Sarepta Therapeutics, Inc. Q1 FY2020 Earnings Call

Good day, ladies and gentlemen, and welcome to the Sarepta Therapeutics First Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. As a reminder, today's program is being recorded. And now I would like to introduce your host for today's program, Ian Estepan, Senior Vice President, Chief of Staff and Corporate Affairs. Please go ahead.

Thank you all for joining today's call. Earlier today, we released our financial results for the first quarter of 2020. The press release is available on our website at www.sarepta.com, and our 10-Q was filed with the SEC earlier this afternoon. Joining us on the call today are Doug Ingram, Sandy Mahatme, Bo Cumbo, Dr. Gilmore O'Neill, and Dr. Louise Rodino-Klapac. After our formal remarks, we'll open up the call for Q&A. I'd like to note that during this call, we'll be making a number of forward-looking statements. Please take a moment to review our slides on the webcast, which contains our forward-looking statements. These forward-looking statements involve risks and uncertainties, any of which are beyond Sarepta's control. Actual results could materially differ from these forward-looking statements, and any such risks can materially and adversely affect the business, the results of operations, and the trading prices for Sarepta's common stock. For a detailed description of applicable risks and uncertainties, we encourage you to review the company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as the company's other SEC filings. The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today based on subsequent events or circumstances. And with that, let me turn the call over to our CEO, Doug Ingram, who will provide an overview of our recent progress. Doug?

