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Edited Transcript of RARE earnings conference call or presentation 1-Aug-19 9:00pm GMT

Q2 2019 Ultragenyx Pharmaceutical Inc Earnings Call

Novato Aug 10, 2019 (Thomson StreetEvents) -- Edited Transcript of Ultragenyx Pharmaceutical Inc earnings conference call or presentation Thursday, August 1, 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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* Adam Anderson Walsh

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst

* Arlinda Anna Lee

Canaccord Genuity Corp., Research Division - Analyst

* Fang-Ke Huang

SunTrust Robinson Humphrey, Inc., Research Division - Associate

* Huidong Wang

Barclays Bank PLC, Research Division - Research Analyst

* Jeff Hung

Morgan Stanley, Research Division - Equity Analyst

* Joori Park

SVB Leerink LLC, Research Division - Associate

* Laura Kathryn Chico

Raymond James & Associates, Inc., Research Division - Former Senior Research Associate

* Maurice Thomas Raycroft

Jefferies LLC, Research Division - Equity Analyst

* Neena Marie Bitritto-Garg

JP Morgan Chase & Co, Research Division - Analyst

* Nicole Ashley Gabreski

Piper Jaffray Companies, Research Division - Research Analyst

* Ross Howard Weinreb

Goldman Sachs Group Inc., Research Division - Research Analyst

* Tazeen Ahmad

BofA Merrill Lynch, Research Division - VP

* Vincent Chen

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

* 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, ladies and gentlemen, and welcome to the Ultragenyx Second Quarter 2019 Financial Results and Corporate Update. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Ms. Danielle Keatley. You may now begin your conference.

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

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Good afternoon, and welcome to the Ultragenyx Pharmaceutical Financial Results and Corporate Update Conference Call for the Second Quarter of 2019. We have 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'd 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 of 1995, including, but not limited to, the types of statements identified as forward-looking in our quarterly report on Form 10-Q that was filed on May 7, 2019, our quarterly report on Form 10-Q that will be filed soon; and our subsequent periodic reports filed with the SEC, which all will be available -- 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 can differ materially from those projected in any forward-looking statements. 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 relating 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'll start today providing some brief introductory remarks before turning the call over to Vlad, who will discuss the commercial performance in the second quarter of 2019. Then Shalini will update you on our second quarter financial results. Finally, Camille will then discuss the progress across our clinical programs, and I'll come back and discuss the outlook for the rest of the year.

Our commercial momentum continues to grow in the second quarter of this year, with strong launch progress in both Crysvita and Mepsevii in 3 major territories throughout the world. Yesterday, we submitted our New Drug Application for UX007 or triheptanoin for the treatment of long-chain fatty acid oxidation disorders. We have relentlessly focused on advancing UX007 through the clinic and into regulatory review in order to get this therapy to patients as quickly as possible.

For our gene therapy platform, we continue to move our 2 clinical programs forward this quarter, one for the treatment of ornithine transcarbamylase deficiency and the other for glycogen storage disease type Ia. Importantly, we recently solidified our mRNA platform by expanding our collaboration and license agreement with Arcturus. The collaboration now includes up to 12 rare disease targets and provides a greater opportunity to treat more diseases with mRNA, siRNA and DNA therapeutics. We've seen promising results from this partnership so far. Our lead mRNA program, UX053 for the treatment of glycogen storage disease type 3 or GSDIII is expected to advance to IND in 2020.

In addition to our mRNA program GSDIII, we have 2 other preclinical programs moving ahead toward IND filings. These include our gene therapy program for Wilson Disease and our dual-trigger prodrug for creatine transporter deficiency.

Now I'll turn the call over to Vlad to walk you through the commercial performance through the second 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. The second quarter of 2019 was a strong quarter for Crysvita in the United States. Since our launch in April of 2018, we've received approximately 1,300 completed start forms from treating physicians. The continued growth in the number of completed start forms this quarter is in line with the prior quarter. The split among pediatric and adult patients continue to hold steady, with roughly 60% pediatric patients and 40% adult patients. Approximately 580 unique physicians have now prescribed Crysvita. As first-time prescribers gain more experience with the therapy and the reimbursement process, we're seeing these prescriber-wide prescriptions for multiple patients. We're encouraged that these numbers continue to grow with more than 1/3 of prescribers today writing prescriptions for more than 1 patient.

Earlier this year, we received a specific J-code for Crysvita. This has helped simplify the buy-and-bill process, especially for Medicare and Medicaid patients. As a result of the J-code and increasing number of state Medicaid policy, the payer mix continues to shift. We currently have approximately 40% government and other payers and 60% private payers to date. We have nearly full coverage of lives within the U.S. at this point. Additional payers without formal policies are approving Crysvita on a case-by-case basis. With this broad coverage across all payer types, we now have approximately 960 patients on reimbursed commercial therapy.

Earlier this year, we implemented easy access to confirmatory genetic testing, independent genetic counseling and pedigree analysis programs. These initiatives have improved the process for them to find more patients with a confirmed diagnosis and converting patients to reimbursed therapy. Consequently, we had a substantial increase in number of patients who began reimbursed therapy in the second quarter.

We launched Crysvita in Canada earlier this year, and we're seeing strong interest and uptake among patients with private insurance. We're also pursuing public reimbursement in Canada, which can take up to 2 years.

Moving to Latin America. We received approval for Crysvita in Brazil earlier this year, where we are continuing to pursue pricing and reimbursement. We also expect regulatory decisions from the Chilean, Colombian and Mexican health authorities this year and next. Reimbursement decision in all of these markets can take a few years, and in the meantime, we continue to respond to name patient requests.

Briefly turning to Mepsevii. This therapy is approved in the United States, Europe and Brazil, and the launch continues to go well. In order to expand availability of Mepsevii to more patients around the world, we're continuing the reimbursement discussions with various government health authorities, and we expect additional regulatory decisions in Mexico, Colombia and Chile this year and next.

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 June 30, 2019, was $24.1 million. For the quarter ended June 30, 2019, Ultragenyx recognized total Crysvita revenue of $20.2 million. This includes $17.3 million in collaboration revenue in the North American profit share territory and $1.9 million in royalty revenue from our partner, Kyowa Kirin or KKC sales in the European territory. Net product revenue for Crysvita in other regions totaled $1 million. Top line worldwide revenue of Crysvita totaled approximately $73.3 million. This represents the total sales across North America, Europe and Latin America, a portion of which are shared with KKC.

