PTC Therapeutics Inc

NASDAQ:PTCT

Earnings Call Analysis

Strong Q3 performance boosts PTC's 2024 revenue outlook and future drug approvals.

In the third quarter, PTC Therapeutics reported total revenue of $197 million, with significant contributions from its DMD franchise, particularly $52 million from Emflaza. Due to this strong performance, the company increased its 2024 revenue guidance to between $750 million and $800 million. PTC has submitted two NDAs to the FDA, expecting decisions in 2025, and plans to launch sepiapterin, aiming for a $1 billion opportunity in the U.S. alone. Their pipeline also includes promising treatments for Huntington's disease and ALS, reflecting PTC's strategic focus on rare diseases and unmet medical needs.

Strong Third Quarter Performance

PTC Therapeutics reported a significant financial performance with total revenue of $197 million for the third quarter of 2024, up from previous periods. This includes substantial contributions from their Duchenne Muscular Dystrophy (DMD) franchise, generating $124 million, which highlights the company's effective navigation through a competitive marketplace. Notably, Emflaza revenue comprised $52 million, indicating strong brand protection against generics. The company now has over $1 billion in cash reserves, which provides a solid financial foundation for future projects.

Increased 2024 Revenue Guidance

In light of this strong performance, PTC Therapeutics has raised its total revenue guidance for 2024 to a range of $750 million to $800 million. This increased forecast reflects the company's momentum and confidence in achieving expected sales from existing and upcoming products, implying a well-managed pipeline and marketing efforts.

Regulatory Progress on New Drug Applications

The company is actively advancing its product pipeline, submitting two New Drug Applications (NDAs) to the FDA in the third quarter: one for sepiapterin, with a PDUFA action date set for July 29, 2025, and another for Translarna. The submission for sepiapterin is backed by robust Phase III trial data demonstrating its efficacy in treating patients with Phenylketonuria (PKU), a rare genetic disorder. Translarna's application is under review, while marketing authorizations are sought in other regions, including the EU and Brazil.

Launch Prospects for Sepiapterin

Sepiapterin has the potential to enter the market globally in 2025. PTC expects to capitalize on the unmet medical needs of more than 58,000 PKU patients across key markets. The company forecasts a revenue opportunity exceeding $1 billion in the U.S. alone, assuming a modest penetration of 20% to 30% of patients currently not on medical treatment. Early adopters will likely be those who have not responded to existing therapies, positioning sepiapterin favorably among prescribers and patients.

Momentum in Friedreich's Ataxia and Huntington's Disease Programs

PTC is also on track to submit an NDA for vatiquinone for Friedreich's Ataxia in December 2024. Early findings indicate significant efficacy, with reports showing a 50% slowing in disease progression over a three-year study period. Additionally, the PTC518 program for Huntington's disease has received Fast Track designation from the FDA, embodying the potential for accelerated development given its promising early trial results.

Operational Efficiency and Cash Management

The company reported a non-GAAP R&D expense of $152 million for Q3 2024, aligned with previous year's figures despite rising operational challenges. Non-GAAP selling, general, and administrative expenses also reduced to $63 million from $68 million, showcasing PTC’s commitment to streamlining operations while supporting their clinical initiatives. With a strong cash position, the company is well-equipped to manage these expenses and fund their ambitious pipeline.

Upcoming Product Launches and Strategic Planning

PTC is preparing for a series of product launches, including sepiapterin, Translarna, and vatiquinone. As excitement builds for these therapies, PTC plans a robust commercial strategy to introduce up to four new products in 2025. They are also engaging in proactive discussions with payers regarding pricing and access strategies, aiming for premium pricing based on sepiapterin’s differentiated clinical profile and demonstrated ability to achieve rapid therapeutic goals for patients.

Navigating Regulatory and Market Challenges

Despite recent negative reviews regarding Translarna in the EU, PTC emphasizes that the ongoing support from healthcare professionals and patients remains strong. The outlook for maintaining market share across various regions continues to evolve as PTC adapts its strategy to factor in regulatory feedback and market demands. This proactive approach is crucial for future revenue stability and growth, particularly in emerging markets.

Earnings Call Transcript 2024-Q3

[Operator]

Welcome to the PTC Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Jane Hanlon, Associate Director of Investor Relations. Please go ahead.

[Jane Hanlon, executive]

Good afternoon, and thank you for joining us today to discuss PTC Therapeutics' Third Quarter 2024 Corporate Update and Financial Results. I am joined today by our Chief Executive Officer, Dr. Matthew Klein; our Chief Business Officer, Eric Pauwels; and our Chief Financial Officer, Pierre Gravier.

Today's call will include forward-looking statements based on our current expectations. Please take a moment to review the slide posted on our Investor Relations website in conjunction with the call, which contains information about our forward-looking statements. Our actual results could materially differ from these forward-looking statements, as such statements are subject to risks that can materially and adversely affect our business and the results of operations. 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 to non-GAAP financial measures and a reconciliation of GAAP to non-GAAP are available in today's earnings release. With that, let me pass the call over to our CEO, Matthew Klein. Matt?

[Matthew Klein, executive]

Thank you all for joining the call today. I'm happy to share the results of another quarter of outstanding commercial performance and pipeline execution. In the third quarter, we achieved total revenue of $197 million, including $124 million from the DMD franchise. I want to highlight the $52 million in Emflaza revenue, which reflects our team's ability to effectively navigate a genericized and competitive marketplace in the U.S. With our strong third quarter revenue performance, we closed the quarter with over $1 billion in cash and are raising our 2024 total revenue guidance to $750 million to $800 million.

In the third quarter, we submitted two NDAs to the FDA, one for sepiapterin and one for Translarna. Both applications have been accepted for filing. The FDA planned action date for sepiapterin is July 29, 2025. An action date has not been provided for the Translarna NDA due to the regulatory context of the filing. The sepiapterin NDA includes the significant and clinically meaningful evidence of efficacy from the Phase III AFFINITY study as well as data from the AFFINITY open-label extension study demonstrating durability of the sepiapterin treatment benefit and the ability of patients to increase their protein intake while maintaining control of Phe levels.

