Ultragenyx Pharmaceutical - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 total revenue was $164.9M (+29% y/y), driven by Crysvita $115.4M (+23% y/y), Dojolvi $31.1M (+34% y/y), and Evkeeza $10.4M; FY2024 revenue reached $560.2M, exceeding the company’s raised guidance range from Q3 2024. Net loss was $133.4M ($1.39 per share) in Q4.
• FY2025 guidance: total revenue $640–$670M, Crysvita $460–$480M, Dojolvi $90–$100M; management expects reduced net cash used in operations versus 2024 ($414M).
• Key 2025 catalysts: UX111 (Sanfilippo) BLA accepted with PDUFA decision expected H2 2025; DTX401 (GSDIa) BLA mid-2025; OI program (UX143) Phase 3 Orbit/Cosmic interim analyses mid-2025 with potential filing thereafter.
• Wall Street consensus (S&P Global) for Q4 2024 EPS/Revenue was unavailable due to a provider rate limit; estimates context is noted below (no numeric beat/miss shown).

What Went Well and What Went Wrong

What Went Well

• Strong commercial execution: Q4 revenue +29% y/y; Crysvita +23% y/y; Dojolvi +34% y/y; Evkeeza demand building ex-U.S..
• Guidance beat/raise cadence: FY2024 revenue $560M exceeded the upper end of prior guidance ($530–$550M) and FY2025 revenue guided to +14–20% y/y growth.
• Pipeline momentum with near-term approvals: “We have created a next-generation rare disease company on a pathway to profitability… pending PDUFA… second gene therapy BLA… pivotal Phase 3 OI… Phase 3 Angelman” (CEO).

What Went Wrong

• Continued losses as R&D and SG&A support pipeline: Q4 net loss $133.4M; Q4 operating expenses $287.2M (R&D $187.8M; SG&A $82.5M).
• Q1 cash flow seasonality and milestone payments to weigh on 2025 Q1 operating cash ($45M total for Angelman Phase 3 initiation and Evkeeza sales milestone).
• Variability in LatAm Crysvita ordering continues to drive quarter-to-quarter revenue volatility (management reminder).

Transcript

Operator (participant)

Good afternoon, and welcome to the Ultragenyx Fourth Quarter and Full Year 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 over the call to Joshua Higa, Vice President of Investor Relations. Please go ahead.

Joshua Higa (VP of Investor Relations)

Thank you. We have 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 and President)

Thanks, Josh, and good afternoon, everyone. 2024 was a pivotal year for the company as we advanced six late-stage programs in serious genetic conditions, most without any approved therapies, while also expanding access and growing revenue from our four commercial products worldwide. In the middle of the year, we increased our guidance for total revenue and now confirm that we exceeded the upper end of that range for 2024. After filing our first BLA for Sanfilippo gene therapy earlier than planned, we now expect to have a second BLA for GSDIa gene therapy submitted to the FDA in mid-2025, and if both are approved, we would have six commercial products on the market.

Combine that progress with the expected phase III data on UX143 and osteogenesis imperfecta, and expected full enrollment of our phase III for GTX-102 for Angelman syndrome, we're set for a strong year of value creation greater than any year in our company's history. Our international growth in 2024 was particularly impressive. We successfully launched Evkeeza in Europe, Canada, and Japan while broadening access to our other commercial therapies in Latin America, Canada, and Turkey. We've also been working within these regions to establish clinical trial sites, to prepare drug submissions with regulatory authorities, and bring our therapies into more geographies through Named Patient programs. We're looking forward to another year of strong global revenue growth in 2025, supported by multiple products in launch mode globally. This progress sets us firmly on a path toward full-year GAAP profitability in 2027.

In January, I discussed in depth our priorities for this coming year, so I will use our time today to focus on our UX111 program for Sanfilippo syndrome, which has the potential to be our next approved product and our first commercial gene therapy program. Last week, we presented important new clinical data at the World Symposium in San Diego that were also included in our BLA submission last December. We filed for accelerated approval based on the substantial and sustained decrease in levels of heparan sulfate in cerebrospinal fluid, or CSF HS, following treatment with UX111. CSF HS is what I call a disease-caused biomarker because it's directly responsible for disease pathology and progression. It's not just a random measure associated with disease; it is the disease.

These new data show that a sustained reduction in CSF HS exposure is statistically associated with significant continued growth in the Bayley-III cognitive raw score for the subdomains of cognition, receptive communication, and expressive communication when compared to natural history data, which show a climb during this age period. Importantly, we also saw that older children with more advanced disease at the time of treatment were able to retain clinically meaningful functional abilities, including communication, ambulation, and self-feeding, following treatment with UX111 when the Bayley score is not an effective measure. As we stated in the release, we know from caregivers, clinicians, and others that stabilizing disease so that a child can retain or even slow down the loss of key skills like walking independently, communicating, and self-feeding has a profound impact on their quality of life.

The earlier we treat, the better is the long-term outcome, and in the long run, newborn screening will identify patients at birth and potentially enable an optimal treatment outcome. Whether treatment from birth or later in life, these gains or retention of function with UX111 treatment are remarkable compared with the progressive loss of function expected in these patients. These results give me confidence that UX111 will be a successful product once approved, with the potential to make a meaningful difference for patients with Sanfilippo syndrome type A and their families. Our UX111 program also serves as a strong example of how we are leading and driving changes for the field. Our progress in Sanfilippo and the progress of other companies in the MPS field is made possible by the FDA's willingness to accept CSF HS as a primary biomarker endpoint.