Mepsevii product revenue for the second quarter of 2019 was $3.2 million, and UX007 named patient revenue was $0.6 million. We also recognized $0.1 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. We are continuing to gain commercial experience of both Crysvita and Mepsevii and will not be providing financial guidance at this time. We have provided 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 early quarters of launch, and we are evaluating the appropriate time to shift to specific revenue guidance as we gain experience with the launches in multiple territories.

Our total operating expenses were $136.6 million for the second quarter of 2019. Our research and development costs were $96 million, including a $15.6 million research and development expense from the Arcturus collaboration amendment. We expect our R&D costs to continue increasing over time as we advance additional product candidates from preclinical development into early and pivotal clinical studies. We expect SG&A to increase over time as we support our commercial programs in multiple geographies. We expect the split of R&D versus SG&A expense to remain fairly consistent.

Net loss for the second quarter of 2019 was $99.2 million or $1.72 per share basic and diluted, compared with net loss of $52.7 million or $1.06 per share basic and diluted for the second quarter of 2018. The loss of the second quarter of 2019 includes the $15.6 million R&D expense related to the Arcturus amendment and a $9.8 million unrealized gain from the fair value adjustment on the investment in the Arcturus equity. Unlike the R&D expense, the change in the fair value of the investment in the Arcturus equity, pursuant to this amendment, will be reflected in future periods. Recall that the loss for the second quarter of 2018 includes a $40.3 million gain from Ultragenyx' portion of the sale of the priority review voucher received with the Crysvita FDA approval.

For the first half of 2019, cash used in operations was $184.5 million -- $184.8 million, which includes the $15.6 million R&D expense from the Arcturus transaction and also includes adjustments for significant noncash charges, such as stock-based compensation expense of $42.4 million, $4.2 million in depreciation and amortization and $0.6 million in noncash foreign currency remeasurement due to exchange rate fluctuations. This is compared to $165.6 million for the same period in 2018, which included adjustments for significant noncash charges, including stock-based compensation expense of $38.4 million, $12.2 million in depreciation and amortization and $5.8 million in noncash foreign currency remeasurement losses resulting from the restructuring of some of our foreign subsidiaries and fluctuations of exchange rates.

We ended the second quarter of 2019 with $618.3 million in cash, cash equivalents and available-for-sale investments, which factors in the $30 million paid in the Arcturus collaboration agreement. We believe our cash resources should be sufficient to continue to support the initial years of launch for Crysvita and Mepsevii and allow us to continue to build and advance our clinical and translational research program pipeline.

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 also wish everyone a good afternoon. Starting with UX007 for long-chain fatty acid oxidation disorders, or LC-FAOD. These serious disorders have unpredictable and precipitous consequences for patients that can lead to metabolic crisis and frequent hospitalizations. There is a high mortality rate, despite newborn screening and current management with medium-chain triglyceride or MCT oil. Therefore, we believe that new treatments are urgently needed for patients with LC-FAOD. Yesterday, the team completed a significant step toward our goal of bringing UX007 or triheptanoin therapy to patients. We submitted our new drug application to the FDA. The submission is supported by a comprehensive package with data from a broad range of over 150 patients, the majority of whom have been treated over a long period of time. The submission includes results from: the company-sponsored Phase II study; the long-term efficacy and safety extension study, which includes 20 patients previously naive to UX007; our retrospective medical review -- record review of compassionate use patients; expanded access data; and the randomized controlled investigator-sponsored study showing the impact of triheptanoin on cardiac function.

Earlier this year, the FDA granted Rare Pediatric Designation (sic) [Rare Pediatric Disease Designation] and Fast Track designation for UX007, which enables eligibility for priority review. Now that we have submitted the application, we expect to hear back from the FDA on submission acceptance and priority review designation within 60 days.

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. Patients with OTC deficiency build up excessive amounts of ammonia in their blood and can quickly deteriorate into full metabolic crisis, suffering from neurological deficits and other toxicities, leading to hospitalizations, coma and even death.

We previously reported data from the first 2 dosing cohorts of the OTC study. In these cohorts, we had 2 responders, who had -- have since maintained normalized ureagenesis levels for 78 and 52 weeks, respectively, continued to tolerate the discontinuation of their ammonia scavenger medication, liberalized their diet to include more protein and manage through infections without experiencing rises in their ammonia levels. We have not seen any infusion-related adverse events or treatment-related serious adverse events. These data suggest so far that a metabolic cure is possible for OTC deficiency with this gene therapy. We are currently evaluating DTX301 at a dose of 1x10^13 gene copies per kilogram, and we will provide an update on the program in the third quarter.

DTX401, our gene therapy program in glycogen storage disease type Ia or GSDIa continues to progress as well. 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 times of increased metabolic stress, such as infection. We previously provided 24-week data for the 3 patients in the lowest dose cohort of 2x10^12 gene copies per kilogram. At this time point, all patients showed durable clinical responses and maintained or increased their time to hypoglycemia in a controlled fasting setting.

Importantly, all 3 patients have sustained their reductions in cornstarch compared to baseline, with reductions of 86%, 46% and 73% at 36 weeks, which demonstrates further improvement in glucose metabolism in the liver.

We have moved to the second dose cohort and are evaluating DTX401 at a dose of 6x10^12 gene copies per kilogram. We plan to provide an update on this program in the third quarter of this year as well.

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 Q&A.

For Crysvita, we expect to see continued strong growth in start forms to reimburse patients and prescribers in our U.S. launch, and we'll continue to expand our reach with the recent Canadian launch and named patient sales and regulatory decisions in Latin America.

As the product launch proceeds the past U.S. alone, we expect our efforts to file and gain approval early in these other territories that will contribute to a broadening base of Crysvita revenue for the company over the coming years. For UX007, we anticipate hearing back from the FDA on the NDA submission acceptance and review designation in the next 60 days. We will continue to work with the FDA throughout the process and ultimately believe this therapy could offer a meaningful treatment option for patients with long-chain fatty acid oxidation defects.

