Ptc Therapeutics, Inc. Q1 FY2023 Earnings Call

Good day, and thank you for standing by and welcome to the PTC First Quarter 2023 Financial Results Call. 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 is being recorded. I would now like to turn the call over to Kylie O'Keefe, Chief Commercial Officer. You may begin. Hello speakers.

Yes. Good afternoon, and thank you for joining us today to discuss PTC Therapeutics' first quarter 2023 corporate update and financial results. I'm joined today by our Chief Executive 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 operations. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as the company's other SEC filings. We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP to non-GAAP financial measures and a reconciliation of GAAP to non-GAAP are available in today's earnings release. With that, let me pass the call over to our CEO, Matthew Klein. Matt?

Thanks, Kylie. Good afternoon, and thank you for joining the call. I'm pleased to share PTC's first quarter results and our expectations for continued strong performance and a transformative 2023. PTC is a leader in developing and commercializing innovative therapeutics to treat rare disorders. I'm incredibly excited to lead PTC into its next quarter century as we continue to utilize pioneering science and deliver therapies to patients with high unmet medical needs. We had a very productive first quarter, achieving $220 million in total revenue, our highest quarterly revenue ever. This represents a 40% growth over the first quarter of 2022. Our DMD franchise revenues in the quarter totaled $170 million, which represents a 33% increase over the first quarter of 2022. Evrysdi also had a strong first quarter, providing royalty revenue of $31 million. The Evrysdi revenue growth continues to be driven by both therapy-naive patients and those previously treated with Zolgensma and Spinraza. In addition, U.S. growth is being driven by patients less than 2 months of age following the recent sNDA approval. This robust first quarter performance puts us in a strong position to achieve our total 2023 revenue guidance of $940 million to $1 billion, which would represent up to 43% year-over-year growth. As we previously shared, we expect to use the study results to be reported in the second quarter to inform a strategic portfolio review and likely OpEx reduction, on which we will provide further details once available. Moving to our pipeline, we remain on track to report results from four clinical studies in the second quarter, three of which are registration-directed. Let me provide a brief overview of each study and the results we expect to share. I'll begin with our APHENITY study. APHENITY is our Phase 3 global placebo-controlled study of sepiapterin in children and adults with PKU. The placebo-controlled portion of the study was 6 weeks in duration with the primary endpoint of reduction in blood phenylalanine levels. To enrich the randomized population specific care and responders, there was a run-in phase during which all screen subjects received sepiapterin for 2 weeks. Only those subjects who demonstrate a reduction in phenylalanine levels of 15% or more from baseline in Part 1 were randomized to Part 2 with the primary analysis population consisting of those who had a greater than 30% reduction in phenylalanine levels from baseline during the run-in phase. At fourth quarter earnings in February, we shared the encouraging data from the Part 1 run-in phase, in which approximately two-thirds of treated subjects demonstrated a greater than 30% reduction in phenylalanine levels. The mean phenylalanine reduction for all subjects with at least a 30% reduction was 66%, and the mean reduction for classical PKU subjects was 61%, supporting the concept that a more bioavailable and potent cofactor therapy, sepiapterin, can provide a clinically meaningful and differentiated response to the full spectrum of PKU patients. We look forward to sharing results in the placebo-controlled portion of APHENITY in May. Let me now move to the two registration-directed trials of vatiquinone. MIT-E is a global registration-directed trial of vatiquinone in patients with mitochondrial disease associated seizures. The study included a 24-week placebo-controlled phase with the primary endpoint being changed from baseline in the frequency of observable motor seizures. The last subject visit for the placebo-controlled phase occurred in March as planned and we continue to expect results in the second quarter. The MOVE-FA trial is a global Phase 3 registration-directed study of vatiquinone in pediatric and adult patients with Friedreich ataxia. The study includes a 72-week placebo-controlled phase, with the primary endpoint being changed from baseline in the validated mFARS score. The last patient visit to the placebo-controlled phase has also occurred, and we continue to expect results from MOVE-FA in the second quarter. Moving to our PTC518 Huntington's disease program. PIVOT-HD is a 12-month placebo-controlled trial that consists of two parts. Part 1 is 12 weeks in duration and focuses on PTC518 pharmacology and pharmacodynamic effects, as well as biodistribution. Part 2 is 9 months in duration and focuses on blood-based, CSF-based, and radiographic biomarkers of disease. The study initially included two dose levels, 5 milligrams and 10 milligrams, with the ability to include a third dose level of up to 20 milligrams leveraging the titratability of the molecule. We initially included patients with Phase 2 Huntington's disease, and we recently expanded the trial to include early Phase 3 patients who we study initially at the 5 milligrams and 10 milligrams dose levels. We continue to expect interim data from the 12-week portion of the trial in the second quarter of 2023. These data will include safety, pharmacology, pharmacodynamic, and biodistribution data from the 5 milligrams and 10 milligrams dosing. With results of these four studies expected in the next several weeks, beginning tomorrow, we will not be discussing these programs until results are reported for each study. Turning to Translarna, we continue to expect the CHMP opinion for the Type II variation to convert the European conditional marketing authorization to standard authorization in the second quarter. In the U.S. we are preparing a Type C meeting request to review with the FDA the totality of data collected to date that could support an NDA resubmission for Translarna. Finally, for Upstaza, as we previously shared, the FDA requested additional bioanalytical data in support of comparability analyses between the clinical and commercial drug product. We have received initial feedback from the agency on these data and are in the process of responding to additional FDA queries prior to submitting the BLA, which could result in a BLA submission occurring in the third quarter of 2023 rather than the second quarter as previously planned. Overall, I’m incredibly proud of the productive and successful first quarter. And we will now hand the call over to Eric to provide an update on our commercial portfolio. Eric?

