PTC Therapeutics Inc (PTCT) 2022 Q3 法說會逐字稿

Hello. Thank you for standing by, and welcome to the PTC Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. (Operator Instructions) Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today, Kylie O'Keefe. Please go ahead.

Good afternoon, and thank you for joining us today to discuss the PTC Therapeutics Third Quarter 2022 Corporate Update and Financial Results. I'm joined today by our Chief Executive Officer, Stuart Peltz; our Chief Operating Officer, Matthew Klein; our Chief Business Officer, Eric Pauwels; and our Chief Financial Officer, Emily Hill.

Today's call will include forward-looking statements based on our current expectations. Please take a moment to review the slide posted on our Investor Relations website in conjunction with the call, which contains our forward-looking statements. Our actual results could materially differ from these forward-looking statements, as such statements are subject to risks that can be materially and adversely affect our business and results of operation.

For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent annual report on Form 10-K and quarterly report on Form 10-Q 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 to 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. Stu?

Thanks, Kylie. Good afternoon, everyone, and thank you for joining the call. I'm pleased to share PTC's strong third quarter results. We continue to demonstrate strong execution and are moving forward on our 2022 milestones. Our marketed products continued to generate strong revenue growth, and we are advancing our broad and deep pipeline of new therapy to treat diseases with significant unmet medical needs.

Our mission at PTC is to discover, develop and commercialize innovative therapies and to bring them to patients with rare disorders and in doing so to create significant value for all of our stakeholders. Today, PTC has 5 marketed products and 7 development programs focused on treating diseases of high unmet medical need. We continue to build a robust pipeline of potential new therapies that at steady state, we expect to deliver 1 therapy every 2 to 3 years.

Moving to our performance in the quarter. We achieved $270 million in total revenue, representing a 57% increase over the third quarter of 2021. DMD revenue was $131 million in the quarter, an increase of 15% year-over-year. Based on continued strong performance across all our commercial portfolio, we are increasing our 2022 DMD guidance. This allows us to raise the low end of the total revenue guidance and Eric will go into this in more detail shortly.

I'd now like to provide a regulatory update on Translarna. The robust results from our Study 4-041 as well as the continued evidence of long-term treatment benefit from our real-world data from the STRIDE registry, positions us well to convert the European conditional marketing authorization to a standard marketing authorization.

For the regulatory path in the EU, as planned, we have submitted a type 2 variation to convert the authorization to the European Medical Agency in September. The type 2 variation procedure typically lasts for several months. And as such, we expect the [CH&P opinion] in the first half of 2023.

Turning to the U.S. We submitted a meeting request to the FDA to gain clarity on the path of filing an NDA. While the FDA has provided an initial written feedback that Study 041 does not provide substantial evidence of effectiveness, we are planning follow-up discussions with the agency to understand whether the evidence in the ITT population in Study 041, along with confirmatory evidence from other studies could support approval.

Clear examples of this approach of using trial results, along with confirmatory evidence to support NDA filing has been seen recently for rare neurological diseases with AMOLEX and Reata.

Let me now turn to discuss the first marketed product from our slicing platform. Evrysdi has established market leadership in all major markets and is on track to become the global market leader for SMA. Rapid growth is being driven by patient switches, naive patient starts and label and geographic expansion.

In addition, Evrysdi has a 90% retention rate in the first 12 months, demonstrating treatment satisfaction. Late last year, Roche submitted a type 2 variation to the European Medicine Agency for use in pre-symptomatic infants with SMA under 2 months of age, a label expansion already approved by the FDA earlier this year. The EU filing is based on the interim efficacy and safety data from RAINBOWFISH study in newborns, which showed that the majority of pre-symptomatic infants treated with Evrysdi achieved key milestones, such as sitting and standing, with half of the patients walking after 12 months of treatment. The label expansion in Europe is expected to be approved before the end of 2022.

Let me now move to our Huntington disease program with our next slicing compound, PTC518. And as we said before, the global PIVOT-HD study is active and currently enrolling in many European countries and Australia. We expect to share results from the 12-week portion of the study in the first half of 2023. Matt will go into more PIVOT-HD trial specifics shortly.

Our robust pipeline of drug candidates continues to advance in clinical development towards commercialization. We remain on target to achieve 3 important data results over the next 9 months. For sepiapterin, previously 923 in PKU in the fourth quarter. For vatiquinone for mitochondrial disease associated seizures in the first quarter of 2023 and for vatiquinone in Friedreich Ataxia in the second quarter of 2023.

We are also excited to announce that we have entered into a strategic financing collaboration with Blackstone Life Sciences. This collaboration will support our mission to build enough programs in our pipeline at steady state so that we can deliver at least 1 new therapy every 2 to 3 years and so that we can continue to bring transformative medicines to patients globally and create value for all our states.

As part of the partnership, Blackstone provided an initial $350 million of low-cost, low dilution capital with an option for additional $650 million in funding. Emily will describe the details of the financing. With sustained growth in our marketed products and many new products advancing in our pipeline, we continue to build our commercial platform with strong growth for many years to come. I'll now hand over to Matt for an update on our development program. Matt?

Thanks, Stu. Over the course of the third quarter, we continued to make progress across all of our platforms and expect results from several of our ongoing registration-directed trial in the next 6 to 9 months.

I'll start with an update on our BLA submission first data. We had a Type C meeting with the FDA in October to discuss the details of the submission package. Based on the discussion, FDA has asked for additional bioanalytical data in support of comparability between drug product used in the clinical studies and commercial drug products. We are currently working with FDA to address this request, and we now expect the BLA submission will occur in the first half of 2023.

