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

Hi, everybody. Good morning. Welcome to the first session of the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the senior SMID biotech analysts here at the firm. It's my pleasure to have with me our first presenting company is Ultragenyx. Presenting for Ultragenyx this morning is CFO, Howard Horn. Howard, thanks for making the trip down from San Francisco this morning.

Thank you for having me.

And I'll also just mention that Josh Higa is in the audience as well from IR in case anybody has any questions. So Howard, maybe we can just do a quick general overview of the company, and we can then move to -- I never thought I'd say this, but the macro factors affecting SMID Biotech these days.

All right. Yes. So starting off, Ultragenyx is what we think of as a next-generation rare disease company.and we're in a unique situation where we're headed towards full year GAAP profitability in 2027. That's driven by growth of our current four commercial programs. And we also have three upcoming near-term launches that are going to transform the company. Those launches are from 111 or 143. We'll talk about those I know today. Each of them has a PRV associated with them, and that's even before we talk about the Angelman program. So there's a lot of exciting stuff coming up for us, specifically for 2025, I'll highlight five things. I'll do it quickly. But top line this year, $640 million to $670 million in total. We will have data from our OI program this year. We are currently under review for our 111 gene therapy program with a PDUFA date of August 18. We are about to file midyear, our 401 gene therapy program. So BLA will go in mid-year and we are enrolling our 102 Phase III trial that will happen before the end of the year, and we should have data next year. So a lot of activity in the back half of this year.

Okay. So we'll get to those catalysts in a second, but I wanted to take a couple of minutes to talk about items that you might have already addressed most of these on previous interactions with investors and also on your recent earnings call. But maybe let's start on the most recent update was the executive order that was announced yesterday as it relates to most of the origination. Can you just talk about how it could potentially impact RARE?

Yes. That is actually the toughest of the new sort of things coming out of D.C. candidly, I don't know. I don't know that I know enough. And by the way, I really appreciated the note you put out yesterday, I think details are still to be revealed. I think the markets spoke yesterday by saying they didn't think it was going to be a big impact for pharma and biotech. But my candid answer is I don't know yet.

So can you talk about -- for your current business for your commercial products, what is the payer mix.

We haven't really stated that yet. So I cannot give you an answer.

So I think as time moves on, people will probably probe you a little bit about that just because of the Medicaid component. And can you just also remind us about what's your ex U.S. sales percentage.

Yes. So ex U.S. sales is a growing part, Latin America, in particular, Crysvitaside for us, but we have a healthy growing business across all of our regions.

And so if something needed to be done, would you make a choice between choosing to be in a particular country versus wanting to maintain price or maybe I'm going too far ahead. In general, some companies have said that they have a very narrow price range for their products with -- in the world of rare disease, not be a safe assumption to make about Ultragenyx as well.

Yes. Unfortunately, it's too soon to think that all through. I think I'd pivot back to our mission as a company, which is to help rare disease patients globally. And that's where we know where we are today.

Okay. And then can you talk about interactions with FDA? How have they been going over the last, I guess, now 2 months. Any changes that you've noticed?

Yes. So this is specifically related to our 111 Sanfilippo program. We don't usually comment on details of regulatory interactions, but given all the changes that the agency, we did and have. And what we've shared is that the 111 process is ongoing exactly the way you would have laid it out or it has been laid out. So we had our mid-cycle review on time. And we know that the inspections of our manufacturing facilities and our clinical sites have been scheduled in an ongoing on time. So everything is on track. I think in a more macro statement, we have a long history of working well with the agency, and I do expect that to continue.

Okay. And then lastly, any impact that you're expecting from general tariffs.

Yes, that's another interesting one, still clearly evolving. We, like other companies are running scenarios, analyzing, trying to learn what might be the final decisions there. Ultimately, we do have a global supply chain, like others. But when we look at the current landscape, I really don't think there's a material impact on any of our programs, including Crysvita.

And have you been public about where your manufacturing takes place?

We have manufacturing all over, but I would note that we have a U.S. factory for gene therapy that's right outside of Boston.

Okay. All right. So we'll follow up as other events happen to ask those questions, perhaps again next quarter. So maybe let's move on to osteogenesis. So for OI, can you just give us a quick overview of the program? And people have been talking about the first interim that happened the second one that's coming and the potential for third and last. And so for those who may not be as familiar, can you just explain to us what those mean?

