Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) Q2 2023 Earnings Call Transcript

Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) Q2 2023 Earnings Call Transcript August 3, 2023

Ultragenyx Pharmaceutical Inc. misses on earnings expectations. Reported EPS is $-2.25 EPS, expectations were $2.11.

Operator: Good afternoon, and welcome to the Ultragenyx Second Quarter 2023 Financial Results Conference Call. [Operator Instructions]. It is now my pleasure to turn the call over to Joshua Higa, Vice President of Investor Relations.

Joshua Higa: Thank you. We have issued a press release telling 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; Eric Crombez, Chief Medical Officer; Aaron Olsen, Senior Vice President of Corporate Strategy and Finance; and Ted Huizenga, Chief Accounting 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.

Emil Kakkis: Thanks, Josh, and good afternoon, everyone. It has been a year of increasing momentum marked by advances in our lead clinical programs which we expect to result in multiple important data catalysts over the next few quarters. At the same time, our excellent commercial offers continue to drive meaningful revenue growth across the portfolio, including Crysvita revenue in North America with our partner, , and in Latin America as well. I’ll spend a few minutes discussing the osteogenesis imperfecta and Angelman syndrome programs before turning the call over to Erik Harris to talk through our commercial update. Beginning with OI. In June, we reported exciting data from the Phase II dose-finding portion of the pivotal orbit study, showing statistically significant increase in levels of serum P1NP, a sensitive marker bone formation.

The bone production response to these patients was extraordinary. This led to a rapid bone-building effect following just 3 months of treatment with setrusumab resulting in nearly 10% increase in lumbar bone mineral density. At baseline, these patients had very limited bone density with an average Z score in the 20 mg cohort of minus 2.12, which means the bone mineral density with 2 standard rations below the mean of normal patients for their age. After 3 months on therapy, that means Z score increased by plus 0.65 points resolving nearly 1/3 of the deficit from normal in a relatively short period of time. As we’ve said before, patients are showing meaningful improvements in bone health, and we are highly encouraged with how they’re doing. Improved bone health refers to the instance of fractures, bone pain and relative global health and activity of the patients.

In the ongoing Phase II, we continue to collect data compare fracture frequently during the study to show the impact of setrusumab and increase the bone roll density on fracture rates. We expect to share this data at an Analyst Day in mid-October around the time of the ASBMR, the major bone focused meeting. In July, we announced that we initiated dosing patients in 2 Phase III studies in setrusumab in 2 different age groups. The Phase III portion of the pivotal orbit study is evaluating the effect of setrusumab compared to placebo on annualized clinical fracture rate in patients 5 to 25 years old. Newly initiated Phase III CASA study is an active controlled study of setrusumab compared to IV bisphosphonate therapy on annualized total fracturati patients aged 2 to 5 years old.

Enrollment in both of these studies is going well so far in part because the Phase II data has generated a lot of excitement for the potential setrusumab for both the clinical sites and from the patient community. Moving up to our Angelman program. In May, we announced we received FDA agreement to expand the ongoing global Phase I/II trial of GTX-102 patients with Angelman syndrome in the U.S. The procollagen enabled us to harmonize the dosing range is used between the U.S. and ex-U.S. cohorts of the study. Since then, we’ve been working to activate U.S. sites that have been on hold for a couple of years. We continue actively enrolling the expansion cohorts globally. Enrollment in expansion core has done well, particularly over the last couple of months.

As of today, we’ve enrolled more than 20 patients. While we are on track to have 8 patients with a full 6-month data by the end of the year, we’ve noted that waiting just a few more months will enable us to report a more substantial update on well more than 20 patients with 6 months of clinical data plus safety data in all enrolled. Though the trial is going well, it seems more prudent to wait for this larger set of expansion core data, which we expect to have in the middle of the first half of 2024 based on enrolled patients to date. We will also be buying the Angelman Program Update Analyst Day event in mid-October. This is an opportunity for us to provide more context for the clinical means of the changes that have been observed in the study.

Now I’ll turn the call over to Erik Harris to provide an update on our commercial efforts for the first quarter.

Erik Harris: Thank you, Emil, and good afternoon, everyone. On April 27, 2023, 5 years after we began our highly successful Crysvita commercialization efforts. We transitioned the North American commercialization responsibilities to our partner, . In the second quarter of 2023. The combined teams in the U.S. continue to generate new start forms and have provided continuity of care for the existing patients. Our close collaboration and planning for the transition over the past 2 years has resulted in a seamless transition, continued revenue growth and importantly, minimize the impact on patients and their providers. As a reminder, a smaller Ultragenyx commercial team will remain in place supporting the Crysvita program in the U.S. alongside their KKC counterparts through April 2024.

