Ptc Therapeutics, Inc. Q1 FY2022 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the PTC First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. I would now like to turn the call over to your host, Kyle O’Keefe. You may begin.

Good afternoon and thank you for joining us today to discuss the PTC Therapeutics first 2022 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 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 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 and quarterly report on Form 10-Q 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. Good afternoon and thanks for joining today. I'm excited to share PTC's first quarter results, but first, an update on what I expect to be a transformative year for the company. On this, PTC has developed therapeutics to help treat patients with rare disorders while producing revenue to provide value for all of our stakeholders. When I founded the company, it was built on the groundbreaking science of RNA biology. By regulating at the RNA level, we realized we could treat diseases of unmet medical need. The company has worked hard to turn these ideas into reality. Over the past 24 years, we have grown into an enduring biopharmaceutical company with a number of commercial products. We are continuing to build a robust pipeline of potential new therapeutics that at steady state would deliver a new product every two to three years. This will allow us to continue to build into a company with substantial revenues that bring growing value to all of our stakeholders. Let me start with our commercial portfolio. I'm proud to report that the net product revenue for the first quarter was $130 million, which represents 42% growth over the first quarter of 2021. Our Duchenne muscular dystrophy franchise net product revenue was $128 million, demonstrating another strong quarter for Translarna and Emflaza. In addition, we recently had the first group purchase order for Tegsedi in Brazil, which will be recognized in the second quarter. Eric will go into more detail on our substantial commercial progress later in the call. Evrysdi sales continue to show strong growth in all regions with substantial growth in Europe. Evrysdi continues to be the most prescribed disease-modifying therapy for SMA with more than 20% market share in the United States and more than 30% market share in Germany. It is currently approved in 79 countries, and we're excited about the continued rapid uptake and sustained growth of Evrysdi, which demonstrates the demand across all SMA patients for an effective orally administered therapeutic. We have several exciting near-term value drivers that I'd like now to provide some updates on. For our first gene therapy for AADC deficiency, we recently announced that we have completed the Scientific Advisory Group and Oral Explanation meetings with the Committee for Advanced Therapies, or CAT. With the successful completion of these meetings, we now expect a CHMP opinion in May. If approved, PTC-AADC will be the first marketed gene therapy administered directly to the brain. We're very proud to have gotten to this point in the European regulatory process, and will now focus efforts on submission of the BLA. Turning now to development programs, where we have five ongoing registration-directed trials. The first of these is Study 041, a placebo-controlled trial of Translarna. We expect to report results of Study 041 by the end of the second quarter. We also recently received the positive CHMP opinion for the 8th annual renewal for Translarna in the EU. Turning now to PTC923 for PKU and the registration-directed APHENITY study. We're excited by the opportunity in PKU with a well-established patient population and a high unmet medical need driven by the majority of PKU patients, either therapy naïve or poorly controlled on existing therapies. In addition, the APHENITY study has an enriched population, a biomarker endpoint and a defined path to registration. Results are expected from this study by the end of the year. For the Bio-e platform, we expect results from the registration-directed MIT-E study of vatiquinone in patients with mitochondrial disease-associated seizures in the fourth quarter of this year. We are also excited to announce that we initiated the CardinALS study in PTC857 in ALS. Moving to our validated splicing platform, we are excited to be following the successful pathway established by Evrysdi with PTC518 in Huntington's disease, or HD. HD is a debilitating disease with no disease-modifying treatments. For PTC518, an oral splicing modifier, we initiated the Phase 2 PIVOT-HD study in patients with Huntington's disease in the first quarter of this year, and we look forward to data from the first 12 weeks by the end of the year. From our oncology portfolio, we also recently initiated the SUNRISELMS study of unesbulin in leiomyosarcoma. We are excited to make progress with this platform and will provide additional updates in the next quarter. I'm proud that while PTC has demonstrated success with RNA science, we have worked to grow and diversify the business to increase the strength of the pipeline for continued success that will produce multiple therapies over the next decade. I'll now turn the call over to Matt for more detail on clinical development. Matt?

