Ultragenyx Pharmaceutical - Q3 2024

Executive Summary

• Q3 revenue was $139.5M (+42% YoY) with Crysvita $97.8M, Dojolvi $21.4M, Evkeeza $10.7M; net loss improved to $(133.5)M and EPS $(1.40) vs $(2.23) in Q3’23.
• Sequentially, revenue declined from Q2’s seasonal high ($147.0M) but EPS improved Q/Q from $(1.52), while management reaffirmed full-year revenue guidance of $530–$550M and Crysvita toward the upper end of $375–$400M; Dojolvi $75–$80M; net cash used in ops ≈$400M.
• Clinical catalysts strengthened: FDA Breakthrough Therapy Designation for setrusumab (UX143) in OI, DTX401 Phase 3 crossover patients showed a 62% mean cornstarch reduction at Week 30, and UX111 moved toward an end-of-year BLA filing path.
• Management highlighted potential for “up to three near-term BLA submissions and approvals,” positioning revenue acceleration and portfolio breadth as stock drivers into 2025–26.

What Went Well and What Went Wrong

What Went Well

• Crysvita revenue grew 31% YoY to $97.8M; LatAm/Turkey product sales were $36.0M (+85% YoY), demonstrating robust international demand and access expansion.
• DTX401 Phase 3 crossover analysis showed a rapid and larger 62% mean cornstarch reduction by Week 30 vs 41% at Week 48 in the original treatment arm; safety remained acceptable, strengthening regulatory case for mid-2025 BLA.
• FDA granted Breakthrough Therapy Designation to UX143 based on Phase 2 Orbit and ASTEROID data, potentially expediting review timelines and increasing visibility into OI commercialization.

Quote: “We continue to see substantial year-over-year revenue growth... This growth could accelerate with up to three near-term BLA submissions and approvals” — Emil D. Kakkis, CEO.

What Went Wrong

• Sequential revenue fell from $147.0M in Q2 to $139.5M in Q3; management cited quarter-to-quarter variability in Latin America ordering, which can affect reported sales cadence.
• Operating expenses increased Q/Q to $271.5M (from $263.4M in Q2), with R&D $170.1M and SG&A $80.4M; non-cash stock-based comp was $41.6M, continuing to weigh on profitability.
• Estimates data from S&P Global was unavailable in this session, limiting direct beat/miss analysis versus Street; however, management only reaffirmed guidance, not raised, suggesting cautious trajectory after a strong Q2.
  (S&P Global consensus unavailable due to data access limits in this session.)

Transcript

Eric Harris (Chief Commercial Officer)

Good afternoon and welcome to the Ultragenyx third quarter 2024 financial results conference call. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, you will have an opportunity to ask questions during the Q&A portion of the call. It is now my pleasure to turn the call to Joshua Higa, Vice President of Investor Relations.

Joshua Higa (VP of Investor Relations)

Thank you. We've issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. Joining me on this call are Emil Kakkis, Chief Executive Officer and President, Eric Harris, Chief Commercial Officer, Howard Horn, Chief Financial Officer, and Eric Crombez, Chief Medical Officer.

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

Emil Kakkis (CEO)

Thanks, Josh, and good afternoon, everyone. This is a great time for Ultragenyx as we successfully have completed development work across our late-stage program and now are reaching the submission stage. If we achieve our approval from regulatory authorities, we expect to build further revenue momentum on top of our existing growing commercial portfolio.

We continue to see substantial year-over-year revenue growth as we expand geographic access and further reach more patients with our medicines. This growth could further accelerate up to three near-term BLA submissions and approvals for our treatment for both Sanfilippo syndrome Type A and GSDIa, and potentially for osteogenesis imperfecta.

These three late-stage clinical programs could be first-ever approved treatments with the potential to dramatically improve the lives of patients and their families. Doing three submissions within the same year or so is a special opportunity we've earned with our investment and development these last years, and we understand the importance of these efforts for the patient community.

This quarter, we have continued to make progress across our clinical portfolio. I'll touch on a couple of points and leave the rest for Eric Crombez, our Chief Medical Officer, to discuss in his prepared remarks.

On UX111 for Sanfilippo syndrome, as we announced back in June, we reached agreement with the FDA that cerebrospinal fluid heparan sulfate is a reasonable surrogate endpoint that could be used to support accelerated approval for the treatment of Sanfilippo syndrome, and we already have clinical data to support clinical efficacy of the product as well.

We have since participated in a pre-BLA meeting with the agency where we aligned on the details of the BLA we are on track to file around the end of this year. We greatly appreciate the FDA's flexibility and thoughtful approach to getting this product submitted and potentially available. Last month, UX143, or setrusumab for osteogenesis imperfecta, received breakthrough therapy designation from the FDA as a treatment to reduce the risk of fracture associated with OI Type I, III or IV in patients two years of age or older.

We're pleased that the FDA has recognized the potential for UX143 to offer substantial clinical benefit for these patients. Before I hand it over to Eric Harris to talk about the commercial business, I wanted to acknowledge the work our teams have done around the world to bring these important medicines to patients.

In Latin America, our team has already generated over $110 million in revenue this year, with the bulk of it coming from Crysvita, but also Mepsevii, Dojolvi, and Evkeeza. Across Europe and the Middle East, we are successfully navigating the country-by-country reimbursement process for Evkeeza and Mepsevii. At the same time, we are continuing to address the unmet need for Crysvita in Turkey and respond to growing demand for named patient access for Dojolvi.

In Japan, we launched Evkeeza in the second quarter of this year and have recently reached agreement with the PMDA that Dojolvi does qualify for a conditional filing package based on the current clinical data. We expect to file the JNDA in mid-2025. These two products are key components in building our rare disease business in Japan and could ultimately contribute to the company's overall path to profitability.

Finally, in the U.S., we continue to support KKC's efforts commercializing Crysvita while also maintaining relationships with the healthcare providers treating patients with XLH and TIO. We clearly have a firm foundation to build from as we think about a future launch of UX143 or setrusumab in OI. We're also calling on prescribers at the Centers of Inborn Errors of Metabolism who treat Mepsevii for MPS VII and Dojolvi for LC-FAOD.

