PTC Therapeutics' (PTCT) CEO Stuart Peltz on Q3 2017 Results - Earnings Call Transcript

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About: PTC Therapeutics (PTCT)
by: SA Transcripts

PTC Therapeutics (NASDAQ:PTCT) Q3 2017 Results Earnings Conference Call November 2, 2017 4:30 PM ET

Executives

Emily Hill - Head-Investor Relations

Stuart Peltz - Chief Executive Officer

Christine Utter - Principal Financial Officer and Treasurer

Marcio Souza - Chief Operating Officer

Analysts

Joel Beatty - Citi

Tazeen Ahmad - Bank of America

Alethia Young - Credit Suisse

Matthew Eckler - RBC Capital Markets

Raju Prasad - William Blair

Operator

Good day, ladies and gentlemen, and welcome to the PTC Therapeutics Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's program may be recorded.

I would now like to introduce your host for today’s program, Emily Hill, Head of Investor Relations. Please go ahead.

Emily Hill

Good afternoon, and thank you for joining us to discuss our 2017 third quarter corporate updates and financial results. Joining me on today's call is our CEO, Stuart Peltz, and our Chief Operating Officer, Marcio Souza and our Principal Financial Officer Christine Utter.

Before I had the call over to Stuart, I would like to remind you that today we will be making forward-looking statements. These statements include all statements other than those of historical facts, including statements concerning financial guidance, our expectations with respect to the future commercial availability of and access to EMFLAZA, the anticipated benefits of the EMFLAZA acquisition, the outcome of any formal dispute resolution request filed with the FDA for Translarna NDA, our future expectations regarding other clinical, regulatory and commercialization matters, including with respect to potential outcomes anticipated timelines, anticipated timelines of our SMA collaboration with Roche, addressable patient populations for Translarna and EMFLAZA, and the potential success of Translarna for the treatment of nmDMD and EMFLAZA for the treatment of DMD.

Actual results may differ materially from expressed or implied by forward-looking statements as a result of a variety of risks and uncertainties including those related to our continued commercial launch of EMFLAZA, including our ability to secure adequate pricing, coverage and reimbursement terms of third-party payers for our products in a timely manner, whether and to what extent third-party payers impose additional requirements before approving EMFLAZA prescription reimbursement, our ability to integrate EMFLAZA into our business and realize the anticipated benefits of the acquisition, changes in margin regulations, our ability to resolve the matter set forth in the complete response letter we received from the FDA in connection with our NDA for Translarna for the treatment of nmDMD, either the outcome of any form of dispute resolution for class for other interactions with the FDA and those risks discussed under heading special note regarding forward-looking statements and risk factors in our second quarter Form 10-Q which is available from the SEC and on our website.

Such statements represent our judgment as of today and PTC undertakes no obligation to publicly update any forward-looking statements except as required by law. We will disclose certain non-GAAP information during this call. Information regarding our use of GAAP and non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available in today's earnings release.

With that, let me pass the call over to Stu.

Stuart Peltz

Thanks, Emily. And thanks for joining us on the call this afternoon. As a global commercial stage rare disease company with a growing pipeline we are pleased with the progress we are making to deliver innovative medicines and drive better outcomes for patients with rare and neglected disorders.

As we will be entering our 20th year in 2018 since we founded PTC, it is important to reflect on where we are and what we have accomplished over the last two decades. Furthermore, it is important to plan where we will be going in the years ahead. As champions for access to treatment for patients with rare and neglected disorders, our strategy remains the same. There is still a considerable amount of important work to bring Translarna to all patients worldwide.

We are disappointed with the FDA decision and plan to work to change this action. We believe that United States patients like others around the world to have access to this important therapy. We plan to continue to build our Research and Development pipeline and to commercialize these drugs so patients have access. Our mission continues to be to discover, develop and commercialize best in class treatments for rare diseases.

The discovery of Translarna demonstrates that we can go from taking a cutting edge innovative basics variance concept and go through the process to where we now commercializing this in 25 different countries. Commercializing EMFLAZA demonstrates that we are also willing to look outside our own internal research and development efforts and that we will bring in products that fill an unmet medical need that we think are important for patients to access.

