Sarepta Therapeutics, Inc. Q4 FY2022 Earnings Call

Good afternoon and welcome to the Sarepta Therapeutics Fourth Quarter and Full Year 2022 Earnings Call. As a reminder, today's conference call is being recorded. At this time, I will turn the call over to Mary Jenkins, Associate Director, Investor Relations. Please go ahead.

Thank you, Valerie and thank you all for joining today's call. Earlier this afternoon, we released our financial results for the fourth quarter and full year 2022. The press release is available on our website at sarepta.com and our 10-K was filed with the Securities and Exchange Commission 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 annual report on Form 10-K 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 President and CEO, Doug Ingram, who will provide an overview of our recent progress. Doug?

Thank you, Mary. Good afternoon, everybody and thank you for joining Sarepta Therapeutics for our fourth quarter and full year 2022 financial results conference call. 2023 may be the most eventful year in Sarepta's event-filled history. Our Biologics License Application, or BLA, for our gene therapy SRP-9001 for Duchenne muscular dystrophy will be a significant bellwether moment: first, for the Duchenne families who are waiting without the luxury of patience for a therapy that might arrest the brutal decline associated with this disease; and next for the promise of gene therapy as a class to deliver meaningful improvements in the lives of patients with rare degenerative diseases, not at some distant vanishing points in the future but in time to do good now. Given the keen interest in the 9001 BLA submission, I'm going to comment on the BLA review before I move to quarterly and yearly performance. As you will recall, in the fall of last year, we submitted our BLA for SRP-9001 to treat ambulant Duchenne patients. In the fourth quarter, the FDA accepted the BLA for filing, granted 9001 priority review and set May 29, 2023, as our action date. We have been diligently prosecuting the BLA. We have by now completed a very productive mid-cycle review with the division. At the mid-cycle, the division requested additional CMC information and we have by now provided answers to all of those questions. The division formally informed us as well at the mid-cycle meeting that they see no significant safety issues that have been identified. The division has also determined that there is no need for an advisory committee meeting for SRP-9001 BLA. As you may have read, FDA has announced that the Office of Tissues and Advanced Therapies, or OTAT, is being reorganized and a new super office entitled the Office of Therapeutic Products, or OTP, is being established. The goal is to improve alignment, increase resources and capacity and enhance expertise. A couple of thoughts. First, Sarepta is delighted by the establishment of OTP. We believe it will enhance reviews and serve Dr. Peter Marks' publicly stated vision to lean in and accelerate the transformative potential of cell and gene therapy. Second, the FDA has stated that the reorganization and establishment of OTP will not impact any timelines. We can confirm that we have not experienced any delay or disruption of any kind as a result of this reorganization. Indeed, we see the establishment of OTP as unequivocally positive and potentially a great benefit to patients. Moving forward, we're going to focus on the following: first, answering any remaining questions the FDA may have on the file; second, preparing for and managing preapproval inspections. The FDA has already scheduled three preapproval manufacturing inspections and along with our manufacturing partner, Catalent, we are preparing to make those inspections a success; third, building inventory for launch; and fourth, completing our launch readiness. Now I provided an update on the mid-cycle today as there has been a significant amount of interest in whether the division would see the need for an advisory committee. However, from here, we will be focusing on prosecuting the BLA and we'll provide an update on or after the 9001 action date. Moving now to performance. As one ponders how Sarepta may execute the launch of 9001, if given that opportunity, I would ask you to consider the team's consistent performance quarter-over-quarter and year-over-year, serving the Duchenne community with our three approved therapies: EXONDYS, VYONDYS and AMONDYS. From an end-market perspective, 2022 was yet another year where our cross-functional team, including commercial, medical affairs, patient services, access and reimbursement and manufacturing and supply chain, to name a few, executed together and delivered for our patients. Fourth quarter total revenue stood at $258.4 million, while net product revenue came in at $235.9 million. That is a 32% increase over the same quarter of the prior year. Full year total revenue came in at $933 million and net product revenue for the year came in at $843.8 million, representing a 38% year-over-year increase. For the last five years, we have grown at a consistent 40% compound annual growth rate, all of which performance comes from serving the Duchenne community and none from price increases. Now as we announced at the JPMorgan conference in January, for 2023, our net product revenue guidance for our three currently approved PMO therapies, excluding the impact of a 9001 approval, is $925 million or greater. Moving back to SRP-9001 for a moment. We are commencing studies this year to ensure that we have the broadest label for SRP-9001 as is possible, consistent with the science. We have already commenced our study to limit mutation-related exclusions. Further, in the coming months, we will be starting a study in the non-ambulant population called ENVISION or Study 303. We will commence two separate studies with alternative approaches to removing preexisting antibodies to make SRP-9001 available to rh74 NAV-positive patients as well. Additionally, we are making significant progress with our limb-girdle pipeline as Dr. Louise Rodino-Klapac will discuss in a moment as she provides updates across our research and development activities. On the RNA platform, we will complete enrollment of the MOMENTUM study this quarter. MOMENTUM, as you know, is our study for our first next-generation peptide-conjugated PMO, also known as PPMO, next SRP-5051 designed to treat Duchenne patients who are exon 51 amenable. MOMENTUM will read out later this year and if successful, we will discuss a filing for SRP-5051 with the neurology division this year. I am proud of the progress that we have made these last six years. Yet it pales in comparison to the good that we can do in the coming years together. We have the potential to improve the lives of countless patients and to greatly reward those who have been committed to and invested in this mission. Indeed, the opportunity in front of us is breathtaking. To realize that opportunity, we will need laser-focused and tenacious execution but as Sarepta has proven time and again, this is a team that knows how to execute. With that, let me turn the call over to our Head of R&D and Chief Scientific Officer, Dr. Louise Rodino-Klapac. Louise?

