PTC Therapeutics Inc (PTCT) 2014 Q4 法說會逐字稿

Thank you for holding for PTC's fourth-quarter and year-end 2014 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 14, 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 Emily Hill of PTC.

Thank you. Welcome to today's conference call to discuss fourth-quarter and full-year 2014 earning results and the commercial launch of Translarna. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. These include statements about our future expectations regarding clinical development, regulatory, and commercialization timelines; the potential success of our product and product candidates; addressable patient populations; 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 our most recent Form 10-Q, which are available from the SEC or on our website. Such statements represent our judgment as of today, and PTC undertakes no obligation to publicly update any forward-looking statements except as required by law.

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

Good morning. Thanks for joining our call. I'm delighted to be here today to review our performance and financials for the fourth quarter and 2014 year end. Last year was transformative for us, with a number of notable accomplishments. We are now a growing commercial stage biopharma Company in the orphan space, developing and delivering groundbreaking small molecules that target RNA-based processes.

We are proud to have launched the first approved treatment for Duchenne muscular dystrophy to patients with this devastating disorder. Translarna was approved by the European Medicines Agency, or EMA, last August. We have been working with patients and advocacy groups throughout the development of Translarna and understand the urgent need for treatments. We are working hard to bring Translarna to patients as quickly as possible. We assembled a team with substantial experience commercializing products in the older orphan space. We have now submitted pricing and reimbursement dossiers in key European countries. And in December of 2014, only four months after approval, we launched our first commercial program in Germany, and we look forward to continuing our commercial rollout through 2015. We also finished 2014 with reimbursed early access and named patient programs authorized in Spain, France, Italy, Turkey, Israel, and Columbia.

This year, we will also pursue reimbursed early access programs outside the EU, including Brazil, Argentina, and Australia. While still in the early days of the launch, we are pleased that feedback from both physicians and patients has been positive.

In December, we also submitted a rolling NDA to the FDA for Translarna approval. This will allow the FDA to review the majority of our materials ahead of the data from our confirmatory phase 3 ex-DMD trial, from which top-line results are expected in the fourth quarter of this year. We've begun building out our US commercial infrastructure in anticipation of the potential Translarna launch in the first half of 2016.

Furthermore, Japan is also an important market for us. It is the second-largest pharmaceutical market, and we have made progress establishing a PTC footprint in Japan, and we are working with regulatory authorities to determine the most expedient regulatory path towards approval in Japan.

As you might recall, we have worldwide rights to Translarna, and we intend to bring this important therapy to patients globally. We estimate there is an addressable market of about 7,000 patients with nonsense mutation DMD worldwide, and the commercial prospect for Translarna in DMD alone is over $1 billion peak sales opportunity. The rollout in Translarna will be staggered on a country-by-country basis in Europe and outside of the EU for EMA approval as referenced. During the 2015 quarterly earning calls, we intend to provide you with the number of patients on Translarna therapy.

Beyond 2015, we will evaluate the metric that will be most useful. I am pleased to share with you now that as of February 25, we have 42 DMD patients on commercial Translarna therapy through either reimbursed early access programs or commercial sales. We anticipate the ramp-up to continue throughout the year.

While we are very excited about the current commercial opportunity for Translarna in DMD, we are equally focused on bringing additional innovative therapy to patients. We achieved major milestones in 2014 with moving our pipeline forward and advancing new therapies into clinical development.

In cystic fibrosis, we initiated a second phase 3 trial with Translarna, ACT CF. Enrollment is on track to be completed by the end of this year. We anticipated data from ACT CF will be available in the second half of 2016.

Modeled after our successful DMD experience, we intend to apply for early approval in Europe once ACT CF is well enrolled. We anticipate this will occur in the second half of 2015. Because Translarna is already approved in Europe, the CHMP review process could be three months.

In recent years, the understanding of CF has evolved. The CF community now recognizes the disease is comprised of multiple subtypes with differing levels of severity. We believe that the recent data from the traffic and transport trial has put expectations around outcome of these different classes into new perspectives. We feel confident that the FEV1 response we saw in non-TOBI patients in our previous phase 3 data is clinically meaningful and would be a basis for US approval if replicated in our current trials, especially given that nonsense mutation CF is one of the most severe forms of the disease.

