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Edited Transcript of RARE earnings conference call or presentation 6-May-19 9:00pm GMT

Q1 2019 Ultragenyx Pharmaceutical Inc Earnings Call

Novato May 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Ultragenyx Pharmaceutical Inc earnings conference call or presentation Monday, May 6, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Camille L. Bedrosian

Ultragenyx Pharmaceutical Inc. - Chief Medical Officer & Executive VP

* Danielle Keatley

Ultragenyx Pharmaceutical Inc. - Senior Director of IR & Corporate Communications

* Emil D. Kakkis

Ultragenyx Pharmaceutical Inc. - President, CEO & Director

* Shalini Sharp

Ultragenyx Pharmaceutical Inc. - CFO & Executive VP

* Wladimir Hogenhuis

Ultragenyx Pharmaceutical Inc. - COO

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Conference Call Participants

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* Allison Marie Bratzel

Piper Jaffray Companies, Research Division - Research Analyst

* Andrea R. Tan

Goldman Sachs Group Inc., Research Division - Research Analyst

* Arlinda Anna Lee

Canaccord Genuity Limited, Research Division - Analyst

* Fang-Ke Huang

SunTrust Robinson Humphrey, Inc., Research Division - Associate

* Gena Wang

Barclays Bank PLC, Research Division - Research Analyst

* Hannah Lynne Latimer

Morgan Stanley, Research Division - Research Associate

* Joseph Patrick Schwartz

SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst

* Matthew Thomas Holt

JP Morgan Chase & Co, Research Division - Analyst

* Tazeen Ahmad

BofA Merrill Lynch, Research Division - VP

* Vincent Chen

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

* Xiaodong Zhang

Stifel, Nicolaus & Company, Incorporated, Research Division - Associate

* Yaron Benjamin Werber

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

* Yigal Dov Nochomovitz

Citigroup Inc, Research Division - Director

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Presentation

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Operator [1]

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Good afternoon. My name is Jerome, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Ultragenyx First Quarter 2019 Financial Results and Corporate Update.

(Operator Instructions) Thank you.

Ms. Danielle Keatley, you may begin your conference.

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Danielle Keatley, Ultragenyx Pharmaceutical Inc. - Senior Director of IR & Corporate Communications [2]

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Thank you. Good afternoon and welcome to the Ultragenyx Pharmaceutical Financial Results and Corporate Update Conference Call for the First Quarter 2019.

We've issued a press release detailing our financial results, which you can find on our website at ultragenyx.com.

I'm Danielle Keatley, Senior Director of Investor Relations and Corporate Communications. With me today are Emil Kakkis, Chief Executive Officer and President; Shalini Sharp, Chief Financial Officer; Vlad Hogenhuis, Chief Operating Officer; and Camille Bedrosian, Chief Medical Officer.

I would like to remind investors that this call will include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act 1995, including but not limited to the types of statements identified as forward looking in our 2018 annual report on Form 10-K that was filed on February 20, 2019, and our quarterly report on Form 10-Q that will be filed soon and our subsequent periodic reports filed with the SEC, which will be available on our website, in the Investors section. These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that actual results could differ materially from those projected in any forward-looking statement. For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements as well as risks related to our business, see our periodic reports filed with the SEC.

I'll now turn the call over to Emil.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [3]

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Good afternoon, everyone, and thank you for joining us.

I will start today by providing some brief introductory remarks before turning the call over to Vlad, who will discuss the commercial performance in the first quarter of 2019. Next, Shalini will update you on the first quarter financial results. Camille will then discuss the latest progress across our clinical programs, many of which were also highlighted in greater depth during our Analyst and Investor Day last month. I'll come back at the end of these prepared remarks and close by sharing some milestones to look forward to this year.

In the first quarter of 2019, our commercialization built on the significant momentum we've established with Crysvita and Mepsevii launches in 3 major territories throughout the world. We're also looking forward to submitting a new drug application later this summer for a third product, UX007, for the treatment of long-chain fatty acid oxidation disorders. For our gene therapy platform, we saw clinical proof of concept in a second program, DTX401, for the treatment of glycogen storage disease Ia. We also successfully raised capital that will enable us to advance our gene therapy and other programs. It will also allow us to build a fully scaled GMP-compliant gene therapy manufacturing facility that will support late-stage clinical development and commercialization of our gene therapy programs. This will be a pivotal year. And we anticipate the Phase I/II data from our 2 clinical gene therapy programs and plan for our Phase III gene therapy studies that will initiate in 2020.

As we discussed at Analyst Day, we are also preparing to submit 3 INDs in 2020. We've identified the gene therapy program for Wilson disease, the mRNA program for glycogen storage disease type III and our dual-trigger program for creatine transporter deficiency programs, as our lead preclinical program is expected to reach the clinic next year.

Now turning the call over to Vlad to walk you through the commercial performance through the first quarter of the year.

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [4]

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Thank you, Emil. And good afternoon, everyone.

For the first quarter of 2019, we've continued to build on the successful launch of Crysvita in the United States. We continued to receive feedback from prescribers and patients with XLH that Crysvita has a meaningful impact on patients' lives. Over the last 11 months since launching the product, we've received approximately 1,100 completed start forms from treating physicians. By the end of the fourth quarter of 2018, nearly all clinical filed patients have successfully transitioned to commercial therapy. Going forward, we expect nearly all new patients will be naïve to prior Crysvita treatment. There continues to be a 60% pediatric and 40% adult split of patients on reimbursed commercial therapy. Approximately 490 unique physicians have now prescribed Crysvita. As this base of prescribers has grown, the number of physicians writing more than one prescription has grown proportionately, with more than 1/3 writing prescription for multiple patients. As first-time prescribers gain more experience with the treatment and the reimbursement process, we believe we will continue to see growth in the number of providers writing multiple prescriptions as well as the total number of prescribers.

Earlier this year, we received a specific J-code which has simplified the buy-and-bill process for Medicare and Medicaid patients. The payer mix as of March 31 reflects this change with 65% private payers and 35% government and other payers. As we stated last quarter, U.S. payers have published policies for Crysvita covering approximately 200 million lives. Additional payers without formal policy are approving Crysvita on a case-by-case basis, ensuring nearly full coverage of lives within the U.S. The broad coverage across all payer types has led to approximately 730 patients on reimbursed commercial therapy since launching in April of 2018. We're pleased the early U.S. launch momentum continues to generate meaningful quarter-on-quarter growth across all of these metrics.

