PTC Therapeutics, Inc. (PTCT) Q2 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the PTC Therapeutics Second Quarter 2020 Financial Results and Corporate Update Conference Call. [Operator Instructions] I will now turn the conference to your host, Mr. Alex Kane, Head of Investor Relations at PTC. Sir, please go ahead.

Thank you. Good afternoon, and thank you for joining us to discuss the PTC Therapeutics’ second quarter 2020 corporate update and financial results. Joining me on today’s call is our Chief Executive Officer, Stuart Peltz; our Chief Financial Officer, Emily Hill; our Chief Development Officer, Matthew Klein; and our Chief Business Officer, Eric Pauwels. Before we start, let me remind you that today’s call will include forward-looking statements based on current expectations. Please take a moment to review the slide posted on our Investor Relations website in conjunction with the call, which contains our forward-looking statements. Our actual results could materially differ from these forward-looking statements as any and such risks can materially and adversely affect our business and results of operation. For a detailed description of applicable risks and uncertainties, we encourage you to review the company’s most recent quarterly report, Form 10-Q, and annual report, Form 10-K, filed with the Securities and Exchange Commission as well as the company’s other SEC filings. We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP to non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available in today’s earnings release. With that, let me pass the call over to our CEO, Stuart Peltz. Stu?

Thanks, Alex. Looking back at the second quarter, I am proud of the continued strong commercial performance in our Duchenne franchise with nearly 20% growth year-over-year, excluding Brazil. Emflaza had an outstanding quarter with greater than 30% year-over-year growth. As you will hear throughout the remainder of the call, despite the challenging environment due to the global pandemic, PTC has continued to execute in our commercial business and advanced key platforms and programs in our pipeline. One of these key platforms is our validated small molecule splicing platform. As many of you know, the most advanced splicing program is risdiplam for the treatment of spinal muscular atrophy, or SMA, with a PDUFA date on August 24, which is rapidly approaching. We believe that risdiplam, which would be the first and only oral treatment for SMA, has the potential to be the most competitive commercial product for this devastating rare disorder. Risdiplam validates our splicing platform and represents how innovation can generate substantial value for all our stakeholders. When we started the SMA splicing program over a decade ago, it was considered a loonshot. The dominant belief at the time was that while splicing is a great target in principle, it is a mechanism that occurs with most all RNAs and cannot be selectively modulated with small molecules. Because of our deep understanding and expertise in RNA biology, we knew that RNAs were actually the first enzyme that can form unique structures with catalytic function that could be targeted. We also knew that, if successful, targeting RNA would lead to a new platform to discover compound that could lead to multiple new treatment options for patients living with rare disorders. It represents a new paradigm for drug discovery. Over the years, we’ve built the splicing technology that led to the discovery of risdiplam into a novel platform, as we highlighted recently in our splicing platform deep dive. PTC has unique expertise in RNA biology. We have constructed an RNA-centric compound library, proprietary screening tools, a proven process to optimize compounds to bring them to the clinic and a fully integrated global commercial infrastructure to bring rare disorder therapies to patients. As you may have heard on our recent deep dive, this is a platform that has a number of additional targets moving forward. We anticipate 3 to 5 splicing development candidates over the next 3 to 5 years. The next splicing compounds to enter the clinic, is PTC518, our development candidate for Huntington’s disease, which is expected to be a first-in-human trial later this year. In addition to Huntington’s disease, there are exciting new splicing programs emerging from our deep pipeline, including SCA3 and MAP tau. We are also making progress in other platforms and programs in the second quarter. We strengthened our pipeline with the acquisition of PTC923 for PKU. PTC923 expands our platform capabilities through the addition of a late-stage program for inborn errors of metabolism, where we believe it has the potential to be the best-in-class treatment for PKU patients. We also recently initiated a Phase 2/3 trial for PTC299 for COVID-19. We recognize that PTC299 has a unique dual mechanism that is potentially effective against both stages of the viral infection. We work with leading academic collaborators that quickly confirm PTC299’s antiviral activity against SARS-CoV-2 in vitro, moving rapidly into the clinic for COVID-19. The clinical trial is being conducted in 2 stages. We expect stage 1 to be completed in the second half of 2020 and anticipate reporting top line results for both stages in the first half of 2021. We have multiple sites in the United States, Brazil, Spain and Australia, with additional countries expected to initiate in the coming months. Ultimately, it’s a combination of the mechanism, the preclinical data, the well-established safety profile and the compound’s oral bioavailability that gives us great confidence in PTC299’s potential as a treatment for COVID-19. One of the reasons that we took PTC299 forward is because COVID-19 global pandemic requires our industry to work towards a solution. In addition to its obvious effect on the health of our individuals, COVID-19 has impacted many industries, including our own. At PTC, we took early and aggressive steps to mitigate potential risks to our operations. Importantly, despite the challenges presented by COVID-19, we have been able to execute on certain key programs and lessened the impact in others. As I mentioned earlier, we expect to initiate a first-in-human Phase 1 trial with PTC518 for Huntington’s disease later this year. In our Bio-e platform, the two potential registrational trials for vatiquinone, formerly known as PTC743, remain on track to initiate later this year. We’re particularly excited about these upcoming trials as they provide us for near-term opportunities to address 2 rare disorders with a significant unmet medical need. In addition, as we recently announced, we initiated the Phase 1 study for PTC857, a second compound from our Bio-e platform, ahead of schedule. Before I pass the call over to the team, I want to touch on recent developments with Translarna for nonsense mutation Duchenne muscular dystrophy, the first product we discovered, developed and commercialized by PTC. Importantly, the EMA confirmed the risk benefit profile of Translarna with the sixth annual renewal of a conditional approval, which is the basis of our sales outside the United States. The CHMP recently recommended a revision to the Translarna label, removing the statement, "Efficacy has not been demonstrated in non-ambulatory patients." This change enables health care professionals to use their clinical judgment to make treatment decisions for their patients on Translarna who have lost ambulation. It also supports our discussions with reimbursement authorities on continuing Translarna treatments for patients who become non-ambulatory. We have pioneered therapies for Duchenne muscular dystrophy and remain highly committed to the community. I will now turn the call over to Matt for key updates on our clinical programs. Matt?

