Ultragenyx Pharmaceutical Inc. Q3 FY2023 Earnings Call

Good afternoon, and welcome to the Ultragenyx Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, you will have an opportunity to ask questions during the Q&A portion of the call. It is now my pleasure to turn the call over to Joshua Higa, Vice President of Investor Relations.

Thank you. We've issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. Joining me on this call are Emil Kakkis, Chief Executive Officer and President; Erik Harris, Chief Commercial Officer; Howard Horn, Chief Financial Officer; Eric Crombez, Chief Medical Officer; Aaron Olsen, Senior Vice President of Corporate Strategy and Finance; and Ted Rozinka, Chief Accounting Officer. I'd like to remind everyone that during today's call we will be making forward-looking statements. These statements are subject to certain risks and uncertainties and our actual results may differ materially. Please refer to the risk factors discussed in our latest SEC filings. I'll now turn the call over to Emil.

Thanks, Josh, and good afternoon, everyone. Before we get started, I'd like to welcome our new CFO, Howard Horn to the call. To say he has hit the ground running is an understatement. He already has an Ultragenyx Analyst Day and a financing under his belt. We're happy to have him on board as we prepare for our Catalyst Rich 2024. It's great to see many of you at our Analyst Day a few weeks ago. We hope that the new data shared along with the positive clinical impressions of the investigators on two of our programs showed you why we have confidence in our lead therapeutic candidates and their potential to transform debilitating diseases with limited or no treatment options. We kicked off the day by sharing new data from the Orbit study for setrusumab in osteogenesis imperfecta, which has been presented a few days earlier at ASBMR, the American Society for Bone Mineral Research 2023 Annual Meeting. Interim data from the Phase 2 portion of the study demonstrated that setrusumab significantly reduced the analyzed fracture rate by 67% after at least six months of treatment and continue to demonstrate ongoing substantial increases in lumbar spine bone mineral density reaching 19% in just six months in the younger patients. We also provided an update on our GTX-102 program in Angelman syndrome. The data we covered was longer-term extension data from the dose escalation cohorts in the Phase 1/2 study and it showed that treatment with GTX-102 resulted in clinically meaningful improvements across multiple domains through both the loading and maintenance phase of treatment. The improvements we saw in Bayley and the interim severity assessments, formerly known as the CGI-S severity scale, were also supported by objective changes in EEG and comparisons to natural history. We also looked at the emerging first-ever development changes from three of the original US patients. When these patients stopped receiving GTX-102, they lost these first-ever developmental gains but were able to gain these skills once they began treatment with a new dosing regimen. Other patients also saw many first-ever developmental gains, which gives us confidence in the potential transformative effect for this neurodevelopmental disease. These first-evers are very important to the families and highlight the clinical meaningfulness of the changes we are observing in the quantitative assessments. The third program we highlighted was our UX701 AAV gene therapy for Wilson disease. We provided data on the five patients in the first lowest dose cohort at 5E12gc per kilo, where four of the five patients showed improvements in copper trafficking and have begun tapering off standard of care with key layers and/or zinc therapy. This includes two of the earlier treated patients who are now completely off standard of care and doing well. Eric Crombez will provide more detailed updates on these programs later in the call. But it's clear we have three large value programs all generating data that meaningfully derisks the probabilities of their success. Now, I'll turn the call over to Erik Harris to provide an update on our commercial efforts for the first quarter.

