Ptc Therapeutics, Inc. Q2 FY2021 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the PTC Second Quarter 2021 Financial Results. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Kylie O'Keefe, Senior Vice President, Global Commercial and Corporate Strategy. You may begin.

Good afternoon. And thank you for joining us today to discuss the PTC Therapeutics second quarter 2021 corporate update and financial results. Joining me on today's call is our Chief Executive Officer, Stuart Peltz; our Chief Development Officer, Matthew Klein; our Chief Business Officer, Eric Pauwels; and our Chief Financial Officer, Emily Hill. 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 this slide posted on our investor relations website in conjunction with the call, which contains our forward-looking statements. Our actual results could materially differ from these forward-looking statements, as such statement is subject to risks that can materially and adversely affect our business and results of operations. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent quarterly report on Form 10-Q and our annual report on Form 10-K filed with the Securities and Exchange Commission, as well as the company's other SEC filings. We would disclose certain non-GAAP information during this call. Information regarding our use of GAAP to 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. Stuart?

Thanks, Kylie. And thanks for joining us today. As we close out the first half of 2021, I'm proud to say that a lot of progress has been made in all facets of our business. I'll go into this in more detail shortly. However, before I do, I'd like to take a moment to reflect on our strategic plan at PTC and measure how we're doing. At PTC our mission is to provide innovative treatments to patients with debilitating diseases that have few to no treatment options. The foundation of our strategy is to have a sustained pipeline so that we may continue to produce commercial treatments that will drive revenue and create value for all stakeholders over both the short-term and long-term. We all know the importance of having a deep pipeline to balance the innate challenges of the drug discovery and development process. We are all working towards building a steady state number of therapeutic programs, so that the successful programs move forward. This approach will allow us to have a sustained pipeline of potential new therapies that reach commercialization and substantially grow our revenue base. So many of us have been fortunate to have access to a COVID vaccine. We recognize that the pandemic is still very much a reality in many parts of the world. This brings additional challenges with potential impact across multiple aspects of our business. However, we're continuing to manage through these challenges as they arise. I want to emphasize the impressive revenue growth that we have seen this quarter, which is driven by the strength in our DMD franchise, and the incredible uptake of Evrysdi. Based on this impressive growth we will be raising our 2021 DMD franchise revenue guidance to $370 million to $390 million, and Emily will go into this in more detail later in the call. So let me start with the DMD franchise. Our commercial team has been working hard to make our therapies accessible to DMD patients around the globe. As a result, Translarna saw an impressive 36% year-over-year growth. I'm very proud that the growth continues almost seven years post launch, both in existing geographies and with continued geographic expansion. Emflaza is also continuing to deliver strong revenue with an increase of 36% over the same period of last year. Eric will discuss the success of the commercial franchise in more detail shortly. Now let me turn to the splicing platform, starting with Evrysdi. Evrysdi continues to see a strong uptake in the US with 1,800 SMA patients now on treatment, representing almost 20% market share in less than a year post launch. Evrysdi is also now approved in 53 markets outside of the US, and we are starting to see early adoption in these markets and expect this growth to continue, as we conclude on additional pricing and reimbursement discussions. As anticipated, Evrysdi was approved in Japan this quarter and we will receive a $10 million milestone payment from Roche upon the first commercial sale. I also wanted to touch on the recent positive results from the SMA studies, which I find to be quite remarkable. The Rainbowfish study using the Evrysdi to increase presymptomatic infants diagnosed with SMA, demonstrated Evrysdi treated infants achieve the same developmental milestones as healthy children. Enrollment data from the Jewelfish study, which is assessing the diversity Evrysdi in SMA patients previously treated with other therapies, including Zolgensma and Spinraza demonstrated overall stabilization in motor function after switching to Evrysdi. This shows the benefit of Evrysdi in the broader energy as real-world as the main population. Turning to PTC518 and the Huntington's disease program, in the second quarter of this year, we were excited to release the preliminary results from our Phase 1 healthy volunteers study. As a reminder, the results from this study demonstrated a dose-dependent lowering of Huntington mRNA, even after only a single dose of PTC518. The results also demonstrated a targeted mRNA lowering of 40% to 50%, even in the lowest multiple ascending dose cohort. We are in the process of completing the Phase 1 trial. This includes additional protein sampling of food cohort and a CSF pharmacology cohort. We plan to release the results of these additional cohorts in the third quarter of this year, as well as share details on our next clinical study, which we are planning to initiate before year-end. I’ll now turn to our bio-e platform. This is an exciting and novel science platform to identify new therapies that result from excess electrons, usually produced from the mitochondria during electron transport. This triggers oxidative stress and causes havoc within the cells that exacerbate multiple disease states. Drugs that can modulate this process would be valuable therapies to treat a wide variety of diseases. We have two important ongoing trials with particular note: our first compound from our Bio-e platform is a 15-Lipoxygenase inhibitor, which is the key regulator of this pathway. The first is in mitochondrial epilepsy, and the second is in Friedreich ataxia. These two trials are registration directed and therefore our potential near-term value drivers. We also have a second-generation 15-Lipoxygenase inhibitor, PTC857, with pharmacokinetic properties that are well suited for a range of adult neurodegenerative diseases. We are pleased to have completed the Phase 1 healthy volunteers study for PTC857, and Matt will share the results later in the call. Turning now to our PKU program, which is another important near-term value driver. We're excited as we plan to initiate the Phase 3 registration-directed study Affinity in September of this year. PKU is a large orphan indication with an estimated 58,000 patients globally. The vast majority of patients are not well controlled with existing therapies, highlighting the substantial unmet medical need. Study startup activities are well underway. We are utilizing our global infrastructure to focus on sites both in the US and globally. PKU is a unique development and commercial opportunity in the rare disease world, as it has a well-defined patient population, well-known centers of excellence, and an expedited path to commercialization. We look forward to the potential for PTC923 as a clinically differentiated therapy to the PKU community. Moving to our gene therapy platform and the AADC program. As a reminder, the CHMP imposed a clock stop to allow for the pre-approval inspection. This process is still ongoing, and we expect to see a CHMP meeting in the fourth quarter. Turning to the US, and we have previously shared, we were conducting additional surgeries in advance of the BLA submission. We're happy to announce that the third surgery has recently been completed, and we will now align with the FDA prior to the BLA submission, which we plan to submit by the end of this year. I want to take this moment to discuss our gene therapy manufacturing facility in Hopewell, New Jersey. We have a 220,000 square foot fully functional, well-equipped and validated facility for the development and manufacture of the gene therapy products in our pipeline, thereby minimizing our reliance on external CROs. As we have excess capacity and retain the relevant manufacturing expertise, we have a unique opportunity to potentially create a revenue stream by entering into development and manufacturing service agreements with other companies, utilizing this facility and our expertise to produce high-quality plasmid DNA and AAV vectors. Lastly, I wanted to highlight the potential upcoming milestones from our oncology platform. Unesbulin, previously PTC596, is in clinical trials for two niche solid tumors, DIPG and LMS. DIPG is a rare pediatric brain tumor, and LMS is a rare adult solid tumor in muscle. Both have unmet medical need with few beneficial to no treatment options. Results are anticipated in the second half of 2021 for the two clinical trials, and with positive results, we have the potential to initiate registration-directed trials. We look forward to sharing the results shortly. As you can see, we are continuing to make progress across our commercial and clinical efforts. I'm proud of our progress, driven by our people and their strong commitment to our mission to deliver therapies to patients in need. With that, I'll turn the call over to Matt for an update on development. Matt?

