PTC Therapeutics, Inc.

Good day, and thank you for standing by, and welcome to the PPC second quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded, I would now like to hand the conference over to your speaker today, Senior Director of Investor Relations, Ron Aldrich.

You may begin.

Good afternoon, and thank you for joining us today to discuss PTC Therapeutics' second quarter 2023 corporate update and financial results. I'm joined today by our Chief Executive Officer, Dr. Matthew Klein, our Chief Business Officer, Eric Powles, our Chief Commercial Officer, Kylie Uketh, and our Chief Financial Officer, Pierre Gravier. Today's call will include forward-looking statements based on our current expectations. Please take a moment to review the slide posted on our investor relations website in conjunction with the call, which contains our forward-looking statements. Our actual results could materially differ from these forward-looking statements, as such statements are subject to risks that can materially and adversely affect our business and results of operations. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent annual report on Form 10-K, filed with the Securities and Exchange Commission, as well as the company's other SEC filings. We will disclose certain non-GAAP information during this call Information regarding our use of GAAP to non-GAAP financial measures and a reconciliation of GAAP to non-GAAP are available in today's earnings release. With that, let me pass the call over to our CEO, Matthew Klein. Matt? Thank you, Ron.

Good afternoon, and thank you for joining the call. I'm pleased to share PTC's second quarter results and our expectations for continued strong performance in 2023. First, I would like to extend a warm welcome to our new CFO, Pierre Gravier. I've had the pleasure of working with Pierre over several years, and I'm confident his extensive experience in finance strategy and healthcare advisory will be incredibly helpful as we continue to build the PTC of tomorrow. Now, let me begin with our second quarter revenue. We achieved another quarter of strong revenue growth with total revenue of $214 million. This represents 29% growth over the second quarter of 2022. Our DMV franchise revenue in the quarter totaled $162 million, a 21% increase over the second quarter of 2022. This robust second quarter performance puts us in a strong position to achieve our 2023 total revenue guidance of $940 million to $1 billion, which would represent 34% to 43% year-over-year growth. In addition to our team's continued strong commercial performance, Evrizdy is now approved in 100 countries with more than 8,500 patients treated globally. Continued growth is expected as access is achieved in countries where Evrizdy is approved. In addition, based on the recent positive opinion from the CHMP, the Evrizdy EU marketing authorization will now include pre-symptomatic infants, providing another important source of potential revenue growth. As we shared in May, we initiated a strategic portfolio review and associated OpEx reduction. With our previously announced decision to discontinue our preclinical gene therapy programs and other prioritization decisions, we now anticipate non-GAAP R&D and SG&A expense for the full year 2023 of between $810 million and $860 million, versus our previous guidance of between $890 million and $940 million. In addition to the expected impact of our May portfolio decisions on 2023 op-eds, we anticipate annualized savings of approximately $150 million in 2024. Moving to our pipeline, Q2 is very busy as we reported results from several clinical studies, including strong data sets from our Affinity and PIVOT-HD studies. Let me start with our Affinity trial of sepia-terran and PKU patients. In May, we announced that we met the study primary endpoint of blood phenylalanine reduction with highly statistically significant and clinically meaningful results. CPI-taring demonstrated substantial free reduction from baseline of 63% in the overall primary analysis population and 69% in the subset of classical PKU patients. In addition, the vast majority of patients were able to reach target fee levels in line with U.S. guidelines of less than 360 micromole per liter. With these strong data in hand, we requested a pre-NDA meeting with FDA, which has been granted and is scheduled for the third quarter. Pending FDA feedback, we expect to submit an NDA in the fourth quarter of this year. Given the strength of the affinity data, we remain incredibly enthusiastic about the potential billion-dollar-plus global commercial opportunity for C. Piotarin. In addition, as Professor Anya Muntau emphasized in our recent PKU commercial deep dive presentation, the physician community is excited about the potential for C. Piotarin to fill the persistent, large, unmet medical need for PKU patients worldwide. Moving to PTC 518 for Huntington's disease patients, In June, we reported interim 12-week data from the PIVOT-HC trial. To summarize, all key objectives of this interim data analysis were met. PTC518 treatment resulted in dose-dependent lowering of blood cell Huntington protein with mean lowering of Huntington protein levels of 30% in the 10-milligram dose cohort. Treatment resulted in the targeted levels of CNS exposure with a ratio of CSF to plasma exposure of 1.5 to 1, at the 10 milligram dose level. This suggests that greater lowering of HCT protein, possibly up to 45%, could be occurring in brain cells. Importantly, PTC518 is well tolerated with no treatment-related SAEs, no reports of peripheral neuropathy, and no treatment-related CSF-NFL spikes, with an overall trend towards lower NFL levels in PTC518 treatment groups. With these encouraging interim data, we will continue to enroll Stage 2 and early Stage 3 patients into the PIVOT-HC study. And of course, we look forward to the 12-month results of the initial treated subjects, at which time we can learn more about the longer-term effects of PTC518 treatment on key disease biomarkers. These HC data, along with the continued global success of ERISI, further support the power of our splicing platform. Moving to vitiquinone, we reported results from the MOVE-FA trial in pediatric and adult Friedreich Pataxia patients in May. While the trial did not meet its primary endpoint, the results of the MOVE-FA trial did demonstrate evidence of meaningful clinical benefit on key aspects of Friedreich Pataxia, including in pediatric patients for whom there remains a large unmet medical need. In particular, the data demonstrating vitiquinone's treatment benefit on the upright stability section of the M-PAR scale support a potential long-term benefit in slowing time to loss of ambulation. Given these results, the well-established safety profile of the tiquidone in pediatric patients and the remaining unmet medical need for pediatric FA patients, we plan to share these results with the FDA to determine if there is a potential path to approval. We requested and were granted a Type C meeting with the FDA, which is scheduled for the fourth quarter of 2023. We expect a number of additional regulatory activities in the second half of 2023. Beginning with Translarna, we expect CHMP opinion for the Type 2 variation to convert the European Conditional Marking Authorization to standard authorization in the third quarter. In the U.S., we plan to submit a Type C meeting request this month to the FDA to discuss the totality of data collected to date that could support an NDA resubmission for Translarna. For Absteza, as we previously shared, we are awaiting feedback from the FDA on additional bioanalytical data we submitted in support of comparability analyses between the clinical and commercial drug product. Based on the timing of this feedback, we expect to submit the Absteza BLA in the third quarter. Overall, I am incredibly proud of our continued successful execution across both our commercial and R&D teams. Our commercial performance in the first half of 2023 positions us well to meet our revenue guidance of $940 million to $1 billion, and the strong data sets from Affinity and PivotHD position us well for continued future growth. I will now hand the call over to Eric and Kylie to provide an update on our commercial accomplishments. Eric?

