Ultragenyx Pharmaceutical Inc

NASDAQ:RARE

Earnings Call Analysis

Company Navigates Challenges with Clinical Progress

In the third quarter, Dojolvi's revenue grew 25% compared to last year, totaling $7 million. The quarter saw a net loss of $160 million, but the company maintains a strong cash reserve of $524 million. A public offering after the quarter raised an additional $326 million. For the full year, net cash used is projected at $425 million. Clinical programs like setrusumab for osteogenesis imperfecta show promising data, with a significant reduction in fracture rates and increased bone density in patients. Early positive responses in Angelman syndrome and Wilson Disease treatments reflect continued progress with key updates expected in the first half of 2024. The company is now focusing on driving value through its clinical milestones.

Quarterly Reflections and New Milestones

Ultragenyx Pharmaceutical Inc. shared optimistic insights into its lead therapeutic programs poised to address diseases with limited treatment options during their third-quarter 2023 financial results call. The company imparted an assured tone, emphasizing the potential of setrusumab in osteogenesis imperfecta (OI), GTX-102 in Angelman syndrome, and UX701, an AAV gene therapy for Wilson disease. These developments bolstered their confidence in a 'Catalyst Rich 2024.' Notably, setrusumab showed a significant 67% reduction in the analyzed fracture rate and considerable increases in lumbar spine bone mineral density.

Commercial Transitions and Financial Health

Ultragenyx transitioned Crysvita commercialization responsibilities in North America to Kyowa Kirin, aiming for a seamless handover while maintaining strong demand for Crysvita and Dojolvi. The company reaffirms its revenue guidance for Crysvita between $325 million and $340 million for 2023 and for Dojolvi between $65 million and $75 million. Despite challenges such as the transition's impact on channel inventory, Ultragenyx anticipates normalization by the year's end and expects steady increase in revenue. Additionally, the company raised a notable $326 million after Q3, evidencing a strengthening financial position and underlining a commitment to financial discipline.

Clinical Program Updates and Outcomes

Ultragenyx presented compelling evidence of setrusumab's impact on bone strength and reduced fracture rates, showing that the majority of study participants experienced no new fractures post-treatment. GTX-102 demonstrated clinically meaningful improvements, evidenced by unique developmental gains that, once lost due to treatment interruption, were regainable—signifying continued potential. UX701 progressed, showing promising signs in improving copper metabolism in Wilson disease patients, with an expectation to complete dosing for the final cohort by year's end. Such promising clinical outcomes solidify the company's pipeline as they look ahead to pivotal data updates and regulatory discussions.

Anticipated Revenue Growth and Expansion Opportunities

Despite a momentary decline in Q3's Crysvita revenue due to transition adjustments, Ultragenyx anticipates a robust final quarter, following historical trends of Q4 growth. The optimism extends to their Wilson gene therapy program, with a possible market of 50,000-60,000 patients or more. The prospect of broadening indications holds promise, especially as patient responses suggest profound benefits from improved copper distribution, potentially converting a larger fraction of patients than initially thought—a game-changer in terms of treatment accessibility and affordability.

Navigating Regulatory Hurdles and Long-term Strategies

Ultragenyx upholds confidence in dialogue with the FDA regarding potential early trial completion for OI Phase 3, backed by interim assessments and continued strong trial enrollment. The company underlined the advantages of setrusumab, including being fully human for better long-term use, chronic therapeutic dosing, and tailored support — elements not matched by competing drugs like romosozumab. With these, Ultragenyx aims to establish setrusumab as a superior choice and a chronic therapy for OI patients, signaling a dedicated approach to rare disease care.

Earnings Call Transcript 2023-Q3

[Operator]

Good afternoon, and welcome to the Ultragenyx Third Quarter 2023 Financial Results Conference Call. [Operator Instructions]. It is now my pleasure to turn the call over to Joshua Higa, Vice President of Investor Relations.

[Joshua Higa, executive]

Thank you. We've issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. Joining me on this call are Emil Kakkis, Chief Executive Officer and President; Erik Harris, Chief Commercial Officer; Howard Horn, Chief Financial Officer; Eric Crombez, Chief Medical Officer; Aaron Olsen, Senior Vice President of Corporate Strategy and Finance; and Ted Rozinka, Chief Accounting Officer.

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

[Emil Kakkis, executive]

Thanks, Josh, and good afternoon, everyone. Before we get started, I'd like to welcome our new CFO, Howard Horn, to the call. To say he has hit the ground running is an understatement. He already has an Ultragenyx Analyst Day and a financing under his belt. We're happy to have him on board as we prepare for our Catalyst Rich 2024.

It's great to see many of you at our Analyst Day a few weeks ago. We hope that the new data shared along with the positive clinical impressions of the investigators on 2 of our programs showed you why we have confidence in our lead therapeutic candidates and their potential to transform debilitating diseases with limited or no treatment options.

We kicked off the day by sharing new data from the ORBIT study for setrusumab in osteogenesis imperfecta and has been prevented a few days earlier at ASBMR, the America Society for Bone Mineral Research 2023 Annual Meeting. Interim data from the Phase II portion of the study demonstrated that setrusumab significantly reduced the analyzed fracture rate by 67% after at least 6 months of treatment and continue to demonstrate ongoing substantial increases in lumbar spine bone mineral density reaching 19% in just 6 months in the younger patients.

We also provided an update on our GTX-102 program in Angelman syndrome. The data we covered was longer-term extension data from the dose escalation cohorts in the Phase I/II study, and it showed that treatment with GTX-102 resulted in clinically meaningful improvements across multiple domains through both the loading and maintenance phase of treatment. The improvements we saw in Bayley and the severity assessments, formerly known as the CGI-S severity scale, were also supported by objective changes in EEG and comparisons to natural history. We also looked at the emerging first ever development changes from 3 of the original U.S. patients.

When these patients stopped receiving GTX-102, they lost these first ever developmental gains but we're able to gain these skills once they start treatment with new dosing regimen. Other patients also saw many first-ever development gains, which gives us confidence in the potential transformative effect for this neurodevelopmental disease. These first-evers are very important to the families and give clinical meaningful to the changes we are seeing in the quantitative assessments.

