Earnings Call
Ptc Therapeutics, Inc. (PTCT)
Earnings Call Transcript - PTCT Q4 2025
Operator, Operator
Ladies and gentlemen, thank you for being here. Welcome to PTC Therapeutics Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's conference is being recorded. I would now like to turn the conference over to Ellen Cavaleri, Head of Investor Relations. Please proceed.
Ellen Cavaleri, Head of Investor Relations
Good afternoon, and thank you for joining us to discuss PTC Therapeutics' Fourth Quarter and Year-end 2025 Corporate Update and Financial Results. I am joined today by our Chief Executive Officer, Dr. Matthew Klein; our Chief Business Officer, Eric Pauwels; and our Chief Financial Officer, Pierre Gravier. Today's call will include forward-looking statements based on our current expectations. These statements are subject to certain risks and uncertainties, and actual results may differ materially. Please review the slide posted on our Investor Relations website in conjunction with the call, which contains information about our forward-looking statements and our most recent annual report on Form 10-K filed with the SEC as well as our other SEC filings for a detailed description of applicable risks and uncertainties that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. Additionally, we will disclose certain non-GAAP information during this call. Information regarding our use of GAAP to non-GAAP financial measures and reconciliation of GAAP to non-GAAP are available in today's earnings release. I will now pass the call over to our CEO, Dr. Matthew Klein. Matt?
Matthew Klein, CEO
Thank you all for joining the call today. 2025 was a year of many significant successes for PTC, positioning us well for 2026 and beyond. I'll start by reviewing the highlights from 2025 and then share our key objectives for 2026. The main highlight of 2025 was the initial global approvals and launch of Sephience for children and adults living with PKU. As we have discussed, Sephience will be the foundational product for PTC's near-term growth. In 2025, we gained approval for Sephience in the U.S., EU, Japan, and other countries, all within several months. The global launch is off to a strong start with broad uptake across all key patient segments and age groups. In 2025, we also made a number of advances in our R&D pipeline, including achieving positive results from the Phase II PIVOT-HD study of votoplam and progressing a number of early-stage programs, including those from our RNA splicing platform. And in 2025, we delivered another year of strong revenue performance. Fourth quarter net product and royalty revenue was $263 million, and full year 2025 total net product and royalty revenue was $831 million, exceeding guidance of $750 million to $800 million. Total revenue includes $587 million of net product revenue with solid contributions from our mature products and from the early Sephience launch. For Sephience in the fourth quarter, we achieved $92 million in revenue. And for 2025 since launch, we achieved $111 million, a really impressive start. In addition to the strong revenue performance, non-GAAP R&D and SG&A operating expenses for 2025 was $728 million, coming in below our guidance of $730 million to $760 million. With our strong commercial execution, disciplined operating expense management as well as the monetization of the remainder of the Evrysdi royalty for $240 million in December 2025, we ended the year with $1.95 billion in cash. This financial strength will enable us to continue to support our commercial and R&D portfolios as well as engage in strategic business development. For 2026, we are providing product revenue guidance of $700 million to $800 million, with the majority coming from Sephience. This guidance represents 19% to 36% year-over-year product revenue growth. The 2026 revenue guidance excludes Evrysdi royalty revenue given the sale of the remaining portion of the Evrysdi royalty. We are providing expense guidance of $680 million to $720 million. And based on our revenue and expense guidance, we have the potential to reach cash flow breakeven in 2026, a significant milestone for the company. As we move into 2026, our main focus will be continuing the strong momentum of the Sephience launch. To date, we have seen broad uptake across all disease severities and age groups. This year, we expect revenue growth through increased penetration in our current markets as well as expansion into additional geographies. By the end of 2026, we expect to have patients on the commercial drug in 20 to 30 countries across multiple regions, including Japan, where we gained approval in December and expect to launch in the coming weeks. Based on Sephience's highly differentiated profile, the large unmet need for adults and children with PKU, and the early broad uptake into all patient segments, we believe Sephience has a potential multibillion-dollar global revenue opportunity. In 2026, we also look forward to progress across our R&D portfolio. For the votoplam Huntington's disease program, an end of Phase II meeting was held with the FDA in the fourth quarter of 2025, where alignment was reached on the Phase III study design. Novartis will be initiating the Phase III trial INVEST-HD in the first half of this year. This trial could serve as the confirmatory study in the context of accelerated approval or as a registration trial. We also expect to have results from the Phase II PIVOT-HD extension study in the first half of 2026 once all participants cross the 24-month time point. For vatiquinone, we had a Type C meeting with the FDA last December, where we discussed potential next steps in the development program following the complete response letter for the vatiquinone NDA. The FDA has indicated that additional studies will be necessary to support NDA resubmission and stated in the meeting minutes that this study could be a single-arm study with a natural history comparator group. We plan to meet with the FDA in the second quarter to align on the protocol for this open-label study, including the matching strategy for the natural history control arm. In 2026, we expect to advance several programs from our innovative R&D platforms, RNA splicing and ferroptosis and inflammation. We expect to elect a development candidate for our MSH3 program for Huntington's disease and myotonic dystrophy as well as to advance some of our earlier preclinical programs. From our inflammation platform, we look forward to initiating the Phase I study for our NLRP3 program by midyear and to potentially elect a development candidate for our ferroptosis Parkinson's disease program as well as our NRF2 activator program. In summary, with our robust commercial engine, innovative R&D programs and strong financial position, we look forward to a successful 2026. I'll now turn the call over to Eric to discuss our commercial performance, including details on the Sephience launch.
