PTC Therapeutics Inc (PTCT) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the PTC Therapeutics' third-quarter financial results conference call.

(Operator Instructions)

As a reminder, this conference call may be recorded.

I would now like to turn the conference over to Emily Hill of Investor Relations. You may begin.

Thank you. Welcome to our conference call. Today we will discuss PTC's third-quarter 2015 and year-to-date financial results, our ongoing commercial launch activities for Translarna and Duchenne muscular dystrophy, results from our Phase 3 ACT DMD clinical trial and other corporate updates.

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 products 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 whether the FDA, the EMA or other regulators agree with our interpretation of the results of ACT DMD and those discussed under the heading, special note regarding forward-looking statements and risk factors in our most recent Form 10-Q, which is 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. As noted in our accompanying press release, we will review ACT DMD data during this call. For those interested, the slides that will be presented during the call are available under the investor relation's section of our website.

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

Good afternoon, and thank you for being on the call.

As you know, we recently reported results from our Phase 3 ACT DMD clinical trials for Translarna for nonsense mutation Duchenne muscular dystrophy. We're excited to talk more about that today, as well as our planned next steps.

As you might expect, we've been sharing the data with a number of important stakeholders globally, including physicians, key opinion leaders and patient advocacy groups. The response to our data has been extremely positive. The feedback is highly supportive of accelerating access to all patients across all stages of disease progression.

PTC has now demonstrated a favorable benefit-risk profile across two large, double-blind, placebo-controlled trials. We are actively finalizing our regulatory submissions to both the FDA and EMA, which we plan to complete by the end of this year. We are committed to working closely with all relevant stakeholders to bring Translarna to patients as quickly as possible.

In all countries where Translarna is already available on a commercial basis, the launch has been progressing well and continues to gain momentum. We are extremely proud to have launched the first-ever approved treatment for patients with this life-threatening disorder. We now have 152 patients on commercially reimbursed Translarna therapy across 13 countries; this includes patients gaining access either through reimbursed early access programs or direct commercial sales.

The launch in Europe and across countries that refer to the EMA approval is impressive given the staggered nature of a country-by-country reimbursement process. This is the largest increase in patients on therapy since we began reporting patient numbers earlier this year. Following the announcement of ACT DMD results, we've seen an uptick on the momentum of new patient orders.

In addition to the 152 patients we have today on commercially reimbursed Translarna, we also have approximately 425 DMD patients in our open-label extension studies from our previous Phase 2 and most recently completed Phase 3 ACT DMD study. This brings our total to more than 550 DMD patients currently on Translarna therapy. As Translarna becomes more commercially available in any given country or region, we expect to transition a significant portion of these patients to commercial therapy as appropriate.

Now I'd like to take some time to review the results of our Phase 3 ACT DMD clinical trials, which we reported on October 15. We have posted supplemental slides on our website which provide additional perspective on our data. Before we get into the data, it is important to understand that in developing a treatment for an ultra-orphan, life-long progressive disease such as DMD, the goal is to show efficacy with given endpoints in the limited window of a 48-week clinical study. We see this in ACT DMD.

Turning to slide 3, the totality of clinical data confirmed Translarna's ability to slow disease progression for patients with DMD. In ACT DMD, while the overall result in the ITT population of our study demonstrated a 15-meter difference in favor of Translarna that was not statistically significant, Translarna demonstrated a highly significant, clinically meaningful 47-meter benefit in the 6-minute walk test in the pre-specified 300- to 400-meter baseline patients. In addition, the pre-specified meta-analysis showed statistically significant benefits to both the primary endpoint of the 6-minute walk test, as well as the secondary time function test.

Now let me walk you through some of the details of the results. On slide 4, you can see that the natural history indicates that patients tend to be stable with 6-minute walk distance baseline above 400, and transition to a more rapid decline with a mid-point baseline 6-minute walk distance of 350 meters. Given this evolving awareness of the natural history of Duchenne muscular dystrophy in the 6-minute walk test, and the heterogeneity of the patient population, we, together with the Duchenne muscular dystrophy community, now understand that the optimal window to see drug effect is a 6-minute walk distance baseline in the range around 300 to 400 meters.

Slide 5 illustrates why the 6-minute walk test is a less reliable endpoint for patients with baseline 6-minute walk distance less than 300 meters. Results from an MRI study that correlate 6-minute walk distance with fat content in muscles demonstrate that patients with a baseline 6-minute walk distance less than 300 meters have between a 75% and 80% fat content in the muscles, and are at high risk to lose ambulation, therefore, making the 6-minute walk test less reliable in these patients.

The 6th slide in the presentation highlights the baseline characteristics of the patients enrolled in the ACT DMD and our Phase 2b results. While our intention was to narrow the range of baseline 6-minute walk distance in patients enrolled in ACT DMD, we now know that the second study actually enrolled patients across a broader range of disease spectrum than anticipated.