Because of Translarna's mechanism of action, it has the potential to address a wide array of genetic disorders. We are therefore developing Translarna in other indications to fully capture its potential as a product and a pipeline. This year, we look forward to advancing another program into the clinic as Translarna moves into MPS1 patients. Translarna is a small molecule which can cross the blood brain barrier. Existing treatments do not address the CNF manifestation of MPS1, which can be quite severe. While setting up sites and identifying patients for our open-label MPS1 trial, we received tremendous enthusiasm from both physicians and patients for the potential to address this unmet medical need.

Based on this feedback, we've decided to amend our trial design to include patients currently on enzyme replacement therapies or post transplant treatment, which do not fully address CNF issues. We continue to expect the data from this trial will be available toward the end of this year.

I will now shift to the SMA program, which is a partnership with Roche and the SMA Foundation. This program has moved into the clinic in 2014.

As you may recall, as published in the journal Science, we demonstrated that small molecules can be highly selective in modifying splicing of the SMN2 transcript. A phase 1 study in healthy volunteers was completed in the spring of 2014 with impressive results. The results show a dose-dependent effect on SMN2 splicing, demonstrating proof of mechanisms. These phase 1 results will be presented in the first half of this year.

Based on phase 1 results, a phase 2 trial, MOONFISH, was initiated in November in SMA patients. This study will enroll approximately 50 patients with once-daily oral dosing for 12 weeks. While the primary objective of this trial is focused on safety and tolerability, SMN proteins production and changes in RNA level are also being monitored. The exploratory endpoint also includes muscle and nerve function measurements. We are also very excited about this program both for the promise it brings to SMA patients and the validation of our splicing platform.

In November of 2014, we hosted our second annual science day, during which we went into detail on additional programs advancing in our pipeline. For Translarna, which we have mentioned is a product and a pipeline, in addition to MPS I, we discussed potential mix indications for which we plan to initiate at least one additional proof-of-concept trial later this year.

In oncology, our cancer stem cell program, PTC596 will begin a phase 1 study in advanced cancer patients with solid tumors in the first half of this year.

Lastly, given increasing antibiotic resistance, we are excited to have a novel antibiotic, PTC672, entering IND-enabling studies for gonorrhea. We look forward to sharing more with you about these programs throughout this year.

Before turning the call over to Shane, who will walk you through the financial metrics for the year, I would like to highlight one. PTC completed two very successful follow-on offerings in 2014, raising net proceeds of approximately $236 million. This contributed to our strong cash position of $315 million at the end of the year. These funds will allow us to independently commercialize Translarna worldwide, to investigate given the new indications and to continue to advance the exciting programs in our pipeline.

With that, let me turn it over to Shane. Shane?

Thanks, Stu. 2014 was a key year in our corporate development. We are now a well-financed commercial growth entity. We finished the quarter and year ending December 31, 2014 with over $315 million of cash and marketable securities on our balance sheet and no debt.

As Stu mentioned, in 2014 we completed two successful financings through public offerings of common stock, where we secured an additional $236 million of net cash proceeds. We believe that this cash position should be sufficient to fund our operations through late 2017.

Here are the financial results from the 2014 fourth quarter and full year as well as financial guidance for 2015.

We are now booking Translarna revenue from our commercial and reimbursed early-access sales. It is important to note that, like many companies when beginning their first commercial sales, we are only recognizing revenue on a cash basis when payment is received as opposed to when product is shipped and invoiced.

In 2014, we had shipped and invoiced for $2.5 million in commercial Translarna product orders. However, we received payment for $0.7 million that was therefore recognized as revenue and reflected on our income statement. The $1.7 million of Translarna invoices that remain outstanding as of December 31 were booked as deferred revenue on our balance sheet. We are working to determine the appropriate time to change our recognition of Translarna revenue. This will largely hinge upon our establishing a pattern of collectability such that revenue will be recognized upon shipment assuming all other revenue recognition criteria are met.

