Ultragenyx Pharmaceutical Inc. Q4 FY2021 Earnings Call

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Fourth Quarter 2021 Financial Results and Corporate Update Conference Call. At this time all participants are in a listen-only mode. After the speaker’s presentation there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today Joshua Higa. Sir, please go ahead.

Good afternoon, and welcome to the Ultragenyx Pharmaceutical Financial Results and Corporate Update Conference Call for the fourth quarter and full year 2021. We have issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. I am Joshua Higa, Senior Director of Investor Relations. Joining me on this call are Emil Kakkis, Chief Executive Officer and President; Camille Bedrosian, Chief Medical Officer; Erik Harris, Chief Commercial Officer; and Mardi Dier, Chief Financial Officer. I would like to remind investors that this call will include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 including but not limited to the types of statements identified as forward-looking in our annual, quarterly and periodic reports filed with the SEC, which are all available in the Investors section on our website. These forward-looking statements represent our views only as of the time of this call and involve substantial risks and uncertainties including many that are beyond our control. Please note that actual results could differ materially from those projected in any forward-looking statements. For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements as well as risks related to our business, see our periodic reports filed with the SEC. I'll now turn the call over to Emil.

Thanks, Josh, and good afternoon, everyone. We've had an exciting start to the year. We concluded a strategic rare disease deal with Regeneron to license global commercial rights outside of the US for both Evkeeza and the potential for a second rare disease therapy, Evinacumab. We also released a clinical update with our partner Genetics on the ancient program, showing positive clinical activity and lower extremity weakness events observed. We finished 2021 in a strong financial position, exceeding expectations for the performance of our commercial products. Additionally, we've made good progress with our broad late-stage pipeline, initiating enrollment in three of four pivotal programs that will be ongoing this year. Despite the challenges presented by the COVID pandemic, we successfully completed a manufacturing technology transfer to our partner, Daiichi Sankyo. I’ll let Erik, Mardi, and Camille provide more details on these accomplishments later in the call. I want to spend a few minutes discussing the deal with Regeneron for the commercialization of Evkeeza in treating homozygous familial hypercholesterolemia, or HoFH, outside of the US. This deal includes our exclusive right to negotiate a separate ex-U.S. agreement for their investigational antibody for Fibrodysplasia Ossificans Progressiva, or FOP. This partnership aligns us with a leader in high-quality antibody drug discovery and development, allowing us to scale and leverage our global commercial capabilities in medical affairs and regulatory functions. Evkeeza is a potent approved product with a novel treatment mechanism that enhances our portfolio with another commercial-stage traditional biologic that addresses the underlying cause of HoFH. This disease occurs when two copies of the familial hypercholesterolemia genes are inherited, leading to very low or absent LDL receptors in the liver and dangerously high levels of LDL-C. Patients with HoFH face risks of premature atherosclerotic disease and severe cardiac events. Despite extensive research on this condition, true homozygous male patients still lack effective treatment options, and the weekly blood draws are difficult and cumbersome to manage. Evkeeza targets and binds to ANGPTL3, a protein crucial in cholesterol regulation and atherosclerosis. In patients lacking LDL receptors to direct proper liver uptake, Evkeeza activates an alternative pathway, converting VLDL into remnants that the liver can clear through different receptors. This unique mechanism significantly reduces LDL-cholesterol levels in severe patients even without functional LDL receptors. The clinical significance of inhibiting ANGPTL3 is supported by data showing that natural genetic mutations protect against atherosclerotic disease, and treating LDL receptor deficient mice with an ANGPTL3 blocker also reduces atherosclerosis. In Regeneron's pivotal clinical program for Evkeeza, the drug demonstrated a significant improvement over standard care, achieving a consistent 49% reduction in LDL-C over 24 weeks in a study involving 65 HoFH patients, in addition to existing LDL-lowering therapies. The study also indicated a 72% reduction in LDL-C for the most severe patients with less than 2% of LDL receptor activity, and triglycerides were reduced by 50% across all participants. Evkeeza has shown a good safety profile and has been well tolerated in all study populations. It is approved by the FDA and EMA for patients aged 12 and older. Regeneron is currently marketing Evkeeza in the US, while we will manage its launch and commercialization in all other regions including Europe, Latin America, and Asia. We may also expand our collaboration with Regeneron to include another antibody in Phase 2/3 development called FOP. This license will cover the same commercial rights excluding the US. FOP is an ultra-rare genetic ectopic bone disease impacting about 1,400 patients in this region. In FOP patients, abnormal bone formation occurs in soft tissue like muscles, resulting in frozen movement and difficulties in essential functions such as eating and breathing, which ultimately leads to premature death in their 50s. My first patient with FOP was during my training in Los Angeles, and I recently spoke at the IFOPA meeting, so I am familiar with this disease; witnessing patients stuck in painful positions is unforgettable. I’ll now pass the call to Erik to discuss last year's commercial team performance and what the team is doing to launch Evkeeza.

