PTC Therapeutics, Inc. (NASDAQ:PTCT) Q1 2024 Earnings Call Transcript

PTC Therapeutics, Inc. (NASDAQ:PTCT) Q1 2024 Earnings Call Transcript April 25, 2024

PTC Therapeutics, Inc. beats earnings expectations. Reported EPS is $-1.2, expectations were $-1.31. PTC Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and thank you for standing by. Welcome to PTC First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Jane Hanlon, Associate Director of Investor Relations. Please go ahead.

Jane Hanlon: Good afternoon and thank you for joining us today to discuss PTC Therapeutics first quarter 2024 corporate update and financial results. I’m joined today by our Chief Executive Officer, Dr. Matthew Klein, our Chief Business Officer, Eric Pauwels; our Chief Commercial Officer, Kylie O’Keefe; and our Chief Financial Officer, Pierre Gravier. Today’s call will include forward-looking statements based on our current expectations. Please take a moment to review the slide posted on our Investor Relations website in conjunction with the call which contains our forward-looking statements. Our actual results could materially differ from these forward-looking statements as such statements are subject to risks that can materially and adversely affect our business and results of operations.

For a detailed description of applicable risks and uncertainties, we encourage you to review the company’s most recent quarterly report on Form 10-Q and annual report on Form 10-K filed with the Securities and Exchange Commission as well as the company’s other SEC filings. We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP to non-GAAP financial measures and a reconciliation of GAAP to non-GAAP are available in today’s earnings release. With that, let me pass the call over to our CEO, Dr. Matthew Klein. Matt?

Matthew Klein: Thank you, Jane. Good afternoon and thank you all for joining the call. I’m pleased to share with you our first quarter 2024 financial results and to provide an update on the progress of our development programs. As we have discussed, 2024 will be a year of execution for PTC, with a number of important and value-inflecting milestones throughout the year. We are off to a great start with strong revenue and achievement of all of the planned first quarter regulatory and clinical milestones. Starting with commercial performance; we had a great quarter driven by execution across the entire commercial portfolio. First quarter revenue totaled $210 million and DMD franchise revenue was $161 million. The first quarter DMD revenue resulted from our team’s efforts to ensure that we optimize revenue during the time that Translarna remains authorized in Europe.

At this time, the European Commission has not yet adopted the CHMP opinion to withdraw Translarna authorization. And thus, we will continue to commercialize Translarna across Europe. Eric and Kylie will provide additional details on our commercial performance shortly. We had a number of important regulatory achievements in the first quarter. As planned, we submitted the marketing authorization application for sepiapterin to the EMA and we remain on schedule to submit the NDA for sepiapterin no later than the third quarter. The European MAA submission is an important step towards our planned global launch of sepiapterin as we bring a potential new standard of care to PKU patients around the globe. As emphasized recently by Lisa Milberg, the Executive Director of the National PKU Alliance, the vast majority of PKU patients are not served by the currently available PKU therapies and there is a great deal of enthusiasm in the PKU community for sepiapterin based on the data generated to date, including the reported patient experience in diet liberalization.

In the first quarter, we also submitted the BLA first data and we aligned with the FDA on an NDA resubmission for Translarna and an NDA submission for vatiquinone for treatment of predicataxian. The NDA resubmission for Translarna will be based on the placebo-controlled results from Study 41 and data from the STRIDE registry which confirmed long-term benefits of Translarna and slowing time to loss of ambulation. We expect to submit the NDA in mid-2024. The vatiquinone NDA will include results from the 72-week placebo-controlled portion of the MOVE-FA trial, along with data from those trials long-term open-label extension. We expect to submit this NDA in late 2024. Turning to our development programs. We plan to share interim results from the PIVOT-HD study of PTC518 in Huntington’s disease patients in the second quarter.

This data update will include 12-month biomarker and clinical results from the initial cohort of approximately 30 subjects on whom we shared data last summer. Specifically, we will share data on blood Huntington protein lowering, CSF mutant Huntington protein lowering, volumetric MRI changes and SL levels as well as data on several clinical scores including the total motor score, total functional capacity and CUHDRS. These 12-month data will allow us to understand the longer-term safety and tolerability profile of PTC518 as well as to identify favorable early signals of CNS activity on disease biomarkers for clinical endpoints. The second quarter update will also include 12-week results for a larger number of Stage 2 and Stage 3 subjects, including blood Huntington protein changes.