Thank you, Emil, and good afternoon, everyone. After five years of successfully commercializing Crysvita in North America, this responsibility was transitioned to Kyowa Kirin on April 27, 2023. As part of the transition, a small Ultragenyx field team and patient support services team was kept to help the Kyowa Kirin field team to find and start diagnosed patients while ensuring a smooth handoff. With the combined field efforts, the demand for start forms throughout this year has remained strong and is greater than what we saw during the same period last year. In recent months, the majority of the start forms have come from adult patients, which further supports our strategy of expanding the search into community physicians to find these patients. The two teams are working hard to ensure patient and physician continuity while continuing to identify new subscribers and patients. Shifting to Crysvita in Latin America. As of Q3, 2023, there are over 460 patients on reimbursed therapy, which includes approximately 50 new patients who began from commercial therapy in this quarter. This year alone we have converted approximately 150 new patients to the commercial drug in this region. The Latin America team has continued to build solid momentum, further strengthened by the recent reimbursement approval for pediatric patients from the largest public payer in medical called IMSS. Crysvita is approved in six countries in Latin America including Argentina, Brazil, Chile, Colombia, Mexico, and Peru. Brazil continues to be the largest market in Latin America and we continue to see growing demand in this country. While the uneven ordering patterns in Brazil will drive some quarter-to-quarter variability, the underlying demand remains strong. Today, we are reaffirming the Crysvita guidance we issued at the beginning of the year, the range of $325 million to $340 million, includes all regions in all forms of Crysvita revenue. More specifically, it includes Crysvita product revenue from Latin America and Turkey and the cash and non-cash royalties from North America and Europe and the collaboration profit share revenue prior to the transition. For Dojolvi in North America, the demand for start forms remains strong. In the US, we have added nearly 19 start forms and converted over 70 patients to reimbursed therapy throughout this year. We continue to expand the number of treaters of Dojolvi in the US, adding 30 new prescribers this year including some healthcare professionals in the field for neuromuscular medicine. In Canada, we continue to make progress following a positive opinion from Care Act, completing pan-CPA pricing negotiations and signing listing agreements. Outside of the US, there continues to be growing demand for Dojolvi. In Latin America, our commercial teams are continuing to identify more patients and we expect demand will continue to steadily increase over time. Across Europe, we continue to deepen awareness for LC-FAOD in key stakeholders and address the high unmet medical need through main patient and early access programs. Requests are coming from across all major European markets as well as Greece, Israel, and the Middle East. Today, we are reaffirming our 2023 global Dojolvi revenue guidance range of $65 million to $75 million, the range we announced at the beginning of the year. Lastly, on Evkeeza, we continue to make progress in major markets in Europe and the Middle East. Evkeeza is now approved in Germany, where we have started to convert patients to the commercial drug. In many other countries, the demand is steadily growing as patients gain access to Evkeeza through various early access programs. In Canada, we received marketing approval from Health Canada for adult and pediatric patients aged five years and older for HoFH. We also continue to make steady progress in Japan, where we have meetings scheduled later this year with the Ministry of Health, Labor and Welfare to discuss pricing and reimbursement. Across all regions, we have received overwhelmingly positive feedback for Evkeeza from KOLs and patients, who have continued to highlight significant unmet need for this disease and the importance of this potent new treatment. We continue to respond to many urgent requests for early access and our teams will continue their efforts to bring this product to people living with HoFH as quickly as possible. In closing, we are reaffirming our 2023 total revenue guidance range issued at the beginning of the year of $425 million to $450 million. With that I'll turn the call to Howard to share more details on the financial results for the quarter.

Thanks, Erik. It's great to join the team for today's call. Before we get into the numbers, I'd like to thank Ted, Aaron, and their teams for all of their contributions over the last year. They implemented a number of important initiatives around financial discipline, which have contributed to the strength of our current financial position. I will briefly summarize the financial results that were included in the press release we issued earlier today, starting with revenue. Our total revenue for the third quarter was $98 million. Crysvita revenue for the third quarter was $75 million, which included $50 million from North America, $19 million in product sales primarily from Latin America, and approximately $6 million in European royalty and other product revenue. As we have previously disclosed, the third quarter US Crysvita revenue was negatively impacted by a one-time decrease in channel inventory related to Kyowa Kirin's change from Ultragenyx-labeled product to Kyowa Kirin-labeled product, as part of the transition of North America commercialization responsibilities. Again, this is a one-time change and we expect Crysvita channel inventories to increase to more normal levels at the end of the year. Dojolvi revenue for the third quarter was $7 million, with North American demand driving 25% growth versus third quarter 2022. Shifting to expenses, our total operating expenses for the third quarter were $243 million, which included R&D expenses of $157 million, SG&A expenses of $75 million, and cost of sales of $11 million. Operating expenses for the quarter included non-cash stock-based compensation of $35 million. For the third quarter, net loss was $160 million or $2.23 per share. As of September 30, 2023, we had $524 million in cash, cash equivalents, and marketable securities. After the end of the quarter, we raised an additional $326 million from an underwritten public offering of common stock and prefunded warrants. Through the third quarter, net cash used in operations was $391 million. We expect fourth quarter net cash used in operations to be around $35 million, driven by anticipated strong fourth quarter revenues and factoring in expected changes in working capital. As a result we now expect full year net cash used in operations to be around $425 million. The team has worked hard over this past year to ensure we are in a strong financial position and we will continue to build on these efforts going forward. Now, I'll turn the call to our CMO Eric Crombez who will provide an update on our key clinical programs.

