Ultragenyx Pharmaceutical Inc. Q3 FY2024 Earnings Call

Good afternoon and welcome to the Ultragenyx Third Quarter 2024 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 question-and-answer portion of the call. It is now my pleasure to turn the call to Joshua Higa, Vice President of Investor Relations.

Thank you. We have 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; and Eric Crombez, Chief Medical 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. This is a great time for Ultragenyx as we successfully completed development work across our late-stage programs and now are reaching the submission stage. If we achieve approval from regulatory authorities, we expect to build further revenue momentum on top of our existing growing commercial portfolio. We continue to see substantial year-over-year revenue growth as we expand geographic access and reach more patients with our medicines. This growth could further accelerate with up to three near-term BLA submissions and approvals for our treatments for both Sanfilippo syndrome Type A and GSDIa, and potentially for osteogenesis imperfecta. These three late-stage clinical programs could be the first-ever approved treatments that have the potential to dramatically improve the lives of patients and their families. Doing three submissions within the same year or so is a special opportunity we've earned with our investment in development over these last years, and we understand the importance of these efforts for the patient community. This quarter, we have continued to make progress across our clinical portfolio. I'll touch on a couple of points and leave the rest for Eric Crombez, our Chief Medical Officer, to discuss in his prepared remarks. On UX-111 for Sanfilippo syndrome, as we announced back in June, we reached an agreement with the FDA that cerebrospinal fluid heparan sulfate is a reasonable surrogate endpoint that could be used to support accelerated approval for the treatment of Sanfilippo syndrome, and we already have clinical data to support clinical efficacy of the product as well. We have since participated in a pre-BLA meeting with the agency where we aligned on the details of the BLA we are on track to file around the end of this year. We greatly appreciate the FDA's flexibility and thoughtful approach to getting this product submitted and potentially available. Last month, UX-143 or setrusumab for osteogenesis imperfecta received breakthrough therapy designation from the FDA as a treatment to reduce the risk of fracture associated with OI type 1, 3, or 4 in patients two years of age or older. We're pleased that the FDA has recognized the potential for UX-143 to offer substantial clinical benefit for these patients. Before I hand it over to Erik Harris to talk about the commercial business, I wanted to acknowledge the work our teams have done around the world to bring these important medicines to patients. In Latin America, our team has already generated over $110 million in revenue this year with the bulk of it coming from Crysvita, but also from Mepsevii, Dojolvi, and Evkeeza. Across Europe and the Middle East, we are successfully navigating the country-by-country reimbursement process for Evkeeza and Mepsevii. At the same time, we are continuing to address the unmet need for Crysvita in Turkey and responding to growing demand for named patient access for Dojolvi. In Japan, we launched Evkeeza in the second quarter this year and have recently reached an agreement with the PMDA that Dojolvi does qualify for a conditional filing package based on the current clinical data. We expect to file the JNDA in mid-2025. These two products are key components of building our rare diseases in Japan that could ultimately contribute to the company's overall path to profitability. Finally, in the U.S., we continue to support KKC's efforts in commercializing Crysvita, while also maintaining relationships with the healthcare providers treating patients with XLH and TIO. We clearly have a firm foundation to build from as we think about a future launch of UX-143 or setrusumab in OI. We're also calling on prescribers at the centers of inborn errors of metabolism who treat Mepsevii for MPS VII and Dojolvi for LC-FAOD. These are the same prescribers who could treat patients with UX-111 for MPS IIIA, DTX401 for GSDIa, and our other gene therapies. The commercial leverage we're gaining in bone and inborn error products will be important contributors to our financial progress in the years ahead. I'll now turn the call over to our Chief Commercial Officer, Erik Harris, to provide an update on the progress across our commercial portfolio.

