Conference Transcript - PTCT 2026-09-15

Judah Frommer, Analyst — Morgan Stanley

All right, welcome everyone to this session of the Morgan Stanley Global Healthcare Conference. I'm Judah Fromer, one of the Smith Biotech Analysts here. We're very excited to have Matthew Klein and Pierre Gravier with us from PTC. I'm just going to read a quick disclosure, and then we'll get started. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morgansanley.com forward slash research disclosures. So with that, welcome again, guys. Between your commercial products and pipeline, there's a lot to talk about. Before we dive in, maybe give the audience just a quick intro to the company for those who may be less familiar with the story and how PTC has evolved over the last few years.

Matthew Klein, CEO

First, Judah, thanks for having us. Great to be here. PTC is a global rare disease company that discovers, develops, and commercializes innovative therapies for diseases of high unmet need. We have a robust commercial portfolio with six marketed products that we deliver to patients around the world, as well as a broad R&D portfolio, including two scientific platforms, including our oral small molecule platform, which has already demonstrated to be quite valuable and well-validated. So far in 2026, we're off to a great start with the continued strong momentum of the Suffiance launch that continues in the U.S. and worldwide, and we remain on target to achieve the important milestone of being cash flow break even this year. So I think that really is an important milestone for the company and is something that we've been working for over the past couple of years as we transform PTC into a diversified, sustainable, profitable rare disease company. Great. It's been a big evolution that we've noticed.

Judah Frommer, Analyst — Morgan Stanley

So maybe we'll start with that Suffiance launch. We're a little over a year in. Suffiance revenue is already annualizing above what we've seen for Kuvan and Palinzeek in the PKU space. So what's made this launch different from prior PKU and rare disease launches? And have there been any surprises along the way for you?

Matthew Klein, CEO

Absolutely. Look, we're incredibly excited about the success of Suffiance thus far, and we remain incredibly bullish on the overall opportunity and we're very much on track to reaching that $2 billion plus level of revenue we've been talking about. I think there have been a number of surprises for everyone, but I'd say first and foremost, what we're not surprised about is the success. I think this marketplace was quite misunderstood and there was a belief that since there were two approved therapies that didn't reach that billion dollar mark, it was hard for PKU therapy to get there, and that's simply not true. The success is really attributable to a number of important factors. First, suffiance, the drug itself. It's a differentiated molecule with a dual mechanism of action that uniquely allows it to have benefit for the full spectrum of PKU patients, regardless of severity. It's classical and non-classical underlying mutation, regardless of age, as well as being oral, convenient, and having a very favorable safety and tolerability profile. That's differentiated. Second is the fact that all the pillars for commercial success were there. There's newborn screening. There's centers of excellence. It's a well-aggregated community. All that was missing was a therapy that could address the broad 17,000 patients in the U.S. and 50,000 patients in global markets where we could commercialize. Next is our team. I mean, we are an experienced team in terms of delivering rare disease therapies to patients, not only in the U.S., but globally. We have a patient services team that's very well accustomed to helping manage through a competitive landscape, providing necessary patient support, and, you know, quite simply, we are very good at executing on commercializing rare disease drugs. So when you put that combination together of the landscape, of the marketplace, the quality of the product, and the execution of our teams, this is what you get.

Judah Frommer, Analyst — Morgan Stanley

And you guys had a significant presence at the SSIEM meeting last month where you shared some new data and analyses for supply and including data on fee normalization. What were the highlights from your data and what do they mean for PKU patients in the real world?

