Ultragenyx Pharmaceutical Inc (RARE) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the second quarter 2017 financial results conference. (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's Financial Results and Corporate Update Conference Call for the Second Quarter of 2017. We have issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. I am Ryan Martins, VP of Strategy and IR. With me today are Emil Kakkis, our Chief Executive Officer and President; and Shalini Sharp, our Chief Financial Officer.

I would like to remind investors that this call will include 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 May 5, 2017; our quarterly report on Form 10-Q for the quarter ended June 30, 2017, that will be filed soon; and our subsequent periodic reports filed with the SEC, which will all be available on our website 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'll now turn the call over to Emil.

Thanks, Ryan, and good afternoon, everyone and thank you for joining us. I'll start by discussing our recent progress and milestones. Shalini will then give an overview of our second quarter results. We continue to make regulatory progress during the quarter with 2 of our clinical programs: burosumab for XLH and vestronidase alpha or rhGUS for MPS 7.

For burosumab, we've had a productive pre-BLA meeting on the clinical package with the FDA. As a result, we are planning to submit the BLA in the U.S. for the treatment of adult and pediatric patients next month and then out today, bone biopsy results from 2 patients in the bone quality study along with statistical analyses of bone fracture healing in the Phase III placebo-controlled study, both of which will be included in the filing.

At the pre-BLA meeting, the FDA agreed that the BLA could be submitted based on available clinical data and confirmed that both pediatric and adult indication would be included in the review. Additionally, the FDA confirmed that data from the ongoing pediatric Phase III study would not be required and agreed to accept any available bone biopsy data from the 40-week open-label bone quality study in adults as supportive evidence.

So today, we announced 2 new pieces of data in adult patients that will be included in the burosumab filing. First, bone biopsy results from the first 2 patients in the bone quality study will be included in this filing. In this study, adult baseline biopsies were obtained from 11 patients. The baseline data confirmed that a majority of the patients had severe osteomalacia with a mean osteoid volume ratio to bone volume of 26% versus the normal range of 0.3% to 3.1%. These data verify that adult XLH patients have severe underlying bone disease even many years past puberty.

Follow-up biopsies after 48 weeks of burosumab treatment are available from the first 2 patients. For these 2 patients, osteoid volume to bone volume ratio was decreased from 24% and 29% to 9% and 7%, respectively. The osteomalacia was characterized by the pathologist reviewing the slides as improving from severe to mild osteomalacia in these patients. These initial data provide important supportive information on the treatment of the underlying bone disease, osteomalacia, present in adult XLH patients, which can lead to fracture as observed in these patients.

We also plan to include a new post-hoc statistical analysis from the adult Phase III placebo-controlled study on fracture healing. This analysis shows an odds ratio of 7.76 for complete healing of fractures and pseudo-fractures in the burosumab-treated group compared to the placebo group. So the P value was 0.0004 at 24 weeks.

Now pushing the review of our conditional MAA for burosumab in Europe, our partners KHK and KKI have decided to separate the adult and pediatric indication to avoid any potential delays in the review procedure due to large amount of recent data from the adult XLH Phase III study that we plan to file. As a result, the conditional marketing authorization will focus on the pediatric indication, and KHK and KKI will submit for adult after decision is first reached on the pediatric indication.

And additional developments in burosumab, we -- burosumab for the treatment of XLH has also now been designated as a drug for a rare pediatric disease by the FDA. If we receive approval for burosumab in XLH, we would expect to receive a voucher for priority review of a subsequent marketing application for a different product. We would likely sell any priority review voucher to a third-party. If the PRV were to be sold, we'd split proceeds 50-50 with KHK.

A couple months ago, we signed an agreement with a wholly owned subsidiary of Kyowa Kirin, which grants us the right to commercialize burosumab in Turkey. They have the option to take over commercialization efforts after a certain minimum period.

Now turning to vestronidase alpha or rhGUS for MPS 7. We announced in May that the FDA and EMA had accepted the BLA and MAA filings. Vestronidase alpha was granted priority review status from the FDA and a PDUFA date of November 16, 2017, and a CHMP opinion is expected in the first half of 2018. The review process of the FDA is moving along normally, and we do not expect an advisory committee meeting at this time.

