Good day, ladies and gentlemen, and welcome to the PTC Therapeutics fourth quarter and full year 2018 financial results conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session and instructions will be given at that time. If anyone should require assistance during the conference, you may press star then zero on your touchtone telephone. As a reminder, this call is being recorded. It is now my pleasure to introduce Head of Investor Relations, Ms. Emily Hill. Please go ahead.
Hello. Good afternoon, and thank you for joining us to discuss our 2018 fourth quarter and full year corporate updates and financial results. Joining me on today's call is our CEO, Stuart Peltz, our Chief Operating Officer, Marcio Souza, and our Principal Financial Officer, Christine Utter. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. Please take a moment to review our slides from our current corporate presentation, which contains our forward-looking statements. Our actual results could materially differ from these forward-looking statements, as any and such risks can materially and adversely affect our business and results of operation. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent annual report on Form 10-K, filed with the Securities and Exchange Commission, as well as the company's other SEC filings.
We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP and non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available in today's earnings release. With that, let me pass the call over to our CEO, Stuart Peltz.
Thanks, Emily. Thank you for joining us on today's call. 2018 was a transformative year for PTC. Going into the year, we set out several ambitious goals. I'm proud to say that we achieved those goals. We met our DMD revenue guidance, expanded the use of EMFLAZA, achieved a label expansion for Translarna, and advanced our oncology pipeline with two potential products now in the clinic. Importantly, we also advanced our SMA program. Following a productive discussion with the FDA, we and our partners, Roche and the SMA Foundation, feel confident to submit the results of FIREFISH and SUNFISH in an NDA later this year. We are very proud that the SMA candidate resulted from PTC's internal splicing program. We have been utilizing this platform to identify other compounds that selectively and specifically modulate splicing. We have a number of other splicing programs that are solely owned by PTC.
Besides achieving these goals, we also strengthened PTC with two business development deals, adding a CNS gene therapy platform with multiple programs and in-licensing two products that we plan to commercialize in Latin America. You may recall that in early 2018, we presented a three-year vision for the company to become a fully integrated orphan drug company. Execution is at the core of everything we do at PTC, and we are proud to have accomplished this three-year plan in just one year. Looking forward, we have defined what we want to deliver over the next three to five years. We described these longer-term goals at the beginning of this year, and I'd like to review them with you today. On the commercial front, in 2018, we had $263 million in revenue from the DMD franchise.
Over the next few years, we anticipate three product launches, risdiplam, Tegsedi, and AADC Gene therapy, as well as expanding EMFLAZA's label to include DMD patients two to five years old. We also have potential for a U.S. approval of Translarna in 2020 based on the outcome of the dystrophin study that started at the end of last year. The combined potential revenue of these products that are currently in our pipeline is anticipated to grow in excess of $1.5 billion in potential revenues by 2023. We will continue to invest and expand our discovery clinical stage pipeline. We plan to accelerate 20 programs over the next five years through internal and external innovation sources across small molecule and gene therapy.
In addition to outlining our five-year vision, we have also recently provided updates on key programs that we'll cover in more detail later in the call, including patient identification efforts ahead of our planned BLA this year with AADC deficiency, the planned NDA submission this year for SMA, and the anticipated launch of Tegsedi in Latin America. We are proud that PTC has positioned itself to be able to become a leading orphan drug company with diversified pipeline of innovative programs and products. We are leaders in DMD, have built a solid revenue base, and have strong talent with committed and motivated employees. We ended 2018 with a cash balance of $227 million and recently completed an equity offering with net proceeds of approximately $225 million. We are in a very strong cash position to execute on our strategic vision.
I'll pass the call to Marcio to review our clinical and commercial progress.
Thanks, Stu. We have a vision of building a portfolio of multiple products to serve patients with rare disease, with the potential 2023 revenue in combined excess of $1.5 billion as Stu just discussed. Our expertise in all aspects of our business, from patient finding to market access, is a key driver of our long-term growth. We have spent considerable time and efforts to build cross-functional teams that can rapidly increase disease awareness, identify the patients, and bring differentiated therapies to the patients that need them. This includes a state-of-the-art patient service, which is a key component of rare disease treatments. As Stu also mentioned, our DMD franchise has an exceptional 2018, reporting a combined revenue of $263 million. This includes sales of Translarna outside of the U.S., which is now in over 40 countries, and sales of EMFLAZA in the United States.
In 2018, EMA approved a label expansion for Translarna to treat nonsense mutation DMD patients aged two to five. Importantly, this label expansion allows patients in all the countries that recognize EMA approval to gain access to therapy at a younger age, which we believe would maximize the benefits to them. Additionally, there is an equal and very urgent unmet need to treat non-ambulatory patients. With that in mind, late last year, we have submitted to EMA a label expansion application for the treatments of non-ambulatory patients. We are in the process of answering some questions we got from EMA, and we expect to finalize the regulatory process later this year. We believe Translarna has the potential to benefit all patients, regardless of where they are in the disease progression.