Eric Pauwels, Chief Business Officer
Thanks, Matt. We are incredibly pleased with the strong launch of Sephience, reflecting its differentiated safety and efficacy profile and the experience and preparation of our global commercial organization. The PTC team has delivered on all key aspects of the early launch. Our customer-facing team's engagement across all key segments, including centers of excellence, healthcare providers, payers, and patient advocacy groups has accelerated adoption of Sephience following FDA and EMA regulatory approvals. The breadth of adoption we are seeing across all patient segments in the first few months of the launch is highly encouraging. In the fourth quarter of 2025, global Sephience revenue was approximately $92 million, including $81 million in the U.S. and $11 million ex-U.S. Sephience generated $111 million in revenue worldwide in 2025 since launch and is expected with the U.S. accounting for the vast majority of the revenue. As of December 31, 2025, we had 946 patients on commercial therapy worldwide and in the U.S. received 1,134 patient start forms. As Matt mentioned, we are seeing uptake from the full spectrum of disease severity and patient age, including therapy-naive adults. We are also seeing breadth in terms of prescription base with 80% of PKU centers of excellence in the U.S. having written prescriptions for one or more patients. We are hearing positive feedback from healthcare providers highlighting broad adoption and have seen many patients of various disease severities, treatment histories, and all ages from newborns to 80-year-olds. We are pleased to see that treatment-naive adults, many of whom have been called "lost to follow-up" or those who have tried and failed therapies in the past, have actively been seeking Sephience in the initial stages of the launch. While it's still early, we continue to see high refill rates and low discontinuation rates, which we view as an important sign of building on the launch momentum. Importantly, the PKU community has been very active on social media, playing a meaningful role in sharing real-world experiences, driving awareness, and influencing other patients to engage earlier with their healthcare providers. We continue to see favorable payer mix dynamics with the majority of prescriptions covered under commercial payer plans. Importantly, the AMPLIFY head-to-head study demonstrating significant superiority over BH4 has been well received by payers who are supporting open Sephience access with very few barriers, including no step edits and 12-month refills before reauthorization. Our teams are also working on the geographic expansion of the launch outside the U.S. We achieved regulatory approval in Japan in December and are finalizing pricing and reimbursement. While the U.S. continues to be the main driver for growth near term, we expect Sephience commercial patients to come from 20 to 30 countries by year-end, steadily building an international presence in terms of both revenue and patients. In Europe, we have submitted health technology assessment dossiers for pricing and reimbursement in key markets and are leveraging paid early access programs for PKU patients to receive treatment as we finalize pricing negotiations. As we accelerate the launch in 2026, we believe the long-term opportunity for Sephience remains significant. In the U.S. alone, there are approximately 17,000 patients and new patients being identified via newborn screening, with most of these patients tied to PKU centers of excellence. The clinical data package of Sephience's highly differentiated efficacy, safety, and dual mechanism of action supports broad penetration across the PKU population and positions Sephience as the potential standard of care. These compelling data and the large orphan patient pool create a significant runway for the future growth of the brand. In the fourth quarter and throughout 2025, we continued to generate revenue from our more mature products, including the DMD franchise, given our ability to successfully defend Translarna and Emflaza despite significant headwinds. In conclusion, we are very pleased with the exceptional results delivered by the customer-facing teams in 2025. We are excited by the early launch Sephience metrics as we continue to build and execute on a world-class rare disease product launch. With that, I will now turn the call over to Pierre for a financial update.
Pierre Gravier, CFO
Thanks, Eric. I will now share the financial highlights of our fourth quarter and full year 2025. Beginning with top line results. Total net product and royalty revenue for the fourth quarter was $263 million, including Sephience net product revenue of $92 million. DMD franchise revenue for the quarter was $66 million, with Translarna net product revenue of $39 million and Emflaza net product revenue of $27 million. For Evrysdi, Roche achieved fourth quarter global revenue of approximately $584 million, resulting in royalty revenue of $79 million. Our full year 2025 total net products and royalty revenue was $831 million, exceeding guidance. Total product revenue for 2025 was $587 million, including $111 million of Sephience revenue and $382 million of DMD franchise revenue. For Evrysdi, full year royalty revenue was $244 million. For the fourth quarter of 2025, non-GAAP R&D expense was $124 million, excluding $9 million in noncash stock-based compensation expense, compared to $116 million for the fourth quarter of 2024, excluding $9 million in noncash stock-based compensation expense. Non-GAAP SG&A expense was $87 million for the fourth quarter of 2025, excluding $10 million in noncash stock-based compensation expense, compared to $76 million for the fourth quarter of 2024, excluding $8 million in noncash stock-based compensation expense. In December 2025, we sold the remainder of our Evrysdi royalty to Royalty Pharma for $240 million upfront and up to $60 million in sales-based milestones. Importantly, we maintained the right to receive a $150 million milestone from Roche based on single-year Evrysdi sales of $2.5 billion. Based on the prior accounting method for the royalty, we will continue to show Evrysdi in our financial statements. However, there will be no cash proceeds for PTC. We have provided product revenue guidance for 2026 of $700 million to $800 million. This represents 19% to 36% product revenue growth from 2025. We anticipate non-GAAP R&D and SG&A expense for the full year 2026 of $680 million to $720 million, excluding estimated noncash stock-based compensation expense of $95 million. Based on this revenue and operating expense guidance, we have the potential to reach cash flow breakeven in 2026. Cash, cash equivalents, and marketable securities totaled $1.95 billion as of December 31, 2025, compared to $1.14 billion as of December 31, 2024. Our strong financial position provides a solid foundation to pursue our strategic objectives, including supporting our commercial and R&D programs as well as potentially pursuing business development opportunities. And I will now turn the call over to the operator for Q&A.