Thanks, Matt. Our global customer-facing team kicked off 2023 with an extremely strong quarter, capitalizing on the significant momentum we created in the second half of 2022. Our team is focused on driving significant growth with our commercial portfolio of products for neurological and metabolic disorders. We continue to make good progress with the Upstaza launch in Europe. We also have launched Waylivra for familial partial lipodystrophy, FPL in Brazil, following the approval of this new indication in the fourth quarter of last year. Our strategy and execution of geographic expansion continue to progress in Latin America and our future growth markets in Asia. We are in a strong position to achieve our 2023 revenue guidance as Matt previously mentioned. Let me start with the DMD franchise. Translarna and Emflaza continued to be an important engine for growth, delivering an impressive $170 million in first quarter net revenue, which is up 33% compared to the first quarter of 2022. For Translarna, we achieved $115 million in revenue this quarter. We continue to see strong growth across the major markets internationally, and there were some large government orders contributing to our revenue in Latin America, Central and Eastern Europe, and the Middle East regions. Given unpredictable government ordering patterns in these markets, we expect to see ongoing lumpiness in quarterly revenue throughout the year. We remain confident that we will achieve our 2023 DMD franchise revenue guidance of $545 million to $565 million as our growth fundamentals remain solid with continued new patient starts, high compliance, low discontinuation, and proper weight-based dose adjustments on an ongoing basis. The fundamentals of the Emflaza business continue to be solid. Quarterly net revenue was $55 million. We have seen a significant number of new patients start forms in the first quarter, which will provide important momentum as we progress through the year along with continued high compliance, appropriate weight-based dosing, and broader insurance access. Now turning to Upstaza, the first and only gene therapy approved to be infused directly into the brain. We continue to see the transformative effects as new patients have been treated in Europe this quarter, including our first cross-border commercial patient. We see the steady rollout of Upstaza commercially in Europe and we'll leverage early access programs and cross-border treatment in other international markets. Importantly, patient identification continues to accelerate and new treatment centers of excellence are being opened in markets internationally. Additionally, market access discussions are progressing well with Germany and France. We have received positive final guidance from NICE in England and Wales for AADC patients 18 months and older. We expect to treat more patients in more countries in Europe and other international markets throughout 2023. Now moving to Tegsedi, we continue to successfully grow these franchises in Q1. Following Waylivra's approval for familial partial lipodystrophy by ANVISA in December last year, we officially launched this new indication in Brazil and have already generated our first prescriptions. We also received our first group purchase order for Waylivra for familial chylomicronemia syndrome, which was completed and delivered in Q1. As mentioned in our last call, for Tegsedi, we received our second group purchase order from the Brazil Ministry of Health. In conclusion, the first quarter was our strongest quarter ever at PTC and an excellent start to 2023 with substantial progress across all our commercial products and in all major regions, setting us up to achieve our 2023 revenue guidance. Now, let me turn the call over to Emily for a financial update. Emily?

