Sarepta Therapeutics, Inc. (NASDAQ:SRPT) Q2 2024 Earnings Call Transcript

Sarepta Therapeutics, Inc. (NASDAQ:SRPT) Q2 2024 Earnings Call Transcript August 7, 2024

Sarepta Therapeutics, Inc. beats earnings expectations. Reported EPS is $0.07, expectations were $0.005.

Operator: Good afternoon and thank you for standing by. Welcome to the Sarepta Therapeutics Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your speaker for today, Mary Jenkins, Associate Director, Investor Relations and Corporate Communications. Please go ahead.

Mary Jenkins: Thank you, Lisa, and thank you all for joining today’s call. Earlier this afternoon, we released our financial results for the second quarter 2024. 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-Q filed with the SEC, as well as the company’s other SEC filings. The company does not undertake any obligation to publicly update its forward-looking statement, including any financial projections provided today based on subsequent events or circumstances. And now I’ll turn the call over to our President and CEO, Doug Ingram, who will provide an overview of our recent progress.

Doug?

Doug Ingram: Thank you, Mary. Good afternoon, everyone, and thank you for joining Sarepta Therapeutics second quarter 2024 financial results conference call. I joined Sarepta a little over seven years ago for one reason. I believe that Sarepta had the greatest hope of developing medicines that could improve the lives of a majority of Duchenne patients, and I wanted to be part of that effort. We’ve had many accomplishments over the last seven years, successfully launching four life-changing therapies and through an obsessive attention to detail, making all of those launches very successful. We have grown revenue at about 150% CAGR from the beginning of 2017 through the end of 2023. We’ve built a deep pipeline. We’ve established ourselves as the leaders in RNA and gene therapy for rare disease.

And we have become profitable. And as of this of this quarter, we are cash flow positive. But it was only in the second quarter year that we that we can finally say have reached that objective that brought me and so many of compatriots to Sarepta, because it was in June of 2024 that we finally obtained a broad approval to make ELEVIDYS available to over 80% of patients living with and dying from Duchenne muscular dystrophy in the United States. As you are aware, in June of this year, the FDA granted traditional approval for all ambulant patients for and older and consistent with every other Duchenne approval in history, also granted approval for the treatment of non-ambulatory patients on an accelerated basis. Also in June, our partner, Roche, announced that the European Medicines Agency had accepted the ELEVIDYS submission for review.

Roche also has obtained six ex US approvals so far and is making good progress serving those communities. So here we are, launching the largest gene therapy yet approved, with the first opportunity yet in history to bring a dystrophin restorative therapy to the vast majority of Duchenne patients. Anyone who has been watching over the last seven-plus years will realize that this is exactly what we are particularly good at. Certainly, we are great at developing therapies for rare disease, and we are great at managing the process to get them approved and we have become exceptional at managing complex manufacturing and distribution. But perhaps above all wells, we are second to no one in the world at launching Duchenne therapies, working with payers and ensuring access.

To that point, in the second in the second quarter, we achieved net product revenue of approximately $361 million. That’s a 51% increase over the same quarter last year. Elevates came at $121.7 million in quarter, in line with our earlier forecast. Even with an exceptionally narrow and restrictive label, in the first full 12 months of launch, we achieved approximately $456 million more than doubling. All other gene therapies launched in the last few years combined. As we have noted previously, with the broader label granted in June of this year, the opportunity to serve patients and in so doing reward committed investors will be enormous. Our early launch has exceeded even our optimistic expectations. All signals are currently positive from physician and patient demand to enrollment forms to assay kit ordering to positive payer interactions.

To manage near-term expectations, let me note again that the process from enrollment form to infusion will typically take between three and five months. So we will see moderate revenue growth in the third quarter, but we anticipate strong growth commencing in the fourth quarter of this year and then exiting this year, 2024 will be a very strong year of growth. We currently anticipate that our 2025 net product revenue across our four approved therapies will come in between $2.9 billion and $3.1 billion, and that is still years away from peak year sales. Indeed, we will be treating the prevalent population over the course of this entire decade before moving to the incident population in 2030 to 2031. Dallan Murray, our Chief Customer Officer, will provide more color on the launch in just a moment.