Thank you, Emil, and good afternoon, everyone. I'll start my section discussing the commercialization team's performance in 2021 despite the impact of the Omicron variant. For Crysvita, within the North American territory, we continue to see steady underlying demand from both the pediatric and adult markets. In the fourth quarter, we added over 50 unique prescribers in the US alone. The split of pediatric and adult patients remains approximately 50-50 while the total number of patients on therapy continues to increase. We expect this split will continue shifting towards a greater portion of adults on Crysvita as the teams are increasingly finding doctors who have adult patients with XLH or TIO in the community setting. The compliance rates remain high. In fact, four years into this launch we continue to hear stories from patients about how much better they feel once they begin receiving therapy. Outside of North America, demand for Crysvita continues to gain momentum. In 2021, product revenue grew 107% to $21.4 million. While there may be variability in the ordering patterns that cause them quarter-to-quarter fluctuations in revenue, it's clear we have strong underlying demand for Crysvita. This is a direct result of all the work the teams have been doing to educate providers find patients and work with regulatory and reimbursement authorities. For 2022, we expect Crysvita revenue in Ultragenyx territories to be between $250 million and $260 million. The midpoint of this range represents a 32% year-over-year growth, an impressive metric four years into a rare disease launch. Turning now to Dojolvi and starting with the US launch metrics. In the fourth quarter of 2021, we added approximately 40 start forms bringing the total since launch to approximately 350 start forms. As of the end of the fourth quarter, this has led to approximately 280 patients on reimbursed therapy. Approximately 160 unique health care providers have written a prescription for Dojolvi with many of them writing prescriptions for multiple patients. Outside of the US, the use of Dojolvi continues through our named patient and early access programs. In Europe, Dojolvi growth was driven by significant increases in named patient requests in France and Italy. We are continuing to work with regional authorities as we look to expand access for all patients who could benefit from Dojolvi. Late last year, the Brazilian National Health Surveillance Agency approved Dojolvi for the treatment of both pediatric and adult patients with LC-FAOD. The final step is to get full reimbursement approval from Brazil's Ministry of Finance, a process we have begun working through for the last few months. I should note this will be the last quarter that we provide specific launch metrics for Dojolvi. We believe the 2022 guidance range of $55 million to $65 million is a better representation of the confidence we have in our ability to continue finding patients and getting them on reimbursed therapy. Now shifting gears to the opportunity we have with Evkeeza which is approved for the treatment of HoFH, an inborn error of metabolism like most of our portfolio. These patients are typically seen by cardiovascular and lipid specialists. HoFH is also a fairly well-developed market with established diagnosis protocols, knowledgeable physicians and a relatively high estimated rate of identified patients. Across the Ultragenyx territories, we estimate there to be between 3,000 and 5,000 patients with HoFH. This program will help further establish us as a truly global commercial organization. Initially, commercialization efforts will focus on Europe where we estimate there to be approximately 1,600 patients. As we modestly build on the current infrastructure that is supporting Mepsevii and Dojolvi, we will also work to submit dossiers and begin reimbursement discussions. This team will also be in place to respond to requests for name patient access, which could begin in 2022 given the strong interest we have seen from the KOL community. In Latin America and Canada, our commercial and medical affairs infrastructure is already well established and ready to add Evkeeza to their portfolios. We have in place today the field teams and patient and prescriber support services needed to successfully launch Evkeeza with very little build-out required. The addition of Evkeeza to our portfolio also sets the stage for our long-term commercial efforts, as we expand into the APAC region. This is a new geography for Ultragenyx where we recently established a Japanese entity and have hired general management. While Evkeeza will help Ultragenyx to advance along its mission of being a truly global rare disease company, we should note that each of these regions are unique and have complex pricing and reimbursement processes. We have begun these efforts, but as you all know it can take some time to work through these processes and see revenue from our new therapy. Key opinion leader feedback on the program is very supportive and the strong clinical data speak for themselves as a significant leap forward for patients with HoFH. My colleagues and I look forward to offering Evkeeza as a new and compelling treatment option for patients. In closing, I would like to reiterate just how proud I am of the team's efforts in 2021 and I look forward to 2022; we will continue to build on that momentum. With that, I'll turn the call over to Mardi to share the financial results.

Great. Thanks Erik. We issued a press release earlier today that included a financial update which I'll briefly summarize. Company revenue for the 12 months ended December 31, 2021 totaled $350.4 million. Crysvita revenue in Ultragenyx territories grew to $192.6 million, including $171.2 million from the North America profit share territory and net product sales of $21.4 million in other regions. Total royalty revenue related to the sales of Crysvita in the European territory was $18.2 million. The Dojolvi revenue for the year was $39.6 million. As Erik mentioned, the ongoing strength of the launch is reflected in our 2022 guidance for Dojolvi, which represents approximately 50% growth at the midpoint of the guidance range. Mepsevii for 2021 was $16 million. As we have previously stated, we expect these revenues may modestly increase over time. 2021 revenues also included $85 million related to the tech transfer as part of our strategic manufacturing partnership with Daiichi Sankyo around our PCL and HEK293 gene therapy technologies. In the fourth quarter 2021, the technology transfer activities were substantially completed and total revenue recognized under this license agreement through December 31, 2021 is $174.2 million. Our total operating expenses for the year were $733.1 million, which includes research and development expenses of $497.2 million, SG&A expenses of $220 million and cost of sales of $16 million. I should note this also includes a one-time expense of $50 million related to the upfront payment for the Mereo license and collaboration agreement regarding setrusumab for OI. We continue to expect our R&D spend to somewhat increase in 2022 as we support three pivotal gene therapy clinical studies: the UX143 Phase 2/3 clinical study, the ICIEM Phase 1/2 study and the Phase 1/2 study for our most advanced mRNA program, UX053 and GSDIII, as well as a number of other preclinical activities as we get ready to advance the next programs into the clinic. We also expect SG&A to modestly increase in 2022 as we continue to support the expansion and launches of our existing commercial products and the launch of Evkeeza. For the year ended December 31, 2021, the net loss was $454 million or $6.70 per share. The net loss includes a $42.1 million decrease in the fair value of equity investments. Net cash used in operations for the 12 months ended December 31, 2021 was $338.7 million, compared to $132.2 million for the same period in 2020. Net cash used in the 12-month period ended December 31, 2021 included the $50 million upfront payment for the closing of the Mereo agreement. This compared to the net cash used in the same period of 2020 that included approximately $155 million of operating cash received from Daiichi Sankyo related to the collaboration and license agreement. We ended the year with approximately $1 billion in cash, cash equivalents and marketable securities. This puts us in a strong position to achieve critical milestones and expand our commercial presence over the next few years. Now I'll turn the call over to Camille to touch on some of our clinical programs.