Thanks, Doug. The accomplishments of 2022 and the opportunities before us in 2023 and beyond speak to the promise of science to fundamentally impact and change the lives of patients around the world. My deepest gratitude to our R&D colleagues across RNA, gene therapy and gene editing for their extraordinary work to get us where we are today. And where we are today represents an important moment in genetic medicine and an important moment for Sarepta. Firstly, we were thrilled to learn last November that the FDA accepted our BLA for review via the Accelerated Approval pathway for our lead gene therapy candidate, SRP-9001. This decision was based on our ability to show a robust expression of the SRP-9001 dystrophin protein, a shortened functional version of dystrophin serving as a surrogate endpoint reasonably likely to predict clinical benefit in patients with Duchenne muscular dystrophy. Duchenne results from a mutation in the gene that codes for dystrophin. Dystrophin acts as a shock absorber in our muscle, attaching to the muscle membrane and distributing force as we move, thereby protecting our muscles from damage. Individuals with Duchenne lack dystrophin and as a result, their muscles become progressively worse. Our goal with SRP-9001 is to change the course of the fatal disease by treating the underlying cause of Duchenne with a one-time gene therapy that delivers functional dystrophin to the muscle. Based on well-established precedent, the FDA has approved four therapies to date using shortened, functional dystrophin as a surrogate endpoint. Furthermore, Sarepta has generated the most compelling preclinical biomarker and clinical functional results to date. What is particularly interesting about SRP-9001 but not completely surprising based on the strong scientific underpinning of our construct is that the early SRP-9001 data provided read-through to our positive clinical experience with the therapy. Over the course of ten-plus years, I, along with Dr. Jerry Mendell, built, researched and tested numerous constructs to determine what areas of the protein were functional and protective. We eventually identified an optimal gene cassette that retained protective and functional elements and could fit easily into AAV, thereby enabling its delivery. This gene cassette was packaged into our AAV of choice, rh74, and we chose MHCK7 as our promoter. We are pleased with the early data which showed robust expression across skeletal, diaphragm and cardiac muscle. As a result of that expression, as well as the dystrophin protein demonstrating functional benefits, we saw significant restoration of function at the clinical target dose. To understand the significance of the results and their importance in the context of a viable therapy for Duchenne, it's critical to understand the dystrophin-associated protein complex, or DAPC. DAPC is a collection of proteins to which dystrophin attaches. In its absence, these proteins disassemble. Individuals with Duchenne don't have a functioning dystrophin-associated protein complex. Understanding this, when we inserted a functional dystrophin protein, we saw up-regulation of the DAPC in animal models. More specifically, we saw an almost one-for-one up-regulation of DAPC when there was expression of the SRP-9001 dystrophin, confirming the protective properties of the protein. Additionally, we saw significant reductions in levels of an enzyme associated with muscle damage. The reduction in CK provided further proof that SRP-9001 was reasonably likely to predict clinical benefit. The strength of this early work gave us the confidence and conviction to advance SRP-9001 into the clinic. Since 2018, across multiple studies, we've dosed over 140 patients, more than any other gene therapy being developed for Duchenne, and the clinical results have surpassed our expectations. SRP-9001 demonstrated robust expression of dystrophin far above what literature would suggest is necessary to protect muscle. All of it is properly localized at the muscle membrane or sarcolemma where it acts as a shock absorber. We also developed a cell-based potency assay that shows that SRP-9001 is active, functional and protective at the muscle membrane. In addition to these compelling pieces of evidence, we can also show a functional benefit versus what natural history would predict. The North Star Ambulatory Assessment, NSAA, is our primary functional endpoint. We were able to show benefit across one-, two- and four-year time points. In summary, based on the totality of the data, we have provided objective evidence that SRP-9001 qualifies as a disease-modifying agent and at the levels of dystrophin expressed based on vast clinical evidence and experience are reasonably likely to predict clinical benefit in patients with Duchenne. As Doug mentioned in his opening comments, since the agency is not planning on holding an advisory committee for SRP-9001, the team is focused on responding to any remaining requests. As a reminder, because we are in active review with the FDA, we do not anticipate publicly sharing additional data cuts from the SRP-9001 studies leading up to the 2023 regulatory milestones and the EMBARK data readout which is on track for the fourth quarter of this year. Continuing now with our gene therapy platform and our limb-girdle muscular dystrophy programs, we were pleased to announce earlier this month the first patient was dosed in study SRP-9003-102, also known as VOYAGENE. VOYAGENE is a Phase I study evaluating SRP-9003 for the treatment of limb-girdle muscular dystrophy type 2E in ambulant adult patients and non-ambulant patients using clinical process SRP-9003 material. Combined with positive expression and functional data shared from our initial study, SRP-9003-101, we believe the data from VOYAGENE will provide us insights into a broader patient population as we finalize plans for a global Phase III study using commercially representative process material that we intend to begin later this year. In addition, we plan to commence a systemic pilot study for our SRP-604 and 6004 dual-vector rh74-mediated gene therapy to treat LGMD2E characterized by the absence of the protein dysferlin. We believe our gene therapy platform is well-suited to generate medicines for limb-girdle muscular dystrophies. Our work in this area continues on pace and represents a key priority for Sarepta. Turning now to our RNA platform, the MOMENTUM study for our next-generation PPMO, SRP-5051, is ongoing and we remain on track to announce data toward the back half of 2023. Furthermore, we were pleased to complete enrollment in the ESSENCE trial, our post-marketing requirement for golodirsen and casimersen. Lastly, we are making good progress with our MIS51ON study and it continues on pace. In closing, I want to take a moment to recognize Rare Disease Day and the over 300 million individuals around the world living with a rare disease. This is my life's work and I, along with my colleagues at Sarepta, will not rest until we do our part in advancing the science and developing the therapies for waiting patients. I would also like to extend my heartfelt thanks to the patients and their families whose generous gift of their time and commitment to our trials make this important work possible. I will now turn the call over to Dallan for an update on our commercial activities. Dallan?