Thanks, Stu. To start, I want to build on Stu’s comments regarding our team’s response to the COVID-19 pandemic. Despite the many challenges, we have worked hard to mitigate the impact on ongoing and planned studies. Let me begin with Study 045, a U.S. Translarna dystrophin study. In developing the protocol for the study, we carefully considered every element of the design to minimize variability that could confound study results. This included the decision to use a single site for the study at UCLA, the method of muscle biopsy collection and the method of biopsy sample analysis. I want to highlight that the protocol specifies that sample analysis will not occur until the end of the study. PTC and study investigators will be blind to the results until all analyses are complete. At this time, final study muscle biopsies have not yet been collected from 8 remaining boys in the 045 study. Given the evolving COVID-19 landscape in Los Angeles and in other affected regions where study patients reside, we are continuously monitoring the situation to determine when it will be possible to safely obtain the final biopsies. We are also exploring all potential options in order to have a data readout by year’s end. Of course, we have ensured that all subjects remain on Translarna until they are able to complete the final study visit. Turning to our Bio-e platform, we remain on schedule to initiate potential registrational trials of vatiquinone in refractory mitochondrial epilepsy in the third quarter and in Friedreich ataxia in the fourth quarter. As we detailed in our Bio-e platform deep dive, the Phase 2/3 mitochondrial epilepsy trial will enroll approximately 60 children with the most common mitochondrial disease subtypes that have refractory seizures as a key component of their pathology. This trial will include a 1-month run-in period to ensure eligible subjects have a minimum frequency of observed motor seizures followed by a 6-month parallel arm phase in which subjects will receive either vatiquinone or a placebo. We estimate that the refractory mitochondrial epilepsy market is approximately 11,000 to 13,000 patients in the U.S., EU, Latin America and Japan. The Phase 3 Friedreich ataxia trial will be a 48-week, double-blind, placebo-controlled trial and will enroll patients from the U.S., EU, Australia and Latin America, where we estimate the FA market size to be approximately 25,000 patients in aggregate. We are working closely with site investigator teams and advocacy organizations to ensure that subjects for both of vatiquinone potential registrational trials will be able to safely travel to and from study sites. In addition, we have adjusted certain elements of the study protocols to minimize any potential disruption that could occur in the event of a second COVID-19 wave. As Stu mentioned, we recently announced that the first patient has been dosed in the Phase 1 trial for PTC857, the second compound from our Bio-e platform. This study is progressing well, and we look forward to having data from the single ascending dose and multiple ascending dose studies prior to the end of the year. Turning now to the splicing platform, our Huntington’s disease program remains on track to initiate first-in-human studies this year. These Phase 1 studies will include both single and multiple ascending dose regimens in order to inform safety and pharmacokinetic parameters and inform dose selection to achieve target huntingtin mRNA level reduction in the range of 40% to 50%. As you may recall, this strategy of validating target engagement and splicing activity in first-in-human studies was a key component of risdiplam’s development program. Moving on to our gene therapy platform, due to COVID-19-related delays, we now expect to receive the final CHMP opinion for our AADC deficiency MAA in the first quarter of 2021. Analytical testing by our contract labs, which is needed to respond to standard review process inquiries, has been delayed as contract lab personnel and resources have been diverted to support their COVID-19-related efforts. Turning to the BLA submission for AADC deficiency, the key gating factor remains the study of the surgical use of the intended commercial cannula to deliver gene therapy product to young patients. These treatment procedures have been delayed by hospital cancellations of elective surgeries due to COVID-19. These procedures are now scheduled to occur in Q3, and we still expect to be able to initiate the BLA submission for AADC deficiency to the FDA in the second half of 2020 in the absence of additional delays. Finally, I want to share that we have completed the integration of programs from the Censa acquisition. We are in the process of completing the necessary non-clinical studies of PTC923 to support the long-term dosing planned for the Phase 3 trial in PKU patients. Despite there being two marketed products, there remains a large unmet medical need globally for PKU patients. We look forward to providing additional insights into the PTC923 PKU program and a deep dive later this year. As you have heard, despite the impact of COVID-19 on certain clinical programs and regulatory time lines, we have been able to advance a number of key programs and, in some cases, accelerate timelines. I will now pass the call to Eric to provide an update on the commercial business.

