Sarepta Therapeutics, Inc. Q2 FY2021 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the Sarepta Therapeutics Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. As a reminder, today’s program is being recorded. At this time, I’ll turn the call over to Mary Jenkins, Senior Manager, Investor Relations. Please go ahead.

Thank you, operator, and thank you all for joining today’s call. Earlier today, we released our financial results for the second 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. I’ll now turn the call over to our President and CEO, Doug Ingram, who will provide an overview of our recent progress. Doug?

Thank you, Mary. Good afternoon, everyone, and thank you all for joining Sarepta Therapeutics second quarter 2021 investor conference call. With a large multi-platform genetic medicine pipeline, which spans RNA, gene therapy and gene editing, and with three approved therapies, we have a significant number of important initiatives underway in 2021. My team and I are very pleased to share with you this evening our progress in the achievement of our milestones. I am particularly proud of this team’s focus on execution and the consistent achievement of our goals this year, which you will see reflected in our results. Now, as pleased as I am with our quarterly performance, I am going to dispense with my usual order and start by updating you on the important and very positive developments for SRP-9001 this quarter. I am delighted to share with you the progress we have made with respect to SRP-9001 and the positive outcome of our recently completed meeting with the FDA’s Office of Tissue and Advanced Therapies, which I will refer to as OTAT going forward. Now, as a reminder, earlier in the second quarter, we announced the 12-week results of our first 11-patient cohort for Study 103, also known as ENDEAVOR. To remind you, Study 103 is our trial evaluating the expression and safety of our commercially representative material. This is an extremely important study as it has confirmed the performance of our therapy using the material process with which we intend to launch SRP-9001. We were pleased to report that on every biomarker, our commercially representative material performs as well as or better than the clinical supply material we used in our prior study. Armed with the positive Study 103 results, we scheduled a meeting with OTAT to review our CMC and our plans for Study 301, our proposed pivotal trial for SRP-9001. I would like to thank OTAT for what was a very productive and informative meeting. Based on that meeting, we are on track to commence Study 301 as proposed to the division, both in the United States and then globally, and we believe we should be able to initiate Study 301 in September of this year. The initiation of Study 301 is an important moment, not merely for this program, but for families living with Duchenne. Following receipt of the final minutes, I will provide detailed information regarding our study design and some of the reasons we are so confident that our program will be successful. Now, we’ve taken a deep dive into Part 1 of Study 102. We are very confident in the performance and transformative potential of SRP-9001, and we are also very confident that 301 is well-designed with a high probability of success. Again, once we have the final minutes and are ready to initiate the trial, I will share with you the details of the trial and the data-driven basis for our confidence in this program. Looking forward, Study 102 is proceeding and remains blinded, and we will have a readout of the second phase of that study, including one-year and two-year functional results in the first quarter of 2022. Staying with our pipeline updates, let me now move to limb-girdle muscular dystrophy. As you know, we have seen very robust results from our first two cohorts in our proof-of-concept study for SRP-9003, our gene therapy being developed to treat LGMD type 2E. I can now report that we have already solicited and received written feedback from both the FDA and EMA regarding our plans for SRP-9003, both confirming the possibility of using protein expression as an endpoint for accelerated approval in the U.S. and for conditional approval in Europe. From here, we need to gain alignment with the FDA and EMA on the precise clinical and regulatory approach, appropriate for LGMD2E and then appropriate for the rest of the LGMD pipeline. Based on the written feedback we have received, we are investing time now, considering how we might move our entire LGMD sarcoglycan platform forward together. With the successes that we’ve seen with our gene therapy approach to LGMD, we are expanding our portfolio. Dr. O’Neil will provide additional color on our license for another rh74 mediated gene therapy, this time to treat LGMD type 2A or calpainopathy. Moving now to our RNA franchise. Earlier this year, we announced positive results from Part A of our MOMENTUM trial, studying our next-generation version of our morpholino platform, a peptide-conjugated PMO or PPMO SRP-5051, designed to be an enhanced version of our PMO technology for Duchenne patients who have a mutation amenable to exon 51 skipping. Dr. O’Neil will review the positive results of that study at 30 mgs per kg and will provide our plans to commence the pivotal phase of our trial for SRP-5051 later this year. The advancement of our PPMO technology solidifies our singular leadership in evidence-driven RNA technology to treat rare diseases where steric blocking can provide benefit. Our PMO is predictable and a durable platform that has already produced three FDA-approved therapies that can in turn improve the lives of nearly 30% of Duchenne patients in the United States and, at least for now, to a lesser extent outside the United States. If confirmed in upcoming trials, our next-generation PPMO will greatly extend the reach and impact of our RNA platform. As Dr. O’Neil will share with you, our PPMO platform has the potential to be a leap forward in the treatment of Duchenne. With the PPMO platform, we have the technical ability to construct therapies for well over 80% of Duchenne patients. And with profoundly greater dystrophin production, the opportunity exists to expand our reach far beyond the United States with approvals globally. While we develop our PPMOs for Duchenne, we are also exploring additional genetic diseases where steric blocking may provide benefit. We will work with the neurology division at CDER to gain alignment on Part B of the SRP-5051 trial, and once confirmed with CDER, we will commence our Part B pivotal trial before the end of this year as we advance constructs for other mutations. Now, let me comment on our quarterly performance, serving the Duchenne community with our three approved RNA therapies. In addition to continuing to adapt to this pandemic, the team has focused on serving our patients with EXONDYS and VYONDYS and launching AMONDYS, which was approved back in February of this year. Their success is reflected in our quarterly numbers. I am pleased to report that in the second quarter, we achieved net product revenue of approximately $142 million. That represents nearly 27% growth over the same quarter last year. Since our first approved therapy nearly five years ago, we have enjoyed long-term compounded annual growth of about 20%. As a testament to the value of our therapies to those living with Duchenne, even considering that each of our therapies requires weekly infusions amid a troubling pandemic environment, the adherence rate for our therapies remains well over 90%, an extremely impressive and telling metric. Based on this success, we have increased our full-year net product revenue guidance. At the beginning of this year, our guidance was in the range of $537 million to $547 million. Today, we are raising that guidance to between $565 million and $575 million, representing at the midpoint a growth of more than 25% over last year. Our Chief Commercial Officer, Dallan Murray, will provide more color on our quarterly performance in a moment. The progress we’ve made in 2021 demonstrates execution by our team of professionals across our fully integrated commercial stage genetic medicine organization. While not currently reflected in our stock price, I am proud that the Sarepta team has executed this year and achieved nearly every one of the ambitious goals we set for them, driving performance of our on-market therapies and advancing our industry-leading genetic medicine pipeline. To summarize, let’s consider the accomplishments thus far in 2021, and I’ll do this chronologically. First, additional evidence-driven confidence in the probability of the success for SRP-9001. Although Part 1 of Study 102 did not achieve statistical significance on the pooled primary endpoint due to titering issues and baseline imbalances in the pre-specified subgroup analysis of the 4 to 5-year-olds, we saw strong statistically significant benefit, perhaps the best results so far in a trial for Duchenne. Moreover, an analysis of the complete data from Study 102 bolsters even more our confidence in the transformative potential of SRP-9001. The study has informed the design of our next trial, greatly enhancing its probability of success. Next, we received FDA approval for and launched our third RNA therapy to treat Duchenne. That is, AMONDYS, now serving a record percentage of patients. As Dallan will detail in a moment, our performance across all three of our RNA-based therapies, EXONDYS, VYONDYS, and AMONDYS, even in these challenging times, has been exceptional. We also reported several positive clinical data readouts throughout this year that bolster our approach and the intrinsic value of both our gene therapy and RNA platforms, consider exceptional functional improvement and durability results for SRP-9003, our LGMD2E gene therapy. We also reported impressive clinical results for SRP-5051, the first of our candidates from our next generation PPMO platform. We also reported exceptional clinical results from the first cohort of Study 103, confirming the performance of our commercially representative material for SRP-9001. Our work and investment to advance our gene therapy manufacturing process over the last few years culminated in a productive meeting with OTAT regarding our pivotal trial for SRP-9001, Study 301, and we are on track to initiate that trial in September of this year in the United States and then around the world as well. Looking forward to the rest of the year, in addition to initiating Study 301 and continuing Study 102 for SRP-9001, we will engage the FDA and ministries of health to align on our clinical and regulatory pathway for our LGMD portfolio. We will also align with the FDA and other ministries of health around the world with the goal of advancing our PPMO SRP-5051 to a pivotal trial this year. I look forward to updating you as we progress and continue to execute on our milestones over the remainder of this year. With that, let me turn the call over to Ian Estepan, who will provide an update on the financials. Ian?