Thanks, Eric. I'll take a few minutes to review our first quarter financial results. Please refer to the earnings press release issued this afternoon for additional details. Beginning with top line results, total revenues for the first quarter were $220 million. This consisted of net product revenue across the commercial portfolio of $187.6 million, Evrysdi royalty revenue of $30.8 million, and manufacturing revenue of about $2 million. Translarna net product revenues in the quarter were $115.1 million, reflecting strong growth across all geographies. Emflaza had net product revenues of $54.6 million, representing 12% growth in the quarter compared to the first quarter of 2022. As Matt mentioned, the first quarter performance puts us in a strong position to achieve 2023 total revenue guidance of $940 million to $1 billion, including $100 million milestone expected whenever it surpasses $1.5 billion in annual revenue. Non-GAAP R&D expenses were $179.8 million for the first quarter of 2023, excluding $15.3 million in noncash stock-based compensation expenses, compared to $127 million for the first quarter of 2022, excluding $13 million in noncash stock-based compensation expense. The year-over-year increase in R&D expenses reflects additional investment in research programs and advancement of the clinical pipeline, as well as the $30 million sepiapterin clinical development milestone paid predominantly in common stock. Non-GAAP SG&A expenses were $73.4 million for the first quarter of 2023, excluding $13.5 million in noncash stock-based compensation expense, compared to $59.7 million for the first quarter of 2022, excluding $13.6 million in noncash stock-based compensation expense. Cash, cash equivalents, and marketable securities totaled approximately $286.3 million as of March 31, 2023, compared to $410.7 million as of December 31, 2022. I will now turn the call over to the operator for Q&A. Operator?

Hi, good afternoon. Thanks for taking my questions. The first one is for your DMD portfolio. Could you talk specifically about what's been the biggest driver in new patient starts? And is this also related to the specific geographies with more patient adds? And then just kind of on top of that bigger picture question here, given you have a few registrational trials on deck, what's been the biggest learning factors and being able to expand your footprint globally, and how do you think you can leverage this should some of these candidates end up crossing the finish line soon?

Great. Thank you very much, Kristen for the questions. We are incredibly proud of the global commercial infrastructure rebuilt and the ability to continue to grow. So DMD franchise revenue year-over-year being that we've been on the market now for almost 9 years. So that's really a tremendous accomplishment. And obviously, there have been a number of key learnings in building that infrastructure that will come into play as we look forward to launching new products. Let me turn the call over to Eric, who can give some more color on the global franchise?

Thank you for the question, Kristen. We're very pleased with our performance and execution across all regions. We achieved $170 million in sales, which is the highest for our DMD franchise. Regarding the growth drivers, we see progress in various areas. Geographic expansion has contributed to acquiring new patients, along with early patient diagnosis and the quick transition from diagnosis to treatment, supported by our commercial team’s efforts. Additionally, we are dedicated to maintaining both ambulant and non-ambulant patients on our therapies, which includes important dose adjustments. We've also seen improved payor access for both Emflaza and Translarna, which is crucial. For Translarna specifically, we recorded $115 million in sales, driven by growth across all our major markets, and we received significant government orders from the CIS region, Central and Eastern Europe, Brazil, and the Middle East. While the timing and scale of these orders can be unpredictable, they affirm the underlying growth fundamentals. We have a strong base of both new and existing patients. We anticipate similar government orders in the second half as well. As Matt mentioned, we are adjusting our guidance for the DMD franchise to between $545 million and $565 million. I hope that answers your question, Kristen.

Yes, thank you. That's helpful. And then maybe just one quick one on Huntington's disease. In oral drug obviously comes with benefits in terms of compliance and adherence. But thinking about the different therapeutics out there and recognizing the mechanisms are different, how are you thinking about an oral agent's ability to really target the right areas in the brain versus some other routes of administration that are being evaluated?