Thanks, Matt. As Stu highlighted, the DMD franchise had strong growth this quarter with both Emflaza and Translarna generating significant revenue in Q2. Outside of Brazil, our DMD franchise had an outstanding quarter with revenue growth of nearly 20% year-over-year. Let me start with Translarna. In our sixth year post launch, we are exceeding expectations in key markets with the exception of Brazil, which is one of the countries most severely affected by COVID-19. Importantly, we continue to find new patients in Europe, Latin America and other key markets despite the challenges of COVID-19. Additionally, as Stu noted, we believe that the revision of the language on the Translarna label will be a positive for patients. We see the update as an opportunity to further educate physicians, caregivers and patients on the impressive real-world results from the STRIDE registry and CINRG DMD natural history study, highlighting Translarna’s long-term efficacy. Now let me provide an update on the group purchase order for Translarna in Brazil. As a reminder, in Brazil, the government is a central payer by which only a few large group purchase orders are placed annually for the number of patients approved through the judicialization process. Due to the impact of COVID-19, there was an administrative delay with payers for this centralized order. We remain highly engaged with the Ministry of Health and are working to ensure that Translarna patients will continue to receive this important treatment. In addition to our ongoing meetings with the Brazilian government, DMD advocacy groups and KOLs are also making their voices heard to advocate for Translarna access in Brazil. These stakeholders are critical to ensure that payers have the most recent information on new and existing patients. Notably, we have seen a substantial increase in newly diagnosed patients in the second quarter. We anticipate an order later this year for both existing and new patients. Now turning to Emflaza, we are hitting our stride in the U.S. by bringing awareness to the community on the critical importance of Emflaza treatment for all DMD patients. We continue to see ongoing improvements and greater efficiency supporting the business, resulting in more than a 30% year-over-year increase in second quarter sales. Based on early observations, we anticipate this strong performance will continue into the second half of the year. Our U.S. commercial team, comprised of regional account, patient engagement, case and market access managers, identified new patients at a high rate this quarter. And it helped accelerate time to commercial therapy. Patients previously on bridge therapy and patient assistance programs transitioned to commercial therapy even more rapidly in the second quarter. These new Emflaza patients included both naive and former prednisone patients. Among our existing base of patients, compliance and adherence remains very high, and discontinuation rates remain low on Emflaza. Now turning to Tegsedi, launch activities in Latin America continue to progress well, and we continue to find new patients in Q2. We remain engaged in pricing discussions in Brazil and expect the process to be completed by the end of the year. Also, in Brazil, during the second quarter, we filed with ANVISA for approval for Waylivra. Patient finding and early access programs for Waylivra are ongoing, and we continue to anticipate revenue from this product in 2020. To echo both Stu and Matt’s comments, while COVID-19 has impacted certain aspects of the commercial business, we continue to drive key areas of the business forward. I will now hand the call over to our Chief Financial Officer, Emily Hill, to review our financial progress.

Thanks, Eric. I am proud that PTC is in an excellent position to invest in our growing business and accelerate growth while maintaining fiscal discipline and a strong balance sheet. We recently completed the transaction with Royalty Pharma that brought forward $650 million in non-dilutive capital. As a reminder, we’ve retained nearly 60% of the risdiplam royalty stream up until a $1.3 billion threshold is reached. After the threshold is reached, PTC retains the entirety of the risdiplam royalty stream. This deal structure allows us to benefit from risdiplam’s meaningful sales potential. We believe risdiplam has the potential to be the most competitive commercial product in the SMA market and believe that its market potential exceeds current analyst consensus. Importantly, we also retain all economics associated with the approximately $400 million in remaining risdiplam milestone payments from Roche. As a reminder, we expect a $15 million milestone payment imminently associated with the filing of the MAA with the EMA. And following the first commercial sale in the U.S., we would receive an additional $20 million milestone payment. I now want to take a few minutes to highlight the second quarter 2020 financial results, which are summarized in the press release issued earlier today. Starting with our top line results, we reported $75.2 million in total revenues in the second quarter of 2020 compared to total revenues of $85.5 million for the second quarter of 2019. As Eric mentioned, Emflaza had an outstanding quarter, and Translarna saw continued growth with the exception of a delay in the group purchase order in Brazil. Translarna net product revenues were $38.6 million for the quarter. This compares to $57.8 million for the second quarter of 2019. As I’ve said, sales for the quarter were impacted by a delay of the Brazil group purchase order, which accounts for the year-over-year decrease in second quarter revenue. For Emflaza, we reported net product revenues of $36.2 million for the second quarter of 2020, compared to $27.6 million reported for the second quarter of 2019. Growth in net product sales, were driven by new patient prescriptions and continued operational improvements and efficiencies in our commercial business. Non-GAAP R&D expenses were $168 million for the second quarter of 2020, excluding $8.6 million in non-cash stock-based compensation expense, compared to $54.5 million for the second quarter of 2019, excluding $5.5 million in non-cash stock-based compensation expense. The increase in R&D expense includes onetime charges associated with a recent acquisition and a manufacturing agreement. Specifically, it includes $53.6 million related to the acquisition of Censa Pharmaceuticals and $41.2 million related to the MassBio commercial manufacturing agreement for our lead gene therapy program in AADC deficiency. The majority of these onetime expenses are non-cash charges for the current fiscal year. Non-GAAP SG&A expenses were $45.3 million for the second quarter of 2020, excluding $8.3 million in non-cash stock-based compensation expense, compared to $43.8 million for the second quarter of 2019, excluding $5.4 million in non-cash stock-based compensation expense. The relatively flat year-over-year change in SG&A expense reflects our ability to leverage our existing global infrastructure. Net loss was $181.4 million for the second quarter of 2020 compared to net loss of $41.8 million for the second quarter of 2019. Cash, cash equivalents and marketable securities totaled $498.9 million as of June 30, 2020 compared to $686.6 million as of December 31, 2019. Now including the $650 million in cash received in July upon the closing of the deal with Royalty Pharma, unaudited pro forma cash, cash equivalents and marketable securities as of the second quarter would be greater than $1.1 billion. I will now hand the call over to the operator to start our question-and-answer session. Operator?