Total revenues for the fourth quarter of 2014 were approximately $12.7 million compared to total revenue in the fourth quarter of 2013 of approximately $4.4 million. The increase was primarily due to the $10 million SMA milestone we received from Roche and recognized in the fourth quarter. Total revenue for 2014 was $25.2 million versus $34.7 million in 2013. In total, we received $17.5 million in milestone payments from Roche during the year, but the overall decrease in revenue for the year was due to a reduction in the recognition of non-cash deferred revenue compared to the same period in 2013.

Research and development expenses accelerated in the fourth quarter of 2014 in conjunction with our expanding clinical programs as well as in support of the launch of Translarna. R&D expenses in the quarter were $26.9 million, including $3.2 million in non-cash stock-based compensation expense, compared to $15 million for the same period in 2013 including $1.6 million in non-cash stock-based compensation expense. R&D expense for the full year 2014 was $79.8 million compared with $54.9 million for 2013.

As the year progressed, our expenses increased as a result of increased clinical development activity such as the initiation of ACT CF, the manufacturing of Translarna product for both clinical and commercial supply, as well as activities in support of our launch where we have grown our regulatory, quality, and CMC supply chain functions.

SG&A expenses were $18 million for the fourth quarter of 2014, including $3.5 million in non-cash stock-based compensation expense compared with $7.5 million for the same period in 2013, including $1.7 million in non-cash stock-based compensation expense. And total SG&A in 2014 was $44.8 million versus $25.2 million in 2013. SG&A expenses have increased as a result of the growth we are experiencing associated with our commercial activities in support of the launch of Translarna across Europe and other regions.

In support of our commercial launch activities, we have added to our organization across many roles including commercial, marketing, medical affairs, and medical information, as well as finance, legal, IT, and facilities costs associated with establishing our international infrastructure.

The Company reported a net loss of approximately $27.3 million for the fourth quarter of 2014 compared to approximately $17.9 million for the same period of 2013. And net loss for the full year 2014 was $93.8 million compared with $51.6 million for the same period in 2013.

Looking forward, we anticipate operating expenses for the full year 2015 to be between $160 million and $170 million excluding expected non-cash stock-based compensation expense of approximately $30 million for total operating expenses of approximately $190 million to $200 million. We currently have 33.6 million shares issued and outstanding, which include 0.7 million shares in restricted stock grants.

Joining us for our Q&A is our Chief Commercial Officer, Mark Rothera. Operator, can we please take the first question?

(Operator Instructions) Ritu Baral, Cowen.

Do you guys have expanded access programs in other geographies that are not reimbursed? And if so, how do enrollment in those compared to the overall number -- the 42 number that you gave us today?

Hi, Ritu. Thanks for the question. I will let Mark talk a little bit about that.

Thank you for the question. We are focusing our expanded access program on countries which have a recognized reimbursed early-access program. And as we mentioned previously, that includes countries in Latin America, other countries in the European, Middle East, and African region, and we are now looking into the Asia-Pacific region. In addition, though, where we've been evaluating a compassionate-use program for additional countries where reimbursement is not possible today. And we will be coming back to you in the future with more details around that.

Great. Any breakout that you can give us on the 42 patients either between reimbursed expanded access or German patients? Any color you can give us on the breakdown?

At this time, we are not actually splitting out patient numbers by different geographies, but suffice it to say that those numbers do include a combination of both commercial drug into Germany and sales into early-access markets.

Great. Thanks. And last question, I will hop back into the queue. Moving to the MPS I protocol amendment, how do you think that may change either statistics on endpoints or how you evaluate potential clinical benefit in these patients, especially for post-transplant patients who may have some impact on cognitive function?

Hi, that's a good question. And so especially if you think about the ERT-treated patients, which don't pass -- which doesn't pass the blood brain barrier, that you will be able to see higher levels of GAG in the CFF. So we think clearly we will be able to see reduction there in clearly for patients that this is for proof of concept. And so we think we have talked to key investigators and heard that any change in the CFF would be actually promising. And then with more innovative approaches in measuring GAG levels, I think we'll be able to look not only at the CFF, but GAG levels in plasma and urine as well.

Great, that's helpful. Thanks, Shane, the questions.

Christopher Marai, Oppenheimer.