The third program we highlight was our UX701 AAV gene therapy for Wilson disease. We provided data on the 5 patients in the first lowest dose cohort at [ 5e12GC ] per kilo, 4 of the 5 patients showed improvements in copper trafficking and have begun tapering off standard of care with key layers and or zinc therapy. This includes 2 of the earlier treated patients who are now completely off standard of care and doing well. Eric Crombez will provide more detailed updates on these programs later in the call. But it's clear, we have 3 large value programs all generating data that meaningfully derisks the probabilities of their success.

Now I'll turn the call over to Erik Harris to provide an update on our commercial efforts for the first quarter.

[Erik Harris, executive]

Thank you, Emil, and good afternoon, everyone. After 5 years of successfully commercializing Crysvita in North America, this responsibility was transitioned to -- on April 27, 2023. As part of the transition, a small Ultragenyx field team and patient support services team was kept to help the hearing field team find and start diagnosed patients while ensuring a smooth handoff.

With the combined field efforts, the demand for start forms throughout this year has remained strong and is greater than what we saw during the same period last year. In recent months, the majority of the start forms have come from adult patients, which further supports our strategy of expanding the search into community physicians to find these patients. The 2 teams are working hard to ensure patient and physician continuity while continuing to identify new subscribers and patients.

Shifting to Latin America. Shifting to Crysvita in Latin America. As of Q3 2023, there are over 460 patients on reimbursed therapy, which includes approximately 50 new patients who began from commercial therapy in this quarter. This year alone, we have converted approximately 150 new patients to the commercial drug in this region. The Latin America team has continued to build solid momentum, further strengthened by the recent reimbursement approval for pediatric patients from the largest public payer in medical called, IMSS.

Crysvita is approved in 6 countries in Latin America, including Argentina, Brazil, Chile, Colombia, Mexico and Peru. Brazil continues to be the largest market in Latin America, and we continue to see growing demand in this country. While the uneven ordering patters in Brazil will drive some quarter-to-quarter variability, the underlying demand remains strong. Today, we are reaffirming the Crysvita guidance we issued at the beginning of the year, the range of $325 million to $340 million includes all regions in all forms of Crysvita revenue. More specifically, it includes Crysvita product revenue from Latin America and Turkey and the cash and noncash royalties from North America and Europe and the collaboration profit share revenue prior to the transition.

For Dojolvi in North America, the demand for start forms remains strong. In the U.S., we have added nearly 19 start forms and converted over 70 patients to reimbursed throughout this year. We continue to expand the number of treaters of Dojolvi in the U.S. adding 30 new prescribers this year, including some health care professionals in the soonest for neuromuscular medicine.

In Canada, we continue to make progress following a positive opinion from -- completing pan CPA pricing negotiations and signing listing agreements. Outside of the U.S., there continues to be growing demand for Dojolvi. In Latin America, our commercial teams are continuing to identify more patients, and we expect demand will continue to steadily increase over time. Across Europe, we continue to deepen the awareness for LC-FAOD in key stakeholders and address the high unmet medical need through main patient and early access programs. Requests are coming from across all major European markets as well as Greece, Israel and the Middle East.

Today, we are reaffirming our 2023 global Dojolvi revenue guidance range of $65 million to $75 million, the range we announced at the beginning of the year. Lastly, on Evkeeza,we continue to make progress in major markets in Europe and the Middle East. Evkeeza is now approved in Germany, where we have started to convert patients to commercial drug. In many other countries, the demand is steadily growing as patients gain access to Evkeeza through various early access programs. In Canada, we received marketing approval from Health Canada for adult and pediatric patients aged 5 years and older for --. We also continue to make steady progress in Japan, where we have meetings scheduled later this year with the Ministry of Health, Labor and Welfare to discuss pricing and reimbursement. Across all regions, we have received overwhelmingly positive feedback for Evkeeza from KOLs and patients. And they have continued to highlight significant unmet need for this disease and the importance of this potent new treatment.

We continue to respond to many urgent requests for early access and our teams will continue their efforts to bring this product to people living with HoFH as quickly as possible. In closing, we are reaffirming our 2023 total revenue guidance range issued at the beginning of the year of $425 million to $450 million. With that, I'll turn the call to Howard to share more details on the financial results for the quarter.

[Howard Horn, executive]

Thanks, Erik. It's great to join the team for today's call. Before we get into the numbers, I'd like to thank Ted, Aaron and their teams for all of their contributions over the last year. They implemented a number of important initiatives around financial discipline, which have contributed to the strength of our current financial position. I will briefly summarize the financial results that were included in the press release we issued earlier today, starting with revenue, our total revenue for the third quarter was $98 million.

Crysvita revenue for the third quarter was $75 million, which included $50 million from North America; $19 million in product sales, primarily from Latin America; and approximately $6 million in European royalty and other product revenue. As we have previously disclosed, the third quarter U.S. Crysvita revenue was negatively impacted by a onetime decrease in channel inventory related to Kyowa Kirin's change from Ultragenyx-labeled product to Kyowa-Kirin-labeled product as part of the transition of North America commercialization responsibilities. Again, this is a onetime change, and we expect Crysvita channel inventories to increase to more normal levels at the end of the year. Dojolvi revenue for the third quarter was $7 million, with North American demand driving 25% growth versus third quarter 2022.

Shifting to expenses. Our total operating expenses for the third quarter were $243 million, which included R&D expenses of $157 million, SG&A expenses of $75 million and cost of sales of $11 million. Operating expenses for the quarter included noncash stock-based compensation of $35 million.

For the third quarter, net loss was $160 million or $2.23 per share. As of September 30, 2023, we had $524 million in cash, equivalents and marketable securities. After the end of the quarter, we raised an additional $326 million from an underwritten public offering of common stock and prefunded warrants. Through the third quarter, net cash used in operations was $391 million.