Matthew Klein, CEO

We were certainly excited to have 17 presentations to be able to continue to reinforce the differentiated nature of suffiance, as well as to bring forward real-world evidence that's substantiating that suffiance has been able to deliver meaningful benefits, not only in terms of phenylality and lowering, but diet liberalization, increased protein intake in the full spectrum of patients. And I think a couple things I want to point out. One is we're still early in this launch, and I think when we think about all the success we've had to date, we still believe we have a very, very long way to go, just given the size of the population and the market opportunity. And the SSIAM and these kinds of conferences are part of the launch playbook. You basically come in a year into the launch and be able to continue to support product differentiation and help foster uptake for the large number of patients who we believe can benefit from suffiance. So I'd say some of the key data points were the fact that we're, you know, people have asked, well, you know, we know that any, your data show that any individual who is on Saproterin or Cuvan-branded or generic has a much better response with suffiance, whether in terms of phylo-ing or dialyperization. But what about more severe patients in your trial? We had an abstract that showed that in all of our studies, individuals who came in with an over 900 micromole per liter phenylalanine level had the same response rate as those who had lower... So really addressing that question. We then had real-world evidence showing that severe patients with classical PKU were able to enjoy significant fee reductions and liberalized diet with significant protein intake. That was really important. So it's just these opportunities to show again and again why suffiance can be an important therapy for the full spectrum of patients and also to support the CUVAN switching, to reinforce the fact that if you're on CUVAN and getting any benefit, switching over to suffiance can bring greater benefit. And then finally, you mentioned the normalization abstract. That was really cool. That was from some of our clinical trial data where we showed in those patients who respond, a majority of them are getting to normal phenylalanine levels. So we know that lower is better in PKU, and just being able to have presentations not only by us but by KOLs doing their own independent analyses of their data just further strengthen the value proposition of the therapy.

Judah Frommer, Analyst — Morgan Stanley

Okay, great. And heading into the launch, you estimated about 70% of PKU patients had tried CUVAN, and you've seen suffiance uptake among both treatment experience and treatment-naive patients, including an adult. So how much of the PKU population do you think suffiance could ultimately reach?

Matthew Klein, CEO

That's a good question. So that segmentation is something we did early on, And I think a couple of very important things to note there. First, the fact that 70% of our estimates of 70% of patients trying CUVAN tells us that we should expect. That's why we say we've got a long way to go on this launch in the U.S. and worldwide. But what's also notable, and to your first question about surprises, is early on, we had a number of patients from the naive bucket, that other 30%, who've been tried on the therapy. And I think that was a little bit of a surprise because a lot of KOLs who were interviewed prior to the launch said, oh, these naive patients are the more challenging patients. Many of them are remote to clinic, and we don't anticipate that they're going to come back to clinic. And we ourselves believed that we could help these patients. We thought that we'd be penetrating that segment a little later in the launch. That's not what happened. We actually had about 30% of patients to date have come from that therapy-naive bucket who tend to be the more difficult-to-treat patients, classical patients. That's why they're therapy-naive because it was believed that based on their genotype of having BH4 non-responsive mutations or classical mutations, they were not likely to respond to saproterin, so therefore they weren't tried. So I think what we're seeing thus far, the data we see and what we're hearing continue to support that suffiance can be a drug for the full spectrum of patients. And we're seeing this, and we're hearing from prescribers saying that this is moving to become first-line therapy and standard of care. We're also now seeing physicians thinking a lot about saying, okay, we have newborn screening for PKU. Maybe we should be now moving suffiance to be starting shortly after birth. We had a very young child start in the U.S. recently with a severe mutation with great result. We know in Germany recently there was the first patient who went from newborn screening directly to suffiance therapy. So, again, this is all really exciting for us and reinforces the potential value of suffiance across the full spectrum of patients, whether you bin them by severity, by age, or previous treatment experience.

Judah Frommer, Analyst — Morgan Stanley

Okay, excellent. And you've achieved, I think you've said, 100% penetration across the original 100 or so centers of excellence in the U.S., and you've seen prescriptions from other centers as well. So how much of the PKU opportunity is contained within these original 100 centers? How should we be thinking about penetration from a center perspective?