Turning to our ongoing registration-directed AFFINITY Phase III trial of sepiapterin, previously known PTC923 in cases of PKU, we remain on target to share results by the end of the fourth quarter. The AFFINITY trial is a 6-week placebo-controlled study with a primary endpoint of reduction in blood phenylalanine levels.

To enrich the randomized study population for likely responders, this study includes a run-in phase, during which potential subjects are treated with sepiapterin for 2 weeks, and only those demonstrating response to sepiapterin are randomized. Following completion of the 6-week placebo-controlled study, all subjects will be eligible to enroll in a long-term extension study.

Turning to the Bio-e platform. We have 3 ongoing registration directed trials; 2 with vatiquinone, the MIT-E study for mitochondrial disease-associated seizures and the MOVE-FA study for Friedreich Ataxia. And 1 trial with utreloxastat, previously known as PTC857 for ALS. Both the MIT-E and MOVE-FA trials are now fully enrolled, and we continue to expect results from the MIT-E trial in the first quarter of 2023 and from the MOVE-FA trial in the second quarter of 2023.

Enrollment is ongoing in the Cardinal global placebo-controlled trial of utreloxastat in ALS patients. The Cardinal trial is a 6-month placebo-controlled study with a target enrollment of approximately 25 subjects. Subjects will be randomized to 2:1 to receive utreloxastat or placebo.

The primary endpoint of the study is change in the ALS FRS disease rating scale from baseline to 6 months with secondary end points, capturing other aspects of disease morbidity as well as mortality.

Turning to our slicing platform. As we recently shared, we are actively enrolling the PTC518, PIVOT-HD Phase II trial at our European and Australian study. Enrollment in the U.S. is paused as the FDA has asked for additional data to support the proposed PIVOT-HD dose level and duration.

As a reminder, Pivot-HD is a 12-month placebo-controlled trial of PTC518 in Huntington's disease patients and initially includes 2 dose levels -- 5 milligrams and 10 milligrams -- with the potential to study a third dose, which will be based on the findings from the 5 milligram and 10 milligram dosing groups.

You will recall that in Phase I, we observed a ratio of plasma to CSF exposure of approximately 1 to 2.7, a relationship that could potentially allow us to treat patients at a lower dose and still achieve the desired 30% to 50% HTT protein lowering in the brain. We have been asked why we have selected 5 milligrams and 10 milligrams as the starting dose levels for the PIVOT trial since we see higher doses in the Phase I healthy volunteer study.

The Pivot-HD dose selection was based on both the percent lowering of blood ACT level and the ratio of plasma to CSF exposure observed in Phase I. In the Phase I MAD study, we observed approximately a 40% reduction in blood HTT levels at the 15-milligram dose and approximately 60% reduction in blood HTT levels at the 30-milligram dose.

Given the observed ratio of 1 to 2.7 of plasma exposure to CSF exposure, we would expect to have an even higher level of CNS HTT protein lowering at the 15-milligram and 30-milligram dose levels. Accordingly, given our stated target HTT protein lowering of 30% to 50% in the brain of HD patients, we have selected 5 milligrams and 10 milligrams at starting dose levels.

If the plasma to CSF ratio in HD patients observed in PIVOT-HD is consistent with what was demonstrated in healthy volunteers in Phase I, dosing at 5 milligrams and 10 milligrams may very well achieve the desired 30% to 50% HTT protein lowering in the brain.

Of course, if the ratio of plasma to CSF exposure in HD patients is closer to 1:1, we have the ability to study higher dose levels in the PIVOT-HD study. We can also confirm that the protocol approved in Europe as [Upsalia] for the 12-month PIVOT-HD study includes the ability to potentially study a 20-milligram dose level if needed.

In terms of study design, the PIVOT-HD study includes 2 parts. An initial 12-week placebo-controlled phase focused on PTC518 pharmacology and pharmacodynamic effect, as well as CSF exposure followed by a 9-month placebo-controlled phase focused on biomarkers, including CSF HTT protein levels, brain volume changes on MRI, and plasma and CSF neurofilament light chain levels.

We look forward to sharing the results from the 12-week portion of Pivot HD in H1 of 2023 today. Overall, we are very excited about our continued progress across our development program and look forward to sharing results from several of our studies in the near future. I will now hand the call over to Eric to provide an update on our commercial portfolio. Eric?

Thanks, Matt. It is exciting to see the progress from our pipeline and the commercial team is eager to bring our innovative treatments to patients to address a high number of unmet medical needs worldwide. Our global customer-facing team has delivered yet another outstanding quarter.

DMD revenue was $131 million in the quarter, an increase of 15% year-over-year. Our DMD franchise continues to be a key revenue driver and remains robust and geographically diversified. As a result of consistent strong quarterly revenue, we are raising our 2022 DMD revenue guidance to $490 million to $500 million.

Starting with Emflaza. Net product revenue for the second quarter was $55 million, which represented 16% growth over the third quarter last year. Continued strong execution by our Emflaza team drove new patient starts supported by continued favorable access, high compliance and appropriate weight-based dosing for DMD patients in the U.S., which drove the growth.

Translarna delivered $77 million in net product revenue for the third quarter, which represents a 14% increase over the third quarter of 2021. This was driven by growth in all regions. Overall, Translarna revenue continues to be globally diversified and we continue to make good progress with our expansion into newer markets in Eastern Europe, the Middle East and Latin America as well as additional markets in Asia Pacific, which is of strategic importance for future growth.