Thanks, Matt. It is exciting to see the progress of our pipeline. and the future opportunities of new product launches and our customer facing team is eager to bring these much needed treatments to patients around the world. We are extremely proud of the accomplishments of our global customer facing team, which has delivered another strong quarter in revenue. The team continues to accelerate the significant momentum built in the first quarter and is focused on executing on the growth strategy of our commercial portfolio of products. Our global DMD franchise continues to be robust, and our strategy of geographic expansion continues to progress in Latin America, Middle East and Northern Africa, and CIS regions, while we continue to build out the future foundation and growth of markets in Asia Pacific. Now, let me turn to the DMD franchise. Trans Florida and Inflaza continue to be an important growth drivers delivering an impressive 162 million in net revenue for the second quarter, which is up 21% compared to the second quarter of 2022. With a strong first half for our DMD franchise, we are updating our 2023 DMD franchise revenue guidance from $545 million and $565 million to $545 million to $575 million. For Translarna, we achieved $96 million in revenue this quarter, which is a remarkable 25% growth over the same quarter in 2022. Growth occurred across all major regions, and we continue to see growth from new patient starts being added in new growth markets. As mentioned previously, due to the unpredictability of large government orders in some of our regional markets, particularly in Latin America, Central and Eastern Europe, the Middle East, and CIS regions, we expect to see ongoing lumpiness in quarterly revenue throughout the year. Now, turning to Inflaza, the fundamentals of the Inflaza business continue to be solid. Quarterly net revenue was $66 million, which is 16% growth over the same quarter in 2022. We continue to see strong trends in the number of new patient start forms in the second quarter, which will provide important momentum as we progress through the year, along with continued high compliance, appropriate weight-based dosing, and a continued focus on broad access. Now, I'll ask Kylie to update the progress on our current and future new product launches. Kylie?

Thanks, Eric. Let me begin with Upstazer, the first and only approved gene therapy infused directly into the brain. We continue our steady rollout across Europe, including treating our first patient in Italy in the second quarter. We continue to see transformative results for the patients that we have treated thus far, which we shared at the recent European Pediatric Neurology Society, the EP&S conference in Prague. New treatment centers of excellence are being opened internationally to support the treatment of patients as we continue the European rollout. We also continue to leverage early access programs and cross-border treatment opportunities and expect to treat more patients both in Europe and other international markets throughout the second half of 2023. Moving to Tegceti and Weylivra in Latin America. We continue to establish Tegceti as the treatment of choice based on its strong clinical profile and improved quality of life for hereditary ATTR polyneuropathy patients. In Brazil, we completed delivery of the remainder of our second group purchase order from the Ministry of Health. We continue to see robust growth in patient identification as well as positive patient responses on treatment across the Latin American region. Lastly, we are extremely excited about the Sepia Terran opportunity as discussed recently at the PKU Deep Dive presentation. With a substantial unmet need and strong differentiation from both the mechanism of action and the affinity results, the customer facing teams are looking forward to bringing this differentiated therapy to physicians and PKU patients upon approval. As we discussed at the call, we were able to leverage our strong global commercial infrastructure, and we have now established our internal global launch team. This team is actively working to prioritize the global launch sequence and key pre-launch activities with the first step of bringing Sepia Terran to the U.S. market, followed closely by Europe, Japan, and other key international markets. With physician excitement as outlined by Dr. Muntau and PTC's proven track record in commercializing rare diseases, the team is poised to achieve the market opportunity of over a billion dollars. In conclusion, our second quarter rounds out an excellent first half of 2023 for the commercial team. With significant progress across all our commercial products and across all geographies, we are well set to achieve our ambitious 2023 revenue guidance. Now let me turn the call over to Pierre for a financial update. Pierre?

Thanks, Kylie. I want to begin by saying how thrilled I am to join the PTC team as CFO. I have known the PTC team as an advisor for several years, and it's a privilege to be working with such a patient-focused company and bring my skills to continue to build the PTC of tomorrow. It is my pleasure to provide you with the financial highlights of our second quarter 2023. Please refer to the second quarter earnings press release issued this afternoon for additional details. Beginning with top line results, total revenue for the second quarter was $214 million. This consisted of DMV franchise revenue of $162 million and other revenue of $52 million. Starting with the DMV franchise, Translana net product revenue in the quarter was $96 million, reflecting growth of 25% over the second quarter of 2022, driven by strong performance across all geographies. And FLAZA had net product revenue of $66 million, representing 16% growth in a quarter compared to the second quarter of 2022. Moving to EverySD. Second quarter global revenue of 342 million Swiss francs, which equates to about 380 million US dollars was achieved, earning royalty revenue of $37 million for PTC. As Matt mentioned, the second quarter performance puts us in a strong position to achieve 2023 total revenue guidance of $940 million to $1 billion, including an expected $100 million milestone when EverySD surpasses $1.5 billion in annual revenue. Non-GAAP R&D expenses were $170 million for the second quarter of 2023, excluding $16 million in non-cash stock-based compensation expense, compared to $143 million for the second quarter of 2022, excluding $14 million in non-cash stock-based comp expense. The year-over-year increase in R&D expenses reflects additional investments in advancement of the clinical pipeline. Non-GAAP SG&A expenses were $75 million for the second quarter of 2023, excluding $14 million in non-cash stock-based compensation expense, compared to $66 million for the second quarter of 2022, excluding $14 million in non-cash stock-based compensation expense. As Matt noted earlier, We now anticipate non-GAAP R&D and SG&A expense for the full year 2023 of between $810 million and $860 million. Cash, cash equivalents and marketable securities total approximately $338 million as of June 30, 2023, compared to $411 million as of December 31, 2022. Cash increased by $52 million from the end of the first quarter, mainly due to the addition of $50 million from restricted cash as a result of the positive sepiaptarian data readout based on the Blackstone agreement. I will now turn the call over to the operator for Q&A. Operator?

