PTC Therapeutics Inc (PTCT) 2017 Q4 法說會逐字稿

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(Operator Instructions) And I would now like to introduce your host for today's conference, Ms. Emily Hill, Head of Investor Relations. Ma'am, you may begin.

Thanks. Hi. Good afternoon, and thank you for joining us to discuss our 2017 fourth quarter and full year corporate update and financial results.

Joining me on today's call is our CEO, Stuart Peltz; our Chief Operating Officer, Marcio Souza; and our Principal Financial Officer, Christine Utter.

Before I hand the call over to Stuart, I would like to remind you that today we will be making forward-looking statements. These statements include all statements other than those of historical facts, including statements concerning financial guidance; our expectations with respect to the future commercial availability of and access to Emflaza and Translarna; the timing and outcome of any future resubmission of an NDA for Translarna to the FDA; our future expectations regarding other clinical, regulatory and commercialization matters, including with respect to potential outcomes and anticipated timelines, anticipated timelines of our SMA collaboration with Roche, addressable patient populations for Translarna and Emflaza and the potential success of Translarna for the treatment of nmDMD and Emflaza for the treatment of nmDMD.

Actual results may differ materially from expressed or implied by forward-looking statements as a result of a variety of risk and uncertainties, including those related to our commercialization of Emflaza and Translarna, including our ability to secure adequate pricing; coverage and reimbursement terms of third-party payers for our products in a timely manner, whether and to what extent third-party payers impose additional requirements for approving Emflaza prescription reimbursements; our ability to integrate Emflaza into our business and realize the anticipated benefits of the acquisition; changes in laws and regulations; our ability to resolve the matters set forth in the denial of our appeal to the Complete Response letter we've received from the FDA in connection with our NDA for Translarna for the treatment of nmDMD and those risks discussed under the heading Forward-looking Statements and Risk Factors in our Form 10-K for the year ended 2017, which is available from the SEC and 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.

We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP and non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available in today's earnings release.

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

Thanks, Emily, and thanks for joining us this afternoon. Joining me on the call today are our Chief Operating Officer, Marcio Souza; and our Principal Financial Officer, Christine Utter. Marcio will provide the commercial and clinical development updates, which will drive our next phase of growth. Christine will end the call with a thorough review of our strong fourth quarter and full year results and our financial outlook.

2017 was a great year. We continue to grow our DMD franchise, which included expanding Translarna use around the world. Furthermore, as you know, we acquired Emflaza based on its differentiated efficacy profile and are providing access to patients in the United States. As a global commercial-stage rare disorders company with a growing pipeline, we are pleased with the progress we are making to deliver innovative medicines and drive better outcomes for patients with rare disorders.

We are proud that 2018 is our 20th year in operation. Over the past 2 decades, we have worked to bring therapies to patients with rare disorders, beginning with Duchenne muscular dystrophy. We discover, develop and commercialize Translarna on our own. We have patients who have been on extension trials in the United States since our earliest clinical trials more than 10 years ago. We have learned so much from working with these patients, including the importance of treating patients early and maintaining therapy and improving standards of care.

Because we know every day matters for Duchenne patients, we have been working diligently to bring Translarna to patients around the world, including the United States. We are pleased to have a path forward towards an accelerated approval so that U.S. patients, like others around the world, may have access to this important therapy.

Looking forward, we are well positioned to continue to execute on our mission of discovery, developing and commercializing differentiated therapies for rare disorders. This includes continuing to build our research and development pipeline into commercialized therapies so that patients have access to these important treatments.

Our commercial success with both Translarna and Emflaza is a reflection of our understanding of the unmet medical needs for DMD patients. We work diligently to ensure patients have access to therapies that make a difference to them. We are now in the position of having 2 commercial products, and we have built an effective global commercial operation. We seek to leverage our commercial platform by continuing to deliver new and differentiated therapies in rare disorders, which is in line with our mission and commitment to patients.

Our commercial execution has led to a strong year-over-year revenue growth. In 2017, our Duchenne franchise generated $174 million. Translarna reported revenue of approximately $145 million, a 78% increase over the prior year. Emflaza reported revenue of approximately $29 million in 2017, having just launched in May.

Our guidance for the Duchenne franchise for the full year 2018 is between $260 million and $295 million. As we announced on February 20, we received the response to our formal dispute resolution request for Translarna from the FDA's Office of New Drugs. While the office denied our appeal, they did recommend a possible path forward using the accelerated approval framework. The Office of New Drugs stated that they would allow a resubmission of an NDA containing the current data on effectiveness of ataluren with additional new data to be generated on dystrophin production.