In the United States, we have begun our Dystrophin study, which will lead to an expected resubmission of our Translarna NDA for accelerated approval later next year. Our DMD franchise also includes EMFLAZA, which is approved for all patients, ambulatory and non-ambulatory, aged five and older in the United States. We continue to work hard to establish EMFLAZA as a standard of care in the U.S. At the end of last year, we received a request from the FDA to file for a pediatric label expansion for EMFLAZA, yet they informed us that we have sufficient data to file the sNDA and that a study would not be required to demonstrate safety and efficacy in this population. We have submitted the sNDA for EMFLAZA for patients two to five years old at the beginning of this year. The action date we received from the agency is July the 4th.
Our commercial team is diligently preparing for the launch in this expanded indication later this year. Based on the expected continued growth of both Translarna and EMFLAZA, we have given 2019 DMD franchise revenue guidance of $285 million-$305 million. We are proud to have established this strong commercial footprint globally, which has made us the partner of choice for some very unique business development opportunities. Last year, we in-licensed Latin America commercial rights to two products from Akcea, Tegsedi and Waylivra. To be successful in the region, it's essential to have the right process and the right team in place. Leveraging our Latin American infrastructure, we have completed all necessary additional hiring to support these products. Importantly, we have also established the necessary process to support patients, including an exclusive partnership with a nursing support team.
On the regulatory front, we have filed Tegsedi with ANVISA, and we expect approval later this year. We are eager to bring Tegsedi to the Latin America markets, where the polyneuropathic form of hATTR is the most prevalent, with approximately 6,000 patients in that region. We're especially proud of this progress in a competitive market as this one is expected to be. Its speeds and execution are critical for success, and we believe we're ahead of the game there. I would now like to highlight our CNS gene therapy platform. As you may recall, our strategy in pursuing CNS-specific gene therapy includes some key advantages. The first is the ability to target the specific area where the disease process is occurring, maximizing the benefit-risk.
Secondly, because cell turnover in the brain is so low, there is the potential for durable effects. The potential to use a small amount of the vector, which we call microdosing, which reduces the manufacturing burden for the process. Lastly, the combination of the target approach with the small dose reduces the potential for immunogenicity, reducing the overall risk for the programs. Our gene therapy programs are rapidly advancing. With AADC, we have started pre-commercial efforts ahead of the anticipated filing of the BLA later this year. As we said before, we have already identified approximately 100 AADC deficiency patients in the United States and Europe through early key opinion leader interactions. We continue to identify new patients steadily week after week. We're now moving to a more focused screening program at at-risk populations.
For instance, we have identified a cohort of approximately 100,000 apparently misdiagnosed patients in cerebral palsy clinics in the United States. Those patients present with normal MRIs. We expect to have the screening programs in cerebral palsy implemented this quarter. We plan to share an update on the screening programs as well as on the patient identification later this year. Beyond the AADC, we plan to submit an IND by the end of this year for the next gene therapy program in the pipeline to treat Friedreich's ataxia. FA is a devastating disease with no real underlying treatments at this point. We have all the elements in place to start the clinical trial in patients following the IND submission. Next, the most advanced program is our gene therapy candidate for Angelman syndrome, which we plan to file an IND next year.
As we have said, we are developing a robust pipeline of gene therapy candidates, and to that end, we intend to declare new candidates later this year. In order to support this growth in the gene therapy pipeline, we are also in the process of securing in-house gene therapy manufacturing. Lastly, we continue to advance our oncology programs with several patients dosed in our DIPG trial and having great progress in our AML trial with PTC299. We expect both trials to complete enrollment before the end of the year. I'll now turn the call back to Stu.
Thanks, Marcio. The progress that's been made across our clinical and commercial fronts is impressive. I'd now like to highlight our splicing programs, an area of innovation in which we are proud to be both the pioneers and leading the field. An emerging area of therapeutic focus is the ability to modulate splicing with a small molecule, in which our technology produced the most advanced compound, risdiplam. We expect this compound, which is partnered with Roche and the SMA Foundation, to be potentially approved next year for SMA types 1, 2, and 3. This is great news for patients with SMA, but it has a broader implication for PTC as a powerful validation of our splicing platform technology. It is now clear that we can identify selective and specific compounds that modulate splicing to treat disease.
A small molecule also has the advantages of broad tissue distribution as well as ease of administration. We are applying our splicing platform to other diseases with high medical needs and have programs across the R&D spectrum. These include familial dysautonomia and Huntington's disease. I'm happy to report that at the end of 2018, we declared the development candidate for familial dysautonomia, and we expect to enter the clinic this year. I'd now like to turn the call over to Christine Utter, our Principal Financial Officer. Christine?
Thanks, Stu. Earlier today, we issued a press release summarizing the details of our financial results for the fourth quarter and full year of 2018, and I refer you to the release for full details. I'll start with a few comments on our financial performance and our guidance for 2019. Starting with our top-line results, we reported $263 million in combined revenue across our DMD franchise for the full year of 2018, compared to $174.1 million in 2017. Translarna net product revenues were $171 million for 2018. This compares to $145.2 million in 2017, representing an 18% year-over-year increase in Translarna revenue. For EMFLAZA, we reported net product revenues of approximately $92 million for 2018, a revenue increase of over $60 million from 2017. We are proud to provide our expectations with respect to continued commercial growth. Our 2019 DMD franchise revenue guidance is $285 million-$305 million.