Thanks, Stu. I want to start by emphasizing the continued progress our development teams have made across all our programs. First, I'll start with our splicing platform and our PTC518 Huntington's disease program. As Stu mentioned, we shared the initial results from our PTC518 Phase 1 healthy volunteer study for the second quarter of this year. As we reported, PTC518 treatment resulted in the desired dose-dependent lowering of HTT mRNA levels in both SAD and MAD cohorts. We are in the process of completing additional cohorts to provide data on HTT protein levels and CSF biodistribution. Results from these cohorts will be released in the third quarter of this year. Given that we have achieved our key objectives for the PTC518 Phase 1 study, planning for the Phase 2 trial is underway, and we expect to initiate the trial by the end of this year. The Phase 2 study will be conducted in HD patients and will focus on demonstrating dose-dependent reductions in HTT mRNA and protein levels. We will provide more details on the study design once it is final. Next, I would like to highlight the progress we have made in the program for bio-e platform. We have two ongoing registrational directed trials with vatiquinone, our lead compound in the bio-e platform. And we recently completed the Phase 1 healthy volunteer study of PTC857, the second compound to the platform. But the MIT-E trial, our Phase 2/3 trial in children with inherited mitochondrial disease and epilepsy and MOVE-FA, our Phase 3 trial in Friedrich ataxia are global studies that are actively enrolled. As you noted, these programs are near-term value drivers. And we remain on schedule to have data readouts with the MIT-E study in Q3 2022 and the MOVE-FA study in 2023. Turning out a PTC857, a 15-lipoxygenase inhibitor being developed for neurodegenerative disease. I am pleased to share that we have completed the Phase 1 healthy volunteer study. PTC857 was found to be well tolerated with no reporting of serious adverse events. PTC857 also demonstrated predictable pharmacology, and we were able to achieve the desired plasma exposure levels consistent with the levels at which we observe efficacy in our preclinical studies. We are now positioned to move PTC857 forward to Phase 2. Through its activity at 15-lipoxygenase, PTC857 targets the pathway of oxidative stress and inflammation, known as Ferroptosis, a pathway key to CNS disease pathogenesis in ALS, Parkinson's disease and other neurodegenerative disorders. Our preclinical program has demonstrated that PTC857 provides potent protection against oxidative stress and inflammation-induced cell injury and death in a series of CNS diseases in vitro and in vivo tests. Turning now to our PKU program, we are on schedule to initiate our Phase III registration-directed trial, the APHENITY study with PTC923 this quarter. As a reminder, APHENITY is a double-blind placebo-controlled study with a 1a Phase to identify subjects who respond to PTC923 treatment. These responders will then be randomized to receive either PTC923 or placebo for six weeks. This approach of enriching the study population with responders increases the probability of success of the trial. Following the efficacy study, all subjects will be eligible to enroll in a long-term open-label extension study. We plan to have data from the exploratory trial in the fourth quarter of 2022. Turning now to our gene therapy platform. As Stu noted, the third round of surgeries in support of the AADC BLA submission has been completed. We plan to align with the FDA on the data package and then to submit the BLA by the end of the year. As a reminder, the surgeries were conducted to gain experience with the intended commercial cannulation delivering our gene therapy product. One of the innovative aspects of our AADC gene therapy program is that the gene therapy product is delivered directly to the putamen, the area of the brain key to disease pathology. In order to achieve this direct delivery into the brain tissue, neurosurgeons use a stereotactic surgical procedure that relies on an MRI-based Google map that provides a direct path for the surgeon to safely reach the putamen to deliver the gene therapy. Let me now provide a quick update on emvododstat, previously PTC299, currently in a Phase II/III trial for COVID-19. Enrollment is ongoing in this trial, and we expect this study to be completed by the end of this year. As a reminder, emvododstat is also being studied in an ongoing trial in patients with acute myeloid leukemia. Finally, I would like to remind you about the ongoing placebo-controlled trial with Translarna for Duchenne Dystrophy study 041. This global study is a 72-week randomized placebo-controlled trial that incorporates many of the key learnings we have made from our previous DMD trial. This study is fully enrolled and we expect to have results in Q3 2022. In summary, we are continuing to move our development program forward with many important milestones in the near future. I will now turn the call over to Eric for an update on our commercial business. Eric?

