Ptc Therapeutics, Inc. Q4 FY2021 Earnings Call

Good day, and thank you for joining us. Welcome to the PTC Fourth Quarter and Full Year 2021 Financial Results Conference Call. I will now turn the call over to your host today, Kyle O'Keefe, Senior Vice President of Global Commercial and Corporate Strategy. Please proceed.

Good afternoon, and thank you for joining us today to discuss the PTC Therapeutics fourth quarter and full year 2021 corporate update and financial results. I am joined today by our Chief Executive Officer, Stuart Peltz; our Chief Operating Officer, Matthew Klein; our Chief Business Officer, Eric Pauwels; and our Chief Financial Officer, Emily Hill. Today's call will include forward-looking statements based on current expectations. Please take a moment to review the slide posted on our investor 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 statements are 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 annual report on Form 10-K filed with the Securities and Exchange Commission as well as the company's other SEC filings. We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP 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. Stu?

Thanks, Kyle. I'm excited to share with you today the significant progress in 2021. Over the last two decades, we have advanced innovative therapies from ideas and discovery to commercializing and distributing them to patients around the globe. These efforts have positioned us to continue to grow into an enduring innovative biopharmaceutical company with substantial revenues. Our vision is to build our pipeline such that at steady state, we can commercialize a new product every two to three years. This will allow us to continue to create value for all of our stakeholders. Executing on our strategy over the last few years has led us to having a robust pipeline with five registration-directed studies ongoing and we anticipate results for many of them this year. Along with the growth of our pipeline, I'm pleased to report that the commercial engine has performed exceedingly well. We have reached $539 million in total revenue in 2021. The Duchenne muscular dystrophy franchise continued to grow, contributing $423 million in net product revenue. These products demonstrate robust growth years after approval, and we expect this growth to continue based on the treatment benefit, maintaining treatment compliance, and continuing geographic expansion. Our goal is to bring Translarna to nonsense mutation Duchenne muscular dystrophy boys globally, and we see continued geographic opportunity in regions like Asia Pacific, Central and Eastern Europe, Middle East, North Africa and Latin America. In addition, with the potential of successful results of Study 041 mid-year, we look forward to pursuing the registration path to bring Translarna to patients in the United States. We anticipate that the commercial team will execute flawlessly and will have a stellar year. Based on this, we're confident that we'll continue to have a strong and growing revenue base, and our revenue guidance for 2022 is between $700 million and $750 million with $475 million to $495 million from the Duchenne muscular dystrophy franchise. In addition to the DMD franchise, Evrysdi has shown remarkable growth in 2021, just over a year after launch. Evrysdi is now approved in 72 countries, capturing over 20% of the SMA market in the United States and is now the #1 prescribed disease-modifying therapy in SMA. We also see continued growth in the ex-United States market with approximately 30% market share in Germany. This rapid and sustained uptake demonstrates the appeal of an effective orally bioavailable therapy. Tegsedi and Waylivra are now well-positioned for successful commercial launches in 2022. Both therapies received Category 1 pricing in Brazil, and this Category 1 designation allows pricing in line with international markets. Eric will go into more detail on this later in the call. In addition to PTC's commercial success, we're excited about the progress across our robust pipeline. By the end of 2022, we expect to have initiated three additional registration-directed studies and a potential approval in Europe for PTC-AADC, our first gene therapy. As alluded to previously, we have a number of results expected in 2022, and we believe this will be a transformative year for PTC. Let me share a few highlights. From our Bio-e platform, results from our registration-directed MIT-E trial are expected in the fourth quarter for vatiquinone in mitochondrial disease-associated seizures. From a metabolic platform, the registration-directed PTC923 APHENITY trial for PKU is expected to be completed by the end of this year. As a reminder, there is substantial unmet medical need remaining in PKU, and with newborn screening well-defined centers of excellence and a clear path to registration, we're extremely excited about this program. We're moving forward with the next compound from our splicing platform, PTC518 for the treatment of Huntington's disease. As a reminder, the Phase I healthy volunteer study demonstrated that PTC518 reduces HTT mRNA and protein levels to the target level of 50% reduction. PTC518 was also measured in the CSF, demonstrating that it crosses the blood-brain barrier and has no efflux. The Phase II study of the PTC518 in Huntington's disease patients is initiating this quarter. We know that the Huntington's disease community is eager for progress. We made significant achievements in 2021 despite the ongoing COVID-19 pandemic. I'm proud of the continued hard work of our people who have shown true dedication to our goal of bringing therapies to patients. PTC has consistently delivered results across research, development and commercial business, and we're well positioned to continue to deliver both short and long-term value to our stakeholders. I'll now turn it over to Matt for more on our development programs. Matt?

