Sarepta Therapeutics, Inc. (NASDAQ:SRPT) Q1 2023 Earnings Call Transcript

Sarepta Therapeutics, Inc. (NASDAQ:SRPT) Q1 2023 Earnings Call Transcript May 2, 2023

Operator: Good afternoon and welcome to the Sarepta Therapeutics First Quarter 2023 Earnings Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. As a reminder, today’s program is being recorded. At this time, I will turn the call over to Mary Jenkins, Associate Director, Investor Relations. Please go ahead.

Mary Jenkins: Thank you, Shannon, and thank you all for joining today’s call. Earlier this afternoon, we released our financial results for the first 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 formal remarks, we’ll open the call for Q&A. I’d like to note that during this call, we will be making a number of forward-looking statements. Please take a moment to review our slide on the webcast, which contains our forward-looking statements. These forward-looking statements involve risks and uncertainties, many of which are beyond Sarepta’s control.

Actual results could materially differ from these forward-looking statements. And any such risks can materially and adversely affect the business, the results of operations, and trading prices for Sarepta’s common stock. For a detailed description of applicable risks and uncertainties, we encourage you to review the company’s most recent quarterly report on Form 10-Q filed with the SEC as well as the company’s other SEC filings. The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today, based on subsequent events or circumstances. I’ll now turn the call over to President and CEO, Doug Ingram, who will provide an overview of our recent progress. Doug?

Doug Ingram: Thank you, Mary. Good afternoon and thank you for joining Sarepta Therapeutics’ first quarter 2023 financial results conference call. Perhaps you’ll see this is a break from the past, but I intend to keep my remarks this evening brief. As you know, in a mere 10 days from now, we will be attending and presenting at the FDA advisory panel for SRP-9001 our gene therapy intended for the treatment of Duchenne muscular dystrophy. And we believe that the primary areas of discussion at the advisory committee will be these whether the totality of evidence supports the conclusion that SRP-9001 dystrophin protein at the levels expressed by this therapy is reasonably likely to predict clinical benefits. The totality of the evidence will include natural history, the preclinical data, biomarker results, and the functional results from our clinical trials.

The panel will also address the risk benefit analysis associated with the administration of SRP-9001 for the treatment of ambulatory patients with DMD in the context of Accelerated Approval. And finally, an assessment of the ability to bring to conclusion, EMBARK, or Study 301, the proposed post-marketing confirmatory trials to support the Accelerated Approval of SRP-9001 in the event that Accelerated Approval is granted. The team is well prepared and excited to share with the advisory committee the wealth of compelling evidence supporting the conclusion that SRP-9001 dystrophin protein in the amounts expressed by that therapy is reasonably likely to predict a clinical event. So to set expectations for this call, we intend to discuss first quarter performance and Dr. Louise Rodino-Klapac will provide a pipeline update, but to respect the process and in light of how soon the meeting will take place, we will not discuss or entertain questions on regulatory matters pertaining to SRP-9001 or the upcoming advisory committee meeting until it’s concluded on May 12th.

Moving now to the quarter, I am very pleased to announce another strong quarter of performance. First quarter total revenue came in at $253.5 million. Net product revenue came in at $231.5 million, that’s a 23% increase over the same quarter of the prior year and exceeding analyst consensus. It is the – this very patient oriented execution that we intend to apply to SRP-9001 if approved. We continue to progress our important post-marketing commitments for our three approved PMO therapies. We have already completed 11 of our post-marketing commitments with respect to ESSENCE, which is our two year blinded placebo-controlled study for VYONDYS and AMONDYS. We were fully enrolled last year and that trial is proceeding with respect to mission, which is our dose ranging post-marketing commitment for EXONDYS.

Part II of that study is substantially enrolled and progressing. As relates to SRP-9001, in addition to preparing for the May 12th advisory committee and prosecuting the BLA with the May 29 PDUFA date in mind, we are ensuring that we will be prepared to successfully launch 9001 and serve the community if and when approved. By now, we have successfully concluded all FDA inspections that includes three GMP inspections and two GCP inspections. With our partner Catalent, we are producing material to successfully launch 9001 upon approval and we are finalizing our launch readiness work. And we are finalizing our plans to commence the studies necessary to expand the 9001 label to the broadest population supported by the science including our commencement of our non-ambulatory study ENVISION, or Study 303, and our multiple studies to explore the removal of neutralizing antibodies to rh74.

Beyond that, we’ve been advancing our broader pipeline that Dr. Rodino-Klapac will provide an update on our pipeline momentarily. Now the coming weeks and months are monumentally important to the patients that we serve. As I have said many times by now, we stand at a bellwether moment with the greatest evidence-based hope yet in history to bring a better life to families today living with and unfortunately today dying from Duchenne muscular dystrophy. And we are also well aware that this BLA stands as a bellwether test for gene therapy itself and for the ability to effectively lean in and use the tools available to us to translate groundbreaking genetic science to medicine that can extend and improve patients’ lives now not merely at some theoretical point in the future.

We feel an enormous obligation to the patients that we serve and our every decision and action is taken and done with that obligation front of mind. And with that, let me turn the call over to our Head of R&D and Chief Scientific Officer, Dr. Louise Rodino-Klapac. Louise?