So I'll now go through some upcoming milestones for each program, starting with burosumab. We're planning to file our U.S. BLA for burosumab in adult and pediatric patients in August of 2017. In Europe, we're expecting opinion from the CHMP around the end of 2017. In late 2017, early 2018, we'll expect to complete data from the bone quality study in adults with XLH.

Now moving on to vestronidase alpha. The vestronidase alpha has PDUFA goal date of November 16 and CHMP opinion expected in the first half of 2018.

For UX007, we are evaluating the potential for an event-based study for UX007 in Glut1 patients with absence seizures, and we'll update you as we move more. The Phase III study in Glut1 patients is ongoing. We continue to plan for a discussion with regulators regarding the Phase III study in patients with FAOD.

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

With that, I'll 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 second quarter of 2017 was $72.9 million or $1.72 per share, basic and diluted, compared with $56.9 million or $1.46 per share, basic and diluted, for the second quarter of 2016. This reflected cash used in operations of $110 million for the first 6 months of 2017 compared with $84.6 million for the same time period in 2016. We continue to expect cash used in operations to increase moderately throughout the year.

Net loss for the first 6 months of 2017 included approximately $30 million in noncash charges, including stock-based compensation of $31.3 million, amortization of premiums on purchased investments, depreciation and amortization and other noncash charges, offset by a noncash intercompany foreign exchange remeasurement gain of $4.6 million. We expect stock compensation expenses to continue to increase over time.

Our total operating expenses were $78.4 million for the first quarter of 2017. Research and development costs were $58.4 million during this period -- during the second quarter of 2017, excuse me, with our Phase III programs accounting for the greatest proportion of R&D costs. Costs for our multiple preclinical translational research programs are also increasing as programs advance toward the clinic. We expect OpEx to increase during the remainder of the year 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 filing for approval, stage investments and our U.S., 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. While our expenses will continue to increase significantly in 2017 as a result of these activities, the rate of increase year-over-year is expected to begin slowing down. We do expect OpEx to increase during 2018 due to anticipated launch activities for both burosumab and vestronidase alpha. We ended the second quarter with $457.5 million in cash, cash equivalents and investments on the balance sheet.

I would like to take this opportunity to turn our attention to burosumab and review the terms of our collaboration with KHK. The agreements refer to 3 territories: the U.S. and Canada, Latin America and Europe. In the U.S. and Canada for the first 5 years post launch, Ultragenyx will launch burosumab and share development and commercial costs 50-50 with KHK. Ultragenyx will also pay KHK a supply price that is a significant fixed double-digit percentage of net sales. This supply price reflects a higher-than-typical cost of goods margin for a biologic and essentially compensates our partner for the fact that we were not required to pay any upfront or milestone payments nor have we paid for the cost of product during the development period or any associated manufacturing costs.

After the first 5 years, KHK will take over the majority of commercialization efforts in the U.S. and Canada. And instead of the profit share mechanism, Ultragenyx will receive a tiered royalty in the mid- to high 20% range. This royalty is intended to reflect the same economics as during the profit share period. Throughout these periods, the agreement states that KHK will book sales for burosumab in the U.S. and Canada.

Turning to Latin America. The agreements state that Ultragenyx will commercialize burosumab and recognize revenue while paying KHK a low single-digit royalty on net sales. In Latin America, Ultragenyx will pay KHK the same supply price as in the U.S. and Canada, a significant fixed double-digit percentage of net sales.

In Europe, KHK will commercialize and book burosumab sales, while Ultragenyx will receive a royalty of up to 10% of net sales. As a reminder, in Europe, it can take 12 to 24 months for approved products to receive reimbursement on a country-by-country basis. Overall, we estimate that we hold roughly 1/3 of the value of burosumab in the territories that are subject to the agreement.

This concludes my remarks for today. And with that, I will now turn the call back to Emil.