Yes. So OI is a bone disease, where you can break bones even rolling over in bed. So it's a pretty -- it can be pretty debilitating. We are in our Phase III trial now. And I think what you're mentioning is we had a couple of interim analyses in that Phase III trial, one of which was at the CUSP of the year, interim analysis 1. We're heading into interim analysis 2 to midyear, and then there's a final analysis if we need to go there at the end of the year. In general, whether it's at the midterm or the IA2 or the final analysis, we feel really great about the program. And regardless of what time point, we get the data. I don't think that impacts the ultimate commercial opportunity. But we're often asked, how do you feel about IA2, what is at the core of why you think it could work. And I think basically, looking back at the Phase II data, we're very encouraged by that. That's fundamentally why we're excited. And if you think about IA1 that was at a time point where we had 7 months of treatment at minimum for all patients. And so if you think about needing a few months for bone mineral density to improve and for the drug to really have an effect. There's only a couple of months of therapeutic window there where you can see a separation between the placebo arm and the active arm. And so if you fast forward to this midyear time point for IA2, that's a 12-month minimum for all patients. So you've added at least another 5 months to that handful of months before, so more than 100% of time. So that gives us some hope that we could hit at IA2.

So what was the reasoning behind having why not wait until the end to do the final analysis? What made the company confident that interim reads at these specific time points because this is a matter of time, right? You collect more events, and that increases the chances of the study working. But why did the interims make sense?

Well, our Phase II data gave us a hint that it could make sense, right? IA1, the initial one would have been an early hit but not impossible. IA2 is sort of more consistent with maybe the data we've seen in Phase II and IA3 -- or sorry, the final analysis would get there. But ultimately, the reason we chose to do it is kind of twofold. One is for patients, right? The earlier we can get them off of placebo the better, and then also a financial one where months do matter for net present value. So our thought was if we could get it to the market sooner, that would be better.

So let's talk about the second interim. Emil has given some color about potential timing as it relates to data lock. Can you just give us a summary of that?

Yes, I'll go with the midyear answer. There's not much more I can share on that at this point.

But has data lock happened?

So we did say that -- we did say at the quarterly call, the data lock has happened, and then it will take some number of months to get that data ready. And then we will -- whether we hit or not, we will tell the Street.

And so I guess, in terms of the study itself, if you do have to go to a third and final read, what would give the company confidence that, that would be the sufficient amount of time that would be needed because people have been trying to debate what potential issues there could be with study design -- any study design in general, but in this case, for this study, what could make the second interim not have collected enough events? And then what gives you confidence that the third and final would be sufficient in terms of time.

Yes. So fundamentally, we're looking for these two lines to separate, right? And I think should we not hit at IA2, I think the fundamental -- my hypothesis is that the fundamental reasoning would be that you just -- you had some more variability in the placebo group, and they didn't have enough fractures to so separation. Recall the p-value for interim analysis 2 is 0.01. So it's a reasonably stringent threshold. But what we've seen in data in the past, I don't think it's in rational one to choose. But then in the final analysis, the -- I think the p-value is 0.04 or thereabouts. So that's a much better bar, if you will, to hit. And I think with those additional months, the chances that those lines separate, it's good.

So what is the market opportunity for OI?

Yes. So we think it's bigger than Crysvita. And so in particular, maybe to frame at 60,000 patients in the world, about 1/4 of those in the U.S. So 60,000 patients for OI, 50,000 for XLH and maybe 15,000 in the U.S. versus 12,000 for XLH. And what we're hearing from physicians is that they have 50% more OI patients in their clinics. These are the KOLs. Now that doesn't mean that there's 50% more patients. It just means that with the severity of the disease, these patients are coming into the key centers. So I think that's good news for us because, one, we already know these docs from our XLH experience; and two, that makes this type of patients more accessible. So I think together, that could mean that we have a faster ramp-up than we saw with Crysvita.

So you talk about the total number of patients, but do you think that all of them would be needing treatment beyond what they have now? Can you just remind us of what patients have available to them now?

Yes. So patients are often on bisphosphonates, although that's not an approved medicine here in the U.S. and for most countries around the world. And our impression is that, that's not satisfactory for them. And so they are -- whether they're Type 1, Type 3, Type 4 I think the majority of those patients, certainly all the 3s and 4s and at least most of the type 1s would be looking for treatment.

Yes. And when we go to the type of patients, so there seems to be a heterogeneity in terms of number of fractures in OI patient can have. And so how did you account for that during enrollment of the study? I think a question that we've gotten is how do you get comfortable with what the baseline fracture rate of patients is when they're enrolled when they were enrolled into the study?

