PTC Therapeutics, Inc. (PTCT) Q3 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the PTC Therapeutics Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a remainder, this conference call may be recorded. I'd now like to turn the conference over to Emily Hill of Investor Relations. You may begin.

Thank you. Welcome to our conference call. Today we will discuss PTC's third quarter 2015 and year to date financial results, our ongoing commercial launch activities for Translarna and Duchenne muscular dystrophy results from our Phase 3 ACT DMD clinical trial and other corporate update. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations. These include statements about our future expectations, regarding clinical developments, regulatory, and commercialization timelines, the potential success of our products and product candidates, addressable patient populations and financial projections. Actual results may differ materially from those indicated by these statements as a result of a variety of risks and uncertainties including whether the FDA, EMA or other regulator degree with our interpretation of the results of ACT DMD and those discussed under the headings, special note regarding forward-looking statements and Risk Factors in our most recent Form 10-Q which is available from the SEC or on our website. Such statements represent our judgment as of today and PTC undertakes no obligation to publicly update any forward-looking statements except as required by law. As noted in our company's press release, we will review ACT DMD data during this call. For those who interested, the slides that will be presented during the call are available on to the Investor Relations section of our website. With that, let me pass the call over to Stuart.

Good afternoon and thank you for being on the call. As you know, we recently reported results from our Phase 3 ACT DMD clinical trials for Translarna for nonsense mutation Duchenne muscular dystrophy. We're excited to talk more about that today as well as our planned next step. As you might expect, we've been sharing this data with the number of important stakeholders globally including physicians, key opinion leaders and patient advocacy groups. The response to our data has been extremely positive. The feedback is highly supportive of accelerated access to our patient across all stages of disease progression. PTC has now demonstrated a favorable benefit risk profile across two large double planning placebo-controlled trials. We're actively finalizing our regulatory submission to both the FDA and EMA which we planned to complete by the end of this year, we're committed to working closely with all relative stakeholders to bring Translarna to patient as quickly as possible. In all countries where Translarna is already available on a commercial basis the launch has been progressing well and continues to gain momentum. We're extremely proud to have launched the first ever approved treatment for patient with his life threatening disorder. We now have 152 patients on commercially reimbursed Translarna therapy across 13 countries. This includes patient's given access either through reimbursed or the access program or direct commercial sale. The launched in Europe and across country that referred to the EMA approval is impressive giving the standard nature of a country by country reimbursement process. This is the largest increase in patients and therapies since we begin reporting patient number earlier this year. Following the announcement of ACT DMD results we've seen an uptake and momentum of new patient order. In addition to the 152 patients we have today on commercially reimbursed Translarna, we also have approximately 425 DMD patients in our open-label extension studies from our previous Phase 2 and most recently completed Phase 3 ACT DMD study. This brings our total to more than 550 DMD patients currently on Translarna therapy, as Translarna become as more commercially available in any given country or region, we expect to transition a significant portion of these patient to commercial therapy as appropriate. Now I'd like to take some time to review the results of our Phase 3 ACT DMD clinical trials, which we reported on October 15. We have posted supplemental slides on our website which provide additional perspective on our data. Before we getting to the data, it is important to understand than in developing the treatment for an ultra-orphan lifelong progressive life one progressive disease such as DMD the goal is to show efficacy with given endpoints in the limited window of a 48 week clinical study. We see this in ACT DMD. Turning to Slide 3, the totality of clinical data confirms Translarna's ability to slow disease progression for patients with DMD. In ACT DMD while the overall results in the ITT population of our study demonstrated a 15 meter difference in favor of Translarna that was not statistically significant. Translarna's demonstrated a highly significant clinically meaningful 47 meter benefit in the Six Minute Walk Test in the pre-specified three to four hundred meter baseline patients. In addition the pre-specified meta-analysis showed statistically significant benefits in both the primary end point of Six Minute Walk Test as well as the secondary Time Function Test. Now let me walk you through some of the details of the results. On Slide 4 you can see that the natural history indicates that patients tend to be stable with Six Minute Walk distance baseline above 400 and transitioned to a more rapid decline with a midpoint based on a six minute walk test of 350 meters. Given this evolving awareness of the natural history of Duchenne muscular dystrophy in the Six Minute Walk Test and the [indiscernible] of the patient population, we together with the Duchenne muscular dystrophy community now understand that the optimal window between drug effects is a Six Minute Walk distance baseline in the range around 300 to 400 meters. Slide 5 illustrates why the Six Minute Walk Test is a less reliable endpoint for patients with baseline Six Minute Walk distance less than 300 meters. Results from an MRI study that correlates Six Minute Walk distance with fat content in muscles demonstrates that patients with a baseline Six Minute Walk distance less than 300 meters have between a 75% to 80% fat content in the muscles and are at high risk to lose ambulation therefore making the Six Minute Walk Test less reliable in these patients. The 6th Slide in the presentation highlights the baseline characteristic of the patients enrolled in the ACT DMD, and our Phase 2B results. While our intention was to narrow the range of baseline Six Minute Walk distance in patients enrolled in ACT DMD, we now know that the second study actually enrolled patients across a broader range of disease spectrum than anticipated. Based on knowledge of the biology and the evolving understanding of the natural history of DMD and the strength and limitations of the Six Minute Walk Test, we were cognizant of the potential importance of defining subgroups in our analysis when submitting the statistical analysis plan to the FDA earlier this year. Therefore we specified subgroups that would focus on the declined phase, specifically those patients with baseline Six Minute Walk distance less than 350 meters at baseline and those between 300 and 400 meters. If you look at Slide 7 we see a 50 meter benefit of Translarna over a placebo in the ITT population although it did not reach statistical significance. However in the 300 to 400 meter subgroup we see a clinically meaningful 47 meter benefit in favor of Translarna. Importantly, this was consistent with the 45 meter benefits seen when we look back at the 300 to 400 meter subgroup from our previous Phase 2B study. The limitation of the Six Minute Walk Test outside the 300 to 400 meter window was confirmed in our recently completed ACT DMD trial. As seen on Slide 8, examining the placebo patients in our study it is clear that in the population of patients with baseline Six Minute Walk distance greater than 400 meters, patients are effectively stable over the 48 weeks. However in the population of patients with baseline Six Minute Walk