Our next company is PTC Therapeutics, represented by their CEO, Matt Klein, and their CFO, Pierre Gravier. Matt and Pierre, thanks so much for being here.
Good to see you, Brian. Thank you.
Good to see you guys. Let's get started. I wanted to first start with the launch of Sephience. Launch has obviously been going really well for you guys. Can you talk a little bit about what specifically has been driving the strength of the recent launch, maybe the patterns of prescribing that you guys are seeing in the real world, where are the prescriptions coming from, how are you looking to potentially expand beyond the initial centers of excellence? We'll build off that.
Yeah, absolutely. Look, we are incredibly excited about the start to the launch and incredibly excited about what we see as sustained momentum, in some cases growing momentum, and a really overall significant opportunity. You've heard us refer to it as $2 billion+, multi-billion, but everything we're seeing thus far reaffirms our confidence in that. I think the keys to early success were a few. One, we have a really good drug in Sephience. The dual mechanism of action allows Sephience to potentially provide benefit for the full spectrum of PKU patients, including the most severe patients. Thus far in the launch, that's exactly what we're hearing. Folks are responding, folks are liberalizing their diet, and more and more we've been hearing about other benefits like decreased anxiety, improved mood, improved cognitive function.
A lot of that likely tied to the fact that the drug gets across the blood-brain barrier. That's been there. Two, population size. There's 17,000 patients or so with PKU in the U.S., 58,000 globally in markets where we believe we can access. In terms of rare disease, that's a healthy population. All the trappings for commercial success have been there. Newborn screening, centers of excellence, identified payers that understand the disease. We have a team, a global commercial team, that's used to executing on rare disease drugs, right?
You've done it before.
We've done it. I think we could even say we've done it before, done it really well with much more challenging data packages.
Yeah
Much more complex competitive landscapes. Then finally, the fact that there is this large population with significant unmet need. It's all there. We had the time to do market development. We had gotten to all the 103 centers of excellence in the U.S., understand the prescribing patterns, the patient patterns, and things like that, and I think that's what really allowed this acceleration out of the gate, right? There were waiting lists and such. Then the other, I think, theme early on has been breadth, the breadth of the launch in every way you can think about it for the PKU population. We said we've gotten prescriptions from over 90% of the centers of excellence. That's really good two and a half quarters into a launch, right?
At this point in a launch, you sort of maybe were focused on some of the larger centers, and then you've got to expand. We're in all these centers, and now it's a matter of penetrating deeper into those centers. In terms of patient segments, well, coming into the launch, one of the, I think let's call it a misconception, was that the launch early on would be driven by those who are on Kuvan switching to Sephience. In fact, a lot of KOLs said that.
Yeah.
That's not been the prescribing pattern. What we've seen early on was more that the largest bucket has been those who've tried and failed therapies. We're seeing a larger number early on than expected of therapy-naive patients. Also, again, in those early dialogues with KOLs, the therapy-naive segment was thought to be adults remote from the center who are not accessible. Maybe later in the launch, you could hope to bring them in, and we're seeing them come in. We have had some switches.
Is that just because Kuvan really hasn't been as actively detailed, or is it intrinsic advantages of the drug, of Sephience's properties?
I think it's the advantages of the drug and another factor, which is the prescribing decisions at a lot of these centers are made by nurse practitioners, physicians' assistants, with a lot of input from dieticians. I think some of the early interviews that were done with folks was a perception, but not the reality of what was going on actually inside their center, in part. The second one I'm going to mention now makes a lot of sense. Look, no one spends their entire day at these centers going through just PKU. They see a lot of different patients with a lot of different metabolic diseases, and it's saying, "Okay, if I've got time to start this drug, why don't I start it for someone who doesn't have a therapy?" Right?
If you're on an existing therapy, if you're on Kuvan, you've been on Kuvan for years, you're likely getting some benefit, and even though 100% of patients we've seen will do better in terms of Phe lowering, diet liberalization, other benefits with Sephience, they're at least stable on a therapy.
