Ultragenyx Pharmaceutical Inc

NASDAQ:RARE

Earnings Call Analysis

Ultragenyx Reports 42% Revenue Growth, Confirms Strong Outlook and Product Developments

In Q3 2024, Ultragenyx achieved $139 million in total revenue, marking a significant 42% increase from the previous year. The robust performance was led by Crysvita, which generated $98 million. Operating expenses totaled $271 million, resulting in a net loss of $134 million. The company reaffirmed its 2024 total revenue guidance of $530-$550 million, expecting Crysvita sales to reach $375-$400 million. Notably, Ultragenyx is progressing on three late-stage drug applications, aiming for potential approvals soon, which could enhance revenue streams and advance towards profitability by late 2026.

Impressive Revenue Growth

Ultragenyx reported total revenue of $139 million for the third quarter of 2024, a significant increase of 42% compared to the same quarter last year. The growth was primarily driven by strong sales of its leading product, Crysvita, which contributed $98 million. The breakdown of Crysvita's revenue showed $56 million from North America, $36 million from Latin America and Turkey, and $6 million from Europe. Notably, Dojolvi brought in $21 million, Evkeeza contributed $11 million, and Mepsevii added $10 million.

Operating Expenses and Losses

The company's total operating expenses for the quarter were $271 million, which includes $170 million in research and development (R&D), $80 million in selling, general and administrative (SG&A), and $21 million in cost of sales. A significant portion of these expenses, around $42 million, was non-cash stock-based compensation. The net loss for the quarter was $134 million or $1.40 per share, reflecting the heavy investment in R&D and commercialization efforts.

Guidance Update

Ultragenyx reaffirmed its full-year revenue guidance, expecting total revenues to be between $530 million and $550 million for 2024, buoyed by the performance of Crysvita and the recent launches of Evkeeza and other products. For Crysvita specifically, the company anticipates revenues will reach the upper end of its previously set range at $375 million to $400 million. Additionally, Dojolvi revenue is expected to be between $75 million and $80 million.

Strategic Developments in the Clinical Pipeline

At the forefront of Ultragenyx's strategic outlook is the advancement of its late-stage clinical programs. The CEO highlighted the potential for three near-term Biologics License Applications (BLAs) submissions, which include treatments for Sanfilippo syndrome types A and G and Glycogen Storage Disease Type 1a. These submissions could lead to the first approved treatments for these conditions, significantly expanding the company's market reach.

Recent Clinical Progress and Future Potential

The clinical development of UX111 for Sanfilippo syndrome is progressing well, with an expected BLA filing by the end of 2024. The data has been encouraging, and the FDA has indicated that cerebral spinal fluid heparan sulfate measures could support accelerated approval. Meanwhile, the UX143 therapy for Osteogenesis Imperfecta received breakthrough therapy designation from the FDA, underscoring its potential clinical benefits.

International Market Expansion

Ultragenyx is actively expanding its international footprint, particularly in Japan, where it has launched Evkeeza following approval for pricing and reimbursement. The company expects Japan to significantly contribute to revenue growth, not only for Evkeeza but across its entire product portfolio. The success in international markets further reflects the company’s commitment to increasing access to its treatments.

Financial Health and Path to Profitability

As of September 30, 2024, Ultragenyx reported having $825 million in cash, cash equivalents, and marketable securities. The company projects net cash used in operations to total around $400 million for the year. Management has indicated confidence in achieving a GAAP profitable quarter by the end of 2026, provided that the momentum in revenue from existing and new therapies continues as planned.

Commercialization Strategy and Market Readiness

Ultragenyx’s commercialization strategy involves maximizing the potential of Crysvita, which is demonstrating strong demand particularly among adult patients in the U.S. The company is also seeing success in Latin America, adding a significant number of new patients for Crysvita. As the commercialization of Dojolvi continues to mature, the company is building robust relationships with healthcare providers to ensure deep market penetration of its therapies.

Earnings Call Transcript 2024-Q3

[Operator]

Good afternoon, and welcome to the Ultragenyx Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] It is now my pleasure to turn the call to Joshua Higa, Vice President of Investor Relations.

[Joshua Higa, executive]

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

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

I'll now turn the call over to Emil.

[Emil Kakkis, executive]

Thanks, Josh, and good afternoon, everyone. It is a great time for Ultragenyx as we successfully completed development work across our late-stage programs and now are reaching the submission stage. If we achieve our approval from regulatory authorities, we expect to build further revenue momentum on top of our existing growing commercial portfolio. We continue to see substantial year-over-year revenue growth as we expand geographic access to further reach more patients with our medicines. This growth could further accelerate up to 3 near-term BLA submissions and approvals for our treatment for both Sanfilippo syndrome type A and GSDIa and potentially for osteogenesis imperfecta. These 3 late-stage clinical programs could be first-ever approved treatments with the potential to dramatically improve the lives of patients and their families. Doing 3 submissions within the same year or so is a special opportunity we've earned with our investment in development in these last years, and we understand the importance of these efforts for the patient community.

