Ptc Therapeutics, Inc. Q3 FY2022 Earnings Call

Hello. Thank you for standing by. And welcome to the PTC Third 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. Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today, Kylie O'Keefe.

Good afternoon, and thank you for joining us today to discuss the PTC Therapeutics third quarter 2022 corporate update and financial results. I'm 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 our 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 operation. 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, Kylie. Good afternoon, everyone and thank you for joining the call. I'm pleased to share PTC’s strong third quarter results. We continue to demonstrate strong execution and are moving forward on our 2022 milestones. Our marketed products continue to generate strong revenue growth and we are advancing our broad and deep pipeline of new therapies to treat diseases with significant unmet medical needs. Our mission at PTC is to discover, develop and commercialize innovative therapies and to bring them to patients with rare disorders, and in doing so, create significant value for all of our stakeholders. Today, PTC has five marketed products and seven development programs focused on treating diseases of high unmet medical need. We continue to build a robust pipeline of potential new therapies that at steady state we expect to deliver one therapy every two to three years. Moving to our performance in the quarter. We achieved $270 million in total revenue, representing a 57% increase over the third quarter of 2021. DMD revenue was $131 million in the quarter, an increase of 15% year-over-year. Based on our continued strong performance across all our commercial portfolio, we are increasing our 2022 DMD guidance. This allows us to raise the low end of the total revenue guidance, and Eric will go into this in more detail shortly. I would now like to provide a regulatory update on Translarna. The robust results from our Study 041, as well as the continued evidence of long-term treatment benefit from real-world data from the STRIDE registry positions us well to convert the European conditional marketing authorization to a standard marketing authorization. For the regulatory path in the EU, as planned, we submitted a Type 2 variation to convert the authorization to the European Medical Agency in September. The Type 2 variation procedure typically lasts for several months. And as such, we expect the CHMP opinion in the first half of 2023. Turning to the US. We submitted a meeting request to the FDA to gain clarity on the path of filing an NDA. While the FDA has provided initial written feedback that Study 041 does not provide substantial evidence of effectiveness, we are planning follow-up discussions with the agency to understand whether the evidence in the ITT population in Study 041, along with confirmatory evidence from other studies, could support approval. Clear examples of this approach of using trial results along with confirmatory evidence to support NDA filing, as we've seen recently for rare neurological diseases with Amylyx and Reata. Let me now turn to discuss the first marketed product from our splicing platform. Evrysdi has established market leadership in all major markets and is on track to become the global market leader for SMA. Rapid growth is being driven by patient switches, naive patient starts, and label and geographic expansion. In addition, Evrysdi has a 90% retention rate in the first 12 months demonstrating treatment satisfaction. Late last year, Roche submitted a Type 2 variation to the European Medicine Agency for use in pre-symptomatic infants with SMA under two months of age, a label expansion already approved by the FDA earlier this year. The EU filing is based on the interim efficacy and safety data from the RAINBOWFISH study in newborns, which showed that the majority of pre-symptomatic infants treated with Evrysdi achieved key milestones such as sitting and standing, with half of the patients walking after 12 months of treatment. The label expansion in Europe is expected to be approved before the end of 2022. Let me now move to our Huntington's Disease Program with our next splicing compound, PTC518. And as we said before, the global PIVOT-HD study is active and currently enrolling in many European countries and Australia. We expect to share results from the 12-week portion of the study in the first half of 2023. Matt will go into more PIVOT-HD trial specifics shortly. Our robust pipeline of drug candidates continues to advance in clinical development towards commercialization. We remain on target to achieve three important data results over the next nine months. Sepiapterin, previously known as PTC923 in PKU in the fourth quarter or Vatiquinone for mitochondrial disease associated seizures in the first quarter of 2023 and Vatiquinone in Friedreich ataxia in the second quarter of 2023. We are also excited to announce that we have entered into a strategic financing collaboration with Blackstone Life Sciences. This collaboration will support our mission to build enough programs in our pipeline at steady state, so that we can deliver at least one new therapy every two to three years. And so that we can continue to bring transformative medicines to patients globally and create value for all our stakeholders. As part of the partnership, Blackstone provided an initial $350 million of low-cost, low-dilution capital with an option for an additional $650 million in funding. Emily will describe the details of the financing. With sustained growth in our marketed product and many new products advancing in our pipeline, we continue to build our commercial platform for strong growth for many years to come. I'll now hand over to Matt for an update on our development program. Matt?

