Ultragenyx Pharmaceutical Inc (RARE) 2016 Q2 法說會逐字稿

Good day ladies and gentlemen, and welcome to the Ultragenyx second quarter 2016 financial results and corporate update conference call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session, and instructions will follow at that time. (Operator Instructions). As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Ryan Martins. Please go ahead.

Thanks David. Good afternoon and welcome to the Ultragenyx Pharmaceutical financial results and corporate update conference call for the second quarter of 2016. We have issued a press release detailing our financial results, which you can find on our website at Ultragenyx.com. I am Ryan Martins, Vice President of Strategy and Investor Relations. With me today are Emil Kakkis, Chief Executive Officer and President, and Shalini Sharp, Chief Financial Officer.

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 plans with respect to our translational research program, the expected release of data from clinical studies, the initiation of additional clinical studies and designs of the same, plans regarding ongoing studies for existing programs, the expectation of increased expenses over future quarters, our belief about adequacy of current cash resources to fund our operations, our intent to file for conditional marketing authorization, and the timing of expected decisions regarding approval from regulatory authorities.

These forward-looking statements represent our views only as of the date of the 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, such as the regulatory approval process including with respect to the MAA we filed seeking conditional approval from the EMA with respect to ACR. While the Phase 3 results from ACR will in fact inform the results from the prior Phase 2 study, the timing of our regulatory filings, and other matters that could after sufficiency of existing cash, cash equivalents, and short term investments to fund operations, and 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 on the forward-looking statements, as well as risks relating to our business, see our quarterly report on Form 10-Q for the quarter ended March 31st, 2016, filed on May 10th, 2016, our quarterly report on Form 10-Q for the quarter ended June 30th, 2016 that will be filed soon, and our subsequent periodic reports filed with the Securities and Exchange Commission. I would like to turn the call over to Emil.

Good afternoon everyone. And thank you for joining us. I will start by discussing our recent progress and milestones, and Shalini will give you an overview of our second quarter financials. We continue to execute and move our clinical programs forward in the second quarter of 2016. We are pleased to announce data from our first Phase 3 program for rhGUS just last month. We received breakthrough therapy designation for KRN23 in pediatric patients aged 1 year and old. And also completed enrollment in two Phase 3 studies for ACR and KRN23 in adults. This success of clinical development activities also complemented by our ongoing efforts to build our early stage transitional research program.

Our recent partnership with Takeda is a significant additional step in building our robust pre-clinical program, along with a number of other partnerships that we have completed over the past 12 months. For our rhGUS product intended to treat MPS 7, we presented data from the Phase 3 pivotal study last month at the MPS Symposium in Bonn. The study which enrolled 12 patients between the ages of 9 to 26, met the primary end point of producing urinary GAG excretion after 24 weeks of treatment. We saw a 64.8% reduction from baseline, with a P value of less than 0.0001. Urine GAG reduction data from rhGUS is at the high end of what we have seen with other enzyme replacement therapies in which urine GAG reductions ranged from approximately 40% to 75%. Because of the small population of available patients and their limitations that prevent them from being able to complete certain tests, we developed a Multi-Domain Responder Index, or MDRI, to assess clinical impact. The MDRI score is a summation of minimally important change scores from six clinical domains. By using the MID, we can filter out smaller changes up and down, and basically add together the big movers of benefit or decline in different clinical domains. Overall the MDRI score demonstrate a mean improvement of 0.5 domains with a P value of 0.0527.

Turning to safety, all patients did experience treatment emergent adverse events, most of which were mild to moderate in severity. There were two serious adverse events, including one Grade 3 treatment-related anaphylactic event infusion rate error, and one Grade 2 unrelated event from an accidental injury. There were no deaths, no treatment discontinuations or missed infusions due to adverse events. In summary, we are encouraged by these data that show a significant urine GAG reduction, size of clinical improvements in a very heterogeneous patient population, and an excellent safety profile for an enzyme replacement therapy.

As a reminder for this program, in the EU the primary end point is the urine GAG reduction and some evidence of transient improvement in the clinical end points, to support a favorable benefit risk/ratio will also be needed for approval. In the US there is no primary end point as the FDA considers the totality of the clinical data appreciating the heterogeneity of the disease. Based on these data, we are in the process of planning to meet both the FDA and the EMA this year to discuss our plans to submit a biologic license application in the US, and a marketing authorization application in the EU, both in the first half of 2017. We currently believe that the urinary GAG effect combined with the evidence of clinical effect in the safety profile we observed, is sufficient to meet the following criteria, but we need to meet with authorities first to determine this precisely.

I'll spend now a few minutes on recent highlights from our KRN23 program. In June the FDA granted breakthrough therapy designation for KRN23 for pediatric patients 1 and older, with XLH, based on the Phase 2 pediatric XLH data, and other KRN23 data. We are encouraged by this designation for the first potential disease-specific treatment option in development for patients with XLH. We'll keep you apprised our discussions with the FDA, as we work with them to bring this potential new therapy to XLH patients as soon as possible. Our KRN23 program in adults with XLH will also continue to progress. We completed enrollment of 134 patients, above our plan of 120 patients in the Phase 3 randomized double blind placebo-controlled clinical study, designed to assess the efficacy and safety of monthly KRN23 in adult XLH patients who are experiencing pain at screening. The primary end point of the study is a comparison between active and placebo groups from the change in serum phosphorus levels from baseline through 24 weeks. Many adult patients with XLH have substantial disability, pain stiffness, due to complications from their disease, which will be evaluated through the secondary end points.

