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Orchard Therapeutics(NASDAQ:ORTX)Q42019 Earnings CallFeb 27, 2020, 8:00 a.m. ET

Operator

Ladies and gentlemen thank you for standing by and welcome to the Orchard Therapeutics Fourth Quarter 2019 Earnings Conference Call.

[Operator Instructions] I would now like to hand the conference over to your host for today Ms. Renee Leck.

Renee Leck -- Director of Investor Relations

Thanks operator. Good morning everyone and welcome to Orchard's Fourth Quarter 2019 Investor Update. You can access slides for today's call by going to the Investors section of our website orchard-tx.com. Before we get started I would like to remind everyone that statements we make on this call will include forward-looking statements. Actual events and results could differ materially from those expressed or implied by any forward-looking statements as a result of various risk factors and uncertainties including those set forth in the most recent Form 20-F filed with the SEC and any other filings that we make. In addition any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements.

And with that I'll turn the call over to our President and CEO Mark Rothera.

Mark Rothera -- President and Chief Executive Officer

Good morning. Thank you for joining us and happy Rare Disease Week. One of the themes of this year's campaign is to reframe what it means to have a rare disease. This fits really well with our view that the term patient should be considered a temporary label given the potentially transformative and even curative effect that our one-time investigational gene therapies can provide. At Orchard we are harnessing the power of genetically modified blood stem cells as we seek to correct the underlying cause of severe rare diseases. We have now treated over 170 patients across seven different diseases and demonstrated durable outcomes going out to 18 years or more. If you break this down into cumulative patient years of exposure that's about 750 patient years of data supporting the clinical profile of our gene therapies. This is all to say that our clinical data is really on another level in terms of durability of response and safety. Our business strategy is to create value by commercializing multiple valuable gene therapy programs for rare diseases via highly efficient global commercial platform and benefiting from increasing manufacturing and regulatory efficiencies over time. The key steps to executing on our strategy can be broken down into a number of components.

Firstly we have built a fully integrated company with industry-leading capabilities in research in medical corporate strategy manufacturing regulatory affairs and commercial across an organization that is approximately 300 people strong. Secondly we've established an extensive pipeline of seven clinical stage hematopoietic stem cell gene therapy programs. Thirdly we're establishing an efficient global manufacturing and supply chain leveraging our existing CMO relationships but also our emerging in-house capabilities. Fourthly we're establishing a global commercial footprint on a phased basis. And finally we are keeping in mind the potential to use business development as a tool to create additional value. Now turning to our three lead programs in MLD ADA-SCID and WAS. There are a number of exciting near-term milestones as these programs progress toward potential regulatory filings approvals and launch. For MLD our key priority is to obtain approval for and launch OTL-200 in Europe in the second half of 2020. A BLA filing for OTL-200 in the United States is planned for late 2020 or early 2021. Regulatory filings for OTL-101 for ADA-SCID and OTL-103 for WAS are not that far behind. We plan to initiate a rolling BLA filing in the United States for OTL-101 in the first half of the year with completion of the file anticipated within 12 months. BLA and MAA regulatory filings for OTL-103 in the U.S. and Europe are planned for 2021.

The clinical work supporting efficacy and safety for ADA-SCID and WAS is complete. For ADA-SCID as per FDA guidance work on process validation runs and release criteria is ongoing using the commercial drug manufacturing process with patient cells. For WAS we've enrolled six patients in the ongoing cryopreserve study and expect to report preliminary data sometime this year. It's our plan that the focused commercial infrastructure we are establishing for MLD will serve as the backbone for the future planned launches of ADA-SCID and WAS with only modest additions needed to accommodate the additional launches. All together we believe there is at least a $1.5 billion incidence-based annual opportunity for our lead three programs in the geographies that we intend to cover that reimburse orphan drugs. Now let's focus on the MLD commercialization strategy. We're focused on four strategic imperatives that are key to the commercial launch preparations: patient identification a phased global infrastructure build supply readiness and market access. Starting with patient identification this is an area of high importance as the earlier patients are treated the better their long-term clinical outcomes. So far we've studied MLD patients with the infantile and juvenile forms of the disease and so we'll be targeting a pediatric label at launch. In MLD we estimate that approximately 500 to 800 patients are born each year in the approximately 50 countries that typically reimburse rare disease therapies. Of these we estimate 80% of the incident population will be eligible for OTL-200 at launch.