Moving to Upstaza and our ongoing launch activities. Following the approval in Europe for the treatment of AADC deficiency, Upstaza was launched at the recent 2022 SSIEM meeting in Germany. Our team is actively executing on all strategic initiatives of the launch. We are pleased to have already treated our first commercial patient this year under the French early access program, and we anticipate treating additional commercial patients in Germany, France and Italy in Q4.

Treatment center readiness is on track as well as further preparation for surgical treatment carried out at key European centers. Patient identification is continuing to accelerate, and we are also strongly focused on markets that have early access programs and others via cross-border health care.

Based on the clinical results and the feedback from the KOLs treating patients to date, we are confident that the durable efficacy and safety data we obtained from up to 10 years of follow-up with Upstaza will support HTA dossier submissions for reimbursement as the first and only treatment approved for AADC deficiency patients 18 months and older. We have guided to $20 million to $40 million in revenue from Upstaza and continue to work towards this in the fourth quarter in France, Germany and Italy.

Shifting gears in Latin America, our team continues to progress with Tegsedi and Waylivra. In Brazil, following the innovative classification for Tegsedi, we delivered the first group purchase order from the Ministry of Health earlier this year. Furthermore, patient identification continues to be strong, particularly in remote areas where Tegsedi self administration is a significant advantage over the competition.

We anticipate to receive an additional group purchase order in the fourth quarter. Finally, discussions continue to progress with CONITEC, the National Commission for the incorporation of Technology for inclusion of Tegsedi in the essential drug list, which will simplify the access to ATTR amyloidosis patients.

For Waylivra, we continue to grow our patient base across Latin America for the treatment of FCS. Patient identification continues to progress, and we are pleased to have received the first group purchase order from the Ministry of Health in Brazil, which we anticipate to deliver in the fourth quarter. This is an important milestone for our FCS patients awaiting treatment.

As a reminder, last December, we submitted an application to Anvisa in Brazil for approval of Waylivra for the treatment of FPL. If approved, Waylivra will be the first approved treatment for FPL in Brazil, and this will mark the first approval globally for this indication. We anticipate a decision later this year.

In conclusion, this is a very exciting time for PTC and in particular, for our global customer-facing team. We are laser focused on delivering a strong finish to 2022 and setting the foundation for an even more successful 2023. Now, let me turn the call over to Emily for a financial update. Emily?

Thanks. Before turning to third quarter financial highlights, I would like to describe the strategic financing of up to $1 billion that we have just closed with Blackstone Life Sciences. This transaction allows PTC to accelerate our revenue and innovative pipeline. This partnership also puts PTC in a strong position to pursue future BD opportunities and moreover, to execute without near-term dependence on market dynamics.

The financing consists of $350 million upfront. This includes $300 million in senior secured debt at 7.25% plus SOFR with a 7-year bullet term and an additional $50 million of equity. Additionally, the term loan includes another $150 million in delayed draw debt that can be accessed in the first 18 months after close.

Lastly, the total financing includes a potential $500 million credit line for mutually agreed upon business development opportunities. Importantly, the term loan investment by Blackstone will be secured by a limited asset collateral bucket, including unlimited to Translarna, Emflaza, Upstaza, (inaudible) sepiapterin and vatiquinone. We look forward to continuing to deliver on our mission of developing and commercializing breakthrough therapies globally.

I'll now take a few minutes to review our third quarter financial results. Please refer to the earnings press release issued this afternoon for additional details. Beginning with top line results. Total revenues were $217 million for the third quarter of 2022, a 57% increase over the third quarter of 2021. This was driven primarily by net product revenue from the DMD franchise of $131 million of received royalty revenue of $33 million and an Evrysdi milestone of $50 million from Roche for capacity annual sales of $750 million.

Our total revenue from the first 3 quarters of 2022 was $531 million. And consequently, we have narrowed our revenue guidance range to $710 million to $750 million from $700 million to $750 million. This includes DMD revenue of $490 million to $500 million raised from our previous revenue guidance of $475 million to $495 million and also includes $20 million to $40 million in revenue from Upstaza, our recently launched gene therapy.

Turning now to our DMD franchise. Translarna net product revenues were $77 million, representing year-over-year revenue growth of 14% compared to the third quarter of 2021. This growth was despite FX headwinds and would otherwise have been approximately 30% growth year-over-year. Emflaza had net product revenues of $55 million or 16% growth year-over-year.

Non-GAAP R&D expenses were $150 million for the third quarter of 2022, excluding $15 million in noncash stock-based compensation expense compared to $118 million for the third quarter of 2021, excluding $13 million in noncash stock-based compensation expense. The year-over-year increase in R&D expenses reflects additional investment in research programs and the advancement of the clinical pipeline.

Non-GAAP SG&A expenses were $67 million for the third quarter of 2022, excluding $14 million in noncash stock-based compensation expense compared to $56 million for the third quarter of 2021, excluding $13 million in noncash stock-based compensation expense. Cash, cash equivalents and marketable securities totaled approximately $288 million as of September 30, 2022, compared to $773 million as of December 31, 2021.

We're happy to report our recent financing increases that cash balance to approximately $635 million on a pro forma basis. I'll now turn the call over to the operator for questions. Operator?

(Operator Instructions) Our first question comes from Brian Abrahams with RBC Capital Markets.

This is Joe on for Brian. Just could you provide us a little more detail about the initial feedback on Translarna? And what do you plan to include in the data package to address this issue?

Thanks for that question. What we did was, as you know, we have submitted a meeting request to the FDA, so we gain clarity on the path to the NDA. So this was a written one, while the FDA provided initially some written feedback that Study 41 does not meet the substantial evidence of effectiveness.

