Ultragenyx Pharmaceutical Inc. (RARE) Q3 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and thank you for standing by. Welcome to Ultragenyx Pharmaceutical Incorporated Third Quarter 2015 Financial Results and Corporate Update. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. I would now like to introduce your host for today's presentation, Mr. Ryan Martins, Vice President of Strategy and Investor Relations at Ultragenyx. Sir, please begin.

Thanks, good afternoon and welcome to the Ultragenyx Pharmaceutical financial results and corporate update conference call for the third quarter of 2015. We have issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. I am Ryan Martins, Vice President of Strategy and Investor Relations. And I am taking over Investor Relations from Rob Anstey who has transitioned to Business Development at the company. With me today are the following members of the Ultragenyx management team, Emil Kakkis, Chief Executive Officer and President; Shalini Sharp, Chief Financial Officer; and Sunil Agarwal, Chief Medical Officer. We will keep our prepared comments brief in order to allow time for the question-and-answer portion of the call. First, I would like to remind investors that this presentation contains forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the expected release of data from clinical studies, the initiation of additional clinical studies and the designs of same. Plans regarding ongoing studies for existing programs, the possibility of making milestone and royalty payments under collaboration arrangements, and the expectation of increased expenses over future quarters. These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance, or achievements to differ significantly from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the uncertainties inherent in the clinical drug development process, the actions of regulatory authorities, the timing of our regulatory filings, and other matters that could affect the availability or commercial potential of our drug candidates. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in the forward-looking statements as well as risks relating to our business, see our quarterly report on Form 10-Q for the quarter ended June 30, 2015 filed with the Securities and Exchange Commission on August 14, 2015. Our quarterly report on Form 10-Q for the quarter ended September 30, 2015 that will be filed soon and our subsequent periodic reports filed with the Securities and Exchange Commission. I will now turn the call over to Emil.

Thanks Ryan and good afternoon everyone and thank you for joining us for our quarterly call. I will provide a high level overview of our progress in the quarter and Shalini will then give you an overview of our third quarter financials. And finally, Sunil will provide additional details on our clinical development progress. The third quarter has been a productive period for the company with clinical data from multiple programs, a Phase 3 start, a major financing, an important pipeline expansion deal, and the filing of our first marketing application which begins the next stage of company's developments. Our clinical data includes positive Rickets Bone data in the subset of patients at an interim four-week analysis in our KRN23 program, positive UX007 data, Phase 2 top line data at 24 weeks in the Long-Chain Fatty Acid Oxidation patients, and positive UX007 data in five infants with cardiomyopathy due to Long-Chain Fatty Acid Oxidation defects. From a regulatory perspective, we announced an update to our UX007 development program in Glut1 Deficiency Syndrome patients, and the filings acceptance board review of the Ace-ER conditional MAA in Europe. From a pipeline perspective, we announced the collaboration with Arcturus Therapeutics to develop mRNA Therapeutics for rare diseases and will combine with substantial financings. In July, we made important progress in our mission of treating rare disease patients. Apart from the clinical update, we received orphan designation in the EU for the treatment of three other sub types of LC-FAOD in addition to the one for VLCAD deficiency. So, the four subtypes represent about 90% or more of the patients born with Long-Chain Fatty Acid Oxidation Defect each year. Now just last week we announced an update to our development program in Glut1 Deficiency Syndrome where we plan to have initiated a Phase 3 study in patients with the movement disorder phenotype in mid-2016, and Sunil will provide more data later on the call. As the movement study progresses, we expect the ongoing Phase 3 study in patients with the seizure phenotype will continue to enroll up to 40 patients, and the two studies together will allow us to better assess the potential benefits of UX007 across these two key disease manifestations, and if the data are positive, the studies are intended to support NDA filing for the treatment of Glut1 Deficiency Syndrome. As one part of our effort to increase our early pipeline programs given the transition of our current clinical pipeline to later stage studies, we entered into a research and collaboration license agreement with Arcturus Therapeutics to discover and develop messenger RNA therapeutics two rare diseases using Arcturus’ UNA Oligomer chemistry and LUNAR delivery platform. We believe this collaboration will help us address specific rare diseases that are difficult to approach with currently available protein or small molecule strategies. Arcturus’ technology platform potentially solves some key issues that mRNA therapeutics and the key advantages associated with their technology include low or less frequent dosing due to their improved stability, longevity of the mRNA action; improved toxicity profile with the use of biodegradable lipids; and formulation quality benefits with particle size control. As part of the collaboration, Arcturus will design and optimize mRNA therapeutics on two Ultragenyx chosen rare disease targets. Ultragenyx will have the option to add up to eight additional rare disease targets. Ultragenyx will be responsible for the development and commercialization of our products, and Arcturus will be entitled to milestone reimbursement of research expenses, and mid-single to low double-digit percentage royalties on sales. Lastly, just five years into the company’s founding in October, we filed our first marketing authorization application with EMA seeking conditional approval for Ace-ER to treat adult patients with GNE Myopathy or HIBM. If after review of our data we are able to receive a positive opinion from CHMP, then a decision from the European Commission is expected in the second half of 2016. The 48-week Ace-ER Phase 3 study continues to enroll patients and data are expected in the first half of 2017, if positive these data would form the basis of an NDA filing with the FDA. We're on track now for some key milestones from now until mid-2016. The full 40-week data including more Ricket's data in the 36 patients from the Phase 2 KRN23 in pediatric XLH by the end of 2015; the initiation of a Phase 3 randomized double-blind, placebo-controlled study of KRN23 in adults with XLH by the end of 2015, initial data from the Phase 2 KRN23 in Tumor-Induced Osteomalacia in early 2016; an update on the design and timing of a Phase 3 study in LC-FAOD patients in the first half of 2016, top line data from the Phase 3 study of rhGUS and MPS 7 patients by mid-2016, initiation of a Phase 3 study in Glut1 Deficiency Syndrome with the movement disorder phenotype into 2016. That’s quite a long list of activities and we're having a great time pushing these things forward. I’d like to turn the call over now to Shalini to provide an overview of our financial results.