In terms of prevalence we believe that up to 30% of MLD patients living with a slower progressing juvenile form of the disease could be eligible at launch assuming we secure our target pediatric MLD label. This figure could grow to approximately 80% if we take into account adult MLD patients and assuming we can successfully expand our label. In order to identify these patients we have near and longer term initiatives ongoing. Disease awareness is the first key area. Now that a first-ever treatment for MLD is approaching a potential regulatory approval there is a strong incentive to improve patient diagnosis. Together with patient advocacy groups we are using targeted tools and resources to educate pediatricians and other specialists on the early symptoms of MLD so physicians suspect and test for an MLD diagnosis sooner. Improving access to the appropriate diagnostic tests is another important area. We have a sponsor diagnostic testing program to help identify patients prior to newborn screening coming online. Our goal is that within 14 days of early suspicion a confirmatory test can be done. Our ultimate goal is universal newborn screening using blood spots. An assay has been developed and we're now initiating with collaborators pilot studies in both Europe and the United States starting with New York State and Italy to validate these assays find patients and ultimately support the adoption of national screening programs. When launching a product for a rare disease it's important to have a focused and dedicated commercial team that enables you to bring these medicines to patients around the world as soon as possible. Building a global commercial footprint is our second imperative. We're doing this on a phased approach through a combination of direct Orchard team presence but also coverage via highly experienced partners in some geographies for example in the Middle East and Turkey where we expect a higher incidence of patients also.

Phase one is the EMEA regional buildout which is mostly complete and includes a team of 25 commercial FTEs. We are working on qualifying approximately six treatment centers in the EMEA region at launch with specialized expertise in transplant and neurometabolic disease area knowledge. Phase two is our U.S. buildout which is under way and will grow over the next 18 months in anticipation of the OTL-200 filing at the end of this year or early next and a potential subsequent approval. Phase three will extend Orchard coverage to the countries in other parts of the world that typically reimburse orphan drugs particularly key countries in Latin America and Asia. This will start in 2021. Our third imperative covers the commercial launch supply. We have a great partner in MolMed based in Milan Italy. They have been working on the MLD program for eight years now and also have commercial manufacturing experience supporting Strimvelis. Our goal is to have vector inventory at launch in line with anticipated demand and a robust supply chain between MolMed and the qualified treatment centers. I'll touch on the fourth strategic imperative around pricing and market access at the close of the call. We believe there is a tremendous potential to treat a broad range of diseases with high unmet need using hematopoietic stem cell gene therapy approach including other neurometabolic and neurodegenerative disorders.

Let me now hand it over to Bobby to develop this topic along with providing updates from the MPS-I and MPS-IIIA programs. Bobby?

Bobby Gaspar, M.D., Ph.D. -- President of Research and Chief Scientific Officer

Thanks Mark. Data in both MPS-I and MPS-IIIA were featured at WORLD and I'll start by briefly highlighting those presentations. I'll also be providing an overview of our proof-of-concept study in MPS-IIIA which was recently initiated. Our approach for both diseases use the same ex vivo HSC gene therapy approach that has delivered such promising results in MLD that is the overexpression of enzyme in HSCs that have the ability to migrate across the blood-brain barrier and deliver enzyme to the CNS. Let's start with MPS-I. And I want to spend some time discussing the proof-of-concept cohort as a whole now that median follow-up is out to six months in seven evaluable patients. As a reminder MPS-I is a lysosomal storage disease characterized by neurodevelopmental deterioration severe skeletal manifestations and cardiopulmonary complications leading to death in early childhood. Allogeneic hematopoietic stem cell transplant remains the standard of care; however significant residual manifestations of the disease remain after treatment. As of the later stage cut all patients undergoing HSC gene therapy have engrafted and all evaluable patients showed sustained supranormal IDUA activity in the bloodstream and the cerebrospinal fluid or CSF. This was accompanied by a concurrent drop in heparan and dermatan sulfate both in the urine and CSF that normalize rapidly within three to six months post-treatments.

