Ultragenyx Pharmaceutical Inc (RARE) 2022 Q2 法說會逐字稿

Good afternoon, and welcome to the Ultragenyx Second Quarter Financial Results Conference Call. (Operator Instructions)

It is now my pleasure to turn today's call over to Joshua Higa, Executive Director and Head of Investor Relations.

Thank you. We issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. Joining me on this call are Emil Kakkis, Chief Executive Officer and President; Erik Harris, Chief Commercial Officer; Mardi Dier, Chief Financial Officer; and Camille Bedrosian, Chief Medical Officer.

I'd like to remind everyone that during today's call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. Please refer to the risk factors discussed in our latest SEC filings.

I'll now turn the call over to Emil.

Thanks, Josh, and good afternoon, everyone. We're now 6 months into the year. And across the company, we continue to make meaningful progress against our goals. The commercial team delivered another solid quarter of revenue growth as they commercialize their products across the globe. We acquired the late-stage product, UX111 from MPS III or MPS IIIA or Sanfilippo syndrome and MPS disease area for which we have extensive experience.

In July, we bolstered our cash position with a substantial royalty financing that also enabled us to acquire genetics and gain full control of our important Angelman program. These activities, along with progress across all of our early and late-stage clinical programs, put us in good strong position over the coming years for exceptional value creation. I want to touch on a couple of pipeline updates before turning the call over to the other leadership team members to provide more detail on the quarter.

Starting with GTX-102 for Angelman syndrome, we reached a similar moment in this program with the acquisition of Genetics and now a full control over the GTX-102 program. As we said on our call last week, we are all in on Angelman syndrome with the exceptional signs regarding the target region and with the excellent data we've seen to date in Phase I/II study. It's rare to see a significant improvement in development function as we have seen recently. This is something I haven't seen in 30 years of drug development.

Last week, we shared data that demonstrate our ability to safely dose patients with GTX-102 at up to 10-milligram doses. We observed meaningful clinical changes in a group of children that are severely impacted by the disease due to the deletion of the maternal UBE3A gene region. This severe mutation always predicts a very slow rate of learning on natural history as Dr. Berry-Kravis, one of the principal investors on the study said on our call last week.

These early clinical responses across multiple domains and multiple clinical measures have been independently confirmed by clinicians therapists and patient families. We observed significant improvements for some of these children and expect to further enhance these effects by increasing loading doses and providing more time in the study.

One specific measure I would like to highlight is the Bayley Scales of infant development or Bayley. I'd like to remind me that Bayley is a standardized measure used to diagnose (inaudible) in childhood is administered in the clinic by trained therapists, not the investigator and Bayley is often used in clinical trials with a cognitive language and motor development in children.

In this study, we're using the latest version of Bayley, which allows for a evaluation of children with delays who exceed the Bayley age limit of neurotypical children. The extensive historical data with this measure allows the ability to set statistically significant threshold for improvement when evaluating individual patient results and showing they're different from error or variation. We know from now through history that score of this measure do not meaningfully change for patients with Angelman syndrome, particularly those with deletion type mutations. Receptive and expressed communications subscore is an important part of Bayley, particularly for patients with Angelman syndrome with lab communication skills. Across the patients in Cohort 4 and 5 been treated for a minimum of 128 days, 7 of 9 children showed a statistical an improvement in either daily Bayley receptive...(technical difficulty)

Operator, it seems like we might have lost Emil's audio connection. Can you confirm if we're still out there?

One moment. I do saw him -- show him still connected.

I'm here, Josh.

Go ahead, Emil. Continue.

All right. Receptive press communication is an important part of the Bayley, particularly for patients with Angelman syndrome who lack communication skills. Across the patients in Cohort 4 and 5 have been treated for a minimum of 128 days, 7 of 9 children showed a statistic significant improvement in either Bayley receptive or expressive communication score as of their most recent evaluation. This compares favorably to 2 -- 3 of the original 5 patients who were treated in the U.S. who have statistically significant change in the same store at day 128.

Our results from the original 5 patients also included patient reported results that were well past the day 128 time point since many patients were 4 months past their last dose at the time of that data release. The results of this objective third-party measure, combined with the Bayley findings from natural history studies give us confidence that we are improving communication skills in Angelman syndrome in a meaningful manner. The full potential improvements of Bayley communication measures will likely depend on the following patients for a longer period of time and starting with higher doses.

In fact, all 3 of the ex U.S. patients to reach the day 170 evaluation in the current study improved in both receptive and expressive communication beyond their day 128 results before receiving their first maintenance dose. We've also amended the protocol in the U.K. and Canada and have begun dosing patients in the additional dose selection cohorts with 2 patients dosed at the higher of 7.5 and 5 mg dosing starting doses for the loading phase that we've already used to treat patients in Cohort 4 and 5.

One other important step forward, the first patient from the originally treated U.S. cohort was read out last week in Canada with no reported drug-related safety events. Our team is also now working to file an interim clinical study report with the FDA to support discussions that would allow for a harmonization of the U.S. and ex U.S. protocols. With all these components coming together, this is the right point for Ultragenyx to lead development of this program. We have the right expertise and capability to ensure our robust clinical program and regulatory strategy for GTX-102.

