RARE JPM 2017 Fall Biotech Conference Call Series

RARE JPM 2017 Fall Biotech Conference Call Series

September 22, 2017 7:30 AM PST Conference Call Transcript

Please disconnect now. At this time, all participants will be on a listen only mode for the entire duration of today s conference. I would now like to

turn the call over to Cory Kasimov, you may begin.

Cory Kasimov, Senior Biotechnology Analyst at JPMorgan:

KASIMOV: Great. Thank you, Mari, and good morning everyone. My name is Cory Kasimov. I m a Senior Biotechnology Analyst at JPMorgan, and I m

here with Shawn Fu and Brittany Turner from our team, and we appreciate you joining us for the latest installment of our 2017 Fall Biotech Conference Call Series on what is in fact the first official day of fall. Today it s our pleasure to be

joined by Ultragenyx, and we re lucky to have both the CEO, Emil Kakkis, and CFO, Shalini Sharp, in addition to Ryan Martins and Danielle Keatley from IR, so thank you very much for participating today. We really do appreciate you taking the

time. Now, we ll have our standard format for this call. Following some brief opening comments by Emil, we ll move into Q&A, and first discuss the recent news around Dimension, and then walk through the company s pipeline and

overall strategy. We have a lot to get through but as usual, feel free to email us questions throughout the call, and we ll ask as many as we can time permitting. Now before I hand it over to Emil, Danielle will read some forward looking

statements, so Danielle, why don t I turn it to you first?

DANIELLE KEATLEY: Thanks, Cory. So except for historical information, the matters

discussed on the call, including statements relating to Ultragenyx s intentions, expectations, or predictions of its future and business environment, or statements relating to Ultragenyx s offer and the potential benefits of the

transaction with Dimension are forward-looking statements. Such forward-looking statements involve substantial risk and uncertainties that could cause our future results, performance, or achievements to differ significantly from those expressed or

implied by the forward-looking statements. There is no assurance that the potential transaction with Dimension will be consummated. For further description of the risks and uncertainties that could cause actual results to differ from those expressed

in these forward-looking statements, see Ultragenyx s periodic reports filed with the SEC. If and when Ultragenyx s proposed tender offer for Dimension s shares commences, Ultragenyx will file with the SEC a tender offer statement on

Schedule TO, including an offer to purchase, a letter of transmittal, and related materials. Investors and security holders are urged to read both the tender offer statement and any solicitation recommendation statement filed by Dimension regarding

the offer when they become available because they will contain important information about the offer. When available, investors and security holders may obtain free copies of these materials at the website maintained by the SEC at sec.gov, or by

directing requests for such materials to the information agent for the offer, which will be named in the tender offer statement. Cory, I ll turn it back to you.

KASIMOV: All right, thanks, that s a mouthful. All right, so now with that out of the way, Emil, do

you want to start us off with some brief introductory comments on the state of Ultragenyx?

Dr. Emil D. Kakkis, Chief Executive Officer

and President of Ultragenyx Pharmaceutical:

EMIL: Sure, and first of all I want to thank Cory and JPMorgan for having us on the call today.

Ultragenyx, since our founding in 2010 with just two employees, we have made tremendous progress on the clinical development and regulatory front, with two products now filed in the U.S. and Europe. This is an important accomplishment for any

biotech company, particularly for a company of our age. Our preparation for global commercialization is also well underway, and the Ultragenyx team is highly focused on the potential of Burosumab particularly, pending the FDA review of our BLA. It

is one of the major drivers of the company in 2018 and beyond. We can get into details about Burosumab and other programs in the Q&A section, but before we do, I d like to review a few key points regarding our offer to acquire Dimension

Therapeutics earlier this week. As you can imagine, I m not going to provide further updates on the specifics of our proposal today but I can talk about the strategic and scientific benefits that have led us to make our offer for Dimension. We

offered to buy Dimension because we have a compelling opportunity to create a more valuable next-generation Rare Disease company by bringing together Ultragenyx s advanced clinical and regulatory expertise as well as our Rare metabolic and

commercial infrastructure with Dimension s Rare Disease focused gene therapies and talented team of scientists. More specifically with this combination, there are a number of key points that we should make. First, we gain a technology platform

to expand into gene therapy, which makes sense as part of our broader goal to become a comprehensive rare disease company. Second, the products acquired are an excellent therapeutic fit in the metabolic genetic disease area, and third, the acquired

