PTC Therapeutics Inc (PTCT) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the PTC Fourth Quarter 2020 Financial Results Conference Call. (Operator Instructions)

I would now like to hand the conference to your speaker today, Kylie O'Keefe, Head of Investor Relations. Please go ahead, ma'am.

Good afternoon, and thank you for joining us to discuss the PTC Therapeutics Fourth Quarter and Year-end 2020 Corporate Update and Financial Results. Joining me on today's call is our Chief Executive Officer, Stuart Peltz; our Chief Financial Officer, Emily Hill; our Chief Development Officer, Matthew Klein; and our Chief Business Officer, Eric Pauwels.

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 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 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 annual report, 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 now pass the call over to our CEO. Stu?

Thanks, Kylie, and thanks for joining us today. In 2020, we have made significant progress in moving our pipeline forward to bring new therapies to patients on all fronts from research and development through commercial. Despite the COVID-19 pandemic, we initiated 5 clinical trials, including 2 registration-directed trial with vatiquinone.

Let me begin with the Duchenne muscular dystrophy franchise. We continue to see strong global growth and geographic expansion. Our DMD franchise sales in 2020 were approximately $331 million. Specifically, in the U.S., the annual revenue of Emflaza totaled $139 million, which is a 38% increase from last year.

The annual revenue for Translarna totaled $192 million and was driven by geographic expansion, new patients and label modification. For example, Translarna received marketing authorization in Russia in the fourth quarter. We have also continued to drive additional geographic expansion in Central and Eastern Europe and in Latin America. Even during the turmoil caused by COVID-19 pandemic, we secured a Brazilian group purchase order for Translarna, and Eric will go into these details shortly.

As a reminder, we also recently reported the results from the 045 dystrophin study. We plan to discuss these results along with Translarna's totality of revenue, including existing clinical and real-world data with the FDA. Our goal has always been to bring Translarna to U.S. patients who have long been waiting for this therapy as quickly as possible.

Moving to our splicing platform. The approval of Evrysdi in 2020 was an important milestone for PTC, our partners, Roche and the SMA Foundation. Evrysdi is a groundbreaking treatment, which has a benefit for all SMA patients with particular benefits of durability and broad tissue distribution. As a consequence of the benefits of Evrysdi, it has continued to show a strong uptake, and Roche expects that Evrysdi will become the treatment of choice in the U.S. in 2021. With the near-term expected European approval, followed by the Japanese approval, Evrysdi should see continued significant growth this year.

Another accomplishment of 2020 with regards to Evrysdi is the royalty monetization deal, which puts $650 million on our balance sheet. The structure of the deal allows PTC to receive approximately 60% of the royalty revenue and reverts to 100% once our royalty monetization partner receives $1.3 billion.

Our next most advanced molecule from the validated splicing platform is PTC518 for the treatment of Huntington disease. As a reminder, PTC518 is an orally bioavailable small molecule that crosses the blood-brain barrier and reaches all regions of the brain. Preclinical results demonstrated a dose-dependent reduction in the HTT mRNA and protein in cells of the striatum, cortex and cerebellum in the back HD mouse model. This is critically important. And Huntington disease is a whole brain disease. HTT reduction is clearly titratable based on PTC518 levels, so the degree of HTT lowering can be tightly controlled.

In addition to the whole brain distribution, PTC518 achieved uniform exposure and HTT lowering in all tissues analyzed, showing a near 1:1 ratio between CNS and blood. This is important because it shows the exposure and effect within the brain is analogous to what we see in the blood cell.

PTC518 is currently in a single and multiple ascending dose Phase I trial in healthy volunteers. We will be measuring both HTT mRNA and protein level and cells within the blood, allowing us to quickly demonstrate drug activity that results in HTT lowering. This will allow us to select a dose with the desired levels of activity. This same approach was successfully used in the risdiplam program, where proof-of-concept was demonstrated in the healthy volunteer study. We expect the same trajectory in the Huntington disease program. We are very excited about this program and look forward to the results that are expected in the first half of 2021.

Now turning to our virology platform. The second and final stage of the FITE19 registrational trial for COVID-19 has commenced. As a reminder, PTC299 is an oral small molecule with a dual mechanism of action that demonstrates both antiviral and antiinflammatory effects. PTC299 inhibits SARS-CoV-2 viral replication and calms the cytokine storm. PTC299 by targeting a cellular enzyme, dihydroorotate dehydrogenase, or DHODH. The advantage of targeting the cellular enzyme instead of a viral protein is that it's less likely to elicit drug resistance. Though there have been great strides made in the development of vaccines, the lack of effective COVID-19 treatments has significantly hampered our ability to resume normal life. And therefore, the continued focus on developing treatment is key.

Now let me turn to our Bio-e platform. We have initiated 2 registration-directed trials with vatiquinone, one in mitochondrial epilepsy and one in Friedreich ataxia and are enrolling patients in both study. The global prevalence of mitochondrial epilepsy is estimated at 20,000 patients, and the global prevalence of FA is approximately 25,000 patients.

Let me now touch on our gene therapy platform. Our initial focus is to launch our first gene therapy for patients with AADC deficiency, which is expected to occur in Europe during the second half of 2021. The BLA submission is also on track for the second quarter of this year. As a reminder, PTC-AADC is a transformative gene therapy that has the potential to produce meaningful changes an AADC-deficient patients. PTC-AADC has robust clinical data that demonstrates durability of affect for up to 10 years posttreatment, a crucial consideration in a single-dose gene therapy.

Now let me discuss our plans for PTC923. As a reminder, there is an estimated global prevalence of 58,000 PKU patients, and the vast majority are not well addressed by current therapies. And therefore, we are excited about the potential of PTC923 as a clinically differentiated therapy to address this high unmet medical need. We will start a registrational trial evaluating PTC923 for treating PKU called AFFINITY mid this year.

Last year, we achieved many important milestones. We anticipate an exciting year in 2021 that will continue to create substantial value for all our stakeholders.

I'll now turn the call over to Matt for key updates on our clinical programs. Matt?

Thanks, Stu. I want to build on Stu's comments on our development team's achievements in 2020. We have worked hard at PTC to navigate the many challenges in the past year and are excited to continue to deliver on planned development milestones across our multiple platforms.

