid program its own. We have a lot of experience now with all of the different programs and how to work with them. And so those are all aspects that we'll have to be proactive on not wait for the problem, but to go at it before you arrive. So when we go to launch, I want us to be know who can get treated, when we can get them treated and what do we have to do to push forward reimbursement because I think for Sanfilippo syndrome, there's no question that everyone should be treated. Everyone should be treated. There's just no other answer to that question. So we just have to get everyone to understand why that's true and how important it is to get it done soon.

We have an e-mail question here, which is, how are you noticed by the data monitoring committee that you're moving to the second interim? I thought -- basically, the question is I thought you had communicated that you would only be notified if you hit the interim, but not if you did not.

Right. Well, -- let me just put -- there is a very detailed SOP and process documentation on how to do this because you want to protect the blind of the study. And I don't want to go into all the details of that. But what I'll say to you is they're not going to tell us if it's negative. They're not going to give us the result. We're not going to know anything about what happened. We don't know anything about it, about the underpinnings of the data and what was in it. All they did say to us is that -- they didn't tell us, we basically heard. All I heard was they had met, and we were not informed of hitting. So it actually doesn't matter that much. The most important thing is that we're protected from any of the underlying data or results. That's what's really important part in protecting the blind. And so the detail of that is not really -- doesn't really matter actually, but we just need to understand that there are very detailed documentation SOPs that go on into conduct of that. We run the database ourselves, but they get blinded data from us and then with a third party are doing the unblind analysis and see it. So we don't actually see -- we have the data, but we don't have the unblinding codes, right? So those are all handed and handled in a very explicit and careful way because this will be highly inspected and it's an important part of the rigor, data integrity is extremely important.

Questions from the audience?

Yes. Related to dose delivery we got these single injection therapies on the medical device side, is there any innovation or additional care that you're doing to ensure dose delivery, is there anything that you're doing that's proprietary on the innovation side?

Well, for the gene therapy for Sanfilippo gene therapy, which is an IV AAV9, it is -- it's been -- the safety has been excellent. The ease has been simple. And so it really hasn't required that kind of innovation at this point in time. I think it's -- from that standpoint, I think it's a really excellent IV gene therapy for a brain disease. In antisense oligonucleotides like Angelman, where you're doing recurrent treatment, it's actually more of an issue of delivery because you're actually doing it repeatedly. Our goal there is to get approved on an intrathecal injection. However, once we make it work, we can then look at devices that might enhance and make the regular life of the patient treatment better by not needing any anesthesia or sedation by having a port or other type of device. So we're going to look at that kind of thing for ASOs for long term and then potentially other life cycle management initiatives certainly. But for the gene therapy for IV, I don't think there's much that we need to do.