Earnings Call Transcript - PTCT Q2 2022

Operator, Operator

Good day and thank you for standing by. Welcome to the PTC Second Quarter 2022 Financial Results and Corporate Update Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kylie O'Keefe, Senior Vice President, Head of Global Commercial and Corporate Strategy. Please go ahead.

Kylie O'Keefe, Senior Vice President, Head of Global Commercial and Corporate Strategy

Good afternoon and thank you for joining us today to discuss the PTC Therapeutics second 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?

Stuart Peltz, CEO

Thanks, Kylie and good afternoon, everyone, and thanks for joining us today. I'm excited to share PTC's second quarter results for what I expect to be a transformational year for the company. Our mission at PTC is to discover and develop innovative therapies and bring them to patients with rare disorders and, in doing so, to create significant value for all of our stakeholders. We've been very successful in pursuit of this mission. Today, PTC has five marketed products, seven development programs, and several scientific platforms to generate future products. We continue to build a robust pipeline of potential new therapies that at steady-state will deliver a new product every two to three years. We made important progress in the second quarter towards achieving our ambitious goals for 2022. We continue to achieve strong revenue growth and advance towards multiple clinical milestones. I'd like to highlight several particularly significant achievements in the quarter. Let me begin with our strong revenue growth in the quarter, in which we achieved $166 million in total revenue with a 42% increase over the second quarter in 2021. This is quite remarkable and puts us in good position to achieve our full-year revenue target of between $700 million and $750 million. The DMD franchise is expected to continue a strong growth trajectory throughout the remainder of 2022. We also reported top-line results with Study 041 which was an important step forward for Translarna. In Study 041, we demonstrated a statistically significant benefit for Translarna and nonsense-mutation DMD patients across several relevant functional outcomes in the broad intent-to-treat study population. Based on these results, we plan to request conversion of the EU conditional authorization to a standard marketing authorization. In addition to the EU, we look forward to discussing these results and a potential path forward for approval with the FDA and other international markets. In addition, these results will reinforce our strong value proposition with payers in the EU and international markets. Matt will go into these results in more detail shortly. We recently announced the marketing authorization for Upstaza by the European Commission. This approval expands our product portfolio to five commercialized products. Upstaza is the third gene therapy ever marketed and the first marketed gene therapy directly administered into the brain. Our goal at PTC is to bring Upstaza to AADC-deficient patients and their families as quickly as possible. We are well-poised for commercial launch and our planned commercial price is between $3 million and $3.5 million. This reflects the exceptional value of Upstaza and takes into account the ultra-orphan AADC patient population with a small budget impact to payers from this one-time durable treatment. Pricing of Upstaza is based on multiple factors, including that the disease is highly morbid and fatal and the high unmet medical needs of AADC-deficient patients with no standard of care. Lastly, Upstaza brings substantial value to patients with transformative clinical results and durable effect with up to 10 years of follow-up. We have already treated our first patient on commercial drug through the early access program in France, and Eric will go into this in more detail shortly. Let me switch gears to Evrysdi, and we continue to achieve strong updates across all regions. The FDA recently approved the supplemental NDA of Evrysdi for pre-symptomatic infants with SMA under two months of age. Their approval is based on interim efficacy and safety data from the RAINBOWFISH study in newborns. We showed that pre-symptomatic babies treated with Evrysdi achieved key milestones such as sitting, standing, and walking after 12 months of treatment, similar to that seen in normal babies. Turning now to our oncology program with unesbulin, previously known as PTC596, we recently announced the current gene preliminary safety and efficacy results from our Phase Ib study in unesbulin, our tubulin binding agent, in advanced leiomyosarcoma patients and a podium presentation at ASCO. Based on these preliminary results, PTC initiated the SUNRISE LMS study, a placebo-controlled registration-directed study of the efficacy and safety of unesbulin and dacarbazine in patients with advanced LMS. PTC has a broad and deep pipeline across a range of diseases and we eagerly anticipate important results with several registration-directed studies during the next 6 to 12 months. We believe the positive results from these trials could be transformational for PTC. PTC is clearly having an exciting year and has executed on all of what we set out to achieve in the first half of 2022, which is truly remarkable. With that, let me hand it over to Matt for a development update. Matt?