Right.
You've got 85-plus% of your patients who are not on any therapy. You might say, "If all things be equal, let me give someone who doesn't have something a try.
Right.
I think there was also an interest in some of the centers to, how can I say this, put Sephience to the test.
Yeah.
Let's see how it is going to do in some of these patients who've tried and failed other therapies.
Yeah
I think one piece of feedback we've gotten so far in the launch has been really positive in saying there was one KOL who I know a lot of folks have spoken to who said, "I put my hardest classical patient on it, and a 90% drop in phenylalanine right away, and now I'm convinced everyone's going to get tried." In a way, the launch has also benefited from that.
Yeah.
You try your hardest patients, they do well, and then there's now this prevailing sentiment that folks are going to try all of their patients on Sephience. That's going to take time, right?
Right.
There's 17,000 patients in the U.S., the vast majority of them are at centers of excellence, and that's why you hear us talk about saying, look, we're off to a strong start. We think we've settled into a pretty reasonable pace now that's sustainable. Why? Because there's a lot more patients to go at these centers, and we don't have the work now of having to say, "Oh, my God, how do we activate the other 80 centers?" No, we're activated in the majority. Yes, we still have less than 10% of centers to go. We think we're going to get prescriptions there. There's always late adopters.
Yeah.
That's typical launch dynamics. We know that there's centers that are not centers of excellence that still have patients, and we're starting to get traction there too.
How do you think about what comes next in terms of the patient segments? How much more of the population is out there at these centers who are plugged in but untreated?
Yep
that haven't already started on Sephience? Secondarily, how and when do you think you'll start to capture the Kuvan switchers?
Yep. I think we'll start seeing more and more switches come. Again, the value proposition here is pretty straightforward, right? If you have a response to Kuvan, it's just physiology. You're going to do better on the Sephience, right? That's there, and benefit means a lot, right? Especially if it's greater diet liberalization, lower Phe, all those different things. That's there. I think we still have a long way to go in these other buckets as well, right? If you consider the majority of patients have tried and failed, just generally, that's a long way to go, and a lot of them are tied to centers. I think, again, one of the early misconceptions as well before starting the launch was that if you're not on a therapy, you're not tied to a center.
If you're on a therapy, you may not be seeing the physician. If you're not on a therapy, your mainstay of management is diet management, right? You are likely in touch with the dieticians at the centers. We've obviously spent one of the key recipes for success in rare disease is making sure you're integrated in the patient community. We've been very well integrated in the patient community, both in terms of disease state awareness and education, but also obviously understanding how Sephience can fit in the community. We hear from folks who haven't been on a therapy talk about their relationship with dieticians. Even if it's not we're seeing them every three months, it could be an email here, an email there. In the world we live in, that's a connection that's helping getting folks back.
I think the other part of this launch that's really important to understand is the international component.
Yeah.
I think PTC, part of our commercial legacy was outside the U.S. We actually built the business outside the U.S. first. To be able to have that existing infrastructure and be able to leverage that infrastructure, we said we expect to be having commercial patients in up to 30 countries by the end of the year. For a company our size, that's pretty impressive. We launched in Europe, we launched in Japan, we launched in the U.S. all within six months. We had to build the team in Japan. That launch is off to a great start. I think that really could be a source as we get into the back end of the year of accelerated growth.
We're just going to have more patients on drug as we enter countries, as we start completing pricing and reimbursement discussions. If we think about the U.S. as being a sort of a source of steady growth, we can have acceleration outside the U.S. in a meaningful way over the long term.
Can you talk a little bit more about the ex-U.S., just the general pricing dynamics you expect for Europe versus the U.S. degree of event ability to a branded BH4 therapy? Just, I guess, how you would gauge the overall long-term market opportunity there?
Yeah
Europe and Japan versus the U.S.