I would like to start with our Bio-e platform. This platform focuses on diseases of oxidative stress by targeting a special class of enzymes called oxidoreductases. Oxidoreductases are a family of enzymes that perform important electron transfer reactions and are known to have important biological functions. Particularly known, the first compound being developed for the Bio-e targets the oxidoreductase, 15-lipoxygenase. 15-lipoxygenase is a key regulator of inflammation and oxidative stress pathways and has been implicated in a number of CNS diseases.

As Stu mentioned, we have initiated 2 vatiquinone registrational trials in mitochondrial epilepsy and Friedrich ataxia. As a reminder, vatiquinone has extensive safety data, particularly in pediatric patients with the longest duration of exposure being over 10 years.

For the first indication of mitochondrial epilepsy, previous clinical studies demonstrated vatiquinone had a positive effect on seizures and seizure-related morbidity across multiple mitochondrial disease subtypes. These results give us confidence that vatiquinone has the potential to show clinically differentiated improvement for mitochondrial epilepsy patients.

The ongoing mitochondrial epilepsy trial, the MIT-E trial, is a randomized, placebo-controlled study enrolling 60 children at centers worldwide. The primary endpoint of the study is reduction in observed motor seizures, with secondary endpoints capturing other aspects of seizure activity and seizure-related morbidity. Enrollment is underway, and data are expected in the third quarter of next year. We are very excited to bring this therapy to children with mitochondrial disease.

The second vatiquinone registrational trial is in Friedrich ataxia, which is a rare, inherited progressive neuromuscular disease that affects the nervous system and heart. In a previous Phase II trial, vatiquinone treatment demonstrated a significant improvement in disease severity compared to a matched natural history cohort over 24 months. These results support that vatiquinone can deliver a meaningful effect to Friedrich ataxia patients.

The Phase III FA trial, MOVE-FA, is a 72-week randomized placebo-controlled study. The primary endpoint of the trial is changed from baseline in the Modified Friedrich Ataxia Rating Scale, or mFARS. The key secondary endpoint is the change from baseline in activities of daily living, as assessed by the FA-ADL scale. This endpoint strategy was developed in consultation with regulatory authorities in the U.S. and EU. We began trial enrollment in the fourth quarter of last year, and we anticipate results in 2023.

Now let me turn to our PTC518 Huntington disease program. PTC518 is an orally bioavailable small market developed from our splicing platform that was designed specifically to treat Huntington disease. Given the need to effectively target every region of the brain, the molecule is designed across the blood-brain barrier and avoid efflux, a significant advantage for treating neurodegenerative disease.

The Phase I healthy volunteer trial is underway and includes both single ascending and multiple ascending dose regimens. As a reminder, this healthy volunteer trial is designed to not only capture key safety and pharmacology data, typical of the Phase I study, but to also establish proof of splicing mechanism and guide dose selection for future studies.

The SAD study includes 5 dosing cohorts, each with 6 active and 2 placebo subjects. The MAD study is expected to have 3 to 5 cohorts, each with 6 active and 2 placebo subjects. In the Phase I study, we are monitoring drug concentration in both the CSF and blood, and we'll be measuring levels of HTT mRNA and protein in the cells of the blood. This ability to gain key proof of splicing mechanism data is similar to what we were able to accomplish, and there is a planned Phase I healthy volunteer studies. The data from the PTC518 SAD and MAD studies are expected in the first half of this year.

Now turning to our gene therapy platform. We remain on schedule for the CHMP opinion on the PTC-AADC MAA and for the BLA submission to the FDA, in the second quarter of this year. In addition, we are continuing to progress our FA gene therapy program and expect first-in-human dosing before year-end.

Turning to our PTC299 FITE19 clinical trial. We recently announced that enrollment of the first stage of the study was completed. As planned, the DSMB reviewed the interim safety data and unanimously recommended continuing with the second stage of the study. We have already initiated enrollment in the second stage, and data are expected in the second half of 2021.

In 2021, we look forward to advancing additional programs through our pipeline. We are on schedule to initiate the AFFINITY Phase III trial for PTC923 in patients with PKU in mid-2021, with data expected by the end of 2022. As Stu mentioned, despite existing therapies, PKU remains a high unmet medical lead.

To summarize, we look forward to building on the successful execution of our clinical development programs in 2021 and sharing important updates when these programs when available.

I'll now turn the call to Eric to provide more detail on our commercial business.

Thanks, Matt. We are very excited with the progress of our late-stage clinical pipeline, which is poised to potentially deliver multiple innovative neurology therapies that we can leverage with our global commercial footprint and existing expertise in rare diseases.

As Stu highlighted, the DMD franchise had strong growth in 2020 with both Emflaza and Translarna generating significant revenue. Despite the challenges of the pandemic, we continue to see year-over-year growth of the DMD franchise.

For Translarna, the only treatment for nonsense mutation DMD patients, ages 2 and older, we saw revenues of $192 million in 2020. The growth was due to the ongoing expansion of the patient base, high compliance, recent label updates allowing broader access and continued geographic expansion.

With the recent approval of Translarna in Russia in Q4 2020, we are excited to bring this therapy to nonsense mutation DMD patients and expand the use of Translarna globally, which is now available in over 50 countries.

In Latin America, we continue to see good progress. As a reminder, last October, we entered into a purchase agreement with Brazil's Ministry of Health to supply Translarna for both new and existing patients. This order was important given the governmental administrative delays in Brazil hit exceptionally hard by the pandemic. The agreement specified 2 shipments. We were excited to announce that both shipments were received by Brazil's Ministry of Health last year, including the last shipment in Q4 2020 to ensure continuity of the growing base of Brazilian nonsense mutation DMD patients. We continue to see further growth coming from new patients in the region and expect the next Brazil order in the second half of this year.

Now moving on to Emflaza, which is the first and only corticosteroid approved for all DMD patients ages 2 and older. We saw revenues of $139 million in 2020, which is a 38% year-over-year growth, driven primarily from new patient starts, a reduction in bridge and PAP free of charge programs, an increase in compliance and lower treatment discontinuations. Importantly, we continue to see strong new prescription growth into 2021, supported by publications of Emflaza's real-world clinical benefit over prednisone, which is now driving patients to seek switching treatment from their health care providers.