distances less than 300 meters patients are declining substantially. This is because patients walking less than 300 meters are at risk of losing ambulation over the ensuing 48 weeks, and we saw this in our study. It seems like now and consistent with the Six Minute Walk Test limitations described above in the less than 300 meter group and the greater than 400 meter essentially no change can be measured using the Six Minute Walk Test over 48 weeks. Together with the DMD community we now further understand the limitations of the Six Minute Walk Test in both rapidly declining patients and very stable patients. The limitations of the sensitivity of the Six Minute Walk Test in these patients impacts the statistical results for the overall patient population. Turning to Slide 11, demonstrating the fact in patients below 300 meters you need an endpoint with the appropriate level of sensitivity. Here you see the data from our key secondary endpoint the Time Function Test in patients with baseline less than 300 meters where Translarna had a consistent benefit over placebo. Though the Six Minute Walk Test may be too onerous for the progressed patients the shorter Time Function Tests demonstrate clinically meaningful drug benefit. This illustrates the importance of using the appropriate test to measure efficacy at each stage of disease. I would like to point you to Slide 13, the North Star Ambulatory Assessment data. The North Star ambulatory assessment is a newer instrument that is dissent specific measure of disease progressions. This has been an area of interest in our discussions with key opinion leaders who see this data as an important measurement of function in Duchenne muscular dystrophy patient. The North Star ambulatory assessment is also an important measure because of evaluation of upper body function which is important for both ambulatory and non-ambulatory patients. In ACT DMD, the North Star assessment score favored Translarna by 1.5 points in the ITT population and 4.3 points in the 300 meter to 400 meter baseline population. This is the most significant treatment effect demonstrated by the North Star assessment in any clinical trials to date. In summary, on Slide 14, you see a flowchart demonstrating Translarna has a consistent benefit over Placebo in the primary and secondary end points across both the ITT as well as the meta-analysis. We've heard feedback from many KOLs that the fact that the six minute walk test and the time functions that are correlated with benefit gives them increased confidence of Translarna's clinical benefit. It is important to note over 900 individuals including healthy volunteers and patients with nonsense mutations genetic disorders have been exposed to Translarna today. In addition to the efficacy results, we've just described, Translarna also exhibited a strong safety profile. This is critically important given than it is intended to be a chronic therapy rotations. We're actively finalizing our regulatory submissions to the FDA and EMA which we plan to complete by the end of the year. In the meantime, the North American commercial leadership team is in place and we're appearing for a U.S. launch. Let me now turn to our Cystic Fibrosis program. I'm pleased to share that during our enrollment of the Phase 3 ACT CF trial, we experienced an overwhelmingly strong demand from physicians and patients who wanted to participate in our trial. We closed patient screening in October and expect to complete enrollment by the end of this year with data about a year later. In September of this year, we've submitted an application to add nonsense mutation restrict by grosses to our label for Translarna in Europe. This application was based on results from our previous Phase 3 trial. The application process with the European Medicine Agency is ongoing and we expect additional information in the coming months. Concurrently we are actively preparing for a potential launch in Cystic Fibrosis in Europe in 2016. In October we attended a North American Cystic Fibrosis conference and received positive feedback from key opinion leaders on our new analysis of FEV1 and exacerbation, new patients less than 18 years old and the importance of addressing the unmet medical need for nonsense mutation Cystic Fibrosis. In addition to our Translarna programs in DMD and CF, there're also programs underway in MPS1 and aniridia. Earlier this year, we initiated a Phase 2 proof of concept study for Translarna and MPS1. Existing treatments for MPS1 do not address this central nervous system manifestation of the disorder which can be quite severe. Because Translarna is a small molecule which can cross the blood brain barrier, there's a potential to address this unmet medical need. In May of this year, we amended the clinical trial protocol to allow patients currently using enzyme replacement therapy to also enter the study. This protocol revision has resulted in delays to opening clinical trial sites and accruing patients. As a result we now expect to have initial data from this trial in 2016. Let me now shift to the spinal muscular atrophy program, SMA is a genetic neuromuscular disease caused by a missing or defective SMN1 gene which results in reduced levels of SMN protein. Insufficient levels of SMN protein are responsible for the loss of motor neurons within the spinal cord and muscle tissue leading to muscle atrophy and death in infants and toddlers in the most severe form. SMA is a leading genetic cause of death in infants. There are currently no marketed therapies for SMA. PTC together with Roche and the SMA Foundation have a robust program around all small molecule SMN2 splicing modifiers as a way to address the disease. Because SMA is both a muscle and nerve disease, there's a benefit through an oral molecule with broad peripheral tissue distribution. SMN2 splicing modifiers affects splicing of the RNA through the production of full length messenger RNA and thereby enable the production of normal SMN protein. Our lead compound RG7800 was selected in 2013 and moved into the clinic in early 2014. Data from the first cohort of our Phase 2 multiple dose study called Moonfish were recently presented at the Annual Congress of the World Muscle Society. RG7800 was well tolerated and substantially increased splicing of SMN2 RNA to full length mRNA. The data demonstrated up to a three-fold increase in full length Messenger RNA and up to two-fold increase in SMN protein levels. We've announced in May that the dose of MoonFish was suspended as we evaluating a non-clinical [indiscernible] monthly up to nine months of dosing and exposure level of above dose dosed in the clinic. As a remainder primary dosing was not done in the clinic. These preclinical investigations are ongoing. There is a high level of commitment to the SMA program for PTC as well as from our partner Roche and the SMA Foundation. Concurrent with the advancement of our lead compound, a robust research effort regarding SMN2 splicing has continued to advance through IND-enabling studies. Additional data are expected in the coming months, which will be utilized to determine the best clinical development path for the SMA program. PTC and the program collaborators remain highly committed to this program and expect that clinical development will resume in early 2016. Let me now turn to our cancer stem cell program targeting BMI1. BMI1 is an up regulated in the tumor stem cell population and is an important component of the complex that allows cancer cells to become resistant to chemotherapy. As you may recall, our compound PTC596 reduced the levels of the BMI protein in preclinical oncology model. I'm very proud to have a fourth internally discovered program at PTC entering clinical development. PTC596 began a Phase 1 study in the second quarter of this year in advanced cancer patients with solid tumor. We are excited about this program and continue to go well and we'll keep your breath with the progress as we move forward. As you can see we've had a busy year so far and reported [indiscernible] many milestones in the coming months. With that let me turn it over to Shane to talk about our financial results for the quarter. Shane?