This quarter, we have continued to make progress across our clinical portfolio. I'll touch on a couple of points and leave the rest for Eric Crombez, our Chief Medical Officer, to discuss in his prepared remarks. On UX111 for Sanfilippo syndrome, as we announced back in June, we reached agreement with the FDA that cerebral spinal fluid heparan sulfate is a reasonable surrogate end point that could be used to support accelerated approval for the treatment of Sanfilippo syndrome. And we already have clinical data to support clinical efficacy of the product as well. We have since participated in a pre-BLA meeting with the agency where we aligned on the details of the BLA we are on track to file around the end of this year. We greatly appreciate the FDA's flexibility and thoughtful approach to getting this product submitted and potentially available.

Last month, UX143 or setrusumab for osteogenesis imperfecta received breakthrough therapy designation from the FDA as a treatment to reduce the risk of fracture associated with OI types 1, 3 or 4 in patients 2 years of age or older. We're pleased that the FDA has recognized the potential for UX143 to offer substantial clinical benefit for these patients.

Before I hand it over to Eric Harris to talk about the commercial business, I wanted to acknowledge the work our teams have done around the world to bring these important medicines to patients. In Latin America, our team has already generated over $110 million in revenue this year with the bulk of it coming from Crysvita but also Mepsevii, Dojolvi and Evkeeza. Across Europe and the Middle East, we are successfully navigating the country-by-country reimbursement process for Evkeeza and Mepsevii. At the same time, we are continuing to address unmet need for Crysvita in Turkey and responding to growing demand for named patient access for Dojolvi.

In Japan, we launched Evkeeza in the second quarter this year in a recently reached agreement with the PMDA that Dojolvi does qualify for a conditional filing package based on the current clinical data. We expect to file the J-NDA in mid-2025. These 2 products are key components to building our rare disease business in Japan, could ultimately contribute to the company's overall path to profitability.

Finally, in the U.S., we continue to support KKC's efforts commercializing Crysvita while also maintaining relationships with the health care providers treating patients with XLH and TIO. We clearly have a firm foundation to build from as we think about a future launch of UX143 or setrusumab in OI. We're also calling on prescribers at the centers of inborn errors of metabolism who treat Mepsevii for MPS7 and Dojolvi for LC-FAOD. These are the same prescribers who could treat patients with UX111 for MPS IIIA, DTX401 for GSDIa and our other gene therapies. The commercial leverage we're gaining in bone and inborn error products will be important contributors to our financial progress in the years ahead.

I'll now turn the call over to our Chief Commercial Officer, Erik Harris, to provide an update on the progress across our commercial portfolio.

[Erik Harris, executive]

Thank you, Emil, and good afternoon, everyone. I'll start with Crysvita, where global revenue continues to grow impressively 7 years into our commercialization efforts. In the United States, where our partner Kyowa Kirin is leading commercialization, the demand for Crysvita continues to remain strong. Approximately 60% of the start forms in the quarter came from adult patients and were prescribed by community physicians. Across the U.S., there are approximately 420 prescribers with 40% or so writing more than 1 prescription. This is encouraging given adult penetration is in the low 20s and suggests Crysvita has meaningful room to continue growing. We are confident in our full year U.S. revenue projections given our -- given the strength of underlying demand.

Shifting to Crysvita in Latin America where we lead commercialization, our Lat Am team delivered another successful quarter by adding approximately 65 new patients to Crysvita totaling now almost 700 patients on reimbursed therapy since launch. Brazil is the largest market in Latin America and continues to drive the majority of the revenue in the region. We are, however, seeing increasing contributions from countries including Argentina, Colombia and Mexico, driven by increasing patient demand. As I mentioned on previous earnings calls, we expect quarter-to-quarter variability in Lat Am revenue due to uneven ordering patterns but remain confident in the underlying demand growth for our products.

Moving on to Dojolvi. Growth of new start forms in the third quarter continues to steadily increase. In the U.S., we added more than 30 start forms and 30 patients on reimbursed therapy compared to last quarter, resulting in approximately 550 reimbursed patients since launch. The split between pediatric and adult patients continues to be approximately 65% peds and 35% adults. The number of new prescribers continue to grow, adding approximately 15 new prescribers in Q3 2024, with half of them writing more than 1 prescription.

With Dojolvi across Europe and the MENA region, revenue is currently driven by named patient sales request. They are over 230 patients treated under MPS across 12 countries in the region. The majority of the demand is from France, but we are receiving an increasing number of requests from other countries within the EMEA region, including the Middle East.

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

In the EMEA region, we have patients from all of the major countries, including France, Italy, Germany, Austria and the Middle East on therapy as a result of our commercialization efforts or responding to named patient requests as we navigate the country-by-country pricing negotiations.