Operator, Operator
And our first question comes from Kristen Kluska with Cantor Fitzgerald.
Kristen Kluska, Analyst
Congrats on a really strong start for the Sephience launch. So first question for me. I just wanted to ask what's baked into your internal and external guidance for Sephience sales this year. Understandably, most of the sales will come from the U.S., but I would imagine if you're going to be in 20 countries versus 30, that will have an influence as well. So anything you can guide us for what's baked in and if you would consider this conservative at this stage?
Matthew Klein, CEO
Yes, Kristen, thank you for the questions. The revenue guidance for this year is focused solely on product revenue, projected to be between $700 million and $800 million, reflecting a growth of 19% to 36% compared to last year. We anticipate that most of this revenue will stem from Sephience, with the rest coming from our more established products. However, we acknowledge that we are facing challenges with the DMD franchise due to an increasing number of generics in the U.S. market for Emflaza. Therefore, we are being cautious about our expectations in this area. As the year progresses and we gain more insights into the DMD franchise, we can adjust our guidance accordingly. Regarding Sephience, we expect the majority of revenue to come from the U.S., with international contributions that we anticipate will be realized later in the year as we aim for commercial patients in 20 to 30 countries by year-end. We're still in the early stages of the launch, having completed 1.5 quarters, and we have observed strong momentum thus far. We will continue to refine our guidance in line with revenue trends as we progress through the year. Eric, would you like to elaborate on the global rollout and its impact on overall revenue?
Eric Pauwels, Chief Business Officer
Yes. And thanks for the question, Kristen. I'll just add, Matt said a lot of different things here, and I think it's really important that you know that the U.S. will continue to drive the vast majority of our revenue during the course of this year. We continue to see very nice momentum in Germany as well. And we have prepared HTA dossiers in Europe as well. So much of this pricing and reimbursement will take place during the course of the second half of the year. We're also really excited that we have the Japanese launch that's coming up in the second quarter. We finalized pricing and reimbursement. We will do that in the next few weeks and anticipate revenue to start in Q2, but more meaningful revenue in the second half. The good news as well is we had approval this week in Brazil, a very important market as well, and we'll begin processes with the named patient programs. And then as Matt said, when you potentially add 20 to 30 countries during the course of 2026, incrementally, they will be contributing over the course of the second half of this year, but really set us up nicely for 2027.
Kristen Kluska, Analyst
And then my follow-up question is in your prepared remarks, you mentioned that you are seeing some of these patients that are "lost to follow-up" now becoming aware and wanting to get on the therapy. How is that dynamic working? How are they becoming aware of it? And do you think that they've just kind of been "lost to follow-up" because there was really no reason for them to go to the office in the past? And maybe if you could just comment on some of the trends you're seeing within each of these specialty centers uniquely, like some of the feedback we hear is physicians are trying it on their more difficult patients first, and if they respond well, then they're kind of encouraging others to consider treatment as well.
Matthew Klein, CEO
Thanks, Kristen. You’ve highlighted several complex dynamics we’re encountering early on. Let's start with the issue of adults being "lost to follow-up." This term originated from physicians noting that many adults not on therapies are not visiting clinics. We’ve found that there are many adults who still have some interaction with the clinic, whether it's through dietitians or nurse practitioners, even if they're not directly associated with the center. What they all share is a desire to be on therapies. Initially, "lost to follow-up" was mistakenly interpreted as a lack of interest in therapy, but that's not accurate. In 2026, social media keeps people connected to community updates. We're seeing increased social media activity where patients share their positive experiences with Sephience, including new dietary possibilities, improved Phe management, and overall better well-being. Furthermore, there are influencers in the PKU community promoting this. The absence of a doctor visit doesn’t indicate disinterest in therapy. What we’re starting to observe is these individuals engaging now that a new, safe, and user-friendly therapy has shown significant benefits. Regarding center dynamics, it's not a uniform approach, but early feedback indicates that centers are focusing on new patients or those who've unsuccessfully tried other therapies first, rather than those already receiving treatment. Some centers are addressing more challenging cases that urgently require therapy, and the feedback has been very encouraging, with severe patients showing strong results. This positions Sephience as a potential first-line treatment for all patients, regardless of their condition's severity. If it leads to positive outcomes for those with the most severe cases, there's increased confidence that current patients, including those on oral therapies, may be transitioned to it. Overall, the response has been robust. It’s important to clarify that being "lost to follow-up" doesn’t necessarily mean being unreachable. This is a learning experience; real-world dynamics often differ from what doctors initially expect. It’s been remarkable to see how quickly we are reaching and assisting those toughest-to-treat and hardest-to-reach patients following the launch.