We continue to use both of these evidence to grow and bring the best products for patients. PTC is now in the position of having two commercial products and have an effective global commercial operation that we will continue to leverage our commitment to patients. We have a lot to review on today's call including our commercial growth, our regulatory status for Translarna in the United States, the advancements of our SMA program to pivotal studies and our financial strength.

I'd also like to introduce the new voice on today's call, Marcio Souza an executive we internally promoted earlier this summer to Chief Operating Officer. Marcio will provide the commercial and clinical development updates which will drive our next phase of growth. We will end the call with a thorough review of our strong third quarter and financial outlook from Christine Utter, our Principal Financial Officer.

These individuals reflect the strengthened leadership team complimenting the strong management already in place. We are highly engaged and aligned on strategy to continue to execute on our global, commercial, R&D and financial performance. This execution has led to a strong year-over-year revenue growth. In the third quarter, Translarna reported revenue of $32 million, a 45% increase over the prior year. In the third quarter EMFLAZA reported revenue of $9.8 million. We are raising our EMFLAZA guidance from $15 million to $20 million to $20 million to $25 million for the full year 2017 which reflects the strength of the launch to date.

Our commercial performance in the thank you was driven by both the strong EMFLAZA launch in the United States as well as Translarna's continued sales growth in every region where it is available. As we announced last week, we received a complete response letter from the FDA's Office of Drug Evaluation I for Translarna. While we are extremely disappointed with this action, we continue to believe in the positive benefit risk demonstrated at both clinical trials and real world experience. We expect to file a formal dispute resolution letter this week and look forward to interacting with the Office of New Drugs during the course of this appeal.

Before moving on to other updates, I'd like to take a moment to thank the Duchenne community for their continued support during this process in the United States. We heard from hundreds of patients and their caregivers, but families and physicians. Many wrote letters to the FDA and dozens travelled to our Advisory Committee to speak about the impact Translarna has had in their lives. We also saw tremendous support from the physicians and patients outside the United States who had commercial access to Translarna for years.

Over 100 physicians outside the U.S. signed and submitted a letter to the FDA testifying to the efficacy and benefit of Translarna they have witnessed in their DMD patients. We strive to bring United States patients the same access and benefit experienced by lots of mutation DMD patients around the world.

We are also focused on developing our oral SMA therapy in partnership with Roche and the SMA foundation. As anticipated the SUNFISH study for type II and III patients transitioned to pivotal phase in mid-October triggering a $20 million milestone. We look forward to advancing the FIREFISH study for SMA type I patients in the coming months. Later in the call I'll speak to the data generated to date in this program.

The advancements that the company has made in the commercialization of Translarna and EMFLAZA and in our research and development pipeline placed us to complete 2017 in a strong financial position. This is critical since longer term the progress that has been made in these drivers position us to be a sustainable global commercial company with an innovative research and development pipeline.

Let me now have Marcio provide you with more detailed updates on our commercial and clinical activities. Marcio?

Marcio Souza

Thank you, Stu. I'm pleased to have joined PTC's executive team and look forward to our success ahead. Now, starting with this quarter's performance for both of our commercial assets EMFLAZA and Translarna, let me start with EMFLAZA which reported $9.8 million in revenue in this quarter. We launched EMFLAZA in the U.S. about six months ago with the firm belief that the evidence supports the use for DMD patients five years and older was strong and that all eligible patients should receive the best possible care, which includes in our view the only approved treatment for our DMD patients in the U.S. EMFLAZA.

We are fortunate to have our own data presented several times as well as independent data from the Collaborative Trajectory Analysis Project cTAP which aligned with forward view of the clinical benefit for EMFLAZA. The reception of EMFLAZA by both patients and healthcare providers in the U.S. has been strong. I am pleased to confirm that over 1500 patients are currently receiving EMFLAZA and that the out of pocket costs for those patient s remained close to zero.

