PTC Therapeutics Inc (PTCT) 2018 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the PTC Second Quarter Financial Results and Corporate Update. (Operator Instructions) As a reminder, this call is being recorded. I would now like to turn the conference over to Emily Hill, Head of Investor Relations. Ma'am, you may begin.

Hello. Good afternoon, and thank you for joining us to discuss our 2018 second quarter corporate updates 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 we start, let me remind you that today's call will include forward-looking statements based on current expectations. Please take a moment to review our slide on our simultaneous presentation, which contains our forward-looking statements. Our actual results could materially differ from those forward-looking statements as any and such risks can materially and adversely affect our business and results of operations. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent quarterly report on Form 10-Q and annual report on Form 10-K filed with the Securities and Exchange Commission as well as the company's other SEC filings.

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 our CEO, Stuart Peltz.

Thanks, Emily, and thanks for joining us this afternoon. Joining me on the call today are Marcio and Christine. Marcio will provide the commercial and clinical development update. Christine will end the call with a review of our financials.

The first half of 2018 has clearly been transformative for PTC. As I outlined at our 20th Anniversary Analyst Day, we have a strategy to build out PTC as a rare disease leading biotech company. While we provided a 3- to 5-year plan, I hope you can see we have aggressively been executing on that strategy. I'm incredibly proud of my team, taking the outline of the strategic vision and aggressively executing on it in the first half of this year.

We continued to successfully grow our Duchenne franchise and advance our splicing platform and niche oncology pipeline. And most recently, we have announced two important transactions that strengthen our pipeline with late-stage and commercial assets. Let me discuss each of those now.

Most recently, we have announced an important agreement with Akcea, which allows us to commercialize two rare disease drugs in Latin America: Tegsedi and Waylivra. Tegsedi has been approved by the European Commission for treatment of Stage 1 or Stage 2 polyneuropathy in adult patients with hereditary transthyretin amyloidosis, or hATTR. The approval by the European Commission is important as it is critical in Latin America. The polyneuropathic form of hATTR, which Tegsedi is indicated for, occurs more frequently in individuals of Portuguese ancestry. Because Latin America, and in particular Brazil, contains a large portion of polyneuropathic hATTR patients, the region is strategically important one for Tegsedi. Tegsedi is also under review by the United States FDA with a PDUFA of October 6.

The second product, Waylivra, is under regulatory review in the United States and Europe for the treatment of people with Familial Chylomicronemia Syndrome, or FCS, with a PDUFA coming up later this month on August 30. This collaboration reflects our strategic initiative to leverage PTC's global infrastructure and our successes in bringing innovative drugs to patients in Latin America. We are eager to bring these important therapies to patients in these regions as quickly as possible.

The next transaction I'll review, the Agilis acquisition, puts us on the forefront of gene therapy. On July 19, we announced our agreement to acquire Agilis Biotherapeutics. The Agilis gene therapy platform for treating orphan monogenic CNS disorders is an ideal fit with our strategy of building out a leading rare disease biotech company. This transaction places us in the leading position in the gene therapy space for rare diseases, including a late-stage CNS gene therapy program. We plan to file a BLA in 2019 for the lead program for the treatment of AADC deficiency. We are very excited by the lead asset, as well as the technology behind the platform. I'll ask Marcio to elaborate more on these transactions later in the call.

Our DMD franchise was strengthened in the first half of this year on several fronts. The [EMEA] (sic) [EMA] approved a label expansion for Translarna in nonsense mutation Duchenne Muscular Dystrophy patients ages 2 to 5 years old. DMD is a degenerative disease. Treating patients earlier allows for better preservation of muscle function. Importantly, this label expansion allows patients in countries that recognize the EMA approval to gain access to the therapy at a younger age.

Our DMD franchise also includes Emflaza for all United States DMD patients over age 5. We are working hard to establish Emflaza as the standard of care in the United States. Recent DMD guidelines reinforced this effort. The guideline states that Emflaza should be initiated for all DMD patients as early as possible.

Our commercial execution has led to strong year-over-year revenue growth. In the second quarter 2018, our revenue for the DMD franchise totaled approximately $68 million. Our guidance for full year 2018 remains $260 million to $295 million.

Beyond the current growth opportunity for Translarna outside the United States, we are also looking to expand and bring Translarna to U.S. patients. We plan to initiate a dystrophin study this year to submit to the FDA next year for potential United States accelerated approval of Translarna.