Thank you, Mardi, and I too wish everyone a good afternoon. In my section, I will briefly provide status updates on our six clinical stage programs before turning back the call to Emil. Starting with the three gene therapy programs; DTX401 for the treatment of glycogen storage disease type 1a or GSD1a is currently dosing patients in the randomized placebo-controlled Phase 3 study. DTX301, for the treatment of ornithine transcarbamylase or OTC deficiency is in the final stage of the study startup. We anticipate the first patients will enter the four to eight-week baseline screening period in the first half of 2022, after which they will be dosed in the Phase 3 randomized placebo-controlled study. UX701 for the treatment of Wilson disease is currently enrolling patients in a seamless Phase 1/2/3 randomized placebo-controlled study. Outside of gene therapy, UX143 or cetruzumab and antiscarostin antibody will begin enrollment in the first half of 2022 in the seamless Phase 2/3 study for pediatric and young adult patients with osteogenesis imperfecta. GTX-102, the ASO in development with our collaborator Genetics for patients with Angelman syndrome continues to enroll and dose patients under the amended Phase 1/2 protocol in the UK, Canada and the US with no reported lower extremity weakness. Cohorts 4 and 5 in the UK and Canada following DSMB support have expanded, adding an additional eight patients to this protocol. The initial assessments have shown early signs of clinical activity. We look forward to providing an update on this program in mid-2022. UX053, our first mRNA for the treatment of glycogen storage disease type 3 is currently dosing patients in the single ascending dose arm of the Phase 1/2 study. Preliminary data from that arm as well as initiation of the repeat dosing phase of the study are anticipated in the second half of this year. With this update, I will now turn back the call to Emil. Thank you.

Thank you, Camille. Before we close out I'll provide a quick reminder of the key upcoming milestones for the company. For GTX-102 in Angelman, we'll provide an update in mid-2022 on Cohorts 4 and 5 in the Canada and U.K. arm of the study as well as available safety and efficacy data from the patients treated in the U.S. For our gene therapy pipeline, we'll continue enrolling the three late-stage clinical programs. And we'll provide longer-term durability data from the Phase 1/2 studies for GSDIa and OTC at major conferences. For UX143 osteogenesis Imperfecta, we'll begin dosing in the pivotal Phase 2/3 study in pediatric in the first half of the year. In the second half of the year we expect to provide an update on the dose strategy we have selected for the Phase 3 portion and initiate a supportive study in children under five years old. For UX053, in the second half of the year, we expect to share a single dose data from the first part of the Phase 1/2 study and to initiate the repeat dosing stage. In 2021, we made meaningful steps in building a strong financial position, bolstering our commercial portfolio, advancing our clinical programs, and completing the tech transfer of our gene therapy manufacturing technology ahead of schedule. In 2022, we look forward to building on this and sharing updates with you. With that, let's move on to your questions. Operator, please provide the Q&A directions.

Thank you. Our first question comes from the line of Yigal Nochomovitz with Citigroup. Your line is open. Please go ahead.

Great. Thank you very much for taking my questions. I just had a question with respect to your planning for the pivotal trial for Angelman. Presumably, you're going to do a randomized placebo-controlled trial. And so my question is, assuming you see a main increase in line with the 2.5 that you've observed so far in the Phase 1/2 study, how are you thinking about the separation from placebo given the natural history of Angelman where clinicians have actually observed slow change in the function over time? For instance, there's a 2020 publication in the Journal of Developmental Disorders that makes this point pretty quite nicely. Thank you.

Yes. Thank you, Yigal. I think one thing about Angelman is though, there may be some small gains over time, the gains are pretty modest compared to the kind of change observed in the trial. So I have no question if we can achieve the efficacy we've seen before in our Phase 3 that we'll be able to distinguish that from placebo and really no concern at all. The CGI as a tool is one approach to measuring the disease, but it is a more subjective approach depending on the opinion of the investigator. We also are certainly going to use underlying instruments that we used before such as the other specific measures of particular function which we will be studying in our Phase 2 study currently with Genetics which will allow us to understand the magnitude of effect and understand the separation. I have no doubt given the fact we've seen before that we can design a study that will have appropriate endpoints and capture what was in our view a very profound effect on development in this disease. Right now, we need to optimize our dosing, which we're working on and figure out this. We'll figure out the magnitude of these effects and come up with a design for the study. Whether it's CGI dependent, or whether it's based on other endpoints, I would say we still have some time to figure that out all. But I think your question or concern raised, and we certainly will walk look carefully at assuring we're powering and observing a change that's meaningful.

Okay. Thank you. That's super helpful. And then just to follow-up on another topic regarding the Regeneron deal. Obviously, this was very interesting. As you usually see the smaller company license to the larger to commercialize an asset, but obviously the reverse happened here. So the question is, could we see more transactions following what happened with Evkeeza, or was this more of a one-off situation that presented itself with Regeneron? Thanks.

