Ultragenyx Pharmaceutical Inc. (RARE) Q4 2018 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Ultragenyx Fourth Quarter and Full Year 2018 Financial Results Conference Call. 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 turn the call over to Danielle Keatley. You may begin.

Thank you, good afternoon and welcome to the Ultragenyx Pharmaceutical financial results and corporate update conference call for the fourth quarter and full year 2018. We've issued a press release detailing our financial results, which you can find on our website at ultragenyx.com. I am Danielle Keatley, Senior Director of Investor Relations and Corporate Communications. With me today are Emil Kakkis, Chief Executive Officer and President; and Shalini Sharp, Chief Financial Officer; and Vlad Hogenhuis, Chief Operating Officer. I'd like to remind investors that this call will include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, the types of statements identified as forward-looking in our quarterly report on Form 10-Q that was filed on November 6, 2018; our annual report on Form 10-K for the year ended December 31, 2018, that will be filed soon; and our subsequent periodic reports filed with the SEC, which will all be available on our website in the Investors section. These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that actual results could differ materially from those projected in any forward-looking statements. For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements as well as risks relating to our business, see our periodic reports filed with the SEC. I'll now turn the call over to Emil.

Good afternoon everyone and thank you for joining us. I'll start today by providing some brief introductory remarks before turning the call over to Vlad Hogenhuis. Vlad joined Ultragenyx last September as our Chief Operating Officer managing commercial tactical operation and business development and he will provide an update on the 15 commercial launches. Next Camille will update you on our fourth quarter and full year financial results. I will come back and close the call providing an update on our clinical programs as well as things to look forward to in 2019. The last 12 months have been truly transformative for Ultragenyx. Over the course of 2018, we have simultaneously launched Crysvita and Mepsevii in three major geographic regions of the world. We have also successfully worked with the FDA to enable submission of a new drug application for our third product UX007 for launching that [indiscernible] application this year. In our gene therapy programs, we have shown clinical proof of concept in both ornithine transcarbamylase deficiency with two patients achieving a parent towards a strong results for our Cohort 1 in Glycogen Storage Disease Type Ia. Our early development successes and approvals are now creating a substantial commercial engine that will fuel our future growth. This will enable us to continue to expand the availability of our currently approved medicines and develop new therapies for patients with rare diseases, who have limited or no options. With that, I'll turn it over to Vlad.

Thank you, Emil, and good afternoon everyone. I'll start with Crysvita, which was commercially available for eight months in 2018, following our launch in late April. We’re pleased that launch continues to be strong with great enthusiasm for pediatric and adult patients with XLH in the United States. By the end of the fourth quarter of 2018, we had received more than 900 completed start forms and treating physicians, a 50% increase compared to the prior quarter. Approximately 80% of these start forms are from patients who are not previously treated with Crysvita and that continues to be a 60:40 split between pediatric and adult patients on commercial therapy. Over 400 unique doctors have prescribed Crysvita with many writing multiple prescriptions. The payer mix as of December 31st remains approximately 70% private plans with the remaining 30% comprised of government and other payers. Nearly 70 payers in the United States have published policies for Crysvita covering approximately 200 million lives. We believe we now have nearly full coverage as additional payers without formal policies approving Crysvita on a case by case basis. This includes Medicare Part B, which covers Crysvita under the buy and bill process. This extensive coverage across all payer types has led to adding nearly 250 patients on reimbursed commercial therapy in the fourth quarter alone. This brings the total number of patients on reimbursed commercial therapy at the end of 2018 to approximately 560 patients in the United States. Now from the beginning of Ultragenyx, we saw to improve the development and commercial process by enhancing physician and patient advocation with a separate dedicated team in addition to the usual sales and medical science liaison teams. As we prepared for the Crysvita launch, we established these three teams with distinct responsibilities to ensure we've quickly reached as many patients as broadly in the community as possible. The patient diagnostic liaisons are solely focused on identifying doctors, who may have patients with XLH. This team shares the information with our UltraCare liaisons and provides healthcare providers the information and support needed to assist them in placing patients on therapy. Once start forms are submitted, our UltraCare guides are there to ensure patients have a seamless experience gaining access to reimbursed therapy. Eight months into the launch we’re seeing that this three-pronged approach is working well and has created a positive experience for doctors and patients alike. Based on the early launch success, we've added additional UltraCare liaisons and additional UltraCare guides to our team to meet the growing demand for service and we continue to evaluate the size of the team in order to meet the demand and best serve doctors and patients. We’re also making progress and expanding the global reach of Crysvita and our commercial territories. Most notably at the end of 2018, we have received approval and launched Crysvita in Canada for the treatment of XLH in adults and pediatric patients, one year of age and older. Canada is covered by the same North American profit sharing agreement as in the U.S. with our partner Kyowa Hakko Kirin, or KHK. Turning to 2019, we anticipate additional approved and launches in Brazil and Colombia as well as continued to reimburse named patient treatment in Argentina in response to multiple physician request. Now briefly turning to Mepsevii, which continues to make an important difference in the life of patients with MPS VII, Mepsevii is currently approved in three major geographic regions including the United States, the EU and Brazil. In 2019, we look forward to additional regulatory decisions in Columbia and Chile. Reimbursement discussions with European payers are ongoing and will provide updates as they are available. Overall, we're encouraged that we continue to identify new patients with MPS VII around the world. With that, I'll turn the call to Shalini, who will provide a financial update.