Based on knowledge of the biology and the evolving understanding of the natural history of DMD, and the strength and limitations of the 6-minute walk test, we were cognizant of the potential importance of defining sub-groups in our analysis when submitting our statistical analysis plan to the FDA earlier this year. Therefore, we specified sub-groups that would focus on the decline phase, specifically those patients with baseline 6-minute walk distance less than 350 meters at baseline, and those between 300 and 400 meters.

If you look at slide 7, we see a 15-meter benefit of Translarna over placebo in the ITT population, although it did not reach statistical significance. However, in the 300- to 400-meter sub-group, we see a clinically meaningful 47-meter benefit in favor of Translarna. Importantly, this was consistent with the 45-meter benefit seen when we look back at the 300- to 400-meter sub-group from our previous Phase 2b study. The limitation of the 6-minute walk test outside the 300- to 400-meter window was confirmed in our recently completed ACT DMD trial.

As seen on slide 8, examining the placebo patients in our study, it is clear that in the population of patients with baseline 6-minute walk distances greater than 400 meters, patients are effectively stable over the 48 weeks. However, in the population of patients with baseline 6-minute walk distances less than 300 meters, patients are declining substantially. This is because patients walking less than 300 meters are at risk of losing ambulation over the ensuing 48 weeks, and we saw this in our study.

As you can see on slide 9, and consistent with the 6-minute walk test limitations described above in the less than 300-meter group and the greater than 400 meter, essentially no change can be measured using the 6-minute walk test over 48 weeks. Together with the DMD community, we now further understand the limitations of the 6-minute walk test in both rapidly declining patients and very stable patients. The limitations of the sensitivity of the 6-minute walk test in these patients impacts the statistical results for the overall patient population.

Turning to slide 11, to demonstrate an effect in patients below 300 meters, you need an endpoint with the appropriate level of sensitivity. Here you see the data from our key secondary endpoints, the timed function test, in patients with baseline less than 300 meters where Translarna had a consistent benefit over placebo. Though the 6-minute walk test may be too onerous for the progressed patients, the shorter timed function tests demonstrate clinically meaningful drug benefit. This illustrates the importance of using the appropriate test to measure efficacy at each stage of the disease.

I would like to point you to slide 13, the North Star Ambulatory Assessment data. The North Star Ambulatory Assessment is a newer instrument that is a Duchenne-specific measure of disease progression. This has been an area of interest in our discussions with key opinion leaders who see this data as an important measurement of function in Duchenne muscular dystrophy patients. The North Star Ambulatory Assessment is also an important measure because it evaluates upper-body function, which is important for both ambulatory and non-ambulatory patients.

In ACT DMD, the North Star assessment score favors Translarna by 1.5 points in the ITT population, and 4.3 points in the 300- to 400-meter baseline population. This is the most significant treatment effect demonstrated by the North Star assessment in any clinical trial to date.

In summary, on slide 14 you see a forest plot demonstrating that Translarna has a consistent benefit over placebo in the primary and secondary endpoints across both the ITT as well as the meta-analysis. We've heard feedback from many KOLs that the fact that the 6-minute walk test and the timed function test are correlated to benefit gives them increased confidence of Translarna's clinical benefit. It is important to note over 900 individuals, including healthy volunteers and patients with nonsense mutation genetic disorders have been exposed to Translarna to date.

In addition to the efficacy results we just described, Translarna also exhibits a strong safety profile. This is critically important, given that it's intended to be a chronic therapy for patients.

We are actively finalizing our regulatory submission to the FDA and EMA, which we plan to complete by the end of the year. In the meantime, the North American commercial leadership team is in place, and we're preparing for a US launch.

Let me now turn to our cystic fibrosis program. I am pleased to share that during our enrollment of the Phase 3 ACT CF trial, we experienced an overwhelmingly strong demand from physicians and patients who wanted to participate in our trial. We closed patient screening in October, and expect to complete enrollment by the end of this year, with data about a year later.

In September of this year, we submitted an application to add nonsense mutation cystic fibrosis to our label for Translarna in Europe. This application was based on results from our previous Phase 3 trial. The application process with the European Medicine Agency is ongoing, and we expect additional information in the coming months. Concurrently, we are actively preparing for a potential launch in cystic fibrosis in Europe in 2016.

In October, we attended a North American Cystic Fibrosis Conference and received positive feedback from key opinion leaders on our newer analysis of FEV1 and exacerbation in patients less than 18 years old and the importance of addressing the unmet medical needs for nonsense mutation cystic fibrosis.

In addition to our Translarna programs in DMD and CF, there are also programs under way in MPS 1 and aniridia. Earlier this year, we initiated a Phase 2 proof of concept study for Translarna and MPS 1. Existing treatments for MPS 1 do not address the central nervous system manifestation of the disorder, which can be quite severe. Because Translarna is a small molecule, which can cross the blood-brain barrier, there is a potential to address this unmet medical need.

In May of this year, we amended the clinical trial protocol to allow patients currently using enzyme replacement therapy to also enter the study. This protocol revision has resulted in delays to opening clinical trial sites and accruing patients. As a result, we now expect to have initial data from this trial in 2016.

