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Edited Transcript of PTCT earnings conference call or presentation 6-Aug-19 8:30pm GMT

Q2 2019 PTC Therapeutics Inc Earnings Call

South Plainfield Sep 11, 2019 (Thomson StreetEvents) -- Edited Transcript of PTC Therapeutics Inc earnings conference call or presentation Tuesday, August 6, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Emily Luisa Hill

PTC Therapeutics, Inc. - CFO & Treasurer

* Marcio Souza

PTC Therapeutics, Inc. - COO

* Stuart W. Peltz

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

* Timothy Dyer

PTC Therapeutics, Inc. - Chief of Staff to the CEO

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Conference Call Participants

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* Alethia Rene Young

Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research

* Eric William Joseph

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

* Gilbert Roland Kinsey

RBC Capital Markets, LLC, Research Division - Senior Associate

* Joseph John-Charles Thome

Cowen and Company, LLC, Research Division - VP of Healthcare

* Martin Douglas Auster

Crédit Suisse AG, Research Division - Research Analyst

* Peter B. Kim

Barclays Bank PLC, Research Division - Analyst

* Raju Yashaswi Prasad

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

* Shawn Michael Egan

Citigroup Inc, Research Division - Senior Associate

* 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 second quarter corporate update and financial results conference call. (Operator Instructions) As a reminder, this conference maybe recorded. I would now like to turn the call over to your host, Chief of Staff to the CEO, Timothy Dyer. Sir, you may begin.

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Timothy Dyer, PTC Therapeutics, Inc. - Chief of Staff to the CEO [2]

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Hello. Good afternoon and thank you for joining us to discuss our 2019 second quarter corporate updates and financial results. Joining me on today's call is our CEO, Stuart Peltz; our Chief Operating Officer, Marcio Souza; and our Chief Financial Officer, Emily Hill.

Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. Please take a moment to review our slide on our simultaneous presentation, which contains our forward-looking statements. Our actual results could materially differ from these forward-looking statements as any and such risk can materially and adversely affect our business and results of operation. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent quarterly report on Form 10-Q and annual report on Form 10-K filed with the Securities and Exchange Commission as well as the company's other SEC filings. We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP and non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available in today's earnings release.

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

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

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Thanks, Tim, and thank you all for joining the call this afternoon.

Over the second quarter, we made important progress growing the DMD franchise around the globe. In addition, we have increased the franchise value this quarter by expanding the Emflaza label to include 2- to 5-year-old patients. Furthermore, following approval of Translarna in Brazil, we completed an annual contract with the Ministry of Health to provide Translarna to patients. We continue advancing the therapies in our pipeline with 2 programs on track to be submitted to regulatory authorities by the end of the year, including an NDA for risdiplam, a small molecule identified from our splicing platform and a BLA for our first gene therapy product for the treatment of AADC deficiency.

Moving these clinical programs to commercial-stage products reflect our continued execution of the 5-year strategic plan that we described last year. This vision elucidates PTC's mission of bringing differentiated therapies to patients suffering from rare disorders with limited or no treatment options. By fulfilling this mission, we will be creating value for all of our stakeholders.

One key pillar of our strategic plan is to continue to build a robust diversified orphan drug franchise. We believe that one of PTC's key differentiators is our ability to work across multiple scientific platforms to bring orphan products to patients in need of new treatments. Our products and innovative programs currently span across 5 core platforms, including nonsense mutation read-through, alternative splicing, gene therapy, antisense DNA technology and on oncology. We intentionally sought to develop products against targets with differentiated mechanisms of action that allow us to diversify our pipeline, ensuring that we bring innovative products to patients with high unmet medical needs.

I'm very proud of the team's execution of the strategic plan. Because of these efforts, we are now in the position to have 4 products launches over the next year: risdiplam for SMA; TEGSEDI for hATTR; Waylivra for FCS; and our gene therapy product for AADC deficiency. In addition, there is potential for a U.S. approval of Translarna for DMD 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 in excess of $1.5 billion in potential revenues by 2023.

Our growing commercial infrastructure was strengthened over the second quarter. Importantly, we have started to see early access sales of TEGSEDI in Latin America, bringing patients the benefit of in-home injections to treat polyneuropathic hATTR. Because this rare disorder has a Portuguese ancestry, Brazil is one of the largest market with an estimated 5,000 patients. We know from market research these patients have a high degree of unmet medical need and TEGSEDI offers important therapeutic benefit. To bring therapy to patients as quickly as possible, we have submitted the application for TEGSEDI registration in Brazil and expect to receive this by the end of the year.

We also made significant progress in Brazil for Translarna. As I mentioned on the last call, Translarna received regulatory approval in Brazil in the second quarter for nonsense mutation DMD patients over 5 years of age. Having received the approval, we have now completed our negotiations for an annual contract to sell directly to Brazilian Ministry of Health. This contract and the ANVISA approval will allow for broader patient access in Brazil.

