Ultragenyx Proposes to Acquire Dimension Therapeutics for $5.50 Per Share in Cash

Ultragenyx Proposes to Acquire Dimension Therapeutics for $5.50 Per Share in Cash

September 18, 2017 8:30 AM PST Conference Call Transcript

Ryan Martins, Vice President, Strategy and

Introduction: Participants and Agenda

Good afternoon and welcome to the Ultragenyx Pharmaceutical conference call to discuss Ultragenyx s proposed offer to acquire Dimension Therapeutics, a

publicly traded gene therapy company based in Cambridge, Massachusetts. We have issued a press release, which you can find on our website at Ultragenyx.com and have also posted a slide deck under Events and Presentations in the Investors section of

our website. I am Ryan Martins, Vice President of Strategy and IR. With me today are Emil Kakkis, Chief Executive Officer and President, and Shalini Sharp, Chief Financial Officer.

The investor slide presentation accompanying this call contains an introductory note of caution concerning forward-looking statements and also an explanation

that the offer reflected in the Ultragenyx proposal has not yet commenced, directing investors to where to find filings that will contain important information about the offer after it has been commenced.

I will now turn the call over to Emil.

Dr. Emil D. Kakkis, Chief Executive Officer and President of Ultragenyx Pharmaceutical:

Thanks, Ryan. Good morning everyone and thank you for joining us today.

We appreciate the opportunity to expand on our announcement this morning that we have offered to acquire Dimension Therapeutics for $5.50 per share in cash in

a transaction with an equity purchase price of approximately $138 million in cash at close.

This represents: A premium of more than 358% to Dimension s unaffected share price as of August 24,

2017; a premium of 24% to the implied value of REGENXBIO s all stock agreement as of market close last Friday; and a premium of 48% to their agreement based on the REGENXBIO trailing 20-trading day volume

weighted average share price.

We believe this proposal would deliver superior value to that implied by REGENXBIO s current all-stock proposal as it: provides Dimension shareholders with a substantial premium in cash and certain value at close as an all-cash bid; has no financing contingency;

provides more favorable merger agreement terms with improved certainty for Dimension shareholders; and provides a quicker projected close than an all stock transaction. We are prepared to complete confirmatory diligence in 2 weeks.

Concurrent with this announcement, we have sent a letter extending our offer to Dr. Annalisa Jenkins, President and Chief Executive Officer of Dimension.

Up until today, Ultragenyx s success as a company has been driven by our focus on diseases with clear biology, finding ways to engage in rapid

development, and building with a global vision. The Board and I believe that this transaction provides a compelling opportunity to leverage Ultragenyx s advanced clinical development and regulatory expertise, as well as our rare disease

commercial infrastructure, in order to advance Dimension s rare disease focused gene therapies from phase 1/2 into advanced stages, and if approved, commercialization. Adding Dimension s gene therapy technology to our technology base of

small molecules, proteins, and mRNA programs would provide us the optimal set of options for treating metabolic genetic diseases by selecting the best treatment strategy available for each disease.

When exploring opportunities for business development, we at Ultragenyx look for five main criteria: Focus on rare and ultra-rare diseases, genetic diseases

with clear biology, high potential for meaningful clinical benefit for patients, ability to translate existing science to the clinic rapidly, and finally having global rights to key assets.

Through their broad early-stage pipeline and gene therapy approach, Dimension fits strongly within all of these

Acquiring Dimension would allow us to significantly expand our capabilities beyond the technologies we had initially focused on. When we

founded Ultragenyx in 2010, our goal was to develop as many rare and ultra-rare disease therapeutics as possible. We have focused on small molecules and proteins initially, but have expanded our technology over time to improve our ability to address

an even broader array of genetic diseases with the best possible treatment strategies. With Dimension, we have taken a step further to add an additional approach to treating rare genetic diseases using gene therapy.

For those of you unfamiliar with the company, Dimension is developing new therapeutic AAV gene therapies for those living with rare metabolic genetic

diseases. At Ultragenyx, we share Dimension s mission and vision for bringing transformational new therapies to patients with these diseases. We have followed their progress closely, and are impressed with the advances they have made across

their product pipeline. I have served as a scientific advisor to Dimension since 2013, and through that experience gained a great deal of respect for their talented employees and deep expertise in AAV gene therapy and manufacturing.

