Ultragenyx Pharmaceutical Inc (RARE) 2016 Q4 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Ultragenyx Fourth Quarter and Full Year 2016 Financial Results and Corporate Update. (Operator instructions) Now I would like to welcome and turn the call to the Vice President of Strategy and Investor Relations, Mr. Ryan Martins.

Thank you. Good afternoon, and welcome to the Ultragenyx Pharmaceutical Financial Results and Corporate Update Conference Call for the Fourth Quarter and Full Year 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 IR. 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 the types of statements identified as forward-looking in our quarterly report on Form 10-Q, filed on November 8, 2016; our annual report on Form 10-K for the year ended December 31, 2016, that will be filed soon; and our subsequent periodic reports filed with the SEC which will all be available on our website at Ultragenyx.com in the Investors section.

These forward-looking statements represent our views only as of the date of this call, and involve substantial risks and uncertainties including many that are beyond our control. Please note that actual results could differ materially from those projected in any forward-looking statement. For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, as well as risks relating to our business, see our periodic reports filed with the SEC.

I will now 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 then give an overview of our fourth quarter and full year financials.

This past year, we advanced each one of our clinical development programs, and if you look back at our pipeline when we went public three years ago, you'll see that all four products and five indications that were in development at that time have moved forward. Over the past three years, we advanced the products from Phase 2 studies into pivotal Phase 3 studies or on to the regulatory filing phase. As these programs progress to late-stage development and near-commercialization, we are also actively building our early-stage pipeline.

In 2016, our translational research program grew through two new partnerships with Takeda and St. Louis University, and today we have now a total of seven early-stage programs that we expect will help replenish our pipeline over the next few years. We generally do not disclose the disease targets in early-stage programs until we are confident we are moving forward with a clinical program, both for investors but also for patients. We don't want to inappropriately raise their hopes, until we're really sure we have something.

We finished 2016 with positive data from our Phase 2 study of UX007 in long chain fatty acid oxidation disorders. We showed a significant reduction in both the frequency and duration of major clinical events including hospitalizations. We were impressed with the results, because getting a statistically-significant reduction in major medical events in a study of only 29 patients is hard to do. The overall data, as well as the pattern of reduction in the specific sub-types of ryabdomyolysis, cardiomyopathy and hypoglycemic events corroborated our previous data from the retrospective compassionate use study that we conducted and published.

Based on these data, we are further developing the Phase 3 design and endpoints before meeting with regulators and initiating the study in 2017. We are now considering an event-based study given the strong clinical meaning and value provided by that type of data.

For KRN23, in December of last year, we filed our marketing authorization application for the treatment of XLH in Europe. The filing was validated by the European Medicines Agency and at the end of the year -- and we expect to have an opinion from the Committee for Medicinal Products for Human Use by the end of 2017.

I will now go through our upcoming milestones for each program, starting with KRN23. In the first half of the year, we expect data from the Phase 3 study of KRN23 in 134 adults with XLH. The study compares KRN23 to placebo over a 24-week period, and evaluates change in serum phosphorous levels as the primary endpoint. In discussions with the FDA, they have indicated they will require achieving a statistically-significant clinical improvement in addition to an improvement in serum phosphorous. We originally included pain alone by the BPI question number 3 for the clinical evaluation, but after evaluating our burden of illness data in the 165 XLH adults and our recent 24- and 48-week Phase 2 data in 20 adults, we believe that both stiffness and physical functioning are also substantial disease manifestations for XLH in addition to pain.

We also observed that all three measures appeared to respond to KRN23 treatment.

In the meantime, we have now also validated the WOMAC evaluation of both stiffness and physical function in XLH patients, which supports their use of key secondary endpoints. As a result of all these clinical data and validation work, our adult Phase 3 will include all three measures -- pain, stiffness, and physical functioning -- as key secondary endpoints. All three will be evaluated and adjusted for multiplicity, and we believe that all three of these endpoints are clinically meaningful to this patient population. And [in positive] would better support the value of using KRN23 in adults than just pain scores alone.

We expect to file our biologic license application with KRN23 in the second half of 2017 based on the full 64-week data from our pediatric Phase 2 study and the adult Phase 3 data, if positive. We will be discussing a detailed submission in a [pre-BLA meeting] with the FDA.

Moving on to rhGUS, following discussion with FDA and EMA last fall, we are preparing our regulatory filings in the US and Europe and plan to submit them in the first half of 2017. For UX007, we plan to initiate a randomized, placebo-controlled, Phase 3 study in approximately 40 patients with a movement disorder phenotype of Glut1 DS, and we expect that study to start imminently. In the study, disabling movement disorders will be recorded by a patient diary.