As I mentioned earlier, we also expanded Emflaza access to patients in the second quarter. The FDA granted our Emflaza label expansion for patients 2 to 5 years old. This is critical as treating patients earlier can preserve muscle mass and delay loss of ambulation. Multiple publications from clinical studies as well as long-term natural history data show that Emflaza is the superior product compared to prednisone.

Our DMD franchise continues to produce robust revenues and provides a strong base in which we are continuing to grow the business. We are reporting that the DMD franchise revenue was approximately $85 million in the second quarter. We remain confident in our DMD revenue guidance of $285 million to $305 million for full year 2019.

The teams have also been working hard to advance our clinical programs. We have been preparing the BLA for our gene therapy product to treat AADC deficiency and are on track to submit the BLA this year with a potential approval next year.

We are also excited to report that Roche expects the risdiplam NDA to be submitted by the end of the year. Roche oversees the risdiplam NDA, and we are supporting this effort. Risdiplam results were showcased at 2 medical meetings this quarter, the American Academy of Neurology meeting and the Cure SMA meeting. KOL feedback was overwhelmingly positive with increasing support for the need of an oral therapy with ease of administration and broad tissue distribution. We believe risdiplam will be the most competitive therapy in the SMA space.

The SMA program was the first project demonstrating that small molecules targeting the splicing apparatus to modulate gene expression can selectively or specifically change the course of disease progression. We are the leaders of the small molecules splicing modulator field. Discovering the first small molecule drug to affect SMA splicing that will be submitted to the FDA for approval is something that we are all proud of accomplishing. It is an important achievement. We have also investigated risdiplam's mechanism of action, which has been productive and incredibly valuable. We have synthesized these efforts to create a splicing platform that we have utilized to discover other potential small molecule splicing modulators to treat diseases.

Moving forward, we intend to substantially increase our focus on the splicing platform with the objective to generate several new transformational therapies for patients. Our unique understanding of the splicing mechanism and how it can be modulated by small molecules is a key competitive advantage that we are working hard to continuously improve. We have already produced another candidate within the platform for familial dysautonomia or FD for short, which is expected to enter the clinic soon and we anticipate entering the clinic next year for Huntington's disease. But the work does not end there, and we intend to generate a significant number of drug candidates using the splicing platform in the coming years.

Splicing modulation is expected to be a key source of innovation and value for all our stakeholders. Like risdiplam both the FD and HD molecules have the potential to demonstrate rapid changes in RNA and protein levels in the blood and other tissue, allowing the ability to show an early proof of concept next year. You may recall that for the SMA molecules, we showed that increases of protein levels were observed in the blood and reflected its clinical activity in the CNS.

Let me turn now to another strategic priority for PTC, our gene therapy platform. Aligned with our strategic imperative to advance the gene therapy portfolio and infrastructure, we are proud to report that PTC has signed a long-term lease agreement with Bristol-Myers Squibb Company under which we gain access to approximately 185,000 square feet of space. This includes an existing state-of-the-art biologics production facility and supporting research and operations buildings on the BMS campus in Hopewell, New Jersey. We plan to further develop the biologics facility to support gene therapy production and also plan to move our research operations to a newly renovated building on the same campus.

The buildings we are leasing are located on an existing BMS property of over 1 million square feet, which has been transitioned to a multitenant research and development campus. The existing GMP suites on this site were recently renovated and will be used to produce material to serve multiple preclinical and clinical gene therapy programs. This adds to our current preclinical production capacity in Bridgewater, New Jersey. These efforts underscore our commitment to our internal gene therapy program.

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

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

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Okay. Thanks, Stuart.

We're very excited with the results in the first half of the year and remain confident about the full year performance. I'd like to start by reviewing some of the key business dynamics for our commercial portfolio.

So far, 2019 has been the strongest commercial performance in the history of PTC. It's especially humbling to be in the position of delivering 4 distinct therapy for rare disorders, all with high medical unmet needs. We are proud to be delivering differentiated therapies for thousands of patients globally.

Let me start by reviewing Emflaza, the only treatment approved in the United States for all DMD patients older than 2 years of age. Demand for Emflaza continues to grow, and we have seen compliance of patients on the drug of around 90%. To date, more than 400 physicians prescribed Emflaza, and our focus remain on the continued growth for the brand, including leveraging new data on differentiation. We expect the continued growth to come mainly from patients that might have decreased dose to manage safety, while sacrificing efficacy with prednisone as well as expanding into segments that might not be as engaged or have equal access to standard of care in the past.

Another area of growth is a recently approved label expansion for Emflaza. The promotional launch is going well, with the focus on updating payer policies and educating health care professionals on the benefit of early intervention. As noted last quarter, we have switched to a new specialty pharmacy in the U.S. and expect temporary operational inefficiencies to be resolved by the end of the third quarter.