Thanks, Stu. Over the course of the third quarter, we continued to make progress across all our platforms and expect results from several of our ongoing registration-directed trials in the next six to nine months. I'll start with an update on our BLA submission for Upstaza. We had a Type C meeting with the FDA in October to discuss the details of the submission package. Based on the discussion, the FDA has asked for additional bioanalytical data in support of comparability between the drug product used in the clinical studies and the commercial drug product. We are currently working with the FDA to address this request, and we now expect the BLA submission will occur in the first half of 2023. Turning to our ongoing registration-directed APHENITY Phase 3 trial of sepiapterin, previously known as PTC923 in patients with PKU. We remain on target to share results by the end of the fourth quarter. 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 responders, this study includes a run-in phase during which potential subjects are treated with sepiapterin for two weeks, and only those demonstrating responses to sepiapterin are randomized. Following completion of the six-week placebo-controlled study, all subjects will be eligible to enroll in a long-term extension study. Turning to the Bio-e platform. We have three ongoing registration-directed trials two with vatiquinone, the MIT-E study for mitochondrial disease-associated seizures and then the MOVE-FA study for Friedreich ataxia, and one trial with utreloxastat, previously known as PTC857 for ALS. Both the MIT-E and MOVE-FA trials are now fully enrolled and we continue to expect results from the MIT-E trial in the first quarter of 2023 and from the MOVE-FA trial in the second quarter of 2023. Enrollment is ongoing in the CardinALS global placebo-controlled trial of utreloxastat in ALS patients. The CardinALS trial is a six-month placebo-controlled study with a target enrollment of approximately 258 subjects. Subjects will be randomized 2:1 to receive utreloxastat or placebo. The primary endpoint of the study is change in the ALSFRS disease rating scale from baseline over six months, with secondary endpoints capturing other aspects of disease morbidity as well as mortality. Turning to our splicing platform. As we recently shared, we are actively enrolling the PTC518 PIVOT-HD Phase 2 trial at our European and Australian study sites. Enrollment in the US is paused as the FDA has asked for additional data to support the proposed PIVOT-HD dose level and duration. As a reminder, PIVOT-HD is a 12-month placebo-controlled trial of PTC518 in Huntington's disease patients and initially includes two dose levels, 5 milligrams and 10 milligrams, with the potential to study a third dose that will be based on the findings from the 5 milligram and 10 milligram dosing. You will recall that in Phase 1, we observed a ratio of plasma to CSF exposure of approximately 1:2.7, a relationship that could potentially allow us to treat patients at a lower dose and still achieve the desired 30% to 50% HTT protein lowering in the brain. We've been asked why we have selected 5 milligrams and 10 milligrams as the starting dose levels for the PIVOT-HD trial since we’ve studied higher dosing in the Phase 1 healthy volunteer study. The PIVOT-HD dose selection was based on both the percent lowering of blood HTT levels and the ratio of plasma to CSF exposure observed in Phase 1. In the Phase 1 MAD study, we observed approximately 40% reduction in blood HTT levels at the 15 milligram dose and approximately 60% reduction in blood HTT levels at the 30 milligram dose. Given the observed ratio of 1:2.7 of plasma exposure to CSF exposure, we would expect to have an even higher level of CSF HTT protein lowering at the 15 milligram and 30 milligram dosing. Accordingly, given our stated target HTT protein lowering of 30% to 50% in the brain of HD patients, we have selected 5 milligrams and 10 milligrams as starting dose levels. If the plasma to CSF ratio in HD patients observed in PIVOT-HD is consistent with what was demonstrated in healthy volunteers in Phase 1, dosing at 5 milligrams to 10 milligrams may very well achieve the desired 30% to 50% HTT protein lowering in the brain. Of course, if the ratio of plasma to CSF exposure in key patients is closer to 1:1, we have the ability to study higher dose levels in the PIVOT-HD study. We can also confirm that the protocol approved in Europe and Australia for the 12-month PIVOT-HD study includes the ability to potentially study a 20-milligram dose level if needed. In terms of study design, the PIVOT-HD study includes two parts. An initial 12-week placebo-controlled phase focused on PTC518 pharmacology and pharmacodynamic effect, as well as CSF exposure, followed by a nine-month placebo-controlled phase focused on biomarkers, including CSF HTT protein levels, brain volume changes on MRI, and plasma and CSF neurofilament light chain levels. We look forward to sharing results from the 12-week portion of PIVOT-HD in the first half of 2023. Overall, we are very excited about our continued progress across our development programs and look forward to sharing results from several of our studies in the near future. I will now hand the call over to Eric to provide an update on our commercial portfolio. Eric?