Thank you, Louise, and good afternoon. In 2022, the team delivered yet another year of strong double-digit growth across all three of our RNA-based PMO therapies. As Doug noted, our full year net product revenue was $843.8 million which beat the upper end of our revised 2022 guidance of $825 million to $840 million. This represented more than $230 million in growth over 2021 and a growth rate approaching 40% year-over-year. I'll take a moment to highlight some of our full year 2022 achievements for our PMO franchise. The team started the year in a strong position by successfully navigating the beginning of the year insurance changes and reauthorizations. This led to a reauthorization rate in the low to mid-90s throughout 2022. This robust start, coupled with high adherence rates and strong international revenues, served as the foundation for full year net product revenue growth of approximately 13% generated with EXONDYS 51 and net product revenue of roughly $511 million. For VYONDYS 53, we ended 2022 in a strong leadership position and market share. VYONDYS 53 exceeded $100 million in revenues, ending the year with $117.4 million in total net product revenue and over 30% growth compared to 2021. Finally, the team's execution on AMONDYS 45 provided exceptional growth in 2022 of over 200% with total net product revenue of $214.8 million. As we've noted in previous calls, our international growth continues to accelerate, representing roughly 11% of our overall net product revenues in 2022, with ex-U.S. net product revenue at $96.3 million for the full year. Our 2022 performance is the result of a highly committed and effective team focused on serving the nearly 30% of patients on metal wire therapies with the urgency that Duchenne requires. Turning now to our performance in the fourth quarter of 2022. We ended the year on a high note with net product revenues of $235.9 million. Once again, the team executed and grew the RNA-based PMO business by more than 30% over the fourth quarter of 2021 and 13% over the prior quarter. I'll outline individual net product revenues for the fourth quarter of 2022 for our three approved RNA-based PMO therapies. For EXONDYS 51, net product revenue of $146 million represented roughly 22% growth over Q4 of 2021. VYONDYS 53 fourth quarter 2022 net product revenue totaled $28.5 million, representing roughly 15% growth versus the fourth quarter of 2021. Finally, AMONDYS 45 net product revenue was $61.4 million in Q4 of 2022, representing nearly 80% growth versus the fourth quarter of 2021. As the business evolved and grew throughout 2022, we see more variability in our quarter-over-quarter revenue numbers, mainly due to international ordering patterns. We've observed lumpy quarter-to-quarter fluctuations and seasonality with our international orders. We expect this trend to continue going forward. For example, sales in the fourth quarter of 2022 were robust due to very strong international sales of $36.9 million. This strength allowed us to exceed expectations for the quarter. However, we do not expect the same dynamic to persist into the first quarter of 2023. We want to provide you this level of visibility to help you model our revenues for the year. Our forecast anticipates this dynamic and it is reflected in our 2023 PMO net product revenue guidance of greater than $925 million which we issued in January. Despite the quarterly fluctuations, we expect a strong year and are confident in our guidance. Again, I'm proud of what we accomplished in 2022. Most importantly, I'm grateful for our team's enduring commitment to the Duchenne community and the patients we serve. This commitment to operational excellence will serve us well as we apply the lessons learned to the upcoming launch of SRP-9001. In parallel with the team's execution of our existing business in 2022, the customer organization build for SRP-9001 is on track and nearly complete. Importantly, engagement with key gene therapy sites and U.S. payers is well underway. If SRP-9001 is approved, the team is prepared to demonstrate their capabilities and expertise in our fourth launch into the Duchenne space, becoming the first gene therapy to serve the patient community. I will now turn the call over to Ian Estepan for an update on our financials. Ian?