The key secondary end point is a change from baseline of the pre-pain inventory question 3, or BPI Q3, which looks at pain at its worst in the last 24 hours. This end point consists of the change in the mean of the BPI Q3 for the 8 days up to and including the study visit days at baseline, week 12, and week 24. The use of pain medications is also being monitored. Additional secondary end points will also evaluate stiffness, physical function and other patient reported end points, based on disease burden we have observed in adult XLH patients. We expect to have data from the study in the first half of 2017. We're also enrolling patients in a 48-week open label bone quality study to evaluate the effect of KRN23 on the underlying osteomalacia. Enrollment is going well, and we have expanded the study from 10 patients to 14 patients.

For Ace-ER, in July we completed enrollment of 89 patients in the randomized double blind placebo controlled 48-week pivotal Phase 3 study, the primary end point of the study is a comparison between active and placebo-treated patients, for the change from baseline to 48 weeks, and the composite of upper extremity muscle strength as measured by hand held dynamometry. We will also look at the GNE Myopathy-functional Activity Scale and disease specific patient reported outcome, including the measurement of ability in upper extremity function, a composite of lower extremity muscle strength, and other measures of lower extremity muscle strength and function. The Phase 3 study design and primary end point were based on feedback from the FDA and the EMA, and we expect the data from the study in the second half of 2017.

We are also continuing to develop and expand our preclinical program, our strategic collaboration with Takeda, which we announced in June provides with a robust source of new product candidates, and will help us achieve our goal of bringing a new therapy into the clinic every one to two years. The most advanced product opportunity is approaching clinical phase development, and the partnership includes the option to license up to 6 other Takeda product candidates for rare diseases over the 5-year research collaboration.

I would like to now go through our upcoming milestones for the rest of the year. For KRN23 in the Phase 2 pediatric XLH study, we are expecting the 40 week data in 52 patients, and 64-week data in 36 patients in the second half of 2016. This will include Rickets scores data, called RSS and RGI-C, from all patients, and height growth velocity from patients who have reached 64 weeks. We're planning to initiate a Phase 3 in pediatric XLH patients shortly, which will include the RGI Rickets scores as the primary end point, and will include a reference arm of oral phosphate and vitamin D therapy. In the second half of the year we expect to have a full 24-week bone data from the first 8 patients in the Phase 2 study in TIO, or tumor-induced osteomalacia. We plan to file for conditional marketing authorization in the EU for the treatment of XLH around the end of 2016.

Moving on to UX007, in the second half of the year we expect 78-week data from our Phase 2 study in long chain fatty acid oxidation disorders, we have closed screening in our Phase 2 seizure study, in Glut1 deficiency syndrome patients, and we will enroll up to 40 patients, and data are expected in the second half of 2016. We plan to initiate a randomized placebo controlled Phase 3 study in approximately 40 patients with glucose disorder phenotype of Glut1 deficiency syndrome in the second half of the year. Based on discussions with the FDA we are working on further substantiating the clinical meaningfulness of Glut1 movement disorder events captured by a patient diary prior to finalizing the study design. For Ace-ER and GNE Myopathy, the CHMP opinion on the official marketing authorization application in Europe is expected in the second half of 2016, followed by a decision with the European Commission in the first half of 2017. I will now turn the call over to Shalini to provide an overview of our financial results.

Thank you Emil. We issued a press release earlier that included a financial update which I will briefly summarize. Total net loss for the second quarter of 2016 was $56.9 million, or $1.46 per share basic and diluted, compared with $29.8 million, or $0.83 per share basic and diluted for the second quarter of 2015. For the 6 months ended June 30th, 2016, net loss was $109.7 million, or $2.81 per share basic and diluted, compared with a net loss for the same period of 2015 of $51.2 million, or $1.46 per share basic and diluted. This reflected cash used in operations of $84.6 million in the first half of the year, compared to $34.9 million in the first half of 2015.

We continue to expect increases in cash use and operations quarter-over-quarter for the balance of the year and into 2017. Net loss for the first 6 months of 2016 included approximately $25.5 million in non-cash charges, with stock-based compensation of $21.1 million, amortization of premiums on investment securities and depreciation amortization. We expect stock compensation expenses to continue to increase over time. Our operating expenses were $58.1 million for the second quarter of 2016, and $111.7 million for the first half of the year.

R&D costs accounted for $43.3 million, or 75% of our operating expenses. Our three Phase 3 programs account for the greatest proportion of R&D costs. As a reminder, we share KRN23 development costs 50/50 with our collaborative partner Kyowa Hakko Kirin. Costs for our multiple preclinical translational research programs are increasing as well, as programs advance toward the clinic. OpEx continues to increase due to the conduct of multiple late-stage clinical studies, manufacturing costs related to the clinical supply of multiple programs, increased regulatory activity across the programs, early staged investment in our US and European commercial infrastructure, and patient identification efforts, general and administrative expenses to support these activities, and increases in stock-based compensation expenses.

Our expenses will continue to increase as we invest in investing multiple product candidates into Phase 3 clinical studies, and developing and expanding our preclinical stage portfolio. This quarter the Company recognized revenue for the first time with $17,000 in named patient sales for rhGUS. We expect to name patient sales to remain negligible for the balance of 2016 as well as into 2017. Emil provided regulatory timing updates for ACR, rhGUS, and KRN23 during his remarks. Given review timelines, as well as the lengthy process of obtaining reimbursement in European countries, we expect little to no revenue from these programs in 2017. We ended the second quarter with $441.8 million in cash, cash equivalents, and investments on the balance sheet. Subsequent to the end of the quarter we closed on the first traunch of our common stock purchase agreement with Takeda, whereby Takeda purchased 374,590 shares of our common stock for $40 million, or an effective price of $106.78 per share. We believe that we are in a position to fund all of our current clinical programs through Phase 3 trials and potential launches. We do not have any debt outstanding. With that, I will now turn the call back over to Emil.