Through the remaining 9 months of 2019, we'll continue to build out the commercial reach of Crysvita in the U.S. We recently implemented easy access to confirmatory genetic testing, independent genetic counseling and pedigree analysis programs. We believe these initiatives will help identify more patients with a confirmed diagnosis and reduce the amount of time it takes to get on reimbursed therapy as well as potentially identify family members who have XLH.

Now within the Latin American market, we're pleased that Crysvita received approval in Brazil for the treatment of XLH in adults and children in March. We also look forward to regulatory decisions from the Chilean, Colombian and Mexican health authorities this year and next. We're eager to launch Crysvita in these key rare disease markets. And we'll continue with reimbursed named patient treatments in Argentina, Brazil and Colombia, responding to multiple physician requests. Over the coming months, we'll continue working with authorities in these regions to ensure broad access to Crysvita for all patients. Reimbursement decisions in these markets can take a few years, but in the meantime we will respond to named patient requests.

Briefly turning to Mepsevii. We continue to have discussion with French, German, Spanish and Portuguese government health authorities; and look forward to additional regulatory decisions in Mexico, Colombia and Chile this year and next. We're pleased this product is currently approved in 3 major geographic regions of the world, including United States, the EU and Brazil. We're encouraged with the difference Mepsevii continues to make for patients with MPS 7 around the world.

With that, I'll turn the call to Shalini, who will provide a financial update.

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Shalini Sharp, Ultragenyx Pharmaceutical Inc. - CFO & Executive VP [5]

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Thank you, Vlad. And good afternoon, everyone.

We issued a press release earlier today that included a financial update, which I will briefly summarize.

Total revenue for the 3 months ending March 31, 2019, was $18.2 million.

Top line worldwide revenue of Crysvita totaled approximately $57.5 million. This represents the total sales across North America, Europe and Latin America, a portion of which are shared with our partner Kyowa Hakko Kirin or KHK. For the quarter ended March 31, 2019, Ultragenyx recognized total Crysvita revenue of $14.5 million. This includes $11.9 million in collaboration revenue in the U.S. profit share territory and $2.0 million in royalty revenue in the European territory. Net product sales for Crysvita in other regions totaled $0.6 million.

Mepsevii product revenue for the first quarter of 2019 was $2.7 million, and UX007 named patient revenue was $0.7 million. We also recognized $0.3 million in revenue from our research agreement with Bayer. As we have stated previously, we continue to expect revenues from this agreement to be minimal going forward.

As a reminder, we are continuing to gain commercial experience with Crysvita and Mepsevii and will not be providing financial guidance at this time. We have provided other launch metrics, including patients on reimbursed therapy, growth in start forms and unique prescribers, to help characterize the strength and momentum of our launch. We plan to provide this level of granularity only in the initial quarters of launch.

Our total operating expenses were $117.4 million for the first quarter of 2019, including research and development costs of $78.1 million. We expect our R&D costs to continue increasing over time as we advance our product candidates from early preclinical development into pivotal studies. We expect SG&A to increase over time as we support our commercial programs in multiple geographies. We also expect the split of R&D versus SG&A expense to remain fairly consistent.

Net loss for the first quarter of 2019 was $96.8 million or $1.82 per share, basic and diluted, compared with net income of $30.3 million or $0.63 per share and $0.62 per diluted share for the first quarter of 2018. Recall the net income from the first quarter of 2018 includes a $130 million gain from the sales of the priority review vouchers.

Cash used in operations for the first quarter ended -- for the quarter ended March 31, 2019, was $95.8 million, which includes adjustments for significant noncash charges including stock-based compensation expense of $20.2 million, $2.1 million in depreciation and amortization and $0.6 million due to the fluctuations of exchange rates. This is compared to cash used in operations of $89.5 million for the same period in 2018. This included adjustments of significant noncash charges, including stock-based compensation expense of $18.8 million, $6.2 million in depreciation and amortization and $4.8 million of noncash foreign currency remeasurement losses in connection with the change in the company's tax structure and fluctuations of exchange rates related to intercompany transactions.

We ended the first quarter of 2019 with $715.3 million in cash, cash equivalents and investments on the balance sheet. This includes net proceeds of approximately $330 million raised in an underwritten public equity offering which closed in March of 2019. We intend to use a portion of the net proceeds to build our own GMP gene therapy manufacturing facility, with the expectation of reducing the costs and increasing the speed with which we can execute on our gene therapy programs in the future.

I would now like to turn the call over to Camille, who will provide an update on our clinical programs.

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Camille L. Bedrosian, Ultragenyx Pharmaceutical Inc. - Chief Medical Officer & Executive VP [6]

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Thank you, Shalini. And I, too, wish everyone a good afternoon.

Starting with UX007 for long-chain fatty acid oxidation disorder or LC-FAOD. LC-FAOD is a group of genetic disorders in which the body is unable to convert long-chain fatty acids into energy. With the severity of these disorders and the high mortality rate despite newborn screening and current treatment with medium-chain triglyceride or MCT oil, we believe that new treatments are urgently needed for patients with this devastating disease. We are on track to submit a new drug application for UX007 to the FDA in mid-2019.

On the regulatory front, earlier this quarter, the U.S. FDA granted fast track designation as well as rare pediatric disease designation for UX007. Fast track designation allows for early and frequent communication with the FDA. It also enables eligibility for priority review as relevant criteria are met. We expect to hear back from FDA on priority review designation 60 days after submitting our NDA.

Moving to DTX301, our gene therapy program for ornithine transcarbamylase deficiency or OTC deficiency. OTC deficiency is an X-linked urea cycle disorder that limits the body's ability to metabolize ammonia. As you are aware, ammonia is a very potent neurotoxin. Patients with OTC deficiency build up excessive amounts of ammonia in their blood and can quickly deteriorate into full metabolic crisis, often induced by an affection. High ammonia results in neurological deficits and other toxicities, leading to hospitalizations, coma and even death.

We provided additional data from patients in the first 2 cohorts of the Phase I/II study at the 2019 American Society of Gene & Cell Therapy annual meeting and our recent Analyst Day. As a reminder, we have had 2 responders, 1 in each of the first 2 dose cohorts, and they have been followed for additional time and extensions. We reported data from 52 and 78 weeks. At these longer-term time points, these patients have maintained normalized rates of ureagenesis, continued to tolerate the discontinuation of their ammonia scavenger medications without rises in ammonia and also have liberalized their diet to include more protein. Furthermore, one of the responders had a lab-documented case of influenza, which typically would initiate a metabolic crisis. This patient was able to stay out of the hospital without experiencing an increase in ammonia levels and without needing scavenger medications. We view this experience as further validation that the improved rate of ureagenesis observed can protect a patient with OTC deficiency from a hyperammonemic crisis during an infection. The data suggests, so far, that a metabolic cure is possible for OTC deficiency with this gene therapy.