Thank you, Ian. Good afternoon, and thank you all for joining us for Sarepta Therapeutics' first quarter 2020 financial results conference call. Let us begin with a topic that is on all of our collective minds, COVID-19. I am very proud that the Sarepta team is still rapidly responding to this crisis, focusing on the safety and welfare of our patients and our workers, while ensuring that our operations run smoothly, and that our programs proceed. We are able to do this not only due to our execution-oriented ability to adapt and remain focused, but also because of good advanced planning. Numerous of our functions, including in particular, our information technology group, our clinical operations function, and our commercial organization began contingency planning as early as January of 2020 in the event that what came to be COVID-19 became a crisis. For that reason we were able to rapidly respond as the situation unfolded. By Friday, March 13, I had ordered that all but a small but dedicated facility-dependent staff would work from home, and because of our advanced preparations and the systems and the infrastructure in place to seamlessly transition, execute, and remain connected as we commenced work that Monday morning. About 10% of our workforce is designated as facility-dependent, and we have worked to keep them safe and comfortable as they come in to the facility to run labs and experiments, continuing our manufacturing activities, and the like. We also immediately reached out to our partners, suppliers, and other important third parties to assess new working arrangements with them and to assure that they and we would continue to deliver, and we reached out to our patients and patient advocates to ensure that we were fulfilling their needs to the fullest extent possible. It is for these reasons and others that while COVID-19 has created some challenges for Sarepta and for our plans, Sarepta is in a privileged position even in these difficult times. Yes, as with all biotech companies, COVID-19 has created some challenges and uncertainties, and will continue to do so for the next few quarters. But all in all, we are uniquely positioned to drive our strategic plans, and to stay on mission during these difficult times. In that regard considering the following, first, anticipating that we would need greater certainty around cash and capital in 2020 and beyond. In late 2019, we entered into the Roche transaction, which added another $1.15 billion to our balance sheet through cost sharing and entitles us to milestones along the development and regulatory pathway. Along with our Roche infusion, at the end of the first quarter, we had nearly $2.2 billion of cash on hand not including another $250 million in a debt facility that we have not drawn down. This level of cash on hand places us in a rarefied position among biotech companies, and of course that is before considering our revenue from EXONDYS 51, VYONDYS 53, and if and when approved, Casimersen. We are in a strong position to weather any COVID-related uncertainties, stay focused on executing our plans, and emerge from this pandemic on track. Second, the greatest development challenge reported in the biopharmaceutical industry right now is the commencement of the trials. Fortunately, we are already in 10 human clinical trials, all of which are intact and progressing, and our talented development and clinical operations team work diligently to minimize the impact of COVID-19. Moreover, with respect to Study 102, our gene therapy trial for microdystrophin, this is a one-time therapy that all patients for the primary 48-week analyses have been dosed. That trial progresses and there is no foreseeable risk of a delay in trial readout. Next, with respect to our currently available therapies, EXONDYS and VYONDYS for the treatment of Duchenne Muscular Dystrophy, our supply chain is fully intact and we are able to manufacture its supply therapy without any interruption, and we do not anticipate this changing. Finally, one of our most significant strategic activities is building out commercial gene therapy manufacturing capacity, and we made less progress in the last 12 months. COVID-19 could have caused significant disruption. Fortunately, our progress has kept us on track during this crisis. The necessary facilities and suites are largely built. All of our assays are built, and all but two of the 24 necessary assays are either already validated or qualified as required, with the remaining two near completion even as we speak. Our process development is complete, and our engineering runs and commercial GMP runs are on track. Hence, notwithstanding this pandemic we remain on track to have SRP-9001 GMP material this July, as originally anticipated. With that, I will comment on current period performance, and then I will touch on the status of some of our most significant development programs. I am pleased to report that in the first quarter our net sales were $100.4 million; that is a 15% increase over the same period last year. There was a modest impact on revenue in the quarter as a result of the COVID crisis, but as you can see from our reported performance it was not significant. Looking forward, while we have a number of elements that are encouraging, such as the high percentage of infusions that occur in-home, we do anticipate that COVID-19 will have a negative short-term impact on revenue. For instance, some patients may have difficulty getting or keeping infusion appointments in hospitals. This impact will be more significant for VYONDYS, which is just launching than EXONDYS, as most existing patients are already on home infusions for that treatment. Additionally, while we anticipate that this will not occur often, some patients could forgo an infusion to avoid having a third party in their homes during the peak of this crisis. Finally, any payer delays in processing reauthorizations could impact revenue, although we assume that payers, both state and private, will understand the duty in these difficult times to make reauthorization efficient and will not take advantage of this crisis to profit by slowing the reauthorization process. We are working with payers and patients to remove any COVID-related roadblocks to reauthorizations. We currently anticipate the COVID-related impact on sales to be both modest and short-lived. Given the dynamic and unprecedented nature of this pandemic, however, we do not have sufficient clarity yet to accurately forecast and provide updated revenue guidance that reflects the impact of the virus. We will monitor, and in our second quarter earnings call we'll provide an updated view. Moving to our clinical programs, as noted above, our plans remain intact with only a modest impact on the timing of some programs anticipated. With respect to SRP-9001, our microdystrophin gene therapy program, our Study 102 evaluating the safety and efficacy of SRP-9001 in patients with Duchenne Muscular Dystrophy is proceeding and it is in good shape. All patients for the 48-week analysis have been dosed. While there were some delayed functional visits, we worked to minimize any disruption and documented the few delays in accordance with the FDA's guidance on this topic, and our statistical analysis indicates there is little risk to the powering or the integrity of this study. We anticipate that going forward there should be few substantial delays. We have two sites to Study 102. Our site at Nationwide Children's Hospital, with Dr. Jerry Mendell as Principal Investigator, imposed restrictions on some in-hospital visits. However, Nationwide Children's Hospital has loosened those restrictions while maintaining the safety of our trial participants. Our site at UCLA, with Dr. Perry Shieh as investigator, continued throughout to permit visits uninterrupted. So in short, Study 102 is on track, it is progressing well, and it is set to read out in the first quarter of 2021, as anticipated. As relates to the commencement of Study 301, we continue to progress. To remind you, Study 301 is our planned multi-center, multi-country Study for SRP-9001 using commercial process material. We are continuing to make progress toward the initiation of trial sites; however, COVID-19 does create some challenges here. While the team is making progress, COVID-19 creates uncertainties around the status of some clinical sites and will likely delay some necessary site initiation visits. Moreover, we do not want to commence dosing at sites until we're confident not merely that they can initiate, but that they will be able to remain operational, can dose, and can consistently and timely assess participants. We hadn't anticipated commencing Study 301 around the middle of 2020. We are on track to have GMP material for Study 301 by July of this year. However, in light of COVID-19, we may modestly delay initiation, but we'll still anticipate commencing Study 301 in the second half of this year. Moving to LGMD2E, as you will recall, our goal was to have expression and safety data from our three patient cohorts in our high dose arm for SRP-9003 to treat LGMD2E in the second quarter. The team has addressed and overcome COVID-related obstacles, and we are indeed on track to evaluate and release that data this quarter. Given that live conferences have been canceled, we will reflect on the best approach and we will update, but again, our goal is to release this quarter as anticipated. Beyond that, the remainder of our plans are also on course, manufacturing is progressing, we have commenced our first commercial GMP run for LGMD2E, and we intend to commence what we hope to be the pivotal trial in 2021 as previously anticipated. With respect to MPS III A, our gene therapy trial with Lysogene, that trial has enrolled and dosed 19 of the 20 patients in that trial, and is on track to dose all patients by mid-year as previously indicated. Now, moving onto the RNA platform, as you know, we are in our rolling submission for our third RNA therapy, Casimersen, intended to treat DMD patients who have a mutation amenable to Exon 45 skipping. That submission is proceeding and it has not been impacted by COVID-19. We should have that submission complete this quarter, as anticipated. Our two RNA confirmatory trials and submissions for EXONDYS and VYONDYS, and if approved, Casimersen, are chronic therapy trials and largely ex-U.S. and thus COVID-19 has created more disruption in our gene therapy trials, both in terms of missed visits and some missed doses. However, the team is working diligently to reduce impact, ensure trial integrity is preserved, and that the trials are proceeding. Next, we're in our multi-ascending dose trial for SRP-5051, our next generation RNA technology founded on our peptide conjugated PMO or PPMO platform for short. This is a significant program and the goal of our multi-ascending dose study is to evaluate whether we're able to safely reach high doses of the PPMO. If we're able to safely achieve therapeutic doses with this technology, our preclinical models predict that the PPMO could be a potentially profound advancement over our current RNA technology, the PMO. It was our intention to provide a data release on SRP-5051 by mid-2020. While we still intend to announce those results in 2020, it will likely come in the second half of 2020 for two independent reasons. COVID-19 did interrupt some dosing, which caused a very modest delay, but importantly, the team quickly addressed the obstacles permitting infusions to continue. More significantly, still, this is a dose escalating study, and the timing of readout depends in large measure on the doses achieved. At the inception of this program, we had anticipated that we could achieve robust expression between 6 mgs per kg to as high as about 12 mgs per kg. However, we have escalated through those doses, and we're already dosing at 20 mgs per kg, nearly 100% higher than the top end of original expectations. Reaching higher doses than we anticipated when the study commenced has necessarily resulted in some delay in reading out that study. Although as you can imagine, it is not the sort of delay with which we're particularly upset. Again, we still anticipate a readout for our PPMO in the second half of this year 2020. Speaking of our PPMO program, you will have seen on April 28th, a press release in which we announced that Sarepta and the United States Army Medical Research Institute of Infectious Disease, or USAMRIID, the lead medical biologics labs for the Department of Defense have entered into a cooperative Research and Development agreement to evaluate our PPMO to treat COVID-19. While we are not currently focused on antivirals, it was a focus of Sarepta in the past, and our RNA platform has shown promise in treating viruses, including coronaviruses. The head of USAMRIID has a detailed knowledge of our PPMO technology, and on that basis, reached out to us to propose working on COVID therapies. Informed by USAMRIID's knowledge of the SARS-CoV-2 virus and potential hotspots that might be targeted, even before the agreement was executed, we built a number of therapeutic candidates based on our PPMO platform and had them manufactured in sufficient supply to be evaluated. We have already transferred them to USAMRIID, which will be responsible for testing and evaluating them in their proprietary in vitro models to determine their potential in reducing viral replication. With one or more of our candidates showing promise, USAMRIID and Sarepta will discuss a plan to move forward. Sarepta is a mission-driven organization dedicated to using our science to bring a longer, richer, more liberated life to those living with and far too often dying from rare genetic diseases, diseases like Duchenne Muscular Dystrophy, or DMD, and the like. It has been critically important to us that we do not find ourselves thrown off mission by this current crisis, and that our patients do not suffer delays in our programs to the fullest extent that we can avoid that, and I am proud to say that we have been able to largely fulfill that goal. Nevertheless, we are in a crisis, and like others we have technology that may benefit society in this fight. So, when crisis came, we answered the call, and through this cooperative agreement with USAMRIID, we have been able to employ our technology rapidly, and to do so without distracting us or taking substantial resources away from our main mission. Moving to infrastructure and talent, things are going quite well, our employees are removing obstacles and staying on mission with our strong cash position and revenue stream, we are able to focus on executing our plans and hitting our milestones, with only limited delay. All of our facilities are operational, including our technical operations and CMC related facilities. Our Gene Therapy Centre of Excellence in Ohio, and our Gene Editing Innovation Centre in Durham, North Carolina, where we are already in our facility and hiring scientists under the leadership of Dr. Charlie Gersbach of Duke University. I would like now to give a big thanks to our dedicated facility-dependent workers who have been coming into the facilities and laboratories during this difficult time to ensure that experiments and other facility-dependent activities proceed without delay. In summary, I do apologize that this discussion has been dominated with references to COVID-19, but it is indeed a crisis. And it is a crisis that must be taken seriously. No rational person desires a crisis and certainly not a crisis like COVID-19, which has caused so much fear, suffering and loss of life, but the one thing that is clarifying about a crisis is that it does indeed test our mettle, our resourcefulness, our creativity, our optimism, and our commitment. We often learn far more about ourselves in times of crisis than in times of ease, and in that regard, we all have much about which to be proud. First, we should all be proud of this biotechnology industry. In times of crisis, this industry has answered the call with energy and passion and investment, building diagnostics, quickly developing therapies, working on vaccines. Consider the great work of the many companies that have joined this fight. I am proud that Sarepta, with our proprietary RNA technology is playing a role in fighting this disease, even as we remain laser focused on advancing our rare disease mission and serving our patients. This COVID-19 may seem fierce to some, but it is by no means invincible, and it is no match for biotechnology innovation. Along with the science and commitment, our industry will defeat this pernicious disease. And second, I am particularly proud of my Sarepta team. We've spoken about the importance of our mission often. When driven by a commitment to develop therapies, with a pace that allows us to intervene in trying to save lives. The diseases we fight are unrelenting. They do not take time off for this crisis. Our Sarepta family is unrelenting; we have not taken time off of this crisis. When this crisis came, this team answered the call, adapted, and kept executing. And like so many people today, we did all of this while dealing with new challenges, new working environments, having to juggle work and childcare and level one concerns, and concerns for themselves, and because of their commitments, Sarepta remains on mission, on strategy, and our programs have been largely unaffected by this crisis. So, to all of the dedicated Sarepta workers who spend their days focused on moving our goals forward while protecting the patients that we serve, I want to say thank you, and I couldn't be prouder. And with that, I'll turn the call over to Bo.

