Ultragenyx Pharmaceutical Inc (RARE) 2021 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the second quarter 2021 financial results and corporate update conference call. (Operator Instructions) I would now like to hand the conference over to your first speaker today, Joshua Higa, Director of Investor Relations. Thank you. Please go ahead.

Good afternoon, and welcome to the Ultragenyx financial results and corporate update conference Call for the second quarter 2021. We have issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. I am Joshua Higa, Director of Investor Relations. Joining me on this call are Emil Kakkis, Chief Executive Officer and President; Camille Bedrosian, Chief Medical Officer; and Erik Harris, Chief Commercial Officer. Mardi Dier, our Chief Financial Officer, had an unavoidable flight delay and is not able to join us on today's call.

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 2020 annual report on Form 10-K that was filed on February 12, 2021, our quarterly report on Form 10-Q that will be filed soon and our subsequent periodic reports filed with the SEC, which will all be available on our -- in the Investors section on our website. 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 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 related to our business, please see our periodic reports filed with the SEC. I'll now turn the call over to Emil.

Thanks, Josh, and good afternoon, everyone. I want to quickly reflect on our progress midyear and note that we are approaching a period of significant execution on our clinical programs in the second half of this year. For those who are newer to our story, we're a diversified global commercial rare disease company with 3 products approved for 4 indications. We now have one of the broadest clinical portfolios among rare disease companies in terms of modalities and indications and one of the most prolific late-stage pipelines of both gene therapy and rare disease. This is a testament to our ability to identify great science, do effective deal transaction to drive that work forward in development of our first year -- 11 years as a company.

We are now on track to initiate 4 pivotal clinical trials over the second half of this year, and these include Phase III studies for 2 of our gene therapy programs, DTX401 and DTX301 in GSDIa and OTC respectively; two, a seamless Phase I/II/III study for gene therapy target UX701 in Wilson disease; finally, a Phase II/III pivotal study for UX143 in osteogenesis imperfecta. Additionally, we will begin our first mRNA therapy, a Phase I/II study for UX053 and GSDIII. Finally, GTX-102 developed by our partner GeneTx will now be back in the clinic treating Angelman patients again.

I'll begin with the Angelman program, and then I'll summarize our clinical and commercial progress before handing it over to the team to provide more details. We previously announced in May and June that Health Canada and the U.K.'s MHRA approved a modified clinical protocol to begin dosing pediatric patients with Angelman syndrome in those regions. These approvals followed reviewed by both regulatory bodies of the clinical data on the first 5 patients in the U.S. as well as abundant nonclinical data.

They agreed with moving forward based on both the promising activities seen at the first lower dose of GTX12 before any signs of serious adverse event had occurred and the extremely high unmet medical need across the 60,000 patients and their families. We're now working closely with our partner, GeneTx, to wrap up the remaining logistical details to get sites enrolling and dosing patients.

In the U.S., we continue to make progress in our discussion with the FDA for resuming the study. Those discussions have been productive, and we have received agreement from the agency on a dose administration plan for naive patients. The agency has requested us to bolster the protocol with some specific additional neurological assessments and documentation to verify the safety of the GTX-102 during study conduct and to manage the study closely. We'll make further simple adjustments to the protocol based on the feedback and already get clearance to resume the study in the U.S. At this time, the FDA has asked us to hold back on retreating the prior treated patients.

As you have noted before, we plan to provide a preliminary data update from some patients treated with GTX-102, either ex U.S. or in the U.S. by the end of the year. The amount of data may be limited based on the timing, but we expect to treat the first cohorts of patients.

Overall, we are enthusiastic about the process for treating Angelman with GTX-102 based on everything we know today. We're looking forward to getting this treatment developed.

Shifting to our gene therapy franchise. We've completed all of the known requirements to initiate 3 pivotal studies in GSDIa with DTX401, OTC deficiency with DTX301 and Wilson disease with UX701. At the ASGCT Conference in May, we announced positive longer-term data from the DTX401 Phase I/II study showing a 100% response rate across all 9 patients treated and a durable response extending to 2.5 years. Similarly, we shared positive long-term data from the DTX301 Phase I/II study that showed a response from all 3 patients at the Phase III dose and total 6 of 9 responders in the first 3 cohorts of patients enrolled. These patients maintain or improve the response up to 3 years following treatment. The teams are in steady start-up mode for the pivotal studies, and we expect them to get going soon.

Our proprietary and commercial quality HeLa manufacturing platform will be the basis for the next generation of Ultragenyx gene therapy products, starting with our program for Wilson disease, and extending to our preclinical program for Duchenne Muscular Dystrophy and CDKL5 deficiency, a neurodevelopmental disorder. These latter 2 preclinical programs represent our first non-liver targeted gene therapies and address much larger patient populations. We will provide updates on these programs later this year.

Beyond our gene therapy work, we remain on track to initiate 2 additional clinical programs this year. One is UX143 or setrusumab, our recently licensed antibody for osteogenesis imperfecta or OI. Our partner has already generated promising results in adults with the OI showing substantial improvement in bone density. Based on our review of the science, both clinical and nonclinical, we are convinced that the enhancement of bone production via the anti-sclerostin mechanism will improve bone mineral density in a productive manner that will improve bone strength in patients with OI by making new bone right where bone stresses is needed and be superior than to purely antiresorptive reactions, for example, bisphosphonates.

This should decrease fractures and potentially prevent the deformation of spine and bones that comes with repeated fractures early in life, especially in the patients with type III or type IV OI.

The clinical study we'll initiate will focus on pediatric and young adult patients that have frequent fractures. We are planning the initiation of a Phase II/III study with this population by the end of the year.

The other program is UX053, an mRNA program for glycogen storage disease type III. This first mRNA program for our license with Arcturus Therapeutics is also expected to begin enrolling a Phase I/II study by year-end.