Yes, the -- sorry, forgive me. Just reminding myself of the actual numbers. So the Phase II had about 70% type 1s and the Phase III is about 50-50 type 1s versus 3s and 4s. And that 3s and 4s have typically a higher -- a more severe disease and a higher fracture rate. So our theory is that there may be a higher fracture rate in the Phase III but the inclusion criteria were the same between the Phase II and III and our stratification of the Phase III was actually done on age and fractures, so not by type, but it's pretty correlated as I was just mentioning between number of fractures that you'd see at baseline by type.

And is there any concern that due to behavioral changes that naturally happened during a clinical trial, people are much more diligent in some cases. Is there any kind of concern that maybe their behavior pattern would be such that you don't collect enough fractures in that time period.

I smiled because we've heard both sides of that, that patients sometimes do are less active sometimes in a trial. But in this case, some of these patients are very inactive, so even going to the clinic is more activity than they're used to and that could risk fractures also if patients are feeling better and they get more active, and we've heard of examples of this, they might receive fractures that way. But ultimately, what we've seen is these fragility fractures, which are the ones we're trying to stop or change, they really fall away. The Phase II data shows that they fall away in the first few months after treatment.

Now what about the safety profile of the drug? Can you talk us through Certolizumab profile thus far?

Yes. I think I'd say it's a classic antibody. Antibodies are safe and pretty safe at least. And I think ultimately, that's encouraging for us because we want to use it as a chronic therapy. We want to have in-home dosing as an option, too.

And how would that work? So let's say that the study is positive when you say in the home option as well, would that be right at the beginning? Or would that have to evolve over time?

So this is something we have experience with, with Crysvita and we would try to implement it as soon as we could.

Okay. So assuming that let's say, either this coming interim or the final interim is positive. Maybe let's just think about timing of the final interim. Would that happen at year-end or after?

Yes, we've said in the fourth quarter, so before year-end.

And with -- so if the results happen in the fourth quarter, would we be made known what the results are in the fourth quarter, would there be a period like you just described about data lock happening and waiting to reveal that data until you have a little bit more details?

Yes. I think we haven't set that expectation yet. Maybe the one that is more near term is for Phase II -- or sorry, for interim analysis to whether we hit or not, we will tell the street. And the -- there's two trials running in parallel here, right? So there's Orbit and there's Cosmic. We will take a look at that second trial if we hit on the first, so we'd spend some alpha and look at it. If we don't hit on Orbit we would wait on Cosmic and look at those together at the next time point. But this summer is pretty much all we've talked about in terms of the exact timing.

Okay. So can you potentially give us a range of when this could become commercial just based on success at the second interim versus success a few months later at the final.

Yes, we'd be commercializing in 2026.

Under either scenario.

Ideally yes.

Right. So I think Emil has been talking about confidence that the drug is active which we would agree with and then the timing of whether it stopped at the second interim or third interim is not potentially as meaningful as some investors might think. Is it because of the reason you described because it doesn't really change the time when the product would become commercial?

Well, I think there will be a series of months in between the two. But I think ultimately, maybe Emil's comment is related to the fact that we think the strength of the data and how profound it is in terms of impacting fractures. It doesn't really depend on whether it's interim analysis to or the final analysis.

And then you talked about the benefits that have been seen with the effect on bone mineral density. Why is that important?

Yes. So I think that what we saw in the Phase II was pretty profound. And I think the question from the community was, would that translate over to reduced fractures. And that's precisely what we saw, right? We saw fragility fractures waning after the first few months. That's what we're hoping to see in Phase III. And I think what we're trying to prevent is the fragility fractures we're trying to prevent the pain that these patients experience morphometric vertebral fractures, which can often change the skeletal forever. So these are the things we're trying to avoid. So transformative therapy is the goal.

This is also thinking ahead, but what would a label look like? Would it be the goal for every OI patient to be eligible to take this therapy?

I think that's our hope.

And how is the competitive landscape shaping.

So right now, bisphosphonates, we've talked about, I think with the second trial we're running, we're hopefully going to show that we are substantially better. And the space is one that we can be the leading therapy.

Based on your experience with Crysvita, do you have a sense on how many of the doctors you as a company already have had touch points with versus ones that you would have to build out relationships.

Yes. We think it's about a 90% overlap between XLH docs and docs for OI. So that's really good news for us. We have a very good relationship with these folks.