We're now planning to follow up on the discussions with the agency to understand whether the evidence in the ITT population in Study 41 along with confirmatory evidence from other studies could therefore then support approval. So I think as usually is the case with the agency, especially with initial written feedback, it can involve some conversations and some live conversations that we expect to have where we can have some back and forth, particularly given some of the long history of the program that really unmet medical need of the disease and the interest in the patient community.

And the fact that really most recently, it has been regulatory presence with other companies in similar situations. And I think a clear example of that, which you've seen recently with NDA submission, especially in the rare neurological diseases, you saw from companies like AMOLEX and Reata where initially, they weren't accepting the submission and subsequently they then did at the conversation.

So we're looking to -- this is the beginning of the first inning of the game here in which we'll be going back and forth with them.

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

So how do you think that this deal with Blackstone and some of your upcoming potential commercial opportunities, if successful here with your late-stage pipeline, could help frame you towards reaching self-sustainability. And I know Emily mentioned potential BD opportunity exploration as well. So can you give a general framework about what you might be looking for and the future balance of in-house innovation as well as outsourcing.

I'll start and then pass it. As I said, we -- and what our plan has been is we've been building through the combination of both external business development as well as internal growth of our drug discovery development pipeline to bring a product to the marketplace every 2 to 3 years, and that's what we're building to. And we're going to use a combination of both of those to be able to both accelerate those processes.

So the way we look at this, Blackstone has given us a great opportunity to accelerate, to take molecules that we have and that have additional indications in them as well as to look, which we always do for assets that are later-stage assets or commercilizable on near-term commercialization efforts, to be able to bring in also to increase revenues and add to our later-stage pipeline. So Emily, do you have anything extra you want to add?

Yes, I'll just reiterate that we're obviously very excited about this deal. As you pointed out, it does really provide incredibly attractive financing at favorable terms and allows us to create strategic flexibility to drive innovation, the growth of the business and business development.

We obviously want to look for further opportunities to leverage our existing commercial drug development infrastructure, and we will utilize some of this access to capital for those business development opportunities.

And then for Upstaza, is the agency now comfortable with the cannula and the surgical procedural items? And I guess what gives you confidence that this is essentially the last item that you need to check off before submitting?

Yes, sure. Matt, do you want to take that one?

So the cannula issues appear to be addressed. The issue in the past was that there was a desire for us to have experience using our specific drug product with the cannula, the delivery of the product into the brand of the children. They had no prior experience with that. And so there was a set of data that included both the benchtop testing showing the compatibility of the product with the device. And then, of course, importantly, those surgical procedures where we now have been able to provide them the data that the drug can be delivered safely to the children with that device.

In terms of the ask regarding additional data in support of the comparability analysis, we're well positioned to provide what they want, which is just some additional samples from the clinical batch material to be included in the BLA. So we are fully confident that we can provide those data and be able to move the package forward with the submission, as we said in the first half of 2023.

Our next question comes from Eric Joseph with JPMorgan. You may proceed.

Just a follow-up on PTC518. I'm curious whether (inaudible) readout, if the data suggests moving to a higher dose, how confident are you that the clinical pause in the U.S. to be resolved at that point, allowing you to recruit U.S. sites as part of that cohort? And then secondly, on Upstaza, I guess from following the progress of other new gene therapy launches, it sounds like some European countries are expressing a desire to reimburse over time. I'm wondering if you've encountered that kind of resistance with Upstaza at all and how that might impact revenue recognition is so?

You were going in and out a little bit on the Slide 18, but I think your question was the ability to go to 20 -- to go to a higher dose, is that right?

If you're able to go to the higher -- if you have to go to 20 mgs, at that time point would you be able to recruit U.S. sites, I guess, with the pause in the U.S. result at that time, if you need to go to 20 mgs?

So maybe just for everybody, I'll start and remind everyone that PIVOT-HD is a global study that's up and running outside of the U.S. in multiple sites in multiple countries at the dose levels and for the duration that we desire. And just to remind everyone that includes the 5 milligram, the 10 milligram, and the 20 milligram.

So all of those went through the regulatory bodies throughout Europe and in Australia. So we have the -- so in the sense that it was -- the outlier there was the U.S. in terms of that. So obviously, what we are doing is we're -- our top priority now is really to get the study enrolled and keep the program moving forward and get their results as rapidly as possible.

And then in parallel, we'll work with the agency to address their concerns. And so from our point of view, the most likely the most likely thing that we could do in terms of the concerns would be show them the subset of the data from the results that we get from there. So what we're doing is that we're moving quite -- our goal is to move incredibly rapidly and the good news that we're able to complete all doses of the groups within those that are approved within Europe and Australia.

And there's nothing in our view, any more telling than actual human clinical data. So we'll obviously bring them results on the subset of patients to try to move forward. But our real priority is really to complete it in -- to move it as rapidly as possible in Europe. So the good news is we don't need their permission to be able to go there. So we'll be able to get the results as a consequence of being able to do the trial in all these other sites.

Then in terms of Upstaza, maybe, Kylie and Matt, you can talk about the European in terms of pay as you go.

Yes, absolutely. And if I heard you correctly, Eric, your question was just around sort of from a contracting perspective, understanding the discussions we're having in Europe at the moment.

Yes. But also, there's been some discussion that some countries might prefer a pay-go paradigm rather than upfront -- paying all upfront for some gene therapy products. I'm just wondering if that might apply also to Upstaza and how that might impact your revenue recognition if it is, in fact, the pay-go structure going forward?

