Good day, and thank you for standing by. Welcome to the PTC 518 Collaboration Agreement Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dr. Matthew Klein, Chief Executive Officer. Please go ahead.
Thank you all for joining the call this morning to discuss PTC's new collaboration with Novartis. As today's call will include forward-looking statements, I refer you to the slide posted on our investor relations website in conjunction with this call, which contains information about our forward-looking statements as well as our risk factor section in our most recent Form 10-K filed with the SEC. We are very excited to be working with Novartis on the PTC 518 program and believe this global collaboration agreement will accelerate the advancement of PTC 518 for Huntington's disease patients worldwide. As detailed in the press release, Novartis will assume PTC 518 global development, manufacturing, and commercial responsibilities following completion of the placebo-controlled portion of the ongoing PIVOT- HD study, which we expect to be in the first half of 2025.
As part of this agreement, PTC will receive $1 billion in cash once the deal closes and be eligible to receive up to $1.9 billion in development and sales milestones. In addition, PTC and Novartis will share profits in the US with a 40/60 split: 40% for PTC, 60% for Novartis, and on ex-US sales, PTC will receive double-digit tiered royalties. The economics of this deal are quite significant. This is one of the largest Phase 2a licensing deals of which we are aware. The economic terms are commensurate with the promise of PTC 518 as potentially being the first approved disease-modifying therapy for HD. Importantly, PTC will continue to have an important role in the PTC 518 development program even after completion of the PIVOT- HD trial, given our expertise in developing small molecule splicing therapies as well as our expertise in HD.
Now a word on how we got to this agreement. PTC 518 has long attracted the interest of the pharma community, given its best-in-class profile and success of Evrysdi. Following the interim PIVOT- HD data readout in June 2024, PTC was approached with an unsolicited bid for the program. We decided that we would run a formal process to determine if there was a potential partner we felt could bring more muscle to the development and commercialization of PTC 518 and could provide deal economics that were consistent with the strong potential of PTC 518. Specifically, we wanted any deal to include a significant upfront payment as well as provide ability to share meaningfully in the upside if development is successful.
This was a highly competitive process with several parties involved, and it became clear through the process that Novartis fulfilled the two key deal criteria and shared our goal of dedicating appropriate resources and experience to advancing PTC 518 for the Huntington's disease community. PTC will continue to oversee the conduct of the placebo-controlled portion of PIVOT- HD and will take the lead on the planned regulatory interactions with FDA later this month, as the deal will not be finalized until completing HSR review, which we expect will be in Q1 2025. In terms of use of proceeds from this transaction, we plan to use these funds to continue to expand our leading and unparalleled splicing platform, including leveraging our new PTC Discovery Engine, which can accelerate identification of promising target and splicing molecule candidates.
In addition, we have several splicing and other therapies at clinical or late preclinical stage that we look forward to advancing. We will detail these programs more in the near future. We will also continue our business development efforts, working to identify promising therapies that can complement our existing commercial and development portfolios. Lastly, I want to share how proud I am of all the PTC team members whose contributions enabled this important agreement. From our scientists who have worked for decades pioneering the discovery and development of oral small molecule splicing therapies to our development teams that have overseen the PTC 518 clinical studies, and to our finance and legal teams who helped get this agreement across the finish line.
We look forward to continuing to work with Novartis to achieve the critically important objective of delivering a safe and effective therapy to the hundreds of thousands of patients worldwide affected by Huntington's disease. I'll now turn the call over to the operator for questions. Operator?
Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Tiago Fauth with Wells Fargo Securities. Your line is now open.
Great. Thank you so much for taking the call and congrats on the deal. Just two from me real quick. Just wondering what sort of data was available for the parties that were part of the process. Was it just the June 2024 update or something else since? And you did mention that Novartis is going to be involved in the regulatory interactions upcoming, but I'm assuming the deal is not conditional in any way, shape, or form on the outcome of that. Is that correct? Thank you.
Thanks for the question, Tiago. Let me take your second one first. No. There's no contingencies in this deal based on the regulatory interactions. This is a collaboration to take this drug forward through the entire development process and commercialization process, whether that's through an accelerated pathway or not accelerated pathway. In terms of the data that were reviewed as part of this deal, the vast majority of the data were what was shared publicly in the 2024 June data announcement.