We expect the DMD global franchise growth to continue in 2021 with geographic expansion for Translarna and new patients for both Emflaza and Translarna. Based on this, our revenue guidance for the DMD franchise for 2021 is $355 million to $375 million.

Now switching to Tegsedi and Waylivra. We continue discussions with CMED for pricing of Tegsedi in Brazil. During this process, we continue to provide medical education, genetic testing, and patient program support as needed. For both Tegsedi and Waylivra, we continue to engage in patient finding in Latin America with ongoing success in these programs. We also continue to engage in early access programs in the region as we await a decision on the Waylivra ANVISA filing in Brazil, which is expected in Q3 2021.

Now moving on to AADC. PTC-AADC is a transformative gene therapy that has the potential to produce meaningful changes in AADC patients. As a reminder, AADC deficiency is a highly morbid and fatal pediatric neurological disorder. There are currently no approved disease-modifying therapies available.

In clinical trials, PTC-AADC gene therapy demonstrated significant and durable neurological and neuromuscular improvement, shown to continue for up to 10 years after treatment. PTC is currently preparing for our first gene therapy launch for patients with AADC deficiency, which is expected to occur in Europe during the second half of 2021.

As part of these efforts, identification and preparation of expert pediatric neurological centers of excellence is underway throughout the U.S., Europe and Latin America. Patient-finding activities are also accelerating with over 60 screening programs in over 20 countries to identify 300 patients by the time of launch.

I continue to take pride in our global customer-facing teams as they ensure continuity of access to PTC products for rare disease patients in need. We continue to expand our commercial expertise with the upcoming launch for AADC deficiency in neurology and build on our success in translating groundbreaking science to transform the lives of rare disease patients worldwide.

Now let me turn the call over to Emily for a financial update.

Thanks, Eric. In 2020, PTC saw strong continued revenue growth and progress across multiple platforms of our pipeline. We are executing on a number of fronts to deliver on many potentially value-creating milestones this year. The press release issued earlier this afternoon summarizes the details of our fourth quarter and year-end 2020 financial results. I will take a few minutes now to review these financial results and our 2021 guidance. Please refer to the press release for additional details.

Starting with our top line results. We reported $380.8 million in total revenue for the full year 2020 compared to $307 million for the full year 2019. This increase was driven primarily by 3 factors: Emflaza growth due to both new patient starts and high compliance; Translarna, driven by broader access, geographic expansion and label updates; as well as Evrysdi, driven by royalties and milestones associated with the U.S. approval and launch.

Revenue growth was due primarily to our global DMD franchise. Translarna net product revenues were $191.9 million for the year compared to $190 million for the full year 2019. For Emflaza, we reported net product revenues of approximately $139 million for the full year 2020, which compares to $101 million from the prior year. This represents a 38% year-over-year growth.

The total DMD franchise net product revenue was $331 million for 2020. Our 2021 DMD franchise revenue guidance is between $355 million and $375 million. And this guidance does not reflect any other anticipated revenue contribution.

The royalty purchase agreement with RPI has allowed PTC to diversify its market risk of having a future royalty stream currently tied to 1 product by transforming its potential future cash flows into a $650 million cash asset. This has created real value for PTC's financial position as the cash is being invested to support PTC's research and development platforms and patient care initiatives.

Additionally, by retaining the majority interest in the future royalties due from Roche, tapping the potential payout to RPI at $1.3 billion to retain future upside and the rights to receive the remaining potential regulatory and sales milestone, PTC has retained its ability to receive consistent cash flows in future periods.

We recognized $42.6 million in collaboration revenue in 2020, an increase of $26.9 million from the prior year. The increase is primarily related to 3 regulatory milestones that were triggered from Roche in 2020. We also recognized $4.8 million in royalty revenue in 2020 due to the FDA approval of Evrysdi in August, as we are entitled to royalties on worldwide annual net sales.

Non-GAAP R&D expenses were $438.9 million for the full year 2020, excluding $38.7 million in noncash stock-based compensation expense compared to $236.6 million for the full year 2019, excluding $20.8 million in noncash stock-based compensation expense. This increase in R&D expenditures reflects costs associated with advancing the gene therapy, splicing and Bio-e platforms, increased investment in research programs and the advancement of the clinical pipeline.

Additionally, the increase in R&D expenses includes onetime charges of $53.6 million related to the acquisition of Censa Pharmaceuticals, and $41.4 million related to the MassBio agreement for commercial manufacturing of our lead gene therapy program in AADC deficiency.

Non-GAAP SG&A expenses were $213.6 million for the full year 2020, excluding $31.6 million in noncash stock-based compensation expense compared to $181.2 million for the full year 2019, excluding $21.3 million in noncash stock-based compensation expense. We anticipate non-GAAP R&D and SG&A expenses for the full year 2021 to be between $725 million and $755 million, excluding approximately $100 million in estimated noncash stock-based compensation expense.

Cash, cash equivalents and marketable securities totaled $1.1 billion as of December 31, 2020 compared to $686.6 million as of December 31, 2019.

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

(Operator Instructions) Our first question comes from Eric Joseph with JPMorgan.

Just a couple from me. First, with PTC-AADC, assuming a positive CHMP decision, perhaps if you could just sort of walk us through the initial launch strategy in Europe. And of the 200 patients that you're anticipating to identify at launch, what countries -- excuse me, I guess, how should we be thinking about that -- their regional distribution or proportion in Europe.

And then also, I guess just thinking about the risk in -- just thinking about the age (inaudible) population here as well. Can you talk a little bit about the risk-benefit profile as it varies by age. Is there any challenges with stereotactic delivery and older juvenile compared to what's been sort of described today in infants?

Yes. Thanks, Eric. And thanks for the call. Maybe I'll start, and then I'll turn it over to Eric, who can talk to you more about the commercial planning. So I thought I'd start just by saying -- just to remind everyone that the AADC treatment that we have for gene therapy, actually is, we think, is really a transformative gene therapy that really can make very meaningful differences in the lives of patients with AADC deficiencies. And that is -- it's just to remind you, it's an ultra-orphan, highly morbid and fatal pediatric disorder.

