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Ladies and gentlemen, thank you for standing-by, and welcome to the PTC Therapeutics 2019 Third Quarter Corporate Update and Financial Results. At this time all participants are in a listen only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Alex Kane, Head of Investor Relations. Thank you. Please go ahead, sir.
Thank you and hello, everybody. Good afternoon and thank you for joining us to discuss our 2019 third quarter corporate updates and financial results. Joining me on today’s call is our CEO, Stuart Peltz; our Chief Operating Officer, Marcio Souza; and our Chief Financial Officer, Emily Hill.
Before we start, let me remind you that today’s call will include forward-looking statements based on current expectations. Please take a moment to review our slide on our simultaneous presentation, which contains our forward-looking statements. Our actual results could materially differ from these forward-looking statements as any and such risk can materially and adversely affect our business and results of operation. For a detailed description of applicable risks and uncertainties, we encourage you to review the company’s most recent quarterly report on Form 10-Q and annual report on Form 10-K filed with the Securities and Exchange Commission as well as the company’s other SEC filings. We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP and non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available in today’s earnings release.
With that, let me pass the call over to our CEO, Stuart Peltz.
Thanks, Alex. Thank you for joining us this afternoon as we provide an update on the third quarter. As you heard on the call with me today will be our COO and CFO, Marcio and Emily. Marcio will provide commercial and clinical development updates. Additionally, Emily will provide update on our Q3 financials.
In this quarter, we have continued to advance our mission of creating a diversified fully integrated biotech company with multiple platforms. As we have previously described our strategic vision is to be a leading diversified rare disorder company that through the combination of both using our internal innovative scientific platforms as well as business development, we will have multiple products and programs and we anticipate approximately $1.5 billion in revenue by 2023.
Today we will continue to discuss our efforts in building out this vision of the company and how we are executing across a number of programs. We will also review the results presented during the World Muscle Society that highlighted the continued clinical benefits and competitive advantage seen with risdiplam.
I’m proud to report that in October, Tegsedi was approved in Brazil by ANVISA. Along with Translarna this marks the second approval that we have successfully achieved in Latin America in this year. The opportunity to treat hATTR in Latin America is important because the disease has a Portuguese founders effect. Brazil is the largest country with Portuguese ancestry, with one of the largest markets worldwide with approximately 5,000 patients.
Additionally, Tegsedi has the advantage of being delivered by subcutaneous injection as infusion centers in Latin America are often saturated or hard to access. Through our early access programs, we are seeing that there is a high unmet medical need in Latin America. We have continued to educate the community on the importance of identifying patients and ensuring that these patients gain access to medicine. The ANVISA approval will allow us to initiate Tegsedi’s launch, giving us the opportunity for direct physician outreach.
We have also been continuing to grow our DMD franchise. As you will hear about this in more detail, we reported top line combined commercial revenues of $71.4 million in the third quarter of 2019 when compared to previous year third quarter of $53 million. We have also shared results from the STRIVE Registry this quarter, which is the first international registry for patients with DMD due to a nonsense mutation receiving Translarna.
I’m also pleased to announce that we have required a late-stage asset from BioElectron Technology Corporation that will be integrated into our portfolio. This asset targets a key enzyme involved in the regulation of oxidative stress and inflammation. The compound is ready to be in pivotal trials for select CNS rare disorders and it has the potential to be used in combination with existing programs in our pipeline. We have agreed to pay success based milestones that are due one year after certain regulatory approvals. We believe this is an exciting opportunity because of the novel approach of treating rare CNS and anti-inflammatory disorders.
I now like to turn to our programs in gene therapy. As we previously mentioned, we are on track to submit a BLA to the FDA by the end of the year for our AADC gene therapy program. I’m happy to report that we have successfully completed the necessary manufacturing run of AADC gene therapy product required for the BLA submission. We also plan to file an MAA in Europe for AADC deficiency following our submission to the FDA. We are proud to potentially be in a position to launch one of the first gene therapy programs worldwide. As Marcio will discuss with you in more detail, we have ramped up our patients’ finding efforts and expect to be in a good position to have a strong launch for this product next year. Our gene therapy program in Friedreich’s ataxia continues to move forward. However, because of manufacturing timelines, we now expect to enter the clinic mid next year.
Let me now switch gears to update you on the progress we’ve been making using our splicing platform. Our collaboration with Roche and the SMA Foundation on risdiplam for the treatment of SMA is progressing very well. Recently we shared updated clinical information from the pivotal FIREFISH and SUNFISH studies. At the World Muscle Society Meeting, we reported that SMA patients demonstrated continued improvement including observing babies that are beginning to walk and stand. These are milestones that would have otherwise not have been achieved.