We expect fourth quarter net cash used in operations to be around $35 million, driven by anticipated strong fourth quarter revenues and factoring in expected changes in working capital. As a result, we now expect full year net cash used in operations to be around $425 million. The team has worked hard over this past year to ensure we are in a strong financial position and we will continue to build on these efforts going forward.

Now I'll turn the call to our CMO, Eric Crombez, who will provide an update on our key clinical programs.

[Eric Crombez, executive]

Thank you, Howard, and good afternoon, everyone. Emil mentioned the key clinical updates we shared at Analyst Day, and I'll provide just a bit more detail on our priority programs. Starting with UX143 or setrusumab for the potential treatment of osteogenesis imperfecta. The data we presented at the Analyst Day supports our view that this is a disorder of inadequate bone production as much as it is about defects and collagen. Across the 24 patients enrolled in the Phase II portion of the ORBIT study, we saw an improvement in bone mineral density Z-score of 0.85 at 6 months.

Importantly, a subset of 5- to 12-year old saw nearly a 20% increase in bone mineral density with a Z score change of 1.19. These improvements in bone mineral density across the 24 patients treated in the Orbit Phase II translated to a 67% reduction in the annualized fracture rate following treatment with setrusumab for at least 6 months. 20 of the 24 patients did not experience any new fractures in the 6 months following treatment with setrusumab.

For the 4 who did have a radiographically confirmed fracture, many of them occurred early on in treatment or had a traumatic precipitating event. The data is all the more compelling because many of the patients in this study were previously treated with estates over the 2 years prior to dosing with setrusumab. During this time, these patients continue to see a high annualized fracture rate with many fractures occurring with very minimal activity. These types of fractures are referred to as fragility fractures and examples include fractures occurring during sleep or when transferring out of a chair.

What we heard from 2 principal investigators who joined us at Analyst Day is that they are not seeing fragility fractures in these studies, patients treated with setrusumab and that many of these kids are now feeling strong enough to engage in more physical activities with friends and family. Next, turning to GTX-102 for the potential treatment of Angelman syndrome where we showed clinically meaningful improvements across multiple domains for the patients in the loading and maintenance phases of the dose escalation cohorts 4 to 7 with the long-term extension data, we showed improvements compared to natural history data and supportive EEG data, providing further evidence that the changes we are assuming are meaningful and improving over time.

We also share data from 3 of the original U.S. patients who stopped and restarted treatment. These patients gained, lost and regained a number of skills, including following complex directions, communicating needs and wants and improved behavior in sleep. These changes show the importance of GTX-102 to enable continued development in these patients with a hope that they will continue to learn and develop new skills.

Dr. Elizabeth Barry Kravis, who is a principal investigator for the study, took us through a few video examples of what these developmental improvements translate to for her patients and their caregivers. Dr. Barry Kravis has been working with Angelman patients in her clinic for decades and noted that it can take years for these patients to learn a single new skill. So the fact that these patients are learning multiple things in such a short amount of time is remarkable.

Enrollment in the dose expansion cohorts, cohorts A through V, continues to go well, and we anticipate sharing data from at least 20 patients who have been on therapy for at least 6 months in the first half of 2024. Lastly, UX701 for the potential treatment of Wilson Disease, which is a disorder of copper trafficking.

As Emil mentioned, we are seeing a response in 4 of the 5 patients treated in the first dosing cohort with patients 2 and 3 completely discontinuing their chelators and/or zinc. At Analyst Day, we said that Cohort 2 receiving a dose of [ 1e13 ] has been fully enrolled. The DSMB is scheduled to meet soon to review the available data, which will enable initiation of dosing in the third and final cohort in Stage 1. The 5 patients for this last dose escalation cohort have been identified and meet enrollment eligibility. We expect dosing in this core to complete around the end of the year. The improvement in copper biomarkers and ability to reduce current standard of care are promising signs of the establishment of normal trafficking of copper in these patients, and we look forward to sharing additional progress with this important gene therapy program.

I'll now turn the call back to Emil to close with the key upcoming milestones and provide some closing remarks.

[Emil Kakkis, executive]

Thank you, Eric. I'll summarize the key upcoming clinical catalysts and before we open up to Q&A. Starting with UX143 for osteogenesis imperfecta, enrollment in both the Phase III studies is going well with strong support for the medical community following both of our data releases this year. We're enrolling at 50 sites around the world and are targeting complete enrollment in the first quarter of next year. We also expect to provide another longer-term data updates from the Phase II portion of the study next year.

Next, GTX-102 in Angelman syndrome. Based on the patients who are currently enrolled in dose, we are on track to provide an update on the expansion course in the middle of the first half of 2024. And -- and as we have said, it will include at least 20 patients data. We've been on there for at least 6 months and include longer-term efficacy data on early enrollees and a safety update on the total exposed population.

Closing with our gene therapy program, DTX401 for GSD 1a dose the last patient pivotal study earlier this year. We're now in the 48-week window and expect to unblind and share the Phase III data in the first half of 2024. US 111 for [ Sanfilippo ] syndrome. We are continuing to see meaningful clinical responses in these patients, and we're working with the FDA around biomarker to help support an accelerated approval filing. DTX301 for OTC is enrolling patients in the Phase III, and we expect the last patient to be dosed in the first half of 2024.

UX701 for Wilsons Disease should have all patients dosed in Stage 1 this year, and we expect to provide safety and efficacy data on all of these patients in the first half of 2024. We've worked hard over this past year to ensure we are in a strong financial position heading into 2024 and beyond. We continue to see growing demand for our commercial products and completed a financing that gives us the ability to advance our large value program through meaningful inflection points. We've been employing more aggressive financial discipline, including realigning our headcount, restructuring in places and doing the work, we need to make sure we're putting the people and capital where we have the ability to generate the most value. Ultragenyx has come a long way since our humble beginnings. As I said at Analyst Day, we expect to have around 8 to 12 approvals in our first 15 years post IPO, and these are an extremely debilitating disease with urgent need for treatment options. I think that really demonstrates the responsibility we feel to lead the future of rare disease medicine. With that, let's move on to your questions. Operator, please provide the Q&A instructions.