Thank you, Doug. Good afternoon, everyone. Despite the headwinds facing our healthcare system due to the COVID-19 pandemic, I am pleased to report that our product revenue for the first quarter of 2020 totaled $100.4 million. Our experienced teams at Sarepta are actively working to navigate through the challenges of the COVID-19 pandemic and allow us to mitigate major treatment disruptions for patients taking EXONDYS 51 or VYONDYS 53. We will continue to navigate the environment, and are learning more each day on how to better serve our patients in this unprecedented time. We continue to work closely with our manufacturers, distributors, and specialty pharmacies to provide an uninterrupted supply of our therapies. As a result, we've had no disruptions in supplying EXONDYS 51 or VYONDYS 53 to patients. Consistency of supply is key. Therefore, we will continue our efforts to ensure that EXONDYS 51 and VYONDYS 53 are supplied to patients throughout the COVID-19 pandemic. We have modified our commercial execution strategy in response to the strain the COVID-19 pandemic has placed on health care workers, hospitals, and distribution channels. Due to recent shutdowns and restrictions at hospitals and clinics, our team is working closely with health care providers and specialty pharmacies to transition patients to weekly home infusions. Fortunately, the vast majority of patients on EXONDYS 51 are already receiving home infusions. Patient safety remains our top priority. Since many of our patients are choosing not to delay or stop therapy, we have thoughtfully deployed measures to minimize the risk of COVID-19 for all our patients, and we'll continue to assess these efforts. We are working towards initiating patients on VYONDYS 53. However, this environment is challenging because physicians typically want to monitor patients in the clinic for the first couple of infusions, and many patients are having difficulty maintaining regularly scheduled appointments with healthcare providers. We will continue exploring options for patients to safely initiate treatment with VYONDYS 53. We are still engaging with key opinion leaders and other healthcare providers on a weekly basis. Additionally, we're having ongoing conversations with payers, about the need for patients to start and stay on therapy regardless of ambulation status, age, or gender. While many of our face-to-face meetings have been placed on hold, the strong relationships we've established with our partners over the years have helped us transition from in-person interactions to virtual engagements. To help minimize access and reimbursement barriers, we continue to work with commercial and state Medicaid plans on reauthorizations, so that patients are able to stay on therapy. We are encouraged by the efforts payers have made to not disrupt patient's treatment plans during this difficult time. Transitioning to our performance for the first quarter, many biotechnology companies often face headwinds related to typical health plan enrollment cycles that impact revenue. The team has been able to successfully navigate these challenges and maintain patients on EXONDYS 51 without significant disruptions. In the current environment, the dynamics of initiating treatment with EXONDYS 51 or VYONDYS 53 are affected. While many clinics are closed or not seeing patients for normal in-person appointments, the impact has resulted in fewer patients initiating treatment. However, we do anticipate this will change as restrictions ease and clinics resume normal operations. As a reminder, VYONDYS 53 received accelerated approval from the U.S. FDA on December 12, 2019. VYONDYS 53 treats patients with Duchenne Muscular Dystrophy who are amenable to exon 53 skipping. We anticipate that patient demographics for VYONDYS 53 will be similar to EXONDYS 51 regarding the average age of patients on therapy and the mix of commercial versus Medicaid patients. Over the past three-and-a-half years, we've continuously reviewed and refined our approach for EXONDYS 51, while leveraging our deep knowledge and expertise from that launch, we will continue to monitor the impact that COVID-19 pandemic has on the VYONDYS 53 launch trajectory. We feel confident that over time patients will ultimately receive access and reimbursement for VYONDYS 53 and start therapy in a timely manner. Launching a new rare disease drug is already a complex undertaking, and we're very proud of the accomplishments the team has made to date, particularly in light of the extraordinary circumstances. The knowledge we gather strengthens our plans for future launches including Casimersen in 2021. The depth of experience in our teams has helped us navigate through this unprecedented time, and we feel confident that the lessons we learn in this will make us a stronger company, better able to serve our patients and deliver on our mission as a global leader in precision genetic medicine. And with that, I'll turn the call over to Sandy.

