Sarepta Therapeutics, Inc. Q4 FY2023 Earnings Call

Thank you, Shannon. And thank you all for joining today's call. Earlier this afternoon, we released our financial results for the fourth quarter and full-year 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 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 quarterly 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 statement, including any financial projections provided today based on subsequent events or circumstances.

Thank you, Fran. And by the way, everyone, it was Fran's birthday yesterday, so Happy Birthday, Fran. And good afternoon, everyone, and thank you for joining Sarepta Therapeutics' fourth quarter 2023 financial results conference call. Led by an exceptional launch of ELEVIDYS and continuing performance of our approved PMOs, EXONDY, VYONDYS, and AMONDYS, we announced, this afternoon, another strong quarter of full-year growth and quarterly growth as we serve the patient community. As we pre-announced in January at the J.P. Morgan conference, fourth quarter total net product revenue came in at $365.1 million, growing approximately 55% over the same quarter of the prior year and the full-year net product revenue achieved $1.14 billion, growing 36% over the prior year. In addition to continuing strong performance among our three approved therapies, ELEVIDYS' performance was particularly impressive and reflects first-in-class launch excellence, notwithstanding a label limited to four and five-year-olds, representing only about 3% or so of the total Duchenne population. ELEVIDYS net product revenue was $131.2 million for the quarter, and over $200 million for the full-year. I'm exceptionally proud of the team's performance here, which speaks to our level of preparation and attention to detail, expert understanding of all aspects of launching innovative rare disease therapies, and, of course, our passion for bringing a better life to those living with Duchenne. Dallan Murray, our Chief Customer Officer, will speak to this in his remarks shortly. We also continue to exercise the discipline of a fully integrated commercial-stage biotech organization. We were profitable on a GAAP basis in the fourth quarter, having achieved non-GAAP profitability in the third quarter of 2023. And we exited 2023 with approximately $1.7 billion of cash, cash equivalents, restricted cash and investments on our balance sheet. Our CFO, Ian Estepan, will provide more color on financial performance shortly. We also advanced our pipeline in the fourth quarter. In the fourth quarter, we submitted a BLA supplement for ELEVIDYS with the goal of both expanding the label by removing age and ambulation restriction and transitioning our approval from accelerated to traditional. And in February of this year, the FDA accepted our supplement for review and set June 21 as our target review completion date. In the fourth quarter, we also commenced EMERGENE, our trial for SRP-9003 to treat LGMD Type 2E. Also in January of this year, we announced the positive results of our trial MOMENTUM Part B, investigating the use of our next-generation peptide conjugated PMO, SRP-5051, to treat Duchenne patients that are exon 51 amenable. Dr. Louise Rodino-Klapac, our Head of Research & Development, will provide more color on our pipeline progress shortly. If we look back to 2017, starting with one approved therapy, $5 million in sales, a modest pipeline, a short cash runway, and little more than ambition and grit, we set out to build a sustainable, mature biotech organization, improving the lives of the greatest possible number of Duchenne patients along the way as we've become the leaders in the use of RNA and gene therapy to treat rare genetic diseases. If we are successful in our plans this year, we will have achieved that vision. From there, we can and we will expand our ambition and rely on our scientific and financial strength; we intend to advance our internal pipeline, but also to bring in external innovation to grow from here, not incrementally, but in great multiples. In short, 2024 is going to be a very important year. And with that, I will turn the call to our Chief Customer Officer, Dallan Murray.