Additionally, risdiplam continues to be well tolerated with no dropouts reported from adverse events. Given that risdiplam has been studied in a broad cohort of SMA patients, we would expect a potential approval to be for a broad label to include all SMA patients for a launch next year. The important of the SMA program is, that is the first small molecule drug that is orally bioavailable that is systemic, that goes to all tissues affected that lack the SMN protein. This is the first small molecule that has been shown to be selectively affecting splicing and leads to modulating gene expression, therefore, validating our splicing platform. We anticipate this to be widely used in all types of SMA patients.
Based on success of this program, we have used to our platform to identify other splicing modulators that effects splicing to treat diseases. In particular, we have discussed two programs that have identified molecules that selectively, as specifically impacts splicing that have the potential to treat orphan disease disorders. One compound was identified to treat patients suffering from familial dysautonomia or FD. And the other program is to treat patients suffering from Huntington disease or HD.
I will now discuss these programs. PTC258 is an orally bioavailable highly potent splicing molecule that has been shown that effectively corrects the splicing defect in FD. This is an ultra-orphan disorder with a small patient population of only a few hundred patients in the U.S., and Israel, resulting from a founders’ mutation predominantly found in the Ashkenazi Jewish population.
The FDA recently indicated that the clinical development path of FD would require a long and complex two years or greater placebo-controlled trial. This trial design is not feasible in this small patient population. At this point, there is not a development path that allows us to move forward in FD. Unfortunately, in drug development, we have to make difficult decisions and as such we have discontinued this program.
We are disappointed for the patients and their families that suffer from familial dysautonomia. We will continue to work with the rare disease community to advocate for the regulatory process that would allow for ultra-rare disorders in difficult diseases to move forward.
Let me now switch to discuss our HD program. We are highly focused on rapidly advancing our Huntington’s program. The compounds identified are exciting, it have shown to be selective splicing modifiers and it shown reduction of the HTT protein in all areas of the brain as well as other tissues in the HD mouse model. We are now in the process of performing larger scale GMP production of one HD compound to perform GLP safety toxicology.
As the program is advancing rapidly, we continue to expect that the Huntington’s disease program will enter the clinic in 2020. Like SMA, there are a number of advantages in having an orally bioavailable compound that is systemically delivered through the blood and has broad distribution to tissues, including all tissues in the brain. We believe that a therapeutic that is systemic and simple to deliver will bring us strong competitive advantage to the Huntington’s disease landscape.
As you can see, we have a number of exciting milestones coming up. We will be hosting an Analyst Day on March 5 and we look forward to sharing more detailed information on our pipeline at that time.
I’d like to turn the call over to Marcio, so he can provide an update on the commercial and clinical development programs at PTC. Marcio?
Thanks, Stuart. Let me start with our DMD franchise. Emflaza, our treatment approved for all DMD patients two and older in the U.S., reported revenues of approximately $6 million to $8 million year-to-date. In the third quarter, we saw a strong prescription growth. However, the net sales were impacted primarily by two factors.
The first related to our specialty pharmacy transition to Accredo, where we face challenges while processing all the new case transitions. We have completed the transition and we do not expect to have any further impacts in the following quarters.
The other factor that effect net sales was the mix of Medicaid’s utilization. This drove us to make a change in our gross to math assumption, in order to align with our expected privates to public payer mix both now and in the future.
In the market access fronts, we have been working diligently to educate payers on the benefits of Emflaza. Recently, we have seen an improvement in the conditions by which some important plans are operating, including removing requirements for precedence zone treatments, every step at it.
To further demonstrate Emflaza’s benefits. During WMS, data collected at Cincinnati Children on more than 400 DMD boys was presented. This data showed clear motor and pulmonary benefits of Emflaza when compared to other corticosteroids. This is one of the largest cohorts ever observed and study in DMD. The data reinforced the importance of correct use of steroids in the management of this disorder and you continue to work with physicians and payers to understand the benefit of Emflaza.
Now switching gears to Translarna. We have seen a strong year-to-date performance with revenues of approximately $141 million. We continue to see growth in demand and support from physicians and patients in all territories Translarna is available. And we continue to execute in our geographic expansion. Most recently with addition of a PTC subsidiary in Russia, which we believe, we will enable the growth in the region.
In addition, as Stuart mentioned, we’re excited with the body of evidence supporting Translarna’s effectiveness, including the data coming from the first Duchenne product registry, STRIDE which is following up more than 200 patients with nonsense mutation DMD, who are receiving Translarna globally. We reported real work, long term evidence from Translarna treated patients coming from this registry.
