Hi, good morning everybody. I'm Kristen Kluska, one of the biotech analysts at Cantor. Very happy to be hosting PTC Therapeutics this morning. We have Dr. Matt Klein, the CEO, and Pierre Gravier, the CFO. Thank you both so much for being here. Thank you, Kristen. Good morning to you. Yes, always a pleasure talking to you. To start, do you mind just giving us a brief intro and some high-level remarks about PTC Therapeutics? Sure, happy to. PTC Therapeutics is a global biopharmaceutical company focused on the discovery, development, and commercialization of therapies of high unmet medical need. We've focused a lot over the past one to two years on really evolving the company and building for the future. We believe the future is now, having closed the second quarter with the approvals in the U.S. and Europe for Sephience, which we believe will be the foundational product for PTC's future growth. It's approved for the treatment of both children and adults with PKU. We also closed the quarter with over $1.9 billion of cash on the balance sheet. We enter this next phase of growth for PTC with a foundational product with strong, large revenue potential, a cash balance to get us to cash flow break even in the not-too-distant future, as well as the firepower to do business development to complement our commercial and R&D portfolios, which include the capacity of PTC to commercialize therapies around the globe with an accomplished global commercial infrastructure, as well as a robust R&D portfolio, including our splicing platform, which produced Evrysdi, the first ever approved oral splicing therapy, as well as PTC518, our therapy for Huntington's disease, which we partnered with Novartis earlier this year. It's an exciting time for PTC. A lot of the work we put in over the past couple of years has brought us to this moment where we can launch into what we believe will be a successful phase of growth for the company. Thank you. Rather than spending a little bit of time on everything, I'd love to just take this fireside chat to go a little bit deeper into Sephience for PKU, if that's okay with you. Sounds great. Okay, awesome. Before we talk about the drug, I think it's really important to understand these patients' backgrounds, their dietary lifestyle, and detail. How does this fluctuate depending on what's available for them? Are they satisfied with what they can eat currently? Yeah, I think it's important to understand that PKU is a highly morbid disease. Not only does it significantly impact the lifestyle of those affected by it, but it has a number of other important symptoms related to cognitive function, other aspects of neurological function, mood, and then also effects outside of the CNS. Basically, when you have PKU, you're born without the ability to process phenylalanine. Phenylalanine is an amino acid, so it's a component of protein. What that means for individuals with PKU is that they have to have a highly restricted protein diet. Why? Because if they take protein with phenylalanine, they won't be able to metabolize it. They'll get high levels of phenylalanine and then suffer a number of significant neurological and other systemic manifestations. The importance of diet control is so critical that PKU is a part of newborn screening because it's recognized from birth. Individuals with PKU need to have a restrictive diet so that they ensure normal neurological or as normal neurological development as possible, as well as basically embark on a lifetime of a diet which is highly restrictive. Just to give you an example of what I mean by that, if in the severe cases, an individual may be limited to having 6 g of protein a day, that could be a piece of bread. Therefore, to get nutrition beyond that piece of bread or a single vegetable, for example, it's required that individuals with PKU take formulas that provide them with other aspects of nutrition because they can't take normal protein by mouth. The ideal therapy would be one that individuals can take, which allows them to get more function out of the broken enzyme in PKU, lower their phenylalanine levels so they feel better, have better neurological function, better mood, and also ultimately be able to have some freedom of diet so that they could have regular meals or more regular meals. Of course, the therapy that's safe and well tolerated. This is the landscape into which Sephience enters. While there are two previously approved therapies, the vast majority of PKU patients are not on these therapies. Why? Because they don't tick the boxes of what's needed for an individual or what an individual with PKU would want from the therapy, that is improved symptoms, lower phenylalanine, the ability to liberalize the diet, and being safe and well tolerated. Thank you. When we think about the reason you laid out several reasons why patients would want a therapy, what's really top of mind if you had to rank them: improving how they feel, protecting themselves from these disease symptoms, or more flexibility in what they can eat? I would say it would be feeling better and liberalization of diet. Those are the two most important things. If you talk to individuals who have PKU, kids or adults, they'll say, "I know when my phenylalanine levels are off. I have trouble concentrating, trouble focusing." We've heard stories from a woman with PKU who says, "You know, I know my levels are off. I have to put it in the GPS how to get home from work. I just can't focus and think." Of course, being able to have a more regular diet. I mean, we look online