Thanks, Matt. Once again, I'm extremely proud of the strong execution from our global commercial team and the continued remarkable growth of our global DMD franchise. With our team focused on patients, our team was instrumental in delivering another highly successful quarter for commercial revenue. We've seen incredible progress in our DMD franchise with year-over-year growth in both Emflaza and Translarna resulting in a 36% growth for the franchise. New patient starts, continued high adherence, and fewer discontinuations have sustained the growth of Emflaza. In this quarter, we achieved $49 million in revenue, which is a 36% increase over the second quarter of 2020. Strong executions supported by new data recently presented by Dr. Craig McDonald at UPMMD continue to support clinical differentiation over prednisone and it's helping drive new prescriptions from patients. Turning to Translarna, we achieved $53 million in revenue this quarter, a 36% growth over the second quarter of 2020. This sustained performance was driven by growth due to the expansion of the patient base, continued high compliance, and broader access in existing geographies, as well as continued geographic expansion. As an example of geographic expansion, following the approval of Translarna in Russia, we are pleased to announce that we have successfully launched and patients are now receiving treatment. The launch in Russia is seen as a growth in other key markets and has been one of the major drivers for revenue growth in the second quarter of 2021. Ongoing geographical expansion in Central and Eastern Europe, Latin America, the Middle East, and Asia Pacific continues to be a focus for us, including expanding our footprint and infrastructure in additional markets such as Japan and Mexico. We are making continued progress with reimbursement for Translarna and we're pleased to be extending the managed access agreement in England. In Latin America, we continue to see increases in newly diagnosed DMD patients and are making good progress towards securing group purchase orders for Translarna in Brazil in the second half of 2021 to treat both new and existing DMD patients. Now turning to case studies, disease awareness, and patient identification continues to be the focus of Latin America, and our teams have made substantial progress despite the ongoing COVID-19 challenges in the region. In Brazil, our discussions on pricing and access continue. During the process, we continue to provide medical education, genetic testing, and patient progress to support the basic studies available in multiple countries in Latin America to early access programs to bring this important treatment for HATTR amyloidosis patients. We are pleased that we now have some of the first patients benefiting from the treatment with our products in Latin America through early access pathways. We are preparing for launch in Brazil. However, due to COVID delays at visa, registration is now anticipated in Q4. As we previously announced, we established a taskforce to address the backlog of pending applications, prioritizing rare disease applications. I will touch on the preparation for PTC’s first gene therapy launch. As a reminder, PTC AADC is a transformative gene therapy that has the potential to produce meaningful changes in AADC deficiency patients. Preparations are progressing well and we anticipate the launch to occur in Europe shortly after final EMA approval. PTC continues to accelerate patient screening activities with over 100 at-home and saliva-based genetic testing programs in over 20 countries initiated in rich high-risk populations. Significant progress has been made with the identification and preparation of expert pediatric neurological centers of excellence throughout the US, the EU, and Latin America to ensure treatment center readiness at the time of launch, and we remain confident to achieve our goal of 300 patients identified globally by launch. We generated another strong and sustained performance in Q2. And I continue to take great pride in our accomplishments from a global customer-facing team and their ability to flawlessly execute against their strategic priorities. With that, I am pleased to announce that PTC is raising our 2021 revenue guidance to $370 million to $390 million. I will now turn the call over to Emily for a financial update. Emily?