Perfect. Thank you so much. Congrats again.
Thank you.
Thank you. Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Your line is now open.
Hi. Good morning. Congrats on the great deal. And I think bigger picture, a testament to your team with now two $1 billion upfront cash deals with this platform in the last 13 months. So maybe just on that note, you said that you're going to use some of the cash to look at this platform in more detail. With the success you've seen from Evrysdi as well as 518 now, how are you thinking about looking at potential other strategies with this platform?
Yes. Kristen, thanks so much for the question. There's no question these deals continue to validate how PTC has pioneered small molecule splicing therapies and really have an unparalleled experience and track record in that regard. We continue to do our splicing work, and our teams are, of course, learning along the way, and we have made a number of additional insights. I mentioned our PTC Discovery Engine, which is going to allow us to continue to develop, discover, and develop important splicing therapies that would be important not only for things that we at PTC would look to develop, but also could be the source of future strategic partnerships.
Splicing represents an incredibly innovative approach to drug development, and we believe that the splicing approach could lead to a number of important therapies for all different indications, including those core to PTC as well as those that might be core to other companies. So we look forward to continuing to build this platform and leveraging its unique capabilities to deliver meaningful oral therapies for high-end medical needs.
Thank you so much. And then, obviously, you guys are pros at meeting with the FDA, especially this year with all of the approvals and ongoing applications. But just given Novartis's willingness to work with you on this pathway, curious if they gave you any good insights or suggestions as it relates to the upcoming Type C meeting. Will they physically be in attendance with you at this meeting?
Yes. So just from a technical point, the deal can't close. It isn't official until the HSR clearance, which won't occur till the Q1 . But let's just say big picture, one of the important aspects of this deal was the Novartis experience and successful track record in the development and commercialization of neuroscience therapies. That was a really important part of this deal for us, and they obviously have experience in Huntington's disease development as well. So we look forward to their collaboration and partnership in every aspect of getting PTC 518 forward.
Great. Congrats again, everyone.
Thank you. Our next question comes from the line of Jeff Hung with Morgan Stanley. Your line is now open.
Congratulations, and thanks for taking my questions. How do the $1.9 billion in milestones split out between development, regulatory, and sales? And then for the tiered double-digit royalties on ex-US net sales, how many tiers are there, and how are those tiers triggered? Are they triggered by cumulative sales, or do they reset on an annual basis? Thanks.
Yeah. Thank you for the question. So I would say for the milestones, they are equally weighted between development and sales. And then it's double-digit tier royalties, and it's based on net sales. They reset every year.
Thank you.
Thank you. Our next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is now open.
Hey, guys. Good morning. Congrats on the deal. Thanks for taking my question. Can you talk a little bit more about your expected next steps beyond PIVOT- HD? I guess what Novartis will be running when they take over development of the program? And then, I guess along those lines, how will development decisions get made in the future? You mentioned PTC is still going to have an important role. Can you talk a little bit about, I guess, the types of committees that will be involved there and how future data disclosures will be handled as well? Thanks.
Thanks for the questions, Brian. PIVOT- HD, as everyone is aware, is a 12-month placebo-controlled study that then has an open- label extension portion in which patients will roll over and allow us to continue to understand the long-term safety biomarker and clinical effect. That study is going to continue to run, but of course, now efforts will shift towards the design and preparations for an efficacy trial. As we've talked about, that would be a Phase 3 trial that could be a registration trial in the context of a standard approval pathway or a confirmatory trial if we were able to avail ourselves of the accelerated pathway. Those are the key components of the development plan.
Of course, there'll be future strategies about how we can think about making PTC 518 available for the full spectrum of HD patients, including earlier stage pre-symptomatic patients. Those all remain a part of the future development of the program. In terms of how development will be handled, there will be a joint development committee that will include members of both PTC and Novartis. Again, a really important part of the decision to enter into this collaboration with Novartis was their experience in HD, the collaborative nature of their team, their strong, strong commitment from Vas as CEO throughout the organization to work as hard as possible and bring the resources necessary to get a therapy forward for patients with Huntington's disease.