Operator, Operator
Our next question comes from Tazeen Ahmad with Bank of America.
Tazeen Ahmad, Analyst
I wanted to get a little bit of color on vatiquinone. So FDA has asked for an additional study for FA. Can you provide any color on details? So do you know what kind of a study you would need to run? How many patients? Over what time period? Any kind of color that you could provide would be great here?
Matthew Klein, CEO
Yes. Sure, Tazeen. Thank you for the questions. As we've talked about before and is visible to everyone publicly, the complete response letter for vatiquinone was really based on statistical considerations. We had demonstrated significant effect on the upright stability scale, which is the most relevant and meaningful scale for the young patients enrolled in that study. This drug continued to show to be safe. And I think in our discussions with the FDA, this may be the FDA giving us an opportunity to provide additional data through an open-label or single-arm study with a natural history control. And I think that, again, this speaks to the potential need to just have some additional evidence beyond what was there in MOVE-FA to provide the totality needed to gain approval. So we obviously want to meet with the FDA as they have suggested we do to go over that open-label protocol, go through all the details of the matching criteria with the FACOMS natural history database as we've talked about before. Friedreich's ataxia and the FA community has done a great job of building a rigorous and robust natural history database that was used by Reata for approval, so this is regulatory precedent using it. And so we will again be using that. And we're just in the process now of finalizing what the subject number would look like and duration of treatment. So more to come on that. We expect to meet with the FDA in the second quarter. That meeting has been requested and scheduled so that we can get final alignment and then we can share those details and look to get this study started as quickly as possible. Obviously, we're excited to have an opportunity to do a study like this that wouldn't subject younger patients to a placebo and really allows us to get that additional treatment evidence that we would need for approval.
Tazeen Ahmad, Analyst
So just to follow up on that, since they made a suggestion, should we assume that is your plan? Is that also included in your operating expenses guidance for this year?
Matthew Klein, CEO
Yes, absolutely. They noted in the minutes that this is an option for us to gather the additional evidence, and that will be our focus in discussions on that protocol. There is some operating expense associated with the FA study, and there will be no change to that. It is entirely possible that an open-label study could be less costly since it is less complex than manufacturing a placebo and managing the blinding and logistics involved in CRO operations, but there will definitely be no increase in operating expenses related to conducting this study.
Operator, Operator
Our next question comes from Ellie Merle with Barclays.
Eliana Merle, Analyst
On Sephience, first, just what are your expectations for the discontinuation rate commercially? Specifically, how long do you think physicians will wait to see if patients respond or not? And I guess, the threshold that physicians view for response. And then just a separate question, just in terms of the cadence of new starts from here. Are you seeing a steady number of new start forms this year so far? Or did you see a bolus upfront? And if you could just talk to sort of how you see the rate of new starts evolving, I guess, in the U.S. over the course of the year.
Matthew Klein, CEO
Thank you very much for the questions, Ellie. I'll just start and I'll pass it over to Eric. As we've talked about thus far, it's still early days in the launch, and we're seeing very low numbers of discontinuations, very high prescription renewal rate. It's still early days, but it's obviously very encouraging. Eric, do you want to talk a little bit about how we're thinking about that dynamic over time and cadence of starts going forward?
Eric Pauwels, Chief Business Officer
Yes. I mean on the discontinuation rate, that's really important because obviously, part of what we're doing is building a prevalence and where discontinuation rates as well as refills are something we're watching very carefully. As we've mentioned before, we have very low dropouts, single digits. And usually, these are based on patient decisions, not necessarily for clinical reasons, safety, or efficacy, which is incredibly encouraging. With regards to cadence, we see we have gone through. And of course, we've gone through the course of the 5.5 months of the launch. We continue to see very nice momentum with new patient starts. And we anticipate that cadence to continue throughout. It is a combination of consistency of bringing in new patients and maintaining the base of patients that we have by ensuring that our case managers and our teams are involved in making sure that medical education awarenesses, reauthorizations, dose adjustments and all of that are taking place. So we're very, very confident that not only the momentum that we've had that we started in the first 5 months will continue, but adding 20 to 30 countries over the course of the second half of the year will bring in meaningful revenue to this truly global launch.
Operator, Operator
Our next question comes from Brian Cheng with JPMorgan.
Lut Ming Cheng, Analyst
How should we think about Sephience's growth in Europe once we reach the end of the 6-month free pricing period? Specifically, how is the negotiated price balance out the projected uptick in the market?
Matthew Klein, CEO
Thanks very much for the questions, Brian. And Eric, do you want to talk a little bit about German dynamics and pricing?
Eric Pauwels, Chief Business Officer
Sure. First of all, we're really pleased with the launch because the vast majority of the centers of excellence in Germany have prescribed Sephience. So we have an incredibly experienced team that's been managing that process. Keep in mind, we've also had a number of products that we've launched. And we've gone through this process right now to get pricing and reimbursement. We have already gotten the assessment from G-BA and AMNOG on the benefit rating. And we're in this process right now for pricing and reimbursement. We've submitted our HTA dossier. It has a very strong clinical package right now that includes both all of the APHENITY data as well as the AMPLIFY data, which will give us a lot of really important strength in terms of supporting the highest possible price. These discussions are ongoing, and they will be going for the next 5 to 6 months before we finalize pricing and reimbursement with the AMNOG process. So I think we need to stay tuned. But we're anticipating with the strength of the data that we'll be able to maintain the highest possible list price and lowest rebate.