And much like when you think about SMA, in the severe form of these patients, they really are developmentally arrested and aren't able to hold their head up, roll over, stand and move and. They could die within the few years of life. There's really no approved therapies and nothing really for disease-modifying therapy that's available for them.

And I think in the clinical trials, we showed that there was really transformative changes in these patients, where patients that were developmentally arrested like this, they all improved. And we had patients that went from not being able to move to be capable of a rolling and sitting, standing and walking. So we saw substantial progression as a consequence of this. So really highly transformative results. Clinical data for 5 years show an improvement after 10 years, of which we've continued to follow them. And we saw this in all pediatric ages that we administer, including older children and adolescence. So we saw a very nice benefit as a consequence of it.

We didn't see any -- really -- anything from the standpoint of surgeries -- challenges related as a consequence to the surgeries. So we think it's a highly valuable product, we believe, because of -- we think it's one of the best packages, clinical packages because of durability, the ability to see a biomarker where you could see changes in dopamine levels that we continue to see. And so I think that's actually -- is really powerful.

And so what we've been working on in terms of the launch is, obviously, are getting ready to identify -- getting ready and identifying patients, getting centers of excellence.

And so Eric, why don't you talk through a bit about the potential launch and what we're doing for launching that?

Yes, sure. Eric, thanks for the question there. First of all, most importantly, we have a number of key activities that Stu outlined in preparing that regional rollout. So those included an increase in disease educational programs, who are driving genetic testing. We now have 60 screening programs now in over 20 countries, the vast majority in Europe as well as LATAM, in other central parts -- Central and Eastern Europe and other places where we know there will be access and reimbursement for gene therapy products and ultra-rare disease products. We've done a number of things in terms of global country and specific webinars and virtual symposium.

So the level of the preparation in the marketplace has been extremely, I would say, aggressive in terms of how and where we're preparing in terms of our patient-finding activities in education. And as Stu mentioned, one of the key areas as well is making sure that those sites, those centers of excellence are prepared to not only treat the patients, but also follow them. And we've been doing that in many of the key areas.

The regional rollout is going to be specific as you would expect, for the first commercial launches in Germany. But we will immediately roll out a number of early access programs and taking full advantage of the mechanisms by which European as well as Latin American and other areas of the world will have once the final opinion and approval comes from Europe. So we would anticipate Germany, of course, and then early access programs in countries like France, Italy, Spain, Northern Europe, in Scandinavia and others. And we'll take full advantage of early access programs in Latin America as well based on the European approval.

We're very confident at this point and we're -- most importantly, I would say, I'm excited that the -- we've seen an acceleration of patient finding since we've implemented a large number of these programs. And we're anticipating to have 300 patients addressable at the time of launch. And these will be in countries where we have access and reimbursement to gene therapy.

Our next question comes from Gena Wang with Barclays.

This is David on for Gena. I have a few questions around the -- for the Huntington disease program, PTC518. First question here is just around the good dose. So can you discuss what those levels you're testing in healthy volunteers? And what's the half-life and dosing frequency?

Yes. So thanks for that. Just to remind everybody that we have PTC518, the role of this is to cause splicing to induce an intron into the RNA so that there's a premature stuff going on so that it will then be -- it would get prematurely stopped. So you don't make the protein, and the RNA is rapidly degraded.

And then -- so that's -- so we designed this. It's an orally bioavailable small molecule that crosses the blood-brain barrier. It reaches all regions of the brain. And I think most importantly is as well, one of the major characteristics is it's not an efflux out of the brain. And just for everyone, the reason that, that is so critical of a property is that many things can pass the blood-brain barrier, but the brain protects itself and moves out many things that are -- that they think is potentially toxic to it.

And so that efflux, so there's many pumps that do that, we've made sure that PTC518 to pass the blood-brain barrier and stay within that. And that's a critical property. So that -- and therefore, you know the level of what you see in the blood is what you see in the cells within the whole brain.

And so what we've shown in animal model that HTT reduction was clearly titrated based on its exposure level so that the degree of HTT lowering can be tightly controlled. And I think that really distinguishes 518 because of the -- it achieves uniform exposure, and that the Huntington lower is in all cells of the tissues analyzed and then all cells within the brain. And therefore, it shows a near 1:1 ratio between the PTC518 levels that are observed at brain cells in all parts of the brain and what we see in the cells of the blood. That's because it passes the brain -- blood-brain barrier. And so we see the same levels in blood and brain. So we have a very good measurement to show that's indeed the case.

So when we think about the trials that we did, it was based on, obviously, working on what the levels that we saw in the mouse, rats and non-human primates. And based on our understanding of -- the experience that we've seen in splicing, that kind of what we did is obviously screen from the molecules for specificity and biodistribution. So we selected, really date -- the molecule on that. Then we moved in the clinic and the levels that we did is based on the results that we saw in the animal models and the predictions of what we would see in people is how we chose the levels of drugs that we would begin with.

So I think that's how we did this, where we identified what we think is the right dose, started low and continue to move up to be within regions that we would predict to see HTT lowering and choose it based on that. So that's how we chose the doses to go into humans and have the -- and look for what levels were changed.

David, did that help you?

Yes, that's very helpful. And just a follow-up on that, Stu. I guess the question is, what level of HTT reduction are you looking for in healthy volunteers that enable you to just like a dose for the Huntington disease patients in your next trial?

Yes. So the way we think about this is we're going to do a single ascending dose and multiple ascending dose. And so we'll be able to know what exposure gives us a targeted number to be able to move forward. And so -- and that's the beauty -- the beauty of the fact -- it's really, really great that we're capable of identifying -- knowing what the dose is, characterizing the exposure and then measuring the level of RNA -- changes in the RNA over time. And both doing that in a single ascending dose and a multiple ascending dose, we get a very good characteristic of what's the dose that gives a steady-state level of reduction.

And that's actually -- so we can -- and I think that's one of the major advantages that we have is that we have a small molecule, so where we know the exposure in the blood and in the brain. And we've shown that what you see in the blood is equal to what you see in the brain, and we've seen that across all of the animals, including nonhuman primates. So we're very comfortable knowing that. So -- and what we're doing, as we measure in people, we'll be measuring the levels of drug and then the reduction of HTT RNAs in the blood. So we'll have a very good of dose response level that we can -- that we can define what dose we want. So we're probably starting to think about looking at probably a 50% reduction within that.