Thanks, Doug. Good afternoon, everyone. This afternoon’s financial results press release provided details for the second quarter of 2021 on a non-GAAP basis as well as a GAAP basis. Please refer to the press release available on Sarepta’s website for a full reconciliation of GAAP to non-GAAP financial results. Total net product revenue for the second quarter of 2021 from our PMO exon-skipping franchise was $141.8 million compared to $111.3 million for the same period of 2020. For the second quarter of 2021, individual net product sales were $112.5 million for EXONDYS 51, $22.4 million for VYONDYS 53, and $6.9 million for the newly launched AMONDYS 45. The increase primarily reflects higher demand for our products and the launch of AMONDYS 45. As Doug said, due to the strong performance, we have increased our 2021 revenue guidance range for our RNA franchise. In the quarter ended June 30, 2021, we recognized $22.3 million of collaboration revenue compared to $26 million recognized in the same period of 2020, which primarily relates to our collaboration arrangement with Roche. The reimbursable co-development costs under the Roche agreement totaled $17.7 million for the second quarter of 2021 compared to $8.9 million for the same period of 2020. On a GAAP basis, we reported a net loss of $81.4 million, or $1.02 per share for the second quarter of 2021, compared to a net loss of $150.8 million, or $1.93 per share for the same period of 2020. We reported a non-GAAP net loss of $121.2 million or $1.52 per share in the second quarter of 2021 compared to a non-GAAP net loss of $117 million or $1.51 per share in the second quarter of 2020. In the second quarter of 2021, we recorded approximately $19.5 million in cost of sales compared to $13.3 million in the same period of 2020. The increase in cost of sales is primarily due to increasing demand for the Company’s products. On a GAAP basis, we recorded $239.6 million and $188.5 million in R&D expenses for the second quarter of 2021 and 2020, respectively, a year-over-year increase of $51.1 million, primarily due to milestone and manufacturing expenses. On a non-GAAP basis, R&D expenses were $189 million for the second quarter of 2021 compared to $160.4 million for the same period of 2020, an increase of $28.6 million. Now turning to SG&A. On a GAAP basis, we recorded approximately $72.3 million and $73.7 million for expenses for the second quarter of 2021 and 2020, respectively, a decrease of $1.4 million. The year-over-year decrease was driven primarily by a decrease in compensation, personnel, and professional service expenses. On a non-GAAP basis, the SG&A expenses were $54 million for the second quarter of 2021 compared to $55.1 million for the same period of 2020, a decrease of $1.1 million. On a GAAP basis, we recorded $16.2 million in other net expenses for the second quarter of 2021 compared to $12.4 million in other net expenses for the same period of 2020. This increase primarily reflects an increase in interest expense incurred on the Company’s term loan debt facility due to an increase in the outstanding balance, partially offset by a reduction of interest expense incurred on the Company’s convertible debt related to the adoption of ASU 2020-06. In February 2021, we entered into an agreement to sell the rare pediatric disease Priority Review Voucher or PRV received from the FDA in connection with the approval of AMONDYS 45. In April 2021, we completed our sale of the PRV and received proceeds of $102 million, which was recorded as a gain from the sale of the PRV. We had approximately $1.74 billion of cash, cash equivalents, and investments as of June 30, 2021. As Doug just outlined and Gilmore will go over in more detail, we progressed several pipeline programs this year. For this reason, we anticipate running multiple pivotal studies in 2022. We will continue to invest in our manufacturing scale-up in anticipation of delivering these therapies to patients. And with that, I’ll turn the call over to Dallan for an update on our commercial activities. Dallan?

