Sarepta Therapeutics, Inc. Q3 FY2023 Earnings Call

Good afternoon and welcome to the Sarepta Therapeutics Third Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. At this time, I'll turn the call over to Francesca Nolan, Executive Director, Investor Relations and Corporate Communications. Please go ahead.

Thank you, Jonathan. And thank you all for joining today's call. Earlier this afternoon, we released our financial results for the third quarter 2023. The press release is available on our website at sarepta.com and our 10-Q 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 further 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 slides 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 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 statement, including any financial projections provided today based on subsequent events or circumstances. And now we'll turn the call over to our President and CEO, Doug Ingram, who will provide an overview of our recent product progress.

Thank you, Fran. Good afternoon, and thank you for joining Sarepta Therapeutics’ third quarter 2023 financial results conference call. It was only two days ago that we announced the results of our double-blind placebo-controlled trial EMBARK. Therefore, I will not linger on the results here, but I will begin by summarizing Sarepta's perspective. First, taken as a whole, the results of EMBARK confirm that ELEVIDYS stabilizes muscles, slows or entirely arrests decline, does so across the ages, and does so with a laudable safety profile not shared by other programs for Duchenne. Second, the EMBARK results have not only satisfied the confirmatory requirements for our June approval, but have shown that ELEVIDYS benefits patients across age groups consistent with its mechanism of action. Hence, we will soon be submitting a BLA supplement to broaden the ELEVIDYS label to remove age and ambulation restrictions. And finally, we have already engaged in productive and encouraging discussions with FDA, and they have confirmed that they are committed to reviewing an application to broaden the label and are committed to doing so rapidly. Now let me comment on quarterly performance. The third quarter was a defining moment for Sarepta. We launched our fourth therapy and the first gene therapy for boys with Duchenne Muscular Dystrophy. We continued to drive great performance with our three PMOs, and importantly, on a non-GAAP basis, we achieved profitability, placing us in ever more rarefied biotech territory. As you will have seen in our release, led by an exceptional launch of ELEVIDYS and continuing performance of our three approved PMOs, EXONDYS, VYONDYS, and AMONDYS. Third quarter total revenue came in at $332 million, and total net product revenue stands at $309.32 million, growing 49% over the same quarter last year reflecting the team's ability to execute and serve Duchenne patients. ELEVIDYS net product revenue came in at $69.11 million, nearly tripled mean external consensus. Likewise, our PMOs achieved $240.21 million in net product revenue, growing 16% over the same quarter prior year, and non-GAAP earnings stood at $38 million in the quarter, a major milestone for Sarepta as we transitioned to a profitable and in the near term cash flow positive organization. The team has done a tremendous job, working with families, physicians, and payers in the quarter and it shows in these results. Dallan Murray, our Chief Customer Officer will walk you through what has been nothing short of a remarkable launch of ELEVIDYS. And looking to the near future, we will take our proven track record of execution and move forward rapidly to expand the label of ELEVIDYS so this team can employ that level of execution to make ELEVIDYS available to the majority of Duchenne patients in the United States. Following Dallan's discussion, Dr. Rodino-Klapac, who will provide an update on our pipeline progress? Now, as you would expect, we are not providing updated guidance this early in the launch, but also obviously across our four approved therapies, we are going to substantially exceed $1 billion this year, another important milestone to be sure. And with that, let me turn the call to Dallan for a commercial update.

