Ultragenyx Pharmaceutical Inc. ($RARE)

All right. Welcome back, everyone. Today, we have the pleasure of speaking with Emil Kakkis, President and CEO of Ultragenyx.

And well maybe to start, just to level set you are sitting in front of key Phase III insulin data in the second half of the year on the potential path to profitability in 2027. So in that context, how is rare positioned from here in the second half of the year and then over the next few years? And what are the company's key priorities?

Certainly. We certainly have to be here and be talking with you today. We started the year off with a difficult problem of missing an OA that OI in Phase III, and that was tough. But we have a lot more than OI in the program in the company. And so Angelman is the big driver for what people are most interested in. It's the biggest upside product. We've done a lot of work in preparing for that Phase III. And we put out some data at the last quarterly call, which talked about the long-term Phase II data. But that Phase II data shows that patients continue to gain ground over 3- to 4-year period, they have durable effects and that the safety is excellent, and there's no cumulative safety concerns or issues arising. And it also tell you something even more important which affects us commercially. And that patients and parents are reason -- are interested in keeping, getting intrathecal infusions every 3 months for years for their kid to see the benefit they're getting. And there's very few parents that keep going for intrathecal injections road drug for no reason, right? So it tells you something that people are staying on the treatment that tells you this is a viable treatment that's really helping their kids and worth it. So that's what we got out of that. We did a lot of work on our Phase III and operationally, which was bringing forth sites that we had already tested in that Phase II study. So we knew they could do the test. We knew what the patients were like, and we had ironed out any particular executional issues. We brought in a third-party tester for the Bayley testing score, which is one of the primary endpoints to make sure that was done into perfection. And we've supported the sites as needed now to be able to handle the workflow and workload. And so it's gone well, and we're really excited about being able to enroll in 6, 7 months and to now be looking at patients finishing the study. You have already had patients finished and crossover, and we continue doing that process. Last patient in was last July, for 8 weeks takes to sometime this June, July. And then there will be some weeks to months of cleaning, walking, preparing and analyzing data before we released. We haven't put out a specific time line but I think we're in a very good position with the Phase II data showing us long-term durable benefit, long-term gain and a Phase III study that's been executed well. And finally, we've added the Aurora study, which will look at the older and the younger patients and the other genotypes to fill out the story together, I think, putting us in a good position. It puts us about a year ahead of everyone else. And I think we're pretty encouraged. So that positioned us well for big upside. But if you talk about revenue and cash, the 2 gene therapies probably have a more immediate impact. We've been investing in the launch of both programs expensing product that we've created and put on the shelf. And some of our burn left couple of years has been to make products sitting on the shelf. So it's not burn that's gone. It's sitting there as a product. When we -- our PDUFA dates are in August and September, so far, reviews are going fine. And if we get both approvals, we will have 2 PRBs we'd expect, which have been selling for very significant sum money, which will add to our cash balance sheet and put us in a good position. But in addition to that, we'll be launching most of those programs. And Sanfilippo has is an urgent disease and force, there are many patients interested in getting treated. And so we had a lot of inquiries both in the U.S. plus also ex U.S. it's a lot more like Zolgensma for SMA, right, in terms of the urgency. And we think that will drive uptake fairly quickly for Sanfilippo syndrome. For GSDIa, it is an urgent disease, maybe not as urgent as Sanfilippo. They're not losing their brain, but do you have taking starch every few hours forever is tough for patients and they want to get off that treadmill and put away some of the fear they have that every day they could die if they miss a dose of their start. So both of those, I think, are programs that we'll do well. And I think our gene therapy franchise is not valued at all, I think it currently. And so if you think about that much cash brought in plus the revenue, the swing between this year and next year will be very substantial and put us in a position to launch Angelman well, but finish '27 with a potentially profitable year. with 3 new products launched and then other products in late-stage development, which I think put us in a really good position for the company going forward. So I look at this year, if we get to third, fourth quarter, it's been kind of transformative for the future of the company. And I think on top of the base business, which is earning the mid-$700,000 $700 million range has been growing by 20% a year the last few years. I think we're well set up with a global company to take advantage of those 3 products launching globally and which we own the full rights to. I think that puts us in a position to really transition to profitability, but more past it. And so I feel good about where that is. It would have been nice to start with a positive OI study this year, but we take the challenges that are put before us, it is biotech and it is hard. So I feel good about where we're going. And I feel like I think it should be a good year for us. And I think at our current valuation, I think it should be a clear opportunity for people. Sorry for from taking a very long period of time.