[Operator]

[Operator Instructions] Our first question comes from Anupam Rama with JPMorgan.

[Anupam Rama, analyst]

Welcome, Howard, hope you're well, man. I got a quick broader question here, which is, what are you monitoring here for the Sarepta DMD gene therapy regulatory review process that could maybe potentially read through to your broader gene therapy efforts and pipeline? And then on one of your gene therapy programs, specifically 401 and GSD1, we heard a little bit about that program at R&D Day, but maybe you could help us define a win scenario to that program when you flip the card and maybe help us understand the market opportunity a little.

[Emil Kakkis, executive]

Very good. Thank you for the question. So as everyone knows the Sarepta Phase III in blinding showed this the primary endpoint of NSAA, but hit strongly to other endpoints. I think it shows that the drug is working. I think the NSA is a terrible endpoint and frankly, I have said, we would never want to work with that endpoint because it's just a clinician score. So it's not so surprising. I think the drug shows it's working, and it will be up to Sarepta to manage that forward.

I think -- what I would say in the broader context for our own program is that the ability to deliver microstep having an important clinical benefit in these patients is still a first step in a path toward improved care for these patients. But we think -- I think in general, it says that these microstrophin gene therapy programs can work and we're still encouraged and still pressing our own program ahead in development.

Regard to 401 GSDIa the program, we think there's something around 68,000 patients and about 1/4 of that would be U.S. patients. The majority of these patients, like 80-plus percent of the patients are null or have no or very essentially no enzyme. What that means is 80% of the patients are severe -- that means 80% of the patients are at risk of dying if they miss a dose of cornstarch. These are the patients that have essentially had done to their head taking cornstarch every day. The driver for adoption is the peace of mind of knowing I'm not going to die if I forget to take my cornstarch. And we think that's a big driver. We believe it's one of the reasons why the Phase III trial enrolls so quickly people really wanted to get out of this treadmill that they're on with cornstarch and sugar control and the fear of every night being a potential risk in death if something went wrong or if they go and exercise, they could collapse and be hypoglycemic. So we think there's a big demand and drive. Of course, cornstarch is not commercially costly, but I do think the peace of mind and stability of people who can live a life instead of one full of fear. I think it's big. And we have high hopes and that the adoption of the treatment will be more aggressive just as it was in the enrollment of the trial, which enrolled everywhere.

In fact, we had a lot of people upset when we closed enrollment that couldn't get in the trial. So we think the demand is going to be there. And while it's not a huge program, it's -- we think 8,000 patients is a substantial one. And we think that there will be early adoption for that program. And I do think that the clinical demand and need is important. I think we've seen it for that program. So I'm pretty encouraged so far.

[Operator]

Our next question comes from Dae Gon Ha with Stifel.

[Dae Gon Ha, analyst]

Two, maybe on GTX-102 and the setrusumab. Just wanted to clarify on cetrizumab, Emil, did you say enrollment completion in 1Q '24? Is that for both Orbit as well as COSMIC? And are you placing any protocol restrictions on strenuous activity. I mean it's encouraging their being more active and fearless, but in terms of endpoints, I wonder if that could kind of create a confounder. For GTX-102 update in first half '24, what kind of data should we be expecting? You had ASA, MDRI as well as Bayley-4. But if you could frame that for us, that would be great.

[Emil Kakkis, executive]

Very good. Thank you. So for etuzumab, we're talking about both Orbit and COSMIC in terms of finishing enrollment. I think we're likely. But the main one we're talking about is Orbit, which is the main driver I believe both of them should get done in that time frame. And in terms of this control of excise or the hazard risk, if someone is feeling better in exercising, well, that's already what's happening in Phase I. People were a lot more active and what was actually, on the plus side is that they were active and a lot of them where we're fallen have fractures necessarily. So while there is some risk that they might be doing more, there was one person who played volleyball and they hadn't been playing.

We're actually overall feeling that the pattern of having falls and fractures seems to be better. And so our net effect overall, as we think even with increased activity, there will be a reduction in fractures, which is really the best thing possible that is the kid to be active and to have a reduction of fractures while being active. So we're not so worried about the, let's say, the noise of having more fracture risk at this point. It looks like you still see the effect well even if there is some risk there.

Now with regard to GTX-102, I expect the day to be many of the same things you've seen, which is the Bayleys, which will compare, of course, the natural history data for the main 3 endpoints we talked about, and there were other 3 that we looked at for the ASA. There are other endpoints, we do describe all the endpoints we had. We had said at the meeting that things like the inline and others had a very similar pattern of response to those. So -- but I would look for data to be very similar to the package of data that you saw that we're probably doing something very similar to what you saw before in terms of comparison to natural history and the ASA. We will try to include enough information to interpret the quantitative changes and the meaningfulness of those changes, which I think is one of the debates.

And we're certainly going to look at emerging skills as well in those patients as best we can. So those are the things I think you'd expect to see. It should be 20 patients, 6-month data. There will be probably 10 patients that have longer data out of the 254 and more than 30 patients worth of data of any type. So it should be a pretty robust set of data. So I'm looking forward to that.

[Operator]

Our next question comes from Jeffrey Hung with Morgan Stanley.

[Michael Riad, analyst]

This is Michael Riad on for Jeff Hung. For setrusumab, how do you think regulators will view the clinical benefit for younger patients who are still developing versus adults who are more or less finished growing? Is there any appreciation for the ability to prevent fractures and complications potentially like bone deformations?

[Emil Kakkis, executive]

Well, I think you're hitting on a really important thing. Let's talk about what the FDA asked for. They wanted to have the major clinical fractures, excluding fingers, toes and skull as the endpoint because they feel those are the most clinically meaningful. However, whatever they think is one thing, they're dealing in fractures from osteoporosis.