These are the same prescribers who could treat patients with UX111 for MPS IIIA, DTX401 for GSDIa, and our other gene therapies. The commercial leverage we're gaining in bone and inborn error products will be important contributors to our financial progress in the years ahead. Now I'll turn the call over to our Chief Commercial Officer, Eric Harris, to provide an update on the progress across our commercial portfolio.

Eric Harris (Chief Commercial Officer)

Thank you, Emil, and good afternoon, everyone. I'll start with Crysvita, where global revenue continues to grow impressively, seven years into our commercialization efforts. In the United States, where our partner, Kyowa Kirin, is leading commercialization, the demand for Crysvita continues to remain strong.

Approximately 60% of the start forms in the quarter came from adult patients and were prescribed by community physicians. Across the U.S., there are approximately 420 prescribers, with 40% or so writing more than one prescription. This is encouraging given adult penetration is in the low 20s and suggests Crysvita has meaningful room to continue growing.

We are confident in our full-year U.S. revenue projections given the strength of underlying demand. Shifting to Crysvita in Latin America, where we lead commercialization, our LATAM team delivered another successful quarter by adding approximately 65 new patients to Crysvita, totaling now almost 700 patients on reimbursed therapy since launch.

Brazil is the largest market in Latin America and continues to drive the majority of the revenue in the region. We are, however, seeing increasing contributions from countries including Argentina, Colombia, and Mexico, driven by increasing patient demand. As I mentioned on previous earnings calls, we expect quarter-to-quarter variability in LATAM revenue due to uneven ordering patterns, but remain confident in the underlying demand growth for our products.

Moving on to Dojolvi, growth of new start forms in the third quarter continues to steadily increase. In the U.S., we added more than 30 start forms and 30 patients on reimbursed therapy compared to last quarter, resulting in approximately 550 reimbursed patients since launch. The split between pediatric and adult patients continues to be approximately 65% Peds and 35% adults.

The number of new prescribers continued to grow, adding approximately 15 new prescribers in Q3 2024, with half of them writing more than one prescription. For Dojolvi across Europe and the MENA region, revenue is currently driven by named patient sales requests. There are over 230 patients treated under MPS across 12 countries in the region. The majority of the demand is from France, but we are receiving an increasing number of requests from other countries within the EMEA region, including the Middle East.

I'll close with a few comments on Evkeeza, where we have been launching this transformative therapy for patients outside of the U.S. with HOFH. In our territories, the HOFH physician and patient communities continue to provide positive feedback on their experience with Evkeeza. The clinical data showing significant reductions in LDL levels on top of standard of care support the long-term potential for this therapy.

In the EMEA region, we have patients from all of the major countries, including France, Italy, Germany, Austria, and the Middle East, on therapy as a result of our commercialization efforts on responding to named patient requests as we navigate the country-by-country pricing negotiations. In Japan, the launch is continuing to build following the pricing and reimbursement approval that we received in the second quarter.

As Emil mentioned in his opening remarks, Japan is expected to be an increasingly important contributor of revenue, not just for Evkeeza, but for all of our programs going forward. With that, I'll turn the call to Howard to share more details on our financial results and for the quarter and guidance for the year.

Howard Horn (CFO)

Thanks, Eric, and good afternoon, everyone. I'll start by briefly summarizing our financials that were reported in our press release earlier today. We reported $139 million in total revenue for the third quarter of 2024, which represents 42% growth versus the prior year quarter. Crysvita contributed $98 million, including $56 million from North America, $36 million from Latin America and Turkey, and $6 million from Europe. Dojolvi contributed $21 million, Evkeeza contributed $11 million, and Mepsevii contributed $10 million.

Our total operating expenses in the third quarter were $271 million, which included R&D expenses of $170 million, SG&A expenses of $80 million, and cost of sales of $21 million. Operating expenses included non-cash stock-based compensation of $42 million. In the third quarter, net loss was $134 million or $1.40 per share. As of September 30, 2024, we had $825 million in cash, cash equivalents, and marketable securities.

Net cash used in operations was $67 million for the third quarter and was $335 million for the nine months ended September 30, 2024. We expect 2024 net cash used in operations to be around $400 million for the year. Shifting to revenue guidance, we are reaffirming our total revenue range of between $530 million and $550 million for the year that we announced last quarter.

This reflects strong performance and trajectory across all of our products, including Crysvita globally and the launch of Evkeeza in our territories. For Crysvita, we continue to expect revenue to be towards the upper end of our range of $375 million-$400 million, which includes all regions and all forms of Crysvita revenue to Ultragenyx.

Specifically, it includes Crysvita product revenue from Latin America and Turkey and cash and non-cash royalties from North America and Europe. We also continue to expect Dojolvi revenue to be between $75 million and $80 million. With that, I'll turn the call to our Chief Medical Officer, Eric Crombez.

Eric Crombez (Former Chief Medical Officer)

Thank you, Howard, and good afternoon, everyone. In addition to the clinical pipeline progress that Emil has already commented on, we have also made meaningful advancement across our gene therapy programs, starting with DTX401 for the treatment of glycogen storage disease Type 1A. In our press release today, we shared new data from the crossover patients in our Phase III GlucoGene study.

These are the patients originally randomized to the placebo group and who have now been treated with DTX401. 12 of these crossover patients have reached 30 weeks post-treatment with DTX401 and demonstrate a clinically meaningful 62% mean reduction in daily cornstarch requirement. This is double the reduction seen in the patients randomized to receive DTX401 in the blinded part of the Phase III study at the same earlier week 30 time point.

Also, importantly, the patients originally treated with DTX401 at the start of the Phase III study continued to reduce cornstarch use while maintaining good glucose control through week 78. While the blinded design of the Phase III study was important, we anticipated that physicians and patients would take a cautious and conservative approach with reduction of cornstarch without knowing to which arm patients were randomized.

Now that all patients have received DTX401 and unblinding is complete, physicians and patients are able to titrate cornstarch with full, direct, and immediate visibility to all glucose values, which enables them to act more rapidly and appropriately, particularly to hyperglycemia. The cautiousness with cornstarch reduction in the blinded period reinforces the unmet need for these patients and the continued deep and ingrained fear for the consequences of hyperglycemia during times of fasting or increased metabolic demand.