While we demonstrated dystrophic production in the previous clinical trial in Duchenne patients using methodologies available at that time, we will work with the FDA to design a study, which will utilize current validated methods to measure dystrophin. We are optimistic that this is a feasible path towards approval in the United States, and we're working expeditiously to pursue it.

Before moving on to other updates, I'd like to take a moment to thank the Duchenne community for their continued support during the FDA process. We have heard from hundreds of patients and their caregivers, both families and physicians from across the world. Many wrote letters to the FDA and traveled to our advisory committee to speak about the positive impact Translarna has had in their lives. It is our goal and intent to bring Translarna to United States patients so that they have the same access and benefit experienced by nonsense mutation Duchenne patients around the world. We want to make it clear that the U.S. clinical access program will remain in place, while we're pursuing the path forward with the FDA and that the patients who are currently on Translarna will be able to remain in this program.

Let me now turn to our internal science research programs and pipeline. We are proud of these efforts and how they are progressing. Starting with our internally developed splicing platform, the first oral small molecule as a treatment for SMAs advancing in the clinic. The program is currently in pivotal studies, a partnership with Roche and the SMA Foundation. As we shared previously, the SUNFISH study in Type 2 and 3 SMA patients transitioned to pivotal stage in mid-October, triggering a $20 million milestone payment from Roche to PTC.

The FIREFISH study is in Type 1 infants with SMA. Based on the results of the dose-finding portion of the FIREFISH study, the appropriate dose for pivotal part of the study has been selected. This phase will commence in the coming weeks. Clinical data were presented on both the FIREFISH and SUNFISH studies in January at the International Scientific Congress on SMA, including survival data from Type 1 infants.

In addition to SMA, our splicing platform has generated Huntington's and Familial Dysautonomia programs, which are progressing and are in the medicinal chemical optimization stages. We also have a developing oncology pipeline, which we look forward to highlighting at our upcoming Analyst Day on April 17.

Let me now pass the call over to Marcio to update you on our clinical and commercial efforts. Marcio?

Thanks, Stu. Our commercial success in 2017 reflects the value of the differentiated DMD therapies we're bringing to patients. Our DMD franchise brings 2 out of the 3 approved DMD therapies to patients around the world.

Emflaza is approved in the U.S. for all DMD patients, 5 and older. We are pleased with the recent published data on the long-term effects of Emflaza, which demonstrated its benefit over prednisone.

Translarna is available outside of the U.S. for nonsense mutation DMD patients. The current published data for each of Emflaza and Translarna supports the motor and respiratory benefits of these therapies. It's well documented that delaying time to loss of formulation delays subsequent milestones.

Age of assisted ventilation in DMD patients is a predictor of age of death. We are proud of these DMD therapies and the benefits they bring to patients.

Let me now reflect on the commercial performance in 2017, beginning with Emflaza. We launched Emflaza in the U.S. in the middle of May, and the reception of Emflaza by both patients and healthcare providers has been very strong. Our launch strategy has 3 phases. The first is to maintain patients who previously had access to Emflaza. The second is to convert patients on prednisone to Emflaza, which has been driven by the published efficacy data. The last phase is to penetrate into the approximately 50% of the patient population that is naïve to any corticosteroid treatments.

As we reflect on the progress after launch, the first phase has moved very quickly, and we have now started to see a high degree of Emflaza script renewals. Our 2018 guidance for Emflaza reflects our confidence that patients will continue to successfully renew prescriptions beyond their initial scripts.

While these results are very encouraging, our work is far from over. Based on understanding of both our own internal-generated results and independently published data, we believe that Emflaza should be the standard of care for all DMD patients. It's encouraging to see that the most recent DMD treatment guidelines reflect and align with this view.

As I mentioned previously, we continue to focus on switching prednisone-treated patients based on the published data and DMD treatment guidelines, demonstrating relative benefits of Emflaza over prednisone. This data indicates that Emflaza delay the loss of major milestones by 2 to 3 years when compared to prednisone.

Reaching naïve patients is yet another critical step in our long-term strategy. It is known that in the U.S., about half of the DMD patients are still not currently treated with any corticosteroid treatment. This is a result of the historical view of the benefit-risk profile of these agents that predate the current DMD treatment guidelines and our launch efforts. In addition to these standard-of-care guidelines, the publication in The Lancet and the CINRG Natural History Study, which shows Emflaza specifically delay loss of formulation and improved lung function when compared to untreated DMD patients.