And moving to DTX401, our gene therapy program in glycogen storage disease type Ia or GSDIa. GSDIa is caused by a defective gene for the enzyme glucose-6-phosphatase alpha, resulting in the inability to allow the liver to release glucose into circulation. This could potentially lead to severe hypoglycemia during fasting or during increased metabolic stress such as infection.

We recently provided additional data on the first 3 patients in the lowest-dose cohort of the Phase I/II study. All 3 patients now have been followed for at least 24 weeks, and all are showing durable clinical responses and further improvement in their glucose metabolism as defined by time to hypoglycemia in a controlled fasting setting. At our recent Analyst Day, Dr. David Weinstein, a DTX401 investigator, professor of pediatrics at the University of Connecticut and Director of the GSDIa program at the university, shared recent observations from the 2 patients that he has treated at his center in the first cohort. His 2 patients have now decreased their cornstarch consumption even further by 76% and 91% compared to baseline. Because their cornstarch consumption is decreased so substantially, the livers also are shrinking and these patients are experiencing significant weight loss. In addition, one of the patients recently had gastroenteritis and was able to maintain normal glucose levels despite the infection. Physically, this would be a major hypoglycemia challenge for patients with GSDIa. The fact that hypoglycemia was not observed suggests that the transgene, with its normal expression control region, is able to support the patient's glucose needs despite the metabolic stresses from a gastrointestinal infection.

I will now turn the call back to Emil.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [7]

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Thank you, Camille.

I'll spend a few minutes discussing a number of important milestones in the coming months that will continue to drive our progress. And then we can move to the question-and-answer period.

For Crysvita, we expect the breadth and depth of prescribers treating both adults and children with XLH will continue to increase, and we'll update you on our progress in our subsequent earnings calls. We're also growing our commercial reach with the recent approvals in Canada and Brazil, and we are pursuing filings and expect the regulatory decisions in other countries in Latin America this year. For UX007, we are on track to submit our new drug application to the FDA in mid-2019. Submission will include a comprehensive package of data for more than 75 patients, including the company-sponsored Phase II study, the long-term efficacy and safety extension study, a retrospective medical record review of compassionate use patients, an expanded access data and the randomized controlled investigator-sponsored study showing the impact of UX007 on cardiac function.

Moving to the gene therapy programs. For DTX301 for the treatment of OTC deficiency, we expect data from our third dose cohort in mid-2019. For DTX401 for the treatment of GSDIa, we anticipate data from 3 patients in the second dose cohort also in mid-2019. For both of these programs, we'll evaluate the data and then determine the path forward for each program. If the data suggests we have reached an optimum dose, we would be enrolling additional 3 patients at dose before moving to a Phase III study. We also look forward to finalizing the site selection bid and construction of our fully scaled GMP manufacturing facility that will support the development and efforts across our gene therapy platform.

Finally, for the preclinical pipeline. We're encouraged by the preclinical data we shared at Analyst Day that illustrate the strength of our research pipeline. And the preclinical model of UX701, our AAV therapy for treatment of Wilson disease, appears to actually pump copper from the cytoplasm and could be a much more effective option than the current chelator therapies. For UX053, our mRNA program for the treatment of glycogen storage disease type III, we have successfully completed non-clinical dose range-finding and toxicology study that suggests this could be a meaningful way to reduce the liver's ability to break down glycogen into glucose and release it into circulation. For UX068, our dual-trigger program for the treatment of creatine transporter deficiency, the nonclinical proof-of-concept studies have shown rapid creatine [accumulation] in the brain, suggesting this drug's ability to cross blood–brain barrier and effectively deliver creatine to the brain. We still need to finalize the exact choice of the molecule to bring to the clinic from our top candidates.

Through the remainder of 2019 and early 2020, we will continue to conduct the necessary preclinical studies and assemble data packages that can enable us to submit 3 INDs in 2020.

Earlier in the year, we celebrated the ninth anniversary of the company's founding and the fifth anniversary of our IPO. Stepping back, I am very proud of what this company has done to relentlessly find solutions for patients. Over the last 9 years, we've worked on treatments for 20 different genetic diseases. And we've conducted 34 clinical studies in 8 different diseases. We've received approvals and simultaneously launched 2 products in 3 major geographic regions of the world and have 2 more programs still to file. We've also established a robust gene therapy clinical and manufacturing platform, with 2 successful products in the clinic. This track record has helped us to become a rare disease company that will keep identifying new therapies and bring them to patients with rare diseases who have limited or no other treatment options.

Let's move to your questions now. Operator, can you please provide the instructions for the Q&A portion of the call?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Ms. Gena Wang from Barclays.

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Gena Wang, Barclays Bank PLC, Research Division - Research Analyst [2]

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I just had the 2 questions. The first one is regarding the revenue. So for the U.S. revenue, if we calculate in 12 -- $11.9 million profit sharing, that translates roughly into, based on our calculation, $35 million in the U.S., representing 31% growth over last quarter. Just wondering. Any seasonality in this quarter that we should take into consideration when we think about the growth trajectory for the rest of the year? And I have a follow-up question.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [3]

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Thanks, Gena. I think the revenue numbers are a little bit complicated because of the partnership and all the moving parts. We appreciate that can be hard. I think -- I don't think we can know if there's really seasonality. We're too early in the launch to be comfortable with seeing that. I know that in some regions there can be regional seasonality, end of year and those kind of things, but I think we're a little bit too early to look at that as reason for anything. At this point, we feel comfortable how the things are progressing. I don't see any specific answer I would give to whether the numbers are up or down from anything more than just the natural progression of launch.

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Gena Wang, Barclays Bank PLC, Research Division - Research Analyst [4]

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Okay. Great. And then quick follow-up is regarding the OTC and GSDIa program. Just want to confirm. Parent cell line, manufacturing cell line in HEK293 suspension cells is already in commercial -- using commercial production. Just wondering, any need for future bridging study?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [5]

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An important question. The -- both programs for OTC and GSDI are in HEK293 currently. The GSDIa program is in a 200 by 4, 800-liter scale production that is of commercial scale and quality. There may be modest improvements that we'll continue to make in GSDI. We do not think a bridging study would be required. We will eventually move to a HeLa platform for GSDIa. We haven't done it now and -- but we do have an ability to do it via the HeLa platform as well, and we will at some point in the future. Given the success of the program so far, we think it important to proceed promptly ahead toward commercial rather than introducing a change at this moment. For OTC, the original phase I/II system is 293 cells again but originally adherent, but they are also -- will be running to a suspension system which we are moving to now. That's very similar to what we're doing with GSDI, which is a 200 liter times multiple containers, giving a run size of around 800 liter. It was a very similar process. We'll be staying with the HEK293 cells for the OTC process heading to approval.