Matthew Klein, CEO

Good question. I think we had, the estimates we had is about 80% of patients were tied to these centers. And then we found that we had additional centers that weren't in the center of excellence. And again, this is what happens at a launch, right? You make new learnings. I think for us, some of the important factors, getting to 100% COE penetration this early in a launch is great because in every launch you deal with early champions and those who are, it takes a little while to get on, but being in every center allows you then to focus on a center-by-center basis and say, how do we penetrate deeper and deeper? And, again, this is just stuff you do in a launch. We have an analytics team that now is able to say, okay, we're in 100 centers, and we can now map within these centers What are the key points to reinforce in Center 1, and what about in Center 6? And this is exactly the work we're doing in order to penetrate deeper and deeper into these different centers. And they come in different sizes, and a lot of these centers, one of the other learnings we've made is that while physicians may be sort of the spokesperson for a center and the individual who gets interviewed, and many of these centers, particularly the larger centers, The prescription decisions are being made by nurse practitioners and physician assistants, and then you also have dieticians who are a point of contact for those not getting medical care. And so being able to understand that on a center-by-center basis helps us then cater our field tactics specifically to each center to help continue to drive penetration deeper and deeper and deeper and also understand, okay, in a center with seven prescribers, fiber prescribing, why aren't the other two? Okay, what's the data now that our teams have to have to go in and get that? So not only do we think we're well-poised to penetrate deeper into these centers, but we're getting smarter in a way of actually what is that tactical map to achieve that.

Judah Frommer, Analyst — Morgan Stanley

Okay, that makes a lot of sense. Heading into the second quarter earnings print, we sense a lot of consternation about discontinuation rates being at this point in the launch, But, you know, it seems like you guys clearly cleared your own internal bar, and I think investors' bar as well on that front. So maybe talk a little bit about discontinuation rates you're seeing in the real world, how those compare to what you saw in clinical trials. And do you have any anecdotal cases of patients returning to supply-int after having discontinued?

Matthew Klein, CEO

Yeah. So we said coming into the launch that in our clinical studies, if you set a bar about 15% phenylalanine lowering, we had 75% of patients got to that level. So we thought all along that in the real world, our discontinuation rate would be in that 25% neighborhood plus minus. And we got to Q2, and we said we're about 20%, which is really good for a couple of reasons. One is we believe we're getting close to steady state. to, as I mentioned, early on, we've had a number of these more difficult classical patients. And to be able to be having that level of adherence said differently than the other side of discontinuation is really impressive in the most difficult patients. And we know now in the next phase of the launch, we expect to be penetrating deeper and deeper into the switch opportunity. And the switch patients, those who are on Kuvan, have already demonstrated themselves to be adherent done a once-daily therapy, and so now you're basically going to be switching individuals from a similarly tolerated once-daily therapy to a superior one with potentially superior efficacy, and definitely these should be more adherent patients. So all this gives us a lot of confidence that we're getting to that flat part of the discontinuation curve, which is really great, especially in a disease like PKU, where patients, first of all, you can objectively measure response, which you can't do in a lot of diseases, and And second, patients use very burdensome dietary supplements and diet restriction in the absence of a medical therapy. So they're only going to come on a therapy if they perceive that there's going to be some benefit. Again, so it's not the kind of thing where people are going to just stay on a therapy because they have nothing else. In terms of coming back on therapy, we do have that. And so, again, this is one of the things we talk to folks who say, well, you know, how much further can this launch go? We're in the first inning, right? And one of the things you do in a launch, and our teams do, is we make learnings. So we've had discontinuations, two main buckets. One is lack of efficacy. We know that 100% of the patients are not going to respond to spines. And then we had other things like patient preference, taste and texture, and things you commonly hear. So we were able to take that data point and get a couple of folks on our patient services team to focus specifically on taste and texture. So now we have programs before an individual prescribes the appliance. They can now talk about that, talk about different foods you can mix the appliance with. And we've now had a number of patients come back on therapy. So I think that's just a great example of what an experienced customer-facing team can do as you go deeper and deeper into a launch, leverage the learnings, bring that back, and continue to drive adherence and penetration. Okay.

Judah Frommer, Analyst — Morgan Stanley

And maybe just the reimbursement component of compliance, how has that been trending?

Matthew Klein, CEO

Very good. I mean, the payer policies have been very favorable. Part of this is, you know, coming into the launch, we had the Amplify study. The Amplify study was a head-to-head study of saproterin versus suffiance and it was a crossover study so we were able to say for each specific individual what were we seeing and again we saw that 100 percent of individuals who had a response to saproterin had a better response to suffiance we quantified that it was 70 percent on average 70 percent phenyl out greater phenyl lowering we had a hundred percent increase in protein intake So to be able to go to a payer and have those data from a well-done study in hand goes a long way to addressing needs for step edits and things like that. And in terms of reauthorization criteria, we've seen it pretty broad. It could be phenylalanine response, protein response, and also medical benefit. And that's super important because what we're hearing quite often now is that individuals on suffiance are enjoying some of the cognitive benefits, less brain fog, less anxiety, improved mood that may or may not directly correlate with phenylalanine lowering. So this is another opportunity to capture benefit aside from the two quantitative factors like fee lowering or protein intake.