Thank you, Doug, and good afternoon. The fourth quarter of 2023 represented a strong finish to an already impressive year as the team generated over $1 billion in net product revenue, a milestone for Sarepta. As previously noted, net product revenue for 2023 totaled $1.14 billion, consisting of roughly $945 million from our PMO franchise and $200 million from the launch of ELEVIDYS, the first gene therapy approved for patients with Duchenne muscular dystrophy. Each of these accomplishments stands on their own merits, and the performance of both surpassed our internal projections and external consensus. In the seventh year of our PMO franchise, we again grew net product revenue by double digits from the nearly $844 million in net product revenue from 2022. As with previous years, we delivered this growth organically, without taking price increases on any of our approved PMO products. As such, this growth represents an increase in the number of patients we are serving, reflecting our commitment to the Duchenne community. Turning to ELEVIDYS, we're extremely pleased with launch execution, exceeding our own lofty expectations. In fact, the $200 million in net product revenue surpassed the combined 2023 revenue of the other five gene therapy launches from the past 18 months. Remarkable, given that the ELEVIDYS approval occurred just this past summer. The success of ELEVIDYS shows that gene therapy can be commercially viable, providing hope for those patients with Duchenne and for all those with genetic conditions with unmet needs. While revenue is how we quantify the success of this launch externally, we measure ourselves on how we support patients. Our preparation is deliberate and intense, and our process was put to the test with the narrow label. The team responded to that challenge with an incredible commitment to supporting all eligible four to five-year-old patients. This is our fourth Duchenne launch, and our knowledge and experience played a significant role in how the team rallied, worked together, and rapidly supported those patients who were approaching their sixth birthday, and who were at risk of becoming ineligible for therapy. Ensuring no eligible patients are left behind is what motivates us. Let's now review the results from the fourth quarter, starting with ELEVIDYS. Net product revenue for the quarter was roughly $131 million. This represented a nearly 90% increase over Q3. We are pleased with our penetration into the very small and narrow segment of the Duchenne population. This four-to-five-year-old label has presented a number of unique executional challenges that are relevant moving forward. Firstly, a significant proportion of the patients in this age group are not yet diagnosed, given that the average age of diagnosis is around five in the United States. Secondly, those who are diagnosed have not had a lot of time to be fully educated about Duchenne, which means the patients and families need to understand that diagnosis, become aware of therapy options, go through a more involved and longer pretreatment process than the PMOs, one example of this being antibody testing. And on top of this, the patients must also secure access to ELEVIDYS in this very short time window. Our team has found themselves in a race against time to help these patients. And finally, the relatively small number of diagnosed four-to-five-year-old patients results in a situation where we will be working through this prevalent population quickly within the first half of the year. On the flip side, many of these dynamics are reversed once patients have transitioned over to the decline phase of the disease. This is illustrated by our real-world experience with the PMOs, where we see a larger proportion treated in the older age groups, which is on top of a larger diagnosed patient pool. Because of all this, we do not expect to see significant additional growth within the existing population through the first half of this year. Notably, however, by the time of label expansion, we expect to have cleared the way for those older patients to get dosed as rapidly as possible upon eligibility. I would caution analysts, therefore, to not use this current younger population as a frame of reference for our market potential in the overall population. The team is preparing, as we speak, for a broad label with a focus on building upon the successful launch execution to date, and we have the access and capacity in place to execute successfully on any broader label scenario. Let's now take a look at the PMO franchise as a whole. As previously mentioned, 2023 net product revenue of $945 million exceeded our full-year guidance of $925 million. This performance represents solid revenue growth across all three brands. In fact, both VYONDYS 53 and AMONDYS 45 continued their double-digit growth trajectory. Looking now at the fourth quarter of 2023, the team delivered roughly $234 million in net product revenue. This was flat versus Q4 of 2022, net product revenue of roughly $236 million. As you may recall from our Q4 2022 earnings call, we cautioned around keeping the guidance of $925 million for the year due to an increase in the quarter-to-quarter lumpiness that we were observing at that time. Looking now in retrospect, it's clear the PMO has performed exactly as we expected and guided. And finally, the performance we just discussed in our PMO business was achieved despite the incredible effort on the ELEVIDYS launch. Notably, we saw minimal impact on our PMO business from ELEVIDYS cannibalization in 2023, given the narrow age range. In closing, in 2023, Sarepta set a new standard for gene therapy launches with ELEVIDYS. We beat external expectations and delivered roughly $200 million. Equally important, we continue to increase the number of patients we support with our PMOs globally. I continue to be immensely proud of our mission-driven team. Combining our PMO and gene therapy businesses, we exceeded a billion in net product revenue for the first time, and we have entered 2024 with momentum.