The history of development of GTX-102 is an inspiring story for our team. It's a story of a group of parents who defies the odds and their relentless pursuit of the right science and search for the right partner. I firmly believe the right size was discovered in Scott Dindot's lab, and we now have an opportunity to bring one of the first-ever treatments to the Angelman community.

In the second quarter, we also announced this agreement to take on UX111 in AAV gene therapy for the treatment of MPS IIIA or Sanfilippo syndrome. MPS diseases and gene therapies are a familiar territory for us, and we believe that we can make a meaningful difference for the Sanfilippo community.

In the past, we worked closely with the FDA to establish the use of alternative trial signed to achieve approval. And we believe the UX111 data are strong and support the use of the trial approval pathway. Our team is hard at work on the filing strategy for our discussion with the agency, and we look forward to providing updates later in the year.

With that, I'll turn it over to the team to provide updates on their functions.

Thank you, Emil, and good afternoon, everyone. I'll start my section discussing our team's continued success commercializing Crysvita before shifting to Dojolvi. For Crysvita, within the profit share territory, we continue to find new adult and pediatric patients more than 4 years since launching the product. As of the end of the second quarter, over 2,600 patients have been prescribed Crysvita and more than half are adults.

In the U.S., we have penetrated almost 40% of the pediatric market and approximately 15% of the adult market. Recall, finding pediatric patients is similar to many other rare diseases, where the treatment is consolidated into centers of excellence. This contrasts to the finding adult patients who were mostly being treated by community-based physicians scattered across the country. Our team is leveraging a mix of traditional in-person meetings along with innovative and interactive virtual programs to educate health care providers and patients as well as enhancing our digital online education presence.

We also recently launched education initiatives to specifically target nurses and physicians assistance that often work with caregivers and the entire family to develop a comprehensive treatment plan for patients. We believe there is meaningful opportunity to steadily grow the Crysvita franchise with new identified patients as well as continued strong adherence within existing patients even 4-plus years into launch. We will continue our efforts as we look towards transitioning their commercial responsibilities outside of the medical genetics to Kyowa Kirin in April 2023.

Outside of the profit share territory, primarily in Latin America, we are now seeing the results of our early launch efforts. In the second quarter, revenue grew 32% versus the first quarter 2022. And in the first half of the year, we have already surpassed the total revenue generated in this region last year. In Latin America, there are over 250 patients on reimbursed therapy. This will continue to grow as we continue expanding in Brazil and as we gain momentum from our recent launches in Colombia and Mexico. In Argentina, we continue to support named patient requests and look forward to gaining regulatory approval over the coming quarters.

Across all of the Ultragenyx regions, Crysvita revenue in the first half of 2022 grew 37% compared to the first half of 2021. Based on our performance to date, we are reaffirming our 2022 revenue guidance in Ultragenyx territories of $250 million to $260 million.

Turning now to Dojolvi and beginning with our efforts in the U.S. We continue to see steady growth across all of the leading indicators as a result of the broad use in key metabolic genetic clinics across the U.S. One of the more promising statistics is that approximately 90% of all cases are approved for reimbursement in less than 30 days. This is an even faster turnaround time than we saw for Crysvita at a similar stage of commercialization.

The team is also moving beyond the major centers for inborn errors of metabolism and is expanding the call coverage to other high potential health care professionals. They are leveraging machine learning and artificial intelligence to generate new leads similar to what we are doing for Crysvita. Outside of the U.S. use of Dojolvi continues to add new physicians and patients through our named patient and early access programs in Europe.

In France and Italy, there continues to be meaningful demand through our named patient program, and we are starting to respond to requests for named patient programs across other countries in Europe. In Brazil, the health authorities approved Dojolvi for the treatment of both pediatric and adult patients with LC-FAOD late last year. We are continuing to work through the process to get full reimbursement approval, but this can take a little bit of time to complete.

At this point in the year, we are reaffirming the guidance of $55 million to $65 million that we put out in January. I look forward to providing another update on this and other commercial programs next quarter.

With that, I'll turn the call over to Mardi to share more details on the financial results for the quarter.

Thanks, Erik. Earlier today, we issued a press release that included financial results for the quarter, which I will briefly summarize. Company revenue for the 3 months ended June 30, 2022, totaled $89.3 million.

Crysvita revenue in Ultragenyx territories were $64 million, including $51.6 million from the North American profit share territory and net product sales of $12.4 million in other regions. Total royalty revenue related to the sales of Crysvita in the European territory was $5.4 million.

Dojolvi revenue for the second quarter 2022 was $13.5 million. Mepsevii revenue for the same period was $4.9 million. Our total operating expenses for the second quarter of 2022 were $230.9 million, which includes research and development expenses of $154.5 million, SG&A expenses of $68.1 million and cost of sales of $8.3 million.

For the second quarter ended June 30, 2022, net loss was $158.2 million or $2.26 per share. During the first half of the year, there have been a number of noncash items that have impacted net loss. This includes approximately $65 million of stock-based compensation, $20 million related to the decline in fair value of our equity investments and $13 million of noncash interest expense related to the Royalty Pharma transaction, these are offset by approximately $10 million of noncash revenue also related to the EU royalty.