Yes. I think from our perspective, obviously, we're under discussions with a number of health technology assessment agencies in Europe at the moment. And I think one of the things that's really important for Upstaza is not just the strong data package that we have that shows the treatment benefit across all patients, but also the durability data. And I think this is what's really important for the pay as you go or pay-for-performance perspective.

And I think that's going to be what we put our emphasis on as we continue these discussions because it's not only that we're able to have that transformational benefit in the patients in the short term, but also the durability of that. And as we've talked about in the past, we have durability with up to 10 years of follow-up. And I think that, coupled with the strong clinical and safety package, clinical efficacy and safety package that we have allows us to believe that we can focus on single upfront payment.

Our next question comes from Joseph Thome with Cowen.

Maybe on PTC923 into the end of the year data, I guess, ahead of a submission, does all we need here a positive pivotal study, is there any CMC work that you need to conduct given that it came in from head of submission. And then if you can just kind of lay out under the context of generic Kuvan, Kuvan and [Polanzique] from [Bio Warner] out there. What's the success, I guess, looks like in this study at the end of the year?

Thanks for that question. Yes, we're pretty excited about 923 for PKU. And part of it is because -- and I think we've discussed this before, is one of the advantages is that really it's -- you said it's really a better Kuvan and that's because it's far more bioavailable and you can get it to higher concentrations, which at the end of the day, makes this far more effective and that you're able to see that in a -- you're able to see that in even patients where Kuvan was not shown to be effective in those types of patients.

Right. So I think that's an exciting aspect of the drug is that is the early results show that we're able to treat more types of patients that show greater reductions of phenology reductions within the block. So we think that in itself because remember, while Kuvan is there, there's a huge patient population that hasn't been well treated and mainly because for those patients that doesn't work. And I think we're going to show that within the drug and what's already shown is that it can actually target more patients.

So I think there's a real commercial advantage there. Matt, do you want to add something else in terms of the PKU enrollment and how it's progressing?

Yes, Joe, I would just say that -- to answer your question, we expect the positive data will be well positioned to move forward towards MDA and all the other components of the package will be ready. And as Stu mentioned, is clearly a significant unmet medical need for patients with PKU, and we're seeing that manifest in the tremendous enthusiasm for participation in the trial in the U.S. and around the world across all levels of severity, including as Stu pointed out, the classical PK mutations.

Our next question comes from David Lebowitz with Citi.

This is [Evangela] on behalf of David. So about Translarna. When you see that FDA says that study--

Maybe we'll switch to the next one and then go back when she's on?

Sorry, I believe there was something wrong. So what I wanted to ask was that about Translarna when FDA says, there isn't substantial benefit in Study 041, are they looking at the benefit in the primary analysis set along with the real-world data or the ITT population? And when can we hear further updates about this?

Yes. So yes, they took a -- the feedback really they took what they took is a pretty rigorous view of saying that you did not hit in terms of the MITT population. So now what we want to talk about is the evidence that would go with -- to get approval on the ITT population that along with confirmatory. So the other way we can get an approval on this and there's evidence of this out there, that is on the ITT population in Study 041, along with the confirmatory evidence from other studies, certainly could actually have approval. And we expect to be able to have a series of conversations about that to be able to have that particular conversation.

And that's, I think, when you look -- again, what we did, I think you can look back and see some of those examples where minds were changed once clarity on the pathway to discuss it, like with AMOLEX and Reata where you see minds were changed after discussions.

And maybe one last question on the PKU program. So what kind of responder rate are you expecting in the upcoming update in patients who have greater than 600 micromole per liter phenylalanine levels?

Matt, do you want to?

Yes, sure. We haven't provided any specific information on what we're seeing in terms of responder rates other than to emphasize what we've seen in the Phase II study and what we expect in this study, which again, what we saw in Phase II was responses across the full spectrum of patients, not only with those with a baseline phenylalanine level of greater than 600 micromole per liter.

But importantly, also in that subgroup of patients, the classical PKU patients with baseline phenylalanine levels of greater than 1,200 micromole per liter, where historically, there's been no response in these patients to Kuvan. And we've been able to demonstrate market reductions in blood phenylalanine levels. So we look forward to seeing robust effect across the full spectrum of severity as well at baseline as well as the different genotypes that could impact PKU. And again, we look forward to sharing those data by the end of the fourth quarter when we have them.

Our next question comes from Alexander Xenakis with Truist.

One on Translarna in Europe. Can you remind us, if you get full marketing approval, does that change anything with the story as far as will you be forced to go and renegotiate price perhaps? Or do you expect additional uptake in patient identification or treatment? Does the story change at all as we -- if you get full marketing authorization. And then a second question on Upstaza in Europe. Can you remind us, as we progress in the launch, what type of metrics you're considering providing in addition to revenue? Will you be providing the number of patients treated or active sites that are full and ready to go?

For the transition in Europe from a conditional approval to a full approval. It's interesting, we've been pretty good about identifying patients and bringing them on to Translarna. So we have a large number of patients are already on. I think the transition to the -- from the conditional to the full approval also just prevents us -- we don't have to report every year, it would be every 5 years. And I think in terms of in terms of HTA and such, maybe Eric, you may want to comment.

Yes, sure. Thanks for the question. I think full marketing approval only helps, of course, but every country actually has their own systems by which they will evaluate the HTA assessment. And so in many cases, a full or conditional approval doesn't really affect too much any of those discussions. We believe that the 0401 results along with Stride and along with all the previous studies combined will not only strengthen the current value proposition that we could have. But I think it will give us even stronger position to add -- continually add new patients and strengthen our current pricing structure throughout Europe and the international corridor.