Thanks, Stu. We made tremendous progress across our broad development pipeline in 2021 and I'm happy to provide some key updates on the team's progress. I'll start with our Bio-e platform. Our first compounds in the Bio-e platform is vatiquinone, which targets the enzyme 15-Lipoxygenase, a key regulator of the inflammation and oxidative stress underpinning a number of CNS diseases. As Stu highlighted, we have two ongoing registration-directed trials with vatiquinone, the MIT-E trial and the MOVE-FA trial. The MIT-E trial is a placebo-controlled study of vatiquinone in patients with mitochondrial disease associated seizures. This study will enroll approximately 60 patients from study sites in North America, Europe, Australia and Asia. The study includes a 28-day observational phase to ensure subjects are experiencing a minimum number of observable motor seizures, followed by a 24-week placebo-controlled phase, during which subjects are randomized to receive either vatiquinone or placebo. The primary endpoint of the trial is a reduction in observable motor seizures, with secondary endpoints assessing different aspects of seizure pathology, as well as overall disease morbidity. We expect results from this study in the fourth quarter of 2022. The second registration-directed trial of vatiquinone, MOVE-FA, is being conducted in patients with Friedreich Ataxia. MOVE-FA is a randomized, placebo-controlled 72-week trial, with the primary endpoint being change in the modified FARS disease rating scale, with the key secondary endpoint being improvement in activities of daily living as assessed by the Friedreich Ataxia ADL scale. The trial is fully enrolled and we expect results in the second quarter of 2023. The second compound in the Bio-E platform, PTC857, also targets 15-lipoxygenase and is a potent inhibitor of paraptosis, a recently described cell-death pathway demonstrated to be key to neurodegenerative disease pathology. The first indication for PTC857 is ALS. With the successful completion of the Phase I healthy volunteer study, we are planning to initiate the CardinALS Phase 2 trial in the second quarter of this year. This global registration-directed trial is a 24-week placebo-controlled study with change in the ALS FRS scale as the primary endpoint. We will provide more details on the trial as we move closer to initiation. Turning now to our metabolic platform. We initiated the APHENITY Phase 3 clinical trial for PTC923 in PKU patients in 2021 and are expecting trial results by the end of 2022. As a reminder, APHENITY is a double-blind, placebo-controlled trial that includes a run-in phase to identify PTC923 responders who will then be randomized to receive either PTC923 or placebo for six weeks. The ability to identify and enroll only responders to PTC923 significantly enriches our primary analysis population. As with previously approved therapies for PKU, the primary endpoint of the APHENITY trial is a reduction of blood phenylalanine levels. Turning now to PTC518 from our splicing platform. We remain on schedule to initiate the Phase 2 PIVOT HD study in patients with Huntington's disease this quarter. The PIVOT HD study will consist of two parts: an initial 12-week placebo-controlled phase focused on PTC518 pharmacology and pharmacodynamic effect, followed by a nine-month placebo-controlled phase focused on PTC518 biomarker effect. The study will initially include two dose levels of PTC518, 5 and 10 milligrams. A third dosing group may be added based on initial pharmacology and biomarker data, leveraging the titratability of PTC518. The primary objectives of the Phase 2 study are to demonstrate safety, pharmacology and evidence of HTT mRNA and protein lowering in HD patients. In addition, we will collect CSF, plasma and CNS radiographic biomarker data, which could provide meaningful evidence of PTC518 treatment effect. As we have previously discussed, we have carefully selected the study population based on extensive review of the existing HD natural history data to ensure that we have a population that is neither too early nor too advanced in terms of disease progression to allow for the best opportunity to demonstrate treatment effect. I am proud of our development team's efforts and accomplishments in 2021 and look forward to providing updates on the numerous milestones that we anticipate this year. I will now turn the call over to Eric for an update on our commercial progress. Eric?