Thank you, Emil and good afternoon everyone. I'll start with Crysvita, where global revenue continues to grow impressively, seven years into our commercialization efforts. In the United States, our partner, Kyowa Kirin, is leading commercialization, and the demand for Crysvita continues to remain strong. Approximately 60% of the start forms in the quarter came from adult patients and were prescribed by community physicians. Across the U.S., there are approximately 420 prescribers, with around 40% writing more than one prescription. This is encouraging, given that adult penetration is in the low 20s, suggesting Crysvita has meaningful room to continue growing. We are confident in our full year U.S. revenue projections given the strength of underlying demand. Shifting to Crysvita in Latin America where we lead commercialization, our LatAm team delivered another successful quarter, adding approximately 65 new patients to Crysvita, totaling now almost 700 patients on reimbursed therapy since launch. Brazil is the largest market in Latin America and continues to drive the majority of the revenue in the region. However, we are seeing increasing contributions from countries including Argentina, Colombia, and Mexico, driven by increasing patient demand. As I mentioned on previous earnings calls, we expect quarter-to-quarter variability in LatAm revenue due to uneven ordering patterns, but we remain confident in the underlying demand growth for our products. Moving on to Dojolvi, the growth of new start forms in the third quarter continues to steadily increase. In the U.S., we added more than 30 start forms and 30 patients on reimbursed therapy compared to last quarter, resulting in approximately 550 reimbursed patients since launch. The split between pediatric and adult patients continues to be approximately 65% pediatric and 35% adults. The number of new prescribers continues to grow, adding approximately 15 new prescribers in Q3 2024, with half of them writing more than one prescription. With Dojolvi across Europe and the MENA region, revenue is currently driven by named patient sales requests. There are over 230 patients treated under MPS across 12 countries in the region. The majority of the demand is from France, but we are receiving an increasing number of requests from other countries within the EMEA region, including the Middle East. I’ll close with a few comments on Evkeeza where we have been launching this transformative therapy for patients outside of the U.S. with HOFH. Our territories and the HOFH physician and patient communities continue to provide positive feedback on their experience with Evkeeza. The clinical data showing significant reductions in LDL levels on top of standard-of-care supports the long-term potential for this therapy. In the EMEA region, we have patients from all of the major countries, including France, Italy, Germany, Austria, and the Middle East on therapy as a result of our commercialization efforts or responding to named patient requests as we navigate the country-by-country pricing negotiations. In Japan, the launch is continuing to build following the pricing and reimbursement approval that we received in the second quarter. As Emil mentioned in his opening remarks, Japan is expected to be an increasingly important contributor of revenue, not just for Evkeeza, but for all of our programs going forward. With that, I'll turn the call to Howard to share more details on our financial results for the quarter and guidance for the year.

Thanks, Erik, and good afternoon everyone. I'll start by briefly summarizing our financials that were reported in our press release earlier today. We reported $139 million in total revenue for the third quarter of 2024, representing 42% growth versus the prior year quarter. Crysvita contributed $98 million, including $56 million from North America, $36 million from Latin America and Turkey, and $6 million from Europe. Dojolvi contributed $21 million, Evkeeza contributed $11 million, and Mepsevii contributed $10 million. Our total operating expenses in the third quarter were $271 million, which included R&D expenses of $170 million, SG&A expenses of $80 million, and cost of sales of $21 million. Operating expenses included non-cash stock-based compensation of $42 million. In the third quarter, net loss was $134 million or $1.40 per share. As of September 30, 2024, we had $825 million in cash, cash equivalents, and marketable securities. Net cash used in operations was $67 million for the third quarter and was $335 million for the nine months ended September 30, 2024. We expect 2024 net cash used in operations to be around $400 million for the year. Shifting to revenue guidance, we are reaffirming our total revenue range of between $530 million and $550 million for the year that we announced last quarter. This reflects strong performance and trajectory across all of our products, including Crysvita globally and the launch of Evkeeza in our territories. For Crysvita, we continue to expect revenue to be towards the upper end of our range of $375 million to $400 million, which includes all regions and all forms of Crysvita revenue to Ultragenyx. Specifically, it includes Crysvita product revenue from Latin America and Turkey and cash and non-cash royalties from North America and Europe. We also continue to expect Dojolvi revenue to be between $75 million and $80 million. With that, I'll turn the call to our Chief Medical Officer, Eric Crombez.

