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Edited Transcript of PTCT earnings conference call or presentation 2-May-19 8:30pm GMT

Q1 2019 PTC Therapeutics Inc Earnings Call

South Plainfield May 8, 2019 (Thomson StreetEvents) -- Edited Transcript of PTC Therapeutics Inc earnings conference call or presentation Thursday, May 2, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christine Utter

PTC Therapeutics, Inc. - Principal Financial Officer & Treasurer

* Emily Hill

PTC Therapeutics, Inc. - Executive Director of IR

* Marcio Souza

PTC Therapeutics, Inc. - COO

* Stuart W. Peltz

PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director

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Conference Call Participants

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* Eileen Connelly Maysek

Cantor Fitzgerald & Co., Research Division - Research Analyst

* Eric William Joseph

JP Morgan Chase & Co, Research Division - VP & Senior Analyst

* Gena Wang

Barclays Bank PLC, Research Division - Research Analyst

* Gilbert Roland Kinsey

RBC Capital Markets, LLC, Research Division - Senior Associate

* Joel Lawrence Beatty

Citigroup Inc, Research Division - VP & Analyst

* Raju Yashaswi Prasad

William Blair & Company L.L.C., Research Division - Senior Research Analyst

* Ritu Subhalaksmi Baral

Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst

* Tazeen Ahmad

BofA Merrill Lynch, Research Division - VP

* Vincent Chen

Sanford C. Bernstein & Co., LLC., Research Division - VP

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and thank you for your patience. You've joined the PTC Therapeutics 2019 First Quarter Corporate Updates and Financial Results Call. (Operator Instructions) As a reminder, this conference may be recorded.

I would now like to turn the call over to your host, Head of Investor Relations, Emily Hill. Ma'am, you may begin.

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Emily Hill, PTC Therapeutics, Inc. - Executive Director of IR [2]

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Thank you. Hello, good afternoon, and thank you for joining us to discuss our 2019 first quarter corporate updates and financial results. Joining me on today's call is our CEO, Stuart Peltz; our Chief Operating Officer, Marcio Souza; and our Principal Financial Officer, Christine Utter.

Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. Please take a moment to review our slide on our simultaneous presentation, which contains our forward-looking statements.

Our actual results could materially differ from these forward-looking statements as any and such risks can materially and adversely affect our business and results of operations. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent quarterly report on Form 10-Q and annual report on Form 10-K filed with the Securities and Exchange Commission as well as the company's other SEC filings. We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP and non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available for today's earnings release.

Before I hand the call over, I would like to point out that given the data from our SMA program will be presented next week at the American Academy of Neurology. We will not be making any comments on that program today.

With that, let me pass the call over to our CEO, Stuart Peltz.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [3]

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Thanks, Emily. Thank you for taking the time today to be on our call. PTC has had a very productive start to 2019. We continue to execute on our strategic vision. Importantly, Translarna was approved this week by the Brazilian regulators. This enables faster market expansion to DMD patients in Brazil. This is the largest independent regulatory authority, outside of the EMA to validate the risk benefit of Translarna, which serves patients around the world.

Our current commercial sales continue to provide us with a strong base to help us grow the business. We continue to reiterate our DMD revenue guidance of $285 million to $305 million for the full year 2019. Over the next 12 months, we anticipate the launches of 4 new products, which will advance our strategic objective. Risdiplam for SMA, Tegsedi for hATTR, Waylivra for FCS and our gene therapy product for AADC deficiency. We also have a PDUFA date for expanding Emflaza's label to include DMD patients 2 to 5 years old. In addition, there is a potential for a U.S. approval of Translarna in 2020 based on the outcome of the dystrophin study.

The combined potential revenue and royalty streams of these products, all of which are either already approved or will be submitted for approval this year, is anticipated to grow to in excess of $1.5 billion in potential revenues by 2023.

To support this revenue growth, we are proud to have established a global commercial infrastructure. We are currently selling DMD therapies in over 40 countries worldwide. This is a strong commercial expertise allows us to position PTC as a key partner for collaborations and business development opportunities. Through these activities, we have strengthened our internal pipeline with the addition of Emflaza, Tegsedi, Waylivra and the CNS gene therapy platform. We plan to continue to strategically assess external opportunities to grow our business and bring differentiated treatments to patients with rare disorders.

In addition, we have made progress, both in expanding our commercial footprint by adding an additional product to our commercial portfolio as well as in advancing our therapeutic pipeline. We have Latin America commercial rights to Tegsedi and Waylivra. Tegsedi was approved last year by regulators in the United States and Europe, and we are happy to report that Waylivra received a positive -- key opinion in the first quarter and we expect ratification by the European Commission in the coming days.

Based on these approvals, we are preparing for the upcoming launches in Latin America for both products. Later this year, I now look as to how Translarna was launched in Latin America, we will be initiating early access programs ahead of formal approvals. We're encouraged by feedback from physician and patients and we have already received requests and prescriptions.