Last February, we joined patient advocates, regulators, academics, and industry representatives in a workshop hosted by the Reagan-Udall Foundation to discuss qualifying biomarkers in support of rare disease regulatory pathways. This was an opportunity to take decades of work by academic researchers and clinicians in neuronopathic MPS diseases and put together a body of information to provide support for leveraging accelerated approval to change the paradigm for drug development in these diseases. Given my long history of working on treatments for MPS diseases, including four of the five currently approved enzyme therapies in the U.S., this was an incredible achievement and opens up the possibility of accelerated development for the broader rare disease community, especially those impacted by metabolic diseases of the brain.

We're pleased and thankful to see the FDA's focus on the rare disease over the past year with the advancement of first-ever treatments, some of which were at risk of being shelved entirely. We will continue our advocacy and engagement efforts to advance rare disease regulatory policy. With that, I'll turn the call over to our Chief Commercial Officer, Eric Harris, to provide a more detailed update on the progress across our commercial portfolio.

Eric Harris (Chief Commercial Officer)

Thank you, Emil, and good afternoon, everyone. 2024 was a strong year for the Crysvita franchise. Both the Kyowa Kirin team in the U.S., Canada, and Europe, and our team in Latin America and Turkey delivered outstanding results and led to the revenue beat, raise, and beat that Emil mentioned earlier. I'll start with Crysvita in Latin America, where we lead the commercial operations. In 2024, our team generated approximately 290 start forms that led to approximately 250 patients on reimbursed therapy. We now have approximately 750 patients on commercial products in the region as the team continues to exceed our expectations. Similar to what we saw in the United States, once doctors in Latin America see how well their patients are doing on therapy, they frequently write prescriptions for their other patients.

Growth in the region has accelerated following successfully negotiating reimbursement from the Brazilian and Mexican authorities, the two largest payers in the region, and continued expansion in other South American countries. In the U.S., our partner, Kyowa Kirin, is leading commercialization and had a strong fourth quarter driven by growing underlying demand. Over the course of the year, the number of start forms generated exceeded our expectations, as did the number of patients on reimbursed therapy. We believe this confirms there are still a large number of patients who could benefit from this therapy and gives confidence there are still meaningful opportunities to grow this product. Moving on to Dojolvi, growth of new start forms in the fourth quarter continued to steadily increase. In 2024, our team generated approximately 120 start forms that led to approximately 105 new patients on reimbursed therapy across the U.S.

This brings the total since launch in 2020 to almost 575 patients on reimbursed therapy. The split between pediatric and adult patients continues to be approximately 65% peds and 35% adults. The number of new prescribers continued to grow in the fourth quarter, with approximately half writing more than one prescription. For Dojolvi across the EMEA region, revenue is a result of named patient sales requests. There are over 250 patients treated under MPS across 14 countries in the region. The majority of demand is in France, but we are receiving an increasing number of requests from other countries in the EMEA region, including the Middle East. The demand for this product is quite strong in this region, especially given where we are not actively marketing the therapy and simply responding to named patient requests.

I'll close with a few comments on Evkeeza, which we have been launching outside of the U.S. over the past year or so. In the EMEA region, we have patients from all of the major countries, including France, Italy, Germany, Austria, and the Middle East. We now have treated approximately 190 patients across 14 countries. This is a result of our commercialization efforts for responding to named patient requests as we continue to successfully navigate the country-by-country pricing negotiations. In Japan, the team continues to build on the launch momentum following the pricing and reimbursement approval that we received last year. We expect Japan to contribute more meaningfully to the total revenue as we launch Evkeeza and our future programs in this country. As I have mentioned on previous earnings calls, we continue to expect quarter-to-quarter variability in revenue, primarily due to uneven ordering patterns for Crysvita and Latin America.

But we remain confident in the growing underlying demand for all of our products around the world. Our teams were excited to deliver strong results in 2024, and we are looking forward to potentially commercializing two or three new products in the coming year or so. In the U.S., our inborn errors of metabolism team that is currently commercializing Dojolvi and Mepsevii look forward to being able to promote UX111 and DTX401 as transformational gene therapies once approved. For UX143, we will need to build out the U.S. team in preparation for a potential launch, and we will be able to use our deep institutional knowledge from our successful Crysvita launch, where there is 90% overlap in call points. With that, I'll turn the call to Howard to share more details on our financial results and guidance.

Howard Horn (CFO)

Thanks, Eric, and good afternoon, everyone. I'll focus on full year 2024 corporate results and our 2025 guidance. Starting with total revenue, for 2024, we reported $560 million, representing 29% growth over 2023. Crysvita contributed $410 million, including $249 million from North America, $135 million from Latin America and Turkey, and $26 million from Europe. In total, this represents 25% growth over 2023. If you focus on Latin America and Turkey, where we are responsible for generating sales, this represents 78% growth over 2023. Turning now to Dojolvi, it contributed $88 million, which represents 25% growth over 2023. Evkeeza contributed $32 million as demand continues to build following launches in our territories outside of the United States. And Mepsevii contributed $30 million as we continue to treat patients in this ultra-rare indication.

Total operating expenses for the year were $1.1 billion, which included R&D expenses of $698 million, SG&A expenses of $322 million, and cost of sales of $77 million. Operating expenses included non-cash stock-based compensation of $158 million. For the year, net loss was $569 million, or $6.29 per share. As of December 31, we had $745 million in cash, cash equivalents, and marketable securities. In 2024, net cash used in operations was $414 million. Importantly, in 2025, we expect reduced net cash used in operations compared to 2024. As you remember from prior years, we typically use more operating cash in the first quarter than in the other three quarters because it includes items like the payment of annual bonuses.

