Sarepta Therapeutics, Inc. Q3 FY2022 Earnings Call

Good afternoon, and welcome to the Sarepta Therapeutics Third Quarter 2022 Earnings Call. 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 proceed.

Thank you, Kathy, and thank you for joining today’s call. Earlier today, we released our financial results for the third quarter 2022. The press release is available on our website, 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, 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 President and CEO, Doug Ingram, who will provide an overview of our recent progress. Doug?

Thank you, Mary. Good afternoon, everyone, and thank you for joining Sarepta Therapeutics’ third quarter 2022 financial results conference call. Commencing with performance, as you will have seen in our release, we had another strong quarter serving the community with our three approved therapies EXONDYS 51, VYONDYS 53, and AMONDYS 45. As we mentioned on our second quarter call, about $5 million anticipated for the third quarter came in and was booked in the second quarter. And even with that, total revenue for the third quarter was approximately $230.3 million, and net product revenue was $207.8 million, representing nearly 25% growth over the same quarter last year. To remind you, in the second quarter, we raised our full-year total revenue guidance to between $905 million and $920 million and our net product revenue guidance to between $825 million and $840 million. And in light of our continuing strong performance, we remain comfortable with that guidance. So, let’s move now to our gene therapy platform and specifically to SRP-9001, our gene therapy for Duchenne muscular dystrophy. 2022 has been a momentous one for SRP-9001 and for the Duchenne community that we serve. Over the course of the first half of 2022, we discussed with the FDA the possibility of submitting a biologics license application or BLA for the approval of SRP-9001 on an accelerated basis. As a result of those discussions and the written feedback that we received, we announced on our second quarter call that we intended to submit a BLA for the approval of SRP-9001 to treat ambulatory Duchenne patients. In the third quarter, we did indeed submit our BLA for SRP-9001. Now, if all goes to plan, the FDA will accept the BLA for filing at the end of November of this year. We anticipate a PDUFA date on our BLA in May of 2023, and if successful, a launch by the middle of 2023. To those of you who have asked why we are trying to move so urgently, let me talk for just a moment about why seeking accelerated approval here is not merely appropriate but is compelled by good science and efforts. We’re justified by appropriate disease therapy and evidence. The accelerated approval pathway is an innovative modern tool that has extended and saved countless lives, including patients living with HIV AIDS, patients living with cancers, and patients living with Duchenne. It brings therapies to patients in time to actually intervene and do good. And at the same time, it results in an explosion of innovation. The FDA itself has repeatedly noted the opportunity for accelerated approval in gene therapies where appropriate. From our perspective, SRP-9001 is an ideal candidate for accelerated approval review. Let’s consider, first, patients need this therapy now, not someday or eventually. Time is the enemy of those living with Duchenne. It irreversibly robs children of their muscle and their function on an hourly and daily basis, ultimately killing them. Preventing further disease progression is the greatest need of every Duchenne family, and patients should not have to irreversibly suffer when a well-established regulatory pathway exists to bring that therapy to them now. Second, Duchenne is a well-characterized monogenic disease, and the shortened functional dystrophin robustly produced by SRP-9001 is an upstream surrogate endpoint for accelerated approval, one addressing the proximate cause of disease, one founded on a wealth of scientific evidence supported by preclinical, related biomarker, and clinical functional benefits and one based on a well-established precedent as the FDA has approved for therapies to date using shortened functional dystrophin as a surrogate endpoint. And finally, we are well underway to confirm the results of that accelerated approval. Our proposed confirmatory trial EMBARK is fully rolled and fully dosed, so children can get this treatment rapidly, and the accelerated approval will be expeditiously confirmed through EMBARK. The risk of granting accelerated approval is fleetingly small, while the risk of harm to Duchenne patients if we did not seek accelerated approval is certain, is severe, and is invariable. So planning for the success of our BLA, we are ramping up manufacturing. We have bolstered our commercial, medical affairs, patient services, and access teams, and we are focused on site and launch readiness. Additionally, we have already commenced a study to narrow the early exon mutation exclusions currently in EMBARK and thus, if successful, to safely expand the availability of SRP-9001 to a larger percentage of the Duchenne population. Likewise, we are finalizing protocols for the commencement of ENVISION, our study for non-ambulatory patients as we look to expand the label for SRP-9001 to non-ambulatory patients as soon as possible. And continuing on the theme of expanding the addressable population, next year, we intend to start a study with our partner, Hansa Biopharma, to explore the use of imlifidase to cleave IgG in rh74 positive Duchenne patients with the goal of safely and effectively permitting dosing with SRP-9001. Dr. Rodino-Klapac will provide further commentary on our gene therapy plans, and those will include our plans for LGMD in 2023 as well. Now moving to our RNA franchise. As you are aware, we have three approved PMOs today, EXONDYS, VYONDYS, and AMONDYS. The first of those approvals, EXONDYS 51, came in the fall of 2016, nearly six years ago. So, in addition to continuing to prosecute our two main post-marketing commitments for those approvals, assent and mission, we have had the opportunity with respect to EXONDYS to evaluate the world evidence of the effect of our PMO therapies over time. At the World Muscle Society Conference in Halifax, Nova Scotia in October, we presented study results on the benefits of EXONDYS versus natural history controls. For those interested, you will find the poster on the Investor page of our website, including the survival benefit associated with EXONDYS. Dr. Rodino-Klapac will discuss these findings in her remarks momentarily. EXONDYS was approved on an accelerated basis using internally shortened functional dystrophin. As encouraging as the early data was to support its approval and that of VYONDYS and AMONDYS as well, with a degenerative disease, those full benefits mature and reveal themselves only over time. That is the value of an accelerated approval in the lives of patients living with a deadly degenerative disease. Without it, patients would have been denied this therapy at least by additional years, and perhaps we would never have been able to generate this long-term data without that approval. So, moving to our next-generation RNA therapy, the peptide-conjugated PMO or PPMO SRP-5051. We are dosing MOMENTUM Part B, and we are on track to complete enrollment this year, and we’ll have a data readout on that trial in 2023. Finally, commenting on a management transition. We are announcing tonight that Bill Ciambrone, our Head of Technical Operations and Manufacture, will be retiring. I would like to give a big thank you to Bill, without whom we would not be in the position to launch SRP-9001 next year. After an impressive career, Bill had been largely retired when I approached him in 2019. Given our mission and our science, and I’d like to believe some fair amount of persuasion from me, I was able to coax Bill out of retirement and give him three important goals. First, to complete the process and analytical development for SRP-9001 and to ensure we had the capacity to launch SRP-9001 and to fully meet the need of the community. Second, to build a robust, sustainable technical operations function that has the talent and the focus to scale with Sarepta’s ambitions. And third, to prepare his successor as Bill had intended to make a large impact in a relatively short period of time. I am proud to say that Bill achieved every one of those goals. We have the process, the people, and the capacity to launch SRP-9001 and make it a success. Bill has built a best-in-class organization, and we now have over 300 technical operations personnel driving us forward. Bill will transition leadership of the technical operations organization to Bilal Arif at the end of this year. He will stay with us as both an adviser to me and to the manufacturing organization through June 2023, after the presumed PDUFA date for SRP-9001. Bilal has been with Sarepta and intimately involved in all aspects of our manufacturing activities, including SRP-9001, from the beginning of 2019. He has over 20 years of experience, including more than 8 years at Shire, where he worked closely with Bill. I’m absolutely confident that in Bilal, we could not have a more aligned successor to Bill, someone who will continue our progress without missing a beat, continuing to drive our technical operations and intimately familiar with our strategic priorities and the technical requirements for success. Bill has made an enormous impact at Sarepta, and he’s been a great thought partner for me and for all of my colleagues on the executive committee. I know that sentiment is shared by our Board as well. I am very pleased that he will remain involved and advise us through the approval of SRP-9001. So, thank you, Bill, for all that you’ve done and for what you will do for Sarepta and for putting us in this great position to be successful. And with that, let me turn the call over to our Head of R&D and Chief Scientific Officer, Dr. Louise Rodino-Klapac. Louise?