In addition, we've been working hard to advance our clinical program. We have been preparing for the BLA for our first gene therapy program in AADC deficiency this year. We are also supporting Roche for SMA, NDA that will be submitted later this year. We are excited about the SMA program and as Emily mentioned, we look forward to sharing data on the SMA program next week at the AAN. Therefore, we won't spend time discussing this program today.

Based on the success of the SMA program, we have been utilizing the splicing platform to address other targets in rare diseases, where we believe this platform is appropriate. We have several programs to identify other oral compounds that selectively and specifically modulates splicing. The splicing platform in subsequent programs are solely owned by PTC. We have already selected a development candidate from this platform for Familial dysautonomia and plan to file an IND this year. Our research team is also working on identifying the development candidate for Huntington's disease and we anticipate this compound will enter the clinic next year.

As we discussed on our last call, it is a strategic priority to bring gene therapy manufacturing in-house to support our gene therapy pipeline. We have identified an approximate 100,000 square foot biological manufacturing facility and are in the process of finalizing a long-term lease. The facility will allow us to use both inherent anticipation, manufacturing systems in gene therapy for production and in-house integrated manufacturing analytical and quality functions.

Well, AADC gene therapy product will remain in production with MassBiologics for the foreseeable future, we believe control and over time, over gene therapy manufacturing will allow for the rapid development of the rest of our pipeline.

I'll now turn the call to our COO, Marcio Souza to discuss details of our commercial and clinical progress. Marcio?

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Marcio Souza, PTC Therapeutics, Inc. - COO [4]

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Hey. Thanks, Stu. We have a vision of building a portfolio of multiple products to serve patients with rare disease, with the potential 2023 revenues in excess of $1.5 billion. Our current DMD business serves as a strong base to get us to an accelerated growth periods and will bring several products to the markets in the coming years.

We continue to reiterate our global DMD revenue guidance for this year of $285 million to $305 million and our first quarter performance was in line with our expectations. Our DMD franchise include Translarna outside of the U.S. and Emflaza in the U.S. For the first quarter, we reported Translarna sales of approximately $35 million. As expected, this reflects a sequential decline from the fourth quarter last year due to the lumpiness of ordering patterns, mainly from Latin America.

Earlier this week, we received ANVISA regulatory approval for Translarna in Brazil. We are extremely happy for this additional validation of the benefit risk of Translarna to serve patients in needs. For the most part of the last 4 years, Translarna business has grown in Brazil through early access products. Now as a next step, we will go for price negotiations with the Brazilian government's. This will likely results in an expected price discounts, which has been reflected in our original guidance.

Over time DMDs approval, we allow for a substantial increase in patient access in Brazil. In the U.S. our DMD business is based on Emflaza, which is approved for all DMD patients 5 years and older. We have a PDUFA of July 4th, for our application to expands the Emflaza label to include younger patients, aged 2 to 5. Our commercial team is diligently preparing for the potential launch in this expanded indication later this year.

For the first quarter, we reported Emflaza sales of approximately $18 million. Prescription growth was in line with our expected 2019 guidance. However, revenue in the quarter was impacted by both seasonality and our plans transition to a new exclusive specialty pharmacy distributor.

Now moving to Tegsedi and Waylivra. We continue to progress nicely with the Tegsedi ANVISA review, which we expected to be concluded later this year. We're eager to bring Tegsedi to the approximately 6,000 patients in Latin America who needs it. We have now established on the early access program for Tegsedi several classes [ph], which should result in early adoption this year and more significant sales contribution next year.

As Stu mentioned, we are very pleased to see Waylivra, has been granted a positive opinion by the EU regulators. Once this is ratified by the European Commission, we will initiate country by country early access programs in Latin America. There are clear synergies between the patient monitoring and diagnosing teams for Tegsedi and Waylivra.

We are in the final stage, as mentioned by Stu of securing our gene therapy manufacturing to support our pipeline. We remain on track to submit a BLA for AADC this year as well as an IND for Friedreich ataxia, gene therapy later this year. We are working to identify AADC patients, focusing on at-risk patient population in cerebral palsy clinics. We continue to make progress, and once we have the screen, the significant portion of this CP patients, we will provide an update on the expected patient numbers for launch.

We're also working towards our market access strategy for AADC. This will reflects the value thing in allowing patients to obtain never seen before motor milestones, such as sitting and walking. We look forward to bringing this life changing therapy to AADC patients worldwide in the coming year.

I would now like to give a short clinical development updates, starting with Translarna. Our key dystrophin Study 045 is enrolling patients and we expect a readouts early next year, which, if positive, would support a risk submission to the Translarna NDA in the U.S. For Emflaza or limb-girdle study is expected to roll the first patient this quarter, which upon completion should allow for the future label expansion.

All 3 of our oncology trials in AML, DIPG, and leiomyosarcoma, are enrolling patients with expected -- expansion cohorts should be decided early next year upon initial readouts of dose finding studies.

Lastly, we're in the final stage of designing our FA trial to submit an IND, the first for the gene therapy in devastating disease. We expect to share details later this year.

I would now like to turn the call over to Christine, our Principal Financial Officer. Christine?