Anne, thank you. And one moment, please. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. One moment for our first question. And our first question comes from Kelly Shi from Jefferies. Your line is now open.

Thank you for taking my questions and congrats on the great quarter. My first question is, So regarding the Translator sales, in Q1 you mentioned the sales benefited from large government order in Europe. Can you comment and how did government order impact Q2 and how should we anticipate for the future Q3, Q4 sales? Thank you.

Kelly, thank you very much for the question. Obviously, it was another strong quarter of Translator revenue. I'll let Eric provide some more details on the differences between Q1 and Q2.

Thanks for the question, Kelly. First of all, we're really pleased with a quarter. I mean, we've generated 162 million of DMV franchise. That's 21% growth year over year compared to last year. And I think as you've seen in the past years, we actually invested in geographic expansion. It's been very consistent that we know that lumpiness will occur quarter to quarter, and it's really nothing new at this point in time. But since we've expanded in many of these regions, large government orders, particularly in Latin America, Central and Eastern Europe, in the Middle East, in our CIS regions, as we've seen consistently, those orders and the size of the orders and the timing is relatively unpredictable. However, unlike Western Europe and the U.S., which tend to be more predictable from week to week and month to month, I would say that the fundamentals are still the same. And we've received large orders, and the timing of those orders will continue. Our base business in even those markets continue to grow. New patient starts, high levels of compliance, dose adjustments, and very low discontinuation rates have occurred. So the fundamentals for both the new markets as well as our mature markets are really solid and in place. We anticipate orders in the second half of the year. And we've raised, if you will, the upper end of the guidance at this point in time to reflect that. The timing and the size of those orders will likely be more defined in the third quarter. And as we get closer and closer to the third quarter, we'll be able to, if you will, adjust and confidently achieve that level of guidance. So just stay tuned, Kelly, for an update around Q3 as we provide a little bit more color and we'll have more visibility. on the timing of group purchase orders in the second half. But right now, we feel very confident, and we have very good tailwinds in the DMV franchise remaining throughout the year.

Thank you very much. And I also have two quick follow-ups. First, can you guide out any trigger for PTC to start reporting UPSTASA's quarterly revenue?

Thanks for calling. Do you want to talk about that?

Absolutely. Thanks, Kelly. So as we've spoken about, while we did provide guidance last year, I think the intent with providing that guidance was to ensure that we clearly indicated that we expected to treat patients very rapidly into the launch. We weren't expecting a delay from launch to treatment of those patients. As we've said previously, it's very difficult to understands the true forecast in the first 12 months of launch. And so as we move through that period and we garner a much clearer understanding on how we're seeing patient throughput, pricing and reimbursement, particularly in Europe, being a country-by-country process, gaining more clarity into that and a number of registrations ex-US will be able to provide more granularity and more clarity. So hopefully that answers the question.

Yes, thank you. And the one last one, if I may. So regarding the type C meeting with FDA and filing, just curious what kind of strategy you could share, like whether you have done some group analysis and also focused on like improved efficacy, maybe on some genetic marker and also certain group of patients. Thank you.

Kelly, thanks for the question. Can you clarify the type C meeting for which indication? Oh, yes, so we, so, as we said, we requested that type C meeting from the, and it was granted and that'll take place in the 4th quarter. And as we talked about, while we didn't hit the primary endpoint, we had very strong data on a number of important aspects of the disease. In particular, the upright stability sub scale. When you think about as a disease and drug development and freedom attacks here. One of the main goals of any therapy would be to slow the time for patients to lose ambulation. That is one of the key, if not the key, morbid transition point of the disease, and every drug that targets altering the progression of disease seeks to try to slow that time to loss of ambulation. The upright stability subscale of the MFARS has been shown to be a key predictor of time to loss of ambulation. So the fact that, one, we had pre-specified that particular subscale as an endpoint, and two, the fact that it is a component of the primary endpoint, and we showed strong signal of effect with a difference of about 1.3 points between treatment and placebo. And we've done some work to show that that should translate to a delay in loss of ambulation of at least eight months. and perhaps more with some other analyses that we've been able to do. So we're able to come to FDA and be able to talk about the potential path to an accelerated approval where we've been able to demonstrate on an intermediate clinical endpoint upright stability that we're able to delay, likely delay, a longer-term significant more of a transition point of the disease loss of ambulation. And the fact that we showed statistical significance and a strong magnitude of effect we can demonstrate that we are able to likely provide a long-term clinical benefit with regards to really the key goal of FA therapy, which is delaying loss of ambulation. So we look forward to having that discussion with the agency. Obviously, with the SkyClarus approval that's directed towards adult patients, we have a study that was included primarily pediatric patients, a very strong safety record of particularly pediatric patients. And then again, now a data set that has many positive aspects, but in particular, very strong data with regard to ability to slow the loss of angulation, which is really the key goal of FASAD.

Very helpful. Thank you.

And thank you. And one moment for our next question. And our next question comes from Sammy Corwin from William and Blair. Your line is now open.

Hi, guys. Thanks for taking my questions. I guess first, do you have any clarity as to why the CHMP opinion for Translarna got pushed? I thought that was originally supposed to happen in May. And is there any contingency plan there if it doesn't get approved? And then I have a follow-up question.