Our Head of R&D and Chief Scientific Officer, Dr. Louise Rodino-Klapac will then discuss our R&D progress from last quarter, including our plans for presenting multiple data sets from across the SRP-9001 clinical program at the World Muscle Society Congress later this year, and she will also provide updates on the advancement of our LGMD programs. I look forward to updating you across the year our launch performance and the advancement of our pipeline. And with that, I will turn the call to Dallan Murray for more details on commercial performance and plans. Dallan?

Dallan Murray: Thank you, Doug, and good afternoon. As Doug outlined, we generated roughly $361 million in net product revenues from our Duchenne franchise in the second quarter of 2024. Q2 is the last quarter in which we will have executed on the limited four to five year old label for ELEVIDYS, given that we received a broad label on June 20. As we had expected, the net product revenue for ELEVIDYS was essentially flat when compared to each of the two prior quarters. Of note, a few patients rescheduled doses at the end of the second quarter which resulted in those infusions being completed early in the third quarter. Net product revenues for ELEVIDYS remain nearly $122 million for the quarter. Net product revenue for the PMO franchise in Q2 was roughly $239 million, which represented modest growth over Q1.

Going forward, the team remains committed to supporting those existing PMO patients who have been remarkably compliant with their weekly PMO regimen for years now. And while we expect some cannibalization by elevates in US in the coming quarters, ex-US PMO growth will help to mitigate this cannibalization. Now turning to the ELEVIDYS launch. We’re pleased with the launch progress date and are on track to realize the opportunity in front of us. To put the current situation into perspective, almost the entire Duchenne population became eligible for ELEVIDYS essentially overnight. What we’re seeing right now is the key neuromuscular centers reacting to unprecedented demand from entirety of their Duchenne patient populations. The treating sites are rapidly working through and prioritizing patient demand.

We’re confident in their ability to manage this, given the fact that these are the same centers who navigated all of the recent Duchenne and SMA launches, including Zolgensma. Your uptake assumptions should reflect the patient journey to obtain an infused gene therapy. We’re only several weeks into this new launch. However, we have some exciting successes to report, which highlight the progress the team has made in the short time we’ve had with the ELEVIDYS label expansion. To begin, one of the first steps in the patient journey, and therefore, an important leading indicator of demand is screening for pre-existing antibodies. In the initial hours of label expansion, we were nearly overwhelmed with requests for assay screening kits, despite our careful preparation, forecasting and market insight.

Our team rapidly adapted and shipped well over 1,000 assay kits in the in the first weeks of launch. As you would expect from assay kit demand, all of our other indicators show that patient demand is very robust and growing. Our market research indicates that the vast majority of Duchenne patients are already interested in seeking therapy, and we only expect this to grow with time. This demand manifested itself the early days of the launch with a flood of patients reaching out to our key treatment sites. This has forced each center to determine best approach to handling the unprecedented demand and plan for how to support their patients in navigating the treatment journey. As such, we’re hearing from the community that some patients are presently being advised of long wait times.

Enrollment forms have exceeded our own lofty expectations just a few weeks into the launch. HCPs have submitted enrollment forms for patients ranging from 4 to 38 years of age, with an average age right now just over 10. It’s also critical to highlight that we have the support of the broader physician community who have gained experience with elevates over the last year in the 4 to 5-year-old population. Since our initial 2023 approval, we received enrollment forms for more than 125 HCPs from 46 states, including from 97% of our sites. And we can see early on that the physician community are approaching label expansion as they have our previous DMD launches, prioritizing declining ambulatory patients, first followed closely by the non-ambulatory and newly diagnosed patient populations.

Of note, the early days of this gene therapy launch are following the same pattern of all of our previous exon skipping launches. One of the critical success factors in any launch is that the key treatment centers have had hands-on experience with the drug. To that end, over 75% of our sites have dosed at least one patient, and we do expect this to grow now that we have a broad label. And turning to the critical issue of patient access. We’ve already started to see encouraging signs on the payer policy front. To date, our teams have had productive and engage meetings with payers, representing greater than 225 million patient lives, including the top commercial plans and state Medicaid agencies. We anticipate it will take three to six months for most to establish new medical policies.