Let me now shift to the spinal muscular atrophy program. SMA is a genetic neuromuscular disease caused by a missing or defective SMN1 gene, which results in reduced levels of SMN protein. Insufficient levels of SMN protein are responsible for the loss of motor neurons within the spinal cord and muscle tissue, leading to muscle atrophy and death in infants and toddlers in the most severe form.

SMA is the leading genetic cause of death in infants. There are currently no marketed therapies for SMA. PTC, together with Roche and the SMA Foundation, have a robust program around oral small molecule SMN2 splicing modifiers as a way to address the disease. Because SMA is both a muscle and nerve disease, there's a benefit to an oral molecule with broad peripheral tissue distribution.

SMN2 splicing modifiers affect splicing of the RNA to the production of full-length messenger RNA and, thereby, enable the production of normal SMN proteins. Our lead compound, RG7800, was selected in 2013 and moved into the clinic in early 2014.

Data from the first cohort of a Phase 2 multiple-dose study called Moonfish were recently presented at the Annual Congress of the World Muscle Society. RG7800 was well tolerated, and substantially increased splicing of SMN2 RNA to full-length mRNA. The data demonstrated up to a three-fold increase in full-length messenger RNA, and up to a two-fold increase in SMN protein levels.

We announced in May that the dosing of Moonfish was suspended as we evaluate a non-clinical eye finding seen in monkeys after nine months of dosing at exposure levels above those dosed in the clinic. As a reminder, the finding was not seen in the clinic. These pre-clinical investigations are ongoing.

There's a high level of commitment to the SMA program from PTC, as well as from our partners, Roche and the SMA Foundation. Concurrent with the advancement of our lead compound, our robust research efforts regarding SMN2 splicing has continued to advance through IND-enabling studies. Additional data are expected in the coming months, which will be utilized to determine the best clinical development path for the SMA program. PTC and the program collaborators remain highly committed to this program, and expect that clinical development will resume in early 2016.

Let me now turn to our cancer stem cell program targeting BMI1. BMI1 is an up-regulated and tumor stem cell population, and is an important component of the complex that allows cancer cells to become resistant to chemotherapy. As you may recall, our compound, PTC596, reduced the level of the BMI protein in pre-clinical oncology models. I am very proud to have a fourth internally discovered program at PTC entering clinical development.

PTC596 began a Phase 1 study in the second quarter of this year in advanced cancer patients with solid tumors. We are excited about this program, it continues to go well, and we'll keep you abreast of the progress as we move forward.

As you can see, we've had a busy year so far, and we're poised to accomplish many milestones in the coming months.

With that, let me turn it over to Shane to talk about our financial results for the quarter. Shane?

Thank you, Stu.

As Stu mentioned earlier, Translarna sales continue on a strong trajectory, and we have now generated year-to-date, September 30 sales of $21 million. In the third quarter, we recorded $9.8 million in Translarna net product sales, representing approximately a 59% sequential growth over the $6.2 million of sales we recorded in the second quarter of this year. Total revenues for the third quarter of 2015 were $9.8 million compared to the prior-year period of $1.7 million.

R&D expenses for the third quarter were $30.6 million compared to $18.8 million for the same period in 2014. R&D expenses increased year over year as a result of additional costs associated with our expansion of our development activities, including late-stage studies in both DMD and CF, as well as an increase in non-cash stock-based compensation.

SG&A expenses were $21.4 million for the third quarter of 2015 compared to $10.5 million for the same period in 2014. SG&A expenses have increased year over year as a result of the commercial launch of Translarna. PTC has grown both domestically, as well as internationally, to support the [X2S] launch activities, as well as in preparation for a potential US launch for Translarna in 2016.

During the third quarter, we issued $150 million of convertible debt, and received net cash proceeds of approximately $145 million. We, therefore, recorded net interest expense during the quarter of approximately $852,000 versus net interest income of approximately $350,000 in the same period last year. We recorded the debt on our balance sheet at a discount, which will be amortized over the life of the bond. While the cash interest rate on the bond is 3%, for GAAP purposes we will be [ducting] at an assumed interest rate of 11%.

We reported a net loss of approximately $43.2 million for the third quarter of 2015 compared to approximately $27.3 million for the same period of 2014. Our net cash burned for the quarter was approximately $29 million, and we finished the quarter with $371.5 million in cash and marketable securities on our balance sheet. We currently have 34.3 million shares issued and outstanding, which includes 0.4 million of un-vested, restricted stock grants.

We will continue to provide patient numbers for the remainder of FY15, and will then assess what metrics to report to the investment community in 2016. Joining us for our Q&A is our Chief Commercial Officer, Mark Rothera.

And, operator, with that, can we now take the first question?

(Operator Instructions)

Christopher Marai of Oppenheimer.