Thank you, Emil and good afternoon everyone. We issued a press release earlier that included a financial update which I will briefly summarize. Our third quarter 2015 results included total operating expenses of $39.9 million. Research and development costs accounted for $29.7 million or 74% of our operating expenses. Our Phase 3 programs, Ace-ER and rhGUS accounted for the greatest proportion of R&D costs in the first nine months of 2015. The largest increases in these expenses compared to the prior year period related to clinical programs that were seen for KRN23 and XLH, Ace-ER and rhGUS. Expenses also increased for both Triheptanoin programs as compared with the first nine months of 2014. As a reminder, we shared KRN23 development costs 50-50 with our collaborative partner Kyowa Hakko Kirin. Costs for our pre-clinical translational research programs also increased over the prior year period. OPEX increased significantly from the third quarter of 2014 due to the conduct of multiple late-stage clinical studies, manufacturing cost-related to clinical supply of multiple programs, increased regulatory activity across the program, investments in our commercial infrastructure, and patient-identification efforts, general and administrative expenses to support these activities, and increases in stock-based compensation expenses. Total net loss for the third quarter of 2015 was $39.2 million compared to $15.8 million for the third quarter of 2014. Net loss for the quarter ended September 30, 2015 included approximately $9.8 million or approximately $0.26 per share in non-cash charges such as stock based compensation, amortization of premiums on investment securities, and depreciation and amortization. In particular, stock compensation expenses have continued to increase significantly overtime. As we build out our global commercial capabilities, advance into multiple Phase 3 trials, and invest in our pipeline of preclinical programs, we anticipate that our expenses will continue to increase in future quarters. We ended the third quarter of 2015 with $581.9 million in cash, cash equivalents, and investments on the balance sheet. We do not have any debt outstanding. I will now hand it over to Sunil to provide the development update.