Yes, Kristen, thank you for the question. We think the route of administration and biodistribution are incredibly important elements to the development of successful therapies for Huntington's disease. The development of PTC518 comes on the heels of the successful discovery and development of Evrysdi for SMA. We've made a number of important learnings about how to design a molecule that can effectively cross the blood-brain barrier, not at flux and globally distribute in the CNS, which is not only essential for the optimal treatment of SMA, but is also similarly critical for Huntington's disease. In the design of PTC518, we applied all of those lessons. The molecule is highly selective, highly specific and gets across the blood-brain barrier, thereby distributing in every region in the brain, which is incredibly important given that Huntington's disease is a whole-brain disease. The mechanism of the drug targets the cause of the disease, which is the production of the mutant Huntington protein that is toxic to cells, leading to neurodegeneration. We're able to do so with our splicing molecule, essentially decreasing the production of the disease-causing toxic protein. Therefore, having the ability to get to every region of the brain that contributes to the disease is an incredibly important advantage of PTC518 over other therapies that are limited in their biodistribution by means of either being locally delivered, as in the case of gene therapy, or having significant disadvantages due to their inability to effectively target all locations in the brain. We also have significant advantages because of all milestones being titratable. We're leveraging our titratability in our clinical study to identify the optimal dose to achieve the target whole-brain Huntington protein that we think is optimal for disease treatment.

Great, thanks. Looking forward to catching up with you once these data read out.

And thank you. And One moment for our next question. One moment for our next question comes from Brian Abrahams from RBC. Your line is now open.

Hi, this is Joan for Brian. Thank you for taking our question. Just on Huntington's, can you tell us more about what which data might be shared from the 12-week portion of the study? And it seems like there may have been some changes in your target population to include earlier Huntington's patients. Can you share your thinking around it? And if it speaks to any possible changes in your thinking around desired levels of the HTT knockdown in CSF? Thank you.

Thanks, Joe, for the question. The PIVOT-HD study is a 12-month placebo-controlled study that is in two parts. Part one is 12 weeks in duration; it focuses on PK/PD in the blood as well as biodistribution, looking at the relative exposure in the CSF and in the plasma. These are important data points to inform optimal dosing that gets us towards the target reduction in the brain of 30% to 50% of the Huntington protein. The second 9 months of the study focus on biomarkers of disease, including Huntington protein levels in CSF, radiographic markers including brain volume changes, as well as NFL levels in CSF. The data we plan to share in the second quarter is an interim analysis from the first 12 weeks of PIVOT-HD. We will be sharing information on the PK/PD in blood, looking at drug levels in the blood and the reduction in Huntington mRNA protein, and then looking at the relative exposure of the CSF in the plasma. As you recall from our Phase 1 study in healthy volunteers, we were able to confirm that we were getting excellent CNS exposure, achieving greater exposure in the CSF than in the plasma. That's a very important finding that will seek to confirm the trove of data, including the biomarker data, such as CSF Huntington protein levels, NFL levels, and brain volume changes will come up in the readout from the 12-month data. To your second question regarding patient populations, we shared at the JP Morgan conference in January that we were adding additional cohorts of slightly later stage patients. We are now including patients who have a total functional capacity score of 11 and 12 rather than just simply having a TFC score of 13. The reasons for this were because there were these patients that were already pre-screened and prepared to participate in other clinical trials that were no longer being conducted. It's a situation where there are patients identified who were incredibly eager to participate in trials, and we believe we could provide benefit with this therapy. The decision to introduce additional dosing cohorts—5 milligrams and 10-milligram dosing cohorts in these early Stage 3 patients—will provide us additional important data on the potential benefit of PTC518 and will also allow us to test our hypothesis in terms of the optimal population we initially set out to enroll. So I hope that answers your question regarding the adjustments or the addition of the patient.

Yes, that was super helpful. Thank you, Matt.

And thank you. And one moment for our next question. And our next question comes from Eric Joseph from JP Morgan. Your line is now open.