Our goal is to get all eligible patients on Emflaza. We have been actively engaged with physicians, payers and patients, discussing the benefits of Emflaza as a critical component of DMD treatment.

We're excited with the current progress of Emflaza and proud of the fact that more patients than ever are receiving this best-in-class therapy. I'm also pleased to confirm that the out-of-pocket costs for those patients remain close to 0.

Now switching gears to Translarna. As Stu said, we remain committed to bringing Translarna to U.S. patients. And at the same time, we continue to expand the adoption globally. We are pleased the FDA has recommended a possible path forward towards accelerated approval. As a result of our successful launch of Emflaza in the U.S., our commercial team knows the pediatric neurology landscape well, which will facilitate a potential launch.

Outside of the U.S., we first launched Translarna in 2014. In January of this year, we guided to a 15% CAGR through year-end of 2022. We're excited about Translarna's growth outlook.

The main driver is the continued uptake of Translarna used in the regions where we are operating, in Western Europe, Latin America and most recently in the Middle East and Central and Eastern Europe. Growth will be more of a consequence of our focus on these areas rather than further geographic expansion. There is a significant opportunity for growth in these regions, especially because of the younger population and a high birthrates.

We are also seeing continuous growth in the more established regions, including the EU5 where we have been present for more than 4 years. It's not uncommon in ultra-orphan disorders to continue to identify patients once our drug is available. Patients and physicians have expressed the benefit of treatment from Translarna, and compliance has remained very high with over 90%.

Let me now provide a short update on the development problems for DMD. As we described before, we appreciate the perspective of the DMD community on the importance of treating patients as early as possible to preserve muscle function. We plan to conduct a pediatric study for Emflaza, as requested by the FDA. This study, upon completion, will provide us an additional 6 months of market exclusivity. Additionally, we have completed a PK study of Translarna in children aged 2 to 5. Data from this study was the basis of our submission for label expansion to DMA, which is currently under review.

Both of these efforts align well with the intent of DMD guidelines to begin treatments at the time of diagnosis.

Our long-term Translarna study, 041, has started enrolling patients in the third quarter of 2017. As a reminder, the conduct of this study is a specific obligation of our EMA approval, and the FDA has stated it could serve as a confirmatory study in connection with an accelerated approval. We are confident that we are well equipped to drive value with both strong commercial and clinical capabilities and our continuous focus on transforming lives of patients with rare disorders.

I'll now hand the call back to Stu. Stu?

Thanks, Marcio. I'd like to share more detail on data recently generated in our SMA program.

Most of you are familiar with the program, which is based on our small molecule splicing platform. This technology has been used to discover potential new therapies for spinal muscular atrophy, or SMA, a rare genetic neuromuscular disorder that generally manifests early in life and is the leading genetic cause of death in infants and toddlers.

We have a robust program in collaboration with Roche and the SMA Foundation around an oral SMN2 splicing modifiers. We believe that an oral systemic therapy provides a competitive advantage because of the broad tissue distribution and ease of administration. Earlier clinical data have shown that RG7916 drives SMN2 splicing towards a complete restoration of full length SMN2 messenger RNA.

As we discussed before, there are 2 registrational studies ongoing. In October 2017, SUNFISH entered the pivotal stage and is currently enrolling. The second registration-directed trial, FIREFISH, is an open-label 2-part study in SMA Type 1 infants. Based on the results from the dose-finding portion, we have recently selected the dose for the pivotal part of the study, which is expected to transition to pivotal stage in the coming weeks.

The primary endpoint is the ability of the infants to sit unsupported, as assessed by the Bayley Gross Motor Scale.

The SMA program also has an open-label trial known as JEWELFISH. JEWELFISH allows SMA patients from other studies of SMN2 splicing targeting therapies to gain access to RG7916. Results from all 3 trials were recently presented in January at the International Scientific Congress on SMA in Krakow. A presentation review in the ongoing dose finding Part 1 of FIREFISH in the Type 1 SMA infants highlighted survival data as well as safety and interim clinical data.

No patients had discontinued due to adverse events. Early interim clinical data reported no patient lost the ability to swallow and no patient has required a tracheostomy or reached permanent ventilation. Posters on the SUNFISH and JEWELFISH studies also supported safety and tolerability of RG7916 at all doses.

Preclinical data were also presented, demonstrating that RG7916 increases SMN protein levels in brain, muscle and blood. These increases were proportional and correlated. These data demonstrate the relevance of SMN protein levels increases in the blood as the predictor of SMN upregulation in the target organs such as the brain and muscle.