Great, thank you Shalini. I will now provide an update on our clinical pipeline beginning with UX007 or Triheptanoin. At the SSIEM Meeting in September, case reports from five infants with moderate to severe cardiomyopathy due to Long-Chain Fatty Acid Oxidation Disorder treated with 007 were presented. FAOD patients can present suddenly with severe cardiomyopathy usually due to an inter current illness, vital infection that can lead to death. All of these patients were detected by newborn screening and managed with standard treatment including medium-chain triglyceride oil. While on standard of care, the patients were hospitalized with severe heart failure that required invasive cardiac support and in some cases resuscitation. Based on five different emergency requests, we supplied 007 and the patients discontinued medium-chain triglyceride oil and began 007 on an extended axis basis. All patients demonstrated an improvement in ejection fraction or EF after treatment with 007. The improvements in EF began between two days and three weeks following treatment and were associated with stabilization of the clinical signs of cardiomyopathy in these patients. Additionally EF continued to improve or was maintained with further treatment. In patients with no EF values before and after treatment and equal score, the main ejection fraction prior to 007 was 32% and after treatment at last assessment was 66%. The most common adverse events were GI distress including loose stools. One patient discontinued treatment after approximately 14 weeks due to GI symptoms. No other significant safety issues or treatment related adverse events were reported. Four of the patients continued to receive 007. Recently we also reported positive interim data on the acute effects of 007 that were being evaluated in a Phase 2 study in FAOD patients. This is a single arm open label study evaluating 29 pediatric and adult patients across three main symptom groups musculoskeletal, liver, hypoglycemia, and cardiac. Patients needed to have moderate to severe FAOD with significant disease in at least one of these domains in order to enroll. The study began with a four week run in period to assess baseline data while on the standard of care therapy including MCT oil if applicable. Patients on MCT oil then discontinued it and were followed to evaluate the effects of UX007 treatment over 24 weeks on several key endpoints including cycle ergometry, 12 minute walk test, liver disease, hypoglycemia, cardiac disease, and quality of life. The 24 week analysis focused on the acute effects of 007 on the musculoskeletal aspects of the disease. Patients who opted to continue will be treated for total of 78 weeks and raise a major medical event such rhabdomyolysis, hypoglycemia, and cardiac events, will be monitored and compared to rates for the two years prior to treatment with 007. The majority of patients enrolled present with musculoskeletal disease compared to a limited number who presented with liver and cardiac symptoms. The patients spanned a wide age range from 10 months to 58 years old. Prior to 007, 27 of the 29 patients were on standard of care MCT oil therapy. 007 was then titrated to a target dose of 25% to 35% of total daily caloric intake. The average dose through 24 weeks was 30% of total daily caloric intake. Four of the 29 patients discontinued prior to 24 weeks, including only one for diarrhea attributed to 007. The other three patients withdrew consent for reasons unrelated to study drug. All other patients opted to continue treatment in the extension phase of the study and are still in the extension phase. Improvements were observed in both measures of exercise tolerance which includes cycle ergometry test and the 12 minute walk test. The three areas of evaluation with cycle ergometry included work load, measure and watched produced at a fixed heart rate, respiratory exchange ratio or RER, a measure of energy supply in duration of cycling. Patient showed improvements in both work load and duration but no change in RER. At week 24, seven qualified patients had a 56% increase in walks over baseline representing a mean increase of 447 walks and a median increase of 128 watts. For the three patients who were not able to complete all 40 minutes at baseline, the mean duration increased by 11 minutes at week 24. With respect to the 12-minute walk test, eight qualified patients demonstrated a mean increase of 188 meters and a median increase of 94 meters. These patients also experienced an increase in exercise efficiency during the walk test as evidenced in an improvement in the mean energy expenditure index. Overall major medical events appear to decrease in the 25 patients who completed the 24 weeks of treatment. When compared to the reported event rates in these same patients in the 18 to 24 months prior to treatment with 007. However, these data are preliminary and we require significantly more observation time for proper evaluation at the 78 week time point which is expected in the second half of 2016. Improvements in patient-reported quality of life scores, specifically the SF-12 were reported in adult patients who also demonstrated improvements in exercise capacity. But no mean difference was seen in parent-reported scores SF-10 for pediatric patients. Though having no deaths on the study, one serious related adverse event for moderate gastroenteritis with vomiting was considered treatment related. Overall 18 patients, 62% had treatment-related adverse events, most of which were mild to moderate in nature. The most common treatment-related adverse events were diarrhea, abdominal GI pain, and vomiting. Some GI events were managed by adjusting dosing or dosing with food. The most common adverse events including those not being treatment related were viral infections, GI disorders, rhabdomyolysis, fever and headache. Overall these data are encouraging and we look forward to presenting them at an upcoming medical meeting and discussing these data with the FDA with the intent to start a Phase 3 study in mid-2016. We recently announced an update to our development program for 007 in Glut1 deficiency syndrome patients, following an end-of-Phase 2 meeting with the FDA. We now plan to initiate a Phase 3 study in Glut1 DS patients with the movement disorder phenotype in mid-2016 and the ongoing Phase 2 study in patients with the seizure phenotype will continue to enroll up to 40 patients as the movement disorder study progresses. If positive, the two studies are intended to support an NDA filing for the treatment of Glut1 DS patients. The Phase 3 movement disorder study is intended to be a randomized, double-blind, placebo-controlled double-crossover design. The primary endpoint would be an assessment of the impact of 007 on movement disorder events as recorded by a patient diary that will be further refined in discussions with the FDA. Additionally it should be noted while the ketogenic diet is considered the current standard of care to treat the seizure phenotype, it is not considered the current standard of care to treat the movement disorder phenotype. The company will continue enrollment of up to 40 patients in the randomized, placebo-controlled Phase 2 seizure study. We will no longer conduct an interim analysis over the current Phase 2 study in the seizure phenotype which will allow us to preserve the integrity of the Phase 2 study, and maximize its utility from a regulatory perspective. With respect to KRN23, we continue to expect efficacies in safety data after 40 weeks of treatment in the first 36 pediatric XLH patients enrolled in the Phase 2 study by the end of this year. The 40-week data will include Ricket scores, key pharmacodynamic measures such as serum phosphorus, the six-minute walk test, PROs and of course safety and tolerability information. Based on the results of the 36-patient data we will make a determination on filing for conditional approval in Europe based on prior scientific advice received. The study was expanded to enroll a total of 52 patients and reported results from the fully extended study are expected in mid-2016. We are on track to initiate a Phase 3 randomized double-blind, placebo-controlled study in approximately 120 adult XLH patients. The primary endpoint will be serum phosphorus levels at 24 weeks with the Brief Pain Inventory patient-reported outcome as the key secondary endpoint among other endpoints including fitness and quality of life measures. The company also plans to initiate a 48 week open label bone biopsy study in approximately 10 patients to evaluate the effect of KRN23 in osteomalacia. Finally, we continue to expect interim data from the first few patients enrolled in our ongoing TIO study in early 2016. Lastly, I would like to provide a brief update on the rhGUS Phase 3 study in MPS 7 patients. The pivotal study is fully enrolled and data are expected in mid 2016. Also in August of this year we initiated a study in patients less than 5 years of age with MPS 7 including some with non-immune hydrops fetalis, a severe infantile presentation of the disease. Approximately seven pediatric patients are expected to be enrolled in this study and interim data are expected by the end of 2016. I am pleased with significant progress we have made across all programs and I look forward to providing further updates as we reach key milestones. I will now hand it back to Emil.