Moving to the gene therapy programs. Our 2 programs in glycogen storage disease type Ia and ornithine transcarbamylase deficiency continue to progress, and we will provide an update on both clinical programs in the third quarter. Finally, for the preclinical pipeline, we're continuing to advance 3 of our preclinical programs and assemble data packages, and we are on track to submit 3 INDs in 2020.

To summarize briefly, our launch momentum with our first 2 approved therapies continues to grow and UX007 is not far behind. We have fulfilled our -- we've rebuilt our pipeline with 2 clinical stage gene therapy programs and 3 promising preclinical stage programs in all nearing IND. We have been successful in rapidly developing multiple rare disease therapies for patients who do not have good treatment option, and we'll always to -- continue to deliver. There are a few companies -- there are very few companies that have completed 4 successful clinical programs in the last 5 years since IPO and also filed 3 BLAs or NDAs in this time frame. Our ability to develop, obtain approval and commercialize globally puts us in a unique category in terms of skills and efficiencies as a rare disease company. The catalyst head on gene therapy, new product filings, regulatory progress and commercialization will make for a productive year.

Let's move to your questions. 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 Tazeen Ahmad from Bank of America.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [2]

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Emil, just wanted to ask you about the readouts for 301 and 401 and the higher dose cohorts. So if the data for both are positive, what would be the next steps that you would take?

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

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Well, both protocols for 301 and 401 define that if we've reached the dose that we're going to continue, we would then add another cohort of 3 patients at that dose. And then with that information, we'd be ready to plan Phase III. We are also looking at other things we might do in enhancing the treatment, and we will talk more about this as we move ahead. But we would first want to confirm whatever we find in that dose cohort with another few patients before we want to proceed to FDA and talk about a Phase III program for both studies -- both programs.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [4]

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And is it your intention that if the data look positive for both to move both forward? Or are there any constraints in terms of how much these would cost? Would you have to choose one over the other?

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

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At this point, we are planning -- our plan includes putting both products into Phase III, and that's what we're planning from a CMC perspective as well as a clinical development perspective.

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Operator [6]

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Your second question comes from the line of Maury Raycroft from Jefferies.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [7]

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Congrats on the progress. My comment was -- my question was just on the named patient requests in Latin America that you've received so far? And if you can provide any details on how the named patient pricing will work and the revenue contribution from this region over the next few quarters?

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

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That is important. I think we've already been receiving and putting some revenue from named patient requests that we have been responding to. I'll let Vlad provide, perhaps, a little more detail on what's going on in South America.

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [9]

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Thank you, Emil. So we're getting named patient requests in a number of countries, Argentina, Colombia and Brazil. We are processing these requests and submitting them with the appropriate documentation to the development of health care authorities. And once we're invoiced, we actually recognize the revenue. In Brazil, to give you a little bit of color, the patients have to go through the legal system to get an injunction for the product and that process is going its course. And we're looking forward to helping all of patients in Latin America with named patient requests.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [10]

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Got it. Okay. And then just a question on gene therapy programs. So with the guidance for 3Q, we've noticed that there are 2 titles at the SSEIM (sic) [SSIEM] conference. Just wondering if you can provide any more specifics on whether the data would be top lined around that conference?

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

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We haven't planned what would be precisely shown at the conference yet, but certainly, it is possible. But we haven't yet prescribed what will be in the conferences. I think the abstract includes existing data.

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Operator [12]

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

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [13]

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Maybe just following Maury's questions. Regarding Latin America, how soon do you think we will get the meaningful revenue contribution at a commercial patient, the reimbursement process?

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

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Well, each country, as Vlad has noted, is different. In Argentina, unlike, in the past, they have new law that allows for named patient reimbursement. So we actually started getting Argentina first. We've gotten some from Columbia. In Brazil, things have changed, and we have filed and gotten an approval there. And what Vlad just talked about a moment ago was, in that process, patients have to request through the legal process of their constitutional right to get treated, and there are a number of patients seeking that. That process takes time. Once some patients get through that process, then it may go faster then. But Brazil has that step and that can take some time, but there are substantial number of patients seeking treatment in Brazil. And there's -- I was down there myself for conferences and meetings with investigators, and there's a lot of interest in Brazil on this treatment in anticipation of being able to put their patients on it. So we're excited to see this process move ahead. Vlad, maybe you can also tell us -- tell them about the reimbursement in Brazil and the time line for that?

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

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Sure. So as you know, we got regulatory approval in March in Brazil. We're now proceeding to getting pricing and reimbursement approval. We expect that by the end of 4Q of this year. Once that's complete, we will start the process of reimbursement, and that can take between 2 and 5 years in Brazil. And we're preparing for submitting that dossier. But in the meantime, as Emil said, we're getting lots of interest from patients who want to evaluate our Crysvita's right for XLH. And we're taking all of these requests and supporting them appropriately up to getting reimbursed by the Ministry of Health, which we hope to see accelerate soon.

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [16]

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Okay. And regarding the U.S. revenue, just based on my rough calculation, in the U.S., it's roughly -- the revenue is about $52 million. I just wanted to see if that is in line with your numbers for Crysvita. And also for the 40% of the adult patient, just wondering, how many of these patients, like the percentage gets through the new patient resources versus existing family tree of the pediatric patients?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [17]

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Well, several questions there. I would just answer the second part. I don't think we could know for sure what came through family trees, and we wouldn't be able to provide that detail on the link between patients. We definitely know there's some families that are getting on treatment, where mom and kids are getting on treatment together. But we -- I couldn't give you that information at this point. I thought perhaps, Shalini is closest to the finance numbers could put forth what we've put out on the revenue.

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Shalini Sharp, Ultragenyx Pharmaceutical Inc. - CFO & Executive VP [18]

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Sure. Thanks for the question, Gena. And as you may have noticed, Kyowa Kirin does not break down the revenue by territory. So that's not disclosed by them specifically, but what we disclosed is, at this -- for this quarter, our share of the collaboration revenue in the profit share territory in North America is $17.2 million. The royalty revenue in Europe, which is -- and up to 10% royalty rate, is $1.9 million. So those are all the publicly disclosed numbers that we can discuss at this time.