As Stu mentioned, we have also outlined the potential combined revenues for products and our existing pipeline in excess of $1.5 billion by 2023. Non-GAAP R&D expenses were $155.9 million for 2018, excluding $16.1 million in non-cash stock-based compensation expense, compared to $102 million for 2017, excluding $15.5 million in non-cash stock-based compensation expense. This increase in R&D expense reflects costs associated with advancing our gene therapy platform and increased investment in our research programs, as well as advancement of our clinical pipeline. Non-GAAP SG&A expenses were $136.4 million for 2018, excluding $17.2 million in non-cash stock-based compensation expense, compared to $106.2 million in 2017, excluding $15.1 million in non-cash stock-based compensation expense, reflecting continued investment in commercial activities to support our DMD franchise.
I would also like to reiterate our non-GAAP R&D and SG&A expense guidance for full year 2019 of $360 million-$370 million, excluding non-cash stock-based compensation expense of approximately $35 million. This expense guidance reflects advancing gene therapy and supporting our commercial products. Net loss for full year 2018 was $128.1 million compared to a net loss of $79 million for 2017. Cash, cash equivalents, and marketable securities totaled approximately $227 million at December 31, 2018, compared to $191 million at December 31, 2017. I would also like to point out we recently completed a public equity offering resulting in combined net proceeds of approximately $225 million. I will now hand the call over to the operator to start our question and answer session. Operator?
Thank you. Ladies and gentlemen, if you have a question at this time, please press star then one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. One moment while we wait for our first question. Our first question comes from the line of Ritu Baral with Cowen. Your line is now open.
Hi, guys. Thanks for taking the question. I have one question and one follow-up. The first question is on risdiplam and the submission. What indication or label are you going to be submitting for? I know the two trials span Type 1 and Type 2, but do you anticipate filing for a certain age range, a certain weight range? My follow-up question is on the patient identification activities for AADC. You mentioned that there was a pool of about 100,000 patients misdiagnosed with cerebral palsy with normal MRIs. Can you say how many centers that's across and whether this is some sort of opt-in program that the screening will use, or will you just sort of go through the centers and go through blood spots? Thanks for taking the questions.
Hey, thanks, Ritu. Yeah. In terms of the SMA, I think the plan is really, and it was based on our conversation with the FDA, was to file based on part one of both Type 1, 2, and 3, really to get a broad label within that. As for AADC, maybe let, Marcio, you want to-
Yeah, absolutely. Maybe just, hey, Ritu, just to finish on what Stu started. There's no expected restriction on the age or weight of those patients.
Yeah.
We feel that we have very comprehensive program, several cohorts that examine that relationship. Roche does a really good job here on executing that trial, that why we are reinforcing what our belief is that this is the most competitive SMA program globally. When we move to the AADC efforts for patient identification, there are basically two layers of clinics in the U.S. and outside of the U.S., there's a lot of different dynamics. In the U.S., there are 65 or so main centers for cerebral palsy, then an expanded cohort that is up to 200, give and taken. The way we're doing this is through a multi-prong approach. One is we are offering four centers if they want to conduct the screening as a research project, quote, unquote.
That's basically a protocol-driven, we're going to go through the IRBs, contract with them, so on and so forth. We have a very good uptake there. There is a number of the centers that really wants to do it that way and go through their entire population. For the ones that either don't have the capacity right now or they don't have the structure to run as a research, we have what we're calling non-protocol. We're providing them the ability to screen their patients. We have those centers opt in there as well. Currently, we're looking into the sample as the whole bloods, but we are validating and finishing the steps of validation for a dry blood spot. Moving to that process is going to be faster as well, more productive throughout the year.
Pretty much all of them are on board on the, what we call tier 1. That's the majority of the patients are in. Should start screening patients in the next couple of days, in Q1. Expect to report the progress later in the year in a more consolidated fashion. Does that help?
Yeah, it does. For the screening, is this something that's sort of done in the background anonymously, or is it something that you need individual family, individual patient, parent, I guess, approval to run the assay?
Yeah, no, that's a really great question. For the one that is done with the protocol, this is part of a research clinical program. There is a consent form, and they're going to go through that. For the other one, it's basically a tool that's being offered to the families. We're looking to this marker. In the U.S., you can do, like, a 3-OMD, it's a precursor of dopamine that's very simple. When that's elevated, we go and you genotype these patients. Outside of the U.S., it's a little bit more country by country. Most of them, we are just providing the tests. They're going through and screening the patients they have. It's more conversation with the family.
As you can imagine, every day we learn more about this as well, these families really want to know if it is not cerebral palsy, if that's something that can be done. We're seeing very motivated families seeking this and having positive conversations. We don't see any barrier there. The barriers were more on putting the process in place. Now that we have that, it should go relatively quickly.
Great. Thanks for taking the questions.
You bet.
Thank you. Our next question comes from the line of Eric Joseph with JPMorgan. Your line is now open.