Yeah. Well, I think we just are a big company, and how we act and behave. So that's what's going on here. But Regeneron is a great company, but they haven't built a global commercial capability, especially in the rare space, they were appreciative of what we had, and felt the best thing for their product and they really care about these patients who want them to get good care, and they said, we want you guys to handle this product because they have confidence to take care of business and do it well. So if there's anything, it's our reputation for taking care of people correctly that draw together, it is a two-product deal. Look, we're pretty full and busy in our pipeline right now. So right now, we're not expecting to do many deals on other commercial deals. But in our view, we want to be selective. We want to pick products that we want to work on that we're proud of, that we think really change care and are important in order to get us to take our precious people's time and put them to on an effort. And Evkeeza, we think is a will be a change in standard of care. And we think burosumab has potential to be life-changing for FOP. So we're excited about both of those. And right now, we'll stick just keeping those going and we won't think about what else could be we'll wait and see if it comes.

Thank you. And our next question comes from the line of Gena Wang with Barclays. Your line is open. Please go ahead.

Thank you for taking my questions. I also have one question regarding Angelman. So Emil, in the early January update, you said the sign of improvement in terms of CGI score. So did you continue to see that trend? If you can be a little bit more quantified regarding the score improvement? In the past, you mentioned like a two-score improvement in two out of five domains. Did that meet that criteria? And then the second part is mid this year, can you lay out specifically what kind of data are we expecting to see from the 12 patients like for example the first two patients from each cohort, the loading dose, after initial loading dose what additional data we could see and also for the remaining eight patients what we could see? And will you have a definitive answer by mid this year that you will know which dose to move forward for a pivotal study?

Very good. So thank you, Gena. For Angelman what we said was and we'll just reiterate is that we had improvements in clinic activity that is their CGI scores for the domains were improving but in the lowest-dose cohort we had said that they hadn't achieved plus two in more than two domains; therefore, the patients escalate to the next dose level. In cohort 5, the older patients that have met and also allowed the expansion of two the Cohort 5 the additional four patients in that cohort. And those patients also escalated that is they were seeing improvements but not two plus. So we're at the beginning of the titration. We wanted to get in the clinic get started. We're seeing activity. We're not seeing any lower extremity issues right now. So we're encouraged. They'll continue to dose and titrate as we move forward with those 12 patients. So that's kind of where we're at. We haven't put out specific scores. But we said if they had two domains or two plus they wouldn't titrate further. That would be considered getting to the level of efficacy we saw before. So we're encouraged, but we're continuing to move forward with dosing and titration. Now what kind of data will we see? We're talking about midyear. That data would be – expectation would be that we would see data from the first Cohort four and Cohort five that have gotten their doses and evaluated day 128 which includes now a whole series of endpoints not just CGIs and domains, but it would include the Baileys expressive and language scores sleep evaluations and as well as behavioral evaluation. So, we would have a number of endpoints that would be supporting. Those endpoints would come from both patients or families, the investigator or a psychologist. So there's three different types of evaluators. So we think we can look at the synchrony between different evaluators and how they're looking at these with different endpoints. We hope this will be a robust assessment of how the drug is doing. So with regard to where we are the point of this program is to kind of get dosing and titrate dose until we see sufficient efficacy that we would separate from placebo in a trial and be a substantial clinical benefit to patients. And we'll see at that point we look at that data if we achieve that level. If we are close to our debt level, we expect that we would expand the cohort and actually add more patients beginning at the new dose level that we had established and moved forward. Now you asked how are we going to know when we got to the dose. I'm guessing by midyear we'll have a sense for the dose, but it could be that the expansion cohort will help identify or verify that higher level. The idea is to try to tune up the efficacy and manage within what we consider a safe dosing range. That would allow us to see results later in the year regarding the dose. It could be that we deal with a young dose and older dose or it could be something else we do. But the idea is we're going to learn about how to dose and get an idea of what the optimal dose range is. But we're really encouraged so far that we're not seeing anything at all with the risk of a lower extremity event. And so, we're encouraged we're seeing activity and we think we just need to work deeper in the therapeutic range as we move forward. So we're excited about the potential with Angelman.

Great. Thank you, very much.

Thank you. And our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is open.

Thank you for taking my questions. I need clarification regarding Angelman's. Emil, can you remind us if you will be able to redose the original five patients who were on the drug? If it's still undecided, will that be part of your discussions with the agency? What would you need to ensure they're comfortable with redosing? Additionally, for Evkeeza, could you provide more details on the synergies between the products you currently market and what you would need to develop to market at HoFH? Thank you.

Thank you, Tazeen. Regarding Angelman, we are eager to redose the original five patients. Their families have experienced a lot and it's been difficult for them, so they are eagerly awaiting updates. We believe we need two key components to approach the agency. First, we want to gather data from the ongoing ex-US program to assess the dosing and administration methods to confirm safety. Second, we are evaluating rheological responses, which will demonstrate that there are no rheological concerns, addressing previous worries about redosing. With this information, we aim to approach the agency in the middle of the year to discuss a plan for redosing those patients and getting them back on treatment. We also hope to align the US and ex-US programs regarding dosing and administration. We think it's important to secure data from these new patients and further evaluate the original five to move forward with redosing. As for Evkeeza, launching rare disease products has some common elements. There is a strong emphasis on medical knowledge, as well as managing reimbursement and country-specific considerations. In rare diseases, particularly in Europe, there are key centers recognized as centers of excellence by the government, which simplifies management with a limited number of field personnel. We are confident in our ability to handle the fundamentals of supply, medical affairs, and reimbursement while maintaining a small team. Evkeeza will also allow us to enter more countries in Europe, broadening our reach and generating additional revenue. This will benefit not only Evkeeza but also our other programs. We have a capable team ready to support Evkeeza, which is also related to lipid metabolism disorders. Despite the involvement of different doctors, it remains a genetic metabolism disorder, and our team is well-equipped to manage it. Moreover, this is a well-known disease area, making it easier to identify patients compared to more obscure rare diseases. Our challenge is to locate these patients, get them on the medication, and since they typically go to major centers, we won't need a large team to effectively commercialize Evkeeza.