Thanks, Dallan. Good afternoon all. This afternoon's financial results press release provided details for the fourth quarter and full year of 2022 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. For the three months ended December 31, 2022, the company recorded total revenues of $258.4 million which consists primarily of net product revenues and collaboration revenues compared to revenues of $201.5 million for the same period of 2021, an increase of $56.9 million. Net product revenue for the fourth quarter of 2022 from our PMO exon skipping franchise was $235.9 million compared to $178.7 million for the same period of 2021. The increase in net product revenue primarily reflects increasing demand for our products. For the quarters ended December 31, 2022 and 2021, we recognized $22.5 million and $22.7 million of collaboration and other revenues, respectively, which primarily relates to our collaboration arrangement with Roche. The reimbursable co-development costs under the Roche agreement totaled $51.7 million for the fourth quarter of 2022 compared to $29.7 million for the same period of 2021. On a GAAP basis, we reported a net loss of $109.2 million or $1.24 and $122 million or $1.42 per basic and diluted share for the fourth quarter of 2022 and 2021, respectively. We reported a non-GAAP net loss of $46.5 million or $0.53 per basic and diluted share in the fourth quarter of 2022 compared to a non-GAAP net loss of $66 million or $0.77 per basic and diluted share in the fourth quarter of 2021. In the fourth quarter of 2022, we recorded approximately $30.8 million in cost of sales compared to $31.7 million in the same period of 2021. The decrease in cost of sales is primarily due to the write-off of certain batches of our products not meeting the quality specifications for the three months ended December 31, 2021, with no similar activity in the same period of 2022 and a decrease in our royalty payments during the three months ended December 31, 2022 due to changes in our BioMarin royalty terms. On a GAAP basis, we recorded $213.8 million and $197.3 million in R&D expenses for the fourth quarter of 2022 and 2021, respectively, a year-over-year increase of $16.5 million. The increase is primarily due to increases in upfront and milestone expenses. On a non-GAAP basis, R&D expenses were $186.8 million for the fourth quarter of 2022 compared to $175.5 million for the same period of 2021, an increase of $11.3 million. Now turning to SG&A. On a GAAP basis, we recorded approximately $120.5 million and $78.1 million of expenses for the fourth quarters of 2022 and 2021, respectively, an increase of $42.4 million. The increase was driven primarily by an increase in stock-based compensation expense due to additional expense recognized through the CEO grant modification agreement executed in 2022. On a non-GAAP basis, the SG&A expenses were $86.6 million for the fourth quarter of 2022 compared to $60.1 million for the same period of 2021, an increase of $26.5 million. On a GAAP basis, we recorded $5.5 million in other income net for the fourth quarter of 2022 compared to $16.1 million in other expense net for the same period of 2021. The change is primarily due to an increase in interest income due to the investment mix of our investment portfolio as well as the reduction of interest expense incurred as a result of the repayment of our December 2019 term loan for the three months ended December 31, 2022. We expect that both SG&A and R&D expenses will be higher in 2023 as we build inventory and prepare for the launch of SRP-9001. These increases in expenses will, however, be partially offset by the growth in our revenue. We had approximately $2 billion in cash, cash equivalents and long-term restricted cash at December 31. We've made tremendous progress over the course of 2022 and this upcoming year has the potential to dwarf all that we have previously accomplished. I'm particularly pleased that we are well capitalized to execute on all of our plans that we've outlined today on the call. With that, I'll turn the call back over to Doug for Q&A. Doug?