Thanks, Matt. It is exciting to see the progress from our pipeline and the commercial team is eager to bring our innovative treatments to patients to address a high number of unmet medical needs worldwide. Our global customer-facing team has delivered yet another outstanding quarter. DMD revenue was $131 million in the quarter, an increase of 15% year-over-year. Our DMD franchise continues to be a key revenue driver and remains robust and geographically diversified. As a result of consistent strong quarterly revenue, we are raising our 2022 DMD revenue guidance to $490 million to $500 million. Starting with Emflaza, net product revenue for the second quarter was $55 million, which represented 16% growth over the third quarter last year. Continued strong execution by our Emflaza team drove new patient starts supported by continued favorable access, high compliance, and appropriate weight-based dosing for DMD patients in the US, which drove the growth. Translarna delivered $77 million in net product revenue for the third quarter, which represents a 14% increase over the third quarter of 2021. This was driven by growth in all regions. Overall, Translarna revenue continues to be globally diversified. And we continue to make good progress with our expansion into newer markets in Eastern Europe, the Middle East, and Latin America, as well as additional markets in Asia Pacific, which is of strategic importance for future growth. Moving to Upstaza and our ongoing launch activities. Following the approval in Europe for the treatment of AADC deficiency, Upstaza was launched at the recent 2022 SS IBM meeting in Germany. Our team is actively executing on all strategic initiatives with the launch. We are pleased to have already treated our first commercial patient this year under the French early access program, and we anticipate treating additional commercial patients in Germany, France, and Italy in Q4. Treatment center readiness is on track, as well as further preparation for surgical treatments carried out at key European centers. Patient identification is continuing to accelerate. And we are also strongly focused on markets that have early access programs and others via cross-border healthcare. Based on the clinical results and the feedback from the KOLs treating patients to date, we are confident that the durable efficacy and safety data we obtained from up to 10 years of follow-up with Upstaza will support HTA dossier submissions for reimbursement as the first and only treatment approved for AADC deficiency patients 18 months and older. We have guided to $20 million to $40 million in revenue from Upstaza and continue to work towards this in the fourth quarter in France, Germany, and Italy. Shifting gears in Latin America. Our team continues to progress with Tegsedi and Waylivra. In Brazil, following the innovative classification for Tegsedi, we delivered the first group purchase order from the Ministry of Health earlier this year. Furthermore, patient identification continues to be strong, particularly in remote areas where Tegsedi self-administration is a significant advantage over the competition. We anticipate receiving an additional group purchase order in the fourth quarter. Finally, discussions continue to progress with CONITEC, the National Commission for the incorporation of technologies for inclusion of Tegsedi in the essential drug list, which will simplify access for hATTR Amyloidosis patients. For Waylivra, we continue to grow our patient base across Latin America for the treatment of FCS. Patient identification continues to progress and we are pleased to have received the first group purchase order from the Ministry of Health in Brazil, which we anticipate to deliver in the fourth quarter. This is an important milestone for our FCS patients awaiting treatment. As a reminder, last December, we submitted an application to ANVISA in Brazil for approval of Waylivra for the treatment of FCS. If approved, Waylivra will be the first approved treatment for FCS in Brazil, and this will mark the first approval globally for this indication. We anticipate a decision later this year. In conclusion, this is a very exciting time for PTC and in particular for our global customer-facing teams. We are laser-focused on delivering a strong finish to 2022 and setting the foundation for an even more successful 2023. Now, let me turn the call over to Emily for a financial update. Emily?

Thanks, Eric. Before turning to third quarter financial highlights, I would like to describe the strategic financing of up to $1 billion that we have just closed with Blackstone Life Sciences. This transaction allows PTC to accelerate our revenue and innovative pipeline. This partnership also puts PTC in a strong position to pursue future opportunities and moreover to execute without near-term dependence on market dynamics. The financing consists of $350 million upfront. This includes $300 million in senior secured debt at 7.25 plus SOFR with a seven-year bullet term and an additional $50 million of equity. Additionally, the term loan includes another $150 million in delayed draw debt that can be accessed in the first 18 months after close. Lastly, the total financing includes a potential $500 million credit line from mutually agreed upon business development opportunities. Importantly, the term loan investment by Blackstone will be secured by a limited assets collateral bucket, including and limited to Translarna, Emflaza, Upstaza, Sepiapterin, and Vatiquinone. We look forward to continuing to deliver on our mission of developing and commercializing breakthrough therapies globally. I'll now take a few minutes to review our third quarter financial results. Please refer to the earnings press release issued this afternoon for additional detail. Beginning with top line results. Total revenues were $217 million for the third quarter of 2022, a 57% increase over the third quarter of 2021. This was driven primarily by net product revenue from the DMD franchise of $131 million, Evrysdi royalty revenue of $33 million, and an Evrysdi milestone of $50 million from Roche for surpassing annual sales of $750 million. Our total revenue from the first three quarters of 2022 was $531 million. And consequently, we have narrowed our revenue guidance range to $710 million to $750 million from $700 million to $750 million. This includes DMD revenue of $490 million to $500 million raised from our previous revenue guidance of $475 million to $495 million, and also includes $20 million to $40 million in revenue from Upstaza, our recently launched gene therapy. Turning now to our DMD franchise. Translarna net product revenues were $77 million, representing year-over-year revenue growth of 14% compared to the third quarter of 2021. This growth was despite FX headwinds and what otherwise have been approximately 30% growth year-over-year. Emflaza had net product revenues of $55 million or 16% growth year-over-year. Non-GAAP R&D expenses were $150 million for the third quarter of 2022, excluding $15 million in non-cash stock-based compensation expense compared to $118 million for the third quarter of 2021 excluding $13 million in non-cash stock-based compensation expense. The year-over-year increase in R&D expenses reflects additional investment in research programs and the advancement of the clinical pipeline. Non-GAAP SG&A expenses were $67 million for the third quarter of 2022, excluding $14 million in non-cash stock-based compensation expense compared to $56 million for the third quarter of 2021, but excluding $13 million in non-cash stock-based compensation expense. Cash, cash equivalents, and marketable securities totaled approximately $288 million as of September 30, 2022, compared to $773 million as of December 31, 2021. We're happy to report our recent financing increases our cash balance to approximately $635 million on a pro forma basis. I'll now turn the call over to the operator for questions. Operator?