In Japan, the launch is continuing to build following the pricing and reimbursement approval that we received in the second quarter. As Emil mentioned in his opening remarks, Japan is expected to be an increasingly important contributor of revenue not just for Evkeeza but for all of our programs going forward.

With that, I'll turn the call to Howard to share more details on our financial results and for the quarter and guidance for the year.

[Howard Horn, executive]

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

Our total operating expenses in the third quarter were $271 million, which included R&D expenses of $170 million, SG&A expenses of $80 million and cost of sales of $21 million. Operating expenses included noncash stock-based compensation of $42 million. In the third quarter, net loss was $134 million or $1.40 per share.

As of September 30, 2024, we had $825 million in cash, cash equivalents and marketable securities. Net cash used in operations was $67 million for the third quarter and was $335 million for the 9 months ended September 30, 2024. We expect 2024 net cash used in operations to be around $400 million for the year.

Shifting to revenue guidance. We are reaffirming our total revenue range of between $530 million and $550 million for the year that we announced last quarter. This reflects strong performance and trajectory across all of our products, including Crysvita globally and the launch of Evkeeza in our territories. For Crysvita, we continue to expect revenue to be towards the upper end of our range of $375 million to $400 million, which includes all regions and all forms of Crysvita revenue to Ultragenyx. Specifically, it includes Crysvita product revenue from Latin America and Turkey, and cash and noncash royalties from North America and Europe. We also continue to expect Dojolvi revenue to be between $75 million and $80 million.

With that, I'll turn the call to our Chief Medical Officer, Eric Crombez.

[Eric Crombez, executive]

Thank you, Howard, and good afternoon, everyone. In addition to the clinical pipeline progress that Emil has already commented on, we have also made meaningful advancement across our gene therapy programs. Starting with DTX401 for the treatment of glycogen storage disease type 1a. In our press release today, we shared new data from the crossover patients in our Phase III GlucoGene study. These are the patients originally randomized to the placebo group and who have now been treated with DTX401. 12 of these crossover patients have reached 30 weeks posttreatment with DTX401 and demonstrate a clinically meaningful 62% mean reduction in daily cornstarch requirement. This is double the reduction seen in the patients randomized to receive DTX401 in the blinded part of the Phase III study at the same earlier week 30 time point.

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

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

Shifting to UX701 for the treatment of Wilson disease. Last month, we provided an update from the dose-finding stage of the Phase I/II/III study that included data showing that patients across the 3 dose cohorts demonstrated clinical activity as well as improvements in copper metabolism. In this initial stage, 15 patients were enrolled into 3 sequential dosing cohorts and followed for at least 24 weeks. Six of the patients completely discontinued treatment with chelators and/or zinc and a seventh patient had begun tapering as of the data cutoff date in August of this year. We are seeing evidence of the establishment of the normal trafficking of copper with the loading of copper onto ceruloplasm (sic) [ ceruloplasmin ] for the safe transport of copper in the body and the pumping of excess copper into the bile system for excretion from the body.

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

I'll now turn the call back to Emil to provide some closing remarks.

[Emil Kakkis, executive]

Thank you, Eric. Over the first 4 quarters of this year, we've continued to hit our marks by delivering growing revenue, advancing our clinical programs. I'll close quickly by summarizing our key clinical catalysts for the rest of the year. For GTX-102 for Angelman syndrome, we are planning to share program update at the upcoming FAST and Child Neurology Society meetings. This update will include data from patients in a dose escalation and expansion cohort who have been on therapy for at least 338 days. The data will show that our Phase III study is very well powered to succeed for the primary end point of Bayley cognition raw scores and also for the key secondary end point of MDRI. We're also on track to initiate the Phase III by the end of the year. Based on our own clinical data and the novel science that supports it, we are confident that we are now the leader in this space.

For the Phase III portion of UX143 Orbit study of setrusumab, there are 2 interim analyses planned with the first anticipated by year-end or early 2025 and the second in mid-2025. In order to end the study early at the first interim, there will need to be an extreme and early separation of the 2 groups to meet a very stringent threshold of a p-value less than 0.001. In order to end the study early at the second interim, we'll spend a little alpha, and we have set the threshold of p-value to be less than 0.01 when there is a little more time for the groups to separate.

In the event the data readout is not accelerated at the first or second analysis, the final analysis will occur in the fourth quarter of 2025 after all patients have been on therapy for 18 months. In the event an interim analysis clears our stringent threshold, we would only share that the threshold was met. Top line clinical results would be announced several months later as the study requires that the patient completes final visits over a couple of months and we'll need time to collect and prepare the data for a complete analysis.

As I mentioned in the opening, we're also working on multiple BLA submissions, one for UX111 around the end of the year. Another for DTX401 is expecting in mid-2025.