These data support to sepiapterin can provide significant benefit to PKU patients of all age groups and severity subtypes, including classical PKU. The impactful results from the AFFINITY trial were recently published in the prestigious Atlanta Journal, a testament to the importance of the study findings.

In addition to the FDA submission, marketing authorization applications for sepiapterin are currently under review in the EU and several other countries, including Brazil. We remain on schedule to submit the JNDA in Japan in December of this year. These submissions will support our planned global launch of sepiapterin in 2025. Our launch plans are progressing well, as Eric will detail shortly.

We remain on track to submit an NDA for vatiquinone for the treatment of children and adults with resorcitaxia in December. This NDA submission will be the fourth approval application submitted to the FDA this year, an impressive testament to our team's execution. The vatiquinone NDA will be based on the findings of significant benefit on the upright stability subscale of the mFARS disease rating scale in the MOVE-FA placebo-controlled trial, as well as results from 2 long-term extension studies. As we recently reported, both long-term extension studies met their primary endpoint with evidence of statistically significant long-term benefit in delaying disease progression. Given the extensive safety data collected to date in both children and adults, vatiquinone has the potential to fill the unmet need for pediatric adolescent FA patients as well as provide a promising therapy for adult FA patients.

Moving to our PTC518 program for Huntington's disease. The program received fast track designation from FDA in September, reflecting the potential of PTC518 to be the first ever approved disease-modifying therapy for HD. In addition, we requested 2 Type C meetings with FDA. One meeting is to discuss the potential for Huntington lowering to serve as a serve endpoint supportive of accelerated approval, and the second meeting is to discuss the endpoint strategy for an efficacy trial in HD patients, whether that trial is completed as a Phase III registration trial or as a confirmatory trial in the context of an accelerated approval. The FDA has asked to combine the two into a single Type C meeting, which has now been scheduled for later in the fourth quarter. The ongoing Phase II PIVOT-HD trial continues to progress well, and we remain on track to complete the study in the first quarter of 2025 with results expected in the second quarter.

Turning to our utreloxastat program for ALS. We remain on schedule to share top line results from the registration-directed CardinALS trial in the fourth quarter. Utreloxastat is the first compound being developed for ALS patients that specifically targets paraptosis, pathway of oxidative stress and cell death demonstrated to be highly relevant to ALS pathology. Given the recent changes in the therapeutic landscape for ALS, positive results from the CardinALS study could enable utreloxastat to address the significant unmet need of ALS patients.

Finally, we remain on schedule for the November 13 FDA action date for the AADC gene therapy BLA. If approved, this would be the first ever direct-to-brain administered gene therapy authorized by FDA and open the door to a whole new approach to treating brain diseases. I am very proud of our team's ability to bring this pioneering therapy to patients.

In summary, we have had a very busy and productive quarter as we continued to execute on all of our planned objectives and achieve our many significant 2024 milestones.

I will now turn the call over to Eric to discuss our commercial performance. Eric?

[Eric Pauwels, executive]

Thanks, Matt. Our global customer-facing team had another strong performance in the third quarter, delivering $135 million of revenue across our 5 marketed products. Our global DMD franchise had a solid quarter with $124 million of revenue. Despite CHMP's recent negative opinion on renewal, there continues to be strong support from physicians, patients and families throughout Europe for Translarna based on the positive totality of evidence in the trials and the real-world experience. We continue to ensure that Translarna is made available to boys and young men living with nonsense mutation Duchenne muscular dystrophy in Europe, as long as it remains authorized pending review of the CHMP opinion by the European Commission.

Outside of Europe, our commercial teams have worked effectively with health care professionals as we continue to add new patients and maintain those on existing Translarna therapy in Latin America, the commonwealth of independent states, the Middle East and North African countries. In fact, in the third quarter, we obtained first-time Translarna orders from two new countries in the Middle East and North African region. In Brazil, we delivered the remaining 50% of a group purchase to the Ministry of Health.

As Matt mentioned, the NDA for Translarna is currently under review by FDA and our highly experienced U.S. team is very well positioned to bring Translarna to nonsense mutation DMD patients rapidly pending potential FDA approval.

Now turning to Emflaza. Third quarter net revenue was $52 million. We continue to work closely with health care professionals, payers and specialty pharmacies to dispense the brand. Our PTC Cares team provides white glove personalized services and programs supporting each patient with co-pay assistance, brand information and timely shipments from our specialty pharmacies, greatly enhancing the experience for both new and continuing patients.

Our customer-facing teams are extremely excited about the potential upcoming global launch of sepiapterin for PKU patients. Based on the feedback from patients, families and physicians, we believe sepiapterin has the potential to generate significant revenue, including an over $1 billion opportunity in the U.S. alone.

PKU has a large addressable orphan disease population of more than 58,000 patients in markets with access and reimbursement, and the vast majority of patients are not receiving medical treatment due to the limitations of current options. We look forward to providing physicians with this important new differentiated treatment option to address these high unmet needs in PKU patients.

As Matt mentioned, sepiapterin is under review in the U.S. and Europe, which are important steps in bringing this important new therapy to children and adults living with PKU. Further submissions are under review by regulators in Brazil, Canada, Switzerland and Australia, with the filing plan in Japan by the end of this year, positioning PTC now for potential global launch in multiple major markets in 2025 and beyond.

I will provide some details on our launch efforts, which have been ongoing for several years. We have been working closely with key PKU health care providers, including geneticists, pediatric metabolic specialists and dieticians around the world to better understand the unmet needs and build a strong relationship with the PKU patient advocacy community. Our teams continue to develop a deeper understanding of the PKU landscape with many of the key treatment centers and prescribers. As you know, PKU is the most prevalent inborn error of metabolism disease with reliable epidemiology via newborn screening available since the early 1960s.