Thank you Shalini. As you heard we have made progress with both our clinical and preclinical programs in the first half of 2016. We are on track to have five Phase 3 programs by the end of 2016, and other ongoing clinical studies. We continue to move forward on the regulatory front as well with both conditional MA filings and [seech] opinions expected later this year. With that, let's move to your questions. Can the operator please provide the instructions for the Q&A portion of the call.

Thank you. (Operator Instructions). Due to time constraints, we do ask that you please limit yourselves to one question and one follow-up question. Our first question comes from Eric Schmidt with Cowen.

Thanks for taking my questions and congratulations on the continued progress. Emil, maybe you could just characterize the most recent EMA discussions you have had around Ace-ER, and then as a follow-up, I was hoping you could sort of outline what you had hoped to expect to see from UX007 in Glut1 deficiency, and specifically in the seizure study, whether there is a bar that you need to achieve in order to get a broader label claim covering that subset indication? Thank you very much.

Okay. Sure, Eric. Good talking with you. Thanks for calling in. For Ace-ER, we haven't really discussed in detail our discussions with the EMA. We have received questions and provided answers and are prosecuting the process with them. So we don't have really any more update to provide at this point. I think it's moving forward. We just don't know if we're going to get a positive opinion. Remember we filed our Phase 2 data to press ahead, and we think there is some risk that is not going to be enough. But we don't know at this point how it's going to go. We think we have been working diligently to prosecute that. But I will tell you, having been through a lot of regulatory processes, you don't really know until you get to the end. So right now that's where that stands. But I will say, and this was our plan from the beginning, is we pressed ahead on Phase 3, we didn't sit back and wait for that, and not move ahead. We moved ahead with Phase 3 for the US as well. So we haven't really lost any time by that filing. It would be great if we could accelerate it, great for those patients. So that is Ace-ER.

On UX007 and Glut1 seizures, the question is, what is a meaningful effect? We're looking for a statistically significant reduction in seizures compared to the placebo and compared to the baseline, in fact. The study is 3-to-1 randomized so there's not as many placebo patients in it. We want to be able to show just if you look at the EMA, what they say is a 50% reduction in seizures in an individual is considered clinically meaningful. Right. And that's one of the secondary analyses we're going to do. That doesn't mean the mean of all the patients is 50. It means that an individual to be considered a responder have to have a 50% reduction in seizures. So I think that's a reasonable thing to say, that if you have at least a 50% or higher reduction in seizures in the individual, then that's clinically meaningful. I wouldn't claim what the overall result is going to be, because you may have some people that respond and some people that don't. So you'll have a blend of that when you look at the overall data. We're looking at top line analysis as are we seeing a statistically significant reduction in seizures or not. Then we'll look at the individual responders and try to determine if that's clinically meaningful, by looking at that degree of response. So that is where we are right now on that. We did close screening which is good. There may be a few more people out of screening than enroll, they have to have a certain of level of seizures at baseline to enroll. That's why we can't give you the exact number yet. So those are your questions. Thanks Eric.

Yes, thank you.

Thank you. And our next question comes from Gena Wang. Your line is now open.

Thank you for taking my questions. So I have two questions regarding KRN23. So the first one, I know you will report the growth velocity measurement. Could you please share with us your measurement methodology, and what would be your ideal outcome? And I have one follow-up.

Yes. So for KRN23, the change in growth velocity means that you have to have an estimate of the velocity before. Not just where they are on the growth curve, but how fast are they growing. So we're collecting historical data on these patients in the period before they enrolled, which will give us an estimate of the pre-treatment rate. So we're going to look at the pre-treatment rate compared to the post treatment rate of growth, and look for whether there's any significant improvement in the rate of growth. But we do know looking at the baseline, and we've mentioned this in December, was that there are definitely some patients have more growth impairment than others. So there is a spectrum of growth impairment in the population.

It's probably also more important to look at the growth velocity in people who are impaired, as opposed to people who are not impaired. That's just a heterogeneity in the disease. What's been published before on oral phosphate treatment is that growth in velocity is not really improved by oral phosphate treatment. So we're going to look at patients who are having growth velocity, whose growth velocity is impaired, and looking to see if we're seeing an improvement or not. We haven't set a percent change, and I will caution you from thinking about achondroplasia, or some other diseases. They are all very different diseases. Achondroplasia is very severe impairment, for example. These are all going to be a little bit different. But what we'll make sure to do is to provide a clinical context to the growth velocity data, so it can be interpretable to you and what it means. Follow-up.

Thank you. Follow-up question is for the Phase 3 pediatric trial design, you mentioned that you would include a standard of care as a reference. Are you looking for superiority versus standard of care? Any feedback from the FDA regarding trial design?

The trial design is randomized control, but it is not blinded, because you can't blind the current treatment standard, which is oral phosphates, it's impossible to create a blind, or a double dummy type of design. So it is randomized control, but not blind, and the FDA was completely accepting of that. And RA-GIC is the primary end point accepted. We have decided to make it a superiority trial, just because based on the data we have to date, and the patients who have been on standard of care, all but one in the Phase 2 data we've shown you already had significant rickets, and we were looking at the ability to convert to, to improve that rickets and we think we've seen a substantial improvement. We also think from a value standpoint showing superiority over the current treatment, I think it is important, and we think the data we have so far gives us confidence that that's something we can do. So it will be a superiority design compared to standard of care.

Thank you.

Our next question comes from Joseph Schwartz with Leerink Partners. Your line is now open.