Thank you, Shalini. We've made tremendous progress on the regulatory front this quarter with the recent pre-BLA meeting for burosumab, near-term plan to file for burosumab approval in adult and pediatric patients in the U.S. and acceptance of our vestronidase alpha BLA and MAA filings. Two products filed in the U.S. and Europe within a year is an important accomplishment for the company. And this year, we will also continue our preparation for global commercialization, and I look forward to updating you throughout the year on our progress.

Let's move to your questions at this time. Operator, can you please provide the instructions for the Q&A portion of the call?

(Operator Instructions) And our first question is from the line of Eric Schmidt with Cowen and Company.

Congrats on the steady progress. Maybe for Shalini while we're on the commercial worldwide rights to burosumab. Can you just talk about whether we should think of Turkey maybe as like a Latin American type of territory and discuss your strategy and interest in acquiring rights at least for the near term there?

Thanks, Eric. Turkey is actually a little bit different from all the other territories in the agreement since it's just a single country and not a material agreement for us. We haven't disclosed a lot of the details around it. We do have a supply price-type arrangement during the time that we are selling the product. We do have to pay royalty during the time that we sell the product. And then there is a certain period after which -- which is triggered by the approval in Turkey, a certain period after which KHK has the option to opt in to that country. And if that were to take place, there are royalties to us in that scenario, and obviously we would no longer pay the supply price. So it's a little bit complicated but again, it's just a single country, so we have opted not to provide all those details.

Fair enough. Maybe a quick one for Emil on the bone biopsy data for burosumab again. Do you have all you need to file with the 2 patients? Or do you need a few more to get that submission in, in August?

No. We have all we need to file for the 2. They weren't expecting any actually to be in the filing. They just thought during the review that if we can -- any biopsies we can get them, they'd like to see them. So we did have 2, and obviously the results were, we think, profound and show that these patients have severe osteomalacia. So I think that's enough to kind of tell them that burosumab is having a fundamental effect on bone. And as we collect some additionals during the middle of the review, there are periods of time where we will send in safety update to answer questions, et cetera, and we'd expect to have opportunities to provide some additional. But I think having 2 in the filing at least states very clearly that these patients have severe osteomalacia. And in the 2 that have reached 48 weeks, we're able to show an important impact on osteomalacia.

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

Emil, can you just update us on your thoughts on the potential for an AdCom for burosumab? And then also, perhaps update us on the XLH patient identification efforts.

Sure. We have said for vestronidase, we're not expecting an AdCom. For burosumab, being a new molecular entity and mechanism of action, we would normally expect there would be an Advisory Committee based on FDA policy. We haven't been informed yet of that, but I assume after we file we'll find out. But at this point, we are expecting it because it has been FDA policy. So on patient identification, we haven't put updates on that. We are looking at patient application both U.S. and South America. We now have people on the ground doing that and have implemented a larger team now in the U.S. of 30 patient diagnosis liaisons that are actually covering 30 [territories] and doing -- through a number of the identified targets are actually working to identify and validate physicians that have patients. So we'd expect that effort to help generate a solid lead for our launch assuming we get approved. At this point, we haven't released the details on the numbers. But we have put out before based on our ICD-9 and 10 code analyses that the 12,000 number is a reasonably accurate number for the prevalence of patients in the U.S., and we don't have any basis to change that number at this point in time.

That's so helpful. And then just one follow-up here. You mentioned that burosumab was designated as the drug for rare pediatric disease with the potential for pediatric voucher. Is it possible that rhGUS for MPS 7 could receive the same designation and potentially also receive a pediatric voucher?

Yes. Well, we've applied for the voucher for that program in the filing. So we're -- we would expect that since (inaudible) got a voucher that certainly, vestronidase alpha would qualify for a voucher. So that would give us one voucher and one another -- 1.5, I guess, if you count the half in the other one. One advantage of getting product, so we got to get them approved first.

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

This is Brittany on for Cory. In your pre-BLA discussions with the FDA for burosumab, has anything changed at all regarding the importance of hitting all 3 key secondary endpoints? And then just a quick financial question. Can you remind us of any milestones that are owed to Baylor Research either this year or next?