Thank you very much, Ian. Valerie, let's open up the lines for questions and answers.

Our first question comes from Anupam Rama of JPMorgan.

Congrats on all the progress. I noticed in the press release and Doug, in your comments as well that the FDA noted no major safety concerns in the filing for 9001. Was there any commentary on the mid-cycle review on the external control arm and that analysis? If I remember correctly that, that was a prespecified analysis by the FDA? And then quickly on manufacturing. Doug, in your opening comments, did you say that the site inspections have been scheduled?

Yes. Thank you very much for your questions, Anupam. So first, as you noted, on safety, at the mid-cycle review, the division explicitly in writing informed us that they saw no significant safety issues with the filing with 9001. That would come as a little surprise to those who know our profile but it was, to say the least, gratifying and encouraging that the FDA saw it the way we saw it. I'm not going to get into a lot of detail on the review beyond what I've already said. I will say on the clinical side of things, we're in an active review. There are lots of questions and analyses that we've done and questions we've answered. I can at least say at the mid-cycle review, the division did not identify any significant issues or material deficiencies with the clinical data set at all. So that's where we are as of the mid-cycle. And then finally, as it relates to the site inspections, yes, all of the manufacturing inspections have been scheduled.

Our next question comes from Brian Abrahams of RBC.

Congrats on all the progress. Is there anything more you can say, at least more broadly, on the nature of the CMC dialogue in preparation for the manufacturing inspections? And I guess I'm curious about your level of manufacturing confidence and overall comfort that there'd be sufficient time post these inspections to rectify any minor issues that might come up and still have sufficient time to build supply. And then just maybe quickly, I'm wondering also if the FDA provided any specific reasons as to why no Adcom would be required. I know sometimes they give specifics on that.

Thank you very much for that, Brian. Firstly, regarding CMC, as everyone is aware and as we've previously discussed about BLAs, particularly in gene therapy, the CMC component of the submission is one of the most critical aspects. As I mentioned earlier, we have addressed all the questions raised by the agencies, and we feel like we are in a strong position. Concerning the timing of the preapproval inspections, we are quite confident. While I won't delve into specific schedules, we are optimistic about them and our ability to adjust as needed. Currently, we have no reason to believe there will be a delay in our PDUFA date for this or any other reason. In terms of the decision not to hold an advisory committee, there is not much more to add beyond the mid-cycle meeting, where they confirmed there were no substantial safety concerns with the program, did not identify significant clinical issues or major deficiencies, and thus decided that an Adcom was unnecessary. That summarizes our current status.

Our next question comes from Colin Bristow of UBS.

Congrats on all the progress. Another one on the Adcom or lack thereof. You previously stated that your one of the focal points of the outcome you're anticipating would be the surrogacy of truncated dystrophin. Did the FDA comment on its comfort around this? Or is this something that's part of an ongoing dialogue that is just part of the review process? And then maybe just on the manufacturing supply side, if you are approved on the PDUFA, can you just talk about the number of patients you expect to be able to supply at launch and how this will build over time?