Shifting to UX701 for the treatment of Wilson disease, last month, we provided an update from the dose finding stage of the Phase I/II/III study that included data showing that patients across the three dose cohorts demonstrated clinical activity as well as improvements in copper metabolism. In this initial stage, 15 patients were enrolled into three sequential dosing cohorts and followed for at least 24 weeks.

Six of the patients completely discontinued treatment with chelators and/or zinc, and a seventh patient had begun tapering as of the data cut-off date in August of this year. We are seeing evidence of the establishment of the normal trafficking of copper with the loading of copper onto ceruloplasmin for the safe transport of copper in the body and the pumping of excess copper into the bile system for excretion from the body.

As a next step, we plan to enroll an additional cohort at a moderately increased dose and with an optimized immunomodulation regimen, with the goal of allowing the majority of patients to discontinue current standard of care treatment before selecting a dose for the pivotal part of the Phase I/II/III study. I'll now turn the call back to Emil to provide some closing remarks.

Emil Kakkis (CEO)

Thank you, Eric. Over the first four quarters of this year, we've continued to hit our marks by delivering growing revenue and advancing our clinical programs. I'll close quickly by summarizing our key clinical catalysts for the rest of the year. For GTX-102 for Angelman syndrome, we are planning to share a program update at the upcoming FAST and Child Neurology Society meetings.

This update will include data from patients in the dose escalation and expansion cohorts who've been on therapy for at least 338 days. The data will show that our Phase III study is very well-powered to succeed for the primary endpoint of Bayley Cognition Raw scores and also for the key secondary endpoint of MDRI. We're also on track to initiate the Phase III by the end of the year.

Based on our own clinical data and the novel science that supports it, we are confident that we are now the leader in this space. For the Phase III portion of UX143 Orbit study of setrusumab, there are two interim analyses planned, with the first anticipated by year-end or early 2025 and the second in mid-2025.

In order to end the study early at the first interim, there'll need to be an extreme and early separation of the two groups to meet a very stringent threshold of a p-value less than 0.001. In order to end the study early at the second interim, we'll spend a little alpha, and we have set the threshold of p-value to be less than 0.01 when there is a little more time for the groups to separate.

In the event the data readout is not accelerated at the first or second analysis, the final analysis will occur in the fourth quarter of 2025 after all patients have been on therapy for 18 months. In the event an interim analysis clears our stringent threshold, we would only share that the threshold was met.

Top-line clinical results would be announced several months later as the study requires that the patient complete final visits over a couple of months and will need time to collect and prepare the data for a complete analysis. As I mentioned in the opening, we're also working on multiple BLA submissions, one for UX111 around the end of the year, and another for DTX401, is expected in mid-2025.

As we head into the final month of the year, I want to express my gratitude to the talented team at Ultragenyx for executing one of the largest late-stage pipelines in the industry. It's incredible to think that we could potentially launch three new therapies over the next couple of years, bringing first-ever approved treatments to patients without any real options.

With the approved programs we currently have, that would make eight commercial programs in just over a decade on the public market. With that, let's move on to your questions, operator. Please provide the Q&A instructions.

Operator (participant)

Thank you. At this time, we'll conduct our Q&A session and if you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. Please limit yourselves to one question and one follow-up question for each time that you queue. You can press star two on your phone to remove yourself from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, to ask a question, press star one on your telephone keypad and please limit yourselves to one question and one follow-up question. Our first question comes from Chris Raymond with Piper Sandler. Please state your question.

Christopher Raymond (Senior Research Analyst)

Hey, thanks, and congrats from us on all the progress. Maybe two questions. I guess first on the Wilson program, maybe, Emil, who is the ideal patient for this gene therapy? Would this be, as you guys are envisioning a commercial rollout, suited for patients that are well-controlled, maybe on copper chelators or zinc or would this be targeted only for those most severe patients?

Then maybe also a follow-up on setrusumab. Can you give a little bit more color on this negative binomial regression model that you're using? Just explain a little bit about what that means, what you're doing there. Thanks.

Emil Kakkis (CEO)

Very good. Do you really want me to go into the math of that, Chris? All right. Let's start with the Wilson question. We've talked about the Wilson program several times about who's the most addressable.

There's about 20% of the patients that are not really well-controlled, can't tolerate the meds, are probably the highest, most addressable population. That's 20,000 out of a population of 20% of a population of 50,000-60,000. Among the remaining, there's certainly a segment of patients that could do better than they are. But there may be some patients who are very stable and well-controlled that may or not be most addressable.

We wouldn't necessarily assume that all Wilson patients are addressable, but we do think a combination of people not tolerating and those that are not getting optimal copper management are patients that, or having clinical symptoms, would be ones that might benefit from the treatment.

Given how large the disease population is, that fraction of the total still makes for a very large potential market. With regard to setrusumab, P.K. Tandon, our head of biometrics, a highly experienced biometric statistician who was at Genzyme for 20 years and has done probably more rare disease programs than anyone, believes the negative binomial model is the best way to do an event-driven analysis, and it's a basic model that the FDA has agreed to.

For me to go through the math would be probably pretty difficult, but we probably can provide some explanation for our investors on that model. But it's the best way to look at events and looking at event rates and being able to control in the model for things like baseline fracture rate or age or other factors that will be different between different patients. So while I can't explain it, what I can say is the study is very well-powered to succeed in the setrusumab Orbit study.

Christopher Raymond (Senior Research Analyst)

Thank you.

Operator (participant)

Our next question comes from Tazeen Ahmad with Bank of America. Please state your question.

Tazeen Ahmad (Managing Director in US Equity Research)

Hi, good evening. Thanks for taking my question. On OI, Emil, given the timelines that you've provided for the different interim reads, if the study has to continue past the first interim, is there a calculation that you've made about the likelihood of success of the trial? That's the first question.

Then secondly, would the timeline to when this would become commercial vary significantly depending on which of the time points the study would eventually stop, assuming that it would be successful at one of those stops? If that question is clear.

Emil Kakkis (CEO)

No, I understand. So first of all, we think that whether the first interim hits or not doesn't have any impact on the outcome. It has to do with how fast the lines separate, not whether they will separate or how powerful. In other words, it could be 0.002 at the first interim and not hit, but be less than 0.01 at the second one just a few months later.