In the third quarter, we achieved two critical milestones for the SRP-9001 program: the completion of enrollment and dosing for the EMBARK study and submission of our BLA to the FDA ahead of schedule. I could not be prouder of my team in R&D and regulatory for their commitment, perseverance, and execution while keeping the Duchenne community and our mission at the forefront. On a personal note, these accomplishments are both personally and professionally meaningful and bring us closer to realizing the potential of SRP-9001 as a treatment for Duchenne. What we’ve accomplished thus far with gene therapy for Duchenne is just the beginning. We are leveraging our learnings from SRP-9001 and are applying them to the candidates in our deep genetic medicine pipeline. Nearly the entirety of my professional career has been dedicated to genetic therapy research. My team and I have never been singularly focused on bringing just one drug to market; instead, finding a way to shift the paradigm and create a platform that shortens the development time while producing multiple targeted therapies. In parallel, and aligned to our strategy, is to bring forth the best therapies to treat the widest array of patients with genetic diseases. We are pleased to announce the advancement of our MyoAAV platform with the Broad Institute of MIT and Harvard. MyoAAV is a new group of adeno-associated viruses that uses a modified capsid or outer protein shell of AAV to deliver genetic therapies with greater efficiency and at lower doses. The platform has the potential to offer another breakthrough in genetic medicine delivery, with early research showing significantly greater gene expression at lower doses compared to natural serotype capsid. Now moving to our PMO therapies. I want to highlight Sarepta’s impressive presence at the 2022 World Muscle Society Conference that took place in October. In total, we had 14 posters and presentations, several containing new data from across our genetic medicine portfolio. I’d like to focus for a moment on a key late-breaking real-world evidence presentation on eteplirsen in treated patients with Duchenne amenable to exon 51 skipping. This new analysis showed that treatment with eteplirsen resulted in statistically significant survival benefit compared to a controlled natural history comparator group of Duchenne patients. The analysis found that patients treated with eteplirsen for an end of 579 patients survived 5.4 years longer when compared to untreated reproduced patient-level data for Duchenne natural history study, which had an end of 1,224 patients. Additionally, longer exposure to eteplirsen was associated with increased survival benefit. Patients treated with eteplirsen for less than two years had survival consistent with the natural history arm with a hazard ratio of 0.89 and a p-value of 0.64. Patients on therapy for 2 to 4 years showed increased benefit with a hazard ratio of 0.36 and a p-value of 0.005. Patients on therapy for 4-plus years had the greatest benefit with a hazard ratio of 0.11 and a p-value of less than 0.001. The findings were generally robust to sensitivity analysis conducted across cohorts, including natural history controls. The 5.4-year survival benefit was observed in the most conservative of the analytical models. Other findings from the analysis included accomplishment; patients appear to have a 66% higher survival compared with Duchenne natural history controls, where p is less than 0.0001. Also, eteplirsen patients experienced prolonged survival and had significantly longer survival from baseline compared with Duchenne natural history controls, where p is equal to 0.0011. This finding was consistent in the subgroup with patients aged 10 to 28 years of baseline for whom those are most likely to be observed, where p is equal to 0.0001. Finally, predicted mortality rates were lower for eteplirsen-treated patients compared to Duchenne natural history control for all patients between the ages of 10 to 30 years. These new data on survival add to the totality of evidence we have for eteplirsen, which also includes a 2.7-year delay in the time to loss of ambulation, a significant milestone for patients with Duchenne and a slower rate of decline in lung function, leading to a difference of 5.7 years free of ventilation. As Doug noted, full details of the posters are available on the Investor page of our website. Now, turning to gene therapy and beginning with SRP-9001. As I mentioned at the outset of my remarks, we are thrilled to have completed the enrollment in dosing for the Phase 3 EMBARK study and so submitted our BLA to FDA. I’d like to take a moment to acknowledge the tremendous effort undertaken by our team. Many activities are done in parallel, so we can move quickly but we were able to accomplish so much critical work in a short period of time because of the team’s deep commitment to execution. Our BLA was submitted for accelerated approval based on the expression of SRP-9001 as a surrogate endpoint reasonably likely to predict clinical benefit. Among other things, it is supported by positive preclinical biomarker and clinical functional results. In clinical trials, SRP-9001 demonstrated positive results at multiple time points, including 1, 2, and 4 years after treatment in addition to a consistent safety profile. The BLA for SRP-9001 includes efficacy and safety data from Studies 101, 102, 103, or ENDEAVOR, as well as an integrated analysis across these three studies comparing functional results to propensity score matched external controls. Importantly, the functional data reinforced the consistency of NSAA improvement across these three independent trials and show mean improvements across key secondary functional endpoints such as time to rise and 10-meter walk/run. Quantification of the SRP-9001 protein expression is measured by western blot and supported by immunofluorescence. The expression data from across our clinical studies demonstrate consistency from both our clinical and commercial manufacturing process. In particular, the clinical results from ENDEAVOR confirm our confidence in the treatment effect of our therapy, increasing the probability of success for our Phase 3 EMBARK. Additionally, these studies serve to increase our level of conviction for EMBARK because both ENDEAVOR and EMBARK are being conducted using the same material. Importantly, across studies 101, 102, 103, and integrated analysis, the safety profile of SRP-9001 remains consistent and manageable with no evidence of clinically relevant complement activation. As I’ve mentioned, we completed the study in EMBARK and are encouraged because at over one month since dosing completion, the safety profile remains consistent with our previous experience. I wanted to note that as we prepare to enter a review period with the agency, we do not anticipate publicly sharing additional data cuts leading up to our 2023 regulatory milestones and the EMBARK data readout. We are committed to reaching as many individuals living with Duchenne as possible, which is why, as Doug mentioned, we have commenced a new cohort as part of the ENDEAVOUR study designed to narrow the early exon mutations that are currently excluded in EMBARK. We are also working to finalize the protocol for ENVISION, a placebo-controlled study evaluating SRP-9001 in non-ambulatory patients. Additionally, we’re in the process of starting an extension study for gene therapy study, enabling us to follow patients out for a minimum of 5 years. Our commitment to our limb-girdle muscular dystrophy programs has not wavered and continues to be a key priority for Sarepta. We are pleased that our natural history study journey continues to enroll and represents a key component of our LGMD development pathway. We will soon be commencing an additional study for SRP-9003, using clinical material for LGMD2E in both ambulatory and non-ambulatory patients. It is also our goal to start a study with commercial process material for SRP-9003 in 2023. Finally, we plan to commence a systemic pilot study for our SRP-6004, dual vector rh74 mediated gene therapy to treat LGMD2B, which is characterized by the absence of the protein dystrophin. The progress in the third quarter exemplifies our commitment to advancing the best science in the interest of individuals living with rare disease. We are enormously grateful to the patients who participate in our clinical trials and their families who support them, along with the clinical investigators and experts who have guided us to where we stand today. Again, thank you to our extraordinary teams, scientists, and professionals who are tirelessly dedicated to our mission to bring forward treatments. I’ll turn the call over to Dallan to update on the company’s activities.