Thanks, Doug. 2023 was a year of great accomplishment for Sarepta, for the advancement of science, and for the health and well-being of patients living with rare disease. 2023 will also be remembered as a defining moment in genetic medicine. In June 2023, the FDA granted accelerated approval to ELEVIDYS, the first gene therapy to treat Duchenne muscular dystrophy. Since that time, we've been successfully treating ambulatory pediatric patients aged four through five years with Duchenne, who have a confirmed mutation in the DMD gene. And then, just about two weeks ago, and as Doug mentioned, we were thrilled to announce that the FDA accepted and filed our efficacy supplement for ELEVIDYS, whereby they will now evaluate broadening the approved indication of ELEVIDYS by removing age and ambulation restrictions and converting the ELEVIDYS accelerated approval to a traditional approval. Should we receive accelerated approval for ELEVIDYS in the non-ambulant population in the United States? Our ENVISION study, also called SRP-9001-303, will serve as our confirmatory study for this population. ENVISION is a global randomized double-blind placebo-controlled two-part study evaluating the safety and efficacy of delandistrogene moxeparvovec-rokl gene therapy in non-ambulatory and older ambulatory individuals with Duchenne. This study is ongoing with all remaining patients being enrolled outside of the United States. With U.S. enrollment completed and the remaining 85% of recruitment occurring internationally, we are confident in our ability to complete this trial. Moving now to our limb-girdle muscular dystrophy or LGMD program, on January 16th, we announced that screening was underway in study SRP-9003-301, also known as the EMERGENE study. We are pleased to now share that the first patient has been successfully dosed in that study. To remind you, EMERGENE is a Phase 3, multi-national, open-label clinical trial of SRP-9003 for the treatment of limb-girdle muscular dystrophy Type 2E or beta-sarcoglycanopathy. The primary endpoint of EMERGENE is expression of beta-sarcoglycan, which is an extremely important endpoint for this program, for the other sarcoglycanopathies, including LGMD2D and LGMD2C, and for the field of gene therapy. I'll explain why. Beta-sarcoglycanopathy is characterized by a mutation of the beta-sarcoglycan gene, which sits in a complex of the membrane called the sarcoglycan complex, and is important for function and for preventing muscle damage during contraction. The sarcoglycan complex is a subcomplex of the dystrophin-associated protein complex, or DAPC. A defective sarcoglycan protein results in loss or reduced expression of the other sarcoglycan, as well as other proteins in the complex, such as dystrophin. Therefore, by restoring the missing protein, such as beta-sarcoglycan, we're able to restore that functional complex at the membrane and thereby restore function to the muscle. Further, earlier this month, I had the opportunity to participate in the Speak Foundation's LGMD Scientific Workshop, which also featured officials from the FDA, including Doctors Marks and Verdun, as well as patients, caregivers, and clinicians, among others. The key takeaways from the workshop included the perspective that traditional trial designs are not suitable for certain types of LGMD, and that to ensure these therapies have the best chance of success, the totality of evidence must be considered. Doctors Marks and Verdun also expressed their strong support for regulatory flexibility and a higher tolerance for uncertainty for rare diseases, such as LGMD, when you're replacing the native protein, as well as support for surrogate endpoints for gene therapies. Currently, no treatments exist to effectively treat LGMD2E or the other LGMDs. The EMERGENE study, which will enroll 15 participants who are ambulatory and non-ambulatory, ages four and older, not only holds great promise for individuals suffering from LGMD2E but will lay the foundation for other LGMD programs, as well as provide a viable regulatory pathway that supports the development of future gene therapies for rare and ultra-rare diseases. These data, combined with positive expression and functional data shared from our initial LGMD2E study, SRP-9003-101, which was also published in Nature Medicine earlier this year, and our Voyagene study, SRP-9003-102, which establishes safety experience across a broader patient population, together constitute a totality of evidence. As a reminder, Voyagene is a Phase 1 study evaluating SRP-9003 for the treatment of LGMD2E in patients ages 18 and older in the ambulant population and ages 4 to 50 in the non-ambulant population. The primary endpoints are safety and change in beta-sarcoglycan expression. We expect to have the clinical results this year. Moving now to our RNA platform, we were also pleased to recently announce positive results from Part B of our MOMENTUM study, study SRP-5051-201. Based on the data we've generated to date, we believe SRP-5051 represents a best-in-class therapy from an efficacy perspective. MOMENTUM is a global, multi-ascending dose clinical trial of SRP-5051, our next-generation peptide phosphorodiamidate morpholino oligomer treatment for patients with Duchenne who are amenable to exon 51 skipping. As previously discussed and based on these results, we believe we have a path forward to an NDA and are planning a meeting with the FDA to discuss an accelerated approval. We anticipate that this meeting will occur in the third quarter of 2024. Regarding our post-marketing studies for the PMOs, as mentioned, we completed enrollment in the ESSANCE trial, our post-marketing requirement for golodirsen and casimersen. As a reminder, ESSANCE is a two-year study and is due to readout in early 2026. In addition, we are 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 the Eteplirsen, 30 mg/kg/weekly, to a dosage that provides significantly higher exposure, up to 200 mg/kg/weekly. MIS51ON is a two-part Phase 3 study. It was fully enrolled in October 2023 with 160 patients. We remain committed to rapidly and diligently advancing MIS51ON and sharing data as soon as it becomes available. In conclusion, the months ahead are filled with great promise to advance our mission and serve patients around the world living with rare diseases.