But -- so and then we'll look for that in terms of clinical benefit. I think there's results out there when you look at clinical data in terms of some snips that you see in patients, where if you lower 50% they have a substantial improvement in terms of 9 years rate of without disease demonstration. So there's pretty good clinical data that suggests that a 50% will have a benefit. But we're also at the -- we also have the capability that as we learn more, it certainly go lower or not, we could titrate that. But I think we're starting to look -- when we can go lower, if we think it's correct to do so. But we're starting to think to look at the reduction as it's starting at looking at a 50% level. But we'll be able to identify, if we can go lower, lower and even further, what would be the dose that we can -- we'll be able to define that dose.

That help you, David?

Yes, absolutely. Very helpful.

Our next question comes from Olivia Young with Cantor.

This is Li on for Olivia. Just wanted to follow-up on the Huntington program, the Phase I study. Can you just give us a quick update on where you are in the trial now? Or -- and have you moved to the net portion of the study?

So you want to know -- right. So as we've talked about, in terms of the trial, we've obviously been doing the trial. We're looking at both the SAD, the single ascending dose, and they going into the multiple ascending dose trial. So we've obviously been doing both of those. So we're in the -- and we said that we'd have it by -- within the first half of the year. So it's underway. And that we've been moving forward. And so just to remind everyone, that's right. We're -- it's designed to capture, obviously, the safety and pharmacological data.

And so what I said is there's -- in the single ascending dose study, it includes up to 6 cohorts, each with 6 patients who have -- active 6 with active drug, 2 with placebo. The MAD study is expected where we'll have -- it could be up to 5 cohorts, again, with 6 subjects that could have active drug while 2 would have placebo. And so things have been dosed and moving forward without any issues. We're actually pretty excited about it.

And as -- just to remind everyone, that in the Phase I study, what we're monitoring is obviously the drug concentration and the blood, the levels of the HTT messenger RNA, and ultimately, protein and blood cells. We will have 1 cohort that will measure PTC518 blood levels as well as what the blood levels in the CSF.

Now as a reminder, these are healthy volunteer studies, and the subjects don't have Huntington disease. So we don't expect to have, in a sense, the proteins of interest that people have talked about in the CSF. The purpose is the new exploratory TK measurement studies in the CSF and to be able to correlate that with the blood. And at the end of the day, I think what you'll see is that we were going to show proof of splicing mechanism, determine the pharmacokinetic characteristics of PTC518, be able to define the dose and be able to say what dose exposure levels that allow us to target the level of HTT reduction that we're shooting for, and to know if we wanted to go higher, what those we would need.

So these -- and I think these results are going to be really analogous to what we're able to accomplish when we did the SMA trial. There is the plan in the healthy volunteer subjects which worked out really beautifully. So we're on track to share the data for PTC518, for the both single ascending dose and the multiple ascending dose, and expect to have that within the first half of this year.

And of course, we're planning to have a deep dive that we'll have -- we will talk further with you, so you can see much of the data that -- of the science and the data that we have in the preclinical studies ahead of that. So I'm quite excited.

Perfect. And then my second question is just on AADC. Just wondering, for you to file BLA in second quarter, what are the remaining steps? And in terms of the cannula study, can you just give us an update on where you are right now?

Sure. I just want to remind you, obviously -- we've already talked a bit about it. And again, we think this is a transformative gene therapy. And that we've seen what it does for patients already, both in the durability and the 10-year post-treatment follow-up. We know about this quite well. And just to remind everyone, in the EU, the M&A is moving forward. We expect CHMP opinion in the second quarter of this year.

Matt, do you want to talk a little bit about where we are right now?

Yes. Sure. Thanks, Stu. As we've talked about before, one of the gating factors -- 2 gating factors to a submission of the BLA was conducting additional surgeries with the cannula we intend to use commercially. And that cannula is CE marked in Europe for the delivery of gene therapy, which is why, obviously, that wasn't an issue with the EMA submission. It's been used in many gene therapies before. And there was just a matter of us getting experience, demonstrating the safety of the cannula and delivering our specific gene therapy to our intended patient population.

And so we've actually completed 2 of those studies -- 2 of those surgeries already. The procedures went well. There were no complications from the surgery, and recoveries are on schedule. And again, just as a reminder, these surgeries are to evaluate the safety of the cannula given that we already have extensive safety and efficacy data that Stu mentioned accumulated over a number of years with the gene therapy product. We plan to conduct one additional surgery. And then once those data are collected, we'll align with the FDA and move forward with the BLA submission.

And our next question comes from Robyn Karnauskas with Truist Securities.

This is Minh on for Robyn. So I guess back on Huntington. When you presented data, are we going to get data from all the dose cohorts? Or will it be whatever the trial has enrolled and that's what you can present? So maybe possibly just a few cohorts from the SAD study. I guess, just the first question around there.

Yes. So I think what we've said in the past, we're going to have both. Obviously, what we have, we're on track to share the data for both the SAD and MAD studies within the first half of the year. And that -- and what we were planning to have is a deep dive ahead of that. So if we get to that point -- when we get to that point, where we would have by the end of the year, both the SAD and the MAD data on that, we'll share the dose levels with you at that time.

I see. And then, I guess, last question. Where -- do you have an idea or a sense where that therapeutic dose may be and where that may fall in? And then -- sorry, one more question as well. Yes, I guess that one first. Any idea where the therapeutic dose may fall within the MAD or SAD study?

Yes. I think we're -- again, we're -- based on the data and based on what we're doing, we had a pretty good indication of what we thought that would be in terms of defining the dose. And so it's been moving forward. So I think we'll be in pretty good shape where we'll be able to have a dose response curve in terms of measuring both the splicing and where the dose is. So we'll know -- we'll be able to give you a pretty accurate prediction of what dose gives a particular exposure that leads to -- in the sense of this, we want to say, a 30% or 50% or 70% reduction of HTT, I think we'll be in a pretty good position to be able to tell you that and then -- and to be able to move forward based on that. And between the SAD and MAD, we're going to have a very good picture in terms of both safety as well as the dose, the exposure and the level of traction by the -- and I said, it's the first half -- by the first half -- at the end of the first half of this year.