The data shows that long term treatment with Translarna is low disease progression by preserving both pulmonary and motor function in all patients observed in the registry. As you know, patients die due to respiratory and cardiac failure. In this cohort, we observed that 32% of patients receiving standard of care has an advocacy of less than 50%, which is in line with the decline in lung function expected in this disease. And it compares with only 2.2% of patients who receive Translarna achieving such milestone. Additionally, patients receiving Translarna had a prolonged ability to withstand from supine by three years when compared to untreated patient population.
Continuing with our commercial portfolio, we’re happy to have receive regulatory approval by ANVISA for Tegsedi this week. It’s an important milestone which enabled pricing, registration and negotiations with the Brazilian government to make Tegsedi available to all patients who may benefits in the country.
We had a team in place for market developments and medical support since the beginning of this year. And now we intend to start launching activities for Tegsedi immediately in Brazil. We are proud to add as important regulatory approval and are committed to serve all the patients in need in Latin America. Our next major regulatory step in the region is to file for the approval of Waylivra.
Now focusing on AADC deficiency. We are preparing for a successful launch in the United States next year, with the expected FDA submission this quarter and subsequent approval in 2020. Market preparation is well underway with a clear plan to cover both the prescribing population, but also the centers of excellence conducting the neurosurgical procedure. In terms of patient finding, our approach involves multiple channels.
First, our field-based personnel are distributing at no costs testing kits for any clinicians that suspect an AADC deficient patient within their practice. A protocol-driven, broad-based screening program of cerebral palsy is also advancing. And our social media initiatives have launched with good success rate to date.
Additionally, we have recently established a partnership which would add AADC deficiency to a second-tier newborn screening panel in the United States, and we are working together on the test validation. We expect more than 200,000 babies to be screened at birth for AADC deficiency next year and more than $1 million in 2021. Our goal is to have more than 300 addressable patients available before launch to be converted to commercial in key territories. We are on track to reach that goal.
Turning to our clinical development pipeline. We have completed enrollments in Study 045, which is our dystrophin management study in the United States for Translarna. This study is positive. We’ll serve for the NDA resubmission in the U.S. We have also had the last patient, last visit for our unread study for Translarna, which should readout at the beginning of next year. Our Friedreich ataxia clinical development program is progressing well as we prepare to those the first patient next year.
Lastly, as Stuart just mentioned, we have acquired some assets from BioElectron. We intend to initiate a clinical trial mitochondria epilepsies with the most advanced compound early next year. The trial has been designed based on scientific advice received from the European Medicines Agency. We also intend to explore other use considering the anti-inflammatory properties of this compound, which are going to be disclosing in the near future.
I’ll now hand the call over to our CFO, Emily Hill. Emily?
Thanks, Marcio. I also wanted to take a moment to acknowledge a new member of the Investor Relations team, Alex Kane. Alex, joins us from the agency side and NASDAQ, where he spent almost a decade focused on biotech companies. We are very happy to have him join us at PTC. As you know, our third quarter press release is disclosed shortly before today’s call which summarizes the details of our financial results. Please see that release for further detail. We’ll start with a few comments on our financial performance in the quarter and our guidance for the full year 2019.
Starting with our top line results. We reported $71.4 million in combined net revenue across our commercial portfolio in the third quarter of 2019, compared to combine net revenue of $53 million for the third quarter of 2018. Translarna net product revenues were $48.3 million for the quarter. This compares to $30.4 million in the third quarter of 2018. This growth includes the expansion of Translarna ex U.S., including regulatory approval and an annual contract with Brazil.
For Emflaza, we reported net product revenues of approximately $22.9 million for the third quarter of 2019, which compares to $22.6 million reported in the third quarter of 2018. We are working towards establishing Emflaza to standard of care for all patients from the U.S., and are happy to be able to bring Emflaza now to patients as young as two years of age.
Continued growth of the DMD franchise and our annual contract with Brazil for Translarna gives us confidence to reiterate our 2019 DMD franchise revenue guidance of $285 million to $305 million. We have also outlined the opportunity for our pipeline to generate potential combined revenue in excess of $1.5 billion by 2023.
Non-GAAP R&D expenses were $58.1 million for the third quarter of 2019, excluding a noncash stock-based compensation expense compared to $49.9 million for the third quarter of 2018, excluding $4.4 million in noncash stock-based compensation expense. The increase in R&D expense reflects our strategic investment in advancing the gene therapy platforms, splicing programs and other research programs as well as the advancement of the clinical pipeline.
Non-GAAP SG&A expenses were $43.8 million for the third quarter of 2019, excluding $5.5 million in noncash stock-based compensation expense compared to $33.9 million in the third quarter of 2018, excluding $4.5 million in noncash stock-based compensation expense, reflecting continued investments in support our commercial activities, launch preparedness in Latin America and global patient finding efforts.