Hi. Good afternoon, guys, and thanks for taking the question. Congrats on the quarter. I was just wondering two things, congratulations on presenting a little bit more of the data, I was wondering would you care to maybe elaborate on when you will present the full curves for the ACT DMD data set? You presented some of the placebo curves for the greater than 300 and less than -- or less than 300 greater than 400.

We are looking at the meetings that are coming up and probably in early spring there is the AAN meeting and things like that are coming up and a peer-reviewed meeting where we'll be showing that. So we look forward to actually showing all the curves then in the data. So we will save those details for those meetings. We look forward to doing that.

Do generally those curves sort of match what you would expect for a treatment, I suppose, steepening towards the end of the 48-week time point? How should we sort of think about what those curves potentially look like?

Great. Those curves look -- actually they look good. They look like you would expect them to where they actually begin broadening early and then expand out and that's true not only of the 6 minute walk test but of also the timed function test as well.

All those curves look actually really quite nice where they separate and they separate relatively early and continue to separate. I think you'll see as we present them at the public meeting that we are very pleased with them and I imagine that you would also be.

Great and then maybe just to follow up on some additional data that you've looked at. Do you guys ever look at the clinical global impression scale for the assessment patient outcomes in your trial? If you remind us of that. I know Bob Marin is making quite a big deal about their global impression.

Maybe what we should do is talk a little bit of our -- we had two things that looked actually nice from a patient reported outcome measure. One is, and I think we talked a bit about this previously, where people were moving from the PedsQL to the PODCI group because it looks like it is more sensitive to those results.

If you look, and I think there is a slide on the PODCI, I don't think we have a slide on this, but even in those patient-reported outcomes where they look at either something called transfer, the ability to transfer from a chair to a bed or going to a toilet, they measure transfer or some physical function, in sports they call it. In both cases patients reported better outcome measures in Translarna than placebo.

Similarly, we did an activity of daily living outcome measure, where it's also a patient reported outcome measure, and in all cases patients showed that they either did not progress or did better while on Translarna than on placebo. So I think, really the totality of the data, and I think for me what's so exciting about this is, not only in the six minute walk test but in the timed function test and also in the North Star Ambulatory Assessment, which is a new test that's specific for DMD, we saw really substantial changes.

And then, consistent with that also, the patient reported outcomes. So, I think the totality of the data is really quite good.

Okay. And then last question and I'll jump back in the queue. It would be interesting to understand if you talked at all to the EU regulators since this data has come out and if there are any updates that you can shared regarding that, thank you.

Obviously, we are in the middle of getting ready for the submission in terms of -- really the goal here really is to complete the conditional approval, which the condition of that was to complete this trial and then submit a report. And so we are in the process of doing that now. And, as you can imagine, it is a sensitive time and that's really this is what we are reporting, that we're in the process of doing that.

Thank you.

Ritu Baral of Cowen.

Hi. It's Ellie on for Ritu. Thanks for taking the question. Congrats on a great quarter with your sales growth. Which country did you add sales for? I'm seeing 12 last quarter and 13 this quarter and was growth weighted towards any specific geography?

Mark you want to talk a little bit about this quarter in terms of commercial activities?

Sure, thanks for the question. The new country we added as a commercial country in the last quarter was Sweden. So we now have five countries where we are fully commercial and, just to remind you, we have eight where we are also selling on a reimbursed early access basis.

So you asked what about waiting, the major region driving new patient starts is Europe where the launch momentum is picking up. But that's not to diminish the contributions from Latin America and other early access countries where we anticipate, will continue to grow in terms of their contribution over the coming months.

I think also it is really nice, to add on to what Mark was saying, is two things. In talking to the physicians in the region, there's really an excitement around this and I think, Mark, there's probably even been a bit of an uptick since the report. So we feel pretty good about this.

Great, thanks. When can we expect to see an update on the NICE guidance for a bit more evidence to justify the cost of treatment?

I'll start and then I can pass on to Mark. Really, the NICE guidance, as you probably remember, is a process that we go through and usually it is multiple meetings. We've had our first meeting and, now, typically for orphan drugs, the highly specialized medicines, it requires multiple meetings to come to an agreement. The committee, as you know, requested some further clarifications from us and we've provided this responses to their queries and so we look forward to having additional discussions with the finalization of that in February.

Have they had any comments about the Phase 3 data that is reflecting positively?

We're in the process of discussing that with them now. We haven't really discussed that part of it with them. Mark, you want to --

I was just going to add, Stu, that we are also in parallel very heartened by the fact that the Scottish NHS has just decided to fund the first patient on Translarna in the UK, which we expect to start on therapy later this month. Things are beginning to move in the UK as well.

Thanks for taking my question.

Anupam Rama or JPMorgan.

Hi, it's Eric on for Anupam this evening. Stu, maybe I could get you to elaborate on your comments about seeing an uptick in patient adds post DMD readout. Is this from converting new physicians who might have been sitting on this fence prior or have they in seeing the data more comfortable in prescribing to patients they may not have otherwise? And if I could get what your most recently seeing on patient compliance rates since the previous update. Thanks.

Sure. Mark is chomping at the bit on this one. I'll give it over to him.