Thank you, Ian, and good afternoon, everyone. The team has yet again exceeded expectations across all three of our approved products in the second quarter of 2021. Due to the strong performance, as Doug mentioned, we have increased our guidance range by almost $30 million with the new guidance being $565 million to $575 million, up from $537 million to $547 million. Total revenue reached approximately $142 million in Q2, representing double-digit growth over the previous quarter, and we approached nearly 27% growth versus Q2 of 2020. The second quarter represents our strongest rate of revenue growth since the EXONDYS 51 launch phase. It’s our 19th consecutive quarter of revenue growth since launch in 2016. To put that into perspective, that’s one quarter shy of five years of consistent quarter-over-quarter revenue growth. Keep in mind that this consistent growth has been achieved without taking a single price increase at any point, making this accomplishment that much more distinct and impressive. Now, transitioning to our performance in the second quarter. Our revenue in Q2 was driven by strong performance across all three of our approved PMO-based exon-skipping medicines. I’ll review each in chronological order. Beginning with EXONDYS 51, the team has continued to execute, driving revenue to over $112 million in Q2 2021, which represents roughly 8% growth versus Q2 2020. We’ve worked hard throughout the COVID-19 pandemic to mitigate risks to EXONDYS 51 and have emerged in a strong position. Our impressive performance from Q1 to Q2 2021 for EXONDYS 51 was a result of the team driving a robust rate of reauthorizations during the insurance changes we typically see at the beginning of each year. As such, we don’t expect to see the rate of growth we saw in the second quarter with EXONDYS 51 to continue at the same rate. It’s important to be reminded that we now see the exon 51 amenable population as mature and well-penetrated in the ambulatory setting. Having had an approved therapy on the market for nearly five years, any growth we see for EXONDYS 51 will be primarily driven by newly diagnosed or incident patients. Moving now to VYONDYS 53. Although we’re still in the launch phase, I’m happy to report we are seeing minimal competitive impact on the demand from both the patient and physician community. Revenue totaled over $22 million in the second quarter, representing nearly 30% growth versus the first quarter of 2021, reinforcing our leading position, our expertise in Duchenne, and the flawless execution of our team. The team has done a great job in the second quarter of getting patients on therapy. As we work through the start forms from the launch phase, we expect more modest growth in subsequent quarters due to a smaller base of start forms to work from. Overall, based on what we’re seeing to date, the vast majority of exon 53 treated patients are on VYONDYS 53, and the competitive launch has had limited impact on our overall launch trajectory to date. And finally, AMONDYS 45. Perhaps our most exciting news coming out of the second quarter is our stronger-than-anticipated launch. While it’s early days, we’re seeing revenue from AMONDYS 45 tracking ahead of the EXONDYS 51 trend, which is even more impressive given the relative size differences of the two patient populations. Adjusting for the relative population sizes, the rate of new patient start forms for AMONDYS 45 is in line with what we saw for the EXONDYS 51 launch. However, based on our deep experience in Duchenne and constant improvements in terms of the execution of the team, the time to getting patients access to and on therapy has been faster for AMONDYS 45 than what we saw for EXONDYS 51. As a result, the team has delivered nearly $7 million in revenue in our first full quarter with AMONDYS 45. The successful launch of AMONDYS 45 is our third since 2016 and represents the dedication of our team who work every day on behalf of patients. Our deep experience with Duchenne has enabled us to serve more patients, expedite access to drugs, and offer best-in-class support through SareptAssist. We are extremely proud of the team and will continue to apply learnings toward our number one priority, which is serving nearly 30% of Duchenne patients who may benefit from our PMO-based exon-skipping therapies. Looking to the future, as Chief Commercial Officer, I couldn’t be more excited about continuing to leverage our learnings to support the Duchenne community as we rapidly advance both our gene therapy and PPMO pipeline. Now, I’ll turn the call over to Gilmore for an update on our research and development activities. Gilmore?