Thanks, LRK. Good afternoon, everyone. This afternoon's financial results press release provided details for the fourth 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 a full reconciliation of GAAP to non-GAAP financial results. Before we get to the results, I just wanted to flag that beginning in the fourth quarter of 2023, amortization of in-licensed rights and income tax expense or benefit are no longer excluded from non-GAAP results. The company has added income tax effective adjustments, which represent the estimated income tax impact of each pre-tax non-GAAP adjustment based on the applicable effective income tax rate. Non-GAAP financial results for the fourth quarter and full-year 2022 have been updated to reflect this change for comparability purposes. For the three months ended December 31, 2023, the company recorded total revenues of $396.8 million, which consists of net product revenues and collaboration and other revenues compared to revenues of $258.4 million for the same period of 2022, an increase of $138.4 million. Net product revenue for the fourth quarter of 2023 from ELEVIDYS was $131.2 million. Net product revenue for the fourth quarter of 2023 from our PMO exon skipping franchise was $233.8 million, compared to $235.9 million for the same period of '22. For the fourth quarter of 2023, individual net product sales were $131 million for EXONDYS 51, $69.9 million for AMONDYS 45, and $32.9 million for VYONDYS 53. The increase in net product revenue primarily reflecting increasing demand for our PMO products as well as net product revenue associated with sales of ELEVIDYS. In the quarter ended December 31, 2023, we recognized $31.7 million of collaboration and other revenues compared to $22.5 million for the same period of 2022. This revenue primarily relates to our collaboration arrangement with Roche. Thus, for the quarter ended December 31, 2023, the company recognized $9.2 million of contract manufacturing collaboration revenue associated with multiple batches of commercial ELEVIDYS supply delivered to Roche with no similar activity ended December 31, 2022. The reimbursable co-development costs under the Roche agreement totaled $23.5 million for the fourth quarter of 2023, compared to $51.7 million for the same period of 2022. On a GAAP basis, we reported net income of $45.7 million or $0.49 per basic and $0.47 per diluted share, and a net loss of $109.2 million or $1.24 per basic and diluted share for the fourth quarter of 2023 and 2022, respectively. We reported non-GAAP net income of $86.6 million or $0.82 per diluted share in the fourth quarter of 2023, compared to a non-GAAP net loss of $53.6 million or $0.61 per diluted share in the fourth quarter of 2022. In the fourth quarter of 2023, we recorded approximately $44.2 million in cost of sales, compared to $30.8 million for the same period of 2022. The increase in cost of sales primarily reflects increasing demand for our PMO products, an increase in royalty payments due to ELEVIDYS sales in 2023, with no similar activity in 2022, and a write-off of certain batches of our products not meeting our quality specifications in the three months ended December 31, 2023, with no similar activities for the same period of 2022. On a GAAP basis, we recorded $195.5 million and $213.8 million in R&D expenses for the fourth quarter of 2023 and 2022, respectively; a year-over-year decrease of $18.3 million. The decrease is primarily due to a decrease in manufacturing expenses and upfront milestone and other expenses. On a non-GAAP basis, R&D expenses were $165.1 million for the fourth quarter of 2023, compared to $186.8 million for the same period of 2022, a decrease of $21.7 million. Now, turning to SG&A on a GAAP basis, we recorded approximately $131.7 million and $120.5 million of expenses for the fourth quarter of 2023 and 2022, respectively, an increase of $11.2 million. The increase was driven primarily by an increase in professional services in compensation and other personnel expenses partially offset by a decrease in stock-based compensation. On a non-GAAP basis, the SG&A expenses were $105.7 million for the fourth quarter of 2023, compared to $86.6 million for the same period of 2022, an increase of $19.1 million. On a GAAP basis, we recorded $15.7 million in other income net for the fourth quarter of 2023, compared to $5.5 million for the same period of 2022. The change was primarily due to an increase in the accretion investment discount net due to an increase in interest rates. We had approximately $1.7 billion in cash, cash equivalents and investments in long-term restricted cash as of December 31, 2023. So, to conclude, we are incredibly pleased to achieve our first quarter of profitability from a GAAP perspective. It is impressive to reach this milestone in just the second quarter of the ELEVIDYS launch, and highlights the leverage in our business. For the reasons Dallan outlined and maybe some lumpiness on the bottom line in the first half, that said, with an expansion of the label, we expect to be highly profitable for the full-year. Also, as I previously noted, in preparation to serve the community in the event of a label expansion, we're continuing to ramp our manufacturing of ELEVIDYS. Its continued investment will be apparent in the first-quarter financials and the remainder of the year. We are thrilled to have the resources on hand to continue to build the inventory needed to deliver ELEVIDYS to the Duchenne community. Now with that, I'll turn the call back over to Doug to start the Q&A.

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

Thank you. I think, operator, your voice was cut off, so I don't know how many questions I can ask. I'll just ask two very quick questions. So, one is ELEVIDYS. So, for the proposed label, was that based on FDA feedback or was it purely from Sarepta's end? And the second, regarding the emerging Phase 3 study in limb-girdle 2E, was it confirmed with the FDA that 15 patients would be sufficient? And what protein level will be approvable?