PKU patients receive their care from well-defined treatment centers and clinicians around the world. We have mapped these treatment centers and health care providers in key markets globally. Since the recent publication of AFFINITY data, awareness of sepiapterin has rapidly increased in many of these centers of excellence, highlighting the compound's differentiated efficacy profile seen in clinical trials as a convenient oral treatment getting more patients to phenylalanine goal levels and enabling potential diet liberalization.

Our field-based teams have met frequently with PKU stakeholders who have expressed their excitement about a new treatment option to address their unmet needs, potentially available next year. Importantly, patients highlight optimism with the ability of sepiapterin to liberalized diet, and this is an important motivator for patients to seek new treatment options earlier from their health care providers.

Now in addition, we are leveraging our established rare disease global infrastructure, which has a footprint in over 50 countries. We will sequence the potential country launches of sepiapterin to maximize access in key markets and maintain a narrow pricing and reimbursement corridor globally. Our research benchmarking of many rare disease analogs indicates a premium pricing strategy can be obtained based on the differentiated profile of sepiapterin compared to current branded treatment options available, especially in key markets where PKU treatments are reimbursed and where we are planning our initial launch sequences upon potential approvals.

Our customer-facing teams understand the complexities of managing rare disease treatments as well as the regulatory and payer access landscape. These core capabilities developed at PTC over the last decade, along with sepiapterin's highly differentiated profile, should facilitate rapid adoption for PKU stakeholders and reinforce our belief in the potential $1 billion-plus opportunity, not only globally, but in the U.S. alone.

Turning to vatiquinone. With the NDA submission planned for December of this year, our commercial team is excited for the potential opportunity to launch vatiquinone for FA patients in 2025. We believe that vatiquinone is well differentiated from current treatment options and could benefit all FA patients, in particular, pediatric and adolescent patients. KOLs who treat FA believe there are significant unmet needs in this devastating disease. They tell us that vatiquinone's unique mechanism of action, its compelling efficacy data in highly relevant functional parameters for FA patients along with favorable safety profile provide a strong rationale for treatment as early as possible in the course of the disease. Our experienced neurology team is focusing on key projects in preparation for the U.S. launch of vatiquinone.

Now moving to Tegsedi and Waylivra in Latin America. We continue to make good progress across these franchises with growth in both newly identified and treated patients across the region. Our capital expansion continues with a recent approval and positive HTA assessment of Tegsedi in Mexico, following which we have initiated reimbursement discussions. In Brazil, we delivered a new government purchase order for Tegsedi in the third quarter.

In conclusion, we continue to execute on all fronts based on a strong first 9 months of revenue this year. As Matt mentioned, we are updating guidance with a 2024 total revenue guidance of $750 million to $800 million. Our customer-facing team is thrilled by the opportunity to potentially launch 4 new products: AADC gene therapy, Translarna, sepiapterin and vatiquinone in the U.S. as well sepiapterin globally in 2025.

I will now turn the call over to Pierre for a financial update. Pierre?

[Pierre Gravier, executive]

Thank you, Eric. I'll now share the financial highlights of our third quarter of 2024. Please refer to the earnings press release issued this afternoon for additional details.

Beginning with top line results. Total revenue for the third quarter was $197 million, including DMD franchise revenue of $124 million. Translarna net product revenue in the quarter was $72 million, while Emflaza net product revenue of $52 million.

Moving to Evrysdi. Third quarter global net revenue of approximately USD 460 million was achieved by Roche, resulting in royalty revenue of $61 million for PTC. GAAP R&D expense was $152 million for the third quarter of 2024, excluding $9 million in noncash stock-based compensation expense, compared to $150 million for the third quarter of 2023, excluding $14 million in noncash stock-based compensation expense.

Non-GAAP SG&A expense was $63 million for the third quarter of 2024, excluding $10 million in noncash stock-based compensation expense compared to $68 million for the third quarter of 2023, excluding $13 million in noncash and expense.

Cash, Cash equivalents and marketable securities totaled $1.0 billion as of September 30, 2024, compared to $877 million as of December 31, 2023. Our strong financial position provides PTC with the necessary resources to execute on our strategy and achieve our milestones over the next several years, including the anticipated launch of sepiapterin and other products.

I will now turn the call over to the operator for Q&A. Operator?

[Operator]

[Operator Instructions] Our first question comes from Kristen Kluska of Cantor Fitzgerald.

[Richard Miller, analyst]

This is Rick on for Kristen. We've got two for you. So first of all, thanks for the update on the Type C meeting in Huntington's. Do you have for when you could update the community on any clarity that might come out of the meeting? Is there any chance that we'll learn more about a potential path forward here?

[Matthew Klein, executive]

Yes. Thanks, Rick, for the question. So the -- we know there's a lot of excitement around the discussions we're going to have with FDA, both in terms of understanding the endpoints for an efficacy trial, but also, of course, the discussions around Huntington lowering as a surrogate end point. As we've talked about, when we think about surrogate endpoints accelerated approval, what the FDA really wants is for us to go to present a package of scientific evidence of why lowering Huntington protein is likely to provide clinical benefit ultimately. And are there specific thresholds of lowering that have been associated that benefit.

So we have been able to provide them with the rich scientific literature, including in vitro in vivo in human studies, which show that if you lower Huntington protein 20% to 50% that you're likely to have a significant benefit in slowing disease progression. And of course, as we've shown in our 12-month PIVOT-HD update, we were achieving the threshold of lowering of Huntington protein.

We expect to have these meetings with FDA in December of this year. And as always, as soon as we have clarity, which sometimes comes at the time of the meeting or shortly thereafter or once we receive minutes, we'll be sure to share that with the broader community, including the Street. As we know, there's a lot of interest in hearing about this path forward for accelerated approval of PIVOT-HD.

[Richard Miller, analyst]

Excellent. And maybe just one more time. We've seen a lot of regulatory flexibility in the rare disease space recently. So given the FDA resubmission for Translarna. Can you talk about how you think the FDA might sort of weigh the STRIDE registry data and Study 41 that were submitted and just kind of looking at these new evidence given sort of how things have been going in terms of regulatory flexibility?