Thank you, Louise. The third quarter of 2022 marked another successful period for Sarepta’s RNA-based PMO franchise. In this quarter, net product revenue reached $207.8 million, with approximately $122 million from EXONDYS 51, $55 million from AMONDYS 45, and $31 million from VYONDYS 53. As mentioned previously, we anticipated a $5 million pull forward due to ordering patterns influenced by the timing of the July 4th holiday in Q2. The results for the third quarter, including this pull-forward, unfolded exactly as we anticipated. The pull-forward significantly affected the net revenue of AMONDYS 45 in this quarter. We consider this quarter an anomaly for AMONDYS 45 and expect a modest rebound in its growth rate in the fourth quarter. Overall, AMONDYS 45 is progressing well, and we continue to identify and access the Duchenne population suitable for exon 45 skipping. It's also noteworthy that the net revenue from EXONDYS 51 has benefitted from our ex U.S. sales growth in 2022, which continues to rise year-over-year. Most of these revenues are surging from EXONDYS 51, contributing significantly to our net product revenue growth while also causing some fluctuations from quarter to quarter due to different ordering patterns compared to the U.S. Regarding the third quarter revenue, while EXONDYS 51's U.S. revenue saw mild growth, the overall quarter was influenced by the irregularities in ex U.S. ordering patterns. In total, the $207.8 million in net product revenues for the third quarter represents an almost 25% growth from the third quarter of 2021. We remain on track to meet our full-year net product revenue guidance of between $825 million and $840 million. Now, let's review the performance of our three RNA-based PMO therapies during the quarter. EXONDYS 51 delivered $122 million in net revenue in Q3, reflecting nearly 6% growth from the same quarter last year. For AMONDYS 45, especially considering the pull forward, we are very pleased with the almost $55 million in net revenue, indicating a significant increase compared to the third quarter of 2021. VYONDYS 53 increased by more than 24% from the third quarter of 2021, with net revenue of $31 million. We have maintained our market leadership in the exon 53 amenable population and our team is actively working to onboard new patients while ensuring existing patients remain on therapy. As we indicated in the second quarter call, we do not anticipate significant changes for VYONDYS moving forward. In addition to another quarter of strong execution and revenue growth, we have intensified our preparations to be launch-ready for SRP-9001 by mid-2023. As leaders in Duchenne, we recognize the urgency of the patient community and are committed to ensuring our experienced team is ready for the approval of SRP-9001, just as we were for each of our three PMO launches. In the third quarter, while our R&D team was ahead of schedule with a BLA submission, our customer organization ramp-up for the SRP-9001 launch reached full momentum. We are currently expanding our field and head office teams to lead what we believe will be the most successful gene therapy launch to date. Additionally, we have begun engaging with key sites to ensure they are prepared to support patients upon approval. We are acutely aware of the magnitude of this opportunity. As the leader in the Duchenne market with three of the four approved RNA therapies, being positioned to launch the first Duchenne gene therapy, backed by the data generated by our R&D team, is truly remarkable. We are ready to take the lead, build upon the efforts of our R&D partners, and deliver this vital therapy to the Duchenne community. On a personal note, I want to express that I recently celebrated nine years with Sarepta. During this time, I've had the privilege to witness our unwavering dedication to our mission and our commitment to serving patients. I'm proud of our team’s impressive performance and execution since we launched our first PMO six years ago. The extensive experience we’ve gained has equipped us well, and I believe we are in an unparalleled position to manage the launch of SRP-9001. Now, I’ll turn the call over to Ian Estepan for a financial update. Ian?