Thank you, Howard, and good afternoon everyone. Emil mentioned the key clinical updates we shared at Analyst Day and I'll provide just a bit more detail on our priority programs. Starting with UX143 or setrusumab for the potential treatment of osteogenesis imperfecta. The data we presented at the Analyst Day supports our view that this is a disorder of inadequate bone production as much as it is about defects in collagen. Across the 24 patients enrolled in the Phase II portion of the ORBIT study, we saw an improvement in bone mineral density Z-score of 0.85 at six months. Importantly, a subset of 5- to 12-year-olds saw nearly a 20% increase in bone mineral density with a Z score change of 1.19. These improvements in bone mineral density across the 24 patients treated in the Orbit Phase II translated to a 67% reduction in the annualized fracture rate following treatment with setrusumab for at least six months. 20 of the 24 patients did not experience any new fractures in the six months following treatment with setrusumab. For the four who did have a radiographically confirmed fracture, many of them occurred early on in treatment or had a traumatic precipitating event. The data is all the more compelling because many of the patients in this study were previously treated with bisphosphonates over the two years prior to dosing with setrusumab. During this time, these patients continued to see a high annualized fracture rate with many fractures occurring with very minimal activity. These types of fractures are referred to as fragility fractures and examples include fractures occurring during sleep or when transferring out of a chair. What we heard from two principal investigators who joined us at Analyst Day is that they are not seeing fragility fractures in these study patients treated with setrusumab and that many of these kids are now feeling strong enough to engage in more physical activities with friends and family. Next, turning to GTX-102 for the potential treatment of Angelman syndrome, where we showed clinically meaningful improvements across multiple domains for the patients in the loading and maintenance phases of the dose escalation cohorts 4 to 7 with the long-term extension data. We showed improvements compared to natural history data and supportive EEG data providing further evidence that the changes we are measuring are meaningful and improving over time. We also shared data from three of the original US patients who stopped and restarted treatment. These patients gained lost skills and regained a number of skills including following complex directions, communicating needs and wants, and improved behavior and sleep. These changes show the importance of GTX-102 to enable continued development in these patients with the hope that they will continue to learn and develop new skills. Dr. Elizabeth Barry Kravis, who is a principal investigator for the study took us through a few video examples of what these developmental improvements translate to for her patients and their caregivers. Dr. Barry Kravis has been working with Angelman patients in her clinic for decades and noted that it can take years for these patients to learn a single new skill. So the fact that these patients are learning multiple things in such a short amount of time is remarkable. Enrollment in the dose expansion cohorts, cohorts A through V continues to go well and we anticipate sharing data from at least 20 patients who have been on therapy for at least six months in the first half of 2024. Lastly, UX701 for the potential treatment of Wilson Disease, which is a disorder of copper trafficking. As Emil mentioned, we are seeing a response in four of the five patients treated in the first dosing cohort with patients two and three completely discontinuing their chelators and/or zinc. At Analyst Day, we said that Cohort 2 receiving a dose of 1e13 has been fully enrolled. The DSMB is scheduled to meet soon to review the available data which will enable initiation of dosing in the third and final cohort in Stage 1. The five patients for this last dose escalation cohort have been identified and meet enrollment eligibility. We expect dosing in this cohort to complete around the end of the year. The improvement in copper biomarkers and ability to reduce current standard of care are promising signs of the establishment of normal trafficking of copper in these patients, and we look forward to sharing additional progress with this important gene therapy program. I'll now turn the call back to Emil to close with the key upcoming milestones and provide some closing remarks.

Thank you, Eric. I'll summarize the key upcoming clinical catalysts and before we open up to Q&A. Starting with UX143 for osteogenesis imperfecta, enrollment in both the Phase 3 studies is going well with strong support from the medical community following both of our data releases this year. We're enrolling at 50 sites around the world and are targeting complete enrollment in the first quarter of next year. We also expect to provide another longer-term data update from the Phase II portion of the study next year. Next, GTX-102 in Angelman syndrome. Based on the patients who are currently enrolled in the dose, we are on track to provide an update on the expansion cohorts in the middle of the first half of 2024. And as we have said, it will include at least 20 patients' data. We've been on there for at least six months and include longer-term efficacy data on early enrollees and a safety update on the total exposed population. Closing with our gene therapy program DTX401 for GSD 1a, we dosed the last patient in the pivotal study earlier this year. We're now in the 48-week window and expect to unblind and share the Phase 3 data in the first half of 2024. US 111 for Sanfilippo syndrome. We are continuing to see meaningful clinical responses in these patients and we're working with the FDA around biomarkers to help support an accelerated approval filing. DTX301 for OTC is enrolling patients in Phase 3 and we expect the last patient to be dosed in the first half of 2024. UX701 for Wilson's Disease should have all patients dosed in Stage 1 this year and we expect to provide safety and efficacy data on all of these patients in the first half of 2024. We've worked hard over this past year to ensure we are in a strong financial position heading into 2024 and beyond. We continue to see growing demand for our commercial products and completed a financing that gives us the ability to advance our large value program through meaningful inflection points. We've been employing more aggressive financial discipline including realigning our headcount, restructuring in places and doing the work we need to make sure we're putting the people and capital where we have the ability to generate the most value. Ultragenyx has come a long way since our humble beginnings. As I said at Analyst Day, we expect to have around 8 to 12 approvals in our first 15 years post IPO and these are for extremely debilitating diseases with an urgent need for treatment options. I think that really demonstrates the responsibility we feel to lead the future of rare disease medicine. With that, let's move on to your questions. Operator, please provide the Q&A instructions.

Thank you. One moment for questions. Our first question comes from Anupam Rama with JPMorgan. You may proceed.

Hey, guys. Thanks so much for taking my question. And welcome Howard. Hope you're well. So I got a quick broader question here which is what are you monitoring here for the Sarepta DMD gene therapy regulatory review process that could maybe potentially read through to your broader gene therapy efforts and pipeline? And then on one of your gene therapy programs, specifically, 401 and GSD1, we heard a little bit about that program at R&D Day, but maybe you could help us define a win scenario for that program when you flip the card and maybe help us understand the market opportunity a little. Thank you guys so much.