So essentially, while this is primarily, as we said, a regulatory where we don't have to file every year for 5 years, it certainly does strengthen our value proposition, and we'll continue to leverage all of the data to ensure that we maintain the best possible price at this point in time.

And then on the Upstaza launch, any additional color on future metrics would be helpful.

I think the major metrics that we were trying to get was those revenues, right. So Kylie, do you want to comment any more on that?

Yes, absolutely. I think as we've shared in the past, we were able to identify a number of patients globally. And I think as we achieve approval, the team is working full steam ahead and being able to work with the different centers that we have in Europe to be able to schedule these surgeries and have these patients treated as soon as possible.

We are extremely pleased to have already treated our first commercial patient this year under the French early access program. And we do anticipate a number of additional commercial patients in Germany, France and Italy in the fourth quarter. And I think we've done a good job of having treatment centers ready to go across a number of countries. And this has been crucial to ensuring that we have the patients identified, the treatment centers ready to go and being able to schedule the surgery so we're able to treat the patients and making sure that we have the right market access environment to be able to do that.

So from that perspective, we're focused -- shifting the focus towards revenue. We have shared that we will hope to achieve or anticipate achieving $20 million to $40 million in revenue this year, and we're still on track to do that.

Our next question comes from Raju Prasad with William Blair.

Just want to get some clarity on the FDA strategy with regards to Translarna. So did you guys request like a type A or B meeting? Or has it not kind of been clarified what type of interaction you'll have with the agency? And then going into this meeting, if there is a request to run on a supplementary study or something of that nature, would that be something that you'd be willing to do to try and support approval? Or is it really just trying to get the FDA to understand the data as it stands today.

Yes. So maybe I'll start out and just a couple of points. Well, clearly, what's critical here that we believe is that A, that it's just ever since COVID, it has been very difficult to have actually, a person to person or for that matter even calls. Most things have been through written communications. And that's a relatively slow way to exchange of ideas to make some changes.

I do want to emphasize, however, that the comprehensive nature of the data set that we have, right, as you think about it, 359 patients, we saw statistically significant results in the ITT data in the 6-minute walk test, the time function test, the North Star, the registry data demonstrating some of the hard end forms like (inaudible) preservation of ambulation and lung function. It's a pretty strong package in our view.

And I think if we, in a sense, so that in a way that one of the first studies to have a statistically significant endpoint in the overall population and then with the data sets that we have, not to mention a full data set of all the patients and how massively statistically significant it is. That we think we can certainly have a discussion with them on getting an approval for that.

So that's the way we want to work towards getting approval for Translarna in the U.S. Matt, is there anything else you want to add to that?

Yes. I would just say that as Stu mentioned, things have been a bit different in COVID. The traditional phases with the agency was always you would get written comments that are often quite conservative and maybe don't completely address all aspects of the data package. And then you have the advantage of that in-person meeting to really value back and forth and can find sort of a middle ground to make sure that the agency is fully understanding of a data package. And I think that's particularly true in one as complex as the Translarna data package.

So we're in a position now where we've got that first written feedback that seems to have focused on our -- on a potential interest of using Study 41 alone to meet that stated substantial evidence of effectiveness criteria that the agency has held out for rare disorders where a single study can suffice rather than seeing we focus on the clear evidence of benefit in the overall ITT population, along with the confirmatory events, we can clearly offer, whether it be in a pooled analysis of [0721 and 28 and 7.1] with a with a p-value of 0.002, showing that is finding for significant treatment benefit.

Clearly, (inaudible) by chance. Or outside, of course, the STRIDE registry where we can't confirm that what we're observing in the clinical trials, in terms of slowing of progression are manifesting themselves in important delays in the key morbid transitions of the disease, whether that be the 4-year delay and loss of ambulation compared to a matched natural history cohort, the 1.8 years in terms of loss of pulmonary function. So where we are now is really, I think, in the early innings of what could very well be a series of back and forth where we are certain that they're seeing the data and the potentials with the data to satisfy what has been used for other sponsors and other rare disorders to meet the criteria for allowing for the submission.

Our next question comes from Gena Wang with Barclays.

Maybe just a quick follow-up, what you just comment. I wanted to have a clarification. For your initial interaction with the FDA regarding the study 01, did FDC your ITT analysis along with the other analysis?

Yes. Go ahead, Matt.

To clarify, all of the data were submitted. I would say their comments seem to focus on the primary analysis group and primary analysis method, which was in the MITT population emphasizing the fact, as we all know, that we did not achieve significant in that prespecified subgroup of 300 and greater than 5. And stating that given that that did not need significant -- statistical significance, we didn't meet the criteria of substantial evidence of effectiveness.

And so I think where we didn't see a clear feedback is on the superset of ITT population. And again, this is the limitations of risk and feedback, and that's why we look forward to having a conversation with the agents.

Another question is regarding the Pivot-HD study. Since you submit the 9-month nonhuman primate data to the FDA after you initiate clinical study. So just wondering, any concerning safety that could trigger FD pause the clinical trial? In other words, what was the highest dose you dosed in the 9-month primate study? And then what was the toxicity you've seen so far?

Yes. So we've -- look, I think what's important is, obviously, when thinking about how -- the role of safety toxicology is always to identify the non observable effect level. And then to be -- have multiple between that and the drug.

And so while we don't really give the details of the toxicology program, we were multiple multiples from the NOAL. So we felt pretty comfortable and that you could see was consistent with the same feelings from the regulatory bodies from all the countries that we're in as well as Australia.