Matthew Klein, COO

Thanks, Stu. I'm proud to share that our teams continue to execute on our many 2022 goals. We are working tirelessly to deliver on our mission to bring innovative therapies to patients around the world. Beginning with Translarna, as Stu mentioned, we recently announced the positive results from Study 041 in patients with nonsense mutation DMD. As a reminder, Study 041 was designed as a global trial with a 72-week placebo-controlled phase followed by a 72-week open-label extension phase which is still ongoing. Top-line results from Study 041 demonstrated a statistically significant effect of Translarna on the 6-minute walk distance in the overall ITT population of 359 boys. This is the first disease-modifying DMD therapy to demonstrate a statistically significant functional benefit in a placebo-controlled trial. In addition, a statistically significant benefit of Translarna was also demonstrated in the North Star Ambulatory Assessment and the 10-meter run/walk and 4-stair ascend timed function tests in the ITT population. These results are not only statistically significant but provide evidence of clinically meaningful benefit as they represent a 20% to 25% slowing of disease progression in a known unilaterally progressive and fatal disease. In addition, in a pooled analysis of the over 700 boys enrolled in our three placebo-controlled Translarna trials, Study 007, Study 020, and Study 041, there is a highly statistically significant benefit across a range of functional assessments. While the Study 041 ITT population results did not achieve significance, we believe the significant results in the ITT population which was the pre-specified population along with evidence of real-world, long-term benefit generated from the STRIDE registry, position us to request conversion from the EU conditional marketing authorization of Translarna to standard marketing authorization. In addition, we plan to meet with the FDA to discuss the potential for an NDA in the U.S. Turning now to our gene therapy platform, following the approval of Upstaza in the EU, we are now focusing efforts on the submission of a BLA to the FDA which is planned for the fourth quarter of this year. I would like to now share encouraging results for our FITE19 study of Emvododstat for the treatment of COVID-19. The FITE19 study was designed as a double-blind, placebo-controlled, 28-day study of hospitalized COVID-19 patients. As a reminder, Emvododstat is an oral small molecule that targets the cellular enzyme dihydroorotate dehydrogenase, or DHODH, by targeting a cellular enzyme rather than a viable protein. Emvododstat is less likely to elicit drug resistance, which is particularly important as the COVID-19 virus continues to mutate. Given the changing nature of the pandemic to the outpatient setting, we concluded enrollment of the FITE19 study early, with 189 subjects enrolled in order to review the data collected to date and make an informed decision on next steps. Across all randomized subjects, there was a trend towards Emvododstat benefit across several disease-relevant endpoints, including duration of hospitalization and time to reduction of fever. Notably, when examining the cohort of patients enrolled within five days of infection, there was a clear benefit of Emvododstat treatment on time to respiratory improvement, duration of hospitalization, dyspnea resolution, and cough relief. As an example, the median time to respiratory improvement, the study primary endpoint, was 28 days in the placebo group and only 10 days in the Emvododstat group with a p-value of less than 0.05. These findings are particularly important, as they suggest a clear potential for Emvododstat in the early treatment of COVID in the inpatient or outpatient setting, where the majority of cases are now managed. We plan to complete the remaining data analyses and will then formulate a strategy for next steps in advancing Emvododstat for the treatment of COVID-19. Over the course of the second quarter, we continue to make progress across our other platforms and expect results from several of our ongoing registration-directed trials in the next 6 to 12 months. Starting with our ongoing registration-directed AFFINITY Phase III trial of PTC923 in patients with PKU, we remain on target to share results by year-end 2022. The AFFINITY trial is a 6-week placebo-controlled study with a primary endpoint of reduction in blood phenylalanine levels. To enrich the randomized study population for likely responders, the study includes a run-in phase during which potential subjects are treated with 923 for two weeks, and only those demonstrating response to PTC923 treatment are randomized. Following completion of the 6-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 in mitochondrial disease-associated seizures of Friedreich's ataxia and one with PTC857 in patients with ALS. Due to COVID-19-related delays in enrollment, we now expect to have results from the MIT-E trial of vatiquinone in patients with mitochondrial disease-associated seizures in the first quarter of 2023. As we have previously shared, the MOVE-FA global trial of vatiquinone in Friedreich's ataxia patients is fully enrolled and we continue to expect results in the second quarter of 2023. Enrollment is ongoing in the CardinALS global placebo-controlled trial of PTC857 in ALS patients. The CardinALS trial is a 6-month placebo-controlled study with a target enrollment of approximately 258 subjects. Subjects will be randomized two to one to receive PTC857 or placebo. The primary endpoint of the study is change in the ALSFRS score from baseline to six months with secondary endpoints capturing other aspects of disease morbidity and mortality risk. Finally, I want to provide an update on our PTC518 Huntington's disease program from our splicing platform. Enrollment is ongoing in our Phase II PIVOT-HD study, a global placebo-controlled study of PTC518 in HD patients. This study will consist of two parts, an initial 12-week placebo-controlled phase focused on PTC518 pharmacology and pharmacodynamic effect followed by a 9-month placebo-controlled portion, during which we will collect blood, CSF, and radiographic biomarker data. The study will initially include two dose levels, five milligrams and 10 milligrams, with the potential to study a third base. We anticipate data from the 12-week portion of the study by the end of this year. 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 discuss our commercial portfolio. Eric?

