Good day, ladies and gentlemen, and welcome to the PTC Therapeutics Fourth Quarter and Full Year 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

[Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to introduce, Head of Investor Relations, Ms. Emily Hill. Please go ahead..

Hello. Good afternoon, and thank you for joining us to discuss our 2018 fourth quarter and full year corporate updates and financial results. Joining me on today's call is our CEO, Stuart Peltz; our Chief Operating Officer, Marcio Souza; and our Principal Financial Officer, Christine Utter.

Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. Please take a moment to review our slide from our current corporate presentation, which contains our forward-looking statements.

Our actual results could materially differ from these forward-looking statements as any and such risks 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 reports 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 and non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available in today's earnings release. With that, let me pass the call over to our CEO, Stuart Peltz..

Thanks, Emily, and thank you for joining us on today's call. 2018 was a transformative year for PTC. Going into the year, we set out several ambitious goals. I'm proud to say that we achieved those goals.

We met our DMD revenue guidance, expanded the use of Emflaza, achieved a label expansion for Translarna, and advanced our oncology pipeline with two potential products now in the clinic. Importantly, we also advanced our SMA program.

Following a productive discussion with the FDA, we and our partners, Roche and the SMA Foundation feel confident to submit the results of FIREFISH and SUNFISH in an NDA later this year. We are very proud that the SMA candidate resulted from PTC's internal splicing program.

We have been utilizing this platform to identify other compounds that selectively and specifically modulate splicing. We have a number of other splicing programs that are solely owned by PTC.

Besides achieving these goals, we also strengthened PTC with two business development deals, adding the CNS gene therapy platform with multiple programs and in-licensing two products that we plan to commercialize in Latin America.

You may recall that in early 2018, we presented a three-year vision for the company to become a fully integrated orphan drug company. Execution is at the core, everything we do at PTC and we are proud to have accomplished this three-year plan in just one year.

Now looking forward, we have defined what we want to deliver over the next three to five years. We described these longer-term goals at the beginning of this year, and I'd like to review them with you today. On the commercial front, in 2018, we had $263 million in revenue from the DMD franchise.

Over the next few years, we anticipate three product launches, Risdiplam, TEGSEDI, and AADC gene therapy, as well as expanding Emflaza's label to include DMD patients two years to five years old. We also have potential for a U.S. approval of Translarna in 2020 based on the outcome of the dystrophin study that started at the end of last year.

The combined potential revenue of these products that are currently in our pipeline is anticipated to grow in excess of $1.5 billion in potential revenues by 2023. We will continue to invest and expand our discovery clinical stage pipeline.

We plan to accelerate 20 programs over the next five years, through internal and external innovation sources across small molecule and gene therapy.

In addition to outlining our five-year vision, we have also recently provided updates on key programs that we will cover in more detail later in the call, including patient identification efforts ahead of our plan BLA this year with AADC deficiency, a planned NDA submission this year for SMA and the anticipated launch of TEGSEDI in Latin America.

We are proud that PTC has positioned itself to be able to become a leading orphan drug company with diversified pipeline of innovating the programs and products. We are leaders in DMD, have built a solid revenue base and have strong talents with committed and motivated employees.

We ended 2018 with a cash balance of $227 million, and recently completed an equity offering with net proceeds of approximately $225 million. We are in a very strong cash position to execute on our strategic vision. I'll now pass the call to Marcio to review our clinical and commercial progress..

Thanks, Stuart. We have a vision of building a portfolio of multiple products to serve patients with rare disease with the potential 2023 revenue in combined excess of $1.5 billion as Stu just discussed. Our expertise in all aspects of our business from patient finding to more excess, the key driver of our long-term growth.

We have spent considerable time and efforts, should be across functional teams that can rapidly increase disease awareness, identify the patients and bring differentiated therapies to the patients that need that. This includes a state-of-the-art patient service, which is a key components of rare disease treatments.

As Stu also mention, our DMD franchise has an exceptional 2018, reporting a combined revenue of $263 million. This includes sales of Translarna, outside of the U.S., which is now in over 40 countries, and sales of Emflaza in the United States.

In 2018, the EMA approved our label expansion for Translarna to treat nonsense mutation DMD patients aged two to five. Importantly, this label expansion allows patients in all the countries that recognized the EMA approval, to gain access to therapy at a younger age, which we believe would maximize the benefits to them.

Additionally, there is an equal and very urgent unmet needs to treat non-ambulatory patients. With that in mind, late last year, we have submitted to the EMA, our label expansion application for the treatments of non-ambulatory patients.

We are in the process of answering some questions we got from EMA and we expect to finalize the regulatory process later this year. We believe Translarna has the potential to benefit all patients regardless of where they are in the disease progression.

In the United States, we have begun our dystrophin study, which will lead to an expected resubmission of our Translarna NDA for accelerated approval later next year. Our DMD franchise also includes Emflaza, which is approved for all patients ambulatory and non-ambulatory aged five and older in the United States.

We continue to work hard to establish Emflaza as a standard of care in the U.S. At the end of last year, we received a request from the FDA to file for pediatric label expansion for Emflaza. Yet they informed us that we have sufficient data to file the sNDA and that a study would not be required to demonstrate safety and efficacy in this population.