This year, the first quarter will also include $45 million in payments for two milestones that were achieved in the fourth quarter of 2024: one for the initiation of our Angelman phase III study and one for a sales milestone for Evkeeza. We will continue to prioritize expense management and focus our investments on the execution of our upcoming commercial launches and advancing our phase III programs. Shifting to revenue guidance for 2025, total revenue is expected to be between $640 million and $670 million, which represents 14%-20% growth over 2024. Drivers include increasing demand for our products in Latin America, continued penetration of the pediatric and adult XLH markets in the U.S., and growth from Evkeeza in Europe and Japan. Crysvita revenue is expected to be between $460 million and $480 million, which includes all regions and all forms of Crysvita revenue to Ultragenyx.

This range represents 12%-17% growth over 2024. As a reminder, in the first quarter of the year, we restart at the lowest tier of our royalty structure in North America. Dojolvi revenue is expected to be between $90 million and $100 million, which represents 2%-14% growth over 2024. As in prior years, our Dojolvi projections represent a blend of faster growth in countries where we commercialize and lower growth in countries where we respond to named patient requests. With that, I'll turn the call to our CMO, Eric Crombez, who will provide an update on our key clinical data readouts expected this year.

Eric Crombez (Chief Medical Officer)

Thank you, Howard, and good afternoon, everyone. I'll provide some brief operational updates on our late-stage programs and review our upcoming clinical milestones. Starting with UX143 for the treatment of osteogenesis imperfecta, the phase III Orbit study is progressing well, and the safety profile is similar to what was observed in phase II. Based on the phase II data we previously shared, we are confident that this study will show a clinically and statistically significant reduction in annualized fracture rate at either the second interim analysis or the final analysis. The orbit and Cosmic studies will both have an interim analysis mid-year after all patients have been on therapy for at least 12 months, and the alpha spend for each study will be 0.01. If IA2 for orbit is not achieved, the study will proceed to full study analysis in the fourth quarter.

Moving to GTX-102 for the treatment of Angelman syndrome. Enrollment in the Phase III ASPIRE study is going well, and we are on track to complete enrollment in the second half of this year. Based on the strong interest from physicians and patient families for this transformative therapy and with our team's commitment, I have confidence that we will be able to enroll the planned 122 patients in less than one year. In parallel, we are also working to initiate our Phase II/III study, AURORA, that will study younger and older patients and those with other mutations. Once this protocol is through the regulatory process, we will share additional design details. Shifting now to our gene therapy programs and starting with UX111 for the treatment of MPS IIIA. Emil already shared the latest data we presented last week, and we expect to receive confirmation of our BLA acceptance shortly.

This will also confirm our product date, which we expect to be in the second half of the year. The biomarker data and the newly presented clinical improvements in multiple domains show the impact this therapy can have for families and patients who otherwise face a lethal disease. I look forward to completing this work and to the launch of our first gene therapy product. Next, DTX401 for the treatment of glycogen storage disease type Ia. Work on the BLA filing is going well, and we are on track for FDA submission mid-year. We have talked about the decision to move manufacturing for this program to our facility in Bedford, Massachusetts, and while this required some additional work and time, it enabled far greater control over the manufacturing process, improved quality, and reduced costs. Finally, I'll touch on DTX301 for the treatment of ornithine transcarbamylase deficiency.

As noted in our press release today, we have completed enrollment in the phase III study with a total of 37 patients randomized one-to-one to placebo or DTX301. We did amend the phase III protocol to allow a blinded comparison of the ammonia reduction primary endpoint through week 36 and will now evaluate the reduction in removal of standard of care after blinding, given the reluctance of patients and doctors to stop alternate pathway medications in a blinded study. This reluctance stresses the severity of this disease with the irreversible damage caused by high ammonia levels and the need for a one-time treatment option that establishes the normal ability of the urea cycle to metabolize ammonia.

The primary endpoints are unchanged and are: one, response as measured by change in 24-hour ammonia levels during the first 36-week blinded period compared to placebo patients, and two, % of responders who were able to remove alternate pathway medications and protein-restricted diet. This responder endpoint will now be assessed across the whole group of patients, including placebo crossover patients, for up to 64 weeks. The new design increases the power of the study by assessing ammonia early, where reductions occur rapidly, and then assessing the diet and drug removal by evaluating all patients compared to the baseline in the longer follow-up period. These changes allow us to reduce costs and to shorten the overall timeline by ending enrollment at 37 patients and making the study more patient-centric.

The protocol amendment reflects the real-time feedback we heard from patients and physicians about the fear of removing lifesaving treatments in a blinded placebo-controlled study. As a patient-engaged company, we need to hear their concerns during trial conduct and now have made a better trial design with their feedback. I'll now turn the call back to Emil to provide some closing remarks.

Emil Kakkis (CEO and President)

Thank you, Eric. In 2025, we'll continue building on the outstanding clinical and commercial execution that put us in place to transform into a leading rare disease company with a commercial financial engine that supports its clinical pipeline. We have a number of near-term catalysts, which Eric has already covered, and I expect to have three potential approvals in the next year or so. As the company ultimately has arrived, we are creating the paradigm for the next generation of rare disease companies changing the future for rare disease patients. With that, let's move on to your questions. Operator, please provide the Q&A instructions.