Hi, good evening. Thanks for taking the question. Just a quick one from me on vatiquinone. Can you just briefly talk about the patent estate for the compound? I guess what claims are covered on IP and where you maintain exclusivity? And then for what duration? Thanks.

Yes, thank you for the question, Eric. So the protection for vatiquinone is principally going to be under orphan exclusivity, as is always the case. We're exploring other potential ways to strengthen and extend the patent life, obviously, in the U.S. and Europe as well as in other markets.

Okay, great. Thanks. And just a quick follow-up if I could. As it relates to MOVE-FA, could you just talk about sort of the range of patients entering by age, and I guess within that patient ages that will comprise the primary analysis for mFARS on the soft line reading? Thanks.

Yes, absolutely. So when we constructed the MOVE-FA trial, we leveraged a number of learnings, given the safety of the treatment and the large volume of exposure in children. This opened up the opportunity to enroll the full spectrum of FA patients in terms of age. In this trial, our primary analysis population consists of patients aged 7 to 21. The majority of FA patients will usually be diagnosed in early adolescence or late childhood to early adolescence. The idea here is if you look at the natural history of disease, the younger patients tend to have a more uniform and more rapid decline. We also have additional adult patients, but they're not part of the primary analysis population. We've previously studied the drug in adults, and we believe we can hold benefit for patients of all ages. I hope that answers your question.

And thank you. And one moment for our next question. One moment. And the next question comes from Robyn Karnauskas from Truist. You are now available.

Thank you for taking my questions. I have three. First, regarding PKU, I know you provided the responder analysis indicating a 30% improvement and fee reduction for those patients. Since the threshold for entering Phase 2 is 15%, it seems likely that some lower responders will move into Part 2 and might achieve 30% by the end. How do you set expectations for Part 2? Do you think it will perform similarly to the lead-in phase, given the possibility of slower responders? Can you elaborate on this for investors? My second question is about FA. With the drug being TID dosing, do you believe the success bar is set higher than for Reata? Could you explain how much the TID dosing might influence the market? Lastly, you mentioned treating younger patients and your confidence that they could experience a lower placebo effect and potentially progress more quickly. How confident are you in this over time? Also, what are your thoughts on the decline in efficacy in that population? We’ve noticed a decline over time in older patients. What about younger patients and the potential decline in the efficacy of these drugs? Thank you.

Okay, Robyn, thank you for those questions. Let's take them in turn. So the first question is regarding the APHENITY trial. We have the run-in phase in which all screened subjects were treated for 2 weeks, and we randomized all subjects who had a greater than 15% reduction. However, importantly, the primary analysis population for the trial includes only those subjects who had a greater than 30% reduction during the run. Just to give you a few of the numbers we've shared in the past, we had 102 of 156 subjects in the run-in phase who had over 30% reduction. And there were additional 13 subjects who had between 15% and 30%. Those who responded to the drug overwhelmingly had a tremendous response of over greater than 30% response. Our expectations about the placebo-controlled study would provide evidence of clinical benefit sufficient to achieve registration, but would also give us evidence and differentiation. I'll comment quickly on the regulatory front then turn it over to Kylie for differentiation. We expect data from the 6-week placebo-controlled study, but patients will roll over from the placebo-controlled study into a long-term open-label extension study, which will provide data on durability effects, and of course, safety data which we believe would put us in a position to file positive data. Kylie, do you want to elaborate on the commercial differentiation question?

Yes, I think that's well said, Matt. I think there are many factors taken into consideration, particularly in a disease of high unmet need like PKU. Efficacy is obviously a key priority. Demonstrating benefit in classical PKU is extremely important given it has historically been a very difficult-to-treat patient population. The primary analysis population being in the 30% or greater fee reduction, but those in the 15% or greater population should still indicate some benefit in classical PKU, which will be a powerful differentiation. Outside of classical PKU, we’ll look at those who have previously tried it to show benefit, especially for those who are poorly controlled over time, demonstrating a 40% plus greater fee reduction opens up more and more patients for treatment.