Thank you, Doug, and good afternoon. The launch of ELEVIDYS in the third quarter was Sarepta's fourth Duchenne launch. It was by far the most complex and challenging to date. And I'm proud to say the team was ready on day one and they have knocked it out of the park thus far. As Doug has mentioned, we generated just over $69 million in net product revenues in the third quarter for ELEVIDYS. Notably, the team exceeded our own lofty site readiness expectations with nearly 70 sites ready to dose today. This helps us support the patients at risk of aging out today and also sets us up for longer term success going forward. We approached this launch by building organically upon what was already best-in-class Duchenne commercial and medical teams. We put additional responsibility on everyone across the board rather than building out separate gene therapy teams. And they have all stepped up magnificently to meet this important moment. Our early success was achieved in three ways. First, flawless execution with our external stakeholders, that is the neuromuscular KOLs, gene therapy sites of care, and the eligible patients they serve. Secondly, proactive payer engagement to expedite access for those patients who are eligible based on the label. And third, establishing a well-functioning, flexible distribution model supported by the Sarepta SiPs team to get each patient's customized kit to the site of care at the right time, just in time for the infusion. I would like to take a moment now to recognize the Duchenne community and how they came together to expedite access for patients who are eligible for ELEVIDYS. Led by our doctors, nurses, and other HCPs, all stakeholders were ready for this important moment, and it was humbling to see the whole community come together to support eligible patients in their treatment journey. This launch also demonstrated the progress our teams and the experts have made in the past several years, educating the payers about Duchenne. We were gratified by the urgency of payers and expediting policies that allowed access for eligible patients. Additionally, and importantly, the payers played a key role in supporting patients who are at risk of aging out. Saying all of that we still have much more work to do with some of the payers to achieve our goal of securing access and treatment for all eligible patients across the country, regardless of plan. The team is working diligently as we speak, educating the payers on the robustness of the newly available EMBARK data. We're confident that this data sets the stage nicely for access to align with our label today, as well as when we gain a broader label. The fast start in Q3 was a function of the team's efforts in the quarter itself, and just as importantly, their efforts over the past seven years building the model which we have established to support all of the Duchenne patients eligible for our therapies. Had this been Sarepta's first launch, our trajectory in the third quarter would have been very different and much slower. We've gained deep knowledge and expertise through three PMO launches, and I'm glad to say we were able to apply these learnings to the launch of ELEVIDYS. So to summarize ELEVIDYS, it was a great first quarter for the launch because our team and our key stakeholders were prepared and they executed flawlessly to support the patients we serve. Driven in large part by the robust ELEVIDYS revenue in the third quarter, we grew overall net product revenue by roughly 30% over the prior quarter. Net product revenue in Q3 of 2023 was $309.3 million. Importantly, as Doug said, in addition to our success with ELEVIDYS, we also had our most successful quarter ever, serving patients with our established PMO franchise. We see continued opportunities in the U.S. and globally for our PMO business in spite of the fact that we also expect cannibalization from ELEVIDYS over time. Since the 4-5 population represents far less than 10% of the PMO business in the U.S., this cannibalization will not have a material impact on our 2023 net product revenue. I'd like to take a moment here to thank all of those who are relentlessly supporting our PMO patients. So as a result of the whole team's effort, the net product revenue from our PMO business in Q3 was $240 million, representing a roughly 16% increase over the same quarter in 2022. Looking now at each of our PMOs individually, net product revenue for EXONDYS 51 was $142.3 million in Q3, which was over 16% above the same quarter in 2022. VYONDYS 53 net product revenue was $31.7 million, 3.4% above Q3 of 2022. And AMONDYS 45 generated net product revenue of $66.3 million in Q3 of 2023. This represents roughly 21% growth over Q3 of 2022. As we mentioned in previous calls, we are in the mature phase of the market now for all three of our approved PMOs. As a result, while we expect the U.S. growth to continue to flatten and the ex-U.S. revenues while still in the growth phase to remain lumpy from quarter-to-quarter and thus difficult to project on a quarterly basis. Taken together, we can reiterate our annual guidance of greater than $925 million in net product revenue for our PMO business in 2023. I'll end by saying that I've been continually amazed and impressed by the resilience, commitment, and execution of our Sarepta teams over the years. And while the success over those years has been impressive, what the teams have achieved in the third quarter of 2023 stands above and beyond anything I've seen in my 10 years working to serve the Duchenne community. The future is bright for Sarepta and for the Duchenne community who have been waiting for and very much deserve this progress. Words can't adequately express just how proud I am of our whole team. The individual stories from across the country are too numerous to mention here, nor can we as a team put into words the joy we feel when we celebrate each and every patient who gains access to any of our Dystrophin restoration therapies. And so with that, I'll turn the call over to Dr. Louise Rodino-Klapac.