Thank you, Howard, and good afternoon everyone. In addition to the clinical pipeline progress that Emil has already commented on, we have also made meaningful advancement across our gene therapy programs. Starting with DTX401 for the treatment of glycogen storage disease type 1a. In our press release today, we shared new data from the crossover patients in our Phase 3 GlucoGene study. These are the patients originally randomized to the placebo group who have now been treated with DTX401. Twelve of these crossover patients have reached 30 weeks post-treatment with DTX401 and demonstrate a clinically meaningful 62% mean reduction in daily cornstarch requirement. This is double the reduction seen in the patients randomized to receive DTX401 in the blinded part of the Phase 3 study at the same earlier week 30 time point. Importantly, the patients originally treated with DTX401 at the start of the Phase 3 study continued to reduce cornstarch use while maintaining good glucose control through week 78. While the blinded design of the Phase 3 study was important, we anticipated that physicians and patients would take a cautious and conservative approach with the reduction of cornstarch without knowing to which arm patients were randomized. Now that all patients have received DTX401 and unblinding is complete, physicians and patients can titrate cornstarch with full direct and immediate visibility to all glucose values, enabling them to act more rapidly and appropriately, particularly concerning hyperglycemia. The cautiousness with cornstarch reduction in the blinded period reinforces the unmet need for these patients and the continued deep and ingrained fear of the consequences of hypoglycemia during times of fasting or increased metabolic demand. Shifting to UX701 for the treatment of Wilson disease, last month we provided an update from the dose-finding stage of the Phase 1/2/3 study that included data showing that patients across three dose cohorts demonstrated clinical activity as well as improvements in copper metabolism. In this initial stage, 15 patients were enrolled into three sequential dosing cohorts and followed for at least 24 weeks. Six of the patients completely discontinued treatment with chelators and/or zinc, and a seventh patient had begun tapering as of the data cutoff date in August of this year. We are seeing evidence of the establishment of the normal trafficking of copper with the loading of copper onto ceruloplasmin for the safe transport of copper in the body and the pumping of excess copper into the bio system for excretion. As a next step, we plan to enroll an additional cohort at a moderately increased dose and with an optimized immunomodulation regimen with the goal of allowing the majority of patients to discontinue current standard-of-care treatment before selecting a dose for the pivotal part of the Phase 1/2/3 study. I'll now turn the call back to Emil to provide some closing remarks.

Thank you, Eric. Over the first four quarters of this year, we've continued to hit our marks by delivering growing revenue and advancing our clinical programs. I'll close quickly by summarizing our key clinical catalysts for the rest of the year. For GTX-102 for Angelman syndrome, we are planning to share a program update at the upcoming FAST and Child Neurology Society meetings. This update will include data from patients in a dose escalation and expansion cohorts who've been on therapy for at least 338 days. The data will show that our Phase 3 study is very well-powered to succeed from the primary endpoint of daily cognition raw scores and also for the key secondary endpoint of MDRI. We're also on track to initiate the Phase 3 by the end of the year. Based on our clinical data and the novel science that supports it, we are confident that we are now the leader in this space. For the Phase 3 portion of the UX-143 ORBIT study of setrusumab, there are two interim analyses planned, with the first anticipated by year-end or early 2025 and the second in mid-2025. In order to end the study early at the first interim, there will need to be an extreme and early separation of the two groups to meet a very stringent threshold of a p-value less than 0.001. In order to end the study early at the second interim, we have set a threshold of p-value to be less than 0.01 when there is a little more time for the group to separate. In the event the data readout is not accelerated at the first or second announcement, the final analysis will occur in the fourth quarter of 2025 after all patients have been on therapy for 18 months. If the interim analysis meets our stringent threshold, we would share that the threshold was met. Top line clinical results would be announced several months later as the study requires that the patient completes final visits over a couple of months and will need time to collect and prepare the data for a complete analysis. As I mentioned in the opening, we're also working on multiple BLA submissions, one for UX-111 around the end of the year and another for DTX401 expected in mid-2025. As we head into the final month of the year, I want to express my gratitude to the talented team at Ultragenyx for executing one of the largest late-stage pipelines in the industry. It is incredible to think that we can potentially launch three new therapies over the next couple of years, bringing the first-ever approved treatment options to patients who currently have no real options. With the approved programs we currently have, that would make eight commercial programs in just over a decade on the public market. With that, let's move on to your questions. Operator, please provide the Q&A instructions.

Thank you. At this time, we'll conduct a question-and-answer session. Our first question comes from Chris Raymond with Piper Sandler. Please state your question.

Hey, thanks and congrats from us on all the progress. Maybe two questions. I guess, first on the Wilson program, maybe Emil, who is the ideal patient for this gene therapy? Would this be targeted for patients that are well-controlled on copper chelators or zinc? Or would this be targeted only for those most severe patients? And then maybe also a follow-up on setrusumab. Can you give a little bit more color on this negative binomial regression model that you're using? Just to explain a bit about what that means and what you're doing there?

Very good. You really want me to go into the math of that Chris? All right, let's start with the Wilson's question. We've talked about the Wilson program several times about who's the most addressable. There's about 20% of the patients who are not really well-controlled, can't tolerate the medication, which represents the highest, most addressable population of 20,000 out of a population of 50,000 to 60,000. Among the remaining, there are certainly a segment of patients that could do better than they are, but there may be some patients who are very stable and well-controlled that may or may not be the most addressable. So, we wouldn't assume that all Wilson patients are addressable. We do think the combination of people not tolerating the existing treatment and those not getting optimal copper management are the patients who are having clinical symptoms and are the ones that might benefit from the treatment. Given a large disease population, that fraction of the total still makes for a very large potential market. With regard to setrusumab, P. Tandon, our Head of Biometrics, a highly experienced biometric statistician who was at Genzyme for 20 years, has probably done more rare disease programs than anyone. The negative binomial model is the best way to do an event-driven analysis, and it’s a model that the FDA has agreed to. For me to go through the math, it would probably be quite difficult, but we can provide some explanation for investors on that model. But it's the best way to look at events, controlling for things like baseline fracture rate or age, or other factors that will be different between different patients. So, while I can't explain it in detail, I can say the study is very well powered to succeed in the setrusumab ORBIT study.