Louise Rodino-Klapac: Thanks, Doug. And good afternoon. As we look forward to the weeks and months ahead, we remain resolute in our conviction and our values to follow the science and present the objective evidence to support SRP-9001’s ability to change the trajectory of Duchenne muscular dystrophy. Our goal with SRP-9001 is to alter the course of the fatal disease by treating the underlying cause of Duchenne with a onetime gene therapy that delivers functional dystrophin to the muscle. Sarepta has generated the most compelling, preclinical, biomarker and clinical functional results to date more than any other gene therapy in development for Sarepta. We’ve been able to demonstrate based on the strong scientific underpinning of our construct that early SRP-9001 data provided read through for our positive clinical experience with the therapy.

After years of research, we identified an optimal gene cassette able to retain the most critical, protective and functional elements and fit in inside AVV, thereby enabling its delivery. This gene cassette was packaged into our AAV of choice rh.74 and we chose MHCK7 as our promoter. The early data showed robust expressions across skeletal, diaphragm and cardiac muscles, and as a result of that expression as well as the dystrophin protein demonstrating functional benefits, we saw a clinical benefit at the target dose in patients with Duchenne. I will explain in a bit more detail. Individuals with Duchenne don’t have a functioning dystrophin-associated protein complex or DAPC. Understanding this, when we inserted a functional dystrophin protein, we saw up-regulation of the DAPC in animal models.

Photo by National Cancer Institute on Unsplash

More specifically, we saw an almost one-for-one up-regulation of DAPC when there was expression of the SRP-9001 dystrophin, confirming the protective properties of the protein. Further, we saw significant reduction increase in kinase or CK. CK is an enzyme associated with muscle damage. The reduction in CK provided further proof that SRP-9001 was reasonably likely to predict clinical benefit. Since 2018 and across multiple studies, we dosed the largest number of Duchenne patients, more than any other gene therapy in development for this disease. And the clinical results have surpassed our expectations. In summary, SRP-9001 demonstrated robust expression of dystrophin far above what literature would suggested is necessary to be protective of the muscle.

All of it is properly localized at the muscle membrane or sarcolemma or it acts as a shock absorber. We developed a cell-based potency assay that shows that SRP-9001 is active, functional and protective at the muscle membrane. And as in animal models with robust expression of SRP-9001, it’s a significant reduction of CK. Finally, expression of SRP-9001 in patients leads to upregulation of DAPC. In addition to all of this compelling evidence, we are able to show functional benefits versus what natural history will predict on NSAA or the North Star Ambulatory Assessment, which is our primary functional endpoint. We observed benefit across one-, two-, and four-year time points. Based on the totality of the data we believe that SRP-9001 qualifies as a disease modified agent as the levels of dystrophin expressed are reasonably likely to predict clinical benefit in patients with Duchenne.

Now moving to limb-girdle muscular dystrophy or LGMD, we remain committed to advancing our LGMD portfolio in the process of variety of subtypes. I look forward to providing updates on these important programs in the month ahead. Currently, we are making excellent progress on journey, our LGMD Natural History Study and in Voyagene, our Phase 1 study evaluating SRP-9003 for the treatment of limb-girdle muscular dystrophy Type 2E, in ambulant adult patient and non-ambulant patients. It’s in clinical process SRP-9003 material. Combined with positive expression functional data shared from our initial study, SRP-9003-101, we believe the data from Voyagene which will give us insights into a broader patient population. Our next milestones for Voyagene includes completing enrollment in the second half of the year and beginning our Phase 3 study using commercially representative process material later in the year.

Finally, we are on track to commence a systemic pilot study for SRP-6004 dual-vector rh74-mediated gene therapy to treat LGMD2E characterized by the absence of the protein dysperlin. Turning now to the progress we’ve made with our RNA platform, we are pleased to complete enrollment in the first quarter of 2023 for our MOMENTUM study for SRP-5051 and we remain on track, we will announce data from the study in the back half of 2023. In regards to our post-marketing studies or the PMOs, as mentioned last quarter, we completed enrollment in the ESSENCE trial for post-marketing requirement for golodirsen and casimersen and continue to make good progress with our MIS51ON study, which is on track to be fully enrolled this year. In closing, we are looking forward to the advisory committee meeting on Friday, May 12, and it will provide us the opportunity to share the science and the data in support of SRP-9001.

I would like to take this opportunity to thank our Sarepta team who have been diligently working these past months. I will now to turn the call over to Dallan for an update on our commercial activities. Dallan?

Dallan Murray: Thank you, Louise. And good afternoon. In the first quarter of 2023, the team executed on our core RNA business and delivered another strong performance across all three of our RNA-based PMO therapies. As Doug mentioned, we delivered $231.5 million in net product revenue in the first quarter, representing well over 20% growth over the first quarter of 2022. Notably, Q1 of 2023 exceeded our expectations and represented the most successful first quarter in the history of our marketed therapies. In Q1 we have historically seen an impact in the U.S. due to the expected insurance changes at the beginning of each year. Due to the extraordinary efforts of the team in navigating those access headwinds, we saw higher-than-expected revenue in the U.S. in the first quarter.

Each of our – each year, our team is prepared for these challenges, and I’m very proud of their steadfast commitment and sense of urgency with which they serve the Duchenne community. They know that every minute matters for each one of patients we serve. Total ex-U.S. net product revenue in the first quarter was roughly $31 million. This represented a decrease over the prior quarter, which was expected and fully reflected in our annual guidance forecast. As discussed on last quarter’s call, we expect to see continued fluctuations in ex-U.S. ordering patterns quarter-to-quarter. Overall, the fundamentals of the business coming out of Q1 are completely in line with what we expected at this point in the year. And we reiterate our full year guidance of greater than $925 million in net product revenue for our PMO therapies.

