PTC Therapeutics Inc (PTCT) 2013 Q4 法說會逐字稿

Thank you for holding for the PTC fourth-quarter and fiscal year 2013 conference call.

(Operator Instructions)

Please be advised that this call is being taped at the Company's request and will be archived on the Company's website until March 20th, which is two weeks from today. PTC's current investor presentation slide deck is available at the same website location.

At this time, I would like to turn the call over to Jane Baj of PTC.

Thank you, operator, and good afternoon, everyone. Thank you all for joining us for PTC's fourth-quarter and full-year 2013 investor conference call.

With me here today are Dr. Stuart Peltz, Chief Executive Officer of PTC, and Mr. Shane Kovacs, Chief Financial Officer. They will provide opening remarks and share some highlights of the year and recent events. Shane will then provide detailed financial results and we will open up the call for questions.

Earlier today, we issued a press release detailing PTC's fourth-quarter and full-year 2013 results which is available on our website at ptcbio.com. During today's call, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical development and regulatory timelines, the potential success of our product candidates, and financial projections.

Actual results may differ materially from those indicated by these statements as a result of a variety of risks and uncertainties including those discussed under the heading, special note regarding forward-looking statements and risk factors in the final perspective for our public offering completed in February 2014, which is on file with the SEC. Any forward-looking statements represent our views as of today only. PTC undertakes no obligation to publicly update any forward-looking statements.

With that, let me pass the call over to Stuart.

Thanks, Jane, and good afternoon, everyone. Welcome to our fourth-quarter and full-year 2013 investor conference call.

2013 was an important inflection point in PTC's 15-year history. We went public in June. With the completion of our recent financing, we are now funded through 2016 when we anticipate having completed both confirmatory Phase 3 trials for ataluren Duchenne muscular dystrophy and cystic fibrosis, as well as having clinical proof-of-concept data for ataluren in at least one additional indication.

We've been focusing on executing on our clinical development program and advancing our pipeline candidates. We achieved several value-creating milestones in 2013. In April 2013, we began enrollment for our most advanced product candidate in the ataluren confirmatory Phase 3 DMD trial called ACT.

As you recall, ataluren is specific to patients with genetic disorders as a consequence of a genetic mutation known as a nonsense mutation. In addition to this late stage clinical development program for nmDMD, ataluren is also entering a Phase 3 trial for nonsense mutation cystic fibrosis, or nmCF.

Available treatments today do not address the underlying cause of these disorders. Ataluren is a wholly-owned product that provides us with a significant potential for value creation. We believe that ataluren has the potential to be an important therapy for other genetic disorders for which a nonsense mutation is the cause of the disease.

We estimate that on average, 11% of patients with any genetic disorder due to a single gene have a nonsense mutation as the cause of their disorder. In the case of DMD, approximately 13% of patients have the disorder as a result of a nonsense mutation and are not addressed by other therapies in development.

We are currently enrolling a 48-week, multi-center, randomized, double-blind, placebo controlled trial evaluating the efficacy and safety of ataluren. The primary objective of this trial is to confirm the effect of ataluren on ambulation in DMD patients. The primary endpoint is the change in walking distance as measured by the six-minute walk test. The design of the clinical trial was informed by the results from our previous clinical studies, as well as our understanding of the natural history of DMD utilizing the six-minute walk test.

Multiple natural history studies have subsequently confirmed our prior work and give us a high degree of confidence that our confirmatory study is both well-designed and well-powered for success. This is the largest study ever conducted in DMD. We plan to enroll approximately 220 patients in this study from approximately 53 sites across 18 countries. Patient enrollment is on track and expected to be completed by mid-2014. We expect to complete this trial and have top line data in mid-2015 and then file for full approval in the United States and Europe in 2016.

As you know, in 2013 we went through the conditional approval application process for ataluren in DMD in Europe. This process culminated with a scientific advisory group meeting followed by an oral hearing, both in December. We found the dialogue with the EMA very productive. During our scientific advisory group meeting in the oral hearing, the CHMP brought in a number of disease experts for an in-depth review of ataluren in DMD. Though we received a negative opinion on our initial filing for a conditional approval from the EMA of this year, the feedback has been very informative.