As we head in the final month of the year, I want to express my gratitude to the talented team of Ultragenyx for executing one of the largest late-stage pipelines in the industry. It is incredible to think that we can potentially launch 3 new therapies over the next couple of years, bringing first-ever approved treatments of patients without any real options. With the approved programs we currently have, that would make 8 commercial programs in just over a decade on the public market.

With that, let's move on to your questions. Operator, please provide the Q&A instructions.

[Operator]

[Operator Instructions] Our first question comes from Chris Raymond with Piper Sandler.

[Christopher Raymond, analyst]

Congrats from us on all the progress. Maybe 2 questions. I guess first on the Wilson program, maybe, Emil, what is -- who is the ideal patient for this gene therapy? Would this be, as you guys are envisioning a commercial rollout, suited for patients that are well controlled maybe on copper chelators or zinc? Or would this be targeted only for those most severe patients?

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

[Emil Kakkis, executive]

Very good. You really wanted me to go into the math of that Chris? All right. Let's start with the Wilson's question. We've talked about the Wilson program several times about who's the most addressable. There's about 20% of the patients are not really well controlled, can't tolerate the meds or probably the highest, most addressable population, about 20,000 out of a population of -- 20% of a population of 50,000, 60,000. Among the remaining, there's certainly a segment of patients that could do better than they are, but there may be some patients who are very stable and well controlled that may or not be most addressable.

So we wouldn't necessarily assume that all Wilson patients are addressable, but we do think the combination of people not tolerating and those who are not getting optimal copper management are patients that are having clinical symptoms will be ones that might benefit from the treatment. Given a large disease population is that fraction of the total is -- it still makes for a very large potential market.

With regard to setrusumab, P. K. Tandon, our Head of Biometrics, a highly experienced biometric statistician who was at Genzyme for 20 years and has done probably more rare disease programs than anyone, believes a negative binomial model is the best way to do an event-driven analysis, and it's a basic model that the FDA has agreed to. We are -- for me to go through the math would be probably pretty difficult, but we probably can provide some explanation for investors on that model. But it's the best way to look at events and looking at event rates and being able to control in the model for things like baseline fracture rate or age or other factors that will be different between different patients. So while I can't explain it, what I can say is the study is very well powered to succeed in the setrusumab Orbit study.

[Operator]

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

[Tazeen Ahmad, analyst]

On OI, Emil, given the time lines that you've provided for the different interim reads, if the study has to continue past the first interim, is there a calculation that you've made about likelihood of success of the trial? That's the first question. And then secondly, with the time line to when this would become commercial very significantly depending on which at the time point the study would eventually stop assuming that it would be successful at one of those stops, if that question is clear.

[Emil Kakkis, executive]

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

So it doesn't really affect what the efficacy determination would be. Our goal in doing the first interim was to try to end the program as quickly as possible to head toward a filing. And we think if we hit that level of threshold, it should be. But I don't think it speaks at all for the efficacy of the drug. It just speaks to the question of how fast they separate and how variable they are.

So with regard to the commercialization time, the reason to go with IA1 or to put the interims in with -- that help shorten the time line, obviously, at the 18 month or towards the end of the year, there's a year difference potentially there. We will collect some extra data from the first interim, but there is a substantial number of months between the first interim and the final.

The second interim, the differential will not be as great because when the secondary interim occurred, everyone will have had a year. So that means we don't have to -- we wouldn't have to wait further to collect any information. So the second one will probably not be as long after the interim. It will be only a few months after in terms of BLA filing.

So you can argue why worry about so many -- a few months here, a few months there. The value -- the NPV value of the program was highly dependent on that. And each month represents a very substantial amount of value to the company and as a company, we look carefully at how time affects value because one of the most important parts of how do you achieve success in rare disease is understanding the value story, not just cash spend in terms of execution. So a few months, by the way, has a very big impact on net present value, and that's why we press hard to get things done as promptly as we can.

[Operator]

Our next question comes from Anupam Rama with JPMorgan.

[Malcolm Kuno, analyst]

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

[Emil Kakkis, executive]

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

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

So there are a couple of things, and also we'll talk -- we'll update on sort of overall safety in the Phase III plan going forward. So it won't be a massive update, but it will be a nice step forward heading to Phase III, which is where our minds are at, getting Phase III up, running and completed.

[Operator]

Your next question comes from Gena Wang with Barclays.

[Huidong Wang, analyst]

Maybe just quickly follow the previous questions. Will data at the FAST and the CNS meeting the same data set? And I have one question regarding setrusumab Phase III study. I mean you did actually provide a little bit more clarity regarding the time line. I remember last time was more likely beginning of 2025. Now is at year-end '24, beginning of 2025. And second interim, very definitive, is 1Q '25. Is that because the event's already picking up and you have more clarity regarding when this will happen?

And then also, will you share the baseline characteristics of Phase III trial at some point? If not, could you comment on patient baseline attack rate range and also the breakdown of the patients, specifically between age 5 to 12, 12 to 18 and 18 to 25?