Thank you, Vlad, and good afternoon everyone. We issued a press release earlier today that included a financial update, which I will briefly summarize. Ultragenyx’s total revenue for the 12 month period ending December 31, 2018 was $51.5 million and for the fourth quarter of 2018 was $16.3 million. The following is a product by product breakdown of these figures. For Crysvita during the year ended 2018 December 31st, we recognized total revenue of $18.9 million. This includes $15.3 million in collaboration revenue in the U.S. profit share territory and $2.9 million in royalty revenue in the European territory from our collaboration and license agreement with KHK. Net product sales for Crysvita and all other regions totaled $0.6 million. Keep in mind these revenues represents eight months of sales after lunching Crysvita on April 27, 2018. Crysvita revenue in the fourth quarter of 2018 was $11.6 million. This includes $9.9 million in collaboration revenue in the U.S. profit share territory and $1.3 million in royalty revenue in the European territory from our collaboration. Net product sales for Crysvita in other regions were $0.4 million. Earlier this month, KHK reported top-line sales of Crysvita totaling 7.7 billion yen or approximately $70 million in 2018. These sales are from their international regions, which include North America, Europe and South America. For the fourth quarter, KHK reported top-line Crysvita sales of 4.5 billion yen, or approximately $41 million in the same international regions. Mepsevii product revenue for the year ended December 31, 2018 was $7.9 million and for the fourth quarter of 2018 was $2.7 million. UX007 named patient revenue for the year ended December 31, 2018 was $1.3 million and for the fourth quarter was $0.5 million. In the year ended December 31, 2018, we recognized $23.5 million in revenue from our research agreement with Bayer, $1.6 million of which came in the fourth quarter of 2018. We expect these revenues to be minimal going forward. As a reminder, we are continuing to gain commercial experience with Crysvita and Mepsevii and will not be providing financial guidance at this time. We've provided other launch metrics including patients on reimbursed therapy, growth in start forms and unique prescribers to help characterize the strength of our launch. We plan to provide this level of granularity only in the early quarters of launch. Our total operating expenses were $106.6 million for the fourth quarter of 2018 and $422.9 million for the full year, including research and development costs of $71.6 million for the fourth quarter and $294 million for the full year. We expect our R&D cost to continue increasing over time as we advance our product candidates from early preclinical development into pivotal studies. We expect SG&A to increase over time as we support our commercial programs in multiple geographies. We also expect the split of R&D versus SG&A expense to remain fairly consistent. Net loss for the fourth quarter of 2018 was $87.8 million or $1.73 per share basic and diluted, with a net loss for the fourth quarter of 2017 of $81.7 million, or $1.89 per share basic and diluted. For the year ended December 31, 2018, net loss was $197.6 million, or $3.97, per share basic and diluted compared with a net loss for the same period in 2017 of $302.1 million, or $7.12 per share basic and diluted. The net loss for the full year ended 2018 was reduced by the sale of the Mepsevii Priority Review Voucher in January 2018 for net proceeds of $130 million and $40.3 million gain from Ultragenyx’s portion of the sales of the PRV received with the Crysvita approval. Cash used in operations for the year ended December 31, 2018 was $290.6 million compared to $253.8 million in the same period of 2017. This includes adjustments for significant non-cash charges including stock-based compensation expense of $80.1 million, $19.5 million in depreciation and amortization and $5.3 million in non-cash foreign currency remeasurement losses in connection with the change in the company's tax structure and fluctuations of exchange rates related to intercompany transactions. We ended the year with $459.7 million in cash, cash equivalents and investments on the balance sheet. We believe that our cash resources should be sufficient to continue to support the initial years of launch for Crysvita and Mepsevii and allow us to continue making strategic investments developing our clinical and translational research portfolio. I will now turn the call back to Emil.