For the Phase 2 seizure study, the last patient visit occurred in the fourth quarter of 2016 and we expect to announce data from the study in the first quarter of the year. The placebo-controlled, 3-to-1 randomized study enrolled 36 patients with either observable or absence seizures. Observable seizures were captured on a daily basis through a patient diary maintained by the patient or caregiver, and absence seizures are measured through overnight EEGs.

The primary endpoint will look at reduction in the frequency of seizures of either observable or absence type, over the eight-week treatment period compared to their run-in period, and compares the seizure reduction rate in the treatment arms to the placebo arm.

As a secondary analysis of the [primary endpoint] we will look at the reduction of each type of seizure, absence or observable separately within that treated group from baseline. Secondary endpoints include a responder analysis looking at the percentage of patients who have a greater than 50% reduction in seizures.

We don't have an overall target for the mean reduction study, but on an individual basis, [a 50%] reduction in seizure frequency is accepted in the US as clinically meaningful for our patients.

Lastly for Ace-ER, we expect data from the pivotal Phase 3 study in GNE myopathy in the second half of this year. The double-blind, placebo-controlled international study evaluates the efficacy and safety of Ace-ER compared with placebo over 48 weeks in 89 patients. If these data are positive, we plan to submit an NDA and an MAA.

I will now turn the call over to Shalini to provide an overview of our financial results.

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

Total net loss for the fourth quarter of 2016 was $71.3 million, or $1.75 per share, basic and diluted, compared with $55.2 million, or $1.42 per share, basic and diluted, for the fourth quarter of 2015. For the year ended December 31, 2016, total net loss was $245.9 million, or $6.21 per share, basic and diluted, compared with a net loss of $145.6 million, or $3.96 per share, basic and diluted, in 2015. This reflected cash used in operations of $161 million in 2016, compared with $106 million in 2015. We continue to expect cash used in operations to increase throughout 2017.

Net loss for 2016 included approximately $58.6 million in non-cash charges, with stock-based compensation of $48.3 million, amortization of premiums on purchased investments, depreciation and amortization, and other non-cash charges. We expect stock compensation expenses to continue to increase over time.

Our total operating expenses were $70.6 million for the fourth quarter of 2016, and $248.1 million for full year. Research and development costs were $183.2 million in 2016, with our Phase 3 programs accounting 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 pre-clinical translational research programs are also increasing, as programs advance towards the clinic.

OpEx continues to increase due to the initiation of additional late-stage clinical studies, manufacturing costs related to clinical supply of multiple programs, increased regulatory activity across the programs including filings for approval, early-stage investment in our US, European and Latin American 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 significantly in 2017 as a result of these activities, although the rate of increase year-over-year is expected to begin to slow down.

In 2016, we recognized revenue of $133,000 in named-patient sales for rhGUS. We expect revenue to remain negligible, and potentially highly variable, from quarter-to-quarter in 2017, given the nature of named patient sales, anticipated regulatory filings, and review timelines, as well as the lengthy process of obtaining reimbursement in European countries.

We ended the year with $498.1 million in cash, cash equivalents and investments on the balance sheet. We believe that we are in a position to fund all of our current clinical programs through Phase 3 trials and to potential launches. We do not have any debt outstanding.

With that, I will now turn the call back to Emil.

Thank you, Shalini. As you heard, we advanced each of our programs through the clinic and have made progress toward regulatory filings. By the end of 2017, we expect to have two products filed in both the US and Europe, data from two Phase 3 studies, and two additional Phase 3 studies up and running. Our strong team continues to push these programs through the development and the regulatory process, and we thank them for all that effort this last year, and this coming year.

This year, we will continue our preparation for global commercialization, and I look forward to updating you throughout the year on our progress.

With that, let's move to your questions. Operator, can you please provide the instructions for the Q&A portion of the call?

Thank you. (Operator instructions) Our first question is from the line of Eric Schmidt with Cowen and Company. Please go ahead.

Thanks for the question, and congrats on the progress. Emil, on trihep in FAOD, it sounds like you're now considering that event-based endpoint that you mentioned. Is the FDA pushing you in that direction? And what would the event-based endpoint be, just simply hospitalizations or some composite?

Well, the FDA hasn't pushed us. I mean, I think we -- we haven't met with them yet to discuss the plan. What's compelling to us is that a 50% reduction in days in the hospital is an immediately important and valuable thing for patients, both for their health and cost to the system. And these days, in the considerations of value for patients, data like that I think would be a more compelling story when you're launching a product internationally, when you can talk about reduction in hospital days. So, our view is just that the intrinsic value of that is great. And the question we had in doing the study was, could you achieve enough power to actually do a study like that? And since we were able to hit it with just a relatively small study, it gives us the possibility that a study like that would not be an extremely large study, or would not take an incredibly long period of time to succeed.