Hi. Thanks very much. I was wondering, first of all, if you could give us an update on how you're doing settling on a prototype for the design of Phase 3 for triheptanoin and FAOD? I think you said that you wanted that to have a hospitalization component. And when we attended the inform meeting on FAOD, we were struck by the improvements in cardiac parameters, but not rhabdomyolysis relative to MCT oil?

Yes, very good. We're still continuing to work on the Phase 3 plan, and part of the issue is how many patients out there have what burden of illness for FAOD. We want to ensure we're designing a Phase 3 that treats a common phenotype. There's not really that much known about the phenotype. So we're collecting data on the burden of illness of cross-patients, we are also then testing various instruments for a patient-required outcome, which we saw in our own data was maybe more a compelling result, because perhaps some of the symptoms are not just muscle. They're fatigue, and there are other facets of change, which suggested a really significant improvement in the SF-12, if you remember, when we presented that data.

So I think we want to verify why is the SF-12 is better and understand it, because usually the TROs are not as acceptable as primary endpoints if you going to use that type of end point. What we're trying to understand is the basis for that phenotype. The rhabdo effect that you're talking about, if you look back at the old Dr. Rowe literature from 2002 to 2008, rhabdomyolysis effect is more modest compared to the impact on other aspects of FAOD phenotype. So I think what you were seeing there was something that we have kind of already seen. Clearly rhabdomyolysis is complicated. It may be an inflammatory response. It has some secondary things that are not just energy deficiency. There are probably some inflammatory components to the disease.

Rhabdo itself is not really the basis for the exercise and tolerance type end point, rhabdo is part of it, but the fatigue and lack of energy, short of having actual rhabdomyolysis, is probably a bigger factor in the change of exercise tolerance and the change in the PRO, if that makes sense. Even if you're not changing rhabdo events, you can be changing how the muscle functions day-to-day, even if you're not affecting an inflammatory reaction.

So to summarize all of that, we are continuing to work on gaining information to design an effective study, and then ensuring ourselves that it's a burden of illness in that particular subpopulation. Because it is a disease no one has ever treated before, there is not a single study in a drug program, we are having to create from scratch that information that will allow us to understand what to do. It's taking a us a little bit of time. In the mean time we are focusing on the Glut1 Phase 3 movement disorder, where we had a very substantial effect, and we think that's something we can push ahead more quickly on.

That's very helpful. Thanks a lot. If I could follow up on that? I'm curious because I noticed that the, as I mentioned, or as you were just saying, the FAOD study is probably going to be vis-a-vis MCT oil but the Glut1 DS work you're doing is versus placebo, but the ketogenic diet is popular at some major centers, so I am wondering, why is that? And where does trihep fit in, in the grand scheme of things, do you think?

In FAOD it's pretty well established that MCT oil and other medium chain oil, that's even chain is standard of care, and news to current treatment. So it's hard to run a study where you don't use that as a control. It's just not felt to be right since most patients are taking, many patients are taking it, though not all. So that is kind of the basis for the choice there, it's really felt to be not as ethical to do. In the case of ketogenic diet, if we run a study with just us compared to placebo, we can actually do a really high-quality controlled study. If you throw ketogenic diet in the mix, then it's impossible to blind the study, because you can't blind ketogenic diet, so then you lose a lot of things by doing that. So ketogenic diet is a somewhat choice that patients may take or not take, they may decide to try to do it, others may not. We think that there's still a significant population among the movement disorder patients who are older, that really can't do ketogenic diet, therefore we don't have to compare to it because they have already opted not to do it. Does that make sense? So in that situation, while it may be standard of care, they have already opted against it and they have opted out. So it's a little easier to do a placebo-controlled study in that setting. That does make things simpler. I think active controlled studies are always more difficult than placebo-controlled.

Very helpful. Thank you.

Thank you. Our next question comes from Adam Walsh with Stifel. Your line is now open.

Hi guys. Good afternoon. Thanks a lot for fitting me in with some questions here. My first one is on the trihep for the Phrase 3 movement disorder study in the Glut1 patients. Emil, could you just elaborate a little bit on the line in the press release that talks about the Company working on further substantiating the clinical meaningfulness of Glut1 movement disorder events? What does that mean, and can you elaborate a little bit on what is clinically meaningful in this condition? That's the first one. Thank you.

Sure. So based on the investigator study that was conducted and we released on before, there were six patients that had a 90% reduction in these events as recorded by a diary. The diary just recorded a whole series of different things that were happening to them. To turn that into an end point, you have to recognize that no agency, EMA or FDA has ever seen a diary for this particular disease, so it's never been used as an end point. So we are looking at those diary entries, while in many neurological disorders they are familiar with diaries, like migraines, like regular seizures, they're less familiar with what it means, these various events that relate to movement disorders and the movement disorders are relatively heterogeneous.

There were eye problems, tongue problems, breathing, fatigue, physical movement, dyskinesia, dystonia. So each patient has a common set of patterns that they're having that are happening at intervals, and I think what the agency queried on, is whether these are clinically meaningful, whether all of the ones being recorded in the diary were meaningful, and how could we substantiate that, since they have never really seen this disease before. So this is a situation where we needed to have had enough data to substantiate that these events disabling, that they're not just annoying, but they're actually disabling. Our belief from these that these are disabling, they affect profound movement, they are episodic, they last for an average in the study was around 45 minutes, and patients are usually not doing other things while these events are happening.