Now turning to our commercial programs. We had another solid quarter with significant revenue increases from Q1 in 2020 with progress over the globe. Crysvita particularly continues on a strong growth trajectory even as we entered the fourth year from its initial approval in 2018. This continued uptick is driven by both North America and Latin America. In North America, penetration in the adult XLH population is a major driver, in line with our expanded patient ID and broader physician outreach efforts. In Latin America, our team's efforts in supporting patient reimbursement have helped drive increased volume and revenue and patients are staying on Crysvita once started and compliant with their regimens. That is a testament to how much it helps patients with XLH.

We also have a number of multigenerational families on Crysvita now and there's nothing better than to get notes from families comment on how much their lives across generations have changed. Crysvita is a paradigm shift in XLH treatment. We're happy to be at the forefront of making this happen.

Our strong launch with Crysvita has been followed by our successful launch of Dojolvi, which has now been on the market for about a year. Our team established great momentum, identifying patients, securing reimbursement coverage, facilitating new start forms. The strong start shows how much a new option was needed for LC-FAOD and tells us that Dojolvi will also represent a paradigm shift in the management of LC-FAOD.

I'll now turn the call over to Erik to elaborate on our commercial progress in the quarter.

Thank you, Emil, and good afternoon, everyone. Before I get into the details of the commercial performance for the quarter, I'd like to thank all of the teams for their work and dedication during what are still uncertain times. While most states have reopened, the teams have shown an ability to adapt and overcome challenges with this -- within this new environment of conducting business.

Crysvita had another strong quarter, growing 6% versus the first quarter of 2021 and 38% over the second quarter of 2020. Within the North American region, second quarter revenue grew 15% versus the prior quarter as the seasonal reimbursement effects normalized. Crysvita revenue in Latin America declined quarter-over-quarter, but this is driven by an uneven ordering patterns and is not reflective of the underlying demand.

Given the strong demand and execution we have seen in the first half of the year, we continue to affirm the 2021 guidance range we previously provided for revenue in Ultragenyx territories of $180 million to $190 million.

In the United States, we are continuing to make inroads beyond major endocrinology and metabolic bone centers and into the community clinics where we are finding more and more adult patients. Early on in the launch, adults made up 40% of the patients treated with Crysvita. Today, as the total number of patients on therapy has grown significantly, so too has the portion of adults who have received Crysvita. We are now at approximately a 50-50 split between adults and peds on Crysvita therapy, mainly driven by the work the team has done in the small, harder-to-reach community clinics. As the teams leverage and expand upon investments that were made over the last year, we are confident we will continue to find more patients with XLH and TIO who could benefit from Crysvita.

Shifting quickly to Latin America. We continue to see growing demand for Crysvita across this region. As is typical, full reimbursement approvals in Latin American countries can take some time, but the base of patients continues to expand as more are granted injunctions and gain access to named patient sales. In Colombia, we recently received regulatory approval for treatment of XLH in adult and pediatric patients 1 year of age and older. Patients had been on therapy through named patient programs but this will significantly streamline the process for patients to receive reimbursement -- reimbursed therapy. In Brazil, we are in the final stages of negotiating full reimbursement and, in the meantime, continue to receive orders from the Ministry of Health to support the patients who have been granted an injunction to receive this therapy.

Turning now to Dojolvi, which was approved for the treatment of long-chain fatty acid oxidation disorders, or LC-FAOD, by the FDA in June 2020 and by Health Canada in February 2021. Recall there are an estimated 2,000 to 3,500 patients in the U.S. with LC-FAOD. As of the end of the second quarter, we have received approximately 270 completed start forms. This represents significant penetration into the prevalent patient population at this point of the launch. These start forms have come from more than 130 unique prescribers of Dojolvi with approximately half having written more than 1 prescription. This has led to approximately 220 patients on reimbursed commercial therapy and continues to speak to the broad interest we are seeing from the physician community and strong support from payers.

As of the end of June 2021, payers are providing broad coverage for patients with LC-FAOD. The time from completed start forms to reimbursed therapy continues to outpace what we saw at a similar point in the Crysvita launch. It is great to see so many patients in the U.S. with LC-FAODs quickly and successfully navigating their insurance policies.

Outside of the U.S., there are a number of patients who have received Dojolvi through named patient and early access programs. We are continuing to work with regional regulators to gain full approval to treat all patients who could benefit from Dojolvi. In Brazil, we have had positive discussions with the Ministry of Health and are hopeful that the review process -- hopeful about the review process with this agency.

Looking forward to the second half of the year, the commercial and field teams will continue leveraging many of the tactics that were developed last year. We have learned how to adapt to this new environment, and we'll continue to find more and more patients who could benefit from Crysvita, Dojolvi and Mepsevii.

With that, I'll turn the call back to Joshua to share the financial results.

Thanks, Erik. We issued a press release earlier today that included a financial update, which I will briefly summarize.

Company revenue for the quarter ending June 30, 2021, totaled $87.0 million. Crysvita revenue in Ultragenyx territories was $44.7 million, including $41.8 million from the North American profit share territory and net product sales of $2.9 million in other regions. Total royalty revenue related to the sales of Crysvita in the European territory was $4.9 million. As a reminder, ordering patterns in Latin America will vary from quarter-to-quarter. In the first quarter 2021, we received a large stocking order from Brazil's Ministry of Health to support the patient demand in that region. We are confident revenue from this region will continue to grow over time, driven by strong underlying demand but ordering patterns will be uneven in the near term as we work through the reimbursement process.

Dojolvi revenue for the quarter was $10.0 million. As we have noted before, we will not be providing revenue guidance for Dojolvi in these first quarters of launch. We believe the metrics Erik discussed better describes the success we are seeing so far. Mepsevii revenue for the second quarter of 2021 was $5.4 million. We expect these revenues may modestly increase over time. Second quarter 2021 revenue also includes $22.0 million related to tech transfer as part of our strategic manufacturing partnership with Daiichi Sankyo around our HeLa PCL and HEK293 technologies. Through the rest of the year -- through the rest of this year, the revenue recognized will taper significantly as the tech transfer activities come to a close. Additional details on this revenue recognition can be found in our annual and quarterly reports filed with the SEC.