So, that's why we're considering it. The other option was doing an exercise-based study. We had thought about that. I think it may be simpler to do an exercise-based study, but it has its own issues and our view is we're going to look at all the options, come up with a plan, talk to the regulators, and obviously between exercise tolerance and days in the hospital, I'm sure FDA is going to be a lot more interested in days in the hospital, just knowing -- you know, their perspective on what clinical benefit means. So, we would expect that would be acceptable.

We just have to come up with a plan that we believe in, that will make sense from a time and investment standpoint.

Okay, makes sense. Just a quick one then also on trihep in the Glut1 seizure disorder Phase 2 study. What's rate-limiting to getting us those data? It seems like the last patient visit occurred some months ago.

It's coming. I think the thing we had to -- it's a diary-based study, and so we had to do, make sure that all the diaries were complete. And through the diary-cleaning process, where you're looking and making sure everything's correct, just took more time. We have to connect with international doctors all around the world who were involved, and that process, we just want to make sure it's all done very correctly before we unwind a study like that. So, it just -- we want to get more time, to make sure we get it all right. That's all.

Thank you.

Our next question comes from the line of Gena Wang with Jefferies.

Thank you for taking my question. The first is a quick follow-up on Eric's question regarding the seizure data. We know that data will be released anytime soon. Just wondering if the data will be from initial 8-week double-blind treatment phase, or will we have more data for the extension phase? And also, can you remind us the statistic assumption?

Sure. So, the study will compare eight weeks of treatment to their run-in period of six weeks for patients on-drug versus placebo. So, you'll see the blinded portion of the study, not the extension portion of the study. We're really focused on the blinded portion of the study is the data we would release. The plan on statistics for the primary endpoint is, obviously we have two different types of seizures, which has not been done. It's a little bit different. But, we did some work on modeling and how to plan that, and we think we have the best plan.

A patient coming into the study was either qualifying because of observable seizures or absence seizures, and depending on how they qualified to get in the study, that will be the primary way they're going to be assessed for the primary endpoint. So, we'll use either the diary for that patient or we might use the EEG for that patient. That's sort of the basic plan.

Our expectation is then we have about half the patients had observable seizures, and about half had absence seizures. So, it's kind of an equal group. We'll then -- that will be the primary endpoint, comparison to placebo. If that succeeds or doesn't succeed, we'll also look at absence seizures or observable seizures independently as a group, but in that subset we'll just compare each patient to their baseline in that sub-group of treated patients to get an understanding of whether we were having an impact on that type of seizure, absence, or observable.

As you may remember in the past, there was a publication showing a 70% reduction in absence seizures, in patients using the EEG-based method. So, there is some evidence that for UX007 in operating, in working in that indication, we want to make sure that we were not -- because we have two different types of seizures, we wanted to make sure we could capture any effect that might be occurring in one seizure type and not another seizure type. So, that was basically designed. So, it's both seizures together for the primary endpoint, and then we'll look at observable or absence independently as well.

Okay, thank you, and then another question, a follow-up question would be for the KRN23 adult data, Emil, you mentioned that it will be the most exciting data in 2017. Could you share with us your expectation for the data outcome, and how does that effect pediatric filing in the case of positive data and the negative data?

So you want me to predict Phase 3 filings? And you're of course not going to hold me to that, right?

(laughter) No, more for the pediatric filing, how is the adult data affect the pediatric filing?

Yes, well, first of all, when we design the study we design it with more than adequate power to assure we can detect the effect, and we had good data from Phase 2 which told us how many patients would be required, and we designed the study we think with ample power to detect and effect, in pain, stiffness and physical functioning. So, that's how we designed it.

Our discussions at FDA suggested that it is possible to file for peds alone, our view was -- and the discussion was -- that if we added the adult data into the filing it would help, it would help support a broader label. However, we did not have the impression that we could not file without the adult data, that the pediatric data, the effect of pediatrics was what we got breakthrough therapy designation for. So, our expectation is that we will talk with the Agency when we see that data, but that -- if the concern is that if Phase 3 fails would pediatric be fileable, we think that that is still true based on our discussion.

Okay, thank you.

Our next question comes from the line of Cory Kasimov with JPMorgan.