Thanks, Dallan, and good afternoon, all. This afternoon’s financial results press release provided details for the third quarter of 2022 on a non-GAAP basis as well as a GAAP basis. Please refer to our press release available on our website for a full reconciliation of GAAP to non-GAAP financial results. For the three months ended September 30, 2022, the Company recorded total revenues of $230.3 million, which consists of net product revenues and collaboration revenues compared to revenues of $189.4 million for the same period of 2021, an increase of $40.9 million. Net product revenue for the third quarter of 2022 from our PMO exon skipping franchise was $207.8 million compared to $166.9 million for the same period of 2021. For the third quarter of 2022, individual net product sales were $122.3 million for EXONDYS, $54.9 million for AMONDYS 45, and $30.6 million for VYONDYS 53. The increase in net product revenue primarily reflects increasing demand for our product in the U.S. and around the world. In each of the quarters ended September 30, 2022, and 2021, we recognized $22.5 million of collaboration revenue, which relates to our collaboration arrangement with Roche. The reimbursable co-development costs under the Roche agreement totaled $22 million for the third quarter of 2022 compared to $29.4 million for the same period of 2021. On a GAAP basis, we reported a net loss of $257.7 million or $2.94, and $48.1 million or $0.60 per basic and diluted share for the third quarter of 2022 and 2021, respectively. We reported a non-GAAP net loss of $70 million or $0.80 per basic and diluted share in the third quarter of 2022 compared to a non-GAAP net income of $2.4 million or $0.03 per basic and diluted share in the third quarter of 2021. In the third quarter of 2022, we recorded approximately $40 million in cost of sales compared to $23.4 million in the same period of 2021. The increase in cost of sales is primarily due to increasing demand for our products and an increase in write-offs of certain batches of our products not meeting the quality specifications for the three months ended September 30, 2022, as compared to three months ended September 30, 2021, partially offset by a decrease in royalty payments during the three months ended September 30 due to changes in the BioMarin royalty terms. On a GAAP basis, we recorded approximately $216.7 million and $139.1 million in R&D expenses for the third quarter of 2022 and 2021, respectively, a year-over-year increase of $77.6 million. The increase is primarily due to increases in manufacturing expenses due to the continuing ramp-up of our SRP-9001 manufacturing. On a non-GAAP basis, R&D expenses were $193.7 million for the third quarter of 2022 compared to $119.6 million for the same period of 2021, an increase of $74.1 million. Now turning to SG&A. On a GAAP basis, we recorded approximately $104.8 million and $61.1 million of expenses for the third quarter of 2022 and 2021, respectively, an increase of $43.7 million. The increase was driven primarily by an increase in stock-based compensation expense, primarily due to an additional expense recognized due to the CEO grant modification agreement executed in the three months ended June 30, 2022, which is recognized over the service period. On a non-GAAP basis, the SG&A expenses were $66.8 million for the third quarter of 2022 compared to $43.6 million for the same period of 2021, an increase of $23.2 million. On a GAAP basis, we recorded $6.3 million in other expenses net for the third quarter of 2022 compared to $20.6 million in other expenses net for the same period of 2021. The decrease is primarily due to an increase in interest income due to the investment mix of our investment portfolio as well as a reduction of interest expense incurred as a result of the repayment of our December 2019 term loan for the three months ended September 30, 2022. In the third quarter, we had proceeds of $1.1 billion from issuing convertible senior notes due in 2027. Additionally, we repurchased a portion of our outstanding 2024 convertible notes and prepaid in full the amount of our outstanding related to the 2019 term loan. The repurchase and prepayment of the existing debt resulted in a loss on debt extinguishment of $125.4 million. Assuming an approval of SRP-9001, we anticipate that along with our current cash and our projected revenue, that this offering will be sufficient to fund our operations to profitability. We had approximately $2.1 billion in cash, cash equivalents, and investments as of September 30, 2022, and therefore, we are well capitalized to support the launch of SRP-9001, if approved. And now, I’ll turn the call back over to Doug to start the Q&A. Doug?