Thank you, Shalini. I will spend a few minutes on our recent development progress and we will then open up the call to your questions. For UX007 in Long-Chain Fatty Acid Oxidation diseases, we've released data from the 75 patient long-term extension study. The study includes patients who had previously been treated with UX007 as well as patients who have not received prior UX007 treatment. In the extension study, patients previously treated on our Phase 2 study showed sustained clinical efficacy with the median rate going down to zero further to zero for both annualized major clinical events and annualized duration rates. In addition, 20 patients who are naïve to UX007 at the beginning of the extension study demonstrated a 70% reduction in median annualized event rate and 80% reduction in median annualized duration rate replicating the fact that we saw in the separate set of patients in the Phase 2 study. The safety profile for all patients in the extension study was similar to what we've seen in previous UX007 studies. These drugs are encouraging and that they can reconfirm we previously saw across the other studies that are broader and more diverse patient population. Moving to DTX401, our gene therapy program in Glycogen Storage Disease Type Ia, we reported positive top line results from the lowest dose cohort of the Phase 1/2 clinical study in early January. All three patients demonstrated a clinical response reflected by approved glucose control, reduced need for raw cornstarch therapy and increased time to hypoglycemia during fasting. Two patients demonstrated clinically meaningful improvement and time to hypoglycemia making it possible to sleep through the night without severe hypoglycemia. Typically for GSDIa patients cornstarch or tube feeding is required during the night to prevent severe hypoglycemia, which can cause seizures or death. There were no infusion-related adverse events and no treatment-related serious adverse events reported. We're encouraged by the strength and consistency of the response of gene therapy, and even the first lowest dose and look forward to providing updates on the program. Turning to Crysvita, we recently reached believe 54-week data that demonstrated a superior efficacy in a randomized head to head comparison with conventional oral phosphate and active Vitamin D treatment in pediatric patients. For these patients procedure showed significantly greater improvements in the healing of records growth and [indiscernible] compared with oral phosphate vitamin D regimen that has been in the standard of care for the last 30 years. The 64 weeks safety profile was similar to what we observed at 40 weeks and in other Crysvita pediatric XLH studies. We have gained our support of our label and will help to ensure all pediatric patients with XLH receive this innovative therapy. Turning forward to 2019, we have a number of important milestones in the upcoming months that will continue to drive our progress. On the commercial front, we look forward to reaching more patients XLH and MPS7 and updating you on our progress on quarterly earnings calls. We also have a number of active filings expected additional regulatory reimbursement decisions ex-U.S. for both Crysvita and Mepsevii throughout the year. For UX007, we are on track to submit our NDA to FDA in mid 2019. Submission includes a comprehensive package with data for more than 75 patients, including the company sponsored Phase 2 studies, a long-term efficacy and safety extension study, a retrospective medical record review of compassionate use patients, expanded access data and the randomized controlled investigator-sponsored study showing an effect of UX007 on cardiac function. For DTX401 for the treatment of GSDIa, we expect our first data from three patients to the second dose cohort in mid 2019 and further long-term data from the first cohort of patients. For DTX301, AAV gene therapy for the treatment of OTC deficiency, we expect data from our third dose cohort in mid-2019. In closing, 2018 was a breakthrough year for us as we built out our commercial organizations and launched two products. For Crysvita, specifically the first eight months of launch have shown the strength of our clinical data can translate to commercial success and will support the tremendous potential support and therapy for patients with XLH. Looking forward we continue to expand our global reach – commercial reach and advanced our clinical product line and translational research program. On April 17, we've planned to hold an Analyst Day in New York City to provide more detail on our commercial and development program and also dive deeper into our most advanced translational research programs that are nearing clinical stage. We look forward to sharing more details with you on the Analyst Day in the coming weeks. Let's move now to you questions. Operator can you please provide the instructions for the Q&A portion of the call. We are ready to begin the questions.

Sorry about that. [Operator Instructions] And our first question comes the line of Cory Kasimov from JPMorgan. You may begin.

Hi, this is Carmen on for Corey. Thanks for taking the question. So with regards to the gene therapy datasets are expected later this year. Could you give us a sense of kind of the cadence of events and whether we could expect them at a medical meeting or as a press release more likely?

Well, in case we have two things coming forward, one is GSD1a, second cohort data which is expected midyear and we would also expect to have some 24-week data on GSD1a, which might come sooner than that. The OTC data second cohort data also is mid-year, so somewhere towards the middle of the year you will hear from both of those programs. Our expectation and tendency has been to announce the top line data in a press release when we have it rather than holding it for a month until A meetingand we would then provide greater detail at appropriate scientific meetings.