[Operator Instructions] Our first question comes from Robyn Karnauskas of Truist Securities. Your line is open.

Hi, everyone. Thanks for taking my question. So I’m going to ask you a question that I get all the time upfront. So can you clarify for us, given the last deal you did, how important is business development for you versus, say, the development of your splicing platform, which I think a lot of people are really excited about? Help us understand how you prioritize your businesses. I think that’s the most common question I get, so I’m going to ask it on the call.

Sure. So thanks for the call. Obviously, our overarching goal is always to bring innovative therapies to patients with high unmet medical needs. And I think we – as you can see, we’ve built the company over the last 22 years and continue for – to build it to have a strong pipeline over the next 20 years. And the strategy has really been to use the internal discovery capabilities that we’ve built as well as business opportunities to continue to grow. And the splicing platform, as you see, I think, has created a substantial value on risdiplam. And I think from the deep dive, you could see how the opportunities are there and available. So we plan, as part of what we’ve done, is to expand all – is to expand into that. So the way I look at this is really, in a sense, shots on goal, that you need a relatively broad pipeline in order to bring a number of products critical for growth. But that’s also true for business development, right, so you never know for sure when things are going to be ready for getting to commercialization. So we look to fill the pipeline as needed through business development. And it’s helped us to evolve and develop additional new core expertise, such as gene therapy, the redox and the inborn errors of metabolism. These are important to us as well, and we think there are some near-term value creators like in the inborn errors of metabolism. We’ll be starting the registration studies, Bio-e programs. We will be starting the two last – that are also pivotal studies that could be – those are starting now, that could be in the 2023 timeframe. So there is a lot of value that we think we can do in terms of creating value. So the way we are looking at that is we are highly excited about our innovation capabilities, and we are going to be pursuing them with great depth moving forward. And we look for business development opportunities in – very strategically and in this case, now that we’ve built the – our pipeline and platforms, to vertically strengthen if we see something that’s interesting. And then the other point is obviously the current platform is important. So the therapeutic area, the platform and the commercial footprint, I think, is how we’re going to continue to grow both the innovation but also the revenues for the company. Does that help you?

Yes. I mean I think the big question is focusing on business development in any way a distraction from developing your current drugs, in particular, that from the splicing platform, which is a near-term catalyst. So that’s the more direct question.

Yes. And I think that’s fair – and the answer is no, it doesn’t. It isn’t like we’re – our pipeline is not yet big enough to say that we’re prioritizing A versus B and that we have the resources to be quite focused to make sure, especially now, to really go whole hog through the splicing platform. And so I don’t think it’s a diversion because there are obviously different people that are moving forward on this. The way we’ve actually constructed the team now or the company in terms of its organizational structure isn’t sort of pulling from one group to another. It’s building out teams to be able to handle that and then have the infrastructure for them to be autonomous enough but with enough oversight. So I think we are pretty focused on that. We are strengthening our current platform. So I don’t think – that’s a very important point. It’s not like we are de-prioritizing one for the other right now, we are not big enough yet to be able to say that we are going to be doing that. So it’s not...

Got it. Thank you so much.

Thank you. Our next question comes from Joel Beatty of Citi. Your line is open.

Hi, thanks for taking the questions. The first one is to follow-up on that last question from Robyn. From a business development standpoint, what types of programs – what would you be looking for that would have the best fit with PTC at least from a high level?