Thanks, Matt. It is exciting to see the great progress of our late-stage clinical pipeline, and our global customer-facing team is well-poised to leverage our expertise and footprint to bring these treatments to patients. Our team has delivered another excellent quarter worldwide, building on the significant momentum created during the year and closing out what has been the strongest year for PTC commercial success. Our global DMD franchise continues to grow across existing main markets and via new geographic expansion. We delivered on key milestones for our products in Latin America, where we are actively commercializing a portfolio of three innovative rare disease products. Importantly, we are well-positioned to execute on our potential launch of the PTC-AADC gene therapy in Europe and other international markets this year. Turning to our DMD franchise, our 2021 revenue for the franchise was $423 million, which is an impressive 28% growth over 2020. The foundation of the Emflaza business continues to be solid. Our 2021 Emflaza franchise sales were $187 million, an impressive 35% growth over 2020. Operational excellence drove new patient starts, more favorable access, continued high compliance, appropriate weight-based dosage, and lower treatment discontinuation. Now turning to Translarna, we achieved $236 million in 2021 net revenue, a remarkable 23% growth over 2020. The growth was due to ongoing expansion of the patient base, high compliance, as well as continued geographic expansion. While Russia was the key driver of the growth, we also continued to see growth in our main markets in Europe. In Brazil, we successfully secured a group purchase order for Translarna for both new and existing nonsense mutation DMD patients, with the first part of that order delivered in December. Now turning to Tegsedi and Waylivra. The Latin American team has delivered on significant milestones for both franchises throughout 2021. Following the Waylivra approval in the third quarter, we were excited to announce that we successfully received Category 1 innovation classification from CMED, the drug market regulation chamber in Brazil. CMED price categorization is the first critical step in getting pricing and reimbursement in Brazil. Category 1 classifications are given to innovative treatments that provide greater efficacy than current standards of care and allow for pricing in line with international markets. Tegsedi also received Category 1 pricing in Q4 2021. Categorization of both products as innovative treatment are key milestones towards optimizing the long-term value in Latin America. Additionally, in December, we submitted an application to ANVISA for approval of Waylivra in the treatment of FPL. If approved, Waylivra will be the first approved treatment for FPL in Brazil, and this will mark the first globally-approved product for this indication. This application has been submitted under the rare disease pathway, and we anticipate a decision in the second half of 2022. I will now touch on the preparation for PTC's first gene therapy launch for PTC-AADC. I am very confident that our team is well-prepared to execute on the potential launch of PTC-AADC, which we anticipate will occur in Europe shortly after final approval. PTC's efforts to accelerate patient screening and identification activity in enriched high-risk populations continue to progress well. Significant advancements have been made with the identification and preparation of expert pediatric neurological centers of excellence and advancing medical education throughout the European Union and other key markets to ensure treatment center readiness at the time of launch. We remain focused on identifying patients globally in markets where gene therapies are accessible and reimbursed.

Thanks, Eric. In 2021, we continued to see strong commercial growth and achievements across our pipeline. We have worked to position PTC to deliver on a number of planned value-creating milestones in 2022. The press release issued earlier this afternoon summarizes the details of our fourth quarter and year-end 2021 financial results. I will take a few minutes now to review those financial results and our 2022 guidance. Please refer to the press release for any additional details. Let me begin with our top line results. We reported $538.6 million in total revenue for the full year 2021 compared to $380.8 million for the full year 2020. Revenue growth was primarily driven by our global DMD franchise, with total franchise revenue of $423 million, as compared to $331 million in 2020. Translarna net product revenues were $236 million for the year, compared with $191.9 million for the full year 2020 for a year-over-year growth of 23%. For Emflaza, net product revenues were $187 million for 2021 compared to $139 million for the full year 2020. We recorded $109.7 million in collaboration and royalty revenue for the full year 2021 as compared to $47.4 million in the full year 2020. This increase was due to an increase in Evrysdi royalty revenue and three milestone payments. In 2021, we recognized royalty revenue of $54.6 million compared to $4.8 million in 2020. We achieved milestones in 2021 of $20 million for the first commercial sale in the EU, $10 million for the first commercial sale in Japan, and a $25 million sales-based milestone reaching $500 million in sales. Turning now to 2022. Our total revenue guidance is $700 million to $750 million, which includes expected revenue contributions from all of our approved commercial products and projected revenue sales of PTC-AADC. Also included in our guidance is an anticipated sales-based milestone from Roche of $50 million, which would be reached upon $750 million in annualized sales of Evrysdi. There is the possibility of an additional $100 million milestone payment if sales of Evrysdi exceed $1.5 billion in 2022. However, this potential milestone is not included in our 2022 guidance and remains potential upside. As a reminder, PTC retains 100% of all milestone payments and 57% of royalties under our agreement with Royalty Pharma. 100% of the royalties from Evrysdi will be retained by PTC once we reach the cap of $1.3 billion. Non-GAAP R&D expenses were $487.1 million for the full year 2021, excluding $53.6 million in non-cash stock-based compensation expense, compared to $438.9 million for the full year 2020, excluding $38.7 million in non-cash stock-based compensation expense. Non-GAAP SG&A expenses were $235.9 million for the full year 2021, excluding $49.9 million in non-cash stock-based compensation expense, compared to $213.6 million for the full year 2020, excluding $31.6 million in non-cash stock-based compensation expense. We anticipate non-GAAP R&D and SG&A expense for the full year 2022 to be between $800 million and $850 million, excluding approximately $115 million in estimated non-cash stock-based compensation expense. Cash, cash equivalents, and marketable securities totaled $773.4 million as of December 31, 2021, compared to $1.1 billion as of December 31, 2020. I will now hand the call over to the operator to start our question-and-answer session.