and we hear from patients stories about kids being able to have pizza for the first time at a birthday party with other kids, being able to eat the lunch that other kids eat at school, mom and daughter talking about being able to have breakfast together, the same breakfast for the first time in their life. This is life-changing. It's not just a lifestyle change. It's life-altering, in addition to feeling better, having better cognitive function, and better mood and other aspects that the disease affects. Okay, so we know that currently today there's a low percent of the total population pool on Kuvan, but do you have a sense of what percent have at least tried it at one point? What's been the biggest drivers for that, or maybe why isn't there as much interest there? I think when you think about the disease that we've just talked about for the past five minutes, you'd understand why an individual would want to try a therapy that can make them feel better and potentially allow them to have more diet freedom and eat more regular foods. That's why there's great interest in therapies, and it's not surprising that over 70% of patients have tried previous therapies. However, it turns out the vast majority of these patients aren't currently on the therapy. Why is that? I think we have to think about PKU a little bit differently than we may think about therapies for other rare diseases. We're very used to neurological and neuromuscular disorders where the goal of treatment is to slow progression over time, and patients may feel that, "I don't know if my progression is slowing or not day to day, but I'm willing to stay on a drug for a year, two years, maybe even longer in the hope that maybe my progression is slowing." In PKU, it's different. As we talked about, the life of an individual with PKU starts with a highly restrictive lifestyle from birth. Your diet is restricted, and you have disease symptoms that you can only control by limiting your diet. Therefore, if you add to the top of that, and it's not making you feel better, liberalize with diet, there's no motivation to now have the same lifestyle plus take a drug. The framework is really different, and that's why in this population, you have existing therapies, and the majority of patients are not on therapy, but don't mistake that for not meaning that they don't want a therapy. They do, but they want a therapy that can change their lifestyle, the restrictive life they've had from birth. Okay, how's this narrative going to change now that we do have a new drug, Sephience, on the market? We're incredibly excited about this opportunity. The Sephience data set demonstrates that Sephience has the potential to lower phenylalanine, allow diet liberalization for patients of all subtypes, so the full spectrum of severity, as well as the full age spectrum, and that's reflected in both the U.S. and European labels for the approvals that we received this summer. We've been able to show that we can significantly increase intake by an average of over 60% in our clinical trials, including 69% in the most severe patients, those with classical PKU. In our feed tolerance sub-study from the long-term follow-up of our phase III study, we've shown that nearly every patient in that protocol has been able to liberalize their diet somewhat, with now nearly 70% being able to get to a diet, a protein intake above the age recommended daily allowance. That means that folks with PKU can now take protein in a diet at a level that would be recommended for someone without PKU. The data clearly support that we're able to lower phenylalanine, which suggests we'll improve symptoms, as well as allow for the diet liberalization, and, importantly, the clinical studies continue to demonstrate that Sephience is safe and well tolerated. Those essential boxes are now checked, which is why we're so enthusiastic about the ability of PKU to address that unmet need in the community. Okay, I think you've officially had the approval for about five weeks. On your next earnings call, which metrics are you going to be providing the street with, and do you have a sense about any that might carry the most weight just initially as we understand that reimbursement and things might take a little bit of time? Yeah, we've been planning for this launch for over two years. We're incredibly excited about the opportunity, given the size of the population and the highly differentiated profile of Sephience in terms of safety and efficacy. This is also a community that understands what it's like to be on a drug that physicians have prescribed before. The payers understand PKU, understand that value can be tied to phenylalanine lowering, and we've got a team that's world-class. Our global commercial teams have been doing rare disease commercialization for over a decade, performing really incredibly well in genericized and competitive markets. When it comes to this opportunity, this is a battle-tested team that is poised to execute. Early days have no surprises. We've been preparing for this. Everything is going as we thought it would be, seeing a great amount of enthusiasm from patients and physicians. When we get to the first earnings call, Q3 earnings, we'll be sharing information such as for the U.S. patient start forms. We'll talk about how many patients are on commercial drug, both in the U.S. and ex-U.S., and we'll also provide an update on how the payer mix is looking so far. In the early days, as you said, it's hard to get too much information. We'll, of course, be looking at things like start