Operator, Operator
Our next question comes from Judah Frommer with Morgan Stanley.
Judah Frommer, Analyst
Maybe just a follow-up on Sephience. Anything you can point to in reimbursement dynamics that have kind of shifted as we move through the initial stages of the launch, maybe specifically for those patients getting approved to be on first-line therapy with Sephience? And then separately, just on the comments around the potential to pursue business development. I guess, how do you think about prioritizing the internal early-stage pipeline and bolting on to that versus kind of going in alternate directions?
Matthew Klein, CEO
Yes. Thank you for the questions, Judah. I'll let Eric talk a little bit about the color on reimbursement dynamics. Pierre briefly on BD. So Eric, you want to go first?
Eric Pauwels, Chief Business Officer
Thank you for the question, Judah. We are very pleased with the interactions we've had with both U.S. commercial and government payers. Our experienced field teams, including medical science liaisons and market access, have engaged with payers covering over 250 million lives. We have been utilizing the APHENITY data, but more importantly, the AMPLIFY data has sparked positive discussions regarding policies. Both government and commercial policies have been favorably written for Sephience, primarily in relation to prior authorization. These policies now feature limited or no step edits for refills, which can extend from 6 to 12 months. Major commercial payers have also finalized policies allowing for 12-month refills with no step edits, which is very encouraging. The reauthorization processes appear to be straightforward and generally positive. After 6 to 12 months, the criteria are consistent with our clinical results, focusing on fee reductions, dietary goals, and the clinical improvement as judged by healthcare providers. Overall, the shift has been quite positive, and we are seeing a favorable trend in plans at both government and commercial levels towards Sephience.
Pierre Gravier, CFO
And on BD, first of all, we're in a strong financial position with $1.95 billion cash as we start the year. Sephience is off to a great start, and we see it to be a multibillion-dollar opportunity. We're obviously focused on the launch and continuing to expand globally as well as develop our internal R&D pipeline. Rest assured, we have enough cash to do both at the same time, no problem. But we're open to accelerate top-line growth via business development opportunities. We will be disciplined, and we will make sure to always look at maximizing shareholder returns.
Operator, Operator
Our next question comes from Ben Burnett with Wells Fargo.
Benjamin Burnett, Analyst
I wanted to ask about Sephience. What dynamics should we anticipate for Q1? Could you provide any insights on discounting or other typical Q1 factors we should consider? Also, where do you foresee the majority of demand coming from in the future? You've mentioned follow-up patients, but going forward, do you think the switches will be the more significant group, or do you expect adoption from both?
Matthew Klein, CEO
Thanks for the questions, Ben. I'll address the second question first. One of the impressive aspects of the launch has been the wide range of uptake across different ages, from patients as young as a couple of months to those up to 80 years old, and across a full spectrum of severity. We've seen patients who are less severe, classical patients with non-BH4 responses, and a variety of segments including those currently on therapies and some who are therapy-naive. Most of our current users have previously tried and failed other therapies. As this launch is still early, we expect to see continued broad penetration as we delve deeper. There's no indication of a slowdown in those trying our treatment after failing previous therapies or those who haven't received therapy yet. Over time, we may see more switches to our therapy since healthcare providers prefer to get patients who are therapy-naive or have failed previous treatments on the right therapy before making any changes. The AMPLIFY data and other studies indicate that every patient who has been on BH4, whether generic or branded, shows a significantly better response to Sephience, whether in terms of fee reduction or fee reduction coupled with diet liberalization. This consistent pattern is recognized within the healthcare provider community, which makes us optimistic about future switches. For now, the story remains one of breadth—broad diversity in patient segments and in severity levels. Additionally, we've secured prescriptions from over 80% of the centers of excellence early in the launch, which is typically the reverse scenario where fewer centers prescribe initially. This reinforces the narrative of breadth and our penetration into these expert centers, which we believe will continue to grow over time.
Operator, Operator
Our next question comes from Clara Dong with Jefferies.
Unknown Analyst, Analyst
I wanted to ask about Sephience. As you consider Japan, Brazil, and other markets outside the U.S. and EU for potential launch, how would you rank those in terms of revenue contribution potential? Additionally, what is the timeline for them to start contributing meaningfully?
Matthew Klein, CEO
Great. Thank you for the question. As we said, we expect going forward, the majority will continue to come from the U.S., but we'll start seeing those contributions from ex-U.S. And Eric, do you want to talk a little bit about timing and contribution?