Our first question comes from Alethia Young with Cantor.

Can you provide an overview of the potential number of patients in Germany for ADC and how we should view the overall contribution from Europe? Additionally, can you update us on your progress in the United States and inform us if any new issues or concerns have arisen?

I think we’ve been working hard to identify patients and develop sites, centers of excellence, so that when we receive approval, we will be ready to move forward. This drug is clearly transformational. Eric, could you share some insights on our readiness for the launch? Then Matt can provide some updates on the trial.

Yes, absolutely, Alethia. We have been very excited with the progress that we've been making in terms of patient finding. We've expanded a lot of our activity screening programs in many of those countries in Europe. We do anticipate the first country to launch will be Germany. And, of course, we'll have free pricing for a period of time, and we hope to treat as many AADC patients, but we will also be exploring early access programs that are currently available through these treatments. So clearly, there are a number of European countries and international markets that following the European approval, we will be able to begin to access and begin to discuss the value proposition. Our focus has really been to prepare sites of centers of excellence and patient identification. The majority of our efforts have really paid off. We've been seeing new patients coming in quarter-on-quarter. The disease and educational programs that we have and the testing that we've been doing has been giving us much higher yields, particularly in those enriched populations. So, the sequence will be a typical kind of European sequence with Germany, a number of key early access markets and then international markets that follow the first launch in Germany.

And then the U.S.?

Yes, it is Matt. I can take that question. So first, just as you pointed out, we expect to be moving forward in Europe and expect an opinion now in April of 2022. There were some additional manufacturing bioanalytical data that the CHMP had asked for. We're in the process of collecting that data. We'll have that in by the end of this quarter and put us in a position for the opinion in April. We're in the process of getting ready to meet with the FDA to align on the submission package. And obviously, we're going to avail ourselves on the new bioanalytical data we're generating in support of the MAA. And so we'll be including that along with the data we have from the carrying treatment cases. And with that, we plan to submit the BLA in the second quarter of this year.

Our next question comes from Joseph Thome with Cowen.

Maybe just a couple more on AADC. In terms of the label itself, do you anticipate any sort of guidance on age group or patient size, either in the U.S. or a European label? And then when you talk about reimbursement, I know for what this may cost others have used kind of pay-for-performance models. Are you debating various ways to get this reimbursed?

Great. Yes. So Matt, do you want to take the first one?

Yes, absolutely. I think what's really impressive, Joe, about the package for AADC is the consistent demonstration of treatment effect across patients of all pediatric age groups, even into early adulthood. So, what we really have is a body of data demonstrating not only an important biomarker response in the early months following treatment begin, significant improvement in motor function, and achieving motor milestones. We had children who were unable to move at all and can now walk. So it's really an impressive clinical package that has been demonstrated in patients of all different age groups. And part of that is because AADC is not a neurodegenerative disorder; rather, all of the networks and coordination that would be needed for motor function remain in place. What's missing is dopa. So with the provision of the gene therapy, the dopamine can now be produced and all of those coordinated movements can occur. I bring that up because that's the reason why we wouldn't expect there to necessarily be a treatment effect difference based on age, while the younger patients certainly do well. We're seeing impressive results in all different age groups. So, at this point, really, the package includes that breadth of age, and we can't comment whether there'd be any restrictions in age at this point and again we're putting forward a data package that's really strong in terms of treatment effect across all the ages that we treat.