Thanks, Eric. In the second quarter of 2021, we continued to see strong commercial performance and demonstrated progress across our pipeline. We remain in a healthy financial position with a robust cash balance and another year-over-year increase in revenue from the DMD franchise. We have been working strategically to advance key platforms and look forward to a number of upcoming milestones from our pipeline. In light of the consistent strong performance of Translarna and Emflaza to date, we are pleased to raise revenue guidance for the DMD franchise for 2021 to $370 million to $390 million from the original 2021 revenue guidance of $355 million to $375 million. The press release issued earlier this afternoon summarizes the details of our second quarter 2021 financial results. I will take a few minutes now to review these financial results. Please refer to the press release for additional details. Beginning with the top-line results, revenues were $117 million for the second quarter of 2021, a 55% increase over the second quarter of 2020. This revenue includes $103 million in net product sales and $14 million in royalty revenue from our partner Evrysdi program. Turning now to more detail on the success of the DMD franchise, Translarna net product sales were $53 million compared to $39 million in the second quarter of 2020. A key driver of this growth has been through geographic expansion, particularly in Russia and the Central and Eastern Europe, Middle East, and North Africa region. Emflaza net product revenue for this quarter was $49 million, as compared to $36 million in the second quarter of 2020. Moving on to an update on Evrysdi, our partner Roche has reported year-to-date sales of approximately $243 million Swiss francs, which is approximately €265 million. As a reminder, in exchange for €650 million upfront cash added to our balance sheet, PTC also retains approximately 57% of Evrysdi royalty until Royalty Pharma receives a return of $1.3 billion, after which 100% of the royalties revert back to PTC. As part of this royalty monetization transaction, PTC also retained sales and regulatory-based cash milestones. Following the approval of Evrysdi in Japan this quarter, we anticipate a near-term $10 million milestone payment upon the first commercial Japanese sale. Non-GAAP R&D expenses were $112 million for the second quarter of 2021, excluding $13.4 million in non-cash stock-based compensation expense, compared to $168 million for the second quarter of 2020, excluding $8.6 million in non-cash stock-based compensation expense. The relative decrease in research and development expenses is primarily related to one-time charges in the second quarter of 2020 of $53.6 million for the Censa merger, as well as $441.2 million for a commercial manufacturing service agreement with MassBiologics. Non-GAAP SG&A expenses were $56.6 million for the second quarter of 2021, excluding $12.3 million in non-cash stock-based compensation expense, compared to $45.3 million for the second quarter of 2020, excluding $8.3 million in non-cash stock-based compensation expense. Cash, cash equivalents, and marketable securities totaled $947.1 million as of June 30, 2021, compared to $1.1 billion as of December 31, 2020. I'll now turn the call over to the Operator for Q&A.

Thank you. Our first question comes from the line of Eric Joseph with JPMorgan. Your line is open.

Good evening. Thanks for taking the question, nice quarter. Just on the DMD franchise performance. With guidance now raised here, we're looking at the midpoint that actually shows a flat to down trajectory for the second half. So I'm just wondering if you could kind of talk us through any risks that you're anticipating with respect to ongoing performance with either Translarna or Emflaza and wondering whether this second quarter results reflected the advanced purchasing or stocking? Then I have a follow-up.

Yeah. Thanks, Eric for the call. Eric, why don’t you take this?