Thanks, Stu. Our development teams continue to work hard to progress all of our pipeline programs. We have a number of ongoing registration-directed trials that we expect to read out this year and several additional studies being initiated. I'll begin with our APHENITY Phase 3 trial of PTC923 in patients with PKU. Enrollment in the registration-directed APHENITY trial is ongoing, and we expect to have results by the end of 2022. As a reminder, the APHENITY trial is a six-week placebo-controlled study with the primary endpoint of reduction in blood phenylalanine levels. To enrich the randomized study population for likely PTC923 responders, the study includes a run-in phase during which potential subjects are treated with PTC923 for two weeks. Subjects who demonstrate a response to treatment, a 15% reduction in phenylalanine levels, will continue to the placebo-controlled phase. Following completion of the placebo-controlled study, all subjects will be eligible to enroll in a long-term extension study. Next, I'll discuss our Bio-E platform from which we currently have two ongoing registration-directed trials with vatiquinone as an additional registration-directed trial with PTC857. The MIT-E trial, the registration-directed trial of vatiquinone in patients with mitochondrial disease-associated seizures is actively enrolled, and we expect results by the end of 2022. As a reminder, this study will enroll approximately 60 patients from study sites worldwide. The study includes a four-week run-in phase to ensure patients are having a minimum number of observable motor seizures, followed by a 24-week placebo-controlled phase during which subjects will receive either placebo or vatiquinone. The study's primary endpoint is reduction in the number of observable motor seizures, with secondary endpoints capturing other aspects of disease morbidity. The second vatiquinone registration-directed trial is the Phase 3 MOVE-FA study in patients with Friedreich Ataxia. The trial includes a 72-week placebo-controlled phase and the primary endpoint is change from baseline in the modified Friedreich Ataxia Rating Scale, or mFARS. This global study is fully enrolled, and we expect results in the second quarter of 2023. Turning to the second compound in the Bio-e platform, PTC857, we have now initiated Phase 2 registration-directed CardinALS study in amyotrophic lateral sclerosis patients. This trial includes a two-month screening phase to establish a baseline rate of disease progression, followed by a 24-week placebo-controlled phase, during which subjects will receive PTC857 or placebo. The study is planned to enroll approximately 255 patients from study sites worldwide and the primary endpoint is change in ALSFRS score from baseline to 24 weeks. Turning now to our splicing platform, we recently announced the initiation of the Phase 2 PIVOT-HD study of PTC518 in Huntington's disease patients. As a reminder, the PIVOT-HD study consists of two parts. The first part is a 12-week placebo-controlled phase focusing on safety, pharmacology, and pharmacodynamic effects on huntingtin mRNA and protein levels. After completing the first 12 weeks, all subjects will remain on their initial treatment assignment of either PTC518 or placebo for an additional nine months, during which we will collect blood, CSF and radiographic biomarker data. The study will initially include two dose levels, 5 milligrams and 10 milligrams. We anticipate data from the 12-week study by the end of this year. I will now turn to our oncology platform and the recently initiated SUNRISELMS study, which is the registration-directed Phase 2 study of unesbulin in patients with leiomyosarcoma. Leiomyosarcoma, or LMS, is a rare and aggressive cancer that affects smooth muscle tissue. It's also one of the most aggressive sarcoma subtypes and has a high risk of recurrence leading to a poor clinical prognosis. Several chemotherapeutic regimens are utilized for relapsed or refractory LMS, but with an objective response rate of only 79%, they offer minimal meaningful efficacy. SUNRISELMS is a global placebo-controlled study enrolling patients with relapsed and refractory LMS. Target enrollment is approximately 345 patients and the primary endpoint is progression-free survival. The SUNRISELMS study is based on the findings from our Phase 1b trial in which unesbulin was found to be well tolerated and demonstrated a treatment effect in patients with relapsed/refractory LMS who had previously completed three, four, or five lines of therapy. In summary, I am proud of our continued progress across the pipeline and look forward to providing updates on our programs over the course of the year. I will now turn the call over to Eric for an update on our commercial progress. Eric?