Thanks, Dallan. Our commitment to the science remains steadfast and our goal to change the lives of patients with rare disease is unwavering. Our opportunity to do good is limitless for those living with Duchenne, limb girdle, and many other diseases for which therapies are either inadequate or non-existent. As Doug has already detailed the EMBARK results, I'll focus my comments on the progress of our gene therapy and RNA programs. First, limb girdle muscular dystrophy or LGMD. We remain committed to advancing our LGMD portfolio across a variety of subtypes and look forward to providing continuous updates on these important programs in the months ahead. We presented on our LGMD pipeline this past weekend at the Speak Foundation's 2023 International LGMD Conference and shared our urgency with the community to bring forth genetic medicines for LGMD. To begin, we made excellent progress for Voyagene, our Phase 1 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. We are pleased to report that we completed enrollment in Voyagene and we remain on track to initiate our phase 3 study using commercially representative process material later this year. Combined with positive expression and functional data shared from our initial study, SRP 9003-101, we believe the data from Voyagene will give us insights into a broader patient population. We're also excited to report that we completed dosing in our systemic pilot study, NAVIGENE for SRP-6004 dual vector RH74 mediated gene therapy, to treat individuals with LGMD2B. LGMD2B is characterized by the absence of the protein Dysferlin. The innovative dual vector strategy allows us to deliver the full length of Dysferlin, the sole cause of LGMD2B. We look forward to reporting results from this study in the first half of 2024. As mentioned last quarter, our LGMD natural history study of the Sarcoglycanopathy, LGMD2E, 2C and 2D, called JOURNEY, has been fully enrolled and we've followed patients for 36 months. We continue to make progress in scalable manufacturing for all of our LGMD candidates in our pipeline and look forward to initiating clinical studies as rapidly as possible. Turning now to the progress we've made with our RNA platform. We were pleased to complete enrollment in the first quarter of 2023 for a momentum study for SRP-5051. And we're targeting readout of the study in 2023. Regarding our post-marketing studies for the PMOs, as mentioned last quarter, we completed enrollment in the ESSANCE trial, or post marketing requirements for golodirsen and casimersen. As a reminder, ESSANCE is a two-year study and is due to read out in early 2026. Finally, we were pleased to have completed enrollment in our MIS51ON study, our dose ranging post-marketing commitment for EXONDYS. MIS51ON is a randomized double-blind safety and efficacy dose finding study comparing the approved dosage of Eteplirsen, a 30 mg per kg weekly, to a dosage that provides significantly higher exposure, up to 200 mg/per kg weekly. MIS51ON is a two-part phase 3 study that was fully enrolled in October 2023 with 160 patients enrolled. We remain committed to rapidly and diligently advancing MIS51ON and sharing data as soon as it becomes available. We look forward to reporting continued progress with our RNA programs in the coming months. On a personal note, my passion for science and its promise to help others began early in life. These many years later, as I reflect on my career and where we are today in realizing the promise of genetic medicine, I'm grateful and I'm humbled. And yet we have so much more to do. We move forward from here today toward a more promising future for individuals around the world living with rare disease. In closing, I'd like to take a moment to thank the Sarepta team for their continued dedication and passion to patients, the science and our mission. I'll now turn the call over to Ian for an update on our financial results.