Hi, Tammy. Thanks for the question. Actually, the initial timing was end of each one. That timeline was put together based on how we thought that the typical back and forth at one sees during the CHMP process, such as a type two variation. Obviously there was one more term of questions back and forth, and that pushed the H1 into the third quarter. So we remain highly confident of our ability to achieve the conversion from conditional market authorization to standard market authorization, knowing that really the bar here is being able to, as the European statutes say, confirm the benefits that existed at the time of registration, which, of course, was in 2014 based on our first placebo-controlled study, study seven. And now we have a data set in over 700 boys that not only confirms that benefit, but it actually expands it with our ability to have shown study 41, a statistically significant benefit on the all-comer ITP population, which is the indicated population, as well as showing significance on a number of different endpoints, including North Star ambulatory assessment and a time function test. So this is really a body of data that not only confirms the evidence, which is the charge, but builds on it.

Great, thanks. And then given you have about $330 million in cash, how are you guys kind of thinking about capital deployment in terms of either focusing on your commercial franchises and products that will be going through regulatory submissions in the near term versus your earlier stage research pipelines?

Yeah, I think as we've talked about, Sammy, we are well capitalized to take us through this year and get us to the PKU launch. We've talked a lot about having the infrastructure in place to launch PKU and other products. We also have a robust discovery and development infrastructure. So all the pieces are there. And so we're well positioned and well capitalized to move forward the programs and prepare for the launches that we expect to occur in the next one to two years.

Great. Thank you.

And thank you. And one moment for our next question. And our next question comes from Kristen Kluska from Cancer Fitzgerald. Your line is now open.

Hi, everyone. Thanks for taking my questions and welcome, Pierre. First, just wanted to ask what the main questions will be at PKU pre-NDA meeting and essentially what feedback you're looking for here.

Sure, Kristen, thanks for the question. So, obviously, pre-NDA meeting is often focused around the structure of the NDA, how the components are put together, how we do integrated safety analyses, integrated efficacy analyses, and then going through the checklist of what we in line with in terms of what's needed from a clinical standpoint, efficacy standpoint, safety database, non-tox package, CMC package. So, it's a fairly standard approach to the pre-NDA meeting. Obviously, we are quite gratified to have the meeting granted and our expectation is that we'll be able to align with the agency and move forward with the submission in the fourth quarter.

Okay. Thanks for that. And, you know, we've often talked to you about the synergies with the splicing platform, especially now that you're progressing along with Huntington's disease, but maybe just kind of wanted to ask the question from the sense of how much overlap you think there is with the neurologist community and in particular, the adult community with the experience with, if RISD given the launch has been pretty substantial here. And then if you have any initial feedback that you've heard from the some leaders in the space based off your early data.

Yes, I can give a little bit of color and then I'll turn it over to Kylie for a bit more detail on this. Obviously, SMA just in general is both pediatric and adult, but Huntington is obviously going to be mostly adult until we're able to initiate and complete our work in juvenile. But I would say there is broad recognition in the scientific position as well as the patient community. importantly, about the power of the splicing platform. And obviously, we've talked a lot about InRISD being able to provide us with a blueprint of how to successfully discover, optimize, develop an oral splicing compound for a whole brain disease such as SMA and now with Huntington's disease. And I would say in many ways, the InRISD experience is also You know, set a path for us as well as we think about getting this out and doing clinical trials with both the patients and physician communities because of their recognition of the power of the splicing platform and the ability to deliver an effective oral small molecule that is not only safe, but be able to deliver meaningful results. Heidi, I don't know if you want to provide more color on how we're thinking about working with the physician community.

Yeah, absolutely. I think what I would add, Kristen, in addition to what Matt said, I think one of the things that we do as a commercial team, which we take very seriously, is making sure we take learnings across all aspects of our business, as well as making sure where there are overlaps between physician specialties and physician target call points, that we're sharing that amongst our different teams. So if we look at Huntington's disease specifically, as Matt said, obviously it's more adults, but one of the things that is consistent is the movement disorder subspecialty within neurology has overlaps between Upstazer and other parts of our business. And so we're making sure it's not an entirely overlap, but there are some components of overlap. And so in that case, we're making sure that where we're having consistent touch points, that we're sharing that across the different teams.

Great. Thanks again. And thank you. And one moment for our next question.

And our next question comes from David Leibowitz from Citi. Your line is now open.

Thank you very much for taking my question. When you think of the guidance for Duchenne for full year, the implication is that at the high end of the guidance, the revenues would actually decline by 27%. in the second half. Are we to assume that guidance is just making the most conservative possible assumptions here, and that things could very well work out differently as the year progresses, or should we expect a decline in the second half?

Thank you, David, very much for the question. Obviously, I talked a bit about how how much growth we've been able to achieve and the reasons for that growth in the Translata franchise. I'll talk a little bit about the dynamics in the second half and how we're thinking about total year guidance.

Yeah, I think, first of all, I think we continue to see growth. So, David, I think what we're trying to do is to really modulate a lot of these group purchase orders in countries where we have established ordering patterns that are relatively inconsistent. And so while we're being a bit conservative in certain areas, the unpredictability of the timing and the size of the orders can certainly play. But what we've seen fundamentally in all of these markets, particularly in the Latin American markets where we continue to see orders and orders from new countries, as well as essential in this Eastern European markets and Middle Eastern markets, which in the last few years have started to sort of stabilize much in terms of their ordering patterns, there are still some unpredictabilities. And because the number of patients that we have, the large amount of patients in certain markets, such as Brazil, Russia, and a number of other key areas, the timing and the size of these orders can have fluctuations between one quarter or the next. But the fundamentals are still very strong. And I think we're very positive, given the fact that we have seen quarter-on-quarter growth. So I think, as I mentioned, I think we have some very nice tailwinds. I think we're going to continue to see good growth, and we're very confident that we're going to be able to achieve, you know, the guidance that we've set out or at least exceed it.

Got it. Thank you very much for that. And just jumping over to PKU, given the trial, the pivotal portion of the trial utilized a diet as a part of the protocol, and I know the OLE, that you are adding fee into the diet. From a labeling perspective, can the OLE serve as a component to allow diet to not be a requirement for a patient, or will the labeling ultimately include on top of a diet?