We have submitted the sNDA for Emflaza for patients two years to five years old, and at the beginning of this year. And the action dates we received from the agency is July the 4. Our commercial team is diligently preparing for the launch in this expanded indication later this year.

Based on the expected continued growth of both Translarna and Emflaza, we have given 2019 DMD franchise revenue guidance of $285 million to $305 million. We are proud to establish in the strong commercial footprint globally, which has made us the partner of choice for some very unique business development opportunities.

Last year, we in-licensed Latin America commercial rights to two products from Ataxia, TEGSEDI and Waylivra. To be successful in the region, it's essential to have the right process and the right team in place. Leveraging our Latin America infrastructure, we have completed all necessary additional hires to support these products.

Importantly, we have also established the necessary process to support patients, including an exclusive partnership with our nursing support team. On the regulatory front, we had filed TEGSEDI with ANVISA and we expect approval later this year.

We are eager to bring TEGSEDI to the Latin America markets, where the polyneuropathic form of hATTR is the most prevalent with approximately 6,000 patients in that region. We are especially proud of this stronger in a competitive markets as this one is expected to be.

Speed and execution are critical for success and we believe we are ahead of the game there. I would now like to highlight our CNS gene therapy platform. As you may recall, our strategy in pursuing CNS' specific gene therapy includes some key advantages.

The first is the ability to target the specific area where the disease process is occurring, maximizing the benefits risk.

Secondly because cell turnover in the brain is so low, there is the potential for durable effects and the potential to use a small amounts of that vector, which we call micro-dosing, which reduce the manufacturing burden for the process.

Lastly, the combination of the target approach with these small dose reduce the potential for immunogenicity, reducing the overall risk for the progress. Our gene therapy programs are rapidly advancing. We say as you see we have started pre-commercial efforts ahead of the anticipated filing of the BLA later this year.

As we said before, we have already identified approximately a 100 AADC deficiency patients in the United States and Europe through early key opinion leader interactions. We continue to identify new patients steadily week after week, but we're now moving to a more focused screening program at at-risk populations.

For instance, we have identified a cohort of approximately 100,000, apparently misdiagnosed patients in cerebral palsy clinics in the United States. Those patients present with normal MRIs. We expect to have the screening programs in several policy implemented this quarter.

We plan to share an updates on the screening programs as well as on the patient identification later this year. Beyond the AADC, we plan to submit an IND by the end of this year for the next gene therapy program in the pipeline to treat Friedreich's ataxia. FA is a devastating disease with no real underlying treatments at this point.

We have all the elements in place to start the clinical trial in patients following the IND submission. Next, the most advanced program is our gene therapy candidates or Angelman syndrome, which we plan to file an IND next year. As we have said, we are developing a robust pipeline of gene therapy candidates.

And to that end, we intend to declare new candidates later this year. In order to support this growth in the gene therapy pipeline, we are also in the process of securing in-house gene therapy manufacturing.

Lastly, we continue to advance our oncology programs with several patients dosed in our DIPG trial and having great progress in our AML trial with PTC299. We expect both trials to complete enrollment before the end of the year. I'll now turn the call back to Stu..

Thanks, Marcio. The progress that's been made across our clinical and commercial fronts is impressive. I'd now like to highlight our splicing program, an area of innovation in which we are proud to be both the pioneers and leading the field.

An emerging area of therapeutic focus is the ability to modulate splicing with a small molecule, in which our technology produce the most advanced compound with the plan. We expect this compound which is partnered with Roche and the SMA Foundation to be potentially approved next year for SMA types one, two, and three.

This is great news for patients with SMA, but it has a broader implication for PTC as a powerful validation of our splicing platform technology. It is now clear that we can identify selective and specific compound that modulates splicing to treat disease.

A small molecule also has the advantages of broad tissue distribution as well as the ease of administration. We are applying our splicing platform to other diseases with high unmet medical needs, and have programs across the R&D spectrum. These include familial dysautonomia and Huntington's disease.

I'm happy to report that at the end of 2018, we declared the development candidate for familial dysautonomia and we expect to enter the clinic this year. I'd now like to turn the call over to Christine Utter, our Principal Financial Officer.

Christine?.

Thanks, Stu. Earlier today, we issued a press release summarizing the details of our financial results for the fourth quarter and full year of 2018, and I refer you to the release for full details. I'll start with a few comments on our financial performance and our guidance for 2019.

Starting with our top line results, we reported $263 million in combined revenue across our DMD franchise, for the full year of 2018 compared to our $174.1 million in 2017. Translarna net product revenues were $171 million for 2018. This compares to $145.2 million in 2017, representing an 18% year-over-year increase in Translarna revenue.

For Emflaza, we reported net product revenues of approximately $92 million for 2018, a revenue increase of over $60 million from 2017. We are proud to provide our expectations with respect to continued commercial growth. Our 2019 DMD franchise revenue guidance is $285 million to $305 million.

As Stu mentioned, we have also outlined the potential combined revenues for products and our existing pipeline in excess of $1.5 billion by 2023.

Non-GAAP R&D expenses were $155.9 million for 2018, excluding $16.1 million in non-cash, stock-based compensation expense, compared to $102 million for 2017, excluding $15.5 million in non-cash, stock-based compensation expense.