Well said, Louise. Good afternoon everyone. This afternoon's financial results press release provided details for the third quarter of 2023 on a non-GAAP basis as well as a GAAP basis. Please refer to our press release available on Sarepta’s website for full reconciliation of GAAP to non-GAAP financial results. We're obviously quite pleased with the financial results for this quarter on the back of a tremendous start for the EXONDYS launch. We actually achieved non-GAAP profitability and assuming an expansion to the label to the broader Duchenne population, we should achieve sustained profitability. We're quite thrilled to achieve this milestone just in the first quarter of the launch. For the three months ended September 30th, 2023, the company recorded total revenues of $331.8 million, which consists of net product revenues and collaboration revenues compared to revenues of $230.3 million for the same period of 2022, an increase of $101.5 million. Net product revenue for the third quarter of 2023 from ELEVIDYS was $69.1 million. Net product revenue for the same period from our exon skipping franchise was $240.2 million compared to $207.8 million for the same period of 2022. For the quarter, individual net product sales were $142.3 million for EXONDYS 51, $66.3 million for AMONDYS 45, and $31.7 million for VYONDYS 53. The increase in net product revenue primarily reflects increasing demand for our PMO products, as well as net product revenue associated with the sales of ELEVIDYS. In each of the quarters ended September 30th, 2023, and 2022, we recognized $22.5 million of collaboration revenue, which relates to our collaboration arrangement with Roche. The reimbursement of co-development costs under the Roche agreement totaled $34.9 million for the third quarter of 2023 compared to $22 million for the same period of 2022. On a GAAP basis, we reported a net loss of $40.9 million, or $0.46 per basic and diluted share, and $257.7 million, or $2.94 per basic and diluted share, for the third quarter of 2023 and 2022, respectively. We reported a non-GAAP net income of $37.7 million, or $0.37 per diluted share in the third quarter of 2023, compared to a non-GAAP net loss of $70 million, or $0.80 per diluted share in the third quarter of 2022. In the third quarter of 2023, we recorded approximately $37 million in the cost of sales compared to $40 million for the same period of 2022. The decrease in cost of sale primarily reflects write-off for certain batches of our PMO products not meeting our quality specifications in the three months ended September 30th, 2022, with no similar activity for the same period of 2023, partially offset by increasing demand for our PMO products. On a GAAP basis, we recorded $194.3 million and $216.7 million in R&D expenses for the third quarter of 2023 and 2022, respectively, a year-over-year decrease of $22.4 million. The decrease is primarily due to a decrease in our manufacturing expenses, partially offset by increases in clinical trial expenses. On a non-GAAP basis, R&D expenses were $163.9 million for the third quarter of 2023, compared to $193.7 million for the same period of 2022, a decrease of $29.8 million. Now turning to SG&A, on a GAAP basis, we recorded approximately $120.9 million and $104.8 million of expenses for the third quarter of 2023 and 2022, respectively, an increase of $16.1 million. The increase was driven primarily by an increase in professional services and compensation and other personnel expenses, partially offset by a decrease in stock-based compensation. On a non-GAAP basis, the SG&A expenses were $92.8 million for the third quarter of 2023, compared to $66.8 million for the same period of 2022, an increase of $26 million. On a GAAP basis, we recorded $12.3 million in other expense net for the third quarter of 2023, compared to $400,000 in other income net for the same period of 2022. The change is primarily due to the impairment of our investment and loss on contingent consideration, that partially offset by increases in increase of an investment discount net and interest income due to the investment mix of our investment portfolio, as well as reductions of interest expense incurred as a result of the repayment of our December 2019 term loan during 2022. We had approximately $1.8 billion in cash, cash equivalents, investments, and long-term restricted cash as of September 30, 2023. We're obviously pleased with the amount of capital on our balance sheet, but in turbulent markets, we know cash becomes even more valuable. We continually evaluate our expenses. That said, based on the EMBARK results and the information we have today, there's no better use of our cash than to build inventory to serve those with DMD. With that, I'll turn the call over to Doug to start Q&A.

Thank you very much, Ian. Michelle, let's open the call for questions.

Thank you. The first question comes from Anupam Rama with JPMorgan. Your line is open.

Hey, guys. Thanks so much for taking the question. Just going back to the EMBARK results, we've gotten this question. If you guys adjust for multiplicity on your key functional secondary endpoints, would you still have statistically significant outcomes on these key measures? Thanks so much.

Yes, thank you for that question, Anupam. I will turn this call over to Louise.

Thank you. We actually performed a global statistical test, and we did this to do just that, to test for multiplicity and show that the secondaries did not hit significant just by chance. So, we essentially tested NSAA combined with the secondaries and showed that they were, in fact, statistically significant. So this is a quantitative way to test the totality of evidence in respect. So, if you think of the forest plot that we showed on our call, that's essentially a statistical test to show that together we see that these are statistically significant.

Please stand by for the next question. The next question comes from Tazeen Ahmad with Bank of America Securities. Your line is open.

Hi, guys. Good afternoon. Thanks so much for taking my question. For me, I think one of the most popular inbounds I've been getting in the last two days is just trying to triangulate timing. So, Doug, to the extent that you can provide us color with what steps are involved next in order to complete your filing, and is there any kind of precedent for a filing like this on the time it would take the agency to review an application? Could it be this calendar year that this could all be complete, or would it be something more traditional like a six-month review, for example? Thanks.

Tazeen, thank you for your question, and let me preface my question by saying I'm probably going to frustrate you by not giving hard and fast timelines, other than we're going to move rapidly and we have a commitment from the division to move rapidly as well. Our goal is to file a BLA supplement. I believe it's an efficacy supplement, and we're going to do that very soon. The team is working on it right now. I don't want to commit to the exact date, but very, very soon that will be submitted. I think traditionally the agency may have six months to review. I do not believe. I believe the agency is committed to moving as fast as is reasonably possible to review this, and there is precedent for this. You see this in other areas like oncology all the time where you can get for something like this very fast turnaround. And of course remember this isn't a BLA but a BLA supplement so the inquiry while extraordinarily important is focused. And that focus is on the fundamental question does the totality of the evidence justify the conclusion that ELEVIDYS is bringing a better life to these patients and of course we believe that it does. The standard for this is quite clear. It's substantial evidence looking at the totality of evidence. The statute on this is quite clear. I apologize I don't know what that music is. I promise I'm not playing a guitar right now. The statute says it's very clear. Can one fairly and responsibly conclude that the therapy will have the effect it purports to have and the regulations are also particularly clear that for life-threatening and severely debilitating illnesses one's life can be shed especially where no satisfactory alternative therapy exists. The FDA has determined that it is appropriate to exercise the broadest flexibility in applying the statutory standards. And as Louise just pointed out to everybody not only are the evidence on whole very compelling that ELEVIDYS is arresting the decline in these patients but if you do the actual statistics and look across the primary and our functional secondaries you can see statistically adjusting for any risk of a false positive, adjusting for multiplicities that is powerfully statistically significant. So all of which is to say winding back to the original question Tazeen that we're going to submit a BLA supplement very soon. The agency is committed to working with us very rapidly and while I won't give an exact timeline, I am confident that we're going to move quickly to review this and if successful broaden this label.

