PTC Therapeutics, Inc. (NASDAQ:PTCT)
Q1 2014 Earnings Conference Call
May 6, 2014 04:30 PM ET
Jane Baj - Director, Corporate Communications
Stuart Peltz - CEO
Shane Kovacs - CFO
Jason Kantor - Credit Suisse
Geoff Meacham - JPMorgan
Thank you for holding for PTC's First Quarter 2014 Conference Call. At this time all participants are in a listen-only mode. Following the formal remarks, PTC management will open the lines for a question and answer period. Please be aware that call is being taped at the company’s request and will be archived on the company’s web site until May 20th, which is two weeks from now. PTC’s current investor presentation slide deck is available at the same website location.
At this time, I would like to turn the call over Jane Baj of PTC.
Thank you, operator, and good afternoon, everyone. Thank you all for joining us for PTC's first quarter 2014 financial results conference call. With me here today are Dr. Stuart Peltz, Chief Executive Officer and Mr. Shane Kovacs, Chief Financial Officer. Stuart will provide opening remarks and share some highlights of the quarter and recent events. Shane will then provide detailed financial results, and we will open up the call for questions.
Earlier today, we issued a press release detailing PTC's first quarter 2014 financial results, which is available on our website at ptcbio.com. During today's call, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory timelines, the potential success of our product candidates and financial projections. Actual results may differ materially from those indicated by these statements as a result of a variety of risks and uncertainties including those discussed under the heading special notes regarding forward-looking statements and risk factors in our 2013 form 10-K which is on file with the SEC. Any forward-looking statements represent our views as of today only. PTC undertakes no obligation to publicly update any forward-looking statements.
With that, let me pass the call over to Stuart.
Thanks Jane, and good afternoon, everyone. Welcome to our first order 2014 investor conference call. We’re happy to report on the progress we have made in the first quarter of each of the clinical, regulatory and corporate fronts. This quarter, we closed a registered public offering of common stock where we raised gross proceeds of approximately $126.5 million. This additional funding provides us with a strong balance sheet from which to execute on our strategic plan.
In the first quarter of this year, we were particularly focused on advancing our clinical development programs. Our lead product candidate, ataluren, is currently being tested in a confirmatory safety clinical study in Duchenne muscular dystrophy and a confirmatory trial with cystic fibrosis will be initiated in the second quarter of 2014. In addition, we plan to begin a Phase 2 proof-of-concept study for ataluren in an additional indication later this year.
Our confirmatory Phase 3 ACT DMD study or Ataluren Confirmatory Trial in patients with nonsense mutation Duchenne muscular dystrophy is the largest study every conducted in DMD. We plan to enroll approximately 220 patients in this study from 53 sites across 18 countries. Patient enrolment is expected to be completed by mid-2014. The design of the clinical trial was informed by the results on our previous clinical studies, as well as our understanding of the natural history of DMD, utilizing the six minute walk test. Multiple natural history studies have subsequently confirmed our prior work and give us a high degree of confidence that our confirmatory study is both well-designed and powered for success.
In addition to the late stage clinical development of ataluren, in nmDMD we are also highly focused on the development of ataluren as a treatment for nonsense mutation cystic fibrosis. Nonsense mutations account for approximately 10% of all CF patients and nmCF is the most severe form of the disease. Available treatments today do not address the underlying cause of disease for nmCF patients. We are in the process of initiating a confirmatory Phase 3 clinical trial in nonsense mutation cystic fibrosis or ACT CF. The design of this trial is likely similar to our previous Phase 2 CF trial with lung function as the primary endpoint and pulmonary exacerbations as a the key secondary endpoint. The major change is from the prior study is to exclude patients from enrolling who are using chronic inhaled tobramycin.
Tobramycin is a ribosome binding drug, that’s been shown to confound ataluren's mutual [ph] activity. In addition to the development of ataluren in these two indications, we are planning to initiate a Phase 2 proof-of-concept study in an additional indication in the second half of this year. Ataluren’s activity has been demonstrated in multiple nonsense mutation preclinical cell and animal based disease models, in multiple different organs with over 20 publications. This is important as it continues to expand ataluren’s potential in [indiscernible] patients as a pipelining the product.
From a regulatory perspective, we’re currently in the final stages of re-examination process for conditional approval of ataluren in nonsense mutation DMD in Europe. We expect the final opinion from the CHMP in the second quarter. As a reminder we continue to believe that there’s risk to gaining conditional approval and our primary focus remained on reaching of our confirmatory Phase 3 ACT DMD trial with date in 2015.