This increase in R&D expense reflects costs associated with advancing our gene therapy platform and increased investment in our research programs as well as advancement of our clinical pipeline.

Non-GAAP SG&A expenses were $136.4 million for 2018, excluding $17.2 million in non-cash, stock-based compensation expense, compared to $106.2 million in 2017, excluding $15.1 million in non-cash, stock-based compensation expense, reflecting continued investment in commercial activities to support our DMD franchise.

I would also like to reiterate our non-GAAP R&D and SG&A expenses guidance for full year 2019 of $360 million to $370 million, excluding non-cash, stock-based compensation expense of approximately $35 million. This expense guidance reflects advancing gene therapy and supporting our commercial products.

Net loss for full year 2018 was $million compared to a net loss of $79 million for 2017. Cash, cash equivalents, and marketable securities totaled approximately $227 million at December 31, 2018, compared to $191 million at December 31, 2017.

I would also like to point out we’ve recently completed a public equity offering resulting in combined net proceeds of approximately $225 million. I will now hand the call over to the operator to start our question-and-answer session.

Operator?.

Thank you. [Operator Instructions] And our first question comes from the line of Ritu Baral with Cowen. Your line is now open..

Hi, guys. Thanks for taking the question. I have one question and one follow-up. The first question is on Risdiplam and the submission.

What indication or label are you going to be submitting for? I know the two trials span type 1 and type 2, but do you anticipate filing for a certain age range or certain week range? And then my follow-up question is on the patient identification activities for AADC.

You mentioned that there was a pool of about – a pool of 100,000 patients misdiagnosed with cerebral palsy with normal MRI. Can you say like how many centers that's across and whether this is some sort of opt-in program that the screening will use or you just sort of go through the centers and go through blood spots? Thanks for taking the question..

Hey, thanks, Ritu. So in terms of the SMA, I think the plan is really, and it was based on our conversation with the FDA, was to file based on part one of both type one, two and three, so really to get a broad label within that. As for AADC, maybe I'll let – Marcio you want to….

Yes, absolutely. And maybe just, hey, Ritu, just to finish on the – what Stu started, right, that's no expected restriction on the age or way of those patients. We feel that we have very comprehensive program, several cohorts that examine that relationship.

Roche has done a really good job here on executing that trial and that's why we are reinforcing what our belief is that this is the most competitive SMA program globally.

When I move to the AADC efforts for patients identification, there are basically two layers of Planex in the United States, and outside of the U.S., there's a lots of like different dynamics. In the U.S., there are like 65 or so main centers for cerebral palsy and then expanded cohort that is up to 200 give and take.

The way we were doing this is through a multi-pronged approach. So, one is, we are offering four centers if they want to conduct the screening as a “research projects”. So that's basically a protocol driven. We're going to go to the IRB, like contract with them, so on and so forth. And we have a very good uptake there.

There is a number of the centers that really wants to do that way and go for the entire population. For the ones that either don't have the capacity right now or they don't have like a structure to run. As a research we have what we're calling non-protocol. We are providing them the ability to screen their patients.

And we have those centers opt-in there as well. Currently, we're looking into like sample as whole bloods but we are validating and finishing the steps of validation for a dry blood spot. So moving to that process is going to be faster, as well more productive throughout the year.

But pretty much all of them are on board, on the what we call Tier 1, that's where majority of the patients are in. So should start screening patients in the next couple of days, so in Q1, and expect to report the progress like later in the year in a more consolidated fashion.

Does the help?.

Yes, it does.

And for the screening, is this something that's sort of done in the background anonymously or is it something that you need sort of individual, family, individual patient's parents I guess approval to run the [indiscernible]?.

Yes. No, that's a really great question. So for the one that is done with the protocol, so this is part of like a research clinical program, right. So there is a consent form, and they're going to go through that and so on. For the other one is a basically two that's being offered to the families.

We are looking to this marker in the U.S., you can do like a 3-OMG, so it's a precursor of dopamine. That's a very simple and one that's elevated will go and you genotype these patients. Outside of the U.S.is a little bit more country-by-country.

Most of them we're just providing the data they're going through and screening the patients they have, so it's more conversation with the family. As you can imagine, every day we learn more about this as well. These families really want to know if it is not cerebral palsy, that's something that can be done.

So we're seeing like very much faded families seeking theirs and having positive conversation. So, we don't see like any barrier there. The barriers were more on putting the process in place, and now that we have that it should go relatively quickly..

Great. Thanks for taking the questions..

You bet..

Thank you. And our next question comes from the line of Eric Joseph with JP Morgan. Your line is now open..

Hey, guys, thanks for taking the questions. Just a couple from my side, first, on guidance for 2019, I just wanted to unpack DMD sales a little bit. At the top end of the range looks as though you are tracking under the run rate for fourth quarter.

So I know that you have talked a little bit about the expectation in seeing lumpy demand over the course of the year, but is there anything else that implicated in current guidance anything in – with respect to pricing. And if there are any expectations on pricing headwinds, where might they be coming from? And then I have a follow-up..