The most important aspect of this data is that murine studies and analysis of patients undergoing allogeneic HSCT suggest that clinical outcomes correlate strongly with the level of IDUA enzyme expression. For example in a murine model of MPS-I a transplant with wild type cells did not fully correct the CNS and skeletal defects whereas overexpression of IDUA through lentiviral vector-mediated HSC gene therapy was able to do so. Similarly in a large published study of allo HSCT patients the level of IDUA expression achieved in the periphery was a highly significant predictor of long-term clinical outcomes. At 12 months post-gene therapy the patient with the longest follow-up is showing signs of resumed growth and bone remodeling improved motor skills and a stable cognitive score in line with evidence of metabolic correction. The trial has currently treated eight patients and we expect additional interim data to be presented this year before full proof-of-concept results are available in 2021. Let's now turn our attention to MPS-IIIA. This is one of the most frequent forms of mucopolysaccharidosis and has no approved treatments. At WORLD we were encouraged to see the University of Manchester present data on the first MPS-IIIA patient treated with ex vivo HSC gene therapy on a compassionate use basis who is doing very well. Engraftment of gene-corrected cells appears stable and enzyme levels well above the upper limits of normal at nine months post-treatment.

The vector and cell transduction protocols used to treat those compassionate use patients are the same as those used in our recently initiated proof-of-concept study. I'll briefly review the study's outcome measures and target patient population in order to provide a sense of scope and objectives. Patients between the ages of three months and two years with normal cognitive function are eligible for the trial. We're enrolling young patients in this initial study because as we've seen in MLD patients treated at a very early stage of the disease or who are asymptomatic have the best response presumably because the extent of irreversible CNS damage is limited. As a first-in-human study the primary objective is to evaluate the safety and tolerability of OTL-201 in addition to engraftment and biological efficacy measured by SGSH expression in leukocytes at 12 months post-treatment. Key secondary endpoints include cognitive and behavioral measures as well as quality of life and activities daily living at three years post-gene therapy which is typically when we begin to see decline in these functions in untreated individuals. The first patient in this trial has been enrolled and we expect to report preliminary data later this year. As patients are enrolled and the study progresses interim data cuts will be presented.

I want to look ahead now to some exciting new initiatives. Using the natural ability of HSCs to deliver therapeutic genes to the CNS and other tissues we believe there is a tremendous potential to treat more neurodegenerative diseases and new therapeutic areas. We will do this by external collaborations and also through in-house discovery and preclinical efforts in our established research laboratories in London. In January we were excited to announce in a new agreement with Dr. Alessandra Biffi a leading expert in gene therapy to help support the expansion of our portfolio into additional areas of critical need for patients including new programs for rare and non-rare neurodegenerative diseases. As the expert that first established our MLD and MPS-I programs her experience and partnership will be invaluable.

It's an exciting time at Orchard and we look forward to keeping you updated on these programs as the data matures. On that I'll turn the call over to Frank.

Frank Thomas -- Chief Operating Officer and Chief Financial Officer

Thanks Bobby. I'm going to start by reviewing our fourth quarter results which are summarized in this morning's press release. Then I'll touch a bit on our outlook for the rest of the year and the upcoming launches for our lead programs. Starting with the financial results we ended the fourth quarter with $325 million in cash and investments compared to $336 million at the end of 2018. Consistent with our previous guidance we expect that our existing cash and investments will fund our anticipated operating and capital expenditures into the second half of 2021. During the fourth quarter we recognized $0.6 million in revenue related to Strimvelis. Research and development expenses were approximately $31 million in the fourth quarter of 2019 compared to $17 million in 2018. The increase was primarily driven by higher cost to advance our programs through later stages of development including the addition of our clinical stage MPS-I program in 2019. SG&A expenses were $19 million for the fourth quarter of 2019 compared to $12.0 million in 2018. The increase was primarily due to investments to prepare for the potential commercialization of our late-stage programs as well as G&A costs to support public company operations in 2019.