I guess from a high level – thanks, Joel, for that. I mean when we tend to think of it from a high level, it’s really to look at within the vertical. If you think about it, we now have either gene therapy, Bio-e, the splicing platform, right? So it’s within the platform that we’ve built, that will be moving – that will probably – we’re not looking to create additional – or inborn errors of metabolism. We’re not looking to go outside of that area. So we’re looking carefully for selective and strategic BD opportunities that the focused efforts on the current therapeutic areas and platforms that we have in place. And so – and therefore – and that could also help enhance our commercial footprint.

Okay, got it. That’s helpful. And then a question on risdiplam, have there been discussions with FDA on the potential indication, anything you can give to help give us confidence on FDA meeting the PDUFA date and how do you anticipate the label could compare with the approved SMA drugs?

Yes. So obviously, we are waiting for the PDUFA date. We strongly believe that it’s certainly going to be approved by that time and we strongly believe it’s the best-in-class product, and we think it’s the most commercially competitive product out there. We think that obviously, from our point of view, it’s going to be – have broad efficacy, will be the standard of care. We expect that the label is going to be very broad for all SMA types, including 1, 2 and 3. Obviously, we have the data for placebo-controlled trials both for SMA type 1 for those younger patients. And even in – I think even there, when you compare the datasets in terms of even in the Type 1, the older patients, seeing benefit there that wasn’t seen by others. So we think it’s really quite strong. And then the Type 2, 3 in the older patients, we saw in the SUNFISH even strong data as well. And then it’s also supported by the other programs, the JEWELFISH and RAINBOWFISH. So at the end of the day, we think it’s going to be a very strong label for both the Type 1 as well as adolescents and adults. Obviously, the first and only treatment that’s an orally bioavailable product. So it’s home administration. And in particular, in this environment now, that’s a huge benefit. You don’t have to go to the hospital, to your physician. There is a strong safety profile. And we think that it’s done actually quite well. So we’re very excited about that.

Great. Thank you.

Thank you. Our next question comes from Alethia Young of Cantor. Your line is open.

Hi, this is Li on for Alethia. Thanks for taking our call. Maybe just one on AADC, can you just give us more color on the remaining steps to file BLA and then how confident that you can file by year end? And then another one on the U.S. dystrophin study. Just wondering if you think the COVID challenges might make it harder to integrate the results given the delay and then is there any specific FDA guidance on it? Thanks.

Sure. So let me remind you that we’ll talk about the BLA, but the MAA has been submitted. So we’re moving through Europe. The key gating item, as you know, is the surgeries with the commercial cannula. And I’ll let Matt – you want to talk a little bit about that, Matt?

Yes, absolutely. So as Stu said, the key gating item is the cost – the surgical procedures with the intended commercial cannula, which is the SmartFlow cannula. Now this is CE marked for gene therapy delivery in the EU. In the U.S., it’s an approved device, just not explicitly, for the delivery of gene therapy into the putamen. It has been used in clinical trials with a good safety record for gene therapy delivery into the putamen of adults. And so really that last piece is getting some experience in the surgical administration of our gene therapy product with the SmartFlow device. So it’s really an assessment that we’ve been asked to provide of the device and the surgical procedure for the delivery of gene therapy product in the putamen. Once we have those procedures completed, we will, of course, move forward for final BLA discussions with the agency and then move forward with preparation for the submission. With regard to the dystrophin study, obviously, we’re all frustrated by the delays from the COVID trial. I mean PTC, as you know, has an incredible, long-standing – probably longest-standing history of being dedicated to developing therapies, specifically Translarna, for DMD patients. We’re obviously incredibly excited to receive the sixth annual renewal in Europe. The evidence that we are continuing to collect on a number of fronts showing long-term benefits through our STRIDE registry. And now we are at the point that we are just waiting for these last 8 patients to come in and get their final biopsies so we can analyze all the results. And clearly, we want to get this study read out by year’s end. Obviously, there’s some unpredictability due to the pandemic, which is obviously affecting not only the study site in California but also in the states where some of the patients live, such as Texas and Arizona. And of course, first and foremost, we want to ensure the safety of the procedures. We’re still in the process of sorting out the exact timing of biopsies at UCLA. Fortunately, it looks like pandemic numbers may be slowing. And so we are in constant communication with the site to see when we can get a better idea of the specific timing for those final biopsies. And of course, most importantly, we are ensuring that these patients don’t have any disruption in the supply of Translarna so that when we are able to get their biopsies, we will be able to do so in the context of ongoing Translarna treatment.

Thank you. Our next question comes from Joseph Thome of Cowen and Company. Your line is open.

Hello, thank you for taking my questions. The first one on the MAA for AADC, I think you indicated that the EMA had some feedback on some additional information that they need from you. If you could just qualify kind of what sort of information do they need. And do they put you on a stop clock, so you have that extra time to respond or is there a time limit? And then second, if you could just update us on the progress for INDs for PTC for Friedreich ataxia and Angelman syndrome?

Sure. So Matt, do you want to talk a little bit about the MAA?