Thank you Sunil. That is certainly long list of data so hopefully you kept with us there. We continued to execute this quarter and continued to track excellent people in filling out our critical roles to drive our business and programs and we expect the end of the year in 2015 with key milestone from [indiscernible] and we will continue to plan for potential commercialization next year. I would like to remind listeners that we will be hosting our first Ultragenyx Research and Development Day in New York on December 3rd where we will have the opportunity to dive deeper into some of our clinical programs. With that I will end my comments, thanks for listening, we can now move on to the Q&A session. Can the operator please provide the instructions.

[Operator Instructions]. Our first question or comment comes from the line of Eric Schmidt from Cowen and Company. Your line is open.

Good afternoon, thanks for the summary, the comprehensive summary and congratulations on all the progress. Let's see, maybe Emil first, is there still an opportunity for namepatient sales on either rhGUS or Ace-ER in Europe or ex-U.S.?

Yes, we are pursuing them. I don’t think we have talked about them yet. But in terms of the actual revenue number, I think we are planning to initiate MPS 7 name patient sale. For Ace-ER, we are looking at doing it and we have to -- we are thinking about a cohort for that because of more patients. But, I wouldn’t expect this year to be any significant revenue amount.

Okay, and you certainly do have a lot on your plate but I have to ask about your appetite for bringing in additional products through in-licensing or organic pipeline growth, what's your appetite and capacity for that?

Well, we like to be very selective in what we pick because we like to have a high rate of success, and we try to be pretty selective. We are and have been since our July fundraise, we have been building out our earlier pipeline work with our goal in operating the system to be running something like five or six early stage programs that would help generate an IND every year or every other year is our kind of target, and we have been building out, our first project brings the couple, we have several others that are already underway, and we are looking at several others that will build in-license. So, a goal would be to have something in the range of five to seven programs in what we call translational research development, and what I will point out though is, we won't generally disclose things that are going on in that early stage, we just don’t want to talk about them until we are confident we are filing -- we are heading to an IND. But at R&D Day, we will provide a little bigger picture, a bigger window opening into what we are doing in early research and how much is going on. So, we are looking at some additional in-licenses. They have to be smart or right in line with where we want to go and our expectation is to build out to five or seven early stage programs.