The truth is what you talked about is really important that the vertebral fractures and other types of fractures that would develop in deformation of the bone are actually things that drive very poor outcomes. So our trial, which will have pediatrics and also has a very young group patients -- we'll look at not just clinical fractions, but also for cerebral fractures and other fractures, which we think will benefit. So I think we'll be able to show the clinical fractures and hit the FDA's required endpoint but we hope to be able to expand that to talk about other aspects of the disease, particularly in the very young patients in the COSMIC study and to be able to show how support for their vertebral bone would not result in the kind of degeneration degradation that leads them all to be wheelchair bound as 5 or 6 year old. I think that would be an amazing result.

We're going to see what we do. But based on the very substantial lumbar spine bone mineral density improvement of 20% in some of the young kids, we kind of expect this line to be strong and to change the future of not deforming like they've had in the past. So I would say we can prove the FDA approval, but the broader acceptance of the treatment and its reimbursement will be supported by the rest of the body of data, which we are including in our plan.

[Operator]

Our next question comes from Yigal Nochomovitz with Citi.

[Carly Kenselaar, analyst]

This is Carly on for Yigal. We had one commercial question. It looks like you're expecting a pretty significant reacceleration in revenues in the fourth quarter in order to meet the guidance range. Now you mentioned an inventory impact to Crysvita during the third quarter. But can you talk a little bit more about your assumptions driving that acceleration in revenue that you're expecting?

[Emil Kakkis, executive]

Sure. Let me -- I'll hand it over to Erik. The fourth quarter has a lot of differences in how things perform. There's always a lot of lumpiness as well. But Erik, if you want to deal with what you think how revenue is going to go in the fourth quarter?

[Erik Harris, executive]

Yes. I think if you look at previous years, we've always had a strong fourth quarter. So it's typical seasonality, which will also this year will entail some inventory rebuilding following the NDC swap out. And as I stated earlier, demand remains very strong. In fact, our demand in [ Scotland ] is higher than it was at this point last year. So we remain confident that we'll see a strong fourth quarter.

[Emil Kakkis, executive]

Yes. I think if you go back and look, you'll see every fourth quarter has been an up quarter. So we're on track. We feel pretty good about where we are in the business.

[Carly Kenselaar, analyst]

Okay. Great. That's helpful. And then maybe just one follow-up related to the Wilson program. how you're thinking about the size of the addressable population for a gene therapy of Wilson and maybe what you're hearing from KOLs about the proportion of patients not well managed on chelators and on the more severe end of the disease spectrum that could be addressable?

[Emil Kakkis, executive]

Yes. I think the Wilson market potential is an important question. The 50,000, 60,000 patients, probably more because it's underdiagnosed in my view. And you can look at it as maybe the 20% of patients that aren't well managed as the core indication. But I think with the drop out of the Alexion AZ Chelator as a competitor and showing that just chelation is not good enough to make patients better -- the door is open to the idea that improving copper distribution could make patients feel better, do better than you can get just with a chelator, which means it might not be just a 20-plus percent that have problems with their chelators, -- it could mean them more of a majority of the patients with Wilson. We're encouraged that the patients are getting off their Yes, the chelators, but I think we're also really encouraged that the copper distribution seems to be improving even at the lower doses and that patients seem to be feeling really good. My hope is if you restore copper distribution that -- the effect of copper deficiency, which is occurring in Wilson disease, overlay it on top of copper toxicity is a real factor. And if we can make people feel a lot better and perform better, I actually think there's a potential for this to be an indication that becomes the majority of patients.

Because our ability to manufacture with the Pinnacle platform in our own plant keeps the costs really low, it also means we can manage the pricing in a more intelligent way that would enable a larger fraction of these patients to get put on therapy and actually build a bigger business model out of it than one based on a $3 million a person kind of price point, which I think makes it more challenging.

So we look at the opportunity here as potentially larger than the initial views. if we can make patients feel better and do better. And I think there is a real chance for that with the Wilson gene therapy.

[Operator]

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

[Tazeen Ahmad, analyst]

Emil, maybe just wanted to clarify one point. And then sorry if it was already asked before. But when you talked to the FDA about downsizing the [indiscernible] Phase III trial, you were supposed to get specific feedback on that. Just wanted to hear your thoughts on what FDA's view on that particular request was or if you're still waiting to hear back.

[Emil Kakkis, executive]

Yes. We haven't really discussed the details of going through that, but the plan on the Phase III with the addition of the interim assessments, we think won't be a problem. But we haven't really disclosed any ongoing discussion with them, but we're comfortable with the ability to get the interim set. And the size of the study is really up to us. In terms of safety, the exact trial sizes well above 100 patients is more than adequate in size. So we'll come up with a plan with them, but I'm not concerned about our ability to get that accepted.

[Operator]

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

[Kristen Kluska, analyst]

Can you provide any more color or thoughts around the timing of the interim analysis of the OI study?

[Emil Kakkis, executive]

Yes. The way the terms will be done, we won't be disclosing when they're happening. We have said that we'd expect a first one to happen this coming year. We want to make sure that patients had at least a certain amount of time of treatment before an interim would be done. And the original plan for the program is to operate off of the fracture information, how many fractures were essentially, event-driven timing. So the precise timing is we haven't disclosed, it depends a little on fracture numbers, et cetera. But we said that one will occur next year, but we won't disclose exactly when. It will happen in a controlled way, unblinded assessment by the DMC. So we won't know when it happens. So at this point, we'll all be waiting.

But we're encouraged by what we're seeing and the potential of the study could end early. But however, we feel we have a drug that works, and we're going to get through a positive Phase III, at least we're feeling very confident about the ability of the product to get us there.

[Operator]

Our next question comes from Joon Lee with Truist Securities.

[Unknown Analyst]

This is on for Joon. So on GTX-102, for the 3 patients who regain some lost clinical benefits after reducing -- so how do you best plan to highlight this significant observation for regulatory agencies? And is it at all possible that time to read those could explain some of these clinical benefits? And I have a follow-up question.

[Emil Kakkis, executive]

Well, first of all, let's talk about what happened in those patients. Those patients got anywhere from 1 to 4 doses, 5 doses. And had their clinical benefit effect of newer emerging findings, they have a safety event. And then they're off treatment for -- on the order of like 2 years in which they lost all this activity -- so 2 years off, they're pretty much washed out completely. No drugs, no benefit.

