Ultragenyx Pharmaceutical Inc (RARE) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Ultragenyx Pharmaceutical Incorporated third quarter 2015 financial results and corporate update.

At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.

(Operator Instructions)

I would now like to introduce your host for today's presentation, Mr. Ryan Martins, Vice President of Strategy and Investor Relations at Ultragenyx. Sir, please begin.

Thanks. Good afternoon and welcome to the Ultragenyx Pharmaceutical financial results and corporate update conference call for the third quarter of 2015.

We have issued a press release detailing our finance results, which you can find on our website at www.Ultragenyx.com. I am Ryan Martins, Vice President of Strategy and Investor Relations, and I am taking over Investor Relations from Rob Anstey, who has transitioned to business development at the Company.

With me today are the following members of the Ultragenyx Management team. Emil Kakkis, Chief Executive Officer and President; Shalini Sharp, Chief Financial Officer; and Sunil Agarwal, Chief Medical Officer. We'll keep our prepared comments brief in order to allow time for the question-and-answer portion of the call.

First, I would like to remind investors that this presentation contains forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Including but not limited to statements regarding the expected release of data from clinical studies, the initiation of additional clinical studies and the designs of same, plans regarding ongoing studies for existing programs, the possibility of making milestone and royalty payments on the collaboration arrangements, and the expectation of increased expenses over future quarters.

These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance, or achievements to differ significantly from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the uncertainties inherent in the clinical drug development process, the actions of regulatory authorities, the timing of our regulatory filings, and other matters that could affect the availability or commercial potential of our drug candidates.

For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in the forward-looking statements, as well as risks relating to our business, see our quarterly report on Form 10-Q for the quarter ended June 30, 2015 filed with the Securities and Exchange Commission on August 14, 2015, our quarterly report on Form 10-Q for the quarter ended September 30, 2015 that will be filed soon, and our subsequent periodic reports filed with the Securities and Exchange Commission.

I will now turn the call over to Emil.

Thanks Ryan, and good afternoon everyone, and thank you for joining us for our quarterly call. I will provide a high-level overview of our progress in the quarter and Shalini will then give you an overview of our third quarter financials, and finally Sunil will provide additional details on our clinical development progress.

The third quarter has been a productive period for the Company with clinical data from multiple programs, a Phase III start, a major financing, an important pipeline expansion deal, and the filing of our first marketing application, which begins the next stage of the Company's developments. Our clinical data includes positive rickets bone data in the [substantive] patients at an interim four-week analysis in our KRN23 program. Positive UX007 data, Phase II top line data, at 24 weeks in the long chain fatty acid oxidation patients, and positive UX007 data in five infants with cardiomyopathy due to long chain fatty acid oxidation defects.

From a regulatory perspective we announced an update to our UX007 development program in Glut1 deficiency syndrome patients, and the filing acceptance for review of the Ace-ER conditional MAA in Europe. From a pipeline perspective we announced a collaboration with Arcturus Therapeutics to develop mRNA therapeutics for rare diseases, and when combined with substantial financing in July we have made important progress in our mission of treating rare disease patients.

Apart from the clinical update, we received orphan designation in the EU for the treatment of three other subtypes of LC-FAOD in addition to the one for VLCAD deficiency. For the four subtypes represent about 90% or more of the patients born with long chain fatty acids oxidation defect each year. Now, just last week we announced an update to our development program in Glut1 deficiency syndrome, where we planned out and initiated a Phase III study of patients with the movement disorder phenotype in mid 2016, and Sunil will provide more data later on the call.

As a movement study progresses, we expect the ongoing Phase II study of patients with a seizure phenotype will continue to enroll up to 40 patients, and the two studies together will allow us to better assess the potential benefits of UX007 across these two key disease manifestations. If the data are positive the studies are intended to support NDA filing for the treatment of Glut1 deficiency syndrome.

As one part of our effort to increase our early pipeline programs given the transition of our current clinical pipeline to later-stage studies, we entered into a research and collaboration license agreement with Arcturus Therapeutics to discover and develop messenger RNA therapeutics to rare diseases using our Arcturus' UNA Oligomer chemistry and LUNAR delivery platform. We believe this collaboration will help us address specific rare diseases that are difficult to approach with currently available protein or small molecule strategies.