In the meantime, we are having success with payers reviewing each patient request on a case-by-case basis. And to that end, we already have authorization approvals for both ambulatory and non-ambulatory patients from both commercial and Medicaid payers for patients in expanded population with ages ranging from four to 21 years of age. And I’m also pleased to highlight that as of this call, there are both commercial and Medicaid payers who have established policies covering ELEVIDYS to be expanded, medically accepted indication. And then finally, with multiple authorizations in hand, we already have patients from the expanded population scheduled for dosing, and we expect the first of these to be dosed this week. As a result of all this, and as Doug indicated, we expect to see growth accelerating modestly in the third quarter.

What you’ll see is a jump in quarter-over-quarter ELEVIDYS revenues of nearly one-third from Q2 to Q3 of this year, followed by a doubling of the ELEVIDYS revenue from Q3 to Q4. But the remainder of 2024 will only be a prelude to what you’ll see in 2025 and beyond, when the sites have had the opportunity to fully adapt themselves to a broad label. Our 2025 net product revenue guidance of $2.9 billion to $3.1 billion for the Duchenne franchise should show you where we are heading with our revenue growth and our confidence around this market potential. And that market potential is absolutely massive. Let me spend a moment painting the picture for how we expect this launch to play out. There are three things, which illustrate just how exciting this opportunity truly is from a commercial perspective.

First and foremost, with no near-term gene therapy competition, we expect to treat the eligible prevalent Duchenne population in collaboration with the key centers over the remainder of this decade. Secondly, our track record over the past eight years should provide you all reassurance of our ability to secure access for Duchenne patients in a broad label setting. While it may take time for some patients, we will ultimately secure access to the vast majority of Duchenne patients who are eligible. Lastly, and very importantly, the ELEVIDYS onetime dose for each patient is entirely upfront. And along with that, so is the revenue. I don’t think this fact has been fully appreciated outside of Sarepta. And this is what I was describing earlier. After that early adjustment period in the back half of this year, we expect the revenue to take off robustly.

We have been planning for this opportunity for many years. We’ve anticipated the challenges and have now had a full year to learn and evolve with a team that was originally built for the full Duchenne population. What I’m most proud of is that patient safety is at the center of everything we do. We are taking a thoughtful approach in integrating education and support proactively into all of our initiatives, enabling a fully informed discussion between doctor and patient is both the right thing to do and sets everyone up for long-term success. As with any launch, we’ll see our share of ups and downs. It will take time for us in the centers to work through the demand that we’re seeing today, there may be some frustration as we do our best to support these deserving patients.

As we demonstrated in our previous launches, there is no team in the rare disease, and I would even argue in the entire biopharma landscape who could execute better on such an incredible opportunity is the one we have in front of us right now. So in summary, the interest and demand from all stakeholders is strong as we had anticipated. We expect this demand will only increase with time. Obviously, all of the patients who are seeking treatment right now cannot be accommodated by the system immediately. We and the physician community are working as hard as we can to support all of the patients seeking treatment. So we will support them and in so doing, realize perhaps the biggest near-term revenue opportunity in all of biotech. I’d like to end by thanking everyone at Sarepta and all of our stakeholders for their role in getting us to this important moment.

As we sit here today, the majority of Duchenne patients are eligible for dystrophin frustration therapy. Yet, the majority as of today, have not yet received dystrophin restoration therapy. We aim to change that, and we continue to execute with the realization that every minute matters for these patients and their families. Now with that, I’ll hand it over to our Head of R&D, Dr. Louise Rodino-Klapac. Louise?