Hi. Good morning, guys, and congratulations on the quarter and the initial launch. I think my first question is really regarding your comments that you are looking at the Japanese market. I was wondering how you want to potentially address that. Are you looking at regional partnership, or how should we see your strategy in Japan, particularly in DMD where obviously there are indications. Thank you.

Hey, Chris. Hey, Mark, why don't you --

Okay. Hi, Chris. I'm sure you're well aware that Japan is the second largest pharmaceutical market in the world, and it's one that is very friendly towards orphan drugs. So we are intending to build up our own infrastructure with PTC in Japan, and we are really pleased by the progress we are making in terms of engagement with regulators and with key investigators. And right now what we're working on is the most expedient regulatory path that we can undertake in agreement with the regulators to enable access for Japanese patients as quickly as possible.

Great. And is there any timeline on access for those patients that you can provide at this time?

Yes, we've been -- we are working on that right now. I think one of the interesting things is we are already on the Japan's PMDA drug lag list. That as you might know, that drug lag list is for getting -- for those diseases that are for very high unmet medical need in that the key physicians who are trying to figure out what drug needs to come into Japan have put actually Translarna already on that list. And I think that really does highlight the importance of Translarna, knowing that they are already very well aware of it and made it a priority to try and ensure rapid access to patients. So we think that's exciting for us. And we are looking forward to working closely with the regulators to expedite the approval of Translarna so that patients can receive it in Japan.

Sounds great. And then one last question here on the UK. Obviously, there is some noise there, and there is a bit of political what-have-you going on about reimbursement of drugs. And I was just wondering where has that put you in terms of your estimates for potential sales into the UK market and any update on that front? Thanks.

Okay, Chris, so I think you are aware that the National Health Service in England has been changing its decision-making process around funding for ultra-orphan and specialized drugs. You heard that last December. But with the latest information we have, we're still expecting a decision on funding by late second quarter this year. So I think things are tracking in line with our expectations.

You've probably also saw something we see as very meaningful that Duchenne muscular dystrophy patients and their families were in London quite recently demonstrating outside of Parliament to demand Translarna's access immediately. And even the Prime Minister came to me with these patients and their families. And out in the floor of Parliament, he emphasized how important it is that patients get access to orphan drugs like Translarna quickly.

Great. Thanks. That's really helpful, and I appreciate you taking the questions.

Simos Simeonidis, RBC Capital Markets.

Thank you very much for taking the questions, and congratulations on everything that's happened this year and this quarter. Maybe I'll start with a quick question for Shane. Shane, is it possible to tell us how many patients does this $0.6 million come from? Were they all from Germany? And can you maybe touch on COGS?

Yes. So just quickly, our sales are predominately through Europe through the combination of both commercial and early-access sales. And I think as Mark alluded to earlier, we are not really breaking out either patient numbers or revenue numbers in terms of early access versus commercial.

In terms of the cost of goods sold, I think consistent with our conservatism around revenue recognition, and I think we have previously disclosed that we've also took in a more conservative position in terms of cost of goods where we had been expensing through the R&D line all Translarna supply, both clinical as well as commercial, up until through probably the rest of this year.

Okay. Great. A question for Mark. Mark, can you maybe help us understand the level of awareness and excitement -- and I think in the previous question you alluded to that. But how much do different countries know that the drug is available? And how quickly do you think that once the specific country, for example, would be selling the drug, you could see people -- you can see patients go on board?

So we've got really great feedback coming from physicians and patient organizations. And as you can imagine, the Duchenne muscular dystrophy community is a very connected community, so there's generally a lot of awareness out there.

As to access, well, you know, I think you'll appreciate that in Europe, whilst you have one approval for 31 countries, each country has their own access mechanism that takes different time frames. And so, if you like, launching in Europe actually is a scaling up of a whole sequence of different launches over those 31 countries over time. So really, our focus has been to engage with payers in different countries to initiate those access conversations.

Last question, Mark, for you also. Where are you with building out your team? Are you at 100%, halfway there in terms of building out everything in terms of labor structure and personnel?