I would also like to update non-GAAP R&D and SG&A expense guidance for full year 2019 to $380 million to $390 million excluding noncash stock-based compensation expense of approximately $40 million, an increase from $360 million to $370 million excluding estimated non-cash stock based compensation expense of approximately $35 million. This increase in operating expense is due primarily to business development activities and investment in gene therapy manufacturing.
Net loss for the third quarter of 2019 was $60 million compared to a net loss of $51 million for the third quarter of 2018.
Cash, cash equivalents, and marketable securities totaled $708.6 million at September 30, 2019, compared to $227.6 million at December 31, 2018. In September, we completed a financing that amounted to $287.5 million in convertible bonds and $100.0 million in equity for a total consideration of $387.5 million, resulting in net offering proceeds of $376 million. This financing puts us in a strong position to execute on many fronts towards achieving our $1.5 billion 2023 revenue target.
I will now hand the call over to the operator to start our question-and-answer session. Operator?
Thank you. [Operator Instructions] Our first question comes from Alethia Young from Cantor. Please go ahead.
Hey guys, thanks for taking my question and congrats on all the progress. Maybe two for me. Just one, I feel like you snuck in this BioElectron. And I was looking on the website. Are you guys going to using this EPI-743, like and use this in combination with other assets? I just maybe can you talk a little bit more in detail as it relates to your platform? I’m not sure if it’s too early. And then on the second side of things, I wanted to check on the U.S. DMD study, which it sounds like it’s still reading out sometime relatively soon. And I guess, how are you thinking about potentially filing? I mean, I know some people have paid attention to what’s happened with like Sarepta in the case of Golodersin? I mean, do you feel confident in the agreement in which you have with the FDA around dystrophin here at this point? Thank you.
Yes. Hey, thanks Alethia for the question. Yes. BioElectron that we thought was a very interesting company with a strong scientific platform that hit oxidative stress and redox, and this turns out to be quite important mitochondrial function and neuroinflammation or inflammation in general. And so we’re very excited about it and EPI-743, as you see, is their most advanced program that we think is – in a sense pivotal-ready program, a study rightly – for potentially a number of disorders. Maybe, I let Marcio talk a little bit about that. But that’s what we thought was really quite exciting and what we’re going to be focused on is, as what I talked about in the script originally, this was really a success based milestones on success of approval on trials to the move forward. So we’re excited. We think it’s a very important asset that could compliment not only new diseases, but can work in inflammation, we can explore in other diseases like DMD as well. So we’re excited about that. Marcio, do you want to talk about that?
Yes, absolutely, Stuart. Thanks, Alethia for the call. So first and foremost, so extremely excited, this two just adds about bringing the portfolio here through these assets agreement with BioElectron. Specifically I want to call out that some of the team members are coming as well and are joining PTC. I’m especially proud to have Matt Klein, who is the CEO now – BioElectron joining the team and leading the effort with 743 and other assets here. We’re going to be focusing on some of the disease as I mentioned in my prepared remarks. The first one is mitochondrial epilepsy.
We see a very high unmet need there, several thousand patients in the U.S., several thousand patients outside of the U.S. So relatively large a market opportunity but yet, relatively small clinical trial to get to the developments. Very interesting Phase 2 proof-of-concept already in house with this. So we’re going to move that quickly and then go for a very rigorous process to prioritizing the other indications to see what makes sense. Obviously, inflammations is the core of a lot of the things we do right now, like DMD and you’re going to take a look and look at what really matters in terms of patients and whether or not we shouldn’t move forward in other indications as well.
And then in terms of the DMD, we’re pretty confident we had long discussions with Janet Woodcock on what was required. And just to remind you that it was, anything above background with the clinical data that we currently have. On hand should be sufficient for approval. So we’ve had a substantial discussion and feel comfortable that we have an agreement to move forward based on that.
Great. Thanks.
Thank you.
Our next question comes from Vincent Chen from Bernstein. Please go ahead.
Great. Congratulations and thanks for taking the questions. A couple of them on the Huntington’s disease program. First, I was wondering if you could provide some detail on what are some of the assays that you use to assess the risk of off target slicing in different cell types and so forth. What preclinical studies already potential candidates subject to? And I guess which of these been completed to date, what remains to be done on this front? And then secondly, how do you think about the target product profile you’d be aiming for? In particular, I guess, if you think about – you’ve shown pretty substantial knockdown in the preclinical studies, what level of knockdown would you be looking to target, in a clinical program?