Thank you for your questions, Gena. Just for future reference, please limit your questions to one per analyst. I appreciate your inquiries, so here are my responses. Our request to expand the label by removing both age and ambulation restrictions is grounded in scientific evidence. We're currently undergoing a review and are pleased with the progress, but it’s too early to provide a definitive perspective from the division. However, we believe that the science and the overall evidence support our requested label extension. This aligns with our views, the scientific rationale, and policy considerations, and most importantly, it supports patients living with Duchenne muscular dystrophy, which should be our guiding principle. Regarding the emerging study, the protocol has been shared and reviewed with the FDA. Based on our discussions, they have approved us to start the study. We will share more information later about the expression levels that may predict clinical benefit. In our previous studies, we had two cohorts that demonstrated strong expression of the beta-sarcoglycan protein, which is the exclusive cause of degeneration in patients with LGMD Type 2E.

Hi, good evening, and thanks for taking my question. I just wanted to get a sense, as you look for the expansion of label and how to model COGS, especially as more patients get on therapy over time, and the weight of the patients presumably will go higher as you get to older patients. What's the reasonable range of COGS that we should be assuming?

Yes, and, Ian, I'll turn this to you.

Sure. So, from a cost perspective, we've been pretty clear that we're targeting 80%. Obviously, from our financials that we reported today, you see it's much higher than that. But over time, as heavier patients get on the therapy and, obviously, our pre-expense inventory is exhausted, you'll see the COGS obviously start to increase, and our margin to start to decline more to that 80% range, which we've been guiding. Obviously, we can't give complete clarity around that because we have a suspension which could be coming online with as much higher yielding process and time for some of the older, heavier patients to be coming on, which would offset their weight. So, as we said, over time, you'd see some erosion of the margin from where we currently are, but modeling in around 80% is probably reasonable.

Hi everyone. Thank you for your questions. This is Will filling in for Joe. Congratulations on the insightful question. Regarding manufacturing, with Novo's recent acquisition of Catalent and the anticipated end of our agreement with them at the close of this year, how are you approaching manufacturing in the future? Also, considering the potential for an expanded label this year, are there any possibilities of supply limitations in the near term?

Yes, it seems there might be some misunderstanding. I want to clarify that our agreement with Catalent will not end this year. We have a long-term partnership with Catalent, and they have been excellent partners for us. Therefore, we do not anticipate any impact from Novo Holdings acquiring Catalent. As we understand it, Novo Holdings plans to acquire the company as a whole, with the GLP-1-related manufacturing likely being sold to Novo Nordisk. Novo Holdings will retain the rest of Catalent, which will continue to operate as it currently does. I have had direct discussions with senior management at Catalent and I am confident that it will be business as usual with them. From a supply standpoint, what we have accomplished together since 2018 in manufacturing and CMC has been impressive, due to science and hard work. As we move forward, we have done an outstanding job serving the community and will continue to do so this year alongside our partner Catalent. We feel very positive about our current position.

Hi, everyone. Good afternoon and thanks for taking our question. So, I know this may be knowable, but can you remind us what the population divide is between ambulatory and non-ambulatory patients? And what is kind of the median age for loss of ambulation?

So, I can give you the broad strokes. It is about epidemiologically about 50-50 between ambulatory and non-ambulatory patients. And Dallan, do you have the recent estimates of the loss of ambulation?

You cut out there for a second. Did you say the diagnosed patients?

No, I said what is the average age of loss of ambulation?

Oh, average age of loss of ambulation. I think Louise would probably have better data than me, but it would be depending on different publications in the 11 to 12 range.

Yes, some are slightly earlier. To your point, there are some differences. Yeah.

Hi, this is Leonard on for Brian. So, maybe I'll ask 1.5 questions if that's okay, not quite two. So, can you clarify the application process with respect to ELEVIDYS? I guess is the conversion to a full approval and the label expansion two separate questions before the FDA that have potentially separate timelines, reviews, discussions around them, and can they be separated? And then I guess just related to that, you mentioned in the prepared remarks you're thinking through broad label scenarios. So, and you mentioned if you get an accelerated approval in the non-ambulatory setting, I guess, is that part of those scenarios? Is that something you've heard from the FDA or is this just preparing for all the possibilities?