Thanks for the question. A great deal of our focus, as you can imagine, over the last 12 months has been on the European launch. So we are a good 80% -- the infrastructure is 80% built. As I said, it's 31 countries in Europe. So essentially, there's still some gaps that we're going to be filling over the coming months. A lot of our attention now is focusing to pre-launch work in preparation for US launch next year as well as early-access program support in Latin America and, as we mentioned earlier, beginning preparations in Japan as well.

Thank you very much.

Alethia Young, Deutsche Bank.

Hey, great. Thanks for taking my question, and congrats, guys, on the progress. Just one simple question to start off with. When you look at the 42, how does that match up versus your expectations for where we stand now? Like if you think big picture?

Hey, Alethia. Thanks for the question. Hey, Mark, why don't you --

Well, yes, you are asking for a relative measure here. We really feel that our launch is on track. We are very pleased. You think about the fact that, thanks to our efforts to put in place early-access program, we've actually enabled patients to go on reimbursed therapy six to 12 months before they might've got drugs through the conventional commercial-only route. So I think we are in a great place and building some good momentum.

Okay. And then just going to your CF Translarna rolling filing here in the second half of the year, do you think that the groundwork you have laid over DMD will make this process a little bit easier? I know you noted that it might take around three months, but I just wanted to know what incremental needs to be provided. Is it just the data, or is it something more around ataluren that they will be looking for this time?

Yes, hi, thanks. So clearly, what we're trying to do is just follow the playbook that we did for Duchenne muscular dystrophy knowing that there is a variation as a consequence of having the approval. And it will be based on the current data that we have now. So it's really just setting it up from there.

Okay. And then just talking about 596, can you talk about what the mechanism is there with cancer stem cells?

Sure. So if the -- the mechanism is the target is the BMI program, and it causes the reduction of the BMI protein levels. And just to remind everyone, it's an important cancer stem cell that regulates many of the important regulatory pathways such that by reducing that, you reduce the level of -- it not only inhibits tumor growth, but reduces or brings to low levels those cells that can be, in a sense, stem-cell-like to either metastasize or grow. So it's a novel target. And so we're targeted by reducing the levels of BMI1 protein production.

Okay. And then just one last one on Translarna. Going back to the price, have pricing and reimbursement kind of -- from what you know so far as you move forward, kind of remained in line with what you saw early on in the launch?

Hey, Mark, why don't you take that?

I am sure you're aware that in the ultra-orphan space there's always negotiation around access. Our job is to explain Translarna's value, the high unmet medical need. And these processes are not always easy, but I believe we have some of the best people in the field working with us. And given that Translarna is really an innovative therapy and the first to be approved for Duchenne muscular dystrophy, and it's been developed for a very small patient population with very high unmet medical need, that we are in a good place. We have good prospects. So those negotiations really are taking place over the coming months.

All right. Great. Thanks.

Yaron Werber, Citi.

Hi, this is Kumar Azane for Yaron. Thank you for taking my question. About this 42 patient, can you tell us how many are from earlier clinical trials versus the non-clinical trial patients? And also can you provide us an update on your patient identification efforts. And I have one more follow-up question on SMA.

Okay. Thanks for the question. In terms of the number of patients who were on previous clinical trials, we really -- those patients -- we didn't really have any patients who were previously on clinical trials, so there's no real overlap there.

In terms of the second half of the question, I will pass it over to Mark.

So you are quite right to mention patient identification and genotyping. We are doing a lot of work to find patients and map them to treatment centers. And it's really a key priority for us. Our goal is to get the vast majority of eligible patients on drug as quickly as possible. And now that there is a treatment available, you can understand that there is a higher incentive out there for people to genotype in the community. However, it is rapidly evolving, and the number of genotypes do vary from country to country. And we are putting in place things to support genotyping country by country.

So for example, we are making sure that we know where all DMD patients are being genotyped currently. But we are also looking at finding centers, which are maybe smaller centers, that are less obvious to ensure the patients in those centers are also getting genotyped.

So really it is sort of a mix-and-match strategy where we do whatever we can to help in efficient countries to make them more efficient, and the ones that are less efficient to put more in place to make them become more efficient.

Thanks. And for the MOONFISH phase 2 data, it looks like the time most likely from late 2015 to now in 2016. Have you guys made any changes during this trial for this delay?