Okay, thanks Doug.

Please stand by for the next question. The next question comes from Gena Wang with Barclays. Your line is open.

Thank you for taking my questions. Maybe just follow this comment. Doug, will you announce when BLA efficacy supplement was accepted and in the data package can you lay out what kind of data will be included in addition to what you shared with us? Would that also be like say the protein correlation of the protein level versus function? Will these data also be included in the package?

There will be certainly more in the package and then the top line we're still evaluating other information including for instance protein and other things, CK and the like. But obviously the focus of the review is going to be first and foremost the efficacy and the safety for this therapy. And then of course it's all going to be evaluated in relation to our request to broaden this label by removing age limitations and ambulation limitations on that. I don't think we've made any final decisions about what we're announcing during this process but obviously generally speaking, we tend to be pretty transparent with folks.

Please stand by for the next question. The next question comes from Colin Bristow with UBS. Your line is open.

Hey, good afternoon and congrats on the impressive ELEVIDYS sales. Maybe another one on the EMBARK data. Can you speak to the interpatient variability you saw in ELEVIDYS treated patients? A sort of question we've been getting is were the positive results driven by a small group of high responders? And maybe if you could also comment on how this variability compared to the phase 2 experience that would be helpful. Thanks.

Sure. I'm going to flip this over to Louise to answer specifically. But I would generally note that the positive results, the P value on these positive results, they're not close. On the time to rise it's .002. On the 10 meter walk run it's .004. On the global statistical analysis when one looks at the primary and all the secondaries together it's .004. So it's very, very powerful. But Louise, perhaps you want to answer more specifically on some of the variability issues.

Yes. Generally, we did not see variability, high variability amongst the patients. The standard deviation was either at or below what we anticipated from our previous studies that we used to power and EMBARK. So there we did not see any high variability.

Please stand by for the next question. The next question comes from Reed Forsyth with Guggenheim. Your line is open.

Hi, this is Rye on for Debjit. Did the top line data provided to the FDA from EMBARK include information on…?

I am very sorry, but I was unable to hear that answer, that question. Can you ask it again, perhaps?

Yes. This is Rye on Debjit. Did the top line data provided to the FDA on EMBARK include information on…?

Oh, well, I imagine that we'll have that data available during the review process with the FDA. As Louise said, the expression we're seeing is in the hunted range of what we'd normally seen. So there's nothing unusual about it. In fact, the P value on it is .0, many zeros. It's very strongly, robustly, as you would expect, the limit is robustly mixed. That's the question, though.

That helps. Thank you.

Thank you so much, Rye. Apologies, I couldn't hear you. I'm sorry about that.

Please stand by for the next question. The next question comes from Brian Skorney with Baird. Your line is open.

Good afternoon. Thanks for taking the question. I guess it wasn't something we looked at very closely before, but I'm starting to tell, I think, time to rise had a non-significant difference in favor and treatment, but not that different in terms of magnitude. I think maybe just under half a second difference. You can tell me if that's right or not. So I know you've talked extensively about the baseline imbalance issue here, and it seems particularly acute in the case of baseline time to rise, where the active arm was 5.1 at baseline and placebo was 3.6. So I was just wondering if you've gone back and looked at making adjustments for baseline imbalances to evaluate the time to rise differences in study 102, and in particular, if the four to five-year-old subgroup looks the same in 102 as it did in EMBARK.

Yes, thank you for that question, Brian. I'll turn this to Louise to respond.

I'm going to speak generally, because what we did was take the inclusion criteria that we've generated for EMBARK and applied it to our previous data when we compared it to the external control. And what we found there is a difference when you exclude those patients that would have been excluded by that criteria in 102, where you had those rapid decliners. So in that case, we saw a more significant difference, but the specific numbers are escaping back right now. But we did do that analysis where we kind of applied the same exclusion criteria and did see a difference.