Got it. That's helpful. And then sorry, last question. Regarding your comments around titration, I guess, will you have enough, I guess, enough sense to know whether there is more safety risk that would come on with -- going with a greater than 50% reduction? I guess, how do you know there won't be any longer-term safety risk that this trial may not be able to measure, should you push beyond 50%?

Well, no, so I think what we're shooting for right now is around that. My point -- the way I think about this is that there's plenty of data in terms of how people have either one allele or -- and the consequence of that. People are -- there are no safety findings that we see of that. So I don't think there's going to be a risk in terms of that.

In terms of going lower, there isn't really a lot of data beyond that. We clearly know that it's important during early embryonic development, but there isn't a lot of data that's said after that. After that, what is the -- how low can you go? I could tell you from -- as a geneticist point of view, when you look at the level of most things of most things that -- when you say, how much do you normally need? I mean, if you have like some of the factors. If you have 10% of them, you're pretty much normal. So the question is at what level -- how far can you go where you don't see any effect?

And so I think there are some ways where we're thinking of being able to test that in animal models that have human HTT, where we can actually use titration of our compounds that reduce it to the level of interest. And we might be able to do some animal studies to be able to define that. And the reason we would be able to do that with 518 with a humanized HTT mouse is that we're really capable of doing -- achieving uniform exposures that continually reduce levels.

For instance, we want 50% down, we could see 50% down in virtually every tissue in the body and certainly within the brain. That would include the cortex, cerebellum and every other tissue within the brain. So we know that from the work we've done. And so we've been working with the groups to be able to build that mouse. And if we're able to do that, we can at least get some data that would suggest, can you go lower or not. But we're obviously shooting for 50% right now, and I think that's a target that, I think, we'll certainly be able to achieve.

Our next question comes from Joel Beatty with Citi.

First, are there ways to assess, using biomarkers into clinical data for PTC518, if you're generating uniform knockdown throughout the body? Or how important is it to assess that clinically?

Yes. Yes, I think clinically -- I mean, the biomarker that we're choosing is looking at the reduction of Huntington levels within the blood, which we've done extensive analysis in both mouse, rat and non-human primates. And we've been able to show that the reduction there goes along with the reduction that we've seen in other tissue types.

So that's going to be a pretty good biomarker. And that's in the -- obviously, just so everyone knows, that HTT is the intracellular protein, right? So we're looking -- when we do the analysis, we're looking directly within the cells. And the blood cells are a good market for the level of reduction that we've seen there. We've seen in all of the tissues when we looked in those models. So we know we'll be able to do that direct correlation based on the blood and what we see, the reduction in protein and RNA levels. Does that help you, Joel?

Yes. Yes, great. And then maybe switching gears for Evrysdi. Can you remind us what additional potential milestones payment?

Any what?

Milestone payments.

Oh, yes. Sure. Emily thought she wasn't going to talk today, but I'll give -- pass it to Emily.

Thank you so much. Thanks Joel for the question. I appreciate it. So you are correct. We have retained all of our milestones for Evrysdi is with the -- after the royalty monetization. And we do have about $300 million in milestones remaining largely sales-based and regulatory. The most real term -- near-term milestones upcoming are about $55 million in total potentially for 2021: $20 million would be in the first commercial sale in the EU, $10 million for the commercial sale in Japan and then a potential $25 million sales-based milestone upon Roche hitting $500 million in sales.

Our next question comes from the line of Brian Abrahams with RBC Capital Markets.

A few on the Huntington's program. Given what's known or not known about HTT protein turnover in the context of the time frame of the study, I was wondering how you guys are thinking about -- looking at mRNA versus protein changes. What's going to guide your decision as to whether to move into those additional 2 MAD cohorts versus just running 3?

And then as you sort of look past the study, how do you think about how the blood-brain barrier properties in Huntington patients might impact the overall plasma-to-CSF ratio and how you might be thinking about dose adjusting when you go into patients?

Yes. Thanks, Brian. So the -- obviously, what we're -- when we think about the drug concentration with the blood and the levels that we'll see, and the reduction that we'll see in the HTT mRNA and protein within the cells, we're also taking the CSF that will -- what we anticipate is the level that we see in blood in the CSF level would be equal. And that's similar to what we've done in nonhuman primates. So we think that's going to be very telling to us. And so we'll be able to just confirm the ratio that we've seen previously.

So I think that's good. At least we'll have a potential to see that. So that's what's going to help us in terms of finding what the exposure is in terms of -- and what that would be. And so that's the way one could look at that in terms of -- to make sure that you see the correct level, and that could be done elsewhere as well. But I think that's a really important way for us to be able to be surer in terms of the PK and then equating the PK to reduction of RNA protein.

You bring up actually a pretty good point in terms of the -- when you think of RNA protein, a lot depends on the half-life of the protein and the RNA. And so we'll be able to get a pretty good handle on that in the most multiple ascending dose and look into what happened with both the RNA level. And what we're obviously trying to do is to -- in the multiple ascending doses, to reach steady state, and then to be able to monitor the HTT RNA and proteins. And so we know that the -- in some ways, they have a -- HTT has a leaky blood-brain barrier. I think that's what you're referring to. So -- but -- so I think that's something that we'll have to take into consideration as we monitor the PK of them -- in patients.

Got it.

Yes. Great. And I would just like to make the other point. We don't have issues with efflux so that shouldn't cause any sort of issues for us.

Next question comes from the line of Vincent Chen with Bernstein.

Congrats on the progress. A couple more for you on Huntington disease. First is in your preclinical RNA-seq experiments, how many other RNA splicing events were identified that were modulated by PTC518? Which ones? And how much were they modulated?

And then the second question is thinking about the ongoing study, how many doses do the MAD healthy volunteers get? And what's your sense for how much runout is needed to assess the risk of off-target toxicity?

Yes. So I think -- so the -- could you just say the first question one more time?

Sure. Sure. In the preclinical RNA peak experiments that you did, how many other RNA splicing events were identified that were modulated by PTC518? Which ones were they? And how much were they modulated?