We continue to receive positive feedback from both patients and physicians. While Duchenne's moment and update gives us confidence on the path forwards we are therefore raising the guidance to $25 million for the full year 2017. While these results are encouraging, our work is far from over. As we moved to the second phase of our launch we are intensifying the investments and focusing our resource on two takeaway issues.

The first one is to improve the awareness and knowledge of the benefit of EMFLAZA as the standard of care for naive patients. The second is to remove barriers for patients and providers who want to switch from their current treatment. We are deploying a combination of the Duchenne's campaigns increasing our medical efforts and investing in scientists communications.

On the bigger fronts our communication strategy will continue to focus on all available scientific data which supports the use of EMFLAZA by all eligible patients. We presented data at the ISPOR International Meeting in May showing that the patients on EMFLAZA had a benefiting muscle function which correlates with up to four years in delay to loss of ambulation. This is not only relevant because of their loss of ambulation itself but also because they are learning from answer or history suggests that a change in the time to loss of ambulation correlates to delay in other significant milestones such as mechanical ventilation and death.

This data was part of the motivation for the EMFLAZA acquisition and we are proud to bring this therapy to all eligible U.S. patients, most of whom previously did not have access.

Lastly, we just received a written request from the FDA to conduct a psychiatric [ph] study for EMFLAZA which upon completion will allow us an additional six months of market exclusivity. We plan to conduct such study.

Now switching gears to Translarna, as Stu said we remain committed to bringing Translarna to U.S. patients and at the same time we continue to expand the adoption globally. The overwhelming support demonstrated by patients and more than 150 physicians globally in connection to the FDA process continues to reinforce our confidence in the impacts we are having on patients' lives globally.

In the three years since launch we have seen tremendous uptake in the European Union and Latin America. And most recently we have begun expanding into the Middle East and Central and Eastern Europe. Patients and physicians have express benefit from therapy and compliance has remained over 90%.

Translarna is growing in every region. In fact, as we look to 2018 we project double-digit patients growth globally which will be driven by increased penetration. Our mission is to make Translarna available for every eligible patient globally. To fulfill that vision we will reinforce our investments in early diagnosis, proper genotyping and disease education, which together will improve with standard of care for DMD patients.

Diagnosed for DMD patients globally is still happening too late with at least rates higher than five years of ageing beautifully all counting. Our Duchenne campaign called Take On Duchenne is focusing on addressing this issue. When patients are finally diagnosed, oftentimes proper and fast genotyping is not available. We have partnered with several groups globally to address access to genotyping. While we are pleased with the results today, we plant to further expand the efforts moving forwards.

Lastly, we are involved in efforts to improve the overall standard of care of DMD boys and young men including the use of steroids and back physical therapy practice. These efforts not only support the commercial growth of Translarna, but aligned with our mission of improving the lives of patients suffering with this debilitating disease.

Let me now provide a short update on the development problems for Translarna and DMD. We recently completed our PK study of Translarna in children aged 2 to 5 years old. The patients on that study transitions are one year [indiscernible] and exploratory active phase which we expect to complete early next year. The second is our long term study, 041 which started enrolling patients in the third quarter. As a reminder, there is a specific obligation of our EMA approval.

Outside of DMD we have completed enrollment for our [indiscernible] study and we anticipate results during 2018. We are confident that were are well equipped to drive value with strong commercial capability and a continued focus on transforming lives for patients with rare and neglected disorders.

I will now hand the call back to Stu. Stu?

Stuart Peltz

Thanks Marcio. Let me now switch gears to another program which is based on our small molecule splicing platform. This technology has been used to discover potential new therapies for spinal muscular atrophy or SMA a rear genetic neuromuscular disorder that generally manifests early in life and it is the leading genetic cause of death in infants and toddlers.

This disease affects the whole body, not only the central nervous systems, but other tissues as well. We have a robust program in collaboration with Roche and the SMA Foundation around oral SMA 2 splicing modifiers. We believe that an oral therapy should provide a competitive advantage. This is because it allows exposure throughout the body including key tissues affected by SMA such as muscle, liver, bones, peripheral and central nervous systems.