Operator (participant)

Thank you. We will now be conducting a question and answer session. As a reminder, if you would 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. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. So that we may address questions from as many participants as possible, we ask that you limit yourself to one question and one follow-up. If you have additional questions, you may re-queue, and time permitting, those questions will be addressed. One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Tazeen Ahmad with Bank of America. Please proceed.

Tazeen Ahmad (Analyst)

Hi, guys. Thanks for taking my question. So mine is going to be on OI and how we should be thinking. I think you've talked about this many times, but Emil, if you could give some color about your confidence in the second interim read being sufficient to stop the study versus needing to go to the third interim? I know you've expressed overall confidence in the trial design and the likelihood of success, but we'd like to hear your thoughts about how you're thinking about the importance of the study being stopped at the second interim. Thanks.

Emil Kakkis (CEO and President)

Great. Well, we believe the second interim certainly has a much greater chance of hitting than the first one because it's a 0.01 threshold and because the patients will have had at least 12 months of treatment to allow the groups to separate. So there's certainly greater confidence in the second interim. But we feel confident one way or another the trial is going to end and we'll be successful this year. We've been watching the phase II patients. They're doing great, and we feel very good about how phase III conduct is going. So we have more confidence in the second interim than we did in the first, but it's either the second interim or the end of study, but we have a product that's going to work, and we're excited about that product and bringing it to OI patients.

Joshua Higa (VP of Investor Relations)

Thanks, Operator. Let's move to the next question.

Operator (participant)

Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Please proceed.

Salveen Richter (Biotechnology Equity Research)

Good afternoon. Thanks for taking my question. Just a follow-up to the first one here. Maybe help us understand if it doesn't hit on the second interim, what would those reasons be, or what are the risks to that, and then how long would we have to wait for the final analysis? Thank you.

Emil Kakkis (CEO and President)

We said the second interim will be mid-year. For it not to hit at 12 months, it's usually in rare disease that have to do with the amount of variation and the number of fractures. If there's a lot of variation, there's a wide range of patients' baseline fracture rates because we have some type 3, 4, and then type 1 patients. Large variation could create a challenge, but I think that so far we feel like the trial is proceeding as expected. If it doesn't hit in the second interim, we'd expect to release data by the end of the year on the final assessment for the trial.

Operator (participant)

Thank you. Our next question comes from the line of Anupam Rama with J.P. Morgan. Please proceed.

Priyanka Grover (VP of Biotechnology Equity Research)

Hi, guys. This is Priyanka for Anupam. Thanks for taking our question. Once orbit hits, will you immediately prepare to file or wait for the cosmic analysis to finish and add it to the application? Thanks.

Emil Kakkis (CEO and President)

If ORBIT hits, first of all, we will have the data cleaned and locked, and there won't be a need to follow for any longer. So it'll be more quickly to reach final analysis and to file. And so compared to interim analysis one, there's probably just a one-quarter delay in filing off the quarter two. So it should come more quickly after that result.

Joshua Higa (VP of Investor Relations)

Thanks, Operator. Let's move to the next one.

Operator (participant)

All right. Our next question comes from the line of Gena Wang with Barclays. Please proceed.

Gena Wang (Managing Director of Biotech Equity Research)

Thank you. Sorry, I will ask another OI question. Given the study completed enrollment on May 1st, 2024, is it fair to assume June, July timeframe you should share the second interim update? Then how would you communicate with the investor in the case the study didn't hit the stats? In the case the study hits stats, would you need to take extra time to analyze the data and therefore share the update a little bit later?

Emil Kakkis (CEO and President)

Yes. So we will be managing the second interim like the first. A DMC will meet and look at the data. And if they don't inform us that it hit, then we know it didn't hit. And we will expect to communicate to the Street where we're at at that point in time. You asked whether it's fair to consider June and July. I guess that's possible, but we haven't set the time. We said mid-year, which is in that range, but we're not committing to an exact time. We're trying to keep you guessing a little bit, Gena. So did I get your question?

Gena Wang (Managing Director of Biotech Equity Research)

Yeah. So if you hit it, that means it would share with us a little bit later since you would need to take a few more weeks to analyze the data.

Emil Kakkis (CEO and President)

Yes. Because the database is locked, the DMC would see the data. We would find out it hit. We would then get to unblind and look at the data ourselves, and relatively sooner after that, we would expect to put out results. It won't be like the first time where we had to go two months more. We had to take two more months, so it should be relatively quicker to come out with the actual top-line results anyways.

Gena Wang (Managing Director of Biotech Equity Research)

Okay. Great. Thank you.

Operator (participant)

Thank you. Our next question comes from the line of Yaron Werber with TD Cowen. Please proceed.

Yaron Werber (Managing Director and Senior Biotechnology Analyst)

All right. Thank you. So I also, shockingly, have a 143 question. In the ORBIT study, are you stratifying just to remind us type 1, 3, and 4 between the two arms? And then secondly, when you look at the primary of fracture rates, do you have a secondary looking fracture rates by type, underlying type? Thank you.

Emil Kakkis (CEO and President)

Yeah. So in general, we do stratify, but it's mainly for its overall fractures and its age. But I'll let Eric talk about the way we're approaching it.

Eric Crombez (Chief Medical Officer)

Yeah. So because the primary endpoint is annualized fracture rate, you want to stratify by fracture rate. So while that definitely will kind of encompass the different types there, the strict stratification is based on fracture rate coming into study.