Our total operating expenses for the quarter were $169.8 million, which includes research and development expenses of $113.2 million, SG&A expenses of $53.4 million and cost of sales of $3.1 million. As a reminder, we expect our R&D costs this year to increase versus 2020 as we support 3 pivotal gene therapy studies: the UX143 Phase I/II clinical study in OI; the Phase I/II study for our most advanced mRNA program, UX053 and GSDIII; and a number of other preclinical activities as we get ready to advance the next programs into the clinic. We also expect SG&A to modestly increase in 2021 as we continue to support the expansion and launches of Crysvita, Dojolvi and Mepsevii.

For the quarter ended June 30, 2021, net loss was $122.4 million or $1.81 per share. This compares to a net income in the same period of 2020, of $25.3 million or $0.42 per share basic and $0.41 per share diluted. The net loss for the second quarter 2021 includes a $31 million decrease in the fair value of investments in equity securities as compared to a $95 million gain in Q2 '20. Net cash used in operations for the 6 months ended June 30, 2021, was $224.7 million compared to (inaudible) $7.8 million for the same period in 2020.

Net cash used in the first half of '21 includes the $50 million upfront payment for the closing of the Mereo license and collaboration agreement compared to net in the first half of 2020 and that included $134.9 million of operating cash received from Daiichi Sankyo related to collaboration and license agreements. We ended the second quarter with approximately $974 million in cash, cash equivalents and marketable securities. This puts us in a strong capital position to reach key clinical and commercial milestones as we continue executing our development and commercial strategies.

I'll now turn the call over to Camille.

Thank you, Josh, and I, too, wish everyone a good afternoon. Today, I will focus my remarks on providing an update on GTX-102 being developed with our partner GeneTx for the treatment of Angelman syndrome. Angelman syndrome is a devastating neurogenetic disorder with a broad spectrum of disease manifestations that affect multiple important domains. Last year, we reported surprisingly early positive efficacy data from the first 5 patients treated in the Phase I/II study of GeneTx -- excuse me, GTX-102 that indicated substantial improvements in multiple domains in all patients.

We also reported all 5 patients had a grade 1 or 2 serious adverse event of lower extremity weakness that has fully resolved. At the first presentation of the SAE, we paused dosing and enrollment in the clinical study. Since then, we have run extensive tests to confirm that this SAE has been fully resolved in all 5 patients. Furthermore, we shared extensive clinical and nonclinical data with regulators and have had productive discussions with regulatory agencies, including Health Canada, the Medicines and Healthcare products Regulatory Agency, or MHRA. In the U.K. and the FDA.

Outside of the U.S., both regulatory agencies have reviewed our data and have given us the green light to begin treating patients with GTX-102. The agencies agreed with our plan to begin dosing in 2 parallel cohorts with a modified dose titration and administration plan. One cohort will start at 3.3 milligrams for patients under 8 years old and the other at 5.0 milligrams for patients aged 8 to 17 years. Trendelenburg or a head-down tilted positioning of the body and an artificial CSF flush should help reduce the local contact time and help the ASO reach the cisterna magna as it is diluted and through circulation distributed to the brain. Careful titration to higher doses may be evaluated on an individual basis after 2 repeat doses have been first administered to allow the exploration of a dose that is both substantially effective in at least 2 domains without causing a safety event.

Dose escalation is capped at 14 milligrams for a single dose. This new dosing plan is within the observed range of clinical and nonclinical activity but below doses associated with SAEs. In the U.S., we have had a number of productive discussions with the FDA, where we discuss the nature and complete resolution of the SAE as well as our plan to resume dosing patients in the United States. Following a Type A meeting, we submitted a protocol amendment. Based on feedback we received on this amendment, we believe we have agreement with the agency on a dose and dose administration strategy to treat naive patients.

The agency asked that a few specific additional neurological assessments be added to the protocol before we resume dosing in the U.S. We will make these changes and look forward to resuming the treatment of patients with Angelman syndrome in the U.S.

We and the GeneTx team have received numerous inquiries from families looking to enroll their children in this study. The data generated will confirm we can safely dose patients with GTX-102 and will inform the loading and maintenance dose regimens as we move to the next phase of development.

With this update, I will now turn back the call to Emil. Thank you.

Thank you, Camille. Before we close out, I'll provide a quick reminder of the key upcoming milestones for Ultragenyx. For GTX-102 in Angelman syndrome, we will dose patients in Canada later this quarter and provide some cumulative data by the end of the year. We also expect to resume the study in the U.S. adapted to the FDA's request. For our 3 pivotal gene therapy studies, DTX401, DTX301 and UX701, all the products have been manufactured and released for use in studies, the sites around the globe identified and patient finding efforts are underway as the final operational tasks are completed before we can begin dosing patients.

For UX143 in osteogenesis imperfecta, we reached agreement with the FDA on a final pivotal study in pediatric and adult patient initiate that study by year-end. For UX053 and GSD3, we tend to move our first mRNA therapy in the clinic with a Phase I/II study. As you can see, we are executing on all fronts with early and late-stage clinical trials of various disease areas and therapeutic modes as well as in commercial. This will set up for multiple important clinical readouts in the coming 12 months as well as pivotal study data from at least 4 programs over the next couple of years.

With that, let's move on to your questions. Operator, please provide the Q&A instructions.

(Operator Instructions) Your first question is from Maury Raycroft with Jefferies.

So I was wondering if you can elaborate on what the additional neuro assessments are that FDA is asking you to use for Angelman. And can you bookend how many patients and how much follow-up you could have to report later this year?