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Operator [6]

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Your next question comes from the line of Cory Kasimov of JPMorgan.

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Matthew Thomas Holt, JP Morgan Chase & Co, Research Division - Analyst [7]

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This is Matthew on for Cory. My first one is on cash burn. How should we be thinking about it over the next 12 months with the ramp in R&D and your gene manufacturing coming online?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [8]

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There are a lot of things, obviously moving parts, but I'll let Shalini provide some color on that one.

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Shalini Sharp, Ultragenyx Pharmaceutical Inc. - CFO & Executive VP [9]

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Yes. Thank you, Emil. So we are looking to expect modest increases in expenses on R&D and SG&A and also to begin the build-out of the GMP manufacturing facility for the gene therapy programs. We do also at the same time, though, expect to have more and more revenue offsetting our expenses over time. Those are the 2 different dynamics that are moving in different directions, but for 2019, we do expect those modest increases on the expense side.

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Matthew Thomas Holt, JP Morgan Chase & Co, Research Division - Analyst [10]

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Got it. And then just for your DTX301 midyear update, is it reasonable to expect that you'll have enough data to be in a position to make a go or no-go decision?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [11]

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We expect to be able to make a decision if we're ready to move to Phase III or not. I think -- remember, the cohort is only 3 patients, so what I'd point out to you is that we would certainly do another 3 patients. We felt that the cohort 3 showed us enough response to suggest it was an effective therapy. We would proceed ahead and treat another 3 patients, which would give us a little more information to deal with. So we'll -- that is what we're looking for. We've suggested that, if we get 2 out of 3 or 3 out of 3 responders [or cures, we would proceed ahead to Phase III. What I would say is, if we're in a position with less-clear results, we would be still working hard to proceed and find a way forward because we believe some of the responders have had life-altering, life-changing results in terms of their outcome. And that's not something you walk away from when you have that kind of response. So there may be things we need to work on, but I actually feel confident that increasing the dose will do a lot toward increasing the consistency of therapy based on what we've seen in many other programs.

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Operator [12]

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Your next question comes from the line of Chris Raymond of Piper Jaffray.

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Allison Marie Bratzel, Piper Jaffray Companies, Research Division - Research Analyst [13]

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This is Ally Bratzel on for Chris. So first one, on the Crysvita launch. You mentioned having 490 prescribing physicians at this point. So I guess, is that number better than your initial expectations now that you're about one year into launch? And could you remind us, do you have a number of prescribers that you're targeting? And just thinking about drivers of growth in 2019 and into 2020, how do you think about the relative importance of increasing prescriber breadth versus depth of prescribing? And then a second quick one, on DTX401, could you just remind us of your thoughts on generating data in the pediatric setting or just talk about how this comes into play as you think about a Phase III trial design? Since, I think, previously you'd indicated a Phase III could include patients as young as 12. So just help us out on that.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [14]

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All right. Good. So I think 490 prescribers for any rare disease launch that I've been involved with is an extraordinary number of prescribers this soon into the launch. I think of the many products I've worked on, we've never had 490 in the U.S., so we are impressed with the number. That said, there are still more prescribers out there. And I'll let maybe Vlad talk a little about where we are on the question of breadth of prescribers versus the depth that each doctor is prescribing.

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [15]

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Thank you, Emil. So I think we're pleased with where the launch is and the number of prescribers. What's kind of important for us is to continue to pursue the prescribers in the top academic and metabolic bone centers who still haven't prescribed Crysvita to all of their patients to continue to convert both their adult and pediatric patients. And that's kind of our first priority, but pretty soon we'll be -- also be moving to expand the breadth and moving to some of the smaller community specialists who are managing patients with XLH, who may have patients with XLH that may not yet have enough knowledge and exposure to prescribe the product yet. So we'll be moving to educating them and helping them convert their diagnosed patients on to therapy with Crysvita.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [16]

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So then I'll answer the second question, DTX401, the ped setting. Based on the strategy, the FDA generally asks people to focus on treating adults first, gain information on safety and then to move down from there. Our view is that a 12-year old, a [16-year] old and an 18-year old are not that different from a standpoint of GSDIa in terms of their metabolism and so forth. So our expectation for Phase III would be to move the age down to something like 12. The factor here to consider is that the size of the liver and how much it grows is important. And there is some evidence from the dog model that early treatment before the liver is fully grown could result in dilution of the effect, and therefore, a dosing in a patient who's now more near full size would probably result in potential for more lifelong effective treatment. So our goal will be to move down to age 12, and the question is, would we go down lower? I think our goal will be to get approved on something like 12 and up and then explore what we would do with younger patients. Obviously, there is a need in the younger patients as well, but we'd have to deal with this question of early treatment and dilution. And we're still early on in the process, and I think it's prudent to get to the 12 and up population while we learn and make good judgments on what we should do in the somewhat younger children.

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Operator [17]

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Your next question comes from the line of Tazeen Ahmad.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [18]

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Emil, the first is on price. Can you give us a sense of, at least on a percentage basis, any kind of price differences that you're noticing relative to the U.S., which we presume is the highest price point. How the price differs in Europe and Lat Am for Crysvita?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [19]

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For Crysvita. Well, pricing is complicated because there's a lot of other factors, including required rebates and other things, going on. We had set as a standard between the companies to have pricing that was within a range, and we agreed upon our strategies for pricing globally and try to achieve a consistent range. Of course, different countries have different situations regarding negotiation. I don't think we can give you a full comparison of all the prices. I -- at this point. I think that what I would say is that we're not seeing a dramatic differential pricing for different territories, and we purposely went with a more moderated price in the U.S. to allow us to achieve more consistent pricing and -- which we think is fair. And we think that, that responsible approach to pricing has given us a better response from payers in the U.S. So we haven't -- we are planning to try to hold within a range globally and -- but now it's a little too early to say what the actual prices are. I couldn't give you more detail yet.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [20]

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Okay. And then for FAOD, for the upcoming NDA, how are you thinking about what kind of sales force expansion, if at all, you'd need, should that get approved next?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [21]

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I'll start with that, and then I can let Vlad talk to it. First of all, the FAOD world is generally managed by a certain number of centers in the U.S. And the centers that we work with a lot, around 200 inborn error centers across the U.S. that usually manage FAOD. And so there's a relatively concentrated set of targets, unlike Crysvita which has many more targets than that. So there is -- and those centers happen to be the same ones as MPS 7. So I'll let Vlad talk then about our field force strategy at the moment.