So when they start up again, they're really starting back from the beginning and regaining the same functions. And in terms of the patient -- the 1 patient has really gained a lot of words who had gained 9 to 12 words in the first period and now having been on consistent therapy for a longer period is actually up to 17 words. That's the patient also that's now swimming as well on their own without float support. So we think that the washout period takes them back to the beginning. It's not really there's no relationship between what happened there on redosing effect. If you look at what happened with naive dosing patients, we showed a graph at Analyst Day that showed a large number of patients having similar first ever emerging skill, the first timing they went on treatment. So we think there's nothing actually special going over those 3 that's any different from any of the naive treaties.

[Unknown Analyst]

The follow-up is on OI. So are there any specific reasons for preferential suitability of setrusumab on AI versus other anticlotting antibodies like Evenity, HR 122 or the others?

[Emil Kakkis, executive]

No. Well, the only other one is the [indiscernible] romosozumab, romo, I guess, we call it for short. Both target the same class, and there are differences, though. Remember, our program, setrusumab is a fully human antibody, which we think is a better choice for a long-term therapeutic because of the risk of antidrug antibodies will be much lower in a fully human antibody. And we haven't seen them. So we're -- we feel ours is a better choice for a chronic therapy. We will have chronic dosing in our label. That is RS 10. The romo is only 12 months. We think OI patients need continuous -- and we've shown when you pull them off drug as it was done in the Aster said they love grown even with the phosphate on board, whereas romo is basically given for a year and then lock supposedly the effects are locked in. But with OI, that's not true. You need chronic dosing.

So the chronic dosing story will be ours. And finally, when we commercialize, we're going to provide the first-rate patient support we do to our rare disease patients, which is not something that's going to happen for an osteoporosis drug. The last thing I'll mention is that the presentation of that drug is a 210 milligrams in a prefilled range -- it's not very adaptive for different size patients and different amounts of drug dosing, whereas our presentation will allow weight-based dosing for each patient and optimization, which I think will be important in the ultimate care of these patients. So Atascosa both can work, but I think ours will be a better choice for long-term use.

[Operator]

Our next question comes from Maury Raycroft with Jefferies.

[Maurice Raycroft, analyst]

For 701 in Wilsons, what goes into the decision tree for decreasing standard of care? And what is the target reduction in Stage 1? And can you provide more perspective around patient baseline characteristics for the first 2 cohorts, including baselines or oxidase activity?

[Emil Kakkis, executive]

Yes. Let me provide a little top line. And then, Erik, if you want to provide a little bit more detail. After they get the drug, there's a period of time where we watch and see how they're doing, and then we start titrating down the standard of care. And the goal in the trial to get them off standard care completely, like the first 2 patients. The others, I think, are going to get there. I'll let Erik talk a little bit about what the criteria are. In baseline, we haven't put out all the information in great detail. But maybe, Erik, you can provide a little bit a high level on a few things to up with help with Laurie's question. So standard of care, strategy and then the baseline.

[Eric Crombez, executive]

Yes. Great. It's nice that we're able to do this in an open-label fashion that gives us the ability to work closely with these investigators. But the goal really is to give all patients a trial of titration off of current standard of care. And what's nice about this disorder is you can monitor copper in a lot of very different ways and certainly with a very big focus on urinary copper, but we feel with all of the types of way we can measure copper, we really do have a good way to understand the effect of the gene therapy.

Certainly, if any patient start seeing any signs and symptoms or biomarkers start trending in the wrong way. We will rescue them back to their original dose of chelators and thing, but we really haven't seen the need to do that across the board or in a meaningful way. The ceruloplasm-based activity assay is interesting, and again, important because key leaders and zinc have no effect on that. So the only -- so the only way for serubaplasin to exist is to have copper onto it. And with this assay specifically measuring the loading of copper and of rural plasm, -- these patients are coming in really with an activity below the lower limit of detection. So again, measuring the rise from there. So still early days. Patients are definitely still increasing and benefiting from the transgene, but things seem to be really trending in the right direction for the great majority of these patients who have been dosed so far.

[Operator]

Our next question comes from Salveen Richter with Goldman Sachs.

[Unknown Analyst]

This is Lydia on for Salveen. So just 2 on setrusumab. So first, could you just provide a bit more detail on what exactly would trigger an early Phase III readout? And then also, do you have any idea on pricing and reimbursement, given the availability of ifostinates and romo?

[Emil Kakkis, executive]

Sure. So -- the way the trial was done, it was an event-driven. That is the unwinding of the original final primary analysis is driven by having 100% of the fractures required to achieve the information needed. So they're event-driven. And the original idea certainly the area is to look at 60% and 80% of that maximum. Assuming a large treatment effect, we think we could hit persuasive statistical significance at maybe just 60% of the fractures required is the separation of the 2 is as high as 67% as noted. So it really depends on the number of fractures and the number of patients and the time of exposure. So it's a complex of those 3 points.

So originally, the 100% is expected to be somewhere between 12 and 24 months of the last exposure -- last patient in, and this would be less than that Well, we expect that we would want to see at least 9 months of data of treatment for the last patient in was our expectations. So it will be fracture-dependent, but we would expect to see at least 9 months of data from the last patient in -- last 9 months of exposure to the last patient in as a minimum.

Yes, the pricing reimbursement question. Well, obviously, romo is out there labeled for osteoporosis has a certain price point. It's actually at a lower dose with the way it's used and -- what we're doing is actually in a much higher dose and will be optimized for OI. So you have to think about the dose differential for the 2 indications as one feature. The other, of course, is that our treatment will be chronic. And so the question people will have with the shorter-term treatment regimen whether they should take romo longer when it hasn't been given longer, right? I think that becomes more of a barrier question about safety. And we'll have, in fact, the chronic data to show our drug can given that way.

We're going to think hard about our pricing strategy. As you know, we've had a -- we're a company that looks at more moderated responsible pricing as we did for Crysvita. We think that would make the differential between it and romo substantially less. And given the dose differential would make it, I think, a not significant issue for the program. And given our support systems, our delivery, home infusion, home delivery of drug as we've done for Crysvita for like 85% of the patients -- there are going to be a lot of features that will help make this a lot more approachable for our rare disease patients that I don't think they'll get support from.