Thank you.

Thank you. And our next question comes from the line of Cory Kasimov with JPMorgan. Your line is open, please go ahead.

Hey good afternoon guys. Thanks for taking my questions. Two for me as well. I guess first just a follow-up on the Evkeeza topic. Can you just talk a little bit more about the anticipated cadence of countries coming online here? Like do Canada and LATAM potentially contribute in 2022, or should we think about these as more of a 2023? And then to change it from Angelman, can you talk about what we might learn from the Phase 2 dosing update for cetrizumab or UX143 in the second half of this year? Do we get like a full-on safety and efficacy update around the various doses, or is it just more like the dose you chose and the plan for Phase 3? Thank you.

Okay. Very good. So Evkeeza there is a sequence that usually people work through and country by country. And I probably wouldn't go through that at this moment. But obviously in Germany you can launch more quickly, but other countries like France, Italy have a process we have to work through. And we're going to work through the filings and timing of these things to manage the pricing process to get through it and to try to achieve consistent pricing across the region. So I won't go through it right now. But 2022 will be spent primarily filing reimbursement and beginning the process of getting reimbursement in these countries. And ultimately Germany at some point is the one country you can launch sooner. And of course that would be something we would do in our plan. With regard to Canada and LATAM, this still requires filing and approval so it's obviously not going to be a big revenue generator in this year. And Canada and LATAM is also right now also launching Dojolvi. And in LATAM Crysvita is still in the beginning of its growth. So they have plenty to do there but Evkeeza will fall in after that. But this year will be more about driving Europe. And again we'll get the filings and for the rest of the world for Evkeeza. Now for the next one was it both UX143 and Angelman was it both or just UX143? So point.

Just one for the.

I kept hearing about Angelman frequently, so regarding UX143, it’s a straightforward situation. We've already demonstrated that 20 meg per kilo works effectively. We are now moving on to testing young children with a higher dose to compare results. The goal is to fine-tune our approach. We are confident that 20 is a suitable dose, but we need to determine if higher doses are necessary. Our focus will be on assessing drug distribution and pharmacodynamic effects at various ages and doses to develop a dosing algorithm. This will be primarily about optimizing dosing based on age. We’ve seen a strong correlation using P1NP in the studies we conducted. We will present a considerable amount of data detailing our dosing algorithm without providing excessive specifics since we are in the middle of a blinded study, which limits the amount of information we can share. However, it should be sufficient to indicate that the drug is effective. We will establish how to dose and prepare for Phase 3, which will be a significant update for the program.

Okay. That’s very helpful. Thank you.

Thank you. And our next question comes from the line of Chris Raymond with Piper Sandler. Your line is open. Please go ahead.

Yes, thank you. I have a couple of questions unrelated to Angelman if that's alright. First, regarding the Regeneron deal, I believe you have mentioned Emil before in relation to the potential second drug, setrusumab. It appears that Regeneron faced some challenges during development due to serious adverse events at the end of 2020, which caused some silence on their part. However, it's unclear whether these fatalities were connected to the treatment, though there does seem to be a safety signal. Could you elaborate on your perspective regarding that molecule, Emil, and its path forward? Additionally, in response to Cory's question about setrusumab, I recall you suggesting previously that this could represent a significant opportunity, potentially outpacing demand for treatment compared to XLH. Could you provide some insight into the market opportunity you foresee? I’m also considering this as a major catalyst either by the end of this year or early next year.

Sure. Regarding Setrusumab, I need to refer you to Regeneron for details on their program. From our assessment of their study, they included very advanced patients with significant health issues. Our conclusion is that the drug isn't responsible for their conditions; these patients are simply very ill due to their advanced disease, which gives us confidence in the situation. While the drug may have some side effects, its impact on the disease is so significant that we believe it should be approved. Regeneron is currently working on their development strategy, and I’ll leave that to them, but we are optimistic about the product based on our observations. Setrusumab can treat both Type 1 and Types 3 and 4 OI patient populations. Type 1 patients experience fractures, which can vary in severity; some have occasional fractures, while others face more serious issues. Types 3 and 4 patients are severely affected, often experiencing significant physical deterioration, much worse than a child with XLH. There is an urgent need for better treatments for these patients. We have been exploring options for the last few years, and we are impressed with the potency of Setrusumab among anabolic agents, which has shown the potential to normalize bone strength in models. In their study, the drug demonstrated a notable improvement in lumbar spine bone density, specifically in patients in Types 3 and 4 who commonly face spinal collapse. The drug achieved an 8% to 10% increase in bone density within just one year, which substantially exceeds any other anabolic agent's results in that area. We believe this improvement in lumbar spine health for young patients could be transformative, shifting the focus from managing broken bones to enhancing growth and function. Given the severe unmet need, we anticipate strong demand. Furthermore, when speaking to key opinion leaders, it’s evident that clinics often see 50% to 100% more OI patients than XLH patients. The prevalence of OI could be higher than the estimated 60,000, potentially reaching around 50,000 or more, indicating a significant gap when compared to XLH. This underscores the need for new treatment options, and we are well-positioned to address this need with Setrusumab.