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [22]

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Yes. So as Emil said, there's a big overlap with the MPS 7 patient centers that we're currently servicing. And we're looking at kind of a number of option how to best address them, but fundamentally I think we see significant synergies with our current presence, our interactions with these physicians that focus on these inborn errors of metabolism that FAOD represent and working within that narrow physician population to be able to serve our patients well.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [23]

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Yes. So I think with some synergies, we think we would be able to manage with not very many. I wouldn't look at this as some huge, like some large build-out to occur. It's not going to be -- we'll have -- we have some current members already managing those [same] doctors. And because of the narrow target list, I'm not expecting a large field force change.

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Operator [24]

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Your next question comes from the line of Yaron Werber of Cowen.

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Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [25]

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So Emil, I've got a couple of questions on 301, first, in terms of, based on the third [doho], the second and third cohorts, at what point do you really decide to also increase the fourth cohort and, let's say, go to the [low, to the 14th], if need be, obviously?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [26]

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Well, by the protocol, e13 is currently the protocol on top dose. We could go to a higher dose. I don't have an answer for you yet, whether we would change the dose. I do think what we've shown is that you can get successful -- very successful cure or normalization, regenesis at a lower dose, and so we want to really understand that better before we would leap up to a high dose because it is not benign to go to e14, for example. Because all the people that are doing that also have long periods of steroid use, a lot of inflammatory reactions to them, we think it'd be smarter not to do that too aggressively.

We think e13 is a substantial step and we think that -- we've seen a lot of people in the e13 range that pass the threshold and start seeing more effects. So we believe e13 will probably be good enough, and we also need to look at other factors like modulation, immune response a little bit if there is an innate immune response as factor, for example, could be something that would enhance our efficiency at a given dose, and it's something that many people have looked at in other settings.

So we're looking at both those things. We'll have dose. Eventually we'll look at whether we need to think about some other strategies if we have any issues. I feel pretty comfortable that we should be able to get to an effective dose at e13, but it's not within -- it's not impossible that we could consider increasing the dose further, although I don't think we'd go right to e14 out the gate because of the safety question that I've raised.

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Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [27]

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Okay. That's very useful. And then at the ASGCT meeting, the presentation noted that one patient has been enrolled in [CAPTIVATE,] the third dose cohort, and 2 additional subjects will be enrolled. I don't know if you can give us an update on that. And presumably with 12-week data, I would imagine it's probably sometime later on in Q3 that we'll get the data? Is that something you're thinking?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [28]

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Yes. Well, we haven't put out a formal enrollment for all the studies in one-by-one basis. It's just something we decided we weren't going to do. We still feel we're on track to get 12-week data in the time frame we said. When we say mid, mid is Q2, Q3 time frame. So we are still on track to be able to do that, for that program as well the GSDIa program.

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Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [29]

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Okay. And then just a question on 301 in terms of -- there's a -- based on the prior data with the first cohort, where the data order looked pretty good. Obviously, there's optimism from you as well as from Dr. Weinstein that the second dose cohort may be sufficient. At what point -- if it is sufficient, at what point and how fast can you move into a pivotal?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [30]

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Yes. So we hope that the second dose cohort, which is 3x higher than the base, so it is a significant jump up, that given that we're getting to 70% to 90% reduction [in starch] that we think the 3x could very well be enough to get us to elimination of cornstarch need, maintenance of glucose and all the secondary effects we'd expect to see of someone who's metabolism has changed. We do want to make sure we are completely changing their metabolism, that there's no dependency on support for their glucose. So we think that's very possible, and we are certainly already planning the design of Phase III and thinking about execution into Phase III. But remember, we plan to treat another 3 patients at that dose if it's positive.

So I think you'd agree that having only 3 patients at a dose is not quite enough to be 100% confident. We'll treat -- if it's the right dose and our optimal biologic dose, we'll treat another 3 and be setting up to go as prompt as possible in Phase III. But Phase III would start in 2020, and we'll do it as promptly as we can. We have to finish the second 3 in line with the manufacturing, any improvements going to be made to assure that we've got FDA's buy-in both on the design and on the manufacturing plan for the pivotal study.

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Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [31]

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Okay. Great. Just a final question. It looks like there's been, as noted, about 1,100 patients started on Crysvita. Any sense how many patients are actually diagnosed now in the U.S. based on your latest work?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [32]

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Yes, Yaron. We did not put out our specific identified or diagnosed. And what we've said, and we believe there's around 12,000 U.S., but we haven't individually identified 12,000 here. We've identified a very substantial number of patients and we feel very comfortable that based on our projections that the 12,000 number is still a pretty accurate number.

And I would say to you, you've been -- you've seen a number of rare disease launches, to get 1,000 people on therapy in the first year means there's got to be thousands of patients. It just doesn't happen that fast, unless you had a lot of patients to get because that's already a significant fraction of the whole population that we expect. So we feel like the numbers are right, but we haven't put out more in the diagnosed. And the reason is it's constantly evolving and I just don't think there's going to be a lot of value yet. But we have found a lot of patients and we feel pretty comfortable that 12,000 is about the right number.

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Operator [33]

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Your next question comes from the line of Jeff Hung of Morgan Stanley.

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Hannah Lynne Latimer, Morgan Stanley, Research Division - Research Associate [34]

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This is Hannah on for Jeff. For Mepsevii, you've said that a focus point has been finding new patients in Europe and South America. So how are those efforts going? And are there any new learnings or [surprises] from those geographies?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [35]

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I'll start and then let Vlad finish and talk about what's going on regionally. With any of the rare disease -- rare MPS launches, and I've been through several drugs that we've worked on, actually 3 others, so the process in both the development and launch phases is a slow step-by-step process, and all the products we've had, what I would call, slow steady growth over time, looking and finding. Sometimes it's not getting the diagnosis is not getting done; sometimes the patients are found but lost on follow-up. We're doing -- pulling all the stuff to pool additional patients. And we are finding additional patients one by one, steadily. Some have been around the whole time and somehow were not found, and I don't know why that is but it's been the same when we launched Naglazyme and almost every MPS product. So I'll let Vlad talk a little bit about what's going on in our regions for our Mepsevii finding, just from a general high level.