This guidance reflects all of the factors that we navigate and monitor in supporting patients forward with. With its increasing global revenue base, we will continue to see fluctuations in the net product revenue from quarter-to-quarter. Importantly as well in the U.S. market, we have now hit a mature phase with all three products and as such, we expect more modest growth in new patient starts in the coming quarters for the PMO business. Turning now to individual net product revenues for the first quarter of 2023 for our three approved RNA-based PMO therapies. EXONDYS 51 totaled $132.6 million, representing more than 13% growth over Q1 of 2022. For VYONDYS 53, sales were $33 million, growing roughly 18% over the first quarter of 2022. And for AMONDYS 45, sales totaled $65.9 million, representing more than 50% growth versus Q1 of 2022.

In addition to the strong performance in our core business, the team has been simultaneously preparing and laying the groundwork of SRP-9001 launch. The full team is in place being rigorously trained as we speak. And I can say with confidence that they are ready to execute if SRP-9001 is approved. This launch will represent a historic moment not only for Sarepta but for the Duchenne community and for genetic medicine. The level of enthusiasm and confidence of the team is at an all-time high, and they are eager for this opportunity to demonstrate what we are capable of and what would be our fourth launch in the Duchenne market. Over the past several months, our field teams and Sarepta leadership have meaningfully engaged with roughly 75 sites of care on strategic and operational site readiness matters.

These important interactions will ensure that the sites are ready to efficiently, safely provide SRP-9001 gene therapy to patients as soon as possible. We’ve also been working closely with sites to provide education and training as well as ensuring that they have the necessary equipment and resources to deliver the therapy to patients. In addition to site readiness, we know from our experience with PMO therapies that access and reimbursement are crucial to successfully delivering SRP-9001 patients. We are committed to ensuring that our gene therapy for Duchenne is accessible to all patients who need it, and we recognize that meaningfully engaging with payers is a critical part of achieving that goal. We found that the payers are asking important questions pertaining to the SRP-9001 clinical data, potential patient population size, launch timing and infusion sites.

We are encouraged by the positive response we have received thus far and are pleased with the progress we have made in engage with both commercial and Medicaid payers. If approved, 9001 brings forth a potentially transformative therapy to patients who have been waiting for far too long. The team has done a tremendous job preparing for what will be the largest gene therapy launch to-date if SRP-9001 is approved. I’d like to take this opportunity to personally thank the whole organization who are not only executing to support 30% of patients on our key member today but who have also risen to the occasion so that we can be ready as a team with this paradigm-shifting moment. And now I’ll turn the call over to Ian Estepan for an update on our financials.

Ian?

Ian Estepan: Thanks, Dallan, and hello all. This afternoon’s financial results press release provided details for the first quarter of 2023 on a non-GAAP basis as well as a GAAP basis. Please refer to the press release available on Sarepta’s website for a full reconciliation of GAAP to non-GAAP financial results. For the three months ended March 31, 2023, the company recorded total revenues of $253.5 million, which consists of net product revenues and collaboration revenue, compared to revenues of $210.8 million for the same period of 2022, an increase of $42.7 million. Net product revenue for the first quarter of 2023 from our PMO exon skipping franchise was $231.5 million compared to $188.8 million for the same period of 2022.

The increase in net product revenue primarily reflects increasing demands of our products. In each of the quarters ended March 31, 2023 and 2022, we recognized $22 million of collaboration revenue, which relates to our collaboration arrangement with Roche. The reimbursable co-development costs under the Roche agreement totaled $20.3 million for the first quarter of 2023 compared to $17.7 million for the same period of 2022. On a GAAP basis, we reported a net loss of $516.8 million or $5.86 and $105 million or $1.20 per basic and diluted share for the first quarter of 2023 and 2022 respectively. This change is primarily due to the loss on debt extinguishment of $387.3 million, a non-cash expense incurred in the three months ended March 31, 2023 with no similar activity for the same period of 2022.

We reported a non-GAAP net loss of $85.5 million or $0.97 per basic and diluted share in the first quarter of 2023 compared to a non-GAAP net loss of $48.6 million or $0.56 per basic and diluted share in the first quarter of 2022. In the first quarter of 2023, we are recorded approximately $35 million in cost of sales compared to $31.4 million in the same period of 2022. The increase in cost of sales is primarily due to an increasing demand for our products as well as write-off of certain batches of our products not meeting the quality specifications for the three months ended March 31, 2023, with no similar activity in the same period of 2022, partially offset by decrease in the royalty payments during the three months ended March 31, 2023 due to changes in the BioMarin royalty term.

On a GAAP basis, we recorded $245.7 million and $194.3 million in R&D expenses for the first quarter of 2023 and 2022 respectively a year-over-year increase of $51.4 million. The increase is primarily due to an increase in our manufacturing expenses. On a non-GAAP basis, R&D expenses were $220.7 million for the first quarter of 2023 compared to $173.2 million for the same period of 2022, an increase of $47.5 million. Now turning to SG&A, on a GAAP basis, we recorded approximately $110.7 million and $71.8 million for expenses for the first quarters of 2023 and 2022 respectively, an increase of $38.9 million. The increase was driven primarily by an increase in professional service expenses to prepare for a potential launch of SRP-9001. On a non-GAAP basis, the SG&A expenses were $83.3 million for the first quarter of 2023 compared to $53.2 million for the same period of 2022, an increase of $30.1 million.