And then Robyn, in terms of your third question regarding the 7 and 21 year-olds and concerns there. The natural history of the disease is clear when you look at age groups and changes in the mFARS scores over time. The patients diagnosed earlier tend to have a more uniform and greater rate of decline. Obviously, any therapy will slow progression over time, though being able to slow the decline of a year or two is incredibly meaningful in such a relentless disease like Friedrich ataxia. We expect meaningful efficacy in children that will modify disease course, even though we will see some progression over time; slowing progression would represent an important impact.

Thanks so much.

And thank you. And one moment, please. One moment for our next question. And our next question comes from David Lebowitz from Citi. Your line is now open.

Hi, this is Debanjana on behalf of David. Thanks for taking our call. The first thing we wanted to ask was if you could share any further details on the nature of FDA queries regarding data like feedback you received? And do you anticipate any additional delays like that could push back BLA submission beyond third quarter? And one more thing to know is that although both trials are using mFARS as an endpoint. There are, of course, differences in the demographics and time points. So how should we benchmark results when they come out against the OMAP? Like label efficacy? Thanks.

Thank you very much for the question. As we have previously shared, the agency requested that we provide additional data on comparability between the clinical drug product and the commercial drug product. The key attributes of the commercial drug products are analogous to the attributes of the clinical drug product, and we provided that data. They've come back and asked for additional questions around one specific area regarding differences in empty fill capsids between clinical product and commercial products. They are quite similar, and we were able to provide that data. We believe the submission of BLA could be delayed to Q3 of this year from Q2 just based on the potential cadence of interactions back and forth between the agency. In terms of differentiation between MOVE-FA and vatiquinone, we believe that while the trial is slightly longer than the previous studies, it will allow for capturing a longer-term impact on patients. Obviously, the patient populations are somewhat different, but nonetheless, we’ll be looking at the longer term over different age groups to appreciate the relative benefits. Secondary endpoints are also really important, considering both an approval pathway and our expectations regarding them.

Okay. That’s very helpful. Thank you.

And thank you. And one moment for our next question. And our next question comes from Joseph Thome from Cowen. Your line is now open.

Hi there. Good afternoon and thank you for taking our questions. The first one on the PKU trial. When you think about what constitutes success here, is it strictly an aesthetic benefit, or do you want to see a certain proportion of patients under 360 micromoles per liter? Or that have a 30% reduction from baseline or what have you? And do you have the sufficient safety database to file off this program if the study works? And then I have one quick follow-up.

Thank you for the questions. I'll begin and then let Kylie discuss the commercial differentiation. A few impressive points from the Phase 1 run-in data include the significant proportion of patients who responded. Nearly two-thirds of the patients experienced over a 30% reduction, which is remarkable compared to the Kuvan all-comer study where only 20% showed a similar response. Additionally, the magnitude of the responses was notable, not just among all patients but particularly in the classical PKU patients, who showed a strong potential for clinical benefit. We expect the placebo-controlled study to demonstrate clinical advantages that could support registration and highlight differentiation. Kylie, would you like to address the commercial differentiation aspect?

Yes, I think that's well said, Matt. I think there are a number of factors that are taken into consideration, particularly in a disease of high unmet need like PKU. Having the ability to demonstrate benefit in classical PKU is extremely important. Matt just touched on the reduction analysis; we are not only focusing on statistical reductions but also on absolute changes that can significantly impact patient outcomes. I hope that overall considerations provide a clear differentiation for commercial prospects.

Great. Thank you. And then just real quickly on Upstaza. I know as much as several patients were treated, I don't think I saw it in the press release but are you able to provide some of the revenue contribution for Upstaza this quarter? Or if not, are you anticipating bringing that out going forward? Thank you.

Eric, you want to talk a little bit about the launch in progress?

Yes, well, we haven't actually broken out specific patient numbers or revenue. But we're really pleased with the way the launch is progressing. It's going according to plan. We are treating patients in both Germany and France, and we also have treated our first cross-border patient which came from the Middle East and was treated in Europe. We continue our patient finding activities and have been able to continue to find patients in the first quarter, and new patients in all major geographies where we know there is access for gene therapy. On the surgical centers, we've been working very closely with them, and establishing them in key countries. We anticipate having centers in the Middle East and Brazil during the course of the year. On the payer engagement side, we've had strong HTA assessments in Germany and France supporting negotiations. We expect to conclude pricing negotiations in the second half of the year, increasing treatment availability in England and Wales soon.