Yes. So maybe it's worth talking a little bit about how we optimize the compounds in general. I think that's actually an important point. So when we -- the way we do the optimization and looking for -- in selectivity, selectivity is a pretty important point for us. And so we begin, when we do the high throughput screening with the small molecules, we screen them in the Huntington in fiber blast for them. And then we optimize those molecules for efficacy and potency, which also includes selectivity in pharmaceutical properties. So we look very much. So first to select for molecules that may start out to be less selective, but build in -- as much selectivity as we can.

So at the end of the day, we've identified these molecules and obviously spent a lot of time to show that they really do have favorable properties, a safety window that we've seen in the site of -- in the animal model strong potency and ability -- and a pretty selective HCT that alters the -- we learned a lot about the mechanism and the specificity of that.

And just contrast that with, for instance, the competitor molecule, that was for one molecule and then the others. I can tell you that, for instance, the specificity of our molecule versus SMA is substantially different than the selectivity that's built-in. It's far more selective for SMA than -- for HTT than SMA. And that was a consequence of really spending the time to build in the selectivity within the molecule to be able to do that.

And that's really a consequence of both understanding the specific sequences, the differences between them, understanding how the new one there works, where we can build in the selectivity in RNA-seq. I think in the deep dive that's coming up, we'll spend some more time on the question that you're asking, and probably, we'll be discussing that more during the deep dive time.

I see. That's very helpful. And I guess the second question is simply, how many doses do the healthy volunteer in the multiple ascending dose study get? And what's your sense for how much runout you would need to assess the risk of off-target toxicity? If I think of slicing toxicity, how quickly would you expect those to show up? And how much run-out do you need?

So obviously, for the multiple ascending dose, that's a 14-day dosing period, followed by 28 days of observation. And so that's what we do in terms of defining the dose. But we got to remember also that we're also doing -- completing the long-term safety toxicity studies that will help us. And I just don't -- I don't want to in -- so the folks that are listening to think there's something different about splicing toxicity versus any other toxicity. Whether it's off-target for splicing or some other function, the key is we spent a lot of time looking for toxicity and specificity. And then we look at toxicity could be for off-target, and it could be for whatever the reason is. And -- so that's why we do those studies, to look for the off-target toxicities. But I don't think you can make the argument there's something unique about these toxicities versus any other drug toxicity. And that's why we do use experiment, the safety toxicology experiments, to be able to identify the toxicities, understand the risk to be able to move forward.

I think this is a very standard and step-wide approach that -- and the targeting of splicing is no different than doing kinases, phosphatases, transcription factors, other things that other people do. I wouldn't try and make it something special here versus other things. Did that help you?

Yes, very helpful. And congrats again on all the progress.

Thanks a lot. I appreciate it.

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

This is Sami on for Raju. I was curious if there's any update on your Angelman syndrome gene therapy. And I believe previously, you said that the Angelman program and Friedrich ataxia gene therapy programs were delayed because of COVID. I'm just wondering if that's still the case or if there's any other behind the things going on.

And then just secondly, how are you thinking in terms of the FDA's recent guidance for gene therapies for CNS diseases? How you are you thinking about that guidance influencing those trial designs? And do you plan on using the same endpoints that will be used for the vatiquinone trial for Friedrich ataxia?

Sure. So yes, you're right. We've talked about this in the past. And I do think one of the things that happened during the pandemic is that there are really COVID-related delays that push programs out. But we're really working hard, and we're progressing on the FA gene therapy program and the affect of the human dosing before year-end. Similarly, we're pushing hard on the Angelman syndrome. I don't think we actually gave a particular time line on that, but there have been some -- we're moving forward on that. And we'll probably talk more about that as we get closer. So -- and we'll talk through over time as we do this.

And so maybe, Matt, do you want to add any other color to this?

Yes, sure. Thanks for the question, Sami. So on the -- I think you asked some questions about our Friedrich ataxia gene therapy program and the recent FDA guidance. Maybe I'll just tackle the guidance first. Quite frankly, not a lot of surprises there. It's sort of read very standard FDA guidance on the development of therapies for neurodegenerative diseases. I think they're still obviously communicating the need to have rigorous control groups for gene therapy, and they obviously also wanted to spend a lot of time talking about the importance of device and -- device comparability and using making sure that your product works well with the device and having consistency throughout the development program.

So all things that, one, not really different from general guidance around CNS drug development. And then second, with specifics to gene therapy, it's all things that we've learned and become quite familiar with the along way with our experience in gene therapy development.

And I think the other thing that we're obviously have in our programs, which is very important, is we're predicting a targeted CNS approach. And one of the a few benefits to that, one, is that we're able to deliver the gene therapy product to the specific anatomic areas where the pathology of the disease we have results from. So for example, in our AADC program, we're delivering our gene therapy products, vatiquinone, which is really the key area neuron function.

In Friedrich ataxia, we're delivering our gene therapy precisely to the -- close to the cerebellum. Obviously, the cerebellum is a key component of ataxia, which is obviously a key component of the Friedrich ataxia disease. And so by doing targeted gene therapy, not only does it -- it allows us to have lower doses, which obviously lowers risk and exposure to the vectors, and obviously, it also lowers on manufacturing burden.

Switching to your questions regarding the Friedrich ataxia gene therapy program. I think we're actually incredibly excited to be able to be developing 2 therapies for Friedrich ataxia. We have our oral small molecule, vatiquinone, which has broad distribution for CNS and other organ systems; as well as our gene therapy program, which is delivering for targeted nucleus. I think these are really complementary approaches. I think while Friedrich ataxia has a great deal of pathology resulting from the dentate nucleus, it's also a whole brain disease and a whole body disease as the heart, for example, is a significant source of disease morbidity, mortality risk in Friedrich ataxia. So we view our approaches as incredibly complementary, and we're excited to be able to offer both of these therapies in a complementary way.

In terms of the development itself and endpoint selection. I think one of the great advantages of looking at Friedrich ataxia is the well-established natural history, the community is well aggregating and has a very rigorous natural history, particularly around the disease rating scale that was developed by the community as well as the activities of daily living scale. So as we think about gene therapy -- the gene therapy development program, obviously, we're looking to those where there's significant natural history so we can really appreciate the impact of a gene therapy on the long-term trajectory of the disease.