Emil Kakkis (CEO and President)

Type two and four may have a higher fracture rate, but we're focusing on that. Doing it by the threes and fours and ones, it didn't look like that was going to be the right way to go as fracture rate was a better way. We are also looking at ages. There's an age balance between the groups. Regarding the other endpoints, we are looking at total fractures, not just the fractures minus fingers, toes, skull. Those total fractures are an endpoint. The subset between subtypes, I'm sure we'll do sensitivity analyses in there, but it's not a formal secondary endpoint.

Operator (participant)

Thank you. Our next question comes from Yigal Nochomovitz with Citi. Please proceed.

Hi. This is Rena on for Yigal. Thanks for taking my question. I just wanted to ask one on OI. I was just wondering if at the point it hits, whether it be the second interim or the final, if we would learn maybe retrospectively any kind of retrospective analysis you'd share on how close the studies were to hitting at either the first interim or the second interim respectively?

Emil Kakkis (CEO and President)

Do you want us to tell you what happened at IA1 or IA2 later? Do you have personal bets with other investors about that to try to settle? I don't know if we would show with the other interims. We haven't decided that. I think what matters is if the study hits, the study works, and the drug works, and right now, I'm not committing whether we're going to show all the little bits and pieces of what happened. We're pretty comfortable that, look, if you look back, we presented phase II data, remember, at six months and showed you a 67% reduction with a p-value of 0.04, and then we did the same group of patients, but now at 14 months, right? And they had a p-value and they had 67% reduction in fractures, but now they had a p-value that was 0.014.

That is a reasonable model for what would be going on here, that the groups are separating. You just need to go a little further to get the p-value where it needs to be and hit the threshold set. So I'd look at that phase II data we've already shown you as kind of a model for what's going on. But right now, we put out data. We'll put out the data we have, and I don't know if we'll put out the rest to settle scores. But thank you.

Operator (participant)

Thank you. Our next question comes from the line of Maury Raycroft with Jefferies. Please proceed.

Farzin Haque (SVP of Biotechnology Equity Research)

Hi. This is Farzin on for Maury. Just to clarify an earlier point, you mentioned that if the second interim hits, you do the final analysis quickly. So just wondering if you need to supplement the final data package with the 18-month data or not?

Emil Kakkis (CEO and President)

No. If we hit at the second interim, then the package will include all those patients with at least 12 months of data. The range, though, would be from 12. There are some patients at that point would have 20 months. It's 12 to 20 months of exposure time. So it's a pretty long period of time, actually. It's almost two years in all patients. So 12, that will be, I think, plenty for that. I didn't mention someone asked about ORBIT or, I mean, COSMIC earlier. COSMIC will be evaluated in parallel. But we won't close out COSMIC if ORBIT doesn't hit. If ORBIT hits, then we'll look at COSMIC, but the data will be ready to be looked at. But we wouldn't stop COSMIC if ORBIT doesn't hit because we need ORBIT in order to file. But we wouldn't hold out filing to get 18-month data. We'd file with the data we had, and we've had that discussion with the FDA.

Farzin Haque (SVP of Biotechnology Equity Research)

Got it.

Operator (participant)

Thank you. Our next question comes from the line of Jonathan Wolleben with JMP Securities. Please proceed.

Jonathan Wolleben (Managing Director)

Thanks for taking our questions. If the OI study goes to completion in 4Q, that implies that the magnitude of setrusumab may not be as great as expected. And in that case, how competitive would setrusumab be compared to bisphosphonates?

Emil Kakkis (CEO and President)

Actually, it would not mean it's not as great. If you remember earlier when we had 6-month data and a 14-month data in phase II, they both had 67% reduction in fractures. What it has to do with is the two lines have to separate. So the biggest reason is there's too much variation, and those variations might cause a delay. But the actual rate separation could very well be 67%. It's just you have a lot of patients that may have 10 fractures a year or one fracture a year in the same study, and some of the ones may not have fractured, for example, and then for whatever reason. And so it's really more about separating the two groups. But I don't think it necessarily tells you what the % reduction is.

We think if you listen to some of the KOLs that 50% or greater reduction of fracture is considered really important. And frankly, when we look at patients after a year, 15, 16 months of therapy, we've had some or longer, many of them are not fracturing at all at some point. So we feel very comfortable that the long-term outcome here is greatly reduced fractures, whatever the number is. But I think the biggest issue is the variation in how much fractures are occurring in each group and that wide range that probably exists that will impact how the study reads out. We are using covariables to manage that variation, but that would be the number one reason. So I don't think you can conclude the drug is not working well if we go to the end. Remember, the original plan here was to do a two-year study.

And the only reason we felt we could go sooner is because the percent reduction was higher than we thought and that the speed of response was faster. Those are the things that give us confidence that we can go earlier. But we've been moving this up from 18-month to two-year study, right, down to what we're talking about now, which is a 12 to 18-month timeframe. So 18 months is still a win. And I feel confident whichever one happens that we have a drug that'll be far better than bisphosphonates and certainly the best treatment for OI that's available.

Operator (participant)

Thank you. Our next question comes from the line of Jeff Hung with Morgan Stanley. Please proceed.

Jeff Hung (Equity Research Analyst in Biotechnology)

Thanks for taking my question. I just wanted to clarify and make sure I understood correctly. You talked about how the phase II data and the 0.014, but just for setrusumab, would the Orbit phase II portion have hit with the second interim analysis criteria? And if not, how were the baseline fracture rates different from the phase II portion? Thanks.