Arcturus' technology platform potentially solved some key issues with mRNA therapeutics and the key advantage associated with their technology include lower or less frequent dosing due to their improved stability and longevity of the mRNA action, improved toxicity profile with the use of biodegradable lipids, and formulation quality benefits with particle size control. As part of the collaboration Arcturus will design and optimize mRNA therapeutics on two Ultragenyx-chosen rare disease targets. Ultragenyx will have the option to add up to eight additional rare disease targets.

Ultragenyx will be responsible for the development and commercialization of all products. And Arcturus will be entitled to milestones reimbursement of research expenses, and mid single to low double-digit percentage royalties on set sales.

Lastly, just five years into the Company's founding in October, we filed our first marketing authorization application with EMA, seeking conditional approval for Ace-ER to treat adult patients with GNE myopathy or HIBM. If after a review of our data we were able to receive a positive opinion from CHMP then a decision from the European Commission is expected in the second half of 2016.

The 48-week Ace-ER Phase III study continues to enroll patients and data are expected in the first half 2017. If positive, these data would form the basis of an NDA filing with the FDA.

We are on track now for some key milestones from now until mid-2016. The full 40-week data including more rickets data in the 36 patients from the Phase II KRN23 in pediatric XLH by the end of 2015, the initiation of a Phase III randomized double-blind placebo-controlled study of KRN23 in adults with XLH by the end of 2015, initial data from the Phase II KRN23 and tumor-induced osteomalacia in early 2016, an update on the design and timing of a Phase III study in LC-FAOD patients in the first half of 2016, top line data from the Phase III study of rhGUS in MPS 7 patients by mid-2016, an initiation of a Phase III study in Glut1 deficiency syndrome with the movement disorder phenotype in mid 2016.

That is quite a long list of activities and we are having a great time pushing these things forward. I would like to turn the call over now to Shalini to provide an overview of our financials results.

Thank you Emil, and good afternoon everyone. We issued a press release earlier that included a financial update which I will briefly summarize.

Our third quarter 2015 results included total operating expenses of $39.9 million. Research and development costs accounted for $29.7 million or 74% of our operating expenses.

Our Phase III programs, Ace-ER and rhGUS, accounted for the greatest proportion of R&D costs in the first nine months of 2015. The largest increases in these expenses compared to the prior-year period related to clinical programs were seen for KRN23 and XLH, Ace-ER, and rhGUS. Expenses also increased for both Triheptanoin programs as compared with the first nine months of 2014.

As a reminder we share KRN23 development costs 50/50 with our collaborative partner Kyowa Hakko Kirin. Costs for our preclinical translational research programs also increased over the prior-year period.

OpEx increased significantly from the third quarter in 2014 due to the conduct of multiple late-stage clinical studies, manufacturing costs related to clinical supply of multiple programs, increased regulatory activity across the program, investments in our commercial infrastructure and patient identification efforts, general and administrative expenses to support these activities, and increases in stock-based compensation expenses.

Total net loss for the third quarter of 2015 was $39.2 million compared to $15.8 million for the third quarter of 2014. Net loss for the quarter ended September 30, 2015 included approximately $9.8 million, or approximately $0.26 per share, in non-cash charges such as stock-based compensation, amortization of premiums on investment securities, and depreciation and amortization. In particular, stock compensation expenses have continued to increase significantly over time.

As we build out our global commercial capabilities, advance into multiple Phase III trials, and invest in our pipeline and preclinical programs, we anticipate that our expenses will continue to increase in future quarters. We ended the third quarter of 2015 with $581.9 million in cash, cash equivalents, and investments on the balance sheet. We do not have any debt outstanding.

I will now hand it over to Sunil to provide the development update.

Great, thank you, Shalini. I will now provide an update on our clinical pipeline, beginning with UX007, or Triheptanoin.

At the SSIEM meeting in September, case reports from five infants with moderate to severe cardiomyopathy due to long-chain fatty acid oxidation disorder treated with 007 were presented. FAOD can present suddenly with severe cardiomyopathy, usually due to an intercurrent illness like an infection that can lead to death. All of these patients were detected by newborn screening and managed with standard treatment, including medium chain triglyceride oil. While on standard of care, the patients were hospitalized with severe heart failure that required invasive cardiac support and in some cases resuscitation.