Lastly, we completed enrollment in the cardinal registration-directed trial of utreloxastat in ALS patients and remain on schedule to report top line results in the fourth quarter of this year. Utreloxastat is the first compound being developed for ALS that specifically targets paraptosis, a pathway of oxadata stress and cell death demonstrated to be highly relevant to ALS pathology. Given the recent changes in the therapeutic landscape for ALS, positive results from the CARDINAL study could enable utreloxastat to address the significant unmet need of ALS patients. In closing, I am proud of our team’s execution in the first quarter. We achieved all of our planned objectives and remain on schedule to achieve the many important expected milestones in 2024.

I will now turn the call over to Eric and Kylie to discuss our commercial performance. Eric?

Eric Pauwels: Thanks, Matt. Our global customer-facing team has kicked off 2024 on a strong footing and has delivered $178 million in revenue for our 5 marketed products. Our team is focused on growth as well as diversification within our current commercial portfolio and on executing launch preparations for Upstaza in the U.S. and sepiapterin globally. Our global DMD franchise had a robust quarter, while our geographic expansion continues to progress in Latin America and the Middle East and North Africa and our future growth markets in the Asia Pacific region. We delivered revenue of $161 million which resulted from our strategies to continue to maximize Translarna revenue in Europe and to successfully protect the Emflaza business in the U.S. For Translarna, we achieved $104 million in revenue this quarter.

The team continued to work to ensure that Translarna patients in Europe continue to receive treatment. Evaluations of local country pathways and named patient sales for continued access to treatment are ongoing. Now turning to Emflaza. Quarterly net revenue was $57 million which reflects our strategy to protect the brand in the face of initial generic entry. Robust Emflaza sales were driven by continued brand loyalty from health care providers and patients with a significant number of new patient starts on EMFLAZA. We continue to work closely with health care providers, payers, specialty pharmacies and advocacy groups to reinforce the benefits and the value of Emflaza while reemphasizing our exclusivity for 2- to 5-year-old DMD patients. Now, I will ask Kylie to update the progress of our current and future new product launches.

Kylie?

Kylie O’Keefe: Thanks, Eric. We continue to plan for our global launch of sepiapterin following the recent submission of the MAA in the EU and the planned NDA submission to the FDA later this year as well as additional regulatory submissions in Brazil and Japan in 2024. As Lisa Milberg, the Executive Director of the National PKU Alliance recently stated, there is a significant unmet need for PKU patients. There is widespread recognition amongst metabolic specialists, geneticist, dieticians and PKU patients of the potential of sepiapterin to meet these significant unmet needs. As we saw from numerous patients in the AFFINITY trial, classical PKU patients as well as those unresponsive to and controlled on Kuvan could potentially do significantly better on sepiapterin.

Importantly, we continue to see durability of treatment effect and the ability for patients on sepiapterin to increase their dietary protein intake beyond the recommended daily allowance while still maintaining control of phenylalanine levels in the ongoing affinity long-term extension study. PKU patient advocacy groups around the world have shared that PKU patients have been waiting for a therapy like sepiapterin that combines efficacy through reduction and a potential ability to liberalize their incredibly burdensome fee restricted diet to improve their quality of life. We continue to believe in the potential $1 billion plus global opportunity. Now turning to Upstaza. The first and only approved gene therapy infused directly into the brain where we continue to see transformative results.

As Matt mentioned, we submitted our BLA to the FDA in March and launch preparations in the U.S. are well underway and the customer-facing team is incredibly excited to bring this much needed treatment to AADC patients in the U.S. In Europe, we treated new patients in France and the U.K. as well as treating new cross-border patients in the quarter. In February, data from the GT-002 study was presented at the IAS PMD Congress that showed significant uptake of CSF, HVA and F-Dopa up to 8 weeks after administration of Upstaza, translating into dopamine production and improvements in common symptoms such as hypotonia. Globally, patient identification, treatment center readiness and access and reimbursement discussions continue to advance as we prepare for additional filings and regulatory approvals.

Moving to Tegsedi and Waylivra in Latin America. We continue to make excellent progress across this franchise with growth in both patients identified and patients treated across the region. In Brazil, we completed delivery of the new group purchase order for Waylivra and anticipate receiving a group purchase order for Tegsedi shortly. Our strategy for geographical expansion continues with additional regulatory filings planned and approvals anticipated for both products. In conclusion, coming off a robust first quarter, we have set a strong trajectory for 2024 and are well positioned to continue to deliver and diversify our portfolio across our geographies and as well as to execute our global launch strategies for sepiapterin and Upstaza. I will now turn the call over to Pierre for a financial update.

Pierre?

Pierre Gravier: Thank you, Kylie. I’ll now share the financial highlights of our first quarter of 2024. Please refer to the earnings press release issued this afternoon for additional details. Beginning with top line results. Total revenue for the first quarter was $210 million, including DMD franchise revenue of $161 million. Starting with the DMD franchise. Translarna net product revenue in the quarter was $104 million, while Emflaza net product revenue of $57 million. Moving to first quarter global revenue of about US$400 million was achieved by Roche, earning royalty revenue of $31 million for PTT. Non-GAAP R&D expense was $107 million for the first quarter of 2024, excluding $9 million in noncash stock-based composition expense compared to $180 million for the first quarter of 2023, excluding $15 million in noncash stock-based compensation expense.