We ended the quarter with approximately $706 million in cash, cash equivalents and marketable securities. Subsequent to the end of the quarter, in July, we raised $500 million in non-equity dilutive capital in a non-dilutive -- non-equity dilutive capital transactions with OMERS Capital Markets for the sale of a portion of our North America Crysvita royalty. We also exercised our option to acquire genetics and paid $75 million in July, which allows us to take over the development of GTX-102. We are well capitalized with over $1 billion in the bank, and we are making operating decisions to stage spend on our development programs and slowing headcount growth in order to manage our burn.

As we have said, 2022 is a peak burn year for us as we have initiated multiple late-stage clinical programs, in-licensed Evkeeza, completed the acquisition of Genetics, and are completing the build-out of our gene therapy manufacturing facility.

In 2023, we don't anticipate additional onetime events of this nature or large capital expenditures and we anticipate SG&A will decrease compared to 2022 as we transition U.S. and Canadian commercialization responsibilities for Crysvita to KKC. We will continue to invest in our clinical and preclinical programs as discussed, and the overall net effect across the company then will be a decrease in net cash burn.

Now I'll turn the call over to Camille.

Thank you, Mardi, and I too wish everyone good afternoon. This is truly an exciting time for clinical development at Ultragenyx. We have 7 programs in the clinic, including our ASO for Angelman syndrome that Emil discussed earlier, an mRNA for glycogen storage disease type 3, 4 late-stage gene therapy trials and a Phase II/III monoclonal antibody for osteogenesis imperfecta. In my section on today's call, I will focus on this antibody, UX143 or setrusumab. We are developing for osteogenesis imperfecta.

Osteogenesis imperfecta, or OI is caused by a defect in collagen that results in significant bone weakness and bone fragility leading to fractures, deformities, stiffness and pain. Currently, there are no approved therapies for OI. As a company, we have spent a lot of time studying bone biology with XLH, TIO and our preclinical candidate for OI before we did the deal for setrusumab.

One of our key insights is that OI is not simply an issue of weak collagen. It is excessive bone resorption and the inadequate production of new bone triggered by this abnormal collagen that leads to low bone mass. What we have found is that if you can increase bone formation and reverse the excessive bone resorption, you can improve bone strength even with the abnormal collagen and improve fracture prevention. We believe this insight gives us the opportunity to change the future for patients with osteogenesis imperfecta.

I won't take time today to go back to all the details of the Phase IIb asteroid data that Mereo has already presented. I do want to remind you of a few of the most important points. This trial was a large randomized blinded study of 90 adult patients with OI being studied across 3 different dose levels. After 12 months, the results indicated dose-dependent and statistically significant effect on bone formation and bone mineral density.

Furthermore, the substantial bone mineral density improvements occurred across multiple anatomical sites. And the observed substantial bone formation, we believe, is a very important factor in improving Bone's strength. All of these findings were accompanied by a favorable safety profile. Similar to how we developed burosumab for XLH when we took over development from Kyowa Kirin. We are taking these impressive setrusumab results in adults with OI and looking to further improve upon them for pediatric patients.

Currently, we are enrolling and dosing patients with OI between the ages of 5 and 25 years with the goal of using the serum bone formation marker P1NP to optimize the dose. Once we have determined the pediatric dose strategy, we will transition directly into Phase III, evaluating the benefit of setrusumab on fractures.

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

Emil, we're having a little bit of a hard time. I'm happy to finish this out.

No, I'm fine. I just problem with my phone. But I'm fine now. Thank you. So thanks Camille. Before we shift to the Q&A portion of the call, I'll provide a quick reminder of the key upcoming milestones. For UX143 in osteogenesis imperfecta, we'll continue enrolling patients in the Phase II portion of the study and expect to provide an update on the dose strategy for the Phase III portion around the end of the year. Separately, we expect to initiate a study in children under 5 years old in the second half of the year.

In our gene therapy pipeline with UX111 for sample IPO, we are continuing to follow patients who have been dosed in the pivotal study and continuing to evaluate the feasibility of filing for approval based on convincing biomarker data. We'll continue enrolling the Phase III for DTX401 and first stage of the UX701 study. We also expect to finalize start-up activities for DTX301 and begin dosing patients later this year.

On the map action side, we will continue the build-out of our facility in Bedford, Massachusetts, which is on track to begin producing material in the first half of 2023. For UX053 and Glycogen Storage Disease Type 3 in the second half of the year, we expect to share single-dose data from the first part of the Phase I/II study and to initiate the repeat dosing stage.

For GTX-102 in Angelman syndrome, we're off to continuing to enroll Cohort 6 and 7 at 7.5 or 10 milligrams outside the U.S. Our expectation is to provide the next update one seems determined an optimal dose and have gathered substantial data from the expansion cohort. All of these programs create a distinct opportunity to make meaningful difference for patients that are the reasons we believe we have one of the most robust, diverse, late-stage pipelines in rare diseases.

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

(Operator Instructions) Our first question comes from Gena Wang of Barclays.

I have 2 quick questions. First one is on Crysvita. Just wanted to make sure I heard it correctly that you penetrated 15% adult market. If that's the case, I'm wondering how would you expand the adult market share and how active you are to leverage family tree.

And the second question is regarding the Angelman program. I think since early this week update, I wanted to know that the expansion cohort, would that -- would still be a definition, the clinical benefit will be 2 score in 2 domains? And are you willing to open to dose higher than 14 milligrams?