In terms of reimbursement, I believe we have a very strong package with five years of clinical data and follow-up. We see all patients responding to treatment in transformative ways, especially younger children who go from being weak and floppy to walking. Additionally, there's biomarker data showing prolonged dopamine production. From a payer's standpoint, the package is compelling, especially considering it targets an ultra-rare patient population, which will likely have a minimal budget impact. For comparison, another ultra-orphan product like Orchard's gene therapy for MLD was priced at $3.5 million, which is about twice the size of AADC. We truly believe this package represents an incredibly strong and valuable product. We're excited about the potential, and once we receive approval, we'll discuss pricing further, but we see it as a highly valuable product.

Our next question comes from Eric Joseph with J.P. Morgan.

A few on Translarna. From a first, maybe, Eric, can you kind of speak to the brand exposure to Russia and whether you see any impact in being able to access that market in sort of the rising geopolitical tensions with Ukraine? Is your top line guidance at risk at all on the lower end with sales in Russia? And then looking longer term, I guess, given all the experience in commercial exposure in DMD, what, if any, are the avenues to extend the market exclusivity of Translarna and Emflaza beyond their current terms? How should investors be thinking of any additional R&D or BD activity within DMD to backfill the franchise?

Yes, sure. So in terms of, obviously, it's unfortunate what's occurring between Russia and Ukraine is obviously a highly volatile situation, and we'll be closely watching the geopolitical tensions. And as the situation unfolds, we'll plan accordingly on how to adjust the business. But we've always had puts and takes within our guidance. So, as such, we're not adjusting the guidance as a consequence of that. We'll need to learn more, obviously, about what the sanctions and if that will affect things like medical. So that time will always tell somewhat about that. Then the second question was commercial exposure and how in terms of what we're doing with Tegsedi and Waylivra in the long run. Eric, do you want to...

It was more about DMD IP runway. Are there any strategies to extend it, and are you making additional investments in that?

Eric, do you want to talk a little bit about that?

Yes, definitely. Regarding the situation in Russia, we are monitoring it closely, but we have a dedicated team on the ground there to ensure product continuity. We have patients using Translarna, and they have already received it. We're closely tracking developments and don't expect any significant impact on the overall revenue guidance provided by Emily and Stuart. Concerning the IP situation, we anticipate that the exclusivity loss for Emflaza will occur in 2024. However, we are actively working on several programs aimed at retaining patients, as we have been delivering exceptional service with Emflaza. At this point, we do not foresee a rapid decline in patient retention and believe we can maintain a substantial number of these patients. We have several key initiatives focused on distribution models and patient retention for Emflaza. For Translarna, we benefit from extended patent protection that lasts well into 2029 and possibly beyond. Our objective is to continue innovating, and with the anticipated results from 041, we might also gain a favorable position in the U.S. with potential FDA approval for Translarna, which would provide additional opportunities. Our teams are fully dedicated to addressing all IP-related matters for both products, and we are making significant efforts at the patient level to ensure a positive experience. I trust this answers your question.

If I could sneak in one more related to Evrysdi. As we're looking towards the potential label expansion, the pre-symptomatic population based on the Rainbowfish study. Can you just maybe describe how you are relative to thinking about the incremental market opportunity there and its competitive positioning? Are there any particular geographies that might be more receptive to Evrysdi over Zolgensma and Spinraza in the pre-symptomatic patient population?

We recently shared results from the Rainbowfish study where we assessed the safety and effectiveness of Evrysdi in pre-symptomatic SMA infants from birth to six weeks old. We found that about 80% of the treated infants who received Evrysdi for at least 12 months reached motor milestones like sitting, rolling, crawling, standing, and walking independently, similar to healthy babies. This is quite exciting as we submitted a supplemental NDA for this so these children could benefit. In particular regions, especially in Europe where newborn screening is more common, we believe this could be made available. The key challenge is to be the first to offer this treatment for pre-symptomatic babies with SMA. We consider this a significant advantage, and we believe that globally, this will be something that people want to utilize, not just in the early stages, but throughout their lives, with long-term efficacy being a major benefit.

Our next question comes from Raju Prasad with William Blair.