But giving the kids a few more months of time for fractures to occur could help dramatically separate. So it doesn't really affect what the efficacy determination would be. Our goal in doing the first interim was to try to end the program as quickly as possible to head toward a filing and we think if we hit that level of threshold, it should be. But I don't think it speaks at all to the efficacy of the drug.

It just speaks to the question of how fast they separate and how variable they are. So with regard to the commercialization time, the reason to go with IA1 or to put the interims in was to help shorten the timeline. Obviously, if the 18 months are toward the end of the year, there's a year difference potentially there.

We will collect some extra data from the first interim, but there is a substantial number of months between the first interim and the final. The second interim, the differential will not be as great because when the second interim occurs, everyone will have had a year. So that means we wouldn't have to wait further to collect any information. So the second one will probably not be as long after the interim. It'll be only a few months after in terms of BLA filing.

So you could argue why worry about so many a few months here, a few months there. The value, the NPV value of the program is highly dependent on that and each month represents a very substantial amount of value to the company.

As a company, we look carefully at how time affects value because it's one of the most important parts of how do you achieve success in rare diseases is understanding the value story, not just cash spend in terms of execution. So a few months, by the way, has a very big impact on net present value and that's why we press hard to get things done as promptly as we can.

Tazeen Ahmad (Managing Director in US Equity Research)

Thank you.

Operator (participant)

Our next question comes from Anupam Rama with J.P. Morgan. Please state your question.

Malcolm Kuno (Financial Analyst)

Hi, thanks for taking the question. This is actually Malcolm Kuno on for Anupam Rama. So what data should we focus on with regard to the near-term Angelman updates coming at the near-term medical conferences?

Emil Kakkis (CEO)

Okay. We'll provide a little bit more long-term data on the group. So it'll allow you to see how the expansion patients have been doing going longer through day 338. The reason to focus on day 338 is that's the length of the Phase III trial. So the data will help give you a view of what it looks like at day 338 for that population.

We're also going to show you the fact that it doesn't really matter if you use RAW or GSV as your analysis, that the transformation of one to the other is not a problem and doesn't affect the power-up. So we'll provide that information, which was requested from a number of investors. So we think we'll help settle people's questions about whether we use the GSV or RAW scores as we're planning based on the FDA's request.

Those are a couple of things. Also, we'll talk. We'll update on overall safety and the Phase III plan going forward. It won't be a massive update, but it'll be a nice step forward, heading to Phase III, which is where our minds are at, getting Phase III up, running, and completed.

Malcolm Kuno (Financial Analyst)

Great. Thank you.

Operator (participant)

Your next question comes from Gina Wang with Barclays. Please state your question.

Gena Wang (Managing Director and Senior Equity Research Analyst)

Thank you. Maybe just quickly follow the previous questions. Will data at the FAST and the CNS meeting the same dataset? I have one question regarding setrusumab Phase III study. Emil, you did actually provide a little bit more clarity regarding the timeline. I remember last time was more likely beginning of 2025.

Now is it year-end 2024, beginning of 2025 and second interim, very definitive, is 1Q25. Is that because the events are already picking up and you have more clarity regarding when this will happen? Then also, will you share the baseline characteristics of Phase III trial at some point? If not, could you comment on patient baseline attack rate range and also the breakdown of the patient specifically between age 5-12, 12-18, and 18-5?

Emil Kakkis (CEO)

Great. That's quite a list. So thank you for the question. So the data cut from Angelman for FAST and the CNS and the Peds child neurology meeting will be the same dataset. There should not be differences between those two. With regard to the first interim timing, the clarity on the timing is not based on data we're collecting. So it's not based on fractures.

We said from the beginning it would be end of the year, early 2025. Then a few months later, we're being a little more specific saying middle for 2025, but it was always a few months. So we weren't intending to change anything. We were just where the timeline is. What we did change a long time ago, we talked about having fracture number as being the trigger.

But because it was so operationally challenged, we just estimated when we'd hit a certain number of fractures. But none of the change in timing is related to fractures. We haven't put out baseline characteristics yet, but we will at the appropriate time. Usually, when we bring out the Phase III data, we'll bring in the characteristics. But we would not expect to put out that data until we're releasing our Phase III data.

What we have said to date is that the population has more Type III and type 4 patients, closer to half or more, as opposed to what was in Phase II, where it was about a third. So that's one difference. We'd expect those patients to have more fractures. We'd expect then the Phase II study to have a higher fracture rate than what we saw before.

But right now, we haven't put in the breakouts for age groups that enrolled in the study either. It is spread across the age groups. It is a primarily Peds study with the majority of patients in the Peds age range. We are stratifying in the randomization to make sure that we have similar populations in both groups. That's where we stand. Thanks for the good questions.

Gena Wang (Managing Director and Senior Equity Research Analyst)

Thank you.

Operator (participant)

Our next question comes from Salveen Richter with Goldman Sachs. Please state your question.

Hi, this is Lydia on for Salveen. Thanks so much for taking our question, and congrats on the progress. Just on Wilson's disease, when could we expect to see data from this additional stage one cohort, and I guess, what would you want to see from this dataset to gain confidence in the regulatory and commercial outlook? Thanks so much.

Emil Kakkis (CEO)

Thank you for the question. So on the Wilson's fourth cohort, we're hoping to get that protocol in and get set up so we would start early in the year. It depends how long it takes to enroll five, but we expect that to be going on, because we have to wait till those patients get at least six months, 30 weeks or so of treatment, it will take most of next year to get there.

But we haven't yet put a specific timeline on when exactly the data will come. It'll depend on how quickly we get the study accepted. We are doing it primarily in the U.S., that cohort, how fast it takes to get that settled and accepted. Then the fact that we have to enroll five and get all their data. So it's going to take a good part of next year.

What we're looking for is, I would say, consistent reduction in standard of care in the majority of patients, if not all. We want to see a majority of patients because we believe to make a gene therapy viable, we want to see a potency that is distinct and profoundly important to patients.

While we have activity at this point, we think we need to see a higher fraction of patients off standard of care to make it worthwhile and we didn't want to invest in Phase III if we had that in hand, and so it makes sense to work at a higher dose. Immune modulation, we hope will improve potency as a simple way to improve potency. So that's what we're looking for. We want to see that we're really changing biology completely in a large fraction of patients.