I will wrap up by covering our Spinal Muscular Atrophy program or SMA. To remind you, this program is the collaboration with both the SMA Foundation as well as Roche. It was granted exclusive worldwide rights to our alternative splicing SMA program. This program moved to the Phase 1 clinical trial in healthy volunteers at the start of 2014 and is complemented by both natural history and biomarker observational studies in SMA patients. SMA is a rare disorder that is the leading genetic cause of death in infants and toddlers. The SMA Foundation estimates that Spinal Muscular Atrophy affects one in every 10,000 children born. It is caused by the defective SMN1 gene, leaving SMN protein production solely as a result of the expression of the SMN2 gene.
This leads to reduced levels of the SMN protein causing significant muscle atrophy, and eventually death by the age of two in the most severe form of the disease. We are looking forward to the continued development of this exciting potential therapy for this devastating disease and will communicate our progress as we shift key milestones. Furthermore, the progress we have achieved to date in this program provide strong validation for Alternative Splicing platform, where we are separately focused on the discovery of compounds and marginally splicing to include or exclude exon in other transcripts for the potential treatment of other disorders.
Before we open up the call for Q&A, let me ask Shane to review our financial results. Shane?
Thanks, Stu. I'm happy to report that we finished the first quarter with over $246 million of cash on our balance sheet. The financing that we completed earlier in the quarter puts us in a very strong position within enough capital to fund our operations through 2016 which takes us beyond the data readouts for both our confirmatory Phase 3 ACT DMD and ACT CF clinical trials. For the quarter, we reported the following summary financials.
Total revenues for the quarter was $9.2 million versus $7.1 million in the prior year. R&D expense for the quarter was $15.9 million compared to $11.3 million in the first quarter of 2013. This increase was primarily driven by higher clinical costs associated with our ACT DMD and ACT CF clinical trials. G&A expense for the quarter was $7.5 million, compared to $4.5 million in the first quarter of 2013. This increase was primarily driven by higher non-cash stock-based compensation expense, pre-commercial activities and public company costs.
Overall, the company reported a net loss of $14.1 million for the first quarter of 2014, compared to approximately $14.7 million for the first quarter of 2013. As a reminder our guidance for 2014 is for total operating expenses to be between $85 million and $95 million, excluding non-cash stock-based compensation. We expect to end 2014 with approximately $175 million to $185 million in cash, cash equivalents and marketable securities. We currently have 30.1 million shares issued in outstanding which include 0.7 million shares in restricted stock grants.
With that, let's open the call for questions. Operator?
(Operator Instructions) First question comes from Jason Kantor of Credit Suisse. Your line is open.
Jason Kantor - Credit Suisse
I guess, a couple of things. First could you give us a little bit of sense of when you think that you’ll be actually in SMA patients with that program and how long you might think it would take to get to some sort of proof-of-concept in that setting and if you think there may be some proof-of-concept that would come out in a healthy volunteer study. And then also I know that there are -- there is both the U.S. and EU extension trials that’s still ongoing. I believe its European One [ph] has continued data collection, I’m just wondering where and when we might expect to see an update out of that?
So the first question, in terms of the SMA. As you know it is a statutory collaboration with Roche and the SMA Foundation, where we picked up development candidate late last year and just started early this year, started Phase 1 trial in healthy patients. We’re limited to what we can say as a consequence of having the partnership with Roche. I can’t remember of which we publicly disclosed previously it was that I think one of the advantages of having an orally [ph] available compound that gets into distributed around the tissues in the periphery, that we showed even with a single dose that we were able to in the animal model, able to demonstrate, that the RNA, you can include, that’s uncertain that you can make the protein and see it come up and come down even in a single dose.
So you know, obviously it was being collected and it’s obviously human but certainly there is a possibility that Roche is leading to development of that, could certainly look at that. In terms of the U.S. so there is possibilities and then after that I would mention that we’d start a proof-of-concept in patients. And then in the U.S., in terms of the EU and U.S. sales trials - extension trials in DMD, those are patients who were in either the study of ’07 study or in other the Phase 3 studies that were on. We’re put on extension studies and there’s two one them, one in the U.S. which is only really collecting safety and then started later the consequence of as we get in the program, we’re measuring six minute walk test and other things on a six months basis or so. So we plan is to present the data at appropriate scientific venue when enough data is collected. So we don’t know when that will be yet.
The next question is from Geoff Meacham of JPMorgan. Your line is open.