[Matthew Klein, executive]

Yes, sure. So as we talked about before the NDA resubmission for Translarna was based on two things. First, the evidence of significant benefit in the overall enrolled population of 359 boys in Study 41. This is where we had significant effect on to 6-minute walk distance, North Star Ambulatory Assessment, time function tests, time to loss of 10%. And that data set in a broad nonsense DMD population showing significant benefit across all those endpoints is actually pretty unique with flexibility or not. I think this is really the first data set that has in an ITT population, significant effect across all these end points.

In addition, as confirmatory events, which the agency likes to see in addition to a single adequate and well-controlled trial, we have the STRIDE registry. And what the STRIDE registry is able to demonstrate is these significant benefits we're seeing on ambulatory function in other aspects of disease in the short term of Study 41 are manifesting cumulatively over several years as a delay in loss of ambulation of 3.5 years. So we -- of course, any flexibility the agency can bring to the assessment will be of the package would be great. But on its own, we have an efficacy package with evidence of clinical benefit in both the short-term and the long term in nonsense DMD patients, which is quite a unique and compelling package of data.

[Operator]

Our next question comes from Eric Joseph of JPMorgan.

[Eric Joseph, analyst]

I have one on the CardinALS trial. We noticed recently that you updated the -- or change -- modify the primary endpoint to use a participant ranked combined assessment of ALSFRS and also survival. Can you talk about what some of the motivations were behind changing to that endpoint? And what the -- what that impact might be from a statistical powering perspective? And I guess, I think you've also now overenrolled the study. Was that meant to accommodate the change in endpoint? Or would you in fact that be sort of slightly overpowered versus prior expectations?

[Matthew Klein, executive]

Thanks for the question, Eric. So those two are not related, your two questions are not related. The first is really a way of analyzing the results of the study. The outcome of interest remains the ALSFRS score, which is a continuous variable that rates disease progression over the course of the trial. However, it's well known that patients will die over the course of the study. And the FDA has recommended in order for us to account for death in the primary analysis, they would like us to use their preferred analysis method in ALS, which is known as the Joint RAN test, which is the statistical test that's able to incorporate the information of decline on the ALSFRS as well as any deaths that occurred during the course of the study. So it's really just a change in the way we're analyzing it to include death in the primary statistical analysis of the data.

And again, this came from feedback from the FDA on the analysis plan as they have said that, that is really their preferred analysis method. And certainly, if you look back to their reviews of other ALS drugs, you'll see that, that is, in fact, the test that they like to use because it's able to incorporate information from all subjects.

Regarding your second question, as we've talked about, we had a target population for the primary analysis population based on a rate of progression observed during the 2-month run-in of the study. So in this 2-month run-in study where we observed patients and calculate how many points they change on the ALSFRS scale. We need to enroll a certain number of patients in order to achieve the targeted number of patients in that primary analysis group. So what you see in the increase in enrollment was really just because we had a slightly lower yield of screen subjects who actually met the criteria for the primary analysis population.

[Operator]

Our next question comes from Kelly Shi of Jefferies.

[Dingding Shi, analyst]

Given the revenue beat for this quarter, could you help us to set of expectations for Q4 maybe also into 2025, what would be the dynamic DMD franchise also versus royalties from Evrysdi?

[Matthew Klein, executive]

Yes. Thank you for the question, Kelly. So as we said, we were -- revenue was quite strong this quarter, which allowed us to raise the overall guidance this year to $750 million to $800 million. We expect in the fourth quarter continued contributions from across our portfolio of inline products, in terms -- in both the DMD franchise revenues, as we talked about, Emflaza continues to perform incredibly well. .

Teams have done a great job protecting the brand in the face of generic competition. And Translarna revenue, we expect to be stable over the fourth quarter. Certainly, as it remains available in Europe, we will have the typical lumpiness that we see quarter-to-quarter with Translarna, but overall, we expect strong deep revenue contribution in the fourth quarter.

[Operator]

Our next question comes from Jeffrey Hung of Morgan Stanley.

[Michael Riad, analyst]

This is Michael Riad on for Jeff Hung. Congrats on the progress in all the programs. Ahead of the Cardinal's top line in 4Q, do you plan to share like baseline characteristics maybe like time since diagnosis? Or can you comment on maybe what percent of patients are going into the OLE?

[Matthew Klein, executive]

Yes, Michael, thanks for the question. So typically, with our top line results, we'll give the key baseline characteristics and results with regards to the key endpoints. We've seen excellent continuation of patients as they were into the OLE, once they finish the cardinals.

[Michael Riad, analyst]

Okay. And then maybe for the long-term FA extension studies with vatiquinone. Why do you think you start to see the meaningful separation extension studies was like a rapid impact on mFAR as expected? Or could you perhaps like add some more color on how like vatiquinone is like influencing the trajectory there?

[Matthew Klein, executive]

I think what we're seeing is a continued benefit in terms of preservation of function. As we reported when we read out the 72-week placebo-controlled study, we saw an approximately 50% slowing in progression in the treatment group relative to the placebo group. And at 3 years, we're still seeing that 50% benefit, 50% slowing the progression. As we reported in the patients who started on vatiquinone, they had a 3.7 point decline. Whereas in the natural history cohort, there was a 7.5 point decline. So we're seeing a continuous benefit in terms of preserving function and slowing disease progression.

[Operator]

Our next question comes from Brian Abrahams of RBC Capital Markets.

[Brian Abrahams, analyst]

I guess one on sepiapterin and one on Translarna. Just stepping after, I'm curious if you could maybe talk a little bit more about the reactions from providers, patients and payers to the Lancet data. And in particular, maybe elaborating on some of the payer research communication that's giving you confidence in the potential for the premium pricing. And then on Translarna, just wondering if you could have any sense of the potential time lines for the next review steps there, both in the U.S. and Europe? And whether you think we might hear some updates in 2025?