Eric Pauwels, Chief Business Officer

Thanks, Matt. This is a very exciting time for PTC and in particular for our global customer-facing teams commercializing a diversified portfolio of products that address high unmet needs for patients with rare diseases. We have achieved another very strong quarter, and we are thrilled to add a fifth commercial product to our portfolio with the recent approval of Upstaza and to bring much-needed treatment to AADC-deficiency patients. Our DMD franchise continues to be a key revenue driver as we continue to expand our global footprint that will also support future growth from the pipeline. Let me begin with Upstaza and our ongoing launch preparations. We are very excited about the recent approval in Europe and our team is actively executing on all strategic initiatives supporting the launch. We are off to a good start and have treated our first commercial patient this quarter under the French Early Access Program. Treatment center readiness is well on track as well as further preparation for surgeries carried out at key European centers. Patient identification is continuing to accelerate and we anticipate treating additional commercial patients with the upcoming launch in Germany. We are also focused globally on markets that have early access programs, such as France, Italy, and other regions via cross-border healthcare. The Upstaza price is expected to be in the range of $3 million to $3.5 million, which factors in our projections of future pricing negotiations in key European markets. We are confident that the durable efficacy and safety data we have obtained from over 10 years of patient experience with Upstaza will support HTA 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. Turning now to DMD. Our global DMD franchise continues to deliver robust revenue across all regions. Our second quarter revenue for the DMD franchise was $134 million. Our Emflaza net product revenue for the second quarter was $57 million, which represents 16% growth over the second quarter last year. Ongoing execution by our Emflaza team to have new patient starts, continued favorable access, high compliance and appropriate weight-based dosing for DMD patients in the United States. For Translarna, we achieved $77 million in net product revenue for the second quarter, which represents a 46% increase over the second quarter of 2021, driven by growth in all regions. As a reminder, we can have large group purchase orders which can create lumpiness due to uneven government buying patterns. Overall, Translarna revenue continues to be globally diversified and robust in all key markets. We continue to make good progress with regulatory approval and pricing and reimbursement in our newer markets in Eastern Europe, the Middle East, and Latin America. We are also continuing to expand our presence in additional markets in Asia-Pacific as this region continues to be of strategic importance for potential future revenue growth for PTC. We are in a strong position to achieve the 2022 DMD revenue guidance of $475 million to $495 million. In Latin America, our team continues to strengthen the Tegsedi and other product franchises. In Brazil, following the innovative drug classification for Tegsedi, we received the first purchase order from the Ministry of Health which was delivered in the second quarter. This was an important milestone for our hATTR patients awaiting treatment. Furthermore, patient identification continues to be strong and we anticipate additional purchase orders over the course of the year. Finally, discussions progressed with CONITEC, the National Commission for the Incorporation of Technology for inclusion of Tegsedi in the essential drug list which simplifies access. For Waylivra, we now have patients on treatment for FCS in Latin America and patient identification continues to progress well. As a reminder, last December, we submitted an application to ANVISA Brazil for approval of Waylivra for the treatment of FPL. If approved, Waylivra will be the first approved treatment for FPL in Brazil and this will mark the first approval globally for this indication. We anticipate a decision in the second half of 2022. In conclusion, our customer-facing teams globally have had an extremely successful first half of the year, and we will be focused on capitalizing on the momentum built from our launch of Upstaza for the remainder of the year. Now, let me turn the call over to Emily for a financial update. Emily?