We expect that our R&D and SG&A expense will increase next quarter as we continue to prepare for a potential launch of SRP-9001. On a GAAP basis, we recorded $12.7 million in other income net for the first quarter of 2023 compared to $17.3 million in other expense net for the same period of 2022. The change is primarily due to an increase in interest income and accretion of investment discount due the investment mix of our investment portfolio as well as a reduction of interest expense incurred as a result of the repayment of our December 2019 term loan during 2022. In the first quarter, we exchange a portion of our 2024 notes with an aggregate principle value of $313.5 million and issued approximately 4.5 million shares of our common stock.

We accounted for the exchange as a debt extinguishment, recognizing the difference of the fair value of the shares of common stock transferred on the exchange date and the net carrying amount of the extinguished debt as a loss of $387.3 million inclusive of the 69 – $6.9 million of third-party debt conversion cost just to again to reiterate this is a non-cash expense. We had approximately $1.9 billion in cash, cash equivalents and investments and long-term restricted cash as of March 31, 2023. We remain well capitalized to execute on our goals for the year and support our transition to profitability assuming and approval of SRP-9001. And with that, I’ll turn the call back over for Doug to start the Q&A. Doug?

Doug Ingram: Thank you, Ian. Now before we begin the Q&A, let me reiterate. And in light of and in respect of the impending FDA advisory committee, we will not be entertaining questions on the regulatory process or the upcoming advisory committee meeting for SRP-9001 tonight. I do look forward to discussing those matters with you once the May 12 advisory committee meeting has concluded. And with that, Shannon, let’s open the line through questions.

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Q&A Session

Operator: Thank you. Our first question comes from the line of Colin Bristow with UBS. Your line is now open.

Colin Bristow: Hey, good afternoon. And huge congrats with you on the cusp of this approval. So on your supply at launch, can you talk about the capacity and ability to meet demand? I’m just asking in light of the fact of or in light of some of the comments from your partner around a and expected production ramp at the Maryland site. And then just sort of within this, in terms of patient logistics, can you talk about your expectations for the initial timelines from a physician prescribing SRP-9001 to a patient receiving a therapy given the need for antibody testing another potential laboring requirements? Thank you.

Doug Ingram: Yes. Thank you very much for that, Colin. So on the first part of the question, as we’ve said, our goal and we will meet that goal is to be able to fully launch and supply the community, assuming that we are able to get an approval. Of course, our goal right now is to get an approval at the PDUFA day, which is May 29. We have seen the comments made by Catalent, so we’re very clear that those comments and the issues that they were discussing do not play any role in or have any effect on our plans or our production plans in the flatness. So we should be in good shape there. With respect to the launch, our goal is to launch this therapy as rapidly as possible and I think we have proven ourselves over the last few years, very capable of doing exactly that.

With that said, the SRP-9001, this gene therapy has its own particular complications you’ve got, for instance, in addition to not simply having a start form for that, you’ve got to do a number of other things, including getting a pre-infusion antibody test that’s sufficiently close to the infusion that it’s valid. And then, of course, not – typically you have – we have to work through access reimbursement and codes and the like. So from a planning perspective, while we’ll be launching this rapidly, one should anticipate really seeing a quarter or two before we really start seeing a significant ramp.

Operator: Thank you. Our next question comes from the line of Gena Wang with Barclays. Your line is now open.

Gena Wang: Thank you. I also wanted to ask one commercial questions. What is your estimate patient numbers for initial indication in the U.S. and also regarding the manufacturing capacity, any major expansion you need to do in order to supply the patient for the initial indication in the U.S.?

Doug Ingram: All right. Let me answer the second part first. The answer is no. There are no major capital expenditures or additional expansion that is required to launch this therapy and serve the community at launch. On the addressable patient population, I can give you the broadest of strokes. They’re somewhere in the 12,000 – 10,000 to 15,000 patients in the United States. Our goal, again, assuming that we are approved at our PDUFA date the goal is to serve all ambulatory patients. The ambulant patients are about 50%, so it’s roughly 50% ambulant, 50% non-ambulant. We’d be covering the ambulant population. And then there will be of course patients that would be excluded because they have preexisting neutralizing antibodies.

Based on our most recent data, that’s about 13.5% of patients would be currently excluded on the basis of having pre-existing antibodies to binding antibodies to rh74. And then there is a subset of patients who would have some of these earlier mutations in a range, in a region that may have a risk of an innate immune response that’ll be less than 5% of patients. So that remainder is the addressable patient population to launch. Now, with that said, I’m going to go ahead and give you our plans for the future as well, because very soon we’re going to be starting a number of studies in an effort to fully build out the addressable patient population to the extent that science allows us to, we’re pretty confident about that. So the biggest opportunity, obviously, is to get to the non-ambulant patients that is extraordinarily important to us and to them, non-ambulant patients don’t have the luxury of time.