Our next question comes from Tazeen Ahmad with Bank of America. Please state your question.

Hi, good evening. Thanks for taking my question. On OI, Emil, given the timelines that you've provided for the different interim reads, if the study has to continue past the first interim, is there a calculation you've made about the likelihood of success of the trial? That's the first question. And then secondly, will the timeline to commercialization vary significantly depending on which time point the study would eventually stop, assuming that it would be successful at one of those stops, if that question is clear?

No, I understand. So, first of all, we believe that whether the first interim hits or not doesn't have any impact on the outcome; it has to do with how fast the lines separate, not whether they will separate or how powerful. In other words, it could be at 0.002 at the first interim and not hit, but be less than 0.01 at the second one just a few months later. Given we hit a few more months of time for fractures to occur, that could help dramatically separate. So, it doesn't affect what the efficacy determination would be; it just speaks to the question of how fast they separate and how variable they are. Our goal in doing the first interim was to end the program as quickly as possible to head toward a filing. We believe if we meet that level of threshold, it should be achievable. But I don't think it speaks to the efficacy of the drug; it just speaks to how fast they are separating. With regard to the commercialization timeline, the reason to go with the interim analysis was to help shorten the timeline. Obviously, the 18 months towards the end of the year means a potential year difference. We will collect some extra data from the first interim, but there is a significant number of months between the first interim and the final analysis. The second differential will not be as great because when the secondary interim occurs, everyone will have had a year. So, we wouldn’t have to wait further to collect any information. The secondary interim will probably not be as long after the interim, only a few months after in terms of BLA filing. So, while you may argue why worry so much about a few months here or there, the value of the program is highly dependent on that. Each month represents a substantial amount of value to the company. As a company, we look carefully at how time affects value; it's one of the most important parts of achieving success in rare disease and understanding the value story, not just cash spent in terms of execution.

Thank you.

Our next question comes from Anupam Rama with JPMorgan. Please state your question.

Hi, thanks for taking the question. This is actually Malcolm Kuno on for Anupam. What data should we focus on with regard to the near-term Angelman updates coming at the near-term medical conferences?

Okay. We'll provide a little bit more long-term data on that group. So, it will allow you to see how the expanded patients have been doing going longer through day 338. The reason we focus on day 338 is that's the length of the Phase 3 trial. So, the day will help give you a view of what it looks like at day 338 for that population. We'll also show you that it doesn't really matter if you use raw or GSV as your analysis, as the transformation of one to the other is not a problem. It doesn't affect the power. We'll provide that information, which was requested from a number of investors, and we think it will help settle people's questions about whether we use the GSV or raw scores as we are planning based on the FDA's request. Additionally, we'll update on the overall safety in the Phase 3 plan going forward. So, it won't be a massive update, but it will be a nice step forward heading to Phase 3, which is where our focus is on getting the trial running and completed.

Good. Thank you.

Your next question comes from Gena Wang with Barclays. Please state your question.

Thank you. Maybe just quickly following the previous questions. Will the data at the FAST and the CNS meeting be the same data set? I have one question regarding the setrusumab Phase 3 study. I remember last time it was more likely beginning of 2025, now it's at year-end 2024, beginning of 2025. And the second interim, which is very definitive, is 1Q 2025. Is that because events are already picking up and you have more clarity regarding when this will happen? Also, will you share the baseline characteristics of the Phase 3 trial at some point? If not, could you comment on the patient baseline attack rate range? And also, the breakdown of the patients, specifically between ages five to 12, 12 to 18, and 18 to 25?