Yeah, absolutely. A few things, I think. We launched in Japan. Pricing is set. The list price there is on par with the U.S. It's fixed for 10 years. That's tied to the fact being an orphan drug. About 1,000 patients in Japan. As I said, I think we're off to a good start there, and we see very good long-term potential there. We launched in Germany first, as is typically done. There, the list price again was on par with the U.S. We're going through the pricing negotiations now. I will note that the free pricing period ended in January, and we started accruing in January for what could be a reasonable estimate of what the ultimate discount to the list price would be. We expect the list price to be there, and then there'll be some negotiated rebate around that.
In other countries in Europe, we again are leveraging our understanding of how the systems work in each different country to begin with named patient programs. When you have named patient programs, that gives us the ability to set the price, but it's a smaller number of patients while we go through formal pricing and reimbursement. You'll get through formal pricing and reimbursement. The price will come down a bit, you have access to the full population of patients. What's been really helpful in the discussions we're having, including our initial feedback in Germany, was the differentiated profile Sephience to your question, the fact that we had the AMPLIFY study completed. The AMPLIFY study was a crossover study where folks were given in Order A or Order B, BH4, Sephience or Sephience and BH4. Really allowed for rigorous intra-individual assessment of superiority.
On average, Sephience resulted in a 70% greater lowering of phenylalanine. To be able to go into a European payer, quite frankly, a U.S. payer or payer anywhere, and have head-to-head data in a well-controlled study.
Yeah
As you start negotiations, really answers any question about differentiation and clinical superiority.
Okay. One more question about Sephience and then I would love to talk more about Huntington's as well. Providing guidance at an early stage of the launch is always a challenge.
Yes
Know there's always a needle to thread there.
Yep.
How did you guys think about that? What does your guidance overall imply in terms of a lot of these dynamics that you talked about and also patient persistence, and I guess?
Okay. I think we've traditionally, and I think many have not issued product guidance in the first year.
Yeah
on launch. For all the reasons. There's a lot of dynamics to play out here, and we've been very clear that while we still need a couple more dots to make a line and give guidance, we're very confident in a long-term trajectory here. I think as we get a little further into launch, we'll be able to give guidance.
Okay
we had a lot of discussions about our product guidance for this year.
Right.
We started the year $700, $800, and we said, "Look, we've got a couple different things we know for sure." One, we're very confident in long-term potential Sephience how things play out, we'll see. We need a few more quarters under our belt, and we've got a DMD franchise that we know is waning and a lot of exceptional circumstances of selling in Europe without a license, 10 generics from Emflaza. The durability there is hard to predict. Now, we obviously had an incredibly strong quarter with $226 million in product revenue. That allowed us to comfortably raise guidance. I would say the lower end raise was based on what we were seeing with the Duchenne franchise. That gave us assurances on the lower end to raise, and the upper end was what we're seeing in terms of Sephience, that gave us confidence.
Yeah
we can go even higher. As we've said, as we get into the next quarter or so, if we need to adjust, raise again, we will. I think for us, what we're going to be looking for now and understanding is seeing the trajectory, the continued growth in the U.S., which we expect, and then understanding what that acceleration outside the U.S. looks like. I think we've said this, that we expect probably the ex-U.S. market to really start having a big impact in the second half of the year as we get pricing and reimbursement on board, as we start going through the process in Brazil of the digitalization that we did with Translarna. Look, we've said all along, Translarna did about, I think, a peak around $360 million outside the U.S., excluding Japan.
We were never into any countries at the same time with Translarna. Here we are with PKU, about 10x the population of nonsense mutation DMD, maybe a little more, a well-owned machine in terms of commercialization and the ability to launch simultaneously now. That's why I'll say that. We think the ex-US opportunity over time can be really meaningful here.
Great. Shifting gears, you recently presented long-term data, open label data for votoplam in Huntington's relative to match natural history. You maybe just start with what excites you guys most about the data.
Absolutely. If we zoom out, Huntington's disease is a complicated heterogeneous neurodegenerative disorder without any treatments. Okay, that's code for it's hard.
Yeah.