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Operator [19]

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Your next question comes from the line of Joon Lee from SunTrust and Robinson.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [20]

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This is Fang-Ke Huang for Joon. A quick question on the 301. And Emil, I remember you mentioned at one of the conference that there are some gender differences may contribute to variability of the response. Maybe can we just elaborate on that? What are the evidence you have seen? Is it mainly from animals, or it comes from clinical evidence as well? Or do you see any evidence from other clinical studies, which is supporting there is a gender differences in terms of response to gene therapy? And I have a follow-up.

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

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Yes. Thank you. So we observed this one possible explanation for our different -- response to different patients in the early cohorts could be gender. We have not proven that. There is examples in the literature in animal models of differences in the gender efficiency, particularly with females being more resistant. And there is some evidence that relates to female hormones and their effect on immunity that may be enhancing immunity. We don't have evidence if that's truthfully was happening in our patients. It was one possibility.

We believe, though, that with increasing the dose, we'll be able to overcome immunity and be able to provide the response we're looking for in female patients, too. We're certainly looking at all possible angles on how to manage that. In other clinical programs, many of those programs have been X-linked that have released. And therefore, you're not seeing a male, female difference, but it is something that's been known before and something that I think will have to be considered in gene therapy.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [22]

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Great. That's very helpful. And the second question is on 401. And I think you also mentioned that one patient -- if there is a reduction in starch consumption, and then patient going to produce more insulin and insulin in turn is going to suppress transgene expression at some degree. Just maybe help us understand that how insulin is going to suppress transgene expression. I think you mentioned about the normal promoter was used for your transgene. That's why there is probably a feedback loop where -- contribute to that. Maybe you can help us understand that would be more -- that will be helpful.

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

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Sure. So we believe that the control of glucose-6-phosphatase needs to respond to normal physiologic signal, like insulin or glucagon, the things that control glucose in your body. And so the design in the vector included 3 kilo basis of the promoter region, which includes elements to respond both to insulin and glucagon as well as -- and steroids or stress responses as well. All of those will give the patient the potential to increase transgene expression under the conditions that would normally increase huge glucose-6-phosphatase, and we think that would provide an optimal phenotype rather than forced expression of that enzyme. We know that insulin will suppress the promoter. We've shown that in vitro, but all we need to do in a patient on starch is we need to wean their starch and let their insulin levels come down and let the expression of the gene come back to normal. And that process has proceeded in the first 3 patients, and as they reduce their starch, they have clearly been able to maintain their glucose. And as you heard now, one is at 86% reduction, and one is in the 70% reduction. Really, all 3 are down into a relatively small amount of starch because the second patient had a lower reduction, actually started at a lower number to begin with. So they are actually all at a relatively low amount of starch now.

So I think what that shows is, as long as we keep ramping back their starch, they can then turn on and manage their glucose with the new transgene provided. Through our confidence, we look forward to this program that weaning down their starch may be part of how we get them to switch their metabolism away from a starch-insulin-dependent system to one that is based on the new enzyme we provided through the gene therapy.

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Operator [24]

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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 Corp., Research Division - Analyst [25]

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I'm also curious about the upcoming dataset with 301 and 401. I'm curious -- Emil, you talked about potentially looking at different dosing schemes, I'm kind of wondering what you're looking to do with those dosing schemes? And then as well, for the 401, what kind of -- I mean all these patients in the first cohort seem to have had an effect. Curious as to what do you think a threshold for expanding that particular cohort would be?

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

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Sure. So in 301, we talked about dose as one lever, and we've gotten now to the e13 level. And we'll put out our data when we get enough data on the patients to be able to make a conclusion. Our expectation is if that level should be enough, what we've talked about is possibly adding prophylactic steroids as another lever in order to enhance the efficacy we see and perhaps improve that, if necessary. So -- but that's an option we have that dose is not the only lever in terms of what we might do. And we'll see what the results look like and make a decision. What I do want to do in our program is start -- is to get more experimental and actually study what we need to study in order to get the right answer because these decisions are affecting patients for their whole life, and we need to make them in the right way with comparative treatment approaches.

For the 401 question, we -- the 3 patients have gotten pretty close to complete metabolic control, and that includes other findings that were discussed at the Analyst Day in detail, which we haven't reiterated now. We're looking to see if we can continue that at the next dose level and try to understand as that level of efficacy what is achievable or is there a higher level achievable, but it is actually pretty good at the first cohort level. In some of that, the question was that, is that enough? And I think it could be enough, but I also think it moves up to explore the second dose level to ensure that if it were different or better, we would know. I do think it takes time to see the results because of the need to wean the starch and see how they respond to that, but the potential is that the 6x10^12 will be sufficient or high enough to achieve a maximal effect, and we'll be able to proceed from there. And we'll put out that data later this quarter, third quarter.

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Operator [27]

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

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Joori Park, SVB Leerink LLC, Research Division - Associate [28]

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I'm Joori dialing in for Joe. I was wondering if I could ask a question on DTX301. Specifically, how does the third dose is being tested in humans compared to doses tested in preclinical models, such as mice? And what percent of the -- what percent of normal gene expression was achieved in mice? And do different OTC decision patients need different levels of correction based on mutation? And I have a follow-up.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [29]

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Very good. I think the mouse dosing is a little difficult to translate because mice are much more easily treated with AAV vectors. So the dosing in mice is 0.1x1^40 per kilo dose we're using in humans, just to be clear. So the exact way to translate the doses is hard. But the e13 should be a range to translate the mouse that should be fully therapeutic. But what I would say to you is that in the mouse, it's easily achievable to reach 100% of lever cured, but in humans and nonhuman primates, the number is significantly less, even at higher doses. The achievement we have to get in this program is to get to, what we think is, about 80% of normal ureagenesis, which is really maybe a doubling of the amount of ureagenesis they have. So they may have, let's say, 3% to 5% of normal to be these type of patients, and we need to get them into more like the 8% to 10% range. So we don't have to get them to 100% to achieve a level of enzyme sufficient to give them normal ureagenesis.