Eric Pauwels, Chief Business Officer
Yes, timing and contribution in those key markets are very important. We're already getting to the very end of this quarter, and we will have negotiated pricing and reimbursement in Japan. I think we're really pleased with the approval there. It's a full and broad label. Our staff is already on the ground. They're fully trained. They're profiling the centers of excellence. And we anticipate first commercial sales from Japan in the second quarter, with more meaningful revenue in the second half. I want to remind you, there's about 1,000 PKU patients in Japan. However, it's a very, very high-priced and premium-priced market with 10 years of orphan drug exclusivity. So we've got a long runway and a very experienced team there. We're also really pleased with the dynamics of Brazil, because Brazil has over 5,000 diagnosed patients, and they're concentrated in major cities. We're pleased because our team there is incredibly experienced. They've launched multiple products in the rare disease space. They know how to navigate the named patient program aspects in Brazil. So the team has gone through already for more than a year, profiled a number of the centers of excellence, healthcare providers, KOLs, and the advocacy groups. And the named patient programs are in place and ready to go since the approval this week. So we have a number of patients already identified. Pricing submission will take place shortly in the coming days. And we anticipate, again, more meaningful revenue towards the end of this year.
Operator, Operator
Our next question comes from Brian Abrahams with RBC.
Unknown Analyst, Analyst
This is Joe on for Brian. I wanted to ask on votoplam. Can you walk us through the Phase III study design? How are you thinking about potential approval pathways there? What might be some scenarios that could enable approval prior to primary reading out? And separately, can you also quickly comment on your net pricing expectations for Sephience?
Matthew Klein, CEO
Sure, Joe, thanks for the questions. Let me address the first one, and then I’ll pass it to Pierre for details on net pricing. We discussed an FDA meeting in the fourth quarter, which focused on aligning with the FDA regarding the design of the Phase III study, INVEST-HD. This study will be fully conducted and funded by Novartis, with our participation as part of the Joint Development Committee. The study aims to either serve as a confirmatory study for potential accelerated approval based on the PIVOT-HD open-label extension data or as a registration study. As we mentioned at JPMorgan, this will be a placebo-controlled study with a 3 to 2 randomization of votoplam to placebo, targeting an enrollment of around 770 participants across more than 30 countries, with the primary endpoint being the change in cUHDRS. There is an interim analysis planned for both efficacy and futility, which means that if accelerated approval isn’t achievable based on the PIVOT-HD study findings from the interim analysis, we could see an earlier approval before all patients complete the INVEST-HD study. Pierre, could you elaborate on net pricing?
Pierre Gravier, CFO
Yes, absolutely. The interesting dynamic in the PKU pricing is 2/3 of the patients are commercial, which is very rare. And usually, in some other settings, for instance, Duchenne, it's 50-50 split. And we said we expect the gross to net between 15% to 25%. At the start of the launch, it will be in the lower hand of that side, and as we get to steady state, it will increase over time.
Operator, Operator
You next question comes from Joseph Thome with TD Cowen.
Joseph Thome, Analyst
Maybe to follow up on the Huntington's program. I guess now that Novartis is in charge of the program, are they also in charge of any further disclosures from Phase I/II program? Or should we expect anything in May of this year? Kind of how does that work? And then I guess is there another planned FDA meeting on the data that you have right now, I guess, to use that package for accelerated approval? Just trying to understand that component. And then lastly, in the Phase III, what triggers that interim analysis?
Matthew Klein, CEO
Thank you for the question, Joe. As we discussed, one of the objectives of the FDA meeting in the fourth quarter was to have a broad conversation about the possibility of accelerated approval. It’s not surprising that the neurology division at CDER is receptive to this idea, given the significant unmet need for those affected by Huntington's disease. It’s clear from our public comments and those of Novartis that both companies are enthusiastic about pursuing this pathway, depending on the data available. The next step involves analyzing the open-label data after we've completed 24 months with all subjects, which will allow us to evaluate the data and decide, through the Joint Development Committee, whether we have sufficient information to discuss accelerated approval. After that, we would need further regulatory engagement to align with the division regarding the data and the potential for accelerated approval. Novartis is currently overseeing this program and will conduct the analysis. We anticipate sharing some findings once the analysis is complete, with more details to be finalized as we progress through it. This analysis is expected to take place in the first half of this year. Regarding the interim analysis, specific details have not been shared yet. However, the goal is to ensure that there are enough subjects who have undergone significant treatment duration to potentially identify an efficacy signal that could support a decision to stop the study or conduct a data analysis relevant to discussions of accelerated approval.
Operator, Operator
Our next question comes from Sami Corwin with William Blair.
Samantha Corwin, Analyst
Congrats on the progress. I was curious how we should interpret the Translarna sales allowance in France, and if we could see a similar adjustment in the future? And then regarding the vatiquinone, did the FDA have any recommendations or input as to whether you could use upright stability as the primary endpoint? Or if they prepare you to use mFARS?
Matthew Klein, CEO
Thanks, Sami. On the first question on the Translarna France allowance, this was kind of a unique thing to France. It's a one-time France-specific thing that we had sold Translarna there under an early access program since the beginning of time where we set the price when the license wasn't renewed, France ended the early access program and set their own price and they issued a charge for the difference. So this is something specific to the France early access system. In fact, it's something specific to Translarna that I think would never happen again for any other drug, and it was a one-time thing. On vatiquinone, so I think one of the questions in terms of what the endpoint is will be based on the duration of that study because one of the important findings we had in the MOVE-FA study was that certainly, over the short term, 12 to 18 months that upright stability is clearly the endpoint that could capture is the most sensitive to capture treatment effect in the population we enrolled in MOVE-FA, which would be consistent with the one that we would enroll in this new study. However, what we saw in the data is that by 18 months and certainly as we went out to 36 months, we continued to record significant effect on slowing of disease progression. But now that slowing was captured on the other subscales as well, including lower limb and upper limb. So that's why I say that depending on the duration of the study, if we're looking at something a little bit longer than 18 months, then it would probably make the most sense to have the mFARS as the primary endpoint. Because really, the goal here is to demonstrate significant effect on slowing of progression and how that's done with mFARS and the subscale is based on the patients and the duration of the study.