Okay, and then maybe as a transition to that R&D event on December 3, your first ever such day, what is sort of the bigger picture that you hope to communicate around that day to investors? And if you wish, you could provide us with more smaller details that you think you might be ready to disclose?

Well, I think there is probably two big picture general messages coming out of the meeting; one, is a deeper understanding of our clinical program results including with some experts there to comment on the data and it is meaningfulness. We want to give investors a real solid view of what the current clinical program's meaning and value is. That is one major message. The second message is to give a better look at some of the early-stage work we are doing and the way we organize and run development. What we're doing is a method that’s a little bit different, it’s one that I had initiated [indiscernible] as a strategy, which we found it a very productive way to run our early development, and we’ll talk a little about what we call the transitional research strategy and how we can get a lot of productivity out of a relatively smaller number of people and with relatively focused and effective spend, so those are the two things we’ll be talking about at the session. Is there something you think we should talk about, that I haven’t mentioned?

No, you guys always have it covered, but thanks a lot and congrats again on the progress.

Thanks.

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

Gena, hello?

Ms. Wang you may need to un-mute your phone.

Gena, are you there?

Okay, I’ll return you to the queue. Our next question or comment comes from the line of Cory Kasimov from J.P. Morgan. Your line is open.

Hey, guys this is actually Brittany on for Cory. Can you just review your rationale for moving right into Phase 3 for the movement disorder study? And then can you just describe some commercial prep that is currently underway in both the EU and U.S., thank you?

Sure, Brittany. So in the Glut1 disorder, our original strategy was to focus on the seizure part of the spectrum because seizures had a well-worn regulatory pathway, and we felt that would be simpler. There is some competition from ketogenic diet that makes it more challenging, and our position on movement disorder problems were they were important, but we had no idea whether treadmill [ph] will help them or not, so we supported a pilot study that Dr. Michelle did. And the reason we're moving so quickly ahead is that the data she presented in the six patients was clearly, we thought, profound in terms of a 90% reduction in the incidence of movement disorders, and that when she pulled the drug away those –- the movement disorders bounced right back, and she put them on drug again and it came back down. So we feel like it was -– even though it was a small group of six patients that by putting them on off on again, we're able to verify that, in fact it was a very substantial effect. And very important to those patients, they all wanted to stay on drug and they’re now all on extension. Our view of the magnitude of this effect and the movement disorder phenotype is that by using a [indiscernible] we've captured the breadth of those results, and given the size of the effect, as long as we felt that it was something that we could design, a double-crossover type design study based on the actual results she showed, and our view was that well we could do a Phase 2 study, our feeling was that at this stage, we are strong enough and the efficacy is sufficient enough that going straight to a Phase 3 study would be the most appropriate. And Sunil is here, I had the conversation, I don’t know if there's anything more you want to add from the conversation with the FDA?

Yes, well I’ll add one thing and then about what you said in the conversation with the FDA, and one thing I’ll add is, I think this also supports the biology, the mechanistic rationale. And that when the brain is starving for energy, it can present in different ways. So when the cortex is starving for energy, you can have seizures. When the basal ganglia is starving for energy, you have movement disorder problems. So we actually, as Emil said, we feel the Phase 2 six-patient data robustly supports Phase 3, but we also believe it supports the mechanistic rationale for the totality of the disease and the totality of the symptoms. So we did have a good meeting with the FDA, and based on that meeting our plan is to go into Phase 3, and again our plan is to start that Phase 3 trial middle of next year.

Right, so the second piece of your question was commercial prep and planning. And Jason’s not on the call today, Jason Dallas is our Chief Commercial Officer. But I can give you kind of a big picture view. We are putting together a team for Europe right now, and Jason is recruiting his senior group. We have people that work for us as consultants on the ground already, doing patient identification in Europe. But Jason’s setting up the European headquarters and with the team here and we will be assembling the team within the next few months, a leadership team there. Our expectation though is on the name-patient sales front in Europe as we are proceeding to work on a cohort plan for the in-patient sales. That has not started but that’s what we're working on, which we’d want to get going ahead of any read out from the EMA. With regard to the U.S., we are working on building a group, but its, obviously there's not an approval coming in the U.S., so the group is a little bit more focused on patient identification work, and it has jointly worked with medical affairs in the U.S. So, I think Jason's big job right now is recruiting that senior leadership team and we are -- have established our location and we are getting set for Europe. I don’t know if Shalini is there anything more you want to say about it at this point.