So we really look forward to this being a true collaboration where each team can leverage each other's expertise in an effort to accelerate the development of this therapy for HD patients.
Thank you.
Thank you. Our next question comes from the line of Ellie Merle with UBS. Your line is now open.
Hey, guys. Congratulations on the deal. Just curious in terms of the timing. I guess just what's the latest, excuse me, in terms of when you plan to meet with the FDA around accelerated approval or pathway in Huntington's? And I guess did that meeting happen already? I guess just given the timing of the deal here, what's your latest in terms of your expectations around the likelihood of an accelerated approval pathway with mutant huntingtin as a surrogate? And then I have a follow-up question.
Sure. Thanks for the question, Ellie. So this agreement was not related at all to the timing of the FDA meeting, nor to our belief, our strong belief in the potential for huntingtin lowering to serve as a surrogate endpoint in Huntington's disease. The timing here was about making sure that we had the partnership in place as we start thinking about that efficacy trial, which we have to start working on as soon as possible. And just to be clear, the FDA meeting has not occurred yet. It'll occur later in the month.
Great. Just a follow-up to Brian's question. Just if you can give us more detail around sort of your conversations with Novartis, I guess what's the latest you're thinking in terms of what a Phase 3 design could look like? I mean, whether that's for confirmatory or for initial approval, just any more details on those conversations and the Phase 3 thinking there. Thanks.
Yeah. I think the teams are fairly aligned in how we're thinking about the trial. There's a need for there to be a longer placebo-controlled phase and endpoint strategy that would include the key known established outcome measurements for HD patients. Of course, one of the components of the FDA discussions later this month, in addition to discussion of the potential for huntingtin lowering to serve as a potential surrogate endpoint in the context of an accelerated pathway, is to have alignment with the agency on how we're thinking about endpoint strategy for that efficacy trial.
Great. Thanks.
Thank you. Our next question comes from the line of Joel Beatty with Baird. Your line is now open.
Thanks. Hi. Congrats on the deal. The first question is, what do you hope to see in the PIVOT- HD readout coming in the first half of next year? And then a second question is, what are your plans for this additional cash that you've gotten with the $1 billion upfront today, as well as a recent sale of the voucher?
Yep. Thanks for the questions, Joel. So the key for PIVOT- HD, as it has been, as we look at the 12-month data in the larger group of patients, is to continue to see what we have observed to date in the first 30 patients, which is evidence of durable peripheral huntingtin lowering, a continued evidence of lowering of CSF huntingtin protein levels. And again, one of the key findings was that consistency in the magnitude of dose-dependent lowering we saw in the blood and in the CSF. And then, of course, also beginning to understand the signal on the clinical scales. I think we were quite excited to see the evidence of dose-dependent benefit on the TMS, as well as the cUHDRS. And now with more patients, it'll be important to see if those trends hold.
And then, of course, finally, the evidence of continued safety and tolerability, which has been a really important part of the PTC 518 story that we've been able to deliver these biomarker effects and early signals of clinical effect in the context of a favorable safety and tolerability profile. In terms of cash proceeds, Pierre, do you want to comment on how we're thinking about that?
Yeah, absolutely. I mean, there will be a number of prongs. One will keep on developing, obviously, our commercial, we're preparing for our commercial launch next year and developing our internal assets. We talked about our splicing platform and PTC, where we believe we have a number of unique molecules that we can bring forward. And finally, we will continue to assess the opportunities and complement our commercial portfolio as well as our development pipeline.
Thank you.
Thank you. Our next question comes from the line of Joseph Thome with TD Cowen. Your line is now open.
Hi there. Good morning. Congrats on the deal, and thank you for taking my questions. Maybe first one, even going back to the prior management team, the company had indicated that it did want to kind of keep whole rights to PTC 518 given the experience with risdiplam. Maybe can you talk a little bit about just what changed in the management thought process there? And then second, do you have any follow-on compounds for Huntington's that you're working on in the splicing platform? Are you limited in what you can pursue there, and does Novartis have access to these follow-on compounds if they exist as well? Thank you.