In fact preclinical evidence supports that RG7916 pharmacodynamic effects seen in blood are mirrored in the CNS. This data will be presented at a major medical meeting early next year. As we discussed before, there are two registrational studies ongoing. We are proud to report that the first SUNFISH has recently entered the pivotal stage and is enrolling. Data from the first dose escalation phase of SUNFISH was recently presented at the World Muscle Society Congress.

An interim analysis of the five cohorts treated with RG7916 versus placebo, for 28 days demonstrated an exposure depended may be in increase of up to two and a half fold in the SMA and protein. As described in the presentation, RG7916 remained well tolerated in patients at all doses and there have been no drug related safety findings leading to withdrawal. The patients remained on therapy for up to 200 days.

The second registration directed trial FIREFISH is an open label two-part study in SMA type 1 infants which is expected transition to [indiscernible] pivotal stage in the coming months. The primary end point is the ability of infants to sit without support as assessed by the Bailey gross motor scale. The SMA program has an open label trial know as JEWELFISH. JEWELFISH allows SMA patients from other studies of SMA2 splicing targeting therapies, including our previous candidate RG7800 we can access the RG7916. The SMA program is not only important for SMA patients, it also validates that our slicing type of technology can identify selective compound that modulates this process.

We are now utilizing this PTC technology outside of the SMA collaboration. We are internally pursuing additional preclinical programs targeting pre-mRNA splicing including Huntington's disease and familial dysautonomia. We will share more about these exciting slicing programs as well as highlighting our R&D pipeline at an upcoming Analyst Day that we plan to hold next year.

I'd now like to turn the call over to Christine Utter, our Principal Financial Officer. Christine?

Christine Utter

Thanks Stu. Earlier today we issued a press release summarizing the details of our financial results for the third quarter and I refer you to that release for full details. I'll start with a few comments on our financial performance this quarter which combined with the commercial results generated year to date set us up well for the remainder of 2017.

Starting with our top line results, we reported strong performances across both of our commercial assets. EMFLAZA revenue in the third quarter was reported at $9.8 million dollars. The EMFLAZA performance to date has allowed us to increase our revenue guidance for EMFLAZA to $20 million to $25 million up from $15 million to $20 million for the full year 2017.

Translarna revenue in the quarter was $32 million a year-over-year increase of 45%. As we noted, Translarna revenue remained strong with growth continuing in both new and existing territories. We reiterate our Translarna guidance of $120 million to $140 million as provided on our last call. This guidance assumes the current exchange rate and the continued commercial expansion for Translarna in nonsense mutation DMD outside of the U.S.

This brings our full year revenue guidance in the range of $160 million to $185 million. This guidance includes a $20 million milestone we achieved from Roche in mid October for the advancement of the SUNFISH trial to a pivotal state. We reported a net loss of approximately $33.7 million for the third quarter of 2017 which declined over $1.5 million dollars from the same period in 2016. Our operating losses are anticipated to continue declining as we leverage our existing infrastructure and continue to grow our revenue base now from two commercial products.

Non-GAAP R&D expenses in the third quarter were approximately $26.4 million relatively flat to the same period in 2016. While we completed the major costs associated with running previous Phase III Translarna studies, the research and development expenses now reflect the initiation of our long term DMD study 041 and certain increased regulatory costs. Non-GAAP SG&A expenses were approximately $27.9 million for the third quarter of 2017 an increase of 47% versus the prior year quarter. SG&A expenses have increased mostly driven by the launch of EMFLAZA.

We are reiterating our GAAP R&D and SG&A expense for the full year of 2017 of between $250 million to $260 million. Excluding estimated non-cash stock base compensation expense of approximately $40 million, full-year 2017 non-GAAP R&D and SG&A expenses are anticipated to be between $210 million and $220 million.

These expenses are expected to be primarily in support of the continued research and clinical development of our product pipeline candidate as well as the commercialization of Translarna outside of the U.S. and investing in the commercial launch of EMFLAZA in the U.S. Our previous task guidance was to complete 2017 with approximately $120 million. Due to our increased revenue guidance we now anticipate ending the year with over $150 million of cash and marketable securities.