Let me now turn to our internal science research programs in our pipeline. I'll start with our internally-developed splicing platform. We have an oral small molecule as a treatment for SMA advancing in the clinic. This program is currently in pivotal studies in partnership with Roche and the SMA Foundation. The ongoing pivotal studies include FIREFISH for Type I SMA infants; and SUNFISH for Type II and III SMA patients.

Encouraging interim data from the dose finding portion of both studies were recently presented at the Cure SMA meeting in Dallas. During the clinical presentation of the FIREFISH dose finding study, a video was shown of three babies sitting independently. I'll provide more details on those studies later in the call. The successes in our SMA program have validated our splicing platform, which we've expanded to include Huntington's disease [to] familial dysautonomia. These are progressing and are currently in lead optimization stages. We expect both programs to advance into the clinic by 2020.

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

Thanks, Stu. As Stu just mentioned, we continue to advance towards our objective for the DMD franchise in 2018. Increasing the use of Translarna globally and transforming Emflaza into the standard of care in the United States. We are pleased with the EMA Translarna label expansion to include patients aged 2 to 5 years old. The launch process has now started, and I'm optimistic about the additional patients to be treated with Translarna in this expanded patient population.

We have been working very hard to have the (inaudible) in lowering the age of diagnose for DMD. Before our launch of Translarna 4 years ago, the average age of diagnose was around 6 to 8 years old, depending on the country. In most geographies where we operate, the age has been reduced by at least 6 months, and as much as 2 years. We continue to invest in improving disease awareness, patient identification, and genotyping to further advance this agenda. We are committed to continue to drive other diagnose efforts to improve patients' outcomes.

We have a similar commitment to improve patient outcomes with Emflaza. We are marching forward to establish Emflaza as the standard of care for DMD patients in the U.S. I'm happy to report the first wave of transitioning deflazacort experienced patients to commercial therapy is complete. We are now expanding Emflaza use to this segment of patients who have been previously, or are currently, on prednisone. This second phase has been slower than expected. Conversion on the payer side is happening, but has been more time-consuming than we previously anticipated mostly due to the doctor's office burden of paperwork and processing.

We have a number of key initiatives underway to ensure Emflaza uptakes continues and accelerates. This includes improving administrative support and continuing to remove barriers with payers based on increased information around Emflaza's benefit.

Two important publications demonstrating the effect of Emflaza [over] prednisone have recently been published. We just announced an important publication, Muscle & Nerve, comparing the efficacy and safety of deflazacort [in] prednisone from the placebo arm of the ACT DMD study. The results demonstrated a clinically differentiated benefit of deflazacort over prednisone in slowing disease progression as measured using physical function endpoints and the time to delay of loss of ambulation.

Reaching naive patients is yet another critical step in our long-term strategy. In the United States, about half of the DMD patients are still not currently treated with any corticosteroid treatment. The current DMD treatment guidelines recommending starting Emflaza treatment upon diagnosis. We have a long-term strategy to penetrate this segment of untreated DMD patients as well as to expand the label to address the youngest patients aged 2 to 5.

Our highly differentiated DMD franchise has been growing year-over-year. In the first half of 2018, the combined franchise reported revenue growth of 67% versus the same period in the prior year. We are reiterating our expected guidance for the full year 2018 of $260 million to $295 million. The global commercial Translarna business and Emflaza acquisition have diversified our product portfolio, revenue and geographic footprint, positioning PTC as an outstanding rare disease [BD] partner.

We have now demonstrated our [ability] to integrate and rapidly launch products for rare disease. In line with our strategy, we had 2 transformative transactions in the past month. Most recently, we announced the collaboration with Akcea to commercialize two rare disease drugs in Latin America: Tegsedi and Waylivra. For our commercialization efforts with Translarna, we have established a strong presence in key countries, including Brazil, Argentina, Chile, and Colombia. Our patient identification efforts have resulted in strong year-over-year growth in these countries.

Tegsedi has received [market] authorization approval from the European Commission for the treatment of Stage 1 or 2 polyneuropathy in adults with hATTR. hATTR is a devastating disease with limited treatment options. As Stu said, Latin America, and in particular Brazil, contains many such patients. So the region is a strategically important one for Tegsedi. We anticipate Brazil should be one of the largest polyneuropathy hATTR markets worldwide. In Latin America, we understand to be more than 6,000 patients eligible for treatment. Our team is working hard with the Akcea Ionis teams to execute on a robust regulatory and go-to-market strategy for the region. We are uniquely positioned from a competitive standpoint to execute in Latin America.