Even beyond that time, Ultragenyx will continue to retain the responsibilities to promote Crysvita to medical genetics in North America. We are thankful for the successful collaboration and expect to continue expanding penetration in the adult and pediatric markets. Shifting to Crysvita in Latin America. The team has continued to build impressive momentum in the region. As of June 30, there were approximately 410 patients on reimbursed therapy, which includes approximately 65 new patients who began commercial therapy in the quarter. Latin America is beginning to approach the same rate of commercial patient accrual as we saw last year in the U.S., which bodes well for the long-term potential in the region. Each country has its own process to obtain regulatory and reimbursement approval.

But our team has been diligently working to facilitate broad access to Crysvita despite the hurdles. I expect the underlying demand for Crysvita in Latin America to continue growing at a steady rate and becoming an increasingly greater contributor to the Ultragenyx commercial story. Today, we are reaffirming the Crysvita guidance we issued at the beginning of the year, the range of $325 million to $340 million includes all regions and all forms of Crysvita revenue. More specifically, it includes Crysvita product revenue from Latin America and Turkey, the cash and noncash royalties from North America and Europe and the collaboration profit share revenue prior to the transition. I’ll now turn to Dojolvi and begin in North America. In the second quarter, we modestly expanded the U.S. Dojolvi commercial team with seasoned personnel from our Crysvita team to support continued growth and adoption of Dojolvi.

During the first half of 2023, we added 61 completed start forms. We also increased reimbursements to 54 reimbursed patients in the first half of 2023. We continue to expand the number of treaters of Dojolvi adding 18 new prescribers, including some health care professionals and centers for neuromuscular medicine. In Canada, we continue to make steady progress following the positive opinion we received from [indiscernible] completing PAN CPA pricing negotiations and signing preventional listing agreements. In Latin America, we are continuing to leverage our existing infrastructure to commercialize Dojolvi. The patient fine efforts have generated a growing number of patients with a confirmed diagnosis across Argentina, Brazil, Mexico and Colombia.

We are continuing to work with the authorities across the region to ensure that Dojolvi is available for all patients who could benefit from this therapy. Across Europe, we continue to deepen the awareness of LCF ALD with key stakeholders and address the high unmet need through named patient and early access programs. Requests are coming from all — across all major European markets as well as Greece, Israel and the Middle East. We gain to expect 2023 global Dojolvi revenue to be between $65 million and $75 million, reaffirming the range we announced at the beginning of the year. Lastly, I’d like to touch on Evkeeza. The team is focused on unlocking access across all markets in the EMEA region, deepening the awareness of HoFH and the urgency to treat and reinforcing Evkeeza’s unique profile amongst stakeholders.

Across the region, a steady growing number of patients are gaining access to Evkeeza through various early access programs. We are on track to launch in certain key EU markets over the next 6 months, and the Phil teams are preparing the markets accordingly. Outside of the U.S., we are continuing to prepare for launches in Canada, Japan and other major markets around the world, further expanding global access to this important therapy. Across all regions, we have received overwhelmingly positive feedback for Akeso from KOLs and patients, and they have continued to highlight the significant unmet need for this treatment. Our teams will continue their efforts to bring this product to people living with HoFH as quickly as possible. In closing, we are reaffirming our 2023 total revenue guidance range issued at the beginning of the year of $425 million to $450 million.

With that, I’ll turn the call to Aaron to share more details on the financial results for the quarter.

Aaron Olsen: Thanks Erik. Earlier today, we issued a press release that included financial results in the quarter, which I’ll briefly summarize. Company revenue for the quarter ended June 30, 2023, totaled $108 million. Crysvita revenue for the quarter was $83 million, which includes $61 million from North America, $16 million from Latin America and $6 million in European royalty and other product revenue. The Crysvita revenue figures for North America and Europe are inclusive of noncash components as a result of our previous royalty financings. As we typically remind you, in Latin America can fluctuate quarter-to-quarter we are continuing to see significant growth in the underlying demand for Crysvita. Dojolvi revenue for the quarter was $16 million with continued strong North America demand, driving 22% growth versus the second quarter of 2022.

Mepsevii revenue at the same time period was $8 million. It’s worth noting, Mepsevii revenue maintained the same level we saw in the first quarter, largely driven by new patients in Brazil and strong order from the U.S. Even 6 years after launch, this ultrarare product continues to grow in patient accrual and geographic reach. Our total operating expenses for the quarter ended June 30, 2023, were $256 million, which includes R&D expenses of $165 million, SG&A expenses of $81 million and cost of sales of $10 million. Operating expenses for the quarter include noncash stock-based compensation of $35 million and a onetime milestone of $9 million payable to Mereo upon initiation of the Phase III Orbit study in OI. For the second quarter of 2023, net loss was $160 million or $2.25 per share.

We ended the quarter with approximately $618 million in cash, cash equivalents and marketable securities. As expected, through the first half of the year, cash used in operations was disproportionately greater than what we expect in the second half of the year. This is primarily driven by the timing of annual bonus payments and changes in certain working capital accounts. Additionally, we expect operating expenses to decrease in the second half of the year, driven by realized cost efficiencies and substantially reduced North America commercial expenses with the conclusion of the profit share period in April. With the impact of these cost reductions, projected second half revenue growth, and the timing of the working capital changes previously mentioned, we expect 2023 net cash used in operations to be around $400 million.