Operator, Operator
Our next question comes from Geoff Meacham with Citigroup.
Jarwei Fang, Analyst
This is Jarwei on for Geoff. Maybe going back to Sephience and thinking about OUS geographies. A lot of the early trends that we've been seeing in the U.S. are pretty encouraging with regard to capturing the loss to follow-up patients and some of these early start trends and also awareness on social media. So maybe thinking about Japan and Brazil and other geographies you're thinking about. Could these trends also be similar, or is your internal expectation that it is just too early to tell?
Matthew Klein, CEO
Thank you, Jarwei, for your questions. It's a bit early to say for certain, but we do know that patients, whether they're in the U.S., Brazil, Germany, Spain, Japan, or the UAE, are connected. Social media networks exist everywhere, along with patient organizations and aggregations. These communication channels, like those in the U.S., promote awareness and allow patients to share their success stories about trying new treatments. This is a global phenomenon. What might vary from country to country are the dynamics concerning patients connected to treatment centers. For instance, I previously mentioned that there are about 1,000 patients in Japan, which are concentrated in roughly 12 centers of excellence. Germany also has a number of concentrated centers of excellence. While the dynamics in these segments may differ slightly, a common theme across many countries is a stronger connection to centers of excellence and social media platforms. Brazil's dynamics may be distinct as well. However, as Eric emphasized, our teams possess substantial experience working in various regions of Brazil, and they understand the dynamics of patient organizations, the role of local governments and advocacy groups, the process of establishing access, and the steps needed to navigate digitalization for early treatments while also pursuing access and reimbursement through CMED and CONITEC. This understanding of unique geographical dynamics will help us achieve early success as we launch our initiatives.
Jarwei Fang, Analyst
Maybe one follow-up is that you mentioned earlier that about 80% or maybe slightly over 80% of centers of excellence in the U.S. have prescribed Sephience. So maybe just thinking about the remaining 20% of the pie, what do you think they need to see in order for them to get on board Sephience, proven efficacy and excellent tolerability and safety profile?
Matthew Klein, CEO
Yes, I'll let Eric talk about that. We're experiencing a unique dynamic at this stage of the launch, being at an 80/20 ratio instead of the usual 20/80, but Eric...
Eric Pauwels, Chief Business Officer
It’s impressive that after five months, 80% of our centers in the U.S. have written multiple prescriptions. We are observing similar trends in Germany at these centers of excellence, which is very encouraging. This indicates that the clinical efficacy of the product is proving itself in real-world applications. Naturally, there will always be a few centers that are lagging behind. We are actively engaging with these centers through regular communication, either daily or weekly. To support those lagging centers, we are implementing key educational programs that involve peer-to-peer learning. We also have newly published data set to enter peer review, including findings from APHENITY, the long-term extension, and AMPLIFY, as well as information on the mechanism of action. We have many points to bring forward. However, one of the main drivers is patient demand; social media and the inquiries stemming from it will encourage these centers to adopt our product more quickly. I believe testimonials from patients at other centers who have used this will motivate the remaining lagging centers to follow suit.
Operator, Operator
Our next question comes from Luke Herrmann with Baird.
Luke Herrmann, Analyst
Just another on vatiquinone. Are you able to share some additional color on your base case for the external control matching strategy in order to maximize the likelihood of a statistical hit? And I guess, what are the key features you need to align on with the FDA at this point?
Matthew Klein, CEO
Thanks for the question, Luke. Obviously, we have experience from the MOVE-FA study of having done this natural history match on key factors that we had aligned with the FDA as part of the statistical analysis plan and had 50% slowing over 3 years relative to natural history. So I think we've got a good sense as does the FDA on those matching factors, and there are the things exactly that you'd expect, age, age of onset based on mFARS scores, things that get at making sure that you have similar baseline severity as well as similarities and things that drive progression. Again, we're fortunate to be in a situation where there's regulatory precedent for using these natural history matching with the FA natural history registry. We've done it ourselves and the FDA is familiar with it. So that really helps. So really, what comes down to the alignment is making certain that the FDA is comfortable with this matching approach, details of the model, statistical aspects of the model, how we're going to do the analysis and duration of study and subject numbers. So really those key points. So as we move down what is a relatively unprecedented path for a neurological disease, having this opportunity to do it have an open-label natural history comparison to allow for us to file, we just want to make sure that everything is buttoned up and we're as aligned as much as possible prior to starting that.
Operator, Operator
Our next question comes from Joon Lee with Truist.
Unknown Analyst, Analyst
Congrats on the strong quarter. This is Joon, and I have a couple of questions. Firstly, Palynziq has an upcoming PDUFA for adolescents with PKU next week. Is that something we should be paying attention to? Also, regarding the gross to net, should we expect the shift towards the 15% to 25% range this year?
