PTC Therapeutics Inc (PTCT) 2014 Q1 法說會逐字稿

Thank you for holding for PTC's first-quarter 2014 conference call.

(Operator Instructions).

Please be advised that the call is being taped at the Company's request and will be archived on the Company's website until May 20, which is two weeks from now. 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 first-quarter 2014 financial results conference call.

With me here today are Dr. Stuart Peltz, Chief Executive Officer, and Mr. Shane Kovacs, Chief Financial Officer. Stuart will provide opening remarks and share some highlights of the quarter 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 first-quarter 2014 financial 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 headings, special note regarding forward-looking Statements and risk factors in our 2013 Form 10-K, which is on file with the SEC. Any forward-looking statements represents our views as of today only.

PTC undertakes the 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 first-quarter 2014 investor conference call. We are happy to report on the progress we have made in the first quarter of each of the clinical regulatory and corporate fronts.

This quarter we closed a registered public offering of common stock where we raised gross proceeds of approximately $126.5 million. This additional funding provides us with a strong balance sheet from which to execute on our strategic plan.

In the first quarter of this year we were particularly focused on advancing our clinical development program. Our lead product candidate, ataluren, is currently being tested in a confirmatory Phase 3 clinical study in Duchenne muscular dystrophy and the confirmatory trial in cystic fibrosis, where we initiated in the second quarter of 2014.

In addition, we plan to begin our Phase 2 proof-of-concept study for ataluren in an additional indication later this year. Our confirmatory Phase 3 ACT DMD, or ataluren confirmatory trial in patients with nonsense mutation Duchenne muscular dystrophy, is the largest study ever conducted in DMD.

We plan to enroll approximately 220 patients in this study from 53 sites across 18 countries. Patient enrollment is expected to be completed by mid-2014.

The design of the clinical trial was informed by the result 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 a confirmatory study is both well-designed and powered for success.

In addition to the 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 mutation accounts for approximately 10% of all CF patients and nmCF is the most rare form of the disease.

Available treatments today do not address the underlying cause of the disease for nmCF patients. We are in the process of initiating a confirmatory Phase 3 clinical trial in nonsense mutation cystic fibrosis, or nmCF.

The design of this trial is largely similar to our previous Phase 3 CF trial with lung function as the primary endpoint and pulmonary exacerbation as a key secondary endpoint. The major change from the prior study is to exclude patients from enrolling who are using chronic inhaled tobramycin. Tobramycin is a ribosome binding drug that has been shown to confound ataluren's readthrough activity.

In addition to the development of ataluren in these two indications, we are planning to initiate a Phase 2 proof-of-concept study in an additional indication in the second half of this year. Ataluren's activity has been demonstrated in multiple nonsense mutation preclinical cell and animal-based disease models in multiple different organs with over 20 publications. This is important as it continues to expand ataluren's potential and its utilization as a pipeline of product.

From a regulatory perspective, we are currently in the final stages of the re-examination process for conditional approval of ataluren in nonsense mutation DMD in Europe. We expect the final opinion from the CHMP in the second quarter. As a reminder, we continue to believe with a substantial risk we can get conditional approval and our primary focus remains on the completion of our confirmatory Phase 3 ACT DMD trial with data in 2015.

I will wrap up by covering our spinal muscular atrophy program, or SMA. To remind you this program is our collaboration with both the SMA Foundation as well as Roche, who was granted exclusive worldwide rights to our alternative splicing SMA program.

This program moved into Phase 1 clinical trial in healthy volunteers at the start of 2014 and is complemented by both natural history and biomarker observational studies in SMA patients. 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 1 in every 10,000 children born.

It is caused by the defective SMN1 gene [which leads] SMN protein production solely as the 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 are looking forward to the continued development of this exciting potential therapy for this devastating disease and will communicate our progress as we hit key milestones. Furthermore, the progress we have achieved to date in this program provides strong diligence for our primitive splicing platform where we separately focused on the discovery of compounds that modulate splicing to include or exclude exons and other transcripts for the potential treatment of other disorders.

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 we finished the first quarter with over $246 million of cash on our balance sheet. The financing that we completed earlier in the quarter puts us in a very strong position with enough capital to fund our operations through 2016, which takes us beyond the data readouts for both our confirmatory Phase 3 ACT DMD and ACT CF clinical trials.

For the quarter we reported the following summary financials. Total revenues for the quarter were $9.2 million versus $7.1 million in the prior year.

R&D expense for the quarter was $15.9 million compared to $11.3 million in the first quarter of 2013. This increase was primarily driven by higher clinical costs associated with our ACT DMD and ACT CF clinical trials.

G&A expense for the quarter was $7.5 million compared to $4.5 million in the first quarter of 2013. This increase was primarily driven by higher non-cash stock-based compensation expense, precommercial activities and public company costs.

Overall, the Company reported a net loss of $14.1 million for the first quarter of 2014 compared to approximately $14.7 million for the first quarter of 2013. As a reminder, 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 to $185 in cash, cash equivalents and marketable securities. We currently have 30.1 million shares issued and outstanding, which includes 0.7 million shares in restricted stock grants.

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

(Operator Instructions). Jason Kantor, Credit Suisse.

Thanks for taking my questions. I guess a couple of things.

First, could you give us a little bit of a sense of when you think you will be actually in SMA patients with that program and how long you might think it would take to get to some sort of proof of concept in that setting? And if you think there may be some proof of concept that would come out of the healthy volunteers study?

And then also, I know that there is both the US and EU extension trial that is still ongoing, I believe the European one has continued data collection. I am just wondering where and when we might expect to see an update out of that? Thanks.

The first question in terms of the SMA. As you know, as I said, it's a collaboration with Roche and the SMA Foundation where we picked the development candidate late last year and just started -- early this year started the Phase I trial in healthy patients.