Great. So for the endpoints in our pre-BLA discussion, there was no actual concern or question raised on the P values or the secondary endpoint choices. They just want to know that we had validated those endpoints, and they were fine with the results. They did not tell us that we hadn't hit something and that was an issue, which would be rather unusual, frankly, that -- you normally don't have to hit all endpoints in any clinical study. And plus, all the trends on the ones that were very close were in the right direction. So we don't see any issue there based on that discussion at the pre-BLA meeting. With regard to Baylor milestones, I don't think we've normally done -- Shalini, would you like to take that one?

Sure. Thanks, Emil. So Brittany, for the Baylor agreement, the maximum milestone outlay that we might have over the next year would be in the low to mid 6-digit range, so nothing very material.

And our next question is from the line of Joseph Schwartz with Leerink Partners.

This is Dae Gon dialing in for Joe. Two quick ones, Emil. With regards to burosumab MAA, the decision to split the indication between pediatric and adult, I was wondering, were there any particular questions or concerns that the KHK -- or EMA guys raised that kind of led to this discussion? Or was this purely on substantial data package size? And second, can you also provide a little more context behind the bone biopsy data you provided today, the 24% and 29% progressing to mild form of 9% and 7%? What kind of quality-of-life difference can you expect when a patient goes from severe to mild osteomalacia?

Sure. So for the ped/adult situation, the EMA has only seen the pediatric Phase II and the small adult Phase II in the actual package. And so they have not -- they have not seen the adult Phase III data, the fracture data or any other data. And so it's merely a decision by our partner that they were concerned the procedure might get bogged down by having too much additional data, which might delay the procedure, and solved it by narrowing it to the peds indication, which was the one for which was the driver for conditional marketing authorization to begin with, would assure they can move more quickly. And so that was their decision, not our decision. They made that decision, but it wasn't really based on -- it was no EMA feedback on the adult Phase III data in that decision. All right. So the question on bone osteomalacia and what percent osteomalacia people feel. I haven't seen anyone correlate precise exact amount of osteomalacia. But when you have severe osteomalacia, it means your bones are very weak and fragile, which means you will have a lot of fractures. Now when you look at the patients in the bone quality study, look at their age and type we compare them to the Phase III study, they're actually very similar to the patients in the Phase III study, almost the same. So what I would say to you is that if you looked at the Phase III study, they have fractures and significant impairment. And what we're saying is in a very parallel, similar population, that was associated with the mid-20% osteoid in their bone. So we think that what you're seeing clinically in terms of symptoms and benefit in that study are probably parallel to what we're seeing in the bone study. But going from severe osteomalacia, which is for patients who've been sick for 40 years, or 40 years old on average, to mild in just a 1 year period, I think, is a very profound change in bone biology. And so we'd expect that to translate into fewer fractures and better fracture healing and -- which should improve the quality of life of patients. Osteomalacia in general, or excess osteoid, does create a faint ache and pain in the bones, which we'd expect to get better. The pain is complicated in this disease because there are other sources of pain. So correlating exactly what overall pain is trickier when you're looking at this disease in an advanced state. So we think that the change from severe to mild osteomalacia will be an important clinical benefit to patients, and it will translate into things like fractures and pain and other symptoms over the long haul.

And Emil, just quickly, are you -- do you plan on providing the full 11-patient data at some point before the end of the year?

What our expectation is that we'll, because there was enrollment over a period of time, that we'll have another group of patients' data during the middle of the review that we should get to the FDA. They'd asked us to get this data as it moves along. It is not an essential piece. It's just a supportive piece. So we would get some additional data based on the filing plan and what we'd expect would be a priority review PDUFA date. We would have all 11 data prior to the expected PDUFA date. So in a sense, the FDA could see all the data before the actual decision is finalized.

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

This is Laura Chico on for Chris Raymond. I guess I have 2 kind of related to earlier questions that were asked. First, on the rare pediatric disease designation for burosumab, was this expected just given the prevalence of the adult form or, I guess, number of patients with adult -- who are adults with the disease? And then separately, how should we be thinking about pricing in Europe now, I guess, that you're kind of separating the pediatric and the adult designations -- or indications? Is there any change to thoughts on how that will be approached?