Sure. Thanks for that. And so yes, in general, our approach is really – we used in a sense of chemical genomics approach in terms of identifying molecules first in a high throughput screen and then go into to cell an animal-based molecule. And they’re always counter screened against a number of other, what we think are similar, yet not identical splicing events to watch. And so we look very carefully at that as well. Then also used in a sense, safety toxicology as an important measure as well, because at the end of the day, whether it’s on-target or off-target is what we tend to want to find that out. So this occurs quite early within our screening tier.
And so we build a screening tier, both looking at – looking at in a sense, the effectiveness of the compounds for selectivity and specificity. We also do deep sequencing and RNA seek to monitor what else within the genome they may hit. So, and we continue to try to improve not only the efficacy but the selectivity collectivity of that. We find that we’re capable of doing that. And as the molecules become more effective, it tend to be in the low in the animal range. It tend to be far more selective as a consequence of that.
And then obviously, we put them in through pharmaceutical – not only do the efficacy and safety, but look at the pharmaceutical co-properties that go along with that. And that’s a long laundry list of things that we look at, whether it’s induces it, whether it aimed assay issues. All the things that we look – that is known to look for that we – if we find some issue with it, we work it out and try and get that out. Until finally, we get a compound that we want to move forward on to do what we’d say is to move forward like a development compound that we then do larger GMP scaling of the product. So we have that synthesizing the GMP manner than does do GLP safety toxicology studies.
What we’ve talked about in the past for a Huntington’s disease is that, this, we think that an orally bioavailable product, much like analogous to SMA, would really be the most competitive product. And so this is a very important program for us where we would anticipate as need be to continue to have as many compounds to move forward as we can. As I said in my prepared remarks, we already have a compound that we are doing GMP scaling and going to be moving into the safety toxicology, such that, as we’ve always said, we anticipate to have it in the clinic, next year. So I think that’s an exciting point here, that we’re moving forward on this compound, continue, obviously to build out the patent, IP profile around all of that.
And then we’ve already shown in animal models that it reduces HTT, not only in the brain, but also in other tissues as well. And we’ll have the advantage that we’ll be able to look into blood and see a reduction of that. These compounds are highly effective. We’re shooting for probably a 60 – between 50% and 60% reduction with these molecules are effective enough to go pretty low. And so we’re capable. I think the nice thing about a small molecule also is that not only do we know it penetrates the blood-brain barrier and gets into – and obviously because of the blood exposure gets to all cell within the brain, but it also gets into blood and skin and very capable of actually monitoring with the effect of what exposure causes a reduction, and the fact that as that we could then go and figure that out to what effect reduction you’ve seen brain.
So we have a very good ways of titrating what the appropriate – what the appropriate exposure is to get a 50%, 60% reduction. And that’s the way of that we’re – that’s the way we pick the compounds and begin to define what would be the appropriate dose of that. And then we can go into humans. And really as a consequence of being able to measure it in the blood, we’re able to say, what reduction we’re able to see. And I think one thing that we probably didn’t push hard enough in the SMA program is that very early on in healthy volunteers, we were able to show that there was a reduction of SMA. Analogous to that, we’re going to be able to show that the molecule we chose, we’ll be able to say, with the hypothesis, do you reduce HTT and can you observe that in the blood?
And we did that in SMA and that gives us a lot of confidence to be able to move forward because of what you see in the blood is what we saw in the brain. So that’s in a sense, one of the first, even in healthy volunteers, I think we’re going to have a good idea whether we hit the target we want, effect this splice, reduce the splice and then move on. And then in terms of the product profile, I think we’ll be sort of talking about that in more detail over the next call.
Great. Thank you very much. Appreciate the insight.
Our next question comes from Joe Thome from Cowen and Company. Please go ahead.
Okay. Congratulations on the quarter and thank you for taking my questions. Maybe first one on the acquisition of the new products. I know you mentioned there was a success-based milestones associated with the programs, but was there any upfront costs associated with the development? And then maybe a second on the dysautonomia program, I know you outlined the reasons as to why you’re not moving forward with that. But is there any read-through to your oral splicing platform as a whole and maybe how has this interaction changed your future development plans for rare diseases? Thank you.
Sure. I’ll take the second one first and then I’ll have Emily, discuss the cost. I think this is an important point. And early on, when we chose to look at FD, it was really a consequence of – it was unique in that it had a founder’s effect in terms of the mutation. It has a single point mutation that actually effect the splicing of the F1 gene that prevented the production of the protein and that leads to the disease.
So it was very much a consequence of altered splicing. And just based on our understanding of where we could fix it. But we knew that it was a relatively small patient population. But we thought it was strategically important to see if we could find another molecule, which I’m excited to say that we did and it’s highly effective. But it’s a very small patient population and we said to ourselves that – and it’s a dwindling population that they now no longer have additional patients because they screened for this.