Emil Kakkis (CEO and President)

Yeah. So what I said with the phase II data at six months last patient in, we had 0.04. And then with the 14-month data, we had 0.0014, right? So that was the difference. You're asking how close does that reflect what's going on? Well, the phase II patients are fairly similar in terms of the entry criteria for fractures are the same. They're made up of type 1, 3s, and 4s. phase III has somewhat more 3s and 4s, but not a dramatic difference. So it's a very comparable population, age range, types included, and baseline fracture requirements. So I think that those are reasonable ways to look at what phase III should be happening. And so the only question has to do with the variation in the population, how big is it, and how much it moves in the timeframe. But I think the data from phase II are a reasonable model for what's happening.

Jeff Hung (Equity Research Analyst in Biotechnology)

Okay. Thank you.

Emil Kakkis (CEO and President)

Hopefully, that's helpful.

Operator (participant)

Thank you. Our next question comes from the line of Joseph Schwartz with Leerink Partners. Please proceed.

Hey, all. This is Will on for Joe. Thanks for taking our questions today and congrats on the progress this quarter. I have one on OI and then a follow-up on UX111. So just first for OI, wondering if you could provide any more color on the characteristics of the patients in the phase II that had fractures while they were on treatment? Do we know the subtype of these patients? And how does that impact your thinking about the phase III, which has, just as you said, a few more severe patients? Thank you.

Emil Kakkis (CEO and President)

Okay. So the phase II, the patients that had fractures, surprisingly, they were not necessarily type 3s and 4s only. There were 17 type ones, and they were some of the ones that had fractured were type 1. So it's not like having type 3s and 4s made more fractures necessarily. The 3s and 4s tend to have higher fracture rates. But the ones that did have fractures were not necessarily only type 3s and 4s. For example, I think they're mostly type 1s, as I recall. So there was no, I would say, a pattern there that would tell you something about how phase III. I think actually there's no pattern. What was probably more impressive is how much all three types respond very comparably in bone mineral density improvement. I think that was the most interesting thing that we saw. So you had a follow-up with 1011?

Great. Yeah. Thank you. Yeah. Just on 1011, since it's going to be the first gene therapy launch for you guys, how are you thinking about pulling learnings from other programs or experiences that had success or maybe not were that successful in their commercial rollout? And how does this kind of set you up for other gene therapy launches down the line, including 401? Thank you.

Yeah. Well, we're a very dynamic commercial organization, and we're used to launching new things and diseases that have never been treated before. That's what we've essentially done every single time. I'll let Eric say a few words if he'd like. But we are going to be looking at what everyone is doing, for sure. And our goal will be to get our work with payers upfront, get to understand the value proposition, the data we have in hand, and to allow them, and hopefully to create as rapid and prompt a pattern of review and approval because urgency and time really matter to these kids. The six-month delay is not allowable. This is a very severe disease. So I would look at UX111 as being more like Zolgensma and SMA in terms of life or death and no alternative treatment. I do think there's an urgency. I think the payers will respect that. We just need to make them aware of it. And I don't know, Eric, if there's any simple thing you can touch on or how we're going about the launch?

Eric Crombez (Chief Medical Officer)

Yeah. We've been in close contact with the treatment centers, potential treatment centers, because remember, we're in with those customers now with both Dojolvi and Mepsevii. And so we're learning a lot about the coordination that will be required between the patients and the physicians for delivery of the gene therapy. So we're ready. We'll be ready to go.

Emil Kakkis (CEO and President)

We'll certainly want to learn from successful launches of Zolgensma. There's a lot of people out there that have that knowledge. I think there's an advantage to coming out now with several products out there and knowing what works, what hasn't. I think the truth about rare disease, about gene therapy launches, it's all about urgency. Disease doesn't have a treatment. It's going to be lethal. Their adoption is going to be much faster. We think UX111 fits that mold like Zolgensma. We're looking forward to a good launch. We're excited about the opportunity of treating this disease. They've been stepping through the pain, waiting forever for something. This is the first time it's actually happening. I know they're grateful and excited about finally something being done for their kids.

Operator (participant)

Thank you. Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed.

Rick Miller (VP of Biotech Equity Research)

Hey, everyone. This is Rick Miller on for Kristen. Thanks for taking our questions. We're going to mix it up a little bit and ask about OTC deficiencies. So just to better understand the amended protocol that you talked about today, when the patients in the phase III are in the initial 36-week blinded period, are they still eligible for titrating down on ammonia scavengers and diet control, or would that just be an option in the following unblinded period? And then based on the natural history for the disease, is there any good understanding that you have based on what a meaningful reduction in ammonia looks like and how this correlates with normalizing some of the clinical effects you see? Thanks.

Emil Kakkis (CEO and President)

Sure. Well, we already have treated a lot of patients and know that none of them wanted to reduce. So we kind of know during the blinded period, none of them would reduce. So if we have the option or not, it doesn't matter. The truth is it's a little cleaner if no one would. But since they haven't, it doesn't matter. So we're going to look at ammonia baseline relative to later. What we know is we allowed up to 200 micromole in the study. So there'll be a number of patients that have significantly elevated ammonia, which on a chronic basis are not good. And these ammonia we're talking about are 24-hour curves, right? So they're monitoring during a 24-hour cycle, and they go up and down. So we expect from our phase II data that should drop within six weeks and very rapidly drop to normal range.