Thanks, Bo. Good afternoon, everyone. In the first quarter, total revenues were in line with expectations, and following the close of the agreement with Roche, and the sale of the Priority Review Voucher that we received in conjunction with the approval of VYONDYS 53, we are in a strong financial position with significant capital to fund our pipeline and ramp up manufacturing while maintaining our overall timelines. In addition, we now have the ability to access Roche's significant expertise and greatly enhance our global opportunity for SRP-9001. Moving to the financials, this afternoon's press release provided details for the first quarter of 2020 on a non-GAAP basis as well as the GAAP basis. The press release is available on the Sarepta website. Please refer to our press release for full reconciliation of GAAP to non-GAAP. Net product revenue for the first quarter of 2020 from our products EXONDYS 51 and VYONDYS 53 was $100.4 million, compared to $87 million for the same period of 2019. The increase primarily reflects higher demand for our products. In the quarter ended March 31, 2020, we recognized $13.2 million of collaboration revenue, which relates to our collaboration agreement with Roche. In February 2020, we received an aggregate of approximately $1.2 billion in cash consideration from Roche, consisting of an upfront payment and an equity investment in Sarepta. From an accounting perspective, $342.7 million is being recognized in revenue on a straight-line basis over the performance period, which we estimate to be through the fourth quarter of 2023. This revenue has been excluded on a non-GAAP basis per Sarepta's policy. For the quarter, co-development under the Roche agreement totaled $16.4 million and are included as a reduction to R&D expenses. On a GAAP basis, we reported a net loss of $17.5 million and $76.6 million or $0.23 per share and a $1.07 per share for the first quarter of 2020 and 2019 respectively. We reported a non-GAAP net loss of $79.8 million or $1.04 per share in the first quarter of 2020, compared to non-GAAP net loss of $53.8 million or $0.75 per share in the first quarter of 2019. In the first quarter of 2020, we recorded approximately $12.6 million in cost of sales, compared to $12.1 million in the same period of 2019. The increase was due to royalties paid to BioMarin Pharmaceuticals and the University of Western Australia, as well as higher product costs as a result of increasing demand for our products. This is partially offset by the write-offs of certain batches of EXONDYS 51 that did not meet our quality specifications for the first three months of last year. There is no similar activity for the first three months that ended March 31, 2020, i.e., this year. On a GAAP basis, we recorded $136.1 million and $90.6 million in R&D expenses for the first quarter of 2020 and 2019 respectively, which is a year-over-year increase of $45.5 million. This increase is primarily related to a $43.3 million increase in clinical and manufacturing expenses. On a non-GAAP basis, R&D expenses were $114.2 million for the first quarter of 2020, compared to $81.4 million for the same period of 2019, an increase of $32.8 million. The year-over-year growth in non-GAAP R&D expenses has been primarily due to a continuing ramp-up of our microdystrophin program as well as our essence program. Turning to SG&A on a GAAP basis, we recorded $82.8 million and $60.6 million of expenses for the first quarter of 2020 and 2019 respectively, a year-over-year increase of $22.2 million. On a non-GAAP basis, SG&A expenses were $54.5 million for the first quarter of 2020, compared to $47.8 million for the same period of 2019, an increase of $6.7 million. The year-over-year increase was driven by significant organizational growth and expansion. It supported our commercial launch plans as well as for therapies in various stages of development across several therapeutic modalities. On a GAAP basis, we recorded $7.4 million in other expenses net for the first quarter of 2020, compared to $0.2 million in other expenses net for the same period of 2019. The unfavorable change primarily reflects the interest expense on our debt facility entered into in December of 2019. In February of 2020, we entered into an agreement to sell the rare pediatric disease Priority Review Voucher from the FDA in conjunction with the approval of VYONDYS 53. In March of 2020, we completed our sale of the PRV and received proceeds of $108.1 million net of commissions, which was recorded as a gain from the sale of the PRV as it did not have any carrying value at the time of the sale. There was no similar activity during the three months ended March 31, 2019. We had approximately $2.2 billion in cash, cash equivalents, and investments as of March 31, 2020. With that, I'd like to turn the call over to Gilmore for an update on our research and development activities.