It's definitely clear that we've seen an uptick in new patients since the data released. We believe that this is due to some physicians taking a stronger position in terms of arguing for reimbursement in light of the confirmatory data, but also different physicians have got innovative medicines at different rates. And I think some are coming off the fence now who were waiting to confirmatory data before they were going to prescribe.

Anecdotally, I can describe an exchange with an opinion leader from the Nordic region who said that on the strength of confirmatory trial data he would now be applying for funding to the hospital budget. So I think that's indicative.

And we're hearing that from, I think also, from a number of physicians and in just talking with a number of the physicians, one of the things that we hear a lot of is that for those that were thinking about it, it was very heartening to see both the six minute walk test and the multiple other secondary endpoints that we are seeing. So that gave them comfort that it was not just one measure but multiple measures that lead to that. Mark, why don't you talk a little bit about compliance rates as well?

Compliance rates since launch have been very good. I would say north of 90%. And we saw similar compliance levels in the clinical trial programs and I think this likely reflects that the patients are experiencing benefit from the treatment. It's oral, it's easy to use and, as we've already said, this is a very good safety profile and so I think all in all, we're seeing very good compliance rates.

Great, thanks for taking the question.

Geoff Meacham of Barclays.

Afternoon, guys, thanks for taking the question. On slide 8 and 9, these are really helpful actually in trying to assess the data. I'm wondering, Stu, if you look at slide 8 have you guys run an analysis of these two curves?

Do they differ when you layer on age as a variable? And do you think that is relevant in the context of slide 9 as well. In other words, the patients that were maybe too sick or too healthy with regard to disease severity on slide 9. Can you put more from the left and right buckets into the middle one, the 300 meter to 400 meter?

Thanks, Geoff, that's a good question. I think what you're seeing slide 8 is really indicative of what we've seen in our previous natural history studies, as well as others, where it really is somewhat on where they are in terms of their six minute walk test.

Now, there is the age component because, as you can imagine, as patients get older they tend to have lower six minute walks, but I think it's predominantly based on where they are within their six minute walk test that ultimately decides what is going to happen and that can vary by age. I don't think ages the key factor here in terms of that. It is really with the baseline six minute walk test.

I think what this really reflects, I think that is reflected in slide 9 of the limitations more of the six minute walk test than of the effect of the drug. Because if you look, and we've learned, as we showed you in the schematic, I think I've talked about this at some length over the years, that when patients are walking extremely well or above 400 meters because dystrophin is in a sense a shock absorber and in itself does not add mass or strength, it's going to be hard to see actually effects of those patient populations. That's why it's clear that you want to get these patients on early because you want to keep them as stable as possible, but from a clinical development perspective, they're going to be difficult to see.

I think also, on the left side, the less than 300 meter baseline population, really I think, reflects the variability and the limitations of the add space where these patients, because, A, they have such a high likelihood of becoming non-ambulatory and are dropping so rapidly that in a 48-week period it is difficult for them to actually do the six minute walk test and it is quite onerous. You can see the recent results from the Florida group in Lee that we showed you, it has become clear that those patients that are 300 meters or less have 75% to 80% back traction in the muscle and they have a high likelihood, and you can see that in that figure, of actually losing ambulation quickly, which makes it, probably for this particular test, relatively difficult.

That is why, I think, this is just the evolving nature of understanding what are the best tools. That probably shorter tests like the timed function test, like 10 meter run-walk where we saw the best activities, you see marginally significance in the 10 m run-walk with a 2.5 second difference and that's actually a pretty large difference, considering in this patient population. I think this is indicative of seeing the drug effect even though it's a harder time because of the six minute walk test as a tool, you need other tests.

Just on that note, Stu, is the six minute walk test, has that been used in any of the launch countries as kind of an access barrier or some sort of diagnostic to exclude patients? And would you expect, I'm assuming when you go to FDA and EMEA with the new data that you will want some sort of claim for the 300 meter to 400 meter subgroup within the context of perhaps a US label?

That's a good question. Really I think most people think of this as a clinical development test and that at the end of the day what we really thinking about is that, at least the current label, which is ambulatory, it's the loss of ambulation and we're looking at but is the loss of ambulation perhaps six months after loss of ambulation as the potential rule, not as where you are in the six minute walk test.

So I think that is the key point. I think the key point is really, and this is common as you know in orphan drugs, is the tools are only so good depending on where you're at and when you demonstrate the activity in the best patient population, it usually extrapolates out beyond that.

Got you, thanks.

Simos Simeonidis RBC Capital Markets.

Thank you very much for taking the questions. I have a question on slide 9 where you show the DMD results broken down by the three different populations under 300, over 400 and the 300 to 400.

And, Stu, maybe you can help with this, trying to understand the rationale of how the drug may work. You've said that under 300 meter baseline patients where we see no benefit, it looks like the patients did the same in both arms and, obviously, we see the benefit in the 300 meter to 400 meter. Why wouldn't the patients that are over 400, why would we not see a benefit there?