Thanks, Matt. The commercial team has kicked off the year with a very strong quarter, building on the momentum that we created last year. So far, 2022 is shaping up to be a transformative year for PTC and in particular for the customer-facing team with potential launches in Europe and other international markets for PTC-AADC and in Brazil, the potential approval for the new indication of Waylivra for familial partial lipodystrophy, or FPL. In addition, we continued the expansion of our geographical footprint for Translarna. Our global DMD franchise continues to deliver robust revenues across all regions. Our first-quarter revenue for the DMD franchise was $128 million, which is an impressive 42% growth over the first quarter of last year. Let me start with Emflaza. Our Emflaza net product revenue for the first quarter was $49 million, double-digit growth from the first quarter of last year. Ongoing execution by the Emflaza team drove new patient starts, more favorable access, continued high compliance, and appropriate weight-based dosing. Now turning to Translarna. We achieved $79 million in net product revenue for the first quarter. Translarna continues to be robust and globally diversified with growth in longstanding existing markets and new geographical markets. Year-over-year growth was predominantly driven by Brazil, where we completed delivery on the remainder of the Ministry of Health group purchase order that we had partially delivered in the fourth quarter of last year. We are continuing to expand our presence in markets in Asia Pacific as these markets have the potential for continued growth of the brand in the future. Now moving on to our progress with Tegsedi and Waylivra. Our Latin American team continues to build significant momentum in the region. As Stu mentioned, in Brazil, following the innovative drug classification forecast study, we are excited to have received the first group purchase order from the Ministry of Health, which will be recognized in the second quarter. Now this is a significant milestone that reflects the growing number of hATTR patients in Brazil awaiting treatment. Furthermore, patient identification continues to be strong and we anticipate additional group purchase orders over the course of the year. Finally, the team has submitted the HTA dossier for Tegsedi to CONITEC, which is the National Commission for the Incorporation of Technology, and has initiated discussions for inclusion of Tegsedi in the essential drug list, which simplifies long-term access. We continue to build our presence in Latin America, with ongoing regulatory submissions of Translarna, Tegsedi, and a recent first-quarter NDA submission of Waylivra in Mexico, making this our third innovative product to be submitted in this country. As a reminder, last December, we submitted an application to ANVISA in Brazil for approval of Waylivra for the treatment of FPL. If approved, Waylivra will be the first approved treatment for FPL in Brazil, and this will mark the first approval globally for the certification. 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 AADC deficiency. We are very excited about the forthcoming CHMP opinion in May and our team is ready to execute on the launch of the AADC gene therapy in Europe shortly after potential approval. Expert neurological centers of excellence in key European countries have been identified, qualified, and are ready to treat patients post-approval. Many of these centers are also being prepared to treat AADC deficiency patients via early access programs in the near future. Identification and preparation of additional centers globally are on track and PTC's efforts to accelerate patient screening and identification activities in enriched high-risk populations continues to progress well. In conclusion, the commercial team is off to a strong start and has set the stage for continued growth across our franchises in 2022. Now, let me turn the call over to Emily for a financial update. Emily?

Thanks, Eric. I am proud to report that PTC has once again delivered excellent results this quarter with strong commercial performance and a number of potential near-term value drivers expected in 2022. We are looking forward to an exciting year. Our strong global commercial infrastructure continues to support year-over-year revenue growth. We are well positioned for continued geographic expansion. Our growing sales revenue base combined with revenues from respective milestones and royalties allow us to continue to invest in innovation. I will now turn to the financial results from the first quarter of 2022. Please refer to the press release issued today for additional details. Beginning with our top line results, in the first quarter of 2022, total revenue was $149 million compared to $180 million for the first quarter of 2021. Of this, the DMD franchise produced $128 million in revenue compared to $91 million in the first quarter of 2021. This includes Translarna revenues of $79 million in the first quarter of this year as compared to $47 million in the first quarter of last year. Emflaza revenues were $49 million in the first quarter of this year as compared to $44 million in the first quarter of 2021. Total revenue for the first quarter of 2022 also included $19 million in collaboration and royalty revenue from sales of Evrysdi totaling approximately CHF 226 million. In the first quarter of 2021, we reported $7 million in royalty revenue in addition to a $20 million milestone payment that was reported as collaboration revenue. Evrysdi royalty revenue is up this quarter and this growth is expected to continue as pricing and reimbursement come online throughout Europe and other markets outside of the U.S. As a reminder, PTC is eligible to receive a $50 million sales-based milestone payment from Roche and annual sales of Evrysdi to reach $759 million. Non-GAAP R&D expenses were $127 million for the first quarter of 2022, excluding $13 million in non-cash, stock-based compensation expense compared to $121 million for the first quarter of 2021, excluding $14 million in non-cash, stock-based compensation expense. Non-GAAP SG&A expenses were $60 million for the first quarter of 2022, excluding $14 million in non-cash, stock-based compensation expense compared to $49 million for the first quarter of 2021, excluding $12 million in non-cash, stock-based compensation expense. Cash, cash equivalents, and marketable securities totaled $588 million as of March 31, 2022 compared to $773 million as of December 31, 2021. I'll now hand the call over to the operator to start our question-and-answer session. Operator?

Operator Instructions. Our first question comes from Eric Joseph with JPMorgan.

Good evening, guys. Thanks for taking the question and congrats on the quarter. I guess just one on Translarna and then a couple on the pipeline. First, just I guess with the performance this quarter's talking about any sort of headwinds related to sales in Russia at all, and are you guiding at this point in terms of how the cadence of revenue performance by proceeding to second quarter with the reiteration of sort of top line from the DMD franchise? And then secondly, as it relates to Study 041, just wondering if you could kind of compare or make the contrast in the primary endpoint being used in this study here compared to DMD? You're looking at slip or change in six-minute walk distance compared to just change in six-minute walk. Is it correct to assume that you're taking multiple intervals in between baseline two weeks? And in that case, how frequently are you assessing six-minute walk distance?