Judah Frommer, Analyst — Morgan Stanley

Okay, great. And maybe can you help orient us on the progress ex-US? It's kind of been fast and furious lately. So how many countries has the science launched in thus far, and where are we in terms of access and reimbursement there as well? Yeah, absolutely.

Matthew Klein, CEO

We said this was going to be a true global launch, and we had the benefit of already having global infrastructure, with the exception of Japan, where we built that team, and they were ready and did a lot of market development work. So we were able to be in a pretty special position that within six months, we had European approval, US approval, and Japan approval. The XUS launch is going great. We started in Germany. We're still in the process of finalizing pricing and reimbursement there, but the launch continues, and Germany represents a pretty large opportunity for us. We expect that once we have final agreement on the price that we probably will see another inflection in patients because there's a number of folks there who are waiting for an agreed-upon price before putting patients on to clients because they worry that if the company is unhappy, they may pull out, and they certainly don't want to start patients at it. But we're in name-patient programs in a number of countries in Europe, including in the France AP2 program and some of the countries in southeastern Europe. We're in pricing and reimbursement discussions of starting them in a number of the larger markets in Europe. We started the launch in Japan at the end of Q1, so I think some of the growth that folks saw in Q2 came from that strong early trajectory in Japan, and that's a great market. while there's maybe about 1,000 PKU patients there, we have an agreed-upon price for the next 10 years that's on par with the U.S. net price. So that's actually a great value country for us. We have name-patient programs going on in Latin America. We have getting ready to launch in the Middle East and North Africa. We have patients on in Canada. Brazil, we got the approval. As you know, the Brazil access procedure takes a long time, but you also know that our teams are very experienced. We currently market three therapies in Brazil. We know very well how that system works. We've already laid the groundwork to get the first injunctions, which will lead to the first group purchase order. So we expect a number of these other markets to really start kicking in in 2027.

Judah Frommer, Analyst — Morgan Stanley

So I guess with that mentioned near term, is XUS expansion the most important driver for new patients' starts, or what would you say is most important in the U.S. versus XUS?

Matthew Klein, CEO

So it's all important, and we expect global growth. We say that we expect the growth in the U.S. to be steady and consistent. Again, we've gotten, you know, over 2,000 start forms. There's 17,000 patients in the U.S. 70% of patients retired on COVID. There's a long way to go in the U.S., and we expect that switch dynamic to start coming into play more and more as we go deeper. I think growth outside the U.S. is going to have – it's going to be steady with the number of inflection points. Each time we gain access in a market, you're going to see an inflection of a larger number of new patients coming on. So, again, we expect growth globally to continue for a long ways.

Judah Frommer, Analyst — Morgan Stanley

So maybe tying this success with Suffiance back to the raised guidance that you provided for the full year, I guess how much of that is Suffiance versus the legacy DMD franchise? maybe speak to high and low ends of the guide as well.

Matthew Klein, CEO

When we came into the year, we were very clear there was a lot of unknowns for the year. We were very confident that suffiance was going to do well, but we were a quarter into the launch, and we had the DMV franchise, which we know was declining. We just didn't know at what rate. And so we were very clear that as we moved through the year that we would continue to raise guidance, and now we're at 850 to 950. Obviously, a lot of that is suffiance and our confidence in continued suffiance growth. we still don't have clarity how much more we're going to get out of the DMV franchise the rest of the year from Flaza there's 10 generics so it's just a matter of time before someone drops that price and then you get a race to the bottom if that doesn't happen we'll continue to tick along so that's sort of been where we are with the DMV franchise but our confidence in the top and the guidance really comes from our continued confidence in suffiance I wanted to make sure we tick through you know, several of the pipeline programs.