Thank you, Dallan, and good afternoon, everyone. In the second quarter, a great deal of progress was made in advancing both our RNA and gene therapy programs. Before beginning with our RNA-based PPMO program, SRP-5051, I want to echo Doug’s sentiment that we are very pleased with our recent meeting with OTAT regarding the SRP-9001 program. We remain on track to initiate our Study 301 this September in the United States and globally. In early May 2021, we announced positive clinical data from the 30 mg/kg arm of the MOMENTUM study for SRP-5051, evaluating safety and change from baseline at week 12 for exon-skipping and dystrophin expression in both ambulant and non-ambulant patients. Three of the patients were in their late teens, and one patient was seven years old at the time of treatment. The results were impressive. The 30 mg/kg cohort showed a significant dose-dependent increase in exon-skipping. SRP-5051, when dosed once per month at 30 mg/kg, achieved approximately 11% mean exon-skipping at week 12. Compared to the PPMO 20 mg/kg dose, we observed a greater than fourfold dose-dependent increase in exon-skipping with only a 50% increase in dose. Further, when compared to the current standard of care, eteplirsen, we observed an 18-fold increase in exon-skipping. In terms of expression, the 30 mg/kg dose of SRP-5051 demonstrated more than 6.5% mean dystrophin protein expression as measured by western blot, representing a greater than 100% increase in expression versus the 20 mg/kg cohort at only week 12. Here are some other notable aspects of the data. First, the results were not driven by a single patient; all patients responded well to therapy. Second, based on our predictive modeling, we should comfortably achieve more than 10% dystrophin with once-per-month dosing over time. Third, baseline dystrophin levels are not a predictor of post-treatment expression. In fact, we observed that two patients with the lowest baseline had the highest level of post-treatment expression. Lastly, regarding safety, we continue to believe that the hypomagnesemia observed in the study remains monitorable and manageable with magnesium supplementation and is not correlated with changes in renal function. Our next step is to meet with the FDA regarding Part B of MOMENTUM, and based on the outcome of that meeting, our intention is to dose Part B by the end of 2021. We are thrilled with SRP-5051 results and the potential that it holds to offer individuals with Duchenne a more convenient, once-per-month treatment option with a manageable safety profile and superior dystrophin expression. Shifting to our gene therapy program, I will begin with our safety and biopsy results reported in mid-May from the first 11 patients in Study 103 using our commercially representative material for SRP-9001. These results are tremendously valuable because they confirmed the characteristics of the commercially representative material, which achieved robust transduction for a mean of 3.87 vector genome copies per nucleus. In addition, we reported robust expression of microdystrophin correctly localized to the sarcolemma membrane. We measured this three different ways, achieving a mean of 55.4% by western blot, 70.5% positive fibers, and an intensity of 116.9% correctly localized to the membrane. Furthermore, we observed a consistent safety profile with our clinical manufacturing process, with no clinical complement manifestations. The Study 103 results provide confirmation of our manufacturing process and analytics, positioning us to serve the Duchenne population. I’d also like to remind you about critical findings from Part 1 of our ongoing SRP-9001-102 Study. I want to emphasize that due to the study’s stratified randomization design and the statistical analysis plan, we can say with confidence that the pre-specified subgroup analysis of 4 to 5-year-old Duchenne boys demonstrated that SRP-9001 treated boys achieved NSAA gains that were clinically meaningful and superior to placebo treated boys with statistical significance. This means that the SRP-9001 microdystrophin construct is functional in humans and confers physiological and clinical benefit, thus substantially increasing the probability of success for this program. Moving to our limb-girdle muscular dystrophy portfolio, our six development stage programs have the potential to address approximately 70% of all limb-girdle patients. These programs are progressing well, and we continue to hold a leading position in limb-girdle muscular dystrophy, grounded in differentiated signs and a deep understanding of the disease. Currently, Sarepta has several programs in development to treat various subtypes of limb-girdle muscular dystrophy. This morning, we announced the execution of a licensing agreement with Nationwide Children’s Hospital for calpain 3, a gene therapy candidate to treat limb-girdle muscular dystrophy type 2A or calpainopathy. Limb-girdle muscular dystrophy type 2A is caused by mutations in the calpain 3 gene and is the most common form of limb-girdle, accounting for one-third of limb-girdle muscular dystrophy diagnoses. We are pleased to report that preclinical research and safety studies led by Dr. Zarife Sahenk at Nationwide Children’s Hospital have provided early proof-of-concept for calpain 3 in limb-girdle type 2A and support further investment. We will apply the learnings from our SRP-9001 and SRP-9003 development programs to the calpain 3 program and our five other limb-girdle programs, all of which use the same AAVrh74 vector, designed to robustly deliver treatment to skeletal muscle, making it an ideal candidate to treat muscular disease. Turning to SRP-9003, our lead limb-girdle gene therapy candidate in development to treat limb-girdle type 2E, which demonstrated positive data earlier this year at the 2021 Muscular Dystrophy Association’s Annual Clinical and Scientific Conference. We presented the first expression data from biopsies of participants in cohort 1, the low-dose cohort, taken two years after a single administration of SRP-9003. The results showed sustained protein expression in muscle tissue. We are thrilled with these results for the SRP-9003 program as they also provide insight into our 9001 program and any program that utilizes rh74 and the MHCK7 promoter. Now, turning to our functional results for SRP-9003, assessments were taken two years following treatment in cohort 1 and one year after treatment in cohort 3 through the high-dose cohort. We were pleased to observe that patients continued to demonstrate stability in their North Star Assessment for Dysferlinopathies or NSAD total score and improvements on timed function tests. The results from both cohorts continue to support a differentiated safety profile of the rh74 vector compared to other AAV serotypes. In fact, between our SRP-9001 and SRP-9003 programs, we have dosed nearly 80 patients and maintained a consistent safety profile. We also believe that the high-level expression observed with our construct led to durable outcomes that are critically important for patients receiving a one-time therapy. All these therapies are not coincidental as the SRP-9001 was rationally designed. The learnings from this candidate have been and continue to be applied to SRP-9003 and our five other limb-girdle candidates. The SRP-9003 results represent a solid foundation, a virtual engine to build and advance a steady stream of additional candidates and derived indications in limb-girdle muscular dystrophy. In early September, the Cellular, Tissue and Gene Therapies Advisory Committee will meet to discuss the toxicity risks of adeno-associated virus or AAV vector-based gene therapy. With the results we have thus far from our SRP-9001 and SRP-9003 programs, we expect the discussion will center around vector-specific toxicities observed with other serotypes. We look forward to the meeting and expect that shared learnings will drive the field of gene therapy forward. Additionally, we look forward to sharing data from our gene therapy and RNA pipeline programs at the 2021 Annual Congress of the World Muscle Society being held virtually from September 20th to 24th. Finally, and most importantly, I want to thank all the patients, their families, study sites and coordinators, my R&D colleagues and our partners who have done so much work under incredibly difficult circumstances caused by the pandemic to maintain our urgent mission to deliver new, highly effective therapies to people with rare diseases. I will now turn the call back over to Doug to open the question-and-answer session. Doug?