The year-over-year reduction in R&D expenses reflects our strategic portfolio prioritization as the company continues to focus its resources and its differentiated high potential R&D programs. Non-GAAP SG&A expense was $64 million for the first quarter of 2024, excluding $9 million in noncash stock-based compensation expense, compared to $73 million for the first quarter of 2023, excluding $14 million in noncash stock-based compensation expense. This expense reduction reflects lower employee costs as a result of the reduction in the workforce. Cash, cash equivalents and marketable securities totaled $885 million of March 31, 2024, compared to $877 million of December 31, 2023. The strong balance sheet provides PTC with the resources to execute on our strategy and to achieve our milestones over the next several years, including the anticipated sepiapterin launch.

And I will now turn the call over to the operator for Q&A. Operator?

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Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Kristen Kluska with Cantor Fitzgerald.

Kristen Kluska: On PKU, I know you’ve gone at length multiple times with us talking about specific segments of where the highest unmet need remains. But I’m wondering, initially, if you think there’s a specific market segment where you’ll see uptake being the strongest. So one thing we weren’t initiating that our to be in actions under 18, for example, is a really critical market.

Matthew Klein: Kristen, thank you very much for the question. We have talked a lot about how the strong data set both from AFFINITY as well as from the long-term extension, including the tolerance data really position us well to address all of those key market segments. And that’s why we really see this as such a large opportunity and we talked about being a $1 billion-plus opportunity. I’ll let Kylie go into a little bit more detail about what we see as sort of the initial segments that we’re positioned to penetrate.

Kylie O’Keefe: Yes. Thanks, Matt and thanks, Christian, for the question. I think as Matt highlighted, there truly is an opportunity across all the different segments. And I think in the near term, immediately post launch, I think we are going to be looking at a number of key segments to penetrate quickly. I think one of the opportunities, as we’ve talked about in the past is therapy naive, so that includes patients that have classical PKU, high unmet medical need, also those that have previously failed on Kuvan and those that are poorly controlled. And I think we’ve also talked about Kristen in the past, as KOLs have highlighted. We heard [indiscernible] highlight this on the deep dive we did last year. But since then, we’ve heard a number of other KOLs also highlight this, the importance of even those on Kuvan that could have a deeper reduction in Phe levels because that really means something to patients and their ability to be able to deepen that Phe reduction allows them to look at potentially liberalizing their diet and that’s truly important.

So it’s hard to sort of pinpoint a particular segment but we will be looking at sort of those key segments in the near term and that’s why we believe we’re able to achieve the $1 billion.

Kristen Kluska: Okay. And I remember at your deep dive, you had a nice map that talked about some of the key regions and where there’s already patients identified that either don’t respond to one of the available therapies or for whatever other reasons, they were available but I’m wondering what work you’ve done around Europe as well as Japan and Brazil as you think about those filings and upcoming decisions?

Kylie O’Keefe: Yes, absolutely. We’ve done consistent work across all the different regions. As we’ve talked about, we have existing commercial infrastructure in place and those teams are ready to go. So they’re out there. They’re visiting the treatment centers of excellence, they’re getting to know the patient communities and upon launch, they’ll be ready to execute upon those patient segments. So we have similar information that’s being collected across all of the different markets. And that’s what we’re also collecting. But in addition to that, there’s a substantial market pull. So there’s people coming to PTC gearing up and wanting the drug. So it’s coming from both directions.

Operator: Our next question comes from the line of Eric Joseph with JPMorgan.

Eric Joseph: Just picking up on your opening comments on the pending European Commission decision for Translarna. I guess we were expecting a potential update earlier in the month. Do you have any visibility as to when the EC might come to with his decision? And whether they’re perhaps reconsidering CHMP’s recommendation in light of perhaps regulatory progress with FDA? And then maybe just following up on that. If Translarna remains authorized, how should we be thinking about sequential performance in the second quarter to the extent you saw sort of advanced pull-through last quarter?

Matthew Klein: Thanks very much for the question, Eric. You highlighted the obvious, right? With the CHMP opinion in January, typically, it would be 67 days following that opinion that the European Commission would adopt that opinion and Translarna would have been withdrawn. That has not happened. We remain fully authorized as we talked about as some business as usual in terms of commercializing Translarna in Europe. We have been notified by the commission that they would be leading this week to discuss the matter in a live meeting. Obviously, we’re in a little bit of a — a lot of an unprecedented situation here. But considering that Translarna has a strong data record of efficacy and safety and considering the significant unmet medical need for mutation patients in Europe or Translarna be withdraw the tremendous alcom the patient and physician community, it may not be that surprising that the commission is looking at this very closely.