So, we'd expect that the patients that have high ammonia that are clearly abnormal range, that clearly impair cognitive function, right, above 80 or so, should normalize. And that's why we think we'll have a lot of power. So, I think that the degree of ammonia change in those that are elevated will be clearly from abnormal cognitive impairing type range and into a normal range where you expect greater clarity of thought and function. We'll be monitoring those things as well. The problem, of course, with removing their drugs is they're so afraid of crashing and because it can happen suddenly that we're just reserving that to after they get unblinded. And so we'll actually have the same endpoints and really the same trial. It's just that we'll unblind people after 36 weeks, and then they can start titrating. We'll get controlled blinded data for that period, which we think will be clinically meaningful ammonia reductions. I don't know if there's anything else I missed, Eric, that you'd add.

Eric Crombez (Chief Medical Officer)

I would just want to draw the parallels to GSDIa. I mean, we had a lot of reluctance there in the blinded period to be aggressive with reduction of cornstarch. But once all patients rolled over to long-term follow-up in an unblinded setting, we saw further reduction in all patients and very closely mimicking what we saw in the phase II. So I think we're confident we'll see something similar here in this phase III and get much closer to a duplication of what we saw in the phase II, which was done in an unblinded manner.

Emil Kakkis (CEO and President)

And the percent responders is complete responders. So they have to get off their drug and diet control to be considered a complete responder, which is what the FDA preferred. So I think having all patients be assessed that way, I think, will help the power of the study because it's actually more patients. And doing it within patient comparison is a lot more powerful than doing it in two-group comparison. So thanks for the question on OTC and breaking up the OI domination. Next.

Operator (participant)

Thank you. Our next question comes from the line of Luca Issi with RBC Capital Markets. Please proceed.

Luca Issi (Senior Biotechnology Research Analyst)

Oh, great. Thanks so much for taking my question. I guess we'll revert back to the meeting here and maybe ask a question on OI. What's the latest thinking on duration of therapy? Assuming that the trial is successful, do you think that the FDA will cap the duration of therapy to 12 months as they have done for rheumatoid, AS, and osteoporosis? Or do you think this will be a chronic dosing with no cap? So that's one. And then second, very quickly, can you just remind us why for Angelman running a sham control trial is the better way to go versus a placebo control trial? Thanks so much.

Emil Kakkis (CEO and President)

Sure. So on the duration, one of the first things we did in taking over the program is not make the assumption that 12 months makes any sense for these patients. What we're learning already is that the assumption that 12 months that the treatment stops working, essentially, you don't need to go longer and that you then lock it in with bisphosphonate. That model is true for maybe 80-year-old women with osteoporosis. When you're talking about these kids, their bones want to resorb the kids that stopped treatment, the adults that stopped treatment before that were with OI patients in the Orbit study started losing ground. It's pretty clear to us that OI is just different. When we look at patients long-term treated, they continue to gain ground in BMD for quite a bit of time.

Our view is that we should be treating till optimal clinical effect. Our expectation is that it will become a chronic treatment. It's possible down the road that they could go to maintenance therapy where they get less frequent dosing. But it's pretty clear that one year, you're not done after one year and that most of these kids probably need at least two years of continuous therapy, if not, and chronic therapy is our expectation. The FDA is aware of that concept and that change. We'll have to help them understand why it's the right way. I think the data we have is already telling us that that's right, that the patients are continuing to benefit.

When you have a bone mineral density, for example, that's minus two to minus four Z-score, while they gain a lot of ground in one year, they're continuing to gain ground in the second year, clearly, linearly. So we're very comfortable that we're making the right call here. And one of the things important as a company is that we don't just follow what everyone says. We're looking at what's really going on and look at the science. And the science says these kids need to get treated longer. And we're going to continue to do that. And we'll work with the agency in the long term. Would there be a maintenance later, perhaps. But I think at this point, we're talking about chronic therapy for this disease.

And that's the best way to probably maintain the right balance of bone production versus bone resorption, which they need that constant stimulation to make that set point right. Not like an osteoporosis patient, which they're artificially trying to up their bone production, but they don't have an intrinsic problem like these kids do, right? So when you have an underlying genetic cause, I think it's just a different biologic situation. And we think chronic treatment is the right answer.

Joshua Higa (VP of Investor Relations)

So, second question on Angelman.

Emil Kakkis (CEO and President)

Oh, the Angelman sham versus placebo. We actually proposed placebo originally. The FDA at the time said their estimates had considered it was potentially unethical to have to do sham treatment or placebo treatment. We opted not, and we'd heard something similar from EMA, so we opted to go with the sham just because we felt there was an ethical or regulatory burden there that we'd have to go through. Not them, but IRBs, but I think you could do the study either way. I don't think it's going to matter. Sham has more work, right?

Eric Crombez (Chief Medical Officer)

Yeah. I mean, the real difference between sham and placebo is in the placebo-controlled patients, we will not be injecting artificial CSF. So that really is the practical difference.

Emil Kakkis (CEO and President)

In the sham design.

Eric Crombez (Chief Medical Officer)

In the sham design. So it's really not a big significant difference between the two designs. But if you don't need to administer artificial CSF, great.

Operator (participant)

Thank you.

Emil Kakkis (CEO and President)

So we've managed all the aspects of blinding and execution for that. It's a little bit more work to do sham, but it is, we felt, I didn't want to battle uphill with IRBs or EMA or other regulatory authorities regarding the issue of injecting placebo and having every injection be an injection in these kids. But I don't think it's going to matter and won't make a difference in the meaning of the treatment. And we feel comfortable that the design is going to get us where we need to go.

Luca Issi (Senior Biotechnology Research Analyst)

Super helpful. Thanks so much.