I will now hand the call over to the operator to start our question-and-answer session. Operator?

Question-and-Answer Session

Operator

Certainly. [Operator Instructions] Our first question comes from the line of Joel Beatty from Citi. Your question please?

Joel Beatty

Hi, thanks for taking the questions. First one is on Translarna, in the past we've seen sales come in a little bit irregularly, it seems like in part due to bulk sales in Latin America. Are you able to give a sense of much bulk sales contributed this quarter compared to previous quarter? Is it safe to assume that since there is – bulk sales were high last quarter that this is a down quarter for that?

Marcio Souza

Hi Joel, it's Marcio. Thanks for the call. As you know, we do not guide specifically on councils or on the regions, but we do expect moving forward their orders from Latin America will continue to be irregular and bumpy. I think the important part here is really we are reiterating the guidance for the year and we don’t expect like any back of a different order coming for that region.

Joel Beatty

Okay, thanks. That’s helpful and then one other question on the SMA program. I see that, the first of two trials says advanced to pivotal where there is functional endpoint for the pivotal trial. Is it possible we could also get functional data from part one of either these trials and Type I or Type II and III patients and if so what could be the timing to be able to see that functional data from Type I?

Stuart Peltz

Yes, thanks for that Joel. So there's - as you know we just transitioned the and we received the milestone from Roche for the transition of the SUNFISH trial into pivotal trial that's occurring and as you know you've been there many time as it’s endpoint. They did collect some results with the Part 1 data and they'll be we plan to present results of that in a poster or in a presentation in 2018 so we'll be talking about that data in the early next year probably.

Joel Beatty

Okay, great and thank you. I’ll get back in queue.

Operator

Thank you. Our next question comes from the line of Tazeen Ahmad from Bank of America. Your question please?

Tazeen Ahmad

Hi good afternoon. Thanks for taking my questions. Stu, on EMFLAZA you've obviously had a nice ramp up in your launch. You had a pretty strong growth sequentially between 2Q and 3Q, but you revised full year number for EMFLAZA wouldn’t indicate that much more growth in the fourth quarter. Is there an expectation of some impact from the holiday there or is there any kind of trend that you can point us to for that? And then I have a question on the SMA program as well.

Stuart Peltz

Sure, thanks, oh Marcio wants to...

Marcio Souza

Sure. Thanks Tazeen, this is Marcio again. So a few early days in the launch. As you know, we are in the first six months, we are definitively very optimistic and very happy with the results so far. We are raising the guidance. There was pent up demand so we know there was a build up of patients that would transition in the first few months. There is no expectation that the build [ph] would continue so it is in line with our initial expectations that we're gaining patients. I think it is going faster than we expected a transition so that's why we are raising the guidance.

Tazeen Ahmad

Do you have any idea of what your penetration is right now in your targeted population?

Stuart Peltz

Sure we are monitoring that. We are not going to be giving this guidance or these numbers in this call right now, but that's something we've been looking very closely and we're projecting moving forward.

Tazeen Ahmad

Okay, great and then on the SMA program, how do you envision this product you know fitting into the treatment regimen that exists now with EMFLAZA as well as the potential for gene therapy, will this be in addition to, instead of, and how can we better understand what the impact of using this drug let's say it's in combination with other drugs would be to I guess justify what would be a relatively expensive treatment?

Stuart Peltz

Sure, thanks for that. So as you may RG7916 is an oral drug that distributes throughout the body. So as you may remember that preclinical data was really quite impressive were its promoted slicing in all the important issues and I remind you that SMA while it affects the central nervous system it affects a whole bunch of other tissues that I described in my initial comments earlier on, in that I think one major advantage is that the molecule can go to these all - distribute to multiple tissues and allow SMA protein to go on. So we think while it may not be the first in class we are hoping for it to be potentially the best in class in terms of being able to make SMA protein both in the CNS as well as other tissues.