Emily Hill, CFO

Thanks, Eric. In the first half of 2022, we saw continued strong revenue growth and progress in advancing our pipeline across multiple platforms. Given current market conditions in the biotech space, we are particularly pleased that the royalty monetization for Evrysdi, combined with our strong continued revenue growth, allows a strong capital structure to fund the further advancement of our pipeline. The press release issued earlier this afternoon summarizes the details of our second quarter 2022 financial results. I will take a few minutes now to review these financial results. Please refer to the press release for additional detail. Beginning with top line results, total revenues were $166 million for the second quarter of 2022, a 42% increase over the second quarter of 2021. This was driven primarily by net product revenue from our DMD franchise of $134 million and Evrysdi royalty revenue of $22 million. Our total revenue from the first half of 2022 was an impressive $314 million. And as Stu said, we are on track to achieve our 2022 total revenue guidance of $700 million to $750 million. Apart from our continued net product revenue, we also anticipate a $50 million milestone payment from Roche when annual Evrysdi sales reach $750 million. In addition, we have guided to $20 million to $40 million in revenue from Upstaza. Turning now to our DMD franchise, Translarna net product revenues were $77 million, representing year-over-year growth of 46% compared to the second quarter of 2021. Emflaza had net product revenues of $57 million, or 16% growth year-over-year. Moving now to Evrysdi. Our partner, Roche, reported 2022 year-to-date sales of approximately CHF500 million, which translated into second quarter royalty revenue for PTC of $22 million. As a reminder, PTC retains approximately 57% of Evrysdi royalties, with Royalty Pharma receiving the remaining 43% up to a cumulative total of $1.3 billion, after which PTC will receive 100% of Evrysdi royalties. Non-GAAP R&D expenses were $144 million for the second quarter of 2022, excluding $14 million in noncash stock-based compensation expense compared to $112 million for the second quarter of 2021, excluding $13 million in noncash stock-based compensation expense. The year-over-year increase in R&D expenses reflect additional investment in research programs and advancement of the clinical pipeline. Non-GAAP SG&A expenses were $66 million for the second quarter of 2022, excluding $14 million in noncash stock-based compensation expense compared to $57 million for the second quarter of 2021, excluding $12 million in noncash stock-based compensation expense. Cash, cash equivalents, and marketable securities totaled approximately $506 million as of June 30, 2022, compared to $773 million as of December 31, 2021. I'd now like to turn the call over to the operator for question and answers.

Operator, Operator

And our first question will come from Eric Joseph from JPMorgan.

Eric Joseph, Analyst

A couple from us on Translarna. First, wondering if you could sort of unpack a little bit the geographic mix in demand this quarter and the extent to which you saw large group purchase orders that may have driven the performance and perhaps that we should be backing out and thinking about the sales trajectory in the second half. Belatedly, is there any material FX impact that we should also be considering? And then, secondly, as it relates to requesting the transition to standard marketing authorization in the EU, can you just provide a little more granularity on the timelines, both requesting that change and sort of what that recycle might look like?

Stuart Peltz, CEO

Yes, I think this was a great quarter where we saw growth of both Translarna and Emflaza, quite well and there was growth throughout all geographies. But maybe, Eric, you want to talk a little bit about where there could be differences in where we saw growth?

Eric Pauwels, Chief Business Officer

We have certainly seen robust growth across all geographies. And as you know, Translarna is a product that has international markets and we have large group purchase orders that can sometimes be a little untimely. But in this quarter, we actually saw large orders across all geographies, and in particular, it was very robust in Europe. And what we see with revenue this year is we never really guide to quarters. And right now, what we're doing is we're really focusing on growth in all key markets and our guidance continues to be $475 million to $495 million. So the growth is actually continuing across different markets, and that's really because of new patients. We continue to see a really high compliance. We've added programs that would also include dose adjustments for patients. So we're really doing very well in terms of preserving the base and growing the base but also geographic expansion. We have new markets that are also significantly contributing. So essentially, we're seeing that robust growth across the global and diversified markets that we have right now.

Stuart Peltz, CEO

I think what's important is, I think you could see we continued to grow our business quite well, and I think we're going to continue to do that. We're reiterating that $700 million to $750 million. So I think we're very comfortable with that. You want to talk a little bit about that?

Kylie O'Keefe, Senior Vice President, Head of Global Commercial and Corporate Strategy

Yes, absolutely. So Eric, with your question around FX, I think, obviously, in the perspective that Stu said, we are reiterating our guidance. And so while we do see an impact across the U.S. dollar to the euro, we continue to see a robust and globally diversified portfolio across a number of different geographies. So while we are seeing an impact, we remain confident in our business, and this geographic diversity allows us to remain confident and reiterate guidance.

Stuart Peltz, CEO

And then your question about timeline, Matt, do you want to take that one?