Very good. Thank you for the question. So as everyone knows, the Sarepta Phase 3 trial showed that the primary endpoint of the NSAA was hit strongly alongside other endpoints. I think it shows that the drug is working. I think the NSAA is a terrible endpoint and frankly I have said we would never want to work with that endpoint because it's just a clinician score, so it's not so surprising. I think the drug shows it's working and it will be up to Sarepta to manage that forward. What I would say in the broader context for our own program is that the ability to deliver microdystrophin having an important clinical benefit in these patients is still a first step in a path toward improved care for these patients. But I think in general it says that these microdystrophin gene therapy programs can work and we're still encouraged and still pressing our own program ahead in development. Regarding 401 GSD1a, we think there's something around 68,000 patients and about one-fourth of that would be US patients. The majority of these patients, like 80-plus percent of the patients, are null or have very little to no enzyme. What that means is 80% of the patients are severe, putting them at risk of dying if they miss a dose of cornstarch. These patients have essentially been forced to take cornstarch every day. The driver for adoption is the peace of mind of knowing I'm not going to die if I forget to take my cornstarch. And we think that's a big driver. We believe it's one of the reasons why the Phase 3 trial enrolls so quickly; people really wanted to get off this treadmill they’re on with cornstarch and blood sugar control, fearing that every night could pose a risk of death if something went wrong or if they go exercise they could collapse and become hypoglycemic. So we think there's a big demand and drive. Of course, cornstarch is not commercially costly, but I do think the peace of mind and stability of having people live without fear is substantial. We have high hopes that the adoption of the treatment will be more aggressive just as it was in the enrollment of the trial, which enrolled very quickly. In fact, we had a lot of people upset when we closed enrollment and they couldn't get into the trial. So we think the demand is going to be there. And while it's not a huge program, we think 8,000 patients is significant, and we expect there to be early adoption for that program. I do think that the clinical need is important, and we’ve certainly seen that for this program. So I'm pretty encouraged so far.

Thanks so much.

Thank you. One moment for questions. Our next question comes from Dae Gon Ha with Stifel. You may proceed.

Great. Good afternoon. Thanks for taking our questions. Two maybe on GTX-102 and setrusumab. Just wanted to clarify on setrusumab Emil, did you say enrollment completion in 1Q '024? Is that for both Orbit as well as COSMIC? And are you placing any protocol restrictions on strenuous activity? I mean it’s encouraging they’re being more active and fearless, but in terms of endpoints I wonder if that could kind of create a confounder. For GTX-102 update in the first half of 2024, what kind of data should we be expecting? You had ASA MDRI as well as Bayley-4. But if you could frame that for us, that would be great. Thanks so much.

Very good. Thank you. So for setrusumab, we're talking about both Orbit and COSMIC in terms of finishing enrollment. I think we're likely, but the main one we're talking about is Orbit, which is the main driver; I believe both of them should get done in that time frame. And in terms of this control of exercise or the hazard risk, if someone is feeling better and exercising well, that’s already what's happening in Phase 1. People were a lot more active, and what was actually on the plus side is that they were active, and a lot of them were not falling and having fractures necessarily. So while there is some risk that they might be doing more, there was one person who played volleyball and they hadn't been playing before. Overall, we feel that the pattern of having falls and fractures seems to be better. Our net effect is that even with increased activity, there will be a reduction in fractures, which is really the best possible outcome, that is for the kid to be active and to have a reduction of fractures while being active. So we're not that worried about the potential noise of having more fracture risk at this point. It looks like we will still see the effect, even if there is some risk involved. Now, with regards to GTX-102, I expect the data to be many of the same things you've seen, which are the Bayley scores, which will compare, of course, to the natural history data for the main three endpoints we talked about, and there are three other that we looked at for the ASA. There are other endpoints we do describe, and we indicated that there were patterns of response to those. But I would look for data to be very similar to the package of data that you saw recently; we're probably doing something along the lines of what you saw before in terms of comparison to natural history. We will try to include enough information to interpret the quantitative changes and consider the meaningfulness of those changes, which I think is one of the debates. And we’re certainly going to look at emerging skills as well in those patients as best we can. So those are the things I think you'd expect to see. It should be 20 patients with 6-month data. There will probably be 10 patients that have longer data out of the 254 and there will be more than 30 patients worth of data of any type. So it should be a fairly robust set of data. I'm looking forward to that.

Thanks. Next question.

Thank you. Our next question comes from Jeffrey Hung with Morgan Stanley.

Hi. This is Michael Riad on for Jeff Hung. Thank you for taking our question. For setrusumab, how do you think regulators will view the clinical benefit for younger patients who are still developing versus adults who are more or less finished growing? Is there any appreciation for the ability to prevent fractures and complications potentially like bone deformations? Thanks so much.