No, thank you for laying all that out. I guess maybe just quickly on the path to profitability before we dig into Angelman and some of the other pipeline products. You have 2 potential PRBs that you mentioned. I guess how do you plan to kind of time the monetization of those to kind of bridge that gap to profitability potentially in '27?

Well, we certainly plan to sell both of them. And the exact timing could depend a little bit on what makes sense. Certainly, we could sell 1 this year and 1 next year to manage the burn. But I would I think Howard and I will talk through it, but I don't think we want to overthink it. I think cash in the balance sheet or what we need to do. But you could look at how that affects profitability next year. I'd also point out Angelman's positive. That's another potential PRV which could be in 2027. So that itself could put us where we want to be. And I would say to you we could do it this year or next year. But if we are able to achieve $200 million for each of those, which is what people have been getting close to at this point. It's a substantial increase from where we were modeling in our own plans. But with the reauthorization, another third one, right, could potentially bring us $500 to $600 million total to the balance sheet. It's a pretty big deal without any dilution. I think that puts us in a good place from where we started the year with the quarter, we had $534 million. If we add that on top of the gains in revenue, it puts us in a very good position to have -- maintain an adequate balance sheet and hit profitability in the time frame we're looking at with additional cost controls we've put into place.

All right. Maybe just digging into Angelman ahead of the Phase III data in the second half as you laid out. what do you need to see from the primary endpoint of Bayley-4 cognition in order to see a successful study? And then what are the kind of key risks here?

Well, we have looked at the modeling of the power of that endpoint before. The data we just put out in Phase II suggests that at 12 months, we could see somewhere close to 10 points of improvement. I think we modeled a smaller number than that. But with the standard deviation we saw, we were seeing 80% or 90% power or greater, depending on what you assume for the control group. If you assume what we see in natural history or in studies, then we have 90-plus percent power if you assume the background could be 2 to 3x higher a little bit less than that, but the history of control groups, whether it's the [ levodopa ] trial in renal or the natural history study. They really haven't gained more than 1 point on Bayley. And so we feel pretty comfortable that there isn't going to be a big placebo effect going on there. And therefore, I think we're well at above 90% power to detect the magnitude of change we're seeing. So I think we're in a good place. So we've put out a little more data on this power before, but we feel comfortable with the strength of the study. That said, it is neurology. Neurology is always hard. There's always things that go wrong or things that go off. And then we have to be conscious of that and we put in the multi-immune responder for 2 reasons. One, it's a more powerful assessment of all the domains that are affected, and I think a better alignment of what patients are thinking they're not thinking about one endpoint. None of us think about any disease we have is one point and point. We all think of multiple problems, right? And so the MDRI is better aligned with what patients think about what are the big 5 issues that affect their kid. But also importantly, it's a very powerful analysis tool and gives us more power. So if there were any problem with Bayley is more powerful and capture more endpoints which help balance out if there's any risk. We're allocating 20% power to the MDRI, 80% of the Bayley, 20% is enough for the MDRI to be successful. It doesn't need very much power. We to be able to beat that level readily. So that's how we've designed it. We hope that it will help put us in a better position to win one way or another. And if one or the others possibly, we believe we'll still be able to file for approval with that. We expect both to be positive.

All right. And then I guess maybe just taking a step back, could you just talk to the rationale for choosing the primary endpoint of Bayley-4 cognition as opposed to receptive communication, which is what Ionis has selective for their Phase III study?

Yes. I think they picked expressive probably communication. .

Yes.