Yes, great. Thanks, Eric. I'll start and then pass it on. You will see, I think, we're adding on patients both for Emflaza and Translarna that continued to grow. We do plan on some approvals in certain countries that can have transient aspects on the dynamics of the market. But I'll pass it on to Marcio to sort of go into what the thinking is on that..

Sure. Thanks, Stu, and hey, Eric. So couple of dynamics here. And I think they are important for everyone to understand. So one is Stu just mentioned, we are seeing patient growth, and that patient growth involve products in all geographies. So the premise of the business and the base is quite positive.

The way we are looking into this, right, to reach our goal, like our 2023 goal that we presented earlier this year is the dynamic of patients over time increasing, staying on therapy. And to do that in some of the countries this year, we believe we're going to have to make some adjustments in terms of the pricing, volume mix.

So there is a little uncertainty, I would say, on that that we are accounting for in the guidance, specifically as it comes to Translarna, since some of these markets became quite big, but there's still a lot of potential.

So when you are looking into the amount of patients that are being treated versus the potential, it doesn't make sense for us to just like be stubborn and not try to gather as many patients, because at the end of the day that's why we are doing business, is to treat these patients.

So there might be a little bit of a negative impact on the price mix throughout the year, which is going to correct once we get those patients all on drug, and then the other countries started. So that's one that might impact. I think it is equally important to talk what is not in the guidance, right. So we don't have the two to five for Emflaza.

You might have noticed on the prepared remarks that we talked about the July 4 approval by the FDA. We received a notification by the end, that's the action date we hope it's an approval. And then with that we're going to be executing the launch, while patients between two and five are not necessarily fully diagnosed yet.

There is a pool of patients there. We're going to be adding dose and depending on how fast we can that might have a significance upside for the guidance. And the non-ambulatory in Europe is not included either here since we're stealing regulatory conversations.

So we try to be as we always are like quite responsible on the way we guide considering all the market dynamics..

Got it. Just a follow-up on Emflaza if I could..

Of course..

We can see that the trial design is up on Clinicaltrials.gov, just wondering how we should be thinking about recruitment timelines, also the level of input and discussion you had with FDA and its design? And I'm also curious to know whether there are opportunities for – to expand the exclusivity runway here potentially through an additional orphan indication? Thanks..

Sure.

And are you referring to the Limb-Girdle 2i?.

Sorry, Limb-Girdle Phase 2 study, yes..

Yes, I thought so, because Study 033, there was the two to five were actually removed because the FDA told us, we don't need to conduct that anymore. So we got a lot of inputs from key opinion leaders here from the biggest center in the U.S. that is 2i. We are fairly constant with some of the natural history they gave to us.

That was what drove the design. Obviously we filed that with the FDA and the recruitment we expect to be relatively fast because there is absolutely nothing approved or in developments for that specific some type of Limb-Girdle which is the most prevalent type in Caucasians at least with the not so vast and expanded literature that's available there.

So, going to provide a little bit more update later in the year on how it's going, but we feel really good about that. On the expansion of the runway in terms of the product, there is a number of things we are doing. Some of them had to do with – for some population this is not that convenient to deliver.

Maybe some other formulations would be more appropriate here. There is a number of elements that you are not quite ready to discuss publicly, but we should be at some point and you might see some things coming off a clinical trials log off as well in the near future in terms of how we are approaching that.

Right now, we are – the base case is the runaway that is present for the products, but we are, as I just said, we are relooking for a number of ways to potentially expand that..

Got it, thanks for taking the questions guys..

Thank you..

Thank you. And our next question comes from the line of Gena Wang with Barclays. Your line is now open..

Thank you for taking my questions. First one is just wondering maybe follow Eric's question, what is the average pricing now for Translarna? Previously our understanding was like $300,000..

Hey, Gena, it's Marcio. So the price has been quite stable for Translarna, while we haven't guided to a specific price. But one thing that we took a lot of care of is we don't want like countries to be parallel reporting or patients to be treated differently in one country and other. So we kept the price fairly stable globally.

We have some like large markets like entering now with the potential to expand dramatically, so that's put a little bit of the negotiation dynamic on the table. And it's the fifth year of the product as well. So we are looking into here, where are the patients that are not being treated.

So quite positive the dynamic so far, especially for an international product that's not in the U.S. We're not talking – when I'm talking about price mix, we're not talking about crazy erosion of value, just wanted to make that clear.

But we believe there are some responsible adjustments that can be done in order to expense disproportionately the number of patients on drug..

Okay.

So just wondering are we talking about like 20%, 30% discount or are we talking about 50% discount in the new territory?.

Yes, I think what you're talking about is depending on the size of the opportunity on some of those markets, and the willingness of the payer, the governments to negotiate longer-term contracts, that we would be willing to give discounts like we have in the U.S. for CMS, for example..

Okay..

That's the kind of thing we're talking about..

Okay. And then another quick question regarding Risdiplam, just wondering would early data of pivotal portions from both SUNFISH and FIREFISH be part of FDA final decision.

Since both trials already completed enrollment now and should have initial data by the time FDA would take a look and make a decision?.

Yes. So, no, the plan now is really is based on part one of the both SUNFISH and FIREFISH trial to make that sufficient for – we thought that we had very good discussions, whether this would be sufficient for approval. So that's the game plan of what we're planning on..