You think about what you want to do in a drug development program, and you come into phase II, what you really want to do is make sure that you come through phase II knowing that your drug works, does what it's supposed to do, and in this case, lowering huntingtin protein, which we believe is a very rational approach to this disease. The drug goes where it's supposed to go, gets into the brain, a very good exposure. That's important. It's safe and well-tolerated. You understand what dose you need. You know who to study it in, and you have signs that it could actually long-term have meaningful efficacy. When we looked at the data that we shared at the end of April, all those boxes are now ticked.
Being able to see that dose-dependent effect with a 52% slowing of disease progression at 24 months, relative to well-matched natural history gives us a lot of confidence. Seeing the dose dependence, the focus of the first 12-month study was really on lowering huntingtin protein. We said the blood is a very good way to understand what the drug's doing. By the way, that was borrowed from the Evrysdi playbook, where we used blood cells in Evrysdi to predict what we were doing to SMN protein in the brain. Same thing we were doing here, with HTT lowering. To be able to say, "Okay, we showed that if you lower huntingtin protein twice as much, you're getting twice as much benefit at 24 months." Now, I'm not saying that's a one-to-one expected thing, but in that ballpark, that's a pretty good sign.
Yeah.
To see contributions across several different scales and some of the other things we understood looking at the data, we thought was really, really good.
Okay.
Gave us confidence that this is a very well-designed phase III study. It's a very well-powered phase III study. It has an interim analysis to get to an answer sooner. I'm very proud of our company, but Novartis is a machine in terms of being able to get up and running and execute from a technical aspect, a phase III trial with 770 or so patients in many, many countries. I think it was seeing that proof of efficacy at 24 months and knowing now that we really as much as you can have de-risked a phase III trial for neurodegenerative disease where there's no approved disease-modifying therapies.
Right. It sounds like the phase III, this really validated the approach that's up and running. What are you going to be looking for to decide whether to engage the FDA around potential accelerated approval discussions, and how and when might you announce potential next steps in that regard?
Yeah, absolutely. Look, I think both companies have been clear that if there's an accelerated path, we want to get this drug to patients as soon as possible. Novartis is very clear about that. We've been clear about that. As Vas outlined in the Novartis earnings, the plan is let's continue going through the data, let's talk with PTC, and come up with a plan for regulatory interaction. I think that's there.
Is there anyone left at the FDA to interact with?
Well, that plays into it as well, right? It is just understanding what we have in terms of data, and what's the best argument you can make, and what's the temperature in Silver Spring? I think one thing people are maybe confusing, look, Novartis has been very clear when they acquired the drug that they believe in it. Their base case was phase III, but if they can accelerate things, they will. They did a great job of getting the phase III trial up and running. I think everyone's excited about what these data showed. I think everyone agrees these data, what we've seen so far, support exactly what's planned in phase III and de-risks it. I think for them, getting phase III up and running and going is a corporate priority.
They're not a small mid-cap biotech company that everything stops, so we run for accelerated approval, and that's what we're doing. It's "Okay, we'll get the data, and we'll have a discussion." I think people shouldn't confuse the fact that they're not coming out tomorrow and everything's fast tracked to make a decision about the FDA with one not having an interest in not believing in the data. It's just the dynamics of companies operate differently. We look forward to the data being completed. As you know, we shared the data. Novartis had earnings on April 28th. That's when we shared the data. There was still more data to go through. We'll have a discussion, and we'll come up with a point of view. Yes, we'll understand what's the temperature at FDA in Maryland and then make a decision to go.
Then just in terms of leveraging the interim analysis from the phase III to potentially get this over the line more quickly, I guess, what are you going to be looking for in a potential interim cut to support a filing? I guess how do you balance the importance of having sufficiently long follow-up and enough patients to fully elucidate the profile, not compromise the integrity of the data against also, I guess, balancing against the importance of trying to get this to patients as quickly as possible if there is going to be a profound effective path for them?