So I would say from a physical effect standpoint, it's almost like having a seizure, in terms of being disabled every other day for 45 minutes, and usually once they're doing something that's either emotional or physically active, so it's not when you're sitting on the couch, so it's when something is going down, so it is like the worst moment basically, a problem. But we didn't have enough quantitative data on that. What we're basically doing is collecting data to say, how disabling are these things, and interviewing patients to collect the burden of illness information, which allows us to say these are disabling, and understanding when we're collecting the diary, how are we substantiating that this event that they are recording is a disabling event. That means honing the diary to make that case. We're making these changes in response to queries from the FDA, and we're just trying to substantiate the clinical meaningfulness of these events. We feel they are clinically meaningful. We just didn't have enough data to provide the support for that. This is part of what I would say happens whenever you're doing a brand new program from scratch. We're learning a lot doing some additional data, but I think we feel pretty comfortable that we'll be able to move forward with a diary, but we will have some improvements to the diary to help substantiate that they are disabling, or clinically meaningful events that we're scoring.

That's great. Thanks. if I could, just a quick question on the adult XLH on the key secondary end point of pain. What is the baseline level of pain in these patients, and can you remind us of the PRO measures that were used in the Phase 1-2 trial. Finally, you mentioned something that pain meds might be allowed in the study, and which ones those might be, and how you control for that? Thank you.

Very good. The question is in the KRN23 adult study, randomized control study, what are we looking at in terms of pain, let me go back, in the Phase 1/2 study, INTO the two of them that have been done before, there was pain as part of the WOMAC pain score, which is a way to try to provide a score, but it was a pain scored from that score. And then there was a stiffness score as well in the WOMAC. We used both of those and showed improvements were observed in a study conducted by Kirin. We subsequently did a burden of illness study, which we did announce also. In the burden of illness, we also asked the BPI, or brief pain index questions along with the WOMAC, we could kind of calibrate how patients score, it showed that they both behaved very similarly as instruments. So we had that data from BPI.

Question three is how much was the worst pain that you have had in the last 24 hours. The brief pain index has a number of other questions as well, but the one that the FDA has requested is to look at the brief pain index question three, specifically for that end point. We will be looking at the other questions. So based on that data we also are conducting, we plan to include then the BPI question three, which we believe is reflected well by the WOMAC study, the WOMAC pain score. They respond very similarly. So we felt pretty comfortable with that in the burden of illness study. While the pain, pain can be complicated and we're fully aware of that. And we are tracking and monitoring pain medications that patients are taking, which can be a confounder. I think the two or three main points about that is, one, we will track them. We haven't told people to stop taking pain meds, because we think that's difficult to do. So we haven't said you can take this or you can't take this one. What we've said is we want you to be on stable pain medication, and you have to have a significant BPI question three score baseline in order to enroll.

That is very helpful.

And to get that screening. And you're going to ask me what that number is. That number already is posted. I don't remember the number off the top of my head. Is it a 4 or something? But there's a score number. We can get that to the group. But there is a particular score number that you have to have at baseline on your current regiment of pain medication, then going forward we are going to monitor your pain medication to ensure that they haven't changed them. But what we decided to do, in order to improve the precision of the tests, is instead of just measuring it at one-time at baseline, one time at week 12, and one time at the at the end, what we've said is we're actually measuring it a series of days in a row, which will give us a score that will average. And that will allow us to be more confident. It's not just a one-day random thing that's changing the score. It's something that's a persistent and consistent kind of effect. That's what we're doing with BPI question three.

We will also have scores on stiffness in the assessment, and I think those stiffness scores are probably just as important as pain scores. We focused in on pain based on our FDA discussions, but I think stiffness is equally important. We want to point out there are more than just the one pain end point. There are other secondary end points which we think is important. Both stiffness and functional scores as well.

That is awesome. Thank you.

Good.

Thank you so much.

Okay.

Our next question comes from Heather Behanna with Wedbush Securities. Your line is now open.

Hey, thanks for taking the question, and congratulations on all the progress. Just a quick question. Most of my questions have been answered. On the XLH study in adults, the open label bone biopsy. You had commented that the study has been increased to 14 patients. I was just curious if that's demand, or if you just want a little bit more power with the study, or if you could just give us some color on that?

Well, we originally said 10 because we felt like getting 10 people to submit to multiple bone biopsies was already hard. But we actually had a lot of demand so we were able to enroll 14. It wasn't because we had a power issue. We don't think there's a power issue at all. But it's just there were enough people showed up, so instead of turning them away, we just included them. So that's the only basis for it.

Great. And should we expect the data to read out from both studies at around the same time?

No, the bone study is a 48-week end point. We're going to give the bone enough time to heal the osteomalacia, we are going to score the osteomalacia on pathology specimens, so are going to give them the full 48 weeks, whereas the pain, stiffness, phosphate stuff is being scored at 24 weeks in the other study.

Great. Thanks for the color.

Thank you. And our next question comes from Yigal Nochomovitz with Citigroup.

How are you doing?

Thanks for taking the question, Emil. Just a question on Glut1 DS trial design, did you at all consider the following design, Trihep plus ketogenic versus ketogenic, does that make any sense? And would you consider that maybe for a future trial? And if not, why not? Thanks.

Well, we've considered it and actually have some supported some investigator studies to look at it. The trick to adding trihep to ketogenic diet is it is complicated from a metabolic standpoint, and how you account for trihep in the mix, but we know, and in our seizure study enrollment, one of the challenges we had in enrollment, is that there were people who were prescribed a ketogenic diet, were still having seizures, wanted to be in our study, but they didn't want to stop taking what they were trying in ketogenic diet, even if incompletely effective in how they were doing it. So that made it challenging. So if you were going to do the ketogenic diet add-on study, you also then needed to figure out what is it you're adding on to? You can't have a random array of implementation of ketogenic diet also.