[Emil Kakkis, executive]

Great. That's quite a lift. So thank you for the question. So the data cut from Angelman for FAST and the peds, the child neurology meeting will be the same data set. There will not be -- should that be differences between those 2.

With regard to the first interim timing, the clarity on the timing is not based on data we're collecting, so it's not based on fractures. We said from the beginning that would be end of the year, early 2025. And then a few months later, we're being a little more specific saying middle for 2025, but it was always a few months. So we weren't intending to change anything. It was just where the time line is. But we did change -- a long time ago, we talked about having fracture number as being the trigger, but because it was so operationally challenged, we just estimated when we hit a certain number of fractures. But none of the change in timings were related to the fractures.

We haven't put out baseline characteristics yet, but we will at the appropriate time. Usually when we bring out the Phase III data, we'll bring in the characteristics, but we would not expect to put out that data until we're releasing our Phase III data. What we have said to date is that the population has more type III and type IV patients, closer to half or more as opposed to what was in Phase II where there was about 1/3, and so that's 1 difference. We'd expect those patients to have more fractures. We expect then the Phase III trend -- study to have a higher fracture rate than what we saw before.

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

[Operator]

Our next question comes from Salveen Richter with Goldman Sachs.

[Unknown Analyst]

This is [ Lydia ] on for Salveen. Congrats on the progress. Just on Wilson's disease, when could we expect to see data from this additional Stage 1 cohort? And I guess what would you want to see from this data set to gain confidence in the regulatory and commercial outlook?

[Emil Kakkis, executive]

Thank you for the question. So on the Wilson's fourth cohort, we're hoping to get that protocol in and get set up so we would start early in the year. It depends how long it takes to enroll the 5, but we expect that to be going on. Because we have to wait until those patients get at least 6 months, 30 weeks or so of treatment, it will take most of next year to get there. But we haven't yet put a specific time line of when exactly the data will come. It will depend on how quickly we get the study accepted. We are doing it primarily in the U.S., that cohort, how fast it takes to get that settled and accepted and then the fact that we have to enroll 5 and get all their data. So it's going to take a good part of next year.

What we're looking for is, I would say, consistent reduction in standard of care in the majority of patients, if not all. We want to see a majority of patients because we believe to make a gene therapy viable, we want to see a potency that is distinct and profoundly important to patients. And while we have activity at this point, we think we need to see a higher fraction of patients off standard of care to make it worthwhile. And we didn't want to invest in Phase III until we have that in hand, and so it makes sense to work at a higher dose. And mean modulation, we hope will improve potency as a simple way to improve potency. So that's what we're looking for. We want to see that we're really changing biology completely in a large fraction of patients.

[Operator]

And our next question comes from Maury Raycroft with Jefferies.

[Maurice Raycroft, analyst]

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

[Emil Kakkis, executive]

Okay. So I think what we learned from the 14-month update on setrusumab was, in fact, that these patients can have a very profound degree of separation, and that separation can lead to the majority of patients having no fractures over a significant period of time.

The other thing we learned is that particularly the younger patients have a dramatic improvement in bone mineral density. So I think what we learned is that how strong the effect could be, and that gave us more confidence in putting in the interim in the first place because if they are separating very quickly within 2 or 3 months and if that effect size is large, then we would expect the groups could separate early. We just don't know for sure. We set a stringent threshold for the first one. The second one, less so.

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

With regard to Angelman, we are primarily focused on patients through day 338. We have patients in a whole series of different stages in the program. The main focus will be on people through day 338 at this point. We'll -- our minds are really focusing on setting up for Phase III, and the day 338 data is really about telling people where we are on path for Phase III, where a larger randomized study will become the most important piece of information we need to gain. So that's what the focus is, update what it would look like and help people see how the Phase III was set up based on our Phase II data.

[Operator]

Our next question comes from Joon Lee with Truist Securities.

[Mehdi Goudarzi, analyst]

This is Mahdi on for Joon. So on Angelman, could you please provide some color on the Aurora study given the patients aged from 2 to 64 and diverse mutation type that are included? So what should be the optimal end point for this study? And would Bayley-4 cognition be the one for this study?

[Emil Kakkis, executive]

Right. So you're talking about the Ionis study, is that right?

[Joshua Higa, executive]

No, Emil, I think he's talking about the Aurora study, the open-label study.

[Emil Kakkis, executive]

I'm sorry, I didn't quite understand what he said, Aurora study. Yes, so let's talk about the main study, Aspire. The main study, Aspire, is 4 to 17 year olds with the deletion type, which represent 80% of the patients out there. For Aurora, this is a supportive labeling study. This study will take the younger patients who have a deletion or older patients who have a deletion to look at effect in those range. And the idea would be to demonstrate an open-label setting where they have similar safety and efficacy as we've seen in the deletion type that's within the randomized trial.