Yes. And maybe just one thing to add in that analysis to Louise's point, we saw a really good consistency between what we observed in 102 and what we observed in 301.

Please stand by for the next question. The next question comes from Salveen Richter with Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking my question. With regard to the regulatory submission, are there formal or regulatory procedures involved with revisiting an accelerated approval after the primary endpoint fails and in a confirmatory trial here? And then just any preliminary feedback on your data from payers and how that might impact the existing label or from physicians with regard to how they think about use in patients here?

I'm not completely sure I understand the question, but I want to clarify that the standard for confirming an accelerated approval involves reviewing all evidence and determining whether the therapy's benefits are supported by the entire data set, not just the confirmatory data. This includes considering surrounding evidence from other studies. I strongly believe that not only EMBARK but all supporting evidence has validated the benefits of this therapy. We are focusing our review on the potential expansion of this label, and I am confident this will be the main focus. Our perspective is that we have confirmed these results across various patients. Looking at the total evidence, including the forest plot and its statistical analysis, demonstrates that this therapy effectively halts the decline in these patients and should be accessible to everyone without age limits or artificial restrictions. Regarding payers, this serves as valuable evidence. Our team in Medical Affairs, along with our commercial field force, has done an excellent job supporting the launch of ELEVIDYS, and I believe this is evident in our performance this quarter, which reinforces our discussions with them. We have established a compelling metric illustrating how quickly patients can start therapy, particularly regarding the time to rise. The P value for this measure is quite significant, and rise time over 5 seconds has consistently been identified as a strong predictor of early loss of ambulation. EMBARK has demonstrated that using ELEVIDYS reduces the odds of this occurring within a year by over 90%. This serves as a persuasive point for payers, who have thus far been effective in providing access. It underscores the importance of starting children on this therapy promptly and supports the case for expanding the label as soon as possible to ensure everyone has access.

Please standby for the next question. The next question comes from Uy Ear with Mizuho. Your line is open.

Hey guys, thanks for taking the question. Congratulations on the great quarter for ELEVIDYS. My first question is, were the patients with the dose primarily those who expected the accelerated approval, and did they receive it more like a bolus? Also, could you share how many patients are waiting to be dosed in the coming quarter? Continuing on this theme, now that the EMBARK data has been released, do you have any sense of a shift in patient receptivity to the product? I know it's early days. Thanks.

Yes, let me address those questions briefly. I don't believe there will be any change in the interest for this therapy. Patients who are not within the range of 4 to 5 years old are likely even more eager to receive this therapy and are not going to wait impatiently for the label to be expanded. We do not disclose patient numbers and will measure our success based on net product revenue. Regarding the bolus or warehousing of patients, there were indeed some patients that physicians gathered to ensure they received treatment before aging out, as the label limits dosing to those 6 years and younger. However, we have seen a continuous flow of new start forms since the approval. Looking ahead, we maintain a steady influx of start forms that are progressing through the process. Additionally, I want to highlight the excellent work done by the team, particularly Dallan and others, in site activation. Our goal has been to have 50 sites ready for infusion at launch, and we initially hoped that by the end of the year or sometime next year, we could reach 70 sites. Currently, we are already at 70, thanks to the team’s fantastic efforts in getting these sites prepared and operational, and there is a consistent stream of start forms to address.

Please standby for the next question. The next question comes from Danielle Brill with Raymond James. Your line is open.

Hi guys, good afternoon. Thanks so much for the question. Doug, so we spent a lot of time discussing EMBARK efficacy at data I'd like to switch over to safety. I recall myocardis events being discussed at the AdCom, including one event that had occurred in EMBARK at the time. Just curious if there are any additional safety events of this nature that occurred in the study or any other SAEs leading to hospitalization? Thank you.

Thank you for your question, Danielle. I will turn the call over to Louise to respond.

Yes, we did not see any differences in the types of SAEs or the frequency of the SAEs that was one of the most reassuring things EMBARK was the continued safety profile and now taken together all of the previous trials, we have a large safety data base that's consistent on those trials.

Please standby for the next question. The next question comes from Ritu Baral with TD Cowen. Your line is open.