forms. We've been very clear that this is a significant opportunity. We've all long said we believe it's at least a $1 billion commercial opportunity in the U.S., about 50% of that ex-U.S. We believe that this is a therapy that can address the full spectrum of disease. One thing we'll be looking at early on will be start forms. That would support that we're having this sort of wide funnel and being able to access all these different key segments, which will be really important as we get deeper into the launch. Okay, I know your team in particular has been very excited about this drug even before the approval. We are also very excited about this drug, but broadly speaking, how should we think about expectations so that we also don't jump over our skis quite yet? Yeah, I think, look, we have thrown out the billion-dollar number early on because a lot of people were trying to benchmark the commercial opportunity for Sephience with other PKU therapies. I think the reasons we've highlighted already, that's just wrong. It has a highly differentiated profile, and the evidence continues to grow. For example, as we sit here today in New York City, several thousand miles away in Japan, at the SSIEM, the International Metabolic Meeting, our team is presenting additional data that continues to support the ability of Sephience to meet the full spectrum of patients. We're providing an update on the long-term affinity data, showing again that now with almost 100 patients through that feed tolerance protocol, almost 70% are able to have a lot more protein in the diet beyond the recommended daily allowance. We're also sharing QOL data, Quality of Life data, that are showing exactly what you'd expect by lowering phenylalanine levels. We are now seeing in patients in our studies improvements in mood, improvements in neurological function, executive execution, thinking, clarity of thought. All of these benefits that patients want, we're able to show, and this is including the most severe patients. We're working on a manuscript now on the mechanism of action of Sephience that is going to talk about the dual mechanism, not only Sephience's ability to serve as a precursor for BH4, which is the cofactor for the injured enzyme in PKU, but also a separate chaperone effect, which is allowing for a benefit in patients with more severe mutations. We look back in the affinity phase III trial, and I think we've got 12 patients with a GPV score of zero that suggests a severe form of the disease that had a greater than 30% reduction in phenylalanine. When we talk about these data points of reduced phenylalanine levels, diet liberalization, improved neurological function, this goes for the full spectrum of PKU, including those severe patients. When you start to think about the ability to access all the key market segments, that's when you start understanding that this can be a sizable market opportunity. Do you mind just touching briefly on what the GPV is? How does it essentially look to understand someone's phenotype, their severity? Yeah, absolutely. Traditionally, PKU has been talked about as classical and non-classical, with classical being those more severe patients who at some point in their life had a phenylalanine level of greater than or equal to 1,200 μmol/L. For reference, normal levels are around 120 μmol/L. There has been a lot of work done in the community of late to try to better understand the relationship between specific genotype and disease phenotype, or genotype G and phenotype V, to get to the GPV, which is a sum of severity, if you will, of the mutation in each of the alleles for the injured enzyme phenylalanine hydroxylase. There have now been specific scores to designate your severity. Classical PKU is thought of as anyone who has a GPV, basically the sum of severity of each of the different alleles, of less than 2.7, with a score of zero clearly representing the most severe form. These are folks that traditionally have not been thought of to have mutations that would respond to Kuvan. These are folks who are thought to have really severe disease. For us to be able to now look back at our data, and not through the lens of defining classical as less than 1,200 μmol/L, but to say we have individuals with GPV scores of zero and additional patients less than 2.7, and we're seeing this level of effect, of greater than 30% reduction in the run-in phase and then persistent reduction in the placebo- control phase, allows us to really support the idea that we can have an impact in that bucket of therapy-naive patients, the more severe classical patients. I would just say the GPV is just giving us another way to, in a more quantitative way, understand the severity of mutations and similarly understand the potential of Sephience to deliver treatment benefit across the full spectrum of disease. Thank you for that. Do you have a sense of what percent of patients are likely to be responders? We've talked about that this is a very unique disease because it's not one where you have to wait a year to see if there's clinical outcomes. The blood feed test makes it very easy that very shortly after you kind of know if someone's going to respond. When we look at the affinity study, I think that's a good place to get an idea of percent response rates because that was a study that enrolled, if you will, all comers, full spectrum of disease. We had 67% of patients, 2/3 of patients, have a greater than 30% reduction from baseline in phenylalanine. If you extend that to a greater than 15% reduction from baseline, we