Matthew Klein, COO

So just as a reminder, Study 041 was part of our commitment following the conditional marketing authorization from the EMA. And really, the idea here was to conduct Study 041 to provide comprehensive evidence in support of the benefit-risk of Translarna. And it's that generation of comprehensive evidence which really triggers our ability to convert the conditional to the standard marketing authorization. So obviously, we're very excited about the results which were collected in the ITT population of 359 boys. And when you think about comprehensive evidence and you think about 359 boys, it's the largest data package in a single trial for DMD, and the statistically significant results on functional endpoints, including walk distance in North Star, we clearly believe that we have that comprehensive evidence which is more at the benefit of Translarna, then, of course, the safety collected in this study and a long-term safety package collected not only through our clinical trials but also in a long-term registry, again informs the favorable safety aspect of the drug. And then, finally, we also have generated over the past several years data from STRIVE which provides long-term real-world evidence of benefit in Translarna in delay loss of ambulation of roughly 5.4 years, delay in loss of pulmonary function of 1.8 years which are really important given that those are the two key transitions in the disease. So when you put the Study 041 data together with the STRIVE data, we believe we have the comprehensive data that warrants conversion from the conditional marketing authorization to standard. The way that's happening mechanically is, as we said before, we are due to provide the data by the end of Q3, that we will submit a type two variation for the CHMP or EMA which basically requests that conversion. This will initiate a process in Europe that will unfold over the course of several months where they'll be back and forth. They may have questions about the data. So it's hard to say exactly what the time will be from initiation of that process in September till the end. We think it will be several months but clearly be much shorter than what we're anticipating as a typical MAA submission.

Operator, Operator

And we'll take our next question from Raju Prasad from William Blair.

Raju Prasad, Analyst

Can you give us a sense, just now having a couple more months of looking at the Upstaza commercial markets under your belt on the potential cadence of kind of revenue recognition that you anticipate maybe this year? And even if you could give a little more color into how you anticipate the launch going into next year, that would be helpful.

Stuart Peltz, CEO

Obviously, our goal is to bring Upstaza to all the AADC-deficient patients. And maybe just a little bit of color, while we recently just got the approval, you then have to do a bit of work to be able to go then into other places. So that being said, we are working on that right now, and then we're going to be working on market access in different places as well. So we're pretty well positioned for the commercial launch. We'll be using both the commercial launch in terms of bringing the drug to patients as well as expanded access programs for patients as well. And so we feel like we're in a good position but like we said, we already have one expanded access patient that has had the surgery in a commercial patient. The preparation for launch, a lot of work has gone into it and there are a number of key success factors which are accelerating disease education, patient identification, preparation of the surgical centers, and making sure that the key positions are engaged and then working with the patient advocacy groups and payer engagement. We've been working hard on that. The first country, obviously, that we will be going into in Europe is going to be Germany, followed by other international markets, in particular, where we can do expanded access programs. And so if you think about patient identification, that's a key focus of ours for the launch preparation and this just goes on really forever, even post-approval. So I think at the end of the day, I think we've shown a strong track record in launching rare drugs. The team is quite experienced, with a broad global commercial footprint to get into over 50 countries. So we're pretty confident that this is a significant opportunity for the Upstaza launch.

Raju Prasad, Analyst

And then just a question on clinical trial enrollment. Can you give us a sense of where you are with the AFFINITY trial on enrollment, as well as it looked like the MIT-E trial first quarter '23 readout as well as obviously the Phase two Huntington study?

Stuart Peltz, CEO

Did you say for the PKU trial, right?

Raju Prasad, Analyst

The PKU trial and then I just saw in the press release that I think the MIT-E trial is now a 1Q '23 readout.

Stuart Peltz, CEO

Yes. So we're pretty excited, obviously, about the PKU trial. We think that our drug has substantial benefit over Kuvan, and we’re pretty excited about that. Matt, do you want to just talk a little bit about where we are on that?

Matthew Klein, COO

Sure, Raj. All three of these trials are global trials, leveraging our global development infrastructure. And for PKU, the sites are up, running, and enrolling, and we are on track for results by the end of 2022. Similarly, as we updated on the PIVOT-HD study, we're standing sites up around the world and enrolling that trial with data by the end of 2022 and results by the end of 2022. Similarly, as we updated on the PIVOT-HD study, we're standing sites up around the world and enrolling that trial with data by the end of 2022 on the 12-week portion. And then on MIT-E, we moved the data from one quarter to first quarter 2023. That's mainly due to COVID-related delays. These children with mitochondrial disease and seizures are quite ill. In fact, when there's not a pandemic going on, seasonal colds and flus can easily put them in the hospital and even can be fatal events. And so there's been a lot of caution on the part of parents and physicians to get the kids into the study sites. So that's caused a little bit of delay in getting the trial to the enrollment target, but we're now on target to have results, as we said, in the first quarter of 2023.

Operator, Operator

And we'll take our next question from Kristen Kluska from Cantor Fitzgerald.

Kristen Kluska, Analyst

So given that you have three registrational trials where we're expecting data through the second quarter of next year and the Upstaza BLA guided for the fourth quarter, could you talk about some of the commercial readiness steps you're taking towards juggling these potential filings and beyond should they be successful?