So we’ve got to move as fast as possible. We are starting our Study 303 for the non-ambulant population very soon. The goal is to have sufficient safety and expression data from that study to seek an update to our label early next year to get non-ambulant patients in the label so we can begin to dose them and we’re starting as well. Two additional studies for two alternative approaches to clear preexisting neutralizing antibodies and if we’re capable of doing that, then that would also bring back into frame for the ability to dose patients that are currently excluded because they have something that reacts and is a preexisting neutralizing antibody. That’s an extraordinarily important issue as well. Oftentimes, you’ll – when you talk to patients and their families, parents will say, the worst day of their lives was getting the news that their child had Duchenne muscular dystrophy, and that the second worst day of their lives was finding out that their kids are one of these rare kids, about 13% of kids who have test positive for preexisting neutralizing antibodies.

So we need to move fast to try to solve that issue for them. Thank you for those questions.

Operator: Thank you. Our next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is now open.

Brian Abrahams: Hi. Good afternoon. Thanks for taking my question. Can you expand on what you’ve been hearing in your preliminary conversations with payers? Is your sense that they would be open to paying for 9001 under accelerated approval, or would prefer to wait for full approval? And should we expect sort of a similar mix as with the exon skippers with regards to the proportion of patients initially receiving access? Thanks.

Doug Ingram: I’ll take broad strokes and Dallan you can follow-up if I’m missing anything. First of all, the conversations have gone very well. We’ve been in dialogue with payers regarding the potential for SRP-9001 for many years now. I mean, I can – I think going back as far as mid-2018, Dallan, myself and others were meeting with payers. Our access and reimbursement team have been meeting with payers significantly. The amount of evidence that we have that supports the conclusion that 9001 is a beneficial therapy for kids and it’s going to do a lot of good is very, very robust. So these discussions have gone very well. With that said, I’m going to be very clear, of course, as is the case with rare disease therapies, right now, access and reimbursement is a complicated challenging thing.

The good news for all of us is that 9001 is going to be watched by Sarepta. And at the risk of sounding a bit immodest, in my view, there is no team better than this Sarepta team to serve these patients, work intelligently with payers and gain access for this therapy for these kids as rapidly as possible. And I am quite confident that’s going to occur and quite confident payers are going to do the right thing. And certainly I believe that they’re going to do the right thing in the context of accelerated approval, which is from our perspective, the approach that one should be taking with respect to 9001, given the data that we have in front of us.

Dallan Murray: Yes. And I think Doug’s really covered it. There are as we said in the opening remarks, really constructive great dialogue going on with the payers. And right now we’re at the – we’re prior to launch they’re asking great questions about the timing and the patient population. And I think more specifically, calling to your question, regardless of when the policies are put in place, the payers are going to look at each patient on a case by case basis. And so the team, as Doug said, is ready to manage that, right, from day one.

Doug Ingram: We’re experienced in battle hardened team.

Operator: Thank you. Our next question comes from the line of Judah Frommer with Credit Suisse. Your line is now open.

Judah Frommer: Hi. Thanks for taking the question. Another one sort of from the payer angle. Any idea if there could be kind of a difference in ramp for patients that are, I guess naive to RNA therapies versus those that are on the PMOs gaining access? And then any indications around potential value based payments given, like you said, this is going to be the biggest gene therapy launch ever. So from a cost perspective, could there be any, I guess, interesting dynamics to the time of payments? Thank you.

Doug Ingram: Yes. As it relates to the first question, I don’t think there’s going to be a difference in ramp. I think this is a – for those who are amenable to this therapy, which at launch we are successful in our BLA would be ambulant patients, excluding a very narrow range of mutations who are rh.74 negative. I think this therapy is going to be extraordinarily important. And I think that there’s going to be an equal ramp, whether you’re naive or not naive to the PMOs. And in fact, we have dosed patients that have been on the PMO and remained on the PMO post dose. So we have good data that supports that. On the value-based agreements and the like, I’m not at a place right now where we’re going to discuss those issues yet.

I will tell you that we have done an enormous amount of work about, which I am extremely impressed and proud to frame the value proposition in the pharmacoeconomic model for one-time therapies like SRP-9001. And our approach to the payer community, pricing, value-based agreements and the like, will be inside the frame of that value framework itself. And the one thing I will tell you qualitatively at least, and then we’ll at the right time talk quantitatively, is that the value that this therapy will bring to Duchenne patients is going to be significantly greater than the cost of this therapy for the healthcare system, which is what we all should want.

Operator: Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.

Salveen Richter: Good afternoon. Thanks for taking my question. With regard to manufacturing, can you just provide us with some details of where you stand on inventory as you look to this launch? And then the breadth of your manufacturing relationships in order to address the supply that’s required over at least the first year or second or first two years of launch year?

Doug Ingram: Sure. So we are building inventory as we speak to be ready for launch. So that’s obviously an ongoing activity with Catalent. It’s a high priority for us, and fortunately also a high priority for Catalent. So we’re in great shape there. And that’s great for launch and we’re in great shape there. If you look down the road longer term, of course, we also have our relationship with Thermo Fisher. We have an entire standalone site with Thermo Fisher. One of the decisions we made in connection with our BLA submission was not to try to get two sites approved at the same time. The complexity associated with that would have created a significant risk of delay. And I think as we’ve said, a million times. Delay is not something that patients with Duchenne can have.

So what we will do post-launch is work with the division to get the Thermo Fisher site up and running and qualified as well. The good news is that launch this – our site with Catalent and our suites with Catalent is sufficient to launch the therapy and serve the community.