Thank you for your question. The situation in Russia is quite volatile, and we are closely monitoring it as it develops. We plan our operations accordingly to adapt our business if needed. Importantly, the sanctions do not include medicines, and our focus has been on ensuring continuous treatment for boys and young men with nonsense mutation Duchenne muscular dystrophy in that region. The positive news is that we have successfully maintained treatment for all patients so far, and we have also been able to collect receivables. As a result, our revenues have remained stable, and our total revenue guidance is not currently impacted. We haven't encountered any issues in that regard. Matt, would you like to discuss the DMD details?

Sure, Eric, thanks for the question. To answer your question about using the model for Study 041, it is indeed as you mentioned. It not only includes the baseline and the final six-minute walk distance but also incorporates data collected at all the other time points, making it a more robust approach to data analysis. This is typically the reason for using such a model. Additionally, in relation to the study visit time points previously discussed due to COVID, some visits occurred outside the expected timeframe. By utilizing a model, you can include not only the specific observations but also the timing of those observations. Thus, the advantage of a model is that it provides information on both walk distance and the time that distance was recorded, offering much more insight in the overall analysis.

That's very helpful. I have a follow-up regarding Study 041. Regarding patient demographics by ambulation at baseline, I understand you're categorizing different ranges for the six-minute walk distance at baseline, such as 300 to 350 and 350 to 400. Are there any specific quotas linked to those ranges? For example, are you aiming to enroll a certain percentage of patients with a baseline walk distance starting at 350 or in other ranges? Additionally, could you share the expected average baseline walk distance for the patients being evaluated?

Yes, Matt?

Yes, sure. So the overall study population as we've talked about in the past is 360 boys. And then there is that modified population you mentioned that has the specific walk distance and that would be 185 boys. We're not commenting as far as exactly what the mean baseline values were, because only two populations of 360 and 180.

Okay, great. Thanks again for taking all the questions.

In terms of our expectations for revenue growth for Translarna in 2022, we believe it will be strong. Last year’s growth was primarily driven by geographic expansion, new patient starts, high patient compliance, and the expanded age label we received in Brazil. For 2022, we anticipate continued revenue growth for the Translarna franchise, supported by our efforts to expand into new markets, optimize our presence in existing markets, and ensure access for all eligible patients. Our focus remains on these initiatives, and we expect this to be another successful year for the franchise.

Your next question comes from Kristen Kluska with Cantor Fitzgerald.

Hi, everyone. This is Rick on for Kristen. Thank you for taking our questions. We just got two for you here. In the MIT-E trial, can you talk a little bit about the seizure running measurement given that there are multiple types of seizures that patients can have, some of which are more observable than others? How are you measuring seizure activity? We'd be interested to know how this approach during a lead in is tailored to the types of seizures that these patients are typically experiencing.

Matt, do you want to take that?

Yes, definitely. The MIT-E trials we discussed involve a global study assessing the impact of vatiquinone on seizures associated with mitochondrial diseases, which are a serious and frequent symptom of these conditions. Approximately 30% to 50% of individuals with mitochondrial disease experience seizures, which often do not respond to conventional antiepileptic treatments. This is mainly because such medications do not address the energy pathways responsible for seizures in these patients. In fact, many of these treatments can increase oxidative stress, which is a contributing factor to seizures in these children. While there may be some positive effects from antiepileptic drugs, the rise in oxidative stress can worsen seizure conditions. As your question noted, these children experience various seizure types, but during the initial phase of the trial and for our primary endpoint, we will focus specifically on observable motor seizures. This is important to ensure that parents can accurately monitor and document these events. We provide parents with a diary to track seizure occurrences and conduct thorough training on how to use this diary effectively, including a vocabulary list to help them identify the different types of seizures in their children. We emphasize that we are focusing on observable motor seizures, the ones characterized by visible motor activity. During the initial phase, we require a minimum of six observable motor seizures to establish a baseline for comparison after a six-month period of either vatiquinone or placebo treatment. We will then compare the monthly seizure rate following placebo or vatiquinone to the baseline. The primary endpoint will focus on the observable motor seizures, while secondary endpoints will assess other aspects of seizure activity.