Our first question comes from Brian Abrams with RBC Capital Markets.

This is Joe on for Brian, thank you for taking our question. Just could you provide a little more detail about the initial feedback on Translarna, and what do you plan to include in the data package to address this issue?

What we did was submit a meeting request to the FDA to clarify the path to the NDA. We received some initial written feedback indicating that Study 041 does not provide substantial evidence of effectiveness. We are not planning to follow up on discussions with the agency to learn whether the evidence in the ITT population in Study 041, along with confirmatory evidence from other studies, could support approval. As is often the case with the agency, especially with initial feedback, we anticipate some conversations and discussions where we can engage in back and forth, particularly considering the long history of the program, the unmet medical need of the disease, and the interests of the patient community. Additionally, there has recently been regulatory progress with other companies in similar situations, such as Amylyx and Reata, which initially faced hurdles with NDA submissions but later succeeded after discussions with the agency. We see this as the beginning of our engagement, where we will be interacting with them moving forward.

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

So how do you think that this deal with Blackstone and some of your upcoming potential commercial opportunities, if successful here with your late-stage pipeline, could help frame you towards reaching self-sustainability? And I know Emily mentioned potential BD opportunity expiration as well. So can you give a general framework about what you might be looking for in the future balances in health innovation, as well as outsourcing?

We have been focused on building our product pipeline through both external business development and internal growth in drug discovery. Our goal is to introduce a new product to the market every two to three years. We plan to use both strategies to accelerate these processes. The collaboration with Blackstone provides us a significant opportunity to expedite our efforts, allowing us to enhance the potential of our existing molecules and explore later-stage assets that are ready for commercialization. This will help us increase our revenues and strengthen our late-stage pipeline. Emily, do you have any additional insights to share?

I'll just reiterate that we're obviously very excited about this deal. As you pointed out, it does really provide incredibly attractive financing at favorable terms, and allows us to create strategic flexibility to drive innovation for the growth of the business and business development. We obviously want to look for further opportunities to leverage our existing commercial drug development infrastructure. And we will look to utilize some of this access to capital for those business development opportunities.

And then for Upstaza, is the agency now comfortable with the cannula and the surgical procedural items? And I guess what gives you confidence that this is essentially the last item that you need to check off before submitting?

Matt, do you want to take that one?

So the cannula issues appear to be addressed. And the issue in the past was that there was a desire for us to have experience using our specific drug products with the cannula for the delivery of the product into the brain of the children; there had been no prior experience with that. And so there was a set of data that included both benchtop testing showing that the compatibility of the product with the device and then, of course, importantly, those surgical procedures where we now have been able to provide them the data that the drug can be delivered safely to the children with that device. In terms of the ask regarding additional data in support of the comparability analysis, we are well-positioned to provide what they want, which is just some additional samples from the clinical batch material to be included in the BLA. So we are fully confident that we can provide those data and be able to move the package forward with the submission as we said in the first half of 2023.

Our next question comes from Eric Joseph with JPMorgan.

Just to follow up on PTC518. I'm curious about the readout; if the data suggests moving to a higher dose, how confident are you that the clinical pause in the US could be resolved at that point, allowing you to recruit US sites as part of that cohort? And then secondly on Upstaza. I guess from following the progress of other new gene therapy launches, it sounds like some European countries are expressing a desire to reimburse overtime. I'm wondering if you have encountered that kind of resistance with Upstaza at all, and how that might impact revenue recognition or so?

So I think Eric, you were asking about the 518, but your question seemed to concern the ability to go to a higher dose. Is that correct?

Not only that, if you need to switch to 20 mg, will you be able to enlist US sites at that point? Will the pause in the US be resolved by then if you need to increase to 20 mg?

To start, I want to remind everyone that the PIVOT-HD is a global study currently underway outside of the US in various locations across multiple countries, utilizing the dose levels and durations we need, which include 5 milligram, 10 milligram, and 20 milligram options. These doses have been approved by regulatory bodies in Europe and Australia, and the only exception is the US. Our top priority is to enroll participants in the study, advance the program, and obtain results as quickly as possible. Concurrently, we will engage with the regulatory agency to address their concerns. We believe the best approach to these concerns may involve presenting a subset of the data from the results we obtain. Our objective is to accelerate this process, and we are pleased that we can complete all approved doses in Europe and Australia. We view actual human clinical data as invaluable, and we plan to share those results and the subset of patients to move forward. Our main focus is to advance the trial rapidly in Europe, and we're fortunate that we don’t require permission to proceed there. As a result, we will gather outcomes from the trial being conducted in other locations. Regarding Upstaza, I would like to invite Kylie and Matt to discuss the European pay-as-you-go model.