Great. Thank you very much.

Thank you. And our next question comes from the line of Brendan Smith with Stifel. Your line is open. Please go ahead.

Hi, Congrats on the progress. And thanks for taking my questions. I was going to ask one on Angelman. Wondering what the cadence of enrollment could look like in the United States. How many patients do you plan on enrolling in the US at two mgs and will you have the ability to adapt dosing or expand the study in the US during the four-month time frame? I guess could there be a US dosing update before your midyear data update?

We have essentially enrolled the four patients that we planned for the two mg dose, and they are getting started with an agreement from the FDA. Our strategy is to gather enough data from our international patients to return to the agency and discuss potential updates to the US program. I anticipate that we will have a clearer picture by the middle of the year, although it's uncertain whether the protocol for the US will have been modified by then. We aim to collect as much data from our current patients so that we can present a comprehensive package to the agency for their approval. Once we gather the necessary safety information, we hope to align the US protocol with the international one. We will also need to manage the patients currently on the two mg dose, who should complete their dosing by that time, and we plan to enroll them in the next cohort of the expanded protocol we are implementing. While I can't provide exact details, we are working diligently to reach that goal by midyear.

Got it. That's helpful. And then I just had a quick question on the FOP option, with Regeneron. I guess, for Evkeeza, I'm wondering if there are near-term obligations with launches that may factor into negotiations related to the exclusive FOP option.

Well, the two things are not really tied to each other. In our agreement regarding Evkeeza, there are performance aspects that we need to execute on, and that is all agreed to. However, the option doesn't rely on those; it is simply our requirement. The option will depend on when they provide information regarding their plan, and we will have the ability to opt in and start sharing some of the development costs for setrusumab. But the two things are not related to each other at this point.

Hi, Congrats on the progress. And thanks for taking my questions. I was going to ask one on Angelman. Wondering what the cadence of enrollment could look like in the United States. How many patients do you plan on enrolling in the US at two mgs and will you have the ability to adapt dosing or expand the study in the US during the four-month time frame? I guess could there be a US dosing update before your midyear data update?

The patients are essentially enrolled, so we have completed enrollment for the four patients planned for two mg. We are letting them proceed and have an agreement with the FDA to begin. Our plan is to gather enough data from our international trials to return to the agency and discuss updates to the US program. I expect this will happen around the middle of the year. It is uncertain if the protocol for the US will have changed by then, but we aim to collect as much data as possible from the current group of patients. This way, we can return to the agency with a clear package and seek their agreement. Once we have the necessary safety information, we hope to align the US protocol with the international one. We will need to account for the patients on two mg. By that time, they will likely have completed their doses, but we anticipate including them in the next cohort of the expanded protocol we are implementing. While we cannot provide exact details, we will certainly strive to reach this goal by midyear.

Got it. That's helpful. And then I just had a quick question on the FOP option, with Regeneron. I guess, for Evkeeza, I'm wondering if there are near-term obligations with launches that may factor into negotiations related to the exclusive FOP option.

The two things are not really connected. In our agreement regarding Evkeeza, we do have certain performance aspects to fulfill, and that has been established. However, the option is independent of those requirements; it is simply what we need to meet. The option will rely on them providing information about their plan at a specific time, allowing us to opt in and begin sharing some of the development costs for setrusumab. But again, these two aspects are unrelated at this time.

Great. Good afternoon. Thanks for taking our questions. I'll also stay away from Angelman tonight. One, just on Evkeeza, it seems to be more commercially driven, but I was wondering Emil, if I could get your take on ANGPTL3 targeting gene editing approach and whether or not you consider that before you went with Evkeeza. And then secondly, on setrusumab, I guess, can you remind us in terms of how you're thinking powering wise that you're going after fracture versus the bone density that was measured in the ASTEROID study. Thank you.

On the commercial front, there are different aspects to discuss regarding ANGPTL3, but the antibodies we have are very safe and effective. We have just initiated submissions for the gene editing knockout strategies with a few patients, which is exciting, but I believe it will take years to develop. Currently, the focus in gene editing is not on treatment. We're monitoring developments in this field, as our company prefers leveraging existing platforms rather than developing new ones ourselves. What we seek is a viable product to sell now, rather than another early-stage program. In the future, there may be alternatives to Evkeeza for ANGPTL3, but it's uncertain whether that will happen in the next few years or in a decade. It might take time, and it's unlikely that many would invest heavily in gene editing for such a small patient population. Should there be a broader market opportunity, it may come eventually. For now, we are confident in the product we have, which is effective and convenient without any unresolved genetic issues. Therefore, we believe it fits well within our portfolio at this moment while keeping an eye on gene editing advancements, which will have their ups and downs. Regarding UX143, the FDA does not generally view bone mineral density as sufficiently clinical, as there have been cases where it did not correlate well. However, this correlation seems to improve with anabolic agents. The FDA's requirement is to have clinically observed fractures as the primary endpoint. From the ASTEROID data, we observed trends of fracture improvement, though the effects were modest and the duration was too short to draw strong conclusions. We believe the bone mineral density improvements and fracture trends in higher dose patients will be clinically significant. It's important to note that the ASTEROID study focused on adults, whose bones respond differently than children's. Our experience with XLH showed that pediatric patients provide a stronger efficacy narrative. Thus, we expect UX143 to yield even better fracture results in kids since their bones respond and remodel more quickly. Historically, interventions have been more effective in children; for example, in XLH, we achieved 80% of the expected benefits in just nine months instead of the anticipated two years. This outcome may have surprised some, but as a pediatrician, I appreciate seeing children improve, which is why I pursued a career in pediatric medicine instead of gene therapy.