Specifically, DTX301 is the Company s lead program in OTC deficiency, the most common type of urea cycle defect. The program is currently in a Phase 1/2

clinical testing having just treated their first patient in clinical study. We expect initial interim data to be available sometime later this year or early next year.

Dimension is also developing an AAV gene therapy for glycogen storage disease type la, a metabolic defect in the

liver that stops glucose release and increases glycogen accumulation. This therapy is expected to enter clinic in 2018.

Dimension also has a partnership

with Bayer for the development of Factor VIII gene therapy which is also expected to be in the clinic in 2018.

In addition to those programs in or near

clinical stage, Dimension has licenses for a number of other metabolic conditions. They also hold one remaining option for an undefined genetic disease. In addition to the portfolio of disease programs, I have great expertise respect for the

expertise they have assembled for AAV process development and manufacturing, which is a key factor in executing AAV clinical trials and bringing these gene therapies to market.

As we outlined in our offer letter, our vision is to leverage our significant advanced stage clinical development and regulatory expertise, as demonstrated by

submissions of marketing applications for two products in the US and EU during this last year, to Dimension s portfolio.

Dimension s early clinical and pre-clinical pipeline will create a substantial number of opportunities in the ultra-rare disease space, allowing us to continue with our vision of assisting those afflicted

by forgotten or ignored diseases.

Ultragenyx has several important catalysts through 2018 in Burosumab, rhGUS, and in the UX007. Now, the addition of

Dimension s clinical candidates provides additional catalysts in 2018 and 2019 and more opportunities to create substantial value for shareholders in the near term with larger rare disease populations potentially treatable for their first

As experts in the metabolic rare disease space, our scientific, clinical, regulatory, and commercial skills would

be highly complementary to Dimension s technology, programs, and people. As such, we believe that a combination of our respective organizations will maximize the impact we can have for patients by bringing much-needed therapies to market. As we

head to potential commercialization for two products in 2018, we believe that we are best prepared to support the global filing and commercialization for products successfully developed from Dimension s portfolio.

Furthermore, we believe that the collective talents of Dimension s employees would be an impressive addition to Ultragenyx. We envision maintaining a

gene therapy development unit and manufacturing development team at Dimension s current facilities in Massachusetts that would retain this critical institutional knowledge.

The transaction we are proposing is following a prior proposal from REGENXBIO. As you are likely aware, REGENXBIO and Dimension signed a definitive agreement

for the all-stock acquisition of Dimension with an exchange ratio of 0.1573 REGENXBIO shares for each Dimension share.

The agreement between Dimension and REGENXBIO allows for termination by Dimension in the event of a Superior Proposal. Our cash bid represents premiums to the

implied value of REGENX s all stock agreement of 24% based on REGENX s latest closing price and 48% based on REGENX s trailing 20-day volume weighted average share price, in addition to offering

greater speed and deal certainty than the REGENXBIO transaction. In our view, our offer is a Superior Proposal.

Additionally, we have sufficient cash resources on our balance sheet to fully fund this acquisition, and our

offer is not subject to any financing conditions. We have provided a draft merger agreement to Dimension and are prepared to accept nearly identical terms to, which are in fact more favorable than, Dimension s existing agreement with REGENXBIO

Also, our proposed all-cash transaction is structured as a tender offer, which could be completed as soon as 25

days following entry into the merger agreement.

No additional shareholder approvals would be needed to consummate the transaction.

Finally, based on our current knowledge of Dimension from publicly available information, we do not believe that any other material approvals would be

required for us to consummate the transaction, other than the expiration or early termination of the waiting period under the Hart-Scott-Rodino Act and, if applicable, any approvals under foreign antitrust laws.

In contrast, the existing merger agreement with REGENXBIO is conditioned on SEC clearance of a registration statement by REGENXBIO and Dimension shareholder

approval. In our view this represents a meaningfully longer process to close the transaction.