Operator (participant)

Thank you. Our next question comes from Maury Raycroft with Jefferies. Please state your question.

Maury Raycroft (Equity Research Analyst of Biotechnology)

Hi. Congrats on the progress and thanks for taking my question. For setrusumab, just wondering what are key learnings from the Phase II 14-month data update at ASBMR that help you triangulate around fracture rates and chances of success for the first interim or second interim updates? Maybe just a quick follow-up, if you can clarify if you'll have new patients with less follow-up in the Angelman data updates that you have?

Emil Kakkis (CEO)

Okay. So I think what we learned from the 14-month update on setrusumab was, in fact, that these patients can have a very profound degree of separation and that that separation can lead to the majority of patients having no fractures over a significant period of time. The other thing we learned is that particularly the younger patients have a dramatic improvement in bone mineral density.

So I think what we learned is how strong the effect could be and that gave us more confidence in putting in the interims in the first place because if they are separating very quickly within two or three months and if that effect size is large, then we would expect the groups to separate early. We just don't know for sure. We set a stringent threshold for the first one, the second one less so.

But that data gave us confidence that we can do that. It also gave us confidence we can lower the number of patients modestly and shorten the timeline then to finish enrollment. So those are the things we learned and what we expect to know and everything that we've seen so far tells us that we have a strong effect going on and we want to reach that as promptly as we can.

With regard to Angelman, we are primarily focused on patients through day 338. We have patients at a whole series of different stages in the program. The main focus will be on people through day 338 at this point. Our minds are really focusing on setting up for Phase III.

The day 338 data is really about telling people where we are on path for Phase III, where a larger randomized study will become the most important piece of information we need to gain. That's what the focus is: update what it would look like and help people see how the Phase III would set up based on our Phase II data.

Maury Raycroft (Equity Research Analyst of Biotechnology)

Got it. Thanks for taking my questions.

Operator (participant)

Our next question comes from Joon Lee with Truist Securities. Please state your question.

Mehdi Goudarzi (Biotech Equity Research Associate)

Hi, good afternoon. This is Mehdi Goudarzi for Joon. Thanks for taking our question. So on Angelman, could you please provide some color on the Aurora study given the patients' age from 2-64 and diverse mutation types that are included? So what should be the optimal endpoint for this study and would Bayley-4 cognition be the one for this study?

Emil Kakkis (CEO)

Right. So you're talking about the Aurora study? Is that right?

Howard Horn (CFO)

No, Emil. I think you're talking about the Aurora study, the open label study that we have.

Emil Kakkis (CEO)

Oh, I'm sorry. I didn't quite understand what he said. Aurora study. Yeah. So let's talk about the main study, Aspire. The main study, Aspire, is four to 17-year-olds with the deletion type, which represents 80% of the patients out there. For Aurora, this is a supportive labeling study. This study will take the younger patients who have a deletion or older patients who have a deletion to look at effect in those range.

The idea would be to demonstrate an open label setting where they have similar safety and efficacy as we've seen in the deletion type that's within the randomized trial. We'll also include patients in the 4-17 range that are like the ones that are in the deletion program but have UPD, ICD, the other genetic types of Angelman, so they will get a chance to get treated.

The idea is to try to cover these various pockets of the population on genetics and age in the Aurora study. We believe one large randomized trial is enough to prove the cause and effect of the drug and the Aurora study will help extend the safety and verify comparable efficacy in these other subpopulations.

Mehdi Goudarzi (Biotech Equity Research Associate)

Thank you.

Operator (participant)

Our next question comes from Yaron Werber with TD Cowen. Please state your question.

Yaron Werber (Managing Director and Senior Biotechnology Analyst)

Great. Thank you. So Emil, I got a couple of questions. Maybe the first one just on setrusumab, and I totally understand the need to, when you finish the study, to have a couple of further assessments.

At the time in which this goes to a committee, independent committee, and let's say based on the events, they decide to recommend to you to terminate the study, I think they will do it based on the fracture rates and statistics and the hazard ratio. Can you at least let us know, hopefully when that hits and it becomes positive, that you hit and the hazard ratio is X, Y, Z at a certain P value is the first question or would you really just not say anything until later?

Then secondly, just on 401, did you complete the tech transfer to your own facilities now that you have a filing around mid-next year? Anything you can share with us initially on margin and COGS because you're going to be obviously scaling a whole new facility. Thank you.

Emil Kakkis (CEO)

Thanks, so at the time of the interim, we will not put out the hazard ratio or any other detail, partly because the study is not locked. All the database will not be locked. There's a certain part of it locked, and we have to collect a little bit more data in final visits, so with the database not locked, we don't want to put out any data of an incomplete dataset.

The interim will allow us to see that the primary endpoint is hit, but we'll want to lock the entire database before we, and we wouldn't want to endanger the study by releasing data from a database that's not fully locked, so that's why there'll be a little bit of delay before we put out the data.

The fact it hits, though, should be enough to give investors confidence that the drug works in a big way and that we want to know we're on track to move ahead. With regard to the tech transfer, tech transfer has occurred. We are running PPQ lots in the plant. Our expectations that running them in the plant will probably save us around 40%.

We haven't put out COGS or margins yet in the program, but by running our own plant, it does substantially reduce our costs. We own the plant outright. So our whole cost structure in the plant will be an improvement over a contract manufacturer. But the ability to control and assure the consistency and execution, I think, will be great. The tech transfer is easy because it's from our Woburn team to our team there.

It's actually almost like an internal transfer because we've developed the processes at our own facility ourselves. The contract manufacturer didn't develop the processes. So a lot of this is going to work way better. It's why we made the investment in the plant because not only with 401, but the other programs in hand, we have the ability to leverage our cost structure and we'll help improve margin costs in gene therapy, which we think will be important for making a successful business out of gene therapy going forward.

Operator (participant)

Thank you, and our next question comes from Yigal Nochomovitz with Citi. Please state your question.

Yigal Nochomovitz (Director and SMID Cap Biotech Analyst)

Yeah. Hi. Thanks, Emil and team. Maybe I missed it, but just with regard to DTX401, it doesn't appear that you gave us the specific reduction for cornstarch for the patients that were on the treatment in the 40-week, 48-week primary period. Do you have that information? Just the way I'm thinking about it is I would think that they would catch up given we know that they received the gene therapy and should catch up to the ones that were the crossovers.