had almost 3/4 of the patients, 75%, have that magnitude of reduction. That is telling you that the majority of patients who see the drug have a benefit in terms of a reduction in phenylalanine. Thank you. How are physicians going to be coaching their patients in real time to help them understand the dietary lifestyle changes, if applicable, and what is this ultimately going to mean for patients? Yeah, we've done a lot of work on this. There are about 104 centers of excellence in the U.S., and as I mentioned, our teams have been working and preparing for this launch for almost two years, if not a little longer, mapping these centers, understanding the patient load at these centers, understanding the care team because PKU and care involves physicians, nurse practitioners, and dieticians. Dieticians play an incredibly important role because absent therapy or absent an effective therapy, the mainstay of treatment, if you will, is dietary management. Often, the dieticians at a center are the point of contact for individuals with PKU. As we work with centers and talk about Sephience, prescribing Sephience, we're also talking a lot about managing diet in the context of a therapy that's allowing diet liberalization. We don't want someone to start the drug and all of a sudden now start going to the buffet and eating everything in sight. It has to be managed in the context of an individual's current protein supplementation or diet supplements, and then how do you gradually increase diet, maybe wean off some of the foods and medical foods and formulas that patients have to take. We spend a lot of time on this education aspect. We've gotten really interesting feedback from some of the nutritionists who are saying this is so wild for them. This is something we never had to think of before. How do we talk about having a hamburger at lunch and then what can you have for dinner? It's just a new world. We spend a lot of time on this. In fact, we've increased our medical field team to include more dieticians, given the importance of peer-to-peer support and management, and as we think holistically about a kid or an adult who's going to get on Sephience and what it means for their life, and how do we make sure that we solve for success in this transition to a new lifestyle. It's been great on social media seeing the experience of patients trying foods for the first time, things that we take for granted. It's been really nice to see that. Yeah, I think for us, this is what it's about, trying to bring important therapies to folks who need them and to see patients themselves talk about what a transformation the therapy has brought them. It's heartwarming, and it's also really important in getting the word out. We talk about a drug launch in 2025. It's maybe different than it was when Kuvan was launched in 2008, where, yes, there's working with the physicians so they understand it, working with the patient communities, but this patient-to-patient interaction, the social media, where someone with PKU can see another individual with PKU having benefits, they want that drug too, and it creates an enormous amount of market pull. We're also aware of social media influencers and influencers in the PKU community, which are also important. I mean, this is one way of helping get the word out about Sephience, including to patients who may be more remote from treatment or who haven't been on a therapy or tried on therapy for a number of years. They're not lost to follow up. They're out there. They live in this world, and people have tuned into social media, and I think the more the word can get spread within the community about the potential benefits of Sephience, I think it's going to generate more market pull and really help get more folks on therapy. It's a new ballgame out there, launching drugs in the age of social media, that's for sure. You talked about the fact that 70% of patients are seeing essentially healthy for their age group dietary allowances, but even for those that aren't, help us understand what level would honestly be life-changing for them, even if it's not normal? Yeah, you know, I'll just say what the patients say because it really comes from them, not from us. I think it's very hard for any of us to walk in the shoes of someone who has that lifestyle and how severely limiting it is. Maybe it means having one meal a day, right? Maybe it's a, you know, an eight-year-old at school being able to sit at the lunch table with the other kids and have the same lunch that the other kids are having and not a medical food that may be smelly or look funny. It may be, you know, an adult who can go to lunch with the other folks in the office and have the same food. It could be just even one meal a day. It could also be for individuals who have a restrictive diet but still have levels of phenylalanine that lead to brain fog or mood disturbances, just feeling better. Maybe their diet's not liberalized very much, but they feel better because their phenylalanine is lowered, you know, 200, 300 points. These are all very important things that are tangible benefits and value that Sephience can bring to patients. Can you help us understand the different waves of patient groups you're targeting, and a very, very early glimpse into if that's actually what you're seeing five weeks into the launch? Yeah, so folks will hear me say a lot, it's early days, but we get this question a lot, and you know, this thought of that there's different segments of patients, right? There's those who are currently on therapy and particularly