Thank you, Sandy, and good afternoon. I would dive a little deeper into the top R&D related activities that Doug has highlighted with particular emphasis on the actions the team has taken to minimize and where possible eliminate the distractions and obstacles caused by COVID-19. First, our SRP-9001 microdystrophin program. We look forward to the imminent publication of the one-year safety and functional data from the four clinical trial participants who received microdystrophin in Study 101. As with any one-time therapy, we know you are interested in the durability of the functional response in these patients. As Doug mentioned, Study 102 is in very good shape. We have dosed all patients in part A, which is the randomized double-blind placebo-controlled portion of Study 102. Notwithstanding some of the constraints arising from restrictions of patient visits to the sites, we have been able to continue monitoring patient safety and data quality. Some clinical evaluations would take place outside of the protocol defined window. These are not critical outcomes, and we are already evaluating how to mitigate the impact of out-of-window assessments in our analysis and regulatory plans. We are also pleased to see that Nationwide Children's Hospital is loosening COVID-19 restrictions and starting to resume clinical trial activities. I should note that our second Study 102 site, UCLA, with Perry Shieh as investigator, has not imposed restrictions. Study 102 is proceeding, and we anticipate no delay in the readout of that study. As far as our Study 301 plans go, I am pleased to report that we have adapted rapidly to the COVID-19 related uncertainties of the next few months. We are maintaining close contact with all of our sites around the world. Investigators remain very excited about the program and want to start as soon as possible. Nevertheless, we must acknowledge that uncertainty hovers over the readiness of individual countries and hospitals to remove travel and visit restrictions. Furthermore, the bandwidth of ethics review boards and regulatory agencies to engage in reviews of new protocols may be affected as they deal with a large volume of requests from multiple sponsors in multiple therapeutic areas to amend current studies impacted by the COVID-19 pandemic. Fortunately, the global footprint of our clinical sites gives us significant flexibility to enable dosing this year. Doug has told you about the status of our ongoing study of SRP-9003 in limb-girdle muscular dystrophy type 2E. To remind you of the study design, we are comparing the safety and expression data of a low-dose arm of 5 to the 13 VG per kilogram to a dose arm of four times that dose. We plan on releasing 48 weeks functional data from the low-dose cohort and expression data from the high-dose cohort in this second quarter. After a final safety review, we will make a form of dose selection decision in the third quarter. These results will not only inform the development path to the 2E program, but should also inform the dose selection and accelerate the development pathway for our other sarcoglycan programs. We also believe that this data will have some read-through to our microdystrophin study, because the programs share the same factor and promoter and, if you recall, are both dosed at high dose equivalents of two to the 14th therapeutic genomes per kilogram. We will also gain experience with this dose in an older and larger patient population, as three patients in the high-dose arm of 9003 are older and larger than the four to seven-year age range of boys included in the microdystrophin study. Now moving on to our PPMO platform, and more specifically our SRP-5051 program. I'm very excited about this program because it has the potential to improve upon the ability of PMO to increase dystrophin expression by fusing a cell-penetrating peptide to the PMO to enhance intracellular and internuclear delivery. We have made a lot of progress over the past year and through modifications of the original development plan achieved single dosing of 20 mg per kg in healthy human volunteers, and are already achieving multiple doses of 20 milligrams per kilogram in boys with Duchenne. If the 20 milligram per kilogram or 20 mg per kg dose continues to be safe and well tolerated, we plan to continue to dose escalate to 30 mgs per kg and then potentially even to 40 mgs per kg. To remind you, these doses are significantly higher than expectations at the commencement of this program. Preliminary biomarker data from our healthy human volunteer study support our hypothesis for enhanced potency of the PPMO compared to PMO. In the coming months, we plan on analyzing the 12-week biopsies from the SRP-5051 20 mg per kg cohort. We will measure Exon skipping by digital droplet PCR, allowing us to directly compare the efficacy of our PMO and PPMO candidates. We will find an appropriate forum this year to provide the safety, biomarker, and other data from the program to date. If we're able to reach a therapeutic window for SRP-5051, the data will read-through to our other DMD programs, where we have a total of six PPMO candidates already built that could treat over 50% of the Duchenne population. We're also formulating developing strategies that could bring the PPMO platform to the rarer Exon populations, which together make up about 35% of the addressable population. Finally, the results of SRP-5051 will also inform the viability of the PPMO platform for new therapeutic areas. One of our research goals is to identify conditions suitable for treatment with PPMO. If we have positive data from SRP-5051, we will be able to rapidly accelerate the development of the PPMO platform both within DMD and beyond DMD to other therapeutic areas. Further highlighting the potential versatility of the PPMO platform, as you recall, we just announced collaboration with USAMRIID to explore therapeutic agents to combat COVID-19. This collaboration builds on the antiviral therapeutic potential of PMOs identified and published by the company in the early 2000s. That original work found that PMOs had demonstrated antiviral activity in in-vitro models against coronaviruses like SARS-CoV, which is the cause of SARS. The antiviral effects of PMO derived from its ability to inhibit the viral replication process. It does this by duplexing to specific candidate sequences in the coronavirus RNA, for example, the transcription regulatory sequence, and thus, sterically inhibiting translation initiation and downstream suppressing viral replication. In this new collaboration, USAMRIID would use in-vitro assays to evaluate the ability of the PPMO to suppress viral proliferation and spread. This collaboration will enable Sarepta to contribute to the efforts to treat COVID-19 while adding to our understanding of the PPMO platform. We did consider utilizing the PMO, PMO-X, and PMO plus platforms in the research collaboration. However, based on our recent experience with our PPMO platform, we are confident that it was the right approach for this act. We are quite pleased to be able to collaborate with USAMRIID in a way that allows us to contribute to the fight against COVID-19 but does not distract us from our R&D priorities. Our mission to deliver precision genetic medicines to patients with rare and serious genetic disorders has served as our north star to guide us in how we are maintaining work on, one, RNA and gene therapy discovery portfolios; two, non-clinical toxicology studies needed to support our portfolio; and three, the translational biomarker development of validation and execution that is so vital to our clinical trials. I too am very proud of my colleagues in R&D and the work they have done to enable us to deliver on the promise of our therapeutic portfolio that is so critical to the people who are desperately waiting for help. There will be multiple data readouts over the next few quarters that will guide our next steps. And with that, I would hand back to Doug.

Thank you, Dr. O'Neill. Let's open the lines now for questions.

Thank you. Our first question comes from Salveen Richter with Goldman Sachs. Your line is now open.

Good afternoon, and thanks for taking my question. So with regard to limb-girdle, when you present this high-dose dataset in the second quarter, could you just comment post-dose selection on what the options are going forward with regard to trial designs for the registrational study?

Thanks for your question, Salveen. We are actively collaborating with the agency on those issues and the development pathway. Despite challenges related to COVID-19, all the children have received treatment and the necessary biopsies. We will share updates on biomarker data, expression data, and safety data this quarter, and soon thereafter we will select a dose. The findings for limb-girdle 2E will also guide dosing for the other sarcoglycan types. Throughout the year, we are focused on two main tasks. First, we are building our manufacturing supply. I mentioned earlier that we are currently conducting a GMP run for limb-girdle 2E, and I want to commend our technical operations team for reaching this stage despite the ongoing disruptions. Regarding our development pathway, we are in continuous discussions with the agency and will provide updates later this year. We aim to establish a development and regulatory strategy that addresses the seriousness of this disease, ensuring it is actionable, quick, and efficient. The gene therapy involves inserting a native protein, the lack of which contributes to the decline and eventual loss of patients with limb-girdle 2E, which should facilitate a smoother approval process. However, I can’t provide specific details yet as we are still in discussions with the agency this year. By early next year, we expect to have two key milestones achieved: completing our process development and confirming GMP material, along with a solid understanding with the CBER and FDA on the development plan for limb-girdle 2E and other limb-girdle types. We will provide updates on this next year, and we aim to begin a pivotal trial for limb-girdle 2E in 2021.

