Earnings Call Transcript - SRPT Q4 2021

Operator, Operator

Good afternoon, ladies and gentlemen. And welcome to the Sarepta Therapeutics Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today’s program is being recorded. At this time I'll turn the call over to Mary Jenkins, Senior Manager, Investor Relations. Please go ahead.

Mary Jenkins, Senior Manager, Investor Relations

Thank you, Mel, and thank you all for joining today's call. Earlier today, we released our financial results for the fourth quarter and full year 2021. The press release is available on our website at sarepta.com and our 10-K was filed with the Securities and Exchange Commission earlier this afternoon. Joining us on the call today are Doug Ingram, Ian Estepan, Dallan Murray, and Dr. Louise Rodino-Klapac. After our formal remarks, we'll open the call for Q&A. I'd like to note that during this call, we will be making a number of forward-looking statements. Please take a moment to review our slide in the webcast, which contains our forward-looking statements. These forward-looking statements involve risks and uncertainties, many of which are beyond Sarepta's control. Actual results could materially differ from these forward-looking statements, and any such risks can materially and adversely affect the business, the results of operations, and trading prices for Sarepta's common stock. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent Annual Report on Form 10-K filed with the SEC, as well as the company's other SEC filings. The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today based on subsequent events or circumstances. I’ll now turn the call over to our President and CEO, Doug Ingram, who will provide an overview of our recent progress. Doug.

Doug Ingram, CEO

Thank you, Mary. Good afternoon, everyone, and thank you all for joining Sarepta Therapeutics fourth quarter and full year 2021 investor conference call. Among the thousands of public and private biotech companies currently existing in the United States and around the world, Sarepta sits in a select and small group of fully integrated commercial stage biotech enterprises with a proven track record of translating brilliant science into approved therapies and then supporting the patient community and physicians in gaining and maintaining access to those approved therapies. This operational focus and commitment to patients was on full display throughout 2021. We have greater than 40 programs in our pipeline of potentially life-enhancing therapies focused on rare genetic diseases across multiple platforms, including RNA, gene therapy, and gene editing. Moreover, in 2021, we entered pivotal registrational trials for our lead programs in both our RNA and gene therapy platforms. We commenced dosing EMBARK, the pivotal registrational trial for SRP-9001, our microdystrophin gene therapy to treat Duchenne muscular dystrophy. EMBARK is currently the only truly global trial, dosing a gene therapy for the treatment of Duchenne. With the approval and launch of AMONDYS 45 in February of 2021, we now have three approved therapies serving the Duchenne community. In the fourth quarter of 2021, we enjoyed our 21st straight quarter of strong quarter-over-quarter revenue growth. Total revenues reached $201.5 million, and net product revenue for our three RNA-based therapies reached $178.7 million, a 46% increase over the same quarter of the prior year. For the full year 2021, total revenue reached $701.9 million and net product revenue was $612.4 million, a 34% increase over the prior year. Since 2017, when we first launched EXONDYS 51, Sarepta has recognized sustained growth with a compounded annual product revenue growth rate of over 40%. Our growth continues, as we entered 2022 in a position of financial strength with our total revenue guidance at over $880 million and our net product revenue guidance of over $800 million, a 30% growth over the prior year. Additionally, we entered 2022 with $2.1 billion in cash on our balance sheet and financial discipline to optimize our resources. Our pipeline continues to perform. In the first quarter of this year, we announced statistically significant functional results and continued confirmation of our differentiated safety profile for SRP-9001 from Part 2 of Study 102. With the objective conviction that comes from consistent results in what is the largest body of clinical evidence in Duchenne today, we continue to enroll and dose patients in the EMBARK and the MOMENTUM studies while also advancing our deep multi-platform pipeline. Our late-stage clinical programs can provide a pathway to profitability by the end of 2024, and by 2025, we could generate yearly revenue of $4 billion. If our pipeline is successful, our yearly product revenue could approach $10 billion generated from our internal programs alone. We have the strongest team in Sarepta's history, and I believe at least one of the most astute and strategically minded teams in all of genetic medicine and biotech. We stand ready to continue executing and translating our programs into life-enhancing therapies for the patients we serve and benefitting the investors who have placed their trust in us. With that, let me turn the call over to our Head of R&D and Chief Scientific Officer, Dr. Louise Rodino-Klapac, who will give us an update on our research and development activities. Louise?