Thank you very much, Dr. O’Neill, and thank you to the rest of my colleagues. Mary, let’s open up the lines for Q&A now.

Your first question comes from the line of Gena Wang of Barclays.

Thank you for taking my questions. I have one question regarding Study 301. Doug, I know you will share details about the trial design. But just wondering if you can share the high level of the trial design now. And also regarding Study 102 crossover data in the first quarter next year, just wondering, have you defined the pre-specified natural history control arm?

Yes. Thank you for that question. Gena, first of all, thank you for the first question, because I’m going to get this question a lot this evening, and this gives me an opportunity to frustrate everybody just once. I am not going to provide details on Study 301, other than, of course, to let you know that it is a placebo-controlled, double-blinded trial that will be our pivotal trial. There are a lot of nuances behind that, like the powering of it, the endpoints, the age groups, etc. We have put a lot of thought into Study 301, informed enormously by Study 102. I’m very excited to share that with you soon, and I’m very excited that we were able to meet recently with the division, gaining confidence that we will initiate that trial in September of this year. But I’m going to frustrate you and not provide a ton of detail other than to know that it is obviously a robust, well-powered, double-blind, placebo-controlled trial. On Study 102, the team is working on natural history sets and all the statistics associated with that. It is a blinded trial. As you know, we’ll have to fully lock all that down before we unblind. I think the team has still additional statistical work to do before the statistical plan is fully locked. Thank you for both of those questions, Gena.

Your next question comes from the line of Tazeen Ahmad of BoA.

Hi, guys. Good afternoon. Thanks for taking my questions. And thanks for all the positive updates. So, my one question, Doug, is about the timing of your study. You’re expecting to start in September. On the Pfizer call that happened recently, they didn’t seem to make specific mention of what is happening with their DMD study, at least with U.S. enrollment. So, I’m curious if you end up on a timeline where you’re starting the study, at least enrolling the U.S. patients around the same time, what’s your view about overlapping clinical trial sites and whether or not it might impact the ability to enroll? Thanks.