Okay. Let me answer the second one first. And then, Erik, you can touch on this Crysvita adult speed penetration question. So on the expansion, we are still using the 2-plus domain to set a criteria for titration, and we expect that we're going to be very close to where we need to be. In fact, we're going to be looking at all their efficacy results, including the longer-term results often tell us a little more about where we're at, but that's what we expect. We don't expect to have to go beyond 14, frankly. I think we're very close.

So right now, I wouldn't speculate on that. I don't think it's going to be necessary once we start loading it this next cohort level. But we'll want to make sure we do get the dose right. So we'll continue to evaluate what we're seeing both in the CGI score, but also in the quantitative scores and also over longer periods of time to make sure we're getting to a dose level that will provide us a substantial meaningful clinical benefit that we could study in Phase III.

Now for the penetration, I think we've been talking about the challenges of finding adult for Crysvita, but the good part of them we find them, they do get prescribed. So Erik, maybe you can touch on the issues she's asking about with regard to penetration in the adult market, 15% versus Ps where it's much higher and what our expectations are and what the challenges are?

Thanks, Emil. Yes, you heard correctly, penetration is 15% in the adult market versus 40% for the pediatric market. And the adult market represents about 2/3 of the overall prevalence. So there is a significant growth opportunity with adults. It just takes longer to pull through because as I stated, many of these patients, a loss in the system of community physician is being treated for signs and symptoms related to XLH, but not necessarily XLH excluding the XLH.

But one thing, as Emil stated, when we do find them, we're able to convert them at a very high rate and they stay on therapy. We do offer genetic counseling which does pedigree family tree work. And the work we've done to date, we think there are about 2 to 4 family members for each XLH program. So for each patient, that's been identified there around 2 to 4 on average that we're finding when patients take advantage of genetic counseling and family tree analysis. So that is something that we do leverage.

Our next question comes from Joel Beatty of Baird.

With the new cash on hand from the recent deal, what are your plans for this cash?

Well, I think maybe -- Mardi, do you want to answer?

Sure. Yes. Thanks, Joel. So plans for the cash are -- well, we used a little bit already to acquire genetics, of course, with the $75 million. But really, the cash on hand and now that we have over $1 billion in the bank, we feel really good that this is going to fund our development program and really put us on this great pathway to profitability. A little bit more refined. We have some very meaningful milestones over the next few years.

And clearly, the cash will get us through those milestones. It also allows us to maintain flexibility in terms of how and where we operate. And -- but I should balance that, and I think I said this in our script as well, is that we have a lot of prudence in employing a lot of discipline in how we spend it. So we're managing our headcount growth and slowing the rate of growth there.

And I should say net cash use, just to reiterate once again, this is a peak year for a number of onetime expenses, acquisitions and in-licensing and the start of a number of programs, et cetera. And we look forward that the net cash use will continue to decrease over time. So it puts us in good shape, Joel, moving forward.

Our next question comes from Dae Gon Ha of Stifel.

Two from us. One on 102. Emil, when the commentary or I guess guidance for the next update is contingent upon substantial data. I guess given that it's more of an individualized dosing on a per patient basis, can you maybe walk us through what that substantial data definition would be, also because longer-term duration of follow-up seems to, I guess, correlate with better functional improvements?

And then second question for Mardi. As we think about that, I guess, $1 billion plus and the net cash burn seemingly coming down. I guess can you maybe walk us through some of that sensitivity like what kind of factors into, say, a cash runway of 5 years versus a total profitability?

Sure. I'll start, Mardi, and you can deal with the cash question. So on what we're talking about in our next data output, I think we want to be clear that we're not going to just release 3 or 4 patients worth of data at the next cohort as the next plan.

We'll be operating the dose escalation cohorts, we'll then expand the cohorts and treat a larger number of patients. And what we said is we'll come out when we've treat enough patients to give us a substantial efficacy result that we can speak to and that people can be confident in rather than small bits of data going forward. We think the major update was very important because it put forth to clarity that we can dose this drug, and you can do it without having drug-related safety events and that we are seeing efficacy. So that means we're in the game and we have an opportunity now to demonstrate the kind of lens meaningful results that we saw before, and we're clearly seeing, as we've talked today, quantitatively.

But the next time I want to talk about, I want to make sure we have a substantial amount of data that will provide confidence to all that we are in the right direction toward -- heading toward a Phase III.

Yes. I will comment a little bit more on the runway for you. We don't give specifics about when will be cash flow positive. But what we did say, just to reiterate that this has put us on the pathway towards profitability. And given our growth in revenues and our increased number of development.

Moving forward, we do see our net cash use coming down, as I've said many times. But those development programs also give us a lot of flexibility and levers to pull if we need to manage our net cash burn moving forward -- has a lot of flexibility and levers to pull if we need to manage our net cash burn moving forward and to get towards our ultimate goal would be to be cash flow positive and towards profitability.

So I don't know, Dae Gon, if you want any more specifics. We're not going to give a year specifically. But importantly, we feel like we're in a good cash position, prudence going forward, levers to pull to help manage the cash flow going forward and increasing revenues. So we feel like we're in a good position financially to move forward.

Our next question comes from Tazeen Ahmad of Bank of America.

Minor on Angelman's. So Emil, when do you anticipate actually discussing with FDA about trying to align the protocol that you've got ex U.S. with the U.S. And as it relates to dosing, do you think that ultimately you may want to try to this dose to where you had been dosing originally just at a slower titration. So do you think you could want to go to, let's say, 36 mg again? And how long could that take if that's something that's on the table?