Based on five different emergency requests we supplied 007 in the patients' discontinued medium chain triglyceride oil, and began 007 on an expanded access basis. All patients demonstrated an improvement in ejection fraction, or EF, after treatment with 007. The improvement in EF began between two days and three weeks following treatment, and were associated with stabilization of the clinical signs of cardiomyopathy in these patients.

Additionally, EF continued to improve or was maintained with further treatment. In patients with known EF values before and after treatment, N=4, the mean ejection fraction prior to 007 was 32%, and after treatment at last assessment was 66%.

The most common adverse events were GI distress, including loose stools. One patient discontinued treatment after approximately 14 weeks due to GI symptoms. No other significant safety issues or treatment-related adverse events were reported.

Four of the patients continued to receive 007. Recently, we also reported positive interim data on the acute effects of 007 that are being evaluated in a Phase II study in FAOD patients. This is a single arm, open label study evaluating 29 pediatric and adult patients across three main symptom groups: musculoskeletal, liver hypoglycemia, and cardiac.

Patients needed to have moderate to severe FAOD with significant disease in at least one of these domains in order to enroll. The study began with a four-week run-in period to assess baseline data while on the standard of care therapy including MCT oil if applicable. Patients on MCT oil then discontinued it and were followed to evaluate the effects of UX007 treatment over 24 weeks on several key endpoints including cycle ergometry, 12-minute walk test, liver disease hypoglycemia, cardiac disease, and quality of life.

The 24-week analysis focused on the acute effects of 007 on the musculoskeletal aspects of the disease. Patients who opted to continue will be treated for a total of 78 weeks and rates of major medical events such as rhabdomyolysis, hypoglycemia, and cardiac events will be monitored and compared to rates for two years prior to treatment with 007. The majority of patients enrolled presented with musculoskeletal disease compared to a limited number who presented with liver and cardiac symptoms.

Patients spanned a wide age range from 10 months to 58 years old. Prior to 007, 27 of the 29 patients were on standard of care MCT oil therapy. 007 was then titrated to a target dose of 25% to 35% of total daily caloric intake. The average dose through 24 weeks was 30% of total daily caloric intake.

Four of the 29 patients discontinued prior to 24 weeks, including only one for diarrhea attributed to 007. The other three patients withdrew consent for reasons unrelated to study drug. All other patients opted to continue treatment in the extension phase of the study and are still in the extension phase.

Improvements were observed in both measures of exercise tolerance, which includes cycle ergometry and the 12-minute walk test. The three areas of evaluation with cycle ergometry included workload, measured in watts, produced at a fixed heart rate; respiratory exchange ratio, or RER, a measure of energy supply; and duration of cycling. Patients showed improvements in both workload and duration, but no change in RER.

At week 24, seven qualified patients had a 56% increase in watts over baseline, representing a mean increase of 447 watts, and a median of 128 watts. For the three patients who were not able to complete all 40 minutes at baseline, the mean duration increased by 11 minutes at week 24. With respect to the 12-minute walk test, eight qualified patients demonstrated a mean increase of 188 meters, and a median increase of 94 meters.

These patients also experienced an increase in exercise efficiency during the walk test as evidenced in an improvement in the mean energy expenditure index. Overall, major medical events appeared to decrease in the 25 patients who completed the 24 weeks of treatment when compared to the reported event rate in these same patients in the 18 months to 24 months prior to treatment with 007. However, these data are preliminary and will require significantly more observation time for proper evaluation at the 78 week time point, which is expected in the second half of 2016.

Improvements in patient-reported quality of life scores, specifically the SF-12, were reported in adult patients who also demonstrated improvements in exercise capacity. But no mean difference was seen in parent-reported scores, SF-10, for pediatric patients.

There have been no deaths on the study. One serious related adverse event for moderate gastroenteritis with vomiting was considered treatment-related. Overall, 18 patients, 62%, had treatment-related adverse events, most of which were mild to moderate in nature.

The most common treatment-related adverse events were diarrhea, abdominal GI pain, and vomiting. Some GI events were managed by adjusting dosing or dosing with food. The most common adverse events, including those not deemed treatment-related, were viral infections, GI disorders, rhabdomyolysis, fever, and headache. Overall, these data are encouraging, and we look forward to presenting them at an upcoming medical meeting and discussing these data with the FDA, with the intent to start a Phase III study in mid-2016.