Thanks. Just to remind everybody, the MOONFISH is the SMA trial in patients. And I think what we've always said is that it will take about a year, so I think we are on track for that. So this is going to be about 50 patients that will be recruited for this trial. So I think we feel good about this completing in a timely manner.

Okay, great. Thanks.

Jason Kantor, Credit Suisse.

Hey, good morning. This is Jeremiah filling in for Jason. Thank you for taking the questions. You touched on the recognition that Translarna is getting in Japan. But do you expect that the current development program is sufficient for Japanese approval, or do you think there might be another study particularly with maybe the majority of Japanese patients?

Yes, hi, Jeremiah. So Mark, why don't you talk a little bit about our plans?

Okay. So, as we mentioned earlier, I think it's great news that the drug is already on the drug lag list. So that means that the authorities see this as a high unmet need and, in a way, want to work with us to find an expedited path to get the drugs to patients in Japan. We are still working on the precise nature of the kind of study that we may have to do to enable that to happen. But, again, the framework for those discussions is trying to find a solution as quickly as possible.

So we anticipate, I think -- just to follow up a little bit, that we think there will need to be some PK work done. But we don't necessarily anticipate it to be that onerous, but we'll be working with the regulatory authorities to supply the most expeditious path.

I know it's still early in the launch, but how quickly do you expect to get paid for the invoice sales should the -- would the deferred amount be recognized as a one-quarter lag or maybe potentially longer?

Hey, Jeremiah. Thanks for the question. You know, obviously we're still early in the launch; we just launched in Germany about two months ago. And so our experience in terms of getting payment is still relatively nascent. So our expectations so far -- we're getting paid on what we think to be a pretty timely manner, but we'll see how our experience goes throughout the year and as we launch from country to country to country.

Just one last question terms of SMA. You mentioned that we might -- we should see that phase 1 data in healthy patients in the first half of this year, if I heard it correctly. But also, when might we see the natural history in the biomarker data for the SMA program as well?

Yes, that's -- clearly, there is a natural history program that's been ongoing. And so I think as we as a group collective, there will be appropriate venue -- I don't think we have defined exactly when that will be presented at this time.

All right. Thanks for taking my questions.

Tazeen Ahmad, Bank of America.

Can you give us a little bit more granularity on what the ex-US DMD populations are, maybe by region? I know EU is a little bit higher than what it is in the US, but can you potentially give us estimates of addressable populations in South America and Japan?

Hi, Tazeen. Mark, why don't you go through that a little bit?

Sure. So, you know, our estimates are that in the DMD population about 10% to 15% have nonsense mutation. We typically use 13% for planning purposes. If you look outside of Europe, for example, where there are 2,500 nonsense mutation DMD patients, our estimates are around 2,100 for North America. Big countries in Latin America like Brazil, we would estimate around 1,000. A couple of 100 in Argentina and Colombia. And then out in Japan, probably a minimum of 600 that possibly are slightly higher incidents of nonsense mutation DMD in Japan. Turkey, for example, another important country with around 400 nonsense mutation patients. So we know we're seeing in the countries we are currently covering and intending to cover around 7,000 nonsense mutation DMD patients.

Okay. Thanks. That's really helpful. Can I ask how many -- in your current phase 3 trial, how many of the patients are ex-US?

Yes, we have a good mix between US and Europe, and we don't really -- we haven't really defined the cut. There's about 230 patients in the trial now. It's the largest DMD trial ever done. But we haven't yet cut out how many are in Europe and US.

Okay. And then one question on pricing, I think you said in the past that you expect the average ex-US price to be around $300,000. But in terms of the countries you are choosing to launch at initially, could we assume that the price that you will be able to get in those countries might be a little bit higher than that?

We don't really talk about country-by-country pricing, and we will continue to guide overall our planning assumption is a net $300,000 per patient. Take into account numerous factors like weight -- it's a weight-based drug, exchange rates, potential discounts in some areas, et cetera. So our blended number from a planning perspective is $300,000 net.

Okay. And then last question is, in terms of guidance to expect going forward, it was really helpful to hear the number of patients that are on drug. But going forward, how are you thinking about guiding the Street on how launch is going?