David, it's a good question. Obviously, we've talked a lot about all the different aspects in your question. Obviously, the importance of having a stable diet in the trial so that we don't confound the trial results. It's incredibly important that we have an understanding of the effects of secret care on relative to placebo in the context of stable diet. But we also know, as you refer to, that being able to liberalize diet is really the holy grail for PKU patients. Their diet is highly descriptive. and obviously takes an enormous impact on patients and their families in many, many ways. And obviously, one of the key differentiating factors is the ability of CPF Terran to maintain phenylalanine levels within control and still allow for the liberalization of the diet. We saw in the early feed tolerance data that we have presented thus far, both in this first study readout as well as in the PKU commercial deep dive a few weeks back that we're seeing that signal of fee tolerance in the face of fee intake that exceeds RDA levels in many patients. And as we're looking at the data that are continuing to come in through the open label extension, we're seeing that to continue to be the case as more and more patients are going through that protocol, and we look forward to sharing those data at the SSIEM and forums in the future. And so what the label would say, we're not sure. It is likely, since the protocol talked about stable diet, that that will be in there. But nonetheless, in all reality, in everyday life, patients will have possibly some component of diet control. But obviously, what they do in daily life is really to liberalize their diet is going to be much more impactful, not in how the drug is necessarily described, but just in what the perceived value is, the increased physician uptake and brought patient interest in finally being able to have oral tolerable therapy that not only provides them control, that finally allows them to liberalize their diet, which is so very important to patients.

Got it. Thank you so much for taking my questions.

And thank you. And one moment for our next question. And our next question comes from Eric Joseph from JP Morgan. Your line is now open.

Hi, good afternoon. This is Anna on for Eric. Thanks for taking the questions. Just wondering when we might be able to see maybe a fuller update or presentation of data from the Phase III MOVE-FA study. As you guys are considering and conducting additional analyses to take the FDA, just wondering if there's a plan to present these to the street.

Yeah, Hannah, thank you very much for the question. So, obviously, we prepared and we shared the key top-line data from the study, including the positive results and a number of the primary, a number of the secondary endpoints and the two important components of the MCARS, the Bolvar subscale, as well as the upright stability subscale. But obviously, we have done additional analyses, particularly around being able to quantify the likely long-term benefits expected with regards to loss of ambulation based on the difference we were able to achieve in slowing progression on the upright stability scale. So we're going to continue to do some more work in that area, and we will look forward to sharing those analyses in the future as part of a publication or a presentation that would be available to the investor community.

Okay. And then this may be a little bit more of a niche question, but so for the diet liberalization study for PKU, just wondering from your conversations with physicians and patients, is there a specific amount or just percentage of increased feed tolerance that patients might achieve that would be considered clinically meaningful to both physicians and patients?

I think I would say we highlighted and Professor Moontow highlighted very nicely in our deep dive a few weeks back how burdensome the restricted feed diet is for patients. slight increases in intake would be an incredible benefit, both gratifying for physicians, but obviously important for patients in their quality of life. Of course, looking at our data and seeing that patients are able to get beyond the recommended daily allowance of protein that an unaffected individual would be able to have as part of their standard diet and still maintain control, I think that that those are incredibly powerful data because that would far exceed what anyone would even hope for in a therapy. So for us to be able to observe that has been very encouraging to us, obviously something that the patients have gotten very excited about. And as Dr. Muntaz said herself, she and other physicians are very excited about what they've seen so far in those data.

Okay, great. Thanks for taking the questions.

And thank you. And one moment for our next question. And our next question comes from Jeffrey Hung from Morgan Stanley. Your line is now open.

Hi, this is Michael Riad. I'm for Jeff Hung. Thank you for taking our questions and congrats on the quarter and the progress. So if you have favorable U.S. regulatory outcomes in all your late stage programs, presumably we'd see them launch in a close timeframe. So how is the company thinking about preparations for multiple simultaneous launches, especially in the context of the annualized 150 million in OPEC savings in 2024? And would you launch them immediately if that was an option? Thanks so much.

Michael, thanks so much for the question. We would look forward to that opportunity. We have been building for that. We're well set up for that. We're well funded for that. I like to provide a little bit more color, but let me just say the short answer is we would welcome that activity and work as quickly as possible as we always do to get these important therapies to patients. Kylie, do you want to add a little more color on this infrastructure?

Yeah, absolutely. Thanks, Matt. And thanks, Michael, for the question. As Matt said, I think we definitely welcome that problem to have. But as we've talked a lot about, we have a really strong commercial infrastructure in place globally. And this includes both capabilities and capacity to focus on neurology and metabolic. And obviously the team is gearing up very quickly for a potential PKU launch. In addition to that, obviously we don't start on day one of launch. The team has done a lot of work while trials are ongoing to build relationships with KOLs, to build relationships with patient advocacy groups, to ensure that we understand the needs of the payers, to ensure that we understand what's necessary to be successful at launch. And all of that takes place you know, sometimes often up to two years prior to launch. So we're in a good position to be ready upon successful regulatory discussions and positive movement towards NDA submissions. And it wouldn't require additional resources or infrastructure to be successful there. So we have the footprint in more than 50 countries around the world, and we are definitely ready to go. And I know I speak for many of the colleagues that we are excited for the opportunity to be able to bring a lot of these differentiated therapies to patients with high medical need and neurology and metabolic spaces.

All right, super. Thank you. That's really helpful. And then maybe last one, more of a housekeeping question. Could you comment a little bit on the royalty rate for Bisbee from Roche? It seems like it's been trending a little bit down in the last few quarters. Any comments here on what we should expect? And thanks so much.

Sure, Carly, do you want to fill that in?

Absolutely, yes. So the royalty rates from Roche for every year are tiered between 8% to 16%. So that is on an annualized basis. So every year they start at the beginning, which is the 8%, and they're tiered up to 16%. So from that perspective, throughout the year, they progress through the different tiers. We're up towards, as we've seen, we're 700% one million Swiss francs of sales in the first half of the year. We're tearing up towards the second and almost near the third tier of royalty rates. So I wouldn't say that they're going down. If anything, they go up, but that's on an annualized basis.