Okay.

And then very quick last question, regarding the Latin America commercial preparation, just wondering how much investment in terms of dollars, you will need to set up a salesforce and be commercial ready for – in both TEGSEDI and Waylivra?.

Yes, of course. So first thing is just to say we hired every one we had to hire in Latin America. Kudos to Eric and his team, who were like very ready to do this, execute this in a matter of weeks. So we don't actually expect to add anyone else to support TEGSEDI.

We obviously don't have anyone dedicated to Waylivra, since the product is not approved elsewhere. So we are not putting any efforts right now. There are basically three major components, right; the commercial, medical, and then the patient support.

And we see them kind of equally like, and this phase right now it's mostly unsolicited request, so our medical affairs folks are in the fields. We have neurologists on staff. We have like great healthcare professionals on our medical staff that are giving that support.

Equally important is the patient monitoring both to help them maximize the standard of care, the testing, get familiar with the testing program we're going to have later, but then understands this connection with B2C, and that's in place as well is a third-party, in our view, it's the best provider of this kind of service in Latin American, it's an exclusive contractor to us.

And then the third part is we did not create a special field force for TEGSEDI, we actually expanding what I normally call solve for zip codes, meaning we are – we're reducing the areas of coverage. Brazil is a very large country, Argentina is a large country we are reducing the area of coverage, so we have more people doing both products.

Because what we've seen is there is about 50% to 70% overlap between the locations and the key opinion leaders and treaters with Translarna and TEGSEDI. So it's highly complementary..

And so I believe the good point there as well is that these are already ongoing efforts..

Correct..

We've already started working and so physicians are aware of this, and we've also submitted for approval already, so which we anticipate will be this year. So there's already a lot of effort that's been ongoing to get ready for this..

Okay, great. Thank you..

Thank you, Gena..

Thank you. And our next question comes from the line of Joel Beatty with Citi. Your line is now open..

Hi, thanks for taking the questions. The first one is on TEGSEDI, kind of a follow-up question of what was just asked.

What you see as the reasonable expectations for the shape of the launch curve there in terms of the key steps that need to be taken toward ramping up sales?.

Sure, hey, Joe. So the beginning of the launch or the beginning of even pre-launch, we expect to have a number of patients as we – to be perfectly honest, we are seeing this already, requesting TEGSEDI for the different channels, right.

The more they hear about it, the more they hear the fact that actually B2C is involved, since we have thankfully a very positive reputation with the physicians. We're starting to get requests and this has been treated as name patient request and going through the process, this takes several months.

So it's going to be fairly slow in the first two months. What we expect is right after the approval, and I'm not going to answer too much on this strategy here, because this is a potentially competitive market.

But to actually accelerate real quick we're entering next year with a potential substantial gain of market share, and then growing on the following years.

So it's slow, I would say, on the next 12 months to 18 months, and then it's starting to have like a hockey stick type of – so it's an unusual launch if you were to think about major geographies like the U.S. and Europe, but fairly usual for rare disease in the geographies in Latin America..

We do think there's a lot of advantages here, as a consequence of just the property of the TEGSEDI, that it's injectable, that there will be ease of – in the instance the patient pick-up as a consequence of that and we're out there now..

Exactly..

Okay. And then maybe one other question on Translarna, you have new Phase 3 trial that initiated late last year.

Could you discuss the design of the trial and what needs to be shown to support an approval in the U.S.?.

Stuart….

Sure, of course. So that – we call that Study 044 – Study 045, sorry, I just got the number wrong there. So it's basically it's a open label study with 20 patients aged 47, were taken a biopsy at baselines at single center in California, and another at nine months. We're not going to read any of this before all the samples are collected, right.

So that becomes the block control internally in the trial. We are using two methodologies which were discussed and agreed with the FDA to measure dystrophin.

So the expectation is that we would see statistical difference between the baseline and the nine months in terms of increase of the amount of protein as measured by – analyzed by a method that's called the CL and a secondary measure that is ICH, is a modified ICH actually on pallets, where we would see the localization in the sarcolemma as you expect to.

So, that's the trial we're enrolling right now. We have couple of patients on the trial. We like have a good interest for that, we expect to enroll like this year in the next several months. With a potential resubmission, obviously, we expect the trail to be positive.

We hope it's going to be positive and we're going to resubmit to the FDA under the old NGA early next year..

Okay. Thank you..

Thank you..

Thank you. And our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is now open..

Okay. Hi, guys. Thanks for taking my questions. Maybe one about risdiplam, I think, Stu in your current deck that posted today as well as the deck that was available back in January you talked about $1.5 billion of potential revenues to the Company by 2023. And in that pie chart, you talk about roughly $200 million in royalties to PTC on risdiplam.

I was wondering if you could give us some color on how you came up with that number vis-à-vis, either priced or market penetration into the SMA market?.

Yes, so we looked at what we thought would be in terms of in excess of $2 billion, where – and it was based on that.

And I think you could see in the previous press release, we put out precisely what was the royalties versus for example in excess of 14% above $1 billion, and excess of 16% above $2 billion and so based on that sort of mix that we looked at the numbers to be around $200 million..