Sure. Well, we've agreed on what the assessments are sort of they want -- how we're documenting them, what the training of the person is, who it is. They just want like a little more of the logistical detail. But these are just really careful neuro exams. We're doing some -- little bit electrophysiology and we'll also have -- we'll do imaging when necessary. They also want us just to be certain of what triggers what kind of action on our part, what you do when you find things. So it's a little bit what I'd call logistical management detail. But I think fundamentally, we have the big pieces put together. That's why we're confident when we get that figured out. It's unfortunate it's taken time to do this, but I think we're finally there.

Now on the -- how many patients, it depends a little bit on how many patients get treated in the U.K. and in Canada. The sites already have patients inquiring. They've gone through (inaudible) committee. So it's a little bit more of the last logistical steps. We said before we'd expect to have a few patients treated through a few doses that we would -- by the end of the year. The exact number, I think, it's hard for us to say, but we'll have some data on a few patients. And we should probably have most of the patients in the first 2 cohorts at least receive 1 dose by the end of the year. So we'll put out whatever we do have but it will be limited. It won't be an extensive amount of data, but we do believe it will give us at least a sense of are we moving in the right direction with the program.

Our confidence is that if we give patients 4 -- 3 or 4 low doses that will load them and then we'll begin seeing these effects, the clinical effects we saw before, so without having the adverse event. So we'll get our -- start to get a read on that before the end of the year.

The next question is from Tazeen Ahmad with Bank of America.

Emil, another one on Angelman's, if I may. So you made, in your prepared remarks, the comment that the agency has asked you not to start redosing the previous patients. Is that pending approval for what you're going to do for protocol for the new patients that you would add? Or is that something that would have to be separately discussed? And then I have a follow-up.

Yes. I think the view right now is that we don't have perfect knowledge of what the reaction we're from. And so they'd want us to get the patients treated that haven't seen higher doses and just see if it's safe to do and that works and then we can rediscuss what to do with retreating patients. But we don't have a perfect knowledge of what the mechanism is. What we have said and what we believe the data we have suggests it's a local chemical irritation-type effect because there's no cellular response, there's no antibody response. It's really kind of a local contact thing. So -- but we don't have perfect knowledge of the mechanism.

So it's mainly about going into naive patients with a lower dose. That way, we know it's nothing about the history of exposure. We're now dealing with the low dose alone. It can look at it in a clean way. After that, we will certainly have to get back to retreating the same patients we saw before. But we don't think this change is the overall time line of what we do. I think we can get the data we need. It just really is tough for those patients who were so excited and want to get retreated for them to have to wait more time. It's disappointing for them, but it won't affect the overall program, but we do feel for them and we're going to work in getting them treated as soon we can.

Okay. And then as a follow-up, is it safe to say that the FDA is asking for additional information relative to what the U.K. and Canada asked for? And if that's the case, what's prompting that?

Well, the actual method we're using in Canada and the U.K. regarding evaluations of safety monitoring is actually the same. It's the same. It's a question of how much detail do we provide them. Do we have a checklist form? Is there some other, let's say, operational structure and verification of training, et cetera. They sort of want just more detailed rigor around the same things that we're doing there and doing here. So it's not like they're making us do extra things really. It's really the same safety and assessment. So I think they're just being very conservative and they want great assurance that we're going to be careful about what we do. But of course, we will. But I think you can be careful by having really great neurologists work at sites to take care of patients carefully. And then the question is how much documentation makes that better or not. And I think you can do it. If you have great people, they'll do a good job. So that's the difference.

Your next question is from Gena Wang with Barclays.

I have one question regarding Angelman clinical end point. Some doctor feedbacks suggested GI has some limitations and rely too much on parents feedback. What other measurement you would include for the Phase I/II, such as (inaudible) that's what doctor recommended.

And then quickly, another question regarding DMD. Just wondering, are you on track for the IND filing second half this year?

Did you say DMD?

Yes, DMD gene therapy.

All right. Well, we'll follow up with that. All right. So on the CGI or the patient feedback story, whatever people are telling you, they're not quite giving the complete story because our evaluations in the trial that GeneTx has been doing involve -- well, there is a caregiver part, but there's also psychologists administer tests like the Bayleaf or administered by people. And then we have other ones that the investigator measures and does themselves by physically watching the patient do things, not dependent on the patient. So we had really 3 different parties reporting the data and the data we've already shown you, all right? That's all complementary and supportive.

In addition to that, we have objective measures like the delta power EEG measures, right, or the active myo, which showed other things. So there's a number of different things that I would say are independent. CGI, from the physician, by the way, depends also on what he sees the patient do. But I appreciate their point. I think we would want to make sure, and this is why we read out data on these multiple methods to make sure we have confirmation by independent observers and not be swayed by just the family's view.

Now I know also for a fact that our PI at Chicago saw videos of the patients doing things that the parents had said they had done. So they actually were shooting videos of their kids because they're so excited about them speaking words and other things. So she also saw video evidence of what they were doing rather than just a patient report, just to be clear, like objective video evidence of things. So we're confident that the things we're seeing are real and are meaningful.

Now let's talk about Duchenne muscular dystrophy. What we said is we're going to update the Street about where we're at on the program. We're not filing IND by this year. We've never said that. What we said this year is we're focused on creating a large-scale commercial manufacturing system using our HeLa system and that we would put out information about that production system. It's going very well. Our expectation is to be able to put out data on a large-scale methodology using our HeLa 3.0 technology later in the year on Duchenne and update you on our nonclinical program. At that point in time, we would lay out potentially the time line to an IND, but it's not the end of this year.

The next question is from Yaron Werber with Cowen.