I think their argument was that express communication what parents want, but I would argue, I don't think parents want their gives us out talking, but not having any thinking that maybe what's happening already for us with teenagers, but sorry, bad joke. But the -- there's no one here to laugh anyways, but no. So you can't have anything without cognition. So the idea that parents want. I think that the -- if you look at the cognition at the core, we think it's the most fundamental function FDA has expected but I would say to you, we're evaluating all the other endpoints as well, we can look at all of them. We'll look at expressive. We'll look at receptive. But expressive does take time to evolve and it also can be dependent a little bit on how much training for education. I think you'd probably work better if you're doing more work on edge game kids to help them develop their language skills. But I think all of these things are important. So we pick Bayley-4 as being a more fundamental function. There's also a history we're also being using it in the Sanfilippo program is something FDA neurology is familiar with -- those are some factors. But I would look at it as defining what's the most important disease. It's what we need for regulatory process. But what patients will see is that endpoint, secondary end points, MDRI, it will see the whole thing. And I think patients can understand endpoints, whether they're primary secondary honestly does not really matter to patients they want to know happening and they're not going to pay attention to the regulatory rubric of statistical plans.

You touched on this briefly already, but just given the one point improvement seen in natural history historically and then the 10-point improvement that you saw in the Phase I/II, I guess, what's your level of confidence that the sham control arm in the Aspire study will not exhibit a significant placebo effect that could kind of compress the treatment effect size?

Well, the main reason is the type of endpoint it is and the type of patient we're dealing with. Angelman patients will be gaining function, but they don't necessarily have the understanding they're in a trial like they don't really know what's going on. So it's a little -- the placebo effect depends on you knowing something and having some belief in something, but that's not really going to happen. Now we don't -- we exclude all caregiver input, which -- where the carryover could have that fee effect they know. But that's being excluded. So we think that will help. The other thing is that this is assessed by a third-party psychologist; not the parent, not the doctor, third party. So the value of that is they're more objective. They're not connected to the family. They don't know the family. They just are doing the testing. Does that make sense? So there I think, going to be a little bit more objective in their professional side. So those are the things we're doing to help control for it. But if you look at the randomized placebo-controlled trials that have been done with the Angelman, which is the 1 levodopa trial, for example, that was placebo-controlled, there was no Bayley placebo effect observed. So that's not a natural study actual trial. It didn't occur in that study.

That's helpful. Maybe just quickly on safety. In the Phase I/II study, there were some cases of lower extremity weakness. Do you believe that these have been mitigated via the use of the Trendelenburg flush in the Phase II?

Yes. We believe it hasn't I think the issue we are having based on the MRIs and everything else is pretty clear that there was local concentration of drug that was causing local chemical train. As long as the patients are put in tenor and the drug driven cranially to allow for rapid mixing. We seem to have eliminated that. And so we feel pretty comfortable, and we have patients now for 5 years on drug up to 5 years, not having a problem. So if it's really a chemical -- it was a drug related effect, it would have it should have either accumulated or heard, but I think it was very much an administration localized effect. I think we've managed it through these changes.

And as you mentioned, you're also running the Aurora study in additional age groups and non-deletion genotypes. Can you talk about the regulatory filing strategy once you have this data in hand and then your level of confidence in that data set, given this is a more heterogeneous population?

Yes. So the Aurora study will help broaden the label past deletion, as you mentioned, includes missense EPD, ICD-type patients. It also includes under age 4 and over age 18. And so the idea is here to cover the rest of the -- we haven't put forth what our filing strategy was going to be. We'll have our Phase III data, we'll have Aurora data, and we'll come up with our exact planning. But the 4 to 17 age group deletion, we think, is the majority of the market. that range and so forth. There are going to be some adult with Angelman we'll get to them, but what we do for the filing right now love to be finally decided. But we think it's most important to get the major market. And the work at will give us knowledge about the rest of it.

And if that study is not stat sig but shows a trend, do you think that will be enough to get that -- the broader label?