Great. That's quite a lift. So, thank you for the question. The data cut for Angelman for FAST and the CNS meetings will be the same data set; there should not be any differences between those two. Regarding the first interim timing, the clarity on timing is not based on data we're collecting; it's not based on fractures. We stated from the beginning that it would be end of the year, early 2025. We are now being a little more specific, saying middle of 2025, but it has always been just a few months. So, we weren't intending to change anything; it was just where the timeline is. But we did change a long time ago; we had considered having the number of fractures as a trigger, but because it was so operationally challenging, we just estimated when we would hit a certain number of fractures. We haven't put out baseline characteristics yet, but we will at the appropriate time. Usually, when we release the Phase 3 data, we'll include the characteristics, but we would not expect to put out that data until we're releasing our Phase 3 data. What we have said to date is that the population has more type 3 and type 4 patients, closer to half or more, as opposed to what was in Phase 2 where there was about a third, and so that's one difference. We'd expect those patients to have more fractures. We expect then the Phase 3 study to have a higher fracture rate than what we saw before; however, we haven't put in the breakout for age groups that are enrolled in the study either. It is spread across the age groups, and it is primarily a pediatric study with the majority of the patients in the pediatric age range. We are stratifying in the randomization to ensure that we have similar populations in both groups. That's where we stand. Thanks for the good questions.

Thanks.

Our next question comes from Salveen Richter with Goldman Sachs. Please state your question.

Hi, this is Lydia on for Salveen. Thanks so much for taking our question and congrats on the progress. Just on Wilson's disease, when could we expect to see data from this additional Stage 1 cohort? And I guess what would you want to see from this data set to gain confidence in the regulatory and commercial outlook? Thanks so much.

Thank you for the question. So on the Wilson's fourth cohort, we're hoping to get that protocol in and get set up so we would start early in the year. It depends on how long it takes to enroll the five, but we expect that to be ongoing. Because we have to wait until those patients get at least six months or 30 weeks of treatment, it will take most of next year to get that data. However, we haven't yet put a specific timeline on when exactly the data will come. It will depend on how quickly we get the study accepted. We are doing it primarily in the U.S., that cohort, and how fast it takes to get that settled and accepted, and then the fact that we have to enroll five and get all their data. So, it's going to take a good part of next year. What we're looking for is, I would say, consistent reductions in standard-of-care treatment in the majority of patients, if not all. We want to see a majority of patients because we believe to make a gene therapy viable, we want to see a potency that is distinct and profoundly important to patients. While we have activity at this point, we think we need to see a higher fraction of patients off standard-of-care to make it worthwhile. We didn't want to invest in Phase 3 until we have that in hand, and so it makes sense to work at a higher dose. The mean modulation we hope will improve potency as a simple way to improve potency. So, that's what we're looking for: we want to see that we're really changing biology completely in a large fraction of patients.

Thank you. And our next question comes from Maury Raycroft with Jefferies. Please state your question.

Hi, congrats on the progress and thanks for taking my question. For setrusumab, just wondering what key learnings came from the Phase 2 14-month data update at ASBMR that help you triangulate around fracture rates and chances of success for the first interim or second interim updates? And maybe just a quick follow-up if you can clarify if you'll have new patients with less follow-up in the Angelman data updates that you have?

Okay. So, I think what we learned from the 14-month update on setrusumab was, in fact, that these patients can have a very profound degree of separation. That separation can lead to the majority of patients having no fractures over a significant period of time. The other thing we learned is that particularly the younger patients show a dramatic improvement in bone mineral density. What we learned from that gave us more confidence in initiating the interim analysis in the first place because if they separate very quickly within two or three months and if that effect size is large, we would expect the groups could separate early. We just don’t know for sure. We set a stringent threshold for the first one and the second one, less so. But that data gave us enough confidence to proceed with our plans. It also gave us confidence we can lower the number of patients modestly and shorten the timeline to finish enrollment. So, those are the things we learned. Everything we've seen so far tells us we have a strong effect going on, and we want to reach that as soon as we can. Regarding Angelman, we are primarily focused on patients through day 338. We have patients in various stages in the program. The main focus will be on people through day 338 at this point. Our focus is really on setting up for Phase 3, and the day 338 data is designed to inform people about our path for Phase 3, where a larger randomized study will become the most important piece of information we need to gain.

Our next question comes from Joon Lee with Truist Securities. Please state your question.

Hi, good afternoon. This is Mehdi on for Joon. Thanks for taking our question. So, on Angelman, could you please provide some color on the AURORA study given the patients aged from two to 64 and diverse mutation types that are included? So, what should be the optimal end point for this study? And would Bayley-4 cognition be the endpoint for this study?

Right, so you're referring to the IONIS study, is that right?

No, Emil, I think he's talking about the AURORA study, the open-label study.