Okay, thanks. And then one more follow-up on the gene therapy front for your Wilson disease program you mentioned that you were in a position to potentially move toward clinic soon. When could we expect to see additional preclinical characterization of the program? And what additional work needs to be done prior to moving to clinic? Thanks.

We expect to present some data on the program at our Analyst Day on April 17 and that will be probably one of first places where you’ll see additional nonclinical data. We're working through the various parts of the manufacturing scale up required in order to do the commercial – the clinical and commercial treatment of Wilson disease patients and we need to do some work with the regulators, with our patients to give you that first glimpse of data on April 17.

Okay, great. Thank you.

And our next question comes from the line of mine of Gena Wang from Barclays, you may begin.

Thank you for taking my questions. I have two related questions about Crysvita launch. So based on my calculation, the EU revenue was roughly $14.4 million and the U.S. revenue was roughly $25.4 million. EU revenue seems flattening out, but U.S. revenue more than doubling of the last quarter. Should we expect continued, modest growth in Europe and a major driver will be from the U.S.?

Well I think, let me answer that particular question. Obviously the European launches and is under the care of KHK and I think it's gone well. But remember the European launch involves reimbursement in a number of territories which take time and it’s dragged it over a period of time. And I think that's very important and how you look at the launches. In the U.S. launch, obviously we have a lot of health plans that we have to deal with, but it's not quite the same as separate country reimbursement authorities have to deal with. So there may be some differences in the cadence and sequence of those reimbursement authorizations and how we grow. We're pretty bullish about how both the U.S. and Europe are going. And we're pleased with the progress we're seeing.

Okay. Thank you. And I have a quick follow-up for the adult patients on Crysvita. What percentage of patients with based on family tree identification through paediatric patients?

I don't have a specific number for you on family tree identification. There are certainly a number of cases where families came together to the clinic to get treated. I don't have a quantified number of that at this point. I don't think it's a big factor in the total, but we do believe that pedigree will matter; did you want to add a word on the pedigrees strategy…

I think the pedigree analysis gives an opportunity for patients to connect with their families and connect with them and see whether they might be affected by the disease as well, which represents an opportunity for them to discuss that with their particular physician and see if Crysvita therapy is appropriate, and we look forward to launching a pedigree program in the near future to help those patients who have that desire.

Yes, so I think the pedigree part of the family connection will be a real important part in overall launch. But at this point I can't give you specific numbers how much was found that way at this moment in time.

So is it fair to say minority of the small percentages through family pedigree?

Well, I would say to you we announced that we have greater than 900 start firms, right, with 400 doctors, so it’s clearly distributed a lot of doctors. So at this point it’s less groups of families as opposed to individuals. But I don't think it matters. I think we're in the beginning of launch. And I think the family connections are really important part of a succeeding in an excellent escalation launch.

Thank you very much.

And our next question comes from the line of Joseph Schwartz from SVB Leerink. You may begin.

Hey, good afternoon and thanks for taking our questions. This is Dig on dialling in for Joe. So Emil one question on UX007 and the other on a 401 for GSDIa. First question on UX007, you mentioned the NDA filing by mid-2019, but can you maybe talk a little bit about how the discussions are ongoing on the EMA side? What do they want to see before you can file there? And can you briefly remind us what your patent coverage is on both sides of the Atlantic? And then the second question is on 401, DTX401, what do you see as the ultimate profile for that drug before you can approach the FDA for end of Phase 2 discussions. And I guess given the significant unmet need any thoughts on filing under accelerated approval or alternatively, how would you envision the Phase 3 trial in terms of design?

Very good, thank you. So for UX007 we have begun discussion with the European authorities and those are still ongoing and we have no complete conclusion at this point, but we're working through the scientific advice process and discussing with regional authorities, well that continues. On the regard to patents, we do have patents issued they cover the U.S. I think it's probably too complicated process to go through here and we can probably more follow-up on that on the various patents. So we do have some patents that are composition like patents that do protect the product. But I also remind you that in Europe there's 10-year orphan drug exclusivity, where in the U.S. it’s seven years. So the 10-year exclusivity, I think, is important protection piece that comes with Europe. So on 401, I think, the reduction in the risk of hypoglycemia during fasting is a fundamental clinical risk problem for these patients and the one that really threatens them every night and every day. We feel confident that the FDA would recognize that as a clinically meaningful change. And our expectation is that we can safely extend that time for patients that are not at risk, going hypoglycemic during the night. But that should be clinically meaningful and our expectation is to pursue that. We'll certainly look at supportive clinical end points on what's happening with their livers and other aspects of the metabolism. But we think that that key piece about hypoglycemia will be sufficient. And we're planning to go talk to FDA as promptly as we can to get our first look. But our expectation is that we’re going to do a Phase 3 trial and not file of Phase 1/2. And I think that it's fair for us to get enough patients in a Phase 3. Our plan for Phase 1/2, is just the second cohort was the right dose, we would still do another three, but that would make only six patients at the dose. And our expectation is that we really would want to treat some more than that in order to get file for approval. So at this point, I would expect the Phase 3 will get to talking to FDA soon with the data we have about what our path forward is.