The SMA program is not only progressing towards an oral and systemic treatment for SMA patients, it also validates that our splicing platform technology can identify selective compounds that modulate pre-mRNA splicing. We are now applying our expertise to other challenging diseases with high unmet medical needs and have internal preclinical programs. We are pursuing additional programs targeting pre-mRNA splicing, including Huntington's disease and Familial Dysautonomia. We'll share more about these wholly owned exciting splicing programs as well as highlighting our R&D pipeline at an upcoming Analyst Day on April 17.

I'd like to turn the call now over to Christine Utter, our Principal Financial Officer. Christine?

Thanks, Stu. Earlier today, we issued a press release summarizing the details of our financial results for the fourth quarter and full year 2017. And I refer you to that release for full details.

I'll start with a few comments on our financial performance and our guidance for 2018. Starting with our top line results. We reported strong performance across our DMD franchise. As Stu mentioned, our results for 2017 were impressive, with reported total net product revenue of $174 million. We have provided guidance for the DMD franchise in 2018 of $260 million to $295 million. Translarna net product sales were $145.2 million for the full year, representing 78% growth in both expansion into new territories and increased penetrations in existing geographies.

Emflaza net product sales reflect success of the launch with reported revenue of $28.8 million for the full year 2017, having just launched in May.

Total revenues for the fourth quarter of 2017 were $78 million, partially influenced by a onetime $20 million milestone as part of the SMA collaboration and a large Translarna order from Latin America. This compares to $25.2 million in the fourth quarter of 2016.

For the full year of 2017, total revenues were $194.4 million compared to $82.7 million in 2016. The change in total revenue was a result of the expanded commercial launch of Translarna, the successful U.S. Emflaza launch and the $20 million milestone payment achieved from Roche.

For the full year 2017, non-GAAP R&D expenses were $102 million, excluding $15.5 million in noncash stock-based compensation expense compared to $100 million for 2016, excluding $16.8 million in noncash stock-based compensation expense and $0.8 million in a onetime restructuring expense.

For the full year 2017, non-GAAP SG&A expenses were $106.2 million, excluding $15.1 million in noncash stock-based compensation expense compared to $77.3 million for 2016, excluding $18.2 million in noncash stock-based compensation expense and $1.6 million in onetime restructuring expense.

For the full year 2017, net interest expense was $12.1 million compared to net interest expense of $8.3 million in 2016. This increase in net interest expense for 2017 is primarily a result of an increase related to the $40 million secured loan facility, which we closed during the second quarter of 2017, partially offset by interest income from investments.

Net loss for the full year 2017 was $79 million compared to $142.1 million for the same period in 2016. This decline in net loss reflects our growing revenue base, as we continued to leverage our successful international corporate infrastructure.

Cash, cash equivalents and marketable securities totaled approximately $191.2 million at December 31, 2017, compared to $231.7 million at year-end 2016.

I will now hand the call over to the operator to start our question-and-answer session. Operator?

(Operator Instructions) Our first question comes from the line of Alethia Young with Crédit Suisse.

This is Derek Yuan on for Alethia. I guess, I want to just first know further about ataluren FDA situation. So basically, do you provide more color on what level of dystrophin data do you think that FDA have categorized that they want to see your new NDA filing? And also could you just remind us what did you see in your earlier study of the dystrophin expression?

Sure. Thanks, Derek, for the question. Yes, so I'll start by reminding you that we previously demonstrated dystrophin production after 2018 treatment in Duchenne -- nonsense mutation Duchenne patients where we saw 61% of them -- of the patients demonstrating dystrophin that was statistically significant and that we used, obviously, for proof of concept to go on to do clinical trials. So in terms of what the results from the appeal, obviously, while we're disappointed that the patients don't get it tomorrow, we're pleased that there's a clear path forward now. And that based on the decision at the appeal that the results from the clinical trials, and we think that's important as well, along with the dystrophin production would be sufficient for accelerated approval. And in our discussions with the FDA, it was really any dystrophin that's statistically significant above the untreated controls. So we're now in the discussions with the FDA to talk about with them, both the trial -- the dystrophin trial as well as the methodologies that we would utilize to look at dystrophin. So that's where we're at right now. And over time when we complete our discussions, we'll describe to you what the next steps are.

And our next question comes from the line of Joel Beatty with Citi.