Sure, Eric. First of all, I think we had a terrific Q2. We had $53 million in sales for Translarna, that’s a 36% increase over last year. And with Emflaza, identically 36% growth. We had $49 million of revenue in the quarter. I think when you look at our revised guidance, I think our guidance right now reflects that we're growing in all major markets. We're very proud of the work that the European team has done after seven years, especially northern and southern Europe where they have the largest base of patients and we've been able to maintain that high base, large base of patients with high compliance rates minimizing dropouts. But what we're seeing growth right now is really, a lot of this, the new patients are coming in from Russia, from Central and Eastern Europe, Middle East, and our business in Latin America continues to be solid, despite some of the COVID challenges that we have. And we expect, right now, orders in Latin America, and particularly Brazil, significant orders, which you already know, can be somewhat lumpy, we anticipate those to happen in the second half of the year. So I mean, overall, I think we're very confident. We have strong continued growth of Translarna. On the Emflaza front, we had one of our best quarters ever, and we continue to see new patient growth. We also see that the compliance with Emflaza is extremely high. And more importantly, that this data that's being generated now, new data, real-world data and switching data, we're seeing not only new patients, but we're seeing an increased amount of patients that are actually switching from prednisone to Emflaza, and that's really a very important side. So overall, I think our guidance, where we're looking at right now is very strong continued performance, it would be right now on the upper end would be at least about a 17% increase year-over-year. And that's pretty in line with what we think we can achieve. And the business right now has a good tailwind.

Okay, great. And just second question on Evrysdi. The FITE19 trial is focused on hospitalized patients, but I'm just trying to get a sense of how you're thinking about the market opportunity of its use here, assuming success. Do you see potential for its use in the outpatient setting? Do you have the regulatory flexibility to do that? Or do you need to conduct a separate file for a patient? Thanks.

Thanks for the question. We're really excited about this. Just to remind everyone, PTC299 is a small molecule that currently can't be used in outpatient settings. We're conducting a hospital trial right now, and it definitely has potential. It has a dual mechanism of action; it's cellular, which means we don't expect as many issues with SARS-CoV-2 mutations since it targets the DH cellular enzyme. This targeting also reduces the likelihood of developing drug resistance. Overall, we believe there is potential for outpatient use, but we'll need to discuss it with the FDA based on the outcomes of the current trial, assuming it's successful. If successful, we will evaluate how it can be utilized in both hospital and outpatient settings. It appears to have the capability for both, and it's easy to take. With a prescription, you can start using it as soon as you contract COVID.

Okay, got it. Appreciate that. Thanks for taking the questions.

Thank you. Our next question comes from the line of Alethia Young with Cantor Fitzgerald. Your line is open.

Hi, congratulations on all the progress. This is Nina on for Alethia and thanks for taking our question. We were wondering for the Huntington's update, if you could just share how much and what information you should get or expect around CSF? Thanks.

Sure. Matt, you want to take that?

Certainly. The primary goal of the Phase 1 study was to show a dose-dependent reduction of Huntington mRNA and protein in peripheral blood cells. This offers a unique chance with an oral molecule that is widely distributed throughout the body and into the brain, where we have a one-to-one ratio of lowering in peripheral blood cells and in brain cells. This allows us to monitor blood cells peripherally to gain insights into brain activity. This capability results from the effective biodistribution of the molecule and its design as an oral treatment that effectively penetrates all parts of the brain, which is crucial since Huntington’s disease affects the entire brain. So far, we've demonstrated a decrease in mRNA in peripheral blood cells in both the SAD and MAD cohorts. The CSF cohort, which we consider a pharmacology cohort, will help us ensure that we achieve the intended biodistribution to the CNS based on our previous work. A significant design aspect of this molecule was to ensure it not only crosses the blood-brain barrier but also remains effective in the CNS. This is vital for achieving consistent distribution throughout all brain regions. We can confirm if this is occurring by measuring drug levels in the CSF and comparing them to peripheral plasma levels. This comparison will give us the readouts from the CSF cohort, allowing us to validate that we are achieving the desired CNS penetration. Specifically, we will first focus on measuring drug levels in the CSF to verify that we get the appropriate biodistribution as observed in our preclinical studies with animal models, which is a key design feature of the molecule.

Okay. Thank you.

Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is open.

Hi, good afternoon. Thanks so much for taking my questions, guys. I just have a couple, one on AADC. This is a program where I think you guys have been engaged in patient-finding efforts for a while. It's been a quarter since we've gotten an update on how many patients you found. I think the last count was somewhere in the 200. I was curious if you have any updated numbers on the addressable patient population that you could identify today. And then I have one follow-up.

Okay, yeah, thanks for the question. Eric, you want to take it?

Yes, Tazneen, we are currently engaged in extensive work. As I mentioned earlier, we are continuing to actively pursue patient-finding initiatives. At this moment, we are not prepared to share specific patient numbers. However, we are on track to reach our goal of identifying 300 addressable patients prior to our first launch, which we anticipate will take place in Germany following EMA approval. At that point, we will disclose the patient numbers. It’s important to understand that this is an ultra-rare disease, and we have expanded our efforts significantly. Currently, we have 100 programs screening patients in high-risk populations, particularly in cerebral palsy and epilepsy centers. We have tested our market strategy in over 20 countries, which provide access and reimbursement opportunities. When we announce the number of patients at launch, that will reflect the global count. Subsequently, we'll prioritize market access and reimbursement across different European countries and early access programs worldwide. We are also ensuring that our treatment centers are prepared. We currently have centers that have treated patients in the US, Europe, and Asia, and we are expanding our network of pediatric neurological centers of excellence to ensure prompt treatment for these patients once they are identified.

