PTC Therapeutics, Inc. (NASDAQ:PTCT) Q4 2023 Earnings Call Transcript

PTC Therapeutics, Inc. (NASDAQ:PTCT) Q4 2023 Earnings Call Transcript February 29, 2024

PTC Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-0.24 EPS, expectations were $0.29. PTCT 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 the PTC Fourth Quarter 2023 Financial Results. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s call is being recorded. I would now like to pass the call over to the Senior Director of Investor Relations, Ron Aldridge.

Ron Aldridge: Good afternoon and thank you for joining us today to discuss PTC Therapeutics’ fourth quarter and full year 2023 corporate update and financial results. I’m joined today by our Chief Executive Officer, Dr. Matthew Klein; our Chief Business Officer, Eric Pauwels; 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 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, Matthew Klein. Matt?

Matthew Klein: Thank you, Ron. Good afternoon and thank you for joining today’s call. I’m pleased to share our fourth quarter and full year 2023 results and to provide an update on the progress of our pipeline programs as we move into what will be an exciting 2024 with a number of potential significant milestones. As we closed out 2023, we had another solid quarter of commercial performance with total fourth quarter revenue of $307 million and full year 2023 revenue of $938 million, representing 34% growth over 2022. Our DMD franchise revenue totaled $143 million in the quarter and $611 million for the full year. Eric and Kylie will provide additional detail on our commercial performance shortly. Our revenue performance reflects the continued outstanding work of our global customer-facing teams and our successful efforts in geographic expansion.

With this infrastructure and track record of execution, I remain confident in our team’s ability to succeed with our next product launches, including sepiapterin for the treatment of PKU. Most of you are aware, in January, we received a negative opinion from the CHMP on the continued conditional marketing authorization for Translarna in the EU. This opinion is expected to be ratified by the EC in late March or early April. Importantly, Translarna remains on the market until ratification occurs. In addition, we continue to commercialize Translarna in several regions outside of the EU, where independent authorizations exist. While we are, of course, disappointed in the CHMP opinion and the potential impact it has on patients in Europe, PTC is well-positioned to withstand this outcome.

As I have previously emphasized, through our efforts to focus our R&D portfolio, right-size the organization, and strengthen our balance sheet, we have a solid foundation for building the company forward and continuing to deliver on our goal of discovering, developing, and commercializing transformative therapies for patients. As we look forward to 2024, we have a number of important potential regulatory and clinical milestones for a number of our programs. I will begin with our sepiapterin program for the treatment of children and adults with PKU. We remain on schedule to submit MAA for sepiapterin to the EMA in the first quarter of this year and to submit the NDA in the United States no later than the third quarter of this year. As we continue to collect data from the open-label extension study following the Phase 3 APHENITY trial, we continue to see durability of sepiapterin treatment effect and the ability of patients on sepiapterin to tolerate increases in dietary protein intake beyond the recommended daily allowance.

This liberalization of diet is incredibly meaningful to patients and further supports the potential of sepiapterin to fill the persistent unmet medical need of the majority of the 58,000 PKU patients worldwide. Moving to our vatiquinone program for Friedreich ataxia, we had a Type C meeting with the FDA earlier this quarter. Based on discussions with FDA, we now have a path to potential NDA filing based on the placebo-controlled results of the MOVE-FA study in combination with long-term open-label extension data currently being collected. The open-label data will be compared to a natural history population from the robust Friedreich ataxia patient registry using analysis similar to those provided to FDA by Reata as part of the SKYCLARYS NDA.

Based on the time needed to collect sufficient long-term open-label data, we expect to be able to submit an NDA in late 2024. We are very excited about the potential of vatiquinone to fill the significant remaining unmet need for pediatric and adolescent FA patients. In other regulatory updates, we remain on track to submit the BLA for Upstaza to the FDA in March and are also scheduled to meet with FDA in March to discuss the content of the potential NDA resubmission for Translarna. Turning to our ongoing clinical trials. We expect to share interim 12-month results PIVOT-HD trial of PTC518 in HD patients in the second quarter of this year from the initial cohort of subjects on whom we reported data last summer. The 12-month results will include additional safety and tolerability data as well as biomarker data, including CSF Huntington protein levels, NFL levels in the blood and in the CSF, and volumetric changes on MRI.