Stuart Peltz, CEO

Yes, certainly. I'll begin by explaining that the structure of our team is designed for each group to progress independently. We aren't really juggling tasks because every team responsible for registration-directed programs is advancing their work in preparation for both launch and regulatory approval. There’s no need to wait for one team to finish before another can start. Each group is moving forward effectively. Our track record in this area is solid, and the team's experience will help us continue to advance all projects. Moreover, our global presence enhances our ability to successfully launch each program as it receives approval in both Europe and the U.S. I hope that clarifies things for you.

Kristen Kluska, Analyst

And I know in the past you've made a lot of synergies with your splicing platform as it relates to Evrysdi and then, of course, the work you're doing in Huntington's disease. But now that there's been a lot of commercial experience here, wondering if your views have at all changed, confidence increase or anything that you could really take away from the commercial experience relative to this platform?

Stuart Peltz, CEO

Yes. I think, from our point of view, we're really pleased with the splicing platform and the commercial prospects of it. Obviously, the nice aspect of these molecules is that they're orally bioavailable, especially for neurodegenerative diseases. The fact is that they get to every part of the brain and, therefore, they could treat every aspect of the disease. We think, in these cases, oral is probably the best way to go. You could titrate it. You can utilize PD markers in the blood to have a sense of where you are in terms of what dose you give and what's the effect of either increasing or decreasing the amount of the protein, like we've done with Evrysdi or PTC 518. So you're not driving the bus blindly; you have a pretty good look into saying what is based on this exposure level, you're getting this effect on splicing. And we think that's really important. And then you can measure the level of the drug and therefore know that, in the CSF as well, to know the exposure level that you're getting within the brain, as well. So you get a lot of information that lets you make good decisions at the same time. And then obviously, from a commercial perspective, when the fact that this is the case is the standard sort of commercial program, where you know that you could show everyone that what the dose is, what the right level is, therefore, with the clinical data on hand. I think this is a really nice commercial product to move forward with. We spent a lot of time now perfecting the splicing platform where it's really honed and efficient. So, we think this is going to be a platform that's going to add multiple programs that ultimately will get to commercial for multiple drugs. We're thinking it's going to be exciting. I mean, I think it's really an exciting platform.

Operator, Operator

Our next question will come from Joe Thome from Cowen.

Joe Thome, Analyst

Maybe one on the mitochondrial epilepsy patients. What's kind of your update is thinking in terms of how many patients are out there? And is it relatively straightforward to identify them? And then, as you're looking at sort of the presentation, are there any variabilities in the type of seizures that these patients experience?

Stuart Peltz, CEO

Matt, you want to take that?

Matthew Klein, COO

Yes, definitely. Seizures are a significant and common issue in mitochondrial disease, affecting about 30% to 50% of children with this condition. Most of these seizures are resistant to standard antiepileptic treatments. This is primarily because traditional therapies tend to increase oxidative stress, which is actually a key factor in seizures for children with mitochondrial disease. In fact, these conventional treatments may exacerbate the issue. Vatiquinone, on the other hand, aims to address the underlying pathways that contribute to oxidative stress in these patients. We estimate that there are around 20,000 patients globally who experience seizures linked to mitochondrial disease. Within this population, there is variability in both the number and types of seizures, which can include motor, myoclonic, tonic, and clonic seizures. Many of these children exhibit a range of seizure subtypes. For our clinical trial, we are concentrating on observable motor seizures as the primary endpoint since they can be easily observed and quantified, which is crucial for assessing treatment effectiveness. Our study design, which focuses on observable motor seizures and includes an observation run-in phase, closely mirrors previous trials in other pediatric epilepsy conditions, utilizing a well-established approach in pediatric epilepsy research.

Joe Thome, Analyst

And then maybe just to follow up on that, is there a separation from placebo in terms of reduction in number of major motor seizures that you're looking for in order to go forward with the submission or conversation with the FDA?

Matthew Klein, COO

Yes. So we powered the study for a Delta of about 40%. We're estimating placebo to have a decrease of about 10% and that's just based on what's been observed in previous pediatric epilepsy syndromes. And then we are targeting an approximately 50% reduction in seizures in the treatment group as a median reduction. And the way that the change is calculated is, as I mentioned, there's a 20-day run-in period where we establish a baseline seizure frequency and then we measure the monthly frequency over the course of the 6-month placebo-controlled phase. I think while we're targeting a delta of 40% in terms of difference between treatment and placebo, I would point out that in these children, given how severe their seizures are, how highly morbid these seizures are and how they're related to other morbid aspects of disease, like aspiration and pneumonia and in some cases, death, even an observed decrease of 20% to 25% will be clinically meaningful for these patients.

Operator, Operator

And we'll take our next question from Tazeen Ahmad from Bank of America.

