Ultragenyx Pharmaceutical [RARE] Conference call transcript for 2022 q2
2022-07-29 00:00:00
Fiscal: 2022 q2
Operator: Good afternoon and welcome to the Ultragenyx Second Quarter 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 the opportunity to ask the question during the Q&A portion of the call. It is now my pleasure to turn today's call over to Joshua Higa, Executive Director and Head of Investor Relations.
Joshua Higa: Thank you. We 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; Mardi Dier, Chief Financial Officer; and Camille Bedrosian, 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.
Emil Kakkis: Thanks Josh and good afternoon, everyone. We're now six months into the year. And across the company, we continue to make meaningful progress against our goals. The commercial team delivered another solid quarter of revenue growth as they commercialize their products across the globe. We acquired the late-stage product UX111 from MPS III or MPS IIIA or Sanfilippo Syndrome and MPS disease area for, which we have extensive experience. In July, we bolstered our cash position with a substantial royalty financing that also enabled us to acquire genetics and gain full control of our important Angelman program. These activities along with progress across all of our early and late-stage clinical programs put us in good strong position over the coming years for exceptional value creation. I want to touch on a couple of pipeline updates before turning the call over to the other leadership team members to provide more detail on the quarter. Starting with GTX-102 for Angelman syndrome, we reached a similar moment in this program with the acquisition of Genetics and now a full control over the GTX-102 program. As we said on our call last week, we are all in on Angelman syndrome with the exceptional signs regarding the target region and with the excellent data we've seen to date in Phase I/II study. It's rare to see a significant improvement in development function as we have seen recently. This is something I haven't seen in 30 years of drug development. Last week we shared data that demonstrate our ability to safely dose patients with GTX-102 at up to 10-milligram doses. We observed meaningful clinical changes in a group of children that are severely impacted by the disease due to the deletion of the maternal UBE3A gene region. This severe mutation always predicts a very slow rate of learning on natural history as Dr. Berry-Kravis one of the principal investors on the study said on our call last week. These early clinical responses across multiple domains and multiple clinical measures have been independently confirmed by clinician’s, therapists and patient families. We observed significant improvements for some of these children and expect to further enhance these effects by increasing loading doses and providing more time in the study. One specific measure I would like to highlight is the Bayley Scales of Infant Development or Bayley. I'd like to remind me that Bayley is a standardized measure used to diagnose level of delay in childhood is administered in the clinic by trained therapists not the investigator, and Bayley is often used in clinical trials with a cognitive language and motor development in children. In this study we're using the latest version of Bayley, which allows for evaluation of children with delays who exceed the Bayley age limit of neurotypical children. The extensive historical data with this measure allows the ability to set statistic significant threshold for improvement when evaluating individual patient results and showing they're different from error or variation. We know from now through history that score of this measure do not meaningfully change for patients with Angelman syndrome particularly those with deletion type mutations. Receptive and expressed communications sub-score is an important part of Bayley particularly for patients with Angelman syndrome with lab communication skills. Across the patients in Cohort 4 and 5 been treated for a minimum of 128 days, seven of nine children showed a statistical an improvement in either daily Bayley receptive…
Joshua Higa: Operator it seems like we might have lost Emil's audio connection. Can you confirm if we're still out there?
Operator: One moment. I do saw him -- show him still connected.
Emil Kakkis: I'm here Josh.
Joshua Higa: Go ahead, Emil. Continue.
