Sarepta Therapeutics, Inc. Q1 FY2021 Earnings Call

Thank you, Jonathan, and thank you all for joining today's call. Earlier today, we released our financial results for the first quarter of 2021. The press release is available on our website at sarepta.com, and our 10-Q was filed with the Securities and Exchange Commission earlier this afternoon. Joining us on the call today are Doug Ingram, Ian Estepan, Dallan Murray, Dr. Gilmore O'Neill and Dr. Louise Rodino-Klapac. After our formal remarks, we'll open the call for Q&A. I'd like to note that during this call, we will be making a number of forward-looking statements. Please take a moment to review our slide on the webcast, which contains our forward-looking statements. These forward-looking statements involve risks and uncertainties, many 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 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 quarterly report on Form 10-Q filed with the SEC 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 now I'll turn the call over to our CEO, Doug Ingram, who will provide an overview of our recent progress.

Thank you, Mary. Good afternoon, everyone, and thank you for joining Sarepta Therapeutics First Quarter 2021 Investor Conference Call. I am pleased to share with you this afternoon the exceptional performance we have achieved this quarter with respect to our 3 approved therapies and the significant progress we have made advancing our multi-platform portfolio. Commencing with our quarterly performance, I'm very proud of the Sarepta team's execution. We have a well-honed ability to address the sophisticated challenges of delivering and serving patients with a weekly infused therapy for rare disease. From our first launch in late 2016, we have enjoyed compounded growth over the last 4 years of over 19%. As we have never taken a price increase and priced all our therapies at parity, this performance comes from our ability to serve the patient community. I'm very pleased to report in the first quarter our execution continued, achieving product revenue of approximately $125 million, representing a nearly 25% growth over the same quarter last year. Our performance comes from our 3 currently approved therapies. As of February of this year, joining EXONDYS 51 and VYONDYS 53, the FDA approved AMONDYS 45 to treat those 8% or more of Duchenne children with an Exon 45 amenable mutation. Having prepared well, we were able to launch on Day 1, including labeling and shipping drug to the warehouse to enable our first patient to be dosed within a week of our approval. With our third approval, we can now offer therapy to nearly 30% of children with Duchenne in the United States. We can theoretically build constructs to offer therapy to as many as 80% or more of the Duchenne community. We also have the opportunity and the mission-driven obligation to bring our U.S. approved and future RNA therapies to children outside of the United States. Our 3 internally designed, developed and approved therapies place us in a small group of biotech companies, and we have still barely begun to realize the opportunity available in our RNA franchise. As just 2 days ago, we announced what we believe to be profoundly important results from Part A of the MOMENTUM trial, our multi-ascending dose study for our peptide conjugated PMO SRP-5051, our next-generation construct. We believe that if we conjugated our proprietary positively charged peptide to our PMO construct, we could achieve much greater tissue exposure, greater exon skipping, and therefore, greater dystrophin production. Part A of our MOMENTUM trial resoundingly confirmed our hypothesis; our peptide could improve PK/PD and induce significantly more dystrophin. At monthly versus weekly dosing of our 30 mg per kg cohort, SRP-5051 exhibited 18x greater exon skipping and more than 400% greater dystrophin versus EXONDYS 51. This was achieved with only 12% of the dose exposure and in just about half the time. If we can safely confirm this level of dystrophin in the next phase of our trial, the PPMO will transform our RNA platform, multiplying the potential Duchenne population with access to our therapies. Beyond Duchenne, we can evaluate other disease areas where a more potent technology could provide benefit. This is an important moment for Sarepta, but most importantly, for the patient community. We will share these results with the FDA and will discuss with them the path for the commencement of Part B of MOMENTUM, with the hope of seeking accelerated approval in the United States.

Thanks, Doug. Good afternoon, everyone. This afternoon's press release provided details for the first quarter of 2021 on a non-GAAP basis as well as a GAAP basis. Our total net product revenue for the first quarter of 2021 from our PMO Exon skipping franchise was $124.9 million compared to $100.4 million for the same period of 2020. For the first quarter of 2021, individual net product sales were $107.2 million for EXONDYS 51, $17.5 million for VYONDYS 53, and $0.2 million for the recently launched AMONDYS 45. The increase in sales primarily reflects higher demand for our products. We are reiterating our 2021 sales guidance of $537 million to $547 million for our RNA franchise. We have gained good experience over the past 5 years launching these therapies amid the COVID-19 environment. These factors serve as a foundation for our guidance. In the quarter ended March 31, 2021, we recognized $22 million of collaboration revenue, with collaborative arrangements totals affecting first-quarter results predominantly reflecting our collaboration with Roche. On a GAAP basis, we reported a net loss of $167.3 million for the first quarter. We recorded a non-GAAP net loss of $122.5 million for the first quarter compared to a non-GAAP net loss of $79.8 million in the first quarter of 2020. We recorded approximately $195.1 million in R&D expenses for the first quarter compared to $136.1 million in the same period of 2020, primarily due to the continuing ramp-up of our gene therapy program. On a GAAP basis, R&D expenses were $173.5 million for the first quarter of 2021 compared to $114.2 million for the same period of 2020. Now turning to SG&A, we recorded approximately $71.1 million and $82.8 million for SG&A expenses for the first quarter of 2021 and 2020, respectively, driven by a decrease in professional services.