Sure. So let me start with your first question. I'll let Shalini answer the second one. So on the rare [PS] designation, I think what you should understand about XLH is all the adults were symptomatic and sick as children. So the disease is a pediatric-onset disease. All of them had sickness. It's not like an adult-onset disease, so it's only adult, not children. I think that is a factor in understanding the disease. The fact that people don't die shouldn't prevent this from counting as a disease, right? That is, the fact that there are people who survived childhood and live to older age shouldn't decrease the fact that this is a pediatric-onset disease. So we filed this just to make it clear because of that question you raised. And they've designated it as such that it is a pediatric disease in that sense, and they rule on the question of whether the prevalence of adults matters or not, or I think what they were basing this on was the fact that it is a pediatric-onset disease. And particularly, pediatric rickets as part of the disease is profound, too. So I think that probably plays into that decision. So pricing?

So just talking about pricing on KRN23. So first of all, there is no final price decided upon for KRN23 in any territory at this point. In terms of Europe itself, KHK obviously is the driver of decision-making on pricing in Europe. However, we do work together in a joint commercial committee to develop a global pricing band within which we would agree to keep our net sales price within that range. Now in all territories, I think everyone agrees that the pediatric population is the more acute population where the unmet need is most obvious. And so that may play -- have some impact on pricing. But at the end of the day, again, no decisions have been made on that and eventually, the adult population would also be, hopefully, submitted and approved in Europe. Another data point on pricing is just if you look at all of your colleagues on the sell-side, there appears to be sort of a cluster among the analysts around $100,000 to $125,000 per patient per year in terms of average annual patient price. Now one thing to note specifically for KRN23 is the dosing is a little bit different between peds and adults. So the pediatric patients are treated every other week, and the adults are treated every month. And so the pediatric patients receive almost double the dose per kg as adult. So that provides a little bit of equalization across the age groups between peds and adults. So hopefully that gives you some guidance in terms of how to think about it. But again, we've made no final decisions on pricing.

And our next question is from the line of Arlinda Lee with Canaccord.

Can you maybe go back and talk about the KHK breakdown of how the profit share works? What happens in, I guess, in the ramp up to the sales force? Are you in control of that in the shared territories? Are they in control of that? And what happens to those sales force after year 5? And then on the biopsy data, do you have any fracture data on those 2 patients? And will you be collecting that on the remaining 9 patients? And then lastly, on triheptanoin, can you maybe talk about the timing of the FDA discussions on LC-FAOD? That data, I thought, was available at the end of last year. What are kind of the speaking points or the bottlenecks? And can you provide -- lastly, can you provide an update on the Huntington's program in France?

Right. I'll let Shalini deal with the profit share question first.

Sure. So the only profit share territory, Arlinda, is the U.S. and Canada. And in that territory, we share development and commercial costs 50-50 with KHK. We do obviously have a joint commercial committee where we coordinate on tactics and resourcing strategy, market research, many things. But ultimately, in the U.S., we're the lead commercialization party right now and up until the time that KHK would take over the majority of promotional activities. The sales force is not addressed in the agreements. So we are building up a sales force to sell in the market KRN23 in the U.S. currently, eventually in Canada. Over time, our plan would be to utilize that sales force across the other programs that are in our portfolio, and we do expect there to be some overlap in terms of some of the treating physicians across our multiple programs, and we expect to get some leverage out of that sales organization that we're building up. So hopefully that answers your question.

So on the second question as to fractures on 2 biopsies. We haven't followed the fractures on the 2 biopsies in those patients. We didn't follow the fracture involved, x-rays and other things, but the patients in that study are very comparable ones where we are monitoring fractures. So I think that -- I would say that we would expect osteomalacia improvement and fractures to be parallel biological processes. For LC-FAOD, we did get the data at the end of last year, but we became -- an initiated kind of a change in thinking. We originally have been planning to do the exercise-induced approach. It's a tolerance approach, and we now shift to doing the event-based strategy, at least we believe so. And it's taking a little time just to figure out for sure how many patients we can enroll and what the strategy and design would be in order to talk with the FDA. We have submitted some things [and you're seeing] we're working through that. It has taken a little time, I agree, but we are hoping to get that resolved here in the second half and get something up and running. For Huntington's disease, we don't have any updates on that. That's an IST. We hear they're continuing to enroll patients, but we have seen -- we haven't -- don't know when they're going to finish the study and report data.