Yes. Our plan on the U.S. alignment serve a top priority. We have enough data now we think we just -- we were asked to provide it in the CSR format, which we're doing, which requires a bit more effort. We're doing that effort right now. We'd hope to get that submitted and get the U.S. patients going this year because it would certainly help us as we expand. So that would be our goal to get them going this year and to be part of that expansion, that's our plan in the U.S. I've had numerous conversations and we are continuing to talk with the division in various ways and believe we can get that done.

Now with regard to the dosing, I don't think we need to go to 36. I think we already -- remember, that number originally was what happened was based on single dose data in the monkey to knock down, you can get to a single dose but you don't need it. You can get to near maximal knockdown with giving the equivalent of 10 milligrams 3x. So I honestly don't think it's necessary to get there. I don't think we've loaded quite enough yet.

But I also would say, if you look at the quantitative data, we were just talking about in our deck, I think you'd see it actually from a quantitative data with the Bayley, we're actually at a very similar place to where we were. So I don't think we're so far off, I think, getting into the 10 range is going to get us where we need to go. Once we give multiple doses of it. So right now, I would not -- I don't think that's necessary. I think we can get there where we are. And therefore, just we need to give it multiple times, and we need to give enough time to act, but I don't think going up to 36 is necessary.

Okay. And just to clarify about your discussions with FDA, will you need -- do you feel like you'll need to have more confidence on what the final dosing regimen should be collectively information that you're collecting now before go meet with FDA? Or does it not matter?

No. Our feeling was we have enough data to enter the clinic and include U.S. patients in the dosing program that we're doing right now. that we can dose at the levels we're at, that we're doing it carefully. We can monitor and not seeing any drug-related safety events. So the point is to get the U.S. involved in that dose determination phase, not afterwards.

So I don't think -- I think there are concerns were a number of questions about certain assays and things or, let's say, certain biologies, which we've now shown do not occur. And the fact that we've been able to dose safely with the new administration strategy, I think the number of elements of what we have should be sufficient to open the door to including the U.S. in the dose titration part of the study as well as going forward. So we're going to work to get that done as promptly as we can and get those patients in the U.S. in the program this year.

Our next question comes from Cory Kasimov of JPMorgan.

I was just wondering if you could provide any incremental color on the redosing of the original 5 Angelman patients around their dosing paradigm? And will their data be included in the next readout?

Yes. So I think it's a very important thing. We've been pursuing this because those patients wanted to get redosed. So we wanted to give them an avenue given that we're unable to do that in the U.S. at this point in time. We're able to get one good site for us in Canada to dose. And what they're doing is they're dosing at the same cohort 4 cohort 5 regimen, right, which is a 3.3 dose for the young patient, and it would be 5 dose for someone who's 8 or older, all right? So it's going to be that same ladder of dosing that we used in cohort 4 and 5. That's what they're going to get started with. So the first patient has been dosed.

Well, second one is signed up. We'll try to get as much as we can done that way until we hopefully get the U.S. open and get the patients actually back in the U.S. But as we know, the first patient hasn't dosed safely did well, did not have a problem, no drug-related safety issue. So which is what we expected. There was no reaction to the drug based on a history of exposure. So -- which was what all the biology said would be true. So we're happy that got started. I'm sad though, that it's taken so long to get these kids back on because they're just aching to get back on because all the stuff that was -- the benefit they saw before, they just -- they want to get back to it. So we got to get it to them as soon as we can.

Our next question comes from Yaron Werber of Cowen.

I've got 2 quick ones on Angelman and one actually on 053. So just on Angelman, I assume the FDA just wanted to look at the clinical site reports, right? They're not necessarily waiting for Liz Berry Kravis to have that natural history from the 4 controls. And then secondly, if you do -- if you're considering obviously doing an MDI as an endpoint also as opposed to, let's say, CSIAS, once you choose the dose, is there a plan to then expand the study and maybe have a placebo just to kind of have some experience of that before going to Phase III? And then I have actually a question separately on 053.

Okay. The control for not really part of the safety story, they are part of assessing efficacy. And those controls have gone through their day 120. We just didn't have that data at the time of the release before. So we can't include that information, but I think the more important information was the dosing administration safety in detail and CSR, complete clinical study report format, GCP compliant, reg compliant format, that's what we're asked for.

So we'll be doing that on the ex-U.S. data, and we'll provide the U.S. an update. But I think that the ex-U.S. data is more important in the state. And the control information will be in there.

With regard to the MRI is a multi-mine responder index, and we'll look at multiple domains, we'll analyze the data we have by the method as we get there. But the expansion we're planning to do once we hit our dose will help us get a little more insight into the dose and how good it is and how have we really optimized it for all types and maybe provide us more color on the youngest patient versus the oldest patients and how the dose banding should be really conducted for a trial.

With regard to adding a control group, I guess there's a lot of interest now in what's the mandate of change seems to be the theme. I'm not sure why there's so much interest in it. I think we could add that kind of control group, but it does make things complicated.