As we recently disclosed in the final prospectus for our public offering completed in February 2014, the committee acknowledged that the post-hoc analysis that we presented were performed in line with the most current knowledge about the natural history of the disease. Furthermore, the committee stated that our definition of the subgroups in the analysis we presented, while post-hoc, was both scientifically and clinically justified. Overall, despite receiving a negative opinion, we believe that these conversations with the CHMP were beneficial for the discussion that occurred regarding the nature of the disorder and what can be expected from a dystrophin replacement therapy.

The dialogue advanced the CHMP's understanding regarding ataluren, its mechanism of action, and the preclinical and clinical data demonstrating its ability to read through nonsense mutation and create full-length protein. Based on the feedback and continued successful enrollment of our ongoing confirmatory Phase 3 trial, we have filed for re-examination.

There is substantial risk to gaining the additional approval, and our focus remains on the completion of our Phase 3 ACT DMD trial. We believe a conditional approval would be potentially beneficial to patients and shareholders. The final CHMP decision on our re-examination is expected in the second quarter of 2014.

In addition to this late stage clinical development of ataluren in nmDMD, we are also highly focused on the development of ataluren as a treatment for nonsense mutation cystic fibrosis. Nonsense mutations account for approximately 10% of all CF patients, and nmCF is the most severe form of the disease. Available treatments today do not address the underlying cause of this disease for nmCF patients.

Results from a completed Phase 3 clinical trial in nmCF showed clinical evidence of activity with ataluren and provides us key insights for the design of our upcoming confirmatory trial. The design of our confirmatory Phase 3 trial will largely be similar to the previous Phase 3 trial, with FEV1 as the primary endpoint and pulmonary exacerbations as a key secondary endpoint.

The main change from the prior trial will be to exclude patients who are using chronic inhalant tobramycin. Tobramycin is a ribosome binding drug that confounds ataluren's activity. We anticipate that the confirmatory Phase 3 trial will be initiated in the first half of 2014.

Regarding our spinal muscular atrophy program, or SMA, a development candidate was declared in August of last year. This program moved into Phase 1 at the start of 2014, and we look forward to communicating next steps on this program.

In addition, the SMA clinical program was complemented by natural history and biomarker observational studies which are ongoing in SMA patients. To remind you, this program was a collaboration with both the SMA Foundation as well as Roche, who was granted an exclusive worldwide license to products from our SMA program.

SMA is a rare disorder that is the leading genetic cause of death in infants and toddlers. The SMA Foundation estimates that spinal muscular atrophy affects one in every 10,000 children born. It is caused by a defective SMN1 gene leaving SMN protein production solely as a result of the expression of the SMN2 gene. This leads to reduced levels of the SMN protein causing significant muscle atrophy and eventually death by the age of two in the most severe form of the disease.

We're looking forward to the continuing development of this exciting potential therapy for this devastating disease. Furthermore, I believe that the results we have achieved to date in this program provide strong validation for our alternative splicing platforms. We are separately focused on the discovery of compounds that modually splice into to include or exclude exons in other transcripts that help treat other disorders.

In addition to these ongoing R&D efforts, we are exploring the potential for ataluren in additional indications, as well as other preclinical programs. Ataluren is both a product and a pipeline with over 20 publications demonstrating its activity in multiple different nonsense mutation cell and animal-based disease models in different organ systems. In 2014, we plan to announce at least one additional indication for ataluren and initiate a proof-of-concept trial for this third indication.

In the fall of 2013, we held our first R&D day to discuss our earlier stage programs and our upcoming pipeline of products. We continue to continue this tradition and update you about the development of our programs in 2014. In summary, PTC has made great strides in the development of our pipeline and has progressed on a number of key clinical and corporate milestones in the recent months.

Before we open up the call for Q&A, let me ask Shane to review our financial results. Shane?

Thanks, Stu.

I'm happy to report that PTC continues to be in a strong financial position to execute upon our strategy and build a leading company focused on rare disorders. Since we issued a press release earlier outlining our fourth-quarter and year-end 2013 financial results, I will just review the highlights and then speak to our cash balance and our financial guidance. The Company reported a net loss of approximately $18 million for the fourth quarter of 2013, compared to approximately $6 million for the prior year.

Net loss for the full year 2013 was approximately $52 million, compared with a net loss of approximately $26 million for the prior year. Total revenues for the fourth quarter of 2013 were approximately $4 million, compared to approximately $7 million for Q4 2012. And total revenue for full-year 2013 was $35 million, compared to $34 million in 2012.