Hi guys, this is Shawn on for Cory. Thanks for taking my question. Just a real quick one. So, from looking at your presentation yesterday from the Leerink conference, I noticed that for rhGUS there was a slide about the side effects, and it looks like 7 out of 12 patients ended up developing antibodies to the drug. So, given that this is a chronic disease and new patients will likely need to be on this drug for long-term, have you guys looked at whether or not there is an effect on efficacy or correlation on efficacy for the patients who develop the antibody and don't develop it?

Sure. So, the antibody response, by the way, at 7 out of 12 is pretty typical for enzyme [retherapy]. Some of them have more. We're just presenting a poster down at World on our Phase 3 data more completely, and basically the antibody titers are not particularly high. They seem to fade with time, and we have not noticed any clinical impact at all, nor have we had recurring hypersensitivity reactions which are pretty common in enzyme therapies for MPS. So, at this point, we don't think the antibodies have an important role in shorter-term or long-term outcome in the therapy.

Okay great, thank you.

Our next question comes from the line of Joseph Schwartz with Leerink Partners.

Great, thanks very much. My first question is on KRN23 and then I have one on MPS 7. So, I was just first of all, curious when your open-label bone biopsy data would read out for KRN23? And how you think this data will fit into the overall filing package, and how regulators will view the product profile?

Right. So, for those not recollecting, we have the randomized control, placebo control, phase 3 study for -- in KRN23 in adults, but we're also doing a bone quality study of KRN23 in adults which will look at the biopsies. That data has been collecting, I think we're to -- it was going to be something later, late this year, where we'll have more data on that. Because it's a 48-week study. The before-and-after biopsies are at 48 weeks. So, we expect to see that data late in the year.

Okay, that's helpful.

Now, I don't think that data is -- I think that data helps support the efficacy. It is another way for us to support the use in adults, so it is one of two ways to help demonstrate the value in these patients. Osteomalacia does cause some pain and vague symptoms and things, but it is a fundamental measure of the bone, underlying bone quality, and it is very poor in these patients. So, we think it's supplemental data but it also could be additional ways to -- that would provide us another way of getting approval for the adult indication.

Okay thanks, and then on MPS 7 and rhGUS, what does your latest pre-commercialization work suggest about the market opportunity in terms of the distribution of these patients worldwide, and whether there's a favorable ROI for you to build a sales force around the world, to serve these patients? Or are you planning on some sort of partnership structure to excess take people in some less core markets?

Yes, so, right now we're continuing to do patient advocation. We've done a lot of work more in the US. Our Europe work is just kind of getting going, in South America we're starting. We haven't really put out any patient numbers at this point, but MPS 7 we said, we estimated would be about 200 patients in the developed world so it's obviously very small. Our goal will be to operate commercially very lean, and to work on the main territories. So, at this point we think -- and I've been through this before with naglazyme at BioMarin. The truth is that for a smaller process, pretty hard to divide it between you and a partner, and make that work. So the key is to be able to run a commercial organization lean that supports it, not to go big.

The value we have, though, is we'll have other products in play which will allow us to leverage our investment and allow us to commercialize it efficiently. However, for certain territories there may be distributorships or partnerships for some places where we're not going to do it ourselves, where it might make sense, and we're open to looking at those opportunities where they make business sense.

Thank you.

Our next question comes from the line of Kennen MacKay with Credit Suisse.

Hey, thanks for taking my questions. One more on KRN23 here. On the KHK quarterly call, they had announced that they had higher expectations for KRN23 to receive approval in the US and Europe, and just wanted to get a sense as to maybe where that could be coming from, from your conversations with the FDA and EMA? I also wanted to get a perspective on what you're seeing in the XLH registry. Are you still thinking sort of US prevalence of a total of 12,000 patients? And the reason I'm asking is again because in KHK's updated deck, they cited about 12,000 adult patients and then about 3,000 pediatric patients for a total of about 15,000 in the US. And just wanted to get your perspective on whether I was sort of thinking about it right?

Sure. Yes, supposed to deal with the prevalence. You know, the rare disease prevalence is never very perfect. The original numbers we provide were based on a frequency of about 1 in 20,000 and you can do the math on the US population and come up with 15,000. We had said 12, we don't know if there is a mortality effect or some other effect. So, that's where our 12 came from. I can't really speak to their numbers exactly, but I actually don't think that those numbers are dramatically different. I think we're in the range of variation we might expect in a rare disease population.