Thanks you, Stuart. As Stuart mentioned earlier, Translarna sales continue on a strong trajectory and we've now generated year-to-date September 30 sale of $21 million. In the third quarter, we recorded $9.8 million in Translarna net product sales representing approximately 59% sequential growth over the $6.2 million of sales we recorded in the second quarter of this year. Total revenues for the third quarter of 2015 were $9.8 million compared to the prior period of $1.7 million. R&D expenses in the third quarter were $30.6 million compared to $18.8 million for the same period in 2014. R&D expenses increased year-over-year as a result of additional cost associated with our expansion of our development activities including late stage studies in both DMD and CF as well as an increase in non-cash stock based compensation. SG&A expenses were $21.4 million for the third quarter of 2015 compared to $10.5 million for the same period in 2014. SG&A expenses have increased year-over-year as a result of the commercial launch of Translarna. PTC has grown both domestically as well as internationally to support the ex-U.S. launch activities as well as in preparation for a potential U.S. launch for Translarna in 2016. During the third quarter, we issued $150 million of convertible debt and received net cash proceeds of approximately $145 million. We therefore recorded net interest expense during the quarter of approximately $852,000 versus net interest income of approximately $350,000 in the same period last year. We recorded the debt on our balance sheet at a discount which will be amortized over the life of the bond. We have a cash interest rate on the bond is 3% for GAAP purposes we will be deducting and assumed interest rate of 11%. We reported a net loss of approximately $43.2 million for the third quarter of 2015, compared to approximately $27.3 million for the same period of 2014. Our net cash burn for the quarter was approximately $29 million and we finished the quarter with $371.5 million in cash and marketable securities on our balance sheet. We currently have 34.3 million shares issued and outstanding which includes 0.4 million of unvested restricted stock grants. We will continue to provide patient numbers for the remainder of the 2015 fiscal year and will then assist what metrics to report to the investment community in 2016. Joining us for our Q&A is our Chief Commercial Officer, Mark Rothera. And operator with that can we now take the first question.

[Operator Instructions] Our first question comes from the line of Christopher Marai of Oppenheimer; your line is now open.

I was just wondering two things, congratulations on presenting a little bit more of the data, I was wondering would you care to maybe elaborate on when you'll present the full curves for the ACT DMD data sets. You just presented some of the placebo curves I guess for the greater than 300 and less than -- less than 300 greater than 400.