I'm sorry, I didn't quite understand what he said about the AURORA study. Yes, let's talk about the main study, ASPIRE. The ASPIRE study is for four to 17-year-olds with the deletion type, which represents 80% of the patients out there. For AURORA, this is a supportive labeling study. This study will take the younger patients who have a deletion or older patients who have a deletion to assess efficacy in those ranges. The idea would be to show an open-label setting where they have similar safety and efficacy as we've seen in the deletion type in the randomized trial. We'll also include patients in the four to 17 range that are similar to those in the deletion program but have different genetic types of Angelman. The goal is to cover these various pockets of the population regarding genetics and age in the AURORA study. We believe one large randomized trial is sufficient to prove causation and efficacy of the drug, while the AURORA study will help extend safety and verify comparable efficacy in those other subpopulations.

Thank you.

Our next question comes from Yaron Werber with TD Cowen. Please state your question.

Great. Thank you. So, Emil, I have a couple of questions. Maybe the first one just on setrusumab. I understand the need to – when you finish the study to have a couple of further assessments. At the time in which this goes to a committee, independent committee, and they decide to recommend to you to terminate the study, I think they will do it based on the fracture rates and statistics and the hazard ratio. Can you at least let us know if that hits and becomes positive, that you hit and the hazard ratio is X, Y, Z at a certain p-value, is the first question. Or would you really not say anything until later? And then secondly, just on DTX401, did you complete the tech transfer to your own facilities now that you have a filing around mid-next year? And anything you can share with us initially on margin and COGS because you're going to be obviously scaling a whole new facility? Thank you.

At the time of the interim, we will not put out the hazard ratio or any other detail partly because the study is not locked. The database will not be locked. There’s a certain part that's locked, but we have to collect a little more data and final visits. With the database not locked, we don’t want to put out any data from an incomplete data set. That said, the interim will allow us to see that the primary endpoint is hit, but we want to lock the entire database before we put out data. We don’t want to compromise the study by releasing incomplete data. The fact it hits, though, should give investors confidence that the drug works significantly, and we want to move ahead. Regarding the tech transfer, the tech transfer has occurred. We are running PPQ lots in the plant. Our expectation is that running them in the plant will probably save us around 40%. We haven't put out COGS and margins yet for the program, but running our plant does substantially reduce our costs. We own the plant outright, and so our old cost structure will improve compared to a contract manufacturer. The ability to control and ensure consistency and execution will be great. The tech transfer is simple because it’s from our Woburn team to our team there. We've developed the process, so a lot of things should work better. That’s why we invested in the plant because not only for 401 but for the other programs in hand we can leverage our cost structure and improve margin and COGS in gene therapy, which we think is important for success going forward.

Thank you. And our next question comes from Yigal Nochomovitz with Citi. Please state your question.

Yes. Hi. Thanks Emil and team. Maybe I missed it, but just with regard to DTX401, it doesn't appear that you gave us the specific reduction for cornstarch for the patients that were on the treatment in the 48-week primary period. Do you have that information? Just the way I'm thinking about it is I would think they would catch up given we know that they received the gene therapy and should catch up to the ones that were the cross-overs?

Yes. The primary treatment group had a 41% reduction during the 48-week period in the blinded phase, and what we said is now they're getting better now that they are able to look at their glucose values, so they're going down, getting better. We are mainly commenting on the fact that if you cross over and know you're getting treatment and can see glucose values, that you have double the rate of reduction, 62% versus what was about 31% at that point in time for the DTX401 group. We’re emphasizing that while you can tell if you have hypoglycemia, if you have hyperglycemia, the patients don’t really feel bad. They may not notice it. This means that, if you're blind to glucose values, you don’t know when you’re running high. If you see a low, you didn’t realize that an hour ago you were very high. This makes it hard for patients to reduce their starch without direct knowledge of their glucose. Monitoring allows them to know when they're high, enabling them to act proactively. Lowering cornstarch and driving glucose down, it actually will induce the transgene; lower insulin and higher glucagon will stimulate transgene expression. It's almost like you need the transgene or gene therapy to exercise. You need to use it a little bit. Thus, we would expect the original treated patients will start to lower their starch, and we want to encourage this trend as we believe they are going the right way.

Okay. Thanks. I guess what I was driving at is will there be a point in time when you'll share the 78-week data from the ones that were originally on therapy from the very beginning in terms of their total cost structure?

Yes, we will put out updated data in a formal scientific meeting with all the data. We’d like everyone to get through a particular point in time. We just thought this piece of data should be shared. But we will share complete data on the 48-week group when they get to their second year to show where they're at. However, as we said, they're titrating further, so we feel comfortable that they're going the right way.

And then more just a corporate picture in terms of cash and profitability. I recall at the R&D Day just over a year ago in New York, you had a qualitative slide on the path to profitability. It wasn't too specific regarding numbers and the exact year. Now that you're burning $400 million cash a year and have a little over $800 million in the bank, I'm just wondering if you could comment any further on revised thoughts around the time to profitability. I know you mentioned that the launch in Japan could accelerate that. Thanks.