In the first 2 patients that did reach around 120% of normal ureagenesis, that doesn't mean their enzyme levels are 120%. It means their ability to convert urea is now 120% normal. But that means their level is probably in the 10% or 15% of normal range in the cells that have the gene and they are able to convert enough ammonia to give them what is equivalent to normal ureagenesis or sufficiently normal ureagenesis. So to be clear, we're looking at a relatively small increase, but in the mouse, at these dose levels, it's easy to get to 100%. But we know nonhuman primates and humans are different and more resistant to AAV. And that is what everyone in the gene therapy space is working to overcome the human ability to resist these vectors as compared to what mice, who are pretty easygoing with regard to AAV.

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Joori Park, SVB Leerink LLC, Research Division - Associate [30]

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Okay. Great. And my next question has to do with UX007. I was wondering if you could provide some color on your commercialization strategy, assuming the drug is approved, given that your field force is currently working with physicians and patients with a different treatment base, with Crysvita and Mepsevii?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [31]

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Yes. So the type of doctors that treat Crysvita are different. There are some endocrinologists and actually they do handle metabolic disorders too. It depends on the institution. We're very familiar with the launch of product into the metabolic genetic or biochemical genetics. So it does involved in multiple 5 or 6 launches. There is around 150, 200 centers that are -- where these patients are concentrated and managed, and a relatively smaller team can actually manage that. And the commercial team will be looking at the options whether it's -- how to leverage the existing team. We already have a metabolic MSL team and so forth. But I think there's some time for us to figure out the best way to launch, but we wouldn't want to impair the Crysvita launch. At the same time, we want to make sure we are resourcing this launch. But because it's a relatively smaller number of targets compared to the number of targets we're dealing with in Crysvita, we don't think we'll need anywhere near as large a team as we are with Crysvita given the size of the product and the number of doctors we have to see.

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Operator [32]

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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 [33]

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Another one revisiting the gene therapy programs and especially DTX301. You've previously alluded that you've been going back to results and trying to assess what's driving some of the heterogeneity in the results. I was wondering what the latest thinking on that is? And what are some of the leading hypothesis? And then as a corollary, related to some of the earlier questions and commentary, if the updated data in the third quarter continues to show a lot of heterogeneity, what will be the range of potential steps in addressing this? I know you've alluded to increasing the dose in prophylactic steroid, but help me understand the range? Now you consider something to suppress B-cells or other elements of the immune system, what are the range of levers that you could reach for, pending your analysis of the drivers of variability?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [34]

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Very good. So with regard to the first question, I don't think we have any new hypotheses on what's going on. I think innate immunity, which could be gender-dependent is clearly one of the factors that is a source of variation in all gene therapy programs, and it still remains to be one of the possibilities. Most of the time, people have been able to overcome that with dose, and I hope that e13 would be the dose that does that, and we'll provide that data later this quarter.

One of the things we've been considering from the beginning when you think about any immunity is how to suppress it. And prophylactic steroids have been shown to improve the transduction by AAV. We've seen in it in nonhuman primate studies we've done. I think it's also from other company's products that have tried it both ways, with and without prophylactic steroids that there is clearly a significant impact on the productivity of expression using prophylactic steroids. So I think it's a natural thing to add on and a very simple thing to add on if it can enhance the expression a couple of fold that's needed. And even if we're achieving normal levels, if adding steroids don't give you another twofold boost, just a few weeks of steroids, it's worth doing whether even if you're hitting 100% normal because the long-term benefit of enhancing their gene therapy, the prevalence of cells that are expressing, I think, is important. So we are looking at that as something we might do here in the Phase II program to tell us whether that might be an added benefit relatively simply. We're currently not looking at other types of targeted drugs. I think there's a lot out there. It takes you into a much more difficult area. And I don't think it's necessary. Our focus is a little bit less on adaptive immunity, you mentioned B-cells, and a lot more on innate immunity as being kind of the core culprits because we're not seeing transgene-directed antibodies or immune responses. We're seeing the question of getting the expression initially. If you're seeing antibody to the transgene, then you might want to think about things that affect that part of immunity. So right now, focus on suppressing innate immunity, enhancing through dose, and we might look at prophylactic steroids as an easy option to potentially boost expression.

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Operator [35]

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Your next question comes from the line of Laura Chico from Wedbush Sec.

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Laura Kathryn Chico, Raymond James & Associates, Inc., Research Division - Former Senior Research Associate [36]

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I was wondering if we could go back to XLH for a moment. And your earlier comments around the genetic testing. I'm just curious if you've had any sense as to whether that 12,000 figure you put out there in terms of the population, perhaps how that might shift with the implementation of genetic testing? And then I have a quick follow-up for you.

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

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Well, we haven't put out the results for our genetic testing program so far, but I think among clinically diagnosed XLH, we're seeing very high-frequency of confirmed XLH. And so we feel comfortable that the clinical diagnostic prevalence numbers are accurate, and we wouldn't think the genetic testing would alter those numbers at this point in time.

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Laura Kathryn Chico, Raymond James & Associates, Inc., Research Division - Former Senior Research Associate [38]

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Okay. Got it. And then I guess kind of related to XLH. I'm wondering now as you've had a few more quarters kind of under your belt here, can you comment at all, perhaps some persistency and compliance rates, as more patients have titrated up? And are there any differences that you're observing across the pediatric versus adult patients?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [39]

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We haven't yet put up formal persist and compliance rates, and I don't actually have them. But what I can say is that pediatric patients who are in the trials have essentially all stayed on drug, and we haven't lost anyone, so -- that I'm aware of. So -- and certainly, in some of the population, persistence has been excellent. Among the adults, there were a few from the trial who may not have continued, but it's been relatively good. And our confidence so far is that persist and compliance has been very good, and it's not -- we don't think a source of problems in the program at this point.

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Operator [40]

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

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [41]

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I just wanted to make sure I understand properly some of the trends quarter-over-quarter from 2Q to 3Q. So there was a 30% -- approximately 30% increase in patients reimbursed in the U.S., but you saw a much higher 45% increase in collaboration and profit share in North America. And as far as you understand, there was no price growth. And you just mentioned earlier that there was a consistent 60-40 split on the patient mix for pediatrics and adults. So I was just trying to get an understanding of what the discrepancy is? Is it related to the -- maybe a skewing in the cadence of patients in the quarter or not accounting for the growth in the Canadian patients or potentially a shift in the payer mix? If you could just provide some insight into how that lines up.