Yes, thanks Chris. Yes we're looking at the meetings that are coming up in probably in early spring like the AAN meeting and things like that that are coming up, that we, and a peer review meetings we will be showing that. So we look forward to actually showing all the curves then, and the data. So we'll save those details for those meetings so yes, we look forward to doing that.

Okay, and then do generally those curves sort of match what you'd expect for treatment I suppose, you know steepening towards the end of the 48 week time point. How should we sort of think about those curves to potentially look like?

Yes, great. So those curves look, actually they look good. They look like you'd expect them to with they actually begin broadening early and then expand out and that's true not only of the Six Minute Walk Test but also of the Time Function Test as well. So all of those curves look actually really quite nice where they separate and they separate relatively early and continue to separate. So I think you'll see as we present them at the public meetings that we're very pleased with them and I imagine that you would also be.

Great and then maybe just to follow up on some additional data that you've looked at. You guys ever look at the clinical global impression scale, sort of assessment type, I guess assessments of the patient outcomes in your trial, you're minus of that, I know [indiscernible] is making quite a big deal about some of their global impression results.

Sure, well maybe what we said here talked a little bit of our -- We had two things that looked extremely nice from a patient reported outcome measures. One is -- and I think we talked a bit about this previously where people were moving from the QL to the proxy group because it looks like there's more sense to those results and if you look and I think there's a slide, no, if you look at the proxy, I don't think we have a slide on this, but even in those patient reported outcomes where they look at either something called transfer, the ability to you know transfer from a chair to a bed or to a going to the toilet which they measure transfer of some physical function in sports they call it. In both cases patients reported better outcome measure in Translarna than placebo. Similarly we did an activity of daily living outcome measure where also patients reported outcome measure. And in all cases patients showed that they either did not progress or did better while on Translarna than on placebo. So I think really the totality of the data, and I think what's so, for me what's so exciting about this is not only the Six Minute Walk Test but in the Time Function Test and also in the Northstar ambulatory specimen which is a new test that's specific for DMD we saw really substantial changes and then consistent with that also the patient reported outcome. So I think the totality of the data is really quite good.

Okay, then last question and I'll jump back in the queue. I think, I guess it'll be interesting to understand if you talked at all to the EU regulators, since this data had come out and if there are any updates that you can share regarding that. Thank you.

Sure. So yes, so obviously we're in the middle of getting ready for the submission in terms of the really the goal here really is to, is to really complete the conditional approval, which the condition of that was to complete this trial and then submit a report and so we're in the process of doing that now and as you can imagine it's a sensitive time and that's really what this is what we're reporting that we're in the process of doing that.

Thank you. Our next question comes from the line of Ritu Baral of Cowen, your line is now open.

Hi, it's Ellie on for Ritu, thanks for taking the question. Just congrats on a great quarter with your sales growth. Which country did you add sales for onto your 12 last quarters and 13 this quarter and was growth weighted towards any specific geography?

Sure, let me ask Mark. Do you want to talk a little bit about this quarter in terms of the commercial activity?

Sure. Thanks for the question. So the new country we added as a commercial country in the last quarter was Sweden. So we now have five countries where are fully commercial and just to remind you we have eight where we're also selling on a reimbursed early access basis. So you asked you know what about weighting. I mean the major region driving new patient starts is Europe where the launch momentum is ticking up. But that's not to diminish the contributions from Latin America and other early access countries where we anticipate, continue to grow, terms of that contribution over the coming month.

I think also -- I think what's really nice just to add on a little bit to what Mark was saying is that, two thing it’s the, in talking through the positions in the region. There's really an excitement around this, there's some, I think Mark just probably has given bit of an uptick since we report, so we feel pretty good about this.

And when can we expect to see an update on the nice [ph] guidance which asked for a bit more evident to just the final cost of treatment?

So, maybe I'll start then I could pass it on to Mark, really we -- the nice guidance as you probably remember is a process that we go through and usually it's multiple meetings, we've had our first meeting and now typically with for orphan drugs the highly specialized medicine, it requires multiple meetings to come through an agreement. The committee as you know requested some further clarification from us and we provided those responses to their queries and so we look forward to having additional discussions with the finalization of that in February.

And they have they had any comments about the Phase 3 data that's reflecting positively?

So, yes, so we've talked -- so, we're in the process of discussing that part of it with them now, we haven't really discussed that part of that -- that part of it with them. Mark you want to…..

I was just going to add to that, we're also in parallel very heartened by the fact that the Scottish NHS have just decided to fund the first patient on Translarna in the UK, which we expect to start on therapy later this month. So, things are beginning to move in the UK as well.

Thank you. Our next question comes from the line of Anupam Rama of JP Morgan. Your line is now open.

Hey guys its Eric on for Anupam. Stuart Just can you care to elaborate on your comments about kind of seeing an uptick in patient adds post DMD readout, I mean is this kind of some converting new physicians you might have been kind of sitting on this fence prior or are they kind of been seeing the data, more comfortable and it's what's driving to patient payment otherwise and maybe kind of just some I could kind of get your most recently seeing on the patient compliance rates since the previous update? Thanks.