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Christine Utter, PTC Therapeutics, Inc. - Principal Financial Officer & Treasurer [5]

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Thanks, Marcio. Earlier today, we issued a press release summarizing the details of our financial results for the first quarter of 2019, and I refer you to that release for full details. I'll start with a few comments on our financial performance and our guidance for 2019.

Starting with our top line results, we reported $53.1 million in combined net revenue across our DMD franchise for the first quarter of 2019, compared to combined revenue of $56.1 million for the first quarter of 2018. Translarna net product revenues were $35.3 million for the quarter. This compares to $36.8 million in the first quarter of 2018. As Marcio mentioned, our Translarna revenue trajectory is influenced by lumpy ordering patterns from Latin America.

For Emflaza, we reported net product revenues of approximately $17.8 million for the first quarter of 2019, which compares to $19.2 million reported in the first quarter of 2018. As was mentioned, Emflaza sales were impacted in the quarter by both seasonality and a planned transition to a new specialty pharmacy. We are reiterating our 2019 DMD franchise revenue guidance of $285 million to $305 million. We have also outlined the opportunity for our pipeline to generate potential combined revenue in excess of $1.5 billion by 2023.

Non-GAAP R&D expenses were $47.9 million for the first quarter of 2019 excluding $4.7 million in non-cash stock-based compensation expense compared to $27.6 million for the first quarter of 2018, excluding $3.7 million in non-cash stock-based compensation expense. This increase in R&D expenses reflects costs associated with advancing the gene therapy platform and increased investment in research programs, as well as the advancement of our clinical pipeline.

Non-GAAP SG&A expenses were $36 million for the first quarter of 2019, excluding $4.6 million in non-cash stock-based compensation expense compared to $29 million in 2018, excluding $4 million in non-cash stock-based compensation expense reflecting continued investment in support of our commercial activity.

I would also like to reiterate our non-GAAP R&D and SG&A expense guidance for full year 2019 of $360 million to $370 million, excluding non-cash stock-based compensation expense of approximately $35 million.

Net loss for the first quarter of 2019 was $72.1 million compared to a net loss of $19.3 million for the first quarter of 2018. Cash, cash equivalents and marketable securities totaled approximately $407 million at March 31, 2019, compared to approximately $227 million at December 31, 2018. After the successful completion of a public equity offering resulted in combined net proceeds of approximately $225 million. We are happy to be in a strong financial position to advance our programs and grow our business.

I will now hand the call over to the operator to start our question-and-answer session. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Vincent Chen of Bernstein.

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Vincent Chen, Sanford C. Bernstein & Co., LLC., Research Division - VP [2]

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And apologies for the background noise. I'm at the airport on way back from ASGCT. So I was wondering if you could provide us with some insight into the level of channel inventory for Emflaza at the end of Q2. How those compared to I guess -- sorry, at the end of Q1, how this compared to the beginning of Q1? And how it compared to typical steady state levels? And then similarly to the extent that you can, could you provide us with some additional color on the timing of [OUS]orders for Translana in fourth quarter 2018, first quarter 2019 and your expectations for the timing of upcoming orders?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [3]

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Yes. Hi, Vincent. Thank you for the -- Marcio, why don't handle that one?

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Marcio Souza, PTC Therapeutics, Inc. - COO [4]

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Of course, Stu. Thanks again for the questions. So on a question for Emflaza, right? So what I mentioned on the prepared remarks, was that the part of the impacts on the quarter was in relation to the performance of our prior vendor that was handling the distribution and specialty pharmacy for Emflaza in the U.S. and the change that we made to a new one, which we believe based on other work that the team did is going to be performing more in line with our expectations in terms of the supports to patients. So it's not only to your question a matter of inventory, it's much more matter of performance in general in terms of timing of dispense, in terms of the revenue that's being done there. So we like -- we're not necessarily happy with that, so we corrected which we believe it's -- it was key for the business. But most importantly, there is no impact for the year, we have the prescriptions coming in strong in Q1, we expect this to continue to grow and to meet our year-end revenue guidance. So that's what we guided for. So we remain confident on the growth, short-term and long-term for Emflaza.

In relation to your second question on the timing of orders for Latin America specifically for Brazil. So we had an order late Q4, which was dispense to the patients as you expected now with the approval that we've just received this week for ANVISA that obviously more patients they are going to be having access and just to give you a little bit of color, we haven't talked about this before. But since we were under early access program, there are many restrictions on programs like that including the inability of PTC to promotes Translarna. So all the demand we had was spontaneous from physicians, and patients and their families -- food, medical needs, basically, but not necessarily through our active promotion. So our penetration in Brazil right now is around 25%. What we expect is that moving forward with the approval, and therefore, our fields team and our medical team being able to discuss more proactively Translarna, that's going to substantially increase moving forward. So we got this order later Q4, as I mentioned, we expect one in Q2, based on our calculations of patients demand that being conversations already because there are always ongoing conversations. So that's and we expect the year to be, as I mentioned in the remarks as well, not to be impacted by any of this in terms of the total guidance. Does that answer your questions?