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

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Sure. We can do that. I do think one of the things that did change a bit is that the -- we were getting more patients reimbursed compared to how many start -- in comparison to the rate of start form generation. We definitely closed the gap on the reimbursed patients. So that definitely was a difference in the quarter. I don't have enough feel for the numbers. Or maybe, Shalini, you can provide some input on the question of the differences?

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Shalini Sharp, Ultragenyx Pharmaceutical Inc. - CFO & Executive VP [43]

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Yes. No, it's a great question. And I think half of the story is probably the increase in the reimbursed patients versus the start forms. That proportion that's reimbursed is higher than in prior quarters. And secondly, you're absolutely right about Canada, actually, that the start form data that we provide you is U.S.-only. Whereas, obviously the North American profit share revenue includes Canada as well. So those are the 2 key explanations.

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

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And we do have patients on reimbursed therapy in Canada who have private insurance, and that's continuing to grow.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [45]

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Okay. So the profit share calculation, I know you haven't gotten into the details on that, but that's constant. It's not as though you're getting a better -- a higher margin at a -- with a higher base on revenue?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [46]

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No.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [47]

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Right.

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Shalini Sharp, Ultragenyx Pharmaceutical Inc. - CFO & Executive VP [48]

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That's right.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [49]

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Right. Okay. And then the other question I had, you mentioned the prophylactic steroids, Emil. And we noticed on ClinicalTrials, at least for 301, you have at least publicly disclosed experimental cohort with a prophylactic regimen of prednisone. And we were just wondering whether that same plan exists for 401 because we hadn't seen that particular detail posted for 401, yet?

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

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Well, we are considering that whether the use of steroids could enhance the expression at any dose level based on data we've seen in animals as well as other people that we see in the clinic. So we're considering the 401. For 401, the use of steroids has some complexities because of how it affects their glucose metabolism. So we're working through that discussion. We could potentially add it. We haven't made that final decision. For 301, we felt it was worth just doing it to verify if we got a bump with steroids for something so simple, it would be worth capturing if it helps the prevalence and enhance the overall expression we see.

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Operator [51]

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

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Jeff Hung, Morgan Stanley, Research Division - Equity Analyst [52]

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If I can dig a little more on the pricing approval in Brazil. Can you talk about the steps that remain outstanding ahead of the formal reimbursement dossier?

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

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Sure. I'll start with that and Vlad will finish. So to be clear, in Brazil, things have changed over time. We -- the Brazilian government wants -- in order to do name patient or legal process reimbursement, they want to see the drug approved. This is partly why we filed immediately rather than doing that process in the pre-approval setting. So we filed to get approved, which allows you or enables you to do the name patient response, where the patient request therapy does this legal process to get access. That process starts, perhaps 2 or 3 cases get taken through. And then the other cases will get adjudicated more promptly than the first few. So we're in the middle of that process right now and have quite a few Brazilian patients who are queued up in that process. And I'll let Vlad talk a little bit about the other process. There are several steps, and the exact amount of time is unknown. And of course, in addition to the normal process, we are going to look to negotiate an access program, if we can, to go faster than the usual process. But maybe, if Vlad can tell you what the -- just remind me briefly, again, what that process was, the normal commercial reimbursement process?

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

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Sure. So after approval, we are submitting a pricing approval process. So we submit that report, and we expect to hear back from the Brazilian Ministry of Health around November/December. Once that is completed, we expect the price to be close to the U.S. price. We will be submitting a reimbursement dossier in 1Q 2020. And the typical time for that to get responded can vary anywhere between 5 to 2 years, closer to 5. There are opportunities to actually do a public-private partnership. We will be exploring those in 1Q after we receive the pricing approval. What I'd like to add, though, is that we have a very experienced team in Brazil, who has done many named patient programs for other companies. So they are well-versed in getting these requests from the physicians, compiling all the information required by the Ministry of Health, and ensuring that patients follow the appropriate path to the legal system. So they are well experienced. And we're now kind of waiting for this patient to get through the legal system up to the Ministry of Health where we will see the first named patient sales materializing.

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Jeff Hung, Morgan Stanley, Research Division - Equity Analyst [55]

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Great. And then Shalini, you mentioned in the initial part of the launches, you've been providing metrics rather than guidance. Can you remind us how you're thinking about an appropriate time to change to guidance? Is it a timing thing after certain number of quarters? Are you waiting for a certain amount of sales in a given quarter?

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Shalini Sharp, Ultragenyx Pharmaceutical Inc. - CFO & Executive VP [56]

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Yes. That's a good question. We have studied the analogous products and other rare disease launches in recent years, and there is a wide range of practice around when to provide guidance. And because we have sales not only in North America but also in other territories, we're in various stages of launch depending on which product in which territory. And to top that, with Crysvita, we also have a collaboration with Kyowa Kirin, so we have to align with them on when they would like to provide guidance. So those are all the kinds of things we'll be considering. So once we have a further level of maturity for these products in more than one market and agreement with our partner, then we'll be able to provide guidance to you.

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Operator [57]

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

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Nicole Ashley Gabreski, Piper Jaffray Companies, Research Division - Research Analyst [58]

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This is Nicole Gabreski on for Chris. So just on gene therapy manufacturing, for HEK293 and HeLa setup, we're just wondering, within your centers of excellence, are these 2 manufacturing platforms being used within the same facilities? And if so could you just give us a bit of color as to the safety precautions that you take to limit the risk of adenovirus contamination from the HeLa platform?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [59]

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That's a good question. Currently, the 293 cell-based contract manufacturing we're doing is in different places from where we're doing the HeLa cell manufacturing. So they are not really in the same location. That said, you still have to control the process, certainly. I think what all of these reactions, including the 2,000 liter HeLa cell system is run in disposal bioreactors with disposal systems. And so we feel comfortable about the controls of that and have not seen a problem with the question.

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Nicole Ashley Gabreski, Piper Jaffray Companies, Research Division - Research Analyst [60]

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Okay. And then just as a follow-up, you've mentioned that the high cost of GMP Plasmid production is one reason to use the HeLa system over HEKs. But has there been any thought about bringing Plasmid production in-house to reduce costs? And if so what are your reasons for or against this?