Okay. And in terms of your total addressable population that you think exists, I think your last guidance was somewhere between 5,000 and 6,000 patients. That's still your view.

Yes, Eric?

We currently see in the published literature and from our work with screening programs, especially in the risk population, that our overall global number suggests a specific patient population. It’s important to remember that this treatment is not a straightforward product like a tablet or infusion. It involves a stereotactic approach, surgery, and follow-up care, making the intervention and treatment process more complex than typical treatments. We believe understanding the number of patients is crucial, and we’ve made significant progress in identifying these patients through our genetic testing programs, including the pinpoint program in the US and our saliva testing initiatives, which are user-friendly. We're successfully identifying patients in several countries where gene therapy is increasingly being reimbursed, which is very significant.

Okay. Thank you. And then if I could squeeze one in on Huntington. Just to clarify, are you planning on showing knockdown for the wild-type by the end of this year?

So we are considering both types equally. You will see the overall levels of RNA that we observe since both wild-type and mutant will be included, along with a reduction in protein levels from both.

Okay. But will you be specifically highlighting what the wild-type knockdown is?

I think we'll be able to provide information on the wild-type knockdown based on the overall differentiation between the two, which is a positive development.

Thank you. Our next question comes from a line of Brian Abrahams with RBC Capital Markets. Your line is open.

Hi. This is Steve on for Brian. Thanks for taking our question. Another one on Huntington's. I'm curious what is known about how the neuron adapts to accumulation of mutant Huntington over time. And given the data from animal models or preclinical models that might tell us whether a rapid depletion of the mutant protein could cause any inflammation or dysregulated protein turnover? Thanks.

We don't have any. I think there have been several studies that show in terms of clinical benefit right in animal models, that shows the lowering of HTT results in improvements in animals. So I think I don't think you have a rapid reduction in that sense that's causing any sort of unusual consequences that I know of at least in the animal studies.

Thank you. Our next question comes on the line of Peyton Bohnsack with Cowen. Your line is open.

Hi, guys. This is Peyton on for Joe. Thanks for taking my question, and congrats on the strong quarter. I was wondering if you could provide a little more background on why ALS is chosen for PTC857 instead of some of these other CNS disorders or neurodegenerative disorders? And any timeline on when you'll release more details on the trial design? Thanks.

Sure. I'll start and then hand it over to Matt. If you consider PTC857 within the entire bio-e platform, it's important to understand that excess electrons can lead to increased oxidative stress and trigger inflammation, which causes aggregation. PTC857, being a 15-lipoxygenase, plays a crucial role in this process. When the system managing excess electrons becomes overloaded, it triggers an emergency response that activates inflammation to address the issue. It's concerning when this response diminishes instead of heightening. The significant point is that this mechanism is relevant across various neurodegenerative diseases and other conditions. We plan to explore multiple disorders, and Matt can provide further details on why we are focusing on ALS as our initial case.

Certainly, Stuart. As you noted, our entire preclinical program is founded on the knowledge that targeting 15-lipoxygenase and its associated oxidative stress and inflammation pathway is vital in various neurodegenerative diseases, including ALS and Parkinson's disease, among others. We have examined several in vivo and in vitro models across a range of diseases and demonstrated strong efficacy in these models, some showcasing generic synergy and others demonstrating disease-specific effects. With our Phase 1 data now available, we are prepared to advance to Phase 2. We decided to start with ALS due to our three-month data and supportive toxicity studies for three-month dosing. In developing treatments for neurodegenerative diseases, two key factors are crucial: first, the ability to dose long enough to observe changes in the disease's progression rate, and second, identifying the right patients who will exhibit measurable changes during the trial. One of the significant advantages of ALS is its rapid progression. Despite having two approved therapies, there remains a substantial unmet need as most patients do not survive beyond 18 to 36 months after diagnosis. Before this unfortunate outcome, patients experience a swift decline in neurological and muscular function, as well as respiratory function, all of which can be easily measured. We also have a validated endpoint, the ALS FRS, which is known to exhibit variations over a three-month period, enabling us to utilize both placebo groups and robust natural history data to demonstrate the impact of our treatment, PTC857, in a three-month trial. We have identified ALS, where our preclinical research highlights the significance of 15-lipoxygenase in the disease's pathogenesis, as a favorable setting for a three-month study to show treatment effects that could support a definitive registration study. To summarize, our choice of ALS as the initial indication is driven by our completed toxicology program and the ability to conduct three-month dosing to gather the necessary data for PKPD effects, potentially leading to efficacy assessments. We are currently in the process of designing this trial, which will include establishing a baseline progression rate over the three-month treatment window. While we are finalizing the specific details, it will involve placebo and dose groups. We will utilize standard ALS endpoints, including the validated ALS FRS scale, which has previously been used for approvals, along with essential biomarkers and pharmacodynamic indicators. We intend to commence this trial in the first quarter of 2022 and will provide further details on the study design and analysis.