And based on early doctor checks that we've done, it certainly seems that physicians would be excited for an oral.

Could this number be conservative if the switch rate potentially comes rather faster?.

That's funny you said that. And we've had meetings were sometimes people think that is conservative is what we – what it can be. So yes, I think, we thought we start out where we are today and then discuss and grow it as we – as time goes on..

And maybe Stu, if I may jump in. Hey, Tazeen. So the couple dynamics that I believe are important as well, right. So there is obviously debates on drug price internationally. We try to take like a relative conservative stance on that. So that's one point of, I would say, upsides on the model.

In general, we know that type 3s, for example, are largely unserved right now. Our own internal checks and it seems like yours as well show that physicians and patients would be very excited to go from like the teens percent that has been treated right now with the current treatment available to a vast majority of the patients with risdiplam.

That market is not competitive. We expect to really dominate that. Similarly in type two and then the type ones are probably going to be the most competitive of all at the time of launch. When you're looking to another molecule that is durable in the fact it's being safe to-date, it's obviously very easy to administer then becomes to access.

The beauty of this model as everyone knows globally how to get access to small molecules for chronic treatments. So this is a plug and play.

And to that point, you're right, we have a starting point here for 200, but we're not going to stop there, and I'm sure Roche while all the conversations we have with them are not going to stop that either trying to maximize this value..

Yes. Some of the products that really came out of our – it really came out of our splicing platform.

And then when we think about it from the competitive nature of this, this really can be really competitive globally as a consequence, not only because of its ease, the broad distribution, but as Marcio said how people understand how to get access to drugs like this..

Okay, thanks. And then maybe Marcio on AADC, you have talked about finding about 100 patients or so in the U.S. and EU.

Over what period of time has that taken you?.

Yes, so that took about I would say 10 weeks for us. I'm going to say though the efforts like we build the team to do that, right. So that took few weeks.

Like we have a very clear strategy on countries that are our priority and no one is going to be surprised that U.S., Germany for example, like few countries in Europe like these are our priorities right now. So we're putting extra efforts there.

Interesting thing is like we are just in a Congress and we feel like a symposium on agency, right after that we got like some new docs that we didn't really have relationships with. And we got a number of patients that they had genotyped before in couple of labs in Europe.

So we are seeing this, I would say, every week in different geographies, both in our core geographies that we are reporting here, but in non-core geographies as well. You might have seen this. I do a lot of really diligent work on this disease is the number of mutations reported at the time we did the acquisition was about 50. Now, it's more than 80.

So we are seeing like huge efforts there and it's diversifying the pool. So I believe the thesis that the patients were not there, there is a founder mutation, it's pretty much dead right now. You can't have 80 founding mutations.

Well theoretically you can, but then it would be in 80 different pools and actually would be a good thing for us, but that's not what is happening. So the last 10 weeks or so, the screening programs barely started. So we expect to see good acceleration throughout the year as well..

I think that's a really good point. Well, not that that was an effort to find the patients, but it really was finding those that people already – actually already knew what's there, that we're able to find them, and hadn't taken yet the efforts of looking for the unidentified patients yet. So that's just target.

So it wasn't that, in a sense, I know it's always tough to find patients, but relatively speaking, we're able to find them because they've already been genotyped. Now there's a whole bunch that will be in those clinics that we'll be able to find who are just misdiagnosed. So, that's the next step..

Okay. So it seems like since the acquisition you have made quite a bit of progress.

So in terms of your target 5,000 to 6,000 patients potentially, how long do you think it will take you to get to that or close to that number?.

Great question, right. And you can imagine that I'm being quite pushy with my team and working very hard here to get there. Like we see this is going to be a little bit of a classic rare disease launch that really focus on the U.S., .and some key geographies as I mentioned.

We believe it's going to be a very successful launch we did, but on the pie that we were mentioning before, substantial number of patients to be treated in 2023, but even by then, I don't expect to have like all the patients identified. What we expect to see is about, for example, 100 new patients per year in the U.S.

And as we move towards like 2022, 2023, that's the incidence patient population is going to be more obvious and we're going to start to gather those patients who are normally quote-unquote, low[ph], I think it's a great day to discuss this, right.

So Rare Disease Day, rare diseases are so and their diagnosed globally and there is so much push now to include genotyping panels and so on. So in the space of, I would say, five years to seven years, we would expect to have a very good number or percent of those patients, and the majority of the incident patients.

So there's going to be substantial markets the way we see..

And we are working hard to make sure we got a strong launch upon approval. So the patients are lined up and ready to roll..

Okay. And if I might squeeze a last question in really quickly on your oncology portfolio, you're doing a study in AML with PTC299.

Can you just give us an idea of what type of patients that's going to be in within AML?.

Yes, of course. So PTC299, right, DHODH inhibitor, I think the body of literature showing that that's a key pathway for hematologic malignancies in general, but in specific AML, it's been growing. We have some good preclinical and clinical data showing that the mechanism is being activated.

It's a three plus three design with three cohorts in refractory relapsed patients. So we are really getting very severe patients. We are starting as we normally do in trials like this, right, with a dose that is relatively small and subtherapeutic, moving onto two therapeutic level dose.