Well, I think that it depends a little bit on what we're seeing. We are looking at MDRI in that study, by the way, in those end points. And those -- it's pretty powerful. So when we had even 12 or 13 patients before and after comparison MRI, we saw strong significance. So it's pretty powerful with that tool, not just in one point. We are looking at daily the really young ones, of course. But I think the methodology will make it a little better for us. And might say well, is not blinded, how does that hurt you, but the value of MDRI in a non -- in an unblind situation or open label is that you don't count anything else with a really big change, right? If it's a little change, like a bias, you're not sure. That won't count. You have to have a big change. So the MDRI has a natural filter for small changes. The only thing that counts are big changes. So if they get better, they're getting better in a big way I think you can be more confident that, that is something real, right, as opposed to something that's just biased on how they're using the tool. So those are some features I think it will be enough. I think in the past, it has been enough. In Crysvita, for example, when we originally filed that program, we had our trials were in the 5 to 12, and there was this older patient trial. But we didn't have any owner age 5. But we submitted 4 patients with data under age 5, 4 total. We had 13 who had been treated but 4 with 6 months of data. But we're able to extend the label with the [ exon 51 ] data and with supportive data just for patients for 6 months, and we were extending the label down to age 1 in that filing, right? So it's open label support of extending the data to the age group. So we've recently done that very thing and was successful. And it was really only for patients. But the 4 looked very good. They fit the safety looked fine. The 13 got doses, drug work the same. So I do believe that it has to look good in those patients. If it's not distinctive clear that it's working, then maybe it won't work, but it will work if it works the same it has been working in does well in the MDRIs, I think we'll be pretty confident that we can put that forth and allow the adaptation. We specifically decided not to put patients through another random life controlled trial because to put all these subtypes, all these smaller subtypes in the randomized trials for each type would have created a lot of cost and put a lot of burden. We put the burden on a group of kids from 4 to 17 to prove the effect of this drug. And for those kids, we just show the fact again, we don't have to prove the relationship because we've already shut proven that this is a cause and effect relationship if that makes sense. And now we just need to prove that they have the effect and they have safety.

Got it. Maybe we'll pivot to the upcoming gene therapy launches, the first of which is in the next couple of months, potentially. Could you just talk to the early launch dynamics for both of those, both GSDIa and then Sanfilippo syndrome type A including maybe pricing? And then also which patients you think will be early adopters here?

Yes. And so first, of course, assume that we get approved. So I appreciate your optimism to talk about launch and launch dynamics. We always have to give the FDA to do that they have something to say for us before we launch. We feel like review is going fine, but we will see. We will get done. Now the launch dynamic for the 2 are probably similar. I think for Sanfilippo is probably the easiest 1 to talk about. Sanfilippo syndrome is a horrible neurodegenerative disorder, and kids are losing brain cells every week, right, that they wait. They have no other treatment. And between the age of 2 and 6, they lose a lot of the developmental function by 10 years old, they're bedridden and they may stay in the bedridden fade with G tubes in out of the hospital, nonresponsive for 5 or 10 years, right? So it's an absolutely horrible situation. There is no parent in that situation, not want to get treated as soon as possible, even if there are 5 or 6 because they can keep -- we've had patients in that age range who may have lost speech already, but are lacking feeding themselves, interacting with the family who have stabilized, and we've shown 5 patients that were older that stabilize their function, and they continue to participate with their family and continue to self-feed, and so forth. So we think the therapy can work in that group, but the younger the patient, the better outcome, and we think there'll be a great urgency the longer you wait, the less function you may have. So we think that one will dynamic will be urgent. And once approved, there'll be people clamor to get treated promptly. And we're hearing about patients now. They're very active in social media, but we're also hearing -- getting inquiries from Europe about named patient treatment and the Middle East as well. So we think there's a lot of interest in the first-ever treatment for neurodegenerative disease. I think it's a pretty easy call. And the treatment is a relatively safe 3E13 infusion dose. So it's not a very high dose. We don't have the kind of complex safety issues that you've seen with some of the others. So there's really -- the downside effects, I think, are modest compared to the potential benefit. So that's a dynamic for Sanfilippo. But for GSDIa, it's an urgent disease. It's not like your brain is going, you can survive on corn start treatment, keep yourself, but it is not a great survival. It is -- this is a difficult life because you're taking starch every few hours, all day, all night about a pound of starch a day. I don't know if you can imagine eating a pound of starch. It like makes you sick thinking about it, right? Well, they feel sick doing it, by the way. They do not feel good. They're all like induced type 2 diabetics. So imagine you're making yourselves sick, but you have to keep doing it because you're trying to avoid running low, and you don't know when you're going to run low. It's like the opposite of diabetes, you're trying to keep your sugar up. but you have the worst problems that the drugs don't start doesn't last very long, so you have to keep taking it keep taking it. And if you don't wake up at night, you could end up with a very low glucose comatose or not wake up or die. That is a scary thing to live with. So there is a substantial urgency. And when we were rolling this trial, we had people want to get in. And we even had a problem in 1 country that they didn't review it very quickly, and we enrolled before this country got started so we canceled enrollment. Parents were -- patients were so upset. They call the regulators who called us and demanded. We opened the trial to let their kids in and we couldn't do it. We've spent all the spots. But it tells you something I've never had regulator call is demand that we opened a trial in their country. never had that happen, right? That's how intense the feeling was. So I know there's urgency. If you deal with a problem every single day, every few hours, you think about that. And you have to know that if I don't drink the starch, I have a gun to my head and I might go off, if I forget to do it. Just think about that stress feeling that way. We want to get off that, if you can. So we think GSD1 will do well. There's more patients with GSD1in the prevalent population than in Sanfilippo though they have similar maybe incidents, but the prevalence maybe 1,500 or more in the U.S. for GSDIa and for Sanfilippo, there's maybe 300 or 400 patients around in the United States. So with urgency is very high. We think both programs will do well. We think there will be -- we feel good about the potential for these programs to achieve meaningful revenue for us. They may not be like other programs, but if approved, we think they will be successful gene therapy products and I think to be supportive of the whole field of AAV gene therapy.