Now focusing on Translarna. Our ex-U. S. business remains very healthy, with organic growth of patients in all regions. We have entered the fifth year of Translarna after the initial approval in Europe. At the time of the approval, we have established a study, STRIDE, aiming to collect long-term effectiveness of Translarna in nonsense mutation commercial patients treated in a real setting. We are delighted with the results coming out of STRIDE, including benefits in ambulatory and nonambulatory patients. This data for more than 200 patients have now been presented at several congresses, demonstrating significant delays in loss of ambulation and improved ventilatory function when compared to match natural history controls.

Additionally, we have received a significant order in the second quarter from the Brazilian government following the approval of Translarna by ANVISA. The number of patients identified in Latin America continue to grow and we continue to work with the payers worldwide to provide Translarna broadly to patients in need.

Supporting the DMD community globally has been our very fabric for many years. We have initiatives for both prescribers and patient groups to advance the needs of DMD patients. Our STRIVE Award for patients and patient advocacy is in its fifth year and we have received more than 30 qualified applications which will support better standard of care for patients globally.

Moving on to TEGSEDI and Waylivra. We have seen the first patient in Latin America for TEGSEDI and first prescriptions for Waylivra. We're excited with the potential of both products and our ability to leverage PTC's infrastructure and knowledge base. TEGSEDI is expected to be approved by ANVISA in the following months which would trigger pricing and access negotiations with the government. The patient care programs, including our nurse network support is in place in all key countries to support this launch. We are working closely with Akcea to review the recent clinical results for Waylivra in familial partial lipodystrophy or FPL to determine the potential commercial strategy in Latin America.

Now switching gears to gene therapy. As we approach the AADC deficiency BLA submission later this year, the teams are busy finding patients and preparing the ground for a successful launch. In terms of patient identification, our global large-scale screening programs continue to roll out to all targeted regions and countries. For instance, we have recently agreed to partner with a key hospital in Germany to initiate a pilot newborn screening project in more than 90,000 newborn screens using the [3OMG] method. It's an important initiative to realize our long-term vision to include AADC deficiency in newborn screening panels globally.

In the U.S., the protocol-driven AADC deficiency screening in cryptogenic cerebral palsy will start screening patients this quarter and the nonprotocol screening systems are in place globally.

On the educational front, we are busy providing resources to physicians and caregivers to identify and provide best care for AADC patients, including a series of webinar, specifically targeting increasing diagnosis in AADC. We have also requested a specific ICD-10 code for AADC deficiency, which we expect to be accepted. This will allow for better follow-up of patients in the future.

Moving to some key clinical development updates, first on ataluren. We have finished enrolling in Study 045, our dystrophin assessment study, which, if positive, would support the resubmission of the Translarna NDA in the United States for nonsense mutation DMD. With the enrollment now complete, we expect the results in the first half of next year. As previously reported, we have requested a reexamination for the nonambulatory label expansion in Europe, and our tentative date for an opinion is in October. And we are working diligently on the resubmission to start the documentation for the European Medicines Agency.

For our AADC gene therapy, on top of the preparations for the BLA submission later this year, we have received approval for our pediatric investigation plan in Europe, which is a critical step towards the market authorization application submission. Our FA program readiness is evolving well, and we have selected Emory as the first site for the initial trial. Since this is the first time a gene therapy will be delivered to FA patients into the cerebellum, it's key that we assess in this trial proper dosing and safety. But at the same time, we intend to assess both imaging and functional end points. Because this is an open label study, we would expect to report on progress for the first few patients in late 2020.

These are exciting times for PTC as we continue to deliver on our therapies to support the rare disease patients.

I'll now hand the call over to our Chief Financial Officer, Emily Hill. Emily?

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Emily Luisa Hill, PTC Therapeutics, Inc. - CFO & Treasurer [5]

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Thanks, Marcio.

I'm happy to be joining the call today for the first time in the CFO capacity. It's been a great experience to be part of PTC's growth in the last 5 years as we've developed from an R&D stage company to a global commercial company still driving innovative R&D. I am eager to continue to be an integral part of our next growth phase as we anticipate submissions approvals and subsequent launch of our first gene therapy product and the advancement of several R&D programs.

As you know, our second quarter press release was issued a short while ago which summarizes the details of our financial results for the second quarter of 2019. Please see that release for further details.

I'll start with a few comments on our financial performance in the quarter and then reiterate our guidance for the full year 2019. Starting with our top line results.

We reported $85.4 million in combined net revenue across our commercial portfolio in the second quarter of 2019 compared to combined revenue of $68.1 million for the second quarter of 2018.

Translarna net product revenues were $57.8 million for the quarter. This compares to $47.8 million in the second quarter of 2018. This growth includes the expansion of Translarna ex-U. S., including regulatory approval and an annual contract with Brazil. For Emflaza, we reported net product revenues of approximately $27.6 million for the second quarter of 2019 which compares to $20.3 million reported in the second quarter of 2018. We are working towards establishing Emflaza as the standard of care for all patients in the U.S., and are happy to be able to bring Emflaza now to patients as young as 2 years of age.