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

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We've certainly could become a Plasmid manufacturer. It's just it adds another level of complexity in supply chain. And some people have done that, and it's certainly something that could be done for 293. And we currently have made the decision to build our own plant, and we could include plasma production. I think the issue with plasma is just one cost factor, but the reproducibility factor is another and it include end the scale. Running 2,000-liter transaction is not really possible. Most people are using smaller reactor sizes and cooling reactors.

But with HeLa, we can really run a reproducible growth of cells at 2,000 liters, and they're probably going to create a much more robust commercial manufacturing process. It's very akin to what's used for vaccine manufacturing. And we said 2,000 liter, but you could make a dedicated plant to go 10,000 liter, and no one is doing plasma transactions at 10,000 liter. So we think the HeLa system is what we think of is sort of the next generation where you're going to create truly commercial AAV manufacturing with the kind of cost structure and reproducibility required for a truly commercial AAV program. We are still using 293. It can be done in these rare indications, and it certainly can be faster upfront. But in the long run, we strongly believe in the HeLa producer cell lines to approach as a better approach to long-term commercial AAV manufacturer.

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Operator [62]

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

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Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [63]

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So maybe I have 2 on gene therapy, and maybe just a follow-up for Shalini. So a quick question relating to -- so help us consider the plan in terms of 301. Is the -- after this initial 3 patients, is the thought next to give steroids and then figure out sort of what the next step, and you'll expand into a few more patients? I'm trying to get a sense of what point do you also make a decision whether you want to try a higher dose? And I have a follow-up as well.

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

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Well, what we're planning to do, we're still continuing the current protocol, doing the 3. If we see 2 out of 3 that achieve substantial responses that will continue then to do the second group of 3 at that dose without steroids. The protocol is to add another whole arm to the study and say, "Let's do that same thing, but now add steroids to the arm." As a comparator arm, to do it no matter what we see in the 2 arms, the idea is if we get a really good response, could we get an even better response with steroids. So that's the argument. We could certainly go higher. It's not an option off the table. However, if we get to where we need to be in the range, if you add something as simple as temporary steroid usage to enhance it further and potentially a couple of fold, improvement is possible. We think that's a really simple thing that's a better answer than simply increasing the dose to get what we want.

So right now, if you look at lot of gene therapy programs, everyone's doing this one linear thing and making tweaks in line. No one is doing comparative experiments. And we think this is a good situation where we should do a comparative experiment and look with the group of patients without steroids, see how they do and then add the steroids and make a good decision on Phase III.

So hopefully that gives you an idea. We're going to do the 3 without steroids that we've done. We'll look at their results, and we will add another 3, assuming 2 to 3 responders. And then the steroid arm will be another arm that we'll add regardless of how that's proceeding to tell us whatever effect we're getting, can we enhance it further by a simple addition of steroids.

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Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [65]

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Okay. Got it. And shifting to 401, depending on obviously what you see in the next dose cohort, but the 5-dose cohort was already pretty good. It sounds like you'll expand and then you'll figure out what you're going to do with the steroid element. But in terms of a potential registrational path, starting Phase III next year, what do you think a Phase III trial design may look like, based on what you know now, in terms of end points?

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

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Well, our general view right now is that for these metabolic disorders that the FDA's preference will be to have controlled studies. And since they are metabolic, we believe that the metabolic end points would make them more attractable than, for example, doing a pure clinical end point.

So for 401, we've been looking at time to hypoglycemia, but we're also looking whether hypoglycemia or cornstarch removal and maintenance of glucose stability. But it's going to be around the glucose control issue, whether it's during the time to have a glycemia or some aspect of glucose control, which we think is tractable and relevant for FDA.

We haven't yet discussed it with FDA. When you think of a program that would likely be, for example, maybe 30 patients, 20 treated, 10 placebo kind of a study. As an idea, however, this needs FDA discussion before we complete that plan. But that's the kind of thing we're thinking about in our current planning, and we are planning for both programs to be in Phase III next year. That is our plan. But we just want to make sure that whichever we do in Phase III, we've made the best choices.

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Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [67]

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Okay. That's great. And any update on potential KHK timing to filing for label expansion, by age, in Europe into the adult segment for XLH?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [68]

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Well, I know that they are planning to put together the filing. Vlad, do you have any updates that they have put forth publicly because I don't know if they disclosed that publicly?

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Wladimir Hogenhuis, Ultragenyx Pharmaceutical Inc. - COO [69]

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I don't know if they had disclosed that publicly.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [70]

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Well, historically, we know they have been putting it together. They have all the information required. And so I think it's in their court to make the filing, but if they haven't disclosed it yet, we have to let them disclose what they're doing in Europe.

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Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [71]

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Okay. And then maybe last question, just for Shalini. The -- so when we calculate the KHK sales in -- that they reported this morning, it was around $70 million, and you're reporting $73.5 million, roughly. So is the delta Latin America, which KHK is not reporting and now potentially Canada? Or is there something else that we're not seeing?

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Shalini Sharp, Ultragenyx Pharmaceutical Inc. - CFO & Executive VP [72]

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Yes. No, it's a good question, and the way they report and the way we report are very different. That's hard to reconcile the 2. But the couple of differences are that we book sales in Latin America as you noted. And also if you read the footnotes of their disclosures, they do not include any early access or named patient sales in their total revenue figure.

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Operator [73]

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

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [74]

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I have 2 brief ones here. The assay used to measure the increase in ureagenesis in the 301 OTC gene therapy trial, I believe, is measured by a label, sodium acetate assay. Can you speak to the historical variability observed with that assay? And how you're accounting for any potential assay variability in the trial? That's first. And then for the second one, on UX007, based on your filing package and most recent FDA interactions, can you comment on your current level of confidence for the NDA acceptance and ultimate approval of the drug now that the filing has been made? Any color there would be helpful.

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

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Very good. So on the assay for ureagenesis question, the assay was developed by a consortium for urea cycle disorders. It's an NIH-funded consortium. They've been doing that work for a number of years and feel it's the best method to assay ureagenesis. Usually, patients, when repeatedly measured, are within 10% of where they were around in that range. And if you look, even in our study, we have some patients that are pretty stable within a range. We've had, on occasion, people who have not been, but we are doing -- collecting more data now to help define that variation. But it appears, over a repeated period of time, we're usually consistent. So we feel -- as long as it's done in the prescribed way, and that is one of the sources for variation, the patients have to be fasted and cannot sneak food in while they are doing that test, for example. So as long as they do it in the prescribed way, it can't be consistent. And we feel the variation should be less than 10%. Therefore, the amount of change we're seeing in the patients that we're calling responders is well past what you would observe just through variation, to answer that part.