I think the question on your on is whether you believe the amount of data or the size and magnitude of effect we will have is a credible real effect or whether you're believing that it's just placebo. And I would say to you, the magnet effect we're seeing is clearly beyond placebo and we're comfortable that it is. But as we get to the optimal dose, you allow more data to say about what that effect is and its magnitude. And our hope to be that it would be clear. If a control group would help, we can look and think about that, but right now, I think we're looking for, hopefully, an incontrovertible large effect, which is, I think, where we're on track to do.

Right. Yes. I mean I guess, look, if it's a 2-point difference in 24 weeks, I mean it's one thing if it's 0.9 or 1.1, I'm just making numbers up, random numbers, obviously. And it's obviously a little bit of a different discussion. Also not just for us, obviously, for regulators, more importantly. And then for you in terms of how do you bend power a new endpoint for Pivotal?

Well, I'm jumping in. It looks like your phone might have clicked off again.

Yes. Unfortunately, my phone when it goes on whatever sleeps screens at remote, it basically turns off it appears. So sorry for that. So in any case, I don't know when you lost me, but I don't think -- I think we should be able to seeing we should be seeing substantial data that would make us confident that it's not placebo.

And I actually think things are seeing already are -- you rarely see -- I've seen -- I've run the Bayley and all kinds of blinded placebo, open-label trial. I never seen things move beyond the variability of the test before, right? We're seeing movements that are significant beyond just the variation of the test already. And I think that just is not something you see normally.

So I'm confident we're well past that. And I think the quantitative data are actually a little more meaningful because they're an absolute change rather than a feeling about how they're changing. So we're excited about what we're seeing, Yaron. I don't think we'll need a placebo to make the call for Phase III, but I understand the question, which is how confident will we be that what we're seeing is a real effect that will sustain withstand a placebo-controlled trial in your sense is having some control might actually help us making that call. So I appreciate that point.

Yes. Because I mean it's a placebo, if you look at IBIT data, which you know well, really did less than a point at a year. So in anyway -- maybe just a quick question. I apologize for all these questions on 053, for GSDIII, you're dosing IV Q2 weeks -- so is there a chance to think about going subcu? And then secondly, just given the tolerability so far? And I know it's very early, given it's in the mRNA therapeutics.

It's very early. I don't want to go into the details yet. It's very early in the program. But our expectation more likely to go once a month in dosing, not every 2 weeks. That is the limit edge of this thing. Our plan is to be once a month. We think once a month will be enough because in this case, we need to clear the abnormal dextrin and limit dextrin storage material.

Once you clear it, it doesn't accumulate that fast. If you can clear it, it even doesn't map the drug has faded away after 2, 3 weeks, you still will be okay for a couple of weeks and then can clear it again. Does that make sense? You don't have to be completely clear continuously to get the benefit of the drug. So we're looking for monthly, and we wouldn't necessarily go to subcu, but certainly, it hasn't done subcu before.

Our next question comes from Salveen Richter of Goldman Sachs line.

This is Tommy on for Salveen. We have 2 on Angelman. So the first is that it seems based on the interim update that the younger patients benefited more, and we're wondering how much of this do you think might be due to the drug needed to be given earlier that patients would develop naturally like more quick at a younger age versus when they are older?

And secondly, about the Phase III study, do you have any guidance on when this might begin? Would you wait for the different geographies to align under the same protocol? Or could see a similar design as in the Phase I/II, where the dosing protocol is different from geography?

Sure. Well, from the first question, I think it's pretty clear, even from the first 5 -- original 5 patients currently now that the younger patients benefit more rapidly, certainly, that part is clearly, they definitely get better more quickly I think it's also a factor of potential of dosing as they're getting a dose that for them is higher than it was for the other. So in the current cohort, the 4-year-old really looked the best, but the 4-year-old is getting a dose that relatively higher than the kid who's 7 years old, right, who is much bigger.

So I do think it's just an indicator of both the dosing. It could be age and being earlier, but we've seen improvements in even the 13-year-old showed some nice improvement. So I don't think age is going to stop us completely from getting good effects. I think we're going to see it. It may be in different domains, but I do think we're going to see good effects in all of them I think we just need to make sure the dosing is optimized and not just flat. I think it's going to have to be adjusted for age.

Now with regard to the Phase III, our plan would be to get the U.S. involved in the Phase II study, certainly would need a synchronized global Phase III, we would not want to have a separate SPUS in U.S. Phase III program. I don't think that's a smart move. We think we can get the U.S. on board. I think they're being conservative at the moment, but I think we can provide the information they require and get them on board and get the patients going in Phase II and ultimately Phase III.

Our next question comes from Maury Raycroft of Jefferies.

Jean in on for Maury. Just how much time gap is needed to enroll the next group of expansion patients after the first 2 patients have been dosed in cohorts 6 or 7?

Okay. So the way the protocol work is the first 2 patients in each cohort get their 2 doses and we assess where they're going. If they are -- should be titrated, they will get titrated then right away the next cohort will begin while the first 6 and 7 are getting their second 2 doses, the next cohort will begin right away. So there's a little faster turnaround now in terms of dosing up. Does that help?

Okay. Makes sense. And then a quick question on the Wilson how is the pace of enrollment? And do you think you can get the Stage 1 data and selection of the state to pivotal by year-end or more like early or (inaudible) upto next year?