Continued growth of the DMD franchise and the contract with Brazil for Translarna gives us confidence to reiterate our 2019 DMD franchise revenue guidance of $285 million to $305 million. We have also outlined the opportunity for our pipeline to generate potential combined revenue in excess of $1.5 billion by 2023.

Non-GAAP R&D expenses were $54.5 million for the second quarter of 2019, excluding $5.5 million in noncash stock-based compensation expense compared to $28.7 million for the second quarter of 2018, excluding $3.9 million in noncash stock-based compensation expense. The increase in R&D expense reflects our strategic investment in advancing the gene therapy platforms, splicing programs and other research programs as well as the advancement of the clinical pipeline.

Non-GAAP SG&A expenses were $43.8 million for the second quarter of 2019, excluding $5.4 million in noncash stock-based compensation expense compared to $29.4 million in the second quarter of 2018, excluding $4.1 million in noncash stock-based compensation expense, reflecting continued investments to support our commercial activities, including expanding our commercial portfolio.

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 noncash stock-based compensation expense of approximately $35 million.

Net loss for the second quarter of 2019 was $41.8 million compared to a net loss of $9.5 million for the second quarter of 2018.

Cash, cash equivalents and marketable securities totaled approximately $363 million at June 30, 2019, compared to approximately $227 million at December 31, 2018. We are proud to have built a global biotech company that is in the financial position to continue to execute on our long-term strategy.

I'll 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 Raju Prasad of William Blair.

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [2]

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Just a quick question on revenue guidance for 2019. I think you guys did $140 million this year. I'm just trying to figure out with the label expansion and Brazil what are you kind of expecting to get to the midpoint there from those new growth drivers.

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

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Thanks for this call. Emily?

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Emily Luisa Hill, PTC Therapeutics, Inc. - CFO & Treasurer [4]

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Yes. Thanks for the call, Raju. We are happy to be reiterating our revenue guidance for 2019 of $285 million to $305 million for our DMD franchise. That reflects the anticipated Brazil order for current patients' underlying demand. It does not contemplate the expansion of 2 to 5 year olds in the Emflaza label as that is a fuller process.

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Raju Yashaswi Prasad, William Blair & Company L.L.C., Research Division - Senior Research Analyst [5]

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Great. And just one on kind of your small molecule platform. Can you just talk a little bit about some of the learnings that you had with risdiplam and the prior 4-molecule splicer that you're going to take forward?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [6]

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Sure. Yes. So for the -- in the risdiplam -- obviously, we've been doing this for some time, and I think we've learned in terms of thinking about mechanism of action and how to focus on that. And over the years we've built quite a proprietary library of small molecules that we think have -- that give us a unique advantage in being able to target splicing. And then also we've learned a bit about in terms of the -- of the site, the first site that we're hitting especially in like risdiplam, is a U1 binding site that has -- that has mismatches there. Now as you probably remember maybe from some of our calls, most of the time it's a perfect interaction between the U1 and the 5 prime splice site but in SMN, it's not. And that's why it's leakier and our molecule in a sense increases the interaction to allow the splicing efficiency to occur, and we've learned a lot about that interaction that allows us in the sense to do a high throughput screen that lets us then morph to other targets as well.

And as a consequence of that, we've been able to move quite rapidly for familial dysautonomia is a good example. So a lot of times when you did it once, you ask yourself, can you do it multiple times, and this is again a clear example of getting FD to a second molecule that's specific for that particular mutation. And then we've gone on to do it on a third time into a late-stage chemical optimization for Huntington's disease. So from a big-picture perspective, I think you could see that what you'd like to be able to do is use a platform to be able to get multiple compounds out of that. And you see that we are able to use our knowledge to understanding the mechanism of action to actually move into multiple other targets and move them quickly through the discovery process into the clinical development.

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Operator [7]

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Our next question comes from Alethia Young of Cantor Fitzgerald.

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [8]

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Congrats on the quarter too. Questions for you. Can you talk a little bit more about AADC deficiency and kind of what's going on with the manufacturing there and the progress toward getting an approval? And then I was just curious if you guys might give an update on how many patients you've found with AADC deficiency. I think the last time we got an update was on January.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [9]

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Thanks for the questions. Yes, we're actually really quite excited about moving AADC deficiency. As we've said, all things are on track for submitting a BLA this year for a potential approval next year. And obviously, as you know, the key thing is on getting manufacturing completed and done. And Marcio, do you want to talk a little bit about that?

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Marcio Souza, PTC Therapeutics, Inc. - COO [10]

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Sure, sure. Absolutely, yes. So a couple of steps here, right, towards the submission of the BLA and hopefully the approval next year subsequent to that. So the manufacturing group continue to work very hard on all these steps that we agree with the FDA towards the -- all the batch that have to be made before the submission, obviously the comparables on those, making sure all the analytical methods is validated in accordance to the discussions we had with the agency, and then all the other parts of the BLA. We do expect to soon be meeting with the FDA in relation to the presubmission for the NDA itself which is a procedural step. It's normally taken on things like that, where it's more structurally and administratively how the submission is going to be going.