We'll also include patients in the 4 to 17 range that are like the ones that are in the deletion program but are -- have missense, UPD, ICD, the other genetic types of the Angelman. So they will get them some -- a chance to get treated. The idea is to try to cover these various pockets of the population on genetics and age in the Aurora study. We believe one large randomized trial is enough to prove the cause and effect of the drug, and the Aurora study will help extend the safety and verify comparable efficacy in these other subpopulations.

[Operator]

Our next question comes from Yaron Werber with TD Cowen.

[Yaron Werber, analyst]

So Emil, I got a couple of questions. Maybe the first one just on setrusumab, and I totally understand the need to -- when you finish the study to have a couple of further assessments. At the time in which this goes to a committee, independent committee and, let's say, based on the events they decided to recommend to you to terminate the study, I think they will do it based on the fracture rates and statistics and the hazard ratio. Can you at least let us know, hopefully when that hits and becomes positive, that you hit and the hazard ratio is X, Y, Z at a certain p-value, is the first question. Or would you really just not say anything until later?

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

[Emil Kakkis, executive]

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

So the interim will allow us to see that the interim -- that the primary end point is hit, but we'll want to lock the entire database before we -- and we wouldn't want to endanger the study by releasing data from a database that's not fully locked. So that's why that will -- there'll be a little bit of delay before we put out the data. The fact it hits, though, should be enough to give investors confidence that the drug works and in a big way and that we want -- we're on track to move ahead.

Regard to the tech transfer, tech transfer has occurred. We are running PPQ lots in the plant. Our expectation is that running them in the plant will probably save us around 40%. We haven't put out COGS and margins yet in the program. But by running our own plant, it does substantially reduce our costs. We own the plant outright, and so our old cost structured plant will be an improvement over a contract manufacturer.

But the ability to control and assure that -- the consistency and execution, I think, will be great. And the tech transfer is easy because it's from our Woburn team to our team there. It's actually like almost like an internal transfer because we've developed the process at our Woburn facility ourselves. The contract manufacturer didn't develop the process. So a lot of this is going to work way better. That's why we made the investment in the plant because not only with 401 but the other programs in hand, we have the ability to leverage our cost structure and will help improve margin and COGS in gene therapy, which we think will be important for success -- to making a successful business out of gene therapy going forward.

[Operator]

And our next question comes from Yigal Nochomovitz with Citi.

[Yigal Nochomovitz, analyst]

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

[Emil Kakkis, executive]

Yes. So the primary treatment group had a 41% reduction during the 48-week period in the -- during the blinded phase, and what we said is now they're getting better now that they are able to look at their glucose values, so they're going down, getting better. We are mainly commenting on the fact that if you cross over and you know you're getting the treatment and you know what your glucose values are that you have a double the rate of reduction that is, by 30 weeks, hitting 62% versus what was about 31% at that point in time for the DTX401 group. So we're just saying we would double the reduction in cornstarch by people knowing what they're on.

The real reason for this, Yigal, is that while you can tell if you have hypoglycemia, if you have hyperglycemia, the patients don't really feel bad. They don't really notice it necessarily. What that means then, if you're blind to their glucose values, they don't know they're running high. And when they see a low, they didn't realize that an hour ago, they were shooting -- were sky high. So they have trouble reducing their starch when the only thing they can feel are lows.

The monitoring allows them to know when they're high and allows them then to be smarter and more proactive. The thing that's important to understand also is that, as the glucose -- as the starch level doses come down and you lower your glucose, it actually will induce the transgene because lower insulin, higher glucagon will stimulate transgene expression. It's almost like you need the transgene or the gene therapy to exercise. You need to exercise it a little bit. So it will become a synergistic effect of lowering cornstarch, driving glucose down, inducing more expression, allowing you to bring cornstarch down.

So we'd expect the original treated patients to gain ground now and start coming down, and -- but we think this explains a little bit that the blinding makes it very hard for people to manage this disease without having direct intermediate knowledge what's happening with their glucoses. So we're just encouraged and we thought it would be important to investors to see that the fact is what we think it is. And if you do it -- apply it in the way it will be applied commercially that patients can improve quite a lot in reducing the dependence on cornstarch and particularly in their fear of dying suddenly by going too low on their glucoses.

[Yigal Nochomovitz, analyst]

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

[Emil Kakkis, executive]

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

[Yigal Nochomovitz, analyst]

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

[Emil Kakkis, executive]

Yes. Well, the growing product portfolio, product approved and launches, including the new ones will continue to help that. I'll let Howard to go through it in a little more detail. But we're on the same path we've put forth before at the Analyst Day, and we feel good about the contributions of Evkeeza, for example, is starting to make. And the 3 other programs launching will help us. So maybe, Howard, you can touch -- talk about the path to probability.

[Howard Horn, executive]

Glad to. Yigal, thanks for the question. What we have said is that with [ things ] we did in June and the monetization of PRVs coming from 111 and 143 that we feel like we have the cash or we will have the cash to fund our operating plan that gets us to a GAAP profitable quarter by the end of 2026. So that's the translation of what we said a year ago about that pathway.