Obviously, we’ll wait further update until we hear, we’ll continue again to make sure Translarna available to as many patients as possible. And team are working to do that and we look forward to the opportunity to continue to bring the therapy to patients as long as we can. And in terms of your second question which was on what we see in terms of impact to revenue, look, the revenue performance in the first quarter was expected based on what we’ve talked about, based on the fact that we said for Translarna in Europe, it would be business as usual while it was authorized. As Eric mentioned on the call, we had a number of strategies in place in the U.S. to protect the brand and protect Emflaza and protect that business. Those strategies will continue.

The efforts for Translarna will continue through this quarter and if there is a need to update our revenue guidance we will.

Operator: Next question comes from the line of Kelly Shi with Jefferies.

Kelly Shi: I’m curious for the ALS trial, you mentioned the MOA of artruloxastat is through inhibiting proptosis, wonder what kind of a genetic biomarker associated with proptosis in ALS patients? And do you expect more prominent treatment outcome in a subgroup of ALS patients?

Matthew Klein: Kelly, thank you very much for the question. Theraposis is a pathway of, a relatively recently described pathway as inflammation, cell stress and cell death that is increasingly being linked to neurodegenerative diseases, including ALS. And what is important about this is it’s not related to any specific genetic it’s really a common response pathway in ALS. And that’s why our trial with uteloxistatis enrolled both genetic and idiopathic ALS patients. So this is one advantage of this approach is that we’re targeting objectively common to any genetic or nongenetic cause of ALS.

Operator: Our next question comes from the line of Sami Corwin with William Blair.

Samantha Corwin: I was wondering if you could provide any additional color on how much the EU contributed to Translarna revenue this quarter? And then have you heard any feedback from U.S. physicians, patients, et cetera, on their perception of the Translarna and [indiscernible] data and kind of with their view of what the commercial potential might be in the U.S.?

Matthew Klein: Thank you very much for the questions. I’ll just make a brief comment and then I’ll turn it over to Kylie to give a little bit more detail. Certainly, on your second question, there’s given the unmet need for DMD patients in the U.S. and what’s known about Translarna in a number of patients have been on Translarna for years, there’s a great amount of anticipation for the potential availability of Translarna with an FDA approval. And similarly for vatiquinone for pediatric patients, there’s a significant remaining unmet need and it’s not well appreciated in the physician expert community as well as the patient community that the data that we’ve collected in MUF demonstrating that important significant effect in stability and what that means in terms of delaying time loss of ambulation is incredibly meaningful for patients and therefore, there really is a significant amount of interest for vatiquinone in the community.

Kylie, I’ll turn it over to you for more color on revenue.

Kylie O’Keefe: Yes. Thanks, Matt and thanks, for the question. I think starting with your first question, Sami, around the contribution from European revenue for Translarna, it’s pretty consistent with the first quarter of last year. We’ve shared that it represents around 45% of total revenue and it’s pretty consistent when you look at Q1 of this year to Q1 of last year. So as Matt said earlier in his comments, the plan going into the quarter was to continue to ensure patients have access to Translarna while it remains in the market. And I think the team has done an incredible job in executing upon that plan. So contribution is about consistent. Jumping to your second question around Translarna in the U.S. and perception there and also vatiquinone in FA.

I think what Matt said is absolutely accurate. I think starting with Translarna, there’s still nothing available for nonsense mutation DMD patients. And so there’s a high unmet medical need there. And then when you look at FA, there’s nothing available for pediatric patients. And I think physicians are starting to get to understand how [indiscernible] fits into the marketplace in the older patients. And there’s still a place for vatiquinone in those older patients as well. So across the board, we’ve seen very positive feedback. Physicians are very well versed on Translarna in the U.S. As that said, there’s a number of patients that are on the drug. And then as we’re engaging with the community on FA, there’s positive feedback coming there, too.

Operator: Our next question come from the line of Joseph Thome with TD Cowen.

Joseph Thome: Maybe on the Huntington study. Looks like maybe this might be the first time we’re really committing to some of those functional measures, the TMS, TFC and CUHDRS. Maybe what are your expectations for efficacy on those points, the follow-up time that we’re seeing in the Q2 data, going to be long enough to show benefit on these measures, do you think? Or how should we interpret those data when we see them? Maybe second question, just on the AADC gene therapy. Can you talk a little bit about reimbursement progress in Europe? And maybe what are you learning there that you can apply to the U.S.?