But from all the aspects, in general, it's all finalization of documents right now other than on the manufacturing that we're still working towards the release of the commercial batch based on the agreements we have with the agency. But since our last updates, that is -- nothing really major or even minor to that extent that happened that is not in the plan. Like, it's all sequential at this point in time. I wanted to make sure we not only manufacture to the specs that we agreed with the agency but also have enough inventory for the time of launch. And the technical operations group is working really hard with that together with and under the supervision of our quality team because we know how important it is to make sure our process are not only efficient but compliant as well.

In terms of the patient finding initiatives, as I mentioned on the prepared remarks, there is a number of things we are doing. One of them is what we call nonprotocol screening and that's basically giving physicians the ability globally to screen the at-risk or other patients that they might have misdiagnosed before with the DGC gene or the 3-OMD [matches] in the blood. This is going very well, and we've been identifying patients like pretty much every week and progressing and are going to give an update in the future on the exact numbers.

The second process, which we believe to actually yield more patients on the identification, is the protocol driven and that has to go through the IRB approvals, the contracting phase and up to a few weeks ago, this has been a little bit slow in a sense that you had to go for all that steps and make sure they're all accomplished. We're now at the process to start that and we expect to have the first patients screened in September. So our expectation is that later in the year we would be able to provide an update on the exact numbers.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [11]

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And I think the work has been exciting and gratifying in that -- just to remind you, we found there is over 80 different alleles that we've identified, which really gets tied to the notion when people thought there was a founders' effect. So we get more and more convinced every day on the number that we had told you previously about 5,000 patients commercially so -- that are commercially viable. So we're excited to keep moving this forward. We're excited that the -- our process thus far in the manufacturing is moving along, and we anticipate the submission with the completion of the manufacturing this year.

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Operator [12]

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

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Gilbert Roland Kinsey, RBC Capital Markets, LLC, Research Division - Senior Associate [13]

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This is Bert on for Brian. I had a couple on the Friedreich's ataxia program. Can you talk about any preclinical, maybe functional data that you have to complement the frataxin expression data you've shown in the porcine and nonhuman primate models that gives you confidence that the level of expression you're able to achieve with the gene therapy would translate to functional improvements? And then also related to that, will you be building -- will the process of building out your own gene therapy manufacturing capabilities to produce material for a clinical study be rate limiting for being able to start the clinical trial in FA patients?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [14]

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Sure. Maybe let me start and then I can pass it on. So the FA program, as you alluded to just to remind everyone else on the call, we're able to obviously inject into the cerebellum and be able to get a substantial production of frataxin there to the levels that we would think would be -- obviously to levels that we think would obviously change the course of the disease. So we're happy with the levels. There aren't any great models in the sense that we have that would be able to do the functional comparisons, but we feel pretty confident that we'd be able to bring it to the right place and that -- in our discussions with all of the key opinion leaders, would anticipate that would have effects as a consequence of that. In terms of the manufacturing, we're on target in terms of manufacturing, getting ready to get manufactured for the IND. That's ongoing now. We're not -- obviously, as I think we mentioned, we have a site that we will be leasing. But this has been done initially at a different facility that we may ultimately come back later if the facility opens to produce it there.

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Operator [15]

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Our next question comes from the line of Gena Wang of Barclays.

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Peter B. Kim, Barclays Bank PLC, Research Division - Analyst [16]

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This is Peter for Gena Wang. So I guess maybe 2 quick couple of ones for me. For TEGSEDI, how should we think about I guess reimbursement decision process post approval? And how would the pricing look like relative to the U.S.? And I guess relatedly, like how should we think about revenue contributions from distribution first few quarters?

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Marcio Souza, PTC Therapeutics, Inc. - COO [17]

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Yes. So thank you so much, Peter, for the questions. So first on TEGSEDI and what do we expect after the approval, which is upcoming from ANVISA. Obviously, that is 2 process, right, as we've described before. One is the individual patient's requests that would be called the name patient sales, and that should continue to be requested by the patients and approved individually. And you might have seen that we got the first patients in the region reimbursed, which we feel really proud off. And that's going to probably be anywhere between the U.S. price and the European price based on the negotiations with the government.

Now we have submitted for, as is requested now by the regulation there, a price to be commercialized in the country. We fully expect that there's going to be some negotiation once it's approved and then there is a cap what it's called. That is a discount that is applied on top of that of around 20%. So it's going to be a reduction on the overall price that is normally anchored to the United States FSS price. So there is some reduction there. It's going to be accounted for. We fully accounted for that in our internal projections on the model in the guidance for 2023 that we gave of $150 million for the product. Identification of patients and the lining up has been quite positive. So we see the launch late this year and next year to be, while patient by patient in this first phase to be quite productive and positive for PTC.