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [36]

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Yes. From a high level, for example, in Europe, we're evaluating the presence of the MPS 7 deficiency in patients with non-immunologic hydrops fetalis and are kind of looking to identify patients who have that. In Latin America, we've actually looked into patients who are suspected of an MPS diagnosis in the past but did not get a final diagnosis because either the MPS 7 wasn't tested, so that wasn't available. And we're re-testing those patients. And in those situations, we have been able to find a couple of patients which I think is terrific, so that we can evaluate how Mepsevii works in those patients. And in the U.S. I think we continue to test, evaluate and diagnose patients, and continue to add to the number of patients who are now on reimbursed therapy. So we're continuing our efforts in the U.S. as well.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [37]

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It will definitely take time, but it's progressing. I think we're finding new patients with relative frequency.

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Operator [38]

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Your next question comes from the line of Edward Nash of SunTrust Robinson Humphrey.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [39]

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This is Fang-Ke Huang on for Edward. Just to follow up on the gene therapy manufacturing. If I recall it correctly, you mentioned that the 401 program is going to transition the HeLa program -- to the HeLa platform. And then for the 301, you're going to stick with HEK293. If that's correct, can you just let us know why one program you are transitioning to HeLa and the other one you choose to stick with 293?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [40]

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Well, the GSDIa program could transform -- could transfer to HeLa sooner, but we think it's smarter to move ahead more promptly with the current manufacturing scale and process to just get approved. And then after approval, we'll put in place the HeLa system, do the appropriate bridging and manage that in a post-approval situation. But we think long-term, the HeLa system will be a better approach for the GSDIa.

For OTC, it's been less successful when applying the HeLa strategy. We don't have specific answers as to why that we would provide. But we haven't produced the proofs to cell line for that particular product. We've done it for many other programs, but not for that one at this point. But it doesn't mean it can't be done, we just may need to look at some additional factors for that one and we decided to stay with 293 since it was productive enough to make it viable.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [41]

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That's very helpful. And then second one, since you -- Crysvita is recently approved in Brazil, can you just talk about, specifically in Brazil, how should we think about the reimbursement?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [42]

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For Crysvita?

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [43]

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That's right. Crysvita.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [44]

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Yes. We will establish a worldwide band for pricing that we're going to, but we want to be thoughtful and achieve our own goal of getting majority access within regions including Brazil, and we have a very good Brazilian team. Maybe Vlad, you can touch on a little bit about what the process for both reimbursements that are ongoing as well as the main patient responses that are ongoing in Brazil.

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [45]

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Sure. So thank you for the question. Thank you, Emil. For Brazil, we'll be pursuing pricing approval for Crysvita and we should get that done in the next 3 to 6 months, at which time we will pursue the formal reimbursement dossier. Typically, the reimbursement in Brazil can take a significant amount of time, up to 1 or 2 years, but we will be studying the recent announcement on Spinraza in Brazil, where a new framework has been put up by the new Brazilian government, and see how that applies to us and get in discussions with the Brazilian government after we get formal pricing approval.

In the meantime, we continue to honor patients' requests for named patient programs. And we have currently a number of patients who are pursuing access through the court system and a number of additional patients who are preparing for that step prior to us getting formal reimbursement approval.

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Operator [46]

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Your next question comes from the line of Joseph Schwartz from SVB Leerink.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [47]

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I was wondering if you could give us a sense of what your target expression profile is for DTX401 in terms of G6Pase? What are you hoping to see -- given it seems like the threshold to see a clinically -- or clinical benefit is fairly low, but of course you want to be able to have this be durable. And if the effect wanes over time, you want to aim a little bit higher perhaps. So wondering, what are you hoping to see in this ongoing study before you pull the trigger on advancing into Phase II? And then, I have a follow-up.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [48]

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Great. Thanks for the question. I think what we're hoping to do there is certainly to cure the metabolic concerns that exist for the patient. The time to hypoglycemia is one way of measuring it. There are certainly other metabolic markers we can look at and also look at the liver and the size of it and try to assess how the patient's health is improving. We clearly have heard patients feel better or doing better from a number of other standpoints that weren't necessarily captured, and we will work to capture that kind of information for the program.

The challenge on a target expression profile, what level, is that we're talking about a liver-based, membrane-bound protein. So in order to really figure out expression level achieved, we need to do biopsies and we just didn't decide and think the biopsies were necessary to get there. So we're going to have to look at the secondary results of improved glucose metabolism, improved secondary metabolism and clinical health of the patient.

Our target would be to expect that the patient would not need cornstarch at all in order to maintain glucose, should be able to tolerate the full night without having risk of hypoglycemia, and that the other metabolic markers around lipids and uric acid and other things if abnormal would have normalized; and if their liver is enlarged, would have shrunken to indicate that the liver is treated enough to clear the glycogen. So we are beginning to see that. I think the -- we feel good that if we're seeing it at this low a dose, then a 3x dose should put as well within the range of what's required.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [49]

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Great. Okay. And then on DTX201, I was wondering if you could give us an update on that program. How is the Phase I/II study progressing and when we expect an update there?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [50]

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For those who don't remember what 201 is, it's the Hem A program. Dimension, before we acquired them, had a deal, developed a Hem A, which is in the clinic now with a partner -- being driven by the partner/buyer. They are treating patients in the clinic and expect to provide an update this year. We won't provide updates on it. We consider it within their control to update the Street on what's happening on that program. However, it is in the clinic. I'll remind you that it does include product made with our 2000-liter HeLa system, which has been successfully run at GMP and accepted by regulatory authorities for use. So we do think it's an important program in terms of demonstrating the utility of that process to create scalable, reproducible manufacturing of AAV.

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Operator [51]

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Your next question comes from the line of Adam Walsh of Stifel.

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Xiaodong Zhang, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [52]

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This is Edwin Zhang on for Adam. Two questions on Crysvita. First, the fourth quarter '19, by my math, you added about 180 patients on reimbursed commercial therapy. I recall you have added 50 patients last quarter of 4Q '18. Do we see a slower pace here and what could be the reasons if not seasonality? Going forward, how do we think of the growth of new reimbursed patients in the next few quarters? Then I have a follow-up.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [53]

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Thank you. I'll start this question and then let Vlad perhaps add a bit more to it. The trajectory of launch, remember, in Q3, Q4 included a large number of clinical trial patients that were crossing onto therapy that were not naïve but people on drug, in addition to naïve patients coming. The majority of those patients now, essentially, all have traversed onto drug with a very small number left. And so now in Q1 you're seeing only naïve patients, you're not seeing as much the clinical trial patients. So that's where we're at right now. And I don't know if, Vlad, if you want to add a little bit more on what our expectations are for growth of reimbursed patients for Crysvita.