Thank you, Ian, for that. Kathy, let’s open the call for questions and answers.

Our first question comes from Gena Wang of Barclays.

I have one question regarding the SRP-9001. Doug, you mentioned that you expect a PDUFA date likely in May 2023. Any concern that the review could be standard review? And do you think that if it’s possible the FDA would like to see 3-year Study 102 data that will mature in January 2023?

So in connection with our submission of our Biologics License Application, we have requested a priority review. We are preparing for that, which is why we mentioned the May deadline for the PDUFA date; that's our current expectation. That is what we are planning for and what we assume. We haven’t received any information or commentary from the agency or the division that would suggest anything different at this time.

Our next question comes from the line of Tazeen Ahmad of BofA.

Doug, I just wanted to get some detail from you on where you are with your manufacturing commitments. What do you need to show FDA? And if you do get a priority review, would this allow enough time for you to complete whatever commitments you have agreed upon before the launch would proceed? Thanks.

Thank you very much, Tazeen. So obviously, we’ll have all of this dialogue with the division during the review itself, but we’re in great shape. You will recall that some time before we commenced our EMBARK study, the placebo-controlled trial that we fully dosed, we were required to get basically the bulk of our CMC completed and our assay work done as well. So, I think we’re in very good shape right now to respond to any of the agency’s questions. The BLA submission that we made is very detailed and has an enormous amount of CMC. So I think we’re in very, very good shape right now.

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

So Doug, maybe this is just helpful for us. Can you put in context a six-month difference for a DMD patient?

Every day is significant for a Duchenne patient. To clarify your question, the time difference between a non-accelerated approval submission and a traditional or accelerated approval would not be merely six months; it would actually be much longer. Without seeking accelerated approval, we would have to wait until the end of EMBARK to gather and quality check all data. By that point, we might be just starting our biologics license application, which we could submit in 2024. If we receive priority review, we might get approval in the latter half of 2024, rather than at the very end. This creates a substantial gap affecting the lives of patients. Even a six-month delay can have monumental consequences for a Duchenne patient. Each passing day can result in irreversible damage that neither our therapy nor any currently envisioned therapy can fully address; our therapy aims to arrest decline, not reverse it. Without accelerated approval, around 200 of these children in the U.S. could die, and many more would be confined to wheelchairs or lose critical milestones, with a few hundred potentially needing ventilators in just that six-month span. When you consider that the difference could be as much as 15 to 17 months, the value of accelerated approval is enormous, affecting not just hundreds but possibly 10,000 to 15,000 children. Every day we delay means more damage for those children. Although science can take time, and some damage is unavoidable, when a pathway to deliver a therapy supported by solid science is available, we must pursue it. From our perspective, it's imperative that we seek accelerated approval now, especially given the extensive data we have to support our case. The evidence we have for SRP-9001 is significantly stronger, and it would nearly be unethical not to pursue accelerated approval after our thorough discussions with the FDA. Thank you for your question.

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

Just a couple from my side. First on the case of myocarditis, you had, I think it was in Cohort 2 103. Just any update here, any further insights around the course? And then second, on Pfizer’s recent protocol change to screen out the patients with the lesion in the regions of exons, I believe this spans the region that 9001 contains near the C terminals region. Sort of any index or concern on your side around potential immunogenicity issues for patients lacking making proteins in that region?

No to the latter question, but I’m going to turn both of those questions over. Dr. Rodino-Klapac can provide additional color.

Thank you for that question. Obviously, we are continuing to follow our patients. As you recall, the patients in Cohort 2 with myocarditis had sustained cardiac function, normal cardiac function trend baseline. There was a troponin increase. Also, as you know, in Duchenne, these increases can occur in natural history as well, so the patient continues to do well and continues to follow. We have not had any concerns with the C terminals for our program.

Our next question will come from the line of Salveen Richter from Goldman Sachs.

Congratulations on the progress. This is Tommy on for Salveen. And we’re wondering if you’ve discussed the scenario where you get accelerated approval for 9001, but EMBARK is not statistically significant on MSAA potentially due to variability or other factors? And can you comment on what could be like the likelihood that you would get an AdCom? Thanks.

Sure. Let me start with the first one first. Before I comment on that hypothetical, let me be very clear, we’re very confident on EMBARK. We’re powered well into the 90s. It is very well informed. That entire study in its design is very well informed. Now it’s dealing with the issue directly. And I think the question underlying all of that is essentially what would you commit to removing the therapy from the market if EMBARK hit. That’s not the actual standard. The actual standard is to look at the entire totality of the evidence. If the totality of the evidence didn’t justify the continued availability of the therapy, then would you commit to removing? And the answer to that is, of course, yes. That is the standard for accelerated approval. We would certainly do that, notwithstanding the fact that we’re very confident. We’re confident based not just on the power of that study, but on all of the data that we already have on the therapy. And I apologize. Perhaps someone can remind me of the second question?

AdCom.

The short answer is that we haven’t heard yet from the agency whether or not we’re going to get an AdCom. We will know that probably shortly after the agency accepts our BLA, which should occur in late November. But given that this is the first in its class, we’re certainly planning for and assuming that we would get an AdCom and that would occur in the spring of 2023. Apologies for that.

Next question comes from Matthew with Morgan Stanley.

I just wanted to ask about some of the real-world data that you presented and some of your thoughts just around the time point for the primary endpoint in EMBARK. I think one of the things a lot of investors are concerned about is potential variability from patients. I wonder if you’ve considered looking at a longer time point in that study and just your confidence that one year is the right time for the primary endpoint in that study? Thanks.