In terms of the contribution of the region for the overall mix of the company, as Emily mentioned, we did receive a large order for Translarna which we're extremely proud of because it means that patients can have continuity of access, and it's for the entire year. So we know that it becomes a little bit more irregular, although still fairly lumpy in terms of the size of the orders, slightly irregular in terms of patients receiving it. It's an important region for us, but it's not the biggest region in the world for Translarna. So again, trying to balance the general demand globally, while giving the emphasis there of all patients being on drug.

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Peter B. Kim, Barclays Bank PLC, Research Division - Analyst [18]

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Sorry, a quick follow-up if I may.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [19]

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Of course.

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Peter B. Kim, Barclays Bank PLC, Research Division - Analyst [20]

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When should we expect any updates from like part one and Part 2 of FIREFISH and SUNFISH?

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

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So the updates -- so we'll be doing that at subsequent meetings for Part 1 and -- Part 1 of each of FIREFISH and SUNFISH at the World Muscle -- WMS Meetings that will be -- we'll be presenting the continuation of that for Part 1. Part 2 will be next year sometime.

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Operator [22]

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Our next question comes from Martin Auster of Credit Suisse.

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Martin Douglas Auster, Crédit Suisse AG, Research Division - Research Analyst [23]

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Maybe just to follow up on the last theme there. Is there any plan to present or kind of publish any of the pre-clinical data from the Huntington's splicing program in the balance of this year or ahead of the IND next year?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [24]

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Thanks. So we've been moving forward on the Huntington's program. We anticipate a clinical candidate this year with it going into the clinic next year. We're always careful in terms of timing of when we publish the work on Huntington's because of the structure and we take our time in terms of putting out the structures. So the publications of those are undefined as of that. But we'll probably be talking either the Science Day or Analyst Day further on about Huntington's so that you get more information and more details about what we're doing.

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Martin Douglas Auster, Crédit Suisse AG, Research Division - Research Analyst [25]

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Are you contemplating an Analyst Day later in '19 or sometime next year?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [26]

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Sometime next year.

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Operator [27]

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Our next question comes from Vincent Chen of Bernstein.

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Vincent Chen, Sanford C. Bernstein & Co., LLC., Research Division - VP [28]

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Congrats on (inaudible). Another follow-up on Huntington's. I was wondering if you could provide a little bit more detail and color on the status of the preclinical Huntington's program and what's left to be done before you can get into the clinic. I guess a little bit more on where specifically are you in the lead optimization process, what are the properties you're focused on then I guess up maybe pointedly are you at a point where you have compound clusters or compounds that appear adequately specific for the targeted pseudo exon? Or is there more to be done on the specificity front and reducing risk off-target effects?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [29]

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Thanks, Vincent, for the question. There's a lot of chemistry that's been ongoing. We're in the relatively late stages and we anticipate picking of a clinical candidate. Now a lot of it is moving it through the screening process, the safety/toxicology studies that we do. And that just takes some time. So we have a set of small set of compounds from a scaffold that we've identified, that we like, that we anticipate where the clinical candidate will come from. And it's just now going through the myriad of assays that are required when you think about sort of what I always call the underbelly of what you got to do for getting a small molecule through an IND process. There's just a lot of testing to make sure for having understanding of the chemical properties and then our own internal safety/toxicology that allow us to define what the threshold and window are. Marcio?

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Marcio Souza, PTC Therapeutics, Inc. - COO [30]

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Yes. Yes. Of course. And Vincent, just to add a little bit to everything that Stuart just said, right. So specific properties that we are looking at these compounds. Obviously, distribution in -- all these structures of the CNS is important for us. We see that as a shortcoming of the other approach to really having the reduction of the Huntington and specifically on the [Gibbs] structures. So that far is important. But at the same time, there is a lot of residual disease peripherically. So wants to make sure that is a distribution peripherically as well. So being an oral molecule or molecules, as I'm going to explain a minute, that's quite important.

Stuart mentioned that we have a number of viable scaffolds that we've been working on from then. At this point in time, while we -- or at least since we're going to GLP tox hopefully soon. We have multiple viable candidates and we intend to continue with them all the way potentially to the clinic since safety margins and even the ability of them to penetrate different issues or to have different properties on the spectrum of the disease. Since we know the Huntington is not necessarily just one manifestation but that is like different types of patients that might benefit from all different profiles. So very extensive approach. We have like really dedicated and large number of people working on this. Expect to declare one or more candidates this year and beyond to clinic next year.

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Operator [31]

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Our next question comes from Joel Beatty of Citi.

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Shawn Michael Egan, Citigroup Inc, Research Division - Senior Associate [32]

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This is Shawn Egan calling in for Joel. I have 3 today. My first one is on the heels of today's positive Phase III Waylivra to the FPL, just try to frame any early work you've done on (inaudible) opportunity there and (inaudible) a bit as well through your Waylivra sales force in any way?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [33]

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Marcio?