Operator (participant)

Thank you. Our next question comes from the line of Liisa Bayko with Evercore ISI. Please proceed.

Liisa Bayko (Managing Director)

Hi. Thanks for taking the question. A question on the variability in OI. In your work preparing for the trial and assumptions, can you talk about any sort of registry or database views you got on variability? Is there some way to describe that? And I guess, is there a trend? If a patient has a fracture, are they more or less prone to a fracture in a certain period of time? I just would love some color around that. Thank you so much.

Emil Kakkis (CEO and President)

We know from our phase II baseline data that there was a pretty wide range. There were patients who had 0.7 or one fracture a year, and some, I think, threw up as high as six or seven fractures a year. Is that right, Eric?

Eric Crombez (Chief Medical Officer)

Yeah.

Emil Kakkis (CEO and President)

Yeah. So that's a pretty wide range of baseline fractures. We know in the younger patients, they tend to have more fractures. So if you talk about the really young ones, the younger you go, the more fractures they have. So those are the factors to age, particularly. And with that wider range, then you have to imagine that you have to power the study to reduce fractures across a wider array of change. So we think that we're well-powered to do that in the design. And if you look at what happened in phase II after a period of time, really, the majority of the patients have not had any more fractures or stopped having fractures completely. And certainly, as we put in our deck, one of the doctors said they've not seen a single fragility fracture since starting to treat setrusumab.

So, we're comfortable that we're going to be able to show the delta. I was just saying, if you asked me why would interim 2 not work. Well, it's a question of variation. It's usually the thing in these studies. But we feel comfortable that with enough time, they will separate, and you'll get an important result for this disease.

Operator (participant)

Thank you. Our next question comes from the line of Ed Arce with H.C. Wainwright. Please proceed.

Thomas Hoffmann (Head of Institutional Equities)

Hi. Good afternoon, everyone. This is Thomas with a couple of questions for Ed. So thank you so much. So perhaps switching kids to 102, as you work to finalize the design for the phase II/3 AURORA study, can you discuss some factors between the two patient populations that would differentiate the study from Aspire? And then taking a bigger picture, overall strategy with 102, do you also expect AURORA would have data to supplement the NDA that we expect to base on Aspire data as expected sometime in the second half of 2026?

Emil Kakkis (CEO and President)

Okay. So, on GTX-102, the main study, to remind everyone, the main study, Aspire, is focused on deletion patients aged 4-17, which is the same population we studied in phase II. So, the AURORA study is simply to support labeling across different age groups and different genotypes. For under 4, we'll have some patients treated open-label. We'll look at the same endpoints. But just show does under 4-year-old patients, do they respond comparable to what we saw in our phase II or in what's in phase III? And it's our experience in the rare disease world that you can expand the label for age simply by treating a small number of patients in an open-label format and collect data that's comparable to your blinded set. We will also do that for some older patients.

For the non-deletion types, we'll look at patients in the main range, and the point will be the same to look at the different genotypes, collect enough patients to show it's safe to give it to them and that using comparable endpoints, we can demonstrate a magnitude effect that is comparable. In our experience, that kind of data would allow us to support labeling, so our intent is to have a cut of data from AURORA in time for BLA filing, but we would probably still continue to collect data in AURORA during the review process in case the agency wanted more. The other advantage of AURORA is that we can also do it in other territories around the world, giving more doctors exposure to the treatment and to gain support for regulatory findings that might occur in other parts of the world. So those are some of the factors of how AURORA will work.

Operator (participant)

Thank you. Our next question comes from the line of Yaron Werber with TD Cowen. Please proceed.

Yaron Werber (Managing Director and Senior Biotechnology Analyst)

Yes. Thanks for taking my follow-up. I just got a couple, Emil. The first one on DTX401. So given that you're fully enrolled now and the primary is at 36 weeks, and then you're on blind, is there a chance that we'll get the data, the first sort of the primaries this year? And then secondly, I think I misheard, but I just want to double-check. It sounds like you're saying in COSMIC, you'll do an interim analysis now mid-year as well. Is that going to be the first interim for that? And I think you mentioned at 12 months, but with a 0.01 alpha. But I thought that was referring to ORBIT. I just want to double-check the interim analysis on COSMIC.

Emil Kakkis (CEO and President)

Sure. So I think you're speaking of 301 for OTC. Yeah. So the 36-week data could provide data. We're not saying when yet. It depends a little on the last patient in and having 36 weeks, etc. But it could be. We haven't provided the exact timing of that data yet to you. For OI, when we run the interim on the ORBIT study, we'll run an interim on COSMIC at the same time. We'll look at ORBIT. If ORBIT's positive, then we'll look at the COSMIC data. If ORBIT's positive, then we'll look at COSMIC. And it also is being looked at at a 0.01 p-value. If ORBIT doesn't stop, then there's no reason to stop COSMIC at this point. So we'll keep them going until we final. But we wanted to do them more in parallel.

So the idea is to have both trials in the filing, which is the FDA's preference, and which would give us the full label. And we also think it gives us labeling against bisphosphonates, right, as well as versus placebo, right? So both studies add value to the commercial launch of the program. The 0.01 for both studies. Okay. Thanks.

Operator (participant)

Thank you. There are no further questions at this time. I'd like to pass the call back over to Joshua for any closing remarks.

Joshua Higa (VP of Investor Relations)

Thank you. This concludes today's call. If there are any additional questions, please contact us by phone or at [email protected]. Thank you for joining us.

Operator (participant)

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.