And so we said that the best – we thought that the best approach for such a small patient population would be a biomarker study that is that we showed that you reduce the level of the protein and then if possible than go into a registry where you would follow it over time. We measure it as we had in the bars for about a year, but then go on and do a post-marketing registry study. And unfortunately the FDA wanted to have or suggested to us that we have a placebo-controlled study, perhaps look for other endpoints. And so in this case, specifically for FD, the small patient population, the fact that it would be placebo-controlled, we just didn’t think there would be enough patients to be able to power and be able to do this.
In the long-term two or three years study, we just didn’t think it was viable. So that’s why that stopped. In the case of other things, we don’t think that’s the case. I mean, Huntington’s disease is a much larger population and we think there’s – the good news is that there’s others who are doing substantial amount of work ahead of us that are helping to find what are the best endpoints, what’s the best way to power it. So we feel in a much better position in the case of Huntington’s then unfortunately for HD.
And I think that’s relatively sad for the FD patients. And one of the cause – I think, we want to work at the company is, trying to think of a way where there’s a – in a way like the Europeans have an exceptional circumstance that can allow for these extremely small patient population that have means to try and get approvals on drugs that could be beneficial. But that would obviously take time to change direction and laws for the company. But that’s something we’re going to try to work in the long run.
And then to answer to your question about the upfront for the assets acquired from BioElectron. We were pleased to structure that as a success based deal. The transaction has very little upfront payment, $10 million upfront for these assets and then obviously, as you mentioned, they are success based milestones due one year after certain regulatory approval.
Great. Thank you.
Thank you. Our next question comes from Gena Wang from Barclays. Please go ahead.
Hi. This is Peter for Gena. I just had two quick questions. First on SUNFISH part 2, could you give a sense of how to what format you would release the data? Would it be a press release followed by a medical conference? And if so, what kind of information would be included in the top line? And I have a quick follow-up.
Hey, Peter, it’s Marcio. So first as you might recall, the trial is reading out in Q4. So we’re trying to do this real-time, so it’s going to be intense for us and we understand it from Roche as well to press release the top line data. As its practice both for us and Roche is the more complete results are going to be shown early next year in that conference – in a scientific conference. So we should be having this before at the end of the year the top line and then next year more complete response.
Got it. And I guess, my follow-up question is, given that I guess part 2 data would be available before the approval decision, would that be part of the discussion as well? Thank you.
Yes, absolutely. I believe we mentioned something to this regard on the previous call as well. Why it’s not required for the submission? As we made clear, it is courtesy and obviously we would be doing on Roche in this case, who are leading the submission, would be submitting that to the FDA the top line data. What is not required here is to have like a CSR format and all the data transfer and everything else that’s normally would be – if it was a new submission would be done. So the top line, again, as a matter of courtesy, but also as a matter of practice to be shown to the agency presented to them if they have any questions and so on. Obviously we’re excited, I think the results of part 1 and what we just showed at WMS and before that and many conference shows incredible activity for this compound in these patients in type 2 and 3. So looking forward to these results later in the quarter.
Great. Thank you very much.
You’re welcome.
Thank you. Our next question comes from Martin Auster from Credit Suisse. Please go ahead.
Hey, all thanks for taking the question. I had a couple, one was just from the press release, you talked about the risdiplam NDA filing on plan for back half of the year. Just wanted to confirm, are we going to just hear about this filing once FDA has accepted it? And is that something we can expect by the end of the year? And then the second question was just on the Friedreich’s ataxia gene therapy IND, just wanted to see if you could add a little more color to the process that kind of led to the slight push out from kind of end of this year towards the middle of next year? And how confident you feel about the revised timeline? Thanks.
Yes, sure. So I think the risdiplam – I think we feel pretty confident that you’re going to hear something by the end of the year. So we feel good about that. In terms of the FA, I think, unlike AADC it’s a much larger population, we think about 25,000 patients. And what we did is we decided that we wanted to optimize the cell line a bit to get larger quantities produce. And so we decided to take the time to get that moving forward and to get that appropriately completed to be able to do that. And so our timelines now have moved, but we still think that – what we’re saying is we still think that we will have IND next year for FA.
Okay, I’ll just do one quick follow-up on the risdiplam NDA. There will be an announcement when FDA has accepted the filing or when the filing has been submitted?
Accepted.
Okay, great. Thank you.
Thank you. Our next question comes from Brian Abrahams from RBC Capital Markets. Please go ahead.