Yes. That’s very helpful. Well, just one more quick kind of follow-up question to that. Do you plan on going into other indications or will you wait until this trial is done with the data?

Our goal will be to address the timing issue related to short versus long-term toxicology. We have focused on adult neurodegenerative diseases, particularly GBA, Parkinson's disease, and ALS, which are more about the timing of when we can enter into that area.

Thank you. Our next question comes from the line of Danielle Brill with Raymond James. Your line is open.

Hi, this is Alex on for Danielle. Thanks for taking the question. I was looking to see if you could provide any color on your plans for the 518 Huntington's Phase 2 patient pool. We've been hearing from KOLs that the patient pool should be as early stage Huntington's disease as possible to capture the benefit. Is it feasible to address in the Phase 2? And if not, could you share your thoughts on how you're approaching the enrollment criteria for the patient pool in the Phase 2 trial? Thanks.

Sure. I can make a general statement on that. In diseases that are either neuromuscular or neurodegenerative, there is always a desire to intervene as early as possible. However, even during the early stages, there might be some measurable decline. If you start too early, it may take too long to show significant results, so it's important to target the right patient population and choose the appropriate endpoints. It's really about finding a balance. If you start too early, it doesn't help, and if you start too late, that also doesn't help. Thus, identifying the right patient group requires careful analysis of the natural history of the disease to define optimal outcomes for that specific group. It may become clear within a certain timeframe that a confident experiment can be conducted, which leads to establishing the inclusion-exclusion criteria for the patient population you expect will show a decline. This is the approach we are pursuing moving forward, and our teams are actively considering this. If there's anything else Matt would like to discuss, he can chime in.

I think the point you raised, Alex, regarding the in-force population is about finding the right group of patients early enough in their disease to influence its progression. Our goal is to act on the biology of the disease before it advances too far, ensuring we can demonstrate a significant change in an untreated group. This is crucial for showing benefits over a placebo. During the trial, it's essential that the placebo group, which won't receive therapy, declines sufficiently for us to observe clinical benefits. We've dedicated a lot of time to utilizing existing databases, including one with over 20,000 patients, collaborating both in-house and with external thought leaders. We're carefully considering important factors like CAG repeats and various endpoints to identify a patient population that meets the necessary criteria. As we progress through our Phase 2 trial, our foremost objective is to demonstrate the effects of HTT mRNA and protein lowering in Huntington's disease patients. We'll be enrolling patients who, based on our analysis, we believe will exhibit changes in their condition. We are particularly interested in geographic changes as biomarkers of disease, which will help us demonstrate the benefits of reduced HTT mRNA and protein. Therefore, it's vital to ensure we select the right patients who are likely to show changes over time, enabling us to demonstrate a benefit in them. But on the other hand, maybe I'll make also a bit. I think there's some interesting things going on. And based on the experience with Alzheimer's experienced with the FDA, we do plan to discuss with them a pathway for accelerated approval focusing on relevant biomarkers. I mean, if you think about the practice in the plaque and Alzheimer that was used, here you have, I think even a better case for the monogenetic disease. You're targeting the precise protein that's mRNA that's involved in the process. You know that as soon as a new company says, there's Natural History data shows that reduced levels of the protein extend the time before you see the onset of the disease. So there certainly is a possibility we'll be able to at least have a discussion with the FDA. Probably Novartis talks about it as well, that they've had a discussion with both the AMA and the FDA. So if that's the case, we're in a very good position to see if we could work with that endpoint for potentially accelerated approval. And then what we've been talking about because certainly that is for the second study.

Great. Thanks so much for the color. And thank you for taking the question.

Thank you. Our next question comes from the line of Gina Lovering with Barclays. Your line is open.

Hi, this is Gina. Thank you for your question. In the past, you mentioned that beyond the 15mg and 30mg maximum doses, there are another two to three doses available. Could you provide an update on the 3Q data regarding how many of those levels are included and what the specific doses are? Additionally, as we move from the healthy volunteer trial to the phase 2 trial, how would you define the optimal therapeutic window? Thank you.