If the drug works and it is making dystrophin, I understand they are healthier, but shouldn't we see a benefit in these boys? It's not that it is a switch and you say under 300, you are all very sick, over 400 your perfect, it should be a gradient. So can you help me understand why the discrepancy?

Thanks for that, Simos. And the way to think about this and this is very important. And it isn't just us. Tools are only good as when they are in the linear range, right? So when you think about dystrophin, again, you're replacing dystrophin in the cell, in itself doesn't mean that you're going to increase mass or muscle, especially in a 48-week trial.

If a kid is already -- a DMD boy is already in the milder stages and is actually stable, the ability to actually see increase in stabilization is difficult, especially when you think about that where they start is about where they end in that period. So that makes it difficult.

If you think about we're seeing in the sense of 40 meter variability where the patients are stable and it is revolving around a very small number, basically not changing very much, it means the variability is such that for this task you need a large number of patients to be able to see it. In a sense have a ceiling effect from the test. That's not that uncommon, it's seen quite often.

You see that actually in the North Star patients as well. If you look at the North Start assessment, once patients are doing very well, it is hard to see anything above that. So it's just an example of a ceiling effect.

That isn't also, if you think about -- and I think the curve 4 in a sense illustrates your other question, which is in the case of the six minute walk test, there is this place where you see a rapid drop in patients below 300. And as you can see in the figure where we showed you the picture of the muscle on the next slide, you can see in the MRI that they have between 75%, 80% fat infiltrate into the muscle and so the proximal muscle has low level of muscle fibers and to do a six minute walk test in that period probably becomes more onerous. Therefore, instead of having a floor effect you tend to have a ceiling effect -- a ceiling effect you tend to have a floor effect.

That becomes an issue within that test so it is nonlinear in that range. So that's why when you think about what other tests you can use that may be more linear, for instance the timed function test, like the 10 meter run-walk, is probably because it is a shorter tests, more of a burst cycle, it stays more linear for a longer period of time.

And, therefore, that is what you're capable of seeing, that's on slide 11, that's why you're probably capable of seeing why it's difficult to see the effect of the six minute walk test. You can see it more clearly in a shorter, 10 meter run-walk test, where the boys still are capable of doing this and it's in a more linear range.

Again, it actually then relates back is the tool good for the test and in certain areas where the boys are, you need the right tools to be able to see it. So it is not really about the drug, it is about what assays you use.

Okay. I want to ask you if you can tell us how many pre-specified subgroups were in the trial in addition to the 300 or 400? Was it of the three that we see on page 9? What is the number and which are the subgroups?

Yes, that's a good question. You have to remember that when we designed the enrollment criteria for ACT DMD, we were targeting patients in the decline phase with respect to the six minute walk test.

This initially focused our understanding in the patients that was less than 350 meters showed a rapid decline while based on our understanding from the previous phase 2B study. So, subsequently, what we did we redefined the 300 meter to 400 meter subgroup based on the recent MRI data and other data showing that patients under 300 meters were at risk for losing ambulation.

By defining these two key subgroups then, they are clearly corresponding complement subgroups, which are patients with baseline six minute walk distances that are greater than 350 meters, greater than 400 meters, and less than 300 meters.

We think that it's important that from a clinical and scientific reason to think that there are two key suburbs, that's the less than 350 and the 300 meter to 400 meter subgroup that are the most reliable. So, I think what you can say, is that we those two key subgroups, which then had three other complementary subgroups.

So there were two subgroups and each one had three, so was it a total of six? Or was it two plus three, a total of five?

The two key subgroups plus the three complement groups, which is five.

Okay, great. If I could ask you quickly on SMA. You said in your prepared remarks and in your press release you expect to resume clinical development and you also talked about the IND-enabling studies for the next generation molecule. So when you say you're going to start trials in 2016 that implies that it could be the follow-on compound not 7800, or am I misreading this?

No, that's right. What we are saying really is that, obviously, we're pretty excited about the move for studies, which showed a threefold increase in the RNA for SMA protein and a twofold increase of the protein. But it really only makes sense to evaluate RG7800 in the context of the backup program where we're going to be getting that data relatively soon and, therefore, in any backup program, which you generally do, is try to improve efficacy and potency, better pharmaceutical properties. So what we want to do is have that data set as well as the RG7800 data set and then move rapidly forward on which molecules, determine which path forward for one or the other.

Is there something about the new molecule that may make you think that you might be up to get around the [I top clinical] observing the pre-clinical data?

At this point it is too early to go through all the details, but, generally, when you have a backup program you're looking for molecules that are more potent and efficacious. And if that is the case that would be beneficial to the program.

Final question. For MPS1 and aniridia, have any patients been dosed and is there any reason to be concerned about safety or anything like that? Or you haven't dosed any patients at this point?

The issue really was here is that initially we were looking for naive patients and that turned out to be a greater challenge than we anticipated and what the key opinion leaders had thought. Therefore, we had amended it.