Emil Kakkis (CEO)

Yes. So the primary treatment group had a 41% reduction during the 48-week period during the blinded phase, and what we said is now they're getting better now that they are able to look at their glucose values so that they're going down and getting better. We are mainly commenting the fact that if you cross over and you know you're getting the treatment and you know what your glucose values are, then you have a double the rate of reduction.

That is, by 30 weeks, hitting 62% versus what was about 31% at that point in time for the DTX401 group. So we're just saying we would double the reduction in cornstarch by people knowing what they're on. The real reason for this, Yigal, is that while you can tell if you have hypoglycemia, if you have hyperglycemia, the patients don't really feel bad.

They don't really notice it necessarily. What that means then, if they're blinded to their glucose values, they don't know they're running high, and when they see a low, they didn't realize that an hour ago they were shooting sky high, so they have trouble reducing their starch when the only thing they can feel are lows.

The monitoring allows them to know when they're high and allows them then to be smarter and more proactive. The thing that's important to understand also is that as the glucose, as the starch level doses come down and you lower your glucoses, it actually will induce the transgene because lower insulin, higher glucose on will stimulate transgene expression. It's almost like you need the transgene or the gene therapy to exercise. You need to exercise it a little bit.

So it will become a synergistic effect of lowering cornstarch, driving glucose down, inducing more expression, allowing you to bring cornstarch down. So we'd expect the original treated patients to gain ground now and start coming down. But we think this explains a little bit that the blinding makes it very hard for people to manage this disease without having direct and immediate knowledge of what's happening with their glucoses.

So we're just encouraged and we thought it would be important for investors to see that the effect is what we think it is and if you apply it in the way it will be applied commercially, that patients can improve quite a lot in reducing the dependence on cornstarch and particularly in their fear of dying suddenly by going too low on their glucoses.

Yigal Nochomovitz (Director and SMID Cap Biotech Analyst)

Okay. Thanks. I guess what I was driving at is will there become a point in time where you'll share the 78-week data from the ones that were originally on therapy from the very beginning in terms of the total cost stretch?

Emil Kakkis (CEO)

Oh, yeah. Sure. We'll put out updated data in a formal scientific meeting with all the data. We'd like everyone to get through a particular point in time. We just thought we should put out this piece of data here. But we'll put out complete data on the 48-week group when they get to their second year through to show where they're at. But as we said, they're titrating further. So we feel comfortable that they're going the right way.

Yigal Nochomovitz (Director and SMID Cap Biotech Analyst)

Then more of just a corporate picture in terms of the cash and the profitability. I recall at the R&D day just over a year ago in New York, you had a sort of a qualitative slide on the path to profitability. It wasn't too specific as far as numbers and exact year. So now that you're burning $400 million in cash a year and have a little over $800 million in the bank, I'm just wondering if you could comment any further on revised thoughts around the time to profitability. I know you'd mentioned that the launch in Japan could accelerate that. Thanks.

Emil Kakkis (CEO)

Yeah. Well, the growing product portfolio, products approved and launches, including the new ones, will continue to help that. I'll let Howard go through it in a little more detail. But we're on the same path we've put forth before at the analyst day and we feel good about the contributions that Evkeeza, for example, is starting to make. The three other programs launching will help us. So maybe Howard, you can talk about the path to profitability.

Howard Horn (CFO)

Glad to. Yigal, thanks for the question. What we have said is that with these we did in June and the monetization of PRVs coming from UX111 and UX143, that we feel like we have the cash or we will have the cash to fund our operating plan that gets us to a GAAP profitable quarter by the end of 2026.

So that's the translation of what we said a year ago about that pathway. Then the underlying sort of logic of that is that we continue to see our commercial programs grow in revenue, add to that a little bit from launches, but not an enormous amount. Then if you kind of level out on all the rest of the spending, that's how you get the P&L, the profitability, again, by a quarter before the end of 2026.

Yigal Nochomovitz (Director and SMID Cap Biotech Analyst)

Okay. Thank you.

Howard Horn (CFO)

Yep.

Operator (participant)

Our next question comes from Ed Arce with H.C. Wainwright. Please state your question.

Ed Arce (Managing Director and Senior Biotechnology Analyst)

Hi again. Good afternoon, everyone. This is Thomas with H.C. Wainwright giving a couple of questions for Ed. Thank you for taking my questions. So first question for GTX-102 for Angelman syndrome, the Phase III Aspire study.

So the preliminary design that was discussed in April. It incorporates 12-week or 84 days primary efficacy time points. Can you discuss the significance of this duration? Then second question for UX143, can you discuss development status, progress, what next step that we can expect from this program in 2025?

Emil Kakkis (CEO)

Okay. UX143 in 2025 is all about the interims and getting to Phase III. We'll have the Orbit study as well as the Cosmic study that will be helped to go to file, and our expectation, depending on where we finish in the year, would take a few months after the data come out to finish the BLA and get it filed, but we'd expect to be filing sometime next year unless we go to the final assessment, which will be at the end of the year.

But it's really those two studies that are the primary drivers. There will be some data from biopsies and a few other things that need to be done. But the package is really Orbit and Cosmic. With regard to GTX-102 and Aspire, I wasn't quite sure I heard the question. Maybe someone from Eric or others heard the question more clearly.

Eric Harris (Chief Commercial Officer)

Yeah. I think the question. Sorry. I think the question was on the importance or why we selected the follow-up period that we did, and I think, obviously, we want to give these children a chance to start to develop, gain new skills, and be able to detect that with the assessments we have there without letting the study go on too long, so based on the Phase I/II data that we presented so far, we have a lot of confidence on not just the primary endpoint, but also key secondaries at that duration.

Emil Kakkis (CEO)

Yeah. I think if we went short of like day 170, there were things that moved faster that you would see. But there's some things that took a little more time and you gain more separation and that's why we felt it worth going to 48 weeks. Is that your question?

Ed Arce (Managing Director and Senior Biotechnology Analyst)

Yes. That's it. Just wanted to understand the duration of the data measurement. So that helps. Thank you again for taking our questions.

Emil Kakkis (CEO)

Okay.

Operator (participant)

Our next question comes from Jack Allen with Baird. Please state your question.