Yes. As we've said before, the in the 701 or Wilson in program, the FDA required a staged enrollment, which was separated by several weeks before -- between each patient. So there wouldn't be possible to get through all the enrollment in that time frame and get there. Enrollment has begun, and we are enrolling patients, but it would -- it's basically stretches out the time of the enrollment for the Phase I part of the program significantly. So it won't have data on Wilson by year-end. We'll provide an update when we can. But we are out there, we're moving forward. So it will take a little bit more time before we see Phase I/II data from 701.

Our next question comes from Joon Lee of Truist.

Regarding GTX-102, I appreciate your comment that 10-milligram in preclinical models get you near complete knockdown of the antisense. But do you have any evidence that it's actually leading to a meaningful UBE3A expression? Correct me if I'm wrong, but I'm not aware of any UBE3A expression data in animal models that's been publicly disclosed.

Yes. Joon, it does induce or we wouldn't be talking about if it didn't. It induce UBE3A expression, particularly for us because our sequence homologous to monkey so we can get a direct result for monkey unlike other situations. So because you can get a direct result, we also have turned out, there is a single nucleotide polymorphism in UBE3A and monkeys, which will help us in some -- some individual monkeys to distinguish between the UBE3A coming from the maternal from the -- versus the paternal chromosome. So in those animals, we can look for the SNP in the maternal expression of the gene, right? And that allows us to determine that we're getting paternal expression in the monkey. And we have, in fact, verified UBE3A expression in -- at that dose level.

Can you quantify -- can you put that in a more quantifiable context?

Well, what happens when you get that expression, you end up getting auto regulation so you'll end up getting very similar level between maternal, all right? So they're like 50-50.

Our next question comes from Liisa Bayko of Evercore ISI.

Just on Angelman. Emil, I didn't completely understand or it wasn't totally tracking with the Bayleys versus CGI and why that's so much more convincing and kind of like deciphering out the noise. Can you maybe just speak to that again?

Well, the CGI improvement scale is a relative scale where (inaudible) is minimal, plus 1, plus 2, plus 3, it's very sensitive because they're trying to compare before to after straight up. And usually, the quantitatives are harder to move because they require a therapy to ask and do conduct specific things that the kid has to do in order to score, right, in order to move. The (inaudible) tends to be more rigorous and a stronger measure of absolute change, whereas the other test can be somewhat dependent on the investigator and their view of what minimum is or what moderate to what...

Understood. Okay.

Yes. So when you're trying to look across investigators in the study, I think looking at the quantitative kind of gives you an objective how much was different, right? And that's why I think it's a little better. That's why we're showing this comparison of quantitative because we're trying to show, okay, with different investigators, the Bayley is the same test done the same way by different people, but it's still a therapy is doing the test, and therefore, I think, is a more comparable way of comparing sites.

Okay. And then with the Bayleys, if it's kind of that, as you said, more quantitative as this, I'm just trying to think as the kids are just like naturally, do they -- I mean I'm sure they're acquiring skills just at a lower rate. Is that -- how does that factor into your kind of thinking on sort of the background rate of change on the Bayley?

Sorry, Emil, you're on mute again.

Sorry. My phone went off. The -- yes. So the Bayleys been studied in the natural history. It doesn't change. I don't know, Camille, if you have anything to say about the Bayley, but I thought it was in the number of natural history programs and not changing. None of the development really changes in the severity.

Yes, that's correct. Thank you, Emil. Thank you also, Liisa, for the question. The Bayley, in particular, communication is quite flat over time, and in particular, in individuals with the deletion mutations, and those are the patients we're studying at this time. There are a number of references that illustrate the relative flatness of improvement in these measures and we actually have one of those references cited in our corporate deck, and we're happy to follow up with you also on that.

Okay. And then just to now take this into Phase III. So I think you were thinking about a multi-domain kind of endpoint. So would there be some combination of Bayley and CGI and other things? Or how should we be thinking about that?

Yes. Well, the multigene respondents would use only quantitative measures like Bayley. So the Bayley receptive expressive could be a communication domain, and we look at those 2 and measure communication change, we could use Bayley for the gross motor change as well. We could do a different measure for sleep like an Angel severity score for sleep, et cetera. So there'll be a quantitative test for each domain, and we'll have to set a minimum amount of change in order to be considered clinically meaningful in order to do the multi-immune responder type approach.

The value of that, of course, is that there is some heterogeneity we can capture benefit across multiple domains. It's a lot more powerful. This type of analysis is android type analysis is really tenfold more powerful than other types for many of these complex multi-domain disorders?

Okay. And I have 2 more questions. Is that okay? They're relatively quick. One is beginning questions on setrusumab and like where it kind of fits into the treatment paradigm given there's some other kind of treatments that can be used? Can you maybe just explain how you're thinking about the target product profile and kind of where would it fit in, in the context of agreement today?

Yes, I'll just do that. Look, I think there's a lot of antiresorptives that are bisphosphonate and related compounds that have an effect on resorption, but they don't improve bone production. Therefore, they aren't really improving bone strength and trying to reduce the amount of access absorption. In the 5 randomized studies, only 2 of them were positive and the magnitude of effect of the 20% reduction in fractures. So it makes patients feel better, but it doesn't solve their fracture problem really. And so we think that there's a lot of room to improvement there.