Hey, guys. Thanks for taking the questions. Just a couple from us. The first on guidance for 2019. I just wanted to unpack DMD sales a little bit. The top end of the range still looks as though you're tracking under the run rate for fourth quarter. I know that you have talked a little bit about the expectation in seeing lumpy demand over the course of the year, is there anything else that's implicated in current guidance? Anything with respect to pricing? If there are any expectation around pricing headwinds, where might they be coming from? I have a follow-up.
Yeah, great. Thanks, Eric. I'll start and then pass it on. I think you'll see, I think we're adding on patients both for EMFLAZA and Translarna. They continue to grow. We do plan on some approvals in certain countries that can have trends and aspects on the dynamics of the market. I'll pass it on to Marcio to sort of go into what their thinking is on that.
Sure. Thanks, Stu, and hey, Eric. A couple dynamics here, and I think they are important for everyone to understand. One is the Stu just mentioned. We are seeing patient growth or net patient growth in both products in all geographies. The premise of the business and the base is quite positive. The way we're looking into this to reach our goal, like our 2023 goal that we presented earlier this year, is the dynamic of patients over time increasing, staying on therapy. To do that, in some of the countries this year, we believe we're going to have to make some adjustments in terms of the pricing volume mix. There is a little uncertainty, I would say, on that we are accounting for in the guidance.
Specifically as it comes to Translarna, since some of these markets became quite big, but there is still a lot of potential. When you're looking into the amount of patients that are being treated versus the potential, it doesn't make sense for us to just be stubborn and not try to gather as many patients, because at the end of the day, that's why you're doing business is to treat these patients. There might be a little bit of a negative impact on the price mix throughout the year, which is going to correct once we get those patients all on drug and then the other countries it started. That's one that might impact. I think it's equally important to talk what is not in the guidance. We don't have the two to five for EMFLAZA.
You might have noted on the prepared remarks that we talked about the July 4th approval by the FDA. We received the notification by them that that's the action date. We hope it's on approval. With that, we're going to be executing the launch. While patients between two and five are not necessarily fully diagnosed yet, there is a pool of patients there, and we're going to be adding those, and depending on how fast we can, that might have a significant upside for the guidance. The no ambulatory in Europe is not included either here since we're still in regulatory conversations. We try to be, as we always are, quite responsible in the way we guide considering all the market dynamics.
Got it. Just a follow-up on EMFLAZA, if I could.
Of course.
We can see that the trial design is up on clinicaltrials.gov. Just wondering how we should be thinking about recruitment timelines, also the level of input and discussion had with FDA and its design. I'm also curious to know whether there are opportunities to expand the exclusivity runway here, potentially through an additional orphan indication. Thanks.
Sure. Are you referring to the limb-girdle 2I?
Sorry, the limb-girdle phase III study, yes.
I thought so, because Study 3, that was the 225, we actually removed because the FDA told us we don't need to conduct that anymore. We got a lot of inputs from key opinion leaders here from the biggest center in the U.S. that treats 2I. We're fairly confident with some of the natural history they gave to us. That was what drove the design. Obviously, we filed that with the FDA. The recruitment, we expect to be relatively fast because there's absolutely nothing approved or in developments for that specific subtype of limb-girdle, which is the most prevalent type in Caucasians, at least with the not so vast and expanded literature that's available there. I'm going to provide a little bit more updates later in the year on how it's going, but we feel really good about that.
On the expansion of the runway in terms of the product, there's a number of things we are doing. Some of them have to do with for some populations, it's not that convenient to deliver. Maybe some other formulations would be more appropriate here. There is a number of elements that we are not quite ready to discuss publicly, but we should be at some point, and you might see some things coming up at clinicaltrials.gov as well in the near future in terms of how we are approaching that. Right now, the base case is the runway that is present for the product, but as I just said, we're looking for a number of ways to potentially expand that.
Got it. Thanks for taking the questions, guys.
Thank you.
Thank you. Our next question comes from the line of Gena Wang with Barclays. Your line is now open.
Thank you for taking my questions. First one is just wondering, maybe follow Eric's question. What is the average pricing now for Translarna? Previously, our understanding was like $300,000.
Hey, Gena, it's Marcio. The price has been quite stable for Translarna. We haven't guided to any specific price. One thing that we took a lot of care of is we don't want countries to be parallel importing or patients to be treated differently in one country or another. We kept the price fairly stable globally. We have some large markets entering now with the potential to expand dramatically. That's put a little bit of the negotiation dynamic on the table, and it's the fifth year of the product as well. We are looking into here, where are the patients that are not being treated? Quite positive, the dynamics so far, especially for an international product that is not in the U.S. When I'm talking about price mix, we're not talking about crazy erosion of value. Just wanted to make that clear.
We believe there are some responsible adjustments that can be done in order to expand disproportionately the number of patients on drug.
Just wondering, are we talking about 20%-30% discount, or are we talking about 50% discount in the new territory?
I think what you're talking about is depending on the size of the opportunity on some of those markets and the willingness of the payer, the governments to negotiate longer-term contracts, that you would be willing to give discounts like we have in the U.S. for CMS, for example.
Okay.
That's the kind of thing we're talking about.