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [54]

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Yes. So these are essentially new -- all new naïve patients last quarter and the 700 patients on reimbursed therapy at the end of 1Q '19 represents kind of also the increase in those patients. The number of patients represented by start forms continue to grow as well, and we're aggressively pursuing continued growth in them. And just remind you, we launched a number of programs in March and April of this year, diagnosis confirmation testing, genetic counseling and the family tree analysis, which will allow us to help identify new patients as well as help shepherd patients quicker to reimbursement. And as physicians get more positive experience with Crysvita, we continue to see and expect to see greater penetration within the existing XLH population. But we'll also go to new -- to Crysvita prescribers who'll be treating some of their patients who are not in the larger centers, so to continue the opportunity to grow our patient base.

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Xiaodong Zhang, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [55]

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Great. Second, Crysvita in TIO. So where are we now in terms of the registration plan? Have you started a conversation with FDA? And how likely is the agency to allow your filing with the Phase II data?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [56]

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Yes. So the filing of Crysvita, we have had in some initial discussions with the FDA about the data set we have and are continuing that discussion. We won't know an answer to our filing plan until somewhat later in the year after we provide some additional information. Our position is that we have adequate data support of filing in the sense that we have biopsy information showing the same effect on osteomalacia that we saw in XLH, associated with the same benefits on bone function and bone structure and symptoms. And therefore, we are confident. I think I'll let Camille, if you'd like, to add what -- if there's anything else we should talk about on TIO.

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Camille L. Bedrosian, Ultragenyx Pharmaceutical Inc. - Chief Medical Officer & Executive VP [57]

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Sure. Thank you, Emil. Thank you for the question. Yes, we're also seeing our trial with patients with TIO normalization increase in phosphorus or phosphate, which is an important marker of the effectiveness of Crysvita in the setting. As Emil said, we will be continuing and progressing our discussions with the agency, and we'll have more updates for you later this year.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [58]

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So phosphate bone structure, everything else suggests drugs work just the same, and we think it -- it's a good -- it makes sense for us to be able to file off the data we have and not subject further delays to the population. But we'll update you later in the year.

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Operator [59]

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Your next question comes from the line of Salveen Richter from Goldman Sachs.

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Andrea R. Tan, Goldman Sachs Group Inc., Research Division - Research Analyst [60]

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This is Andrea on for Salveen. Maybe just a really quick one. If you could comment on what, if any, of the potential impacts of the international pricing index could be to Crysvita and Mepsevii.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [61]

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That's an interesting question, perhaps similar to the question I was talking about pricing earlier. We think that our pricing strategy will set us up well to be able to manage that because we are targeting similar pricing across territories, therefore we don't think there'll be a large impact on us if that we're to come to be. It's a little different from other programs where there's huge differentials and that might be an issue. But we think we've been sort of forward thinking on the strategies and the [close with clients] around pricing and trying to find that right balance between achieving -- maximizing revenue but also maximizing access for patients. So our -- we don't think it will have an important impact on us, but we're certainly keeping a close eye on it.

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Operator [62]

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Your next question comes from the line of Yigal Nochomovitz of Citigroup.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [63]

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I think at the Analyst Day, Dr. Weinstein made an interesting comment regarding the third subject in the 401 study in that he was actually very impressed with that result even though they only had a 20% increase time to hypoglycemia, and apparently that just had to do with rapidly coming off the cornstarch. And I think he was off for actually 3 weeks. Are you doing anything in the second cohort in addition to obviously tripling the dose to tweak or fine-tune the titration off the cornstarch?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [64]

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Thanks, Yigal. I think the issue is an important one. What he's getting at is, when you have patients at this age who's been getting large doses of cornstarch chronically, they're in constant fed mode and their insulin is constantly being produced. And so now we're trying to adapt them to a new world where they actually can release glucose, but their insulin is still being overproduced. So what he's saying is you need to kind of step down the glucose to get the insulin to back off.

But it may be a time of -- it may be a time for modulation or a ramp back of insulin that may slow them down. I think he thought that patient was just producing a lot of insulin. But his view is how the clinical finding of that patient were compelling to him, and he's very comfortable that patient is responding and doing well. So he's taking a little more time on slowing him down, not going too fast, so that he doesn't -- his insulin levels don't overtake what his treatment will do.

We're going to have to look closely at that question in other patients who are on larger amounts of starch. So it's an important consideration. Because remember, as we take them off, they get a certain amount of cornstarch in the time to hypoglycemia test, right? But if they reduce their starch a lot and their insulin is not kept up, you're actually making it a little harder for them to tolerate time to hypoglycemia. So we're going to look at that carefully to make sure we are managing how that works.

But I don't think of it as a problem. I think it's just an issue that we have to manage in the timing and how the process goes. But I don't think it's something that we'll have to change the fundamentals of what we do. The patient still has dropped his cornstarch over time and doing well. So we're really encouraged by that. But we're going to have to pay attention along that whole story.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [65]

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Okay. And then just a couple questions on the partnership with KHK. I believe that they're still seeking approval in Europe for adults. I don't know if you can provide any update on that. I understand that there's a Phase IIIb clinical study running with a long-term safety extension in (inaudible), the safety data that KHK is waiting for to -- in order to file for adults in Europe. And then more generally, just regarding your strategy in the United States, obviously you've developed a lot of experience with the product in the last year or so, and you've got good momentum and your sales force is obviously continuing to get even better educated on the market. So with respect to the switch to the profit split in 5 years -- sorry, with respect to the switch to the royalty in 5 years, is there any potential for renegotiations so that you could keep your own sales force as opposed to turn it over to KHK and sort of let them start the process from scratch?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [66]

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Right. Well, I'll start with the adults in Europe. They're planning to file adult but it's not really waiting on the long-term safety, they already have all the adult randomized controlled data they need to file. I think they're just working through some other steps in their process, and I'd rather let them kind of provide more updates on what their timing is than have to do it for them. But it's not related to any trial data, it's more related to others aspects of the execution of the plan.