It adds another level of complexity. We do think, however, and you're right, it's an important study to look at. We've decided to support some pilot patients through investigator studies, just to get a little more experience, to understand how to use the combination. We currently believe there is a role for triheptanoin as an add-on ketogenic diet, but it wouldn't necessarily be a complete [prohibition], but it may be, require some complexity in how you manage it, and how you manage diet in the context. But to try to do the first randomized control study that way, I think is tricky to do because it's just complicated, because remember the placebo we're using is not really in the context of the ketogenic diet, it's not a placebo. That is safflower oil, long-chain oil can be part of the ketogenic diet, so it's actually relatively inactive in that situation. It's a complicated story. I guess for everyone there, we thought about it, we are looking at investigator studies. We may do it in the future, but we decided to work on the seizure and the movement disorder in the placebo-controlled setting as a first line approach. And then we'll look at how to use it in add-on mode.

All right. That's very helpful. And just a question on clarifying, Shalini, what you mentioned about the 17,000 for the named patient sales, is that just basically reimbursement at cost? I guess I would have assumed a higher number even for one patient, given where you expect to price that drug? Thanks.

Right. So for named patient sales, we are currently recognizing revenue upon receipt. So this reflects the receipt of payment from one of our sites. The dosing of the drug also depends upon the size of the patient. It is a weight-based dosing. And this patient happens to be an infant. So the pricing is dependent a little bit on the number of kilograms per patient. So it would be very hard to interpret what the $17,000 means, if you don't know what period of treatment is covered, or what the weight of the patient is, et cetera. So I can't provide a lot more detail on that. We haven't disclosed what our per program pricing is for named patient sales. But it isn't done at cost, and it is highly dependent on the weight of the patient.

Got you. Thank you.

Thank you. And our next question comes from Arlinda Lee with Canaccord. Your line is now open.

Hi guys. Thanks for taking my questions. Maybe to follow up on the named patient sales, and I know you can't disclose pricing, but is the named patient sales pricing along the lines of the pricing that we would see in the commercial setting?

Well, the pricing that you see in the commercial setting, it obviously depends on the molecule, and the average weight of the patient, and things like that. But it's certainly within the ballpark of what you would see for other enzyme replacement therapies for MPF disorders.

Okay. Great and then on the KRN23 Phase 3 pediatric study initiation, what are the gating factors? We're going to see some additional 40-week data and 64-week data later this year. It doesn't sound like that's going to be part of something that will restrict the start of the Phase 3? I guess I'm kind of curious, what is there left to be done in terms of trial design, or anything else? Thanks.

Well, right now the trial design is completed, and the program has been filed at sites and is in progress. There's nothing holding, we're not waiting for any data. We think we had enough data so far, in the Piece program, to design it, with the RHAIC, the standard of care, the recurrent treatment control arm, and all of that. So we're just going in execution mode right now, and there's nothing really dependent on any data that would alter what we do.

Okay. Great. And then I guess lastly, as you think about building our pipeline early stage, and so on, I guess I am kind of curious on the Takeda deal, what kind of led you to that collaboration over others? How do you see collaborations in building your pipeline going forward? Thank you.

Well, we've talked with a number of parties. But the group at Takeda has really put a big effort into externalizing innovation there, and they had a pretty substantial catalog of compounds and rare disease opportunities, that they just were not able to do on their own. They wanted to find an expert partner. And I think for us, a deal which brought us a partner with cash, with med chem-type products which are things we wouldn't be able to develop on our own, made for reasonable synergy in terms of creating value. We knew the rare disease space and how to approach development in an efficient way, and they had molecules which they had spent a considerable effort on developing, which we can turn into something of value. And I think that's a good partnership, when both sides are contributing something important to the deal.

We didn't really go out looking for these things. But we have had a number of people come talk to us. I think they just had a deal for us that made a lot of sense, providing us both cash, buying additional shares of stock as well, and multiple products that we can pick up on our own option. And there was an anchor product area which we're very interested in, which we haven't really talked about yet. It was at the core of why we do a deal like this, there has got to be some value-driving product that's at the core of a deal like that. Otherwise it's hard to get something going that is all on theory alone. So with that product in hand, that gave the deal with Takeda more value to us in the short-term, and we think they are certainly a great Company. They have done a lot of great partnerships in the past. So we're hopeful that we can create something great for some rare disease patients with them.

Great. Thank you very much.

And our next question comes from the Cory Kasimov with JPMorgan. Your line is open.

Hi. This is Brittany [Terner] on for Cory. Thanks for take the questions. Most of them have been asked. But just one on the commercial side. Could you provide any updates on where you are with building out your commercial infrastructure and launch prep?

I'll let Shalini answer that one.

Sure. So we're currently focusing on just a small number of key hires, and they are focused firstly on Germany where reimbursement does take place on approval, if approval is obtained. And also in France where they do have named patient programs. And also on patient diagnosis, which is something that we need to do across all of the programs, and is something you want to do pre-commercial as well as post commercial. So the way that we're focusing on the commercial infrastructure is in a very staged and measured way, until we know whether or not or when we would have an approved therapy in Europe. But generally speaking, our commercial infrastructure requirements should be relatively limited compared to larger market indications. That is certainly core to our strategy around how to build that out.

Okay. That is helpful. Thank you.

And our next question comes from Kennen MacKay with Credit Suisse. Your line is now open.

Hi. Thanks for taking the question. Emil, in the press release it states that you will be filing KRN23 for conditional authorization in the EU for the treatment of XLH. Could that be regardless of age and include adult patients? Or will that just be restricted to the pediatric setting?