Emil Kakkis: Receptive and expressed communication is an important part of the Bayley particularly for patients with Angelman syndrome who lack communication skills. Across the patients in Cohort 4 and 5 have been treated for a minimum of 128 days, seven of nine children showed a statistic significant improvement in either Bayley receptive or expressive communication score as of their most recent evaluation. This compares favorably to two -- three of the original five patients who were treated in the US who have statistically significant change in the same store at day 128. Our results from the original five patients also included patient reported results that were well past the day 128 time point, since many patients were four months past their last dose at the time of that data release. The results of this objective third-party measure combined with the Bayley findings from natural history studies give us confidence that we are improving communication skills in Angelman syndrome in a meaningful manner. The full potential improvements of Bayley communication measures will likely depend on the following patients for a longer period of time and starting with higher doses. In fact, all three of the ex-US patients to reach the day 170 evaluation in the current study improved in both Receptive and Expressive communication beyond their day 128 results before receiving their first maintenance dose. We've also amended the protocol in the UK and Canada and have begun dosing patients in the additional dose selection cohorts with two patients dosed at the higher of 7.5 and 5 mg dosing starting doses for the loading phase that we've already used to treat patients in Cohort 4 and 5. One other important step forward, the first patient from the originally treated US cohort was read out last week in Canada with no reported drug-related safety events. Our team is also now working to file an interim clinical study report with the FDA to support discussions that would allow for a harmonization of the US and ex-US protocols. With all these components coming together, this is the right point for Ultragenyx to lead development of this program. We have the right expertise and capability to ensure our robust clinical program and regulatory strategy for GTX-102. The history of development of GTX-102 is an inspiring story for our team. It's a story of a group of parents who defies the odds and their relentless pursuit of the right science and search for the right partner. I firmly believe the right size was discovered in Scott Dindot's lab and we now have an opportunity to bring one of the first-ever treatments to the Angelman community. In the second quarter, we also announced this agreement to take on UX111 in AAV gene therapy for the treatment of MPS IIIA or Sanfilippo syndrome. MPS diseases and gene therapies are a familiar territory for us and we believe that we can make a meaningful difference for the Sanfilippo community. In the past, we worked closely with the FDA to establish the use of alternative trial signed the endpoint to achieve approval. And we believe the UX111 data are strong and support the use of the trial approval pathway. Our team is hard at work on the filing strategy for our discussion with the agency and we look forward to providing updates later in the year. With that, I'll turn it over to the team to provide updates on their functions.
Erik Harris: Thank you, Emil, and good afternoon, everyone. I'll start my section discussing our team's continued success commercializing Crysvita before shifting to Dojolvi. For Crysvita within the profit share territory, we continue to find new adult and pediatric patients more than four years, since launching the product. As of the end of the second quarter, over 2,600 patients have been prescribed Crysvita and more than half are adults. In the US, we have penetrated almost 40% of the pediatric market and approximately 15% of the adult market. Recall, finding pediatric patients is similar to many other rare diseases where the treatment is consolidated into centers of excellence. This contrasts to the finding adult patients who were mostly being treated by community-based physicians scattered across the country. Our team is leveraging a mix of traditional in-person meetings along with innovative and interactive virtual programs to educate healthcare providers and patients as well as enhancing our digital online education presence. We also recently launched education initiatives to specifically target nurses and physicians assistance that often work with caregivers and the entire family to develop a comprehensive treatment plan for patients. We believe there is meaningful opportunity to steadily grow the Crysvita franchise with new identified patients as well as continued strong adherence within existing patients even four plus years into launch. We will continue our efforts as we look towards transitioning their commercial responsibilities outside of the medical geneticists to Kyowa Kirin in April 2023. Outside of the profit share territory, primarily in Latin America, we are now seeing the results of our early launch efforts. In the second quarter, revenue grew 32% versus the first quarter 2022. And in the first half of the year, we have already surpassed the total revenue generated in this region last year. In Latin America, there are over 250 patients on reimbursed therapy. This will continue to grow, as we continue expanding in Brazil and as we gain momentum from our recent launches in Colombia and Mexico. In Argentina, we continue to support named patient requests and look forward to gaining regulatory approval over the coming quarters. Across all of the Ultragenyx regions, Crysvita revenue in the first half of 2022 grew 37% compared to the first half of 2021. Based on our performance to date, we are reaffirming our 2022 revenue guidance in Ultragenyx territories of $250 million to $260 million. Turning now to Dojolvi and beginning with our efforts in the US. We continue to see steady growth across all of the leading indicators as a result of the broad use in key metabolic genetic clinics across the US. One of the more promising statistics is that approximately 90% of all cases are approved for reimbursement in less than 30 days. This is an even faster turnaround time than we saw for Crysvita at a similar stage of commercialization. The team is also moving beyond the major centers for inborn errors of metabolism and is expanding the call coverage to other high potential health care professionals. They are leveraging machine learning and artificial intelligence to generate new leads similar to what we are doing for Crysvita. Outside of the US, use of Dojolvi continues to add new physicians and patients through our named patient and early access programs in Europe. In France and Italy, there continues to be meaningful demand through our named patient program and we are starting to respond to requests for named patient programs across other countries in Europe. In Brazil, the health authorities approved Dojolvi for the treatment of both pediatric and adult patients with LC-FAOD late last year. We are continuing to work through the process to get full reimbursement approval, but this can take a little bit of time to complete. At this point in the year, we are reaffirming the guidance of $55 million to $65 million that we put out in January. I look forward to providing another update on this and other commercial programs next quarter. With that, I'll turn the call over to Mardi to share more details on the financial results for the quarter.