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Marcio Souza, PTC Therapeutics, Inc. - COO [34]

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Yes. Thanks, Shawn. That's a great question, and we're super proud of the work Ionis and Akcea has done here to help this community, and with the results that they sharing today and we shared as well. The opportunity basically doubles for us in Latin America when we add both FCS and FPL together. It's a perfect overlap. It's the same physicians diagnosing this. Our screening and monitoring programs are already contemplating. One of the reasons -- and we alluded to that before, but maybe not so explicitly -- that we did not submit to ANVISA or other regulatory agents because we were waiting for the readout of this trial to submit a broader label with a bigger indication, which we intend to do. We're going to be reviewing -- we'll review the results -- preliminary results with the Akcea team before today's disclosure. We share their view and enthusiasm in relation to that and going to review the full results as soon as that is available and then file for the submission in Latin America. I think what you can say right now is that patient identification was always in our radar screen. We're going to continue to look into them. We have a number of cases already they're being reported to us, and you're going to definitely try to get these patients the treatment they deserve.

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [35]

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And actually maybe from a point of view -- just based on what we've talked about before in terms of the vision in the 2023, the numbers that we gave previously did include FPL as part of that. So that's something upside as well.

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Shawn Michael Egan, Citigroup Inc, Research Division - Senior Associate [36]

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Great. Yes, completely makes sense. So Marcio, you mentioned initial newborn screening efforts in Germany. Have you had any initial discussions with the secretary of Advisory Committee around getting AADC deficiency add as measure [thereof]?

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Marcio Souza, PTC Therapeutics, Inc. - COO [37]

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Yes. So more generic discussions. To be honest, Shawn, a disappointing time because the methods that we are validating now internationally like using the blood sample and being widely available has not been tested for NBF. Yes. So one of the key things we're trying to do with this large hospital in Germany is to not only screen these babies and provides a potentially like saving diagnosis and treatment for them, but also to make sure that this test work at scale so we can bring to other places like the United States. So all these conversations are ongoing. And as I mentioned, again, on the remarks, it's part of a broader strategy to make sure at the time of launch or shortly thereafter, we have an available platform for newborn screening that can be readily deployed.

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Shawn Michael Egan, Citigroup Inc, Research Division - Senior Associate [38]

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Great. And my last question is that, can you provide any update on the enrollment for the pre-symptomatic RAINBOWFISH study? And kind of when we're evaluating those dataset, is it more important to kind of show comparability to SPINRAZA and Zolgensma? Or are there other points of differentiation that are important to consider?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [39]

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So I think we'll probably be giving an update on RAINBOWFISH next year. From the comparability, I think obviously the asymptomatic patients, one would anticipate maybe having improvements and that's been seen within the data. We'd expect results like that as well that the patients relatively improved. Obviously, we think that the advantage of being able to pass not only get to the blood-brain barrier but get into all of the tissues is an advantage, not only early but also as the babies mature and the blood-brain barrier no longer is open, that still get the benefits of a molecule that can both go to CNS as well as distribute into other tissues.

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Operator [40]

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Our next question comes from Eric Joseph of JPMorgan.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [41]

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Maybe just a biology question for the Huntington [neural process] the splicing program. If I'm understanding the mechanism correctly, you'd be promoting those -- the turnover of the new [Neanderthal type] antigen protein. So I'm just wondering if you could speak a little bit of the native function of Huntington and sort of how -- from a biological perspective, how wide of a therapeutic window you'd anticipate with this approach. And in preclinical, are you able to analyze the relative turnover of the mutant versus the wild type version of the protein? And I guess if there are any different safety considerations or meaningfully different safety considerations with this indication versus the approaches that are directly administered to the CNS?

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

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Yes. Thanks for the question. So as you know, actually, right, we are through a pseudo exon label to promote the reduction of the Huntington's protein. I think it's widely believed that one could see efficacy by reducing it approximately 50%. We're able -- obviously, the goals are lower but -- it hits both wild type and mutant forms of that. And so -- but we think that one could certainly establish a knockdown of 50% without having any detrimental or toxicity. At least that's I think what we all believe is true, and we'll be able to monitor that as well. So I think that's where we are within our thinking of what we'll be able to do in terms of the clinic, to be able to get at least at a 50% reduction.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [43]

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Got it. That's helpful. And maybe just a follow-up here if I could on risdiplam. It sounds from Roche's commentary earlier and also on your PR tonight that an MAA filing would be contingent on at least some part of the Part 2 data from the ongoing studies. Can you clarify whether EMA is interested in Part 2 [being] different, both SUNFISH and FIREFISH? Or are they prioritizing one? And I guess as it relates to SUNFISH, can you just talk a little bit about your expectations from the randomized portion of that study, what magnitude benefit in MFM32 the trial is powered to detect what would be regarded as clinically meaningful?