What I think we would say is that it's still, it's a lot of patients, obviously, in the US compared to other things like let's say, MPS 7 for example. So, you asked about the -- their view, was it the probability of approval was increased? Well, we certainly feel strongly that we have a good data set and our meetings with regulators have suggested that we have a fileable and approvable package. But of course, we can't predict what regulators are going to do in the process. But the EMA allowed us to file for conditional on the data. They saw the data, and they allowed us to file because they think that they could approve us. But as you know, there's things go on in an approval process. But we're confident and we have an approval package, but that doesn't mean there's not going to be potential for anything happening.

In the US, we've -- we're still finalizing what the package is. I think the FDA has indicated they feel that including the adult Phase 3 data with the peds Phase 2 data, would give us a stronger package in their mind and they strongly advise to focus on that rather than filing just the peds indication. That of course slowed up the timeline for us but the benefit of it is that we would get a broader label potentially off the gate.

Again, in the BLA, the FDA doesn't predict provability of applications but they do give guidance, whether this is fileable or not. At this point, we have the feeling that with adult Phase 3 and peds data we would be fileable, potentially the peds data alone could be fileable. We'll get clarity on that when we have a pre-BLA meeting and update [investments] at that point in time, but we feel comfortable we have a -- we'll have a fileable package one way or another. And you know, we feel good about the prospects for approval. We just -- we don't normally predict what that number would be.

That's totally fair, I appreciate the color, Emil. And maybe just a quick follow-up on triheptanoin in Glut1 DS and the Phase 3 going on there? So, it looks like this is going to be utilizing sort of a patient diary, and I just wanted to get a perspective on some of the conversations that you've had with the FDA about the inclusion of that diary and sort of what controls are in place there to sort of ensure the quality of that data?

Yes, so we are using electronic diary here, and we are -- have designed the diary to focus on disabling movement disorder events. Now, our original discussion with FDA included all types of events, many of which are distressing to patients but which FDA thought may or may not meet the criteria of being disabling. They want events that interfere with the patients' daily activity, that they can't do things. Although patients that say when they have tongue-twitching or eye-twitching or eye motion problems, they're disturbing for them because it's obvious to them something's going on.

So, all we did was look at our data and trim back to what we thought were the disabling movement events, and so what will be recorded are disabling movement events but we will capture other events as well in our diaries. We just made those modifications and we were able to proceed. We filed that and the FDA has not -- it so allowed us to proceed. So I think the key there is just they want to make sure we're doing things that are really powerful and important in what we're measuring, and not something that might be thought of as more superficial.

So, that's the basic plan. The diary is electronic and would be we think a high quality tool for tracking what's happening each day, at the end of each day, how many things happened during the day, and that that will allow us to capture an effect.

Got you, thank you very much for taking my questions.

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

Hey, thanks. Emil, on KRN23 in the adult study -- I know this has been discussed a bit and I know you've talked about how showing serum phosphorous level decrease is not enough, you'll need to show these clinical endpoints, and the three, specifically. But can you maybe clarify the statistical treatment of those three? If you hit on one, but miss on two, or hit on two and miss on one, is that good enough? Or is there -- is there some higher test there, statistically?

Well, our plan on the power for the study is that we would want to hit all three, that's our expectation from the powering of the study. So, the question is, how do we approach the multiplicity? In this case, we're doing -- it's not hierarchal, it's not like a sequence. It's basically what's called a Hochberg procedure, for those that are the statisticians among you. It basically takes the worst p-value and tests it first, and work your way down. So, it could be if we have one result that's hit point P-01 and two others that miss, or trend only, that's still a positive result from a clinical standpoint. However, this is one of those types of things that will become a review issue, we have to have the discussion with the FDA, we have a partial result. What does that mean? We think it's clinically meaningful, but I think it depends on the total context.

But I would guarantee you, having worked with FDA on a lot of programs, they don't like to make predictions of what they're going to do based on what they see. They like to see the data, then they'll tell it to you. So, what they want to make it clear to us, is they want us to demonstrate clinical benefit in some way in this study, and not phosphate alone. And so, you could argue one endpoint positive is clinical benefit, but I think it's going to take the whole context of what we see to understand what it means.

Okay, great, and I have a follow-up question on trihep. So, just on the Glut1 Phase 3 movement disorder study, I think beginning of the year you guys talked about having the beginning of that study being imminent. And it looks like, you know, we've got similar language now. Can you maybe point to something that's -- are we splitting hairs here, expecting something sooner than a month or two, or what -- if you could maybe talk to what the delay is? If there is one?

Well, we have sites that are identified operating in both US and Europe, and active in US and they're in the point of screening patients. We talk about a steady start, so when a patient gets an investigational product that's when the timeline starts. It's happening. You know, we say imminent because we think it is within -- it's certainly within this quarter, but it's -- we expect it to be relatively soon and we're -- the process is ongoing right now.