Judah Frommer, Analyst — Morgan Stanley

So maybe we'll start with vetequinone, right? You were guiding toward initiation of a phase three open label study this quarter. Where do we stand on study initiation there? Can you remind us just quickly the purpose of the study given the history with this asset?

Matthew Klein, CEO

So following the CRL, we met with FDA and they were quite clear that they wanted an additional study to support NDA resubmission. They offered the possibility of doing a study that was open-labeled with a natural history comparator. We expect that's in part because we had some evidence of efficacy, the safety of the drug is very well established, and they've used the Friedrich's Natural History Registry as part of a previous approval for Skyclaris. So they knew that registry. They've actually invoked it as an example of a very well-done natural history registry. And so we designed a protocol with a statistical analysis plan, and we met again with FDA to just make sure that they reviewed that and they were okay that we were doing this study and just to make sure that this could support NDA resubmission. They gave us some feedback, some things to address in the protocol and analysis plan. We were able to easily do that, and we're still on target to initiate in this quarter.

Judah Frommer, Analyst — Morgan Stanley

Okay, great. And, you know, just given the different endpoints available in pre-dricted atoxia, you know, we've talked about MFARs and the upright stability scale, you know, MFARs being the primary endpoint for this study. What's FDA going to be looking at, you know, in terms of primary and secondary endpoints that will, you know, give them comfort, given that it's a matched natural history?

Matthew Klein, CEO

Yeah, I'll try to make this as simple as possible. So, look, the MFARs has four components, one of which is upright stability. that MFARs, each of those different components of the scale kind of move at different stages of the disease in different ages of patients. And so over the short term in a younger population, short term meaning 12 months, maybe up to 18 months, most people believe that upright stability is probably the best place you're going to see effect, and that's what we saw in MOVE-FA. As you move out to a longer term, all of the natural history studies show that you start seeing as you get out to one and a half, two years, contributions from other components of the MFARs. So we designed a study that's single-arm versus natural history comparator. And so what we want to do is, by using the MFARs endpoint, allow for the ability to capture benefit on any component of the scale, understanding that the natural history is likely to progress two to two-and-a-half points a year with contributions from different scales. So really it was a lot of thought that went into giving us the best chance to win in the study. And I think from the agency's standpoint, they want to see evidence of a statistically significant effect on disease slowing to really confirm, in a way, what we saw in a shorter time period in the younger patients in MOVE-FA.

Judah Frommer, Analyst — Morgan Stanley

Okay, great. And at the front, you talked about your oral splicing platform, so maybe we'll switch to Vodaflame for Huntington's. Maybe just remind us of the opportunity for this program and the 24-month data you reported earlier this year and kind of incremental excitement from those data.

Matthew Klein, CEO

Yeah, absolutely. So we're incredibly excited about the Vodoplank program. We've talked a lot about how the preclinical and clinical development programs for Vodoplank followed in the successful development path established by VRISD, our first oral spicing molecule. So the development program was really designed in phase one to do typical phase one stuff, safety, pharmacology, as well as get evidence in healthy volunteers of target engagement in HTT, mRNA, and protein lowering, which we did. Then we moved to phase two. And in phase two, the first part was about, again, establishing PKPD relationship in individuals with Huntington's disease, ensure that we're getting adequate CNS exposure to reach the desired 30% to 50% HTT lowering throughout the brain. Safety, obviously very important, as well as to get early evidence of clinical effect and understand what the optimal clinical trial population would be because that's a very big issue we saw again last week in neurological disorders. And so by the time we got through the 24-month time point, we had a lot of really important boxes ticked, safe, well-tolerated. Drug was doing what it's supposed to do in terms of dose-dependent Huntington protein and RNA lowering. We were getting excellent CNS exposure in line of what we needed to do to be confident. we're getting the level of reduction in brain cells that we're seeing in blood cells. Against placebo at 12 months, we had evidence of dose-dependent benefit, and then at 24 months, against a well-matched natural history, we saw that we're having 52% reduction at the 10 milligram dose level relative to natural history. I'll also point out that Novartis was able to look both at the trajectory of the placebo group to 12 months and the natural history group to 24 months, and they almost overlap. What does that tell you? that gives you a lot of confidence that we have a well-matched natural history group and that we can extrapolate the placebo group now at the 24 months to add to the robustness and the reliability of the finding of 52% slowing out at 24 months. Importantly, we also learned about the right population to study, and this isn't a small thing. The hypothesis going into Pivot HD was that the stage 2 patients are probably the right group, especially if you're targeting HTT protein, which is the causative factor in the disease. So you're going all the way upstream in the disease. Earlier-stage patients are likely to enjoy a benefit or a more detectable benefit in a shorter period of time than more advanced patients, and that's what really teed us up for the INVEST-HD protocol where we're focusing on early symptomatic patients who have a normal TFC, so really looking very much like the stage 2 patients from the PIVOT-HD study.