Hey Mark, chomp in at the bid on this. I’ll pass it over to him.

It's definitely clear that we've seen an uptick in new patients. Since the data release, we believe that this is viewed some physicians taking a stronger position now in terms of arguing for reimbursements in light of the confirmed data. But also, as you know different physicians adopt innovative medicines at different rates and I think some are coming off the fence now, who are waiting to confirmatory data before they were going to prescribe. And just anecdotally I can describe an exchange with the opinion leaders from the Nordic region who said that on the strength of the confirmatory trial data he would now be applying for funding to the hospital budget, so that's indicative.

And we're hearing that from, I think also from a number of physicians and I think one of the things in just talking with the numbers of physicians when wonderful things that we share a lot of this bid, for those that were thinking about as a fact was very heartening to see both the Six Minute Walk Test and the multiple other secondary endpoints that we're seeing, so that gave them comfort that it wasn't just one measure but multiple measures that led to that. So, Mark quantify a little bit about compliance rates as well?

So, compliance rates since long should've been very good, I would say north of 90%. And we saw similar compliance levels in the clinical trial program then I think that this slightly reflects that the patients are experiencing benefits from the treatment, it's in oral, it's easy to use and as we've already said, this is a very good safety profile and so I think all in all we've seen very good compliance rates.

Thank you. Our next question comes from the line of Geoff Meacham of Barclays. Your line is now open.

You got one on Slide 8 and 9, these are really helpful actually in trying to assess the data, I'm wondering, Stuart if you could, if you look at Slide 8, have you guys run an analysis of these two curves, do they differ when you layer on each of the variable and do you think that is sort of relevant when in the context that Slide 9 as well another words the patients that were maybe too sick or too healthy with regards to disease that vary on Slide 9, can you put more from the left and the right buckets into the middle that 300 meter to 400 meter?

I think what you’re seeing in Slide 8 is really indicative of what we're seeing in our previous natural history studies as well as others where it really is somewhat on where they are in terms of their six minute walk, that's now -- there's the age component, because you can imagine as patients get older they tend to have lower Six Minute Walk, but then I think it's predominantly based on where they are within their Six Minute Walk test that ultimately decides what's going to happen and that can vary by age. I don’t think ages is the key factor here in terms of that, it's really were their baseline of walk test and I think with this really reflect is -- and that's I think reflected in Slide 9 of the limitations more of the walk test than we effect of the drug because if you look and we've learned as we show to you in that schematic and I think I've talked about this at some length over the years that when patients are walking extremely well or above 400 meters because just dystrophy is in a sense a shock absorber and itself doesn't add mas or strength, it’s going to be hard to see actually affect in those patient population. That's why -- it's clear that you want to get these patients on early because you want to keep them stable as possible, but from a clinical development perspective they're going to be difficult to see. I think also on the left side the less than 300 meter baseline population, really I think reflects the variability and the limitations of aspect [ph] where these patients because, A, they have such high likelihood of becoming and they’re dropping so rapidly than in the 48 week period. There it’s difficult for them to actually to do the six minute walk test and it’s quite onerous. And you could see it in the -- I think the recent results from the Florida group in lead that we showed you, you can see clear as those patients that are 300 meter to less have 75% to 80% fat fraction in their muscle and that's -- they have a high likelihood and you see that in that figure of actually loosing ambulation quickly, which makes it probably for this particular test, relatively difficult and that's why I think, when you think -- and it’s just evolving the nature of understanding, what are the best tools that probably shorter test like type function test, like 10 meter run or walk where we saw the best activities, you see near and marginally significant in this 10 meter run or walk with 2.5 second and that’s actually a pretty large difference and considering in this patient population. So, I think this is indicative of stream drug effect even though we're -- it's a harder time because of the six minute walk as a tool you need other test.

Yes. And just on that note Stuart, is the six minute walk testament, has that been used in any other the launched countries as an access barrier or some sort of diagnostic -- to exclude patients and then would you expect -- I'm assuming that when you go to FDA and EMEA with the new data that you want some of claim for the 300 to 400 meter -- subgroup within the context of perhaps that U.S. they label.

I think that's a good question. Really I think most people think of this as a clinical development test and that at the end of the day, what we're thinking about it, that is really at least a current label which is ambulatory void [ph] it’s the loss of ambulation and we're looking at that as the loss of ambulation perhaps six months after, loss of ambulation is the potential rule not as where you are in the six minute walk test. So I think that's the key point. I think the key point is really and this is comment and as you know, in orphan drug is -- the tools are only so good dependent on where you at and when you demonstrate the activity in the best patient population it usually extrapolates out beyond that.

Thank you. Our next question comes from the line of Simos Simeonidis of RBC Capital Markets. Your line is now open.

I have a question on Slide 9, where you show the DMD results broken down by three different populations, under 300, over 400 and this 300 to 400 and Stuart maybe you can help with this, trying to understand the rational of how the drug may work, you said that the under 300 meter baseline patients where we see no benefits or it looks like patients did the same in both arms and then obviously we see that the benefit in the 300 to 400 meter, why wouldn't the patients the [indiscernible] that are over 400, why we not see a benefit there, if the drug works and it's making dystopian, I understand they're healthier, but shouldn't we see a benefit in the [indiscernible], I mean it's not as you say, it's a switch and we say under 300 you are very seek, over 400 you are perfect, it should be a gradient, so can you help me to understand why that discrepancy?