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Operator [5]

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Our next question comes from the line of Ritu Baral of Cowen.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [6]

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So some -- nothing -- Risdiplam, I'm going to ask about the next best thing I guess which is Stu, the Huntington's program that you mentioned. Can you walk us through -- I guess the strategy, the mechanism behind that program and how you see the emerging landscape? There's quite a few program in development right now. But how do you see this fitting in?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [7]

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Yes, sure. Hi, Ritu. Thanks for the question. So the Huntington -- really come from -- just to remind everybody that we've built out a splicing platform where we're able to identify small molecules that selectively and specifically modulate -- modulate splicing and in the SMA case there was a consequence of a point mutation that made us splicing less efficient and the small molecule makes it more efficient and allows the addition of the exon to be added where it wasn't before. It's interesting in the case of Huntington and again, it actually alters the splicing selectively and specifically, but it doesn't and I think a quite novel way. In the case of Huntington, it's a CAG repeat issue and in this case, it's almost like a (inaudible), right, where you get in the sense of large protein mass that's ultimately cause of death of neuronal cells within the brain.

And so ultimately, in this case, you don't want to -- you want to actually reduce the level of Huntington's protein. And so what we figured out, is that based on our understanding of the splicing that we have in the sense of splicing within the intron within the Huntington's gene that could be modulated by a small molecule that we've identified. And therefore, the way it works is that actually induces an exon to go into the Huntington's RNA that has a premature termination code on within the small exon that causes a rapid degradation of the RNA and you reduce the level of protein that's been made. And we've shown both in cells in animal models that's indeed what happens and that you actually reduce the level of the Huntington's protein as a consequence of that. So that's the strategy behind it.

When you think about -- we think it's a major advantage here, is obviously it's an orally bio-available small molecule, when we think that not only as a consequence of that, it will get into the regions of the brain that deep regions of the brain and all cells, so that is actually be an effective small molecule modulator and then be able to cause the reduction of Huntington and it's also, it's obviously easy, we know how to, it's easy to take and we think obviously not only because the mechanism is such, we think it will be a broad distribution, be able to get into the -- all of the tissue easy to take, and therefore, it's going to be a competitive advantage as a consequence of that as well. In terms of the market, maybe Marcio, do you want to talk a little bit about that?

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Marcio Souza, PTC Therapeutics, Inc. - COO [8]

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Yes, of course, at height. Like, it's a very large markets, right, Huntington's and for a rare disease and as Stu was saying, there are the number -- there are number of advantage of our approach to the others that are out there. We are learning from the others. We appreciate that there is a number of compounds and developed here, but some limitations in terms of the delivery as this was just highlighted, which will in our view transferred to a whole body disease just like SMA, not being able to be addressed completely. With our partnership with CFCI [ph], we actually learn a lot, in terms of the other aspects and we continue to learn, which are very unique of this disease. And probably some subset of patients are going to be better served by some therapies than other. And we believe on all molecule is going to have like a prominent position in the marketplace. So we feel extremely excited. We want to answer the clinic next year as we guided previously and we're on track to do that.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [9]

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Do you -- would you say, normal Huntington 13, as well as new Huntington 13 or just (inaudible)?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [10]

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No. So, yes, so this molecule does both, the normal and mutant and -- we -- and so I think the common thinking within the community is, if you can reduce it by 50% or so, that's what we're targeting to reduce the mutant Huntington's protein that is still enough normal Huntington's protein that we don't think it would be an issue.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [11]

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Got it. And a quick follow-up. Marcio, could you -- could you also Stu, what's the strategy, your current strategy is for the Translana resubmission to the FDA. At the beginning, you had noted that there were a couple of different data cuts -- biopsy data cuts that could still the resubmission. But what have you settled on looking at early data?

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Marcio Souza, PTC Therapeutics, Inc. - COO [12]

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Absolutely, happy to. So the key trial for the resubmission early next year is Study 045. And basically, what that study is, we are doing a needle biopsy. So taking for course in this biopsies is about 150 milligrams to 200 milligrams of muscle. We are doing 2 types of quantification of dystrophin with methodologies that we've added data it's and I agree with the FDA that would be adequate. So we're enrolling that study. It's a single site to reduce very ability in California like we're very happy with how the quality of the biopsies are coming, we obviously don't do the quantification early on, but we like check for quality in terms of infiltration and so one -- and -- so they're coming as we expected in terms of batch and the enrollment is being quite nice. So it's taking the pace that we expected for these readouts early next next year. The duration of treatments, once the patient started then had the baseline biopsies 9 months, the way we decide this to do in agreement with FDA, since there is no control group, we're going to be batching all the samples together and all of them are going to be read at the same time points at the end of the study. So there's not going to be a readout in between or anything like that for the study. So this is our primary study is the one that we have agreed to. We are running another study as we mentioned before as well exploratory in terms of understanding like the levels of expression in patients who were previously exposed to Translarna, we call that Study 046. That study is up and running as well and we are seeing some very good interest in rolling. And for that's a little bit more liberal inclusion there is no baseline. So really looking into trends and in terms of our own understanding of long-term expression. But that's going to be complementary and supplements to Study 045 for the resubmission, not the key study at this point in time.