And if I heard you correctly, Eric, your question was just around the contracting perspective, understanding the discussions we're having in Europe at the moment?

Yes. But also, there's been some discussion that some countries might prefer a pay-go paradigm rather than upfront, paying all upfront for some gene therapy products. I'm just wondering if that might apply also to those phasing in, and how that might impact your revenue recognition, if it is, in fact, a pay-go structure going forward.

I think from our perspective, obviously, we're under discussions with a number of health technology assessment agencies in Europe at the moment. And I think one of the things that's really important for Upstaza is not just the strong data package that we have that shows the treatment benefit across all patients, but also the durability data. And I think this is what's really important for the pay-for-you as you go or pay-for-performance perspective. And I think that's going to be what we put our emphasis on as we continue these discussions, because it's not only that we're able to have that transformational benefit in the patients in the short term but also the durability of that. And as we've talked about in the past, we have durability with up to 10 years of follow-up. And I think that, coupled with the strong clinical and safety package, clinical efficacy and safety package that we have, allows us to believe that we can focus on single upfront payments.

Our next question comes from Joseph Thome with Cowen.

Maybe on PTC923 into the end-of-the-year data, I guess ahead of its submission, there's all we need here a positive pivotal study; is there any CMC work that you need to conduct given that this came in from SEMSA ahead of the submission? And then if you can just kind of lay out under the context of generic Kuvan, Kuvan, Palynziq from BioMarin out there. What's the success I guess look like in this study at the end of the year?

We're very enthusiastic about 923 for PKU. One of the main reasons is that it represents an improved form of Kuvan, as it has significantly better bioavailability and can achieve a higher concentration, making it much more effective. This is evident even in patients who did not respond well to Kuvan. The promising initial results indicate that we can treat a broader range of patients, resulting in greater reductions of phenylalanine levels in the blood. This is significant, especially considering the large patient population that has not been effectively treated with Kuvan, particularly those for whom it was ineffective. We believe that this drug has the potential to reach more patients, providing a real commercial advantage. Matt, would you like to provide any additional insights about the PKU enrollment and its progress?

No, I would just say that, to answer your question, we expect the positive data will be well positioned to move forward towards FDA, all the other components of the package will be ready. And as Stu mentioned, clearly, a significant unmet medical need for patients with PKU. And we're seeing that manifest in the tremendous enthusiasm for participation in trials in the US and around the world across all levels of severity, including, as Stu pointed out, the classical PKU patients.

Our next question comes from David Lebowitz with Citi.

This is Dipanjana on behalf of David. So about Translarna, when you see that FDA says that study 041, are they looking at the benefit in a primary analysis set along with the real-world data or the ITT population? And when can we hear further updates about this?

They seriously considered the feedback regarding the mITT population, which indicated that certain targets were not achieved. What we need to discuss now is the evidence that could support approval for the ITT population along with confirmatory data. There is a potential pathway to obtain approval based on the ITT population in Study 041, as well as confirmation from other studies. We believe that we will be able to engage in several discussions regarding this matter. Historically, there have been instances where clarity on the path forward has led to changes in opinion, as seen in discussions around Amylyx and Reata where perspectives shifted following talks.

And maybe one last question on the PKU program. So what kind of responder rate are you expecting in the upcoming update in patients who have greater than 600 micromoles per liter phenylalanine levels?

We haven't provided any specific information on what we are seeing in terms of responder rates other than to emphasize what we have seen in the Phase 2 study and what we expect in this study, which again what we saw in Phase 2 was responses across the full spectrum of patients, not only with those with the baseline phenylalanine level of greater than 600 micromoles per liter but importantly also in that subgroup of patients, the classical PKU patients with baseline phenylalanine levels greater than 1,200 micromole per liter, where historically there has been no response in these patients to Kuvan, and we have been able to demonstrate market reductions in blood phenylalanine levels. So we look forward to seeing robust effect across the full spectrum of severity as well as the different genotypes that could impact PKU. And again, we look forward to sharing those data by the end of the fourth quarter when we have that.

Our next question comes from Alexander Xenakis with Truist.

One question regarding Translarna in Europe. Can you clarify if obtaining full marketing approval would alter the situation in terms of potential price renegotiation, or do you anticipate an increase in patient identification or treatment? Does the narrative shift in any way with full marketing authorization? Additionally, regarding Upstaza in Europe, as we move forward with the launch, what metrics do you plan to disclose? Besides revenue, will you also provide the number of patients treated or the number of active sites that are prepared and operational? That information would be valuable.

For the transition in Europe from a conditional to approval to a full approval. It's interesting, we have been pretty good about identifying patients and bringing them out to Translarna. So we have a large number of patients already. I think the transition from the conditional to the full approval also just prevents us open, we don't have to report every year, be it five years. And I think in terms of HTA and such, maybe Eric you may want to comment.