That's helpful. Thanks, Doug.

Thank you. Our next question comes from Brian Abrahams with RBC Capital Markets. Your line is now open.

Thank you for taking my question. Regarding the regulatory path for microdystrophin, I would like to know your current thoughts on what you plan to present to regulators for Study 3 to potentially support approval. I'm curious if there might be any changes based on what you can gather or what the FDA may require due to the pandemic and the delayed start. Additionally, have you received any specific feedback from the FDA regarding the out-of-window data collections of Study 102, and do you believe this could affect your ability to use it for registration without full functional data from the commercial scale material in Study 3? Thank you.

Thank you for the questions. I will address the second part first. We have documented the few out-of-window functional visits as recommended by the FDA. The positive aspect amid this pandemic is that the FDA is proactively considering the disruptions caused by COVID-19 to prevent significant delays in our studies. Guidance is already in place, and we are documenting any delayed visits accordingly. It's important to note that there have not been many delays. Beyond that documentation process, we're ensuring there are no technical issues. Upon careful review of the study, we see no reason to believe that the study's power, readout, viability, timing, or success probability have been affected. I want to emphasize this clearly. Out of an abundance of transparency, there have been a few cases of patients with out-of-window functional visits, mainly because Nationwide Children's Hospital had previously limited some in-clinic visits. However, this is changing, and based on our analysis, it will not impact the study's viability or integrity or affect the readout, timing, or success chances of the study. Currently, I am confident about Study 102. I attribute this success largely to our clinical operations team for their efforts to minimize disruptions, but I also owe a great deal of appreciation to Nationwide Children's Hospital and their operations team, especially to Dr. Jerry Mendell for his outstanding support throughout this process. Regarding Study 301 and the broader suite of studies, we are currently following the same approach we employed before COVID-19. Study 301 will involve children aged four to seven and will be a placebo-controlled trial. We are actively reaching out to study sites. I can share that the study sites are generally enthusiastic and optimistic about starting Study 301 on time. However, we must remain realistic. The main challenge so far has been ensuring the timely release of GMP material. As I mentioned earlier, thanks to our technical operations team, we are on track to have GMP material by July, as we had anticipated prior to COVID-19. Another point is that we want to ensure that the sites are ready to start enrolling patients and that we navigate through all necessary processes, including IRB approvals. We are confident these sites will be prepared to continue into the fall, winter, and into 2021 and beyond. While this may cause minor delays, I must emphasize that they are indeed modest. Our goal remains to initiate Study 301 and its related studies in the second half of 2020, and we currently feel assured that this will not pose a problem.

Thanks very much, Doug.

Thank you. Our next question comes from Tazeen Ahmad with Bank of America. Your line is now open.

Hi, good afternoon, guys. Thanks for taking my questions. I'm sorry if this question was already asked, but Doug, can you clarify for me, for Study 102, how often are the patients actually being monitored for the functional visits? And specifically I just wanted to get a sense for the biopsies that were scheduled to be taken for the patients in Study 102, do they have to be taken per protocol at a certain point of time after they were dosed or is there any flexibility in when the biopsies can be taken?

I'm going to turn this over actually to Louise Rodino-Klapac to respond to both of those questions.

Sure. Thanks, Doug. There is a certain visit window for the biopsies but as Doug mentioned, in terms of flexibility, any out of window just needs to be documented as per the FDA guidance. So, as we look at it, there's no particular delays or misses within the protocols that will be meaningful to the outcome of the study.

Okay, and did you know what percent of patients were a little bit delayed in getting the biopsies?

No, I'm sorry. We're distant, for those who may wonder why there was an enormous delay; we're distant from one another, and I actually insisted that I direct the questions, so, apologies for that, Louise. So, Louise, I'm sorry, could you answer the question?

I don't know the exact number of visits that were delayed, but it's due.

Very small, very small number.

Okay. And then as we think about limb-girdle to follow-up for the pivotal study that you're going to start next year for the 2E subgroup, can you just remind us of how big of a population that is relative to the rest of all GMP?

Well, it's very rare. This is an ultra-rare population. I don't think we've gone out and given the exact numbers as one of the things we've said, if you look at the entire epidemiology and population of all of the patients that we're looking at, we're talking about a group of patients that are about 70% of the size of Duchenne Muscular Dystrophy, but the limb-girdle 2E is a very rare form of limb-girdle and a very severe form of limb-girdle. So we haven't nailed that, we haven't nailed the size of the trial down but obviously with that in mind, when you consider the rarity of the disease and you consider that this is kind of the perfect sweet spot opportunity for a gene therapy. This is a monogenic disease, well-characterized, well-understood. It is the lack of a structural protein; it is a single structural protein that is causing all of the damage and degeneration and loss of life that comes with 2E, and the gene therapy that we have created and that Louise has created will introduce a gene that codes for the actual native protein, the lack of which is causing their disease.

Okay, thank you.

Just a reminder everyone, one question; we have really full queue. The line is going to be silenced after you ask one question, thanks.

Thank you. Our next question comes from Debjit Chattopadhyay with H.C. Wainwright. Your line is now open.

Hey, good afternoon guys, and thank you for taking the questions. So given that you're at the 20 mg per kg dose with SRP-5051, what should be the 12-week dystrophin expression that would excite you to advance the 45 and 53 programs rapidly?