No, not at this point. I think we will be setting up operations in Europe and obviously that will drive additional expenditure over the next year as we build our commercial infrastructure for the first time from scratch to support hopefully multiple product launches in the next couple of years.

Okay, great. Thanks so much.

Thank you. Our next question or comment comes from the line again we have tried Ms. Gena Wang from Jefferies. Your line is open.

Hey thank you. Sorry, for the technical issues.

Speak louder.

Can you hear me okay.

Yeah, now you are good, thanks.

Okay, sorry about that. So, I just have a one quick question, wondering what level of a reducing a full Ricket score will be considered as clinically meaningful for the interim analysis of KRN23 in pediatric patients?

Yes, so your question is what is the magnitude of change in the RSS or Ricket Scoring System, the factor score that would be seen as clinically meaningful. It is a continuous scale and really depends on where you start and where you end and what the meaning of that is and plus the time frame is what it is. But Sunil, I thought maybe you can provide some details of what we think about clinical trials.

Yeah, absolutely and it is a really good question, thank you. I think a couple of things to remind people about it is how this scoring system works. And what I mean by that is it is a 0 to 10 scoring system and what people I think misunderstand and it is not -- it makes sense that sometimes people misunderstand as 10 isn't terrible disease and 5 means moderate disease. If you see scores of 2 and 3 and 4 that is very severe disease on these children, on their bones. So, one thing is I have never seen any patient above 4 or 5 or 6 even. I have no idea what that even would look like. I mean basically no bone left in the body. But when you see scores of 2 or 3 that is very significant disease according to the treating physicians who take care of these patients. And when you look at our interim data that we already disclosed earlier this year when you talk to the experts like Dr. Carpenter and others they have said that the magnitude of benefit we have seen is highly clinically meaningful. Another way to simply state, as being a pediatric doctor myself who has seen these patients, any bone disease is bad and you don’t want these children to have bone disease. And if you can improve that bone disease which is picked up by the scale that is meaningful to these children, that is meaningful to the parents, and that is meaningful to the caregivers.

So in our analysis so are we setting a -- for a threshold analysis, I bet she wants to know this.

Yes, so we are looking into that right now. We have to talk to the agency about what the threshold will be. There are several different scoring systems also and we are trying to -- we work with the agency to decide which one is the best scoring system to use. Part of that decision will be based on the other data set we are going to get by end of the year. I mentioned that we are going to get full 36 patients of week 40 data and from that it will allow us to make those decisions. But bottom line I do believe if you improve the bone disease to any degree that is clinically meaningful. But we will work at the agency to see if they have cut point that they are going to require.

But Gena what I would commit to is that we will have when we bring out our 36 patient 40 week day we will include information trying to help investors understand the clinical meaningfulness of the magnitude which I think is the core of your question.

Yes, absolutely.

Okay, great, thank you. And also follow-up question is, I know you are completing enrollment for additional 14 patients, so what will be the decision to make -- when you were talking to that regulatory ageing based on the interim analysis and at what point you need to include additional 14 patients, and if the initial 36 patients were not robust enough, so what will make you feel more comfortable about the read hours additional 14 patients?

Very good, well I will start and I will let Sunil finish. The reason to add the patients, we wanted to include another set of patients with the more significant Ricket's disease and so we added those in. For the Europe plan they had already agreed to the 36 patients being sufficient data. We think by adding in another 14 you had a minimum threshold for Ricket's which enhances the data set for patients with more significant, more severe Ricket's. We think it just gives us a better data set to validate the therapy on next year and we decided to do it now instead of wait, which is the generally characteristic we will do. We will be dynamic and look at information and adapt. For the U.S. now we think it would be -- our plan is to go to a Phase 3 instead of care control study to get approval. If we had any hope of trying to accelerate it we felt that having some additional data on more severe patients would give us a more robust set of data for discussion with the FDA. However we –- at this point they have required us to do a standard of care control arm. So we think overall we just helped speak to the effect of the drug by having more severe patients in the pool and we think it will be useful potentially in the U.S. discussions.

Okay, great. Thank you.

Thank you. Our next question or comment comes from the line of Matthew Harrison from Morgan Stanley. Your line is open.

This is David Leibowitz in for Matthew Harrison. Thanks for taking my question. I had a question on the FAOD indication in pediatric patients specifically. I was wondering overall how you are thinking about that indication as you go forward?