And then the underlying sort of logic of that is that we continue to see our commercial programs grow in revenue. Add to that a little bit from launches but not an enormous amount. And then if you kind of level out on all the rest of the spending, that's how you get the P&L., the profitability, again, by a quarter -- about before the end of '26.

[Operator]

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

[Wing Yip, analyst]

This is Thomas Yip asking a couple of questions for Ed. So first, a question for GTX-102 for Angelman syndrome, the Phase III Aspire study. So we called it preliminary design that was discussed in April and it incorporate 12-week or 84 days primary efficacy time point period. Can you discuss the significance of this duration? And then second question for 143, can you discuss development status progress, what next step that we can expect from this program in 2025?

[Emil Kakkis, executive]

Okay. 143 in 2025 is all about the interims and getting to Phase III. We'll have the Orbit study as well as the Cosmic study that will help to go to file. And our expectation, depending on where we finish in the year, we take a few months after the data come out to finish the BLA and get it filed, but we'd expect to be filing sometime next year unless we go to the final assessment, which will be at the end of the year. So it's really those 2 studies are the primary drivers. There will be some data from biopsies and a few other things that need to be done, but the package is really Orbit and Cosmic.

Regard to GTX-102 and Aspire, I wasn't quite sure I heard the question. Maybe someone from Eric or others heard the question more clearly.

[Eric Crombez, executive]

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

[Emil Kakkis, executive]

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

[Wing Yip, analyst]

Yes, that was it. Just wanted to understand the duration of the data measurement. So that helps.

[Operator]

Our next question comes from Jack Allen with Baird.

[Jack Allen, analyst]

Congratulations to the team on the progress made over the course of the quarter. I know there's been a lot of discussion on setrusumab and the interim analysis on the call, but I was hoping we could just step back and provide some more context around what triggers the interim analysis. I think there was a comment made by Emil previously about an estimation of time to fracture rate. And I just want to understand, are the interims set in stone internally as it relates to when those interims accrue? Or is there still incoming data that needs to be accrued to determine the timing of the interim analysis?

[Emil Kakkis, executive]

Yes. So they're now set on a time line, but originally, where plan was to do the interims based on the events and that they could move up or back based on when the events occurred. It was operationally challenging, the setup because it left a lot of unknowns to the team. So we decided to just estimate when we'd expect those fractures to be hit, the 60% and 80%, laid those down, the time line and just set that at 6.

We are confident that, that is going to be fine because we're estimating based on the original fracture rate, but we believe the true fracture rate will be faster than what we saw from their historical fractures. Therefore -- and Because of the type III and IV numbers, we'd expect that, that estimation will be, at best, after the 60% would have been hit, for example, because of the fact that the fracture rate is probably faster than what we used to make the estimates. So it's just an operational choice, but they're set on the time line now, which is the time line we put forth in our current corporate presentation and what we just described. Was there any more color, Eric, on this?

[Eric Crombez, executive]

No, I think that's great.

[Jack Allen, analyst]

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

[Emil Kakkis, executive]

The time of onset -- the estimate, we started gaining by looking at the 14-month data. It really looked by about 3 months or so in that the number of fractures had declined and the number after 3 months, relatively few and after 6 months, much, much less. And so our take was that in fact separation is probably happening within 3 months.

Now for osteoporosis, people know that the separation occurs around 6 months with a anti-sclerostin. So it's not so surprising when you go to children that it might be faster. But that's what we've learned. Now Erik, do you have an answer for the second part of that?

[Eric Crombez, executive]

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

[Emil Kakkis, executive]

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

[Joshua Higa, executive]

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

[Operator]

Our next question comes from Joe Schwartz with Leerink Partners.

[Joseph Schwartz, analyst]

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

[Emil Kakkis, executive]

Well, we assumed a 50% reduction in fracture rate and a fracture rate of 0.7 for the powering estimate. However, for the interims and the choice of doing interims, that was based on the concept there could be more fractures events happening, not a higher fracture rate reduction. And so if there are more fractures, it improves the power to detect that result earlier, right, just because more events defined.

So the effect size of 50% and the fracture rate, 0.7, was what was used in both the power and design. Given that the fracture rate reduction was closer to 67%, which could be similar or higher with the binomial, I think we feel pretty comfortable that we're in good position in how we've designed the study. So that's sort of what happened there with regard to the effect size. Now...

[Joseph Schwartz, analyst]

Okay. And then what kind -- sorry, sorry, Emil, go ahead.

[Emil Kakkis, executive]

No, go ahead. I'm ready.