Thank you for that, Debjit. To broadly address this, it's important to note that 12 weeks is an early timeframe for assessing dystrophin. I can't guarantee that we will be focusing on dystrophin at that point; rather, we will be examining Exon skipping. As many are aware, Exon skipping is the process that results in a shorter form of RNA, which ultimately produces a slightly truncated but fully functional dystrophin that we aim to achieve. From what we know in animal studies, there are two key insights: first, there is a clear link between the levels of Exon skipping and the production of dystrophin. Thus, evaluating Exon skipping is a strong indicator of the dystrophin we may observe over time. For instance, with Golodirsen, we had made some confident predictions about its performance compared to Eteplirsen, based on our early observations of the corresponding Exon skipping. Exon skipping is indeed a valuable marker, and we are particularly interested in comparing the levels of Exon skipping we might observe from PMO at 12 weeks to those from the PPMO at the specified doses. We don't have those results yet, but we expect to see them in the second half of the year, at which point we will have data on tissue exposure, Exon skipping, safety, and dosing levels. In animal models, we have become enthusiastic about doses significantly lower than what we are currently administering. Originally, we thought we could achieve solid expression at doses between 6 mg per kg and about 12 mg per kg. However, we have escalated to dosing at 20 mg per kg, nearly double our initial expectations. The need to reach these higher doses has caused some delays in reporting study outcomes, but it is not a source of frustration for us. We still expect to receive results for our PPMO in the latter half of this year.

Thank you. Our next question comes from Alethia Young with Cantor Fitzgerald. Your line is now open.

Hi, this is Emma on for Alethia. Can you give us any color on what the actual processing requirements look like for a patient to transition to home infusion, just what the percentage of patients are currently on home infusion for VYONDYS and EXONDYS and what those trends might look like next quarter?

Sure, I'm going to turn this over to Bob before I turn it over just to remind everyone with respect to EXONDYS, as it stands today, the vast majority of patients are on home infusion. With respect to a launching product line VYONDYS, we will see a greater percentage of patients that start in the hospital; it will, over time, be the same case that the vast majority of VYONDYS patients will become home infusion as well. Of course, Bo can talk to you about the things that we're doing today to accelerate that process. Bo, with that?

Yes. Thanks, Doug. To Doug's point, the majority of our patients are already at home infusion, but for the patients that are being dosed in the hospital, it's really just an authorization, like a reauthorization process with payers. So it's just more of a paperwork process of transferring the authorization from in-hospital infusion to home infusion. So, there is a couple of weeks delay for those patients that do need to transition, but we do expect this to ease over the next couple of months.

One other thing, I would say on this topic is this, there's a lot of process involved both in the launch of VYONDYS and EXONDYS. One of the things you might have heard in my opening remarks was about the fact that we're watching very carefully how payers are going to react in the middle of this crisis to ensure that payers don't themselves take advantage of the disruption that's occurring with COVID-19 in ways that might profit them to the detriment of children. In fairness, I should note that payers are based on everything we're seeing right now doing exactly the opposite, that in fact, I think that very laudably, payers have been looking for ways to reduce some of the obstacles that might be imposed as a result of COVID-19 to ensure that kids could stay on therapy. I'll give you just one example. With respect to State Medicaid, I'm informed every single state, all 50 state Medicaid have been have requested and have been granted by CMS waivers that allow them in turn to waive prior authorization requirements and to extend kids on therapy without the need to go through the prior authorization process. I don't want to suggest that that means that they're not going to impose prior authorizations; they likely still will, but certainly that is a significant step in the direction of ensuring that COVID-19 doesn't get in the way of kids who have access to therapy, and I really do think they deserve kudos for that.

Thank you. Our next question comes from Gena Wang with Barclays. Your line is now open.

Thank you for taking my questions. I have one regarding limb-girdle beta. So, there was an abstract 503 on cohort one data at the ASGCT, PDF abstract, but somehow the final website doesn't have this abstract anymore. Just want to double check that there will be no data at the ASGCT from limb-girdle, and also given the good safety so far we see from the microdystrophin program, limb-girdle program has the same factor and the promoter, is it fair to say higher dose safety should be largely in line with the microdystrophin program.

Well, on the latter part, I'm going to say that we're going to comment on that when we release the data and we'll have that data released this quarter. You won't have to wait long to get an update on limb-girdle about the expression and safety. Your point's well taken, which is this is the same promoter. This is the same vector and what we're currently calling this is a prior dose or high dose on limb-girdle, is the same dosing level that the kids with Duchenne Muscular Dystrophy ever received, both in 101 and 102, and together that is a significant number of patients that have that dose. With that, I'm going to turn it over to Louise, who might comment on ASGCT and limb-girdle, but maybe give an overview of what kind of abstracts or posters we might have at ASGCT?

Certainly. Regarding the clinical data, we will release it later this quarter. We will present two preclinical abstracts as posters for limb-girdle, focusing on long-term expression data and expression in later stages of the disease. This will all be preclinical work, and we will also hold our symposium to outline the background of our constructs and discuss the nine-month microdystrophin data.

Thank you. Our next question comes from Ritu Baral with Cowen. Your line is now open.

Hey, guys, this is Sushant on for Ritu. I have a question about Study 102. Could you clarify what some of the assessments being outside of the window might imply? Have you had to revisit the statistical analysis plan, and what adjustments are being considered? Thanks.

Yes, thanks for asking the question. We've looked at it carefully and there is no adjustment necessary. We don't have a concern on the statistical analysis plan. In broad strokes you're going to have this concern on powering. We don't think there's any impact from the modest number of out-of-window functional visits to calm any concern regarding integrity, and certainly as we've said before, it won't have any effect on timing. Dr. O'Neill, if there is anything I've missed in that, feel free to add to that, or correct me if I misstated anyhow.

No corrections necessary. Doug, we've looked and these out-of-window assessments are not critical and have no impact on our statistical analysis plan.

So, we remain on time.

Thank you. Our next question comes from Joseph Schwartz with SVB Leerink. Your line is now open.

Thanks very much. So, based on the age of the patients that you've enrolled in Study 102, how do you expect their North Star scores to change over the duration of part A? And how is the study powered to detect a difference between the two arms? There is a copious literature suggesting that North Star can increase during this age range, so I'm just trying to think about what kind of an increase 9001 will have to produce in order to succeed?