But obviously, in our first-in-human studies, we'll also be exploring other endpoints that are both biomarkers, biochemical mediators, imaging modality and also other clinical endpoints that would -- you know to be important to the disease. And that would certainly capture the ability of gene therapy to have a significant effect on disease trajectory.

Our next question comes from the line of Danielle Brill with Raymond James.

This is (inaudible) on for Daniel. On 518, I had a question on 518, how uniform was the HTT reduction in animal models for a given dose? And is the reduction affected by the length of nucleotides or any other factor that you could identify?

Yes. Sure. Thanks for the question. So actually, that's the beauty, the fact that -- one thing that I think really utilizes PTC518 is that it really achieves uniform explosion. So when we look, for instance, for HTT lowering in the cells and tissues analyzed, we'll see -- if we see a 50% reduction in blood, we saw it in animal models, a 50% reduction within the brain, and in particular, 50% reduction in the cortex, striatum, cerebellum. So it's amazingly uniform.

And that's good, right? And that's a demonstration of -- really, as I said, we had a 1:1 ratio in terms of what we saw lowering in the blood within the brain. But that's true within all tissues as well. So -- and that actually turns out to be, I think, very important because I know people have talked about Huntington in terms of striatum and cortex. But I think when you look -- you see that Huntington disease is a whole brain disease. So it's very important to emphasize that -- based on our preclinical results that we'll see a dose-dependent reduction of the HTT mRNA protein in all our cells within the brain. That includes the striatum, cortex and cerebellum. And so it gets everywhere.

And then, again, I think a really critical point is that -- and this is, I think -- and this was true for SMA. I think it's going to be true here as well, is that we have the ability to measure the reduction based on exposure since we could determine that within the blood that, and that same ratio that we see in the blood occurs in other tissues as well.

Right. That's helpful. But in terms of the -- like HTT gene itself and the variation in the nucleotide repeat within HTT, does that have any effect on HTT reduction for a given dose?

No, no. It's -- yes, that's near -- that's in a different location. It's -- the way this is working is -- it's within an intron of the pseudoexon, the piece of the RNA within the intron that gives -- that normally doesn't get spliced in. But because of the molecule, it does get spliced into mRNA, and that leads to, again, premature termination and rapid degradation of the RNA. That's not in the CAG repeat, and it doesn't matter as a consequence of that.

So there is no issue with that, and therefore -- and that's the beauty of this. This will be good for all patient types. And obviously, in the long run, as you can see, because it's orally bioavailable, that the advantage here is that we would anticipate over time that it would be for patients while we'll be looking initially at those that are manifesting symptoms. And you can imagine over time, we'll be able to do that in -- for patients before they have symptoms because it's so easy to take. So I think that's important.

So at the end of the day, the answer to your question, is that pseudoexone incorporation occurs regardless of the degree of HTT expansion.

Our next question comes from the line of Joseph Thome with Cowen and Company.

Just one on the Bio-e platform. Curious with PTC857, after you see these healthy volunteer data, maybe what are you looking for? And kind of when can we see that advancement into a potential GBA Parkinson's study? And then as 857 and vatiquinone both target 15-LO, can you kind of tell us what are the differences that make 857 maybe more amenable to the Parkinson's disease indication?

Yes, sure. So I think part of what we're doing -- it does have different properties, and in terms of -- that probably would be an advantage for something that we're taking long-term for a lot of people. Again, it's an orally bioavailable molecule. And for indications like GBA, what you said, Parkinson's, obviously, it's a different -- it's in a different number of patient population versus vatiquinone and where that's going now. So we thought it'd be best to have a different molecule with perhaps different properties. And so that's sort of -- in the sense that it has a different value for the size of the patient population. And so we thought it was important to have another molecule.

Matt, you want to talk a little bit of where we're at in terms of the trial and what we're thinking about?

Yes, absolutely. Joseph, thanks for the question. So the -- so as you mentioned, we've been studying 857 in the Phase I study, which was a single ascending and multiple ascending dose studies, fairly standard healthy volunteer studies where the focus has really the safety and pharmacology. We completed the dosing in those studies and we're in the process of doing the analysis. And really, what we're looking for here is understanding the pharmacology, making sure that it's -- that the molecules behaving in humans as we've been able to model it in the 3 clinical studies and also identifying the dose level that gets us the exposures that we saw to be efficacious in all the preclinical work that we've done. So we want to walk away through the study with a dose level that we know a safe and has predictable pharmacology and would be consistent with delivering the exposure that's necessary to achieve the preclinical effects you've seen.

Now, as a -- a bit of background, 857 targets 15-lipoxygenase, which is a key governor of a number of pathways which independently have known to be important in Parkinson's disease pathology, such as microglial activation, alpha-synuclein oxidation, aggregation, glutathione depletion and with the base oxidative stress. And so what we're able to by target 15-LO is affect simultaneously all 4 of those pathways. And so we do have extensive amount of preclinical work demonstrating effect. And again, what we want to see in the Phase I study is identifying a dose level that brings us that exposure that matches up with what we've seen in the preclinical studies. And then we'd be in a position to move forward with the next day to development.

Yes. Yes. Thanks, Matt. And I think the really important point here as well is that oxidative stress, right, really, extra electrons cause oxidative stress. There's multiple diseases that we could go in, as Matt has said. And so having another molecule to go into other indications with different properties, we think, is going to be valuable.

Thank you. I'm not showing any further questions. I will now turn the call over to Stuart Peltz for closing remarks.

Well, thanks a lot for joining us today. And as many of you may be aware, the Rare Disease Day is upcoming this Sunday. And this is oftentimes where we take stock of where we've been and where we're going as a company, and it serves as a report and reminder to us that we do this work, ultimately, to benefit the patients. And I hope that you see just how strong our execution has been in 2020 and how this sets up really for us for many value-creating milestones in 2021.

So we're excited about the programs that we have, and we look forward to -- in particular, I know everyone's been interested to see by the questions, the interest in Phase I Huntington disease readout. And we look forward to sharing that with you within the second quarter. Again, thank you for joining. Have a great evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.