First question is on Translarna sales ex U.S. In the past, we saw some lumpiness with Q2 '17 being particularly high and then coming down in Q3. And now it's back up again in Q4. Could you characterize whether this increase from Q3 to Q4 is the same lumpiness that we saw on Q2 or have sales kind of flattened out?

Sure. Marcio, you want to...

Sure. And hey, Joe, and thanks for the question. So in Q4, we saw growth -- we continued to see growth across all the regions in number of patients and the revenue. So what you described is exactly how this business goes right throughout the year. We do have a little bit of variability, a little bit of lumpiness, as you described, in the past and that influenced the quarter-by-quarter. What do we look and the way we forecast every year is like we're looking to the total number of patients in the year that our expectations in terms of net patient exits. And that's how we create the -- our guidance and that we just communicated to all of you. So it's going to be -- we expect that there continue to be a little bit of lumpiness throughout not only 2018, but beyond as well. But at the end of the day, our commitment for all the patients to stay on drug and to continue to grow in every region is really what we're aiming for. Would that answer?

Okay. Yes, got it. And then one other question in Emflaza sales in the U.S. You've talked about 3 stages of growth, one being patients previously on Emflaza, another being patients on prednisone and another third on naïve to steroids. Could you discuss the size of those opportunities? How many patients are available in each of those 3 buckets?

Sure, absolutely. So our estimates is that there is around 10,000 patients or so in the United States that would be eligible for Emflaza. What we have right now, as we're being -- the last time we gave patient numbers was 2 quarters ago, 1,500 patients at that point in time. And we are seeing -- we continue to see, obviously, patient growth on that regards. The split of patients on the remaining, so about -- all patients in the U.S., as I mentioned, the -- on the remarks, about half of them are naïve. So we see that's -- and they might be naïve on the strict senses of naïve or they might have used steroids a long time ago and for many years not have expose to that. So they don't have recent and current exposure to any type of corticosteroid. So that's obviously a pretty big size. And then for the other half, it's about half of those as well between like 20% and 30% or so that would be on prednisone. So we still have a way to go in terms of penetrating that 2 segments. We think we did a really good job. And the team here, I'm very proud of the work of the team on really getting out these patients on drug. They come from all 3 segments or the ones to give the false impression that is only coming from one segment the -- for the patients we have right now. But the majority of them, we'll really focus on patients with prior experience to deflazacort, Emflaza. So doing very well so far, and we want to continue to benefit all 3 of them.

Maybe from a big message point of view is, especially with what recently come out with The Lancet Duchenne muscular dystrophy guideline where they specifically called out that patients should be on the deflazacort or Emflaza. And also with the recent publication from the CINRG Natural History really differentiating the Emflaza from prednisone. I think this makes it -- really our goal is that because of the differentiation that we believe that all patients should be on Emflaza, that gives us a further information to discuss with physicians and patients why this -- why we transitioned them on to Emflaza.

And our next question comes from Anupam Rama with JPMorgan.

It's Eric on for Anupam. Just a couple from us. I guess, first on Translarna and sort of the existing commercial footprint that you have, you kind of note that that you expect kind of growth to come from deeper penetration of the current geographical footprint. Just wondering if you could sort of characterize for us a bit more kind of where you see regionally the greater growth opportunities, maybe EU versus other geographies currently? And sort of what the kind of hurdles are there to deeper penetration broadening access are? And then I have a follow-up.

Sure. Go ahead, Marcio.

Sure. So they are a little bit different on the region we have, right, when you look into long term. But just to walk you through a little bit, so we do expect all the regions to continue to grow. And I think that's very important, because sometimes, we see this concept that the EU5, because we've been there for longer time, is well penetrated, there's not a lot of growth. We still see a substantial amount of growth throughout the years to come up for -- from Western and Central Europe. It's mostly driven by 2 factors there. So one is, we continue to see patients grow, like we're very happy with all the work that our medical teams, that our marketing teams are doing on patient identification, on patient finding throughout the world, but especially on challenging geographies that are more penetrated. So in the short term, there's still a lot of growth that comes from there. As we move more to the mid -- long-term, then we're seeing the geographic expansion that we did last year -- in the last 2 years, I would say, playing an even bigger role to get to our long-term guidance like Latin America, the young population, very large countries, still a lot of patients to be found. And then most recently, as I mentioned in the remarks as well, we have Central and Eastern Europe and the Middle East where the penetration is very small. The patient finding activity has just started. And we're really trying to unify time to diagnose, age of diagnose to drive this patient growth throughout the years. And so far, we've been extremely happy with the results we're getting.