This is Brendan on for Yaron. Congrats on the progress. Just a quick one from us. I guess to keep on the same line in Angelman, I was kind of just hoping to see if you could maybe give us a little bit more color on the timing for the U.K. study. I know you said it seems like Canada is pretty close to the first doses. Just wanted to see what's left to maybe getting drug in some patients in the U.K. and if we might get any of those in the year-end data.

And then just wanted to see also if -- you mentioned that you settled on a dosing scheme administration with FDA. I wanted to kind of see if you can tell us if it's the same structure you're using in the U.K., in Canada or if you're thinking about a different design for that?

Okay. So the U.K. is on track. I mean it could be U.K. or Canada in terms of treat (inaudible) within weeks of each other, so it won't be that much different. We would expect to have some U.K. patients treated. There's a great deal of enthusiasm from the U.K. patient community getting enrolled. So once the sites open, we expect them to be able to enroll. And remember that study, we'll have 2 patients below (inaudible) first treated and then a couple of doses and then the additional patients will get treated, right, until they're 6 and 6 treated. So that's -- we'd expect some U.K. patients then.

Now you're asking about the U.S. protocol. U.S. protocol will also have monthly dosing, will have a different dose, but the methodology will be simpler in the U.K. -- in the U.S. In fact, not identical to what the U.K. and Canada is doing because the FDA has made specific request. We have understanding with them about the dose and administration strategy that we're going to use in the U.S., but it is a little bit different. It is monthly dosing similarly, but the method so far will be a little bit different based on FDA's input.

Your next question is from Joon Lee with Truist Securities.

I have a question on UX053 for GSDIII. And I'm very interested to hear your views on the use of modified versus unmodified mRNA given the precedent set by Moderna, BioNTech and CureVac. Curious if they signal some potential headwinds for 053 given Arcturus uses the unmodified mRNA, and some KOL seems to think that uridine might have contributed to weak data for CureVac. And they also point out to double-stranded RNA as a potential trigger innate immunity. And so curious what your views on that are on that and sort of what kind of biomarkers are you hoping to collect from this initial data to assuage any concerns there?

Yes. So we think the issue of the innate immunity stimulation of mRNA is very important. And we actually do several things to design. We design the mRNAs very carefully to assure that they don't induce innate immunity response. And we actually use peripheral blood -- white cells for patients to actually test our mRNAs to determine they're not having significant amounts of double-stranded in how we purify, prepare them. We have used modified on nucleosides. We're using mRNA. So we just have to make sure that they're translated efficiently. But we haven't disclosed all the details of that. But we know our mRNA is not stimulating human white cells, which we think is -- gives us a handle on that particular issue, and we know the expression is substantial in terms of how much enzyme can be made from the mRNA product.

So the old issue with regard to the COVID vaccines, I think, are more complex than just the RNAs, frankly. So I think there's a lot of other aspects like the LNP themselves, which can -- lipids being used, et cetera. Those are factors that matter. The (inaudible) we're using is a novel one that (inaudible) occurs developed that is metabolizable and cleared -- 99% cleared within a couple of weeks from the body, unlike some of the other lipids. So it's a very appropriate one. It releases early and this gives us better expression. So we think the LNP is a factor too on how this works. But the mRNA quality, we do a lot of work in optimizing how we prepare, purify and the use of modified nucleotide as needed.

Your next question is from Salveen Richter with Goldman Sachs.

This is Elizabeth on for Salveen. My question on the Angelman's program. So I know previously you've sort of discussed expanding the program to include other genetic types outside of the most severe deletion based patients. Just wondering how this would work in terms of the trials in progress or if it's more of a future consideration.

We definitely think the other generic types serve retreated, and we think the ASO, if it works in the deletion type, it will work in the other types based on the mechanistic understanding. Our plan right now is to focus on the 77 patients that have deletions for the program we're conducting. However, we would probably put in place a second study to look at other genetic types. The reason to focus the main pivotal study on the deletion type is because they are more severe. Therefore, any improvement you see in language, in communication, which is one of the main things that patients are most interested in would be clear if we have a mixture of patients who have varying degrees of communication skills and words, et cetera. It would just create difficulty in a pivotal randomized study.

So we'll focus on those and -- but we are not going to forget the other times. We put some program in place to deal with the other types as well. But creating heterogeneity in the main body of a big study is one of the ways you can create trouble for something that's doing great. So we wouldn't do that.

Your next question is from Joseph Schwartz with SVB Leerink.

We noticed -- a couple of questions on Crysvita. First, we noticed that the label was updated in Europe to allow patients to self-administer therapy. And we were wondering what impact do you expect this to have, if any. And do you think we could see a similar change take place in the U.S. at any point in the foreseeable future?

Thank you, Joe. In the U.S. right now, we actually have temporary authorization from the FDA to allow self-administration, which is going on already because of the pandemic. We haven't submitted to change that at this point. We have done the human factor study. The drug administration is very similar to what you might do for any other subcutaneous drug. There's nothing very special about the injections or problems. So it certainly could be added. It has complexity though in the U.S. because we have to deal with the different systems, whether it becomes a medical product or hospital product or a home product or not a Part B product. So we have -- there are some complexities in the U.S. at this point in time. But we are -- patients are doing self-administration. And I think in the long run, we would certainly move in that direction.

We haven't had a big compliance issue. And I think one of the things that may be important, Joseph, is to know that we supported right upfront and do include in the cost of drug getting a home nurse that comes to your home and inject you. So the 85-plus percent of patients are getting their stuff at home already, right? So the benefit of self-administration is you don't have someone show up at your house. On the plus side, there's a lot more confidence that you're going to get your injection on time since it's an appointment. But we want to make sure it's as convenient as possible because it is a lifelong treatment. So we'll look at self-administration in the long run. But so far, the home nurse are working well and some of the patients are getting it -- are doing it for now on the temporary authorization.

Okay. That's helpful color. And then has the need for Brazilian patients to use the label system to gain access to Crysvita but holding back adoption there to an appreciable degree? Can you quantify the impact you expect to see on Crysvita Brazil sales from potential Anvisa approval?