Great.

I don't know more that we can say.

Thank you.

Our next question comes from the line of Adam Walsh with Stifel.

Hi, thanks for taking my questions. My first one is back on the trihep Phase 3 Glut1 movement disorder study, Emil, it sounds like the primary endpoint that the regulators have asked for is a little bit more stringent than the one perhaps that was used in Dr. Mochel's original study. I guess my first question is, is it a more stringent endpoint? And then, the second question is, if you looked back at Dr. Mochel's data that she reported it was only six patients, but -- and you applied the more stringent endpoint of disabling paroxysmal movement disorders, what would those data have looked like? And then I have a follow-up, thanks.

Yes, well obviously it'd be critically important to understand that, and we did do that and the reduction was the same in disabling versus others. It's just most events were disabling, there were just a few that were not. So, when you look at the percent reduction, the 90% reduction you observed in disabling as well as others. We just lose a few events that were not considered disabling, but the majority of the events are disabling and the reduction rate was the same.

Okay, that's helpful. And then in Dr. Mochel's study I think she originally had eight patients in her study, and two of the patients weren't included in the analysis that was presented, because they were non-compliant. I think those were assessed by biochemical parameters specifically, if I remember correctly, C5 ketones which you'd expect to see in compliant patients. Will you be checking for C5 ketones in the Phase 3 in terms of compliance? Is there some way you can utilize that biomarker to assess for compliance, or would that be useful?

Well, we will collect metabolic markers, but the truth is, in a pivotal Phase 3 trial you don't get to drop off patients. You will be required to include it in the intend-to-treat analysis which will include all patients. If you do the analysis with Fanny's data, with those two patients, you still get a very strongly positive result. She was just trying to demonstrate the two didn't respond, why did they not respond? Well, they didn't have any drug in them. So okay, the reason was not the drug was in them and it didn't help them, it was that they didn't even take it. So, it was mainly an explanation of what was going on in those patients.

However, in a Phase 3 study we're going to have to evaluate all patients that receive the investigational product in our analysis plan, and we will -- you know, in terms of, we will look at the metabolic parameters, but I would say to you that it's unlikely we would be able to say to FDA we're going to drop off patients that don't have product in their blood. It's just not something you're normally allowed to do. We will look at it just in case we do have people that didn't respond that should have, and maybe that will give us an indication of what was going on.

We are working of course with this oil therapy to assure that dietitians are helping people titrate and get on the right drug dose, and it takes a little bit of work to make there's a titration ramp-up phase. So, we'll do our best to assure people are taking the drug the way they need to take it. And we've gotten that to work in our FAOD study, patients go on-drug for quite a long time at the right dose. So, we think it's doable but I think that's an explanation what went on in her study. But I don't think it changes our outlook.

Excellent, thanks so much. Appreciate it.

Our next question comes from the line of Arlinda Lee with Canaccord. Please go ahead.

Hi guys, thanks for taking my question. So on the Phase 3 movement disorder study, these are going to include only patients that are not on ketogenic diet. Are you expecting to enroll patients to switch off ketogenic diet, or for whatever reason have chosen intolerant [tester] than not to be on the therapy?

Yes, understand. So, in movement disorder a ketogenic diet is not as effective, and it's harder to do, frankly, in adults. It's a lot easier when you're a kid and people control everything you eat. But in fact, a ketogenic diet is not being used more routinely in a movement disorder, and so there is less of an issue than it is when you're doing seizures. We don't think it's a good idea to force people to come off ketogenic diet. We're looking for people who generally were na?ve to it, is the right way. So, we don't think it should be a problem, because it's understood that it doesn't work as well in the movement disorder phenotype. It's also hard to apply in adults.

Thank you.

Our next question is from the line of Edward Nash with SunTrust.

Hi, thanks for taking the question. This is Mike, on for Edward Nash, and so just want to understand about the powering for the Phase 3 trial for Glut1 DS movement disorder. Our understanding that the trial is based -- design on the Phase 3 trial is based on the six-patient from Mochel's trial. So, just trying to understand the power there, thank you.

Yes, so the Phase 3 movement disorder study has 40 patients in a randomized, double-blind, crossover design. So, all 40 patients will get placebo and drug, and they'll be compared for how they did on drug, for how they did on placebo. If you remember from Dr. Mochel's study, that she put people on a run-in period where they're not on-drug, put them on-drug for two months and then got the results, and took them off-drug for two months. The effect, the movement disorders, came back. And then put them on-drug again, and they came back down again. So, basically there was a pretty rapid on-off effect, whether you're on-drug or not. And what we're taking advantage of the study is the fact that if you could take the same patient with their particular movements and put them in an on-off mode, you gain a lot of power.