Yes. So the FAOD indication is complicated because you both have multiple different genetic types which have some variations in their outcome and then you have a whole series of age and phenotype variations. So it makes it complex. Our Phase 2 study included mostly patients with a skeletal muscle phenotype and a few of the other phenotypes. And the older patients with the muscular atrophy can be evaluated using, let’s say, more traditional tools like the lock test or an ergometry. The other type of patients are a little harder to assess and it tends to be event driven. So the way we look at FAOD right now is its sort of dividing off into kind of two types of patient population evaluations. One is patients who have exercise limitation which involve both skeletal, muscle and heart to some degree, and the effect that treadmill will have on improving tolerance and that’s sort of one phenotype and one study that we're talking about right now. The other type of patient, it could include six-month old, one-year old, two-year olds’ who have hypoglycemic problems, may have variable cardiomyopathy problems, who have a lot of events end up at the hospital, in and out of the hospital, which we think is a huge driver of cost and morbidity for patients. And also leads to mortalities for many of those, and so that’s a different population. We have -– we're waiting to see what our event data look like to kind of better realize that there might be a study that we would do that looks at the change in event, right? As you know we published a retrospective on 20 of the 24 patients that had been on long-term therapy and showed a 69% reduction in the number of days in the hospital per year, from around 17.5 to 5.5. And that is a huge benefit if you can demonstrate that in a controlled study, right? That’s a, if you can get that in a controlled study that was not a controlled study but -– so we're going to look at our run-in data, our data that we have from run-in period or the historical period as well as going forward now, compared and looked at that event, right, see if we have traction there on looking at event right type of study as well. Sunil, I’ve kind of, I’ve gone through those two pieces, any part of that you think you could add?

Yes, no, you covered it very well and I think it’s the same old, but we’ll get that event rate data middle of next year when you have the week-78 dataset. Additionally, I think you covered this as well. As you know, in the infant cardiomyopathy, severe cardiomyopathy patient population is an interesting one as well, that’s likely a very unique patient group. So we're looking at this right now as we speak and how we designed kind of a Phase 3 program in FAOD and we are going to be discussing this with the agency very shortly, and again, our plan is to start that Phase 3 program middle of next year.

In part, it is an involved study though.

Yes. And likely will be more than one study based on that point.

So it’s likely going to be more than one study because, those populations’ is just too bifurcated?

Yes, I mean…

So let’s put it this way. I will still assume that one study is sufficient to be pivotal and get approval, but the question is whether you want to do two studies to give you more data across the spectrum. And particularly if you could show exercise tolerance has improved, well that’s great, you can get approved on that I believe from all the data and all the rare diseases we worked on. But if you could also show a reduction in hospitalizations or days in the hospital as a second piece of data that is tremendously valuable when you’re going off around the world and talking about reimbursement, right? So let’s talk about, to get approval one of them, I think, is enough. But if you want to build this franchise it could be the second piece is actually very compelling and so we do want to make sure we don’t under invest and lose an opportunity to support the product out in the field.

That’s right.

As far as follow-up for such trial, would there be different timelines for each of these categories just because of the data that’s been collected is different?

Yes. It is Sunil speaking. I don’t really, I mean that’s more from a safety and tolerability perspective.

I think it is when we're starting it.

I’m sorry, when we're starting the studies, but it might all – whatever that Phase 3 program looks like, it will start middle of next year. We don’t – we wouldn’t…

It’s when we’ll have the event study.

Yes. Event – and again, it will all be starting in the middle of next year. Now the events that have a longer timeline depending on how long it takes to get the events we need, so that’ll be a little bit hard to determine right now. But those – we should know a lot more in a few months.

Our expectation for the XLH tolerance study would be about a six month length in the control study. The event study is likely to have to be at least a year, could end up being longer. We’d have to figure out what we think based on what we've learnt, right. So inevitably the Phase 3 at times would be reading out before the study.

And then if we did any work in cardiomyopathy, when we saw that high patient extended access experience the improvement is within days to weeks. So that likely would be the shortest study, where as XLH’s tolerance’s mid-size study or mid-length and then they almost point the event rate studies for longest study.

Thank you very much for taking my questions.

Thank you. [Operator Instructions]. Our next question or comment comes from the line of Yigal Nochomovitz from Citigroup. Your line is open.