Yes. The growing product portfolio, product approval, and launches, including the new ones, will continue to help that. I'll let Howard touch on it in a little more detail, but we're on the same path we set forth before at the Analyst Day, and we feel good about the contributions Evkeeza is starting to make. The three other programs launching will help us too. So, maybe, Howard, you can discuss the path to profitability.

Glad to. Yigal, thanks for the question. What we said in June about the monetization of PRVs coming from 111 and 143 suggests we feel like we have, or will have, sufficient cash to fund our operating plan that gets us to a GAAP profitable quarter by the end of 2026. So, that translates to what we discussed a year ago about that pathway. The underlying logic is that we continue to see our commercial programs grow in revenue. Add to that a little bit from launches, but not an enormous amount. If we level out on all the rest of the spending, that’s how you piece together P&L profitability by a quarter, again, before the end of 2026.

Okay. Thank you.

Our next question comes from Ed Arce with H.C. Wainwright. Please state your question.

Hi, good afternoon everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for taking our questions. So, first, a question for GTX-102 for Angelman syndrome, the Phase 3 ASPIRE study. We mentioned a preliminary design that was discussed in April, incorporating a 12-week or 84-day primary efficacy time point period. Can you discuss the significance of this duration? And then a second question for 143, can you discuss the development status progress and what next steps we can expect from this program in 2025?

Okay. UX-143 in 2025 is all about the interims and getting to Phase 3. We'll have the ORBIT study and the COSMIC study to support the filing. Expecting to file next year depending on where we finish the year; it could take a few months after the data are released. For GTX-102 and ASPIRE, the significance of the chosen follow-up period is to allow children a chance to start developing and gaining new skills. That allows us to detect this with the assessments we have without leaving the study open too long. Based on the Phase 1/2 data we presented so far, we are confident about not just the primary endpoint but also key secondaries at that duration.

Yes, that was it. Just wanted to understand the duration of the data measurement. So that helps. Thank you again for taking our questions.

Okay.

Our next question comes from Jack Allen with Baird. Please state your question.

Hi, thanks so much for taking the questions and congratulations to the team on the progress made over the course of the quarter. I know there's been a lot of discussion on setrusumab and the interim analysis on the call, but I was hoping we could just step back and provide more context around what triggers the interim analysis? I think there was a comment made by Emil previously about an estimation of time to fracture rate. I want to understand if the interims are set in stone internally concerning when they accrue or if incoming data could still affect the timing of the interim analysis.

Yes. They are now set on a timeline, but originally, the plan was to do the interims based on events, which could move up or back based on when the events occurred. It was operationally challenging, as it left a lot of unknowns for the team. We decided to estimate when we expect those fractures to hit, the 60% and 80%, laid those down for a timeline. We are confident they will be fine because we estimate the original fracture rate will be faster than what we previously saw. So, the interims are now set on a specific timeline, based on our corporate presentation and description.

That's very helpful. Thanks, guys. Can I just ask one brief follow-up? How did you think about the potential time for onset of setrusumab when making those fracture estimates? And I guess that's all I'm really interested in. Maybe when operationally did you decide to make the change in thinking as it relates to estimating the fracture rate rather than going off the initial data?

The estimate started to gain clarity by looking at the 14-month data. It looked by about three months into the data available, the number of fractures declined, and after three months, there were significantly fewer. Hence, our take was that separation is likely occurring within three months. Even for osteoporosis, people know that separation occurs around six months with anti-sclerostin. It isn't surprising that this could be faster in children. But that’s what we learned. Would you like any additional details, Eric, on this?

No, I think that’s fine.

Our next question comes from Joe Schwartz with Leerink Partners. Please state your question.

Great, thanks so much. I also have a couple of questions on setrusumab. I was wondering, first, on ORBIT, if you could talk a bit more about how you're calculating the effect size in ORBIT, how that compares to how you did in Phase 2? And then the range of effect size separations that might be needed to hit statistical significance at different interim analyses would be very helpful. I also have a follow-up on COSMIC.

Well, we assumed a 50% reduction in fracture rate and a fracture rate of 0.7 for the powering estimate. However, for the interim analysis choice, we're looking at how many fracture events happen, not a higher fracture rate reduction. More events mean we improve the power to detect the result earlier. So, the effect size of 50% and the fracture rate of 0.7 were used for both the power and design. Given the fracture rate reduction was closer to 67%, filled with the binomial, we're in good position in how we've designed the study.