Well, I think you're hitting on a really important point. Let's talk about what the FDA asked for. They wanted to have the major clinical fractures, excluding fingers, toes, and skull, as the endpoint because they feel those are the most clinically meaningful. However, what they think is one thing—they're dealing with fractures from osteoporosis. The truth is what you talked about is really important: that the vertebral fractures and other types of fractures that would develop as deformation of the bone are actually things that drive very poor outcomes. So our trial, which will have pediatrics and also has a very young group of patients, will look at not just clinical fractures but also for skeletal fractures and other fractures which we think will be beneficial. I think we'll be able to show the clinical fractures and hit the FDA's required endpoint, but we hope to be able to expand that to talk about other aspects of the disease, particularly in the very young patients in the COSMIC study and to demonstrate how support for their vertebral bone would not result in the kind of degeneration that leads them to become wheelchair-bound. I think that would be an amazing result. We're going to see what we can do. But based on the substantial lumbar spine bone mineral density improvement of 20% in some of the young kids, we expect this line to be strong and to change the future of not deforming like they've experienced historically. I would say we can prove the FDA approval, but the broader acceptance of the treatment and its reimbursement will be supported by the overall body of data which we are including in our plan.

That’s really helpful. Thank you so much for your time.

Thank you. One moment for our next questions. Our next question comes from Yigal Nochomovitz with Citi. You may proceed.

Hi, team. This is Carly on for Yigal. Thanks for taking our question. We had one commercial question. It looks like you're expecting a pretty significant reacceleration in revenues in the fourth quarter in order to meet the guidance range. Now you mentioned an inventory impact to Crysvita during the third quarter. But can you talk a little bit more about your assumptions driving that acceleration in revenue that you're expecting? Thank you.

Sure. Let me—I'll hand it over to Erik. The fourth quarter has a lot of differences in how things perform. There's always a lot of lumpiness as well. But Erik, if you want to deal with your thoughts on how revenue is going to go in the fourth quarter?

Yes. I think if you look at previous years, we've always had a strong fourth quarter. So it's typical seasonality, which will also this year entail some inventory rebuilding following the NDC swap. As I stated earlier, demand remains very strong. In fact, our demand in North America is higher than it was at this point last year. So we remain confident that we'll see a strong fourth quarter.

Yes. I think if you go back and look, you'll see every fourth quarter has been an up quarter. So we're on track. We feel pretty good about where we are in the business.

Okay. Great. That's helpful. And then maybe just one follow-up related to the Wilson program. how you're thinking about the size of the addressable population for a gene therapy of Wilson and maybe what you're hearing from KOLs about the proportion of patients not well managed on chelators and on the more severe end of the disease spectrum that could be addressable? Thank you.

Yes. I think the Wilson market potential is an important question. The 50,000 to 60,000 patients could be more because it's underdiagnosed in my view. You can look at it as maybe the 20% of patients that aren't well managed as the core indication. But I think with the dropout of the Alexion AZ Chelator as a competitor and showing that just chelation is not sufficient to make patients better—the door is open to the idea that improving copper distribution could make patients feel better, do better than you can get just with a chelator, which means it might not just be 20% that have problems with their chelators; it could mean more patients, potentially a majority of the group that have Wilson disease. We're encouraged that patients are getting off their chelators, but I think we’re also really encouraged that the copper distribution seems to be improving even at lower doses and that patients seem to be feeling really good. My hope is if we restore copper distribution that the effects of copper deficiency, which occurs in Wilson's disease, overlaying copper toxicity, is a real factor. If we can make people feel much better and perform better, I actually think there's potential for this to be a big indication that can cover a larger population. Because our ability to manufacture with the Pinnacle platform in our own plant keeps the costs really low; it also means that we can manage the pricing in a more intelligent way, which would allow a larger fraction of these patients to receive therapy and create a more sustainable business model than one based on a $3 million price point per person, which poses challenges. So we see the potential here as greater than originally anticipated, if we can improve the well-being and outcomes of patients with Wilson disease. I think there is a real chance for that with the Wilson gene therapy.

Great. Very helpful. Thank you.

Thank you. One moment for questions. Our next question comes from Tazeen Ahmad with Bank of America. You may proceed.

Hi. Thank you so much for taking my question. Emil, maybe just wanted to clarify one point. When you talked to the FDA about downsizing the OI Phase 3 trial, you were supposed to get specific feedback on that. Just wanted to hear your thoughts on what the FDA's view on that particular request was or if you're still waiting to hear back. Thanks.

Yes. We haven't really discussed the details of going through that, but the plan on the Phase 3 with the addition of the interim assessments we think won't be a problem. But we haven't really disclosed any ongoing discussion with them, but we're comfortable with our ability to get the interim set. The size of the study is really up to us. In terms of safety, the exact trial size of above 100 patients is more than adequate. So we'll come up with a plan with them, but I'm not concerned about our ability to get that accepted.

Okay. Thank you.

Thank you. One moment for questions. Our next question comes from Kristen Kluska with Cantor Fitzgerald. You may proceed.