There are essentially two issues at the agency simultaneously. One is modifying the label to broaden access for a larger population of patients. We have requested the removal of all age and ambulation-related restrictions from the label, based on our scientific foundation. The second question is whether we have met the requirements for our confirmatory trial, and if the entire approval can be transitioned from accelerated to traditional approval. There are various scenarios to consider, and there will be discussions about the extent of the label as well as which parts are confirmed for traditional approval and which parts will remain under accelerated approval. We have a strong perspective on what the science supports. From an administrative standpoint, the timelines are the same, with a target completion date of June 21 for both issues. We are pleased with this timeline, especially considering the previous guidance extending to the end of August. However, regarding the substantive review, that will depend on the ongoing discussions, and we are still in the early stages. While the engagement with the division has been positive, we acknowledge that more work and discussions are needed, and I don’t want to make any premature promises. Our primary focus is to achieve the broadest possible label, as this will provide access and potentially improve lives for the greatest number of patients. The secondary issue of transitioning from accelerated to traditional approval will be discussed separately. We have more discussions and work ahead, with June 21 as our return date on these matters.

Thanks for taking our question and congrats on the impressive progress. So, one quick question from us, if we assume that your label will restrict elevated use to ambulatory patients only for all ages, how straightforward would it be for physicians and importantly payers to clearly determine whether someone is ambulatory or not, given that patients are losing ambulation progressively? So, there may be a stage where the ambulation status is unclear. So, would it be clear for physicians and payers to determine if someone is eligible or not?

Thank you for your question. I want to clarify that I do not agree with the assumption that we will only have access to ambulatory patients, as we are currently aiming to remove those restrictions. However, ambulation is part of the current label. The key issue is how physicians define ambulation. Ultimately, it is up to their medical judgment, but there are established guidelines in medical practice that assist with this. These definitions rely on functional assessments and tests, with one of the most recognized methods coming from synergy. This method states that a patient must report continuous use of a wheelchair without any ambulation, which is then confirmed by a physician's observation that the patient cannot walk 10 meters unassisted. This represents a standard functional assessment used to evaluate a patient's ambulatory status, making it a challenging determination for physicians.

Hey, guys. Thanks for taking my question. Just to follow up on the last question, could you just remind us what data was included in the filing on patients that are non-ambulatory, if any, just to kind of clarify that?

Yes, we have data from children up to 20 years old from a separate study that we call study 103 that went in with it. We obviously also have an ongoing study ENVISION, which is a study for non-ambulatory patients. Now that is an ongoing placebo-controlled trial, but the safety from that study is obviously made available to the FDA on a continuous basis and all of that supports our BLA supplements.

Thanks for the question. Can you discuss the level of warehousing currently occurring in the DMD community and maybe any subpopulations that are ahead of this potential expansion in the summer, which we should be aware of? I know we all focus on ambulatory and age-related. Is there anything else though, that we should also be looking at the life function or other cell populations?

Well, I'm not 100% sure what we mean by warehousing, to be honest. There is going to be an exceptional amount of demand for this therapy when the label is expanded, both from the physician community, but from families with Duchenne muscular dystrophy. And we stand prepared to build the material and have lots available to fully serve that demand over the course of 2024. But, Dallan, do you have other thoughts on the warehousing question itself?

Yes, I think it's related to the PMOs and warehousing with the PMOs in anticipation of the gene therapy. We were worried about that leading up to the initial launch, and the team did an exceptional job of making sure that that did not happen. And we don't see widespread warehousing where patients are getting delayed, or really any warehousing where people are forgoing PMO in anticipation of the gene therapy. So, I think, as I mentioned in the script, one of the things we're particularly pleased with this year is the continued incredibly excellent execution of the PMO team for patients who were not eligible for the gene therapy for ELEVIDYS.

Thanks for taking my question. Regarding the exon skipping products, can you help us understand the year-over-year growth for the first half of the year and how we should consider the first half of 2024 for those three products?

We haven't provided guidance on the PMOs for this year, but we are doing very well. And we saw very good performance of all three of the PMOs last year, and AMONDYS and VYONDYS were still growing double-digits. And one of the things that's interesting is that we are not seeing right now, and probably won't see a significant amount of cannibalization from ELEVIDYS over the course of 2024 that will have a significant impact on the PMO. So, we feel very good about where we are with our three RNA-based therapies in 2024.

Hi. This is Rudy on behalf of Salveen. Thank you for taking my question. If the label for ELEVIDYS is expanded and a larger population becomes eligible, how do you think physicians will decide which patients to treat first given their constraints? Thank you.