Well, we have the approval, and we are getting injunctions and Ministry of Health orders. That's the lumpy ordering pattern we're seeing. But it is -- we are getting orders. Now it's growing over time. What we're talking about today is getting formal approval of the organization within Brazil that actually determines government reimbursement. With that, it would help get more regular reimbursement for Brazil. So that is near the final stages. And once that's completed, we'd expect that would help boost Brazil further. So we wouldn't have as much of the logistical challenges of what you're doing with the injunction approach. Does that answer your question?

Yes. It's helpful. I was just wondering is there any way to quantify how much the current systems then holding back sales -- or how much could you get a boost from?

I don't know -- yes, let me -- Erik, do you think there's some -- any color on that? I don't have any sense for what that would be. I know we have a lot of patients who want to get on drug. So it's definitely holding back something. Erik, do you have any sense for how many patients are in demand. I mean rough sense and how many actually navigated the process?

We've done a good job of identifying patients, and many of those patients have sought injunctions and has stated -- many have received injunctions and are receiving reimbursed therapy. I would say to the magnitude of about two to threefold patients that have been identified and are seeking reimbursement versus that have received injunction. So there's some upside once we receive formal reimbursement.

And one thing I do want to point out, just to piggyback on what Emil stated is that in the first quarter, we did receive a positive opinion supporting reimbursement in Brazil. We're just working through that final stage, which is establishing clinical guidelines, which is the next step in the approval process, and we expect to complete that sometime in the new year.

Your next question is from Cory Kasimov with JPMorgan.

On Angelman, had the FDA conveyed this concern before about retreatment? Because it seemed like that was the plan for the go-forward strategy in the U.S. until very recently. I guess just wondering if there's something new that triggered this change in direction.

Well, we had our Type A meeting with them, and this is where -- it's pretty clear that they were just concerned of the patients that had a reaction might be more sensitized. But again -- and therefore, they'd have trouble determining if the safety would have been different had they have a patient who never had the reaction as opposed to one that did that makes sense. So in terms of understanding what's going on, they felt it safer to start with a naive patient, and they want us to hold back on that. There's no new data that help change their mind. We have no new data. Regarding things that might cause them to have a more severe reaction, we think based on everything we have that they don't have something that we think would have occurred that way, but we can't prove the mechanism exactly, right?

And so without that proof, the agency wants to play it safe with regard to who they exposed in the beginning. So that's the story. There isn't anything new that came out, for example, that would have made that new change. It's just something they finally disclosed to us at the Type A meeting.

Okay. Makes sense. And then I just wanted to try to clear up the dosing you're expecting to use in the U.S. You said it's going to be different than Canada and the U.K. Is it that you're going to start with lower doses and work your way up? Or would it be higher doses here given you've treated some patients?

No, we're going to start a little bit lower. We think that it's still in a range that will load the patients sufficiently over 4 doses to get a treatment effect. But I think the FDA wants to be more cautious. And so we went along with what you have to do to get it going.

Your next question is from Yigal Nochomovitz with Citi.

This is [Carly] on for Yigal. We had a couple on Wilson disease. As far as the target patient profile for the Phase I/II/III trial, will you be focused on recruiting patients with established disease? Or is the focus on treating newly diagnosed patients? Just curious if you think there could be an advantage in terms of the magnitude of benefit with UX701 if you're able to capture patients earlier versus later in the course of the disease?

And then secondly, what is your expectation at this point for when we could potentially see some initial data for this program from the dose escalation part of the study?

Yes. Thank you. So the patients will be patients who have been -- or established patients who've already had chelators on. The problem doing naive is there'll be very few patients and it will greatly slow enroll, take a long time. I don't disagree with the thesis that treating patients early before they've changed would allow cleaner result. But we do believe that since the chelators remove copper by bringing it into the urine and what we're doing will bring copper into the bile that we'll be able to look at urinary copper and show that the copper is no longer ending up in the urine, oozing out of the liver or being chelated. It's going to be routed into the bile, right? Does that make sense?

So even though they're on drug, we can determine that the copper pathway is changing in the body and if ceruloplasmin is going up. So it won't really matter if they're established or not. We can see the difference happening. And the truth is there are so many more patients on established therapy would be -- would take us a long time to do it the other way. In the long run though, using naive patients, I think, would give you a cleaner result. And I think taking patients earlier in their course might change people's view of what's happening. Everyone believes it's just excess copper, but it's also possible that it's copper not being properly distributed as well. That's part of the symptomatic problems that you're seeing in Wilson and we think that gene therapy can fix both. So we're -- that's our focus based on the ability to conduct the study and the way we can measure them.

Now with regard to when data -- we expect to be able to get the patients enrolled in the dosing relatively quickly. I can't say specifically when that data would come out, but we will put out data -- it could be by the end of 2022, but I'm not 100% certain. It depends a little bit on Delta virus sites execution, but we're up and running products ready. Sites are getting set up. And we have, I think, a very convenient protocol that will be easy on patients. So I think it will help make recruiting easier.

Your next question is from Laura Chico with Wedbush.

Just on Angelman, you've commented in the past on the potential potency differences between GTX-102 and the Roche program, then there's also another program starting from Biogen. I'm wondering if we could just take a step back and how do you think about the key elements of differentiation in a clinical setting for all these ASO-targeted strategies? Are there logical points in which 2 agents might differ? If this is still kind of evolving, I guess what kind of aspects should we be focusing on as the clinical trials get underway here?

And then just one quick follow-up. With respect to the dosing in Angelman patients in the U.K. and Canada, I think in the past, you've spoken about getting them through the titration, getting up to a steady-state level. It isn't clear to me how many patients are actually going to be at that range and especially if we're going to be needing more like 3 or 4 doses. I guess I'm just trying to understand how do you think the response data might differ this time around versus the prior experience.