The second product, Waylivra, is in the regulatory review in the U.S. and Europe for the treatment of FCS. Waylivra has the potential to be the first and only therapy indicated for FCS. We expect the market opportunity for Waylivra to have the potential to be similar to the one of Translarna in Latin America. FCS has been historically misdiagnosed, and we expect patient identification to be the gating factor for launch. FCS is caused by impaired function of the enzyme lipoprotein lipase and is characterized by a risk of unpredictable and potentially fatal acute pancreatitis. We're excited with the opportunity to bring these life-changing drugs to patients.

Let me now turn to the Agilis acquisition we recently announced. Earlier last month, we announced the planned acquisition of Agilis Biotherapeutics. The acquisition bring us four gene therapy programs at various stages of development, all focused on treating CNS disorders, starting with a late-stage program in AADC deficiency for which we plan to submit a BLA in 2019. This is [followed] by programs including Friedrich ataxia and Angelman syndrome, as well as other cognitive disorders. This acquisition adds a cutting-edge gene therapy platform and it strengths our pipeline, adding both late- and early-stage gene therapy products which we are eager to bring to patients.

Many of these gene therapy programs will benefit from the advantage of targeted micro-dosing directly to specific structures in the CNS. Micro-dosing of the viral vectors bring many advantages, because it allows for small-scale manufacturing, reduced risk of immunogenicity, while maximizing efficacy in the CNS. These transactions align with our strategic priorities, bringing in late-stage therapies for rare disease and leveraging our global infrastructure. We are confident [they are] well-equipped to drive value with both strong commercial and clinical capabilities and a continued focus on transforming lives of patients with rare disorders.

I will now hand the call back to Stu. Stuart?

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 oral SMN2 splicing modifiers. We believe that an oral systemic therapy provides a competitive advantage because of its broad tissue distribution and ease of administration. Earlier clinical data has shown that RG7916 drives SMN2 splicing towards a complete restoration of full-length SMN2 messenger RNA. This program is currently in pivotal stages with two registrational studies - FIREFISH for Type I infants; and SUNFISH for Type II/III patients.

The JEWELFISH study, while not registrational, is also enrolling patients from other splicing therapies. Data from JEWELFISH and from the dose finding portions of FIREFISH and SUNFISH were presented in June at the Cure SMA meeting in Dallas demonstrating sustained benefit and safety and tolerability. Data from the 21 babies in the dose finding portion of FIREFISH highlighted continued survival.

During the presentation, the investigator of the study showed a video of these babies demonstrating improved motor function, including head control, rolling from supine, and sitting. Three babies were depicted sitting independently. The first baby received their first dose 6.8 months of age and was depicted sitting at week 35. The second baby received their first dose at 4 months of age and was depicted sitting at week 26. The third baby was first dosed at 5 months and was sitting at week 26. Notably, the last baby was also depicted riding his [dragon] ride-on toy across the hospital.

Previously published natural history data indicate that the median age of event-free survival for SMA Type I infants to be between 8 and 10.5 months. Of the 21 babies presented already, 13 have surpassed the natural history expectation of 10.5 months survival. It was also noted, no babies have required a tracheostomy or permanent ventilation since study initiation, and no baby has lost the ability to swallow. The median age of the first dose was 6.7 months, and babies have received RG7916 for a duration of up to 24 months.

As of the June presentation, RG7916 has been well-tolerated at all dose levels, and there's been no drug-related safety findings leading to withdrawal. Two deaths were previously reported due to disease progression and were determined not to be drug-related. The FIREFISH dose finding study is now complete, and all babies have been transitioned to the therapeutic dose for an extension trial. Ongoing data presentations from this trial are expected throughout 2018, including additional survival data, CHOP-INTEND scores, and other motor milestones. We look forward to sharing these developing data with you.

The next anticipated medical meeting presentation is at the World Muscle Society Congress in early October. Data on additional sitting SMA babies will be shared at this point. Based on reports of an increasing number of sitting babies, we and the collaborators believe there's a potential to file an NDA in 2019. Recruitment is ongoing globally for the pivotal registrational portion of the FIREFISH and SUNFISH studies, and enrollment is expected to complete this year. The SUNFISH is a blinded study with a primary endpoint of motor function at 12 months. The primary endpoint of the open label FIREFISH study is a percentage of infants who are sitting without support at 12 months of treatment as assessed by the Bayley Infant Scale.

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-RNA splicing. We are now applying our expertise to other challenging diseases with high unmet medical need and have an internal preclinical program. These include programs in Huntington's disease and familial dysautonomia. We expect both programs to enter the clinic by 2020. We are very excited about our splicing programs and covered them in depth at our Analyst Day. And I would refer you to those slides on our website for full details.