We used about $44 million of cash to fund operations in the fourth quarter of 2019. We expect the quarterly burn rate to increase in 2020 due to the capital investment for the manufacturing facility as well as sequential quarterly growth in operating expenses to support the potential launch of OTL-200 in the second half of 2020. I wanted to also use today's call to touch on our outlook for our lead programs. We are building a global commercial infrastructure and a manufacturing platform that we can leverage with each subsequent product launch. Notably each rare disease in our portfolio has its own set of unique factors that will influence the uptake curves as we enter the launch phase. A few of these factors include first is there a pool of prevalent patients and how easy will it be to identify and treat these patients? Second does the disease currently have a high level of awareness and diagnostic tools in place to aid patient identification? And third where will we launch first? To illustrate this with an example for a disease like ADA-SCID newborn screening is already established in all 50 states in the U.S. and some countries in Europe. So this gives us confidence that we should be able to quickly identify the incident population eligible for gene therapy driving faster uptake. Another example for a disease like WAS patients typically live longer due to the slower progressing nature of the disease and many have already been diagnosed. This will likely make the treatment of prevalent patients a key driver in early uptake. We are also planning to launch these two therapies first in this U.S. where adoption can often happen quicker.

Turning to MLD OTL-200 is an investigational treatment for a condition that is characterized by rapid progression. This means that our work to raise the awareness for physicians and implement diagnostic initiatives will be crucial in driving adoption before newborn screening is in place. Also we are planning to launch MLD first in Europe assuming approval and there will be country-by-country negotiations with payers which will mean a phased rollout across the continent. With the potential second half European MLD approval we expect meaningful revenues starting in 2021. We anticipate all three lead programs to be generating U.S. revenue by 2022. So in conclusion we believe that we're taking the necessary steps to position these programs for long-term success and demonstrating the scalability of our platform approach. As I said earlier in my remarks the investments we made in 2019 and the continued buildout of commercial and manufacturing in 2020 will take us a long way toward achieving our vision of building a fully integrated company with industry-leading capabilities.

And now Mark back to you.

Mark Rothera -- President and Chief Executive Officer

Thank you Frank. In closing as we get closer to our anticipated OTL-200 launch I'd like to address the four strategic imperatives for OTL-200 namely market access. We are seeking to bring a new type of medicine to the world. A one-off administration with the potential to deliver lifelong transformative benefit including the potential to cure. As a company we have committed to four key principles that will guide our approach to value and pricing which we've been proactively discussing and sharing with stakeholders. Firstly we are committed to share value. I think our investigational gene therapies are intrinsically very valuable medicines to the patient but also to the family whom according to recent research spends an average of 17 hours a day on caregiving responsibilities for an MLD child. We also expect the healthcare system and society more broadly to benefit from the potential value of these medicines. And certainly we want to reinvest some of this value in future innovation for other rare disease patients who are in need. Secondly we're committed to risk sharing. We recognize that gene therapies are still new to the system and questions exist about the durability of response over the long term. Having treated more than 170 patients and seeing follow-up now in our own portfolio spanning upwards of 18 years we are confident in the durability of response and are willing to engage in payment models that share risk if that is so required.

Thirdly we are committed to informed pricing applying well-developed robust and recognized tools to the best available evidence we have to measure value and in turn determine pricing. For instance we recently conducted an MLD caregiver research exercise in close partnership and consultation with leading KOLs and advocacy groups using standard well-accepted instruments like PedsQL. Early findings from this project presented two weeks ago at WORLD indicate that children with MLD experience roughly 20 outpatient visits and three inpatient visits in the last year. On average six days are spent in hospital per inpatient visit. That's an incredible amount of time for these parents to be away from work away from the rest of their family and community and knowing that the care for their child is only palliative. Unsurprisingly then our findings suggest 83% of parents were forced to miss work caring for their child with 68% of this being unpaid leave. Finally we will engage with stakeholders across the continuum to help evolve the way our healthcare system thinks about delivers and pays for gene therapy medicines. For years it's mostly been about managing chronic conditions and treating symptoms of disease. It's in everyone's interest that there is a successful path forward for one-off potentially curative medicines to be made available to patients.

Thank you for your time and attention. Operator you may now open the line for questions.

Operator

[Operator Instructions] Our first question or comment comes from the line of Anupam Rama from JP Morgan. Your line is open.