So then in terms of the investment that would need to be made for the commercial launch of this product, is it going to be meaningful?

Yes. So it's very rare. So I was a former athlete. It's very rare that you get to run this play the second time around, but with all the hindsight and knowledge from the first time around. So we feel like that's a privilege. We do still have some of our Crysvita sales force and some of our patient find organization in place. So the build on that is sort of -- it's modest. So there's not a lot to be invested there.

Okay. And then can you talk about your partner, Mereo? The type of interactions that you have, let me just describe them to us and let us know the nature of the relationship Mereo has European rights. And so maybe can you talk about why they were the right partner for this particular program.

Yes. So they are a terrific partner. We -- the relationship works as follows: that we run global clinical and global regulatory. They run commercial in Europe, and they pay to us a mid-teens fixed royalty and then we would run commercial everywhere else around the globe and pay them a tiered mid-teens royalty plus some milestones.

And how do you overall think about the European market opportunity versus the U.S. opportunity in number of patients wise?

It's certainly smaller. I think it's a good market. We've characterized it as one that we have a base of operations there ourselves. So I think I think it will be of our markets, maybe not as fast growing as the U.S. and Latin America, but certainly an important contributor.

And so do you think that setrusumab could be the biggest product for the company over the next several years?

For sure.

Okay. So with that in mind, let's move on to another indication, another program that has got a lot of attention, and that's for Angelman. Can you just remind us on where you are in development there?

Yes. So we're enrolling our Phase III now, and we have said that we expect to complete that enrollment this year and have data next.

And how is that -- how are you expecting enrollment to go? Because you are competing with another company?

Yes. So we have sites open globally. So North America, Asia, Europe, and to date, we're on our plan. We feel really good about it. We haven't heard about a lot of competition for enrollment. So it's not as the people are waiting for other trials. So it's been going to plan.

Are these enrollment centers concentrated.

No, they're all around.

And can you just talk to us about geographically where your sites are located?

Yes. So U.S., Canada, multiple places in Europe, Japan.

And is the profile of the Angelman patient any different geography-wise?

I don't think so.

Okay. Now can you talk to the endpoint that you've chosen for Phase III because at the time that Bayley-4 cognition was something that people were trying to understand a little bit better.

Yes. So we -- as you know, we had maybe five to choose from. We thought of cognition or I think of it as sort of a predicate to some other developmental areas. Also, we saw good movement on it with the Bayley score in our Phase II. So for those reasons, we chose it as our primary.

And what would be -- is there -- I guess, what would be the concern of using that versus any of the others that you looked at? And the flip side is, what gave you confidence that, that is the right one to look at.

Yes. So we had choices, as I mentioned. And in fact, we have a key secondary endpoint called the MDRI which takes five of these things and put them together which I guess we'll talk about in a minute perhaps. But ultimately, as I mentioned, cognition rose the top because we did see significant movement in it. And the agency preferred that we choose one.

Is there any subjectivity involved in these end points?

To some degree, but when you think about natural history and you think about the possibility of a placebo effect, you don't see much more than maybe a point of movement in that regard. And we're showing the minimal difference that we think is important is 5 points, and we're showing increasing trajectory well beyond that.

So you talked a second ago about this MDRI scale. Can you talk about the components that go into it? And how do doctors think about that versus Bayley?

Yes. So this is a very heterogeneous disease, right? And so some patients will have issues with sleep or behavior or cognition or gross motor, I think I hit them all, but we have five of them in there. And the idea is that the MDRI lets you see all of that together at once and to see where you're making gains and to not have to just choose one of them. And what we've heard is that it's a simplifying way to take all this complex data and all the heterogeneity and look at it in one place. And so from physicians and from patients, they've said it's been a very helpful tool to deal with all of that information.

And so what is your expectation for when the study would read out?

We have said back half of next year, I think, because it's a 48-week study, and if we're enrolling in the back half of this year.

And so what would be good data for that study?

I think that we keep showing that we've improved on these five domains.

So simply just being static on your primary as well as looking at MDRI.

Yes. I think we don't need MDRI to hit to win here, but I think that will be an helpful extra piece of information because ultimately, your primary matters, but when you're prescribing, I think they want to see the totality of the data, and I think that's where MDRI helps with that story for patients and docs.

And how big is this opportunity relative to OI.

It is about the same size in terms of patients. Josh, remind me of the total number we've talked about.