Another quick question regarding risdiplam. Just wondering, will the early data of pivotal portions from both SUNFISH and the FIREFISH be part of FDA final decision? Since both trials already complete enrollment now and should have initial data by the time FDA would take a look and make a decision.
Yeah. The plan, though, really is based on part one of both SUNFISH and FIREFISH trial to make that sufficient. We thought that we had very good discussions and that this would be sufficient for approval. That's the game plan of what we're planning on.
Okay. Very quick last question. Regarding the Latin America commercial preparation, just wondering how much investment in terms of dollars you would need to set up a sales force and be commercial ready for both Tegsedi and Waylivra?
Yeah, of course. First thing is just to say we hired everyone we had to hire in Latin America. Kudos to Eric and his team who were very ready to do this, executed in a matter of weeks. We don't actually expect to add anyone else to support Tegsedi. We obviously don't have anyone dedicated to Waylivra since the product's not approved elsewhere, so we are not putting any efforts right now. There are basically three major components. The commercial, medical, and then the patient support. We see them kind of equally. In this phase right now it's mostly unsolicited requests, so our medical affairs folks are in the fields. We have neurologists on staff. We have great healthcare professionals on our medical staff that are giving that support.
Equally important is the patient monitoring, both to help them maximize the standard of care, the testing, get familiar with the testing program we're going to have later, but then understands this connection with PTC. That's in place as well. It's a third party. In our view, it's the best provider of this kind of service in Latin America, and it's an exclusive contract with us. The third part is we did not create a special field force for Tegsedi. We're actually expanding what I normally call solve for zip codes, meaning we're reducing the areas of coverage. Brazil is a very large country. Argentina is a large country. We're reducing the area of coverage so we have more people doing both products.
What we're seeing is there is about 50%-70% overlap between the locations and the key opinion leaders and treaters with Translarna and Tegsedi. It's highly complementary.
Probably the good point there as well is that these are already ongoing efforts.
Correct. All of it.
We've already started working, physicians are aware of this. We've also submitted for approval already w hich we anticipate will be this year. There's already a lot of effort that's been ongoing to get ready for this.
Okay, great. Thank you.
Thanks, Gena.
Thank you. Our next question comes from the line of Joel Beatty with Citi. Your line is now open.
Hi. Thanks for taking the questions. The first one is on Tegsedi and, kind of a follow-up question of what was just asked. What do you see as a reasonable expectations for the shape of the launch curve there in terms of the key steps that need to be taken towards ramping up sales?
Sure. Hey, Joel. The beginning of the launch or the beginning even pre-launch, we expect to have a number of patients. To be perfectly honest, we are seeing this already, requesting Tegsedi through the different channels, right? The more they hear about it, the more they hear the fact that actually PTC is involved, since we have, thankfully, a very positive reputation with the physicians. We're starting to get requests, and this is being treated as name patient requests and going through the process. This takes several months, so it's going to be fairly slow in the first few months. What we expect is right after the approval, and I'm not going to enter too much on the strategy here because this is a potentially competitive market, but to actually accelerate real quick.
We're entering next year with a potential substantial gain of market share and then growing in the following years. It's low, I would say, on the next 12-18 months, and then it's starting to have like a hockey stick type. It's an unusual launch if you were to think about major geographies like the U.S. and Europe, but fairly usual for rare disease in the geographies in Latin America.
We do think there's a lot of advantages here as a consequence of just the property of the Tegsedi, that it's injectable, that there'll be ease of, in the sense of patient pickup as a consequence of that, and we're out there now.
Exactly.
Okay, maybe one other question on Translarna. You have the new phase III trial that initiated late last year. Could you discuss the design of that trial and what needs to be shown to support an approval in the U.S.?
You want to-
Sure. Of course. We call that study 45. Sorry, I just got the number wrong there. Basically, it's an open label study with 20 patients aged four to seven. We're taking a biopsy at baseline. It's a single center in California and another at nine months. We're not going to read any of this before all the samples are collected. That becomes the block control internally in the trial. We're using two methodologies which were discussed and agreed with the FDA, to measure dystrophin. The expectation is that we would see a statistical difference between the baseline and the nine months in terms of increase of the amount of protein as measured by an ELISA type method that's called ECL.
A secondary measure, that is IHC, is a modified IHC actually on pellets, where we would see the localization in the sarcolemma as you expect to. That's the trial. We're enrolling right now, have a couple patients on the trial. We have a good interest for that. We expect to enroll this year, in the next several months, with a potential resubmission. Obviously, we expect the trial to be positive. We hope it's going to be positive, and we're going to resubmit to the FDA under the old NDA early next year.
Okay. Thank you.
Thank you.
Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is now open.
Okay. Hi, guys. Thanks for taking my questions. Maybe one about risdiplam. I think, Stu, in your current deck that is supposed today as well as the deck that was available back in January, you talk about $1.5 billion in potential revenues to the company by 2023. In that pie chart, you talk about roughly $200 million in royalties to PTC on risdiplam. I was wondering if you could give us some color on how you came up with that number vis-a-vis either price or market penetration into the SMA market.