Joe, thanks for the questions. I think what we've said, at least with this current management team, is that we believe that we have the team and the resources to be able to take PTC 518 forward through development and to commercialize it. This collaboration agreement is really about seeing an opportunity to bring more muscle to those efforts and not only enhance the probability of successful development and commercialization, but also accelerate those processes. And we're talking about a placebo-controlled trial that's likely to have hundreds of patients and perhaps hundreds of study sites and a very large potential global HD population that needs to be, that's going to need access to a therapy if it's approved. So this is really a matter of seeing an opportunity to accelerate both the development and commercial prospects for the therapy.
In terms of your second question, this is a deal that really focused on PTC 518 and related compounds that are splicing agents that have a mechanism of huntingtin lowering. So this was exclusively about our splicing platform and huntingtin lowering as the target. PTC does have other preclinical HD programs, including splicing programs looking at other Huntington's disease targets outside of huntingtin lowering that we are continuing to work on and look forward to continuing to advance.
Great. Thank you. Congrats again.
Thank you. Our next question comes from the line of Gina Wang with Barclays. Your line is now open.
Thank you. Also, add, my congrats. That's a great deal. So I have two questions. One is, is it fair to say that the base assumption for the Huntington program from Novartis' side to moving forward is based on a Phase 3 functional approval path? And also, did Novartis see additional three more months' data since last June? I think someone already asked this question, but just wanted to ask again. And regarding the deal term, the royalty, double-digit royalty, is it fair to assume a low teens to mid-20s range like what we usually see in other deals? And regarding the profit sharing in the U.S. 40/60, will you need to share also the development cost? For example, if moving forward post PIVOT- HD, if there is a P hase 3 study ongoing, will you need to share also 40% there?
Gina, thanks for the questions. I'll take the first two, and then I'll turn it over to Pierre for the last two. So your first question was about the assumptions of the development program for PTC 518. I think what's clear is that this is a collaboration for the entirety of the program. Obviously, both teams, the PTC and Novartis team, will look to see if we can leverage the accelerated approval pathway. And if not, obviously, the teams are in place and ready to move forward, as we talked about with that efficacy trial that would support a standard approval. So I think this is a commitment to bring this program forward with whichever pathway can be leveraged to get this therapy to patients faster.
As I mentioned earlier, in terms of the data shared, the bulk of the data were the clinical data shared in the June 2024 data disclosure. There were obviously additional questions on some of the preclinical data, mechanistic data, and other types of things, of course, anyone who is going to be collaborating on this program would want to see.
In terms of the economics, I will say a few things. The royalty, you can assume that they are similar to other deals. And then on the profit sharing and the 40/60 in the U.S., development cost after PIVOT- HD will be 100% for Novartis.
Great. Thank you.
Thank you. Our next question comes from the line of Sami Corwin with William Blair. Your line is now open.
Hi there. Thanks for taking my questions, and congrats on the deal. I guess, what are your thoughts on what a best-case scenario would be for the pivotal trial design? And do you think it'll take multiple interactions with FDA to have clarity on what that design might look like? And do you think it's possible that you would have insight into what the trial design would look like before the data update in 2025? Thank you.
Thanks, Sami, for the questions. Look, I don't know if there's a best-case scenario around study design. I think this is fairly clear that this is going to have to be a placebo-controlled trial of sufficient length to allow us to detect a meaningful clinical effect. And we've said in the past that we believe that would be at least two years. And in terms of endpoint alignment, look, I think there's a finite set of efficacy endpoints that are well understood and validated for HD patients. So I think we're not dealing with a situation where we have to reinvent the wheel here.
I think it's really a matter of alignment with the agency on what they would accept in terms of a likely designation of primary and key secondary endpoints that together could provide the evidence of effectiveness on how patients feel or function in everyday life, which is what the FDA likes to understand in terms of gaining an approval. I think we will have the first discussions in December, and I think we'll have a better idea of what additional discussions could be needed following the completion of those discussions. Again, I think there's a lot already known about how to go about designing that phase three trial.
Gotcha, and does the $1 billion upfront payment change your estimated timeline to becoming cash flow break-even at all?