I'd now like to turn the call 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 second quarter of 2018, 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 second quarter of 2018 were total net product revenue of $68.2 million compared to $47.9 million in the second quarter of 2017. Based on where we stand today, we are reiterating our 2018 revenue guidance of $260 million to $295 million.

Translarna net product revenues were $47.8 million for the second quarter of 2018, representing 4% growth over the prior year period, mostly as a result of increased penetration in existing geographies. The 4% growth rate reflects the uneven ordering patterns from Latin America, which make quarter-over-quarter comparisons less representative of underlying growth. Our Translarna guidance contemplates this lumpiness and reflects the total patient demand for the year.

Emflaza reported net product revenues of $20.3 million in the second quarter of 2018. Non-GAAP R&D expenses were $28.7 million for the second quarter of 2018, excluding $3.9 million in noncash stock-based compensation expense compared to $26.9 million for the same period in 2017, excluding $3.9 million in noncash stock-based compensation expense. This increase in R&D expense reflects increased investment in our research program and the advancement of our clinical pipeline.

Non-GAAP SG&A expenses were $29.4 million for the second quarter of 2018 excluding $4.1 million in noncash stock-based compensation expense compared to $24.9 million for the same period in 2017 excluding $4 million in noncash stock-based compensation expense, reflecting continued investment in commercial activities to support our DMD franchise.

Net loss for the second quarter of 2018 was $9.5 million compared to a net loss of $17.5 million for the same period in 2017. This decline in net loss reflects our growing revenue base as we continue to leverage our successful international corporate infrastructure. Cash, cash equivalents and marketable securities totaled approximately $296 million at June 30, 2018 compared to approximately $191 million at year-end 2017. We are proud of the transactions we just announced in the last month. As we close on these transactions and move forward with integration, we will provide updates to our expected spend for the year.

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 Brian Abrahams with RBC Capital Markets.

This is actually Rick on the line for Brian. Congrats on all the progress. First, I just wanted to follow up, Stu, on your comments about the potential for accelerated approval of RG7916. Based on the data emerging out of FIREFISH, what is your current understanding on what the bar for -- the potential for accelerated approval is? Is there a threshold number of babies achieving the sitting up unassisted milestone you think that would be supportive of accelerated approval? Or are there any other motor milestones you think could play into accelerated approval?

Yes, thanks for the question, and we think that's an important question. And maybe as you might remember what we reported at the Cure SMA meeting, where we saw a number of babies be able to have development milestones that included being able to raise the head, being able to turn over, as well as being able to -- sitting, where sitting is the endpoint for the trial. And in that -- in the part 1 of that, where there were 21 babies within that trial, we had reported at the Cure SMA meeting in June that there were 3 babies that were able to be sitting. So we thought that was actually really quite important. Over time now, what we're saying is that there are, as a consequence of more time passing, that there are additional babies sitting since that time on top of the 3 that we had. And so we wanted at this point, and probably you've heard from before where Roche had disclosed last week that there's a potential filing in 2019. And I think that just reflects the potential to file for that -- reflects that the increased number of babies sitting, that will probably be presented at the World Muscle Meeting at that time. But what we wanted to do here is really reflect the increase in number of sitting incidents. That is the endpoint, and we're seeing increased numbers. And I think what we said before, that 5 out of 40 would be statistically significant in the part 2 of that trial. Seeing additional sitters in this part just gives us more confidence for a potential. So I think it's obviously going to require additional conversation with the regulators so that they look at both safety and efficacy for a potential filing. But just the fact that we continue to see such exciting results makes us think about how to move this as rapidly as possible for the patient.

I have a follow-up. So assuming positive results from the FIREFISH study in Type I patients, what kind of implications would that have for a potential expedited approval pathway in Type II and Type III SMA patients? Since they all have the same underlying genetic defect but the progression of disease in Type I SMA is much quicker, is there the potential for some sort of submission package where you could maybe combine the achievement of motor milestone data from Type I patients with biomarker and safety data from Type II and III patients?

Yes, I think that's, again, a really good question that would require additional conversations with the regulators to see how they would think about it in terms of knowing what you see in Type I and extrapolating to Type II others, which is not uncommon in the orphan disease space. So it's certainly a conversation we would have, and we have an ongoing SUNFISH trial that certainly would then be continuing on, as well.