Anupam Rama -- JP Morgan -- Analyst

Hey, guys, thanks so much for taking the question. And how are you thinking about the initial size and scope of the sales infrastructure buildout in the EU for OTL-200 particularly as we think about layering on indications over the next several years? And maybe you can touch on the U.S. market as well. And then a quick second one on OTL-101. The rolling BLA's supposed to be starting here in the first half but what are the gating factors to completing it given the known preclinical data and clinical data? Is it really CMC related? I guess the guidance is that the OTL-101 filing would complete within 12 months but I guess why wouldn't it be quicker given everything that we know so far? Thanks so much.

Mark Rothera -- President and Chief Executive Officer

And the first one was about the size and scope of the team in Europe and then the overlay for the additional launches. And so as we mentioned for rare disease programs you really need a highly focused team. It doesn't have to be a large team but focused and dedicated as we have. We've guided to the fact that we have 25 FTEs out in markets in Europe with the major focus on the biggest markets such as Germany France UK and Italy. But I think one of the advantages of having our team in those countries is they are also sort of regional hubs for clusters of countries. So with the teams that we're building we expect patients to be referred not only from within those countries but from adjoining countries into those referential qualified centers for treatment. You asked a bit about how do we scale up. Well the good thing is that once you've established sort of a core group with some of the key capabilities like for example a general manager for Germany medical marketing and sales you really are looking at sort of adding just incrementally. You don't need another general manager you don't need another medic you don't need another head of marketing but what you might need is some additional people on the ground to meet additional customers to support patients getting to those treatment centers. So it is kind of incremental.

And the same is true in the U.S. where we'll begin well we are already preparing the buildout this year and into next with the MLD timeline in mind. And the other thing that I think is very efficient is for the most part you're talking about the same treatment centers the same qualified centers that can treat MLD patients or ADA-SCID patients or WAS patients. And again you might add a few incrementally to what you start with over time but again it's not a copy/paste. So the second question you asked was about the ADA-SCID program. So you're quite right that essentially we've done the clinical work on efficacy and safety. We've last year we talked about the cryo data that showed that cryo is performing like fresh. And really our key focus as per FDA guidance is the process validation work where we're using the commercial vector with a commercial drug manufacturing process using patient material which is something that they've specifically asked for. So we're guiding to initiating the rolling BLA in the first half of this year. That work that I just alluded to is ongoing and I think we'll feature in the final module that we will then present to close the filing. And as you mentioned we have up to 12 months to do that. And that for the moment is the guidance we're giving.

Anupam Rama -- JP Morgan -- Analyst

Great. Thanks for taking our questions.

Mark Rothera -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question or comment comes from the line of Whitney Ijem from Guggenheim. Your line is open.

Whitney Ijem -- Guggenheim -- Analyst

Hey, good morning. Thanks for taking the question. This one is to follow up on some of the comments around market access. Kind of sounds like you're doing a lot of work on sort of the establishing value side. But from a logistical perspective on the reimbursement side I guess what work is ongoing around coding or kind of any other like logistical reimbursement type considerations that we should be thinking about?

Mark Rothera -- President and Chief Executive Officer

I think the first focus from a market access point of view is the potential launch of OTL-200 in Europe in the second half of this year. So for that there are many aspects that have been ongoing. Engagement with payers and making sure that the payers appreciate the background to the product the data and the benefit that we're able to convey to patients and the durability of that response. So a lot of this is an educational exercise. One thing we're very delighted with is a clear signal of willingness to pay given the fact that this is a product for a very high unmet need very severe condition that affects children and for which there are no treatments today and where the dataset that you've seen is very compelling. As you know in Europe there are I think this was alluded to in Frank's comment it's a sort of phased launch and so we also are engaging in the variety of different processes in different countries in order to be able to be well prepared on approval to move those forward as quickly as possible. And to remind you the lead country in Europe is typically Germany where you can launch relatively fast after an approval and have about a one-year time frame to complete the negotiations. So I hope that answers your question. If there's anything else you need to know please let me know.