So those are all factors, I think, and how it will play out. But we're really knowledgeable about the space because Eric and his team has been commercializing and 90% of those stocks we commercialize Crysvita to are also treating OI, right? There's a 90% overlap. So we really know who they are. We have a strong relationship, and that will put us in a good position, I think, to compete. And in our view, we'll have the label. We'll have the best antibody. We have the right dosing, right regimen, the right team to commercialize.

[Operator]

Our next question comes from Yaron Werber with TD Cowen.

[Yaron Werber, analyst]

First, I think a quick one from us. Really kind of looking ahead to your first half of next year. Obviously, you're going to have a pretty busy 6 months, it looks like. So any sense that you can maybe give us on kind of the cadence of when to expect even if it's just kind of relative one before the other would be super helpful.

And then one quick one on GSD1a. Sorry if I missed this, but has FDA kind of given you any indication? Or do you already have a sense of how long after the top line readout, you really need to continue to follow these patients. Really just trying to understand when you might be able or in a position to file potentially launch with 401 of the data looks good.

[Emil Kakkis, executive]

The cadence of findings, we actually have a table that has some of it. I have to say, we've generally not provided extremely precise target of catalysts for various reasons. It is a busy first half. Buckle your seatbelt, it's going to be fun. It's going -- we're going to have a lot of good work and coming out for you. But I don't think we -- I can give you a blow-by-blow exactly when all it's going to happen. But we'll have a table that will give you at least some ideas. And it will be a fun quarter.

I'm looking forward because we have so many working programs, and we're in such a good position. It will be great to see how they're doing and be able to talk to you about them.

Now the question on GSD1 is how long to file. The agreement with FDA is that we could file with 48 weeks of primary data and including the long-term extension data from Phase I/II patients, which are now out like 5 years, so there's quite a bit of data there. So we think we have a lot of long-term durability data in hand. But keep in mind that the trial enrolled over a period of a good part of the year. So even if we have 48 weeks from the last patient, There'll probably be up to a couple of years of data in the very earliest patients by the time we file, right? So I think I would expect us to be able to file within a reasonable time frame. There may be other factors that we'll have to discuss with regard to the rest of the package and filing, but we'll be working to try to file as promptly as we can once we get all the pieces together.

[Operator]

Our next question comes from Joel Beatty with Baird.

[Joel Beatty, analyst]

Okay. For the amalogenic spinout, what's the latest plan and timing and how much ownership does Ultragenyx plan to maintain?

[Emil Kakkis, executive]

Well, we do have a term sheet signed and a group of investors we've put together that we're filling out that syndicate. I can't tell you more yet about the details, but -- our expectation is for Ultragenyx to own the majority interest in the spinout, a majority interest in a spinout based on what we had expect -- but -- it's not been finalized, and I wouldn't want to provide any more detail until we get closer.

But it's moving along. We have a lot of interest, the Analyst Day also brought out some new interest. I think there's a lot of belief that the NAB mills against do work, but there's also a lot of room for improvement for something better. And we think this is one good option for how you might do a better treatment. So we'll put out more information we get there, but we don't a majority interest, and we'll hopefully to fill out that team and get that finance half much before the end of the year is our goal.

[Operator]

Our next question comes from Gena Wang with Barclays.

[Huidong Wang, analyst]

Two very quick ones. The first one is regarding the Angelman program, the update next year. I mean you say you also have a 10 patients with a longer follow-up. Will you be able to share the Bayleys other domain? If I look through it, it's social emotional and also adaptive behavior. And regarding the multidomain responder index, do you think that, that could be a possible index that you could discuss with the FDA about possible approvable endpoint in the future?

And quickly regarding Crysvita. So regarding in LATAM, now the territory will be much more important for the revenue contribution. Any strategy you can think of can improve the penetration there?

[Emil Kakkis, executive]

Okay. Well, good questions. Maybe I'll let -- but when I get to it, you can do the -- I'll let Eric do the Crysvita penetration strategies question. All right. I'll start with first with the Angelman data. You asked about Bayley, other domains of the Bayley. A lot of that means we're not -- I think the adapter to social motional are not very well designed for Angelman patients. They're designed for normal people. So I think they're not very good. But we will have data on adaptive behavior. We'll have [indiscernible] one which has adapter, but we'll also have another scale called ABC scale, and we'll probably be -- I didn't mention, but is it a barren behavior scale, which I think is maybe even more relevant to these patients which is what's clinically important. When you talk about social emotional or adaptive type things.

So we'll have some things, but I don't think the Bayley is not the best test for some of those things. We are focusing on the ones where I think it's sensitive. With regard to the -- so that's 10 patients that we might have longer-term data that is up to 254 longer and 20 that would have day 170. So that's -- we're trying to give you a better sense. We'll give you what we have on all of them.

Now for MDRI, we believe is a good strategy. We don't have FDA's agreement on that. They've seen it. I presented to them, including multiple senior leaders in the multiple conferences. We published a good paper on it. It's a very powerful method. I think it's a very appropriate method. The key thing with the MDRI is that you really measure endpoints, you can agree on any ways, endpoints that are meaningful, right? The only thing the more is, is an analytical tool, how do you take 5 different endpoints and add up the results. And this says, look, I'm going to add up how many people responded in each of the end points to a clinically meaningful degree and add up those responses. So it's not conceptually that hard you do get all the underlying data. So it's not like FDA is giving up anything by using that endpoint, right? They're actually getting all the underlying end points. So -- if they can get comfort around the Bayley scale for certain things and the ASA score, the parent behavior score Filono others as representative of those functions then I think we can get them comfortable with MBRIas an analysis tool and how to get to the result. So lastly, let's talk about Crysvita. Look, I think Crysvita should be majority of the piece, in fact, I personally think every single kid who has XLH should be on Crysvita and not oral phosphate, if they need treatment. And we still have room to go there. And we're working with our partners. So I thought maybe, Eric, maybe you can say anything we might be doing to try to help them maximize the penetration of Crysvita.