Yeah. We looked at what we thought would be in terms of in excess of $2 billion, and it was based on that. I think you could see in a previous press release, we put out precisely what was the royalties, whereas, for example, it was in the excess of 14% above $1 billion 16% above $2 billion. It was based on that sort of mix that we looked at the numbers to be around $200 million.
Based on early doctor checks that we've done, it certainly seems that physicians would be excited for an oral. Could this number be conservative, if the switch rate potentially from SPINRAZA is faster?
That's funny you said that. We've had meetings where sometimes people think that is conservative of what it can be. Yes, I think, we thought we'd start out where we are today and then discuss and grow it as time goes on.
Maybe, if I may jump in. Hey, Zeen. There are a couple of dynamics that I believe are important as well, right? There is obviously debates on drug pricing internationally. We try to take a relative conservative stance on that. That's one point of-
Yeah.
...I would say upsides on the model. In general, we know that type 3s, for example, are largely unserved right now. Our own internal checks, and it seems like yours as well, show that physicians and patients would be very excited to go from the teens percent that is being treated right now with the current treatment available to a vast majority of the patients with risdiplam. That market is not competitive. We expect to really dominate that. Similarly in type 2, and then the type 1s are probably going to be the most competitive of all at the time of launch. You look into an oral molecule that is durable in effect, it's been safe to date. It's obviously very easy to administer, then it comes to access. The beauty of this model is everyone knows globally how to get access to small molecules for chronic treatments.
This is a plug-and-play.
Yeah.
To that point, you're right, we have a starting point here for 200, but we're not going to stop there, and I'm sure Roche by all the conversations we have with them, are not going to stop there either, trying to maximize this value.
We're proud that it really came out of our splicing platform and that when we think about it from the competitive nature of this really can be really competitive globally as a consequence, not only because of its ease, the broad distribution, but, as Marcio said, how people understand how to get access to drugs like this.
Maybe Marcio on AADC. You have talked about finding about 100 patients or so in the U.S. and EU. Over what period of time has that taken you?
I would say, 10 weeks for us. I'm going to say, though, the efforts, like we built the team to do that, right? That took a few weeks. We have a very clear strategy on countries that are a priority, and no one's going to be surprised. The U.S., Germany, for example, a few countries in Europe, these are our priorities right now, so we're putting extra efforts there. Interesting thing is we're just in a congress, and we put a symposium on AADC. Right after that, we got some new docs that we didn't really have relationships with, and we got a number of patients that they had genotyped before in a couple labs in Europe.
We are seeing this, I would say, every week in different geographies, both in our core geographies that we are reporting here, but in non-core geographies as well. You might have seen this. I know I do a lot of really diligent work on this disease, is the number of mutations reported at the time we did the acquisition was about 50. Now it's more than 80. We're seeing a huge effort there, and it's diversifying the pool. I believe the thesis that the patients were not there's the founder mutations, pretty much dead right now. You can't have 80 founding mutations. Well, theoretically you can, but then it would be in 80 different pools, and actually it would be a good thing for us, but that's not what is happening. The last 10 weeks or so, the screening programs barely started.
We expect to see a good acceleration throughout the year as well.
I think that's a really good point. Well, not that there was an effort to find the patients, but it really was finding those that people actually already knew was there, that we're able to find them. It hadn't taken yet the efforts of looking for the unidentified patients yet. That's just started.
Yeah.
It wasn't that in a sense. I know it's always tough to find patients, but relatively speaking, we're able to find them because they've already been genotyped. There's a whole bunch that will be in those clinics that will be able to find who are just misdiagnosed. That's the next step.
Okay. It seems like since the acquisition, you have made quite a bit of progress. In terms of your target 5,000 to 6,000 patients, potentially, how long do you think it'll take you to get to that or close to that number?
That's a great question, right? You can imagine that I'm being quite pushy with my team and working very hard here to get there. We see this is going to be a little bit of a class A rare disease launch. We're really focused on the U.S. and some key geographies, as I mentioned. We believe it's going to be a very successful launch. We did put on the pie that we were mentioning before, a substantial number of patients to be treated in 2023. Even by then, I don't expect to have all the patients identified. What we expect to see is about, for example, 100 new patients per year in the U.S.
As we move towards like 2022, 2023, the incident patient population is going to be more obvious, and you're going to start to get those patients who were normally quote unquote, "lost." I think it's a great day to discuss this, right? It's a Rare Disease Day. Rare diseases are so underdiagnosed globally, and there is so much push now to include genotyping panels and so on. In the space of, I would say five to seven years, you would expect to have a very good number or percent of those patients and the majority of the incident patients. It's going to be a substantial market the way we see it.
We're working hard to make sure we got a strong launch upon approval so the patients are lined up and ready.
To roll. Yeah.
To roll.
Okay. If I might squeeze a last question in really quickly on your oncology portfolio. You are doing a study in AML with PTC299. Can you just give us an idea of what type of patients that's going to be in within AML?
Yes, of course. PTC299, right? The DHODH inhibitor. I think that the body of literature showing that that's a key pathway for hematologic malignancies in general, but it's specific AML, is growing. We had some good preclinical and clinical data showing that the mechanism is being activated. It's a three plus three design with 3 cohorts in refractory relapse patients, so we are really getting very severe patients. We are starting, as we normally do in trials like this, right, with a dose that is relatively small and subtherapeutic, moving on to therapeutic level dose. It is a relatively slow design in a sense. We expect to enroll, during the year, all cohorts and to move into an expansion early next year. Depending on what we are seeing, because this is open label, we are seeing the hematologic data for all those patients.