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Operator [13]

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Our next question comes from Eric Joseph of JP Morgan.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [14]

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Just a couple of commercial and one development. I guess first on Translarna. Marcio, would you be able to kind of orient its run the amount of discounting that you're anticipating as a result of negotiations in that country and whether that pricing would serve as -- I guess reference pricing in the broader region? And on Emflaza, I'm just wondering if you kind of help us kind of understand -- just in thinking about the push/pull drivers here what you're seeing in terms of patient experience of late and what are your expectations are on net price going forward?

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Marcio Souza, PTC Therapeutics, Inc. - COO [15]

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Yes, no, of course, and thanks Eric for the questions. So on the pricing in Brazil for Translarna, I would say there are 2 tiers here. So the first one, at the time of the approval, new orders have mandatory rebate. So let's think about this like our CMS, right, rebates in the United States, actually about of the same magnitudes of 20% and that's what we call CAP there, or CAP and that's going to be applied to others moving forward. We submitted price requests to the body in the Brazilian government's called CMEDs that regulates price within here back from (inaudible). And based on that, that's where the actual price negotiations are going to be done, which we feel very confident is going to be within -- happens in the past, like few percents more than demand as hard discounts. This is all included in our guidance for this year, right? And it's the magnitude of the discount is much smaller than the expectation that we have to grow the markets. So it's a net positive ballpark 2019. But most importantly for the future as I mentioned before on the previous question from Vincent is, we only have 25% penetration there, which is quite impressive when you compare with others early access programs, but it's relatively small for the potential of the markets. So we expect to get a substantial number of patients increasing in terms of treatment on the following years.

For the Emflaza question that you asked, so the dynamics, and again, there is a number of levers here that we have to account for, right? So the number of new prescriptions are exactly as we expected. We're having good traction there. We mentioned late last year, we're ending the bridge program, we did that portion of those patients was transition and we're having good traction there as well. There's a fewer number of patients in free drug that we continue to transition to, compliance in the drugs being pretty high for (inaudible) that is taking daily, but not anything like Translarna, which we have like 95% or so. It's more in line with other oral drugs in that regard. But we're not seeing any dynamic that is negative to the market. If anything, all the dynamics worth, we're keeping -- tracking are positive. One thing I mentioned as well, previous call, is that we're going to expand the sales force because we believe there were some areas that required more dedication and we did that. We completed the exercise, we completed the hiring and they are all in the field and we should see the benefits of that expansion later in the year as well.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [16]

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Got it. Maybe just one development if I could. I want to try and look past the -- and to cure SMA, and just wondering if you could oriented surround Jewelfish where you guys will be presenting how to think about patient numbers duration of follow-up? I understand that it's primarily a PD and safety trial. But I'm more curious to know whether we should be -- whether there'll be measures of functional benefit as far as that patient follow up there?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [17]

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Yes. So I think, hi, Eric. So I think there -- obviously, we're including other patients in gene therapy and they'll will be discussed soon at CureSMA. I don't think there's going to be a lot of data. So that's really a bad time. But you'll see some that there'll be some increments of other things as well. But -- I don't think yet, we're going to have a lot of data for this.

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Operator [18]

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Our next question comes from Gena Wang of Barclays.

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Gena Wang, Barclays Bank PLC, Research Division - Research Analyst [19]

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And I apologize, I joined the call a little bit late and it's already discussed, so I apologize. So I'll also have the 2 commercial questions regarding Translarna and Emflaza. With Translarna, can you remind us the Brazil sales in 2018 and how the passive look like?

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Marcio Souza, PTC Therapeutics, Inc. - COO [20]

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Sure. Hey, Gena, and no worries at all. Happy to address any question. So we haven't guided for country or regions specific revenues in the past, it's pretty obvious by the variation that we have, when we have a large order from Brazil that is a substantial business for the size of the country and the number of patients we have. We haven't given exact numbers. But we...

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [21]

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Maybe it's good to talk about -- even we talked a bit about like Germany and others where we saw...

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Marcio Souza, PTC Therapeutics, Inc. - COO [22]

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Yes. So it's a growing market, it's fairly substantial, we had a number of patients that being found, it's one of the most successful patient finding exercise we have going on globally. So, as Stu was mentioning, it's bigger than some of the more established markets in Europe and it's going to continue to go in that direction. Well, there is more than 300 million people there. So I think it's easy to see how it can continue to grow. So we see the patents for Translarna there as the enforceable obviously, we take very seriously. Our IP this being discussed and being submitted together with our regulatory submission. We don't see any trend per se and I know there are case recently unilateral decisions, other types of issues from the governments in Brazil that they might be creating a question, but we don't see that kind of risk at this point in time for Translarna. Our relationship and our level of collaboration with the markets in general, key opinion leaders and the government has been very friendly, differently from some of the other circumstance that happened. But we feel very strongly, it's a very long runway there beyond the planning period that we've been talking about.

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Gena Wang, Barclays Bank PLC, Research Division - Research Analyst [23]

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Thank you. And I have another question regarding Emflaza. So just wondering if you can provide a color the breakdown of patient had a try prednisone treatment versus the PRI [ph] deflazacort treatment. And then how the trend look like in this quarter versus the last few quarters?