We recently announced an update to our development program for 007 in Glut1 deficiency syndrome patients following an end-of-Phase II meeting with the FDA. We now plan to initiate a Phase III study in Glut1 DS patients with the movement disorder phenotype in mid-2016, and the ongoing Phase II study in patients with the seizure phenotype will continue to enroll up to 40 patients as the movement disorder study progresses. If positive, the two studies are intended to support an NDA filing for the treatment of Glut1 DS patients.

The Phase III movement disorder study is intended to be a randomized, double-blind, placebo-controlled, double crossover design. The primary endpoint will be an assessment of the impact of 007 on movement disorder events as recorded by a patient diary that will be further refined in discussions with the FDA. Additionally, it should be noted while the ketogenic diet is considered the current standard of care to treat the seizure phenotype, it is not considered the current standard of care to treat the movement disorder phenotype.

The Company will continue enrollment of up to 40 patients in the randomized placebo-controlled Phase II seizure study. We will no longer conduct an interim analysis over the current Phase II study in the seizure phenotype, which will allow us to preserve the integrity of the Phase II study and maximize its utility from a regulatory perspective. With respect to KRN23, we continue to expect efficacy and safety data after 40 weeks of treatment in the first 36 pediatric XLH patients enrolled in the Phase II study by the end of this year.

The 40-week data will include rickets scores, key pharmacodynamic measures such as serum phosphorus, the six-minute walk test, PROs, and of course safety and tolerability information. Based on the result of the 36-patient data, we will make a determination on filing for conditional approval in Europe based on prior scientific advice received. The study was expanded to enroll a total of 52 patients, and week 40 results from the fully expanded study are expected in mid-2016.

We are on track to initiate a Phase III randomized double-blind, placebo-controlled study in approximately 120 adult XLH patients. The primary endpoint will be serum phosphorus levels at 24 weeks, with the brief pain inventory patient-reported outcome as a key secondary endpoint among other endpoints including stiffness and quality-of-life measures.

The Company also plans to initiate a 48-week open label bone biopsy study in approximately 10 patients to evaluate the effect of KRN23 on osteomalacia. Finally, we continue to expect interim data from the first few patients enrolled in our ongoing TIO study in early 2016.

Lastly, I would like to provide a brief update on the rhGUS Phase III study of MPS 7 patients. The pivotal study is fully enrolled and data are expected in mid-2016.

Also in August of this year, we initiated a study in patients less than five years of age with MPS 7, including some with non-immune hydrops fetalis, a severe infantile presentation of the disease. Approximately seven pediatric patients are expected to be enrolled in the study, and interim data are expected by the end of 2016.

I am please with the significant progress we have made across all programs, and I look forward to providing further updates as we reach key milestones. I will now hand it back to Emil.

Thank you, Sunil. That's certainly a long list of data, so hopefully you kept with us there.

We continue to execute this quarter and continue to track excellent people in filling out our critical roles to drive our business and programs. And we expect the end of the year and 2016 will have key milestones from our development programs and we'll continue to plan for potential commercialization next year. I would like to remind listeners that we will be hosting our first Ultragenyx research and development day in New York on December 3, where we will have the opportunity to dive deeper into some of our clinical programs.

With that, I will end my comments, thanks for listening, we can now move on to the Q&A session. Can the operator please provide the instructions?

(Operator Instructions)

Eric Schmidt from Cowen and Company.

Good afternoon. Thanks for the summary, the comprehensive summary, and congrats on all the progress. Maybe Emil, first, is there still an opportunity for named-patient sales on either rhGUS or Ace-ER in Europe or ex-US?

Yes, we are pursuing them, I don't think we've -- have we talked about them yet? But in terms of the actual revenue number, I think we are planning to initiate MPS 7 named-patient sales. For Ace-ER we're looking at doing it and we are thinking about a cohort for that because there's more patients, but I wouldn't expect this year to be any significant revenue amount.

Okay. And you certainly do have a lot on your plate. But have to ask about your appetite for bringing in additional products through and licensing or organic pipeline growth. What is your appetite and capacity for that?

Well, we like to be very selective in what we pick because we like to have a high rate of success. We try to be pretty selective. We are and have been since our July fundraise, we have been building out our earlier pipeline work with our goal in operating the system to be running something like five or six early stage programs that would help generate an IND every year or every other year. It is our kind of target.

And we have been building out -- the Arcturus project brings the couple, we have several others that are already underway, and we're looking at several others that we'll in-license. Our goal would be to have something in the range of five to seven programs in what we call translational research development.