We will also be sharing data from the clinical outcome measures collected as part of the study. Finally, we expect to share top line results from the CARDINAL’s registration-directed trial of utreloxastat in ALS patients in the fourth quarter of this year. In closing, we are well-positioned for an exciting 2024. We have the team, the capital, and the strategy that position us to execute on the many impactful opportunities that lie ahead. 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 delivered yet another strong quarter, continuing the significant momentum we have built. We see ongoing growth from our portfolio of products in more mature markets such as the U.S. and EU and also new markets where we have invested in geographic expansion in Latin America, the Middle East, North Africa, and the Commonwealth of Independent States, where there has been a robust year-over-year growth. In the fourth quarter, we delivered $155 million of revenue for PTC-marketed products, which represents 22% growth year-over-year. For the DMD franchise, we closed out the year with a strong fourth quarter for both Translarna and Emflaza, delivering an impressive $143 million in net revenue, which is 25% growth compared to the fourth quarter of 2022, with a strong full year performance of $611 million.

For Translarna, we achieved $75 million in revenue this quarter, with annual sales of $356 million, which is a robust 23% growth over the same annual period last year. I’m very proud of the team’s efforts and determination in these last few months as they have worked tirelessly to ensure that every single Translarna patient in Europe continues to receive treatment until the ratification of the CHMP opinion. And we are actively evaluating local country options for ongoing access to treatment. Additionally, we continue to diversify our Translarna franchise globally as we brought this treatment to patients in seven new countries last year as part of our ongoing expansion geographically around the world. Now, turning to Emflaza. Quarterly net revenue was $67 million, with $255 million of net revenue in 2023, which is a 17% growth over 2022.

The team has implemented a multipronged strategy to ensure that we protect our Emflaza business in anticipation of a loss of exclusivity in Q1 this year. Our U.S. team continues to engage with healthcare professionals by providing meaningful clinical differentiation compared to prednisone and have implemented other strategies to ensure Emflaza brand loyalty for new and existing patients. We continue to support DMD patients and their caregivers with outstanding service from our PTC Cares team by enhancing customer experience, providing easier access to treatment, facilitating co-pay assistance, and improving adherence for patients in the U.S. PTC is also partnering with our specialty pharmacies and contracting with targeted payers to dispense the Emflaza brand.

We continue to communicate and support our exclusivity for two to five-year-old DMD patients, which continued into 2026. And we are also leveraging patient advocacy in support of the benefits and value of Emflaza. Now, I will ask Kylie to update the progress of our current and future new product launches. Kylie?

Kylie O’Keefe: Thanks Eric. Let me begin with Upstaza, the first and only approved gene therapy infused directly into the brain, where we continue to see transformative results. In October, we presented Upstaza data at the CNS [ph] Conference, showing cognitive improvement and continued increase in long-term motor milestones. Our rollout across Europe continues to progress with new patients treated in the quarter. Furthermore, we are continuing the global expansion of the franchise with additional regulatory filings in Asia-Pacific countries and have recently received regulatory approval in Israel, where the team is working actively to treat our first patient. Globally, patient identification, treatment center readiness, and access and reimbursement discussions continue to advance.

Moving to Tegsedi and Waylivra in Latin America. We closed out the year with robust growth for both Tegsedi and Waylivra, more than doubling our revenue in the region. Patient identification is robust and the number of patients on treatment continues to grow across the region, including first-time revenue in new countries. In Brazil, we received a new group purchase order for Waylivra, which is in recognition of the increased number of patients that rely on these life-changing treatments. We anticipate fulfilling this group purchase order in the first quarter. As previously discussed, we are updating our total revenue guidance following the CHMP opinion for Translarna, with growth continuing across the portfolio for Evrysdi, Upstaza, Tegsedi, and Waylivra.