Maybe just to add a little bit, right, so SUNFISH, our trial for Type II and III, is -- as we mentioned before, we expect these trials to be enrolled relatively soon, by the end of the year. So, we see that both Part I in SUNFISH, where we collect the, like, [safe] data and the [ascending] dose, and now this pivotal phase for SUNFISH are going to be fundamental. So while they are [spectrums] of the disease, [they] fundamentally different in terms how they progress. But the program is so comprehensive and there is so much data in terms of, like, the number of patients that's being, the exposure, our understanding of the PK and PG relationships and so on, that we believe this is by far the one development most advanced in terms of just how comprehensive and large it is. So that gives us confidence that, if you were to find a path forward with the regulators to file for Type I, we could follow shortly thereafter with [Part] II/III or even all together. So stay tuned, and we're going to keep you guys updated.

Our next question comes from Joel Beatty with Citi.

This is Shawn filling in for Joel. Congrats on such a busy and eventful quarter. So I've got a few questions kind of to follow up on SMA. I think we're going to see kind of your first efficacy data at World Muscle Society for SUNFISH. Can you just review what are the most important endpoints that we should be looking for?

Yes. Thanks for that, yes. So SUNFISH, that's for Part I, where we've in the past showed both the RNA as well as protein levels. And over time, appropriately, we were going to -- we're measuring MFM and others as well. So obviously, it's open label there, but we'll be looking at the MFM scores and things like that as well.

And then I just have two follow-up questions on the hATTR program. Could you just briefly describe any work you've done to give us confidence in the estimated 6,000 patient population and kind of how you got there?

Yes. I think there's been a lot of prevalence and due diligence in terms of looking at this. Marcio, why don't you go through a little bit on what we've done?

Absolutely. So as you might know, and we mentioned during the press release last week, right, on the collaboration, so let me first say how excited we are. We think that Akcea and Ionis are incredible partners, like the collaboration so far has been tremendous. And there was a lot of data they had collected previously. During the due diligence in the last several months, we met with all the key opinion leaders in the [country]. [We're] looking to both primary research and secondary research. But also we have a network of labs that we've been working on in Latin America that collects genetics information, epidemiological information. So we rely on all of that. And considering just how large the ancestry background in terms of, like, DV30M, a mutation in [Brazil alone], for example, with this, we feel very confident on the numbers that we provided as about 6,000 patients in the region. It is mostly concentrated in the South, of South America, so Brazil and Argentina, for example, are the two most important countries on that regard, but we see the potential across the region, just with a slightly different (inaudible) background than the other countries.

And we feel good about the notion that, well, we think there's around 10,000 to 15,000 patients with the polyneuropathy, that really this area gives us between 1/3 and 1/2 of those patients. And we feel pretty comfortable that this is a really important and valuable area for the drug.

That makes a lot of sense. And just as a brief follow-up, can you talk a little bit on our strategy to best identify these patients, considering it is such a heterogeneous disease?

Yes, absolutely. So we're doing a lot of things already, and part of the joint development and diligence with the Akcea group, right, we exchange a lot of ideas. We're going to be updating all of you, like, in future quarters in terms of what we are doing. But one of the key things is really mapping these patients that have the clinical diagnose but not the genetic diagnose to the sites. We know where these patients are concentrated right now. We believe that there are areas outside of the main centers that have been historically treating hATTR patients where there's large pools. We're focusing on those large pools. Having the team already presence in all these countries makes a huge difference, right, to have Medical Directors and [MS Sales] and, like, a field team that is really, like, going to all these accounts already. That is a fairly large overlap in terms of the neurologists with the accounts that we've been already developing relationships, or have relationships for Translarna. So it's kind of a perfect fit. We're going to be giving updates. Now, in a sense, this is a competitive space, and we believe that we have a competitive advantage here. So [we're] not going to be sharing as much as we shared before in relation to Translarna since we believe we are ahead, at least few years ahead of the competitors here, and we want to make sure we remain so.

Our next question comes from Gena Wang with Barclays.

Just wondering, I think that in the press release you also comment the 5-year net product revenue growth rate, 15% compound annual growth rate into 2022. So that translate into I think roughly $350 million in 2022. Just wondering, what are the assumptions for this $350 million in 2022? And do you think you've been a little bit conservative in terms of that assumption?

Thank you so much for the question. The way we look and issue guidance, and we mentioned this before, right, in our future guidance, as well, it's always in terms of the midpoint or so of what we are expecting. So there is a number of initiatives that we are doing to get that 15%. One that I just wanted to highlight, we just got the 225 label ratified by the CE, so that alone in total of the population, we're talking about a very large number of patients. I mentioned in my prepared remarks, as you probably saw, that a lot of those patients are not identified yet, but I'm extremely happy with the progress that was done in all the countries we operate in terms of identifying these patients, genotyping reducing. So a lot of our assumptions are both on identification and conversion, but they don't differ much in terms of what we are seeing right now in terms of the trajectories. There are few territories that we're going to be adding and increasing the penetration. We mentioned that before, specifically like Latin America, where we just discussed recently our presence there. We are intensifying the presence. We feel the deal with Akcea, very synergistic on that regards. It's going to put more people on the ground, more efforts. It's going to help with Translarna as well, and the Middle East region as well. So it's multi-prong, in a sense, approach, but patient identification, expansion of the label, and these new geographies are going to be the key drivers here. The interesting thing that I believe sometimes get lost is, even on the key EU countries where we launched way back 40 years ago, we were still seeing fairly robust growth in the number of patients and identification and so on, what gives us extra confidence on this long-term.