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Marcio Souza, PTC Therapeutics, Inc. - COO [24]

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Well, that's a great question and thank you so much for that. So last -- the last 18 months or so, we've been focusing a lot on getting this patients who were previously had some exposure to the deflazacort like Emflaza, as I mentioned, and like secondarily changing the strategy to focus on the expansion with prednisone. There are step added in most plans as you know for prednisone before treatment to Emflaza. Some of them, very recently have been removed or reduced. So we're happy with that. What we were seeing now, and I would say mostly on the last 90 days, 120 days or so is a big trends and change towards patient switching therapy (inaudible). So patients who are originally on prednisone being using that for a while. They are choosing actively to use Emflaza, which is ultimately what we want the entire markets to (inaudible), right? This -- we believe and so thus the key opinion leaders is a better alternative for the patients and we continue to communicate that into engaging dialogues for patients to switch. So moving forward, the entire year growth is basically predicated on prednisone and to a secondary degree on new patients and therapists since this market is still growing and there is a substantial number of patients who are not on treatment with any steroids right now. So kind of 2 buckets to get patients from.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [25]

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And we've been able, because of the publications that came out last year not only on our own data, but also on the natural history that really gave us a lot of material to be able to go to the payers then - so that we can then -- where we can use those to demonstrate Emflaza's better efficacy. So that's helped quite a bit as well. And that's also why people -- I think we are seeing a bigger changes over time.

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Gena Wang, Barclays Bank PLC, Research Division - Research Analyst [26]

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Just wondering, what is the percentage of patient like non-ambulatory patients on drug right now?

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Marcio Souza, PTC Therapeutics, Inc. - COO [27]

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On Emflaza, I assume, right...

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Gena Wang, Barclays Bank PLC, Research Division - Research Analyst [28]

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Emflaza, yes.

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Marcio Souza, PTC Therapeutics, Inc. - COO [29]

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Yes. So it is not a disproportional with how the market is. The -- basically if you look into the last 10, 15 years, right. How is steroids treatment change was almost exclusively for ambulatory patients and just recently physicians became more comfortable and the (inaudible) became more clear that no ambulatory patient should be treated. So we got a lot of new requests for non-ambulatory as well. We have a substantial number of patients, but it's just still not what you would expect to be there is almost 50-50. It is still more disproportional, I would say towards ambulatory at this point in time and younger patients coming in as well. A lot of excitements in terms of the expansion of the label to 2 to 5, which is going to capitalize the growth as well later this year.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [30]

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Again the papers are helping a lot because of the natural history showing better lung function -- patients are on Emflaza.

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Operator [31]

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Our next question comes from the line of Raju Prasad of William Blair.

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [32]

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Marcio, I think you previously you've mentioned hiring all the sales -- the expanded sales force in Latin America. Can you just put some metrics around the number of reps that you've hired? And then with several recent approvals in Latin America just approximately what percent of your kind of $1.5 billion in 2023 will be coming from Latin America, versus EU, versus U.S.? Thanks.

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Marcio Souza, PTC Therapeutics, Inc. - COO [33]

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Sure. Hey, Raj. So like the first question, right. So the expansion -- we expanded both in the U.S. for Emflaza and that was about 20% increase on the number of sales force, and we also increase the size of coverage in Latin America in general, not only in Brazil but in Colombia and Argentina as we have like or may operations as well. The numbers are fairly small in absolutes. So we would be somewhat silly for me to actually say like percent. So we added like 3 or 4 more individuals here and there. So in absolute there is relatively small, but for a coverage of the country makes a lot of sense. So we believe we have a very good coverage right now -- like we have very focus efforts on neurologists and pediatricians to cover both products. Since we dramatically have both actively now Tegsedi and Translarna and starting to introduce Waylivra as well, which you're going to have a small expansion to cover the additional specialties that are covered by Waylivra.

When you're looking to the 2023, our guidance, the biggest contributor there coming from like Latin American generally is Tegsedi. We talked about $150 million at that point in time, we still feel very confident about there and about the early indicators that we're seeing in terms of demands that's coming from other markets. And for the other products is a lesser -- It's a little bit more balance, I would say part of the business, we haven't guided regionally. So I don't think it would be appropriate for us to do this, right now, but it is still an important market for us, but it's not the predominant market moving forward. If you look into the U.S., for example, for Translarna in 2023, I was talking about $200 million, which arguably has a lot of potential to grow from that number as well. So again, our approach for guidance is really to make sure we deliver on that and we continue to look into this metrics and we're feeling very good about it.

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Operator [34]

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

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [35]

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So Marcio, I just wanted to get your thoughts about Waylivra and Tegsedi. This could be something that might be under-appreciated on the street. How are you thinking about the market opportunities in LATAM? You've obviously done some work on this, you started to initiate the early access programs as we try to think about value in the models for these contributors, how do you think the best way of guiding us would be? Thanks. And then I have a follow-up.