Sure. In our previous discussions, we mentioned that in the singular test doses, we reached up to 135 milligrams, which reduced the mRNA levels by about 50%. This means that a dose between 90 and 135 milligrams likely results in a complete reduction of HTT. In the multiple ascending doses of 15 and 30 milligrams, we observed a reduction of between 40% and 50% after 14 days of treatment at the 15-milligram dose. The lowest dose of 50 milligrams in our trial achieved this effect, while the 30-milligram dose resulted in a reduction of between 60% and 70%. We can effectively adjust the level of HTT mRNA based on exposure. Additionally, we are examining food effects and looking into CSF to better understand our dosing strategy. We think launching with a dose between 15 and 30 milligrams will lead to a 50% reduction. We're in a solid position, and the next step is to replicate our findings and analyze biomarkers related to HTT in HD patients to confirm that our observed exposure and reduction are effective. We are also evaluating CSF to ensure that what we see in the blood corresponds with CSF results. Our aim is to achieve the desired reduction at the lowest dose that indicates we are within an effective therapeutic range, which we believe is around the 15-milligram dose. Does that help?

Yes. For the CSF cohorts will that cover at one dose level or will do it covered multiple dose levels in that cohort?

We're only doing one dose level, right.

Yeah. You really only need one dose. This is basic simple pharmacology. We basically need the single dose level. Obviously based on the dose proportionality, we've seen throughout the not only the SAD and MAD work, but all the preclinical pharmacology. I think one thing you can say, one thing that translates very well in our degenerative diseases is the pharmacology models from pre-preclinical to clinical right sort of what we've learned about the bio-distribution and what we've learned about the predictive pharmacology we are able to assess a single dose level verify at a single dose all the way in Human.

Very helpful. Thanks.

Thank you. Our next question comes from the line of Raju Prasad with William Blair. Your line is open.

Hi there. This is Sammy on for Raj. Congrats on the quarter and thanks for taking our questions. There was recently a paper published in Nature Communications that came out of an academic center in which they used DC gene therapy that was administered to the substantia nigra and ventral tegmental area, and that ultimately led to some pretty compelling improvements in motor function. Just want to get your thoughts on targeting these midbrain regions as opposed to putamen? And if you would consider conducting a post-approval study examining the administration of PTC-AADC to them? And then I have a follow-up.

Thank you for the question. The clinical work was conducted in a university setting focusing on the substantia nigra. Looking at our results, we've shown significant progress during the retainer phase, with profound outcomes observed in a larger group of patients over five years in clinical studies, as well as results extending up to ten years. We believe we have the only therapy for AADC that's currently undergoing active regulatory review with the EMA, which we submitted in 2020. We also plan to submit the BLA by the end of the year. This uniquely positions us to make PTC-AADC available to all AADC patients globally who need this transformative therapy. We prefer to retain patients because we see consistent improvements in all cases, and we have numerous patients to support this. Additionally, the midbrain is a deeper structure that presents challenges in accessing it, which influenced our selection process based on various factors. The results we've seen indicate this area is quite spacious and transformative, especially where the dopamine neurons are located, and the data shows they are very active. We feel confident in our position and are completing all necessary regulatory requirements to deliver gene therapy to patients.

Got you. Thank you. And just a separate thought, I felt like we haven't heard too much about your oncology pipeline before, and it's a little divergent from your other therapies, which mainly target rare genetic disorders. Could you remind us what those candidates are and your clinical development strategy for them?

Thank you for the question. Our oncology program includes two compounds: Unesbulin, formerly known as PTC596, and Emvododstat, previously PTC299. We’ve discussed their use in trials for COVID-19 and acute myeloid leukemia (AML). We plan to provide a detailed update on these programs shortly, including sharing results. Additionally, PTC on UNESCO is currently in clinical trials for diffuse intrinsic pontine glioma (DIPG) and leiomyosarcoma (LMS). DIPG is a rare brain tumor in children, with about 300 new cases diagnosed annually in the US, while LMS is a rare type of adult solid tumor found in muscle, with around 4,000 cases each year. Both conditions have significant medical needs and limited treatment options, making our approach similar to that of diseases considered rare disorders. We expect to have trial results in the second half of 2021, which is promising. If the results are positive, we could start registration-directed trials based on these findings. Additionally, we anticipate results for AML treatments by the end of 2021. These are two programs and compounds we haven’t discussed extensively so far, but we’re gearing up to share data and insights soon, which should be exciting.

Great. Thank you. I look forward to seeing that data.

Thank you.

Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to management for closing remarks.

Thank you. So thanks for joining us today. As we shared our second quarter highlights, I believe the progress that we've made in this quarter is really a result of the dedication of our people. And while the pandemic is ongoing, I really am continually impressed by the development team that has made substantial progress across the full pipeline. And we're excited to continue this year, these updates with you as they become available. Also in addition to that, I think the perseverance and execution of the global commercial team has resulted in PTC raising our 2021 revenue guidance for the DMD franchise. And we look forward to the continued execution of this in the second half of this year. So thanks for joining and look forward to talking to you all.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.