[Matthew Klein, executive]

Yes. Sure, Brian. Thanks for the questions. Let me tackle Translarna first, and then I'll pass the second question on sepiapterin over to Eric. So first on Translarna. So you asked about the U.S. and the EU. In the EU, we are of course in that period now of approximately 67 days following the CHMP opinion, where the European Commission does its assessment of whether or not they want to adopt the opinion. So expect to hear anything further for at least approximately 67 days. And as we've talked about, Translarna remains authorized in this period. And of course, we're making sure that we continue to provide the drug to patients and make it commercially available while authorization remains.

In the U.S., as we've talked about, given the fact that this is a resubmission of an NDA that had initially been filed over a protest in 2016, many, many years ago. Nonetheless, the FDA is not bound by a clock in terms of doing this review. However, we expect just given what's involved in the evaluation of a resubmission, which is just the portion really the efficacy package. We expect that they'll get to the review in the next few months. So as soon as we have more information on the specific time line that can provide any clarity, we will.

Regarding sepiapterin, let me just make the first comment that obviously, you're quite excited about the Lancet publication. I think that's a true testament to how differentiated sepiapterin is with its dual mechanism of action, not only in its ability to act as a precursor to the BH4 co-factor, but the fact that it has a second chaperone mechanism of action, which allows it then to provide benefit to patients who are not BH4 responsive, which again is a really important element of why we're seeing such significant effect across the board in PKU patients of all severities and variety of genotypes. The physicians are very excited about this. I think they see the Lancet publication has been consistent with what they believe, which is that this is a potentially transformative therapy that can meet the significant unmet need for PKU patients.

Let me turn it over to Eric to talk a little bit about our payer discussions and how we're thinking about potential pricing?

[Eric Joseph, analyst]

Yes. Thanks, Matt. Thanks Brian for the question. As you can see, we're really pleased with the publication of AFFINITY. We've been able to engage in a lot of payer activity, including market research and also doing a lot of landscape research in many of the countries where we're sequencing it. Clearly, what payers have told us is to see a differentiation based on its efficacy profile, and seeing that more than 8 out of 10 patients can actually achieve therapeutic goals. And importantly, that Phe levels and those goals can be measured rapidly. With a very high unmet need, we know that there is close to 90% of the population that is not on medical therapy at this time.

There is a high unmet need and payers see that and they're willing to pay a premium price both in Europe as well as in the U.S. You know that they can achieve -- or they can actually see the levels of therapeutic gain literally in a matter of weeks with sepiapterin. So obviously, our pricing strategy is evolving. But as we know, we've actually looked at a number of different analogs, including many that have been recently launched that are clearly differentiated, and we believe that having a premium price for existing branded therapies can be achieved in many of these markets. Finally, I'll just say the pricing strategy really is not going to be announced until we get much closer to launch. And then when we have the final label.

[Operator]

Our next question comes from Eliana Merle of UBS.

[Eliana Merle, analyst]

Can you talk a little bit more about the potential path forward and potential range of outcomes in terms of the feedback that you could specifically get from this Type C meeting? And if the FDA is not supportive of the use of Huntington lowering as a surrogate, I guess what would the potential range of outcomes from there in terms of what the clinical endpoint study and path forward the registration could look like? And I guess in that scenario where that is not supportive of the use of a surrogate, how are you thinking about your strategy around whether you would run a full Phase III on your own or look for a potential partner?

[Matthew Klein, executive]

Thanks for the question, Eliana. Obviously, we're optimistic about the ability to have a productive discussion with the agency regarding the potential for Huntington lowering to serve as a surrogate endpoint because it really meets what they ask for in terms of a surrogate endpoint. That is there's evidence that shows that reductions in Huntington protein can have clinical benefit. There's a specific threshold associated with that, which we're able to achieve.

And just taking consideration of the disease itself, but it's a monogenetic disease that's caused by a toxic mutant Huntington protein and we're able to address that. I think it's very squarely in the way they have thought about surrogate endpoints and other disorders where there's an implicated protein in a drug target at protein, for example, dystrophin in DMD. We also believe that the agency has had an interest in leveraging the accelerated approval pathway for neurodegenerative disorders like Huntington's disease, where there's significant unmet medical need and establishing efficacy takes a bit of time.

So if there's a safe therapy that has shown that the ability to impact a marker of disease that is known to be important to that disease pathology that certainly could open the door for an accelerated approval. And then we believe that PTC518 and lowering Huntington protein certainly fits. At the same time, we're also having a discussion about endpoint strategy for an efficacy trial because what we want to do is be in a position to move forward with that efficacy trial as quickly as possible, regardless of the outcome of that meeting.

For example, we could meet with FDA, and they could say, these data from the first 30 or so patients with PIVOT-HD look very good. Why don't you come back with the complete data set on PIVOT-HD, and we'll revisit the surrogate endpoint discussion in the spring, that's a possible outcome. And if that occurs, you still want to be ready to put in place and get started on the efficacy trial because we're going to need that efficacy trial to be initiated either as part of an accelerated approval for, as you say, in the situation where the doors on other than endpoint, we want that study up and running so we can get to the finish line as quickly as possible.

In terms of conducting the study, like we said all along, we have position the company and build that balance sheet to be able to conduct that Phase III study. We have the infrastructure and capital to do that. Obviously, our team has worked incredibly closely with the Huntington's disease community, including the patient groups and the physicians around the world, who are incredibly enthusiastic in participating in the study, whether that's as an investigator for the patients who want to be in that study either because they didn't have the opportunity for the previous study where they've seen the data now and really want to be in part of a Huntington-lowered trial of an oral therapy, which is easily administered and has shown to be safe and well tolerated.

So we look forward to being able to advance that trial. Again, we'll do it either way, whether we have -- whether it becomes the registration trial or the confirmatory study in the context of an accelerated approval.

[Eliana Merle, analyst]

Great. And just a quick follow-up. I think you mentioned that you had requested 2 Type C meetings with the FDA, but the FDA asked to combine the 2 to a single meeting. Maybe this is just logistical, but can you share maybe any context around this? Or maybe what this might suggest?