Great, thanks for taking our questions.

And our next question comes from the line of Chris Raymond from Piper Jaffray. You maybe begin.

Great, thanks. Yes, just two questions. First on Crysvita. I guess, could you – I think, last quarter, you mentioned the mix was 60:40 piece to adults. I think you also said that, at that time, there were no discontinuations. Can you maybe give an update on are you still seeing the same trend with respect to that mix and then maybe an update on the discontinuations? And then on the GSDIa program, just from the data that you have back in January I think there was a third patient that I think they all had cornstarch intake go down dramatic, but there was one patient at that saw, I think go down dramatic, but there was one patient at that saw, I think, just a slight increase from baseline and time to hypoglycemia. Could you get a little more color on that third patient? Was there some baseline characteristic that might have driven that, for example? And then if I could slide one more DTX401 question there, are you assessing gene expression in the study? And will you give an update on that at all this year? Thanks.

Okay, so let's start with the 60:40 piece adults. The 60:40 still continues the same as before. It hasn't really changed. And so we’re comfortable with that. We haven't really talked about discontinuation. In the clinical program, it's been very few. And so far, we're in good shape. So let me just stop with that. I think, you have three questions. GSD1a data, the third patient column, the third patient has kind of a higher baseline time of 5.4 hours and one to 6.5 hours. So they’re almost already of getting through the night, but they were less if they less severely affected. The thing that was important about that patient, even though the time hypoglycemia was not have changed, they were already decreasing their cornstarch needs approximately 50%. And so, there were – their fatty glucose were improving sufficiently to allow them reduce cornstarch intake. So I do believe all three patients responded to GSDI, and there are some degree of variation of how severe they were and therefore how big the change is. But right now, we're very comfortable with all three our responders. Now with regard to gene expression, we're not measuring gene expression directly because it is going to be expressed in the liver, and we don't want to go into the tissue source. I do think that these patients have essentially – are null for GSD – for the glucose-6-phosphatase enzymes, their genotypes are null. Therefore, they really have no enzymes at all. Their ability to release glucose for extended period of times are in a sense a assay of their whole body's expression of that enzyme. And so we think that just simply measuring glucose in a sense measuring their enzyme assay, and we haven't planned anything more specific than that.

Great, thank you very much.

And our next question comes from the line of Maurice Raycroft from Jefferies. You may begin.

Hi, and thanks for the taking my questions. The first question is on Crysvita. For the new 64-week data, we noticed that you showed statistic benefit on the Six-Minute Walk Test, which was not shown in the 40-week data. And so I'm just wondering if you have any comments on the meaningfulness of the data points if that can make its way into the label.

Well, we have shown an effect on walking even on the Phase 2 study that was quite substantial, particularly in those patients that had impairment of walking. So this is simply verifying once again as the walking has improved as a component of the total genotype. The challenge with walking is it is an effort to test. And although the trial is a randomized trial, it's not placebo-controlled because it can't be controlled. Therefore, on an effort base test might have a hard time getting into the label for that reason. However, we certainly can ask. And I think if you look at the data, I think, what I would say to whether it's walking and any other parameter you measure, Crysvita is so much better than standard of care. There's no question about it that there is no reason for patients to be on oral phosphate any longer, given the efficacy up and down the line every single endpoint, walking just being another one. And so, our hope would be and talk with the agency is to get the best label to actually give doctors the right advice on what to be doing with their patients with XLH. But we think certainly walking is important, but I think because it's open label or not blinded, I think, it may be harder to get on the label and other things.

Got it. That's helpful. And then as a follow-up for Crysvita in the Latin American countries, are you still on track for approval starting in the first half of 2019? And then can you provide any granularity on how you expect to launch in specific countries to play out?

Well, we have several filingsin play and right now, we're not quite predicting exactly when those approvals are coming out, but we expect in 2019 to have at least a couple of countries where we would get approval, and we work through the reimbursement process which can take some time as well. But we haven't provided any more granularity, partly because it will take us time to figure out what [indiscernible]and getting through the reimbursement process as well the regulatory approval. But we're confident that we’ll be able to press ahead get approval and begin the launch process in South America for Crysvita beyond just any patient work that’s going on right now in Argentina.

Got it. Thank you very much.

And our next question comes from the line of Edward Nash from SunTrust Robinson. Your may begin.