What I will point out though is we don't -- we won't generally disclose things that are going on in that early stage, we just don't want to talk about them until we are confident we are heading to an IND. But at R&D Day we will provide a little bigger picture, a bigger window opening into what we are doing in early research and how much is going on. So we are looking at some additional in-licenses, they have to be smart, right in line with where we want to go, and our expectation is to build out to five to seven early stage programs.

Okay, and then maybe as a transition to that R&D event on December 3, your first-ever such day, what's sort of the bigger picture that you hope to communicate around that day to investors, and if you wish, you could provide us with more smaller details that you think you might be ready to disclose.

I think there's probably two big picture general messages coming out of the meeting. One is a deeper understanding of our clinical program results, including with some experts there to comment on the data and its meaningfulness. We want to give investors a real solid view of what the current clinical program's meaning and value is.

So that is one major message. The second message is to give a better look at some of the early stage work we are doing and the way we organize and run development.

What we're doing is a method that's a little bit different. It's one that I had initiated [barm ran] as a strategy which we found is a very productive way to run early development, and we will talk a little bit about what we call the transitional research strategy and how we can get a lot of productivity out of a relatively smaller number of people and with relatively focused and effective spend, so those are the two things we will be talking about at the session. Is there something you think we should talk about that I haven't mentioned?

No, you guys always have it covered, but thanks a lot and congrats again on the progress.

Thanks.

Gena Wang from Jefferies.

Gena, hello. Gena, are you there?

Cory Kasimov from JPMorgan.

Hey guys, this is actually [Brittany] on for Cory. Can you just review your rationale for moving right into Phase III for the movement disorder study? And then can you just describe some commercial prep that is currently underway in both the EU and US? Thank you.

Sure, Brittany. So in the Glut1 disorder, our original strategy was to focus on the seizure part of the spectrum because seizures had a well-worn regulatory pathway and we felt that would be simpler. There is some competition from ketogenic diet that makes it more challenging. And our position on movement disorder problems were they were important, but we had no idea whether [trepnin] would help them or not, so we supported a pilot study that Dr. Michelle did.

And the reason we are moving so quickly ahead is that the data she presented in the six patients was clearly, we thought, profound in terms of a 90% reduction in the incidence of movement disorders, and that when she pulled the drug away those movement disorders bounced right back and she put them on the drug and it came back down. So we feel like it was even though it was a small group of six patients, that by putting them on, off, on again we were able to verify that in fact it was a very substantial effect and very important to those patients. They all wanted to stay on drug and they are all on extension.

Our view was [a mag due to the fact], and the movement disorder phenotype is that by using a [dire] we've captured the breadth of those results, and given the size of the effect, as long as we felt that it was something that we could design, a double crossover-type design study based on the actual results she showed, and our view was that while we could do a Phase II study, our feeling was that the data were strong enough and the efficacy sufficient enough that going straight to a Phase III study would be most appropriate.

And Sunil is here, had the conversation, I don't know if there is anything more you want to add from the conversation with the FDA.

I will add one thing and then -- about what you stated in the conversation with the FDA, and one thing I'll add is I think this also supports the biology of mechanistic rationale, in that when the brain is starving for energy it can present in different ways. So when the cortex is starving for energy you can have seizures. When the basal ganglia starving for energy you have movement disorder problems.

So we actually -- as Emil said we feel the Phase II six-patient data robustly support Phase III, but we also believe this supports the mechanistic rationale for the totality of the disease and the totality of the symptoms, so we did have a good meeting with the FDA and based on that meeting, our plan is to go into Phase III and again our plan is to start that Phase III trial middle of next year.

So the second piece of your question was commercial prep and planning. And Jayson is not on the call today, Jayson Dallas is our Chief Commercial Officer, but I can give you a big picture view.

We are putting together a team for Europe right now and Jayson is recruiting his senior group. We have people who work for us as consultants on the ground already doing patient identification in Europe, but Jayson is setting up the European headquarters and with the team here, and we will be assembling the team within the next few months, a leadership team, there.

Our expectation, though, is on the named-patient sales front in Europe as we are proceeding to work on a cohort plan for the named-patient sales. That has not started but that is what we are working on which we would want to get going ahead of any readout from the EMA.

With regard to the US, we are working on building a group but obviously there is not an approval coming in the US, so the group is a little bit more focused on patient identification work and jointly work with medical affairs in the US.