And our next question comes from the line of Liisa Bayko with JMP Securities.

Just to follow up a little bit more in the pricing question. Is that something that you decide given that you kind of ultimately will be getting royalty, but you'll be kind of doing upfront commercialization in U.S. and Canada, so in those territories? Is that your purview to decide? Is there some joint decision? And then to that point about kind of people being around between $100,000 and $125,000, can you give us some benchmarks that would be good benchmarks for this kind of a drag that would be really helpful.

So Shalini, I think you should handle those.

Okay. Thank you. Well, to answer the second part of the question first, I don't think we have very strong benchmarks for this therapy. I think the data have been quite striking to date, and I think that's a helpful fact in terms of value creation for patients. I think there are other bone -- rare bone diseases with approved drugs, but they're pretty different from XLH, so I don't think you can draw analogy. So for example, some have asked us about hypophosphatasia, but that disease, you're talking about an enzyme replacement therapy. We're talking about a lethal infantile form. So it's not really exactly comparable in terms of XLH. So there's not a great comp out there. So for now I think the best we can do is point you to the sell-side and again, point out that we haven't made a final decision about pricing. In terms of how pricing decision-making actually works, so it is a very collaborative type arrangement. So we do have a joint commercial committee, and that committee jointly conducts market research and again, makes decisions about a global pricing band regarding the net price for the product globally. So globally, we would expect the pricing for the product to remain within that band. In each territory, there is a defined sort of a lead commercial party. And in the U.S. and Canada for the first 5 years post launch, Ultragenyx is the lead commercial party. In Europe, KHK is always the lead commercial party. In Latin America, we're obviously the lead commercial party. So that's how it works. There is a lead party, but there is a lot of coordination and discussion among the 2 teams in the form of the joint commercial committee. There's a joint steering committee. There are escalation methods that are typical for collaboration agreements. So nothing too unusual there. So a lot of coordination, but also some lead parties assigned.

And our next question is from the line of Vincent Chen with Bernstein Research.

As you approach the completion of the burosumab BLA filing and approval looms on horizon, no doubt you've had fairly extensive discussions with payers who really try to grease the skids for a robust launch. How are you pitching the pharmacoeconomic argument for both the pediatric and adult populations relative to current therapy? Is there an ability to differently price the drug to reflect greater value in the pediatric indication? And what are you hearing from payers with respect to how pricing might affect the level and type of restrictions applied, whether that's preauthorization criteria that are being contemplated or criteria for reauthorization?

Well, we can talk about the case for burosumab. We wouldn't really discuss ongoing payer discussions. I think that there's a lot more to be done before we get to the launch stage on that and pricing. I think when you look at the -- the pitch we certainly would make is based on the data we have and looking at the (inaudible) studies. The patients, even on existing standard of care, are severely disabled. Essentially, all the patients have a bowing and are result in multiple surgeries and disability as older patients. And the fact of the study shows these patients' rickets are substantially improving, that their deformities are resolving, their growth is improving, their pain and physical functioning, in the pediatric patients, are improving and in adults, the fractures are healing as well as improvements in bone remodeling and function, we think that treatment really has no comparable. The oral phosphate standard of care is a very modest drug, but it also has substantial clinical side effects and particularly, around 25% to 30% of the patients have nephrocalcinosis are basically calcification of the kidneys, which, in many cases, leads to kidney stones. In the old days, when you try to use even more of that treatment to get better efficacy, there used to be 50% to 100% of the patients have calcium in their kidneys. So we think that from a safety perspective that burosumab will be substantially safer on how it works particularly. So we think the combination of the effect on rickets and deformities and growth and fractures and procedures and look at that over the long haul, we think that will be a substantial case for changing what is a very disabling disease into one that's manageable. We need to work on that argument and develop the case, and the team and our groups will be doing that continuously going forward.