Operator: Thank you. Our next question comes from the line of Gil Blum with Needham and Company. Your line is now open.

Gil Blum: Good afternoon everyone, and thanks for taking our question. Doug, in your earlier comments, you mentioned that the company’s planning to start some of the other studies including a non-ambulatory patients and the clearing of antibody studies. What about planning a study in younger patients? I’m assuming that with – as with all gene therapy, younger is usually better. Thank you.

Doug Ingram: Yes, well, let me comment on that last piece first. It is extremely important that we get to younger patients as well. I want to be very clear. But I want to be also clear that there – from our perspective there is no place across this journey of Duchenne where the intervention of a therapy like 9001 that can restore functional dystrophin to patients won’t be beneficial. There is no trial that’s beyond value that’s important to remember. So if you’re 19 years old and you’ve been in a wheelchair for five years, you are as valuable to us as a very young child. So that’s why we’re very focused on the non-ambulant side, but we aren’t focused on the very young as well. We’ve already dosed kids that are down to three years old. Louise you might want to comment on other plans we have to dose much younger children as well.

Louise Rodino-Klapac: Yes. Correct, we dosed three year olds in our 103 Study, and then we’re also planning an additional study along with Roche to dose even younger than the three year olds and that will begin in short-term.

Operator: Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is now open.

Tazeen Ahmad: Hi, good afternoon. Thanks for taking my questions. I guess, Ian, I just wanted to clarify a comment that you made regarding write-offs of certain batches of the company’s products that weren’t meeting quality specs. Which products were they? Can you share and have you resolved that issue? And then also maybe just to follow-up on comments that Doug made regarding inspections being completed. Can you also confirm whether or not FDA has any comments on the inspection? And if they have, have they been resolved? Thanks.

Doug Ingram: Sure. I’ll take the first one first. Yes, that was regarding the PMO, this is just part of our normal manufacturing process. If you look back over several quarters that happened. So, this is just something that’s part of the normal manufacturing process. And there is some batches that don’t meet specs and we have to write it off, but nothing to be concerned and should be expected to continue to go far.

Ian Estepan: And then as relates to the second question, all of the inspections are completed in any of the observations have been entirely satisfied. So we’re in great shape from an inspection perspective.

Operator: Thank you. Our next question comes from the line of Danielle Brill with Raymond James. Your line is now open.

Danielle Brill: Hi guys. Thanks so much. I actually have a couple of questions on EMBARK. I’m curious what percent of patients have completed that trial? Just trying to gauge how backend loaded enrollment was. And then also how frequently do you measure NSA? And how are missing data imputed? Thank you.

Doug Ingram: I’ll answer the last part, but you take the first part on the completion.

Louise Rodino-Klapac: Yes. So, the study was completely enrolled last fall in terms of the – so we can expect the one year endpoint to close out this fall with the study report early next year. In terms of the NSAA these are – the primary endpoint for the NSAA is at one year, but we measure it at intervals prior to that certainly part the one year endpoint.

Doug Ingram: We will have the data update on the staff plan when we announce the results.

Operator: Thank you. Our next question comes from the line of Mike Ulz with Morgan Stanley. Your line is now open.

Mike Ulz: Hey guys, thanks for taking the question. Just another one on the SRP-9001 launch. Do you have a sense of how many patients might want to switch from some of your PMO therapies and how do you plan to manage that? Thanks.

Doug Ingram: So let me say two things. First, we don’t anticipate at launch a significant impact on our current PMO revenue, just from a revenue perspective. In the long run, one might, one should assume some significant cannibalization, it won’t happen early on to the extent that the patient wants to switch from PMO to have access to the gene therapy, we will embrace that and being likely excited from them.

Operator: Thank you. Our next question comes from the line of Neena Bitritto-Garg with Citi. Your line is now open.

Neena Bitritto-Garg: Hey guys. Thanks for taking my question. I just wanted to go back to some of the questions on the payer conversation so far. Can you just tell us a little bit about whether any of your conversations so far have suggested that payers may wait to actually issue coverage determinations until they see the EMBARK data? And if so, how they may think about kind of restrictions and the coverage policy post EMBARK? Thanks.

Doug Ingram: We intend to launch this therapy and work with payers to get access to this therapy immediately. I would remind folks that we have three approved therapies today, EXONDYS, VYONDYS, and AMONDYS, all of them were approved via accelerated approval pathway. And the team has done, in my opinion, an absolutely brilliant job of working with payers to ensure rapid access for patients who are amenable to those three therapies. We’ll take that same execution focus, we will apply it to 9001 and we anticipate that payers are going to respond well given the robustness of our data and that kids are going to have access immediately.

Operator: Thank you. Our next question comes from the line of Tim Lugo with William Blair. Your line is now open.

Tim Lugo: Yes, thanks for taking the question and best of luck, obviously. Can you talk about how you view capital deployments in a post-approval role ? You obviously have a lot of studies we’ve talked about. You have to build the label out yourself in the girdle and to leave your pipeline is described as 40 compound feet. So that sounds like a lot of R&D. And I’d love to hear your thoughts around that, which is probably money extremely well spent. But maybe if that also influences your thoughts around pricing of 9001?