Hi this is Fang-Ke Huang on for Edward. Thank you for taking our questions. My first question is maybe on the manufacturing side for gene therapy, can you just talk briefly what the capacity you have for gene therapy manufacturing? If I call it correctly, both of the DTX301 or DTX401 are currently in the manufacturing using [indiscernible] cells. Do you have any plans to transition that manufacturing platform to another with the HeLa cells? Then I have a follow-up. Thank you.

Very good. So currently, we have no manufacturing gene capacity of our own. We're using contract manufacturing for our program. What we do have is as a team and set up that allow us to run full-scale manufacturing operations to develop the process, and then we transfer that to the contract manufacturer efforts fully developed. Currently, the 293 cell or HEK293 cells are being used for OTC in an inherent format, but we have developed a suspension format, which we would do for Phase 3. For the DTX401 program we are also in a HEK293 cell transfection strategy, but they are already in suspension so the product is the suspension not adhering to [indiscernible] suspension that we run four reactors, than 800 litre process. We have the ability then to convert that to HeLa cells, which is something we plan to do for the GSD1a program. For Wilson we plan to go straight to the HeLa system that’s where we’re starting with. And for the Hem A program with our partner Bayer it is the HeLa cell of suspension is for cell line system.

Great, that may be helpful. Second question is more related to the DXT401 program. You mentioned the second dose cohort could derive those. And can you just provide some quantitative like magic stuff saying when do you think it can be the right dose? Thank you.

I think it's an important question getting the dose right. Our expectation is we want them to last through the night, in other words beyond an eight-hour period, but what expect is to be full night without any risk of getting hypoglycemia. So that's kind of the basic and important thing. We want to also know that there is improvements in their metabolism in their liver, that are consistent with achieving a complete effect, because we wouldn't want to stop at a dose that’s very good, but not essentially taking the patient to a cure. And those will be additional elements that we will look at in totality, but we haven't specified to the public yet any specific criteria. But I would focus on the time of hypoglycemia needs to be not just we get barely through the 90s be comfortably safely through the night for all patients.

Got it, thank you very much.

And our next question comes from the line of Vincent Chen from Bernstein. You may begin.

Great, thank you very much for taking the questions. A couple of quick ones. The first one, a bit of a follow-up on the previous question on the gene therapy manufacturing, I'd be curious to hear a little bit more about how you think about the trade offs in choosing between different manufacturing platforms, sort of [indiscernible] suspension and then in the HeLa cells. Really the scalability advantage of different ones, but hopefully there’s more time involved in sort of making those transitions. I would love to hear a little bit how you think about that. And then a second follow-up I'll talk to you later on the UX007 opportunity and LC-FAOD.

Well, our view is that suspension HEK293 is essentially transaction, multiple plasma transaction is a rapid way to get to the clinic and to initiate development. I think it can be commercial and we have to see that’s scaling it up further. The producercell line approach with HeLa cells I think provides a larger scale, more commercially long-term viable strategy in which you can run 2,000 litersproduction and have a – create a very consistent way, is a lot like producing vaccine where you grow by call cell lines to 2000 liters and then to use the helper virus to recover your AAV. So I think there is advantages about 293 cells systems, maybe it’s a little bit faster to get there and very well widely used and approved. The HeLa cell system takes a little longer to get setup, but in the long run provides you a better cost structure and scalability that you can get with 293. We are using both of these in our armamentarium for manufacturing and mixing and matching as we move ahead to get to the clinic as prompt as we can and also to manage the necessary scale and costs required to create a long-term gene therapy business.

I see. And then on the UX007 opportunity and LC-FAOD as we think about the U.S. prevalence of LC-FAOD sort of 2,000 to 3,500 or so, how do these patients break down into the different sub-segments of LC-FAODs, how well identified as each segment and what segments would you expect to see more or less up-taken?

So when you say sub-segments, I assume you mean the different genotypes. There are…

Yes, yes, the different – I guess the different LC-FAODs, yes.

Yes. There are six different genotypes that are considered within the LC-FAOD pool, five of them have been in our clinical studies into any significant degree. The VLCAD type is the most common and we'd expect to see in the most of those patients. The CPT II and LCHAD types are less common and form a smaller fraction of the total. The CPT type is a very small fraction, very small number, but also very lethal and potent, and some of our compassion use patients have been the CPT type for internal heart failure that have gotten [indiscernible]. So I think it gives you at least a sense. VLCAD is definitely the largest and the LCHAD, TFP, CPT II group is a smaller fraction of the total. This is – you can find information on this in the public literature using numerous screening program data from either California or other states that will give you a sense for the ratios.