I think a full marketing approval only helps of course, but every country actually has their own systems by which they will evaluate the HTA assessment. And so in many cases, a forward conditional approval doesn't really affect too much any of those discussions. We believe that the 041 results, along with STRIDE and along with all the previous studies combined, will not only strengthen the current value proposition that we have, but I think it'll give us even stronger position to continually add new patients and strengthen our current pricing structure throughout Europe and the international corridor. So essentially, while this is primarily, as Stu said, a regulatory where we don't have to file every year for five years, it certainly does strengthen our value proposition. And we'll continue to leverage all of the data to ensure that we maintain the best possible price at this point in time.

I think the major metrics that we were trying to get was revenues. So Kylie, do you want to comment anymore on that?

We have successfully identified a large number of patients around the world. Now that we have received approval, our team is fully engaged in coordinating with various centers across Europe to schedule surgeries and ensure patients receive treatment as soon as possible. We're excited to have already treated our first commercial patient this year under the French early access program, and we expect to see more commercial patients in Germany, France, and Italy in the fourth quarter. We have effectively prepared for treatments in multiple countries, which has been essential in identifying patients, having treatment centers ready, and scheduling surgeries. This preparation allows us to treat patients while ensuring we have the proper market access. As we shift our focus towards revenue, we aim to achieve between $20 million to $40 million in revenue this year, and we remain on track to meet that goal.

Our next question comes from Raju Prasad with William Blair.

I just want to get some clarity on the FDA strategy with regards to Translarna. So did you guys request like a type A or B meeting, or has it not kind of been clarified? What type of interaction we'll have with the agency? And then going into this meeting, if there's request to run a supplementary study or something of that nature, would that be something that you'd be willing to do, try and support approval, or is it really just trying to get the FDA to understand the data set as it stands today?

I’d like to highlight a few important points. Since COVID, it has been challenging to conduct in-person interactions, and most communications have shifted to written formats, which slow down the exchange of ideas and implementation of changes. Nonetheless, I want to stress the comprehensive nature of our dataset. With 359 patients, we observed statistically significant results in the ITT data across various measures, including the six-minute walk test, time function test, and the North Star data, which highlighted important heart endpoints like ambulation preservation and lung function. This represents a strong case for us. We believe that having statistically significant endpoints in the overall population, combined with our extensive dataset, makes a compelling argument for the approval of Translarna in the U.S. We are eager to engage in discussions about this approval. Matt, do you have anything else you would like to add?

Raj, I would just say that, as we mentioned, things are going a bit different in COVID. The traditional cadence with the agency was always you'd get written comments that are often quite conservative, and maybe don't completely address all aspects of the data package. And then you have the advantage of that in-person meeting to really volley back and forth and find sort of a middle ground and make sure that the agency is fully understanding the data package. And I think that's particularly true in one as complex as the Translarna data package. And so we're in a position now where we've gotten that first written feedback that seems to have focused on a potential interest of using Study 041 alone to meet that stated substantial evidence of effectiveness criterion that the agency has held out for rare disorders where a single study can suffice, rather than seemingly focused on the clear evidence of benefit in the overall ITT population, along with the confirmatory evidence we can clearly offer, whether it be from a pooled analysis of Study 0720 and 0728 and Study 041 with a P value of 0.002, showing that the findings of significant treatment benefit clearly are not just by chance or outside of course, just trying to understand where we can’t confirm that what we're observing in the clinical trials in terms of slowing of progression are manifesting themselves in important delays in the key morbid transitions of the disease, whether that would be the four-year delay and loss of ambulation compared to a matched natural history cohort, the 1.8 years in terms of loss of pulmonary function. So where we are now is really, I think, in the early innings what could very well be a series of back and forth where we are certain that they're seeing the data and the potential with the data to satisfy what has been used for other sponsors and other rare disorders to meet the criteria and allow then for the submission.

Our next question comes from Gena Wang with Barclays.

Maybe just a quick follow-up on what you just commented, I wanted to have clarification. For your initial interaction with the FDA regarding the Study 041, did the FDA see your ITT analysis along with the other analysis?

So to clarify, all of the data we submitted, I would say their comments seem to focus on the primary analysis group of primary analysis method, which was in the mITT population emphasizing the fact, as we all know, that we did not achieve significant results, saying that pre-specified subgroup of 300 and greater than 5 and stating that given that did not be significant, statistical significance, we didn't meet the criteria for substantial evidence of effectiveness. And so I think we didn't see it clear with clear feedback on that super set of ITT population. And again, this is the limitations of written feedback, and that's why we look forward to having a conversation with the agency.

Another question is regarding the PIVOT-HD study. Since you submit the nine months of non-human primate data to the FDA after you initiate clinical study. So just wondering any concerning safety that could trigger FDA pause the clinical trial? In other words, what was the highest dose you dosed in the non-human primary study, and then what was the toxicity you have seen so far?