Now I’ll turn the call to our CMO, Eric Crombez, who’ll provide an update on our key clinical programs.

Eric Crombez: Thank you, Aaron, and good afternoon, everyone. Emil has already discussed the progress in the quarter for the osteogenesis imperfecta and Angelman programs, so I will briefly touch on the latest progress in our gene therapy pipeline. Starting with UX701 for the potential treatment of Wilson disease. Earlier this week, we announced that we have begun dosing the second dose escalation cohort in our pivotal study following completion of dosing and data review from the first cohort. In this first stage of the pivotal study, we are evaluating the safety and efficacy of up to 3 dose levels to determine the dose for the second stage of the study that will support registration. In July, the Data Safety Monitoring Board agreed that it was safe to proceed with dosing patients with a higher dose of 1e13.

Their first patient in cohort 2 has already been dosed and the other 4 patients have been identified. This gene therapy is designed to directly address the underlying cause of disease by establishing the normal trafficking of copper. This will address both the toxicity of free copper and the copper deficiency driving many of the signs and symptoms seen in patients who are not well-managed on chelators. And the first dose cohort, UX701 has been well tolerated with no unexpected related treatment emergent adverse events observed as of July 11, and there are early signals of the establishment of normal trafficking of copper. Initially, study entry required well-controlled signs and symptoms of Wilson disease on current standard of care, which proved challenging and resulted in a large number of screen failures as many patients, for example, still had elevation in liver transaminases despite optimized chelator and zinc therapy.

This tells us that even with current standard of care, there remains a real unmet need for these patients. After additional discussions with regulatory authorities, we have changed entry criteria enrollment has accelerated. We are now on track to complete enrollment in Stage 1 around the end of the year and expect to share initial data in the first half of 2024. Moving to DTX401 for the potential treatment of glycogen storage disease type 1a, it is important to remember that all patients in the Phase I/II study responded and showed meaningful reductions in their dependence on oral glucose replacement therapy. These patients have demonstrated a durable response with patients moving into their fourth and fifth year of follow-up with more detailed data presented at ASGCT in May.

As we have previously disclosed, the Phase III study was fully enrolled earlier in the year. We expect data from the 48-week primary analysis period to read out in the first half of 2024. We look forward to sharing the first Phase III data generated by a gene therapy portfolio next year. Quickly on DTX301 for the potential treatment of OTC, or ornithine transcarbamylase deficiency, Enrollment in the Phase III study began earlier this year, and this is a 64-week study that is designed to enroll approximately 50 patients. We are gaining meaningful traction with recruitment of the study especially as more health care providers and patients appreciate the Phase I/II data with durable responses lasting more than 5.5 years with more detailed data also presented at ASGCT in May.

Currently, there are 15 active global sites with additional activations pending regulatory and IRB feedback in Italy, U.K., Japan and Australia. We look forward to providing enrollment updates over the coming quarters as this program continues to build momentum. I’ll now turn the call back to Emil to highlight the key upcoming milestones and provide some closing remarks.

Emil Kakkis: Thank you, Eric. I’ll summarize the key upcoming clinical catalysts before we open up for Q&A. Starting with UX 143 for osteogenesis imperfecta. Enrollment in both of the Phase IIIs is going well. supported by meaningful demand from patients. Our goal is to have both of these studies fully enrolled around the end of the year. We also plan to provide additional clinical data from the Phase II portion study, including fracture data at Analyst Day in mid-October. Next, GTX-102 in Angelman syndrome. We’re planning to give an update on the program at the Analyst Day in mid-October that would include some information about the treatment effects we have observed so far in the earlier dose cohorts. We expect to share expansion data in the middle of the first half of 2024, when we’re able to share 6-month data on at least 20 patients.

Closing with our gene therapy programs, for enrolling patients in the dose-finding stage. We’re excited about completing the first cohort and starting the second, we expect this to final stage to be complete around the end of the year with data on safety and initial set of efficacy expected in the first half of 2024. GTH-41 for GSD1a dosed the last patient in pivotal study earlier this year, we’re now in the 48-week window and expect to share this Phase III data in the first half of 2024. Through the first half of the year, we’ve made meaningful progress across all of our priority initiatives, we finished and opened our gene therapy manufacturing facility outside of Boston and just week successful completed the first manufacturing run. This is not a modular assemble plan or a furbished clean room but a true ground-up designed and built state-of-the-art GMP manufacturing plant.