In terms of in combination or as monotherapy, obviously now we're looking at it as monotherapy just demonstrated activity, but it makes sense also in time in due course to consider combinations and what's best for the SMA patients.

Tazeen Ahmad

Okay and sorry, the last person might have also already asked you, so when is the next data readout that we should expect for SMA?

Marcio Souza

Yes, so I think what we talked about is that we'll be presenting the part one of FIREFISH at an upcoming meeting, so expect that to be early in 2018 and I think we'll be talking again about the preclinical data as well, so people again really understand the importance of being able to get SMA drugs to other tissues that are important for SMA patients.

Tazeen Ahmad

Okay, thanks Stu.

Operator

Thank you. Our next question comes from the line of Alethia Young from Credit Suisse. Your question please?

Alethia Young

Hey guys. Thanks for taking my question. Maybe a couple, maybe Stu, you can talk a little bit more about the EMFLAZA trends maybe? I guess I'm more curious about you having the [indiscernible] and now how do you kind of what's the hurdles to educating the rest of the people? And then also are there trends around, you know, doctors are now putting multiple patients on a site or kind of just give us a little more about the cadence that you've seen there? And then, I just thought, I don’t know if you answered this, but as far as ex-U.S. opportunity for Translarna, I mean can you discuss some of the areas where you think you remain underpenetrated? Thanks.

Stuart Peltz

Sure, but let me I’ll ask, Marcia wants to talk a little bit about the EMFLAZA and then...

Marcio Souza

Sure Stuart. So in terms of like the types of patients right, we've seen scripts coming on, on all these different segments of patients for EMFLAZA so it's been pretty broad. You know your question in relation to the doctors, so I think two points that are quite important, so one it is a very broad base that we have right now. Our team has been very effective on having conversations with doctors in both the main, like centers like the NBA centers, but outside up and down as well we've seen multiple scripts for accounts seemed like a variety of accounts are very happy with how it's coming as we just raised guidance it's mostly because obviously you are not seeing the number of scripts growing, but also the fact that they're going faster, so fairly happy with that. Stu wants me to...

Stuart Peltz

Yes, and I think also maybe a little bit of discussion on the education, fact that standard of care the superior the product might be useful too...

Marcio Souza

Fair enough. That’s a very, very important point. Thank you, Stuart. So before EMFLAZA was launched in the U.S. there was really no indication in the markets in terms of the benefits of these patients being on treatments or even the need for some patients. The guidelines while they were updated they were very generic and what you're doing right now and as we move to the second phase as I mentioned during my remarks earlier on the call is really vast on that education, just use a lot more our medical affairs both staff and resource that we would be using in the initial phase of the launch to answer questions mostly from completion to actually help with education as well in the field.

So both patients who are never treated with steroids, who are a very large part of the market it's not small, are also the ones that are looking for switching therapy have the opportunity to do so because they are more educated. We truly believe on the benefit of EMFLAZA. As we mentioned during the acquisition we acquired EMFLAZA because that’s the best treatment patients should be on and will continue to generate data and to get this data out there that that we also believe.

Stuart Peltz

And I think as Marcio said is that since the acquisition of EMFLAZA there's been a lot of data that we say we've had that's been able to get out as well as work from the placebo of things like the Lily data as well as there could be a recent or there would be a publication from the Synergy Natural History, that really shows the superiority of EMFLAZA and that patients should be on this drug. And so I think there's a lot of education that will be occurring with all this new data that is getting out both in posters and soon to be in the literature.

Marcio Souza

And maybe to answer your Translarna question, so we just mentioned right we're going to be expecting double digits patient growth next year this is coming for the regions as well. We just where we believe it was a really good job on penetrating like Western Europe and like the main countries had a very good result in Latin America.

We expect to see growth in all the regions including those as well, but as we move forward, the biggest or the smallest penetration should I say is in Central and Eastern Europe and the Middle East and that's where we're going to be focusing as well lot of the efforts.

Operator

Thank you. Our next question comes from the line of Matthew Eckler from RBC Capital Markets. Your question please?