Thanks very much.

Thank you. And our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is open. Please go ahead.

Hey. Thanks for taking the question. This is Elizabeth on for Salveen. For your 2022 Crysvita guidance, just wondering if you could comment on the breakdown you expect may come from North America versus the other rest of world geographies?

Well, generally, we don't make that breakdown from the sole purpose of allowing Erik the room to do what he has to do to get the sales there. But Erik, I don't know if you want to comment. I don't think we've made the breakdown in the past.

I'll provide a brief comment based on the numbers, and then you can chime in. Last year, the North America territories generated $171 million, and while we didn't provide a detailed breakdown of other product sales, most of it came from Crysvita in Latin America, totaling around $21 million. This illustrates the significant difference in our guidance. We are observing robust growth for Crysvita in Latin America, but the primary growth and largest figures are clearly from North America. Erik, do you have anything to add?

Exactly what I was going to say.

Thank you. Great.

Thank you. And our next question comes from the line of Joseph Schwartz with SVB Securities. Your line is open. Please go ahead.

Thanks very much. At the past conference, I guess I'll preface this by saying my first question is on Angelman and my second is not. But at the FAST conference late last year, Dr. Dindo emphasized the value of preclinical models for Angelman. And so I was wondering if particularly the pig model. And I was wondering if you've studied GTX-102 in the pig model and if so, what did you see with respect to the therapeutic index and dose response of GTX-102. And then is any of that value in working out to be in line with what you're observing in patients now.

Dr. Dindo discussed the relevance of animal models, especially considering Texas A&M's background. The pig model was recently developed, but we haven't collected data on it yet, as we are currently focused on clinical trials. While the pig model shows interesting behavioral traits similar to those of individuals with Angelman syndrome, we have not conducted enough research to draw conclusions. This model could potentially assist in refining our molecule or exploring various approaches. However, the fundamental understanding of the therapy comes from working directly with human patients. While we might explore biomarkers in the pig model, any validated biomarkers will likely emerge after we have already completed our clinical program. Ultimately, our immediate future relies on the outcomes of our clinical work, and while animal models can enhance our understanding, they won't define our clinical path.

Okay. And then given your seamless Wilson disease study, we'll have a decision or data points. I was wondering if you can give us a sense of when we might hear something first about the effect and the dose that will be taken into the pivotal portion of the study?

We will conduct an interim assessment of the program. However, due to the blinded nature of the program, we cannot share all the data we have. The study just began, so we won't have the interim results this year. We expect to understand the dosing response and confirm the drug's effectiveness and its impact on important markers, allowing us to select a dose and move forward. We'll provide detailed information, but we must be cautious not to compromise the objectivity of the Phase 3 study. Nonetheless, we should be able to clarify the drug's dosage and confirm our progression to Phase 3.

Thank you. And our next question comes from the line of Joon Lee with Truist Securities. Your line is open. Please go ahead.

Hey, thanks for taking the question. For the Angelman data by midyear, is your goal to have all Canada and UK patients on the 14-milligram dose before you top line the data? Do you have sufficient time to get all those patients to 40 milligrams, or do you have the ability to skip a few doses between the studying dose and the maximum 40-milligram dose? And what is your definition of midyear?

Very interesting. We'll start with the last, the midyear is Q2 or Q3 it's broad enough to really be annoying to all of you. So that's why we pick it that way. But the truth is we have to get through a number of steps and get the study executed. The study has a protocol they escalate after two doses and then they can escalate every three months during the maintenance phase further. However, getting to 14 will take a number of months if we were to get there. So your question is can we just jump doses, not in normal clinical protocol to jump doses. So we are going to look at data we have as we get to midyear. And our expectation instead of jumping doses will continue to monitor. We'll add an expansion cohort, which will jump up another level and then titrate from there. This will hopefully give us that dose; this dose somewhere between all of that information we'd expect to have clarity later in the year regarding the dose. I think we've seen so far there is a therapeutic window. We just need to figure out what it will take to get the dose that gives us the kind of efficacy we think would be meaningful for patients.

Got it. And then quickly are there any more planned meetings for the Data Safety Monitoring Board or is there no prespecified?

Well, yes, the two prespecified were related to the further enrollment or expansion of the enrollment. That's how those have happened, but they will meet on a regular rhythm cadence, because they need to continuously evaluate safety that's ongoing. Of course, if a lower extremity then happen they would be notified immediately and have an ad hoc meeting, but there is a regular cadence that they are going to be doing. But there's no special trigger yet except an event. Otherwise, it's a regular cadence of meetings as they go forward.

Thanks for taking the question. For Evkeeza, what considerations beyond the indication were there for the partnerships, such as you mentioned geographic expansion to APAC and further into Europe? And then how important is the potential for the expansion?

In terms of considerations, the key for Regeneron is to commercialize in all the regions where we support patients, including those involved in the trial, such as patients in South Africa and other locations. We are committed to supporting any patient in any country and have to commercialize in a wide range of countries as part of our efforts. With Asia in focus, we aim to utilize the Evkeeza tool, which includes data from Japanese patients, and we have engaged with Japanese key opinion leaders who are very positive about the study and eager to help us achieve quick approval in Japan. We already have a submission package potentially filed in Japan, which will facilitate our entry into that market sooner. This will be part of our immediate filing expansion. I don't think further details are necessary at this moment. Regarding the development program, we are assessing the existing data set they possess, and at the appropriate time, we will have discussions about the next steps. Currently, the drug is demonstrating a significant and beneficial impact for patients, and I believe most patients would want to be treated with it. We are very optimistic and intend to proceed from here.