It just takes longer times now to get through IRB's and ethics committees and that took longer to set up. So we now have the sites up and running and we're just going to get all -- there's not a safety issue to be worried about whatsoever.

There has been no dosing as of --

We never talk about how many patients we have, but there is not a safety issue or anything like that to worry about.

Thank you very much.

Gena Wang of Jefferies.

Thank you. I think also slide 8 and 9 are very helpful, especially slide 9. I just want to ask, there were four patients loss ambulation in the less feeble arm for the 300 meter to 400 meter baseline. I'm wondering at what phase of the clinical trial do they lose ambulation?

The precise details we're not giving out in this call. So in terms of -- that will be part of -- when we present data and publish, we will have that more in discussions at that point.

What would the total number of patients who lost ambulation beyond the 300 to 400 baseline?

Sure. So when we looked at the loss of ambulation within patients that there were overall 23 patients lost ambulation in the trial of which 9 of 115 patients, 9 patients out of 115 patients lost in the Translarna arm while 14 out of 115 patients overall lost it in the placebo arm.

Okay.

I should make a point also that all of the Translarna patients that lost ambulation were under 300 meter baseline. That the ambulatory loss in the 300 meter to 400 meter subgroup, where we now know the six minute test is best able to demonstrate it's efficacy than these groups, 4 out of 52 placebos in the 300 to 400 group lost ambulation in 48 weeks while none of the 47 Translarna patients lost ambulation.

So if you combine both studies, 007 and 020, it was 6 out of 74 placebo patients lost ambulation while zero out of 69 in the 300 to 400 subgroup, and, therefore -- actually if you do a future effect you get a p-value of 0.03.

And, I think, from a patient perspective that's actually really, in a way, that's what they care about. So you can see where we think this is having value to the patients in terms of preventing loss of ambulation.

Okay. Just want to make sure I understand correctly. So nine patients in the Translarna arm last ambulation and these nine were in the patient group that baselined below 300?

That's correct.

The 10 patients from placebo arm lost ambulation were also from patient baseline below 300?

First of all, it was 14 patients.

Yes, so 4 is in 300 to 400, right, in the placebo and the other 10 was in the group below 300 meters.

That's right. You've got it right. And, actually, that's an important point, no patients about 400 lost ambulation, which actually goes to the notion that these kids are pretty stable.

Okay. Also another question. I wanted to ask you the commercial update for ataluren this quarter. Was that from mainly the commercial programs or from the patient named programs?

We don't give you a precise breakdown between reimbursed early access and commercial. But I think the general point I wanted to make earlier, which is we've seen an uptick since the data was released. We've had extremely positive feedback from the opinion leaders from across the world.

For example we've heard them say that they believe this data unequivocally shows that the drug benefits patients. They've also emphasized to us that the concordance of the primary and the secondary measures is a really important strength in this data.

Also, for some, the fact that we've shown benefit using the North Star Ambulatory Assessment is very meaningful to them. It's the first time they've really seen a drug effect on the North Star Ambulatory Assessment.

And others have continued to prescribe who felt vindicated in their decision to prescribe based on the early approval and we are glad to see that ACT DMD confirmed that they've taken the right decision. So I think that is the general point. Across the board we're seeing that reaction.

Okay, great. And last question. Is NCS1 a program? If you modify the enrollment criteria and the [implementation] for their own replacement treatments, how should we think about the endpoint measurement in terms of the magnitude of the movement?

Thank you for that. We will be looking at both urine and blood gags and those will be reduced. Those won't be as high as probably patients who are naive, but the other thing is we're going to be looking into CMS as well and that's where these drugs do not pass the blood brain barrier.

That's probably where we think we will have the greatest advantage in the back is because we think the CMS manifestations patients have the highest unmet medical need and will be most meaningful to measure the gag levels in the CSS.

Okay, thank you.

Heather Behanna of Wedbush Securities.

Hi, guys, congrats on the quarter and thanks for taking the question. Just a couple. One, just on the CF submission in the EU, what is the gating factor for that and if that will happen after the DMD review in the EU?

Thanks for the question. The CF, we've already submitted and we are in the process of that now. So this is a variation on the approval. We are already in that process. So that will occur prior to the DMD, most likely before then.

That's, actually, already ongoing, we haven't started the DMD one yet. Since they are variations, they can occur -- it's a three-month process that would stop depending on the number of questions they have. So this is a shorter period than a first-time submission.

Right. Okay, thank you. A question on if [AAN] and some other form we'll see some exposure data on the PK and to sort of understand and see if there is any difference in performance of boys that have higher or lower exposure of Translarna from the Phase 3?

For Translarna -- In this case it is a bit different than we had before because there were two doses, a low dose and a high dose. In this patient population there was a single dose, which is obviously only the low dose, and basically the level mirrored pretty much what we saw in the previous trials. So we don't anticipate that to be a problem whatsoever.

Okay. And a quick question for Shane. Moving forward for collaboration in grant revenues, would be expect those to remain similar to the third quarter until we get into the next quarter and maybe the SMA program ramps up again?