It is a relatively small – sorry, slow design in a sense, so we expect to enroll during the year all cohorts and to move into an expansion early next year, depending on what are seeing because this is open label, we're seeing a hematological data for all the patients.

We're being able to learn as well the kind of patients would want on the expansion to maximize the probability of success there.

Would that help?.

All right. Thank you. Ladies and gentlemen, our next question comes from the line of Alethia Young with Cantor Fitzgerald. Your line is now open..

Hey, guys. Thanks for taking my question. Congrats on the progress over the past couple of months. I guess two questions on timeline here.

One, can you just talk a little bit more specifically about with the AADC gene therapy? What's kind of left to work through in the manufacturing, and I mean do you view that is like big hurdle as far as getting to the finish line with the FDA or it's just kind of business as usual? And then the second question, as far as SMA Risdiplam readouts over the year, I mean, are we looking at basically every medical meeting will have some sort of update on the part one of the study? And I just wanted to kind of get characterization of like what data we should expect over the year? Thanks..

Yes, I think if – thanks, Alethia, in terms of the second question. First, we'll obviously the next meeting is AAN and we'll be having a full presentation of the results then. So we're excited to be there for that, and we'll do it at the upcoming meetings that continue on after that as well. So we'll continue to update you on that as well.

In terms of the second question AADC manufacturing, once you –.

Yes. Let me give you, so I would say, Alethia, business as usual and manufacturing for gene therapy, I don't think belong on the same sentence this day, it's right. So I'm going to – I'm not going to be cocky there and say that that it is. We take extremely seriously all the feedback we got from the FDA.

We've been pleased and blessed for having the interactions we have with them and get the guidance on the Type C meeting we had late last year. We're following all these steps, NBL that is our CGMO has been great to work with giving a lot of attention to our briefing.

And right now, all these steps that we have to move to get to the BLA later this year are occurring. And hopefully Neil and his team are working extremely hard to get there. Everything is going to continue in place. We continue to expense part of what is a consideration for us here, so obviously we want to have a successful launch.

So we have to have several commercial best manufactured to that commercial launch. So we're looking to that capacity. We're looking to continue to add the material, and I know we discussed this in one of our calls, but just for the broader groups view, we had two manufacturing CGMOs before, both in the United States, that is a clinical trial product.

So we are able to use that process and be out on the commercial, and now we are in the late stage of implementing the methods and everything else the FDA discussed with us for a BLA later this year, as I mentioned..

Yes. And just to remind everybody as well as one of the advantages of what we're doing is, it's stereotactic surgery. So the levels that we need and this is one of the reasons when we went with Agilis is that the requirement and manufacturer is much smaller. We're around two times 10 to the 11th viral particles total.

Well, like Marcio said, we never take it for granted. They are different – in terms of what other programs are, it's a different level of what you need for the manufacturer..

Great. Thanks..

Thank you..

Thank you. And our next question comes from the line of Raju Prasad with William Blair. Your line is now open..

Thanks for taking the question. Just a quick clarification on something you previously said to, the NDA submission is only going to be based on part one of SUNFISH and FIREFISH? And I guess, just that first, I have a follow-up..

Yes, that's right. It was based on our interactions with the FDA, where they saw the results of both SUNFISH and FIREFISH that we are submitting based on that..

Okay.

And I guess was there any amount of time that they wanted to see those patient out before you could submit or is it just when the CMC package and the rest of the package is put together then you can submit it?.

Yes, we're going to – our plan is to put together the package and have it submitted by this year, later this year. So it's really based on that. And most of this is just getting ready to be able to submit in the NDA. So that's what – that's more about not about it longer term necessarily..

Okay.

I guess, what would – if the part two of your study didn't show five patients, what would – are there any discussions there or how is part two going to factor into kind of regulatory discussion moving forward?.

So, Raju basically the conversation with the FDA was center under like and some of the data they are seeing is not being public, because this was at the different time points than the one we showed at the WMS. And based on that I believe the best interpretation of the feedback we got from them is that they're looking to proportions, right.

We always use absolute numbers, but the proper way to look into this is like for part two FIREFISH that was 12.5% of the babysitting. What we are looking to right now if you are to apply that proportion to part one that's about 2.5 babies, right, so three babies would be to that threshold.

When they look into this, they are like look that's robust data in the CHOP-INTEND and few other things. With the – SUNFISH is similarly right. We are seeing patients that normally decline on the MFM-32 base on the natural history increasing. So the package and we never got definitive answers before a full review from any regulatory agency.

But based on the briefing book data they receive, they are like this looks sufficient for the file. Both trials completed one year or more of exposure right now for parts one. So it meets the normal, I would say, non-codified in the statutes but normally used threshold of one year of exposure, a 100 patients a year of exposure, things like that.

So Roche feels very confident, we feel very confident with the package, and it is now more procedural documents they have to be put in place for an upcoming submission..

Great, that's helpful. And then just a clarification question on the milestone payments.

I think it was $400 million in the press release, approximately what percent of those are regulatory and milestone versus [indiscernible]?.

So we posted some slides today in the – our SEC filings in our website. There is a very detailed schedule of all the payments, but maybe Christine you want to go over it..