Thank you for that. I want to clarify that I'm not going to directly compare our program to others, as I tend to favor competitors. However, I must emphasize that no other program has the extensive clinical data or the confidence in their therapy that Sarepta possesses. As Dr. O’Neill mentioned, we have treated over 80 children with SRP-9001 in both ambulatory and non-ambulatory settings, providing us with a wealth of information that boosts our confidence in the next steps. We've completed Study 101 and Part 1 of Study 102, and we will be conducting Part 2, which will have results early next year. In Study 103, the first cohort demonstrated excellent performance concerning therapy expression and safety, and we plan to initiate Study 301 in September, all going well. We are very confident about this progress. Our sense of urgency comes from the fact that families affected by this rare disease are witnessing thousands of children losing muscle every day, and it is a relentlessly fatal condition. Therefore, we must act quickly, and we intend to do so. Regarding the enrollment timeline for Study 301, there is a tremendous demand for therapies like this, and many investigators recognize the urgent need. Based on our observations, we expect strong recruitment for SRP-9001 once we begin.

Your next question comes from the line of Brian Abrahams of RBC Capital Markets.

Hey, guys. Congrats on all the progress. Thanks for taking my question. I’m just wondering, with respect to Study 301, are there any additional gating factors to getting that study up and running, both in the U.S. and internationally? Any additional back and forth required with the agency? Also, can you confirm that, at this point, you’re aligned and all the necessary potency assays are expected to be aligned shortly? Thanks.

I want to make sure there’s clarity. To initiate and enroll a study globally, there are lots of steps. I don’t want to create the impression that there’s not much additional work left to do; there is. While the team has been fantastic in execution, there's still a lot to accomplish to get Study 301 fully enrolled worldwide, particularly in the United States. The most significant issue for us to ensure rapid movement and initiate this trial quickly was our recent meeting with OTAT. I will say, that meeting was very positive and informative, and we now have great confidence that we’ll be able to swiftly initiate this trial, aiming for September. Regarding the potency assay, we’ve made significant advancements. You may recall that back in September last year, we faced some delays due to potency assay concerns. Fortunately, that proved beneficial, as it provided insight and clarity in our dialogues with the division. Since then, we’ve shared our approach, which the division has endorsed, and we’ve gathered the necessary data. There’s still a lot to do, but we feel confident we’ll be initiating Study 301 soon.

Your next question comes from the line of Alethia Young of Cantor.

Hey, guys. Thanks for taking my question. Congrats on the progress. I’ll ask one, but I will put a contingency in because you may not answer it. I guess, I wanted to get your perspective on like PPMO potential endpoints. Is there a potential for similar endpoint PMO, or is it more functional? And then, if you don’t answer that, can you just talk about some other indications where steric blocking is associated with PPMO? And where you might consider going then? Thanks.

Yes. I will start with this: For PPMO, there will essentially be two pathways – functional endpoints, which we will eventually need to confirm the benefits functionally to maintain therapy approval, and in the first instance with the PPMO, to seek accelerated approval in the U.S. and potentially conditional approval in Europe based on the robust expression we’re seeing. There will be functional endpoints for the PPMO, and we have not yet disclosed specific endpoints, as functional endpoints for ambulatory patients differ from potentially non-ambulatory ones. Regarding additional indications, I will turn this over to Dr. O’Neil or Dr. Rodino-Klapac for further detail.

Yes. We’re very interested in leveraging the PPMO beyond muscle and muscular dystrophy and are looking at a number of tissues, with renal indications being a target of interest. This is work still in our discovery phase, and we will leverage our learnings from the ongoing 5051 program and accelerate those forward once we have clarity on 5051 progress and the PPMOs across the exon-skipping amenable population for Duchenne. Louise, do you want to add anything to that?

No, I think you covered it well. Thanks.

We have preclinical work ongoing, exploring a number of different disease areas where steric blocking might be interesting beyond Duchenne. For PPMO 5051, we’re developing additional constructs for other mutations. From a technical perspective, we can create constructs with a high probability of success for over 80% of patients, excluding a small number of very rare mutations.

Your next question comes from the line of Anupam Rama of JP Morgan.

Congrats on the progress. Just on Study 301 and the initiation here in September, how do you think about getting global sites up and running, particularly with the pandemic being so variable in different regions, and how you think about the enrollment curve here? Thanks so much.

So, I’ll say this. Every time we think we have clarity on this pandemic, new information arises that makes it challenging to prognosticate. However, I remain confident—as does our team—that the enrollment for SRP-9001 will be robust. Even during the ultra-challenging parts of the pandemic, we've successfully executed trials without major issues. We’ll navigate these challenges, but we must stay humble regarding the pandemic. I believe that the significant need for therapies will help drive enrollment. Our team is well-prepared to engage with patients and families to deliver these much-needed therapies.

Your next question comes from the line of Salveen Richter of Goldman Sachs.

In your meeting with OTAT, was there any discussion about the potential for 9001 approval in the four to five-year-olds with DMD based on data to date? And then, can you help us understand how these two limb-girdle muscular dystrophy type 2A programs will coexist within your portfolio?