Great. Thank you very much.

And thank you. One moment, please. And one moment for our next question. And our next question comes from Kelly Shi from Jefferies. Your line is now open.

Thank you for taking my questions. So, Vatiquinone, I would say, my question is that the Phase 2 study showed the treatment effect at a 2.5 point difference over placebo arm on mFARS Neuro start at 24 weeks. And the first — for our Phase 3 is to 72 weeks and you said about 4.5 points difference. I'm curious what data you will rely on to demonstrate how the treatment effect could trend from 24 weeks to 72 weeks and make this desirable on the primary endpoint. Thank you.

Thank you very much for the question, Kelly. So a number of important points here and that you brought up so being the Phase 2 study was 6 weeks in duration and had the difference that you noticed. Part of that is driven by a placebo effect that was present even up to 6 months. More time is needed for that effect to abate. Our selection of the 18 months duration for the placebo-controlled phase is to allow for complete washout of any placebo effects and allow for patients to more closely mimic the natural history of the disease, which averages a 2.5 point loss on the mFARS score per year. We did do the 6 weeks placebo portion, right? But all patients were treated for an additional 18 months which allows for a comparison with natural history cohorts. The magnitude of the difference between the two groups in terms of treatment benefit was based on our hypothesis derived from long-term extensions from the Phase 2 study. Plus, we expect that 4.5 estimating power will puts us in a strong position to capture significant benefit in the study.

Very helpful. And I also have a quick follow-up in PKU, if I may? Do you think 16 classic patients are sufficient to ensure a broad label in both mild and classical PKU patients? Or this might require expand data enrollment?

Yes, it's a good question. We have 15 patients who are in that greater than 30% reduction. Previous shared that we have five additional classical patients who have between 15% and 30% reduction in the run-in phase with a mean reduction of 22%. You see quite meaningful reductions across 20 patients which in classical PKU is a lot. Moreover, we also capture the number of classical PKU patients, so you're seeing a good proportion of those treated, showing meaningful reduction in outcomes. The absolute change in phenylalanine also matters, as it's known that reductions in phenylalanine by even 100 point can impact the clinical effects. Therefore, we believe that the dataset will have sufficient patients with classical PKU to be included in the label. The magnitude of effect also impacts our assessment positively.

Danielle, if your phone is on mute, could you please unmute it?

Yes, hey, sorry. This is Alex on for Danielle. Just a couple quick ones from us. Just to clarify, my audio went out. Just wondering what was up with the FDA Type 2 meeting request for Translarna. Has that been requested or scheduled? And then secondly, just curious about the order of the upcoming readouts. We're trying to back into it a little bit. Is it fair to assume that PKU will come first? We were trying to get May and maybe June for the others. Thanks so much.

Yes, thanks for the questions, Alex. So let me take the second question first. We've been able to provide specific guidance for PKU, which is readout in May, and obviously the others, we've not provided more specific timing because we don't have that yet. In regards to your first question—TBD for Translarna—we had a clarification meeting following up on the written response we received from them in the fall. In that meeting, the agency suggested that we request a Type C meeting to review with them the totality of data from Translarna, including mechanistic data, dystrophin data, and the data generated over the clinical studies done to date. A robust discussion is anticipated regarding the data package, aimed at providing a clinically meaningful effect with context. We believe that all the data collected in over 700 boys points to a solution that's meaningful for the FDA.

Great, thanks so much.

And thank you. Our next caller is Jeff Hung with Morgan Stanley. Jeff, your line is open. Please go ahead.

Thanks for taking my questions. For MIT-E, can you remind us of why the study was powered for a 40% placebo-adjusted difference in seizure reductions when a 20% to 25% reduction can be important? Would you consider the study success if you see a 20% to 25% reduction or do you need to see a 40% reduction? And then I have a follow-up.