[Matthew Klein, executive]

Yes. Again, this is purely logistical. We submitted the meeting request roughly at the same time. And as you know, it's going to be the same people who review and discuss and provide their feedback and as proud as we are of how well we've been collaborating with the agency in the neuro division, I think they -- for logistical reasons, we'd rather just have one meeting other than two where the issues have such overlap and it's the same people involved. So we look forward to having that one meeting in December.

[Operator]

Our next question comes from Joel Beatty of Baird.

[Joel Beatty, analyst]

For Translarna, what percent of the current ex U.S. sales would not be affected by any potential on your commission decision? And also how long could those sales potentially last into the future?

[Matthew Klein, executive]

Yes. Joel, thanks for the question. As we've talked about in 2023, roughly 46% of Translarna revenue was from Europe itself, that would be the revenue that we think that would be at risk in the event that the EC adopts the CHMP opinion.

Now we've said going forward that there's a possibility in certain countries that we can leverage inpatient or other individual country pathways is still make commercial product available. But obviously, that will be something that will play out on the other side of the EC adoption. And it's that European revenue that we would see at risk and only that revenue.

[Joel Beatty, analyst]

And how long would exclusivity be in those other regions?

[Matthew Klein, executive]

It varies. We have, in many regions, exclusivity out to 2029.

[Joel Beatty, analyst]

And then one last question for Friedreich's ataxia in the U.S., do you expect an AdCom?

[Matthew Klein, executive]

Hard to know. Obviously, we'll submit the package. We expect to submit it in December, but we would expect there to be a priority review. We'll find out at that point whether or not there'd be an AdCom. Now certainly, the FDA is quite familiar with Friedreich's ataxia having already approved therapy for that disease. And there's obviously a number of therapies in development, so they should have a great deal of understanding of the endpoints. And particularly, we know they have a very good understanding of the importance of the upright stability subscale with our discussions.

So I'm not -- I don't know that they would need to have an outcome from the standpoint of this being novel in terms of first in disease therapy or first time they've looked at this endpoint. But if there is an AdCom, we'll be ready for it.

[Operator]

Our next question comes from Sami Corwin of William Blair.

[Samantha Corwin, analyst]

Congrats on the quarter. As you ahead for the launch of sepiapterin, are you envisioning specific patients to be early adopters? And what are your assumptions in terms of the percentage of patients that may go on the drug who would be classical? And based on your conversations with payers, have they kind of disclosed that many of their copper patients would have to step through generic Kuvan? And then I have a follow-up.

[Matthew Klein, executive]

Yes, sure. Let me start, and then I'll turn it over to Eric. So as we talked about, we see several segments of the population that would be early adopters, including those that are Kuvan nonresponders, which would be classical PKU patients or those not tried on Kuvan as well as those who've been on BH4 and not had optimal response. So those are two segments that we believe that we can easily access just based on the strength of data from INFINITY study. And as we've heard from KOLs and our commercial detail last summer, therein want to try all their patients on sepiapterin regardless of whether they fit into those buckets. But let me pass over to Eric, who can talk a bit more about how payer dynamics play into that. .

[Eric Pauwels, executive]

Yes, Sami, thank for the question. It surely is an unmet need market. Right now, what we've seen is 90% of the patients don't get medical treatment. They either tried, failed or discontinued for a variety of reasons. And the current standards of care are inadequate and physicians see that, but also payers see that. So it's not a very difficult conversation when you get -- when we discuss this with payers, around the world in these key markets, also with U.S. payers that, one, there is a substantial number of patients that can benefit from treatment from a highly efficacious and oral treatment that can be easily taken.

Second, as mentioned earlier, we can have a premium pricing strategy simply because they recognize that these patients do not have adequate treatment. They're not controlled with diet. They're not controlled with current treatment. And they can actually measure what efficacy is very quickly and rapidly. So this isn't something that is a burden in terms of the cost. They can see fee level reductions very rapidly. They can measure diet liberalization. They can also measure how many patients actually get to therapeutic goals. So everything that we presented has been supported by the AFFINITY data and the head-to-head study so far has been well received by the payer community. And when we've talked about premium pricing strategy, we definitely know that physicians and patients already know the access pathway there, we'll be able to get access to treatment quickly and rapidly.

To your question about step edits, I think it's a very simple and easy thing because, again, Phe levels can be measured very quickly. So sepiapterin can get patients quickly on to sepiapterin through prior authorizations and rapidly through Phe measurements. So overall, right now, the response has been overwhelming by the AFFINITY data and the PKU community right now is very excited to have a new treatment option.

[Samantha Corwin, analyst]

Great. And I think the team has pointed out the $1 billion opportunity in PKU B4, and that was with the assumption of modest penetration. So I guess, what are your internal assumptions for penetration to reach that $1 billion opportunity in the U.S.?

[Eric Pauwels, executive]

Yes. I think right now, our -- I would say, first of all, we're preparing for a global launch, all right? So there's going to be contribution everywhere, but we believe that there's a $1 billion opportunity in the U.S. alone. And if you look again -- if you have somewhere between 17,000 to 20,000 patients and 90% of them are not medical treatment, a very modest penetration, even somewhere between 20% to 30% would get you there. And especially to support our premium pricing strategy, which we believe we can get. And while we believe $1 billion launch in the U.S. alone is an important opportunity, we're not ready to guide yet on the product. We're going to be -- as we get closer and closer to launch, we will be guiding on product revenue. Provided with this opportunity because of the substantial unmet need and how many patients currently are not on medical treatments.

[Operator]

Our next question comes from John Peyton Bohnsack of TD Cowen.

[John Peyton Bohnsack, analyst]

Congrats on a strong quarter. I guess on the vatiquinone application for December, what's outstanding for the submission? And then I know the FDA requested certain stats natural history when you were designing the analysis. Have you sent that to the FDA? Have they reviewed it and given any feedback? And then I've got a follow-up.

[Matthew Klein, executive]

Yes. Thanks for the question, Peyton. I'm not sure I heard the second part of your question about the statistical analysis plan, is that what you asked?