Yes, absolutely. So thank you for the question. So as we mentioned, we submitted the MAA in January. And based on the standard MAA time lines, we expected the final CHMP opinion in late December of this year. That’s just based on the pre-specified time line from the EMA. During the review process, the agency asked for some pretty standard questions, wanting additional manufacturing-related analysis done on the drug product. These are all done by our external commercial manufacturing organizations. They have been impacted by COVID in a few ways. One is obviously decrease in the number of available personnel. But also, our lead CMOs are involved with other companies in developing solutions for the COVID pandemic. So obviously, they redirected their resources toward – personnel and other resources towards the COVID-related activities. Therefore, in order to be able to satisfactorily respond to the EMA’s questions to us, we were granted a stop clock so that we can then obviously come back and address the questions, which are easily addressable once we have the available resources to do so and plan now on the final opinion in Q1 of 2021.

Great. And then just the update on when we could see the IND for Friedreich ataxia for that gene therapy, if there’s any update.

I think we said it was delayed a quarter – we announced last quarter that we are continuing to work to advance on both, but there has been a number of COVID-related delays for at least a quarter. So what – we really do remain enthusiastic about both of these programs, and we’re working to really get it all done so we can get that done. So that’s where we’re at now. So it’s similar to what we reported the last time.

Great thank you guys/

Thank you. Our next question comes from Brian Abrahams from RBC. Your line is open.

Hi this is David Szeto on for Brian. Thank you for taking my question. Hello I think your line is not muted madam.

Okay. Go ahead, David. Sorry.

No worries. Yes. So just another one on AADC, from your ongoing pre-launch activities, maybe engaging in that same market, could you just update us on your evolving sense of the clinical pathway to identify AADC patients and if there are perhaps differences in the U.S. versus EU, I just want to get a sense of what your current level of confidence is in the epi here? And then I have a follow-up after this.

Sure. So Eric, do you want to talk a little bit about our patient-finding efforts?

Yes. Sure, Stu. I think we have – we are continuing to work very hard to identify a patient despite COVID-19. We have actually been raising disease awareness and driving testing particularly in areas that are – patients that are at high risk, so through all the clinics and – epilepsy clinics. We have accelerated a lot of our master class symposiums, we engaged in key opinion leaders programs, ad boards, steering committee symposium. They have actually published clinical data. So in terms of raising disease awareness, we really increased our level of activities for awareness and identification. We’ve also expanded a lot of our activities to a number of different countries as well, both in Europe, Asia Pacific and Latin America to increase our funds, and in addition to that, we have been having a lot of payer discussions, and they really do like the clinical data to understand the gene therapy landscape and to look at the value proposition, so patient identification continues to progress well. And as we said, our goal is to find 300 patients by the time we’re prepared to launch in our first key markets globally.

Thank you. And then maybe just a quick follow-up on Translarna again so going back to your opening remarks discussing the recent CHMP recommendation to open the label to patients who become non-ambulatory, I was just wondering if you could provide maybe an update beyond any other evolving dynamics among physicians in the EU and if you have any perspective on expanding Translarna label to initiation among non-ambulatory patients? Thank you.

Yes, yes. Thanks for that question. We were really heartened by this and substantial positive feedback from both physicians and payers on the revision. And this really does allow the patients to keep that – have a path to remain upon Translarna even if they transition to the non-ambulatory part. And so that’s actually really important. And certain countries had already had the willingness to do this. In terms of non-ambulatory, that really is sort of country by country as well right now. Certainly, when you think about it, it makes sense from this point of view that if you are non-ambulatory, going from ambulatory to non-ambulatory, that you would like to – we have been working on that. Maybe a little bit, do you want to talk a little bit about the – Eric, in terms of what Europe is doing?

Yes. And first of all, we have gotten a lot of feedback immediately after the announcement. Physicians and payers have looked at this as being a positive step forward. So immediately after that announcement, a number of patients that might have been actually considered to stop, because they went non-ambulatory, continued treatment. So this willingness, if you will, to not implement a stopping criteria is what’s critically important. So we’ve already actually – since we’ve already actually seen patients that are – that have been on Translarna go non-ambulatory and stay, it gives a lot of the physicians positive feedback and continued, if you will, this dialogue that they could have right now, they couldn’t with certain payers in Northern Europe, in Southern Europe and even in places like Latin America, where payers view the label – the wording of the label as a sort of stopping barrier or stopping criteria. So now there’s a much – there’s going to be now and in the future, I think patients and physicians will have a positive risk/benefit discussion with payers. And by removing that in the label, provides, if you will, a constructive dialogue that can be handled by the physician and the payer.

Yes. And then the other thing, we have done a fair amount of work both in our STRIDE registry as well as the non-ambulatory patients following them. And what’s really nice is that the results that we saw in the clinical data that’s been shown were patients – and actually, you can use now much harder end points, those – the publications on the STRIDE data is really quite clear in terms of the substantial improvement on not only the walking longer but multiple other time function test measurements where you see substantial improvement. And also, what we have seen is, in the non-ambulatory patients, clearly better pulmonary function, I mean very clear demonstration when compared to natural history. So we are excited about this. And we do try and work to make sure that non-ambulatory patients have a way to get Translarna as well.

Thank you.

Thank you. Our next question comes from Raju Prasad of William Blair. Your line is open.