Thank you. The real-world evidence from EMBARK, along with our work on EXONDYS, is exciting for us, as we've tracked the progress of those children over several years. It's important to note that the PMOs and our therapies differ significantly. The PMOs produce reliable amounts of dystrophin consistently across all of our therapies and studies, but they generate a smaller quantity of truncated functional dystrophin compared to what 9001 achieves. This results in varying impacts on a child's life over time. To clarify, 9001 produces a truncated functional version of full-length dystrophin, similar to Becker dystrophins and PMOs, which all approximate the same outcome. In designing the 9001 study, we've carefully considered the variability and heterogeneity within the patient population. Our organization has extensive experience in this area, and we have access to comprehensive natural history data, including various study data over time. We believe our assumptions regarding the study's design and powering are conservative, reflecting our confidence in its robustness, which is well over 90%. We feel positive about where we stand, especially over a 52-week period. While this duration in the life of a Duchenne patient may seem short, it's encouraging to see a significant difference in disease trajectory after just 52 weeks on 9001 compared to natural history. As we extend the timeline to two years and four years, the effects become even more transformative, aligning with the expectations for a treatment that addresses the root cause of the disease and modifies its progression. Overall, we are very confident in the powering of EMBARK and have strong conviction about the results. This study is one of the largest of its kind currently, and we are thrilled about the implications for patients.

Our next question is from the line of Joe Schwartz of SVB Securities.

This is Beth on for Joe. Thank you for taking our question today. For SRP-9001 BLA filing for ambulatory patients, we were just wondering if you have a sense from the FDA if your current data package is sufficient to support use in ambulatory patients broadly regardless of age, just in our doc check, desire to initiate gene therapy sooner than later. I also was curious if you maybe consider doing a study in DMD patients younger than 4 to support use there, kind of similar to what Pfizer is doing with their 2- to 3-year-old study? Thank you.

We do feel good and confident about the approach we’re taking seeking approval for the ambulatory patient population and remind us that the regulatory standard as well as the legal standard for extrapolating to greater parts of the population is well understood. You have a presumed mechanism of action that would be applicable to a broader population. You have the ability to study in a narrow population to see the effect, as we were discussing a moment ago, to deal with the heterogeneity that comes from a larger population then expand it to broader populations. That’s why we’ve chosen the ambulatory population; we want to get started as soon as possible on a placebo-controlled trial for the non-ambulatory population. We are actually ongoing dosing non-ambulatory kids today, but in our 103 protocol, we want to expand it to the non-ambulatory patient population as soon as possible because those kids need this therapy rapidly. And then to your point, we are in the planning phases for a study to go significantly lower, but I’ll turn that to Louise Rodino-Klapac; can you talk about going even lower than the 4-year-old population in EMBARK?

Thanks for that. We plan the study to go even younger than 3 years old as well. We are in the process of solidifying our therapy that broadly addresses this population.

Our next question comes from the line of Brian Abrahams of RBC.

Can you provide an update on the CMC assays and process development for limb-girdle? Also, I may have misunderstood, but it seems there will be a plan for two studies involving clinical materials, followed by materials scaled for commercial use. Can you clarify the timelines for these studies and how they might work together to support a potential pivotal path?

Yes. I’ll pass it to Louise for more details. In general terms, we are still finalizing the assays necessary for the commercial process release for 9003. Just as a reminder, to initiate a study that could support an approval, the current standard requires us to have those assays completed and ready for commercial use; clinical use alone is not sufficient. We are continuing our efforts on that, which takes time. Our aim is to complete everything and start the study in 2023. As you mentioned, we have two different studies planned. They are not intended to be done one after the other; rather, they can be conducted simultaneously. These studies are actually quite different, and we expect both to take place in 2023. The question arises about why we are conducting two studies instead of just using the commercial process material once the assays are completed. The reason is that we have access to clinical material that is very useful, and we believe it could greatly benefit patients, while also providing valuable insights into other segments of the population beyond the studied group for our pivotal trial next year with commercial process material. From our perspective, it makes sense to utilize that material, conduct the study, and gain additional insights while helping patients.

Non-ambulatory patients will provide us with significant insight into the entire population. As Doug mentioned, we’re ensuring that we capture the whole population.

Our next question comes from the line of B. Skorney at Baird.

I guess, as we think about potential launch, obviously, clinical sites are somewhat prepped for this, and patient demand would presumably be pretty high. I guess, what have your conversations been like so far with payers? I know that payers have sort of pushed back recently on Subpart H approvals. Just trying to think about the curve of the launch. You’re obviously in negotiations with a ton of payers on accomplishment, have some idea of utilization of Zolgensma. But just do you think that there are going to be hurdles put up until you get the EMBARK data out, or do you think that payers will be relatively flexible at initial Subpart H approval?

I want to highlight a few points. First, while Dallan might not mention it, the good news is that there will be challenges ahead, but we are well-prepared to work with payers, address these challenges, and ensure that kids receive therapy. It's important to remember that with three approved therapies from EXONDYS, we've experienced a compound annual growth rate of 35% to 40% for nearly six years, and our compliance and adherence rates exceed 90%. Our success in getting children on therapy, especially in managing chronic therapy, has been remarkable. We've navigated prior authorization processes and reauthorization, which may not apply to gene therapy. We know what we're doing, and we're engaging significantly with payers to understand their perspective and needs. Concerns regarding demand can be immense, both from patients and physicians who are eager for this therapy. Additionally, we are focused on ensuring capacity at infusion sites. We aim to have 70 expert sites ready for infusions; around 80% of patients are served by 50 sites, and many of them have substantial experience with gene therapy, thanks to Zolgensma's launch. Our proactive engagement with payers is essential. It’s crucial to clarify that these children cannot afford to wait for therapy. Delays of three to four months in accessing treatment are unacceptable, and we are addressing this directly with payers. We are not just seeking access, but timely access. We believe that well-informed payers will be supportive, especially when they see the compelling value our therapy offers. While the process might take some time, assuming we meet our approval timeline, we anticipate that it will take a few quarters to start treating kids. However, I believe that once we begin, the uptake will be strong, and I have confidence in Dallan and the team's ability to execute this effectively.