[Joseph Schwartz, analyst]

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

[Emil Kakkis, executive]

Well, keep in mind something about Orbit and the Phase II part Orbit is those patients were -- the vast majority of those patients had been on bisphosphonates. The bisphosphonates are in their bones. So when we're looking at the 67% reduction, that's really like setrusumab on top of bisphosphonates, just to be clear, right? That's not -- so we'd expect that a similar differential occur even head to head with bisphosphonates, right? It is really like an add-on, if you will, in Orbit because they already have them in their bones.

There might be some tailing off of the bisphosphonate effect in Orbit. But in Cosmic, everyone had to be on bisphosphonates upfront, so our expectation is actually similar in terms of we went with the 50% reduction in fracture rate.

Now the fracture rate in little kids can be much higher. It could be several fold higher, which is partly why the study is in the 60- to 70-patient range rather than 150. But that's our assumptions right now.

[Operator]

Our next question comes from Jeffrey Hung with Morgan Stanley.

[Michael Riad, analyst]

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

[Emil Kakkis, executive]

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

[Michael Riad, analyst]

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

[Emil Kakkis, executive]

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

[Michael Riad, analyst]

No, no, that's very helpful.

[Operator]

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

[Kristen Kluska, analyst]

On setrusumab, I was hoping to get a little bit more color around thoughts about the placebo arm. We know that the 5 bisphosphonate studies had diverse readouts. So can you give us some context about how you developed that 20% figure? And then is there any possibility in this trial that because patients are used to being quite inactive that we could see more fractures on placebo if the protocol requires them to go to the clinic?

[Emil Kakkis, executive]

Yes. So there were -- we're aware of 5 randomized studies to look at bisphosphonates. Three of them failed and 2 of them were successful. And the 2 that were successful, there was an estimate that they had a reduction of 20% in fracture reduction. And they did make patients feel better, too, which is one of the reasons why people are using it, less about fracture reduction than feeling better, which is probably dealing with like micro fractures and something of that kind. So the data are not really that compelling, but if you look at our own Phase II data, the 67% reduction was on top of bisphosphonates, which were on the majority of those patients. So it's pretty clear what -- we should be able to see a substantial difference between the 2.

Now if you talk about the placebo arm in the study, they're not getting the bisphosphonates anymore during the study, so they will be weaning, which might have some impact on their bones over the period of the year. But in addition, most of them would be normally staying at home. And we know that by coming in the clinic alone, the incident of accidents and fractures goes up. It's one of the reasons patients are elected to come in a placebo-controlled study.

They know going back and forth the clinic every month opens them up to having fractures. So we'd expect actually the clinical activity to actually increase their fractures, which would give us more opportunity to detect the difference between them. So -- but because the data in the Phase II were so strong, the doctors, the patient decided they want to get in even if they got placebo because they realized they would cross over on the drug before anyone else, and they want that opportunity. So that's why we suddenly were able to get enrollment to crank up and go real well as people felt like this is going to be too big a difference to not want to be part of it.

[Operator]

Our next question comes from Dae Gon Ha with Stifel.

[Dae Gon Ha, analyst]

I wanted to, Emil, take a different angle to the setrusumab line of questions that have dominated the call today. I wanted to ask about manufacturing for setrusumab. Just if you can maybe remind us what scale is it at. Does that plant actually have some precedent or regulatory success track record when it comes to getting a drug approved?

And similarly, when it comes to burosumab or Crysvita, it was, I guess, as of 2023, transitioned over as more of a royalty-based commercialization activity in the U.S. So just wondering from a sales force standpoint, how ready are you if you were to hit the interim #1? Would there need to be a massive hiring spree that would need to get done?

[Emil Kakkis, executive]

Okay. So on the manufacturing for setrusumab, it's a traditional third tank batch type method. And it's currently a 3,000-liter scale. It is operating at a contract manufacturer in Germany that we use already for Mepsevii, so they are already licensed and approved. So we're very comfortable on that. Given our view of the product and the size of the market, we'd expect to have to get another manufacturer in addition to that at some point, and we would obviously start working on that since we knew we had our study. So -- but we are well set up to launch and if the product does as well as we think it can, we'll need a second manufacturer to get going. But we're confident in the manufacturer we have. We work with them. They are approved.

With regard to the situation in the U.S., while it has become royalty-based, we have actually had people in the field since the crossover in April 2023, and we currently still have 16 salespeople helping support our partner, KKC. And we have some people within the org, within the patient services and other places that have been moved around, filled other roles. They are still part of our team and have the knowledge, experience. So there's significant established base of people, but no doubt, if we're launching, given the value of the program and its potential, we would need to hire additional people to launch that product. And -- but I think at that point, I think it's going to be real evidence that the value of the product will be high that, that investment will make a lot of sense.

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

[Erik Harris, executive]

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

[Emil Kakkis, executive]

Our North American head, our head of the patient services hub, the team involved that, the regional managers, we've got a lot of -- we've got a great team set up, but we'll be in good shape to take off.

[Operator]

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

[Joshua Higa, executive]

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

[Operator]

Thank you. All parties may now disconnect.