Good afternoon everyone. Thank you for your question. Doug, could you and maybe Dallan explain how you anticipate patient numbers for the different scenarios that regulatory experts suggest could be in play for label expansion? You mentioned that 10% of your PMO sales are for 45, which are covered. How would you segment that by 6 to 7-year-olds if the FDA decides to pursue that path again? Additionally, how might that number change considering the entire ambulatory population, which now extends to around 12 years of age?

For ambulatory patients, the average age for loss of ambulation is currently 12 to 13 years. I’ll have Dallan confirm that shortly. I want to clarify that we are not pursuing a label expansion to cover patients aged 4.5 to 7 years, and we believe there is no scientific reason to limit the age range to 4 to 7 based on the data we have. We have not encountered age-related restrictions in any other Duchenne therapy labels. To address the broader question, the ambulatory population constitutes about 50% of all patients, with the non-ambulatory patients making up the other half. This is a significant distinction. Dallan, do you have anything else to add on this topic?

No, I think you covered it, Doug. Our goal is to target all the patients within the entire population. Regarding your question about the average age of loss of ambulation, I believe you're in the right range. However, the key opinion leaders have been discussing the definition of loss of ambulation extensively because, as you understand, there's variation among patients. Some individuals can walk at much older ages, and we have a significant cohort of patients who have been treated with the PMOs for years, which we believe will also result in older ages of loss of ambulation. Therefore, we think the ambulatory population won't be defined solely by age. But as Doug mentioned, our aim is to have a broad label that targets all eligible patients.

And is that 50% of your PMO sales too?

Yes. The ambulatory versus non-ambulatory split, I think it's in that range of 50%. I think the access is more difficult in the older patients. So on average, we've got a higher penetration in the younger given population.

Please standby for the next question. The next question comes from Mike Ulz with Morgan Stanley. Your line is open.

Good afternoon and thanks for taking the question. You mentioned now that you have about 70 sites are active. Can you give us a sense of what percentage of those sites have actually prescribed ELEVIDYS so far? Thanks.

We are going to resist providing that level of detail, specifically regarding the number of sites or the number of patients infused at any one time. As we've done over the last seven years, we believe we have successfully communicated with stakeholders. We use net product revenue as the indicator of success and uptake. I apologize for that, Mike.

Please standby for the next question. The next question comes from Tim Lugo with William Blair. Your line is open.

Thanks for the question. You mentioned earlier in the week that you didn't expect an additional advisory committee for broadening the label. But we can all remember when we did expect one for the accelerated approval discussion. I guess why not request an AdCom? It seems like listening to the AdCom, the participants were much more amenable to non-age-restricted approval than the agency was.

Yes, that's a good question, and I'm not surprised by the comment. Some might argue that I have a poor track record when it comes to predicting advisory committee meetings. However, the last time I mentioned we would have one, I had it confirmed in writing. We believe that an advisory committee will not be necessary for our situation, and I feel that this perspective is shared by both us and FDA leadership. Previously, we had a very constructive conversation with FDA leadership about our data and the potential for submitting for a broader label. Additionally, it's worth noting that the division has undergone significant changes this year, including a reorganization where OTAT has been replaced by the new office, OTP, led by Dr. Nicole Verdun. It’s important to recognize that the division is evolving. If an advisory committee meeting were to occur, we would be well-prepared, and I believe we would perform very well. Dr. Rodino-Klapac and her team did an exceptional job representing us, and as you may recall, we ultimately succeeded in that advisory committee meeting. However, at this point, we feel confident that we can achieve some expansion without needing an advisory committee.

Alright. Thank you.

Thank you very much.

Please standby for the next question. The next question comes from Gil Blum with Needham & Company. Your line is open.

Good afternoon and congratulations on all the progress. I wanted to follow up on Alan's earlier questions regarding Study 102. Is there any chance we could have some follow-up information, particularly concerning the older patients who crossed over in part 2 of Study 102 about their time to rise? It will be interesting to compare that data with the EMBARK data. Thank you.

Sure. Louise, any thoughts on that?

Okay. Although one or two patients are continued to follow up for up to 5 years. So that's certainly something that we can look at over time. We don't have that data at hand, so we can look at that.

Please standby for the next question. The next question comes from Brian Abrahams with RBC Capital. Your line is open.

Hi there, congratulations on the strong first full quarter of the ELEVIDYS launch. Thank you for taking my question. Can you remind us of the protocols in place in EMBARK to protect against functional unblinding? Did this come up in your recent discussions with the FDA? Also, why do you expect any differences in the effects of functional unblinding, if any, on timed tests versus the NSAA? Thank you.