Geoff Meacham - JPMorgan
Just to ask the question another way. What have you guys learn from your Phase 2 experience in DMD or CF? Just with longer exposure, do you feel like the efficacy trends, is it stable? Is it modestly up? Is it modestly down? And maybe how does that inform, for example, how you’re thinking about what the benefits could be in the CF study and then I guess also in the….?
That’s a really good question. In terms of the DMD study what we -- ours was the first study in which really we learned the natural history and there has been subsequent results from multiple other studies and now that really have demonstrated what we observed. And I think the important point there in our observations were that patients, when they are in the decline phase and in particular when their baseline six minute walk test is 350 meters or below, it declined quite well. And I think what we showed overall in the DMD study that there was substantial stabilization after that year. So I think that’s what we know in terms of that right now.
In the CF study, as a consequence we had a crossover, we showed that the patients on ataluren in the nonsense mutation cystic fibrosis patients were stable in year one and then in the extension study when we look at that, they were also stabilized. So we saw consistent stabilization was in that as well. So that looked quite good. So I think it goes to the notion of continual improve -- that you get continued stabilization of it. And obviously what you like is to get patients on as early as possible in order to see - in order for them to make as much discipline [ph] as early in the disease as possible.
Geoff Meacham - JPMorgan
As a follow up, when you look through other indications for ataluren, obviously there are a lot that are nonsense mutation. Maybe just walk us through your thought process, how would you sort of prioritize, how you would select the new indication. Is it a preclinical data that could justify the probability of success? Is it more related to the opportunity and the unmet need, or what effect size you could have, just how do all these things play out when you select your next?
Sure that’s -- so just if you think about the notion I think we’re so excited about ataluren is that not only is it a product but it’s a product that’s within a pipeline in that you can choose multiple indications. Cystic fibrosis and Duchenne muscular dystrophy were the first. But over the last three to four years now there has been over 20 publications demonstrating ataluren’s activity in both nonsense mutation model systems, both in cell based and animal model, in different organ systems. So I think there is now a fair amount of preclinical data in multiple therapeutic areas for us to consider from that point of view.
And then from a clinical point of view obviously what we’re thinking about is what is the fastest way to show of proof-of-concept, and so what we would like is something where there is an outcome, a biomarker that could be determined -- we see changes relatively rapidly. And that we know the biomarker, the sudden understanding of it, from the outcome measure, that from a point of view that it would be stable in terms of - so that you will be able to get a robust answer quickly and in as few patients as possible, that will then let you to go on to do perhaps a more subsequent work.
So clearly what we talked about, we’re on the path now of finalizing that decision and trying to get that moving as rapidly as possible. Certainly many of the metabolic relates to some of these disorders like MDS1 would be quite interesting. There is tremendous data and a review of that will be -- that itself was most nice as well. That probably will take a little longer -- just probably one could consider doing it with eye drops. I think there was in our investor deck, which could be found on our website, a number of examples of diseases that we’re finalizing, deciding on and then from there we would anticipate disclosing that we’ve started a trial.
(Operator Instructions) Next question is from Christopher Marai of Wedbush. Your line is open.
This is Neil Davis [ph], in for Chris Marai. I was just wondering, given the recent SMA data we saw, and the natural history data they presented, there’s a pretty good correlation with SMN proteins and how are you thinking about potential surrogate endpoints and the risk benefit there. I know you’re doing your ongoing biomarker study. Just if you could give me some insight into how you’re thinking about that?
Sure, obviously we’re doing this with Roche and the SMA Foundation and that hasn’t been disclosed exactly of what we looked at. But I think what we have disclosed and discussed and again with such an advantage of having an orally bio-available molecule that actually disperses to all tissues and where we’ve shown it, for instance in the blood, you could see increases of appropriately spliced SMN protein as well as SMN protein being made. So you can see both in the transcript of the RNA by looking at blood [ph] in humans or in animal skin. That really is a major advantage in the sense that you can start quickly look at its effect in the periphery. So that gives you a real biomarker advantage. So as you mentioned this -- and that’s really being looked at within some natural history studies where we’re looking at some blood as a biomarker -- for looking at SMN levels of both protein and transcript [ph] however and understanding how that varies at different stages of the disease. So it is exciting to have that potential.
There are no further questions at this time. I would like to turn the call over to Stewart for any closing remarks.
Thank you operator, and thank s guys for the questions. I think that 2014 for us is off for a strong start. We’re executing on our clinical programs and strategy focused on building a leading company on rare and neglected disorders. We look forward to communicate with all of you as we achieve our future milestones. Thanks again for your interest and for joining the call today. Thanks guys.
Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect. Have a wonderful day
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