This is Sami on for Raju. I had a question regarding the dystrophin studies. At what point – or what would be the scenario in which you forgo the biopsies or a portion of them in order to file that BLA? I am just trying to understand which event you are prioritizing.

So the – I think the – so we have to outline the 20 that has been done, and so – that have been treated, and they have not been – they are still blinded. So we don’t know the data within there. We just – the study was performed with 20 patients, pre and post, and they are still being treated. So we just think that it’s better to have all the patients if possible. As this continues and extends on, we will – there is a possibility we could say maybe we should just look at the data now in an interim way and take a look at that. So we would obviously need to align with the FDA on that before we were to do that. So we don’t want to look at the data before we agree with that. But it’s really a question of if we think it’s going to take forever or not. So that’s our thought on that.

That’s really helpful. And just a quick follow-up, how are patient identification efforts for the mitochondrial epilepsy trial? Just to get an idea how quickly you will be able to enroll patients in that trial.

Sure. Matt, do you want to sort of talk a little bit about our patient identification for the trial?

Yes, absolutely. So just for sort of historical background, 743 was really the first drug we brought into the clinic explicitly for pediatric mitochondrial disease patients, has an enormous amount of brand recognition in the mitochondrial communities globally. We also have very good working relationships with the patient foundations both in the U.S., EU, Australia, Japan, and so we have been relying on this network to help us get the word out that this trial is starting. There’s already a great deal of enthusiasm in a number of the countries in which the trial is going to be conducted. And we are really excited to be able to launch the trial and believe that we can rapidly enroll the trial again, COVID permitting.

Great. Thanks for taking my question.

Thank you. Our next question comes from Gena Wang with Barclays. Your line is open.

Hi. Also taking my question, this is Peter for Gena Wang. I guess two questions for me. First on Translarna, how much of the quarter-over-quarter decline is due to COVID-19? And any color on the impact on new and existing patients? And for back half of the year, do you expect some growth relative to the first two quarters or largely stable excluding the Brazil order? And I have a quick follow-up. Thank you.

Okay. Say the first part again.

For Translarna, how much of the quarter-over-quarter decline is due to the pandemic?

Okay, great. Yes. So Eric, do you want to talk a little bit about that?

Yes. Sure. I think there’s very little decline if we look at the major markets. In fact, I think Translarna in our key markets outside of Brazil has continued to grow, and we have been seeing new patient identification and new patients come on to therapy even in some of the most affected countries like Southern Europe, like Spain and Italy, where we have had new patients go on to treatment. We have also seen very high adherence rates, compliance rates and very, very low dropout. So essentially, in the main areas, in the main regions, we haven’t actually seen that much impact at all from COVID-19. The main issue in decline is primarily the administrative delay from Brazil in the group purchase order at this time.

Yes. I think also, you might remember, Peter, in my first – in my comments initially, I said outside of Brazil, we saw a 20% – approximately 20% increase.

Got it. Right, okay. Thank you. I guess my second question is, to the extent that you can provide any color on risdiplam EAP, would you be able to give color on like how the enrollment rate has been impacted by COVID-19 relative to your expectations? And any color on folks switching from this medicine? Thank you.

Yes. Sure. I guess I don’t think we have ever given numbers on how things are going, but things actually in terms of the EAP has gone actually quite well. And I know that Roche is quite satisfied with how the EAP has been going. We do expect an approval that we think that – obviously, we are confident of Roche’s ability to launch this quickly. And we think, in particular, there will be a lot of transition from SPINRAZA to risdiplam. So we think that’s going to be a very strong part of the growth of risdiplam over time as well as obviously the naives, in particular, the adolescents. There’s so many patients that are not being treated that I think risdiplam, as an oral and bioavailable agent, is very well suited for these patients. So we are excited about this launch, which we think – which we anticipate will occur quite quickly.

Thank you. Our next question comes from Eric Joseph of JPMorgan. Your line is open.

Yes. Thanks for taking the question. Just on Translarna, picking up on your prior comments about discussions with EMA and health authorities. Can you talk a little bit about the extent to which they are interested in results from Study 045 as they look to potentially renew conditional approval again in ‘21? And I guess from health authorities’ view, I guess, is there any sensitivity on their end on Study 045 outcomes versus how to look at the STRIDE registry data?

Yes. Sure. Thanks for that, Eric. I think one important point here is that it was very clear that the European authorities didn’t look at dystrophin as a biomarker that reasonably predict any efficacy. So it really – everything was based on the clinical results and so we have kept them apprised not only of the clinical data that we have, but also the clinical data from the STRIDE and the non-ambulatory data. So they know that data quite well. And so the results from Study 045, I don’t think will be of any service in the EMA since – whether good or bad because I don’t think that – it isn’t a biomarker that reasonably predicts clinical benefit. And so they had no interest in it in the past. I think you can see from another company when they talked about the results that they didn’t make any headway either. So they are not using this as something that’s in the preferable biomarker. So – and that’s, I think, true in most other countries outside of the United States.