I just want to get your thoughts on some of the clinical holes that we've seen in some of the PKU programs? And maybe how that impacts or how are you looking at the commercial market kind of in the long term for 923 given kind of the gene therapy holdups?

Yes, that's an interesting point. We've observed issues in two different trials with two distinct viral vectors, which have caused them to be put on hold. The implications for the gene therapy concerning the large amounts of enzyme produced are uncertain. However, a significant advantage for us is that our molecule is orally bioavailable, allowing for direct oral administration without the associated complications. This provides us with a distinct advantage compared to our gene therapy efforts. Additionally, our targeted gene therapy strategy focuses on delivering therapy directly to the necessary tissue at relatively low levels, which we believe is a major benefit. This approach allows us to avoid a systemic concentration early on and enables us to understand the therapy better before progressing. In terms of PKU, we still lack proof of concept, highlighting the need for an oral therapy.

Regarding AADC, I know you've mentioned identifying a number of patients in previous quarters. Do you currently have an estimate of how many patients have been identified in EMA territories compared to the U.S.? Also, how are you approaching the launch considering the patient identification so far?

Yes, I believe we have been diligently working on identifying patients. We have identified around 300 patients globally. While we haven't disclosed specific details, I think we are positioned well to quickly treat these patients upon approval and establish centers of excellence to facilitate that. We are making significant progress in finding patients, especially following approval, and we are already noticing an increase in patient numbers as more people recognize that there will be a treatment available. This trend is common with ultra-orphan diseases; as treatments become available, more patients are identified, often exceeding initial estimates, as physicians start to take a closer look at these cases. Therefore, we believe we are in a strong position to identify and treat several patients this year following the approval.

Our next question comes from Brian Abrahams with RBC Capital Markets.

A couple of quick ones on PKU. For 923, I'm curious what the key parameters that you're going to be looking for in the APHENITY study, particularly the lead-in portion to guide who's going to optimally respond to 923 and how it's going to be used in the real world? I'm curious if you envision this being used primarily in classical patients or some Kuvan non-responders or perhaps more broadly in order to get more patients to be able to normalize their diet. And then my second question is also on 923. Can you remind us where you are on the chronic toxicity studies? And maybe any similarities or differences to what preclinical signals have been observed with Kuvan at comparable doses?

Sure. Matt, do you want to take that?

Sure. Hi, Brian. For your first question about the trial, there was a Phase 2 trial conducted with PTC923, which compared it directly with Kuvan in a crossover study. This study treated both PTC923 and Kuvan, and we found that 50% more patients responded to PTC923 compared to Kuvan. Among the patients who responded to both treatments, those on PTC923 experienced a greater reduction of over 200 mmol/L in phenylalanine levels compared to those on Kuvan. We are seeing that PTC923 can benefit more patients, including those with classical PKU, who have baseline phenylalanine levels of 1,200 mmol/L or higher. In cases where Kuvan showed some effect, PTC923 had a significantly stronger response. This gives us confidence that we can meet the ongoing need for an effective therapy in the PKU market. As we approach the Phase 3 trial, we believe that PTC923 will benefit patients of all ages. This study will involve both pediatric and adult populations and will include a run-in phase, during which all potential subjects who meet the screening criteria will receive PTC923 for two weeks. We will then evaluate whether there's a noticeable reduction in phenylalanine levels after treatment with PTC923. If the answer is yes, these subjects will be randomized to receive either PTC923 or a placebo for a six-week placebo-controlled phase, with the primary goal being to reduce phenylalanine levels in patients receiving PTC923 compared to placebo. Based on our mechanisms and the data we currently have, we expect to offer benefits across all demographics, genotypes, and severity levels, including classical PKU patients, as we have already observed benefits in the Phase 2 study. Regarding chronic toxicity, we have completed all essential toxicology work for the six-week placebo-controlled phase, which serves as the efficacy component for our pending NDA, as well as for the long-term safety aspect where all patients will transition into an open-label safety portion after the placebo-controlled phase. These studies are now completed, and we are ready to proceed with the full trial, including the six-week placebo-controlled phase and the open-label extension.

Our next question comes from Gena Wang with Barclays.

I just have one regarding Translarna confirmatory study 041 data in mid-2022. Could you provide different scenarios of the outcome and its impact on the Translarna launch in the European market?