With regard to other biologics that are maybe looked at, I think, setrusumab or the antisclerosins really by far the best in terms of what phenotype of inducing bone cells to become bone-producing cells last to (inaudible) and to stimulate the production of bone. The combination of those 2 is phenomenal, but it also is antiresorptive. So it's really working on both sides of the story, and I think that a powerful effect. It's not true for some of the other biologics. And we looked at all of them and including denosumab has been pulled out, stopped the program. And I don't think the other molecules have anywhere near the biological potency that this one does. So I'm pretty confident that it stands above the others at this point.

Okay. And then just final question is shape of R&D for this year. So I know you've part of this year? Or should we -- will it be continuing to increase from here and then like lower as we go into next year? Or how should we think about -- I know you said you were commenting on starting a lot of studies. I just wanted to understand the shape of the R&D spend.

We have a lot going on. We're trying to manage it. And I think Mardi can give you a sense of what R&D...

Yes. Liisa, it's Mardi. We don't -- we talk about OpEx in general and our net cash use. And I gave some examples that we believe SG&A, particularly next -- I mean, SG&A next year, in particular, will go down as we transition our commercial efforts of Crysvita to KKC. But R&D, we're funding our development programs, right? So we have 7 clinical trials. So that will continue to be a major part of our spend going forward.

Having said that, we're very conscious of what we're spending, and we have a lot of levers among the various programs. So we are measured and paced where we need to be. We're still moving through major milestones.

Our next question comes from Joseph Schwartz of SVB Securities.

I have a question on GTX-102. Are we going to be getting more data in the patients you just reported when you provide your next update? And I'm assuming you're going to keep increasing the dose in these patients in the maintenance phase, but I wanted to confirm that. And would it be possible to adjust the schedule to see if they could benefit more on a more frequent dosing regimen in the maintenance space?

Yes. So when we provide our next update, we will provide more data on the current patients and longer-term data. They are titrating until we hit where we think we need to hit on dosing. And when we through looking at the broad program as we hit a dose where we think we're right near the dose, what we have built in the protocols, the ability to make an extra dose on a monthly scale for anyone in the 3-month period. So we can give an extra dose or 2 in order to top them up, let's say, to get to the right level so that we do have that ability then rather than load them more. We just simply need to give 1 or 2 extra doses and that will, we think, would get them optimized if we -- once we figure out what we think the right dose should be. So we have ways forward to get more data on the current set and make sure that they're contributing fully and we're dosing them optimally.

Our next question comes from Yigal Nochomovitz.

Ashik Mobar on for Yigal. I guess just a couple of commercial questions. It looks like your second quarter Crysvita sales showed a nice bump over the last quarter. So -- but if I'm looking at this correctly, it seems like to hit the midpoint of your Crysvita guidance you're maybe expecting modestly decelerating quarterly growth during the second half. So we're just curious as to why you think that might be and how conservative your guidance might be and any commercial dynamics there.

And then a similar question on Dojolvi. It seems like at the midpoint of your guidance, you'll need to see some growth or some accelerating growth in the second half. So our question is what do you think the key drivers of that acceleration will be?

Great. Yes. Well, we did see a big bump, which is kind of equal a little bit of lumpiness that we see. I don't know. Perhaps, Erik, you want to say something about our guidance, but let's put it this way. We put guidance because it's our best estimate, we think is going forward, and we certainly are going to then caveat the guidance based on other parameters. But Erik, any thoughts on going forward for Crysvita and Dojolvi?

Yes. For both products, it's pretty much the same. We're expecting strong sales in the second half of the year, which has been the case if you look at the previous years for Crysvita. So we're confident in our ability to continue to grow -- accelerate growth as we continue to find new patients and those patients get converted to treatment.

Yes. So we generally had a stronger second half than first half is what you're saying here, Erik. So that's our expectation for both products.

Okay. Got it. And then maybe more of a conceptual question on your gene therapy pipeline. I think you're up to 6 distinct gene therapy programs. And so I'm just curious about how you're thinking about prioritizing between these -- all these programs, both from a development standpoint, but also from a spend standpoint, given your earlier comments about managing cash burn over time.

Yes. We've already been doing some of that staging because we put the 401 for or GSDIa kind of in the lead position with top priority program, (inaudible) getting enrolled. It's the 48-week study. It had very strong data. It has very high demand and desire and was one we thought we could push forward more quickly.

OTC, we staged a little bit further back take the burn off. It's going to take a little bit more time, Wilson is somewhere in between. UX111 program we've just added is actually -- has treated all the patients we believe would be required in order to file. It's a question now of when to file. So in that program, we're managing the manufacturing that's required and we might -- how we should have some products eventually to treat additional patients. But the program is a little bit more like a post Phase III program in spend-wise, and we'll manage the commercial manufacturing part of it is the only piece that we really need to absolutely focus on. And so that's how we're kind of working the ones we have.

The earlier stage 1s are a year back, but I agree, we have a lot. We need to stage it, manage it. And our hope also is the gene therapy manufacturing plant will start picking up more of the load, especially in the earlier stage 1, which will allow us to reduce our costs and reduce their cost for clinical trials and ultimately bring down our cost of goods as well for manufacturing and improve our consistency. So with sophisticated products like this is necessary to invest in your own plan, and that's how we're going to continue to gain traction in our gene therapy programs is being in control of manufacturing as we move forward.

I'm showing no further questions at this time. I'd like to turn the call back over to Joshua Higa for any 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.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you for all participating. You may now disconnect. Have a great day.