Understood. Thank you for that. And maybe just one more. After recently initiating the Phase 2 PIVOT-HD trial, is there anything you can say about ongoing enrollment pace or performance of clinical sites versus expectations? We'd really be interested in getting an idea of how the early stage of trial enrollment has gone. Thank you.

Thank you. We have recently started this trial, which will last for a year and consists of a 12-week segment followed by the remaining timeframe. We expect to have the results from the 12-week segment by the end of the year. This will involve comparing treated patients to those receiving a placebo, focusing on safety and analyzing the levels of HTT RNA and protein in the blood cells. We will also examine biomarkers like mutant HTT and NfL in the cerebrospinal fluid.

Thank you.

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

Hi, everyone. Good afternoon. I appreciate you taking my questions. My first question is about PTC-AADC. It seems you've had some fruitful discussions with CHMP. Could you provide more details about those meetings and your confidence in receiving a positive recommendation? Additionally, as we consider the launch preparations you mentioned, can you share more about the number of neurological centers you plan to work with and how many of them have already identified patients, or will the initial launch engagement initiate a screening process? I also have a follow-up question regarding Huntington's. Thank you.

Sure, thanks for the question. As we mentioned, we expect to receive the CHMP opinion in May. To remind everyone, AADC is a rare and serious pediatric disorder characterized by a lack of dopamine, which leads to halted growth. In severe cases, patients cannot hold their heads up, sit, roll over, or stand, similar to severe SMA patients. Recently, we disclosed that we have been collaborating with the Committee for Advanced Therapies, which is part of the CHMP that reviews gene therapies. We held a Scientific Advisory Group meeting and an Oral Explanation, both of which we successfully completed. As a result, we anticipate receiving their final opinion in May, which gives us confidence. Matt, do you want to elaborate further since you led the effort?

Sure. Thanks, Brian, for the question. We're optimistic about the positive opinion expected in May, particularly because the discussions in our meetings centered on the specifics of the label, indicating that we are nearing the conclusion of the process and moving toward a favorable opinion. We are eager to bring this therapy to patients. The data we've gathered so far is quite convincing, demonstrating our ability to treat children with no motor activity, helping them achieve milestones such as sitting, standing, walking, and functioning like healthy children their age. An important aspect of the data is its durability, which plays a crucial role in our overall submission. We have follow-up data extending from six to ten years that shows sustained motor improvements and other benefits from the treatment. We're also thrilled that this will be, as Stu mentioned, the first directly administered therapy to the brain. This represents a significant advancement in the gene therapy field, as it allows us to combine a common neurosurgical procedure with targeted gene therapy delivery to the precise area of the brain that requires it most. This brings us to our preparations for launching in the specialized surgical and neurology centers of excellence.

Yes. We are excited about finalizing our preparations and have been diligently working towards the upcoming launch. We've been focusing on getting the neurosurgical centers ready and identifying patients, including extensive screening efforts. As this is a relatively new disease, it's essential to identify the patients, and our progress in finding them has been accelerating. We've conducted over 100 screening programs in 20 different countries and have been successful in identifying patients in all regions. We are truly excited about these developments. Eric, could you share more about the ongoing efforts?

Yes, certainly, Stu. The launch preparations in centers are progressing extremely well. We've been focusing on accelerating disease education, patient identification, and that's been going on already for a number of years. But to your point, Brian, preparation of surgical treatment centers has been really an important part of our most recent efforts. And in particular, we've been working with many of the top key opinion leaders both in the pediatric neurologists as well as neurosurgeons in preparation for that. So to answer your question really simply, we are looking to ensure that there are multiple centers in each of the main countries that will be ready, that are ready now and will continue to be ready. And we're going to continue to expand in each one of these major markets to ensure that we have as many centers over time. One of the things that we do know is that as we find patients and as we treat them, and the more we provide disease awareness and education, when a treatment is available and the families and the patients see this, we certainly will have more and more demand. And we will continue to expand, if you will, the neurological centers that we have not only in Germany, France, Italy, of course, UK, Northern Europe, and many of the other markets that will have early access programs. So we certainly are going to do as many centers as possible. We'll have multiple centers in each of the main countries at the time of launch.

That's super helpful. Thanks. And then maybe just a quick one on 518. The Phase 2 study was posted to Clinical Trials this morning. And I guess we're curious what the DSMB is going to be looking for to make the recommendation to escalate to the 20-milligram dose for Part B? Is that just safety? Will it get knocked down? And is there a goal there? And I know also you guys have talked about volumetric MRI as a potential endpoint that could be used for accelerated approval. We didn't see that listed in the posting, wasn't sure if that was just because that's something that'll be in Part B or if there's been any change to the endpoints you view as being key there for accelerated approval? Thanks.