Whitney Ijem -- Guggenheim -- Analyst

Maybe just one quick follow-up. Sort of in that same vein as we think about uptake or kind of penetration into the European markets versus the U.S. markets again with sort of reimbursement and the difference in the reimbursement frameworks in those geographies any color you can give or kind of how you guys thinking about that at this point?

Mark Rothera -- President and Chief Executive Officer

So it is a cascade of launches in Europe. So it's a very large market collectively as you know with 450 million inhabitants 28 countries. And it is a cascade of different launches with each country having a specific process for approval. I would say that one of the things that we have I think in the favor of launching a product like MLD in terms of the impetus to get this to market quickly is that really there's no treatment for these children and it is very severe. And so and the data is compelling. And so I think that there is a willingness to work with us now prospectively but also rapidly through these processes because time really matters for these children.

Operator

Thank you. Our next question or comment comes from the line of Esther Rajavelu from Oppenheimer. [Operator Instructions] Okay we'll move on. Our next question or comment comes from Gena Wang from Barclays. Your line is open.

Gena Wang -- Barclays -- Analyst

Thank you for taking my questions. I have two. One is regarding the MLD launch and the other is regarding the pipeline. So for the MLD launch just wondering Mark you mentioned that MolMed had a will have sufficient inventory being produced to meet expected launch demand. Just wondering those inventory are you referring to vectors and the plasmid? And what is the expected launch demand in terms of the number of patients? And also the capacity of the MolMed how many patient product can they process at the same time?

Mark Rothera -- President and Chief Executive Officer

Yes we're obviously delighted to have a partner like MolMed who have been working on the MLD program now for eight years and they have commercial manufacturing experience doing that already for the Strimvelis program. So it's a great partner to have on this program. So we work with MolMed actually on a whole range of programs. And we have capacity that is if you like fungible flexible depending on the various programs and their different stages of importance in demand. So we have the ability with MolMed to titrate very rapidly according to demand which is helpful. But the key thing that I was alluding to was the vector inventory as being one of the things that we wanted to make sure we had in place to allow us to meet the demand. Drug product manufacturing suites are also available at MolMed. And again there is certain flexibility there because we can manage across our portfolio of programs with them. At this time we're not guiding to patient numbers specifically. If that changes in the future we'll let you know. But our intention is to make sure we're matching supply with anticipated demand.

Gena Wang -- Barclays -- Analyst

And then my next question is regarding the pipeline. For MPS-IIIA and the MPS-I just wondering what based on your discussion with FDA and the other drug approval in the past what could be the latest thoughts for approvable endpoints and will you start to share the data of those the endpoints with us in the future?

Mark Rothera -- President and Chief Executive Officer

I'm going to turn that over to Bobby.

Bobby Gaspar, M.D., Ph.D. -- President of Research and Chief Scientific Officer

So as far as let me start with MPS-I first of all. So this is a proof-of-concept study where the primary endpoints currently are as far as efficacy endpoints are concerned are around biological parameters; the enzyme activity reduction in substrate levels. The clinical endpoints are exploratory at the moment in this proof-of-concept study. And so we will move from this to a registrational study and the data from the proof-of-concept study will inform the endpoints for the registrational study. And so obviously we are having thoughts about what those endpoints would be in the registrational study and they need to be clinically meaningful endpoints. And we'll I'd say we can't give you details about that at the moment but obviously the major issues in MPS-I are around cognitive defects skeletal defects etc. And so we'll look at how we can capture those in the registrational study. And once we've got to more detail and agreement around that we'll share that data with you. As far as MPS-IIIA is concerned again we're in a proof-of-concept study at the moment at the University of Manchester. And again within that there are cognitive endpoints that are and behavioral endpoints that are being measured. And so that study has just started with the first patient having been enrolled.

Gena Wang -- Barclays -- Analyst

Bobby just follow-up question regarding MPS-I. So that has been a while ago. IDUA then got approval based on the SVC and the 6-minutes walk test. Do you think this will still be the case or you think that going forward the endpoint that could change also diverge from this?