Mardi Dier: Thanks, Erik. Earlier today, we issued a press release that included financial results for the quarter which I will briefly summarize. Company revenue for the three months ended June 30 2022 totaled $89.3 million. Crysvita revenue in Ultragenyx territories were $64 million, including $51.6 million from the North American profit share territory and net product sales of $12.4 million in other regions. Total royalty revenue related to the sales of Crysvita in the European territory was $5.4 million. Dojolvi revenue for the second quarter 2022 was $13.5 million. Mepsevii revenue for the same period was $4.9 million. Our total operating expenses for the second quarter 2022 were $230.9 million, which includes research and development expenses of $154.5 million, SG&A expenses of $68.1 million and cost of sales of $8.3 million. For the second quarter ended June 30 2022, net loss was $158.2 million or $2.26 per share. During the first half of the year, there have been a number of non-cash items that have impacted net loss. This includes approximately $65 million of stock-based compensation, $20 million related to the decline in fair value of our equity investments and $13 million of non-cash interest expense related to the Royalty Pharma transaction, these are offset by approximately $10 million of non-cash revenue also related to the EU royalty. We ended the quarter with approximately $706 million in cash, cash equivalents and marketable securities. Subsequent to the end of the quarter, in July we raised $500 million in non-equity dilutive capital in non-equity dilutive capital transactions with OMERS Capital Markets for the sale of a portion of our North America Crysvita royalty. We also exercised our option to acquire genetics and paid $75 million in July, which allows us to take over the development of GTX-102. We are well capitalized with over $1 billion in the bank and we are making operating decisions to stage spend on our development programs and slowing headcount growth in order to manage our burn. As we have said, 2022 is a peak burn year for us as we have initiated multiple late-stage clinical programs in-licensed Evkeeza, completed the acquisition of Genetics and are completing the build-out of our gene therapy manufacturing facility. In 2023, we don't anticipate additional one-time events of this nature or large capital expenditures and we anticipate SG&A will decrease compared to 2022 as we transition US and Canadian commercialization responsibilities for Crysvita to KKC. We will continue to invest in our clinical and preclinical programs as discussed, and the overall net effect across the company then will be a decrease in net cash burn. Now, I'll turn the call over to Camille.
Camille Bedrosian: Thank you, Mardi, and I too wish everyone good afternoon. This is truly an exciting time for clinical development at Ultragenyx. We have seven programs in the clinic including our ASO for Angelman syndrome that Emil discussed earlier and mRNA for glycogen storage disease Type 3, four late-stage gene therapy trials and a Phase 2/3 monoclonal antibody for osteogenesis imperfecta. In my section on today's call, I will focus on this antibody UX143 or setrusumab. We are developing for osteogenesis imperfecta. Osteogenesis imperfecta or OI is caused by a defect in collagen that results in significant bone weakness and bone fragility, leading to fractures, deformities, stiffness and pain. Currently there are no approved therapies for OI. As a company, we have spent a lot of time studying bone biology with XLH, TIO and our preclinical candidate for OI, before we did the deal for setrusumab. One of our key insights is that OI is not simply an issue of weak collagen. It is excessive bone resorption and the inadequate production of new bone triggered by this abnormal collagen that leads to low bone mass. What we have found is that if you can increase bone formation and reverse the excessive bone resorption, you can improve bone strength even with the abnormal collagen and improve fracture prevention. We believe this insight gives us the opportunity to change the future for patients with osteogenesis imperfecta. I won't take time today to go back to all the details of the Phase 2b ASTEROID data that Mereo has already presented. I do want to remind you of a few of the most important points. This trial was a large randomized blinded study of 90 adult patients with OI being studied across three different dose levels. After 12 months, the results indicated dose-dependent and statistically significant effect on bone formation and bone mineral density. Furthermore, the substantial bone mineral density improvements occurred across multiple anatomical sites. And the observed substantial bone formation, we believe, is a very important factor in improving bone's strength. All of these findings were accompanied by a favorable safety profile. Similar to how we developed burosumab for XLH, when we took over development from Kyowa Kirin. We are taking these impressive setrusumab results in adults with OI and looking to further improve upon them for pediatric patients. Currently, we are enrolling and dosing patients with OI between the ages of five and 25 years, with the goal of using the serum bone formation marker P1NP to optimize the dose. Once we have determined the pediatric dose strategy, we will transition directly into Phase III, evaluating the benefit of setrusumab on fractures. With this update, I will now turn back the call to Emil. Thank you.