To be a great plan is hard, but to do it during the pandemic to stay on time and on budget is exceptional. We give great [indiscernible] to our team on this accomplishment. In the second quarter, the commercial team continued to deliver meaningful revenue growth with the LatAm Casita franchise doing particularly well, becoming a larger contributor to the company’s financials. Across the globe, our development teams are advancing 1 of the largest late-stage rare disease clinical pipelines in the industry, and we expect to generate a number of important data catalysts over the next few quarters. With that, let’s move on to your questions. Operator, please provide the Q&A instructions.

Q&A Session

Operator: [Operator Instructions]. Our first question comes from Gena Wang with Barclays.

Gena Wang: One quick question regarding the Angelman program. In mid-October update, what clinical measurement will you be presenting and is Baileys your key measurement? And if so, what is your bar for efficacy to move forward?

Emil Kakkis: Yes. So our plan with — when we we’ll talk about there is folks only on the clinical means of the effects we’re seeing. And the information on the Baileys in that comparison was something we’ll focus on with the expansion cohorts where we have a large number of patients compared to a larger number of natural history patients to give you the kind of quantitation maybe you see. So the October will focus more on the coke meaningfulness and not so much on the detailed quantitative information. We’ll reserve that for the expansion cohorts.

Gena Wang: Okay. Emil. So maybe a follow-up, a quick follow-up questions. So based on the natural history, what would be the Baileys the change that you consider will be clinically meaningful that you would be looking for, for your expansion cohort? .

Emil Kakkis: Well, we’ve already put forth that the size of change we’ve seen, we thought were clinically meaningful. So the amount you’ve seen before is there. I think I’d rather not go deeper into it. I think we need to do it in a more deeper context with data at hand, and I’d rather not go deep into that discussion at this moment. But when we put out the Bailey data and we put out the other data, we’ll have the clinical means of the thresholds, quantitative on the natural history data to look at — and I would not folks only at daily. I see there’s also other end points we’re going to be looking at because we’re still working through the data from our expansion cohorts to help us really nail down with the right answer. And so still in the mix is the Global Impression Scale, CGI scores, which FDA has accepted this primary, which would allow you to cover more domains essentially and be more agile specific.

So we’re still looking at a number of those particular endpoints. But — the truth is we’ve had relatively small amounts of data from these escalating cohorts, expansion data allows us to really get a large number of patients treated in the same way and to give us kind of quantitation to really answer your questions. in a robust way, which is not quite there yet, but I feel good about where we’re at in the program, the fact that we’re in that works and that we need to figure out how to move to the Phase III.

Operator: [Operator Instructions]. Our next question comes from Liisa Bayko with Evercore ISI.

Liisa Bayko: Can you just give us a sense of kind of your level of confidence about what you’re seeing in the OI program and how the changes in bone mineral density relate to potential changes you might see in fracture.

Emil Kakkis: Yes. We have a high level of confidence that the magnitude of bone marrow density we saw at 3 months was already sufficient enough to improve the strength of bones and probably reduce fractures. At that level, we saw at 3 months in. So we have high confidence in the fact that bone marrow density went improved by this mechanism, anti-sclerostin mechanism where you’re getting anabolism or producing production of new bone will translate into fracture improvements. And we’ve talked about the nonclinical data in the past, but we’ll be able to talk more about this at the October Analyst Day to provide that support, but we have a high level of confidence that the BMD produced by NASA glass luxetruzumab will translate into fracture reduction.

Liisa Bayko: Just as a follow-up on that. Can you explain to me the amount of sort of the bone metal density levels of OI patients, how do they relate to those of osteoporosis patients? Because I’m just trying to kind of relate the 2 changes the amount of changes you’re seeing to what we — outcomes we’ve seen in osteoporosis. It seems to be maybe the 1 mill density levels are slightly different. Can you expand on that at all? .

Emil Kakkis: Sure, Lisa. What we said for this population, this study is that the mean funeral density was minus 2.12, which means 2 standard relatable menu normal people. Now osteoporosis patients have reduced bone marrow density. I don’t have for you exact comparisons to put forth. But I would say the mean of minus 2 standations is pretty low on the bone scale. And if you look at the range we had patients as low as minus 4 standard deviation. So these patients have, I think, a more severe on average bone marrow density problem than an average osteoporosis patient would and therefore, have more need of bone production. What has been the misunderstanding is everyone thought that the defect in the collagen was why the bones were fracturing.

What we’re kind of trying to say is actually, while that may be a factor is in fact the effect of that mutation on bone production appears to be a bigger factor, and that’s something we can change with setrusumab, and that’s why we think we’re going to have an important effect on OI.

Operator: Our next question comes from Maury Raycroft with Jefferies.

Maurice Raycroft: Based on the expansion data in first half is the time line for the pivotal study starts shifted out some? And have you received any preliminary feedback from regulators on your data so far and what the pivotal design and endpoint could be? And is this something we can learn more about in the mid-October update? .