Yes, I think -- thanks, Tazeen. I think, as we talked about, there's still a lot of variables that are happening. This is the first launch ever into this community. And so at least at this point, we won't be giving any forward-looking guidance in terms of either revenues or patients, but we intend to report each quarter where we are in terms of actual patient numbers. So hopefully that will be helpful as you track our launch.

Okay, great. Thank you.

Anupam Rama, JPMorgan.

Hey, guys. This is Eric in for Anupam this morning. Most of my questions have already been answered, but I thought maybe I would circle back to MPS I. Maybe -- perhaps -- I was just wondering if you could offer a little more color around the feedback you have been getting from physicians about Translarna's potential on MPS I. And whether there is anything in your pre-clinical data that points to it that as a potential there on top of ERT and whether or not in your proof-of-concept study you are now considering a -- more of a randomized type of line there. Thanks.

Yes, thanks for the question, Eric. When you think about MPS I, clearly the CNS cardiac and bone are clear issues, and that's where there is still a significant unmet medical need. We've done -- and I think we have talked about this previously in our studies, where we saw a reduction in GAG levels not only in plasma but also in brain and various other tissues. And that's not surprising to us considering that we know that Translarna is a small molecule that can pass the blood brain barrier. So we think that there is a real advantage -- considering that patient -- there's fewer patients that are either not ERT or had bone marrow transplant that they will be able to help those patients, even though they are on either ERT or bone marrow transplant, be able to help where there is still real issues there. So we think that's a real advantage to be able to do that. And that should help, I think, unlock the full potential of Translarna and be valuable in addressing a major unmet medical need in these patient populations.

Okay. Thanks.

Debjit Chattopadhyay, ROTH Capital Partners.

Just quickly on Japan first, would you need the (inaudible) studies in healthy volunteers, or would that be in DMD patients? And does that similar framework apply to the two major Latin American countries?

Hey, Debjit. How are you? Thanks for the question. Yes, we are currently in discussions with the Japanese regulatory authorities. So I think it's a little too early to actually define precisely the regulatory path. So as we go through the discussions, I think we will give more color as we are more sure on where we are at. In terms of Latin America, we don't think there will be any other criteria that is needed there.

And do you think the Japanese approval could potentially come ahead of the ACT DMD phase 3 readout, or do you think they will potentially hold out and wait for the data readout?

Yes, I think right now as we really initiated the regulatory discussion talking with the investigators, I think it's too early to give timelines in terms of where we're at right now in terms of when that will happen.

And on -- there have been about 700 to 800 patients in Translarna clinical studies to date, right? And most of these patients have rolled over to some sort of a maintenance program or compassionate-use program. How are you following the outcomes of these patients over the long term?

Yes, so a couple of points there. Clearly, in completion of both the phase 2a and the phase 2b studies, well, we terminated it after the 2b that we then started extension studies. So we've been collecting predominantly safety data, but in Europe some efficacy either once or twice a year. So we're accumulating that. And so we will be accumulating that over time. And then at the appropriate time, obviously present something from there.

In addition, we will be -- in the post-marketing setting, we are setting up registries in which we will continue to collect longitudinal data for patients who are getting either expanded access or commercial drug so we can get additional information on the long-term benefits of Translarna. And then in the current studies, there's an extension study where we will continue to get additional data on that.

So what I'm trying to get at is at this point, do you have any sort of feel as to -- especially in, say, DMD, how these patients are tracking with respect to natural history studies?

Because it is somewhat complicated where they went on and off in the minimal data set we have. And as we collect it, I think at the appropriate time we will be able to present that at a venue. I think we are encouraged that virtually all the DMD Translarna patients to date have stayed on therapy, and some even up to four years. So it's been very well tolerated. But at the appropriate time, we will be presenting some of that data.

And do you guys plan to update on country-by-country approvals. or are you just on patient numbers at the end of every quarter?

So as we said earlier, we will be providing updates on patient numbers on reimbursed therapy on these calls. And no doubt there will be, over time, visibility into countries where those launches have taken place.