Thank you for your question. Regarding the first part, we are indeed aiming for a reduction. In addition to safety, we are examining biomarkers, specifically the reduction of HTT RNA and protein levels in the blood, and we are also looking at what's happening in the cerebrospinal fluid concerning PK levels, to establish baseline measures. In the Phase 1 studies, we observed a 2.5 to 3-fold increase in the cerebrospinal fluid compared to the blood. We need to determine if these findings are consistent with what we've already observed and, based on that data, we will decide how to adjust the dosage—if necessary—and determine the appropriate level for titration of the compound. Matt, would you like to discuss the MRI aspect a bit more?

Yes, certainly. Sure. And just to follow up on Stu's point, Brian, so it will be a combination of the safety evaluations in the DSMB and then what we're seeing in terms of the levels of reduction in huntingtin mRNA and protein, as we said all along targeting at 30% to 50% reduction range. So how close are we with the first two doses? And then do we need to titrate in the molecule and go to additional dose? And then, of course, marry that with the safety evaluation from the DSMB. In terms of ClinicalTrials.gov, you're correct. What's listed there is for that first 12-week portion focusing on the pharmacology and PK/PD relationship, and volumetric MRI will be tracked enough that that's going to really be an endpoint in the second part, right, the nine months focus on biomarkers.

Really helpful. Thanks, again.

Our next question comes from Joseph Thome with Cowen and Company.

Hi. Good afternoon and thank you for taking the questions. Maybe one on AADC in the U.S. Maybe what remains to be done ahead of submitting that BLA? Have you been able to meet with the FDA and have them sign off on those surgeries that were completed last year?

Yes, thank you for that. Regarding the AADC, as we mentioned, we are in the final stages of completing what we needed with the CAT and the CHMP. We believe we have accomplished that and it should be beneficial for the FDA. Based on this, Matt, could you outline our plans for the BLA?

Yes, absolutely. Joe, thanks for the question. As you said, we wanted to get to the finish line in Europe and obviously be able to leverage all the learnings we've made in the regulatory interactions with Europe and really use those to enhance further the package for the FDA. And as you said, the plan will be to meet with the agency aligned on this mission package and move forward. The meeting request has been submitted. We'll look forward to meeting with the agency and then moving forward with the next step.

Perfect. That makes sense. And maybe more of a financial question. A lot of the acquisitions that you did over the past couple of years had some pretty attractive upfronts but then came with some milestone payments on enrollment or successful data or approval. So are some of those milestones baked into the 2022 financial guidance? And maybe if you could just highlight the ones that we should expect, that would be very helpful? Thank you.

Yes, sure. So they are baked in. And Emily, you're on.

Thanks for the financial question. We do have a payment due for success in AADC and that's $70 million expected in 2022. And then for PKU, we also expect to pay a $30 million developmental milestone for the completion of enrollment of the clinical trial in 2022.

Thank you very much. Very helpful.

Yes. On the flipside, I'd just remind you that in our revenue guidance, we have a $50 million milestone from Roche expected for certain Evrysdi sales thresholds and there's the potential to reach up to $100 million milestone for additional thresholds.

Our next question comes from Gena Wang with Barclays.

Thank you for taking my questions. I have three questions. The first one is regarding Emflaza. Just want to clarify that seven-year orphan drug exclusivity should be expired in 2024. And also even assuming additional six months extension based on the label expansion to younger patients, and also no more protection after 2024. So that's the first question. My second question is regarding Translarna. What kind of data every year you need to submit to receive renewal in Europe? And my third question is regarding the PIVOT-HD trial. Since you will collect data, huntingtin protein data, both in the blood and the CSF and based on what you've learned so far, do you expect a similar percentage reduction in huntingtin protein in CSF versus blood?

I'll address the first question regarding the loss of exclusivity of Emflaza. You're right that it will occur in 2024. We are actively exploring our options to maintain our position in the market. We have several programs in place aimed at retaining patients, and we are optimistic about these efforts as we offer patient support services for Emflaza to both patients and caregivers. We are also examining various strategies to protect the Emflaza brand, including utilizing our patient support programs, enhancing partnerships with specialty pharmacies, and reinforcing our key relationships with contracts and payers. It's worth noting that in the rare disease market, patient loyalty tends to be strong. Any discounts from generic pricing are often balanced out by the benefits of our patient support programs. Regarding Translarna, Matt, please elaborate on that.