Doug Ingram: Well, I’m going to say two things. I’m going to turn this to Ian who can comment about capital deployment in a more general sense. I mean, let’s first – we are going to significantly focus on research and development and the like, of course. And we will continue to do that deep into the future. That notwithstanding we will, our current plans, assuming that we’re approved and our plans come to fruition would have us being profitable next year as relates to the pricing of 9001. The pricing of 9001 will occur in the context of the pharmacoeconomic models we use to ensure that the value is appropriate for that therapy. And that, as I’ve said before, that the value brought to the patients and their lives from this therapy is much greater than the cost of the healthcare system. But beyond that, Ian, do you want to comment on the capital deployment plan?

Ian Estepan: Yes, no, I think you’re exactly right. We’re obviously going to continue to invest in R&D, but we’re also going to be focused on profitability and follow metrics that will guide that and ensure returns for shareholders. But obviously as investing in our R&D is going to lead to continued growth and we are going to be focused on moving programs forward that have high probability of success based on the data which we generate. We also think the market conditions right now lend itself to being in a position to partner or acquire technologies that we think are scientific breakthroughs as we continue to build out our pipeline. So we’re going to be very consistent with the approach that we’ve used previously to obviously put us in a position where we’re one of the leading emerging biotech companies and we’re not going to stray from that.

Operator: Thank you. Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Your line is now open.

Kristen Kluska: Hi, good afternoon and best wishes to your team this month. Can you talk about the latest as it relates to looking at some of the ways you’re looking to address pre-treatments for those with pre-existing antibodies to AAV? I saw that you’re presenting with Hansa some preclinical data at ASGCT, the agenda was literally just released about an hour ago. So can you talk about some of those efforts please?

Doug Ingram: Yes. So there are two approaches, and there’s more to say beyond this. But we can tell you, broadly, there are two approaches that we’re taking right now. One is of course with our partner Hansa and imlifidase to cleave and therefore remove antibodies that we stand in the way of a child getting 9001 and the other is using apheresis to clear antibodies.

Louise Rodino-Klapac: Strong preclinical data with both approaches and as Doug mentioned, we’re planning to start two clinical studies on both approaches. So this has been important to us to make sure that we can serve the entire community.

Operator: Thank you. Our next question comes from Hartaj Singh with Oppenheimer and Company. Your line is now open.

Hartaj Singh: Great. Thank you. Thanks for the question. I’ve just got a quick question on the VOYAGENE study LGMD. Assuming you get that Phase 3 started with commercially represented material by the end of the year, how much insight will the Phase 2 and Phase 3 give you into the other LGMD; I mean, could you move faster, could regulators be amenable to looking at them sort of holistically versus very separately? And then how easy will it be to scale the manufacturing for all the LGMD? Thank you for the question.

Doug Ingram: Yes. When I say broadly, one’s seen public presentations from Dr. Peter Mark’s. You’ll know that his ultimate goal, his long-term goal is to get to a place where you can build therapy upon therapy and particularly if you’re using the same capside which we are in connection with the LGMDs that you should be learning from each and then being able to greatly shorten the timelines. And I think that a form of that will occur with our limb-girdle. But we are on the early days of limb-girdle, so it won’t be fully formed like that as we’re – we are moving through. We do get significant value and learning from each of these programs that we apply to the next one, the limb-girdle are benefiting enormously from 9001. Remember most of our limb-girdle, the majority at least use the same promoter as 9001, and they all use the same capside rh.74.

So there is this virtuous cycle where we ought to be able to start moving faster and faster over time. It’s going to take some time to do that. I would say we, and finally I’d say on manufacturing we definitely benefit from prior knowledge as we move forward, but each of these programs is its own program and requires some bespoke elements including for instance much of the assay work. Some of the assay work can be very translatable, but a lot of this assay work is bespoke from program-to-program, and so that does take some time and it will take some time with respect to some of these little hurdles.

Operator: Thank you. Our next question comes from the line of Debjit Chattopadhyay with Guggenheim. Your line is now open.

Debjit Chattopadhyay: Hey, good afternoon and thanks for taking my question. I just wanted to clarify one of the comments you made in your prepared remarks. You brought up EMBARK in the context of the Adcom. Could you clarify and frame that question again?

Doug Ingram: Oh, I think. Oh, yes, the – one of the issues that we just need to discuss at the advisory committee is that EMBARK, which is our proposed confirmatory trial, and obviously needs to complete and complete on time. And so one of the obviously reasonable questions, one would pose is, are you confident that if we give you an approval now on an accelerated basis, that EMBARK will in fact complete that there won’t be something about the approval of this therapy that would somehow influence the ability to successfully complete EMBARK? As you know, EMBARK actually was fully enrolled as of last year – September of last year, so I think relative to other accelerated approval therapies we are in a particularly advantageous, brilliant position with respect to the completion of our confirmatory trial.

Operator: Thank you. Our next question comes from the line of Joseph Schwartz with SVB Securities. Your line is now open.

Joseph Schwartz: Hi everyone. Thanks very much. Since we’re so close to the panel, I was wondering if you have seen the FDA’s briefing documents at this point, and if you can give us your gestalt about their tone so that we can be more prepared for what to expect?

Doug Ingram: Yes. As I’ve said we are 10 days away counting from the advisory committee meeting. I wanted to be very clear about this. What we’re all doing together right now is extraordinarily serious. It’s important to us and it’s important to our investors, but it is vastly more serious and important to the patients living with Duchenne muscular dystrophy. This is literally a potential life or death issue for them, so in regard to that we are going to be mission driven. And what that means to us is we’re going to stay very focused on prosecuting our BLA, preparing for our Adcom, we’re not going to discuss the Adcom or the briefing books or the regulatory process right now. We’re going to do – we’re going to get ready for, and in my humble opinion we’re going to do a brilliant job.