So I think Jayson's big job right now is recruiting that senior leadership team and we have established our location and we are getting set [trip] for Europe. I don't know if Shalini, is there any more you want to say about your -- at this point?

No, not at this point. I think we will be setting up operations in Europe and obviously that will drive additional expenditure over the next year as we build our commercial infrastructure for the first time from scratch to support, hopefully, multiple product launches in the next couple of years.

Great, thanks so much.

Thank you. Gena Wang from Jefferies.

Thank you. Sorry about the technical issue.

Speak louder.

Can you hear me okay?

Now you're good, thanks.

Sorry about that. So I just have one quick question. Wondering what level of a reduction in [a true] rickets score will be considered as clinically meaningful for the interim analysis of KRN23 in pediatric patients.

Your question is what is the magnitude of change in the RSS or rickets scoring system, the Thacher score, that would be seen as clinically meaningful. It is a continuous scale, and it a little bit depends on where you start and where you end and what that meaning of that is, and plus the timeframe is what it is. But Sunil, I thought maybe you could provide some details on what we think about (multiple speakers).

Absolutely. And it's a really good question, thank you.

I think a couple of things to remind people about it is how this scoring system works. And what I mean by that is it is a 0 to 10 scoring system, and what people I think misunderstand and it's not -- it makes sense that sometimes people misunderstand this, 10 isn't terrible disease and 5 means moderate disease. If you see scores of 2 and 3, that is very severe disease on these children, on their bones.

So one thing is I have never seen any patient above a 4 or 5 or 6 even. I have no idea what that would even look like, basically no bone left in the body. But when you see scores of 2 or 3 that is very significant disease according to the treating physicians who take care of these patients.

And when you look at our interim data that we are already disclosed earlier this year, when you talk to the experts like Dr. Carpenter and others, they said that the magnitude of benefit we have seen is highly clinically meaningful. Another way to simply state it as being a pediatric doctor myself who's seen these patients, any bone disease is bad. And you don't want these children to have bone disease period, and if you can improve that bone disease which is picked up by the scale, that is meaningful to these children, that's meaningful to the parents, and that's meaningful to the caregivers.

In our analysis, though, are we setting for a threshold analysis? (Multiple speakers)

So we're looking into that right now. We have to talk to the agency about what the threshold will be. There are several different scoring systems also, and we'll work with the agency to decide which one is the best scoring system to use.

Part of that decision would be based on the other data set we are going to get by end of the year. I mentioned that we are going to get full 36 patients of week 40 data, and from that it will allow us to make those decisions. But bottom line, I do believe that if you improve the bone disease to any degree that is clinically meaningful but we'll work at the agency to see if they cut point that they're going to require.

You know what I would commit to is that we will have, when we bring out our 36-patient 40-week data, we will include information to try to help investors understand the clinical meaningfulness of the magnitude. Which is what I think is at the core of your question.

Absolutely.

Great, thank you. And also, a follow-up question is I know you complete enrollment for additional 14 patients. So what would be the decision to make when you're talking to that regulatory agency based on the interim analysis, at what point you need to include additional 14 patients. And if the initial 36 patients were not robust enough, what would make you feel more comfortable about the readout with additional 14 patients?

Very good. I will start and I'll let Sunil finish. The reason to add the patients -- we wanted to include another set of patients with the more significant rickets disease and so we added those in. For the Europe plan, they had already agreed to the 36 patients being sufficient data.

We think by adding in another 14 who had a minimum threshold for rickets, which enhances the data set for patients with more significant, more severe rickets, we think it just gives us a better data set to evaluate the therapy on next year and we decided to do it now instead of wait, which is generally a characteristic we will do. We will be dynamic and look at information and adapt.

For the US now, we think it would be our plan is to go through a Phase III standard of care controlled study to get approval, if we had any hope of trying to accelerate it we felt that having some additional data on more severe patients would give us a more robust set of data for discussion with the FDA. However, we -- at this point they have required us to do a standard of care control arm. So we think overall it would just help speak to the effect of the drug by having more severe patients in the pool and we think it will be useful potentially in US discussions.

Okay, great, thank you.

Matthew Harrison from Morgan Stanley.

This is David Lebowitz in for Matthew Harrison, thank you for taking my question. I had a question on the FAOD indication in pediatric patients, specifically. I was wondering overall how you're thinking about that indication as you go forward.