Matthew Eckler

Great. Thanks for taking the questions guys. So I wanted to dig a little bit more into your full year guidance and first specifically you are looking at Translarna, at the low end of guidance this actually applies - implies a contraction in revenues up something around 51% sequentially while at the high end of guidance you're implying about a 12% quarter-over-quarter growth. So look, I guess my first question here is why not move up the low end of guidance, are you anticipating the potential of a slowdown in revenues in Q4?

Marcio Souza

So when you're looking through the Translarna guidance I understand your question correctly right, where we are from the guidance for this year is that a question you are asking?

Matthew Eckler

It is, so to date, year-to-date you've done what about $104 million in sales right and you're guiding for $120 million to $140 million for the full year, so that implies anywhere from $15 million on the low end to $35 million on the high end and obviously $15 million in Q4 is a significant decline from Q3, so why not move in, move up the low end of your guidance is there something in there that that you could be concerned about a slowing in revenues.

Stuart Peltz

No, there is no major concerns that we're having. Again we are reinforcing the guidance because that's how we're I'm looking forward in terms of the mix of patients, assigning the size of the other staff oftentimes change specifically as it come closer to the holidays. So that is no fundamental off the business that is changing is really making sure that we give a realistic guidance for you guys that is in line with our expectation.

Matthew Eckler

Okay, but again, I mean correct me if I'm thinking about this the wrong way, but the low end of your guidance implies this to be slowing in revenues for Q4 is that correct?

Stuart Peltz

The lower end of the guidance if you were to be there would be smaller in size quarter but that doesn't mean that thinks our guidance is, right? So we’re guiding for the range not for the lower end.

Matthew Eckler

Okay, understood and then separately do your current Translarna revenues or guidance include any inventory build or stocking?

Stuart Peltz

No.

Matthew Eckler

No, okay got it. So it's all revenues are recorded on a sell-through basis?

Stuart Peltz

That's correct.

Matthew Eckler

Okay, perfect. Very helpful, thank you. And then just kind of one last one from me, so you mention in the press release that you're seeing a greater than 90% compliance rate for Translarna, so obviously very, very high compliance there but for the patient to have discontinued on what are the some of the reasons there for discontinuation.

Marcio Souza

Sure, so first let me just expand a little bit on the compliance rates right? So this is a therapy that is taken three times a day. The young children some of them are teenagers like we have to bring this to school and so on, so when looking to 90s in general always very good for any drug, but we to are specifically really, really pleased with the results we’re seeing. We believe this is linked patients are really seeing the benefit of that and continue on the drug.

So, incredible results as we in general. We haven't given any numbers in terms of discontinuation. The number has been very small and mostly related to patient choice are not sequentially on the drug in different countries, but the number is very small as I mentioned.

Matthew Eckler

Okay, got it. Okay, great thanks very much, very helpful.

Stuart Peltz

Oh you bet.

Operator

Thank you. Our next question comes from the line of Raju Prasad from William Blair. Your question please?

Raju Prasad

Thanks for taking the question. One on Translarna, I felt like at the outcome one of the biggest bunch of contention was on the bell shape dose response curve. I just wondering if from the PK study in the children 2 to 5 is there anything that you'd be able to show to the FDA to kind of get them more comfortable with dose response, currently you guys have explained for Translarna?

Stuart Peltz

Yes, thanks Raju for the question. I think that will just show I think in a sense typical PK, but I think more towards your question is, we had done a formal PK PD response analysis where we did, in essence one of the questions that was asked by two person who is a PK person in terms there but to one to the person who's the PK. person in terms of did you do a form of model? And the answer is yes, we had actually and it's one of the things that we're pointing out that was missed is that we had done a former model that demonstrated it.

That is a formal model but they normally would have done, that's a standard procedure that been done that demonstrates the bell shaped curve. So I think that model will be included as part of our appeal response, but it does, it's a good example of something that was missed, that was important for them to look at.

Raju Prasad

All right. Great, thanks Stu and then on EMFLAZA can you just give a little more color on the 1,500 patients as far as the bridging program? I mean maybe just how many are in the bridging program or a general percentage as well as. Is that where you're seeing a majority of growth in patients quarter-over-quarter?