Certainly. Thank you for the questions, Gena. The annual renewal includes safety data collected from our post-marketing safety registry, as well as data from the STRIDE registry to provide evidence of clinical benefit. This information supports a favorable benefit-risk balance, which is crucial for the European authorities to approve the renewal.

And then your third question was HD blood and CSF, right?

Yes.

I think it's an interesting question regarding what’s happening within the cell, particularly with the changes in splicing. When we examine the reduction of both RNA and the resulting effects on the protein, there’s a clear contrast in understanding the exposure and reduction. However, looking at the CSF and the biomarkers presents a different metric since we are observing what's outside the cell. We understand that a small amount of HTT is likely secreted, while the majority comes from damaged cells, which contributes to HTT levels in the CSF. The intriguing aspect is what changes might take place. We'll keep track of that. Since PTC518 can reach all areas of the brain, it should give us one of the most accurate assessments of the impact of HTT reduction in the CSF and the rate at which it decreases. We will also determine the drug's exposure level in the CSF and whether it aligns with what we observed in healthy volunteers or differs in HTT patients. This will provide significant insights into the exposure levels and the resulting changes in the CSF due to HTT secretion, influenced by damaged cells. It’s essential to consider that reductions could be impacted by the integrity of the cells, so how we measure these changes and their timing will be particularly interesting. Does that clarify things for you?

Yes, that's helpful. I'm just wondering, does that mean providing a lower baseline in the CSF should result in a more sensitive change in the CSF compared to blood?

What do you mean lower? We don't have that enough.

Sorry, because in the CSF, you only have a broken protein released from the cell versus in the blood you collect all the protein inside the cells, so then the protein baseline level will be much higher in the blood versus in CSF?

That's right. So what we're looking for is the percentage change that occurred as a consequence of that, right. So you normalize the change of that that you'll see in HTT in cells and then you'll normalize that to what you see in the CSF.

Thank you.

Our next question comes from Robyn Karnauskas with Truist.

Great. Thanks for taking my question. All right, okay, a couple. For AADC, can you just first talk a little bit about the patients you've identified, where are they at? Maybe this question's around the launch trajectory and how it can be. So giving that platform would be great. And given so many patients in Asia, maybe give an update. And then I have a follow up.

I’ll let Eric share his insights here. We've discovered patients in every country we've examined worldwide. There’s often a misconception that this condition is more prevalent in Asia, perhaps due to the founder's effect, but it is indeed present everywhere. We have found it in every nation, and our efforts in patient identification have been increasing. As mentioned, we've completed over 100 programs, and we are learning how to locate these patients more effectively. This is allowing us to accelerate our identification efforts. Eric, would you like to elaborate on the patient identification findings?

Thank you for the question, Robyn. We've excelled at patient finding and have observed consistent progress each quarter as we expand our efforts across various regions. Over the last couple of years, as Stu mentioned earlier, we've initiated hundreds of screening programs in more than 20 countries. These countries are our primary focus because they have reimbursement pathways for gene therapy and centers of excellence for treatment. It's crucial for us to concentrate our screening efforts there. We're satisfied with the diverse range of patients we've screened, including individuals from a few months old up to their teens. Patient identification spans various types, ages, and severity levels. We're primarily identifying patients in high-risk populations, particularly at centers for cerebral palsy and epilepsy. Our emphasis has also been on key markets where we are conducting extensive testing and finding patients. Additionally, I'd like to emphasize the role of neurological centers of excellence. In regions like Germany, France, Southern Europe, and Northern Europe, where we have early access programs, there's a significant interest in screening and identifying more patients as soon as treatment starts. We have engaged key opinion leaders in these areas, and as Stu pointed out earlier, we have discovered patients across all major geographies, which we find very encouraging.

Breaking it down though, can you just help us a little bit though to feel a little bit better about given that you're launching slowly in different countries, like where you're finding the patients and you've been working so hard to find them, I think that's where people are trying to go at this, like how is it speeding up?

It's important to remember that with a new disease, many patients are often misdiagnosed and placed in clinics for cerebral palsy or refractory epilepsy, among others. Therefore, we need to develop an effective algorithm to identify the right patients. When we mention that we've conducted over 100 different programs, it's because we've implemented extensive testing across various countries to determine the best methods for finding these patients. We've essentially acted as laboratories to discover the most effective practices, which can then be adopted universally. When we state that we've identified patients in more than 20 countries, we mean it literally; we have been searching and have successfully found patients in all these locations. As we prepare for a launch, our focus is on getting patients ready for surgeries upon approval, which has been our primary objective.