What's important to note is that the role of safety toxicology is to determine the non-observable effect level and ensure that there are multiples between that level and the drug. While we don't disclose the specifics of the toxicology program, we are significantly above the NOAL, which gives us confidence. This aligns with the feedback from regulatory bodies in all the countries where we operate, including Australia. I want to emphasize that the role of toxicology is to provide insights on what to monitor. So far, we have not observed any treatment-emergent serious adverse events or adverse events at higher doses. What was observed did not manifest in clinical settings. For instance, with Evrysdi, there was a toxicological finding in non-human primates that was widely discussed, but after treating 7,000 commercial patients, it became clear it was specific to nonhuman primates and not seen in other species or in patients. We are cautious about labeling a drug based on safety concerns, as we currently have not encountered any issues. Our primary aim is to advance this global study, enroll participants worldwide, and obtain data results. We believe that is crucial, and eventually, we will present the clinical data to the FDA, as there’s no substitute for strong clinical evidence.

Our next question comes from Danielle Brill with Raymond James.

I have a couple of questions about PTC518. First, are you planning to show CSF HTT protein levels now that the data is expected to be available early next year? Also, since it seems you're conducting the full 12-month study outside the US, if PIVOT-HD demonstrates a functional benefit, is there a possibility for a streamlined development path in the US?

To remind you, the PIVOT-HD study consists of two parts: the first 12 weeks focus on pharmacology and pharmacodynamic effects, while the second part examines biomarkers and outcome measures. The critical aspect in the first 12 weeks will be to gather data on the relationship between dose exposure, HTT mRNA, and protein reduction in the blood at steady state, along with exposure in plasma and cerebrospinal fluid (CSF). This information is essential because the 5 and 10 milligram doses are based on observations from healthy volunteers, indicating a nearly 3:1 ratio, which informs us about the appropriate exposure range. Over the course of the full year, we expect to track not only HTT and CSF but also neurofilament changes, MRI results, and other outcome measures. It is important to note that patients in Europe and Australia are similar to those in the U.S., and the results from this study should align with those from U.S. patients. If we can integrate various biomarkers—such as neurofilament and HTT changes in blood and CSF, along with brain volume variations measured by MRI—we may have a basis for potential accelerated approval. We believe that this perspective remains valid regardless of the location of data collection and can be used to consider either accelerated approval or to optimize our Phase 3 approach without altering based on the presence of U.S. patients.

Our next question comes from Kelly Shi with Jefferies.

So regarding PTC518 for the patients already involved from the US, have they all completed the study of the first wake portion? I just want to quickly confirm on that? And also for the MIT-E results in the first quarter of next year. Can you help to set expectations on what kind of percentage change in the numbers of observed motor seizures from baseline would be considered clinically meaningful?

Matt, do you want to take that?

Your first question was about PTC518 and the pause in enrollment in the US and its impact on US patients. To provide context, we had started a three-month study supported by a three-month toxicity assessment with the intention of obtaining nine-month results and potentially amending the protocol for a full 12-month study, which would include the 5-10 and possibly up to the 20-milligram dose levels. We were very careful to avoid any gaps in treatment for patients between the initial 12 weeks and the next nine months in case there were delays in getting approval for the full 12-month protocol. Although we initiated enrollment and had study sites operating, we limited the number of patients enrolled in the US to prevent any potential lapses in treatment. By the time the pause occurred, the enrolled patients had completed the 12-week part of the study, so they were not affected by the pause since we had managed the enrollment pace carefully to ensure continuity in treatment for the full 12 months. Regarding the MIT-E question, we anticipate having results from the MIT-E study on mitochondrial disease-associated seizures in the first quarter. It's important to note that seizures occur in about 30% to 50% of all children with mitochondrial disease, often leading to significant morbidity and even death. Unlike other types of seizures, these do not generally respond to standard anti-epileptic medications because they stem from issues in energy pathways associated with mitochondrial disease, which vatiquinone targets. We see children suffering from severe seizure burdens, sometimes experiencing hundreds of seizures a day. Given the lack of effective therapies for these challenging seizures, a reduction of even 25% in daily or monthly seizure occurrences could provide significant clinical benefits. The study is designed to capture a 40% difference in effectiveness between the treatment and placebo groups, aiming for about a 50% reduction in seizures in the treatment group and a 10% change in the placebo group, which aligns with findings from other pediatric epilepsy studies. Thus, capturing a 25% reduction in seizure burden would be considered a meaningful clinical outcome, given the severe impact and high risk associated with these seizures in children who currently lack effective treatment options.

Our next question comes from Judah Frommer with Credit Suisse.

Just a quick one on the Blackstone collaboration. Could you give us a little color on the genesis of the arrangement? Were there other financing transactions being considered and this was the most attractive? And did you feel that this was the time to raise capital? Or did this kind of fall into your lap?

Emily, do you want to take that one?