Let me give you the broad stroke. I'll give you a broad stroke answer on that. Some of the nuance I'm probably going to avoid simply for confidentiality and competitive reasons. I can do the broadest stroke. The broadest stroke is the following. I suspect that no one has better patient level data on Duchenne Muscular Dystrophy than Sarepta. Obviously the leaders in Duchenne Muscular Dystrophy would have been close to the patient community and the data for eons. We have not only all of the literature; we have our own data, patient level data we have access to synergy data, we have access to all of the data from BioMarin that they had back in the day that we negotiated. We are well-informed to build this, the study that we built to your point in a nuanced way. What you see across four to seven year olds in broad strokes is that there is the possibility for a couple point potential increase between the four and five year range, but you will see them coming over the top and actually declining, starting to significantly decline in the six and seven-year-old range. As you know, these kids are four to seven. All of that nuance understanding of the course of this disease that has been used to inform the protocol that we've used, and beyond just that, we of course have the benefit of the first four patients that we've had. We've had some of that data as well, but we've used some of the data that we have gleaned from the first four patients to help us consider the powering of this study. I will note, by the way, I don't know if we've talked about this, but the one-year publication on the first four kids, that cohort will be published very soon imminently, and all of that went into this, and just to make the broad stroke point, the powering of this study was over 90% when we got to 40 patients. So we feel confident about the protocol, about the powering, and certainly about the progress, the Study 102.

Thank you. Our next question comes from Christopher Marai with Nomura. Your line is now open.

Hey, good afternoon. I'm just thinking about the path forward for limb-girdle muscular dystrophy with regulators and the potential for using expression data. I was wondering just how much expression data it might need to see there, and if the FDA has any concerns or if you have any concerns about also, I suppose, just the sarcoglycan complex being sort of reformed by re-expressing the protein and making sure that's intact. And then just real quick with PPMO, I mean, how much data will really satisfy you guys with respect to safety at any given dose call it 20 mgs per kg? What kind of timeframe are we looking at before we can get confident that you could move forward and say 20 or 50? Thank you.

We are continuing to work on the development and regulatory pathway for limb-girdle as anticipated. We believe this should be a very streamlined approach, and ideally, we see a strong opportunity for approval based on a biomarker of expression. You raised an interesting question regarding the reconstitution of the dystrophin-associated protein complex, which we consider a crucial aspect. Another important biomarker is whether, when beta-sarcoglycan is upregulated, the dystrophin-associated protein complex itself also starts to upregulate, leading to the expression of other proteins in that complex that were previously absent due to the lack of cohesion in the DAPC. This is significant, and regardless of FDA requirements, we feel it is essential to demonstrate this point. The encouraging news is that we have observed this consistently. This is the native gene and protein at our previous dose, showing strong expression and correct localization. Additionally, we see a strong correlation between the upregulation of beta-sarcoglycan and alpha-sarcoglycan. While these children have the gene to produce alpha-sarcoglycan, significant amounts are not evident because, in the absence of beta-sarcoglycan, the DAPC isn't formed. All these factors will be considered in our development plan. We aim to avoid lengthy trials requiring a placebo-controlled setup, and we continue to engage with the agency to find the best path forward. We will provide an update early next year.

Thank you. Our next question comes from Tim Lugo with William Blair. Your line is now open.

Thanks for taking the question. For the commercial supply trial, the ongoing issues around COVID impact how you think about that Study size. Maybe adding additional sites than you originally anticipated or additional geographies where you may enroll patients or even just the overall powering of that Study?

Thank you for your question. The study is still on schedule and proceeding as planned, including its size, multi-country and multi-institute setup, and placebo-controlled design. There haven't been any changes to the study's design. I want to highlight that a logistical challenge we face at the start is ensuring we have in-person site initiation visits from our clinical operations team. It’s essential that everyone is adequately trained to maintain consistency across all global sites. There is quite a bit to accomplish, so we anticipate a modest delay in the trial's initiation to ensure we approach the situation thoughtfully and cautiously, particularly due to COVID-19. This means there will be a slight delay, and I describe it as modest because we still intend to start Study 301 in the second half of this year. The delays should be a matter of months rather than significant timeframes. Overall, things are progressing, and we have not made major changes to our current approach.

Thank you. Our next question comes from Liisa Bayko with JMP Securities. Your line is now open.

Oh, sorry. Thanks for taking the questions and congratulations on the strong quarter. Just wanted to know if you could give us a little bit more detail and color from the quarter itself in terms of how many patients actually started on VYONDYS just so we can better understand the dynamics there. And then also any changes in gross-to-net or any of those kind of details that we should be thinking about given patients' insurance and maybe kind of levels of unemployment there might. What's the right way to think about some of those dynamics? Thank you.

Sure. I will turn this question over to Bo, although I think some of the nuance we're probably not at liberty to disclose.

Yes, Liisa, we won't provide specific patient numbers for EXONDYS or VYONDYS. However, I can share that despite VYONDYS being smaller in terms of population, we are very pleased with the progress we’re making with payers and coverage, which is far ahead of where we were with EXONDYS. We have coverage for 148 million lives, either through restricted policies or both labels, and we are satisfied with that. The launch is meeting our expectations, and although the pandemic has caused some minor delays, we are overall very happy with the situation.

Thank you. I am not showing any further questions at this time. I would now like to turn the call back over to Doug Ingram for closing remarks.

All right, thank you. I'll be brief. Thank you all very much for joining us for our earnings call. Hopefully you've seen here that like so many other companies, and frankly individuals, not just in the United States, but around the world, this pandemic has caused enormous numbers of challenges and obstacles for the Sarepta team. As I've said before, I'll say it again because it bears repeating, I am unbelievably proud of the Sarepta team for the ability to stay on mission. 90% of this team transitioned to working from home, and yet we did that on the Friday, we got up on Monday. I have taken a careful look at every metric you can see, and not only externally; when you see the way we're tracking against our milestones, but through all of the metrics, you'll see that this organization remains as productive as it was on the Friday before we all went to working from home. There is a lot of learning in this, probably not just for Sarepta, but for all of us about the ability to be efficient even in a virtual manner. We are mission-oriented as an organization. We have never taken our eye off the need to bring a better life to these kids. Even through this difficult and distracting period of time, even in a period of time when our workers themselves have to worry about their own loved ones and about themselves, they have not lost sight of the fact that Sarepta is on mission. We're going to continue to execute across 2020, and we're going to be excited to give you additional updates across the year. We can give you better clarity on sales in our second quarter earnings call. We have a number of significant milestones across the rest of this year. I think the rest of this year into 2021 is going to be an enormously consequential period of time, not only for Sarepta but for the patients that we serve. So, thank you all very much. Everyone please stay safe, wash your hands, and let's get this crisis behind us.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.