Louise Rodino-Klapac, Chief Scientific Officer

Thanks, Doug. My decision to join Sarepta four years ago was driven by the strong foundation of the R&D organization and Sarepta’s unmatched dedication to science as a patient. Since then, the R&D group has grown in breadth and depth to become a truly integrated team focused on translating the very best science to the very best treatments for patients in the shortest time possible. I'm proud to lead such a strong and committed team of scientists. Together, this R&D has achieved significant milestones, and this is especially an exciting time for our organization. We are fostering and leveraging our internal research capabilities, capitalizing on our current strengths while ensuring we are positioned for sustained growth into the future. As a fully integrated organization, we have expertise in the manufacturing of our RNA and gene therapy assets, and we have developed and validated the analytics to characterize and release this material. I'm particularly proud of our competency in this area as it’s a capability unique to Sarepta. We have become efficient in our development processes with consistent manufacturing processes, and we've established internal GLP capabilities at our Genetic Therapy Center of Excellence in Columbus, Ohio. This affords us flexibility, agility, and speed for preclinical studies. Additionally, in the past two years, we've created an internal innovation engine driven by our subject matter expertise that resulted in the advancement of over 50 therapeutic candidates across gene therapy, gene editing, and RNA. Our goal is to further enhance our delivery platforms so we can reach more patients with our therapies faster. We are also investing in next-generation technologies. In 2021, we successfully advanced our partnership with Genetic following encouraging initial in vivo results. One of the significant challenges when developing a non-viral delivery mechanism is establishing good muscle tropism. The results from this collaboration demonstrated the potential of genetic polymer nanoparticles to deliver therapeutic cargo to muscle tissue. Our partnership reflects our strategy to leverage various therapeutic modalities to treat rare neuromuscular diseases. Our innovative scientific mindset extends to our development organization, which takes pride in the creative approach rooted in specialized experiences in genetic medicine and neuromuscular disease. An example is our success with SRP-9001, and the initiation of our Phase 3 global trial for SRP-9001. In January, we marked top-line data from SRP-9001, Study 102 Part 2. This reinforces our belief in the therapy's potential to alter the disease trajectory. Study 102 was a double-blind, randomized, placebo-controlled trial evaluating SRP-9001 in participants with Duchenne. In Part 2, all participants in the placebo group crossover to active treatment. Our goal was to evaluate the placebo crossover cohort against a propensity score-weighted external control, which shows that the external controls are nearly perfectly matched against the crossover patient baselines. SRP-9001 treated participants scored a statistically significant two points higher on mean NSAA at 48 weeks compared to the external control.

Dallan Murray, Head of Commercial Operations

Thank you, Louise, and good afternoon, everyone. 2021 represented an incredible year of execution, with our team delivering net product revenue growth of more than 30%, amounting to $150 million over 2020. This strong growth was driven throughout the year by exceeding expectations in all three approved RNA-based PMO therapies. In 2021, we delivered nearly 8% growth of EXONDYS 51 and more than 160% growth in VYONDYS 53. We recognized $68.5 million in revenue from AMONDYS 45 after launching within just 24 hours of approval in the first quarter of 2021. This success was generated by collaborative efforts across all field teams and their deep commercialization experience. The flawless execution is supported by cross-functional partners throughout Sarepta, who are dedicated to the Duchenne community. In 2021, we began strong, setting the stage by successfully navigating the reauthorizations process and maintaining more than a 90% success rate throughout the year. As mentioned previously, we ended 2021 strong in market share for VYONDYS 53. For the fourth quarter of 2021, our RNA-based PMO business grew by a robust 46%. Total net product revenue for the fourth quarter was $178.7 million, bringing total net product revenue for the year to $612.4 million, reaching the upper end of our guidance. This outperformance in 2021 was driven by AMONDYS 45, and we believe our 2022 net product revenue guidance of greater than $800 million captures the performance of all three approved therapies. For the fourth quarter, EXONDYS 51 saw revenues of roughly $119 million, VYONDYS 53 saw nearly $25 million, and AMONDYS 45 had close to $35 million in revenue, representing strong growth.

Ian Estepan, CFO

Thanks, Dallan. Good afternoon, everyone. This afternoon's financial results press release provided details for the fourth quarter and full year 2021 on both a non-GAAP and GAAP basis. Please refer to the press release available on Sarepta's website for full reconciliation of GAAP to non-GAAP financial results. Total revenues for the fourth quarter of 2021 reached $201.5 million, which consists primarily of net product revenue and collaboration revenue. This reflects an increase from total revenues of $145.1 million for the same period in 2020. Total net product revenue for the fourth quarter of 2021 from our PMO exon skipping franchise was $178.7 million, compared to $122.6 million for the same period in 2020. Individual net product sales for the fourth quarter were $119.1 million for EXONDYS 51, $34.7 million for AMONDYS 45, and $24.9 million for VYONDYS 53. We reported a net loss of $122 million and $189.3 million, or $1.42 and $2.40 per basic and diluted share for the fourth quarter of 2021 and 2020, respectively. We recorded approximately $2.1 billion in cash, cash equivalents, and investments as of December 31, 2021. Based on our current assumptions, we believe our balance sheet provides us runway beyond the readout of Study 301 and into 2024. Our gross margins remain solid, and we are excited about the upcoming year.