technology is complementary with our small molecule protein MRNA modes of treatment, allowing us to choose the best approach to treatment for any disease. Finally, the acquired programs are at an early stage of clinical development that are

complementary to stage 2, Ultragenyx s later stage and filed programs. As you know, I have served on Dimension s scientific advisory board since the inception of Dimension so I am familiar with the work they have been doing over the last

several years. I have great respect for the team s expertise that they have assembled for gene therapy and their requisite AAV process development and manufacturing technology, which is a key factor in executing AAV clinical trials and bringing

these gene therapies to market. As experts in the metabolic rare disease space, we are confident that our scientific, clinical, regulatory, and commercial skills are highly complementary to Dimension s technology programs and people. There is

an excellent therapeutic fit. We see an opportunity to seamlessly integrate Dimension s technology and manufacturing expertise to advance the treatment of certain genetic diseases. We believe that we are

well positioned to support clinical development and the potential global filing and commercialization for any products successfully developed from Dimension s portfolio, also providing us

additional catalysts in 2018 and 2019. Thank you for allowing me to make these introductory remarks, and I m happy to take some of your questions now.

KASIMOV: All right, thanks Emil. Obviously, the timing of this call clearly worked out quite well with the announcement earlier this week of that

proposed acquisition of Dimension. And I guess some of my questions will be somewhat repetitive of some of the things you have discussed, and I assume there would be some others that you might not be able to answer but I ll ask them anyway and

you can just tell me if you can t. But I guess maybe we can start the discussion by walking through the strategic rationale of this move a little bit more, in what maybe specifically attracted you to this company in particular and maybe gene

therapy more broadly.

EMIL: Well, let s start with sort our strategic development of Ultragenyx to begin with. We focused originally on

straightforward small molecules and well-characterized biologics as a way to build the company without creating any technology platform risk, and our view was we would do that to start, generate products that are let s say fileable and on the

way to commercial revenue, and then think about expanding our technology base, and that s what we ve been doing. After the first two products got to that point, we did add some programs from mRNA therapeutics, we re now adding these

for gene therapy, and so our view is when you look at any particular genetic disease, there may be several ways to approach their treatment, and rather than only approaching a treatment with the one method you have in house, I d rather be able

to have the option to figure out what s the best approach you could take. And so having gene therapy now in the list does provide us another opportunity to approach therapy, and if you think in the long run with the progress being made in gene

therapy, it seems like an important piece for any company that s going to focus on rare disease therapeutics.

KASIMOV: Okay, so then can you

describe Dimension s overall gene therapy capabilities and platform?

EMIL: Well, I ve been on their SAB from the very beginning of the

company, and the Dimension group, basically a number of them including their Chief Science Officer, come from Genzyme, and Genzyme has been involved in AAV for many years, in fact one of the leaders in AAV strategies. In addition, because they were

at a company that had strong knowledge about GMP manufacturing, they also were working on scalable AAV manufacturing, and I think those are really key pieces of the ability to do gene therapy these days is being able to develop scalable AAV GMP

manufacturing strategies. In addition to that, they have brought in some people with rare disease experience to help on developing the therapeutic strategies, and as an SAB member, they worked through picking their targets which they announced. A

number of the targets are metabolic targets which are I think good targets in the sense that they have readily assessable biomarkers that you can tell within weeks to months that something is actually

happening and you can quantify to what degree you re having an impact on a patient, and those diseases also are a really good fit for us. We have a lot of history in them. So I think the

people there were able to work in a space which I think has a great potential for being able to use gene therapy and understand how to develop it, during the process of figuring out what the right dose is and whether you re achieving what needs

to be achieved from a biochemistry standpoint.

KASIMOV: Okay. So what are the key programs that are currently under evaluation at Dimension, and

what s your understanding of the potential market opportunities associated with them?

EMIL: Well, the three programs closest to the clinic or

in the clinic, first is DTX301 which is the urea cycle disorder Ornithine Transcarbamylase Deficiency, so that one they are now dosing their first patients. DTX401 is for von Gierke disease or Glycogen Storage Disease Type 1, which is a disease

which patients can t release glucose from their liver, and their livers get enlarged and hard, and they have hypoglycemia problems. That one is expected to be in the clinic sometime next year. The third program is they have a Factor VIII

program in partnership with Bayer. That s DTX201. That s basically a hemophilia A, factor VIII basically, mini-gene, and they are working on that scalable manufacturing. That is expected, based on their public statements, to be in the

KASIMOV: Okay. All right, and then with regard to the hemophilia program, and they had hemophilia D, what happened with

hemophilia B and what s the potential read-through in your opinion to other Dimension programs, if any?