Hi, everyone. Thanks for taking the question. Can you provide any more color or thoughts around the timing of the interim analysis of the OI study?

Yes. The way the interim will be done; we won't be disclosing when they're happening. We have said that we'd expect a first one to happen this coming year. We want to ensure that patients had at least a certain amount of time on treatment before an interim would be done. The original plan for the program is to operate off of the fracture information regarding how many fractures were essentially event-driven timing. The precise timing we haven't disclosed; it depends a little on fracture numbers, etc. But we said that one will occur next year, but we won't disclose exactly when. It will be an unblinded assessment by the DMC. So we will all be waiting. But we're encouraged by what we're seeing, and the potential of the study could end early. However, we feel confident about the drug’s efficacy and our prospects for completing a positive Phase III.

Thank you.

Thank you. One moment for questions. Our next question comes from Joon Lee with Truist Securities. You may proceed.

Hi, everyone. This is Maddy on for Joon. So on GTX-102 for the three patients who regain some lost clinical benefits after reducing, how do you plan to highlight this significant observation for regulatory agencies? And is it at all possible that time to redose could explain some of these clinical benefits? And I have a follow-up question.

Well, first of all, let's talk about what happened with those patients. Those patients had anywhere from one to five doses and had their clinical benefits affected by a safety event. After being off treatment for around two years, they essentially lost all activity—so when they start up again, they're really starting back from the beginning and regaining the same functions. For the patient who has gained a lot of words, who initially had gained nine to 12 words and is now up to 17 words, that's the same patient who now swims independently without float support. We think that washout period takes them back to the beginning. There’s no relationship between what happened there on redosing effect. If you look at what happened with naïve dosing, we showed a graph at Analyst Day detailing many patients having similar first-ever emerging skills when they first went on treatment. So we think there's nothing special going on with those three that's any different from any of the naïve treatments.

Thank you. The follow-up is on OI. So are there any specific reasons for the preferential suitability of setrusumab on AI versus other anticlotting antibodies like Evenity SHR-1222 or the others?

No. Well, the only other one is romosozumab, or romo for short. Both target the same class, and there are differences. Remember our program, setrusumab, is a fully human antibody, which we think is a better choice for a long-term therapeutic due to the lower risk of anti-drug antibodies. We haven’t seen those. So we feel ours is a better choice for chronic therapy. We will have chronic dosing in our label. That is RS 10. Romo is only 12 months. We think OI patients need continuous treatment, and we’ve shown when you pull them off the drug as was done in the Aster study, they lose growth even with phosphate on board, whereas romo is only given for a year, and the effects are supposed to be locked in, but with OI that's not true. You need chronic dosing. So the chronic dosing story will be ours. And finally, when we commercialize, we're going to offer the first-rate patient support we provide to our rare disease patients—which is not something that's going to happen for an osteoporosis drug. The last thing I'll mention is that the presentation of that drug is a 210-mg prefilled syringe; it's not very adaptive for different-sized patients and different drug dosing, whereas our presentation will allow weight-based dosing for each patient and optimization, which I think is crucial for the ultimate care of these patients. So at its core, both can work, but I believe ours will be a better choice for long-term use.

Thank you very much. Thanks for taking our questions.

Thank you. One moment for questions. Our next question comes from Maury Raycroft with Jefferies. Your may proceed.

Hi, thanks for taking my question. For 701 in Wilson's, what goes into the decision tree for decreasing standard of care? And what is the target reduction in Stage 1? And can you provide more perspective around patient baseline characteristics for the first two cohorts including baseline ceruloplasmin activity?

Yes. Let me provide a little topline and then Eric, if you want to provide a bit more detail. After they get the drug, there's a period of time where we monitor how they’re doing and then we start titrating down their standard of care. The goal in the trial is to get them off standard care completely, like the first two patients. The others I think are going to get there. I’ll let Eric talk about what the criteria are. In terms of baseline, we haven't disclosed all the information in great detail, but maybe Erik you can provide additional details that may help answer Maury's question about standard of care strategy and then the baseline.

Yes, great. It's nice that we're able to do this in an open-label fashion that gives us the ability to work closely with these investigators. But the goal really is to give all patients a trial of titration off of current standard of care. What's nice about this disorder is you can monitor copper in a lot of different ways, focusing on urinary copper, but we feel with these multiple methods to measure copper, we truly have a good understanding of the gene therapy's effects. Certainly, if any patient starts seeing signs or symptoms arise or biomarkers trend negatively, we will quickly return them to their original dose of chelators. However, we haven't seen the need to do that across the board or in any meaningful way. The ceruloplasmin-based activity assay is interesting and important because chelators and zinc have no effect on that. The only way for ceruloplasmin to exist is with copper. Hence, our assay specifically measuring the loading of copper on ceruloplasmin, with patients coming in with an activity below the lowest detection limit. Patients are definitely still increasing and benefiting from the transgene, and trends appear to be favorable for the majority of these patients who have been treated thus far.

Got it. That’s helpful. Thanks for taking my questions.