Yeah. Balance is a good word, Brian. Novartis hasn't disclosed the details of the interim yet. We've made clear, obviously it's going to be sooner, at a sooner time point, potentially in a smaller number of patients, but it's been very well thought out. Just when you think about the cadence of enrollment and the fact that we'll also have experienced longer term certainly in terms of safety from PIVOT-HD, that study is going to enroll 770 patients. If there was a situation where the interim analysis was successful, I think you'll have the ability to have a very strong, robust dossier to support a filing.
Is there also a superiority interim analysis baked in at some point, or is it just that one interim that would potentially dictate a rapid approval?
Yeah. It's basically a single efficacy and futility interim.
Okay.
Again, I think giving a lot of credit to the thoughtfulness of the Novartis team, it's been very well thought out in terms of setting up for potential success.
Got it. Maybe moving to vatiquinone. You're now conducting a 24-month study versus the 12-month timeframe in the prior study. I guess how confident are you that upright stability, that subscale is going to remain the most sensitive measure here for the full 24-month duration? Maybe talk about the trial design and plan there.
Yeah, absolutely. This was, I'll say, a pleasant surprise for us that FDA suggested that we could potentially use an open label study to support NDA resubmission, compared to natural history. I think part of that comes from their understanding of the natural history database. The fact that in our MOVE-FA study that the placebo trajectory and the natural history trajectory were pretty consistent. The fact that safety is pretty well understood for vatiquinone. It's not that we don't need a blinded placebo-controlled study to better characterize safety. All the elements were there, and we were able to use the 2023 guidance on external controls to show how well this study could fit that. The decision to do the 24 months was, again, based on having time points when natural history is collected and allowing for a result that would be interpretable.
We believe that the best endpoint at 24 months is actually the entire mFAS score, and this may be what your question was alluding to because while upright stability subscale has been shown to be most sensitive to change over the short term.
Right
if you look at all the natural history studies, they say from about 12 to 18 months, that's the subscale of interest. Given to the nature of that scale, the fact that it's binary whether you have or lose something, and the fact that it's usually two to three years between losing a step, what all the natural history studies show is that as you go out further 18 months, 24 months, you start seeing contributions from upper limb and lower limb.
Yeah.
If you look at the MOVE-FA data, at 18 months, yes, it was driven, and our data showed by upright stability, but you start seeing lower limb kick in. As we went to 24 months, it was the same thing.
Got it.
Now you think about designing a 24-month study where if you're doing a natural history control, you know what that control group is going to do more or less based on natural history. What you want to do to capture treatment effect is make sure you can capture any element where a treatment effect can be measured.
Yes
That's why we believe that Emflaza is probably the best got it at 24 months.
Makes sense. Pierre, question for you. You guys have a pretty robust balance sheet, I think close to $2 billion. You've said that there's a lot of leveragability in the existing commercial infrastructure that you have for the Sephience launch. There's not going to be a ton of additional expense necessarily there. You have a number of internal R&D programs, many of them are quite early stage and I imagine are not super capital intensive at this point. I guess, what do you want to do with the cash? How are you prioritizing use of capital now across internal versus external versus internal R&D, external commercial?
The beauty in having such solid balance sheet, we should agree.
Sure
gives us all the flexibility.
Yeah.
That's very important. Obviously, we'll continue to deliver Sephience across the globe. We'll continue to invest in our own R&D pipeline, and then we'll look as well at ways to accelerate potentially structure that is highly capable. They demonstrated with Emflaza, with Translarna, with, obviously, Sephience. They have capacity. We're going to be very thoughtful and disciplined. Our approach needs to be strategic. We're not going to do an eBay, a GameStop type of transaction. That's how we think about it is let's be very disciplined. Let's find accretive transactions that accelerates that path, right? We're going to get $2 billion peak sales plus at least $2 billion+ with the funds. Are there ways to accelerate that with our commercial infrastructure?
Do you think there's anything interesting out there? Do you think valuations have now come up to more prohibitive levels?
Good question. Yes, there are opportunities, of course. Maybe you can share some of those multiples with us. Again, we're going to look at creating value for our shareholders.