Sure, I actually excited for this Simos, and the way to think about this and this is very important is that -- and it isn’t just us, tools are only good as when they're in their linear range right. So, when you think about dystopian, again you're replacing dystopian in itself, doesn't mean that you're going to increase mass for muscle, especially in a 48 week trial. So, it's the kid is already a DMD boy is already in the milder stages and is actually stable, the ability to actually see the increase in stabilization is difficult especially when you think about that where they start is about where they end in that period. So it's not that it's -- so that makes it difficult if you think about, we're seeing in the sense of 40 meter durability where the patients are stable and it's revolving around a very small number of basically not changing very much. It means the variability is such that for this test you need a large number of patients be able to see it. So in a sense you have a ceiling effect from the test. That's not that uncommon, it's seen quite often. You see that actually in the Northstar patients as well, if you look at the Northstar assessment what patients are doing very well it’s hard to see anything above that. So it's just an example of a floor effect, I mean as a ceiling effect. And that isn't also -- if you think about -- and I think the curve four in a sense illustrates your other question, which is in the case of the Six Minute Walk Test, there's this place where you see a rapid drop in patients below 300 and as you can see in the figure where we showed you the muscle, the picture of the muscle on the next slide you can see in the MRI that once -- I mean they have between 75%, 80% fat infiltrate into the muscle and so the proximal muscle is pretty good, has low level of muscle fibers and to do a Six Minute Walk Test on that period probably becomes more onerous and therefore instead of having a floor effect you tend to have a ceiling effect -- a ceiling effect you tend to have a floor effect. So that becomes an issue within that test, so it's nonlinear in that range. So that's why when you think about what other tests you can use that may be more linear for instance the Time Function Test like the 10 meter run/walk is probably because it's a shorter test more of a burst cycle, it stays more linear for a longer period of time. And therefore that's why you're capable of seeing and that's on Slide 11, that's where you're probably capable of seeing while it's difficult to see the effect in the Six Minute Walk Test, you could see it more clearly in a shorter like a 10 meter run walk test, where the boys still are capable of doing this and it's in a more linear range. Again it's actually been -- it relates back, is the tool good for the test and in certain areas where the boys are you need the right tool to be able to see it. So it's not really about the drug it's about what access you use.

Okay, I want to ask you if you can tell us how many pre-specified subgroups were in the trial, in addition to the 300, 400, was it I think the three that we see on page nine, what's the number and which are the subgroups?

Yes, that's a good question, and in a way what you have to remember that when we designed the enrollment criteria for ACT DMD we were targeting patients in the decline phase with respect to the Six Minute Walk Test. This initially focused our understanding in the patients that were less than 350 meters showed a rapid decline while based on our understandings from the previous Phase 2B study right. So subsequently what we did is, we defined the three to four hundred meter subgroup based on the recent MRI data and other data showed that patients under 300 meters were at risk for losing ambulation. So by defining these two key subgroups then they clearly corresponding complement subgroups which our patients with baseline Six Minute Walk distance that are greater than 350 meters, greater than 400 meters or less than 300 meters. So we think that it's important that from a clinical and scientific reason to think that there're two key subgroups, that's the less than 350 and 300 to 400 meter subgroup that are the most reliable. So I think what you could say is that we had those two key subgroups which then had three other complementary subgroups.

Okay, so there're two groups and each one had three, so it was a total of six or is it two plus three total five.

The two key subgroups plus the three complementary groups which is five.

Okay great, if I could ask you quickly on SMA you said in your prepared remarks and in your press release that you expect to resume clinical development and you also talked about the IND enabling studies for the next generation molecule. So when you say you're going to start trials in 2016 does that imply that it could be the follow on compound not 7800 or am I misreading this.

No, that's right. What we're saying really is that you know obviously we're pretty excited about the MoonFish studies which showed a threefold increase in the RNA for SMA protein and a twofold increase of the protein but you know it really only makes sense to value RGA7800 in context of the backup program, we're going to be getting that data relatively soon and therefore, you know in any backup program what you generally do is try and improve efficacy and potency you know better pharmaceutical property so what we want to do is have those -- that data set both that data set as well as the RG7800 data set and then move rapidly forward on which molecules, just telling me what's the best path forward for one or the other.

Either at something about the new molecule that may make you thing that you might be able to get around the [indiscernible] quick clinical data?

At this point it's too early to go through all the details but generally, when you have a backup program you're looking for molecules that are more portent and [indiscernible] and so if that’s the case, that would be beneficial to the program.

Final question for MPS1 and aniridia, have any patients being dosed and is there any is there any reason to be concerned about safety or anything like that or you haven't dosed any patients at this point in time?