So the FAOD indication is complicated because you both have multiple different genetic types which have some variations in their outcomes. And then you have a whole series of age and phenotype variations. So it makes it complex.

Our Phase II study included mostly patients with a skeletal muscle phenotype and a few of the other phenotypes, and the older patients with the musculoskeletal phenotype can be evaluated using let's say more traditional tools like the walk test or ergometry. The other patients are a little harder to assess and it tends to be event-driven.

So the way we look at FAOD right now is it's sort of dividing off into two types of patient population evaluations. One is patients who have exercise limitation which involve both skeletal muscle and heart to some degree, and the effect that [trigryn] would have on improving [ef ed] tolerance and that's sort of one phenotype and one study that we are talking about right now.

The other type of patient could include six-month-olds, one-year-olds, few-year-olds who have hypoglycemic problems, may have variable cardiomyopathy problems, who have a lot of events, end up in and out of the hospital, which we think is a huge driver of cost and morbidity for patients, and also leads to mortality for many of those.

That is the general population, we are waiting to see what our event data look like to better realize whether there might be a study that we would do that looks at the change in event rate. As you know we published a retrospective on 20 of the 24 patients had been on long-term therapy and showed a 69% reduction in the number of days in the hospital per year from around 17.5 to 5.5, and that is a huge benefit if you can demonstrate that in a controlled study.

If you can get that in a controlled study that was not a controlled study but -- so we are going to look at our data that we have from run-in period or the historical period as well as going forward now compared and looked at that event rate and see if we have traction there, looking at an event rate type studies while Sunil, I have gone through those two pieces, any part to that you think you could add to?

You covered it very well, and I think you said the same but we'll get that event rate data middle of next year when you have the week 78 data set. Additionally I think you covered this as well, in the infant cardiomyopathy, severe cardiomyopathy patient population is an interesting one as well that's likely a very unique patient group. So we're looking at this right now as we speak and how we design a Phase III program in FAOD, and we are going to be discussing this with the agency very shortly and again our plan is to start that Phase III program middle of next year.

(Inaudible) study, though.

It likely will be more than one study based on that point.

So it's likely going to be more than one study because those populations are just too bifurcated.

Yes, I mean -- (multiple speakers).

Let's put it this way: I would still assume that one study is sufficient to be pivotal and get approval, but the question is whether you would want to do two studies to give you more data across the spectrum, and particularly if you could show exercise tolerance is improved, well that's great, you get approved on that, I believe, from all the data and all the rare diseases we've worked on.

But if you could also show a reduction of hospitalizations or days in the hospital as a second piece of data, that is tremendously valuable when you're going off around the world and talking about reimbursement. So get approval one of them I think is enough, but if you want to build this franchise it could be the second piece is actually very compelling and so we'd want to make sure we don't under invest and lose an opportunity to support the product out in the field.

As far as follow-up for such a trial, would there be different timelines for each of these categories just because the data that's being collected is different?

Yes, Sunil speaking. That's more from a safety and tolerability perspective.

(Multiple speakers) when we are starting it.

Oh, I'm sorry, when we are starting the study. It might be but all -- whatever that patient program looks like, it will start middle of next year. We wouldn't (multiple speakers).

And again, I would all be starting the middle of next year. Now the event study could have a longer timeline depending on how long it takes to get the events we need. So that will be a little bit harder to determine right now but we should know a lot more in a few months.

Our expectation for the excise and tolerance study would be about a six-month length in a controlled study. The event study is likely to have to be at least a year. It could end up being longer.

We'd have to figure out what we think based on what we have learned. So inevitably the Phase III exercise tolerance would be reading out before the other study.

And then if we did any work in cardiomyopathy, when we saw that five-patient expanded access experience, the improvement was within days to weeks, so that likely would be the shortest study whereas exercise tolerance is midsize study or mid-length, and then to Emil's point that event rate study's our longest study.

Thank you very much for taking my questions.

(Operator Instructions)

Yigal Nochomovitz from Citigroup.

Hi guys. Thanks for taking the questions and congrats on the progress. Just wanted to follow up on David's question regarding the past forwards for Triheptanoin and LC-FAOD.