Thank you. And our next question comes from the line of Liisa Bayko with Evercore ISI. Your line is open. Please go ahead.

Hi. Yes. I just have a quick financial question. Most of my questions have been answered, but could you provide some guidance regarding this year's spending for Angelman? I've noticed that your R&D number is slightly higher. Is that a reasonable rate to consider, or could you outline the expectations for the year, particularly concerning R&D? Thanks.

Sure. There is clearly some increase in spending as Mardi has explained in more detail. There have also been some one-time items involved. Mardi, could you provide some clarity on this?

Yes. We highlighted the $50 million upfront for the collaboration that's in there. But right now with our development pipeline in late-stage programs and our work in gene therapy, etc., we do think we'll have some growth in R&D going into 2022 mostly on the R&D line. I would say other than the focus on Evkeeza as we build out the reimbursement in multiple countries in Europe will stay pretty much the same. But we would expect to see continued growth in our for the next year for sure.

Okay. Thanks. And then just on Angelman's. Are there any biomarkers or things like that that you're looking at to help guide you and that would be sort of indicative of kind of telling with respect to the other metrics you're looking at?

Sure. First of all, the soluble biomarkers such as UBE3A were initially thought to be present in spinal fluid, but it seems they were likely a result of blood contamination since UBE3A is found in blood cells. This means that the trace amounts of UBE3A detected might be due to a bit of blood leaking during the tap, indicating that they are probably not valid biomarkers in spinal fluid. Instead, I would focus on neurophysiology, specifically looking at Delta power in EEG readings. The EEG doesn't rely on patients' perceptions or actions; it assesses neurological function. We have shown updated data on the EEGs of patients involved in the trial, examining both epileptiform activity and Delta power assessments, which revealed significant changes in neurophysiology among those patients. This suggests that the findings are not just subjective but are supported by neurophysiological evidence. I view neurophysiology as the most informative type of biomarker, indicating that there are fundamental changes occurring, and these highly abnormal brains are beginning to respond differently to stimuli than they have in the past.

Okay. Thank you.

Thank you. And our next question comes from the line of Joel Beatty with Baird. Your line is open. Please go ahead.

Hi. Thanks for taking the questions. First one is on SKUs outside of the US. After approval how fast could the ramp-up in sales be compared to what might otherwise be typical for a rare diseased drug? And then the second question is for Wilson's disease in the Stage 1 part of the trial, how much potential is there at that time to learn about any efficacy on neuro endpoint?

Okay. So the first question on outside the US was about Evkeeza or something else?

Yes Evkeeza.

So it's a little hard for us to guide for sales outside yet. I mean I think this year is going to be about reimbursement in Europe, getting it set and going. And the other countries are going to be somewhat behind them, so I wouldn't be able to tell you much about how the growth is going to be. But I would expect that an ex-U.S. launch, it's going to take a couple of years of filings and approvals and reimbursement work to get dramatically going. But this year is all about Europe and that's what the team will be focusing on. With regard to Wilson, there are some neurocognitive Wilson scales that are in the program. However, remember a lot of the patients may not have abnormality at that – at the beginning, so if you were talking about the people that do have score abnormalities, trying to determine the difference would be hard to do on dosing. So we're going to focus the dosing on the biomarkers of copper control and there's really good data to say that copper control in various forms should give us the right answer on dosing. Basically, I would say to you that, if all things equal, if the highest dose gives us the highest ceruloplasmin levels, which it likely would and assuming that it's safe – same safety as the e13 does, I would think the highest is going to end up most likely to be the dose.

Great. Thank you.

Thank you. And our next question comes from the line of Laura Chico with Wedbush. Your line is open. Please go ahead.

Good afternoon and thanks for squeezing me in. I just have one on Angelman. Assuming the best-case scenario and you're advancing towards pivotal studies, I'm wondering if you could talk about kind of on the execution side, what would be a feasible number of recruitment sites in the U.S. Thanks.

That's a very interesting clinical question, Laura. We've discussed this topic quite a bit. Typically, studies tend to involve a large number of sites, but I believe that the most successful studies often utilize a smaller number of exceptional sites, and that will be our approach. There are many Angelman patients and centers with ample patients. If the data from our Phase 2 study is as promising as we anticipate, I think we will be able to enroll enough participants. We just need sites capable of managing intrathecal administration and the necessary support services to conduct a substantial study. While we haven't established a specific target, I expect the trial will involve more than 100 patients, likely under 200. Consequently, it will be an international study, not limited to just the U.S. We aim for it to be a six-month study focusing on the clinical effects observed during the loading period. I can't provide a precise number for the sites right now, and I don't want to make any predictions about that. Regarding your concern about competition for patients and sites, there are indeed other programs in Angelman, which may lead to competition for patients. However, there are many Angelman patients overall, so we believe there will be sufficient participants to enroll in our studies, even with other programs in the mix. More importantly, demonstrating the effectiveness of our drug safely in Phase 2 will pave the way for everything else if that is successful.

Thank you. And this does conclude today's question-and-answer session. I would like to turn the conference back over to Joshua Higa for any further remarks.

Thank you. This concludes today's call. If there are any additional questions, please contact us by phone or at ir@ultragenyx.com. Thanks for joining us today.

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