Thank you. Thanks for the clarification. Thanks so much. And thank you.

And one moment for our next question.

And for our next question, we have Brian Abrahams from RBC Capital Markets. Your line is now open.

Hi, this is Joe. I'm for Brian. Thank you for taking our question. Just going back to TransLarna, can you talk about some of the potential outcomes of this CHMP opinion? Is there a possibility that TransLarna can remain on the market with conditional authorization with the annual renewal? And I have a follow-up.

Yeah, Joe, thanks for the question. So, obviously, the type 2 variation that we're submitting is to convert the conditional authorization to standard authorization. And as we've talked about, we're confident in the ability to do that given the strength of the data and our ability to meet the requirement of confirming, as I answered earlier, building on the data that already existed at the time of registration. Obviously, if the CHMP were to decide that they want us to continue to collect data, whether that's as part of the longer term open label section of study 41, which was included the 72-week placebo control portion and 72-week open label portion. Obviously, the analyses we presented and analyses that form the basis of the conversion request are on placebo control. Unfortunately, that's a possibility. Could the CHMP say, you know, STRIDE's really great. It, for the first time, provides direct measures of the long-term benefits of a therapy for DMD and also is able to capture the fact that we're having an impact on the two key morbid transition points of the disease, loss of ambulation, loss of pulmonary function. And they say we want more real-world data to convert. That's totally possible. So there absolutely is that possibility. that they say continue with the conditional authorization for now, which of course would be business as usual for transwarning.

Got it. Thank you. That was very helpful. And also to touch on the US pathway, I guess if I'm not mistaken, Type C meeting has been requested this month. Is there a typical response time from the FDA? To get back to you once the meeting has been requested or and also how much additional back and forth can you expect to have before the meeting is scheduled? Thank you.

Yes, thanks. And we had said that so that meeting request came based on a recent discussion with the division within our division, where we talked about the potential pathways. to an NDA resubmission in the U.S., particularly now given the volume of data we have, not only from the three placebo-controlled studies, study seven, study 20, study 41, but importantly, those stride data that I recently mentioned, which provide very strong evidence that the benefits that we're recording over the course of the time of the clinical trials are translating to long-term, meaningful benefits in the most significant ways possible, by slowing down the loss of ambulation and loss of pulmonary function. The agency said, well, why don't we get all of our data together, including some of the mechanistic data that we generated over the years, any analysis we want, request a Type C meeting, and we'll have a discussion about how we can put together an NDA package that would be suitable for resubmission. As mentioned, we have not yet submitted that request. We will be submitting that request in August. They typically respond within a couple of weeks to let us know if the meeting is granted or not. And typically, the timeline for Type C meetings following meeting request to meeting date is roughly 75 days.

Got it.

Thank you for the clarity. And thank you. And one moment for our next question.

And our next question comes from Collin Bristow from UBS. Your line is now open.

Hi, this is Yihan for Collin. Congrats on the quarter, and thanks for taking our question. So I guess our question is on the PTC518HD program. So in terms of the US partial clinical hold, just wondering if you have already submitted the Part A data as well as the additional safety data to FDA yet? And if there's any feedback or further requirement from FDA to potentially lift the hold. And also the second part on the same program. So for the dose escalation, so based on your data, it seems like the 10 milligram will be very likely to reach your targeted, you know, HTT reduction goal of like 30 to 50% in brain. And you previously noted you need some more data at low doses to further determine for the dosing escalation. So just wondering, could you please let us know what kind of data set you might need to see to make this decision? And will this potential dosing escalation be included in your conversation with FDA for the clinical hold lifting? And when will we expect to see the data, the next data update. Thank you so much.

Thank you very much for the questions, yeah. I'll start with the first question regarding FDA and the partial clinical hold in the U.S. Obviously, we were very pleased to see that the data that we presented in June on the first cohort of patients coming through the first part of PIVOT-HT demonstrated the drug was safe and very well tolerated, no serious adverse events, no evidence of peripheral neuropathy, no NFL spikes that have been observed in other therapies. So, overall, as strong as a safety record as we could have hoped for. Obviously, we're continuing to monitor safety. We also mentioned that we have an independent DSMB that continues to meet and continues to support continuation of the study as it is. and also indicated, based on looking at the 5mg and 10mg data as part of that interim cuts, that they would support, if we would decide to do so, escalating to the 20mg dose. We have submitted to the agency the safety data and our argumentation in support of reopening the study in the U.S. That process is still ongoing, and obviously we'll provide an update at the appropriate time. Regarding your second question on the doses, You're correct. We were, as we shared, we believe a 10-milligram dose, both based on what we observed in terms of blood reduction in mutant Huntington protein of approximately 30%, as well as, again, seeing higher exposures in the CNS to the blood with the ratio of CSS to plasma of 1.5 to 1, gives us every reason to believe that we're within that targeted range of 30% to 50% lowering within brain cells. And so what we said we would do, since we believe we are in the range, is continue to collect data on the 5-milligram and 10-milligram dose cohort. Importantly, some of those biomarker data over the second part of pivot HD that we will present with the 12-month data cut later once available. And that will confirm if we are at the dose level we want. And then we'll probably use that time point to inform any additional decisions regarding going to that higher dose level of 20 milligrams. Of course, it's important to note that we're in an incredibly favorable position with an oral molecule that we can titrate and to be able to have peripheral biomarkers such as blood hunting protein that can provide important information regarding target engagement and pharmacodynamic effect is an incredibly important factor in being able to steer this clinical development program forward and taking us to a right dose level that's not only safe, but could provide important benefit potentially to patients. So as for now, we're continuing with the five and 10. We will expect to have that next data update, the biomarker 12-month data update, approximately nine months from when we had the three-month data update. And again, in terms of that decision, it'll be based on what the data look like. And as I mentioned, the DSMD has already provided us their okay and support to go to a higher dose if and when we decide we need to.