So, that's not -- the issue really was here is that, initially we're looking for naive patients and that turned out to be a greater challenge than we anticipated or what the key opinion leader had though and therefore we have amended and it's just takes longer time now to get through IRPs and ethic committees and that took longer to sped up. So we now have the sites up and running and we're just going to get all this -- there's not a safety issue to be worried about whatsoever.

There’s been no dosing at this point?

Yes, we're not at the -- we haven't really -- we don’t really talk about how many patients we have, so we're -- there's not a safety issue there or anything like that to worry about.

Thank you. Our next question comes from the line of Gena Wang of Jefferies. Your line is now open.

I think also in Slide 8 and 9 as [indiscernible], especially Slide 9, so just wanted to ask, your mutations loss ambulating in the placebo arm for 300 meter to 400 meter base line, wondering on what phase of the clinical trial [ph] did they lose ambulation?

So, we're -- the precise details we're not giving out in this call. So, in terms of -- that'll be part of the -- when we present data and publish, we'll have that more in discussions at that point.

So, what was the total number of patients who lost ambulation beyond the 300 to 400 baseline?

When we look at the loss of ambulation within patients, that they were overall 23 patient loss ambulation in the trial, of which 9 of a 115 patients -- 9 patients out of a 115 patients lost in the Translarna arm while 14 out of a 115 patients overall lost it in the Placebo arm. So, then I should make a point also that all of the Translarna patient that lost to ambulation were under 300 meter base line, that their ambulatory loss in the 300 meter to 400 meter sort of group we now know the six minute test is that they will demonstrate the efficacy, that in these groups 4 out of 52 Placebo that’s in 300 to 400 group, lost ambulation in 48 week, while none of the 47 Translarna patients lost ambulation. So, if you combine both studies 007 and 020, it was a 6 out of 74 Placebo patients lost ambulation while zero out of 69. And actually if you do a in the 300 to 400 subgroup and therefore if you can actually if you do in a sense of future effect you get a peak value of 0.03. So, that's actually -- and I think from the patient perspective that's actually really in a way that's what they care about and so you could see where we think this is having valuable sort of patients in terms of preventing loss in ambulations.

Just one to make sure I understand correct, so 9 patients in Translarna on loss ambulation and all these 9 were in the patient group that base lined below 300?

That's correct.

And then the 10 patient from Placebo arm who loss ambulation were also from patient baseline below 300?

No. So, at Placebo it was 14 patients.

Yes, so 4 is in 300 to 400, right in the placebo and the other 10 were in the group below 300 meter? Am I right?

That's right, you got it right. And actually that's an important point, no patients above 400 loss ambulation which actually goes to the notion that these kids are pretty stable.

Also another question, wanted to ask you the commercial uptake or affluent this quarter, was that from mainly the commercial programs or from the patient name program?

So, we don't give you a precise breakdown between reimbursement of the access from commercial but I think the general point I wanted to make earlier which is we've seen an uptake since the data was released, we've had extremely positive feedback from the opinion leaders, from across the world. For example, we’ve heard them say that they believe this data unequivocally shows that the drug benefit patients, they have also emphasize to us that the concurrent of the primary and the secondary measures is a really important strength in this data. And also for some -- the fact that we show benefit using the Northstar Ambulatory Assessment is very meaningful, it’s the first time, they're really seen a drug effect on the Northstar Ambulatory Assessment and others have continued to prescribed who felt vindicated in their decision to prescribe based on the early approval and we’re glad to see that the ACT DMD confirmed, that they've taken the right decision. So I think that's a general point across the board we’re seeing that reaction.

Okay. Great and last question is on MPS1 program, so if you modify enrollment price here and include patients who are on enzyme replacement treatment, so how should we think about the endpoint measurement in terms of the magnitude of improvement?

Thank you for that. So we'll be looking at both urine and blood GAG and those won’t be as high as probably patients who are naïve, but the other thing is we're going to be looking in the CMS as well and that's where these drug don't pass the blood-brain barrier and that is probably where we think we'll have the greatest advantage in the fact is because we think the CMS manifestations have the highest unmet medical needs and will be most meaningful to measure the GAG levels in the CSF.

Thank you. Our next question comes from the line of Heather Behanna of Wedbush Securities. Your line is now open.

Just a couple, one just on the CF submission in the EU, what's the gating factor for that and if that will happen after the DMD review in EU?

Thanks for the question. The CF we’ve already submitted and we're in the process of right now and so this is a variation on the approval. So we're already in that process, so that would occur prior to the DMD most likely before that. So, that's actually already ongoing, we haven't started DMD one yet. And since they're variations, they can occur -- it's a three month process with staff depending on the number of questions they have. So this is a shorter period than a first time submission.

And then just a question on if may be at AAN or in some other [indiscernible] well see some exposure data on the CK and just too sort of understanding, if there is any difference in performance of boys that have higher or more exposure of Translarna from the Phase 3?

For Translarna in the -- so in this case, it's a bit different than we had before because there were two doses, a low dose and high dose. In this patient population, there was a single dose which was obviously only the low dose and if the basically, the level mirrored pretty much what we saw in the previous trials. So we don't anticipate that to be a problem whatsoever.