To summarize the highlights of our proposal, we firmly

believe that Ultragenyx s $5.50 per share offer is compelling, full and fair, and represents a Superior Proposal to the existing agreement with REGENXBIO. The cash structure also delivers certainty and faster time to close compared with an all-stock offer. Additionally, the proposed merger agreement helps provide further deal certainty to Dimension shareholders.

As stated before, we look forward to engaging with Dimension with the goal of consummating a transaction

expeditiously, as we believe that our offer represents a Superior Proposal under the merger agreement with REGENXBIO. The next steps you can expect in this process are that: We will execute a CDA and conduct expedited due diligence after

Dimension determines to engage with us; will negotiate a merger agreement and submit a binding proposal post-diligence; Dimension s Board of Directors will make a Superior Proposal determination and terminate its merger agreement

with REGENXBIO in order to sign an agreement with Ultragenyx; we will launch a tender offer and obtain customary approvals; and the tender offer could complete as soon as 25 days after our merger agreement signing.

We thank you for taking the time to listen to today s call.

We want to make sure you have all the facts you need, and are now happy to answer any questions you may have.

Ladies and gentlemen if you have a question or a comment at this time, please press the star, then the 1 key on your touch tone telephone. If your

question has been answered and you wish to remove yourself from the queue, please press the pound key.

Our first question comes from Eric Schmidt with

Q: Thanks for the call and taking my question, or questions. Two quick ones: Maybe Emil, just on the background

process here with REGENXBIO, can you talk about whether you were late to the game or weren t given a look in an original auction? Why are you needing to jump in right now? And then second, I don t believe you ve talked about gene

therapy as a platform of interest historically. Can you talk about maybe what s changed and whether you now think the time is right for gene therapy or that Ultragenyx is particularly in need here with regard to such a platform? Thanks.

Emil: Thanks, Eric. So I ve been affiliated with Dimension from near its founding as an advisor, but we really did not become aware of a transaction

until 3 weeks ago, and so that s what got us going. Now the question is why are we doing gene therapy now? I think if you look in the long run for us as a company, if you want to treat rare diseases, gene therapy is gonna [sic] be one of the

modes to optimally treat some rare diseases though not all of them. We wanted to be able to do that at some point in time. When we started the company earlier we preferred the small molecules and proteins to get us started as a company, but now that

we ve reached commercialization stage for two of those programs moving forward, the opportunity then to move into gene therapy for certain indications I think is something we should do, and this opportunity represents the best opportunity for

us as a company to get into that space. And I think given the excitement and success of some of the gene therapy programs out there we think this is an opportune moment to think about this platform as a way to address certain genetic diseases that

might not be addressed by any other method.

Q: Got it, thank you.

Our next question comes from Joseph

Schwartz with Leerink Partners.

Q: Great, thanks for taking my question as well. I was wondering if you could talk about how Dimension s

candidates would fit with your own based on their anticipated commercial footprint and what sales and marketing resources do you require to execute your current plan on a standalone basis and then how that would be leveraged differently if you had

Emil: Well currently if you look at our portfolio products we have two programs that are already in the inborn error or the biochemical

genetics area which is the rHGus or for the enzyme therapy for MPS7 and then also the fatty acid oxidation defect group so those two areas have us interacting with inborn error doctors around the world. In fact, if you look at the two lead programs,

it s the OTC program and the GSD1, or glycogen storage disorder disease 1, it s the same doctors that treat those diseases as treat our others. So we think there s excellent therapeutic fit with their inborn errors initial targets and

ones that we re doing already. So we think it s rather seamless to be able to put those programs into our operation going forward. Now they are earlier stage, they re in the Phase 1/Phase 2 stage. Our other programs are actually at

Phase 3 or filing, so they re later stage. So I think it fits very nicely for us to go out, finish, launch those programs, assuming they get approved, and then have these programs coming forth to fall into that infrastructure that we ve

built commercially. So from a fit standpoint I think from a therapeutic area, from a timing and from a technology standpoint we think it s a great complementary fit to what we have today.

Q: Okay, thanks for that. And I was wondering if you could also give us your latest view about how the opportunities at Dimension compared to those in your

own pipeline at a similar stage such as Arcturus and galactosialidosis?