Thanks for the question, Jeff. So the power in the MIT-E study was based on previously observed placebo responses quantified in other trials. Given the refractory nature of those seizures, experts would generally agree that a 20% to 25% reduction would be clinically meaningful, particularly since those cases can be highly morbid in nature. What we hypothesize at 50% is mainly driven by efficacy experience we have quantified. So our objective is indeed to assess 20% to 25% as clinically meaningful while targeting our original design for robust support of the treatment benefit.

Great. And then for PTC518, did the FDA specify where the additional data supporting dosing and duration needed to come from geographically?

Yes, just as a reminder, the FDA asked for additional data to support the dosing and duration was based on nonclinical data. As this study has only been conducted in countries outside of the U.S., they would naturally understand those data are going to come from patients outside of the U.S. and they expect the data will be reviewed as we cut through interim data.

And thank you. And one moment for our next question. One moment. And our next question comes from Gena Wang from Barclays. Your line is now open.

Thank you. Very quick few questions. First one is regarding the full data sets; will we see each individual data set in this press release and the conference call in the second quarter? And the second question is regarding the APHENITY trial in PKU; some patients had a prior Kuvan experience. Would these Kuven responders in the study or simply just Kuvan experienced patients? Lastly, very quickly on PIVOT-HD, what is your Huntington knockdown level?

Yes. Will, as we've guided, data from APHENITY will come out in May, while others will follow. We haven't provided details on whether there'll be all releases and calls. Regarding the second question, we have patients who entered the study who had previously been treated with Kuvan who are Kuvan failures or those who were on Kuvan and washed out. This allows us to compare responses between this group. As for the PIVOT-HD study in Huntington knockdown, our goal is to achieve a lowering of Huntington protein in the brain of 30% to 50%. We need to correlate our data points from blood and CSF; we’re looking at changes in blood and will assess relative exposure in the CSF for pharmacodynamic effects.

And thank you. And one moment for our next question. One moment. And our next question comes from Colin Bristow from UBS. Your line is now open.

Hi. This is Yihan on for Colin. Thanks for taking our question, and congrats on the quarter. So the first question is for the Translarna. It seems to have a very big beat this quarter. And you just noted the government order would continue to be expected in the second quarter. Can you provide more color on this government order in terms of the longer time and also because you didn't really update your DMD guidance? Just wondering if we should potentially expect more revenue for this whole year versus your guidance. The second question is just a clarification; for the Upstaza BLA filing delay in Q3, you previously said you've already provided the additional requested data to FDA, is that correct? Thank you so much.

Thank you, Yihan. Let me pass it to Eric to comment further.

As we mentioned earlier, Translarna continues to grow across major markets. We see government orders as vital for continuing revenue growth. We anticipate ongoing orders in the second half but cannot predict the timing of those orders. We are confident in our current 2023 guidance while witnessing some lumpiness. Revenue will come in line with patient demand, and we will revise our guidance if necessary.

Regarding Upstaza, yes we provided data requested, but there are still some follow-up questions from the FDA. We expect continued interaction as we prepare for submission, and any delay for submission to Q3 is due to this back and forth nature.

And thank you. Please hold for our next question. Our next question is coming from an indiscernible source. Your line is now open.

Hi, this is on behalf of Paul Choi. Thanks for taking our questions. Two quick ones. First, we wanted to understand the impact of inventory or stocking throughout the quarter. Additionally, we noticed you removed your full-year operating expense guidance, and we would like to know the reasoning behind that decision and how to think about future operating expenses as the pipeline progresses. Thank you.

Yes, we do not typically provide quarterly guidance, but are proud to see great performance in the current quarter. Regarding OpEx guidance, we’ve been building our R&D and commercial infrastructure, and as we pivot our focus towards ongoing studies, we plan on doing a portfolio review that will inform our OpEx trends going forward. Reduced OpEx will be based on ROI and probability considerations as we look to achieve revenue growth over coming years.

And thank you. I would now like to turn the call back over to Chief Executive Officer, Matthew Klein.

I want to thank everyone for joining the call today. I'm incredibly pleased with the productive and successful first quarter that we have, and we look forward, of course, to sharing the upcoming study readouts with you all as soon as they've come to pass. So thank you all again for joining the call, and have a good evening.

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