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [44]

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Sure. Well, yes. So -- I think as Roche has recently discussed and actually in recent interactions with the EMA, that there was a change of heart in that they wanted to see Part 2 of both FIREFISH and SUNFISH. So as we've said previously, the SUNFISH data will be completed by the end of this year. That study as well as the FIREFISH early next year, all that data then will be compiled. There was no change, just to be clear, from any discussions from the FDA in terms of putting in based on Part 1 for both FIREFISH and SUNFISH. And Marcio want to take the --

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Marcio Souza, PTC Therapeutics, Inc. - COO [45]

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Sure, sure. And just to clarify, right, direct to your question. So we expect both submissions to include -- the submissions to include both Part 2 for SUNFISH and FIREFISH. The main reason on the discussions with the EMA is just how close to the completion of the trials it is, so they just want to make sure that they see -- that there is nothing really unusual here, I would say. In terms of the power of that trial, to your question -- so just to remind you, the 2 to 1 randomization, originally planned to [186] patients. The expected point estimate change between placebo and the active arm was 3 points with a 6, so the deviations of a half, standardized measure there. This is less than what is seen in the Part 1 if you were to look into the change compared to natural history. So if you're really good since this group is expected to be less heterogeneous than the original group was in the Part 1 of the trial and we've seen such impressive results so far, so we feel like quite positive about the results.

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Operator [46]

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Our last question comes from the line of Joseph Thome of Cowen & Company.

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Joseph John-Charles Thome, Cowen and Company, LLC, Research Division - VP of Healthcare [47]

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Congratulations on the quarter. First on Translarna in Brazil. I was curious if you can give us a little bit more information maybe on ordering patterns there and the size of those orders. There was a posting online suggesting the size was around $45 million. Can you give us any indication of how this is going to be booked and maybe the frequency there? And then second on risdiplam, for the initial data from the RAINBOWFISH study, are the FDA -- will the FDA receive some of these data and do you anticipate pre-symptomatic infants may be able to be on the initial labels either in the U.S. or the EU?

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

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Great. Marcio, want to take the first?

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

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Yes. So I'll start a little bit on the pattern, then the use in Brazil and maybe and we can talk a little bit about the revenues, right? So the dispense is based on the patient consumptions and the amount of patients that are being accrued. As Emily mentioned and I mentioned on my remarks as well, this is for the current patients. It's being practiced in Brazil that the Ministry of Health does dispense to patients that are accrued throughout the year. So we expect that potentially some of those patients are going to receive and a new request is going to be made periodically. I think what it does to us is like, that is -- there is one shipment that was made this quarter. We expect they're going to have new shipments. It is very hard to some extent for us to anticipate if this is going to be during Q3 or the beginning of Q4. But we know for sure that it is required to be done during this year since the patients use which has been pretty good in terms of compliance, they're going to require all the orders to be. In terms of the amounts of the shipments and the revenue recognition, I'm going to hand over to Emily to answer.

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Emily Luisa Hill, PTC Therapeutics, Inc. - CFO & Treasurer [50]

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Thanks, Marcio. Yes, we're grateful to be in a position of having now a formal approval from the regulatory authorities in Brazil and now an annual contract. It really demonstrates the Brazilian government recognizes the benefit for nonsense mutation DMD patients. There is an annual contract that we have now entered, and if you remember, historically we've received a large order for Translarna in Q4 of 2018, which reflected the need for a number of [months] of patients and subsequently did not receive an order in Q1. So a large segment of the annual contract was booked in Q2 and the remainder will be booked in the second half of 2019. And this gives us confidence, as I mentioned before, to reiterate our DMD franchise guidance.

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Marcio Souza, PTC Therapeutics, Inc. - COO [51]

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And then to your second question on the label for risdiplam. So the availability of data in terms of pre-symptomatic and whether not that's going to be included, it's going to depend obviously on the amount of babies that are enrolled in the trial between now and the submission, on the availability of data and the discussions with the agents during the review. So it would be premature, probably irresponsible for us as well to comment on this right now until we have that. What we know in the discussions that did happen with the FDA is that the label would be based on review of the current data for Type 1, 2 and 3, which are considered quite important since the Type 2 and 3 are vastly under-treated globally, and we see the differentiated profile operates the plan on those patients. And in overall, I believe and we all hear and concur and so does the community, so there is still remaining and maybe growing unmet needs on Type 1s considering the market dynamics that are happening every day.

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Operator [52]

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

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Stuart W. Peltz, PTC Therapeutics, Inc. - Co-Founder, CEO & Executive Director [53]

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Okay. Well, thank you all for joining the call today. As you could see, the team has been executing quite well. I'm very proud of what they've been able to get accomplished in this half year. I think it's really important for all our stakeholders to continue to build out the company that we talked about and it's gratifying to see the execution and the vision to building out a rare disorders company. So thank you for joining the call.

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Operator [54]

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