[Erik Harris, executive]

Well, just to reiterate, LatAm is doing great. It's been very successful thus far. We'll continue with our current commercial efforts. But really, what's going to continue the strong demand there is the -- what's really going to drive the growth there is as we continue to get formal reimbursement across the other countries, right? We've seen the significant uptake just recently in Brazil following the formal reimbursement, public reimbursement as we work our way through reimbursement through the other countries. We'll see continued growth in the Latin American region.

[Emil Kakkis, executive]

Certainly, in countries that have started treating patients, they would like what they see, they start adding patients. So there is a drive for use of the drug. And hormone reimbursement is definitely one of the pieces that will help get us there. It certainly has picked up a lot since Brazil got approved. So we're encouraged. I think there's still more room to grow and Crysvita is still in the middle of launch. It's not plateauing out, it's continuing to grow.

[Operator]

Our next question comes from Laura Chico with Wedbush.

[Laura Chico, analyst]

I guess I wanted to circle back on the potential anylogenics spinout. You showed some intriguing data at the R&D Day with respect to plant reduction in the 5xFAD models. Could you just remind us any data demonstrating effects on either anti-inflammatory or proinflammatory markers there following treatment with the product. And just out of curiosity, will there be any further data updates expected prior to the spin out? It sounds like things are moving along pretty quickly.

[Emil Kakkis, executive]

Yes. So we focus mostly on the pharmacology of plaque rather than secondary markers of inflammation, et cetera. So I don't have more to offer you at this point. The one challenge I would say is when you're doing the way you do it in the mouse, we're injecting directly in the brain, there is an effect of putting a needle in the brain, how that affects things. To get to those models, I think you need to be doing real intrathecal treatment. And maybe in the rat model where you can do that, you can kind of look at those markers. But if you have to inject through the brain, I think it's -- it makes it a little more complicated to get to look at those aspects of the neurologic disease. We won't likely put out more data until the spinout occurs. We are continuing to do some work. It's not a big burn factor, but there are some experiments going on to look at both the 2x FPD mouth and some other aspects of optimization. But we're really encouraged by the potential that we think is greater than the monoclonal antibodies reducing amyloid in the worst model out there, which is the 5x FAD.

And so we think there's enough interest and -- with our systems and Pinnacle PCA manufacturing, it really puts us in a position actually being able to approach a large market indication, which -- and I think it would be from a response we've seen from KOLs in our market work, there's a great deal of interest and something that wouldn't cause area inflammation but allow a single-shot therapy for a treatment for a disease this kind. So we're excited about the spin out, and we'll put more information out when we get we get it done as we progress.

[Operator]

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

[Unknown Analyst]

This is Thomas here asking a couple of questions for Ed. Perhaps for [indiscernible] for Santa Riposyndrome. Can you discuss some major topics that you plan to discuss with the FDA in the upcoming meeting? And what do you plan to achieve coming out the meeting?

[Emil Kakkis, executive]

Yes. Well, in the MPS IIIA program, our main focus of these discussions is on how to qualify apertsulfate as a biomarker for accelerated approval. I'd point out to you, we're also measuring clinical data, and we're encouraged by the clinical data as well. I mean the patients are continuing to gain ground, gain development skills over time. And I think that this shows that the gene therapy is working.

While we could potentially get approval by just following these patients clinically, our hope is to be able to get the biomarker accepted. There's been a challenge with the agency. I think Peter Marks has publicly supported the use of biomarker and including this biomarker at the recent MPS conference, but we have to get them through the details of how that's done. I think as a company, we're as well versed as anyone how to explain the biomarker and how to analyze the results. But it is a situation where you have a neuro degenerative order with a relatively slower progression through multiple years. And therefore, the qualification takes a little more work to figure out and support. But I'd say everything I've seen in our program and multiple other clinical programs from other parties shows that these markers are -- represent the underlying disease and their reduction through either enzyme or gene therapy is showing a meaningful reduction that will have important clinical benefits. So we're confident about the value of the treatment, and we're continuing to work with them on what it takes to qualify and we've had I will say for the program, we're also working on the CMC side production as we had to take that over. That is going to take some time. So in any case, we wouldn't be ready to file until we were able to run the CMC side of the equation. This is not a priority program for the company, so we have managed it in a more capital efficient way as best we can given -- but our hope would get CMC straight as well, which will be part of the factor that will determine our ability to file it in addition to our discussion with the FDA.

[Unknown Analyst]

Understood. Perhaps just one more question from us. This one for GX 102 for Angelman syndrome. As we expect the expansion cost data in first half of '24. What -- do you expect the median time duration amongst these patients would be? And what are your some initial thoughts on possible registrational endpoints?

[Emil Kakkis, executive]

Well, the duration -- most of the patients, 20 that will show, will have only day 170. We've shown you that in the most recent extension data, the day 254 looks better than day 170. However, the dose loading -- the average dose loading of expansion cohort is higher than what we just showed you before. So they're actually getting more drug -- so our expectation by day 170 will see more effect is our expectation. We will have 10 patients that should take us through to 254. Allow us at least a sense for how that's going and give us an idea. So our expectation for a pivotal study would be that it would be somewhere in the range of 7- to 9-month kind of study, where we've loaded and gone through a few maintenance doses. We think that's a sweet spot for improvement and change without giving kids too many placebo intrathecal injections, these are people's kids and you're putting -- doing lumbar punctures in them. So I think that combination will give us enough time to separate. And we think it would be long enough. I'm sure the FDA would always want longer, but I think we're getting close to the 1-year point, but I would hope that maybe it's going to be 7 to 9 months would be a reasonable place to show a place where you could see a lot of movement in the development of these kids.

[Operator]

I'd now like to turn the call back over to Joshua Higa for any closing remarks.

[Joshua Higa, executive]

Thank you. This concludes today's call. If there are any additional questions, please contact us by phone or at [e-mail].

Thank you for joining us.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.