I think, look, I think what it does is it reinforces our confidence that we have the funds we need to get to the cash flow break-even that remains a key priority for the company. We have a number of important regulatory milestones to come over the next few months that I think will help define that timeline for reaching the cash flow break-even, but we've said it's in the not-too-distant future, and certainly will be accelerated by some favorable regulatory decisions in the coming months.
Great. Thank you. Congrats again.
Thank you. Our next question comes from the line of Paul Choi with Goldman Sachs. Your line is now open.
Hi. Thank you. Good morning, and let me add my congratulations on the deal. Nicely done. My first question is with regard to ex-US development. And I think the European Clinical Trials Registry is currently only listing the 5 milligram and the 20 milligram doses. Can you maybe just comment on the status of the 10 milligram cohort and what's going on with regard to international development? And my second question is, for your planned update on the PIVOT- HD trial next year, can you just confirm that the 20-mg dose cohort is fully enrolled and that you'll have both Huntington's biomarker data and TMS clinical data endpoints when you report that update? Thank you very much for taking our questions.
Thanks for the questions, Paul. Just to clarify, as we said, all along, the only two doses that are in development are 5 milligrams and 10 milligrams. Those are the only two that are being studied in addition to the placebo subjects in PIVOT- HD. There has not been, nor is there currently, a plan to initiate the 20-milligram dosing cohort. So the data that we read out following the completion of the 12-month portion of PIVOT- HD will be from the 5, 10-milligram and placebo cohorts. As we mentioned, we expect last patient, last visit to be in the Q1 , and that means that we will likely have the data read out in the Q2 .
Okay. Great. Thank you for clarifying that.
Thank you. Our next question comes from the line of Danielle Brill with Raymond James. Your line is now open.
Hi. Good morning. Thanks so much for the question. And let me extend my congrats as well on the great deal here. And just a quick one, Matt, you said the deal was highly competitive and you're prepared to walk. So I'm curious if you could elaborate on how many parties were interested. Thank you.
Yeah. Thanks for the question, Danielle. Look, obviously, it was a confidential process. Let's just say there was interest from a number of parties, which is not surprising given the promise of a therapy. This included pharma companies that have worked in HD and others that had not worked in HD that were interested in getting into the field.
Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is now open.
Hi. Good morning. Thanks for taking my question, and also congrats from me on the deal terms. I was just curious, Matt, as to how you're thinking about timelines. You've talked about the specific reasons why you're excited about Novartis coming on board, and it seems like a lot of that is with regards to the potential for commercial opportunity. How are you thinking about the potential for narrow timelines? Let's say that you don't get an accelerated path to approval and you do have to do a traditional phase three. Relative to the timelines you were thinking about if you were running the study by yourself versus now with Novartis involved, can you give us a sense on whether or not that timeline is now accelerated as well, even for a traditional approval?
Secondly, I just want to clarify, based on your PRV sale and based on the cash received from Novartis, do you expect to need to do any financings going forward? Thanks.
Thanks for the question, Tazeen. So this was a deal that we believe accelerates and, as I said, brings more muscle to both the development efforts and to the commercialization efforts. And that's the development efforts, whether this goes down an accelerated path or the more traditional path. When we think about the size, the extent of that efficacy trial, if it were a phase three trial, I think having the muscle and the experience of the Novartis team will be incredibly important for not only accelerating that phase three trial, but we also believe heightening the probability of success of that trial, just given the neuroscience expertise that Novartis brings to the table. So we view this very much as a deal that is significant not only for commercialization efforts, but also for development efforts.
That speaks to the timing of this because now is the point in the program based on the data we had from PIVOT- HD in June that we need to start moving full speed ahead now with the planning of that efficacy trial. Then on your second point, I think we are very comfortable saying we don't anticipate any need to raise additional cash to get to our cash flow break-even and beyond.
Thank you. I would now like to turn the call back over to Dr. Matthew Klein for closing remarks.
Thank you all again for joining the call this morning. As I mentioned earlier, we are very excited about this agreement and look forward to continuing to work with Novartis to achieve that critically important objective of getting a safe and effective therapy to hundreds of thousands of patients worldwide affected by Huntington's disease. Thank you all again, and have a great day.
This concludes today's conference call. Thank you for your participation. You may now disconnect.