Louise Rodino-Klapac: Thanks, Dallan, and good afternoon. I’ll begin my remarks with the approval of the ELEVIDYS label expansion and then provide an update on our pipeline. Following decades of research and development and after a thorough scientific review that critically considered all of the available evidence across multiple studies, the Office of Therapeutic Products of the FDA approved expansion of the ELEVIDYS label based on the following: the clinical benefits of ELEVIDYS in ambulatory patients was confirmed by our double-blind, placebo-controlled study embark and related study. And based on these data, traditional approval was granted to all ambulatory Duchenne patients, aged four and older. The mechanism of action of ELEVIDYS is universal, regardless of disease state as long as muscle is present.

As a result, the ELEVIDYS dystrophin expressed by our therapy in nonambulatory patients is reasonably likely to clinical benefit in this population. As a result, accelerated approval or AA has been granted for the treatment of nonambulatory patients, ages 4 and older. The accelerated approval for nonambulatory patients includes a post-marketing commitment to confirm clinical benefit, which we addressed via our nonambulatory and late ambulatory study 303, also known as ENVISION. As a reminder, ENVISION is a global randomized, double-blind, placebo-controlled 2-part study, evaluating the safety and efficacy of SRP-9001 gene therapy in nonambulatory and older ambulatory individuals with Duchenne. ENVISION is progressing well with US enrollment complete and the remaining recruitment occurring ex-US.

Enrollment is expected to be completed in 2025 and with our last patient last visit expected in 2027, following an 18-month placebo-controlled period. We also continued to advance clinical studies that monitor long-term follow-up with ELEVIDYS. Our long-term follow-up studies include ENDEAVOR and Expedition. ENDEAVOR is a Phase IV observational study that will follow individuals treated with ELEVIDYS for up to 10 years. One-third of sites have been activated and up to 500 patients will be enrolled. In addition, Expedition is a Phase III study enrolling approximately 400 patients that were previously enrolled in ELEVIDYS clinical trials and follow for consistent safety and efficacy measures for up to 5 years. Regarding patients currently ineligible to receive ELEVIDYS under the expanded label, we are conducting multiple studies.

So, the approximately 15% of patients who are screened out for pre-existing anti-AAV Rh74 antibodies, we have commenced the study to cleave and inactivate antibodies within ELEVIDYS and will shortly begin a separate study to remove antibodies with plasmapheresis. In addition, for patients under the age of 4, we have treated patients as young as 2 in our Study 103. And together with our partner, Roche, we are executing Study 302 to gain experience dosing patients under 4 and as young as 3 months. We will continue to transparently communicate the range of trial experience in patients treated with ELEVIDYS from those that are under 4 to those with more advanced disease. As of the end of June 2024, we have dosed over 60 late ambulatory and nonambulatory patients within our clinical program.

We have multiple scientific disclosures planned throughout 2024. We look forward to releasing multiple data sets from across ELEVIDYS clinical program at the next available form, which is the World Muscle Society Congress in early October. Among the presentations accepted, our additional embark data, including muscle MRI and cardiac MRI. ENDEAVOR or Study 103, safety and expression data in late ambulatory and nonambulatory patients, and Study 101, 5-year longitudinal data. Multiple manuscript submissions are in process or planned as our plans to release numerous abstracts at additional congresses, including the International Congress of Neuromuscular Diseases, the Academy of Managed Care Pharmacy and the American Association of Neuromuscular and Electrodiagnostic Medicine.

Finally, we are pleased to report that the primary embark manuscript has been accepted for publication in a high-impact journal and will be available online in the coming months. To summarize ELEVIDYS, we are extremely happy for the Duchenne community on the expansion of our label and the expanded opportunity for those living with Duchenne that wish to receive ELEVIDYS. I’d like to offer a very special thank you to the courageous families who chose to participate in our studies that support this approval. We will continue to diligently serve the community through execution of our ongoing clinical studies and communication of safety and efficacy data on an ongoing basis as it becomes available. Moving now to our programs, limb-girdle muscular dystrophy or LGMDs. Starting with SRP-9003.