Bobby Gaspar, M.D., Ph.D. -- President of Research and Chief Scientific Officer

I mean I think at the moment I'd say we are looking at a number of exploratory endpoints within the proof-of-concept study and that includes we're looking at IQ we're looking at skeletal abnormalities growth etc. So we're looking at a number of things. And so I'd say we'll need to take that on board first before we decide what the endpoints will be for the registrational study. And I know you've talked about ERT being approved on the basis of 6-minute walk test etc. but things have moved on since that time. And also remember ERT doesn't have the ability to correct the CNS which is one of the major abnormalities one of the severe problems associated with MPS-I. So we would want to capture that within our endpoints for the registrational study.

Gena Wang -- Barclays -- Analyst

Okay great. Thank you very much.

Bobby Gaspar, M.D., Ph.D. -- President of Research and Chief Scientific Officer

Okay. Thank you.

Operator

Thank you. Our next question or comment comes from the line of Graig Suvannavejh from Goldman Sachs. Your line is open.

Graig Suvannavejh -- Goldman Sachs -- Analyst

Hi, good morning, or good afternoon, folks. Thanks for taking my questions. I've actually got a few but I'll try to keep them to maybe two or 3. First just on your opening comments around seeing the commercial revenue opportunity for your three lead programs at $1.5 billion is there any other color you can provide in terms of perhaps sizing magnitude if they're all equally say $500 million apiece or how should we be thinking about that? My second question just has to is focused more around OTL-200 and given that you're launching into Europe first how should we think about subsequent U.S. pricing? Should we be expecting that the price will be similar between the two geographies or we commonly think about pricing in Europe being less than what we see in the U.S. And then my final question is for Frank and the model. Thanks for the color around quarterly cash burn and how it will increase versus your exit rate in fourth quarter. But first half or second half should we just continue to steadily assume quarterly increase in cash burn as we evolve from the beginning of the year toward the second half of the year? Thanks.

Mark Rothera -- President and Chief Executive Officer

So I'll start with the first two and then hand over to Frank. You ask about any more color on the $1.5 billion annual incidence opportunity-driven revenue opportunity for the lead three programs. So reminding ourselves it's MLD ADA-SCID and WAS. And when we look at the global incidence in those key markets around the world when you you asked about more color the largest indication is MLD and then WAS and then ADA-SCID on an incidence basis. And we're expecting approximately 80% of the incident patients in those three indications to be eligible for our gene therapies at a minimum. It could actually be higher for a number of reasons I could go into as well. And when you look at that collectively using current gene therapy pricing analogs as a guide you can see it's at least a $1.5 billion annual opportunity. But I think very important color here is that that does not account for a really important upside which is prevalence. And we've also given an indication about the prevalent pool in each of the indications. I think Frank alluded to that in the prepared remarks. So Wiskott-Aldrich syndrome for example which is a slower progressing disease has a very significant prevalent pool. We estimate 3000 to 5000 patients worldwide living with that condition living with a sort of that need treatment. And we expect that about 55% of those could be eligible for gene therapy. So I think as Frank alluded to we see that as an especially prevalent play as far as the revenue build is concerned in that incident.

With regard to MLD we see it roughly as a balanced approach with both incidence but a 30% prevalent pool in the juvenile population that would be eligible for treatment we think at launch. But ultimately this would be an incident-based treatment. So on the second point you talked about which is OTL-200 pricing I think there are many reasons to consider the fact that MLD pricing could be actually with a relatively tight corridor between U.S. and Europe because this is a very high unmet need very severe disease. There are no treatment options. And I think given the data that we've generated as well as the durability of response I think we have a compelling case to make to payers both sides of the Atlantic. But that said I think we are of course launching in Europe first and the pricing will be set for Europe to start with. And then there's another year or so before we get to the U.S. launch. So in that time we will be watching carefully listening learning and we'll take a view on the U.S. price ultimately closer to the U.S. launch. So the third question was over to you Frank if I can hand it over to you.

Frank Thomas -- Chief Operating Officer and Chief Financial Officer

Yes sure. No problem. So Graig on the modeling question I think for 2020 think about the growth in opex to be sort of incremental sequential growth on top of Q4. And I wouldn't say I mean if there's an inflection within there it would likely come in the second half of the year as we start to ramp up some of the commercial spend on the U.S. in preparation for a potential launch in the U.S. for MLD. But I would say generally just incremental growth quarter on quarter. In terms of the other piece which is the capex because we'll start construction on the manufacturing facility in 2020 I think we've previously earmarked about $70 million to $80 million total capex which will be spread over 2020 and 2021. So the construction activities will ramp up I would say second half of 2020 and first half 2021 largely. So that's how I would model the capex and the burn associated with the manufacturing facility.