Emil Kakkis: Yes. I don’t think actually the time line changes the time line for what the Phase III is going to be because we’re going to be setting up the protocol and the plan and endpoint even before the full data are available. So we’ll already have understood what’s going on. We’ll have our discussions with the FDA soon after that and have a full protocol ready to get kick in and got going in ’24. So it doesn’t really change that time line it changes the timing of how much we know and when, but we are going to be gaining ground during the year, and we expect to talk with the clinical outcome group at FDA, the CoA Group this year. We haven’t talked further with the FDA. We’re looking at when we want to get to them. They said we could go to them.

We’ll look at when we want to start talking to them about endpoints. They appreciate that this will require a lot more discussion than an average program. being a first ever in a very complex developmental disorder. But with the first meeting with Koa, we’ll get some ideas and feedback. We’ll gain our data as we go along this year, but I would expect in late in the year, early next year, we’ll have a handle on what we think the endpoints will be. The data will then further finalize the decision on dose regimen and allow us to head to — and then the Phase II meeting in the first half is our expectation and to think about getting to a Phase III study then next year.

Operator: Our next question comes from Joseph Schwartz with Leerink Partners.

Joori Park: I’m Joori in for Joe. I have two on UX701 for Wilson’s disease. First, could you talk about your decision to move to an open label business line and broadening the inclusion criteria in Stage 1? How do these 2 factors impact the efficacy results, if any? And is any that we’re going to get for the data that we’re going to get in the first half of ’24. And secondly, I believe in your opening remarks, you mentioned time lines around 2. But I’m curious about cohorts can we expect the Stage 1 cohort 3 patients to be dosed? And will the Cohort 3 data be included in the update provided in 1 half 2.

Emil Kakkis: Sure. Well, I’ll start with the last part. Yes, our expectation when we talk about first half is to talk include cohort 3 patients. And the point at that point would be to make a decision on dose and to then kick off enrollment in Phase III because it’s a combination study. We go right to Phase III, we make the call, make the decision and move. So the beauty of that is it’ll cut out any dead time. It’s already agreed on the endpoints and moving forward. But let me let Eric Crombez talk through the open label and the criteria changes and the reason for those in the conduct of the study.

Joori Park: Yes. No, I think in the context of a single study registration, it’s always time to get the beginning to kind of go to a double-blind format there. But the truth is, is we do want to learn in that initial stage there, and the blinding was really kind of hindering that. So that was, in large part, the driver to moving Dopa label, and I think it was absolutely the right decision reviewing the data and really looking at those early signals after the readout from our first cohort. And as far as entry criteria a gene therapy has never been studied in Wilson patients. And certainly, it makes good sense to want to put any liver-directed gene therapy into as healthy a liver as possible. I think a lot of treaters out there would say their patients are very good.

Their team is good and does a very good job of managing the patients. The truth is, once we started screening a large number of patients, we realized most of these patients do not have LFTs in the normal range, meaning that they’re still really having effect on the liver from the toxicity of that free copper, but we needed to collect that data and have that discussion with the agency in order to adjust those entry criteria to allow more patients to enter the study.

Operator: Our next question comes from Yigal Nacheviz with Citigroup.

Yigal Nochomovitz: Another 1 on 701. I think you mentioned that you’re seeing early signals of normal traffic of copper. Can you expand on that a little bit? Is the goal of this gene therapy to get patients back into the normal range of copper or just closer to normal range?

Emil Kakkis: It’s a little bit early. I’ll let Eric comment a little more on that, but it’s a little bit early to go deep into the data since just the first cohort. But the goal of the program, certainly was to try to improve copper distribution sufficiently to remove corporate efficiency, which we believe is occurring and not fully understood in many patients. And so we haven’t set a threshold requirement for how much that would be. But our goal is by having both detoxification and some improvement in distribution, we think going to have a much bigger impact than you can with the situation. So maybe you want to talk about the early signals of copper.

Eric Crombez: Right. And I think that’s really the point here. I mean key leaders have been great for this patient population, but chelators buying copper that’s freely in circulation. You’re not pulling copper out of these hepatocytes where it’s accumulating. So again, the fact that you have elevated transaminases it shows that you’re not excreting copper into the bile and you’re not loading copper onto ceruloplasm which is how it traffics to cells for copper to act as an important co-factor for a lot of enzymes. So when you look at how you’re measuring coppers for a chelator, it’s different than how we’re looking at copper levels, whether it’s urine blood or from whatever capacity once you establish normal trafficking patterns and then importantly, we still are looking at activity-based assay, which shows the loading of copper on to ceruloplasmin. So really a very direct measure of the effect of this gene therapy.

Emil Kakkis: Yes. So the trapping is you have direct measures near where they’re looking at to give us that sense, which is what the description of improving copper trafficking could come from. But it’s early yet. It’s cohort 1. We have more code to go.

Yigal Nochomovitz: And then on Angelman, just operationally, can you comment for the update in October? And then for the 1 next year, how many of the patients under the U.S. protocol are going to be represented in each of those updates, just ballpark?