EMIL: Well, the hemophilia B program,

speaking from public statements, they successfully achieved expression but they had some inflammatory reactions which in fact all the gene therapy companies have had, requiring steroids, and the question with that type of those reactions are to what

degree do they hurt expression over the long haul, and they had some effects on expression, and I think they made the determination and announced that compared to the other programs and where they re at, that they didn t feel it was

competitive and met the target profile they preferred, so I think that made practical sense. But I think the issue of inflammation in the liver using AAV is something that s pervasive among all the companies to some degree, and so I don t

think there s anything particularly dramatic there. Now, they used a particular strain of Clade E called AAVrh10. Clade E is where AAV8 is, that type, and there s some variations in that and this is called the AAVrh10. Whether that

particular vector is an issue or not, is unknown. Each of these Clades, these particular variations have certain features, but the thing that s important is that that particular strain of Clade E AAV with viruses was only being used for the

Factor B program. So the two programs I talked about, 301 and 401 on the inborn errors are using AAV8, so the one that s probably more common among more companies. So I would look at what happened in B as being, one, a common problem, and two,

if there is anything related to the vector, it really only affects the Factor B program and not the other part of the portfolio.

KASIMOV: Okay. All right, and you have mentioned manufacturing previously on this call and earlier in the

week, can you talk a little bit more about Dimension s manufacturing capabilities, and maybe now as Ultragenyx is transitioning into a commercial organization, how you could potentially ramp up the capacity there?

EMIL: Yeah, so they re using suspension-based cell culture, mammalian cell culture system to produce the AAV virus, which I think are the sensible

choice. And they re scalable because they re a suspension culture, and they have been running it at 250 liters scale, and they also have a 1,000 liter scale that s out there that they re developing. So the strategies they re

using are credible, scalable GMP approaches, and that contrasts with the earlier AAV years when people were using adherent cells or things in roller balls and that type of thing, which are very difficult to scale and were a critical problem because

if you can t make enough of the AAV virus, and these doses require substantial amounts of virus, then you can t really do gene therapy. So the group there clearly has a curve on developing strategies for manufacturing the AAV virus and we

think that s a critical piece, and as I said when we wanted to get into the technology platform of gene therapy, the manufacturing component of it is a critical component, and that was why this made more sense to us than other things that might

KASIMOV: Okay. So then with regards to the transaction and the proposal itself, and just the overall competitiveness of this process, can

you talk about timing a little bit and why the offer was made two weeks after the process began with news of the REGENX-Dimension deal?

Well, I can talk about the timing. Look, we were aware of Dimension for obviously since its founding, and we watched them all year thinking about it, but we got interested in doing it when they announced the transaction with REGENX, which did catch

us off-guard. I had thought they were going to continue for a while. But in any case, that kind of opened the door to the fact that they were considering or would consider being acquired, and put us into

action. I ll let Shalini fill us in a little bit about the process going forward.

Shalini Sharp, Chief Financial Officer:

SHALINI: Sure, so as we said on the prior call earlier this week, we expect the conditions for the transaction to be satisfied so that the tender offer

could complete as soon as 25 business days after a merger agreement would be signed, and that would follow any due diligence period as well, and we are pleased, of course, that Dimension s board made a determination that allows Dimension to

provide information to and to conduct discussions with us regarding our proposal.

KASIMOV: Okay, and then in terms of expecting, not expecting next steps between now and getting a merger

agreement signed, I assume that s a little bit up in the air, or just maybe TBD is a better way to look at it?

SHALINI: We re really not

able to comment on a lot of the day-to-day activities related to the process that s going on right now. I think as we said originally, we were looking basically at

publicly available information on Dimension, and we were asking for an abbreviated period to conduct due diligence to confirm some of the public information that we ve seen, and then it s the tender offer process which I have already

described, and we do think that that s at least a meaningfully faster process than the all-share transition that was proposed by REGENX because the all-cash offer

would then be completed hopefully as a tender offer which would be complete again as soon as 25 business days after an agreement was signed.

KASIMOV: Okay, makes sense. So looking to some of the other side just for a second, in the event the deal does not go through, what does this say about

your commitment to expanding your development strategy over to gene therapy? And Emil, you made an interesting comment early on that if you re in the orphan disease business, you really need to be looking at gene therapy, so what does this

overall move signal for Ultragenyx?