And then, I think your point is a good one, is there is potential upsides we have, depend on things like -- we're working now for the non-ambulatory in Europe. If you may remember, the pulmonary function data, which was really quite strong, and so we're in the process of trying to get label expansion of that. And that could be considerable upside. That could be a 40% upside in terms of that. So yes, there is potential for greater growth, as well.

And then just one another, also revenue-related question. Emflaza seems pretty flat. I think that you also comment. It just seems like the conversion of new patient to the drug has been a little bit slow. Just wondering if you could provide -- I don't know how much detail you can give, but if you can just give a sense how is this quarter compared to the last quarter in terms of, say, new patient growth?

Sure. So Marcio, why don't you give a little color on thinking on ?

Of course. So there are 2 drivers here, or may I say 3 drivers here that are impacting this quarter. So one is the growth (inaudible) is still fairly similar to what we're seeing last quarter. We mentioned it was a little bit higher than we were expecting before, so we have a little bit more on the growth (inaudible) adjustments. We've seen growth in patients, both on the prescriptions and on the conversions quarter-over-quarter. But what was happening is, when we launched this last year, we mentioned about our expectation for the conversion between the time we got the prescription in-house to the time the patient get dispense commercial product to be between 3 and 6 months. In the first quarter, in the second quarter of the launch, we mentioned as well that we were seeing more on the lower end of that, so around [to reach of] 4 months-ish, and now we are seeing on the other ends, more on the 6 month-ish. So what's happening is, within our expected conversion timelines, but it's skewing, in a sense, towards the 6 months conversion. So what we are doing right now in a very focused way is to go patient-by-patients, basically, and help them reduce that. So we have hundreds of patients right now by which we have prescriptions that we are working with them. We are working with their providers. There's something new for the neuromuscular accounts, where now they have multiple products and they never had it, or they have to manage all those products, and some of them are Part D, some of them are Part B. So it's a little bit confusing for those accounts. So we are seeing they need a little bit more support than not. And we are intensifying that. We're making sure everything is in place to bring that average down to where we would like to be and driving. We've seen some movement already on the last several weeks, and we expect that to improve and to get to the end of the year and beyond on where we want [that] to be. That was pretty much where we were before.

And the other thing that's probably worth noting as well is there's recently been two publications that have been really quite useful that are demonstrating the superiority of Emflaza over prednisone. One was the Synergy Natural History study that showed just how much better Emflaza was over prednisone, and then the recent publication of our placebo data, looking -- comparing Emflaza to prednisone, again showing improvements as well. And that's been very helpful in having the physicians understand the differences between steroids and then the payers as well.

So there's a combination of all of that that we're working hard to make sure that it pushes through the large number of prescriptions we're already having to funnel, to try and get it through that funnel.

Our next question comes from Tazeen Ahmad with Bank of America.

Stu, I just wanted to get your thoughts about your partnership with Akcea. You are very good at doing ex-U. S. launches. You've demonstrated that very clearly. I just wanted to get a sense about how you're thinking about this particular opportunity with ATTR patients, given -- I guess unlike some of your other launches, it's likely that at some point in time, there'll be more than one drug option available for this community of people.

Sure. Maybe I'll touch on this, and I can pass on to Marcio, as well. One of the -- I think this -- where we're really excited about this, obviously, it's unique in that it's a polyneuropathic form of it, in that it's, in a way, almost -- I mean, some of the physicians, they know it more as the Portuguese disease, because it really has a unique -- for that particular form of it. And the fact that it's actually injectable versus infusion is a really major advantage of this area in which there's not a lot of infusion support there, as well. So not only is the drug quite efficacious, but the route of administration and the simplicity of it is going to be a major advantage in that group as well. And so that's the work we've done, and the due diligence in looking at this deal really suggests that that's having -- the physicians there have looked at the efficacy and really believe that the efficacies of this drug is really quite good and similar. They're comparable, but the similarities of how it's administered give this a major advantage.