Emil Kakkis: Well, you see in October, most of the patients are in the program are ex U.S., there’s only a small number that were on 2 mg. They are now shifting to a higher dose as cohort E. So it’s a relatively small number of U.S. patients are involved in that exact number. I don’t think it’s worth knowing. We put in the data release, how many patients we have. But I think what we’ve — what’s probably most important is when we talk about expansion, we’re seeing, well, well more than 20%, it will be significantly more in ’20 that we’ll have months of data. So that’s why we can do a little more statistical analysis and have a group of people all treated the same way. Whereas in the inflation cohorts, they were treated different ways at different doses, and it’s not as easy to analyze. So there will be a small number of U.S. patients in the fall, but a larger number with loaded the correct way that will be represented in the first half update on the expansion cohorts.

Operator: Our next question comes from Dae Gon Ha from Stifel.

Dae Gon Ha: Two for me as well. One, a commercial question. Just wanted to clarify with the revenue numbers, it seems like there was a jump in the EU derived royalty. Am I misunderstanding something? Or can you maybe delve into what happened there and what the rest of the year may look like from the EU side of things? And then second, on the clinical side, so looking at the press release on GTX-102, you mentioned the encouraging him dependent clinical activity. I was wondering if you can speak to any interpatient variability here. Is there a certain duration of follow-up or certain doses that you’re starting to converge on for driving therapeutic benefit? Or is it still very much individualized?

Emil Kakkis: Great. Well, I’ll start with the second part, and then either Eric or Aaron can talk about the EU part. So what we said is that as we look through time and we even published some of the present some of the day in July that the day 128 data is not as strong as it is at day 17 that going a little longer, particularly some patients have a significant improvement in that time frame. There’s no doubt there’s some variation between patients and responsiveness. Some or responsible at very low doses, some need higher doses. And that will be true, no matter what. Our goal in the expansion course is not to find the perfect dose for all patients, but to find a very good dose that gives good effect a large number of patients, but our expectation in the long run is that there may be some need to be individualization and titration.

And it’s just hard to run that in a Phase III program. So the main goal of expansion to find a dose that works the majority of patients that works well, and we think we can do that. We see changes in all patients, all of them have improvements. But there’s definitely some variation in the degrees of sensitivity. And we’re still learning more in truth is we’ve treated relatively small numbers of patients now for a year, it’s about — I think it’s more in the 13% than have a year or so. And with the expansion cars is going to allow us to get 40 patients on Dragon really learn something about at 40 patients treated the same way, right, and get a better handle on the range and sensitivity. But our expectation there will always be some variation, and we’ll manage it.

But I think if we can get a majority of patients having a good treatment effect, a significant and transformative change of life, then we’ll be able to manage an extension getting to the right optimal place. So let me leave it with that and let Aaron is going to talk about the EU.

Aaron Olsen: On the EU, the noncash royalty did not jump in Q2. But as a reminder, there is a part of our North America royalty that is noncash now, and we can follow up off-line with any other questions.

Operator: Our next question is from Yaron Werber with TD Cowen.

Yaron Werber: Great. So Emil, I got two. One, just on Angelman in a sense, how many patients do you think you want to have in Phase II to nail down the powering for the Phase III? And secondly, and potentially the nail down the schedule, the dosing schedule, — and then secondly, on Sanfilippo, the program — the gene therapy program that you in-licensed in the — based on that Phase I, Phase II data, is there any way you’ve can file for accelerated approval just given FDA’s new overture on accelerated pathways even though that data was still early, not perfect while you’re doing a Phase III confirmatory.

Emil Kakkis: Yes. So on the Asian program, we do have a lot of patients from the extension that are on drug for a long time. So that’s a chunk of patients that help us in deciding the Phase III we’ll announce in the mid part of first half, data from at least 20, it will be well more than 20% of data we’d expect to have 40-plus enrolled, maybe even closer to 50 in role. And so by — towards second quarter or so, we’ll have a lot of data on all of those patients that will help contribute to the final decisions on dose and regimen that we’ll be making. So hopefully that gives you kind of an outline of how much data we expect to have. We definitely think you need more than a handful to make this kind of decision. And 20 years or 20 plus will be a good number to make a handle of what we have.

But before we actually pull the trigger on the Phase III, we expect to have 40 patients worth of data or more to be confident that we’ve got the dose exactly right and we’re picking the right things. So on Sanfilippo syndrome, accelerated approval is near and dear to my heart. I’ve been fighting for inborn areas for like nearly 30 years, read my book, Davin. Anyways, the truth is that the FDA wants and particularly Peter Marks wants us to do or approval, but it’s hard to get reviewers kind of degree. We are working with the FDA potentially on a workshop to talk about that. What I’d say to you is on our own Sample program, it’s not exactly licensed. I guess it was licensed, but it was handed off to us — and we’re excited to help these patients get forward.