Great, thank you very much.

Thank you. And our next question comes from line of Arlinda Lee from Canaccord. You may begin.

Hi, guys. Thanks for taking my questions. I also wanted to follow up on the gene therapy question. So you talked a little bit about what you're looking for in the second cohort 401. Could you also talk about what kind of a profile you'd like to see in the third cohort of 301 that would like lead you to go to decide on a go forward dose? And then can you talk about what the next steps might be and what might be gating to a registrational trial or cohort? Thanks.

Sure. So you're asking about the 301 ornithine transcarbamylase program. What we're looking for is what we consider a cure for two out of three or three out of three, what I mean by cure is achieving normalized fatty acids, which will allows to come off their drugs and potentially off dietary restriction. We can achieve that two out of three. We feel that as an adequate dose. We certainly hope to see all three patients having the clinical response. Some patients may start with a lower OTC level, which make it harder to reach full normality. But that is our general view to get a lead to towards move on to the next dose. At this point, we have two patients that have shown a cure effect of ones we have treated and we are hoping the higher dose will give us consistency of effect across more patients, who allow us to proceed to the next stage of Phase III.

And then can you maybe talk about what kinds of things are you looking for in discussions with regulatory agencies or could you go ahead and start expanding a dose cohort or maybe gather additional information of the dose that you selected? Thanks.

Yes. So, Arlinda, our strategy has always been to manage the timeline. And what we would do is if we hit our – if the next third cohort shows what we wanted to see, we would then initiate the process of talking with regulatory authorities while in parallel we treat another three patients with that same dose. We've teeded up to move briskly ahead. By the time the meeting would happen, we probably have some of the information from those other patients. But our expectation is not to sit and wait for the next cohort, but to take the data that we have and move to those discussions to the regulatory authorities promptly to manage the timeline as crisply as we can.

Great, thank you very much.

And our next question comes from line of Martin Auster from Credit Suisse. You may begin.

Hey, guys. This is Tiago for Marty. So for Crysvita and the opportunity in Latin America, just curious if you could give us any color on how well established is patient identification or registries, how well established is standard of care, how dispersed those patients there and how could that impact the launch? And just on the gene therapy for [indiscernible] GSD1a, if you could outline the patient segmentation and given the broad various spectrum, what do you think is actual addressable population considering the patients that you're enrolling and the target product profile that you're pursuing right now. Thank you.

Well, I'll give you a little general about Latin American outlet then Vlad touch on more specifically on what we're doing at XLH. In general, Latin America through the other launches I have been involved with, the Kennedy Centers of Excellence that have very large reach areas of coverage to which patients go to get diagnosed. Care, of course, may become more local, but there is usually Centers of Excellence, which is their primary place to start with in identifying patients. Obviously, Crysvita is extremely foreign product for Latin America, and we are doing our best to get set to manage and reach all patients there. We do believe the frequency of XLH in Latin America is the same as it is elsewhere because it is excelling dominant. But of course there's challenges differences in how Latin America will operate. I'll let Vlad to talk a little bit about the team and what we're doing to set up for launch in Latin America.

Thanks, Emil. So we have a strong general manager, Edward Thompson, who has a lot of experience in Latin America. He has built three strong teams in Argentina, Brazil and Colombia with a mixture of MSLs and liaisons, UltraCare liaisons who are now in the process of working with the different metabolic bone centers, mapping a number of patients and responding to named patient program request that we are supporting. We also have built up a strong reimbursement function that helps with the different submissions for reimbursement and as soon as we have updates on regulatory approvals and reimbursement we will share them with you. But we’ve got a strong team that's experienced and well established to create a task not only for Crysvita, but also Mepsevii where we are approved in Brazil.

All right, and our next question comes from the line of Salveen Richter from Goldman Sachs. You may begin.

Thanks. This is Andrea on for Salveen. Thanks for taking our questions. My first one is, as you come up on one year post the Crysvita launch in the U.S. can you speak on the feedback that you've received thus far and have you seen any gating factors to doctors prescribing this drug?

I think the feedback from doctors, who have experienced treating patients or is it very positive? I think doctors are discovering patients are feeling better than they – more – better than they thought they could, because the doctors didn't always appreciate how sick the patients were. And we've had a number of doctors tell us that the patients they thought were not that bad, actually still got a lot better on treatment. So we're really interested in making sure that doctors aren’t get out of the habit of not treating adults as they have treated for a while and start to stepping forward and really changing the view of what needs to happen. And so, I would thought – Vlad, if you have any thoughts a little bit on what else you might do with what we're doing with the results.