Well, Kennen, we think we have data boat on adults and pediatrics in terms of control of phosphate, and bringing phosphate into normal range for both. And I would like at the rickets data as evidence that change in phosphate done by this mechanism, is sufficient to alter bone health. So our general plan is to apply for not just pedes, but the whole indication, of course the regulatory authorities may have different views, but that is what our approach is. I would point out that our Phase 3 adult data is coming very soon. In fact would likely arrive in the middle of the review period. So we potentially have the opportunity to enter that data into the review process as well. So the top line answer would be our goal would be to get approval across the indication, but we'll have to of course negotiate with the authorities and EMA regarding what label they would provide.

That would be terrific. Thanks, Emil. Then just to follow-up regarding the Phase 2 trial in pedes stage 1 through 4, can you talk a little bit about what you think that could add to sort of the data package that you'll have there?

So the very youngest patient study?

Yes, exactly.

Well, I think what you have to understand is a little bit of the diagnostic pathway. Diagnostics treatment pathway for children with XLH. For patients that are sporadically diagnosed, if there is a new mutation, if there's no family history, they usually get discovered at age 2, 1.5, when they start walking, their legs start bowing and they end up at the orthopedic evaluation, or medical evaluation for bone disease. So for that patient at 2 years old, if we don't have a label for under 5, they would end up or starting on oral phosphate for several years before they would get access to KRN23, which we think would be a terrible mistake if we believe our data which would suggest treatment early in life is probably going to be beneficial. That treating rickets early, before it gets advanced, would probably be beneficial.

In order to ensure that we don't end up in that situation we have set up, and this is not only for KRN23, but for other programs, to do under 5 studies, not after marketing but as soon as we can to provide some safety information and efficacy, in this case on phosphate control, and we'll look at rickets as well. In patients under 5, when they are normally first diagnosed to help assure that our label, to try to press for our label to include patients as young as 1 when they're normally diagnosed, even in families that have XLH in them that are known, they still don't start treatment until they start walking. They usually are waiting. So the whole goal here that when a patient, if we're approved and we want to be able to get approved when a patient gets diagnosed with XLH that we're first line, and we don't become second line oral phosphate, and then get switched later. If that makes sense. And I think some under-5 safety data, efficacy data provides the support for us in the regulatory process, to help reduce the risk that our label would get restricted. It doesn't eliminate the risk, but it reduces the risk that your label would get restricted.

Thanks, Emil.

Thank you. And our next question comes from Edward Nash with SunTrust. Your line is now open.

Hi, this is Mike [Gould] on for Edward. Thanks for taking my questions. Regarding the Phase 2 XLH study, what are the next steps for syndication especially on the timing for the pivotal study? The second question is what other indication can potentially be addressed by KRN23, other than XLH and PLPs? Thank you.

Okay. So I hope I understood. You said that Phase 3 XLH study, adult is fully enrolled, and the pedes one is getting started. So those you have assumed. You are asking what else would be doing for XLH? We have the under-5 study we're certainly doing right now. And currently that's the spectrum, and the ongoing Phase 2 extension. That's the spectrum of studies that we have ongoing for KRN23 and XLH at this point. We are doing the work in tumor-induced osteomalacia, which is ongoing, and there should be more data on that later in the year as well, bone data on the first group of 8 patients, I think, coming later in the year.

I'm sorry?

Go ahead. Maybe you could explain your question a little bit more, if I did not get it?

Sure. So my question is about the TIO indication, so after the Phase 2 data at the end of this year, the 8 patients, what I was thinking regarding this indication, what are the steps for this indication to move forward, please?

Oh, I see. You really want to know about how we're going forward with TIO indication? I'm sorry. I didn't quite get that.

Yes, please.

The TIO indication, first, we want to see what the data looks like. The first two patient bone data was very encouraging, and we're encouraged by it. We look at TIO as a follow-on indication rather than a separate indication. But our expectation is, we don't have actually a defined and verified plan that we've discussed with regulatory authorities. We have added some additional patients to that plan. We're getting a lot of requests for that treatment right now on those patients. I think we're still working through what the reg. strategy, ultimate pivotal filing strategy would be. Our expectation for KRN23 is for XLH is in the lead, so we would file with that. So we would be looking at this one as potentially a supplemental filing.

The question is what do we need in order to do that. We don't have enough regulatory feedback at this point to know. And I think we want to wait and see what the data looks like. The two options would be potentially adding more patients and just doing more Phase 2 data if it's very compelling. And completely without question, then potentially that's something that could be pursued, whether that's a filing path or not. Alternatively, we have to do a controlled study, which is a more typical request of the regulatory authorities. So I think it depends on what the data look like, and how well, how compelling it is for regulatory authorities.

Okay, got it. That's helpful. So the other question from me is about additional indications can potentially be targeted by KRN, other than the two indications that you are doing, XLH and TIO also. What other indications can you address?

Two of the other hypophosphatemia disorders, the autozonal dominant and the recessive type, they're relatively uncommon. We had not yet planned programs for those two indications. However, we expect there will be a need to look at them at some point. And if we get requests for studies or investigator studies, we may look at it in that manner. Right now we don't have an active plan on developing it for those two relatively less common versions of hypophosphatemic rickets. There are potentially other uses for anti-FGF23. We haven't really talked about those publicly. I think we need to develop, get a little deeper and a little further along before we talk about what other uses we might want to work on. Does that answer your question?

Yes. Thanks a lot for answering my questions.

Thank you. Our next question comes from Carol Werther with H.C. Wainwright. Your line is now open.

Oh, thanks for taking my question. So I have a couple of questions about the pre-clinical programs. Are you going to take UXOO4 forward, or are you waiting to sort out the partnership with Takeda, and take one of those programs forward? And if you mentioned it, could you mention it again? Thanks.