Thank you. One moment for questions. Our next question comes from Salveen Richter with Goldman Sachs. You may proceed.

Hi. This is Lydia on for Salveen. Thanks so much for taking our question. So just two on setrusumab. First, could you elaborate a bit on exactly what would trigger an early Phase III readout? And do you have any insights on pricing and reimbursement, given the availability of ifosfamide and romosozumab?

Sure. The way the trial was designed, it is event-driven. That is, the unwinding of the original final primary analysis is driven by having 100% of the fractures required to achieve the information needed. So, they're event-driven. The initial design considered that 60% and 80% of that maximum would be required. Assuming a large treatment effect, we think we could hit persuasive statistical significance with maybe just 60% of the fractures required, and we’ve noted as high as 67% separation. Thus it depends on the number of fractures and patients and time of exposure. It’s a complex combination of those three points. The original 100% is expected to be somewhere between 12 and 24 months of the last exposure of the last patient in, and this would be less than that. We expect to see at least nine months of data of treatment for the last patient in. It will be fracture-dependent, but we expect to see at least nine months of data from the last patient as a minimum.

Thanks so much.

Yes, concerning pricing and reimbursement, romo is out there labeled for osteoporosis has a certain price point. It's actually at a lower dose with the way it's used and what we're doing is actually in a much higher dose and will be optimized for osteogenesis imperfecta. So you have to think about the dose differential for the two indications as one feature. The other factor, of course, is that our treatment will be chronic, whereas the question people have regarding the shorter-term treatment regimen will hopefully drive greater adoption. I think that becomes more of a barrier question about safety. We will have chronic data to show our drug's efficacy in providing positive outcomes. We're developing a solid pricing strategy, taking into account our experience with previous pricing, which tends to reflect responsible pricing strategies such as we applied to Crysvita. We believe this will significantly differentiate us from romo, and with our ongoing support systems, our delivery model can ensure greater accessibility for rare disease patients.

Thanks so much.

Thank you. Our next question comes from Yaron Werber with TD Cowen. You may proceed.

Great. Thanks, guys, for taking the questions. First, looking ahead to the first half of next year. Obviously, you have a busy six months coming up. Could you provide any insight on the timing of upcoming catalysts, even if it's just relative?

The catalyst for findings—we have a table that has some of that data. I have to say we've generally not provided extremely precise timing for various reasons. It is a busy first half. Buckle your seatbelt; it's going to be fun. We have a lot of valuable work to come out for you. But I don’t think we can offer an exact schedule for all events. We will provide a table that will give at least some insights, and I’m looking forward to sharing the positive trajectory and the multiple programs we have.

All right, great, thanks very much.

Thank you. One moment for the question. Our next question comes from Joel Beatty with Baird. You may proceed.

Thanks for the update. For the Ultragenyx spinout, what's the latest plan and timing and how much ownership does Ultragenyx plan to maintain?

Well, we do have a term sheet signed and a group of investors we've assembled that we're filling out that syndicate. I can't disclose additional details yet, but our expectation is for Ultragenyx to own a majority interest in the spinout. Some majority interest is our expectation, but it's not finalized. I wouldn’t want to provide any more detail until we get closer. Things are moving along. We received a lot of interest, particularly after the Analyst Day, where interest was quite invigorating. I believe there's a lot of confidence in the Mab micros against Amyloid-β, but also a recognition that there's substantial room for improvement with something better. We think this could be a good option for a better treatment. We will release more information when we approach closure.

All right. Thank you.

Thank you. One moment for questions. Our next question comes from Gena Wang with Barclays. You may proceed.

Thank you for taking my questions. Two very quick ones. The first regarding the Angelman program update next year. You mentioned you would have 10 patients with longer follow-up. Will you be able to share the Bayley data across other domains? If I look through it, it’s social emotional and also adaptive behavior. Regarding the multi-domain responder index, do you think that could be a possible index that you could discuss with the FDA about possible approvable endpoints in the future? And quickly regarding Crysvita; given that LATAM will be a significant region for revenue contribution, do you have any strategic initiatives to improve penetration there?

Okay, well good questions. I’ll let Eric respond to the Crysvita penetration strategies question shortly. To start with the Angelman data: you asked about Bayley and the other domains. A lot of that means we’re not—I think the adaptive and social/emotional domains are not well-designed for Angelman patients. They're created for normal people, so I think they do not capture well. We will have data on adaptive behavior with unbinding when we have data on adaptive behavior but we’ll also have another scale that is very relevant, called the ABC scale, which I think is clinically more meaningful. We are facing challenges with Bayley, but we are focused on sensitive assessments. Regarding the multi-domain responder index (MDRI), we believe it’s a legitimate strategy and don’t have FDA agreement on that yet. They've seen it, and I presented to them multiple senior leaders in various conferences. We published a good paper on it, and I think it's a powerful method. The key with MDRI is that it measures endpoints you can agree upon that are meaningful. The technique aggregates responses from different endpoints to convey the overall treatment efficacy, which should be appealing to the FDA, as they get all the underlying data. If they can acknowledge the Bayley Scale data for specific aspects along with the ASA score and the parent behavior score, then I think they would be inclined to accept the MDRI as a valid analysis tool.