R&D expense for the fourth quarter of 2013 was $15 million, which compared to $9 million in R&D expense in the fourth quarter of 2012. Additionally, R&D expense for full-year 2013 was $55 million versus $46 million in 2012.

As you would expect, the increase resulted primarily from the ongoing expense of our confirmatory Phase 3 ACT DMD clinical trial, as well as our open label extension studies in nonsense mutation DMD and nonsense mutation cystic fibrosis. G&A expense for the fourth quarter was $7 million, compared to $3 million for the fourth quarter of 2012, and G&A expense for the full-year 2013 was $25 million versus $15 million in 2012. This increase was driven primarily by public company related expenses, precommercial activities, and increased non-cash stock-based compensation expense.

With the proceeds from our combined equity financing in the first half of 2013, as well as a $10 million milestone we received from Roche in the third quarter of 2013 for the selection of a development candidate in our SMA collaboration, we ended the year with over $142.5 million in cash versus approximately $2.7 million at the end of 2012. In January of this year, we also received an additional $7.5 million milestone from Roche when our SMA program entered Phase 1. As a reminder, in February of 2014, we successfully completed a public equity offering and raised net proceeds of approximately $118 million, after fees and expenses, which further strengthens our balance sheet.

This recent offering puts our cash position currently at over $250 million, which should be sufficient to fund our operations through 2016. Our guidance for 2014 is for total operating expenses to be between $85 million and $95 million, excluding non-cash stock-based compensation.

We expect to end 2014 with approximately $175 million to $185 million in cash, cash equivalents, and marketable securities. We currently have 30.1 million shares issued and outstanding, which includes 1.1 million shares in restricted stock grants.

With that, let's open the call for questions. Operator?

(Operator Instructions)

Jason Kantor, Credit Suisse.

Thanks, and congrats on all the progress that you have made. I am just wondering two things. Can you give us some visibility on when you might get some data from the extension studies and what form that data might take?

And then also, with regard to new indications for ataluren, I know you are not prepared to tell us what they are at the moment but maybe you can give us some sense of what the process is that you are going through in order to identify those. It would seem -- are you doing preclinical studies? Or Is this just a matter of determining which markets are most attractive? How should we think about that? Thanks.

Thanks for the question. On point one on the extension study, we do have an open label study where we're collecting data. There is two. One in the US and one in Europe. In Europe, we are -- is where we are collecting data and so we have less and that started later than the US one. Over time, I think that we will be collecting data and at the appropriate time, we will find a venue, a scientific meeting to present that some time when enough data has been collected. We haven't yet decided what the best time of that would be.

In terms of the new indication, we have thought a lot about the new indication. As you know, approximately 11% of any given -- of patients with any given genetic disorder with a single gene effector, about 11% of those patients have their disease as a consequence of a nonsense mutation. When we think about what would be the next indication, it is certainly very nice to have preclinical data. As I said in the official remarks, there is now over 20 different publications in which ataluren has been demonstrated in many different organ systems in which a nonsense mutation causes the disease. And that's both in cell-based as well as in disease models.

I think in our presentation that will be up, there is a number of examples like in lysosomal storage disorders, MPS1, in certain eye disease, and given these examples, aniridia, choroideremiaandand, quite striking in terms of the results of that. There is a large number of examples and metabolic disorders as well. What we try and think about is, are the patients that have been genetically defined a substantial number of patients? Are there some outcome measures that would be -- outcome measures that could be used for rapid proof-of-concept in clinical trials.

Do we have preclinical data for it? Are there specialty sites for that as well? And are there specific patients to be able to do this rapidly? I should point out while I do say there's 11% overall, certain populations like MPS1 have about 70% of their patients due to a nonsense mutation. So it's that set of criteria that we look at for rapid proof-of-concept to prioritize which would be the next set of indications to bring forward. And we hope to be able to prioritize maybe the top 5 or 10 and start moving through that process this year. Hopefully by the end of this year we will be starting with one or two.

Thank you.

Thanks for the question.

Geoff Meacham, JPMorgan.

Mike in for Geoff. With respect to the ongoing regulatory process in Europe, assuming you guys don't get conditional approval in Q2, can you maybe comment on the next steps there? Is there more potential for rapid approval once you get the Phase 3 data next year as a continuation of the existing process or would the clock restart again once you get that Phase 3 data? Thanks.