We are limited to what we can say as a consequence of having the partnership for Roche. I can remind you of what we have publicly disclosed previously was that I think one of the advantages of having an orderly bioavailable compound that gets into distributed around the tissues in the periphery that we showed even with a single dose that we were able to, in the animal model, able to demonstrate that the RNA -- you can include exon 7 that you can make the protein and see it come up and come down even in a single dose.

Obviously blood's being collected and it's obviously human. But certainly there is a possibility that Roche, who is leading the development of that, could certainly look at that.

In terms of the US -- so there is possibilities -- and then after that I would mention that we would start a proof of concept in patients. And then in the US, in terms of the EU and US extension trials in DMD, those are patients who were in either the study -- 2007 study or in other of the Phase 2a studies that were on -- were put on extension studies. And there's two of them, one in the US, which is only really collecting safety and then started later as a consequence of as we gain in the program where we are measuring six-minute walk test and other things on a six-month basis or so.

So what we plan is to present the data at the appropriate scientific venue when enough data is collected. So we don't know what that will be yet.

All right, thanks.

Geoff Meacham, JPMorgan.

Afternoon, guys, and thanks for taking the questions. Just to ask the other question another way, what have you guys learned from your Phase 2 experience in DMD or CF just with longer exposure?

Do you feel like the efficacy trends, is it stable, is it modestly up, is it modestly down? And maybe how does that inform, for example, how you are thinking about what the benefit could be in the CF study and I guess also in the (technical difficulty)?

Sure, that's a really good question. In terms of the DMD study, ours was the first study which really we learned the natural history. And there has been subsequent results from multiple other studies now that really have demonstrated what we observed.

And I think the important points there, observations, where that patients when they are in the decline phase and in particular, when their baseline six-minute walk test is 350 meters or below declined quite well. And I think what we showed overall in the DMD study that there was substantial stabilization for that year. So I think that's what we know in terms of that right now.

In the CF study as a consequence of we had a crossover, we showed that the patients on ataluren, the nonsense mutation cystic fibrosis patients, were stable in year one and then in the extension study when we looked at that they were also stabilized. So we saw consistent stabilization within that as well.

So that looked actually quite good. So I think it goes to the notion of continual -- that you get continual stabilization of it. And obviously what you would like is to get the patients on as early as possible in order to see -- in order for them to make as much dystrophin as early in the disease as possible.

And then as a follow-up, when you look to other indications for ataluren, obviously there are a lot that are nonsense mutations. Maybe just walk us to your thought process, how would you prioritize how you would select the new indication? Is it the preclinical data that could justify the probability of success?

Is it more related to the opportunity and the unmet need, or what effect size you can have? Just how do all of these things play out when you select your next indication?

So just to think about the notion that I think is so exciting about ataluren is that not only is it a product but it's a product within a pipeline that you can choose multiple indications. Cystic fibrosis and Duchenne muscular dystrophy were the first, but over the last three to four years now there has been over 20 publications demonstrating ataluren's activity in nonsense mutation model systems both in cell-based and animal models in different organ systems.

So I think that there is now a fair amount of preclinical data in multiple therapeutic areas for us to consider from that point of view. And then from a clinical point of view, obviously what we are thinking about is what is the fastest way to show proof of concept. What we would like is something where there's a biomarker that can be determined where you could see changes relatively rapidly in that we know the biomarkers there's some understanding of it, some of the outcome measures that from a point of view that it would be stable, that it would be stable in terms of so that you would be able to get a robust answer quickly and in as few patients as possible that would then let you go on to do perhaps more subsequent work.

So clearly what we've talked about we are on the path now of finalizing that decision and trying to get that movement as rapidly as possible and certainly many of the metabolic or lysosomal disorders like MPS1 would be quite interesting. There's tremendous data in aniridia and choroideremia that would be, that was nice, as well.

That probably would take a little longer because one could consider doing it without drugs. I think there was in our investor deck, which can be found on our website a number of examples of diseases that we are finalizing the signing on. And then from there we would anticipate disclosing that we have started a trial.

Okay. Thanks a lot.

(Operator Instructions). Christopher Marai, Wedbush.

Hi, thanks for taking my question. This is Nate Davis in for Chris Marai.

I was just wondering giving the recent SMA data we saw and the natural history data they presented, there's a pretty good correlation with SMN proteins and how are you thinking about potential surrogate endpoints and the risk-benefit there? I know you are doing your ongoing biomarker study, just if you could give me some insight into how you're thinking about that?

Obviously we are doing this with Roche and the SMA Foundation. That hasn't been disclosed exactly what would be looked at.

But I think what we have disclosed and discussed and again with such an advantage of having an orally bioavailable molecule that actually disperses to all tissues. And where we have shown that for instance in the blood you can see increases of appropriately spliced SMN protein as well as SMN protein being made.

So you can see it both in the transcript of the RNA by looking at blood or in animal skin. That really is a major advantage in the sense that you can quickly look at its effect on in the periphery, so that gives you a real biomarker advantage.

So, as you mentioned, there's -- and that's really being looked at within some natural history studies where we are looking at blood as a biomarker for looking at SMN levels of both protein and transcripts. So we will have an understanding of how that varies at different stages of the disease. So it's exciting to have that potential.

Great. Thanks for taking my question.

Thank you, there are no further questions at this time. I would like to turn the call over to Stuart for any closing remarks.

Thank you, operator, and thanks guys for the questions. I think that 2014 for us is off to a strong start. We are executing on our clinical programs and strategy, focused on building a leading company on rare and neglected disorders.

We look forward to communicating with all of you as we achieve our future milestones. Thanks again for your interest and for joining the call today. Thanks, guys.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program.

You may now disconnect. Have a wonderful day.