Erik Harris: Emil, we're having a little bit of a hard time. I'm happy to finish this out.
Emil Kakkis: No, I'm fine. I just had problem with my phone. But I'm fine now. Thank you. So thanks, Camille. Before we shift to the Q&A portion of the call, I'll provide a quick reminder of the key upcoming milestones. For UX143 in osteogenesis imperfecta, we'll continue enrolling patients in the Phase II portion of the study and expect to provide an update on the dose strategy for the Phase III portion around the end of the year. Separately, we expect to initiate a study in children under five years old in the second half of the year. In our gene therapy pipeline with UX111 for sample IPO, we are continuing to follow patients who have been dosed in the pivotal study and continuing to evaluate the feasibility of filing for approval based on convincing biomarker data. We'll continue enrolling the Phase III for DTX401 and first stage of the UX701 study. We also expect to finalize start-up activities for DTX301 and begin dosing patients later this year. On the map action side, we will continue the build-out of our facility in Bedford, Massachusetts, which is on track to begin producing material in the first half of 2023. For UX053 and Glycogen Storage DTX 3 in the second half of the year, we expect to share single-dose data from the first part of the Phase I/II study and to initiate the repeat dosing stage. For GTX-102 in Angelman syndrome, we're off to continuing to enroll Cohort 6 and 7 at 7.5 or 10 milligrams outside the US. Our expectation is to provide the next update, one seems determined an optimal dose and have gathered substantial data from the expansion cohort. All of these programs create a distinct opportunity to make meaningful difference for patients that are the reasons we believe we have one of the most robust, diverse, late-stage pipelines in rare diseases. With that let's move on to your questions. Operator, please provide the Q&A instructions.
Operator: Thank you. [Operator Instructions] Our first question comes from Gena Wang of Barclays. Your line is open.
Operator: Our next question comes from Joel Beatty of Baird. Your line is open.
Operator: Thank you. Our next question comes from Dae Gon Ha of Stifel. Your line is open.
Operator: Thank you. Our next question comes from Tazeen Ahmad of Bank of America. Your line is open.
Q – Tazeen Ahmad: Okay. Great. Thank you.
Operator: Thank you. Our next question comes from Cory Kasimov of JPMorgan. Your line is open.
Operator: Thank you. Our next question comes from Yaron Werber of Cowen. Your line is open.
Operator: Thank you. Our next question comes from Salveen Richter of Goldman Sachs. Your line is open.
Q – Unidentified Analyst: Hi. This is Tommy [ph] on for Salveen. Thanks for taking our question. We have two on Angelman. So the first is that it seems based on the interim update that the younger patients benefited more and we're wondering how much of this do you think might be due to the drug needed to be given earlier that patients would develop naturally like more quick at a younger age versus when they are older? And secondly about the Phase III study, do you have any guidance on when this might begin? Would you wait for the different geographies to align under the same protocol, or could see a similar design as in the Phase I/II, where the dosing protocol is different from geography? Thanks.
Operator: Thank you.
Operator: Our next question comes from Maurice Raycroft of Jefferies. Your line is open.
Operator: Thank you. Our next question comes from Joon Lee of Truist. Your line is open.
Operator: Thank you. Our next question comes from Liisa Bayko of Evercore ISI. Your line is open.
Operator: Thank you. Our next question comes from Joseph Schwartz of SVB Securities. Your line is open.
Operator: Thank you. Our next question comes from Yigal Nochomovitz of Citi. Your line is open.
Operator: Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Joshua Higa for any closing remarks. Thank you.
Joshua Higa: Thank you. This concludes today's call. If there are additional questions, please contact us by phone or at ir@ultragenyx.com. Thank you for joining us.
Operator: Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you for all participating. You may now disconnect. Have a great day.