Sure. First, I would say that the entire discussion, that's kind of the fundamental issue in the review is the use of short and functional dystrophin is reasonably likely to predict a clinical benefit. As it relates to the Adcom comments, we see the decision to lead Adcom as a positive. We had a very productive mid-cycle review. We're not going to speculate on what this means for the probability of success. What we would say is that given that we know there are no significant safety issues, that there isn't going to be an Adcom, we can then spend our time really focusing on answering any remaining questions preparing for and executing our preapproval inspections and doing that successfully, making sure that we're launch-ready and building inventory for launch. We haven't given exact patient numbers as it relates to manufacturing but what we've said and we stand by it is that our goal is to launch this therapy and serve this community without back orders with all patients getting the therapy as soon as they are able to get it from an access and reimbursement perspective. We want to be in a position to do that, and we will be.

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

I guess two just follow-ups for me. I know we've touched on many of the major issues here. But first, just on manufacturing. Can you just talk, to the extent you can, in a bit more detail? Are these multiple facilities or just lines in the same facility that are being inspected? How comprehensive is this inspection versus maybe what you were expecting or thought you might see? And then just secondly, on the inventory and the supply that you are building now. Is there any chance or any reason that the supply you've started to build now could not be used? Could you just talk about supply you have now versus supply you're continuing to build?

Yes. So first of all, on the inspections, there are three separate facilities. They are exactly as we anticipated. In fact, none of the questions that have been posed and none of the inspection notices that we've received have been surprises. We've been very well prepared for them. So we're in good shape there. From an inventory and supply perspective, we're on track. No, we don't think there's any significant risk that the inventory that we build will not be able to be used commercially; so we're tracking well there. A lot of work to do as an organization. Site readiness is a significant issue. Building inventory is a significant issue. Completing this review and satisfying any remaining questions or comments or analysis the FDA is extremely important to us and we need to focus on that as well. But the team is very focused on all of this and working overtime to ensure that we have a successful BLA review.

Our next question comes from the line of Tazeen Ahmad of Bank of America.

Can you give us a sense of how the doctors' offices or facilities that the patients would have to go to might have to make any adjustments? Is the infrastructure already there for high demand for the physicians to be able to meet the potential volume demand we would expect upon an approval? I don't know what your checks are telling you but I'd love to hear some color on that.

Yes. I mean, I think the first thing I'll say is that we start in a very good place, probably in a very privileged position because of SMA and because of Zolgensma. A significant percentage of the neuromuscular experts treating patients with Duchenne muscular dystrophy with 9001 have previous experience with Zolgensma. So we're starting from a good place. Now certainly, I'm going to turn this over to Dallan to provide any additional context that I missed but I would say there is still a lot of work to be done to make sure that specifically for 9001, the sites are prepared, ready to go, properly educated, and able to make this therapy a success. Our goal at launch is to have about 50 of those sites operational, which would serve around 80% of the Duchenne community, and then over time, we aim to increase that number to around 70 sites over the course of the next couple of quarters. But Dallan, what have I missed?

No, I think you covered it, Doug. These sites are really at the forefront of precision genetic medicine. They have a lot on their plates but they're absolutely ready, and we're already engaging with them in terms of educational initiatives prior to approval that are compliant and appropriate. Every site is different, but these centers of excellence are already treating Duchenne muscular dystrophy patients, so they'll be ready to go.

Our next question comes from the line of Robert Fink of Guggenheim.

This is Robert on for Debjit. How quickly can Sarepta finalize reimbursement agreements following approval in the race to launch?

I'll turn this over to Dallan as well. The short answer is that we're going to be ready to go on day one. It doesn't mean kids are going to get infused on day one because there's a process here. The access and reimbursement framework, including testing for neutralizing antibodies and finalizing the policies, must be completed. The team is already doing an enormous amount of work with sites and payers now to be in a position to begin to serve the community on day one post-approval, assuming that we receive approval. Dallan?

Yes. Yes, we'll be ready on day one. We're already engaging with payers, and we will do everything we can to accelerate access for eligible patients on day one, applying the lessons we've learned from past launches.