We're being able to learn as well the kind of patient we would want on the expansion to maximize the probability of success there. Did that help?
All right. Thank you, ladies and gentlemen. Our next question comes from the line of Alethia Young with Cantor Fitzgerald. Your line is now open.
Hey, guys. Thanks for taking my question. Congrats on the progress over the past couple of months. I guess two, since I'm going to follow the trend line here. One, can you just talk a little bit more specifically about with the AADC gene therapy, what's left to work through in the manufacturing? Do you view that as like a big hurdle as far as getting to the finish line with the FDA, or is it just business as usual? The second question, as far as SMA risdiplam readouts over the year, are we looking at basically every medical meeting will have some sort of update on the part 1 of the study? I just want to get a characterization of what data we should expect over the year. Thanks.
Thanks, Alethia. In terms of the second question first, obviously next meeting is AAN, and we'll be having a full presentation of the results then. We're excited to be there for that, and we'll do it at the upcoming meetings that continue on after that as well. We'll continue to update you on that as well. In terms of the second question-
AADC manufacturing.
AADC manufacturing. Why don't you-
I'll tell you. Business as usual and manufacturing for gene therapy I don't think belong in the same sentence these days, right? I'm not going to be cocky there and say that it is. We take extremely seriously all the feedback we got from the FDA. We've been pleased and blessed for having the interactions we had with them and get the guidance on the type C meeting we had late last year. We're following all these steps. NBL, that is our CDMO, is being great to work with, giving a lot of attention to everything. Right now, all these steps that we have to move to get to the BLA later this year are occurring. Hopefully, Neil and his team are working extremely hard to get there, everything is going to continue in place. We continue to expand.
Part of what is a consideration for us here is obviously we want to have a successful launch. We have to have several commercial batches manufactured to that commercial launch. We're looking to that capacity. We're looking to continue to add the material. I know we discussed this in one of our calls, but just for the broader group's view, we had two manufacturing CDMOs before, both in the U.S. that did the clinical trial product. We are able to use that process at NBL on the commercial, and now we are in the late stage of implementing the methods and everything else the FDA discussed with us for our BLA later this year, as I mentioned
Just to remind everybody as well, it's one of the advantages of what we're doing. It's stereotactic surgery. The levels that we need, and this is one of the reasons when we went with Agilis, is that the requirement to manufacture it is much smaller. We're around the 2x 10 to the 11th viral particles total. Like Marcio said you never take it for granted. They're different in terms of what other programs are. It's a different level of what you need to manufacture.
Great. Thanks.
Thank you.
Thank you. Our next question comes from the line of Raju Prasad with William Blair. Your line is now open.
Thanks. Taking the question. Just a quick clarification on something you previously said, Stu. The NDA submission is only going to be based on part one of SUNFISH and FIREFISH. I guess, just that first. I have a follow-up.
Yes, that's right. That it was based on our interactions with the FDA, where they saw the results of both SUNFISH and FIREFISH, that we're submitting based on that.
Okay. I guess, was there any amount of time that they wanted to see those patients out before you could submit? Or is it just when the CMC package and the rest of the package is put together that you can submit it?
Our plan is to put together the package and have it submitted this year, later this year. It's really based on that. Most of this is just getting ready to be able to submit in the NDA. That's what that's more about, not about it longer term necessarily.
I guess, if the part two of the study didn't show five patients, are there any discussions there? How is part two going to factor into kind of regulatory discussions moving forward?
Raju, basically, the conversation with the FDA was centered under some of the data they've seen is not being public, because this was at the different time points than the one we showed at WMS. Based on that, I believe the best interpretation of the feedback we got from them is that they're looking to proportions. Right? We always use absolute numbers, but the proper way to look into this is like for part two, FIREFISH, that was 12.5% of the babies sitting. What we are looking to right now, if you are to apply that proportion to part one, that's about two and a half babies, right? Three babies would be to that thresholds. When they look into this, they're like, "Look, that's robust data," and the CHOP INTEND and few other things. With the SUNFISH, it's similarly, right?
We're seeing patients that normally decline on the MFM32 base on the natural history increasing. The package, and we never got definitive answers before a full review from any regulatory agency, but based on the briefing book data they received, they're like, "This looks sufficient for the file." Both trials completed one year or more of exposure right now for part one. It meets the normal, I would say, non-codified in the statutes, but normally used threshold of one year of exposure, 100 patients, year of exposure, things like that. Roche feels very confident. We feel very confident with the package, and it's now more procedural documents that have to be put in place for an upcoming submission.
Great. That's helpful. Then just a clarification question on the milestone payments. I think it says $400 million in the press release. Approximately what percent of those are regulatory and milestone versus sales milestone payments?
We posted some slides today in our SEC files and our websites. There's a very detailed schedule of all the payments. Maybe Christine, you want to go over it?