And if you expect to hear from -- hear back from NIS by the middle of the second quarter, would that still be in time to be on the schedule for 2015 reimbursement, or does this push it out to 2016?

The current expectation is that a decision would be made by the end of second quarter for funding in the second half this year.

Great. Thanks so much, and good luck.

(Operator Instructions) Heather Behanna, Wedbush Securities.

Hey, guys. Congrats on the progress, and thanks for taking the questions. Just a question a little bit on Latin America, sort of a follow-up on the patient identification. When we think about the Latin American opportunity, are most of the patients identified or treated in concentrated centers, or is it more of a fragmented system compared to some countries in Europe?

What we have found so far is that in countries like Brazil, there are a number of very important centers with relatively large numbers of patients. But then beyond that, there is a more fragmented picture. So as we establish ourselves in Brazil, we will be initially focused more on supporting the big centers, but in time expanding into new geographies as well.

And to follow up on that, I think we are working hard not only on working with them, but also genotyping -- making sure that the patients are all genotyped.

Great. Thanks. That's helpful. And then a quick question for Shane. With you guys being down (inaudible) in Ireland, if you could give any color on just how we should think about tax rate looking forward.

Yes, you think about what we've done with our -- setting up our international headquarters in London, I think many other companies -- or, sorry, in Dublin, many other companies have had similar tax structures. And I think ultimately, we recognized a blended tax rate in the low teens. I think we're still a little early in terms of giving any guidance on where we would ultimately land.

Okay, fair enough. Thank you.

Christopher Marai, Oppenheimer.

I was just wondering on the MPS disorders, obviously there's other nonsense mutations affected patients beyond MPS I; wondering how you're looking at those. Number two, how are you measuring urine GAGs? Just remind us -- and I remember some conversations that you may be looking at a different sort of methodology to test out during this trial. I think it was maybe Biomarin who had sort of a proprietary method here.

Then finally, how do you think about tissue distribution and activity-dependent concentration -- activity dependency on dose with respect to MPS? Obviously, you want to cross the blood brain barrier, and I think you guys do, but also there are many tissues that are unaffected by ERT. But obviously we would want to see activity across the board in those for the ultimate benefit of patients. Could you maybe comment on that? Thanks.

Sure. Thanks. Okay, so let's -- we will break that down to the other lysosomal storage disorders. You're actually quite right. There are other ones that one could easily measure and look for reduction in that there are nonsense mutation patients. And clearly what we're doing is thinking about what other indications that one could actually do in terms of proof of concept. And so we are actively thinking hard about that as well, and I think we'll talk about that as we make decisions on that.

In terms of the GAGs, there are now -- again, you are quite right; there's a nice discussion. I think Biomarin has a nice method, or has developed a nice method, in terms of being able to more accurately monitor GAG levels. There's ones that are similar to that as well. And we'll be using, I think, some more updated methods for measuring GAG levels both in the CSF as well as in blood and urinary GAG levels.

And I think that sort of goes to your point in terms of tissue distribution, the fact that we'll be taking measurements both in the urine as well as blood as well as in the CSF will give us an opportunity to see some of that -- see differences in distributions to the effect in different tissue types. So, again, because Translarna is an orally bioavailable molecule that distributes well throughout the tissues, we are encouraged by the possibility of it being able to go to tissues where ERT may not be able to go to.

Great. And just quickly on EMI I, do you have any plans, remind me, to go into hematological malignancies?

Yes, that's a good question. Obviously, we are starting with the typical phase 1 oncology study that looks at PK and safety and then examines tumor response. But we're also -- and that's going to be an escalated dose. But we're still -- we are excited about (inaudible) as you move forward -- as we move forward, and we hope to rapidly move as we get more closely to the appropriate dose to look at those indications as well. So that's in our game plan as well.

Great. Thanks. Congrats on the progress.

Thank you, and that does conclude our question-and-answer portion. I would now like to turn the call back to Mr. Stuart Peltz for any closing remarks.

Thank you. And thanks for being on the call. And I think, as you've heard, we are in an exciting place where we are commercializing Translarna and developing our robust pipeline, and that we look forward to updating you over the year. Thank you for all your interest and for joining our call today. Thanks again.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day.