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Marcio Souza, PTC Therapeutics, Inc. - COO [36]

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Of course. Hey, Tazeen. Good to hear from you. So I completely agree with your assessments. I think we've been saying this right and we're seeing, they realize. So let me start with Waylivra first. Even like before the approval or the better, the recommendation from CHMP for the European Commission to approve. We've seen a lot of demands from patients. Somewhat even more than we were expecting in terms of the awareness of FCS in the region. So we're seeing a substantial number of cardiologists and other specialty coming up to us and saying like I have a family. I have a number of patients here even with little work that was done since we're gated completely in terms of investment and efforts before the recommendation.

So we believe that the Waylivra opportunities in the region is going to be as big as Translarna and we haven't got regionally, but you would expect, that it's fairly substantial, right, anywhere in terms of like 500 patients to even potentially more since our early reads in the prevalence and the incidence of that seems to be actually on the higher end, not on the lower end of the range. So excited about the product, excited with the potential for revenue in other key markets there and having some goods early -- like, we have spontaneous demand for Waylivra, right now. Meaning physicians are prescribing, we're becoming aware of this coming through the channel. It takes a while to materialize as revenue, but it's happening.

In terms of Tegsedi, I would say all the systems are green and everything is gold the monitoring programs in place, feedback from the patients that we consulted physicians being excellence in terms of what they're getting from PTC and our exclusive partner there. The number of patient that was coming through our genotyping programs quite impressive as well, on top of the ones that are already identified. Different dynamic because in Brazil alone, we were talking about, around 4,800 patients give and take for the hATTR. So it's much bigger for 6,000 patients expected in Latin America. So our -- somewhat I would say realistic guidance, as I mentioned on Raj's question is $150 million for Tegsedi in 2023. We didn't give guidance for Waylivra yet. But you'd expect that's going to be substantial. So appreciate the interest on that and the opportunity to talk a little bit more about this 2 assets. And you said you had a follow-on.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [37]

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Yes, if you could just for Translarna to talk about the European opportunity. I think in March you announced that you have as it relates to Study 041 as the EMA for an extension of when you will need to submit that data, I think originally the plan was to submit that data for the end -- maybe third quarter of 2021, but that due to slower pace of enrollment, you've asked for one-year extension on that. So I just wanted to get a sense from you as to why you think that enrollment might be slower than might initially have anticipated?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [38]

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Yes. Maybe -- go ahead, Marcio.

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Marcio Souza, PTC Therapeutics, Inc. - COO [39]

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Of course, Stu. So 041 in a sense the enrollment for, they said, is a little bit trickier, right, because it is a placebo-controlled study and we are fairly successful on the markets in Europe and Latin America, for example. So there is not a lot of patients available on this core markets for enrollments. So we had to expand this to other countries like in Asia, some countries in Latin America, we are not commercially the United States. So originally some of those countries took a little bit longer to open the sites and while the patients are there and we're like very confident, enrollment is going as expected now as we communicated to EMA, it was this lower to start. So it was not in the interests or even availability of patients, it was more starting up the sites, requirement for some of then. And to be honest, some of the countries in Europe, like that we are not present in Eastern Europe, for example, they simply didn't want to start the study because they're anticipating getting commercial Translarna during the study conducts. So all those factors we've being for EMA was not simply a submission to then and like, hey, we want 1 more year here. We've been in contact with them, we've been informing of the progress and we formally requested an extension during the renewal procedure this year. Based on the communications, we had with them before the submission and interactions, we don't believe that's going to be an issue. We believe that 1-year is going to be Plan C for us in terms of the extension. And we feel that it's going in the right direction. In the last few months with all the sides open it eaten [ph] up quite a bit and it put us in definitely not comfortable situation.

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Operator [40]

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

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Gilbert Roland Kinsey, RBC Capital Markets, LLC, Research Division - Senior Associate [41]

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This is Bert for Brian. Thanks for taking our question. I just wonder if you could speak a little bit more on building out your gene therapy, manufacturing capabilities in-house, I know you mentioned earlier that the new facility would have both adherent and suspension capabilities, but is there any more, I guess established gene therapy manufacturing program that you're kind of using as a guide or learning from? And are there any kind of timelines or milestones for this process that we could look for?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [42]

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Yes, I think -- yes, thanks for the question. I think in terms of the manufacturing, obviously when we picked our CNS gene therapy programs -- I think we thought we were pretty thoughtful from the notion of that since you're injecting directly into the region that the level of the material that would be needed are less. For example, in the case of what we're doing for AADC deficiency, it's like 2x the level and their total. So it's not like per kilogram, it's just total amount there. And so that gives us the opportunity to be able to manufacture, but at a level that we think is really quite doable. Right now we're not -- that is not meant for the facility that we'll be going into, that's going to be done by MassBio, which we've been working on that -- with them and that's going to be our commercial CMO for that. So they will be making it for the foreseeable future. In terms of the manufacturing of the facility that we have -- that we'll be going into, we think that facility is going to be -- it's obviously going to be committed to gene therapy, it is an existing biologics facility and it's an operating plan that will be -- and design probably for GMP standard. So we'll have to make some modifications for this gene therapies and we'll adapt it to that. But otherwise, I think we'll be moving in and continue to work on. Obviously, we have a set of other programs that we're doing, that includes Friedreich ataxia, Angelman and others that will be going. That will be moving in and we've started to obviously, higher, really qualified people who have expertise and experience in this region. That will help get us going within that plan. And so I think that's -- I think we're in actually pretty good shape to get that ready and go.