We haven't given any formal guidance looking forward on sources of revenue, but, I think, collaboration in grant revenues tend to be somewhat sporadic and this quarter you can see there was not much there in the quarter versus maybe prior quarters from grants that we're continuing from before we went public.

Okay. Thanks for the color.

Debjit Chattopadhyay of ROTH Capital Partners.

Hi, I was just wondering at what point do you start thinking about cardiopulmonary measurements? If you look at slide 9, the patients who are between 300 meters and 400 meters will eventually get to that 300 meter below threshold within about three years and then the decline starts accelerating. In terms of what physicians are likely to do in terms of continuing to dose the patients, for the cardiopulmonary benefits become important once these patients rapidly start losing ambulation?

Yes, thanks for the question, Debjit. Probably -- it's an interesting question. The cardiopulmonary measurements are probably more important in late non-ambulatory than in the ambulatory phase because they tend to be masked by the steroid use and not to be able to see rapid declines in those.

I think you're getting to an interesting point of what are the best outcome measures for the non-ambulatory, late ambulatory groups, and clearly that is one we are working with investigators now because as patients go non-ambulatory, you want to understand what is the natural history and what are the best outcome measures?

Probably people are looking at pulmonary functions as one. There's some range of motion and then cardiac, probably ultimately, would be important. Because, clearly, we have an extension study that is ongoing and we want to utilize as much information, and we have like upper arm strength.

So even in the non-ambulatory patients demonstrating upper arm strength, which we actually have seen in five and six-year-olds with the biometry and the previous study and actually that the North Star, there's no data that correlates with increases in North Star correlate well with effects on upper body strength.

So you're pointing to a good question that is the next phase of the process and while cardiac and lung functions ultimately what they have problems with, people are working hard to figure out in terms of natural history, what are the best things to monitor?

Thanks for that, Stu. And then in terms of any feedback from physicians or the private payers or even the government payment systems in Europe, would they be willing to reimburse if a patient eventually loses ambulation while on Translarna?

Obviously our label is five years in greater ambulatory, so that is really what we focus on in terms of that. There are some patients who are on -- who have gotten drug who are non-ambulatory and, obviously, one of those things that we intend to do is meet with EMA based on this data to try and seek for a broader label that would include both younger patients as well as non-ambulatory patients.

And the basis on this is, obviously, that Translarna is a mechanism-based drug and, I think, if you understand the mechanism it will benefit to have dystrophin production in all muscle, upper limb, lung, heart muscles, and we've shown in pre-clinical studies that it does get made into the diaphragm and the heart. So while we're going to try and make the case that this should be a broad label for all patients and that there is precedent for that in an orphan drug. So we want all the kids to be able to have the Translarna and we're going to work towards that.

And then moving on to CF, your recent re-analysis of the prior data showed a greater benefit in the younger patients. So I'm just wondering, the Phase 3 study, is there limits to the number of younger patients that you've enrolled versus the older patients and how do the statistics change?

Thanks for that. Obviously, that was an important new learn is that we do, therefore, plan and anticipate to have subgroups as part of the physical analysis plan and as we further progress that and evolve that, we will talk to you about that.

One last question. Do you have a sense of the timing as to the approval, for full approval of Translarna in Europe? Do you think it's going to be a three-month amendment review or this is going to go through a full 13 month review process? Thank you so much for the questions.

Thank you. Obviously, this is a variation on that so it tends to be a shorter process. The first go-around is a three-month process, but it can have clocks stops. So it's not the 13-month process for new application.

Thank you once again.

Joel Beatty of Citi.

Hi, thanks for taking the question. My question is on the ceiling effect with the six minute walk test., Was a similar ceiling effect also seen around 400 meters baseline for the other secondary effects? Or did we learn that there is some secondary endpoints that are helpful for seeing the effect of Translarna at the higher walk distances?

We will be looking at that in more detail, but in general, and as I said in talking to investigators, that there just tends to be -- when a DMD boy is doing quite well, they tend to be kept up above that and you don't see significant changes.

I was actually recently at Action Duchenne meeting and I was just talking to a number of investigators about that and how it is difficult to see when they are doing well, to see them necessarily to better because they are pretty stable, especially in a one-year trial. I think this is just a general phenomenon that you will see.

Great, thank you.

Thank you. I'm showing no further questions at this time. I would like to turn the call back over to Stuart Peltz for any closing remarks.

Thanks, everyone, for being with us on the call today. As you can see in the coming months, we're going to be busy finalizing our rolling NDA and meet with the regulators. And 2016 is going to be a very exciting year with many new and important developments.

In particular as we continue to bring Translarna to DMD patients in Europe and other parts of the world that accept DMA-approval, the potential launch of Translarna for CF in Europe and DMD in the United States and we look forward to speaking with you in the future. Thank you for joining us today.

Ladies and gentlemen, thank you for participating in today's conference. That does conclude today's program, you may all disconnect. Have a great day, everyone.