And then I'll remind you, those -- obviously, in the role of toxicology is to get an idea to know what you want to be looking for. That being said, I want to make it clear that these are enough because you go to higher doses. We've not seen any treatment-emergent SAEs or AEs thus far. And so what was observed had nothing to be seen in the clinic. And part of the reason when we think about that, like we've never seen an example with -- Evrysdi, I think, is a great example where there was obviously, a toxicological finding in non-human primates that everyone talked about for quite some time.

But 7,000 commercial patients later, it turned out as we suspected to be specific to nonhuman primates and wasn't seen in other species or in patients. So we try and be very careful and not try and tag a drug in terms of any safety because we have any issues that we haven't seen any right now.

So our goal and our top priority is, since it's a global study, and it's opened up the sites around the world, is really to get -- to keep moving and keep this getting enrolled and moving forward and get the results of the data. Because we think that's the key here. And then at some point for the subset of results, clinical data to talk to the FDA. That's I think the easiest way to do it because there's nothing like clinical data to trump everything.

Our next question comes from Danielle Brill with Raymond James.

I have a couple on PTC518 as well. I guess, first, are you planning to show CSF HTT protein levels now that the data are pushed to early next year? And then since you're running -- it sounds like you're running the full 12-month study outside the U.S., if Pivot-HD shows a functional benefit, is there a mechanism or a pathway for a streamlined development path in the U.S. available still?

So I think just to remind you, we've, again, the PIVOT-HD study is a 2-part placebo-controlled study where the first 12 weeks are really focused on the pharmacology and pharmacodynamic effects. And the second part is focused on the biomarkers and outcome measures.

And so from our perspective, the first 12 weeks, what's really going to be critical there is going to provide the data on the relationship between dose exposure, HTT mRNA and protein reduction in the blood at steady state. And then we'll also know the exposure in the plasma and the CSF. And I think that's ultimately critical because what the 5 and 10 milligram doses are a reflection of what we've seen in healthy volunteers, which is basically a close to 3:1 ratio that we observe. So -- and that tells us about the exposure in that right range.

And then the CSF protein, I think, will be -- I think we'll have a longer time over the duration of the full year study to look not only at the HTT and the CSF but also neurofilament changes, MRI and other outcome measures as well. So I think from that perspective, in the sense that I think it's important to realize that patients in Europe and Australia are no different than patients in the U.S., and it's well accepted that they're similar patients.

So the results that you get with this study are no different than the results that you can get from treating patients in the United States. And so the mere fact that you -- the matter of fact that you could use this data and then if there's any way where we can use a combination of biomarker, whether it's neurofilament, HTT changes in the blood and CSF as well as changes in creating volume as measured by MRI, a lot of measures, is that's a means for a potential accelerated approval.

Certainly, that would be viable, I think regardless of where you collected the data. That's our view of the world in terms of can this potentially be used for a potential either accelerated approval or to define what's the best way to do the Phase III. We don't think it changes regardless of whether there's U.S. patients in there or not.

Our next question comes from Kelly Shi with Jefferies.

So regarding PTC518 for the patients already involved from the U.S., have they all completed the study of the first wake portion? I Just want to quickly confirm on that? And also for the MIT-E results in the first quarter of next year. Can you help to set expectation on what kind of percentage change in the numbers of observed motor seizures from baseline would be considered clinically meaningful?

Sure. Matt, do you want to take that?

Sure. So thank you very much, Kelly, for the questions. Your first question was on PTC518 and the pause in enrollment to the U.S., the impact on U.S. patients. Just to contextualize the situation in the U.S. As we mentioned, we had started the 3-month study as we had the 3-month tox to support that with the plan that we would be getting the 9-month results and look to amend the protocol, not only in the U.S. but globally for the full 12-month study to include the 510 and potentially up to the 20 milligram dose levels.

Obviously, we were very cognizant of not wanting to have any patients have a lapse between the first 12 weeks and the second 9 months, if there were delays in getting the clearance of the full 12-month protocol. And as such, while we initiated enrollment and study sites up and running, we were able to limit enrollment and so that we had only several -- we had several patients that enrolled in the U.S. because we wanted to make sure that we didn't put too many patients in a situation that could be lapsed.

So by the time the pause has occurred, the patient had completed -- completed the 12-week portion of the study. So there was no additional impact to those patients because of the way we paced enrollments until we are certain that we could provide enrollment in the full 12 months without disruption.

Turning to the MIT-E question, as you mentioned, we expect to have results from the MIT-E study in mitochondrial disease-associated seizures in the first quarter. And maybe just as a reminder, about seizures in patients with mitochondrial disease, they are common in about 30% to 50% of all children with mitochondrial disease, highly morbid often the cause of death in patients with mitochondrial disease.

And unlike other seizures, these seizures don't respond to typical antiepileptic agents because they usually result from disturbances in the energetic pathways that are common in mitochondrial disease, and of course that are targeted by vatiquinone. So you're in a situation where you have these children who are having severe seizure burdens, including up to hundreds a day in some severe cases.

Given the lack of therapy for these refractory seizures, I think most physicians would view even a 25% lowering in daily seizures or monthly seizures we'll be reporting would be a significant clinical benefit to these patients. We, of course, designed the study in (inaudible) for a change of a difference of 40% between treatment and placebo boosts. So we powered around a 50% lowering in the treatment group, a 10% change in the placebo group, which is consistent with what's been observed in other pediatric epilepsy syndrome studies.

Again, I think even if we were able to capture a 25% reduction in seizure burden that would be viewed as a really impactful clinical effect given the enormous seizure burden, high morbidity and mortality that's associated with this severe seizure burden in these children who have no therapies that are typically effective for them.