Yes, I think, the other piece of feedback in addition to the clinical observations by pediatrics, endocrinologist and – endocrinologist is also the appreciation of the physician of how we're supporting their offices with getting their patients would apply hospitalization process by assisting them, making sure all the information is compiled, available and the process complete, so that the patients don't have to wait too long, forgetting they're reimbursed therapies. I would add that as a second point.

Great, and then my second question.

Go ahead.

And then my second question was with regards to FAOD program, assuming approval and launch in early 2020. Can you speak on any launch preparations that may have already been started and if additional sales force would be necessary?

Well, I think this is a good question. What I would point out to you is that our expectation is the launch of the UX007 products with the same team that we're launching with in the U.S., Europe and Latin America. In fact, it is the same doctors that are treating MPS VII and Mepsevii as well. So I think that we'd be able to do this with great synergy and efficiency, launching globally. So I would not expect a substantial change in the team that we need, but of course we will do what we need to assure that the launch goes well. But the synergy I think is important there between our other metabolic programs and the fatty acid oxidation event.

Great, thank you so much.

Thank you. And our next question comes from line of Yigal Nochomovitz from Citi. You may begin.

Hi, this is Samantha on for Yigal. Thanks for taking our questions. I wonder for DTX301, is there anything in your preclinical work that gives you confidence that the dose you’re using in Cohort 3 could be sufficient to demonstrate the dose response relative to Cohorts 1 and 2 sort of the two out of three or three out of three you mentioned earlier in the call?

Well, I think, we have shown in the non-clinical model that we do get better expression at higher doses that's very consistent, so I think there is no plateau or maximum effects seen in this dose. So there is data showing that higher doses will get a better effect. So we're comfortable from a nonclinical standpoint that we would expect to get better expression from higher doses.

Great. And then just switching gears to Crysvita. With all the new insight into the XLH market you’ve gathered into the launch thus far, who is on vitamin D and oral phosphate and all the additional identification you've done with the families of XLH, are you maintaining your estimate for the 12,000 XLH patients in the U.S.? Is it would be reasonable to assume that you have some updated thoughts either up or down, approaching one year into the launch?

We're still maintaining the 12,000 number, I think everything we have found from various channels seems consistent with getting that number. And I think I would say in eight months getting to 900 prescriptions also tells you that that number is probably pretty real based on what we think would happen. So at this point, we don't have a reason to change it. And everything we've found seems to triangulate toward that kind of number. Now I would tell you that doesn't mean they're all found or readily available. There definitely will be some adults, who are – lots of thoughts and other doctors and a lot of our patients diagnosed efforts will be focused on finding those patients whoever they are. But right now, we're sticking to the 12,000 number.

Great, thank you so much.

And our next question comes from the line of Jeff Hung from Morgan Stanley. You may begin.

Thanks for taking the questions. For Crysvita, can you provide an update on identifying adults and remind us what you think the biggest hurdles are with that process?

Well, different from pediatrics where the patients are already being managed with treatment are going to the doctor frequently. As adults may not be seeing the prescriber on a regular basis because they have nothing to prescribe, so they're not seeing their endocrinologists that they were seeing five, six years ago. They're going to their orthopedic doctor, their rheumatologist and pain management person. They're seeing all these different doctors. And so they're not really at somewhere who's ready or able to prescribe this product. So we need to find them in those secondary specialties and find the prescriber for them to get them back. That's just going to take a little bit more time to get deep into the adult population, but we think through a number of tools including new ICD-10 codes and our efforts with the PDL that we'll be able to continue to find those patients. But it's just – and the tradition had been to stop treating when you got to [indiscernible], then you get our people that have been from many years not really been seen by the doctors as it matters. In addition, the outreaching doctors might see the patients for other reasons using codes and other techniques. We're also, of course, doing what Vlad had mentioned before, which is the work on the pedigree to make sure we're finding the aunts and uncles of our pediatric patients, in some cases, grandmothers. We have found grandmothers who – wherever they are and that pediatric – the pedigree effort will be one of the other ways we triangulate find more patients through the system. It's an important part of the launch, but right now, we feel like it’s going well.

Great. And then can you remind us what remains outstanding in your discussions with the FDA on the regulatory path for Crysvita and TIO and what additional data you might need to collect?

We have had some initial discussion with them on TIO and the question, of course, that we have Phase 2 data and biopsy data on TIO and the question is whether a rambling study would be required or not. We think we have more than adequate data to show that TIOs behaving like XLH and we're continuing that discussion with XLH to be able to file off the existing data, which we think is the right move. So that discussion continues and we should have an update later in the year.

Thank you.

Thank you. And I’m showing no further questions at this time. I’d like to turn the call back to Danielle for closing remarks.

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

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone, have a great day.