We did have to put into play some of the CMC part of the story, making the product has to get made. And a lot of the time line is driven more about getting CMC set up than the actual data part. So in the end of the day, even if they said today, that we could file, we’re still not ready because of the CMC part. So — but we’re going to work on getting slight approval. I do believe there is an appreciation, but now we need to get some degree of science to start doing it. And we’re setting up for the group of companies to go to the FDA have a workshop and talk through that and I’ve been advocating the FDA both in editorials and in meetings about the need to start seeing the science differently, and we hope we can get that to happen. I think if we can get that to happen for sample and other MPS disorders, it opens the door to us actually getting the benefit of precision medicines that we have trouble fully capturing today with a system that’s just not designed for rare complex neurological diseases needing treatment.

Operator: Our next question comes from Joon Lee with Truist Securities .

Joon Lee: I have a couple. On setrusumab, what’s the value of doing an active comparator study against IV isospenate, which is off label. Are you looking for noninferior it and how did you power the study? And GTX-102, in light of the recent discontinuation of rubinersen, what gives you confidence that 1 or 2 can succeed in Angel and we’re Rubersngwith all the resources that Roche has to offer sales to fans.

Emil Kakkis: Oncetuzumab, our original plan was due to the placebo-controlled trial as the gold standard without an approved therapy. The truth is the really young patients, there was more concern that those patients who have very high fracture rates couldn’t go beyond a placebo and there was resistance to that. At the same time, people are using off-label this phosphate and people have impression of them as being standard of care is off-label. And so — our view, though, is that the potential effects of Citrus should be far better, far superior to bisphosphonate. But the best way to get that is to actually study it improve it. With bisphosphonate, 5 glandimized studies have been completed, 3 failed, 2 succeeded. The treatment effect size is a 20% reduction in fractures.

So it’s not very much patients do seem to feel better with it, which is why it’s being used. We — in our trial, we’re planning to do superiority of setrusumab to bisphosphonates and we think the high fracture rate in that population and our expected effect on those fractures should generate a successful study that throughout the world, all global areas where there may be reimbursement question, table to show why setrusumab should be standard of care for OI and not just a second line treatment. And that’s what that study will do. And also particularly important in Europe, where in comparison to drugs are being used is an important part of getting good reimbursement. So there’s a number of factors on all that. Now on the GTX12 and Roche Rugeneris determination, we’ve been saying from the beginning that there are many ways to go after the near locus, but the locus specific region that we are working on is more potent and it’s because it’s near the fire prime end of the message.

This is the work that Dr. Dindo had, Roche and are working in further downstream. When we’ve made those molecules, we do not feel there is potent. They only data comparison was that Roche required 24 milligrams to do what we were doing with 1 or 2 milligrams. I think whatever happened to the trial, we don’t know. We only know with public, but they weren’t able to achieve a dose level applied safely that will allow them to get their knockdown they required to achieve what their particular goals were. But — in my view, that was somewhat expected because I think the potency was not enough. And I don’t think it speaks at all to the mechanism, which we know from our data in our own hands that we’re having a transformed effect on agent patients and 1 that I think will be extremely important to them.

And that’s operating at the dose ranges of 5 to 14 milligrams so that’s what I think — I think it shows why the science matters and sometimes 1 really smart guy can beat a company with large amounts of money.

Operator: Our next question comes from Salveen Richter with Goldman Sachs.

Tommie Reerink: This is Tommie on for Salveen. Just trying to understand maybe more the format of the Angelman release at the Analyst Day. Is it going to be in a similar kind of presentation is, for instance, the update last year? And any more detail you can provide on follow-up or patient numbers? And just if you have any updates on how the OTC Phase III enrollment is progressing.

Emil Kakkis: Sure. I’ll start with Angelman and maybe Eric can comment on OTC enrollment. So it’s in as what the release is going to look like. You actually want the category, the size of the treatment effects we all want to know. It’s not going to be the same as July because in July, we put out a lot of raw information, which we were personally quite excited about at the company. And that received — we had a complex response from investors because it wasn’t well adjusted. What we’re talking about out is not like that situation where there’s a lot of granular data. It’s going to be more high levels going to talk about clinical meaningless information that will provide to help give people a better feel why we as a company are confident on the importance of this therapy, but it will not be focused on the quantitative data, which we said would be — we’ll let drive the expansion cohorts, the large amounts of data to be able to do what I would call the day-driven statistical kind of look at what we’re seeing, right?

So it’s a little bit more about clinical means for this, and it will be a higher level. than what we saw last July.

Eric Crombez: And then for OTC, like we come in, it’s doing really well. Again, designed very similarly with a similar global footprint with clinical trial sites to GSDIa, so the truly global Phase III study there. So really good enrollment rate and really tracking well to finish up enrollment next year.

Operator: Our next question comes from Christopher Raymond with Piper Sandler.

Nicole Gabreski: This is Nicole Gabreski on for Chris. So just going back to the Wilson program, and sorry if I missed this, but I guess I was wondering if you could just expand on the changes you made for the patient inclusion criteria in the current study. And I guess, was this just primarily around baseline liver transmits levels that were modified. And then, I guess, just beyond does this change your thinking at all about the potential addressable within patient population for a gene therapy.