Got it. That's helpful. And maybe just a quick one on SMA, if I could. With the pivotal portions of both SUNFISH and FIREFISH underway or getting underway in your term, just wondering if you could give us a sense of sort of the anticipated enrollment curves in either study? And also to what extent regulators are sort of interested in tissue-related SMN expression outside of the peripheral blood at all.

Sure. So as you know, we -- the -- SUNFISH has been in pivotal studies and FIREFISH, we just picked the dose, and therefore, we'll be starting that in the coming weeks. So we anticipate these to go pretty well. It's global studies, and we're getting patients in not only -- into these studies not only in countries where other drugs aren't available, but also even where there are approved products for them, we're still seeing patients choosing to enter into these studies as well. So we anticipate rapid recruitment over time in these studies. So we feel pretty good that these will be completed relatively quickly. And so obviously, while this won't be the first-in-class, we do think there's a real opportunity for us to be the best-in-class. Because when you think about it, this is easy drug to take it orally bioavailable. This -- it's -- intro -- throughout the body, including the -- not only in the CNS, but also into other tissues that are affected and organs that are affected such as the liver, the muscle, the bone. So we think there's a substantial advantage to that. And I think we've heard other key opinion leaders actually talk about that as well. So we think that's a truly important advantage.

So just to answer the question specifically about the need for regulators and the distribution, the tissue or the expression of the tissue, right. So first, as Stu just said, there is oral bioavailable drug. So we expect to distribute throughout. We just showed some preclinical work really showing this -- the distribution of this drug in terms of like the compartments and really getting to all the target tissues. And there is no expectation right now that, that would be required -- or even a desire to see on a drug like RG7916 to have that kind of endpoint.

But one thing we did see, which was truly also an advantage, was we were able to look at complete restoration. In preclinical models, we saw complete restoration of the SMN to RNA to SMN RNA that produces the protein. And that level we saw one-to-one between what was in the blood and what was in the brain. And we not only saw that in the animal models, but also similar sort of levels that we're seeing in other rodents and other nonhuman primate studies as well. So we're confident that it actually distributes quite well. And so that looking at the changes that you see in blood, we feel pretty confident that will be the -- that is what you'll see within the brain. So we're excited about that as well.

And our next question comes from the line of Tazeen Ahmad with Bank of America.

Maybe another one on SMA. I'm sorry if you talked about his earlier and I might have missed it. But in terms of the criteria for patients that are allowed to enter the SMA trial, what are the therapies are they allowed to be on concurrently? And also how do you, in the grand scheme of things, envision your drug being used? Could this be monotherapy? Is this just add-on? Kind of walk us through how you think the market opportunity for this could develop.

Yes, sure. I think that's a good question. I think from -- concurrently, I think, obviously in the pivotal studies, we really want to make sure that we're looking at the benefits of the drug on their own. So there won't be other therapies. In the long run -- this is a question we get all the time in terms of other therapies. I think obviously, we want what's best for the patient. But what we're seeing thus far is that the transcript itself for the RNA that got displayed through the transcript, we've seen complete restoration of that RNA to the messenger RNA. So from a splicing point of view, we think that whatever can be made or whatever can be made into SMN RNA will be done. So we don't know if there'll be necessarily a need for other compounds that actually affect the splicing efficiencies of it. Only time will tell. We currently do have a trial, JEWELFISH, that is ongoing that allows patients to have available RG7916 who would like to take it, who have been on previously other therapies as well. So we're making that available. And then, obviously, when you think about what a patient may need that could be concurrent for it is something that an improve muscle mass or function might be used as well. So certain of those that increase muscle mass or improve muscle function certainly could probably be helpful in combination with this in the long run.

Okay. So how big of a pivotal program do you think one would need for this?

So for the FIREFISH study, it's 40 -- it's -- in this case, it's an open-label study. And just to remind you, FIREFISH has for Type 1 instance that are diagnosed within the first 3 months, there'd be 40 babies -- 40 infants that would be enrolled in the trial. And that would be -- and we need to see -- we think we need about 5 to be able to see. In the case of SUNFISH, it's about 158 patients. This is a placebo-controlled study that's 2:1 in terms of the placebo-treated patients. So that's -- 90% powered study to be able to see the benefits there as well.

Okay. And then how long do you think it would take to enroll, because those are not small studies?

Well, as I said, one is 40, one is 168. We think that they'll actually rapidly enroll. And I think -- I don't think yet we've disclosed our timelines yet.