Matthew Klein, CEO
Thanks for the questions. The first question is about the potential label expansion of Palynziq to adolescents. We've discussed that Sephience is approaching a point where it will become the first line of treatment. It offers an oral, convenient option with a strong safety and tolerability profile, along with proven efficacy for a wide range of patients. Even if Palynziq gets approved for younger patients, its history of safety tolerability, challenges with administration, and the lengthy titration period to reach an effective and safe dose will likely keep it as a second-line option behind Sephience. For adolescents, having an effective oral drug with a strong safety record is very beneficial compared to one that may have more challenges. Pierre, would you like to follow up on the question regarding the gross to net range of 15% to 25%?
Pierre Gravier, CFO
Yes, absolutely. I think, as I mentioned, we're on the lower end, and it will take multiple quarters to reach the top end. So it's going to be a slow and steady, and it will not be our expectation to hit the top end this year.
Operator, Operator
Our next question comes from Joseph Schwartz with Leerink Partners.
Unknown Analyst, Analyst
Just one question from us. At R&D Day, you highlighted your new splicing and inflammation programs. What are the first clinical proof-of-concept milestones that would provide validation and how do you view the catalyst path for these programs? Additionally, how are you prioritizing capital allocation as you aim for cash flow breakeven?
Matthew Klein, CEO
Thank you for the question. To start, we can confidently say that splicing has proven to be a validated platform. Both Evrysdi and the success of votoplam underscore the potential for splicing to yield transformative and valuable therapies. As we proceed with specific program validations, we look forward to advancing the MSH3 molecule to development candidate status this year and swiftly getting it into the clinic. The next step involves completing all necessary preclinical work and IND-enabling studies to facilitate this transition. Regarding the inflammation and ferroptosis platform, we have some clinical-stage programs, and we aim to move our NLRP3 inhibitor program into Phase I by mid-year. The next significant milestone will involve typical Phase I activities to assess safety and pharmacology. Additionally, we anticipate starting the Phase II program for the DHODH inhibitor this year. The early-stage programs I mentioned, including the Parkinson's ferroptosis program and the NRF2 activator program, are both approaching the development candidate stage. We are currently focused on completing nonclinical toxicology and pharmacodynamic studies to advance these programs. We look forward to reaching these milestones and progressing these initiatives as swiftly as possible. Pierre, would you like to discuss capital allocation?
Pierre Gravier, CFO
Yes. I will mention a few things. Number one, we demonstrated over the last few years that we're very disciplined from an operating expense management. You see revenue increase and a strong Sephience launch and operating expenses over the years. We've been very disciplined. We'll continue to be. That's important to us to reach cash flow breakeven and be cash flow positive after that. We are highly focused on the momentum of Sephience and expanding globally. That's important to us. You mentioned R&D Day and our R&D programs, which will continue to develop both on the splicing platform as well as ferroptosis and inflammation. And finally, we're open to look at the opportunities, as I mentioned, and ways to accelerate top-line growth.
Operator, Operator
Our next question comes from Paul Choi with Goldman Sachs.
Kyuwon Choi, Analyst
Congrats on all the progress. And I also wanted to ask on the early-stage pipeline as well, Matt, which is just with regard to your NRF2 program, as you mentioned. Is there a particular area of fibrosis, which, in your view, allows for the shortest clinical development time and time to market? And then for your NLRP3 program, I think you guys were still in the stage of indication selection. Can you maybe just comment on what your latest thoughts are on that program and just sort of where your target focus might be?
Matthew Klein, CEO
Yes. So I think the way we're thinking about it for both programs is 2 things, right? One is where can we see overlap between the target pathway, the mechanism, and mechanism of drug and disease state. And then the second is how do we think about that in terms of efficiency and moving things forward? When you talked about the R&D day, how our NRF2 activator program is pretty unique in that it has a differentiated mechanism of action that has what we like to consider comprehensive NRF2 activation, which modulates both the cellular stress response as well as inflammation pathways. So we're able to see effects and as we share data from both kidney studies, and I believe lung studies as well showing great activity and benchmarked to others. So I would say at this point, while we're still doing indication selection there, we should have a beat on that soon. But where we want to go is understand where there's been a clear evidence that by targeting NRF2 the way we can that we can deliver clinical effect. And obviously, we're going to be in the rare disease realm. And as usual, from a developability standpoint, we'll look for things that allow us to have objective biomarkers or clinical effect that can not only facilitate the development program but also get to that acceleration piece you talked about, get confidence early that we're having a meaningful effect that could either open up an accelerated approval portal or allow us to move forward faster in initiating a registrational study. On the NLRP3 front, as we shared at the R&D Day, PTC612 has demonstrated really strong potency due to its selectivity, and we benchmarked it to a number of compounds as we shared that day with favorable potency. We talked a bit about that day and continue to believe that our initial targets will be lung inflammation of fibrosis, given the overlap between the NLRP3 pathways and lung fibrosis. So we are still honing on final indications, but I think our first goal will be at pulmonary fibrotic conditions.
Operator, Operator
Thank you. I would now like to turn the call back over to Dr. Matthew Klein for any closing remarks.
Matthew Klein, CEO
Thank you all very much for joining the call today. 2025 was a really successful year for PTC. We're excited about the Sephience launch, the R&D platform, our strong financial position, all of which really sets us up for great success in 2026 and beyond. Thank you all again, and have a great evening.
Operator, Operator
Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.