Hi. Thank you very much for taking my questions. First one on risdiplam and SMA. As the SMA market and the data continue to evolve, what’s been your latest feedback from regulators, physicians and reimbursers as to the magnitude of benefit that would really resonate from the SUNFISH part 2. And then separately, you mentioned that you’re tracking on the AADC program towards your patient identification goal. Just wondering if you could give us a little bit more granularity around that? Where are the patients being identified? Are coming from geographically through what channels that you’re finding them? And then I’ll hop back in the queue. Thanks.
Sure. So on the risdiplam, I think, people have seen the data that we presented from part 1. I think they feel pretty good about that. We’re looking at the results in a sense the payment from the gene therapy program that seems that they’re getting paid for that. So we feel pretty good about where we’re at. We think, obviously not only do people like the efficacy and the fact that it’s systemic and actually hits other tissues in which SMA is – the lack of SMN affects, like liver, bone, muscle and other tissues as well. But the simplicity in the oral bioavailability of the drug I think is a real important factor. So we think the combination of the quality of the data that we’ve shown thus far, the ease of use is going to really put us in a very good and competitive position.
In terms of the second question, let me pass that over to Marcio.
Sure. Brian, so the agency patient identification, as I mentioned in the prepared remarks, we’re making some good progress here towards our goal to have 300 patients available at the time of launch to convert into reimbursements. The main source of patients right now is two-fold, right. One is, our efforts on really connecting with families and physicians through social media and that’s been panning out slight quite nicely. And the second is our grassroots approach in terms of visiting the physicians understanding where the diagnosis and distributing kits. We had like a very good number of kits distributing the United States where we are providing this at no costs and outside as well.
You mentioned about geography in your question. So the key focus obviously is that you asked, that’s the majority of our focus right now. That’s where we expect to launch first. But we are putting some real nice effort as well in some selective countries in Europe and in Brazil. So we have relatively, I would say restrictive in terms of focus, geographic expand for now for the next 12 months, we’re going to build success on success. So trying to get to these patients on areas they’re going to launch first and the last source is the identification through the screening programs.
So that’s coming along. Now we have the sites open, as I mentioned the previous quarter, we had a little bit of slow down there, so that’s – now it’s going to start to generate some patients. And then for next year, as we just mentioned, we expect to start newborn screening on patients in the United States. This is on top of the newborn screening program we announced last quarter. We’re going to be having as a pilot in Germany. So it’s all coming out quite nicely for a successful launch.
Thanks, Marcio, and thanks, Stuart.
Thank you. Our next question comes from Raju Prasad from William Blair. Please go ahead.
Thanks for taking the question. Two for me. In Emflaza, you mentioned the mixed towards utilization of Medicaid. Is that something that we should anticipate moving forward and just maybe some general color on how the label expansion is going so far for the product? And then on Tegsedi, it looks like in the year 2023 projections you have about $200 million for the invented study. Can you just provide some color on how we should anticipate that long as to go and approximately what percent of that $200 million is the your remark for Tegsedi? Thanks.
Sure. Raju, it’s Marcio here. So first on the question on Emflaza, right? So Medicaid’s, we constantly monitor the use. As you can imagine, there’s like new patients pretty much being added every day. We need to look into that enrolling basis so we can meet our legal obligations with CMS and beta rebates and so on, quarterly. So when you look into that – in the last few quarters, it was trending a little bit higher in terms of the percent than we expected. So we had to make some adjustments to make sure like we were okay in terms of gross to net that results in a little bit off of negative impacts on the net revenue this quarter. When you’re looking for that, it’s not only for the past, but very importantly our – we revise our projections for the future based on the rate of patients are coming in and what are the insurance plans are? So we should be – our best expectation right now is that we should be covered for the subsequent quarters in terms of the mix we have. And we’re going to update your properly if not.
In terms of the label expansion, the key here is not necessarily to convert the patients, it’s that actually a relatively easy task is really these patients are not getting diagnosed and they’re not getting on steroids. So we’re doing our field forces working a lot in our medical science liaisons and our patients advocates are working a lot on getting the identification. Very nice early progress, but it is still a long roads to go.
So lastly on the Tegsedi, so extremely excited, let me just say that first, since your question is first about like Tegsedi, we officially published the approval today. We received an advanced note for Emflaza that would be coming, so the very first approval in the world for any to include quality of life in the indication statements. So as we talk about differentiation, competitive markets, we want to make sure we are always ahead of everyone. So that’s very nice. When you’re looking to our long term projections, Brazil is the most important markets in the region, about 5,000 patients. It puts us ahead in terms of negotiations with the government and that’s what we’re going to start now.