Graig Suvannavejh -- Goldman Sachs -- Analyst

Great. Thank you very much for my questions.

Frank Thomas -- Chief Operating Officer and Chief Financial Officer

Thank you.

Operator

Thank you. Our next question or comment comes from the line of Yaron Werber from Cowen. Your line is open.

Yaron Werber -- Cowen -- Analyst

Ron, thanks very much for taking the question. Actually two if I might actually. So just really briefly I wanted to touch first on Strimvelis how we should kind of think about the slight up and down quarter-over-quarter sales. And more importantly I think how you're thinking about the drug moving forward particularly as the other ADA-SCID therapy approaches commercialization. And then just a question on the X-CGD and thalassemia programs mostly just kind of regarding on excuse me regarding timelines there when you think we might have next data and whether you're also considering a staggered filing and launch between Europe and the U.S. for X-CGD as well. Thanks.

Mark Rothera -- President and Chief Executive Officer

So Strimvelis has been a tremendously helpful learning tool for us about ex vivo gene therapy. It is a great product. It's available only in one center in the world in Milan Italy. And so we've learned a lot about helping patients move to treatment center in fact in many cases from one country to another what it takes to help those patients be well-managed and go through the treatment process. And yes it is a little bit bumpy and that to some extent depends on the identification of patients. And then the various stages of patient going through the decision making process between staying locally let's say for bone marrow transplant what the risks of that entails or going over to a center in Milan Italy for treatment. And I think one of the important distinctions to make going forward is that with our programs as you know we've gone from cryopreserved gene modified stem cells so where Strimvelis is only available as a fresh formulation which means patients have to do the traveling. As we look forward with our cryopreserved gene modified stem cells it's really those cells that are going to do the travel for the most part which is going to make it a lot easier for patients along this journey. So again I think the overall message is we've used this as a learning tool to prepare ourselves for launch for our OTL-200 and beyond. So for Bobby maybe you could answer the next question?

Bobby Gaspar, M.D., Ph.D. -- President of Research and Chief Scientific Officer

Yes. So Yaron as far as X-CGD and beta-thal is concerned there are some similarities as far as the work we're doing in those two programs. So for X-CGD as you know the proof of concept is complete. And our initial thoughts on the pivotal study was that it would focus on late adolescence and adults where the best results were seen. But really in order to treat as many patients as possible we want to be able to treat pediatric patients as well. And so we need to see this year outcomes in pediatric patients. So that's part of the work for this year. But the other thing is this is a large prevalent population that we've talked about and so we need to get a manufacturing process that is appropriate to treat that number of patients. So we are spending again time this year on ensuring a manufacturing process that is fit for the commercial opportunity and that involves the use of transduction enhances for example to optimize the use of vectors. So that CMC work is ongoing as well. And third that latter part is really again what is what we're doing as far as beta-thalassemia is concerned. Proof of concept again established in that condition large patient population and opportunity and trying to get the manufacturing process correct in order to be able to serve that opportunity. And as I say that's predominantly looking at both the drug product process use of transduction enhances and also looking at vector as well. So I hope that addresses your question.

Yaron Werber -- Cowen -- Analyst

Sure. Thanks very much guys.

Bobby Gaspar, M.D., Ph.D. -- President of Research and Chief Scientific Officer

Thanks.

Operator

Thank you. Our next question or comment comes from the line of David Nierengarten from Wedbush Securities. Your line is open.

David Nierengarten -- Wedbush Securities -- Analyst

Hey, thanks for taking the question. I had one on the MLD patient numbers and incidence versus prevalence. And I know there's a little bit of a probably a blurry line but the incidence numbers that you provided are strictly births or new diagnoses? And I'm asking about new diagnoses because of course those might be a delayed diagnosis and so might actually be counted by some as a prevalent patient. So I was just wondering if you could provide a little bit more detail on those patient estimates for MLD. Thanks.

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