Great. Good to hear from you, Carol. We're planning to bring the UX004 to [less held] doses into the clinic. We're just timing it. We have a lot of things on our plate, obviously, if we have 6 clinical programs, 2 more filings to conduct, and so we're just trying to manage the flow of activity. But our expectation is that we would file an IND, and that program is currently in the what we call the pre-ID or stage 0 stage, where we're doing the manufacturing scale-up and production, and planning the toxicology program, and regulatory and discussions, et cetera for 004. So we're in that stage. I would expect us to file next year. I don't look at that one as having an impact on where we would go with the first Takeda program.

But we have a number of other programs in place. So we would have to think through how to stage and manage it. We want to continue to invest, we also have to manage our burn and our cash position as well. So we have to be thoughtful about our choices and timing in the growth of the Company. I think we want to make sure we don't get ahead of ourselves, while at the same time continue to grow value. So 004 is still moving ahead. So there will be product from the Takeda deal, and there are several others that are in our pre-clinical pipeline that we haven't discussed specifically, that we might considerate some point in the next 2 or 3-year period. So it will be a little more time before we say anything. But at this point 004 is moving ahead.

Okay. Thanks. And I noticed that you're supporting a symposium at ASBMR, the Bone Society meeting --

BMR?

Yes, sorry. And I was wondering if you could just discuss if you have any data presentations through the end of the year? Thank you.

We haven't really laid out which meetings and presentations. ASBMR has been a big meeting for rare genetic bone diseases. So in the past we have presented data at that meeting. We haven't yet announced at what meetings we are presenting what, but we will provide you that ahead of time. There are a number of different meetings going on, so it would be hard on the call right now to kind of outline them. But we will give analysts a heads-up as to where things are coming out, and when, when we can.

Okay. Thank you.

And our final question comes from Matthew Harrison with Morgan Stanley. Your line is now open.

Hi, yes, this is Cyrus [Amoozegar] on for Matt. Thanks for taking the question. So for KRN23, how do you expect uptake to be different between adults and pediatrics, and then in Europe, how do you expect the initial reimbursement decisions to develop, given the different timelines and potential approvals?

Well, so adults, uptake, obviously if you take the feedback from Tom Carpenter at our R&D day, I think that's probably the best. His feeling was that he would expect that all pediatric patients, assuming the drug is approved and found safe and effective by regulatory authorities, he would expect to put all of his patients who were currently getting oral phosphates, or nearly all of them are treated, and he would expect to treat them. With adult patients he thought that maybe 60% of his patients, and I have heard the number 50%, 50% to 60% of patients with adults are being actually treated. That is their disease is so severe that they can't just stay off treatment, they have to be treated with something. So his feeling was that these were that made them candidates for treatment with KRN23. So it is sort of the overall percentage. The uptake, I think the assumption is that pedes is so devastating, the bone disease is so bad and that they will rapidly take up, and we would expect it, assuming we have our data arc to what it needs to be.

I personally that I that maybe we are under-appreciating how bad the adult disease is, and how much patients would want to get on treatment. The only data point we have for that now is the fact that when the patients were taken off KRN23 that were adult, from the INTOO2 study, there were 22 patients who came off, who got taken off drug, we enrolled 20 of the 22 back on drugs again. 20 of the 22 wanted to go back on injections, and were writing letters and things. So our view is that there is a medical need in adults that is not trivial, that is substantial. And we think that as our data hopefully come out and present that, we will be able to make that forward. But actually I think the Phase 3 data will actually be critically important in making that case. So it's a little hard to say what the adult RP uptake will be. I assume you're talking about a commercial setting after we've managed to get past regulatory authorities, and got it approved. So sorry, what the second question was, I lost it?

For Europe, how do you expect the initial reimbursement decisions to be developed given the different timelines and potential approvals?

Different timelines for adults versus pedes?

Yes.

Our goal would be not to go different. But I would say to you our plan is to come up with a single pricing strategy that we prosecute. I have heard this many times, people suggest one pricing strategy, and then another indication that you change the pricing strategy. But honestly it becomes quite an incredible ordeal to manage, changing the pricing. I just don't think that's a very valid way to approach it. We think there's probably an adult and a pediatric indication where we developed data to support that. I think we'll come through pricing with a reasonable strategy that makes sense for both indications up front, rather than thinking about a strategy for one or the others.

I would point out to you that there appears to be some difference in the dose requirements for pedes and adults. And the pediatric patients are heading more towards 0.8 MG per kilo twice a month, whereas the adults are at 1 MG per kilo once a month, so there is a differential also, which will have some impact on the question of cost versus value, which is a factor. So right now, we would try to come out with one worldwide approach to this that makes sense, and that accommodates the adults and the pediatric situation intelligently, and we've made it very clear in the past, that our goal is to penetrate all of the patients that would benefit from treatment, and not create a pricing strategy that results in the narrowing of acceptance of the product into a very small segment, rather than the whole population. The adult population is a very significant number of the kilograms of patients that are in need out there, because they are obviously larger, and this is weight-based dosing. So you have to think through that whole commercial strategy. And our goal would be to maximize the revenue curve, which is not necessarily maximized through the price itself per kilo. So that will be the work that Jayson, who is not here on the call, and his team will be working on is how to triangulate, and come up with the best approach to pricing and reimbursement in Europe. And of course working with Kirin, who of course owns the rights for KRN23 in Europe.

Got it. All right. Thank you.

I am not showing any further questions in queue. I would now like to turn the call back over to Ryan Martins.

Thanks. That is all the time we have for questions today. If no additional questions, this concludes the call. 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.

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