On the question of the switch to the royalty, I think it was an important part of the deal for Kirin that they become a global commercial company and they are also launching right now an antibody product for cancer indication in the U.S. We certainly have a good partnership with them, and I think our goals with them always do the right thing for the product and patients, and we're certainly open to looking at ways to optimize that execution. But I'd want -- that needs to be a joint decision between us and Kirin, how we would manage that transition. So far it's done so well, I feel comfortable we can do it.

I'd also point out to you that we are looking at other bone metabolic products that we might, for example, work on and expand so that -- and plus other programs of ours that will probably proceed to approval. So we'll have many things for our field force to do, including potential other bone metabolic products, as well as products we might do, gene therapy and otherwise. So I would look at that as an opportunity for us to work on other products as well.

Anyways, in summary, I think Kirin and us, Ultragenyx, have a great partnership and we've done very well with the other. And we'll always work together in getting the right decisions, but I wouldn't want to predict a revision to the deal at this point in time. But we'll work with them as we get there and make the right decision.

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Operator [67]

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Your next question comes from the line of Vincent Chen from Bernstein.

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Vincent Chen, Sanford C. Bernstein & Co., LLC., Research Division - VP [68]

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Great. I was wondering if you could comment briefly on trends that you're seeing with respect to the timing of conversion of start forms to reimbursed drug for their disposition. I noticed at the end of third quarter, you had 600 start forms, which translated to 550 U.S. patients a quarter later at the end of 4Q '18. But the over 900 patients with completed start forms as of the end of 4Q '18 translates to 730 at the end of first quarter, which seems to suggest that it could be taking a little longer to get on reimbursed commercial drug. Could you provide some color on why it's taking longer for start forms to translate into commercial patients on Crysvita? Or is there some other factor that's driving the slowdown in sort of the conversion between the aggregate start forms and the aggregate commercial patients?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [69]

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Okay. I'll start that question then let Vlad sort of finish out some of the detail. I think one of the things that's important to recognize is that while initially there were a few -- very few plans that were requiring genetic testing, as the year went on after one started doing it, now a majority of these plans want genetic testing. I think that was probably one of the biggest drivers. And some of the patients are hung up then in the testing process because they fill their start form, it goes to plan, then they were sent a request -- a rejection requiring the test; then they have to get the test and the test takes several weeks; and then they have to get that resubmitted and then reviewed.

So there are some factors there that we're working through, and that was starting to happen. It's not a big problem. I think Vlad can talk to you what we're doing to address that and to help improve that. But I think the trajectory of start forms is excellent, we just need to work through those conversions. So maybe you can talk a little bit about the programs we're doing to help accelerate that conversion.

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [70]

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Yes, in addition to the confirmatory testing which helps kind of managed care with having the test results, we're doing some quality improvement initiatives to make sure that the start forms are all compete and have no errors before we submit since that tends to delay things. In fact, we've seen an accelerating trend in actually clearing the completed start forms, especially with our commercial payers.

I think what you see in 1Q is also the new Medicare/Medicaid patients getting used to the new J code. Some states take a little bit longer in publishing their Medicaid policies for Crysvita. Just to mention, Illinois, Wisconsin had a little bit of a delay, and then in New York, their fiscal year starts in April. So we're working through that. But in general, we're seeing an accelerating trend in clearing the start forms into fully reimbursed patients.

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Operator [71]

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Your next question comes from the line of Arlinda Lee from Canaccord.

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Arlinda Anna Lee, Canaccord Genuity Limited, Research Division - Analyst [72]

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I had a couple more follow-ups on 301. You mentioned that it's currently manufactured in HEK293 adherent. So what are the technical or maybe regulatory requirements to convert to suspension? And how important is that to incorporate now for the regulators? Or can you -- do you need a bridging study to kind of convert that? And then maybe secondly, on the inter-patient variability, do you think this next dose level will help you get -- be able to dose above that? Or do you think that it will help inform maybe which patients need a little more dosing later on?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [73]

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Okay. So on the first question, we have had our discussion already with regulators about the adherent to suspension, we already have a plan in place. And it really requires just a comparability protocol, which we're very comfortable with and have already evaluated. So it's a relatively modest step. And it's the same cell substrate, the same plasma, et cetera. So it's really a shift from adherent to suspension, which many people have made and the agency is pretty comfortable with that. So I don't see that as a barrier and I don't see a bridging study as being required.

The second question, consistency. We think that the data we've seen so far suggest that we're probably close to a threshold and that e13, I think, is going to get to that place where we should be able to get through. We have seen some other programs need to get up to, let's say, in BioMarin's case, either up to the 6 e13 kind of dose level, but that was AAV5. And AAV8 is several-fold more potent than AAV5 in our view. And so we think from a lot of triangulations that we should be at e13 at a good place and start to see consistent responders across all types of patients.

Again, as I said before, if we see any limitations on effect in the population of patients, we would look at not only dose but potentially also prophylactic treatment with medications to help improve their response as another strategy. There's -- using prophylactic steroids, for example, as a way of enabling just better potency.

So there are some options, not only dose. And I think the e13 should get us close and our hope would be if that's good for most, that we would look at possibly another strategy around using modulation of their immunities as a way to improve them further. But still, there's many unknowns, but we're encouraged about what we have so far, particularly because the effect we're seeing in those who have responded has been sustained now for a year or more, and that makes us more confident that we have a real therapeutic effect that's meaningful for patients.

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Arlinda Anna Lee, Canaccord Genuity Limited, Research Division - Analyst [74]

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And then maybe lastly, you guys just did a raise to help build out a gene therapy facility. When do you think we might start to get first batches of commercial or clinical product?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [75]

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Well, I would be reluctant to predict the live -- go-live time for our manufacturing plant. I'm sure if they're on the call, they would be reluctant to have me do that too. But plants take time because you have to not only design and build them, but you also have to prepare, staff them and validate and get approval to use a product. So you should always think of it as at least a couple-year process.

In the meantime, we continue to use CMOs; and we'd expect to use CMOs even after the plant is in place. The plant would just give us greater flexibility to manage and put more products in the clinic more quickly and manage our cost over the long run. But we expect to still use CMO between now and then [flexibly] and we have several partners doing good work for us.

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Operator [76]

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There are no further questions at this time. Ms. Keatley, you may continue.

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Danielle Keatley, Ultragenyx Pharmaceutical Inc. - Senior Director of IR & Corporate Communications [77]

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Thank you. This concludes our call today and the replay will be available on our website shortly. If you have additional questions please contact us by phone or at ir@ultragenyx.com. Thank you for joining us.

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Operator [78]

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