No, I think you’ve covered it, Doug. We’ve had constructive dialogue with payers, and there is a high level of receptivity to gene therapy. In the past six years, thanks to the Duchenne community and especially our neuromuscular key opinion leaders, the payer community has gained significant insight into Duchenne. We are in a much better position now compared to the launch of EXONDYS 51 in 2016. Additionally, thanks to Louise and our R&D colleagues, the data we will be presenting, along with the publications supporting the value and efforts of our health outcomes team, will strengthen the value framework that Doug discussed. We have also learned a lot about Duchenne, and we are well-equipped to engage in constructive dialogue moving forward.

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

Congratulations on the progress. I know we’re focused on the AA and the EMBARK data next year. However, we haven’t heard much about Europe in a while. Can you provide an update on your relationship with Roche and the time frame for making an impact in Europe and beyond? I assume that will depend on EMBARK regardless of what happens with the AA?

We have a great working relationship with Roche. I believe you can see it revealed in their public statements. Roche seems to be about as bullish as we are about this therapy publicly, and that certainly reflects the very positive working relationship we have with our colleagues at Roche. I think we have a very good collaborative approach across all aspects of the development program, commercial planning, regulatory, and the like. On Europe and beyond to other parts of the world outside of the United States, I will leave it to my colleagues at Roche to inform the external world on the timing of things, other than to know what you’ve noted, Tim, which is that I think Roche’s public statements have been that they will rely upon the EMBARK readout as the pathway for their approvals and the HTA discussions they’ll have in Europe and around the world. Unless we hear something different from Roche, I think that’s their public statement, and that’s what we should rely upon.

One moment for our next question, which comes from Anupam Rama of JP Morgan.

I wanted to follow up on Tazeen’s question earlier. You’ve highlighted this a little bit. But on the manufacturing side, what are the 9001 supply scenarios that you’re planning for looking to next year, pending approval? Are there any constraints or hurdles we should be considering when it comes to supply access as we think about this launch curve?

Yes. Thank you. I think with Tazeen, I was answering a slightly different question, which was, do we have a good shape from a CMC perspective? Do we have the assays done, and the data that is supported? The answer to that is yes. We’ve done a ton of work. In fact, we did a ton of work before EMBARK, so we were in a very good shape. Your question is a very good one, which is how about capacity? Are you in good shape from a capacity perspective to fully launch? The answer is yes; we’re going to be in very good shape. We’re planning to launch for the ambulatory patient population. That is our current working assumption, broadly speaking, and our goal is to fully serve that community without delay. Even assuming a fairly aggressive uptake and even assuming, which I think is at this point, a very fair assumption that we would be launching this alone.

Our next question comes from Hartaj Singh of Oppenheimer.

Thank you. Thanks for all the update. I just had a quick question. The MyoAAV program. I know, Louise, you and your colleagues from Nationwide have worked on rh74 for over a decade, and it seems you have a best-in-class AAV vector there. What really attracted you to MyoAAV? Is it significantly better than rh74? How do you see it getting into the clinic in DMD, LGMD? Thanks for the question.

Sure. I’ll turn this to Louise to comment.

Yes. Thank you for that question. We love rh74, so I guess I’d say we’re very bullish on it. MyoAAV is very exciting. It’s in the research phase. What we’ve seen is quite promising, and we will continue to validate it in the clinical path as well.

I apologize, but I think Louise is cutting out a bit. I'll try to summarize what I believe she was conveying. First of all, we are enthusiastic about rh74, which is currently our leading platform for gene therapy targeting neuromuscular and cardiomyopathies. From our view, rh74 stands out as the best serotype concerning safety and tropism. This is not a criticism of rh74; we are very pleased with it. There is significant future value for patients if we can discover methods to reduce dosages, making therapies more accessible globally, while also likely enhancing safety. However, we have a long journey ahead. We have not yet treated any patients or healthy volunteers with MyoAAV, but our preclinical animal studies have shown some very promising indicators regarding its potential. MyoAAV could potentially be significantly more tropic than any current serotypes, which would have substantial implications, especially in regions like India and Africa, where we need to address costs to fully realize the benefits of our treatments, including 9001. It could also potentially open doors to treating various challenging diseases which are currently not manageable. This is a situation we need to address. MyoAAV—if not MyoAAV, perhaps another capsid—represents our best candidate, as we have explored all options. It has the potential to be a groundbreaking next-generation approach to gene therapy. We are very fond of rh74, but we are also optimistic about the future prospects of MyoAAV.

One moment for our next questioner, which comes from the line of Anvita Gupta of Cowen.

This is Anvita for Ritu from Cowen. I wanted to continue questioning on the MyoAAV program. Are you guys seeing any transduction of satellite muscle cells to hopefully get a sense of potentially improve durability in DMD patients, or is that something that you hope to explore?

We will certainly explore satellite cells and the like. I don’t know if we have yet.

We will explore it. We have also explored our transduction there with satellite cells. It’s not something we already see, but we’ll certainly evaluate it with MyoAAV as well.