Our efforts to protect the Emflaza business and expected Translarna revenue in geographies outside of Europe, we are updating our annual total revenue guidance to $600 million to $680 million. We continue to plan for our global launch of sepiapterin. Feedback from the PKU community is extremely positive, and there is a widespread recognition amongst metabolic specialists, geneticists, and dieticians of the potential of sepiapterin to meet the significant unmet needs for many of their PKU patients, not just patients who have been unresponsive to Kuvan, but also those who are fully-controlled on this drug and could potentially do significantly better on sepiapterin as we saw for numerous patients in the APHENITY trial as well as classical PKU patients.

More 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 Phe levels in the long-term EXTENSION study. In addition, we have heard from patient advocacy groups around the world, the PKU patients are excited as they’ve been waiting for a therapy that combines efficacy through both Phe reduction and improved fee tolerance with tolerability. Both the physician and patient excitement continues to give us the confidence that we can reach over $1 billion opportunity, and we look forward to taking a step closer to realizing this upon our first global approval. In conclusion, the strong fourth quarter rounds out what was a strong 2023 for our commercial team.

Our team is well-positioned to continue to execute across all our commercial products and across all geographies, together with building out the foundation for sepiapterin for success in 2024 and beyond. 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 fourth quarter of our full year 2023. Please refer to the earnings press release issued this afternoon for additional details. Beginning with top line results. Total revenue for the fourth quarter was $307 million. This consisted of DMD franchise revenue of $143 million and other revenue of $164 million. Starting with the DMD franchise. Translarna net product revenue in the quarter was $75 million, while Emflaza net product revenue of $67 million. Moving to Evrysdi. Fourth quarter global revenue of CHF354 million, which equates to about $400 million was achieved by Roche, earning royalty revenue of $51 million for PTC. We also earned $100 million milestone for Evrysdi achieving more than $1.5 billion in 2023.

Our total revenue for full year 2023 was $938 million or year-over-year growth of 34%. This included DMD revenue of $611 million, which represented 21% year-over-year growth. Evrysdi royalties for the year grew 49% to $169 million year-over-year. Non-GAAP R&D expense was $130 million for the fourth quarter of 2023, excluding $8 million in non-cash stock-based compensation expense compared to $175 million for the fourth quarter of 2022, excluding $14 million in non-cash stock-based compensation expense. The year-over-year reduction in R&D expenses reflects the strategic portfolio prioritization as the company continues to focus its resources on its differentiated high potential R&D programs. Non-GAAP SG&A expense was $68 million for the fourth quarter of 2023, excluding $8 million in non-cash stock-based compensation expense compared to $79 million for the fourth quarter of 2022, excluding $13 million in non-cash stock-based compensation expense.

This expense reduction reflects lower operating costs as a result of the reduction in the workforce. We’re maintaining our guidance we provided in January for GAAP R&D and SG&A expense of between $740 million and $835 million. We are also maintaining our guidance for non-GAAP R&D and SG&A expense of between $660 million and $755 million, including expected R&D expense milestone payments of up to $65 million and excluding estimated non-cash stock-based compensation expense of $80 million. Cash, cash equivalents, and marketable securities totaled approximately $877 million as of December 31st, 2023 compared to $411 million as of December 31st, 2022. 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.

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

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Q&A Session

Operator: Thank you so much. [Operator Instructions] Our first question is from Sami Corwin with William Blair. Please proceed.

Brooke Schuster: Hi. This is Brooke Schuster on for Sami. Thanks for taking our question. We were wondering if you could provide more details on the transition of sales forces and resources for Translarna with the removal of the EU market? And if there will be any effect on the SG&A outlook for 2024?

Matthew Klein: Thank you very much, Brooke, for the question. As we talked about previously, the — obviously, we still are marketing Translarna in the first quarter in Europe until the ratification of the CHMP occurs. And then it will be a very rapid transition of that infrastructure to get ready for the sepiapterin launch. As we discussed, we’ll be submitting the MAA for sepiapterin the first quarter, and that infrastructure that we’ve built will be well-positioned for a successful — what we’re planning in the successful launch of sepiapterin in Europe. So, the OpEx guidance that we’ve given for the year incorporates what we plan to have today and also already accounts for what we’re going to need tomorrow for the sepiapterin launch and any other product launches that we have.

Brooke Schuster: Thank you.

Operator: Thank you. One moment for our next question, please and it comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed.