[John Peyton Bohnsack, analyst]

I was asking whether or not after the readout came in October, have you -- the FDA has viewed that or you sent that to the FDA? And if maybe give any back on it.

[Matthew Klein, executive]

Great. Okay. So in terms of outstanding items, we're just finishing up all of the summary reports and write-ups from the long-term extension studies. Obviously, we got those results in October. It takes some time to just write that all up format a table set and send it in. We had, had our pre-NDA interaction with the agency also in October, where we reviewed with them the contents of the package, including what we are planning to show in terms of long-range -- long-term outcome data. They've seen some of the data.

And importantly, they have previously agreed to the physical analysis plans we were using both for the analysis of the MOVE-FA later extension as well as the long-term extension data from the earlier placebo-controlled study completed a few years ago. So they knew exactly how we were going to analyze the data, how we were going to do -- how we went about doing the matching the endpoint strategy with the primary endpoint being change in mFAR scale over time. And so we will fully align with them on that. And as I mentioned, they have seen some of the data. We don't expect any additional feedback from the agency until after we submit the NDA.

[John Peyton Bohnsack, analyst]

Great. That makes a lot of sense. And then I guess really quickly pivoting to the -- have all the necessary inspections been done for the manufacturing facility? And then assuming approval next week, how quickly could you launch the therapy? And how the patient identification...

[Matthew Klein, executive]

Yes. So with the PDUFA date of November 13, any inspections are long since done. Everything went quite well from an inspection standpoint and we look forward to -- for the next week. We obviously remain optimistic about the potential for approval based on our interactions, and we look forward to being able to bring this transformative therapy to patients in the U.S. as quickly as possible.

[Operator]

Our next question comes from Paul Choi of Goldman Sachs.

[Kyuwon Choi, analyst]

Congratulations on the quarter. I want to just follow up on -- with regard to vatiquinone payer discussions here. Can you maybe just comment on what payer feedback has been? And just sort of how you may be potentially sort of thinking about pricing relative to Sky Claris here for the adult population? And secondly, the cash position remains very healthy here. Matt, I just want to sort of ask what your appetite is currently for potential external business development versus funding the coming multiple launches here in '25?

[Matthew Klein, executive]

Yes. Thanks for the questions, Paul. Obviously, we're a bit early to be having the payer discussions on vatiquinone. We're focused now on getting the package in. But I would say that, look, we -- there's a clear unmet need for pediatric and adolescent patients, and we have a data package in terms of safety and efficacy that supports an important benefit for these patients. As we know as well, there's an important proportion of patients who are pediatric and adolescent. But as diagnosis is increasing in the field, patients who are being diagnosed are increasingly young. And so that need -- that unmet need for FA patients is getting strong, and we look forward to being able to provide a safe and effective therapy for those patients.

But as you raised, we also believe we can be able to provide a therapy for adult patients. We have evidence in MOVE-FA and benefit adult patients. We have evidence on the upright stability scale, which speaks directly to the ability to reduce risk of loss of ambulation, which is incredibly important for any ambulatory Friedreich ataxia patients of any age. And of course, in the long-term extension studies of both MOVE-FA as well as the early placebo-controlled study, which was conducted only in adults, we have evidence of important long-term benefit in slowing disease progression. Again, we also have a very strong safety and tolerability profile. So I believe we have really a differentiated product that we look forward to thinking about how the price and also having discussions with the payers on that.

In terms of the cash position, look, we've worked very both in terms of restructuring the balance sheet towards the end of last year, our efforts to reduce operating expenses and move the company towards cash flow breakeven. I think having a strong cash balance not only enables us to launch the products and we would love to be in that situation of having -- needing to have the capital to launch more products, both in the year and the U.S. and the global launch of sepiapterin. But we also, of course, remain opportunistic about business development.

And we have the cash we have on hand. We also have the ability, if we needed to, to draw down some of the additional or royalty monetization that we did with Royalty Pharma if we saw an opportunity that fits well into our portfolio. Look, we're in a position where we are -- we could be launching many products in the U.S. in the short term. And so now we need to think about how we could use business development in a strategic way to help fill out the commercial portfolio ex U.S. and also think about any other opportunities that can set very easily into our existing commercial infrastructure or even development infrastructure.

[Operator]

Our next question comes from Gena Wang of Barclays.

[Huidong Wang, analyst]

I have a few questions. The first one regarding sepiapterin, PDUFA date, July 29, 2025. Just want to confirm that FDA confirm there will be no PDUFA -- no AdCom. Second question is regarding the Translarna. You mentioned that right now the 67 days EU. So can you walk through like after 67 days, if the decision is unfavorable, what will be the next steps? And how long would that take the process in when we really will see the actual impact on the revenue in Europe? And related questions -- maybe unrelated Brazil, I know you're under independent assessment there.

They have an independent approval process back in April. Any update regarding the renew process there? Lastly, very quickly regarding ADC next week, you will get approval, hopefully, keep our fingers crossed. How ready are you regarding the manufacturing? How many doses you already stacked? And how do you think you can ready to -- how many patients you already identified in the U.S.?

[Matthew Klein, executive]

Gena, thank you for the questions. Let me take them one by one. First, on the PDUFA date for sepiapterin July 29, 2025, we do not expect it to be at AdCom. There's been no indication of AdCom. Again, we're in a situation where endpoint of the trial reduction of phenylalanine is publish one of the blood tests that can support full approval.

Obviously, the agency understands PKU, the prove 2 therapies So I think this is not one where we would expect to have an AdCom. In addition, the clear efficacy of the data package is also leaves very little question. I think that we needed to be brought to AdCom.

Your second question was about Translarna and the time line in the EU. Look, the 67 days is an approximate 67 days as we learned it the first time we went through this in the spring, we expected 67 days to take us from late January to late March or April, and it wasn't until late May or that we actually got confirmation that the East had made the decision to not adopt opinions and things back to CHMP. So I think that it's the approximate 67 days and -- we can't say for sure what happens on the other side of that is going to depend what the European Commission says they could adopt the opinion and say we're going to operate adopt it and for immediate implementation, we're going to adopt it would delay it implementation.