Tazeen Ahmad, Analyst

Stu, I just wanted to get your thoughts on how you're viewing the opportunity for Emvododstat in COVID. Number one, I guess it's a little bit outside of what we've all become used to expecting from PTC in terms of areas of focus. And then also, I think people kind of view COVID becoming more endemic now and there are a number of oral antivirals available. Would love to hear your thoughts on where you think the under-met need is. And then secondly, just going back to your study, can you clarify if you met the primary endpoint? And what additional analyses would you expect to conduct before you make a decision on what to do with the product next?

Stuart Peltz, CEO

Yes. We began our efforts early as we were understanding COVID and identifying the best approaches. It became evident that this was a continually evolving situation; even in hospitals, observing factors that influenced the viral load required analyzing data from patients who were diagnosed early versus those who came in later. It was more challenging to see the impact on viral load in patients who presented later. We learned that determining the optimal site for advancing our study was complex. Nevertheless, we opted to review the study when 189 subjects had been enrolled to analyze the collected data and make a well-informed decision, as the trial was taking longer than anticipated. We found that, across all subjects, there was a trend indicating a benefit of Emvododstat across several key disease-related outcomes, including hospitalization duration and time to the deferred investment. Specifically, for patients enrolled within five days of infection, Emvododstat treatment demonstrated a statistically significant advantage in metrics such as time to respiratory improvement, duration of hospitalization, resolution of dyspnea, and relief from cough. For instance, the average hospitalization period in the placebo group was 28 days, compared to just 10 days in the Emvododstat group. This strongly indicates the potential of Emvododstat for early treatment of COVID-19, a positive expectation among people. We believe that an outpatient setting, where most cases are currently managed, is the best approach to pursue this treatment. We are evaluating optimal strategies for outpatient administration and exploring collaborations for delivering DHODH inhibitors for COVID-19 treatment. There remains a need for additional medications, as our findings for DHODH confirm its potential efficacy against COVID-19. The next challenge is to address this and emerging viruses, as DHODH is a cellular target expected to exhibit low mutation rates. Unlike some existing drugs that encounter resistance, we anticipate maintaining effectiveness. As you noted, this isn’t typically a field we engage in for large indications, but there was a crucial need for effective treatments during the pandemic. Understanding the mechanism of DHODH in regulating de novo pyrimidine synthesis, which is essential for viral replication, was instrumental. Most patients relied on the salvage pathway, which is insufficient for replication. Recognizing this as a significant target, we felt it was vital to contribute to addressing such a critical global health issue, which drove our decision to participate in this endeavor.

Operator, Operator

And we'll take our next question from Nishant Gandhi from Truist Securities.

Alex Xenakis, Analyst

This is Alex on for Robin. What type of cadence we wanted to know for news flow should we expect to see around the Translarna filing and the launch press in the U.S.? And what kind of communication can we expect? And then also, can you remind us about your manufacturing capabilities and capacity to support launches in both the EU and the U.S.?

Stuart Peltz, CEO

Manufacturing, or what are you referring to? Just in general?

Alex Xenakis, Analyst

Do you anticipate any sort of supply chain issue regarding supplying the gene therapy products for an ultra-orphan therapy in the global markets?

Stuart Peltz, CEO

Sure. We are indeed excited about Translarna. We will be holding an end of Phase III meeting with the FDA, and I believe we'll have updates as we gain more clarity from that discussion. Matt, would you like to elaborate on the next steps?

Matthew Klein, COO

Yes. So in terms of Europe, I think we've talked quite a bit about the timeline. We expect to submit a type two variation by the end of September to request the conversion from conditional to standard into the U.S. As you asked, the plan will be to meet with the FDA, lay out all of the data from 041 as well as the totality of data which strongly supports the benefit of Translarna and being able to share the fact that we have statistically significant data in DMD on functional endpoints which for a therapy that's targeting the underlying mechanism of disease will be a first. So, we really look forward to being able to share that, along with the totality of data we collected in the STRIDE registry, demonstrating long-term safety and benefit, as we've previously talked about. So once we have that meeting with the agency and they give a line on the path to an NDA, it will obviously move forward. And obviously, we will share updates as appropriate.

Operator, Operator

And we'll take our next question from Gena Wang from Barclays.

Unidentified Analyst, Analyst

This is Shan for Gina. I have two questions. I want to start with Upstaza for AADC. How you mentioned before you have identified 300 patients globally. So how many of them are eligible for treatment based on the EU label? Secondly, can you break down the patient numbers by country or region? And how many of them have early access?