Yes, to remind everyone, we have study 041 scheduled for the middle of this year, and we're quite excited about it. We've leveraged all the insights gained from previous clinical trials to properly identify the right endpoints and the appropriate patient population for this study. We believe we're well-positioned to demonstrate the efficacy of Translarna using the correct patient population and endpoints. We anticipate having the study results by mid-year. If the study proves positive, we aim to submit an NDA to the FDA to make Translarna available to children in the U.S. In Europe, this relates to our conditional marketing authorization, and a crucial aspect is the STRIDE registry, which shows a significant benefit of Translarna in terms of loss of ambulation and pulmonary function over the years. The clinical trials are designed to reflect what we can achieve in these critical events affecting boys with DMD. We utilize a 6-minute walk test to assess what we can do to prevent loss of ambulation. We're committed to providing this data to the CHMP, which supports our annual renewal of the conditional marketing authorization. Additionally, we believe that the latest data indicating a five-year difference in loss of ambulation and prevention of pulmonary function decline is a compelling part of our submission and will be important for how the CHMP assesses Translarna.

So sorry, just a follow-up. So, if the trial fails, what additional data would you need to provide to maintain Translarna on the market in Europe?

Yes. I believe that what Matt mentioned is correct: we have the STRIDE registry, which has shown significant results in preventing loss of ambulation and maintaining pulmonary function, as well as helping individuals get off the ground. The data is very convincing, and you may have seen this in the publications we've shared. Additionally, European regulatory authorities are quite interested in this information. This represents a crucial piece of evidence that reinforces Translarna's capability to help DMD patients maintain what is essential to them—motor function. We anticipate that many of the renewals we’ve discussed in the past will hinge on real-world evidence from the STRIDE data. If, hypothetically, the trial does not succeed, we believe that the strength of the STRIDE data itself is sufficient to keep the product available in the EU for patients.

Our next question comes from Danielle Brill with Raymond James.

This is Alex on for Danielle. Could you remind us where the Angelman gene therapy program stands? Based on my notes, I'm looking at, I think you were originally targeting 2021 for the IND filing. So we're just curious what needs to be done there to get that IND filed?

Yes, sure. Matt, you want to go through this a little bit?

Yes, absolutely. Hi, Alex. We previously shared that we were in the process of completing the gating toxicology work to move the program into the clinic. We did have a number of delays related to COVID in terms of both its impact on our CDMOs and manufacturing CMOs, as well as the global shortage of nonhuman primates. I'm happy to report that we are moving forward now and are continuing our work towards having the IND or CTA ready to get that program into the clinic in the near future.

Our next question comes from Robyn Karnauskas with Truist Securities.

Congratulations on all the progress you've made this year. I have a question about MDS in the Bio-e platform, which is becoming more prominent. Can you provide more details about the MIT-E trial? I understand you're enrolling patients who experience a significant number of seizures within a 14-day window, particularly during the last month. What percentage of the MDS population fits this criteria? Additionally, could you explain the risks associated with the placebo-controlled portion of this trial, considering the age range of the patients being enrolled? How consistent is it for these patients to experience clusters of seizures before the study? I'd appreciate any insight into how this study is being structured. My second question is regarding the current state of market opportunities; many mid-cap platforms are available for acquisition. What are your thoughts on pursuing M&A in the current climate?

So Matt, do you want to take the mitochondrial disease associated seizures?