As we mentioned on the first quarter call, dosing is under study SRP-9003 301, also known as EMERGENE, our Phase III multinational open-label clinical trial of SRP-9003 for the treatment of limb-girdle muscular dystrophy type 2E for beta-sarcoglycanopathy. The agreed primary endpoint of EMERGENE is expression of beta-sarcoglycan, the absence which is the sole cause of the disease. We are encouraged by the agency’s willingness to create a viable pathway for SRP-9003 which treats an ultra-rare genetic condition that is progressively debilitating, results in loss of ambulation and leads to early mortality. Assuming a positive pre-BLA meeting, we would anticipate the BLA filing in 2025. We are also very pleased to announce that we received Fast Track Designation for SRP-9003.

The Fast Track Designation is a process designed to facilitate the development and expedite review of drugs that treat serious conditions and fill unmet medical needs. In addition to Fast Track, SRP-9003 has also been previously granted rare pediatric disease designation and orphan drug designation from FDA as well as orphan drug designation from the European Medicines Agency. The ability to progress a small N15 biomarker study, together with our ability to demonstrate delivery of a functional beta-sarcoglycan protein is extremely important, not just for this program, but for the other cycloglycinopathies in our pipeline, including LGMD2D and LGMD2C, both of which are progressing to the clinic. Having successfully advanced SRP-9003, we will submit our SRP-9004, IND update reflecting our suspension process this year with Phase I initiation expected to start by year’s end.

As a reminder, SRP-9004 is designed for the treatment of limb-girdle muscular dystrophy type 2D or alpha circlglycinopathy Finally, we are also rapidly progressing our program for SRP-9005 the treatment of limb-girdle muscular dystrophy type 2C or gamma sarcoglycopathy. We plan to engage with FDA in Q4 of this year with plans to initiate a clinical study in Q1 2025, pending the outcome of that meeting. To summarize, we are very pleased with the progress of our LGMD portfolio, and expect to have three of our LGMDs in the clinic in less than nine months. We are maximizing the synergies across this platform from both an R&D and manufacturing perspective and our sights are firmly set on accelerating the remainder of the LGMD assets to the clinic.

The subject matter expertise that we’ve built positions us well to rapidly advance our current and future pipeline. Continuing with our RNA platform and beginning with our PMO. The ESSENCE trial, our post-marketing requirement for golodirsen and casimersen as well mission or post-marketing commitment for EXONDYS are both fully enrolled and remain on track. As a reminder, ESSENCE is a two-year 2:1 randomized placebo-controlled study of both golodirsen and casimersen and is due to read out in early 2026. The study was fully enrolled with 228 patients. MISSION is a randomized double-blind safety and efficacy dose finding study comparing the approved dosage of eteplirsen 30 mg per kg weekly to a dosage that provides significantly higher exposure up to 200 mg per kg weekly.

MISSION is a two-part Phase 3 study. It was fully enrolled with 160 patients. We remain committed to rapidly and diligently advancing missions and sharing data as soon as it becomes available. Turning to PPMO. Early in the first quarter, we announced positive results from Part B of our MOMENTUM study, or study SRP-5051 201. MOMENTUM is an ongoing study of SRP-5051, our investigational peptide conjugated PMO or PPMO. We are actively engaging with Cedar regarding the Phase 3 study that could serve as a post-marketing requirement or PMR study for a potential accelerated approval. Agreement on the Phase 3 PMO study is a prerequisite for an accelerated approval filing. Our intent is to gain an agreement for a study that considers the current landscape can be completed in a reasonable time frame and reflects patients reluctance to enroll in a placebo-controlled trial.

Our hope is an agreement can be reached on a trial design this year. In summary, our team looks forward to a bright future ahead as we work diligently to advance our mission with the goal of serving patients around the world living with rare disease. I’d like to take a moment to thank my R&D colleagues for their unwavering devotion to advancing our entire portfolio. They have demonstrated admirable dedication, scientific integrity and a passion for helping patients that I’m extremely proud of. I’ll now turn the call over to Ian Estepan for an update on our financial results. Ian?