Okay. So on the competition, we know the mechanism for this all go is special. The region is -- the patented region is different. It's at the Five Prime in. I think Dr. Dindot has shown that it is far more potent than antisense oligos from other parts of the message in terms of knocking down the production of the antisense message and level of induction. I think each ASO could have varying levels of potency and penetration. But I think you want to have high potency across the brain and you want to bring the mRNA down -- I mean the antisense RNA down far enough to get significant induction of the message. And we've shown that we can do that with a relatively small amount of drug, and that effect goes across the whole brain to all regions.

So I think the difficulty will be how well the oligos are distributing and how well are they able to knock down. And because all ASOs have toxicities, it's pretty common, you've seen them in a lot of programs. There are drugs that have a lot of potential challenges. The potency will end becoming a question of therapeutic window. I do believe if we're able to successfully dose in the single-digit range, single-digit, low double digit and achieve the efficacy we saw that we'll greatly reduce the possibility of having systemic ASO side effects that you sometimes see or other neurological effects. So certainly, that's our expectation.

So on the type dosing and titration story, in the first set of patients, right, we're treating 2 in each group, and then we're going to add 4 and 4. So it will be 12 patients total, right? We'll have 12 patients. And from the 12, we'll get a read on where do they seem to be getting the efficacy and what dose are they at? Once we get that information, we're going to try to look at it and try to make sense of how is the optimum way to dose going forward. But what we said before, once -- if we see safety and we're getting good efficacy, we'll take that information and translate it into a dose that we'll use in an expanded cohort of, say, 30 or 40 patients. Those patients would get a starting dose based on the dose achieved during the titration and use that as a starting dose. Does that help you? And the idea is that those 30 to 40 would now have a little more standardized dosing regimen, right? Does that make sense?

Yes, I think that helps.

Titrate individuals, learn a little bit and then standardize it in the next group.

Your next question is from Dae Gon Ha with Stifel.

Congrats on all the progress. Maybe one question on Angelman and then a quick one on 401, Emil. So on Angelman, a lot of my questions have been answered, but just curious on clinical trials, you have one site in Canada, one site in the U.K. But just going back to the variability issue, will you have a centralized reading for the CGI to make sure that there's a confident vote in terms of the CGI benefit as well as some of the other benefits that are included?

And then on 401, just curious, given that one of your end point measures, the glucose control using CGMs, was wondering if the protocol entails any backups in case CGM starts malfunctioning or any validations for any significant variability that might occur during the study.

Sure. So there's really no way to do CGI centrally because it's an opinion of the physician there. And not everything they're doing in terms of valuing the patient could be centralized, turned into a video. We will -- the sites will be trained on the various end points. CGI, there's a global one, and then there's individual ones or individual domains, which have specific questions that they answer, and we'll try to -- we will do our best with our team to train -- the CGI team to train the sites to be able to do these tests. We also have a number of tests that are not CGI, right, that are -- that have basic scoring mechanism and are being administered by professionally trained psychologists, for example, as well as some other objective measures.

So we won't be relying on CGI to make all the calls. I think CGI will give you a gestalt feeling about the PI thinks. But as we noted when we presented this data before, you want to look at the other end points to show there's an underpinning, right? If having CGI without any underpinning, then the rest of the data would be suspicious, right? That someone's just wishful thinking, hoping they're better. But if they're really better, there should be something else happening. So we feel confident we can manage the question of objectivity by using the supporting data.

Now with regard to 401 CGM controls, we won't -- well, we won't have them continuously monitored. We're actually going to take windows of sample time and do the calculations for how they're doing. So if, for example, they had a probe and the probe fell off and stopped working, we would see the defect. We could take the period of time when they sampled, right, effectively and calibrated. And so they're going to put them on, calibrate, measure for a period and we'll use these sample periods. Does that make sense? Because if you expect to be able to use all the data continuously for months and months, right, yes, stuff is going to happen during that period. But we'll have periods of assessment that are in intervals of time. We're going to watch it more carefully, more closely. And we'll take windows of sampling that will be or is verified as operating correctly, calibrated correctly and receiving.

So that should help protect us against the kind of digital disaster you're talking about. And we've been thinking about that too.

I would also point out the devices collect locally and then they collect in the cloud, too. So it's actually double-collected. If anything, we could actually ship the device and do it. But that doesn't stop a patient from having a probe malfunction or something, right? So you have to include all levels of the problem, not just digitally, but on the physical part connected to the patient, which are probably the bigger source of questions.

But we've had good experience so far. We're getting a lot of good data from it from the patient. So we feel pretty comfortable we can get this to work without having a lot of trouble.

Your next question is from Liisa Bayko with Evercore ISI.

Just to clarify. So in the U.S., just back to Angelman's program, even though you're starting lower, can you still escalate up to the 14 milligram level?

We'll start lower and see how we do. And then we'll treat several doses at a lower dose, which, as I said, should still give us enough drug to show an effect. And then if we've established safety there and we have safety elsewhere, we'll then apply to the FDA to kind of titrate them up. But we're kind of taking baby steps forward in the U.S., get them tested, get some data and get comfort. But whatever happens in the U.S. will not control the future. We will have U.K. and U.S. sites more than one site doing -- with all that data together, will come again -- come up with a plan.

I think the agency is being very conservative. It's fairly typical for them. And we're just working our way to get going. But I don't think it's going to affect anything. It just may -- it will delay our ability to titrate those patients, but we will still have enough drug on board to know that it's safe and to know that it is doing something for them.

Okay. I see. Okay. That's helpful. And so there's no -- the max dose is basically not determined? Or is there a -- because you've kind of set it at 14 for the other.

For ex U.S., we agreed it's 14 based on the other authorities with 14 is the max. But in the U.S., we haven't set a max because we're not titrating. We're starting at a low dose. We're going to repeat that multiple times. And the FDA has agreed to that. So I'll get us started and start getting some data.