Got it. That’s helpful. And maybe a follow-up on Emflaza, just wondering if you could help us unpack the dynamic to the strong quarter here, how much is sort of driven by efficiencies in the prior auth process versus growth in new patient adds among naive patients? Should we anticipate a similar benefit in the second half of the year? And I guess also, we also just noticed that the Phase 3 limb-girdle study also completed enrollment recently. Can you just remind us whether this is a potentially label-expanding trial and what regulators might be looking forward to enable that? Thanks.

Sure. So in terms of the Emflaza, obviously, we have been spending the last couple of years in terms of gathering data and the publication. I just think I saw a player in terms of demonstrating why Emflaza is the superior – the data just shows that it’s the superior product relative to prednisone. And I think that there’s been a lot of hard work done on that to get to this point. And so I think it’s growth. Maybe, Eric, do you want to talk a little bit about the growth of Emflaza in terms of patients on site?

Yes. Sure. Eric, good question. We are really pleased with the growth right now that we have seen from Emflaza. This is – the majority of the growth right now is that we have been able to convert patients that have been on bridge and have been on patient assistance. We have been able to convert them much, much faster to commercial therapy, which is extremely important because that’s free drug. In addition to that, we have continually increased the number of new subscription start forms during the quarter, and we saw a nice increase there, an influx of both, a nice combination of naive and former prednisone. The other thing that’s driving is that the base of patients are again, like Translarna, we are seeing very high adherence and very good compliance rates and very low dropouts. We also come into a period of reauthorizations, and our team is staying way ahead of the reauthorization process, with the insurance companies, so that patients can spend less time in that bridge environment of free drugs and more on commercial therapy. So it’s a combination of a lot of these different efficiencies that have really driven this growth. And we are seeing that again. It’s looking real strong as we are moving into the second half of the year.

Yes. Got it. And on limb-girdle, Stu?

Limb-girdle, yes. My recollection, I can’t remember that was [indiscernible], but I do think it was – but that’s one where I don’t think we have actually completed the enrollment. And I think it’s been – especially with COVID, it has been at substantial recruiting challenges.

Understood. Thanks for the clarification. Thanks for taking the question guys. Appreciate it.

Thank you. Our next question comes from Martin Auster of Credit Suisse. Your line is open.

This is Matt Terwelp on for Marty. Thanks for taking my questions. Regarding the Huntington’s program, you mentioned that Phase 1 healthy volunteer data will include information on huntingtin-lowering and plasma. And I believe you presented some data on mice, on the relationship between huntingtin-lowering and plasma versus the brain. Does your therapy lower huntingtin protein in nonhuman primates? And if so, can you describe the relationship you saw in HP in terms of huntingtin-lowering and plasma relative to various regions of the brain? Thanks a lot.

Sure. Yes. So you are absolutely right. We are the – it’s really – to remind everyone, it’s – the Huntington’s program, which you might have seen on the deep dive, was that, we think – that you take what we call the pseudointron and be able to trick it into being able to go to be part of the messenger RNA, which actually makes the RNA unstable because of a premature stop and you don’t make either the protein or the RNA. So that’s really actually quite important, and that’s the human form of it. My recollection is that the nonhuman primate, because it’s within the intron, doesn’t have that sequence in it. So you wouldn’t necessarily see that. That’s my recollection of that. So you – it’s not in the sense a model where you can do the subset – where you can actually look at the substrate, the human substrate in that case.

Right. Thank you so much for the question.

But it is very true that in the – in patients, we will very much be able to measure in blood the reduction of the RNA and potentially protein, especially in the multiple ascending dose where you have time to see the protein go down. And we do know from measurements that the blood-brain levels are pretty much 50-50. So what you see in blood, we anticipate will be similar to what we see in brain, and that was indeed the case in the animal model. So it’s really quite exciting. It’s actually very similar to – analogous to what we saw in the SMA program or what we anticipate to see. So you have really an idea from the very early stages of the program that you are on mechanism, on target, you see the effects, and then you go on to measure clinical benefit.

Perfect. Thanks again.

Thank you. I am showing no further questions at this time. I would like to turn the call back over to management for any closing remarks.

Okay. Well, thank you, folks, for staying on the call and asking these questions. We are obviously very pleased with the strong performance this quarter across both the commercial and clinical programs. And I am very proud on how the teams have continued to execute in the environment that we are in. As you know, we have been trying to do our part to reduce the consequences of the pandemic. You saw that, that we are very excited about 299 and its potential to be part of the solution for COVID-19. We have also, as I talked about before, recently launched our internship program, providing opportunities for graduates, which we call the Talent Pipeline Program or TPP. It offers a 1-year internship to provide a real-world experience for graduates during the challenging economic times. All graduates – although all graduates are eligible, we have used this program to reach out to institutions, at minority communities. And I am gratified to say we approximately have about 3,000 applications. So it’s been quite successful. So we are excited to be able to work alongside and mentor what we hope will be future leaders in the biopharmaceutical community. So thanks again for listening, and we hope that everyone stays safe.

Ladies and gentlemen, this does conclude today’s conference. Thank you for participating. You may all disconnect. Have a great day.