So, the 40-patient study should be more than adequately powered to detect a movement disorder event, and it sometimes could depend on what the placebo rate is, but we think at this point the placebo rate should be relatively low. But, the defined 40, the study was very significant with just six patients. So, we think with 40 we should be more than adequately powered to achieve the result.

Got it, that's helpful. And also, for the Phase 3 trial for LC-FAOD, we are going to (inaudible) this year. Just trying to understand about, because an even-based endpoints, so just trying to understand about duration, you know, potentially maybe the 1.5 years for the trial?

Yes, so the duration of the study that we did in Phase 2 was 1.5 years, comparing historical 1.5 to the next 1.5. We could design something like that. We haven't set a plan yet whether it's one year, or two year. What I would suggest to you in a study like this, where you're talking about events, and healthcare, kids, and -- right -- which we would likely have a data monitoring board, they're going to look at the study, and likely if we're showing a big separation between being in the hospital or not in the hospital, it's possible that a longer study could end up shorter if that worked. But, we haven't set a timeline. It's certainly going to be at least one year, is my expectation for that set. I wouldn't expect it to be less than a year. How much longer than a year might depend on how many patients we enroll, right? And how long we have to go to get the difference.

We used 18 months, it probably could have been positive at one year, but the team is still working on the numbers. And obviously, we never want to design a study that's barely over the line. You want to design a study that's definitive and compelling. So, we'll still need to do some work on the exact length. But I would assume, not less than a year.

Thanks a lot.

Our next question is from the line of Tazeen Ahmad with Bank of America.

Hi guys, this is Peter Stapor on for Tazeen, thanks for taking my question. On the triheptanoin trial, could you talk about whether patients with observable or absence seizures are more frequent? Was one group more or less difficult to recruit? And how many patients have an overlapping presentation of the symptoms? Thanks.

So we'll start with the last part. It's -- Glut1 is very interesting and unusual in that these patients can have one, two, or three different types of seizures in the same patient, ongoing at different rates. So, it's pretty complicated. Absence seizures are actually more common, a larger fraction of absence, but the generalized seizures people think of as more concerning for people -- although I think both of them suggest their brains are not functioning well, and they're not good.

So, if you look at -- there are some papers that look into distribution, but absence seizures are probably a bigger fraction than observable. But observable people pay attention to and work on. The challenge in recruiting is not so much about the frequency of the seizure type, but whether they're on a ketogenic diet or not. And in general, the observable seizure patients get put on a ketogenic diet very aggressively, whereas in absence, they weren't as aggressively using ketogenic diet. So, we had -- it would actually turn out to be easier to enroll some of the absence patients because they weren't -- they were taking meds, but not ketogenic diet.

So, that's more about competing therapies than it was about the prevalence, exactly, of the type.

Thanks.

And our next question comes from the line of Matthew Harrison with Morgan Stanley.

Hi, this is Cyrus on for Matt. Thanks for taking my question. Can you remind us what you expect to see in the pivotal study of Ace-ER, and given your discussions with the EMA, what you see as the regulatory bar for approval?

Very good, so, the Ace-ER program is designed very similar to what the Phase 2 -- the difference is, we enrolled only the patients that had greater than 200 meter walking ability. So, we enrolled the stronger half of the patients that were in Phase 2, who had the bigger effect and the more powerful effect. So, we've enriched for the patients who should show us the best difference. What our EMA discussion suggested, that if we simply replicate what was observed in the Phase 2 study that that would be fileable for us, and that's what we said before -- that we didn't have to do something more, if we just can replicate what we saw in Phase 2, in the Phase 3 study, then we should be fileable. The primary endpoint in this case is upper extremity composite muscle strength.

There are endpoints for the lower extremity and there's also the functional activity scale with endpoints which we believe we're powered for as well. The hope would be to have a primary endpoint, like muscle strains, and also have supporting data from the patient reported, or the [functional] activity scale. That would give us, I think, the best label. But, our view is that if we can show the strength differential that we saw before, that we would be potentially fileable with that data.

So, that's what we got from the EMA.

All right, thank you.

Our next question is from the line of Yigal Nochomovitz with Citigroup.

Hi, hi Emil, thanks for taking the question. Are you still searching for a new CMO, or is that suspended right now? Thanks.