Stuart Peltz

No, that's not where we’re seeing a majority of the growth right? So we're not talking specifically about the split between life commercial shipment and bridge. The bridge is something very important for us because in relation to our commitments to get access to all the patients who are being uninformed in EMFLAZA or who are in need of EMFLAZA there. So we're really using this it's been very efficient at the bridge, so patients are not remaining there. Therefore our period off line we are getting newer scripts every day. So that's the growth is now coming exclusively from the bridge, but obviously some of them are transitioned from bridge.

Raju Prasad

Okay, great. Thanks for the question.

Stuart Peltz

You’re welcome.

Operator

Thank you. Our next question comes from the line of Gena Wang from Barclays. Your question please?

Unidentified Speaker

Hey there. This is [indiscernible] on for Gena. Two questions, one for EMFLAZA and one for Translarna. For EMFLAZA just I was wondering if you could provide some additional color on the launch, for example any color you can provide on gross to net and cost of sales associated with the launch? And then I have a follow up for Translarna.

Stuart Peltz

Sure. So I'll start with the gross to net. So the gross to net so far has been within our expectations. It’s on the mid to high teens that’s pretty much on the brands of we're expecting between private and public payers and all like the discounts are associated with that, were not in out exactly what we were expecting. We don't expect this to move much, that's what was in our original expectations, so we are happy to see that patients are getting there.

In terms of the other details of the launch we're not necessarily going to be giving there now. I just wanted to reinforce we're very happy with the patient growth. I'm very happy there we're being able to keep our promise that no patients would need access to and EMFLAZA would not get access. So we’re seeing these groups coming in and you are keeping them on drug either for the bridge broader more direct shipments for commercial. =

Unidentified Speaker

Great. Thanks for Translarna and ex-U.S. could you remind us the timing for CHMP opinion on the renewal of the conditional approval? And just trying to understand a little bit more about the expansion efforts in Middle Eastern and Central Europe any just like specific steps you're taking now that the U.S. approval has some other barriers anything extra that you're going to do there to kind of expand the footprint there.

Stuart Peltz

Sure, so let me start with the renewal procedure for our approval in Europe. So, every first quarter we will submit the procedure for renewal. We are on track internally to do that. We're going to be submitting the procedure just like we did this year at the beginning of our 2018 so not foresee any issues with that, it requires like a database lock and few other things going to be doing this. So again, as they go through there's a specific timetable and you can find in the CHMP timetable and in the website and it's going to follow that’s general.

In terms of the expansion on the Middle East and Central and Eastern Europe, so I mentioned before in the call about few aspects that we are working on and that we're are going to be investing on next year. When you look into that region specifically there are two major components that I would like to highlight to you, so one is education. And why education is not an issue but I would say a barrier of different magnitudes throughout the world and in all regions we are working on it.

And in all regions we're working on if you specifically important in center in the Middle East I mean and sea regions. So we're going to be intensifying our efforts both with our south and other partners we have in the region on increasing the education on DMD. The second is access to genotyping. We have a lot of partnerships throughout the globe on getting access to genotyping. We've been very, very pleased with them.

We increase the level of full next generation sequencing a lot since we started launched three years ago but that’s to one area that specifically in the Middle East, we're going to be investing fairly happily next year to make sure that every patient who is diagnosed with DMD gets proper genotyping fast. So if they are eligible to Translarna and the physician the patients believe that should be appropriate that they get access to it.

Unidentified Speaker

Great. Thanks a lot.

Stuart Peltz

You’re welcome

Operator

Thank you. And this concludes the question-and-answer session of today's program. I’d like to hand the program back to Dr. Stuart Peltz for any further remarks.

Stuart Peltz

Okay, thank you. I want to thank everyone today for being on the call and thank you for your questions. As you can see we're focused on and moving forward here in transforming the lives of these patients for better outcomes. Thanks for your time today.

Operator

Thank you ladies and gentlemen for you participation in today's conference. This does conclude the program. You may now disconnect. Good day.