Okay and then just a quick question for Shane, we've seeing storage for collaboration in grant revenues, should we expect those remain so much to the third quarter until we get into next year and maybe the estimated program runs up again?

We haven't given any formal guidance I think looking forward on sources of revenue but I think collaboration in grant revenue tend to be somewhat sporadic and this quarter you can see there wasn't much there in the quarter versus maybe prior quarters from grant that we're continuing from before we went public.

Thank you. Our next question comes from Debjit Chattopadhyay of Roth Capital Partners. Your line is now open.

I was just wondering at what point you start thinking about cardiopulmonary measurements because as you look at your Slide 9, the patients who are between 300 and 400 meters will eventually get to that 300 meter below threshold within about three years and then they start accelerating the decline start accelerating. So in terms of what physicians are likely to do in terms of continuing to dose the patients, wouldn't the cardiopulmonary benefits become important once these patients rapidly start losing ambulation?

Thanks for the question. So, probably it's an interesting question. The cardiopulmonary measurements are probably more important in late non-ambulatory than in the ambulatory phase because they intend to be masked by the steroids used and tend not to be able to see rapid declines in those and I think you're getting to an interesting point on what are the best outcome measures for the non-ambulatory, late-ambulatory groups and clearly that's one that we're working with investigators now because of patients going on ambulatory, you want to understand, what's the natural history and what are the best outcomes measure. So, probably people are looking at pulmonary function as one, there's some range of motion and then cardiac probably ultimately would be important because clearly we have an extension study that’s ongoing and we want to utilize as much information then we have like upper arm strength, so even in the non-ambulatory patients, demonstrating upper arm strength, which we have actually seen in the five to six year olds with the myometri [ph] in the previous study and actually that the Northstar, there's not data that correlates with increases in the Northstar correlate well with effects on upper body strength. So, you're pointing to a good question, that's sort of the next phase of the process and while cardiac and lung functions ultimately would they have problems with people are working hard to figure it out, whether in terms of natural history, what are the best things to monitor.

And then in terms of any feedback from physicians or the private payers or even the government paying with systems in Europe, would they be willing to reimburse it or patient eventually goes from -- eventually loses ambulation while on Translarna?

Yes, so right now we're just -- obviously our label is five years and greater ambulatory. So that's really what we focused on in terms of that there are some patients who are on -- who have gone drug, who are non-ambulatory and obviously one of the things that we intend to do is to meet with the DMA based on this data to try and seek for a broader label that would include both the younger patients as well as the non-ambulatory patients, and the basis on this is obviously that Translarna is a mechanism based drug and I think if you understand the mechanism it will benefit to help dystrophy production in all muscles upper limb, lung, heart, muscles and we've shown in preclinical studies that it does get laid into diaphragm in the heart. So, we're going to try and make the case that this should be a broad label for our patients. And that -- there is precedent for that in orphan drug, so we do want -- we want all the kids to be able to have the Translarna and we're going to work towards that.

And then moving on to CF, your recent reanalysis of the prior data showed a greater benefits in the younger patients, so I'm just wondering the Phase 3 study is there limits to the number of younger patients that you've enrolled versus the older patients and how does the statistics change?

Obviously, that was an important new learning that we do therefore plan and anticipate to have subgroups as far as this specific analysis plan and as we further progress that and evolve that we'll talk to you about that.

And one last question, do you have a sense of the timing as to the approval for full approval to all Translarna in Europe, do you think it's going to be a three month amendment review or this is going to go through a full 13 month review process?

So, obviously this is a variation on that. So, it tends to be a shorter process, the first go around is a three months process that it can have, clock stop. So, it's not the 13 months process for a new application.

Thank you. And our next question comes from the line of Joel Beatty of Citi. Your line is now open.

My question is on the ceiling effects seen with the Six Minute Walk test, whereas the similar ceiling affect staying around 400 meters baseline for the other secondary effects or did you learn that there is some secondary endpoints that are helpful for same the effect of Translarna at higher walk distances?

Actually, we'll be looking at that in more detail but in general -- and as I said in talking to investigators that this just tends to be -- when the DMD volume is doing quite well, they tend to be kept up above that and you don’t see significant changes and I was actually recently at the action to [indiscernible], and I was just talking to a number of investigators about that until -- how it's difficult to see when they're doing well to see unnecessarily do better, because they're pretty stable and especially in a one year trial. So, I think this is just a general phenomenon that you'll see.

Thank you. I'm showing no further questions at this time. I'd like to hand the call back over to Stuart Peltz for any closing remarks.

Thanks everyone for being on with us on the call today. And as you can see in the coming months we're going to be busy finalizing our rolling NDA and meet with the regulators. 2016 is going to be a very exciting year with many new and important developments. And particular as we continue to bring Translarna to DMD patients in Europe and other parts of the world that accept DMA approval, the potential launch of Translarna CF in Europe and DMD in the United States and we look forward to speaking with you in the future. Thank you for joining us today.

All ladies and gentlemen, thank you for participating in today’s conference. This does conclude today's program, you may all disconnect. Have a great day everyone.