Well, just to reiterate, LATAM is doing great. It's been very successful thus far. We'll pursue current commercial efforts. Ultimately, what will continue to drive growth is obtaining formal reimbursements across other countries. We've observed significant uptake recently in Brazil following the formal public reimbursement, and as we work our way through reimbursement processes in other countries, we anticipate continued growth in the Latin American region.

Indeed, in countries that have begun treating patients, they realize the value and continue to add new patients. There's a strong desire to use Crysvita. Reimbursement status is a key factor facilitating this, and demand has certainly increased since Brazil received approval. We are optimistic that there’s still growth for Crysvita; it still has potential for increased penetration and is not plateauing.

Thank you.

Thank you. One moment for questions. Our next question comes from Laura Chico with Wedbush.

Good evening. Thanks very much for taking the question. I wanted to circle back on the potential spinout. You showed some intriguing data at the R&D Day regarding plant reduction in the 5x FAD models. Could you remind us whether there's data demonstrating effects on anti-inflammatory or pro-inflammatory markers following treatment with the product? Also, will there be any further data updates expected prior to the spinout? It sounds like things are moving quite quickly.

Yes. Our focus, primarily, has been the pharmacology of plaque rather than secondary markers of inflammation. I don't have more to offer you on that at this point. One challenge is that in mouse studies, injecting directly into the brain can lead to effects in response to the injection itself. To gain insight into those markers effectively, real intrathecal treatment might be necessary; perhaps it could be explored in rat models. We won’t likely have additional data until the spinout occurs, but we’re continuing some work—it's not a significant burn factor, but experiments are ongoing to evaluate the 5x FAD mouse model as well as some other optimization aspects. However, we remain hopeful and encouraged by the potential, which we believe may surpass monoclonal antibodies for amyloid reduction in the 5x FAD models. Additionally, KOL responses have indicated strong interest in this approach, as it signifies the opportunity for a single-shot therapy for such conditions. So, we appreciate your interest and enthusiasm; we’ll provide more information as things progress.

Thanks very much.

Thank you. One moment for questions. Our next question comes from Ed Arce with H.C. Wainwright. You may proceed.

Hi. Good afternoon everyone. This is Thomas here asking a couple of questions for Ed. Perhaps for III for Sanfilippo syndrome. Can you discuss some major topics that you plan to discuss with the FDA in the upcoming meeting? And what do you plan to achieve coming out of the meeting?

Yes. Well, in the MPS IIIA program, our main focus for these discussions is on how to qualify arylsulfatase as a biomarker for potential accelerated approval. I'd point out that we are now also measuring clinical data and we're encouraged by its status as well. The patients continue to gain ground in developmental skills over time, and I believe this shows that the gene therapy is effective. While we could potentially gain approval by merely observing these patients clinically, we hope to qualify a biomarker. Encounters with the agency have been challenging; however, I think Peter Marks has publicly supported the use of biomarkers, including this one at the recent MPS conference. Our goal is to navigate through the logistics of how to make that happen. I believe we are among the most knowledgeable in explaining the biomarker and analyzing results accurately. That said, it is a neurodegenerative disorder with relatively slow progression, spanning multiple years. Thus, the qualification process is more arduous. Everything I’ve observed regarding our program and multiple clinical programs from other sources suggest that these markers represent the underlying disease, and their reduction through either enzyme or gene therapy will yield meaningful clinical benefits. We believe in the treatment's value and we're continuing to work with the agency to qualify this biomarker while also addressing CMC production, which will require time. Given that it’s not a priority program for the company, we're managing it as efficiently as possible, but our aim would be to ensure CMC completion, which will contribute to our submission timeline.

Understood. Perhaps just one more question from us. This one for GTX-102 for Angelman syndrome. As we expect the expansion cohort data in the first half of 2024, do you expect the median time duration amongst these patients would be? And what are your initial thoughts on possible registrational endpoints?

Well, duration—most of the patients in the 20 that will be presented will only have day 170. We've shown this in the most recent extension data; the day 254 outcome looks better than the day 170. However, the dosing average in the expansion cohort is higher than what we just showed you before. Our expectation at day 170 is for increased efficacy. We will have 10 patients that should guide us through to 254, sort of giving us an insight into the outcome. For a pivotal study, we envisage a time frame of approximately seven to nine months to allow for loading and maintenance dosing. We believe this duration will provide sufficient opportunity for improving changes while limiting the burden of repeated lumbar punctures on the patients themselves. Our expectation is that a seven to eight to nine-month timeline will showcase substantial progress, and we will analyze data around day 254, which provides insight into how well this treatment is enabling skill acquisition for these children.

Got it. Thank you again for taking my questions.

Good.

Thank you. I'd now like to turn the call back over to Joshua Higa for any closing remarks.

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

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