Doug Ingram, CEO

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

Debjit Chattopadhyay, Analyst

Hey, good afternoon, and thank you for taking my question. The prepared remarks indicated consolidated analysis of all patients who received the correct dose. So would this include all 33 patients in Study 103? Will you supplement with the biopsy data from the EMBARK study? And what would be the timing of the engagement, and how closely is Roche aligned with the strategy?

Doug Ingram, CEO

First of all, everything we do is in concert with our partner, Roche. I'll make a few comments, and then Louise, you can provide additional commentary. We have multiple analytics and data that we want to share with the agency and will have some discussions. After that, we will share additional information, including data from Part 2 of Study 102 and the integrated analysis from Study 103. Our regulatory professionals have suggested strongly to share that information with the agency before discussing it externally. We will package that data and submit it to the agency in the not-too-distant future. We will provide an update to the investment community following our submission, but I want to remind everyone that while we will have discussions with the FDA, our base case assumption is that EMBARK is our pathway for approval. We believe in this pathway, and we are moving quickly to have it fully dosed.

Louise Rodino-Klapac, Chief Scientific Officer

I think you've covered it well. For the integrated analysis for Study 103, we would include patients who are four to seven consistent with Studies 101 and 102.

Brian Abrahams, Analyst

Hi, guys, thanks so much for taking my question. Congrats on all the progress. I'm curious if your level of confidence has evolved regarding a faster path for approval.

Doug Ingram, CEO

I want to be careful on the first question, as it could reveal data that we don’t yet have. I will say that we have a strong conviction around our program and our data. Leadership changes at the FDA will not negatively impact our strategy but may enhance it. The accelerated approval pathway has saved many lives, and we are excited about our future discussions with the agency.

Dallan Murray, Head of Commercial Operations

When we launched AMONDYS 45, we were able to deliver revenue growth quickly through the dedication of our team, enabling us to serve nearly 30% of individuals living with Duchenne in the United States.

Ian Estepan, CFO

The company recorded total revenues of $201.5 million for the three months ended December 31, 2021, reflecting an increase of $56.4 million year-over-year. Total net product revenue for the fourth quarter of 2021 was $178.7 million, compared to $122.6 million a year earlier.

Tazeen Ahmad, Analyst

Hi, guys. Good afternoon and thanks for taking my question. Doug, I was hoping to get a little more granularity on your $10 billion in peak sales by the end of the decade.

Doug Ingram, CEO

I can't give too much detail, but our strategic plans rely on existing internal programs. Our success with SRP-9001 would have significant impact on our revenue. We are assuming some cannibalization of RNA therapy while maintaining reasonable revenue projections.

Gena Wang, Analyst

Thank you. I have a question regarding the MD presentations in two weeks. Will we see two-year data from the drug arm with propensity score weighting analysis?

Doug Ingram, CEO

We have substantial analytics and will gather information, but we want to present this data following discussions with the FDA. We are encouraging a thoughtful presentation of our results to highlight positive impacts.

Gil Blum, Analyst

So, focusing on the PPMOs, would there be discussions around potential price increases given the improved clinical benefit with SRP-5051?

Doug Ingram, CEO

We haven’t determined pricing for PPMOs yet. Our general philosophy is to price our therapies appropriately, ensuring that they are accessible. We believe pricing our therapies appropriately from the start enables our sustained success.

Ritu Baral, Analyst

Good afternoon, everyone. Thanks for taking the questions. So, Doug, 2024 breakeven implies some revenue from SRP-9001. Can you share what groundwork you're laying for reimbursement?

Doug Ingram, CEO

We have dedicated efforts through our medical affairs and commercial teams, learning from past experiences to ensure we are positioned for a successful launch and reimbursement strategy.

Yun Zhong, Analyst

Hi, thanks very much for taking the question. With the better clinical profile for the PPMO platform, how do you think it can expand the patient population?

Doug Ingram, CEO

Our PPMO platform can treat easily 50% of the Duchenne community and theoretically up to over 80%. We are moving fast with our preclinical efforts for future candidates as well. Thank you very much for joining us for today's call. I wish everyone a good evening.