No, when the CMO left last time what we said was, we're going to wait for a few months, because we have so much going on, and we've obviously executed well on the development side. The team's done a phenomenal job and moved things forward, and we've initiated a search for a CMO. But, we're not going to rush into it. We want the right person. Obviously we've got a lot of work going on and we need help. We have added some people at the senior level which we haven't disclosed, but we've actually bolstered our team, and I think that we're in good shape right now. But we obviously need a high-level clinical leader to help us to the next level, and that search is ongoing.

Okay thanks, and just one quick follow-up on the seizure trial. So, as I understand you've shown the data for the absence seizures for a single dose, that was the 90-minute experiment. Could you just comment on how you believe that efficacy may translate both to the observable seizures, which you're looking at, as well as in terms of duration of effect? Because the current study is obviously an eight-week endpoint. Thanks.

Yes, so the study you're referring to was not our study, it was an investigator-initiated study, and that study -- they showed a 90 minute but if you look at the paper they also followed up with a three-month assessment, which showed the same effect was occurring after three months. So, he showed it both at 90 minutes and at three months, very similar. So, we think that the effect is sustained, certainly in absence seizures.

That data really speaks to absence. I think -- the thing you have to understand about Glut1 is that the brain is not functioning because it's running out of energy. If you're fixing the manifestations, [with regard] to replacing the energy source and restoring brain function with regard to absence seizures, you're really helping the brain in general. Our expectation is that would translate to other types of seizure which are also related to declining energy function. However, we don't have data to show you on observable seizures at this point in time. But, we will have both types of seizures in the study and that will give us a chance to either replicate the absence seizure thing, and also get an idea of whether observable generalized seizures are also improved.

And would you make connection between the movement disorder results and observable seizures, or is that not appropriate?

Well you know, I don't know if you're a neuroanatomist there, but seizures are kind of a cortical, surface-of-the-brain phenomenon. But, the movement disorder is a mid- is the middle of the brain, basal ganglia-type problem, like where Parkinson's and Huntington's disease are affected. Those are high-energy neurons in adults. Those are the ones that coordinate your movement, which is very complicated and involves coordinating a lot of neural signaling. Because those are so high energy, that's why it tends to be an adult. But, whether it's the cortex or the basal ganglia, what we're talking about is inadequate energy stores and efficiency, which leads to inadequate neurologic function. So, I think the same phenomenon is happening, it just depends on whether you're talking about the surface of the brain or deep in the brain. It depends on how old you are, and what you're doing.

Okay, thank you.

Our final question comes from the line of Carol Werther with H.C. Wainwright.

(technical difficulty) my question. I was wondering about the LO, the [LOAD] study, just in terms of the side effects and also whether or not people were able to come off the MCT oil?

So, the FAOD Phase 2 study you're talking about?

Yes, yes, I am, thank you.

So, in that study, patients, 27 out of 29 were on MCT oil as their energy source. During the period where they were having events, they were on that during that period. When they started our study then they came off MCT oil completely and crossed over on to trihep so they switched that part. But, the rest of their schema for their diet and systems were the same, they just switched from MCT to trihep. So, when we're looking before and after, what you're really looking at is what they were doing while they were on MCT versus what are they doing while they're on triheptanoin. Doe that help clarify?

Yes, it does. And then it seemed that most of the side effects are GI-related, but you've mentioned that you can manage that by adjusting the dose with food? Can you just explain that to me?

Yes, well, I don't know if all of you go to Italian restaurants, but if you eat too much of the bread with olive oil, you can get your stomach pretty upset. I sometimes do that. But the truth is when you eat lot of oil in your stomach, it gets your stomach going. It will get your stomach active, gastrin and so, that's kind of what happens. So, we have to kind of work them up on the dose. The key, though, is we just take straight oil like shots -- if you tried that with olive oil by the way, it would make you sick too -- so, the key to that is mixing it with a food that can sort of emulsify, like nonfat yogurt or eggs, or things that will emulsify the oil and break it up so it doesn't sit in your stomach like a ball, and then slide on through as one little chunk.

So, if you mix it up with food, don't take it in a shot, and titrate them up, that usually gets -- people are fine then, they figure it out. If they start trying to take it like a shot, like Nyquil in a little cup and taking a shot, then that will cause stomach upset. It's not because it's -- it really could be any oil, if you try it with any oil you'll -- it will cause the same kind of problem.

Okay, great, so then overall it's very well-tolerated if you moderate some of these things?

And yes, you just have to manage, titrate it up, mix it in the right way, not take it straight.

Okay, thanks very much.

Ladies and gentlemen, this concludes our Q&A session for today. I would like to turn the call back to Ryan Martins for final remarks.

Thanks, everyone. This concludes our 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, thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program, and you may all disconnect.