Rick Miller: Hi, this is Rick Miller on for Kristen. Thanks for taking our questions. Maybe on FAA for vatiquinone, can you speak to anything on kind of the ongoing regulatory strategy in the U.S. versus Europe? With two guided regulatory interactions, do you plan on making similar arguments around the data and move FA to the different regulatory bodies? Or could there be sort of different strategies when it comes to the FDA and EMA based on what you’re looking for? Any color here could be helpful. Thank you.

Matthew Klein: Sure Rick. As we shared on the call, we were very pleased to announce that we had a very productive discussion with the FDA regarding the [Indiscernible] program earlier in the first quarter. Based on those discussions, we now have a path to NDA submission we believe, late in the year. It was an extensive discussion regarding the clear evidence of benefit in the FA placebo-controlled study, particularly an upright stability scale, which is now clearly recognized as the most applicable part of the entire mFARS score for assessing ambulatory pediatric adolescent and young adult patients that made up the majority of the population of the MOVE-FA study. So, after that discussion, it was agreed that we have the ability to potentially submit an NDA based on MOVE-FA along with confirmatory evidence from the long-term open-label extension portion of MOVE-FA comparing those data to [Indiscernible] data very much like Reata did to its SKYCLARYS NDA, that we’re combining solid, reliable, strong evidence of clinical benefit in the MOVE-FA study along with confirmatory evidence from the open-label portion of that study.

So, we are very excited–

Rick Miller: Okay. Thank you.

Operator: Thank you so much. One moment for our next question, please, it’s from the line of Kelly Shi with Jefferies. Please proceed.

Unidentified Analyst: Hi, this is Yun for Kelly. Thanks very for taking the question. First question on Emflaza, have you seen any patient switching from Emflaza to generic? And I know that you cannot speak for patients, but if patients were to be — sorry, were to switch or were not to switch, do you know what could be the reason driving patient decision, please? And I have a follow-up question, please.

Matthew Klein: Yes, thank you Yun, very much for the call. Kylie, do you want to comment on what Emflaza revenue projections and potential impact of generic?

Kylie O’Keefe: Yes, absolutely. So, thank you very much for the question. As we’ve said in the past, we’ve obviously had the fact that loss of exclusivity has been on the horizon, and we’ve been preparing for this. The team has a number of strategies in place to do everything they can to protect the business. And obviously, Eric outlined a number of these in the prepared remarks. So, I think from that perspective, we’ve talked about contracting with specialty pharmacies. We’ve talked about contracting with payers, a number of initiatives, highlighting clinical differentiation to prednisone, ensuring brand loyalty through our patient PTC Cares team. And a number of these programs are in place to ensure that we can protect the business upon the loss of exclusivity.

From that perspective, I think it’s too early to say we think switches, there’s nothing that we’ve seen so far. And I think what we have seen and understand through speaking to both physicians and patients in the community is that there is a strong brand loyalty to Emflaza. There’s a number of programs in place to ensure that brand loyalty. And so from our perspective, we’ve done everything we can to maintain that business and our revenue guidance is projecting that as well.

Unidentified Analyst: Okay, great. And then on the Huntington’s disease program, has the FDA given you specific guidance in terms of the criteria and timeline to lift the clinical hold, please? Thank you very much.

Matthew Klein: Yes. As we previously shared, we had a very productive discussion with the agency in the fall of last year, where they shared that this data we collected so far in the PIVOT-HD study for 12 weeks should be sufficient to allow conduct of that study for 12 weeks’ duration. And if we wanted to be able to do the full protocol of 12 months that they would like to see 6 months’ worth of safety data. So, that’s obviously very encouraging because as we shared last June, there’s very strong evidence of safety and tolerability thus far with no evidence of NFL spikes steam and also no treatment-related serious diverse events. The profile continues to be safe as we continue to collect more data. So, we look forward to being able to share now with the FDA the six-months’ data they’d like to see to partial clinical hold, which we will expect to do as we take those data in the coming months.

Unidentified Analyst: Thank you.

Operator: Thank you. One moment for our next question and is from the line of Eric Joseph with JPMorgan. Please proceed.