That's very helpful. So, just, sorry, just one quick clarification. So, do you, like, will you provide, for example, additional child-based data stage two or stage three patients in terms of the program, or the next update will just be the nine-month data? Thank you.

Yeah, so good question. So we have a few more data updates to go, right? So obviously those first patients that we presented the Part A data on or that first three-month data on in June, we'll expect in approximately nine months from then to have the 12-month data, right? And then obviously we'll be able to provide the three-month data update on the additional stage two and the early stage three patients when those are available. We haven't given that time yet, and we'll provide the timing for that once we have more clarity on the precise date.

That is very helpful. Thank you so much.

And thank you. And one moment for our next question. And our next question comes from Joseph Tom from TD Cowan. Your line is now open.

Hi there. Good afternoon. Thank you for taking my questions. Maybe one on Upstaza. It seems like companies are having various ability to treat patients after the approval of the gene therapy in the U.S. and various levels of success here. So I guess, is there anything that you can do during the hopeful FDA review process to kind of prime payers to be ready to to reimburse of SESA upon potential U.S. approval, which I expect will come sometime in the back half of next year. And then maybe second, we are going to know what the pipeline looks like by the end of this year based on the regulatory feedback you get the next couple of months. I believe in your previous deal with Blackstone, there was like $500 million earmarked for BD, I guess. Are you ever contemplating using that at all, depending on what comes over the next few months? Thank you.

Yeah, sure. Joe, thank you very much for the questions. The first question on of Stesa, I'll let Kyle give some detail on how we're setting the U.S. market in terms of payers, but I will add that we're obviously incredibly gratified to see as we continue treatments in Europe, as well as the treatments that we did as part of the Canyonless study that included sites in the U.S. We're continuing to see very strong data again, substantiating the fact that this is a transformative therapy. It's one of those therapies where we get it and see the effects of what we're told for with the gene therapy, taking kids who have virtually no dopamine production, no motor function, and then providing an ability to make dopamine and then seeing them be able to sit, crawl, and walk is incredibly gratifying. And of course, that in and of itself does so much to preset the market and increase both patients' and physicians' desire to get that therapy. So, Kyra, do you want to talk a little bit about our preparation for U.S.?

Yeah, absolutely, Joe. We are engaging with U.S. payers, and we do this well ahead of launch to understand what are the types of queries that they have and what are some of the roadblocks that might be put in front of us. And we obviously, especially with AADC, need to do education around what is the disease the high morbidity and mortality rates, the lack of standard of care or any disease-modifying therapies out there available, and obviously budget impact. And all of that work happens ahead of approval, and the U.S. team has been actively engaged in that process to date. As Matt said, with a strong data package and transformative data, not just in the short term, but also in durability, which is one of the questions that a lot of payers have put in front of other companies with gene therapies, how well does your treatment perform, not only in the short term, but also in the long term. We feel very, very confident around the data package that we have for Upstazer, and the value proposition in totality has been very well received by U.S. payers, and there has been a high willingness to pay.

And, Jillian, your second question regarding, you know,

We'll learn a lot more about, about the portfolio in the coming months. And obviously you've done a lot of work in our own strategic prioritization, obviously decisions to discontinue the preclinical gene therapy programs as they move more towards a coherent strategy and focus. And obviously BD can be an important part of that. Pierre, do you want to add some more color on funding and BD opportunities?

Absolutely. So as Matt said, The team and the company is well aligned about our capital and our strategy to leverage our expertise and being opportunistic on BD. And as it comes to Blackstone, we're very proud to have partnered with such a strong group with life science expertise. And we will always evaluate our funding options as it comes to BD on our capital structure.

Great.

Thank you very much. And thank you. And one moment for our next question.

And for our next question, we have Jaina Wang from Barclays. Your line is now open.

Hi, it's Tony on for Jaina. Going back to the Huntington's program, could you just add some more color potentially on what kind of threshold you might be looking for in terms of CSF protein? I know you talked about 30 to 50% range, but is there kind of a specific cutoff you would be specifically looking for?

Yeah, Tony, thank you very much for the question. Obviously, there's been a lot of discussion about CSF Huntington protein, what it means, and how do we measure it, and many things like that. We're in a position where there's many important biomarkers of disease that we're measuring in this study. We're measuring CSF protein. We're also measuring NFL, which obviously has been shown in neurodegenerative disease to be a very important marker, obviously, of safety in terms of potential nerve injury, which I mentioned we've not seen any signs of thus far in the PIVIT-HC trial, but also efficacy. We can look to the first and accelerated approval as an indicator that there is broad interest, including from the regulatory authorities, to look at NFL as an important marker of efficacy in neurodegenerative disorders that are characterized by neuronal injury and neuronal loss. CSF Huntington protein has been a bit less well-characterized. What we do know is that in early stages of Huntington's disease, there's no detectable mutant Huntington protein with CSF. It's at levels that are so low that it's not detected by the assays that anyone would use. However, over the course of time, as nerve degeneration progresses, there's a gradual increase in the levels of mutant Huntington protein with CSF. So that tells us that it is, in a way, a marker of neurodegeneration. So if that is true, and we believe it is, and that that CSF protein is likely coming from spilling from nerve cells as they become injured and die during the course of the process, the ability to lower CSF Huntington protein is an important marker that we are having a favorable effect on the brain cells such that they're less injured and are spilling less Huntington protein into the CSF. So, all that is to say, that's what we understand about it. Quantifying what change is meaningful is a bit challenging. I don't think anyone has an exact number other than to say, obviously, if you have a marker of disease that is increasing over time as the disease worsens, if you could stabilize and ultimately lower that marker, that's obviously very good. But I think the way we think about it is not in terms of any specific threshold, but being able to look at our effects on the trajectory of CSF protein with the goals towards lowering. And we did share on the 12 recall that we are observing lowering in the dose cohorts at very early points in time before we know that we're reaching a steady state in terms of what we'll ultimately be able to achieve in CSF protein lowering. But we're also going to look at that alongside other important markers such as as well as the volumetric MRI, and that together those will paint an important picture of the benefits that PTC518 will be able to provide for Huntington's disease patients. Got it. Very helpful. Thank you.