Sure. The conditional approval process is a 120-day process. We will know by the end of the first half of this year. As we said, we always said there is substantial risk in that and we really have our focus on the data that comes out in 2015. We think once that comes up, we have done a lot of work already on getting ready with the MAA and NDA in terms of writing it up so it is really the process of cleaning the data and then writing up the particular -- this particular trial. So we think we get the data in mid-2015, give top line data to -- so that everyone knows that and have that in by early 2016.

Thanks.

Debjit Chattopadhyay, Emerging Growth Equity.

Thank you for taking the question. Just a couple of questions, if I may. On the SMA program, in healthy volunteers, the SMN-2 protein and plasma, is that what you are measuring? And how does that translate to the HMS scale in the SMA patients in general? Is there a correlation between what you are measuring in healthy volunteers versus what you would likely see in the sicker patients?

Thank you for that question. As everyone knows, we went with Roche to do a Phase 1 study, a healthy volunteers study, with up to 48 patients, single offending dose versus placebo which we started in the first quarter of this year. Really, it has been a safety study. At this point, this is all that's being -- that Roche would let us disclose. So we are not disclosing any other endpoints right now.

With respect to the BMI-1 program, do you have data on -- [breaking through] data and suggesting synergies with any of the concurrent regimens in CRC? [Fallfox fall CA], for example. And on a higher level, how do the BMI-1 fit in in the evolving immuno oncology paradigm?

That is a good question and BMI, as you know, is involved in modulating the chromatin structure and remodeling that is shown to be important in the cancer inducing cells, in regulating those. It's probably a little bit too early to say how we are going to fit that in within the clinical trials. I think as we are working through our thoughts on how to -- what steps we would do and I think once we've worked that all out, I think we will be in a better position to answer that question.

Thank you so much.

Thank you for the question.

(Operator Instructions)

Chris Marai, Wedbush Securities.

Thanks for taking my question. Congratulations again. Just wondering with the upcoming MDA conference, will you guys be presenting any data at that conference here? And then, finally, again sort of touching upon some questions with the new indications for ataluren, looking at aniridia, how do you look at the doses in terms of the doses you use systemically versus potential direct to the eye type dosing?

With respect to Hurler's, given the current (technical difficulty) and some folks are starting to use EMT as a treatment for these patients. How are you looking at potentially running this trial in the US? Are you looking at other sites? And what considerations with prospective patients might you be thinking about? Thanks.

I missed -- you were in and out a little on some of that. In terms of the MDA, there will be some posters there and I believe we will have a lunch where we will be presenting data and such. I think we will certainly have a presence there. In terms of aniridia for dosing, in terms of the preclinical models, which is all we are really talking about right now.

I think there was work done by the group in UCB, Gregory Evans, a very nice job in terms of looking at both systemic delivery as well as doing eyedrops of appropriate doses so that's, I think, a pretty good starting point for us to be thinking about what to we would use at least. I think it is still far too early in terms of defining right now. That is part of the more gaining of what are the next indications of how we would do the various studies, both for aniridia as well as certainly one that we are interested in and thinking about how to do that. That's being planned out right now as well as MPS and how one can do that.

The way we normally do any of this is -- what we try and obviously learn as much as we can in terms of the overall field and how people have done these. And then we bring in a number of experts. It's actually in the sense really used a whiteboard to say what is the best and most efficient proof-of-concept approach to get at that answer. So we are doing that right now so I think it would be a little bit premature to be able to say exactly how we would do it.

Thanks, and then with respect to just the timing of the potential readout from a proof-of-concept study in new indications for ataluren, do think that might happen before the readout in DMD? Thanks.

Certainly, as we have plan to initiate by the end of 2014. So we are hoping that certainly would be in the following year whether it is before or after that, it's hard to say yet.

Great. Thank you.

Thank you. This does conclude the question-and-answer session of today's program. I would like to hand the program back to management for any further remarks.

Thank you, operator. I'm going to say 2013 has been a successful year for PTC and I think 2014 is off to a strong start. We look forward to executing our Phase 3 trials in DMD and CF and communicating with you as we achieve these and other milestones. Again, thank you for your interest in PTC and for joining our call today. Thanks, again.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.