I see. And with the adult XLH population, a much larger portion of the adult patient pool and one where treatment is currently fairly and frequently and very unevenly applied, what steps are you taking to really drive pull and eventual adoption? It seems [as though in] our discussions that many of the key opinion leaders in the XLH space believe there's true benefit to treatment in adults, but really the secondary group of physicians managing XLH appear to treat adults fairly infrequently. I guess what's your sense for the portion of patients who are managed by the XLH thought leaders rather than the broader secondary group? And also, what are you doing to ensure adults who can benefit indeed get treated, whether it's a matter of educating the broader physician community or driving adults toward the XLH specialist centers?

Well, with regard to treatment of adults, whether it's key opinion leader or other centers, the biggest issue has generally -- the thing that's been limiting it is the fear that they're going to damage our kidneys. And so a lot of doctors won't do it for fear of damaging the kidneys of an adult patient just from the, essentially, the risk standpoint. And therefore, there are certain docs who just treat no one because of the risk issue completely. The other doctors that are doing the treatment, whether key opinion or other, are treating around half the patients that's in -- that's based on the number of patients that have severe enough bone disease that they're willing to take the risk on the kidney injury question. And so when we look at this, I think there are going to be different opinions and different amounts of awareness. But everything that we've had, if you look at patients and talk to them directly with adults, there is severe disability and dysfunction of those patients. And that hasn't been well appreciated. It will be, and it's one of our jobs is to make the physicians aware of it. Most of them, though, I would say are afraid to treat because of the damage of a patient and discomfort with the current therapy.

What's the plan for how you drive that awareness?

Well, we're doing currently is our patient diagnosis teams will talk about the disease out there with doctors and adults. And we're working closely with the patient advocacy group and making them aware, and they're actually rather shocked at how their adult disease is underappreciated. I can tell you, when I told them of that, they've been very surprised that people don't appreciate how disabled they are. So with working with patient advocacy and our patient diagnosis liaisons in the field, we hope to raise awareness on the disease burden and the serious issues that exists with adults and work with our patient advocacy colleagues to help raise awareness among the patient communities that XLH adult disease is not mild. It's a severe disease. And we think actually the data from the biopsy study will allow us to show that the underlying disease in these patients is severe and even if unrecognized in some areas. So we're pretty confident that combination of disease awareness efforts through our patient diagnosis liaisons with advocacy efforts in addition to the support of this clinical data will be enough to chart this. The other thing I'll tell you that I think is extremely important for people to recognize is that adults and patients are not -- adults and pediatric patients are not separate groups. They're not living separately. All the pediatric kids have parents, and most of those parents have XLH, too. So when you're treating a pediatric patient in the same household, be often an adult with XLH and there will be aunts with XLH or uncles with XLH. So when you start treating kids and they get better, the awareness will go throughout the family tree. And it won't be like 2 separate populations with 2 separate doctors because the families are all in one group. So think of it less about what the doctor and think about the underlying family. I mean, you look at other X-linked diseases like [factor VIII] that's been quite instrumental in the launch is the connections of the family tree, so that one person getting treated, getting a result now translates into interest from other family members.

How concentrated is the treating population?

Well, we recently did an analysis, which we had in our investor deck, and there was actually quite a few physicians across the U.S. that are -- appear to be treating hypophosphatemia patients or prescribing phosphates. So they're a fair number. We know that the major ones are in the pediatric endocrine, nephrology area. But we are seeing some other doctors in medical genetics, in orthopedic and some other centers that are actually treating patients. So that's data though because they're prescribing a drug, the oral phosphate can be tracked, it allows us to find all those people and with our patient diagnosis liaison team, to be able to go out and contact and validate which of those doctors actually are treating XLH patients and to help focus our efforts on those physicians that we know have patients.

I imagine there must be a pretty long tail to those. How many are you able to catch with sort of the efforts you put out there so far?