And thank you. And one moment for our next question. And our next question comes from Tazin Ahmed. From Bank of America, your line is now open.

Hi. What would a shift to a standard approval from the status that you're at now for EU practically change in terms of either commercial opportunity, reimbursement, or does that kind of not really matter in the grand scheme of things? And then as far as the cost savings that you mentioned about an annualized number of about $115 million or so, to clarify upon what you might have said before, could there be room for additional cost savings beyond what you just described as we get closer to 2024 and you take a closer look at your portfolio? Thanks.

Great. Thank you very much for the question, Suzanne. On the first question regarding the conversion, From a regulatory standpoint, I think the impact is perhaps you don't have to go through a process every year of getting a renewal, but more importantly, and to the point of your question, the commercial impact, I'll let Kylie talk about that.

Yeah, so, Dazeen, in answer to your question around the benefit, I think what the team has done is a remarkable job of securing very favorable pricing and market access with conditional approval. and not only being able to secure but maintain a really favorable pricing corridor over the years of maturation of the product, which is not easy to do. I think from a benefit perspective, we don't see a huge upside when it comes to the countries that were already launched in with pricing and market access. There are some smaller countries that would open the door to a discussion post-conversion, but I think where the true upside is is the countries that we don't have registration in yet.

And then to be in regarding your second question, in terms of potential further cost savings, look, as we talked about at the time of the CEO transition, one of the things that we really wanted to focus on, particularly. As we were reading out studies and with the positive data that we ultimately had, we were in a position to start really focusing down. and looking at opportunities to reducing our effects and reducing our costs. So the team spent a lot of time in the spring looking into this. We obviously shared the reductions that we planned associated with the discontinuation of the preclinical gene therapy programs. Obviously, that involved reduction in head count, and we made these decisions in late May, which obviously gave a bit of a limited time in 2023 to realize the impact in cost savings, which is why we share that we expect those changes in 2023 to have a greater impact than the impact of approximately $150 million in cost savings in 2024. Of course, we also are going to be in a position where we're going to continue looking at the portfolio, looking at opportunities to ensure that we're advancing programs that have a reasonable return on investment as well as saving opportunities to save when that's not the case. Let's look at cost savings. We're looking at 940 million to a billion dollars of revenue this year. We're incredibly excited about that. We expect as we move our other programs forward and looking forward to the the potential launch of the PKU program, which we believe can be an over a billion dollar market opportunity. We're really in a position where we should be thinking about moving towards a break-even point and ultimately one day in the future being profitable. And to do that, we have to continue to be very thoughtful and strategic about our utilization of capital and how we think about OpEx and we think about program spend. So you're correct. This is going to be something that we continue to do over time as we build the company forward.

Okay, thank you.

And thank you. And one moment for our next question.

And our next question comes from Paul Choi from Goldman Sachs. Your line is now open.

Thank you. Good afternoon, and congratulations on the quarter. My first question is on the commercial side with regard to Evrizzi, your partner, Roche, reported the first sequential decline basically since the early days of the launch. I'm just wondering if you can maybe comment on market trends there, given that your guidance embeds a milestone for 2023. My second question is also on Huntington's, just with regard to enrollment progress pending the discussion with the FDA. and just how you're factoring in the pace of enrollment contingent upon clarifying the clinical hold there. Thank you.

Thank you very much for your question, Paul. Let me take the second one first. So in terms of enrollment, look, we've said all along that we were in a position to enroll this study outside the US. So that's the benefit of having a global development organization that can run, get trials started, and conduct trials in countries around the world. We have the study up and running in a number of countries in Europe, as well as in Australia, as well as Canada. And there is a great deal of enthusiasm in all of these countries amongst the physicians and the patient groups to participate in this trial. Obviously, the interim data readout showing that the drug today is shown to be safe, well-tolerated, and is having the desired pharmacodynamic effect has only heightened the interest We're obviously very aware of the desire of patients in the U.S. to participate in the study and physicians in the U.S. to participate in the study. But I will say that we're going to continue to enroll that study without doing anything to slow it down, knowing that if we're in the position to reopen the sites in the U.S., there will be opportunities for patients to participate. Regarding your second question, on Evrizdi. Kyra, did you want to take that?

Yeah, absolutely. Thanks. I think one of the things, Paul, that we're seeing with Evrizdi is we're continuing to see the growth in total patients treated, and this is being driven by a number of different factors across the board. It's being driven by continued switches coming from both Zolgensma and Spinraza, as well as continued therapy-naive patients being treated. In the U.S., you've also heard Roche talk about the infant starting to be an increasing patient segment that we're seeing for every treated patient. And with the recent CHMP opinion, we also expect this trend to continue ex-U.S. They've also talked about the fact that they are market leaders in most major markets around the world and expect to be global market leader by the end of 2023. I think one of the things that you do see with Everisdi, which is consistent to what we see with Transliner and what Eric touched on throughout this call, is lumpiness to the business. And that's directly related to the international business. Like us, they have large government-based purchase orders that fluctuate throughout the different quarters. And so it is expected that you will see that quarter over quarter lumpiness. I think we've seen growth from 2022 into Q1 of 23 with a little bit of lumpiness in Q2. but we expect the growth to continue throughout the rest of the year. I think we're in a good position for the $100 million milestone that you touched on. If you look at sales through the first half of the year, we're past halfway, so that's a really positive sign. And so from that perspective, that's why we remain confident with the full revenue guidance for 2023, including that $100 million milestone. So just lumpiness that we see across our TransLana business as well.

Okay, great. Thank you for the caller.

And thank you. I am showing no further questions. I would now like to turn the call back over to Dr. Matthew Klein for closing remarks.

Thank you again for joining us on the call today. I'm extremely proud of our many achievements in the second quarter, and we look forward to a busy and productive second half of 2023. So thank you all again for joining the call, and have a good evening.

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