One thing just to add to that is that you have good precedent on what you've seen in terms of our launches for our PMO exon skipping franchise. To Doug's and Dallan's point, it takes time to get patients on therapy and through the access and reimbursement system. Obviously, there's state Medicaid and getting through the drug utilization review board process. It is going to take a couple of quarters for patients to work through and you've seen that before. But once we carefully navigate those reimbursement steps, there will be a very strong uptake.

Our next question comes from Gena Wang of Barclays.

I have two quick questions. Doug, you mentioned that there are still remaining questions from the FDA. What are the natures of these remaining questions? And do you expect late-cycle review will be focusing mainly on these questions and no new questions remaining? The second question is regarding the three sites. Do any of these three sites have established commercial experience with iCELLis manufacturing?

Well, there's not a ton of history. I'll answer the last question first. I remind you that what we're doing is nearly a first. You won't find many organizations around the world with extensive experience with commercial iCELLis unless they happen to be Novartis. So for now, what I can say is that we are inspection-ready. I want to dispel a misunderstanding. The agency did not tell us at one point that there would be an Actcom and then later determined it wouldn't need one. We indicated that with the BLA submission that we should all assume there would be an Adcom. It was at the mid-cycle review that the agency informed us that they didn't need an Adcom for this filing.

Our next question comes from Ritu Baral of Cowen.

Doug, regarding the Adcom, the FDA initially indicated there would be one, but now it seems they have decided against it. It appears they have resolved a question about the biomarker independently. Are there any additional data sets or analyses related to the ongoing or follow-up studies for 102 or 103 that you've submitted, or is it simply about addressing the questions you've mentioned? Also, on CMC, have you completed mark inspections at the Harmon plant and the other two facilities? Are you ready for inspections?

We are undoubtedly inspection-ready. We're an organization that doesn't want to be surprised. We are very much prepared for the inspections. To answer the first question, there wasn't a point where the agency indicated they would require an Adcom and then determined otherwise. What occurred was that we assumed there would be an Adcom but it was at the mid-cycle review they confirmed they didn't need one.

Our next question comes from Joe Schwartz of H.C. Wainwright.

This is Beth on for Joe. We are wondering how much precedent you believe EXONDYS' Accelerated Approval on the basis of dystrophin expression provides for 9001? Specifically, we're also wondering if you've been able to quantify the benefit of higher expression of a less complete micro-dystrophin compared to the lower expression of a more complete shortened dystrophin produced by exon skippers and if this is something that the FDA has been considering throughout the review.

Yes. Let me answer your question. Let me start with the second part of it then work to the first part of it because there's a fundamental misunderstanding and it's understandable that you have this misunderstanding but there's a misunderstanding of the underlying science when one assumes that the 9001 dystrophin which is shortened, is vastly shorter. The exon skipping occurs to restore reading frames and allows the messenger RNA to produce dystrophin. The resulting dystrophin can be 40% smaller but may still be highly functional. That also applies in natural history with Becker-like dystrophin where functionality exists despite reductions in size below the full-length dystrophin. So... Yes, I do believe there's significant precedent, and it plays a vital biomarker role in predicting clinical benefits.

Our next question comes from Judah Frommer of Credit Suisse.

Just curious if EMBARK came up in any way in the mid-cycle communication and if so, in what context? And kind of same question for conversations, pre-commercialization conversations with payers. Is EMBARK coming up as a topic of conversation there?

As it relates to the mid-cycle, there was no explicit discussion in the mid-cycle review. On pre-commercial discussions, certainly we discussed the entire program and it includes the confirmatory trial, EMBARK.

Our next question comes from Gil Blum of Needham.

One quick technical question. Isn't May 29 a holiday? Doesn't that have any effect on the filing? And the other question I have is, do you think the payer pathway is going to follow closely the roadmap set by Zolgensma?

Yes, it is a holiday. Officially, May 29 is our PDUFA date, so we expect to hear on that day or if needed, the business day prior. Regarding the payer approach, Zolgensma is one model, and we have extensive experience with payers given our existing therapies; we believe it positions us well for productive discussions about access and reimbursement for 9001, assuming we receive approval.

Our next question comes from Danielle Brill of Raymond James.

Doug, I have a question on the micro-dystrophin follow-up data. I believe we saw 60-week data from Part 1 of Study 102. Do you have additional expression data at that time point or any expression data at later time points? And then random question, do you see any legal risk for 9001 from REGENXBIO IP claims?