We were very straightforward about our goals with OTAT. We did not discuss other issues, like accelerated approval for the four to five-year-olds based on the data we’ve seen already, nor did we discuss data we might see early next year in Part 2 of Study 102. We had a productive meeting focused specifically on Study 301 and its commencement, and I’m excited that we’ll initiate that trial soon in September. As for limb-girdle, I’ll hand it over to Dr. Rodino-Klapac.

Thank you for that question. We only have one LGMD2A program. We previously discussed this as an option program, but we recently executed the license and are excited about moving forward. Dr. Sahenk has worked diligently to complete preclinical data that demonstrates efficacy both functionally and logically in various mouse models, giving us confidence in our development plan for this program.

We are particularly excited that this is another rh74-mediated gene therapy. With the data we've developed over the last few years, we are increasingly confident in the differentiated aspects of rh74 as a vector delivery mechanism for gene therapy.

Your next question comes from the line of Brian Skorney of Baird.

Congrats on getting clearance to go into Phase 3. I guess, I don’t know if the question is the most appropriate for Dr. Rodino-Klapac or Dr. O’Neill. But, I know you guys have been exploring certain AAV redosing strategies. I think, you have a partnership with Selecta, and we’ve also discussed some other potential strategies in terms of tolerizing patients for redosing. Any thoughts on the progress there? I know, based on the LGMD data, it also looks like there’s really weaning of protein expression here, but sort of in the long term. Where are you in terms of looking at the potential for redosing AAVs?

I’d say a couple of preface remarks, then I’ll turn it over to Dr. Rodino-Klapac to provide comments. There are several reasons why this is important, including redosing, and knocking down neutralizing antibodies to enhance the numbers of patients who can benefit from our therapies. We have internal programs and partnerships with Selecta that address these aspects aggressively. So, the ability to redose and knock down antibodies will be crucial, and we’re excited about our preclinical progress in this area.

Yes. I reiterate that we have a comprehensive strategy for treating patients with pre-existing antibodies and potentially for redosing. We are working both internally and through our partnership with Selecta to tackle these issues effectively.

This has significant implications for the entire field of gene therapy. It’s crucial to address the neutralizing antibodies issue, which is why we are dedicated to finding solutions to enable viable treatments to as many children as possible.

Your next question comes from the line of Gil Blum of Needham & Company.

Congratulations on a great quarter. Just a quick one from us. So, the FDA is going to have an advisory meeting on the safety of AAVs. Is there any potential for new guidelines coming out of this meeting that might require amendments to protocols? Thank you.

I will let Dr. O’Neill touch on that. However, I just want to emphasize that during our recent meeting with the division, none of these issues were raised as they were highly focused on parameters around CMC and our upcoming studies. We have no preclinical or clinical data that raises concern about these issues in our ongoing work. As we approach this advisory group meeting, we look forward to learning more, but we are not concerned about its impact on our therapies.

I think you said it nicely. It is our belief, supported by our data, that different serotypes of AAV behave differently. We have robust data demonstrating our differentiation and how we anticipate designing our protocols. We've dosed over 80 patients, and we’ll continue to use our empirical data sets to guide future study designs.

Your next question comes from the line of Ritu Baral of Cowen.

Doug, did I hear you right regarding the FDA feedback on the LGMD sarcoglycanopathies? Will sarcoglycan levels suffice to drive accelerated approval? And does that apply to all the sarcoglycanopathies?

Yes. From recent written feedback, the FDA noted it's possible to use protein expression levels for LGMD2E, presumably based on beta-sarcoglycan levels as a basis for approval. This aligns with FDA guidance and discussions with EMA. The simplicity of the gene being contained within AAV is advantageous, making it reasonable to consider this potential pathway for all sarcoglycans. While there's still work to do, we’re optimistic about the developments moving forward.

Your next question comes from the line of Difei Yang of Mizuho Securities.

So, just a clarifying question. At your OTAT meeting, did the FDA provide any guidance with regards to how to construct the natural history cohort for Study 102?

No, that wasn’t discussed. Our meeting with OTAT focused primarily on the commencement of our pivotal trial, Study 301. So, that natural history component wasn’t brought up there.

Okay. And then, do you think eventually you’ll need to have FDA buy-in on the natural history comparator arm?

It's our responsibility to ensure that the natural history sets are robust enough and meaningful. We are masters of our statistical plan for Study 102, and we’ll ensure that it meets all necessary requirements.

Your next question comes from the line of Tim Lugo of William Blair.

Hi, guys. This is John on for Tim. Congrats on the quarter. I was just wondering if you could provide any updates on your views on longer-term competition or maybe even opportunity from CRISPR-based therapies in neuromuscular diseases.

We’re very excited about CRISPR technology. We’ve been making significant investments in CRISPR-Cas9. We have three platforms: RNA therapy, gene therapy, and now gene editing. We are one of the leaders in gene therapy and also have a Gene Editing Innovation Center in Durham focused on CRISPR-Cas9. While we’re enthusiastic about it, CRISPR-Cas9 for full-body infusion in neuromuscular diseases remains challenging today. We're not ready yet to translate CRISPR-Cas9 work into clinical programs, but we believe strongly in its potential.