Okay. And then last thing is just on your gene therapy programs, the GSDIa and OTC. I know your end points are at 48 and 64 weeks. Do you need a greater safety databases than that? I'm just thinking back to BioMarin or -- to file? Or -- and kind of longer-term efficacy? Or can you really file on that when you reach the primary end point sufficient to file there?

Yes. It's a good question. I think the key thing here is that we will have 12 patients from the earlier cohorts in both programs that have been exposed that will give us some sense of durability. Now so far, it's looked durable. I think the challenge with BioMarin is they had some decline in activity and the FDA was trying to understand the direction. Our disease are much smaller, remember, than hemophilia. Remember, hemophilia has 100,000 patients in it. Our diseases have 8,000 to 10,000 patients, 1/10. So the size of our trial compared to the population size is actually substantially more, right? So we're taking a bigger sample.

In addition to the safety patient trial and the 12 patient one -- Phase I/II, it's very likely we might add some additional patients that we would treat that, for example, different ages or other situations that we would add to the package. But right now, we believe these numbers are fine. And frankly, we have not had any regulatory authority debate the size of the studies with us. And remember, the 50 randomized, the other 25 will get treated, too, right? So they all cross over. So you'll have 50 patients treated -- 52 patients treated. It's pretty a normal safety set for rare disease products. It's not an unusual one. For gene therapy, I think it's good.

Your next question is from Jeff Hung with Morgan Stanley.

Most of mine have already asked. So you recently indicated that patient identification for Crysvita had come back to prepandemic levels. Any additional update on that level since then, particularly given the Delta variant and recent increase in COVID?

Yes. It seems to be going still pretty well. I think it's just people have adapted to the new world, and so we're still doing a lot of virtual work and people are responding and getting things done. So I don't know that we've seen anything from Delta, and I'm not sure if Erik or Camille have something to say about patient ID and Delta at this point.

The only thing I would add is that the patient identification has been pretty consistent the last couple of quarters. And the other good thing to add about that is that we're finding more adult patients than pediatric patients and, thus far, have not seen any impact from the Delta variant, but it's very early.

Right. This is Camille. I would agree with that. And to Emil's point, the teams have been working virtually quite a bit as well as understanding more about the multigenerational aspects of the disease and finding patients in that way as well.

The next question is from Joel Beatty with Baird.

For Angelman, what gives you confidence that the changes you're making in dose administration will help reduce or avoid the lower extremity weakness. And part of the reason I asked is that since it wasn't seen in preclinical studies that may make it more difficult to test for.

Certainly. I think there's 2 things I would say, Joe, is that based on nonclinical studies, we know the therapeutic window actually goes pretty low. So we know that in the single-digit range, we would see efficacy based on what we're seeing in the animal. So it gives us confidence that we could stay low and still get the potency, right? There is a therapeutic effect we would expect.

What we know so far is among the patients that got the lower doses early in the course -- and there's only a few patients, right, they didn't seem to have the problem at all. And in fact, their lower extremities were improving prior to the event. So the only way they're not having an adverse effect, their actually lower extremity function was actually 1 of the first things that people were talking about that they weren't falling down. They're able to walk uphill. They're walking on grass and not falling down. These kids fall down a lot. So -- when they stop falling down, parents noticed, right, because it's kind of normal for them. So we think that those early doses, we're seeing an improvement even before the effects are.

So I think that's why we're pretty confident that lower extremity effects not happening at lower doses because they wouldn't be getting better if you're having a safety event at the lower doses. So the combination of those 2 features, I think, put us in a position to believe that the lower doses will get the safety and the appropriate administration. And we believe the Trendelenburg flush approach we're taking ex U.S. will optimize the delivery of drug and make sure it's not sitting down at a high concentration locally, causing the chemical effect.

And your last question is from Joon Lee with Truist Securities.

So just to clarify Emil, you said that you saw no antibodies or cells implying that it's unlikely to be an adaptive mean reaction, which sort of assuages FDA's concern on redosing. But have you ruled out the formation of any like tertiary structures or like self-complementary of your GTX-102 that may trigger innate immune responses? Because just curious what sources of -- that could be what FDA may be worried about?

From everything we evaluate, the only thing we're seeing is like localized inflammation. There's nothing systemic. So any structured thing you're talking about wouldn't necessarily just become a localized phenomenon, right? It should have been a systemic. If the drug gets absorbed, we can prove it to you. It's absorbed in the circulation, the significant concentrations and is going -- it will -- from the animal study, you know it will end up in the kidney and everywhere. So why would you have such a highly localized effect if you're really having this fundamental problem. So I really don't think there's anything about it that fits that story. And we've done a lot of work on innate immunity and otherwise.

Actually, I agree with you because you don't see any effect in the brain itself. It's just local. So it's not like you see it where the antisense oligo goes.

Right. You don't -- you only see it where the first place is applied. So it's why it's very concentration dependent. If it was a nucleotide targeting thing, which we -- by the way, they did some detailed work on showing it does not. But if it were, it should it be happening wherever the drug is. It doesn't. It is highly localized to just below T12 to L5, that area, not even up the cord, where you know the drug went there. So -- right? It wouldn't -- you wouldn't see such a weird localized phenomenon, I think. That's why I think if you look at a lot of the data, the ASOs cause a nonspecific toxicity thing. That's what this looks like to me, and it's concentration dependent. So we just need to stay below the threshold and we'll get it -- the specificity part is very potent. We just need to keep the other part managed.

And that concludes the Q&A session for this conference call. I will now turn the call back to Joshua Higa for additional or closing remarks.

Thank you. This concludes today's call. If there are additional questions, please contact us by phone or at ir@ultragenyx.com. Thank you for joining us.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Stay safe and well. Have a great day.