Yeah. There's about $87 million related to regulatory milestones, and the remaining are sales-based milestones. As Marcio said, all the details, as well as the tiered royalties, are also in those schedules.
Great. Then one question on AADC. Any color you can provide on the U.S. versus ex-U.S. split between those 100 patients?
Sure. Happy to. It's about half and half right now, give and take. As I mentioned before, we're putting effort on both regions. In Europe, it's relatively easy. Physicians request the kits. They test this. We're probably going to see a little bit of an uptake in Europe in the next couple of months. Potentially, I don't know, because we haven't run, but potentially faster than the U.S. It's equal right now. We expect that this is pandemic. Don't expect to have a concentration in one region or another. Obviously, putting a lot of emphasis to get all this cleaning up and running in the U.S., because the U.S. is our first launch, is the most important pharmaceutical market in the world, we want to be very successful here.
Great. Just one quick last one. What's the age range of those patients?
Right now, the information we have, we don't have age for all of them, but they are within the age that were exposed to the treatments before.
All right, great. Thanks. Thanks for all the questions.
You bet.
Thank you. Our next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is now open.
Hi. Thank you for taking my questions. My first question is on the AADC program. Among the patients you identified, can you talk about what proportion we should be thinking about as being eligible for treatment with the gene therapy? Would all of them be eligible or just a small part?
Yeah. Thanks, Brian, for the question. What we've seen and what we anticipate is that all patients would be eligible for the gene therapy treatment. We've seen actually, and it's interesting, regardless of age, we've seen improvement in all the patients thus far.
Got it. Bigger picture, I would love to hear a little bit more about your plans to build out the in-house gene therapy franchise with respect to what type of manufacturing platform you plan to use. What's the progress been like to date? Any specific timeline goals or milestones we should be thinking about and potential associated costs there as you build out that emerging franchise?
Yeah. Thanks for that. I think on one front is we're going to have our own internal gene therapy group building out vectors and things like that as well. I think as we talked about in terms of, we thought that it's important to control the manufacturing ourselves. We've been looking hard to be able to bring it in-house. I think probably within the next 60 days, 90 days, we'll have probably more to talk about then.
Okay, fair enough. Last one from me. Curious your latest views on use of capital for continued external business development versus investing in the internal pipeline and other capabilities like manufacturing. Where do you stand? What's your latest thoughts?
I'll start, and then you have Christine. Our view is obviously we're, as we've talked about in the vision of what we'll be doing, we'll be expanding both our research and clinical programs internally. We said we'd be, as we said in our vision of what we would be. We're doing that as well. We've always said we'll continue to look externally as well. Obviously, you can't do everything in-house. We continue the search and try and see if there's other things that are compatible fit for us. In terms of capital, maybe Christine, you want to.
Just to remind you, we had $227 million in cash at year-end. We recently completed the equity offering of approximately $225 million. With our solid revenue base and our diversified pipeline, we'll continue to invest both internally and also continue to look externally what fits our strategic vision.
Yeah.
Great. Thanks so much.
Thank you.
Thank you. Our next question comes from the line of Martin Auster with Credit Suisse. Your line is now open.
Hi, everyone. This is Mark Connolly for Marty. Thanks for taking my questions. I guess looking at risdiplam, I have a couple questions on that particular product. When should we expect to see functional data for the JEWELFISH study? Can you outline what specific data you may provide? Similarly, when should we expect to see initial RAINBOWFISH results? What do you expect the initial data update to entail? Thank you.
Yeah. I don't know if we've I guess a couple of points is one, the JEWELFISH has been expanded to include patients that are treated with gene therapy. While that's relatively new, we would probably have data at the Cure SMA meeting, is probably when we would be talking more about that.
Yeah. Maybe if I may, Stuart. JEWELFISH is a safety trial at its core. Obviously, there's some measures there. We're looking into the PK and the exposure, protein levels. I will show some of that data at WMS, which is extremely positive in my view, when you're seeing patients switching from other therapies and having an increase in sustainable levels of SMN protein. That's going to continue. Cure SMA is the next expected because the cohort was just expanded to include other type of treatments. RAINBOWFISH is on the beginning of enrollment, so we're not quite ready to give an estimate on when that's going to be reading out. As you can imagine, there's a lot of interest with physicians being more and more confident with risdiplam on treating presymptomatic patients with it.
Perfect. Thank you.
Thank you.
Thank you. That concludes our question and answer portion. I would now like to turn the call back over to CEO, Mr. Stuart Peltz, for closing remarks.
Oh, thank you. Thank you all for joining the call today. As you know, today is Rare Disease Day, and I think it's an important reminder of what drives us here at PTC, where we're focused on rare disease really every day. As you've seen, after a transformative 2018, we're now really now executing on our vision to be a leading company with a diversified portfolio on the scientific cutting edge to treat rare genetic disorders. With an expected BLA for gene therapy treatment of AADC and a planned NDA for spinal muscular atrophy treatment both this year, we'll be advancing towards this goal. We look forward to delivering on the five-year plan to bring innovative products that make a significant difference in patients' lives and will enable us to achieve the potential $1.5 billion revenues by 2023. Thank you all for joining the call today.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.