Judah Frommer, Analyst — Morgan Stanley

Okay, great. And you and Novartis are planning to engage FDA later this year to discuss those data and a potential accelerated path. So I guess related to accelerated paths in Huntington's and even rare disease more broadly, it's tough to handicap what anyone's thinking in these cases. So I guess how is VOTA plan positioned for that discussion? Can you remind us of the potential path to approval? You know, you do have the Phase III study initiating, so I guess what are the potential paths here?

Matthew Klein, CEO

Look, Novartis has been very clear that their base case remains phase three. Now, they've included an interim analysis that gives the opportunity to get to a win earlier on a smaller number of patients at an earlier time point. Nonetheless, FDA appears headed towards a precedent of accepting an application for approval for Huntington's disease based on CUHDRS as an intermediate clinical endpoint. And so if that's going to be the case, I think the PGC Novartis team is believe it's worth having a discussion when we're able to offer a data package with many more patients exposed, having placebo-controlled data, having biomarker evidence of target engagement and protein reduction that's dose-dependent, a better characterized safety profile because more patients have been exposed, a therapy that in the worst-case scenario could be withdrawn because it's oral, and as you mentioned, the InvestHD Phase III study has started. But 100%, Judah, as you said, I'm not here to predict what FDA is going to do. No one should be confident in predicting that. But this is simply a matter of saying, hey, if this precedent is being established in CBER, then it's worth a conversation in CEDAR. And in parallel, keep moving forward on the Phase III. That's the situation, and we've commented, Novartis commented, that that meeting will occur. We expect that meeting to occur in H2.

Judah Frommer, Analyst — Morgan Stanley

Okay, perfect. Maybe just sticking on Huntington's, you have another splicing candidate targeting MSH3 entering the clinic in 2027 that I think you've said could be developed in DM1 or Huntington's. So from a mechanistic standpoint and also for commercial considerations, how might this program complement Vodoplane?

Matthew Klein, CEO

So we're really excited about the PTC-303 MSH3 program for a number of reasons. I think it's the product of our renewed focus of PTC on the splicing platform. We always knew the power of that platform as a differentiated RNA platform, but we're a lot more intentionality and focused resources in trying to bring things forward, and the MSH3 program is the first result of that. It's also targeting a novel sequence that there's never been a splicing molecule before, so a lot of exciting things. And, as you mentioned, we're targeting MSH3, but it has application beyond just one disease. So we're looking at HD and DM1, both where triplet repeat expansion is an important part of ethology. In terms of complementing Vodoplam, you've heard us say that we believe it is complementing. Vodoplam is targeting HTT reduction, the mutant protein itself, whereas PTC303 would be targeting somatic expansion, which is another element in Huntington's disease pathogenesis. I also believe that juvenile HD, for example, might be a subset of the HD population that may be particularly well-suited. Because juvenile HD, these individuals have rapid expansion. That's why they get early-onset severe disease. So if you have a drug that slows expansion, targeting a population that has rapid expansion kind of makes a lot of sense.

Judah Frommer, Analyst — Morgan Stanley

And in terms of, you know, endpoints and what we could be looking for in terms of what might be meaningful de-risking for the program, what should we be thinking about for this one?