Yes, this is certainly a challenge that physicians will need to address. There are several constraints to consider. One point you raised is that we must always prioritize excellent outcomes and safety over short-term revenue. Physicians will have to keep this in mind as they ensure not only that they can treat patients but also that they follow up appropriately. This may require them to prioritize treatment as they evaluate this therapy. Ultimately, we cannot dictate medical decisions for them. There are valid arguments on both sides. Some physicians might focus on very young children to intervene before any harm occurs, while others may be concerned with non-ambulatory or later stage patients, where time is critical. Addressing the needs of these patients and preventing damage before it becomes irreversible is extremely important. Thus, these choices will be challenging for physicians, and I expect there will be extensive discussions among our leaders regarding this issue. The immediate concern is somewhat different; given our current label, we need to make sure we get children treated before they age out.

Hi, guys. Thanks for taking the question. I want to just follow-up on the shorter guidance, given your comment on not to expect additional quotes in ELEVIDYS through the first-half of the year at least until the PDUFA. Is that a comment or reflection on just the fact that you reached sort of a runway on four to five-year-old, or is that a comment on sort of capacity of the systems throughput? Are you getting through with many patients as possible? And can you comment on what that sort of throughput capacity of the center is at this point for when hopefully the label expands?

Yes. This really isn't a capacity issue right now. So, I think as Dallan commented in his opening remarks, the label that we have today in this population is really a fairly unique population. First, as we all know, it's a very narrow age range, four to five years old, but that alone doesn't really describe the unique nature of this population, because beyond that there is a significant percentage of those patients that are not yet diagnosed. And so, that makes it unusual. And when they're diagnosed, remember, they're not all getting diagnosed on four years in one day. Some of these kids are getting diagnosed until they're five. And so, what does it mean? It means that a family is faced with what is very likely the most devastating piece of news so far in their life has to come to grips with that news, then understand it well enough and then go through the administrative process that exists to get approvals, to get antibody tests, to get an infusion date, and to get infused. So, this is a really unique population in light of that, obviously give a shout out to the team, it is particularly impressive when one considers that we did $200 million in that product revenue this year. So, what Dallan was really talking about, when we were talking about, this is just simply that as we work through the prevalent population, this is a really unique population and much narrowed than you might imagine the four to five. And so, by the middle of this year, assuming now label expansion, you would get to a place where you begin to be treating the incident population as opposed to some abolished prevalent population in this group. Now, the good news is that we have a June 21 date for our request for label expansion. So, hopefully by July we will have a broader label and we will be able to serve a much greater percentage of the population.

Hi. Thanks for taking the question. I just wanted to ask a little bit more about the suspension of manufacturing you have in the works. How active is something like that come online and once that is operationalized, how might that improve your margins?

So, we are excited about where we are from a suspension perspective. There's still a ton of more work to do, but a couple of things to think about. We are very advanced actually in those suspension works that we are doing, not just SRP-9001, but we are actually getting great results from a suspension perspective with some of our limb-girdle programs. A couple of our sarcoglycan programs actually transitioned through suspension, and we are making great progress there. When we focus specifically on ELEVIDYS, we are in engineering realms right now. On suspension, we have done 500 liter, we are doing another 500 liter. We will start in the next month or so, 2,000 liter. We are so far getting not only really tremendous enhancement on yields, but really good product qualities. If all goes well, our goal is to have this suspension process available commercially by 2026. That's a moonshot goal on our part, and we are keeping the patients front and center; we are going to try to move as fast as possible. But hopefully we have the history to prove that we can cope with audacious plans and serve them. So, we are really excited about this. As far as what that might do, both from a capacity perspective as we go around the world with our partnership, and a COGS perspective, that's going to require more work and more clarification as we get these runs done, but it won't be modest. It will be multiples. And we are seeing multiple times greater yields with suspension than we get with our ICLS process, which Ian mentioned; filter it right now and 80% margin. So, you will probably hear in my voice a certain amount of enthusiasm for our manufacturing approach and our suspension approach, and it is still early days and we are just in the engineering realm trying out. But we are very, very excited about what this could mean for our ability to bring this therapy across the world and at a lower cost of goods as we go across the world.

Hey, guys. Thanks for taking the question. Maybe just a quick one on timing, since the PDUFA date was granted two months ahead of expectations, just curious if the thinking now is you'll probably get a decision close to the PDUFA date, or is the FDA still really committed to rapidly reviewing this? And we might get an answer sooner?

I have more reason to believe that the FDA isn't committed to rapidly reviewing this. With that said, there is still a lot of work to be done, and I think it would be a dream for all of us to assume that our target completion date of June 21 is the date on which we are going to get the answer on this. So, we are planning for June 21, even though we are going to get so many things. We try to move as fast as possible, but we are assuming June 21 is when we are going to get on label expansion request answered.

Hey, guys. This is Alex on for Danielle. Thanks for taking the question. Maybe the PMO confirmatory trials are fully enrolled; could you just remind us whether we should expect data for the MIS51ON this year?