One moment for our next caller, which comes from the line of Yun Zhong of BTIG.

It’s actually an old question that had been asked before, but now that you’re talking about the launch of gene therapy program with strong confidence, so probably more related. So what kind of impact do you expect the launch to have on your exon skipping revenues? And are we going to build that into our launch strategy, please? Thank you.

One of the core discussions within our organization centers around being patient-driven and mission-focused. If we have a therapy that is as effective as we believe 9001 to be and it significantly outperforms the current exon skipping platform, thereby benefiting children, we would be very pleased. I want to emphasize that we are committed to utilizing the best technology for kids. We believe that both gene therapy and our exon skipping therapy or PMO and next-generation PPMO will have important roles for a long time. It’s important to remember that we do not anticipate significant cannibalization in the near term for multiple reasons. Notably, around 50% of our current exon skipping patients are non-ambulatory and rely on this therapy while waiting for 9001 to receive approval. Additionally, there are about 14% of children with neutralizing antibodies who are not eligible for this therapy, and we are working on solutions for them. We are going to initiate a study with Hansa, and are optimistic about the preclinical results we've obtained. Until we can resolve these issues, the current therapy will continue to benefit those kids. There will also be various locations, both in the U.S. and internationally, where PMO or PPMO options are available even when gene therapy is not. We believe these therapies can exist alongside each other for some time. Furthermore, we are looking into the possibility of co-administering gene therapy with PMO or PPMO, as some preclinical studies and existing literature indicate potential additive benefits from this approach. If 9001 proves to be as effective as we suspect, it may indeed take some market share from existing therapies, and if that translates to better outcomes for children, we would be very happy, and as investors, you would feel the same. The addressable population for 9001 is significant right now. We are working on reducing the number of early exons that need to be excluded and are focusing on patients with neutralizing antibodies. We plan to conduct a trial, and if successful, this could include an additional 14% of children in our treatment scope.

Our next question comes from the line of Kristen Kluska of Cantor Fitzgerald.

This is Rick on for Kristen. Thank you for taking our question. For the real-world EXONDYS 51 data presented at the World Muscle Society, could you talk about how you’re specifically thinking about the importance of these data in the high unmet need non-ambulant population?

The question centers on the impact of dystrophin on ambulatory patients. The data applies equally across the population, as every child is facing the same challenge of lacking functional dystrophin, which leads to muscle damage with movement. The significance of this real-world evidence is that it has demonstrated over time that the initial findings with EXONDYS become clearer as time goes on. This is also the benefit of accelerated approval. We can anticipate significant outcomes with 9001 when we examine the amount of induced dystrophin. With EXONDYS, VYONDYS, and AMONDYS, we have made considerable post-marketing commitments, investing hundreds of millions of dollars in these studies. Two of these studies are particularly important to us, and we are fully committed to completing them in a timely manner. The real-world evidence is promising, and we must continue our efforts on post-market commitments as well.

One moment for our next question, which comes from the line of Zhiqiang Shu of Berenberg.

I’d like to ask about the external control in your integrated analysis for the gene therapy package you submitted for accelerated approval. Have you reached any agreement with the FDA regarding the external control based on natural history? We know there was a recent negative opinion from a Supervisory Committee about an oncology product. I'm curious if you have any consensus on this and how crucial it is to have that data to support your accelerated approval.

The totality of evidence is extraordinarily important. The design, why it exists the way it exists, the extent to which it’s a reasonable approximation of Becker dystrophin, the preclinical work, all of the related biomarker work, and then everything we have from a clinical data perspective, including integrated analyses from studies 101, 102, and 103, very broad age ranges, very broad weights and the like. The FDA has seen all of this data, and we feel very good. I don’t think it’s any one piece of data. It’s going to reveal itself in the review process and the totality of the evidence that’s being considered. We’ve done a ton of work to utilize a well-masked external control. We masked on 4 different covariants. To ensure we had a tight correlation, we did regression analysis and propensity matching and essentially made the distribution, not just the means of the distribution identical across the two. Many of the patients in the external control came from placebo-controlled trials. So to the extent that people might wonder about that, they were actually on a placebo at the time their information was developed. We believe it’s very compelling.

One moment for our last question, which comes from the line of Gavin Clark-Gartner of Evercore ISI.

For LGMD, I’m just wondering if you’re planning to include a placebo arm for either of those next trials and what your current thinking on registrational endpoints is?

Yes. We plan to include a placebo arm that is older patients who are going to be more severe ambulatory and then non-ambulatory. As we think about the Phase 3 study, we are in agreement.

Just to remind everybody with respect to 9003, we’re still working on the assays for clinical material. We’ve gotten a very similar safety profile to 9001, not surprising since it’s rh74, and we’ve seen very good expression across both cohorts. I would remind you of two other things. First off, that this condition is well-characterized, and we’re familiar with what’s causing the demise of the patients. We know exactly what’s causing this. We see expression with significant upregulation of the dystrophin-associated protein complex, and reduction in CK and beyond that. Our goal is to commence the study in 2023.

Thank you. With no further questions, I’d now like to turn it back to Doug Ingram for closing remarks.

Thank you all very much for spending time with us this evening, and thanks, everyone, for your very insightful questions. Obviously, the next seven months are among the most consequential in our history, and we have a fairly long history. More than that, I believe, they are probably among the most consequential for Duchenne patients, perhaps since the discovery of the dystrophin gene back in 1986, if I’m remembering correctly. We’re looking forward to all of the work that we have ahead of us, and we’re excited to update you as we pass through these important milestones. With that, I would ask everyone to have a lovely evening.

Yes. Thank you for your participation in today’s conference. This does conclude the program, so you may now disconnect.