Yes, certainly. Hello, Robyn. Regarding mitochondrial disease-associated seizures, it's important to note that approximately 40% to 50% of patients with mitochondrial disease experience seizures as a significant aspect of their condition. These seizures often do not respond to standard antiepileptic medications due to the disturbance in energy pathways that these medications do not target. In fact, many of these treatments can worsen the energy defects that contribute to seizures in these patients. As a result, while they may offer some antiepileptic benefits, the adverse effects on the underlying pathology can negate any positive impacts. In other words, these children often face numerous and severe seizures, leading to significant morbidity, frequent infections, and, regrettably, early mortality. Throughout the development of vatiquinone, we have examined its effects across various mitochondrial disease subtypes, which arise from different mutations in the mitochondrial or nuclear genomes affecting mitochondrial function. Across the various subtypes we've treated, we have observed a consistent positive effect on seizure-related issues, including reduced seizure frequency, alleviation of refractory status epilepticus, decreased disease-related morbidity, and, in some cases where we have sufficient historical data, evidence of a protective effect on mortality. The MIT-E study is designed based on our previous observations regarding the impact on seizures, related morbidity, and quality of life among mitochondrial disease patients of diverse subtypes and treatments. This study operates as a basket trial, emphasizing the common issue of drug-resistant seizures rather than focusing on specific genotypes or mutations. The study includes a run-in phase to ensure sufficient observable motor seizures are present, allowing us to demonstrate any potential benefits. Many of these patients experience frequent seizures, primarily because existing treatments do not adequately control their condition. If they meet the required number of observable seizures over a 28-day period, they will then be randomized to receive either vatiquinone or placebo for six months, with the primary endpoint being the change in observable motor seizures compared to those in the run-in phase. This trial design has been successfully utilized for the approval of treatments in other pediatric seizure syndromes. Moreover, we will incorporate secondary endpoints to evaluate other seizure pathology aspects and disease morbidity, as vatiquinone is not an antiepileptic drug but instead targets a fundamental mechanism of the disease. We are measuring seizures to assess and quantify the treatment effect. To summarize, we are including various disease subtypes and balancing enrollment to ensure representation across different mutations in both vatiquinone and placebo groups. Importantly, there is no age restriction; we are including all pediatric patients aged 18 and under, focusing only on those with the requisite number of observable seizures.

So Robyn, I think with your question on what's in this space, there's a fair amount of M&A and you wanted us to comment on. Is that what you do...

I think everyone is asking this question due to the low valuations of many mid-cap companies. People are curious about their interest in acquiring certain platforms. It's about understanding the level of interest in the market and whether there is a strong possibility of experiencing more mergers and acquisitions in the latter half of the year. This is the main question we are all contemplating during these earnings calls.

I understand. My perspective is that mergers and acquisitions are always complex, depending on a company's capabilities, their pipeline, and their commercial strengths. It's difficult to determine whether someone could do it better or if others are actively working towards being acquired as per their goals. While there is certainly significant interest in treating these diseases, I can't definitively say whether there will be an increase or decrease in activity; it's clear that there's a strong interest in these drug types.

Our next question comes from Judah Frommer with Credit Suisse.

Just a couple on 518 as you kind of head toward beginning enrollment there. Just maybe any feedback from the sites as you get them set up on kind of receptivity to route of administration, maybe versus other Huntington's programs that are in the clinic? How important that is to patients and doctors and also to type tradability given the lack of specificity toward mutant Huntington? And then also, you do have a functional endpoint in there as a secondary; kind of how are you thinking about potential to show anything there given the length of the study?

Sure. From the first part, the orally bioavailable small molecule is a significant advantage due to its ease of administration. It's simple to take, and patients can do it at home. Additionally, the major benefit lies in its ability to distribute effectively, crossing the blood-brain barrier and reaching various tissues, including the brain. You can track the pharmacokinetics, which allows you to know the exact concentration of the drug in both plasma and cerebrospinal fluid (CSF). This knowledge includes the levels of drug in the entire brain when it’s in the CSF, and you can observe changes in plasma levels, providing a strong indication of a good response. Furthermore, you can directly see the impact on biomarkers like the HTT protein. There is so much potential to learn from this, and there is confidence that the drug is reaching the intended areas. When confirmed to be present throughout the brain, you can expect effects in various regions. Everyone involved, including patients and physicians, is very excited about these findings. We have organized our approach to assess not only HTT level reductions but also to monitor biomarkers related to NFL, HTT, and changes in brain volume through MRI. While the duration of the study might not be long enough for certain outcome measures, we are in a good position regarding accelerated approval prospects, which would allow us to conduct long-term trials for clinical benefits. Overall, we are well-prepared to examine protein level reductions, decreases in CSF levels of HTT and neurofilament, and preservation of brain volume. This represents a strong set of metrics to evaluate.

That concludes today's question-and-answer session. I'd like to turn the call back to Dr. Stuart Peltz for closing remarks.

Okay. So first of all, let me thank you all for joining us today so that we can discuss the progress that we've made really up to the date for 2021. I'm really proud of the team that really continues to execute on the goals as we continue to grow. I think we've made significant progress across our research and development pipeline with many upcoming milestones in 2022. We're driven to bring these medicines to patients around the globe, and I anticipate that 2022 is going to be a real transformative year for us and we look forward to the progress and updates that we'll give you. So thank you for joining.

This concludes today's conference call. Thank you for participating. You may now disconnect.