Well, we haven't talked about the exact number, but we have hundreds of patients in our various centers that we've already seen, and a lot of centers have many, many patients. So I personally was a doctor and I had a lot of XLH patients in my clinic. That's why we're working on this because I was thinking about I have so many of these patients and I was thinking there must be something better than the therapy I was prescribing, which is the phosphate. So there are a lot -- a lot of the centers have quite a few patients. So it's not like MPS diseases where you're dealing with 1 or 2 at a time.

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

This is Cyrus on for Matt. A couple things for KRN23. So for the bone biopsy data, how do you expect the FDA to treat that from the pre-BLA meetings? Did it seem more like it was just helpful in confirming the underlying mechanism? Or was there some sort of read-through to efficacy and labeling? Also, for the dual time line filing in the EU for peds and adults, what is the impact on your expectation for when each of these indications will be available to patients?

Yes, so on the first question, bone biopsy question, I think they just want a verification of the mechanism of action. They consider that an important efficacy parameter, by the way. And the group there at FDA does deal with osteoporosis and other disorders where biopsies are used in various ways to look at the biology. It is one confirmation that they're seeing a change in the underlying biology, which we think we've already shown in the first 2, that it's not just a change but a profound change in one year. So we think we have -- we can meet their interest, which is just showing the mechanism of action and doing what we think it's doing, which I think enhances your ability to understand why the fracture healing is happening. It's happening because the osteoid is being changed and mineralized properly to make strong bones that now can -- so that's on the bone biopsy. And the time of filing, the time line we're putting forth on the pediatric indication is the same as before. And it will depend on KHK filing, the adult indication, after the physician on the peds indication. And so that will initiate as a type 2 variation, a follow-up filing and the time line for a review will be expected what the review is now we'd expect.

And our last question is from the line of Maury Raycroft with Jefferies.

I'm just wondering if you can remind me what we'll see for the GNE myopathy results with potential forum for that. And if it's positive, would the NDA and MAA be filed by year-end?

Good question. So the GNE myopathy study, just to remind everyone is, 89-patient randomized, double-blind, placebo-controlled. And the primary endpoint is the upper extremity composite of muscle strength, core muscles measured and that's the primary -- that's the endpoint we used in the Phase II study. Secondary endpoints include a couple muscle strength measures at the lower extremity and a GNEM-FAS, or functional activity scale, as well. And so we're -- our expectation is we only need to show an effect in the upper extremity to be able to file, and getting an effect to lower extremity would be beneficial but not required. So we're looking to see a supportive statistical significant result. Based on the powering, we would think that result would be -- we would -- would be comparable to what we've seen before and therefore, we think that would be sufficient to file. Our time line for filing is probably in early '18. Probably wouldn't make it by the end of the year. That would be very short period of time and honestly, we're also prosecuting 2 other filings simultaneously right now. So I would expect that filing in the first half of '18.

Okay. Great. And just quickly on the post-hoc bone fracture stats, I was just curious if those possible 2 [stats] statistically at 12 weeks and then potentially breaking out the complete versus 0 fractures.

We did look at it. It is also positive at 12 weeks. It's more positive at 24 weeks. I can't recall -- we have broken out, but we don't -- we've said before that we didn't see a difference in the fracture changes for pseudo or full fracture. They both improved similar -- through a similar ratio. That makes sense? So it's not like there's one or the other moving. The numbers are both moving.

Okay. Right. As far as the stats at 12 weeks, is there any update on that?

It was also -- yes, it was also happening. It was positive at 12 weeks, but I think it doesn't -- it's so strong at 24 weeks and the odds ratio of 7.76 is a massive odds ratio. I'm not sure how familiar you are with odds ratio. That's a huge number. So it just shows that the treatment effects size is quite profound in terms of the healing of fractures.

And with that, we conclude our Q&A session for today. I will turn the call back to Ryan Martins for his final remarks.

Thank you. And with no additional questions, this concludes the call. The replay of the call will be available shortly. If there are any additional questions, call us at (844) 758-7273 or ir@ultragenyx.com. Thanks.

And thank you all for participating in today's conference. This concludes the program, and you may all disconnect. Have a wonderful day.