Matthew Klein, CEO

So Vodoplame followed the RISD playbook. 303 will follow the Vodoplame RISD playbook. So we're right now doing the IND enabling studies. So the plan would be to get into Phase I in 2027 and, again, use the Phase I study to give us important information on pharmacology, but also substantiate CNS exposure and leverage, again, the fact that we have systemic exposure and can interrogate peripheral blood cells to confirm that we're having target engagement and the desired effect on MSH3. We're, again, in a situation where, based on our preclinical research and the published literature, that we need to be achieving approximately 30% to 40% MSH3 reduction to deliver a therapeutic benefit. So in terms of de-risking, it's seeing in that Phase I study that we're able to get to that level of mRNA protein reduction at doses that are safe and well-tolerated. Just, you know, again, going back historically, same with the SMA program early on being able to show that we were able to have dose-dependent increase in SMN protein, especially at doses that were safe and well-tolerated blood cells, and we had CNS exposure. That ticked a lot of the key boxes. Vodoplam phase 1, similarly, we will show that we were getting into the brain, getting adequate CNS exposure, and dose-dependent mRNA reductions in phase 1. So really that phase 1 study becomes important, the risking environments of all the things we know that need to be in place to have clinical success.

Judah Frommer, Analyst — Morgan Stanley

Okay, excellent. I want to make sure we get to ST920, you know, the gene therapy for Fabry that you recently acquired in a bankruptcy auction, if I'm not mistaken. So maybe just tell us a little bit about the stage of asset that you're acquiring here, why this was attractive to you, a bit about the development history for this one.

Matthew Klein, CEO

Absolutely. We were very clear that we have a significant cash balance of over $2 billion. We have global commercial capacity and a team that has demonstrated that it can execute on rare disease commercialization. And we were interested in trying to find products that could deliver, you know, $500 million to $700 million top-line revenue so we can really accelerate top-line growth as we cross over to profitability. This was not on the radar screen, to be clear. But it came to our attention that it was going into a bankruptcy, that it was BLA stage. So the approval application had already been initiated and the company didn't have the resources to take it across the line. So we started looking at this and we said, you know, first, does the drug work? And on diligence, it does. You're making the, you know, Fabray is a disease where the standard of care is enzyme replacement therapy. If you can provide the enzyme, there's clinical benefit. That's been approved therapies on that. So we're able to see that the gene therapy is producing the enzyme. There's enzyme activity out to five years. It's safe and well tolerated. There's no need for immunosuppression. You're seeing benefits in terms of stabilization of renal function. Those who came in on our ERT are coming off ERT. All that is really, really strong. The CMC package, we have experience. We've gotten an AAV gene therapy approved. We know exactly what that takes, so we had comfort that we could get the CMC package where it needs to be for approval. And from a commercial standpoint, we're in an interesting situation where our head, our chief business officer, Eric Powell, who runs our commercial group, launched Replica. We have several people on our team who were involved in the RepliGal launch. We have a board member who launched Fabrezyme. So we've got a lot of in-house knowledge on Fabre. In fact, our folks helped build that marketplace. So we're pretty confident on the commercial opportunity. The deal should close in the next week or so. We'll work to complete the BLA by the end of the fourth quarter, and if all goes well, this could be a commercial launch next year.

Judah Frommer, Analyst — Morgan Stanley

Okay, great. So I guess post that acquisition, maybe just to round out the conversation, Where does that leave you from a capital allocation perspective? How are you thinking about uses of cash? And is this transaction a good benchmark for what business development might look like?

Pierre Gravier, CFO

So, look, as Matt mentioned, we closed Q2 with $2.2 billion cash. The transaction was $111 million up front, so we still have a lot of firepower available to us. Obviously, we're laser-focused on executing. We can develop our pipeline, and then obviously continue to be opportunistic and be disciplined with external business development transaction. We have a global infrastructure. We can feed, you know, cassettes in assets in the orphan space. That's very important. And we said we could be cash flow break even this year. We're still on track. And after that, we're going to manage obviously OPEX based on revenues. We said all along since 2023, the goal is to build a global rare disease, diversified and sustainable. You achieve that by being profitable, and that's how we're going to look at it going forward. Okay, great.

Judah Frommer, Analyst — Morgan Stanley

Well, we could keep going, but we're out of time. So thank you very much for being here.

Pierre Gravier, CFO

Thank you, Judith. Thank you.