In the situation here, it's important to realize that this is not being -- this has not come about due to a safety issue. So there's no patient risks here in terms of there being an urgency to get the product off the market. So I think that may also provide a little bit of flexibility as well in terms of what exactly happens in terms of the steps following an adoption of the negative opinion. And then, of course, it's sent back to the CHMP and that's a whole -- we'll have to see what those instructions are as well. So still a lot of unknown there. The 67 days is approximate and obviously, we minors we reach that time line.

Into Brazil, it is an independent assessment. It has been ongoing. We have not gotten any additional feedback from What we do know is that we had 2 orders in Brazil, bulk orders, one in the second quarter or one in the third quarter. We obviously view that as a good sign. There is obviously a strong interest for the Minister of Health to ensure patients in Brazil remain on Translarna.

And then in terms of ADC, we're ready. I mean, again, we had the EU approval in 2022. We've been -- we've had approvals. We had a in Brazil for AUC deficiency. We have approval in Taiwan. Approval in the U.K. We're doing cross-border And we're in the process of treating patients around the globe. So we have more than adequate supply. And again, once we see the label will understand with the addressable patient market look like in the U.S., and we have, we believe, more than enough supply at hand to treat patients well through the next 1 to 2 years.

[Operator]

Our next question comes from Danielle Brill Bongero of Raymond James.

[Danielle Brill, analyst]

I just have a quick clarification from an earlier question. I'm curious why the Translarna NDA commission is technically a readmission under Why wouldn't it be a new NDA can see new data to review from Study 041?

[Matthew Klein, executive]

This goes back to 2016, 2017. In 2016, the NDA was filed over protest. The agency reviewed it and issued a complete bonds letter. The main issue in the complete miles, the need to conduct an additional adequate and well-controlled trial to establish efficacy. Study 41 addresses what was in that CRL, and therefore, this was technically resubmission of that NDA now fulfilling the identified that led to the complete response previously in 2016. Does that make sense?

[Danielle Brill, analyst]

It does. I appreciate the clarification.

[Operator]

Our next question comes from Joe Schwartz of Leerink Partners.

[Joseph Schwartz, analyst]

I have a question about vatiquinone and one on utreloxastat. So in FA, we've heard that while some patients think that they benefited more patients seem to not be blown away by SKYCLARYS' efficacy. So we're wondering how that might influence how patients might feel about vatiquinone, which is following its reps and works further downstream. How do you think this market evolving now in terms of patient and retention for new treatment options as well as their potential to switch or try a combo with vatiquinone?

[Matthew Klein, executive]

Yes. Thanks for the question, Joe. First, vatiquinone acts upstream of at least mechanistically of where SKYCLARYS is in terms of its effects in the theratosis pathway. But I would say, look, I think in the -- clearly, there's no option for pediatric and adolescent patients with SKYCLARYS given the of the label. And in terms of adults, I think it's always hard with drugs at slow disease progression and patients' perceptions of if they're getting better or not, it's always hard to know. But needless to say, I think that we would certainly be able a therapeutic option where we believe we can provide benefit to patients, the data from effect not only in slowing of disease progression, but also a significant effect scale, which we know is the #1 symptomatic complaint patients with Friedreich ataxia.

Do I think that people will be interested in combo therapies? I do. A lot to be sorted out there, of course, in terms of payers and such. But I think, look, when any time you have a flex disorder like Friedreich ataxia, it would make sense that you would likely to need more than one therapy, and it would be the two therapies could have a combined effect. But look, we look forward to being able to offer particular one to FA patients, particularly the kids and adolescents who desperately need a therapy. I mean look, if you've got a slow disease progression, the best thing to do is to start as early as possible so that you can enjoy the benefits of slow depression as much as possible. And for adults, we welcome the opportunity to provide them with the safe and good therapy as well.

[Joseph Schwartz, analyst]

Okay. And then for targeting ferroptosis in ALS, can you give us some context for what you're trying to achieve mechanistically? Is there a particular threshold you're looking to meet based on any preclinical or natural history data that supports your therapeutic hypothesis? And have you done anything in the CardinALS study to select patients that might best respond?

[Matthew Klein, executive]

Yes. It's a really good question, Joe. Obviously, this is the first in disease study we have with nutraloxastat in ALS aspect, we'll learn a lot on the other side about how we how Enbridge could probably go. But look, the rationale for -- targeting ferroptosis is very well established in ALS. There's a number of different preclinical studies that clearly show that if you target ferroptosis whether that's by inducing overexpression of GPX4, which is a key enzyme in the ferroptosis pathway. You have significant phenotypic. But similarly, if you augment the ferptotic process to any number of insults you can accelerate decline in ALS. The whole concept of SOD1 for oxide distance speaks directly to being able to affect as stress of a relevant edoxaban stress in ALS. So there's a great bit of data to support the rationale for targeting keratosis. But look, ALS is incredibly complex and aggressive disease. We hope to be able to provide a therapy that could slow that progression by targeting what's going to be a key pathologic element.

[Operator]

This concludes the question-and-answer session. I would now like to turn it back to Dr. Matthew Klein, CEO, for concluding remarks.

[Matthew Klein, executive]

Thank you very much. Let me just follow on the last question to Joe and just share with everyone that as we are getting close to having data for utreloxastat CardinALS ALS study, following this call would not be taking any questions and be sort of a quiet period for the CardinALS study just because of where we are in terms of being close to having data in the next period of time.

Overall, again, thank you, everyone, for joining the call. We're incredibly excited about the strength of the quarter, the revenue performance, the ability of our teams to continue to execute at an incredibly high level across all parts of the company, whether it be on the commercial side, on the clinical and the regulatory side and all around. We look forward to keeping you updated as we saw the number of important milestones this year. And again, thank you all for joining the call, and have a good evening.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.