The second question you asked was on 007, our level of confidence. Well, we used to have great and detailed discussion with FDA at both the pre-NDA and previously and an ongoing dialogue on assuring that we're providing the informations that we have a high confidence that the filing will be accepted and reviewed. We feel that between the time they accepted the filing for review and while that gets to review, we added additional 20 patients worth of data, another third cohort of naive patients treated that had an 80% reduction in the median number of days in the hospital from 10 days to 2, consistent with the prior data we had in our Phase II study as well as in the retrospective study. So we feel, actually, they are getting more data now than they actually have when they made the decision.

In addition to that, we've added expanded access information we've been collecting, which we think is strongly supportive. So our cost is as high as the package is in sufficient size of 150 patients exposed, some of them for more than 10 years of continuous exposure combined with the magnitude and seriousness of the type of data we're talking about. These aren't small changes in hospitalization rates. These are very large changes and very sensitive clinically meaningful types of changes. Combine that with the safety profile of the drug that is simply the GI oral drug that have some GI upset issues, but no observed toxicities as downside, I think the benefit/risk is pretty strong. And we feel confident we can get through this review and get approved. As said, the FDA had questions they raised, and we will have to work through those questions in the process with them. And they are good questions, and we want to make sure we're getting the right answers.

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Operator [76]

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

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Neena Marie Bitritto-Garg, JP Morgan Chase & Co, Research Division - Analyst [77]

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This is Neena on for Cory. I just wanted to ask 2 quick questions. So one, kind of a higher-level question, just about -- you talked about the Medicare/Medicaid exposure in the U.S. And just wanted to hear a little bit about your thoughts on the recent pricing proposals and how that might impact the business going forward? And then I just have one quick follow-up.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [78]

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Very good. Well, we don't look at the Medicaid/Medicare exposure as risk. We look at it as benefit. Now if they are approving grain policies and are hearing the stories of our patients and are responding with support for policies to treat patients, so far, we think the fact that a bigger percentage is going is just to show you that there's that much interest and support for this drug because of its profound impact that we've been seeing in terms of rickets and other aspects of the disease. So we're confident in that. I think the question on pricing and reimbursement questions that are going on in Washington. There's certainly a lot of proposals on the table. We have a government press group. We follow it closely. I think the issues that we've asked people ask about is whether a reference pricing to Europe would cause us a problem. And I would say for that particular issue, we have been very thoughtful about how we work together with Kirin on pricing strategy, and we feel that the pricing from Europe to U.S. is actually not differentiated and should not have an impact on us, we think, in a significant way, unlike maybe some other situations.

So we feel like we're in good shape from that standpoint. I think fundamentally, from all pricing conditions, Rare Diseases in this kind of very rare disease is very profound effect of drugs. I just think it's a kind of thing that people are always going to want to get done. And I think there's a lot of larger market situations where there's really huge amounts of money and issues at hand that I think are important, but we believe the rare disease space is special and that there will be -- whatever happens, people and parents want their kids get treated, and that's going to happen.

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Neena Marie Bitritto-Garg, JP Morgan Chase & Co, Research Division - Analyst [79]

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Okay. Great. And then just one quick follow-up. Are there any updates on the filing plans for TIO for Crysvita.

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [80]

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We haven't yet provided TIO guidance. We are working with the FDA on that. Our hope and expectations that we could be able to file, but we want to confirm all the details at this point. But when we get those details confirmed then we'll update The Street on TIO. But we continue our discussions, and we expect that we will be able to file, but the details are yet to come.

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Operator [81]

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

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Ross Howard Weinreb, Goldman Sachs Group Inc., Research Division - Research Analyst [82]

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This is Ross on -- I know you said you're planning to file the IND for Wilson in 2020. Just as we kind of think about what a clinical program in Wilson disease can look like, can you just help us understand what a clinical trial would be like here? And what end points would be of interest?

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Emil D. Kakkis, Ultragenyx Pharmaceutical Inc. - President, CEO & Director [83]

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Yes. Thank you. So Wilson disease, fortunately, for us, is a disease that has had other therapeutic approved, which gives us a lot more knowledge about the clinical regulatory path. And particularly Wilson has the use of free serum copper as a metabolic biochemical marker that is accepted and was -- it is the primary end point in the election on copper, the new chelator program that is currently in trial and has been used in other indications. We feel then that there is a strong basis for using metabolic copper or free copper levels, which are abnormal and which do go down when you use our gene therapy in animal. We think also loading of throughput on copper is important, but we think the free serum copper is clearly the thing that's going to move people.

And that said, I think with the gene therapy, we're going to also have to look at what else we're doing for patients. We're going to have to look at both liver injury, liver disease situations as well as CNS, in the study to help support the benefit of the product in the long run. And so our study, while it might primarily focus on the free serum copper or in various supporting metabolic markers, we would expect to also study the neurologic in liver phenotypes, which are important part of what we look for and benefit.

We haven't said what our plan is. Our hope is to design something that is more forward-thinking, in terms of becoming adaptive and working, including a randomized control group initially. And our hope would be to be able to move faster through dose cohort and adaptively design a program that goes into pivotal through that, that will require a discussion with the FDA and agreement, and we do not have that yet. But we think that the signals from the FDA have been that they are looking at ways to provide smoother, more contiguous development programs. And we think this -- Wilson is a very good choice for that plan because there is clinical history and established end points from the path.

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Operator [84]

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I'm showing no further questions at this time. I would now like to turn the conference back to Ms. Danielle Keatley, you may proceed.

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Danielle Keatley, Ultragenyx Pharmaceutical Inc. - Senior Director of IR & Corporate Communications [85]

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Thank you for joining us today. This concludes our call, and a replay will be available soon. If you have any additional questions, please contact us by phone or at ir@ultragenyx.com. Thanks for joining us.

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Operator [86]

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Ladies and gentlemen, this concludes today's conference. Thank you for joining, and have a wonderful day. You may now all disconnect.