Jack Allen (Senior Research Analyst)

Great. Thanks so much for taking the questions, and congratulations to the team on the progress made over the course of the quarter. I know there's been a lot of discussion on setrusumab and the interim analyses on the call. But I was hoping we could just step back and provide some more context around what triggers the interim analyses.

I think there was a comment made by Emil previously about an estimation of time to fracture rate and I just want to understand, are the interims set in stone internally as it relates to when those interims occur or is there still incoming data that needs to be accrued to determine the timing of the interim analysis?

Emil Kakkis (CEO)

Yes, so they're now set on a timeline, but originally, the plan was to do the interims based on the events and that they could move up or back based on when the events occurred. It was operationally challenging to set up because it left a lot of unknowns to the team. So we decided just to estimate when we'd expect those fractures to be hit, the 60% and 80%, laid those down on the timeline and just set that as fixed.

We are confident that that is going to be fine because we're estimating based on the original fracture rate. But we believe the true fracture rate will be faster than what we saw from their historical fractures and because of the Type III and IV numbers, we'd expect that that estimation will be at best after the 60% would have been hit, for example, because of the fact that the fracture rate is probably faster than what we used to make the estimates.

So it's just an operational choice that they're set on the timeline now, which is with the timeline we put forth in our current corporate presentation and what we just described. Was there any more color, Eric, on this?

Eric Harris (Chief Commercial Officer)

No. I think that's great.

Jack Allen (Senior Research Analyst)

That's very helpful. Can I just ask one brief follow-up? I guess, how did you think about the potential time for onset of setrusumab when you were making those fracture estimates? I guess that's all I'm really interested in. Maybe when operationally did you make that change in the thinking as it relates to estimating the fracture rate rather than going off the data?

Emil Kakkis (CEO)

Okay. The time onset, the estimate we started gaining by looking at the 14-month data, it really looked by about three months or so in that the number of fractures had declined and the number after three months, relatively few. After six months, much, much less.

So our take was that, in fact, separation is probably happening within three months. Now, for osteoporosis, people know that the separation occurs at around six months with an anti-sclerostin. So it's not so surprising when you go to children that it might be faster. But that's what we've learned now. Eric, did you have an answer for the second part of that?

Eric Harris (Chief Commercial Officer)

Well, the second part, I guess, when we decided to make these changes?

Emil Kakkis (CEO)

Yeah.

Eric Harris (Chief Commercial Officer)

Yeah. I mean, really it was based on the results we started seeing in younger patients. When we originally designed this, remember, Orbit's Phase II/III, we really only had the original adult data set. So once we started seeing these really profound and much earlier effects in younger children, we really were able to recalculate power and the overall design of that Phase III part of that II/III study.

Emil Kakkis (CEO)

I think he was thinking about when we decided to change from an actual event-driven interim versus a time-driven interim. Is that what you're asking? It was some time during the year we made the operational decision to be easier just to do it right up front rather than wait and see. But I don't think it matters. It's still.

Eric Harris (Chief Commercial Officer)

I think we're.

Emil Kakkis (CEO)

Essentially the same event.

Eric Harris (Chief Commercial Officer)

Operator, I think we can move on to the next question. I think also underlying that is we're not looking at the blinded fracture rate. So it's not that there was some sort of information that we had from the Phase III that caused that operational change.

Operator (participant)

Our next question comes from Joe Schwartz with Leerink Partners. Please state your question.

Joe Schwartz (Managing Director and Senior Biotechnology Analyst)

Great. Thanks so much. I also have a couple of questions on setrusumab. I was wondering first in Orbit if you could talk a little bit more about how you're calculating the effect size in Orbit, how that compares to how you did in Phase II, and then the range of effect size separations that might be needed in order to hit stat sig at the different interim analyses would be very helpful. Then I have a follow-up on Cosmic.

Emil Kakkis (CEO)

We assumed a 50% reduction in fracture rates and a fracture rate of 0.7 for the powering estimate. However, for the interims and the choice of doing interims, that was based on the concept that there could be more fracture events happening, not a higher fracture rate reduction.

So if there are more fractures, it improves the power to detect that result earlier, right, just because more events to find. So the effect size of 50% and the fracture rate 0.7 was what was used to develop the power and design. Given that the fracture rate reduction was closer to 67%, which could be similar or higher with the binomial, I think we feel pretty comfortable that we're in good position in how we've designed the study. So that's sort of what happened there with regard to the effect size.

Joe Schwartz (Managing Director and Senior Biotechnology Analyst)

Okay. Thanks.

Eric Harris (Chief Commercial Officer)

Then what kind?

Joe Schwartz (Managing Director and Senior Biotechnology Analyst)

Sorry. Go ahead.

Emil Kakkis (CEO)

No, go ahead. I'm ready.

Joe Schwartz (Managing Director and Senior Biotechnology Analyst)

Okay. So in terms of Cosmic, what kind of a treatment effect do you assume in your powering relative to bisphosphonates? What do you hope to see for the setrusumab arm? Are there any nuances in terms of how the endpoints in Cosmic are calculated versus Orbit?

Emil Kakkis (CEO)

Keep in mind something about Orbit and the Phase II part. Orbit is those patients. The vast majority of those patients had been on bisphosphonates. The bisphosphonates are in their bones. So when we're looking at the 67% reduction, that's really like setrusumab on top of bisphosphonates, just to be clear, right? So we'd expect that a similar differential to occur even head to head with bisphosphonates, right?

It is really like an add-on, if you will, in Orbit because they already have them in their bones. There might be some tailing off of the bisphosphonate effect in Orbit. But in Cosmic, everyone had to be on bisphosphonates up front. So our expectation is actually similar in terms of we went with the 50% reduction in fracture rate. Now, the fracture rate in little kids can be much higher. It could be several fold higher, which is partly why the study is in the 60-70 patient range rather than 150. But that's our assumptions right now.

Joe Schwartz (Managing Director and Senior Biotechnology Analyst)

Thanks again.

Operator (participant)

Our next question comes from Jeff Hung with Morgan Stanley. Please state your question.

Michael Riad (Biotech Equity Research)

Hi. This is Michael Riad for Jeff Hung. Thank you for taking our questions. For UX111 for Sanfilippo, given reductions in heparan sulfate and their association in Bayley, is it safe to assume HS is the sole biomarker data in the BLA or do you expect to include other measurements like maybe more downstream markers like NfL just in case? Thanks. I have a follow-up.