That's perfect. I'm trying to be really mindful because I know others want to ask questions and be efficient. I have a quick question about PKU. You mentioned that the PKU centers are struggling and backed up. How confident are you that you can continue enrolling in time? Given the backlog and the inability to treat patients, what are your thoughts? Additionally, Emily, you provided a lot of insight about buy-in from LatAm, particularly Brazil. Can you clarify how we should model the first and second quarters? Thank you.

Regarding the first point about PKU, I believe we have made some progress. Matt, could you share some insights on the clinical trials for PKU and their current status?

Yes, sure. So, Robyn, we're not seeing what you've mentioned. And I will say that, once again we're leveraging our global infrastructure with study sites around the world, and quite frankly a lot of pull from investigators to participate in the trial. And so our teams have done a really good job in terms of projecting and managing enrollment flow. So we're not seeing positive access to centers. It will be an enrollment challenge at this point.

So we haven't seen that. And then your last question was, are you asking about the lumpiness of?

Yes. You talked about orders from Brazil as well. So we just want to make sure we model it correctly. Could you give us a little more granularity on how do we model these orders? Do they come in exactly in the first quarter? Then explain the second quarter, how do we think about that for LatAm? Thanks.

Sure. Emily, do you want to go through?

Yes, sure. We don't give quarter-by-quarter guidance exactly because of that lumpiness. So it is hard to give additional color for modeling purposes. I will say that we contemplate that guidance, that lumpiness when we give our annual guidance and we remain confident in our annual guidance for both the DMD franchise and the other revenues we've included.

Okay, great. Thank you guys so much. Sorry to be so quick. I want to make sure I'm being respectful of everyone's time. Thanks.

Thank you.

Our next question comes from Danielle Brill with Raymond James.

Hi, everyone. This is Alex filling in for Danielle. We have a couple of questions regarding Translarna and Study 041. Have the regulators provided any indications on whether market access depends on Study 041 achieving statistical significance? Additionally, how much is the EMA investing in this drive registry? Lastly, could you remind us of the timeline for regulatory actions following the top-line data readout? Thank you.

Thank you for the question. We've mentioned for a while now that we believe the EMA takes into account the full range of data, which includes not only the trial results but also the registry outcomes. We are seeing favorable results over five and a half years, with improved walking ability and better pulmonary function. These long-term results are what we hope will address critical endpoints. The STRIDE registry shows that Translarna has a significant positive impact on children, reflecting improvements in how patients function, feel, and survive. We believe that the combination of our trial data and the STRIDE registry, along with the overall data, is crucial. Does that answer your question?

Yes. But just to pin you down a little bit, if you're saying that you think that you have the potential to still access the market if Study 041 does not hit statistical significance. Is that what I'm reading?

Yes, until we have all the data, it’s difficult to give a precise answer, but we expect that even if the outcomes aren’t perfect, the overall data from Study 041 shows consistent benefits in various assessments, such as the six-minute walk test and the NSAA falls, favoring Translarna over placebo. Additionally, the STRIDE results indicate a real-world impact, and we certainly believe that this data will support keeping the product on the market.

Our next question comes from Colin Bristow with UBS.

Hi. Good afternoon and congrats on all the progress. Just one on PTC-923 and PKU. So the open-label extension criteria was recently updated or relaxed to allow patients with 50% or greater reductions in fee levels versus previously being greater than or equal to 30%. So I just wanted to touch base on this and can you explain the rationale? Is this a tool indicative of using a lower magnitude of fee reduction than you first expected? Thanks.

Matt, do you want to take that?

Sure. Colin, the purpose of the long-term extension is really just to allow patients in who were in the first part of the trial. And it's allowing us to collect long-term safety data to build up the safety dossier. And also, obviously, look at magnitude to effect. That change was administrative. It has nothing to do with anything we're going to be seeing in the trial because we weren't actually not looking at any data yet or observing anything in the trial. I think it's just intended to allow for as many patients as possible to enter into that follow-up period, even if they maybe didn't meet the criteria to be randomized that we could actually put them in if we want to bolster the number of patients we're collecting long-term safety data on.

Okay, great. Thank you.

And I'm not showing any further questions at this time. I'd like to turn the call to Stuart Peltz for any closing remarks.

Okay. Well, thank you for joining us today. I'm proud of our strong financial performance this quarter as we continue to execute and deliver on all fronts. As we've discussed today, we've already progressed a number of key milestones and we'll continue to do so throughout the year. We're excited about the upcoming potential CHMP opinion for AADC gene therapy as well as the results from a number of registration-directed trials anticipated this year. We're well positioned to continue our mission of bringing life-changing therapies to patients, and I look forward to providing updates on all our progress as the year goes on. Thanks for tuning in.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.