Yes. So there is about $87 million related to regulatory milestones and the remaining are sales-based milestones. And as Marcio said, all the details as well as appeared royalties are also in the schedules..

Great. And then one question on AADC, any color you can provide on the U.S. versus ex-U.S.

split between those 100 patients?.

Sure. Happy to – so it's about half and half right now like give and take. So, as I mentioned before right, we're putting effort on both regions.

In Europe, it's relatively easy as physicians request the kids that passed this, so we probably going to see a little bit of an uptick in Europe on the next couple of months potentially, I don't know, because we haven't run, but potentially faster than the U.S., but it's equal. Right now, we expect that this is pandemic.

So we don't expect to have a concentration in one region and other obviously putting a lot of emphasis to get all these screening up and running in the U.S., because U.S. is our first launch. It's the most important pharmaceutical markets in the world. We want to be very successful here..

Great.

And then just quick last one, what's the age range between of those patients?.

They are – right now the information we have, we don't have age for all of them, but they are within the age that were exposed to the treatment before..

Alright, great. Thanks for the question..

You bet..

Thank you. And our next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is now open..

Hi. Thank you for taking my questions. My first question is on the AADC program.

Among the patients who identified, can you talk about what proportion we should be thinking about as being eligible for treatment with gene therapy? Would all of them be eligible or just a small part?.

Thanks, Brian, for the question. What we've seen is that – and what we anticipate is that all patients would be eligible for the gene therapy treatment. We've seen actually and it's interesting, regardless of age, we've seen improvement in all the patients thus far..

Got it.

And then bigger picture, can you talk a little bit more about your plans to build out the in-house gene therapy franchise with respect to what type of manufacturing platform you plan to use? What's the progress been like to date? Any specific timeline goals or milestones we should be thinking about, and potential associated costs there as you build out an emerging franchise?.

Yes. Yes, thanks for that. I think on one front it's, we're going to have our own internal gene therapy group building out factors and things like that as well. And then I think as we've talked about in terms of – we thought that it's important to control the manufacturing ourselves, and we've been looking hard to be able to bring it in-house.

And I think probably within the next 60 days, 90 days, we'll have probably more to talk about that..

Okay, fair enough. And then last one from me. Curious your latest views on use of capital for continued external business development versus investing in the internal pipeline and other capabilities like manufacturing.

Where do you stand? What's your latest thoughts?.

So, I'll start, and then you echo, Christine. Our view is obviously where – as we've talked about in the vision of what we'll be doing, we will be expanding both our research and clinical programs internally, and so we said what we would be – as we said in our vision of what we would be. And so we're doing that as well.

But we've always said, we'll continue to look externally as well. Obviously, you can't do everything in-house. And so we continue the search and try and see if there's other things that are compatible fit for us. In terms of capital maybe Christine, you want to….

Yes. Just to remind you, we had $227 million in cash at year-end. We recently completed the equity offering of approximately $225 million. So with our solid revenue base and our diversified pipeline we will continue to invest both internally and also continue to look externally what fits our strategic vision..

Great. Thanks so much..

Thank you..

Thank you. And our next question comes from the line of Martin Auster with Credit Suisse. Your line is now open..

Hi, everyone. This is Mark on for Marty. Thanks for taking my questions. I guess looking at risdiplam, I have a couple of questions on that particular product.

When should we expect to see functional data for the JEWELFISH study, and can you outline what specific data you may provide? And similarly when should we expect to see initial RAINBOWFISH results and what do you expect the initial data updates until? Thank you..

I don't know – so the JEWEL – but I guess a couple of points that one is the JEWELFISH has been expanded to include patients that are treated with gene therapy. And so while that's relatively new we would probably have data at the Cure SMA Meeting is probably when we would be talking more about that..

And maybe if I may, Stu, so JEWELFISH is a safety trial at its core, obviously there is some measures there. We are looking to the PK and the exposure of protein levels.

I will show some of that data at WMS, which is extremely positive in my view when you're seeing patients switching from other therapies and having an increase in sustainable levels of SMN protein. So that's going to continue through SMAs, the next expected because the cohort was just expanded to include other type of treatments.

RAINBOWFISH is on the beginning of enrollments. So we're not quite ready to give like an estimate on when that's going to be reading out. But as you can imagine, there's a lot of interest with physicians being more and more constant with risdiplam on treating presymptomatic patients with it..

Perfect. Thank you..

Thank you..

Thank you. And that concludes our question-and-answer portion. I would now like to turn the call back over to CEO Mr. Stuart Peltz for closing remarks..

Thank you. Thank you all for joining the call today. And as you know, today is Rare Disease Day, and I think it's a report and reminder of what drives us here at PTC, where we're focused on rare disease really every day.

And as you've seen, after a transformative 2018, we're now – really now executing on our vision to be a leading company with a diversified portfolio on the scientific cutting edge to treat rare genetic disorders.

With an expected for BLA for gene therapy treatment of AADC and a planned NDA for Spinal Muscular Atrophy treatment both this year we will be advancing toward this goal.

We look forward to delivering on the five-year plan to bring innovative products that make a significant difference in patients lives and will enable us to achieve the potential $1.5 billion revenue by 2023. Thank you all for joining the call today..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a wonderful day..