Okay. I only ask, because they would potentially be competing with other therapies that are approved. And if you do want to just look at patients that are not on other therapies, what would be the pitch for the parents of these children to put their children in the studies?

I think that's a good point. I think the pitch is -- I think that the -- if you go back and look at the preclinical data is really quite astounding. We would argue that if you looked at what was been published within -- and talked about within the preclinical studies, there was certainly the most exciting data set that was performed. And the fact that it's orally bioavailable, that it distributes well throughout the body and it could be consistently taken has a lot of advantages to it. We do know that it builds the muscle as well as nerve as well as affecting other organs. And so we think there's a real large advantage for an oral drug that can be consistently taken.

Okay. And then if I could ask a question about DMD, going back, I know you discussed dystrophin earlier in the call. But I mean in the past, especially with your most recent pivotal study, it seemed that you were pretty adamant that measuring dystrophin may not be the right way to determine the efficacy of Translarna. So I guess, why do you think now might be a good time to go about collecting this additional information? Because I think the FDA in the past might have suggested it to you. And correct me if I'm wrong, why do you think that collecting the information now would be the best route forward?

So a couple of points. One is that actually, I think we were for a long -- and we're a long time in agreement with the -- in discussions with the FDA where it didn't necessarily predict clinical benefit, and therefore, was a proof of concept study. And since we had done Study 04 and demonstrated dystrophin, we went in to see clinical efficacy. And even to this day, I think it's very clear that the dystrophin levels don't now even correlate with efficacy. However, the FDA has come around to the notion that any dystrophin is important and can predict benefit. And that -- what they said is that a -- and I think this is important that was -- and we made this point on it that they gave us a path in the appeal for us that any dystrophin above -- even that was statistically significant above the control treatment along with the current clinical data that we have today would be suitable for accelerated approval. And so while in the past we were doing clinical benefit study, that this is now a path that is available to us where we think is the most expeditious path to bring Translarna to the U.S. patients. And so we're confident that -- we believe that we'll be able to show this in a very rapid way as we can to bring it to patients. And we think this, therefore, is the best path for us to move forward on.

Okay. And last -- go ahead.

And I was just about to say that we have agreement with the FDA. We're going to be moving forward with that.

Okay. And so last question, if I may, is when should we expect the next update on DMD path in the U.S.?

So I think where we are right now is we're working to discuss with them the methodology and get agreement on the -- what we'll move forward on. And we think that's probably a 3- to 6-month process. And so we'll update you on that as we understand it.

And our next question comes from the line of Gena Wang with Barclays.

The first one is for SMA. Just wondering when will we have update from both FIREFISH and the SUNFISH in terms of a clinical measurement such as (inaudible) for Type 1 patient and also milestone achievement?

Yes, thanks for that. As we said, what we did is we were -- let me just remind you that the study that we're talking about was first a dose-finding -- was a 2-part study where the first part was a dose-finding study that then transitioned in through the pivotal portion of it. So we, obviously, have multiple doses of that. So therefore, it's easier and clearer to see what the survival data looks like. And as the data matures, I think we'll have an opportunity to talk about the motor milestones as they read out throughout the year at some point that we'll be doing this. But right now, we just continue that we now transition to the pivotal study, we continued to be obtaining additional data throughout the year, so we'll be able to report that at the appropriate time.

Okay. And also, Stu, you mentioned that, I think, for the FIREFISH pivotal trial, you mentioned that 4, 5 babies if they can sit. Would that be considered approvable if you see 4, 5 babies that can sit out of a 40 patient?

Just by, so we said by just simply looking at power calculation that you see 5 babies out of 40 would be statistically significant.

And that will be compelling to the natural history, right?

We would anticipate that to be the case, yes. Since they (inaudible) actually on their own Type 1 babies are capable of sitting and you don't see that that would be pretty awesome.

Okay. And just one last quick question. Stu you also mentioned that the dystrophin level for the U.S. (inaudible) market data. So you commented that dystrophin level compared to untreated patients. Just wondering was that the feedback from the FDA. We know that in the past I think FDA comment on like comparing to the baseline rather than untreated patients. I am just wondering if I can get more color.

That will be part of the final agreement, yes. So we said, untreated or baseline, that's yet to be defined. So -- but I think there is some precedent to be using controls versus peer controls. So certainly, obviously, it would be faster to be able to look at dystrophin levels and compare with untreated blended controls if possible. But that's yet to be determined in this discussion with the FDA.

And our next question comes from the line of Raju Prasad with William Blair.