Thank you, Ian, and good afternoon, everyone. With the approval and launch of AMONDYS 45, our third PMO-based exon skipping medicine, the team exceeded expectations in the first quarter of 2021. Total revenue reached approximately $125 million, representing our 18th consecutive quarter of growth since launching in Q4 of 2016. This kind of consistent growth in the face of a pandemic is only possible due to flawless execution by our field teams and home office teams and the commitment of our patients in the larger DMD community. The February 25 approval of AMONDYS 45 has accelerated our momentum even further. While launching during a pandemic can present challenges, Sarepta has benefited from nearly 5 years of building relationships and trust within the Duchenne community. Within a week of the AMONDYS 45 approval, we shipped product and dosed the first commercial patient in Florida. Our launch-ready status underscores our commitment and urgency to drive access for every patient. The first quarter marks our third approval where we were launch-ready within 24 hours with all facets of our commercial, manufacturing, and medical organizations prepared for the AMONDYS 45 launch. We will continue exploring options for patients to safely initiate therapy with AMONDYS 45, and we are pleased with the demand for start forms. The launch is proceeding on pace.

Thank you, Dallan, and good afternoon, everyone. Our commitment to serving the Duchenne Muscular Dystrophy Community has been greatly strengthened by the achievement of several critical milestones over the past months. Just two days ago, on May 3, we announced positive clinical data in the 30 mg per kg arm of the MOMENTUM study evaluating our lead PPMO candidate, SRP-5051. The data we shared included safety measurements and change from baseline metrics at week 12 for exon skipping and dystrophin expression in muscle tissue. The 30 mg per kg cohort showed a significant increase in exon skipping, achieving approximately 11% mean exon skipping at Week 12. SRP-5051 at the 30 mg per kg dose resulted in more than 6.5% dystrophin protein expression, representing a greater than 100% increase in expression versus the 20 mg per kg cohort. Our analysis shows the response is consistent across all patients treated. Our primary working hypothesis is that the PPMO may compete for magnesium transporter proteins, causing a decrease in magnesium after infusion, but its effects are manageable. In summary, SRP-5051 dosed monthly at 30 mg per kg delivers clinically meaningful levels of dystrophin, a significant improvement in potency over our marketed first-generation PMO medicines.

Thank you very much, Dr. Gilmore. Jonathan, let's open up the line for questions now.

This is on for Gena. One question on the potency assay for Study 301. Could you confirm that all the potency assay matrix has been cleared and you don't need to do any additional work before dosing patients in 301?

Yes. Thank you for that question. The number one issue is that we have to have a meeting with the division as a predicate for commencing Study 301. We were able to get a productive discussion with the agency last year regarding potency assays, which has helped us immensely. We've performed additional work on stability assays. Now we need to take all of our CMC and our protocol for the next trial and have a discussion with the agency, targeting for the middle of this year. We feel very good about our potency assay and the data that supports it.

Just a follow-up on 301, what are the remaining gating factors for the initiation?

The two big ones are we need the 103 data and we need to gain insights from Part 1 of Study 102 to refine the protocol for our next study, Study 301. Once we have those things, we will meet with the agency, which should be around the middle of this year, and we aim to commence Study 301 as quickly as possible thereafter.

Doug, my question to you is about the timeline for Study 301. If you are able to start the study sometime this summer, could you clarify your thoughts on the timeline for enrollment?

We want to move as fast as possible. We aim to have our meeting with the agency around the middle of this year and to start as soon thereafter as permitted. The full enrollment will depend in part on the speed of the study, but we expect to be able to enroll rapidly due to interest from investigators and families.

On your call back in December for the 20 mg per kg SRP-5051 group, you mentioned there was a slight delay in muscle biopsies due to COVID-19. Could you give a little bit of color on the average time from last dose to biopsy in the 30 mg per kg group?

I don't think there was any significant issue regarding the biopsy timings for the 30 mg group. Let me turn it over to Dr. O'Neill for further details.

There were indeed some delays in muscle biopsies; however, because of their duration, they do not confound our primary conclusions. We are confident about the robustness of our dose-response analysis.

Just as a clarification, was any functional data collected at baseline from the patients enrolled in Study 103?

We do take functional measures with the kids in 103, but there won't be any report on that for a variety of reasons. It's an open-label study and outcomes will not be disclosed until following our data release.

How are you thinking about running studies for some of the other limb girdles beyond 2E?

We are exploring multiple approaches, including the possibility of conducting basket trials. It all depends on discussions with the regulatory agencies to create a pathway for each limb girdle therapy.

Would there be challenges in enrolling a randomized study for SRP-5051, assuming a placebo control?

I do not expect significant challenges in enrollment since Duchenne Muscular Dystrophy is a devastating disease. However, we must be sensitive to the issues surrounding placebo controls, which can be challenging to navigate. We will pursue this carefully, keeping patient benefits at the forefront.

Can you confirm whether you saw a threshold relationship with expression levels?

There is unquestionably a correlation between expression and function. Our goal is maximizing expression to benefit our patients. The results indicate that higher expression levels correlate to better outcomes.

You mentioned previously that you plan to enroll additional 4- to 5-year-olds in Study 103. Have they been completed in those patients?

We're not going to wait for the outcomes from the additional patients. Our upcoming meeting with the FDA will be based on the initial cohort's data. Thank you very much, Jonathan. Thanks everyone for joining us and for the thoughtful questions. We have a focused team with considerable milestones ahead. We are on a mission that matters for patients with rare diseases. Thank you all very much, and I look forward to additional updates throughout the year.