Stuart Peltz, CEO

Thank you for your question. I’d like to discuss AADC deficiency, which is a severe condition resulting in patients missing motor milestones and dopamine production. Most of the patients we've identified do indeed miss significant milestones. We're pleased with the broad scope of our label, which we believe will lead to a higher number of patients receiving treatment. We have identified 300 patients so far and will continue to find more. While we haven’t categorized these patients by specific regions yet, we anticipate being quite active in treating them throughout 2022 and beyond. We already have patients reaching out to treatment centers in Germany and have scheduled patients for expanded access. Overall, we see this as a greater than $1 billion opportunity. This year, we expect revenues between $20 million and $40 million, and we believe that will grow as we align more patients and develop our surgical centers. We are excited about the next couple of years as we continue to find additional patients to treat.

Unidentified Analyst, Analyst

May I ask a second question? I do want to switch gears a little bit to Huntington; your PIVOT-HD trial. I just wondering what kind of data we should expect by year-end. Will you share like neurofilament data also beside biomarkers, what type of other endpoints you will show by year-end, such as any imaging data, like Kitimat or ventricle volume?

Stuart Peltz, CEO

Yes. You may recall that the trial consists of two phases. The first phase is a 12-week trial aimed at determining if the results observed in healthy volunteers are replicated in Huntington's patients. This phase is a placebo-controlled trial that focuses on the pharmacology and pharmacodynamic effects of PTC518. The second phase will concentrate on biomarkers and clinical endpoints. The initial 12 weeks will yield crucial data regarding the relationship between dose exposure in Huntington's Disease Trials and protein reduction in the blood at a steady state. We believe this information is vital for understanding how pharmacokinetics in the cerebrospinal fluid compares to blood, particularly in Huntington's patients, where we previously observed a ratio between two to three in CSF to blood. As the trial progresses, we also aim to analyze various other markers, but the primary focus initially will be on pharmacology and blood pharmacokinetics.

Unidentified Analyst, Analyst

Just want to confirm, so by year-end, we would see only PK/PD data at 12 weeks. But are you going to collect data for some internal reviewing?

Stuart Peltz, CEO

Yes, probably as we have everything, we'll be looking and being able to monitor. This is all relatively new. There's never been an orally bioavailable drug. So right now, we're trying to get all the parameters correct in terms of knowing what the PK/PD and what it looks like in terms of inpatients in terms of what it's doing in the solo approach in RM.

Operator, Operator

And we'll take our next question from Danielle Brill from Raymond James.

Alexander Nackenoff, Analyst

This is Alex on for Danielle. I just wanted to touch back on Translarna in the U.S. and the Sarepta read-through, and kind of how you're looking at the agency considering their apparent tolerance for some, let's say, dataset flexibility in Duchenne. Are you reading through to this that the Translarna future, it bodes better? Or do you think it stands on its own? Or are you not considering that there are different FDA divisions at play here?

Stuart Peltz, CEO

I hope you caught my earlier comments. I'm optimistic because we conducted Study 041, which was a well-executed study demonstrating a functional benefit in a broad group of patients with Duchenne muscular dystrophy. The data shows statistically significant results in the ITT population for the 6-minute walk test, as well as in the North Star and time function tests. This indicates that we have the first drug showing a direct impact on the underlying cause of the disease, with significant results across various measures favoring Translarna over placebo. The findings from Study 007 and 014 further support the clinical benefits we've observed, without relying on a biomarker that we believe has not shown predictive clinical benefit. Overall, we're in a strong position clinically, especially with information from the 007 study and the STRIDE registry that helps us understand critical endpoints and predict patient outcomes. The STRIDE registry indicates more than five years of preserved ambulation and nearly two years of maintaining the ability to get off the ground, alongside significant preservation of pulmonary function. For patients, key concerns are whether they can still walk and stand up. Given that the major causes of mortality in DMD are related to pulmonary and cardiac function, improvements in these areas suggest the drug is demonstrating clinical benefit. We are confident in our position.

Operator, Operator

And I am showing no further questions at this time. I'd now like to turn the conference back over to Stuart Peltz for any closing remarks.

Stuart Peltz, CEO

Great. I want to thank you all for being here today. We've had a fantastic year and made significant progress, achieving several key milestones. We're proud of the approval of Upstaza, which represents groundbreaking science and is a milestone not only for PTC but for the entire gene therapy field and the AADC community. The positive results from Study 041 highlight the benefits to patients with nonsense mutation DMD, reinforcing the value of Translarna. Additionally, we have several registration-directed studies underway that we look forward to sharing with you soon. We're excited to continue our mission of discovering and developing innovative therapies for rare diseases. Thank you for joining us today, and we look forward to updating you in our next conversation.

Operator, Operator

Thank you. This concludes today's conference call. Thank you for your participation and you may now disconnect. Everyone, have a wonderful day.