I guess maybe just in Sanfilippo, given there is no standard of care currently, how do you think about patient identification and whether there might be a headwind there trying to find those patients?

Well, I think the challenge is finding them early enough to have the best benefit -- I'll just get water. The truth is you really need new or screening to capture patients early because you really want 1 mother H2. The methodology for newborn screening is the same methodology we already have approved for MPS-I and MPS II, which are being implemented in newborn training because MPS IIIA is comparable and there's a method. So it's not hard to implement. It could be implemented. It should be, but the newborn screening control system, the sector's committee is not operating. So we have to work through the [ factory Kennedy ] to help bring forth the need to start newborn screening. In the meantime, what we're looking is to help support and make sure that patients are being included in panels for developmental delay or other early signs of that you would express in Sanfilippo. Some patients are getting diagnosed earlier because of that, that any kind of development delay is being evaluated. But we need to get into newer screening down, make sure panels are being used for those early developmental patients. And then user network connection among inter born are just to make sure that we're finding many as we can. But I agree with you with one of the pieces. Right now, I've said we found about 300 to 400 patients with Sanfilippo already found in the United States. And we know the age ranges, et cetera, of the patients out there. Will all patients get treated, later-stage patients, maybe not. If they're very advanced, not responsive parent need sites, that's not right antigen, we don't know what the label will do. We've created people up to age 8 or 9 in the trial. So that range could be readily expected in the label, whether it will go beyond that, we couldn't be sure. I think patients starts emulating [indiscernible] is probably a range that makes sense. We'll have to negotiate what the labeling shows. But on the patients we found, I think that will keep us busy enough with supply for the time being.

I guess on that note, could you just speak to the capacity at your Bedford manufacturing plant and whether you have capacity to meet the expected demand for the first maybe 12 months of launch?

Well, because unfortunately or unfortunately, because of the delay, we've been accumulating more commercial products. So while the launch last year would have been more supply constrained where our supply is continuing to increase and we've been running continuously, the drug substance is actually made at our at a contract manufacturer in Ohio, and we do the fill/finish at Bedford for Sanfilippo program. So that program continuing to run continuously and build a supply. And we think we should have plenty of supply to handle the demand based on what we think we need for the first 12 months. For GSDIa, we're doing both drugs at the drug product. Again, we should have enough supply to handle the need. Of course, there are more prevalent patients with that disease, but we have enough for what we expect to be the population that will get treated in that time frame.