Okay. And then what kind of a treatment effect do you assume in your powering relative to bisphosphonates? What do you hope to see for the setrusumab arm? Are there any nuances in how the endpoints in COSMIC are calculated versus ORBIT?

Keep in mind that the majority of patients in ORBIT were already on bisphosphonates. Those bisphosphonates remain in their bones. When we're looking at a 67% reduction, that is setrusumab on top of bisphosphonates, just to clarify that. We would expect a similar differential to occur head-to-head with bisphosphonates since it functions as an add-on in ORBIT. Therefore, our expectation of a 50% reduction in fracture rate applies there, too. The fracture rate among little kids can be much higher, which is partly why the study is in the 60 to 70-patient range instead of 150. Those are our assumptions right now.

Our next question comes from Jeffrey Hung with Morgan Stanley. Please state your question.

Hi, this is Michael Riad on for Jeff Hung. Thank you for taking our questions. For UX-111 for Sanfilippo, given reductions in heparan sulfate and their association with Bayley, is it safe to assume that HS is the sole biomarker data in the BLA? Or do you expect to include other measurements like more downstream markers like NfL?

As we presented, we have heparan sulfate. We also have gangliosides, which are elevated or likely pathologically important, which also decreased. And then we have NfL data, alongside brain volume data. We have a value chain from the beginning through the biology that supports efficacy all the way to Bayley.

Thank you. That's helpful. And then as a follow-up, for the interim setrusumab analysis, if you see a fracture rate similar to what you would have seen in ORBIT, would that treatment effect be sufficient enough to indicate a winding back to ORBIT? Would ORBIT have observed a clear separation at the first interim analysis?

If the fracture rate is 0.7 and the reduction is 50%, then probably the first interim has a good chance of hitting. The first interim could hit if the fracture rate is higher and the reduction greater, which would enhance our opportunity to meet the interim analysis.

Our next question comes from Kristen Kluska with Cantor Fitzgerald. Please state your question.

Hi everyone, good afternoon. Thanks for taking my question. On setrusumab, I hope to get some clarity about the placebo arm. We know that the five bisphosphonate studies had diverse readouts, so can you give us context on how you developed that 20% figure? Is there any possibility of more fractures on placebo if the protocol requires patients to visit the clinic?

We are aware of five randomized studies on bisphosphonates. Three of those studies did not succeed while two did, with the successful ones indicating a 20% reduction in fracture rates. Additionally, these treatments improved patients' overall well-being, highlighting that the focus is less on fracture reduction and more on overall improvement. Although the data are not overwhelmingly convincing, our Phase 2 trial showed a 67% reduction in fractures among the majority of patients. In terms of the placebo group, participants will be gradually reducing their bisphosphonate usage during the study, which could affect their bone health. Typically, they would remain at home, and it is known that visiting the clinic can elevate the risk of fractures. Therefore, we anticipate that their clinical activity may lead to more fractures, allowing us to better discern any differences. Patients chose to participate in this study because they were eager to be part of a significant treatment difference.

Thank you.

Our next question comes from Dae Gon Ha with Stifel. Please state your question.

Hey, good afternoon, guys. Thanks for taking our questions. I wanted to take a different angle on the setrusumab line of questions. I wanted to ask about manufacturing for setrusumab. Can you remind us what scale you are at? Does that plant actually have some precedent or regulatory success track record when it comes to getting a drug approved? Similarly, with burosumab or Crysvita, as of 2023, that transitioned over to more of a royalty-based commercialization activity in the U.S. So, just wondering from a sales force standpoint, how ready are you if you were to hit the interim number one? Would there need to be a significant hiring spree?

On the manufacturing for setrusumab, it's a traditional third tank batch type method. Currently, it's operating at a 3,000-liter scale. It is run at a contract manufacturer in Germany that we also use for Mepsevii, so they are already licensed and approved. We expect to eventually require a second manufacturer in addition to this plant, and we would begin working on that soon. But we’re confident in our current manufacturer as we already have experience with them and they are approved. As for the market situation in the U.S., while it has become royalty-based, we have actively engaged people in the field since the crossover in April 2023, and we still have 16 salespeople supporting our partner, KKC. They occupy critical roles with our patient services and other capacities. There’s a substantial established base, but if we're launching, we would certainly need to hire additional people to support that product. However, I believe we have built an efficient, effective launch plan with our existing team.

Thank you. And ladies and gentlemen, we have reached the end of the question-and-answer session. I'll now hand the floor back to Joshua Higa for closing remarks.

Thank you. Sorry, we weren't able to get to all the follow-up questions. Feel free to reach out; I'd be more than happy to help facilitate responses. This concludes today's call. Thank you for joining us.

Thank you. All parties may now disconnect.