This was a lengthy competitive process. We assessed various options, including equity-related choices, additional royalty options, and secured debt alternatives. Ultimately, this was determined to be the most cost-effective solution with the least dilution for the company. We are also pleased to have created a customized deal with Blackstone that involves a limited collateral basket, which means some of our other assets in the pipeline are excluded. Regarding timing, we have pinpointed assets in the pipeline for which we want to expand their indications. Therefore, moving quickly would best enable us to enhance innovation and advance the pipeline.

And then just on that $500 million in potential credit facility; when you say mutual agreement, does that mean that Blackstone will potentially take ownership with you? Or it's just that they need to approve business development that you're planning on taking on?

I mean that was an important part of the transaction, and I think that's where we're really excited to have such a highly respected partner with such a broad network. So we will work with Blackstone. We've obviously demonstrated our ability as a proven consolidator to create value for business development. We'll work with Blackstone to further those efforts to leverage their network. And then, yes, they will be mutually agreed upon transactions that can be structured in a number of ways through either upfront funding or royalty financing that will allow us to accelerate our momentum.

Our next question comes from Tazeen Ahmad with Bank of America.

Just on PKU, can you give us a sense about how you're thinking about the market opportunity? I know the goal is to present data that is looking to be a better Kuvan, but given Kuvan is generic, where do you think, at least initially, the drug would place in terms of where in the treatment regimen it would fall? Maybe it's early to talk about that, but to the extent that you have, would love to hear it. And then on the Blackstone deal; a second question. Was the Translarna path to U.S. approval part of the discussion? And did they get a chance to see that written feedback from the FDA under CDA, if so?

So maybe let's start with the PKU. Maybe I'll start and then pass. I think that the PKU, I think one thing that I think we should make very clear is that while there is Kuvan, and maybe this isn't as well known as it should be, but that the majority of patients of PKU patients remain either untreated or are not really well controlled on Kuvan, even with the two commercial products available. So there's a large population of patients that's about 58,000 PKU patients globally, of which a very small percentage are actually controlled by Kuvan. So the consequence of that is that there's a huge opportunity here. And the huge opportunity is with a better Kuvan more patients will be treated, and therefore, that's really the big opportunity here. And so maybe to go through in more detail the market, why that's the case. Maybe Kylie, do you want to go through and sort of explain how you think about slicing and dicing the patients who respond and don't?

I think as Stu said, we see this as a really unique opportunity. While there's about 58,000 PKU patients globally and two approved therapies, there's still substantial unmet need. So we sort of think of the marketplace in broad strokes in the sense there's around 30% of patients that are therapy naive today in the US. And of those patients, that includes the classical PKU patient, those that are typically severe and have baseline phenylalanine levels of 1,200 micromole per liter or more. And in the past, these have not been able to see benefit from Kuvan or other treatments. And so from that perspective, they remain therapy naive. In addition to that, the remaining 70% of the patients that have tried Kuvan, many of them, as Stu said, are not on Kuvan. And that could be because they either initially failed or because they're poorly controlled over time. And so there's a substantial opportunity when you look across those three main segments. And if you think about the data that gives us confidence going from the Phase 2 into the Phase 3 study from the Phase 2 head-to-head PTC923; which was sepiapterin was able to demonstrate benefit in that classical PKU patient, has not been able to be seen with Kuvan previously, opening up an opportunity for the therapy naive. We were able to see 50% more responders with 923 than Kuvan, opening up the opportunity for those that initially failed on Kuvan. And then even in those that were previously treated with Kuvan, we saw a 200% greater reduction in phenylalanine than Kuvan. So demonstrating data points across all those different patient segments. And if you think about the requirements for sepiapterin, for example, in the US, it's obviously normally around providing documentation for trying the treatment and on certain aspects of that. And if you look across that 70% of the population, they've already done that. And so it's a market opportunity that's able to be captured very quickly upon launch. And obviously, as I mentioned in the therapy naive, there's no mechanistic reason why they should be put on Kuvan if it fails. So we think there's a unique opportunity, and we think we're able to capture upon it very quickly upon launch.

And then for the Blackstone deal, Emily, you want to talk about the due diligence?

I think everyone on this call can attest that Blackstone conducted very thorough due diligence on the company. Obviously, standard diligence on the data we have to date, our regulatory correspondence, our forecast, our commercial assessment. And so yes, they have reviewed all of our regulatory correspondence that we have received in writing. I think this is really a statement to Blackstone's belief and the robust long-term potential of our pipeline and our commercial products.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Stuart Peltz for any further remarks.

Yes. So first of all, let me thank you all for joining us on the call today. Obviously, what you can see, we've made significant progress this year and moving forward and delivering on a number of milestones throughout this year in the last three quarters. We also have a number of critical registration-directed studies that are ongoing now, and we look forward to sharing the results of these in the next six to nine months that I think are going to continue to really both transform and create value for all our stakeholders. So as you can see, we're working hard to continue our mission to both discover and develop innovative therapies for rare disorders. So again, thanks for joining the call.

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