On the second question, I would say we see no risk. On the first question, I'll turn it over to Louise; I didn't fully understand the question. Apologies.

Yes. There are no additional biopsy time points available for that study.

Our next question comes from Hartaj Singh of Oppenheimer.

Congratulations on a significant milestone. I'm eager to see what comes next. I have a question regarding SRP-9003. I understand that the VOYAGENE trial is beginning Phase I, and you are conducting further work. Doug, you're also involved in a lot of efforts to characterize the clinical and commercial material. Could you discuss that, as well as provide some insights on what the Phase III design might look like? I believe you mentioned that it could begin later this year.

Yes. Louise, do you want to take that?

Certainly. We're looking closely at this as it's an ultra-rare indication, and we're gathering data in both the ambulatory population and this new population of older ambulant and non-ambulant patients. All results from these two trials will inform the ultimate Phase III study design.

Our next question comes from Yun Zhong of BTIG.

My question is actually also on the limb-girdle program. I was wondering, what is the purpose of the Phase I study? And what kind of information are you trying to gather? And given the small prevalence of the indication, what's your thinking on the patient allocation enrolled in the current study? I don't believe you've disclosed the size of the study versus maybe saving patients for future pivotal studies.

Yes. There are two reasons why we've initiated this clinical experience study. First, it allows us to explore the safety and expression of the therapy in a broader patient population than we would typically do for pivotal trials. Second, we had clinical material available. For the pivotal trial, we need commercially appropriate material, which is very important, so the current clinical material allows us to gain insight while also benefiting patients simultaneously.

Just to emphasize, this is a different patient population than we've previously studied, specifically older patients, where we can evaluate safety and efficacy in both non-ambulant and older ambulatory patients, which is an important component of this pre-plan population.

Our next question comes from Kristen Kluska of Cantor.

This is Rick on for Kristen. In the press release, you mentioned that the Catalent agreement structures how Catalent could support multiple gene therapy candidates in the LGMD pipeline. Could you maybe go into detail on what this might mean in terms of whether this could deal with clinical-grade material or potentially commercial-grade material for later-stage trials in LGMD?

Yes. Our goal with Catalent is to potentially enable commercial representative material from the first patient clinical trial. Historically, the first study with 9001 used clinical material from Nationwide Children's Hospital. We intend to have commercially representative material from the outset, and the potential of doing that with Catalent is significant.

Our next question comes from Gavin Clark-Gartner of Evercore.

Phase II excluded exons 1 through 17. But as you noted, you've been dosing patients inside that range. Have you had any discussion with the FDA on getting some of those exons included in the initial label? And is there any chance that something in here could represent a major amendment?

It won't represent a major amendment because our BLA went in with the assumption that we would have a narrower exclusion. We had scientific rationale for the label exclusions that needed to be narrower, and we have a study underway examining those mutations. The BLA was submitted with a request for a narrower exclusion in our proposed label.

Our next question comes from Salveen Richter.

It's Tommy on for Salveen. Congrats on the progress. Just wondering how you're thinking about uptake in between that period after the Accelerated Approval but before EMBARK reads out. Any physician or payer commentary that some might wait to prescribe to see EMBARK? And can you just remind us how long it takes for patients to get tested for eligibility?

I don't think there's a viable option for families to wait. The urgency of this degenerative disease means that patients cannot afford to wait. As we progress through this call, we acknowledge that kids with Duchenne don't have time, and therefore, we don't expect people to wait for updates from EMBARK. Dallan, can you elaborate on the eligibility process?

Yes. To emphasize Doug's point about the urgency. We're seeing an overwhelming need to provide immediate access to patients. Having a fully enrolled confirmatory trial at the time of approval puts us in a great position going forward for discussion with stakeholders.

I'm showing no further questions at this time. I'd like to turn the call back over to Doug Ingram for any closing remarks.

Thank you very much, everyone, for joining us this evening and for your very good questions. It is a significant day, as Dr. Rodino-Klapac noted that today is Rare Disease Day. We are committed to using great science and moving as quickly as possible to bring a better life to Duchenne patients and beyond to others living with rare diseases. I look forward to updating you along the way. However, I will note again that regarding the BLA for 9001, the next substantive update will be on or around May 29, which is our action date. Thank you all very much and have a lovely evening.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.