But very importantly, while we’ll be preparing the markets and we have a decent number of prescriptions for already. We couldn’t promote, we couldn’t say the world Tegsedi, we couldn’t talk about the label. So as of tomorrow, the team in Brazil is going to be talking about this to physicians. So we’re going to be seeing hopefully a very nice increasing demand and which is going to convert into revenues. The first year is normally as low, in terms of revenues. But we do, obviously, we’re going to do our best and more than that even to the delivery on results. But I would try, if our modeling was in your shoes, I would be putting a little bit of price lower first 12 months and then ramping up from there.
One small point for the $200 million for Tegsedi was really, I think what we put for Tegsedi. We had about $150 million for Tegsedi. So it was right.
Thank you. Our next question comes from Joel Beatty from Citi. Please go ahead.
Hi. Thanks for taking the questions. The first one is, could you just discuss the importance of showing a statistically significant benefit in SUNFISH part 2 compared to placebo, now from both regulatory standpoint as well as a commercial success standpoint. And then the second question is, could you discuss the confidence in DMD revenue guidance for the year? It implies uptick from where it was at this quarter? And any thoughts on what it could be towards the bottom of the upper end of the range?
Yes, go ahead.
Sure. So on the SUNFISH part 2, right? And what do we expect from that trial, obviously, extremely bullish in terms of the program in general and this is based on what it looked into part 1. So the way that the trial was powered is in relation to obviously it’s always a ratio between the point estimate change and the standard deviation. On this case, we expected to be three points change on the MFM32 that is the primary endpoint and six, standard deviation for that. This is pretty much what we’re seeing with part 1, so on that regards, like there’s all indicators that the trial is going in the right direction. The good thing is this population should be more homogeneous, so one would expect that the results are a bit more homogeneous as well.
It is important to have a positive trial. And obviously, that’s what we are planning for, right? Both for the regulators, payers, patients and so on, it’s very hard for us to try to predict right now what is – where is going to land. This trial was well conducted extremity, well conducted. More of 186 patients are – sorry, 168 patients always inverse that your numbers there my apologies, and powered properly, so all we could do to de-risk was done. And again, we’re excited to hear about that before the end of the year and inform you guys.
In terms of the DMD guidance for the year, it is trending positively. You are absolutely right. We continue to just like of our approach for guidance, as we always say, is to be realistic in terms of what can be achieved at this point in time because we do have some ordering pattern fluctuation. We didn’t feel was the right thing to narrow the guidance. Obviously, we’re excited and going to do our best. And we were all pushing here to be as high as possible, but the most responsible thing for us was to keep the entire range of the guidance open.
Great. Thank you.
Thank you.
Thank you. Our last question comes from Eric Joseph from JPMorgan. Please go ahead.
Hey, good evening. This is Turner on for Eric. Just a follow-up on Huntington’s and thinking about entering the clinic with healthy volunteers next year and getting some initial PD data. Do you have a sense yet of what level of plasma and MRNA and HTT protein reduction? Would give you some confidence to meet the 50% or 60% reduction threshold in the CNS that would convert some efficacy? And then one other quick one, I’m just curious as to when we may anticipate updates for JEWELFISH and RAINBOWFISH and any particular recruitment update for RAINBOWFISH? Thank you.
Sure. In the case of HTT, yes, we’ve probably, now obviously, we’re looking to see some change of that. Obviously, what we’re shooting for is somewhere between 30% and 60% reduction of the HTP protein. So that’s what we would consider important. So we think that we know that within the blood and brain, the blood brain barrier, that there’s a good – almost a one-to-one ratio within the exposure that you see in blood is what you see in the brain. So we’d be pretty confident that the results that we get from blood would be indicative of what you’re seeing in the brain. And again, I think the importance of that is that obviously, because it’s in blood, it would get distributed to all cell, all cells within the brain. And actually – I think that’s actually an important point because if – there are certainly deep recesses when the blip in the brain, that are difficult to get to and we think by having the exposure in the blood really gives us a big advantage.
And maybe I can take the second on the other trials for SMA. So RAINBOWFISH is probably the one we’re the most excited to see next, right? So you probably see our update in WMS, dose the first patients there having really great interest, several sites open globally. That should as it comes, we’re going to be showing updates. I think it’s being practice for this program to be presenting all the major scientific conference. There are obvious ones at the beginning of the year, like AAN and that’s where we should expect to have a general update for the program.
Okay, great. Thank you.
Thank you.
Thank you. This concludes our Q&A session. At this time, I’d like to turn the call over to Stuart Peltz, CEO for closing remarks. Please go ahead sir.
Well, again, let me just thank you all for joining the call today. We really appreciate it and I think what you could see thus far that we’ve really had a productive year thus far with a number of exciting milestones that will be coming I think in the coming weeks and we look forward to sharing those with you. Again, thanks for being a part of our call.
Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect. Good day.