Emil Kakkis (CEO)

Yes, well, as we presented, we have heparan sulfate. We also have these gangliosides, which are elevated or probably pathologically important, which also decrease. Then we have NfL data and we also have brain volume data. So we have a value chain all the way from the beginning through the biology that helps support what that efficacy is all the way to Bayley.

Michael Riad (Biotech Equity Research)

Thank you. That's helpful. Then as a follow-up for the interim setrusumab analysis, if you see a similar fracture rate like you would have seen in Orbit, would that treatment effect have been sufficient enough to winding back to Orbit? Would the Orbit have detected a clear enough separation at a representative first interim analysis?

Emil Kakkis (CEO)

I think if the fracture rate of 0.7 and 50%, then the probability of hitting the first interim is much less. The first interim has a chance of hitting if the fracture rate's higher, and if the fracture rate reduction is greater, those would synergize and give us an opportunity to hit the first interim. Is that what you're asking?

Michael Riad (Biotech Equity Research)

No, no. That's very helpful. Thank you.

Operator (participant)

Our next question comes from Kristen Kluska with Cantor Fitzgerald. Please state your question.

Kristen Kluska (Managing Director of Biotechnology Equity Research Analyst)

Hi, everyone. Good afternoon. Thanks for taking my question. On setrusumab, I was hoping to get a little bit more color around thoughts about the placebo arm. We know that the five bisphosphonate studies had diverse readouts.

So can you give us some context about how you developed that 20% figure? Then is there any possibility in this trial that because patients are used to being quite inactive, that we could see more fractures on placebo if the protocol requires them to go to the clinic? Thank you.

Emil Kakkis (CEO)

Yes. So we're aware of five randomized studies to look at bisphosphonates. Three of them failed and two of them were successful. The two that were successful, there was an estimate that they had a reduction of 20% in fracture reduction and they did make patients feel better too, which is one of the reasons why people were using it, less about fracture reduction than feeling better, which is probably dealing with microfractures or something of that kind.

So the data are not really that compelling. But if you look at our own Phase II data, the 67% reduction was on top of bisphosphonates, which were on the majority of those patients. So it's pretty clear that we should be able to see a substantial difference between the two. Now, if you talk about the placebo arm in the study, they're not getting the bisphosphonates anymore during the study.

They will be weaning, which might have some impact on their bones over the period of the year. In addition, most of them would be normally staying at home. We know that by coming in the clinic alone, the incidence of accidents and fractures goes up. It's one of the reasons patients are reluctant to come in a placebo-controlled study. They know going back and forth to clinic every month opens them up to having fractures.

We'd expect actually the clinical activity to actually increase their fractures, which would give us more opportunity to detect the difference between them but because the data in the Phase II were so strong, the doctors and the patients decided they wanted to get in even if they got placebo because they realized they would cross over on the drug before anyone else.

They wanted that opportunity. So that's why we suddenly were able to get enrollment to crank up and go real well if people felt like this was going to be too big a difference to not want to be part of it.

Kristen Kluska (Managing Director of Biotechnology Equity Research Analyst)

Thank you.

Operator (participant)

Our next question comes from Dae Gon Ha with Stifel. Please state your question.

Dae Gon Ha (Director and Senior Analyst)

Hey. Good afternoon, guys. Thanks for taking our questions. I wanted to. We'll take a different angle to the setrusumab line of questions that have dominated the call today. I wanted to ask about manufacturing for setrusumab. Just if you can maybe remind us, what scale is it at?

Does that plant actually have some precedent or regulatory success track record when it comes to getting a drug approved? Similarly, when it comes to burosumab or Crysvita, it was, I guess, as of 2023, transitioned over as more of a royalty-based commercialization activity in the U.S. So just wondering, from a sales force standpoint, how ready are you if you were to hit the interim number one? Would there need to be a massive hiring spree that would need to get done? Thanks so much.

Emil Kakkis (CEO)

Okay. So on the manufacturing for setrusumab, it's a traditional stainless tank batch-type method and it's currently at 3,000-liter scale. It is operating at a contract manufacturer in Germany that we use already for Mepsevii. So they're already licensed and approved. So we're very comfortable on that.

Given our view of the product and the size of the market, we'd expect to have to get another manufacturer in addition to that at some point and we would obviously start working on that as soon as we knew we had our study. So but we are well set up to launch and if the product does as well as we think it can, we'll need a second manufacturer to get going. But we're confident in the manufacturer we have. We work with them. They are approved.

With regard to the situation in the U.S., while it has become royalty-based, we've actually had people in the field since the crossover in April 2023 and we currently still have 16 salespeople helping support our partner KKC. We have some people within the org, within patient services and other places that have been moved around, filled other roles. They're still part of our team and have the knowledge and experience.

So there's a significant established base of people. But no doubt, if we're launching, given the value of the program and its potential, we would need to hire additional people too to launch that product. But I think at that point, I think it's going to be real evident that the value of the product will be high, that investment will make a lot of sense.

If we have enough established base, I think that'll allow us to be really efficient and effective and really design a launch plan that will meet our needs. I don't know if you want to say anything else, Eric, about who we have and our expectations on launch.

Eric Harris (Chief Commercial Officer)

I think you covered just about everything. The only thing I would add is that we still have our leadership team in place that successfully led the commercialization of Crysvita and had it on the right trajectory. So we'll be ready.

Joshua Higa (VP of Investor Relations)

Yeah. I think we've got our North American head, our head of the patient services hub, the team involved, and the regional managers. We've got a great team set up. So we'll be in good shape to take off.

Dae Gon Ha (Director and Senior Analyst)

Yep. Yep. Sounds good. Thanks very much, guys.

Operator (participant)

Thank you, and ladies and gentlemen, we have reached the end of the question and answer session. I'll now hand the floor back to Joshua Higa for closing remarks.

Joshua Higa (VP of Investor Relations)

Thank you. Sorry we weren't able to get to all the follow-up questions. Feel free to reach out. I'd be more than happy to help facilitate responses. This concludes today's call. Thank you for joining us.

Operator (participant)

Thank you. All parties have been able to take their.