Just wondering in terms of the data you have shown in infantile cardiomyopathy which looks very good, what are you thinking about in terms of potentially differential pricing for the infantile LC-FAOD indication versus the older patients and also versus Glut1 DS? Because it seems like there is an opportunity there for premium pricing for the product and how might a different formulation of Triheptanoin give you some advantages there? Thank you.

Thanks, Yigal. Interesting question. One thing I will point out to you that you might not have thought about is that the dosing in the infants is actually much different than the dose in adults. So the amount you give the infants is something on the order of 4 grams per kilo versus adults where you might be giving 1 gram per kilo, because it's based on their metabolic turnover rather than their strictly just their weight. So there is some flattening of the benefit-cost curve because of the difference in dosing.

We have not thought about keeping a separate skew or different formulation because it would require a fair amount of work. Our view on the cardiomyopathy story is not that you should just treat cardiomyopathy with it because that is a fairly small number, but that if you want -- the view would be if you can prevent any FAOD patients from getting into cardiomyopathy or reduce that possibility and reduce hospitalizations related to it, that you would want to actually use this compound as first-line for all patients to help prevent any from ending up in the hospital or near death.

That would be the way I use it. It is basically justification for using it first-line, as opposed to just simply a specific treatment, because if you narrow yourself to cardiomyopathy alone it's a relatively small number patients, it is a crisis when it occurs and some of the patients die after their first episode, but we think it speaks to the fact that if Triheptanoin can prevent or reverse cardiomyopathy in these very sick patients, it really should be first-line.

Okay, got it. And then just a question on the Glut1 DS Phase III. I think Sunil, you mentioned that ketogenic diet, although it's used in the seizure disorder setting, it is not the standard of care for movement disorders.

I'm just curious what is used -- what is currently the approach to movement disorders? Is the ketogenic diet tried, are there other options that might be useful? If you could expand a bit on that. Thanks.

It is a great question and this is an area like in many rare diseases, it's not well characterized or well understood how these patients are managed, and talking to the caregivers and talking to the investigators, a lot of these patients like many diseases, they just fall through the system, they don't do anything because they don't think there's anything really good out there to take.

And we are all adults, we often make the worst patients in that we are not compliant with our own medications. You're much more compliant taking care of your children than yourselves, and the ketogenic diet is by no means an easy thing to comply with. So we find that the adults don't want to do it even if they could do it.

Another thing that's sometimes used is the modified Atkins diet. And again, that's still pretty difficult to do in a rigorous manner.

So we are finding a lot of these patients are not really taking anything. So we believe there is a significant unmet medical need there for these patients, and then getting something like Trihep, if it were to work, will really kind of plug that hole of that major unmet medical need.

I would also point out one other thing we should have talked about, ketogenic diet is not benign at all. If you look at the publications, the longer you're on it, the more probability you're going to have broken bones, multiple broken bones, kidney stones, cardiovascular complications, so a lot of the people are on it, the kids are on it for like a few years and they go off it. And it's usually particularly used in the peak years when seizures are a problem but there is not a lot of people on it for many years because of the accumulating risk of complications.

So we think that is also a factor in this whole story. And that's why I think when people say do you have to beat ketogenic diets, you have to take ketogenic altogether, not only just efficacy but its safety and the whole picture and the difficulty at applying it, et cetera. And so we think those are features that I think patients deserve to have another option and I think this option would be substantially easier to apply, we think, and we just need to demonstrate that we have reasonable efficacy in helping their disease.

Great, and just one final question on KRN23, just following up on Gena's question regarding the 14 patients that you're going to be adding to the therapeutic program. Did you mention what the minimum rickets score is for those 14? I may have missed that. Thanks.

It's got to be on clinicaltrial.gov. So it is 1.5 in the knee.

Yes, that is right.

Okay, great. Thank you.

If you have knee disease you often will have wrist disease too, so they go hand-in-hand, appendage (multiple speakers).

Hand-and-hand (multiple speakers). We had about half the patients already in the study were like that, so we just enriched the, let's say, the more severe half. We doubled down on the more severe half of the population we already studied.

Got it. All right, thank you very much.

Very good. How are we doing?

Do we have any other questions, operator?

I'm showing no additional audio questions at this time, sir. I'll return the conference back over to you for any closing remarks.

Thanks, with no additional questions this concludes our call today. A replay of the call will be available shortly. If there are any additional questions please contact us at (844) 758-7273 or IR@Ultragenyx.com. Thanks everyone for joining us.

Thank you all.

Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.