Unidentified Company Representative: So yes. So the two big parts of entry criteria that change were the lots — after initial conversations with the FDA really wanting these LFTs very close to the normal range with patients not being able to achieve antlers. We were able to have that conversation and allow patients and with somewhat, I would say, mildly elevated LFTs, and that was important. And then also stability of copper levels on chelators and zinc I think most people would tell you that those are relatively stable and easy control. It turns out they are not. So quite a bit of variability in copper levels regardless of where you’re looking — so then again, really changing that criteria to allow enrollment to really accelerate.

I would say we’ve always had high expectations for this gene therapy. We do think with all of really kind of how we target these diseases, replacing what’s missing is important here, key leaders have done a great job for these patients. But again, we want to affect both the toxicity or free copper, which key leaders does a decent job of addressing. But then again, with the signs and symptoms of patients who are not well managed on chelators, we think is really driven by the fact that copper is not able to traffic to cells and tissues that need copper tact as a co-factor for some important enzymes. So again, addressing both parts of this disease. And I think, yes, really broadly applicable to all patients living with Wilson disease.

Emil Kakkis: Yes. I would add that I think our view of the addressable market has gone up. We used to say it was a fraction that might have severe disease, not manage their chelators. The Alexion AZ chelator also has been pulled because it really wasn’t helping that probably opens up the addressable market because there’s some view that maybe that key later would be better, but it wasn’t. Given with our knowledge of how many people have transaminases and copper issues still don’t feel right, I do think the addressable market for Wilson could be higher. If we see great effect on copper distribution and symptom improvement otherwise. I think there’s a possibility that turns out to be a more important player bigger fraction of the population.

We still have more data to collect. We’re not there yet, but I do think the possibility that this could become a more important and major that all — most or all patients with Wilson could be addressable, I think it’s a possibility, which I think makes this really important program to push ahead if we are.

Operator: Our next question comes from Kristen Kluska with Cantor Fitzgerald.

Kristen Kluska: Just one on manufacturing. Given the size of your new facility, how much flexibility does this allow you to expand beyond the current pipeline? And maybe what are some of the mid- to longer-term goals with building this as well.

Emil Kakkis: Yes. The plant gives us a lot more flexibility because we can flip and switch what we do. We’re still in the buildup phase in terms of how many runs we can run, but that will accelerate quickly. And we also have a second suite that we can outfit and operate, which would get us to be running 32 runs a year. So I think we probably would have capacity to do. For example, if we did partnerships or other deals we could offer manufacturing plus the piece of those type of deals is something we could do. But I would say to you, we have really one of the larger AAV programs out there with 3 probes in Phase III, Wilson, OTC, GSD 1a plus. We also have potentially to put in the plant the UX-055, the CDKL5 deficiency gene therapy, which is heading to our 90 and is actually the subject of the first run in the plant.

We also have a program to talk about too often is the Duchenne program, which is coming and potentially some others. So we have a great use for the plant, but I do think it gives us the capacity to be able to do some other manufacturing for other programs as needed. And I think the team will be a superb team. And given the challenges that CEOs, I think that it will become a valuable asset broader than simply making our own products.

Operator: Our next question comes from Anupam Ram with JPMorgan.

Unidentified Analyst: This is Priyanka on for Anupam. We just have one quick question. Will the Analyst Day we only focused on the 143 and GTX-102 programs? Or will the overall pipeline also have other various updates?

Emil Kakkis: Yes. Our expectation is to have several other programs highlighted there. Some you know about, maybe some you don’t. It could be interesting. Don’t miss it. So we have a great pipeline. The hard part is that it’s really hard for most people to handle more 1 or 2 good things. But Ultragenyx has got half a dozen things, and we will have more than GT-102-OI at the meeting. So I think it tended to be exciting. We tend to bring what we are learning and new things we’ve put together and hopefully give people a better breadth of understanding of the value we’re creating and what we can do as a company is I think we will become the leading rare disease company out there.

Operator: Our next question comes from [indiscernible] with Baird.

Unidentified Analyst: This is Ben on for Joel. I’m sorry if I missed it, but what are next steps for dosing the remaining four patients in Cohort 2 for Wilson’s disease.

Aaron Olsen: Yes. No. So we do have a 2-week dosing interval that was required by the FDA for Cohort 2, those additional 4 patients are lined up and ready to go.

Emil Kakkis: They’re all screened and waiting. So it’s just a time clock now.

Aaron Olsen: Yes. And then we will have another DSMB meeting, and then we’re only required to have a single week between dosing for the third cohort. So the time-line will start to accelerate.

Operator: And I’m not showing any further questions at this time. I’d like to turn the call back over to Joshua for any closing remarks.

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

Operator: Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect, and have a wonderful day.