Our next question comes from Judah Frommer with Credit Suisse.

Just a quick one on the Blackstone collaboration. Could you give us a little color on the genesis of the arrangement? Were there other financing transactions being considered and this was the most attractive? And did you feel that this was the time to raise capital? Or did this kind of fall into your lap?

Emily, do you want to take that one?

Yes. Sure, happy to take that one thing for the question. This is a long competitive process. We evaluated several options, obviously, looking at options that were equity-related, further royalty options and secured debt options. And frankly, this came out as the best in cost of capital and lowest dilution option for the company.

We are also very happy to be able to structure a tailored deal with Blackstone that holds a limited collateral basket and therefore, excludes some of our other assets in the pipeline. And I guess, as far as it comes to timing, as you mentioned, we do have -- we have identified assets in the pipeline where we want to extend their indications. And so the sooner the better to be able to accelerate that innovation and develop the pipeline.

And then just on that $500 million in potential credit facility, when you say mutual agreement, does that mean that Blackstone will potentially take ownership with you? Or it's just that they need to approve business development that you're planning on taking on?

I mean that was an important part of the transaction, and I think that's where we're really excited to have such a highly respected partner with such a broad network. So we will work with Blackstone. We've obviously demonstrated our ability as a proven consolidator to create value for business development. We'll work with Blackstone to further those efforts to leverage their network.

And then, yes, they will be mutually agreed upon transactions that can be structured in a number of ways through either upfront funding or royalty financing that will allow us to accelerate our momentum.

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

Just on PKU, can you give us a sense about how you're thinking about the market opportunity? I know the goal is to present data that is looking to be a better Kuvan, but given Kuvan is generic, where do you think, at least initially, the drug would place in terms of where in the treatment regimen it would fall? Maybe it's early to talk about that, but to the extent that you have, would love to hear it.

And then on the Blackstone deal, a second question. Was the Translarna path to U.S. approval part of the discussion? And did they get a chance to see that written feedback from the FDA under CDA, if so? Thanks.

Great. So maybe let's start with the PKU. Maybe I'll start and then pass. I think that the PKU, I think one thing that I think we should make very clear is that while there is Kuvan, and maybe this isn't as well known as it should be, but that the majority of patients of PKU patients remain either untreated or are not really well controlled well on Kuvan, even with the 2 commercial products available.

So that -- so there's a large population of patients that's about 58,000 PKU patients globally, of which a very small percentage are actually controlled by Kuvan. So the consequence of that is that there's a huge opportunity here. And the huge opportunity is with a better Kuvan more patients will be treated, and therefore, that's really the big opportunity here.

And so maybe to go through in more detail the market, why that's the case. Maybe Kylie, do you want to go through and sort of explain how you think about slicing and dicing the patients who respond and don't?

I think as Stu said, we see this as a really unique opportunity. While there's about 58,000 PKU patients globally and 2 approved therapies, there's still substantial unmet need. So we sort of think of the marketplace in broad strokes in the sense there's around 30% of patients that are therapy naive today in the U.S. And of those patients, that includes the classical PKU patient, those that are typically severe and have baseline fee levels of 1,200 micromole per liter or more.

And in the past, these have not been able to see benefit from Kuvan or other treatments. And so from that perspective, they remain therapy naïve. In addition to that, the remaining 70% of the patients that have tried Kuvan, many of them, as Stu said, are not on Kuvan. And that could be because they either initially failed or because they're poorly controlled over time.

And so there's a substantial opportunity when you look across those 3 main segments. And if you think about the data that gives us confidence going from the Phase II into the Phase III study from the Phase II head-to-head PTC923 was -- sepiapterin was able to demonstrate benefit in that classical PKU patient, which has not been able to be seen with Kuvan previously, opening up an opportunity for the therapy naïve.

We were able to see 50% more responders with 923 than Kuvan, opening up the opportunity for those that initially failed on Kuvan. And then even in those that were previously treated with Kuvan, we saw a 200% greater fee reduction than Kuvan. So demonstrating data points across all those different patient segments.

And if you think about requirements for sepiapterin, for example, in the U.S., it's obviously normally around providing documentation for trying the treatment and (inaudible) on certain aspects of that. And if you look across that 70% of the population, they've already done that. And so it's a market opportunity that's able to be captured very quickly upon launch. And obviously, as I mentioned in the therapy naive, there's no mechanistic reason why they should be put on Kuvan if it fails.

So we think there's a unique opportunity, and we think we're able to capture upon it very quickly upon launch.

And then for the Blackstone deal, Emily, you want to talk about the due diligence?

I think everyone on this call can attest that Blackstone conducted very thorough due diligence on the company. Obviously, standard diligence on the data we have to date, our regulatory correspondence, our forecast, our commercial assessment. And so yes, they have reviewed all of our regulatory correspondence that we have received in writing. I think this is really a statement to Blackstone's belief and the robust long-term potential of our pipeline and our commercial products.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Stuart Peltz for any further remarks.

Yes. So first of all, let me thank you all for joining us on the call today. Obviously, what you can see, we've made significant progress this year and moving forward and delivering on a number of milestones throughout this year in the last 3 quarters.

We also have a number of critical registration directed studies that are ongoing now, and we look forward to sharing the results of these in the next 6 to 9 months that I think are going to continue to really both transform and create value for all our stakeholders. So as you can see, we're working hard to continue our mission to both discover and develop innovative therapies for rare disorders. So again, thanks for joining the call.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.