Sorry for putting a lot of pressure on you, Louise. We’re going to do a brilliant job of presenting what I believe to be the wealth of evidence that supports that, the conclusion that 9001 and the amounts made by this therapy is reasonably likely to predict clinical benefits. So in light of that and with all respect and apologies for not answering your question, I’m not going to answer your questions on the regulatory process through the Advisory Committee until after May 12th. And then we’re going to all come together and I’m going to be thrilled to talk about all of these issues with you.

Operator: Thank you. Our next question comes from the line of Zhiqiang Shu with Berenberg. Your line is now open.

Zhiqiang Shu: Good afternoon. Thanks for taking my questions. And maybe going back to the manufacturing ramp, talking to some expectations on how many patients, do you plan to treat for 9001 and secondly on 9003 growth program. And obviously you commented the Phase 3 will start in the second half of the year. Is there any possibility for accelerated approval pathway for this program as well? Thanks very much.

Doug Ingram: So answering the second question first, ultimately we will propose a form of accelerated approval for 9003. This is an ultrarare disease. We are the 9003 makes the native protein, the absence of which is the sole and exclusive cause of the demise, and ultimately the death of patients suffer from 9003. So certainly if we see great results in the confirmatory trial in the Phase 3 that we’re starting, we are going to propose an accelerated approval pathway. As to the first question we, I’m not going to provide numbers on, numbers of patients other than to say our goal is to treat every patient that’s amenable to this therapy, as quickly as reasonably possible. And so we’re preparing ourselves to have a robust launch.

Operator: Thank you. Our next question comes from the line of Gavin Clark-Gartner with Evercore ISI. Your line is now open.

Gavin Clark-Gartner: Hey, thanks for fitting me in. Just to follow-up on the LGMD2E question, what’s your base case assumption for the Phase 3 primary endpoint and trial design? When will you align with the FDA on this?

Doug Ingram: So the short answer is, we’re going to start that study before the end of this year. We will align with the agency on that along the way. We’ve got, work to do there. Obviously we’ve been prioritizing 9001 right now. The functional endpoint would likely be a form of NSAA, which I think it’s called NSAD, if I’m not mistaken. It’s been adapted for limb-girdle, but we’ll obviously also be looking at expression and safety with respect to 9003.

Operator: Thank you. Our next question comes from the line of Ritu Baral with TD Cowen. Your line is now open.

Unidentified Analyst: Hi guys, this is on for Ritu today. Can you confirm the timing of Embark topline data? Have there been any changes to that? And then any updates for your long-term revenue guidance of $4 billion in 2025? How will you be revising this if 9001 is approved this month?

Doug Ingram: Our forecast assume approval this month. So I’m sorry, what the first question was?

Unidentified Analyst: Embark readout.

Doug Ingram: Yes, no there’s been no change in the Embark readout; the Embark was fully enrolled as of September of last year. It’s going, swimmingly it’s obviously blinded. So it’s being executed swimmingly and we anticipate top line really again of this year, early next year.

Operator: Thank you. Our next question comes from the line of Brian Skorney with Baird. Your line is now open.

Brian Skorney: Hey, good afternoon. Thanks for taking my question. I guess kind of jumping off, on some of the questions around the ability to successfully conclude Embark that you mentioned, can you just talk to us about study conduct and is there any risk that accelerated approval could put study conduct at risk? I think you said before that most U.S. patients have actually had their last visit. So can you just kind of review what you would say to someone questioning whether or not you’re going to be able to successfully maintain study conduct on Embark once you have commercially available 9001 under AA?

Doug Ingram: There’s no risk, zero risk. A study was enrolled, fully enrolled September of last year. All of the kids in part one of the study have received their doses. The kids on crossover are being dosed even as we speak. Any kid that has yet to be dosed will be dosed in the next few months at maximum. So the March is going very well. We’ll read out on time, regardless on whether we received accelerated approval, there’s no reasonable risk to that study.

Operator: Thank you. Our next question comes from the line of Anupam Rama with JPMorgan. Your line is now open.

Anupam Rama: Hey guys thanks so much for taking the question. On SRP-9003, could we see any portions of the Voyagene data this year? May be starting ahead of the commercial material Phase 3? I think the CRO only is committed to like enrollment completion, but not data itself potentially, but just wondering if we could do see some this year?

Doug Ingram: Yes. I’m sorry for jumping in there. We – it’s not clear whether we’d have data this year, so we’ll update you later in the year on that.

Operator: Thank you. I would now like to hand the conference back over to Doug Ingram for closing remarks.

Doug Ingram: Well, thank you all very much for joining us this evening and thank you for your questions. And thank you for accommodating. My request that we not, talk about the regulatory process for the advisory committee as much as you want to ask questions about that and as much as I want to answer questions about that, if I’m going to be honest and direct with you. I look forward to obviously we all look forward to May 12. That advisory committee meeting is an unbelievably important moment for patients living with Duchenne. I’m extraordinarily confident in the ability of this team to present the data well and to frame it brilliantly as I said before. And then I look forward to coming back together thereafter and discussing where we are and the path forward. So thank you all. Have a lovely evening.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.