Hi guys, thanks for taking the questions and congrats on the progress. Just want to follow up on David’s question regarding the fast forward of Triheptanoin and LC-FAOD. Just wondering, in terms of the data you’ve shown in infantile cardiomyopathy which looks very good, what are you thinking about in terms of potentially differential pricing of the infantile LC-FAOD indication versus the older patients and also versus Glut1 DS because it seems like there's an opportunity for premium pricing for the product and how might a different formulation of Triheptanoin give you some advantages there? Thank you.

Thanks, Yigal. I think interesting question. One thing is – I will point out to you that you might not have thought about is that the dosing in the infants is actually much different than dosing in adults. So the amount you give the infants is something on the order of four grams per kilo versus adults where you might be giving one gram per kilo because it’s based on their metabolic turnover rather than their -– strictly just their weight. So there is some flattening of the benefit cost curve, because of the difference in dosing. We have not thought about keeping a separate –- like a separate SKU or a different formulation because it would require a fair amount of work. Our view on the cardiomyopathy story is not that you should just see cardiomyopathy with it because that’s a fairly small number. But that if you want, the view would be if you can prevent any FAOD patients from getting into cardiomyopathy or reduce that possibility and reduce hospitalizations related to it, that you’d want to actually use this compound as first line for all patients to help prevent any from ending up in the hospital or near death. That – I mean that would be the way I use it. It’s basically a justification for using it first line as opposed to just simply a specific treatment. Because if you narrow yourself to cardiomyopathy alone. Its relatively smaller number of patients. It’s a crisis when it occurs and some of the patients die at their first episode. So, but we think it just speaks to the fact that if Triheptanoin can prevent or reverse cardiomyopathy in these very sick patients, it really should be first line.

Okay, got it. And then just a question on the Glut1 DS Phase 3. I think Sunil, you mentioned that ketogenic diet although used in the seizure disorder setting, and it’s not the standard of care for movement disorders. I’m just curious so what is used – what is currently the approach in movement disorders, do they – is the ketogenic diet tried or are there other options that might be useful if you could just expand a bit on that? Thanks.

Yes, no, it’s a great question. And this is an area like in many rare diseases it’s not well characterized or well understood how these patients are managed. Talking to the care givers and talking to the investigators, a lot of these patients like many diseases, they just fall from the system, they don’t do anything. Because they don’t think there is anything really good out there to take. And we are all adults, we often make the worst patients, and that we are not compliant with our own medications. We are much more compliant taking care of the children than yourselves. And the ketogenic diet is by no mean an easy thing to comply with. So, we find that the adults don’t want to do it even if they could do it. Another thing that sometimes uses the modified Atkins diet and again that is still pretty difficult to do in a vigorous manner. So, we are finding a lot of these patients are not really taking anything. So, we believe there is a significant unmet medical need there for these patients and then getting something like triad [ph]. If it would have worked we really kind of plugged that hole of that major unmet medical need.

I would also point out one other thing which you have talked about little is ketogenic diet is not benign at all and if you look at the publications, the longer you are on it, it is more probable you are going to have broken bones, multiple broken bones, kidney stones, cardiovascular complications. So lot of the people are, kids are for like a few years and then they go off it and it is usually particularly used in the peak years when seizures are a problem but there is not a lot of people on it for many, many years because of the accumulating risk of complications. So, we think that is also a factor in this whole story and that is why I think when people say you have to be checked, well we keep check altogether not only just efficacy but it is safety in the whole picture and the difficulty at applying it, etc. And so we think those are features that I think patients deserve to have another option. And I think this option would be substantially easier to apply we think and we just need to demonstrate that we have reasonable efficacy in helping their disease.

Great, and just one final question on KRN23, just following up on Gena's question regarding the 14 patients that you are going to be adding to the therapeutic program, did you mention what the minimum Ricket Score is for those 14, I may have missed that, thanks?

It has got to be on clinical trial so it is 1.5 in the knee, right.

Yes, that is right.

Okay, great, thank you.

If you have knee disease you often will have wrist disease too. So, they go hand in hand or appendage to appendage. That is about hand to hand.

Guess -- we had about half of the patients already in the study were like that so we just enriched the lets say the more severe half. We doubled down on the more severe half of the population we already studied.

Got it, alright. Thank you very much.

Very good, how are we doing, are we…

Do we have any other questions, operator.

I am showing no additional audio questions at this time sir. I return the conference back over to you for any closing remarks.

Yes, thanks. With no additional questions this concludes our call today. A replay of the call will be available shortly. If there are any additional questions please contact us at 844-758-7273 or ir@ultragenyx.com. Thanks everyone for joining us.

Thank you all.

Ladies and gentlemen thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.