No, we shouldn't. It doesn't read out until 2026.

Hi, this is Charlie on for Brian. Thanks for taking our question. So, we were just wondering if you've heard anything from Roche regarding timelines with the EMA as well as. If the European opportunity were to come online, would there be any supply limitations resulting from that? I know you're very comfortable with the expansion of the label, but bringing on a whole another constant. Do you think you'd have to do any prioritization between regions?

Well, Roche is publicly saying that their goal is to submit in 2024. And then, as it relates to supply, our supply plans include our partner Roche.

And just one quick follow-up just to the previous question around MIS51ON and the timing, just one thing to remind everyone is that this is a dose that compares the doses of the drug. And so, the data which we'll read out will be comparative from the 30 mg/kg compared to either a 100 mg or 200 mg/kg. And there's no risk of the drug being pulled off the market.

Hi, this is Rich Miller on for Kristen. Thanks for taking our question. Since launching, are you able to talk about if and how the profiles of DMD patients that are looking to get on an ELEVIDYS have changed? Or to put it another way, I imagine you had highly engaged caregivers who were ready for an ELEVIDYS on day one. So, are you seeing more patients coming forward now after a few months of commercial experience or caregivers to get their child in line for an ELEVIDYS?

Yes, I would say in the broadest of strokes, there is going to be a substantial demand for this therapy. I don't think that's changed; I think it's what we anticipated. Before launch, I don't think it's changed after launch. Duchenne muscular dystrophy is a devastating disease, and the opportunity that's offered by an ELEVIDYS is an important one. I think physicians understand that, families with Duchenne muscular dystrophy, boys understand that as well. But, Dallan, if you have any additional color on this or views, please share them.

No, I think broadly speaking, you're exactly right, Doug. We're not seeing a significant change in the number of patients coming in. We are working with a small population, and as soon as they are diagnosed and have had discussions with their doctors, they are completing the enrollment forms. We are processing these patients as quickly as possible before they age out. However, there haven't been any major differences; for instance, there wasn't a sudden influx of patients initially that has since changed. It's just been a consistent pace.

Hey, guys. Thanks so much for taking the question. At the conference in January, you talked about 70 sites being active and about half of those sites had dosed patients. Can you give us a sense of where you are kind of now in the first couple months of the year?

Yes. I mean, I believe that that remains the accurate answer, but Dallan, you can give us an update if there's any change in that.

No, Anupam, it really hasn't changed all that much. There's obviously more than there was then, and there's a higher proportion of sites that have dosed, but we're actively looking at this on a daily basis. We have a flexible model that allows us to bring on new sites and get them trained and ready as needed. We have more than enough sites up and running with great geographic coverage, and the team is prepared to support and serve as needed.

I want to give credit to this team for our achievements. The goal was to reach as many as 50 sites by 2024 and to have over 50 by the end of 2023, which would have set a record for a gene therapy launch. There was also an aspiration to potentially reach 70 sites fully trained and operational. This team surpassed expectations by exceeding 70 sites in 2023, and I take great pride in how they accomplished this. As I mentioned earlier, we prioritize patient safety and favorable outcomes over revenue. It’s crucial for us to ensure excellent outcomes, and the team has made significant strides in that direction. The 70 activated sites are well-trained and prepared to safely administer this therapy while achieving consistent results. We maintain a commendable safety profile for a full-body infusion gene therapy and intend to uphold that over the long term. Additionally, we offer access to experts so every physician has the necessary information to effectively administer and monitor patients, which is something unique in our approach. We are well-positioned to responsibly serve this community, and I'm very proud of the team's current status, which also reflects in our revenue for 2023. Thank you, Shannon, and thank you all for joining us today. I appreciate your insightful questions. I believe 2023 was a crucial year for Sarepta. Many people on this team, along with the patient community, investigators, and physicians, worked tirelessly to reach our current position as a rapidly maturing, fully integrated biotech organization dedicated to improving the lives of patients with Duchenne muscular dystrophy, limb-girdle conditions, and other serious rare diseases. The significance of 2024 could be even greater if we succeed, positioning us to make a meaningful impact for many rare disease patients and reward those who have supported us in seeking better lives for these patients. If we are successful this year and expand the label for ELEVIDYS while meeting our goals, we will utilize our expertise, financial resources, and the team's talent. Our aim is to grow significantly beyond ELEVIDYS, not just incrementally but in multiples. We have ambitious plans if we succeed in 2024. With that said, our focus needs to be on achieving success in 2024, and the team is ready for that challenge. I look forward to updating you along the way. Thank you, and have a pleasant evening.

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