Maybe just on commercial efforts. I think you've mentioned before that you plan to leverage the existing Mepsevii and Dojolvi sales force, given that these are gene therapy launches, could you just speak to the investments being made to manage the high-touch requirements of a gene therapy launch and the long-term patient monitoring that's required?

Well, there are several things we're doing. From the patient services side, we're creating a gene therapy guide. It's 1 of our patient services group that become point for helping coordinate all the different functions that are going on. We've created a separate group of the gene therapy treatment group, which is physician experts who are going to guide qualify treatment centers on both treatment and immune modulation or co-medication management so that they have an expert at hand at all times to help them. Our commercial team is also creating the qualified treatment centers who will be prospectively trained and ready to go and launch. And so those things, there's a few extra people that are in the gene therapy treatment group. There's been some support for the MSLs required. And the patient services group will be set with some specialized people to help handle the unique needs. So there are a few places we need to bolster on top of the existing commercial group to manage specifically a gene therapy. The supply chain is also a bit different. And so it's fall because we're going to be -- we have flat pricing, if we expected. So that means every group of waste is its own code and has to be packed -- so you actually have to create a supply chain that can handle creating a product for each patient's weight in real time. So there's some people in the quality supply chain people who have to be able to do that. The idea is that we will have flat pricing for the gene therapy across the age groups. And so there is some logistics involved in doing that. So there are some places we have to do, but it's not a big lift. Not as big a list as getting here.

Got it. Maybe just with the last few minutes, anything else you'd like to highlight from the pipeline? And then also if you could just quickly touch on setrusumab and whether you've completed those additional analyses of the Phase III data and whether there's a path forward potentially in some subgroups or age ranges?

Well, we've done quite a bit of analysis. So we talked about some of it at JPMorgan in the pediatric subgroup, we certainly see excellent improvement from advancing really in every one, but we saw improvements in pain, physical function, vertical fractures or in other areas. So we've done a lot of analysis on that. I think we wanted to do it carefully and thoroughly, and there will be discussions with regulators around pathway. We'll probably put out information on what that pathway is later in the year before we come out with Angelman data somewhere in that time, we should have some understanding. So we made a decision what we're doing, we'll know them. The goal is to try to find a way with existing patients and ongoing treatment to be able to come up with a path to filing we can always do another randomized trial, we're trying to whittle a multiyear kind of a thing. We have a lot of data. We have 2 randomized trials and other patients ongoing treated. So we hope we're going to work with regulators and coming up with an idea. We think the drug is working, but of course, it didn't hit the primary and secondary fracture endpoints. So a factor that will always be an issue for us to solve.

Anything else in the pipeline that you'd like to touch on?

Well, we've been incredibly productive. We have OTC Phase III that was positive at will be ongoing with Wilson Cohort 4 coming. Those are in play. But we also have some things we've held back. And if we hit our marks on our gene therapy approvals launches, we have a program for creatine transport efficiency we've had for a while. It's a prodrug of creatine, a really cool drug that we've made ourselves. It's actually a ring pro drug, we have 2 clips, but we can deliver creatine to the brain traditionally. And that's a very large market disease, maybe 30,000, maybe 50,000 patients no treatment at all male and female both have infected symptoms that could come to the clinic. And we're having some support from the patients who are moving that forward. We also have a gene therapy for CDKL5 deficiency. You might think another gene therapy why there's a neuro disease intractable seizures like we used to be called a typical Rett syndrome. So like Rett, we expect it could have dramatic effects. They're propelling the Rett programs forward. We think it's another good one. I just want to be clear, we are an engine of innovation. We have incredible number of products we put. And those INDs have been sitting and waiting for the opportunity. So we need to create the value, get the value and drive forward and put some of these programs in play and show that we can be the most productive rare disease company in the business.

All right. With that, thank you so much for joining us. I guess that's all the time here.

Good.