Yes. And just to complement a little bit of what Stu is saying, right, the one key thing here that we looked when we were exploring several deals and this came to mind, is our ability to compete. And an interesting analysis that we did with the team is just going around and understanding how many competitive situations each one of us, like myself included, all down to my team, like [Eric] and his team in Latin America, and all the way to the ground, and all of us, like from top to bottom, have been on one or more competitive situations on the ground and being very successful on that. So that was a key component.

You're absolutely right. We expect this to be competitive. We believe we have an advantage for multiple reasons. Time is one. The acceptance of the physicians, the interest of the patients for an [SE] drug versus having to be on a [hospital], for example, or using steroids before the administration. But very importantly, it comes down to people being able to compete on the grounds, and we have this team that is highly motivated to make sure that they're going to make it happen for the ATTR patients and make this drug successful.

And there's probably one that you should touch on that's I think important, Marcio, that people -- it's a complex system in Brazil requiring licenses and analytical labs that we've spent the last 12 to 18 months building. You may want to talk a little bit about that, as well.

Yes. Part of what we believe is the competitive advantage here is just how established we are there. It takes a very long time, as Stu just mentioned, to just be ready, get all the proper license, make sure we have the right relationships in place, that everything from compliance perspective is well established, considering all the environment in Latin America, and we checked all the box. We went through several due diligence with our team and our systems, and we're very confident we can deliver on that for patients, because, at the end of the day, that's why we are doing this, right? So there are thousands of patients there that needs the drug now, and you're going to make sure to provide to them.

And then, I'm sorry if you addressed this earlier, but similar to how you've talked about how long you think it'll take for you to address your estimated addressable gene therapy population, how long do you think it could take you to reach those estimated 6,000 population that you're going for?

Yes, that's definitely not going to happen overnight, and that are, like, differently from the AADC deficiency, that I believe that's the one you are referring to, where that is very few patients identified, and we're really doing the ground-up in terms of the awareness. The biggest difference here with hATTR is, like, virtually every physician, if you go to Latin America, specifically Brazil and Argentina, have treated a patient, have seen a patient, have lost a patient, or have someone in the family. So it's a little bit different in terms of the awareness. It's mostly making sure they have the correct referral network, the genotyping, and so on, so forth. So we expect that to be faster. Now, at the same time, there are much more patients, so logistically and the conversations with the government and so on, are little bit different than for AADC deficiency. So we don't see one necessarily taking precedent over the other. We're going to put the best effort on both of them. But it is a multi-year process, not a few months.

Yes. The AADC, that was more finding those patients, because -- and we'll go to cerebral palsy clinics, severe epilepsy clinics, to try and find the large -- is where we think a lot of those patients will be. In this case, as Marcio said, it is the awareness in these countries is really quite high. It's now about genotyping and getting them onto drug. So we think they're different, but it's -- as with all orphan diseases, as Marcio said, it takes some time to get the peak.

Our next question comes from Raju Prasad from William Blair.

Can you just provide maybe some color on how you expect the ramp for some of the younger patients in the EU on Translarna? Is this something where you've got several commercial sites already available in 28 countries? And maybe there'll be a little bit of a bolus of commercial patients early on, and then as you continue to identify patients, kind of a slow ramp? Or is this something where it'll take some time to develop and hit peak?

Thanks for the question. So this is going to take probably a little bit of time. We don't see necessarily a bolus of patients pretty much anywhere, right? It is, as I mentioned before, that a very few patients until recently identified on this. We made a lot of progress. I'm very happy with the progress that was made. But now is really getting patients access, and there are several routes, and some of them are individual patient requests that are happening already. Other countries, we don't have to submit a health technology assessment dossier, and we're going through that. But the majority of the countries, we had to wait until the green light for the [CE] ratification to submit the dossiers. So now, we are in the phase where some's going to be granted faster than others. So it's going to be a staggered, in a sense, launch, which we accounted for when we are projecting our CAGR and getting to that point where we can maximize it. There is a lot of enthusiasm from the patients and the physicians' perspective, and that's what gives us confidence that you're going to penetrate this relatively fast. But just the way the system is in Europe, what is our priority markets right now for this, it takes some time to get this through the system.

But actually, let me just also -- I think kudos to the team, because one of the things that Marcio talked about is changing the time of diagnosis, which requires not only to do a lot of hard work on disease awareness and genotyping, but to change it in an average 6 months, and in some cases much as 2 years, is a tremendous effort in the 4 or so years that we've been doing that. And so that really then got -- as a consequence, well, it's not where we want it to be yet. There then are starting to be patients that they're picking up earlier. And so we think that the efforts are sort of paying off on all the hard work that's been done for the 4 years. So there will be patients that we'll be getting. And actually we've even known patients for physicians who have decided, when they find younger patients, put them on earlier because I think the general notion is that, when they're younger, they have more muscle. Therefore, there's more to help them. And we think that's going to bear out true as well.