[indiscernible]

Yes, about [ 60 ].

And in terms of the investment you would have to make for Angelman, would that be something that you would need to do from scratch? Or would you be able to leverage what you already have?

That would be new.

And how big are you thinking an investment you would need for that you would need for that.

I haven't gotten there yet. But in rare diseases, we can typically be very efficient.

Okay. So between these two products, this could potentially, as I said -- as you said a second ago, OI could be the company's biggest product. But if Angelman is also successful, how are you thinking about the need for future investment in R&D as well as how to manage expenses for general SG&A launches.

Yes. So I guess I started off by talking about our pathway to profitability. We're committed to that full year profitability, GAAP profitability in 2027. And we don't need any -- we don't need all of these near-term launches to work to have that be case. I think what that will tell us, though, is the slope of our EPS and therefore, how much we would have to reinvest. We have multiple IND-ready assets internally. So we're excited to bring those forward when we can. Also, the company was built sort of bringing things in from the outside. That's part of our DNA, and we would look to be able to do that to. But I think ultimately, the amount of investment we would put after this generation of programs will depend on sort of the slope of their success.

Yes. So I guess one difference between OI and Angelman might be that you might have OI to yourself. But with Angelman, you might have competition. And do you think that the Angelman market, just based on the numbers you gave us just now is begin up to support two players?

So it's certainly big enough to support one really good one. But whether it can support more, I think, really is going to depend on what the data looks like. And so could it support two? Sure.But I think how that dynamic will play out, we'll be really told about the data.

Okay. And then maybe let's move on to Wilson disease. Can you talk to us about where that's in development currently?

Yes. So we're enrolling a fourth cohort for Wilson, and we expect to have that enrolled before the end of the year, but it's in Phase II in development.

And same question as I've been asking how big is this indication?

So it's also about 50,000 patients globally, maybe 1/4 of those in the U.S.

And I guess, what is the current protocol in terms of standard of care for these patients?

So it's chelators and zinc. And our aspiration is to be able to have the majority of patients come off.

How successful are chelators and zinc with these patients?

I think not so successful. I think when you look at the levers of patients who are deemed to be under control, there's still some trouble there.

We've talked about this question about tech transfer in the past, but just can you just remind us for this particular program -- what is the plan for that?

Yes. So this one is in our manufacturing plant in Bedford already. I think the tech transfer story was around 401 where we had that external lead initially and then took a little bit of a time delay, but now that it's in our plan. I think that's a much better situation.

So I guess for anything that would come out of that facility going forward, it would be pretty much leveraging off of what you've already done in terms of tech transfer.

Yes.

Okay. One question that I've gotten is, what kind of COGS do you expect on these types of products.

Yes, we have not been super specific about that. But I think the advantage of having our own plant and the methodology that we use in the plant means that we can reduce these COGS much lower than you probably expect. And so I think there's a healthy margin to be had.

Okay. And then just in terms of pricing, Emil has always talked about responsibly pricing products, and that's part of the makeup of Ultragenyx as a company. Some have asked me about when you have a product where current standard of care can involve things that are clearly inferior, but also much cheaper. Does that in your mind, raise the bar of what needs to be shown in order for a product to be commercially successful, just in general, not related to any of these particular programs.

Maybe you're thinking of like 401, where you have very cheap alternatives with cornstarch I think ultimately, like using that one as an example. I think the value proposition there is that, that disease has such urgency and it has its life and death implications that patients would see the value and the gene therapy, the onetime gene therapy. It's been described to me that having that disease is like living potentially with a gun to your head that could go off if you miss a dose of your corn starch slurry. And while it is inexpensive, I think it is a challenging way to exist. And so our hope is that the value of the gene therapy would bring price responsibly would be well better than what they're currently being served by.

Okay. And then the last product I wanted to talk to you about really quickly is the market opportunity for Sanfilippo syndrome. Can you just tell us what your market data shows on that and what the competitive landscape is.

Sure, 3,000 to 5,000 patients globally, about 1/4 of those in the U.S. No approved therapies today. And our thought is that with that being a very lethal disease that the price point could be in the $2 million to $4 million range.

And how are you thinking about competitive landscape as it relates to potentially [ Denali ]?

We're tracking it, but we know we're ahead, and we're excited to get this thing to the market ideally before the end of the year.

Okay. Perfect. With that, we're out of time. So thanks for joining us this morning. Thanks, everybody, for sitting in.

Thank you. Great to start the day with you.