Yes. I can allow Louise to discuss the protocol aspects of the blinding process, which was exceptionally rigorous. We can generally assume that if that these are very objective time test would be less subject to any kind of influence in the event there wasn't unblinding. But I would say also that I think the protocol was very good about the blinding process and the study itself, one should remember, was actually very well run. I want to be clear about that.

Just specifically so the patients and caregivers obviously blinded the PIs as well as the physical therapist doing the functional tests are all completely blinded. So the studies is maintain blinded, study staff disrupt is blinded. It's maintained by a third party. So there is a rigorous process in place to make sure that the blinded remains intact.

That’s helpful. Thank you.

Please standby for the next question. The next question comes from Kristen Kluska with Cantor Fitzgerald. Your line is open.

Hi, good afternoon. This is Jason Bouvier on for Kristen Kluska. Thank you for taking my question and congrats on the strong quarter for ELEVIDYS. One question from us, the cadence treating patients is going faster than the original timelines you laid out. So we're just wondering what the biggest drivers are there? And how might this also impact the potentially broader launch next year? Thank you.

I'm going to address the question because I want to highlight our team. There are two main reasons why this launch is going exceptionally well, making it, in my view, a remarkable success in gene therapy. First, the therapy itself, ELEVIDYS, is highly needed, and both patients and their families strongly believe in its importance. Children receiving this treatment have been stabilizing and achieving milestones that untreated kids are unable to reach. Secondly, I want to commend our team, particularly Dallan and our manufacturing and distribution groups. It’s a collective effort that has led to this success. This is not our first experience; we have successfully launched four therapies, each of which has performed exceptionally well. To provide some context, since our first PMO approval in late 2016, we’ve continued to grow, with a 16% increase this quarter compared to the same quarter last year, even while launching ELEVIDYS. This reflects both the effectiveness of our therapies and our diligent execution. Looking ahead, we are equipped to serve the Duchenne community well. We are excited about the potential for a broader label, which would allow us to provide ELEVIDYS to many more children and young men in the U.S. suffering from this serious condition. I'm truly enthusiastic about the prospects of expanding access to this therapy while we’re already seeing success with the current launch. Thank you for your question.

Please standby for the next question. The last question comes from Joseph Schwartz with Leerink Partners. Your line is open.

Great. Thanks very much for fitting me in. I was wondering how are you thinking about upcoming clinical data for a different gene therapy candidate, which will have an interim look soon. Is there anything that you'll be focused on in particular? And how do you see the trade-off between safety and efficacy? If it were able to produce a greater impact on FAA, how would that impact your relative value proposition for ELEVIDYS?

Thank you for your question. As I've mentioned before, we are facing an extremely tough competitor in Duchenne muscular dystrophy, and our entire focus and energy are dedicated to overcoming this disease. I believe our team is doing an excellent job in this effort. We are very pleased with the performance of ELEVIDYS. In the past, decisions were made regarding constructs and capsids, and with many years of experience, we take great pride in our choices. We are genuinely excited about the specific capsid and construct we have developed. It not only protects the muscles of these children and halts their decline, but it also boasts a commendable safety profile given the extensive therapy required and the nature of full-body infusions. RH74 has been exceptional, and we are confident that anyone making a decision today regarding capsid selection and construct development would likely attempt to replicate our success. Our primary focus remains solely on Duchenne muscular dystrophy, and we are fiercely committed to conquering this disease. That is where our attention lies. Thank you again for your questions.

I would now like to turn the call back over to Doug for closing remarks.

Well, thank you very much, Michelle. And thanks, everyone, for attending tonight, and thank you for your very thoughtful questions. Let me summarize. This quarter has been an extraordinarily important one. With our fourth approval, we launched ELEVIDYS and in my opinion, we launched it brilliantly. We've continued to serve the community with our PMOs, which continue robust growth even in the face of an ELEVIDYS launch. And on a non-GAAP basis, we are now profitable, and we are marching toward a cash flow positive in the very near future. We have built a strong enduring organization that is focused on two major things. The first is serving our patient community through brilliant science and the second is executing and getting things done. And that is precisely what we will be doing over the coming months. We intend to continue our strong performance and commitment to serving this community. We intend to move with speed to submit our efficacy supplement and conclude the review on the broadening of the ELEVIDYS label. And when our label has been updated to remove age and ambulation restrictions, we intend to bring this therapy to the majority of patients living with Duchenne in the United States. And with that, I look forward to updating all of you on our progress along the way and have a lovely evening. Thank you.

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