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Operator [43]

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Our next question comes from the line of Alethia Young of Cantor Fitzgerald.

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Eileen Connelly Maysek, Cantor Fitzgerald & Co., Research Division - Research Analyst [44]

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This is Eileen on for Alethia. Thanks so much for taking the question. So just one on AADC. Can you give us an update on where you stand with the filing preparations for that? And what the remaining steps on the manufacturing front for that program are? Thanks.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [45]

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Yes, sure. I think, we're -- in terms of manufacturing of this or where we are is obviously, we have the results that we've talked about over here for quite some time and we think they are really pretty incredible results and demonstrating the ability of these kids to go in the sense, you've seen a number of them who were basically placid children that we're capable of walking that, all the kids were able to improve. Really now we're just completing the CMC part of that and that's really just doing the comparability studies to get it all completed to fire by the end of the year. And so we -- right now that we think we're on track for that to be able to complete that. So there a BLA AADC will be submitted by the end of the year. So we -- in essence, we feel good that the everything's on track, including the manufacturing to allow us for the BLA.

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Operator [46]

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Our next question comes from the line of Joel Beatty of Citi.

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Joel Lawrence Beatty, Citigroup Inc, Research Division - VP & Analyst [47]

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The first one follow-up on the AADC program and manufacturing. Well, could you discuss the steps that you need to take to give FDA confidence that manufactured gene therapy will be comparable to what was used in the clinical trials?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [48]

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Sure. Yes, Marcio, why don't you actually.

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Marcio Souza, PTC Therapeutics, Inc. - COO [49]

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Of course. Hey, Joe, how are you? So basically the process that we used before in the 2 other sites that produced the material are essentially the same, right? So we are using adherence (inaudible) 93 here in hyper stacks that was what is used before. Obviously that was done in the clinical level, we are looking now into commercial. So there was like a number of conversations, we had with the FDA in terms of what they expect for that, what's the product comparability like we're not changing process per se. So we are looking into the previous drug analytically being comparable to. So the 2 key steps here, I would say missing those obviously are number of things that being done. But the two is -- one is analytical methods to commercial grades, release specs that we discussed with the FDA being finalized and testing the batch we've been producing, getting the release batch or we call PPQ1 [ph] as you are probably very familiar with getting the PPQ1 ph release using those methods, using the data that we collected to getting the certificate of analysis for the batch to include on the BLA. Everything we've been doing so far, every step. I don't know how Neil still has little -- little bit -- doesn't have a little bit of time because he's being running around and making sure everything is absolutely on time and absolutely perfect with his team. But they're working very hard doing like great job on getting every step of the way either on time or ahead of time, so we can file the BLA because this patients really need this. So everything -- so far so good. We take this very seriously. We want to make sure the product has -- the product is the quality in terms of biologics. So we're doing everything we can to get the kind of product we need for those patients. Considering the level of inventories as well that we believe are going to be adequate for a successful launch. Since we are identifying patients every single day with AADC and we are driving for a successful launch, we're matching not only the manufacturing terms of the specs but making sure we have adequate levels for a successful launch in the United States and subsequently globally.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [50]

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And again the big picture here is that -- you didn't change the process from clinical to commercial, so there wasn't -- in terms of comparability it's really just saying, you have the same materials from the same way you made. So almost like a transfer of protocol rather than a different way of doing it. So we feel pretty good that we'll be able to complete this and get the BLA by the end of the year.

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Joel Lawrence Beatty, Citigroup Inc, Research Division - VP & Analyst [51]

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Got it. And thanks for that. And then a clarification question on Translarna revenues, they were down this quarter compared to the first quarter of '18, is that driven by volumes or is there a pricing component there?

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Marcio Souza, PTC Therapeutics, Inc. - COO [52]

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Yes. There is no pricing components there, that's mostly some orders like in Q4 that came like for Q1 and some timing of orders in Q1 as well. And new patients who are getting are younger, so the -- like average price per patient is a little bit lower as well. So it's more a mix, I would say then actually the absolute price of the drug we're being able to keep pretty good stable international price.

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Operator [53]

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Thank you. At this time, I'd like to turn the call back over to our CEO, Stuart Peltz, for closing remarks. Sir?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [54]

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Thank you. The remainder of 2019 brings some major milestones for us and this includes submitting the first gene therapy BLA for AADC deficiency, the SMA NDA by Roche and the launch of the Tegsedi and Waylivra in Latin America that we've been discussing. Where we are following through on our vision of building a fully integrated biotech company addressing rare disorders worldwide, we look forward to sharing the progress of the Risdiplam for SMA next week and I thank you for joining the call today.

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Operator [55]

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Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may disconnect your lines at this time.