Your next question comes from the line of Matthew Harrison of Morgan Stanley.

Hi. This is Max Skor on for Matthew Harrison. Thank you for taking our question. So, how should we think about the crossover arm in terms of the findings from Study 102? Would you expect it to replicate some of the age differences and other factors compared to baseline?

The good news is that there were two flaws in Part 1 of Study 102. One was the titering issue due to supercoiled PCR, where some children received less than the target dose, and 60% were below target dosing. The crossover patients will not encounter the same problem, as our titering method has improved for a more accurate assessment. The second flaw involved a significant baseline imbalance, but this will be addressed through the crossover. The titering issue is resolved with precise titering and crossovers. However, it is essential to have a strong natural history model in place before unblinding.

Your next question comes from the line of Joseph Schwartz of SVB Leerink.

I was wondering, beyond those two flaws, how much have you been able to learn from your analysis of Study 102 that you can use to implement in Study 301 to improve the probability of success? Do you have any examples that you can give us to help us appreciate how the POS might rise going forward?

I’m going to beg off on detail now, as we’ll talk about that later when we have minutes and are closer to initiating the trial. However, I can summarize by saying that we gained tremendous insight from Part 1 of Study 102. Two key aspects increased our confidence in the transformative potential of SRP-9001, particularly after addressing the base issues we faced with those kids. And this informed our design for 301, significantly enhancing the probability of success for this program.

Your next question comes from the line of Colin Bristow of UBS.

Hi. This is Ting on for Colin. Thanks for taking our questions. Congrats on the quarter. So, we have a follow-up question related to the potential accelerated filing for 9001. I understand it was not discussed over the meeting you had with OTAT. I just want to get an idea of where you stand now on filing microdystrophin expression like biomarkers, especially now with aducanumab approval. FDA did take a much more flexible approach for neurological diseases with high unmet need. A follow-up question on the competitive landscape where we noticed Pfizer announced plans to start a Phase 3 trial in non-ambulatory patients with no age restrictions and a Phase 2 for early symptomatic patients aged two to three years old. Any plans to initiate studies in this population in the near term? Thank you.

In response to your second question, historically the non-ambulatory population has been underserved in clinical trials for understandable reasons. However, we're looking to conduct trials in that population, and in Study 103, we have dosed many non-ambulatory larger patients. So that's part of our plans. Regarding the accelerated approval pathway, we understand the necessity of swiftly moving our therapies forward. While we haven't had conversations about accelerating the approval for four to five-year-olds, 301 is our pivotal trial, and we've designed it with significant rigor. Our focus now is on swiftly enrolling and confirming results we anticipate seeing.

Your next question comes from the line of Danielle Brill of Raymond James.

Hi. This is Alex on for Danielle. Thanks for taking the question. I just want to expand on your point on 103. When can we expect to see the expanded data set? And if you can comment, how many patients have you dosed in those non-ambulatory MD older cohort? Thanks.

We plan to find an appropriate medical meeting down the road to provide additional information on Study 103. Currently, we’ve dosed a number of non-ambulatory patients in a range of larger kids with Duchenne muscular dystrophy using SRP-9001, and that progress is proceeding well.

Your next question comes from the line of Yun Zhong of BTIG.

On limb-girdle 2E, it’s very encouraging to hear about the surrogate endpoint discussion. You showed very positive functional data after one year of treatment. My question is: Why don’t you pursue full approval with functional data? Will the surrogate endpoints allow you to avoid running a placebo-controlled study, or could it even enable the potential for approval earlier than one year after treatment?

We must dose children using the commercially representative material first. While we have brilliant data from our current cohorts, that is using clinical supply material. Once we advance to the commercial material, we’ll evaluate the potential for accelerated approval. The LBMD landscape is more heterogeneous than Duchenne, and waiting for a statistically meaningful functional readout might unnecessarily delay access to the therapy. We believe that this is the perfect scenario for accelerated approval, where we can provide immediate access to the treatment and conduct ongoing studies to confirm results. We’re thrilled that the FDA is open to this approach and look forward to further discussions.

There are no questions at this time. I will now turn the call over to Doug Ingram for closing remarks.

Thank you very much for joining us this evening. I am very proud of the work this team has done to serve the patients with our available therapies. One aspect that hasn’t been asked about today is our revenue, which reflects the exceptional commercial expertise we have, and I cannot be more proud of our team's execution in a challenging environment. We are in a solid position to continue launching new gene therapies while maintaining our commitment to patient access without price increases. Our multi-platform approach holds great promise, and the progress we’ve made this year gives me great confidence. I again want to express my gratitude to the patients, families, and teams working tirelessly under difficult conditions to deliver new, effective therapies to individuals with rare diseases. Thank you, and we look forward to providing updates throughout the rest of this year.

This concludes today’s conference call. Thank you for participating. You may now disconnect.