Just one on the 5-year 15% CAGR guidance. What -- (inaudible) like what percentage of that would you say current patients that are on therapy, they're just gaining weight or getting bigger versus new patient stats and does that number also include the expectations you'll get the label update for the 2-to 4-year patients in DNA.

Sure, and that's Marcio, Raju. Thanks for the questions. So the -- yes, the 3 components that you just mentioned, right. So the organic growth. So patients were -- currently they're adding new patients, obviously, these patients are going to be getting older and heavier. So that's while in the expansion. I would say proportionately the biggest part of this continues to be from patient growth. So we're adding new patients constantly. That's the biggest driver of the market. We're very happy that the compliance and the dropout rates are very, very low for dropouts and the compliance very high. So maintaining patients is all something positive. We don't see only obviously from the financial standpoint, but even happier, we are, that these patients are still alive and thriving. So that's quite important for us. And that as they continue, they gain around 3 or so kilograms per year. That's the historical cohort for Duchenne if we look into our clinical trials and our commercial experience. So that contributes as well, but that's not a significant part of the growth. In terms of the 2 to 5 or the other younger than 5, shall I say, that's included as well in the later part of the guidance. The average age of diagnosis globally is still higher than 5. In some countries, it's a little bit lower than 5 and in other countries, it's higher, but it's still around 5 the average so not a lot of in the next 4 years for example or 5 years is going to be driven by that segment so much, although, we are working very hard to reduce the age of diagnosis and hopefully this patients are going to have even a better and longer life if we can get them to be diagnosed when they each show symptoms that is around 2 years of age.

Great. And then, could you provide any just general commentary on study 041 enrollment trends? And is that something that you might try and take a little cut off data and submit to the FDA as well? Or it's just effectiveness data that you already submitted that will be going into your kind of additional data for the accelerated approval?

Yes. So just obviously Study 41 is a global study. That is a 36 month trial where the first 18 months are placebo controlled. So the consequence of it being a placebo controlled with sort of precludes you from really bringing in any other data too much earlier. But on the other hand, I think, what's important is with the FDA, in our discussions with them, it was pretty clear that what would be needed for accelerated approval would be the clinical data that we currently have and the dystrophin data. And that the study 41 would serve as a confirmatory trial of the accelerated approval process. And so I think that's the way we would set it up that way and, I think, we would just go with that, I think that would make sense.

Great. And just needed one last one. Anything anecdotal we can say about patients that are enrolled in JEWELFISH and why they're coming off splicing therapy? And would you enroll anybody that has been on gene therapy trial in JEWELFISH.

Yes. We're not really discussing details of that. Well I would love to. I don't think we're into position to really talk about that right now.

And our final question comes from the line of Brian Abrahams with RBC Capital Markets.

This is Rick on for Brian. So we had a question about the progress for the pediatric EMFLAZA study. We're wondering if you could just give us latest updates on the study the FDA discussions around it. And then, furthermore could you maybe discuss how important the pediatric indication is for your projections for Emflaza?

Hey Marcio.

Happy to address that. So let me start by your last point there. So our projections for Emflaza do not include the pediatric trial right now. We only gave guidance to 2018 for Emflaza. If in the future we move towards that, I'm going to make sure to clarify whether or not it includes. We received the written request from the FDA. We consider extremely important that no data was ever generated on the use of steroids in patients younger than 5. So it's not only strategically for us that is important, but what would we be hearing from the patient groups, from the key opinion leaders is that this is an important study for them to really understand about these patients and the influence. The care guidelines -- the updated care guidelines that was just published in the Lancet suggest that (technical difficulty) patient information clinically that can be given to them, we're hearing like a very positive feedback. Having said that, we are just working on the final details with the FDA where we intend to conduct the trial as we mentioned on the remarks. And as soon as we have more clarity on that and time lines and so on we're going to be updating all of you.

And that does conclude today's Q&A session. And I would like to return the call to Mr. Stuart Peltz for any closing remarks.

Well, thank you, again, for being on the call. We are looking forward to a really productive 2018 and as we continue to execute on our -- on the commercial fronts with our Duchenne muscular dystrophy franchise. For the United States patients, we're going to work to finalize the dystrophin study design with the FDA and look forward to conducting that study as expeditiously as possible. On the SMA front, our SMA program will continue to have data and we'll be talking about that at the relevant medical meetings this year. We look forward to updating you on these fronts and the other exciting developments in our pipeline. And our Analyst Day is on April 17th, so mark that into your calendar. And thanks for joining us today.

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