And any update on kind of FDA, or high level discussions with the FDA on the dystrophin study? I know that there was -- I know you guys were planning on trying to get a favorable study design, but anything you can kind of comment there?

Yes. I think what we've (inaudible) what we've said in the past is that we anticipate starting the dystrophin study by the end of this year, will be completed by the end of next year. We could then be filed for accelerated approval. And I think that we're on track to do that.

And then just the last one. Can you just comment on the types of hospitals or specialty centers that you would expect AADC patients in the U.S. to show up at? Is there any overlap with some of the other rare diseases that obviously you guys are looking at, like SMA or anything of that nature that you can leverage?

So there are a couple targets that we have mapped and that the Agilis team has done a tremendous job on mapping before, like very happy with everything they've done and established relationship with key opinion leaders. So the key focus, I would say, for the next few months is going to be on the cerebral palsy clinics, not only in the United States but globally in general, by the patient journey mapping that we did and by the work that Agilis did. It seems to be that that's where the most patients are going to be concentrated, so we're going to focus there. But also in patients with severe epilepsy, or with a diagnose of severe epilepsy they actually don't have epileptic crisis. These patients is a misdiagnose, and you're going to be looking there. I think the biggest overlap that you are start to seeing is with some of the efforts that BioMarin's doing to diagnose the [Barron's] patients. So we've been hearing from some physicians that they are doing, like, a tremendous job on doing identification there, and that's starting to raise the awareness of disease and genetic base of some of those CNS disease. So that's helping. There's a little bit of spillover effect there, so nothing specifically there. We've done before.

Definitely not SMA, very little in terms of the differential diagnose on the neuromuscular. There is outside of the United States a good overlap on the treating physicians where in several countries you don't see the neuromuscular expert taking care of DMD, but more a general neurologist or pediatric neurologist. And then you're going to have a little bit more of overlap. But in the U.S., it's probably the CP clinics and some of the epilepsy centers.

Our next question comes from Martin Auster from Credit Suisse.

I guess a couple follow-ups from some of the earlier questions on RG7916. On the Part 2 of the FIREFISH study, is your expectation that the data will be reported to the public in a press release or a conference once the required number of infants sitting up is achieved? Or will it run until some completion of that study that's kind of time dependent? And then, on SUNFISH, I had a question regarding -- with SPINRAZA, the functional benefits of SPINRAZA seem to kind of separate out from placebo around the 9-month endpoint. I was wondering, from your perspectives, about how 7916 functions and its differences versus SPINRAZA in benefit and effect. Do you think that that's a reasonable timeframe to see separation with this drug? Do you think that there's anything about it that should make us expect something different?

Thanks for the question. The first part of the question, 7916, Part 2 of FIREFISH, I think that's a good question, and I think a lot will depend on how we think about into the first part of [it]. Obviously, the second part of the FIREFISH is a pivotal study, so we'll obviously think hard before -- when we talk about it. But it is an open label study, so it'll be able to be seen. So we'll have to be talking with our partners about what's the best way to start presenting that and putting that in in line with what's happening in the first part and how we move forward on that. On the SUNFISH side, I think that's a very interesting question. And it's just going to require some time to see. I think you can even see from some of the earlier parts of the FIREFISH data that even some of the patients that are older within this study, you're still seeing improvements faster in the CHOP-INTEND from the patients on RG7916. And in a way, that's in line with how we've thought that might be, especially when we look at the preclinical data. We were able to show previously that we can actually dose in the animal model much later, even in the (inaudible), and be able to recover that. So we think it's a highly effective molecule, and I think only time will tell how well that will -- if that will bear out in the Type II and III. But we're quite hopeful that that will be the case.

Thank you. And I'm not showing any further questions in the queue. I will like to turn the call to Stuart Peltz for his final remarks.

Yes. Thank you, and thank you all for joining. Obviously, what our vision is to continue to build a fully integrated rare disease biotech company that really leverages the deep scientific expertise and world-class commercial capabilities. The programs we'll obtain through these transactions, along with our ongoing DMD splicing and niche oncology franchises, really does provide, I think, a number of value creation opportunities over the next two years. So with that, let me again just thank you all for being on the call.

And ladies and gentlemen, thank you for participating in today's program. This concludes the conference, and you may all disconnect. Have a wonderful day.