on Kuvan, even branded or generic, where you know our data continue to demonstrate that if you're on, if you have any benefit from Kuvan, branded or generic, that you're going to have a much greater response to Sephience. In our phase III trial, we showed that in those 27 patients who were on Kuvan prior or BH4 prior to being treated with Sephience, we had 54% greater reduction. In Tokyo right now, we're sharing data from a small study we did to support payer discussions in Europe where we did a crossover study, head-to-head comparison of sapropterin and Sephience, and found again that we were having much greater response with Sephience. This time, it was 70% greater lowering with Sephience than giving BH4 alone. That's obviously a segment where individuals can go from one once daily therapy to another and have a much greater benefit. There's also therapy-naive patients who have never been tried on the therapy. These tend to be the more severe patients who thought would never have a benefit from taking BH4, and there's some interest in trialing those patients, and then there's those who've been tried on therapy but failed. Those are the three large segments we've talked a lot about, and what we've been learning is that why we believe that there's a wave of patients who are either on therapy or recently tried and failed and closely tied to the treatment centers, that those would be the first wave of patients. We're hearing in some cases there's wait-listed centers that include the therapy-naive patients. I think it's hard to know just yet who's going to be in that first wave. It's going to differ center- to- center. The important thing is that we're seeing interest in prescribing and interest from patients in each of those segments. How is Sephience going to ultimately help the company reach profitability? Yeah, look, Sephience is the foundational product for PTC going forward. We talked about a $1 billion opportunity in the U.S. and $500 million of that ex-U.S., and we don't need to reach that to be profitable, but that's really going to be a large contributor to get us there. I think as we also talk about the billion-dollar number, just looking, you know, we've shared the price for Sephience and the population of roughly 17,000 in the U.S. To get to that billion, it would be very modest, modest penetration, and if we think about more in the realm of where the drug can be as a differentiated rare disease therapy, then, you know, we believe the potential could be even greater. As Pierre said, that billion-dollar number alone will get us to profitability in the near future. I took this recent Censa transaction as a signal of confidence in how this launch could ultimately look, but can you just help us walk through the math you did to assume that this is a good deal based on also your projections of what this launch could look like? Yeah, absolutely. The way we thought about the Censa transaction is, you know, that's the company that we acquired and we got Sephience from, and the royalty that we owed Censa was, you know, quite high. I think the range was 8%- 12%, and the 12% was at $500 million. With what we're saying, with a billion-dollar plus opportunity in the U.S. alone, that tells you that this royalty was going to be very expensive. For us, even with modest numbers, you can see that the IRR that we paid for, which was $225 million upfront, is, you know, very, very high. If you take a look at just consensus numbers, that is 20%+ IRR based on that. That's how we thought about it. We started to think about that as we got closer to the approval, and you can see that, as usual, we strike pretty quickly. You saw the announcement of that deal right after the approval in the U.S. You have a great balance sheet these days, must make a CFO's life, quite happy. Tell us about it. What does it allow you to do? We're very happy with our cash balance. We closed Q2 with $1.99 billion, and this is a very unique situation, right? If you take a look at all our other peers, I think in our space, we probably have one of our stronger balance sheets, and that allows us all the flexibility, right, to allow us to launch PKU, obviously, globally, to continue to develop our own internal pipeline, as Matt mentioned as well, continue to think about business development opportunities with a few goals in mind. Number one, exactly the same way we thought about Censa, we're going to be disciplined, right? We want to make sure we create value for shareholders. We're not going to jump and go just because we have cash for the sake of it, acquire something. Again, with this in mind, we want to make sure that we accelerate, that we are past profitability, and it just allows us to execute with all the flexibility we want. Anything I didn't ask about Sephience that I should have? We are very much looking forward to that earnings call. Thank you. Look, we're incredibly excited about the opportunity and really excited about where the company is today and where we are now well positioned to take the company tomorrow. As we said, all the necessary requirements for success are in place with the launch, including just the population, payers' understanding of the disease, the need for a highly differentiated therapy, and our team, our team's ability to execute globally. We're incredibly excited to be able to bring this important therapy to kids and adults with PKU. Thank you so much, Matt and Pierre. Always a pleasure to host you, and we are quite excited about this launch ourselves. Thank you. Thank you very much, Kristen.