Ian Estepan: Thanks so much, Louise. Good afternoon, everyone. Before I review our financial results, I want to discuss quickly just three topics. First, I just want to add some color on our approach to revenue guidance. We plan to refine the guidance as we get further into the launch, but I think what we’ve provided today will help everyone model the ELEVIDYS launch curve more appropriately. The guidance likely isn’t surprising anyone as the trajectory is consistent with our previous CMO launches and the guidance also provides some visibility of our expectations and how we expect ELEVIDYS will impact our PMO franchise. It’s apparent that we expect modest cannibalization of the PMOs over the upcoming year? So all-in-all, the broad takeaway from our guidance is that the ELEVIDYS launch will put us in a very, very strong financial position.

In fact, as Doug mentioned, we were actually cash flow positive for the first time in our history. We expect to achieve sustainable cash flow positivity in the middle of next year. So with strong revenue growth reaching almost at the end of the decade, we’ve had several questions on how we plan to utilize our cash. So I want to briefly talk about how we’re thinking about deploying capital in our BD strategy. And before I went into it, I think it often gets overlooked that we have a proven track record of successful business development. In fact, we wouldn’t be here today if we had an identified evidence as a differentiated approach to treating DMD and acquired it. We’ll continue to leverage our capabilities in both neuromuscular and rare disease space, and this will remain a core area of focus of ours.

We have the ability to use propensity match controls to better evaluate efficacy early in studies, which can provide valuable insights in determining the probability of success of the program. Doug also rightly noted that, our commercial capabilities are not in rare disease. So we’ll evaluate opportunities to see, if we’re best positioned to deliver transformative therapies to patients in need. We’ll also look at areas that are tangential or for muscular expertise such as CNS or cardiovascular and continue to look to expand our capabilities. Now with all this being said, and with the growth that we have in front of us, we’re well positioned to transact, but we have no need to do anything imminently. We have the luxury of being able to find assets that squarely fit into our strategy.

We’ll have substantially more resources to deploy, but we’ll continue to use the same financial discipline that has gotten us here today. As we’ve witnessed over the past week, market dynamics can change quite quickly. Our strong fundamentals should somewhat insulate us from the macro environment and allow to strategically deploy capital where appropriate. So finally, in the continuous period of helping the Street model our financials, I wanted to highlight that we’ve issued a notice of to our second supplier to terminate our development and supply agreement related to our adherent manufacturing process for one of our gene therapy programs. As Doug mentioned, we’re in a good place from a supply perspective and based on several factors, including the progress we’ve made with our suspension manufacturing process, we do not believe that it makes strategic or financial sense to continue to invest in the adherent process for this program.

The termination will be effective as of August 21, and we’re currently performing an analysis of the financial impact of the termination. As today, we expect to record approximately $55 million to $65 million in additional research and development expenses as a result of the termination for the 3 and 9 months ended September 30, 2024. This range is net impact of any expected termination expenses, write-off and the reduction to operating expenses for applicable reimbursement costs under Roche agreement. We’re still analyzing any further impact from the termination that will be recorded 3 months ended and 9 months ended September 30, 2024. I want to further reiterate that this has no impact on our suspension-based manufacturing agreements. Now, moving to our financials.

This afternoon, financial results press release provided details for the second quarter of 2024 on a GAAP basis, as well as a non-GAAP basis. Please refer to our press release available on Sarepta’s website for a full reconciliation of GAAP to non-GAAP financial results. Beginning in the fourth quarter of 2023, amortization of in-light and income tax expense are no longer excluded from non-GAAP results. The company has added income tax effective adjustments, which represents the estimated income tax impact of each pretax non-GAAP adjustments based on the applicable effective income tax rate. Non-GAAP financial results for the second quarter of 2023 have been updated to reflect this change for comparability purposes. For the 3 months ended June 30, 2024, the company recorded total revenues of $362.9 million, which consisted of net product revenues and collaboration revenues and other revenues compared to revenues of $261.2 million for the same period of 2023, an increase of $101.7 million.

Net product revenue for the second quarter of 2024 from ELEVIDYS was $121.7 million. Net product revenue for the second quarter of 2024 from our PMO EXONDYS skipping franchise was $238.8 million compared to $239 million for the same period of 2023. For the second quarter of 2024, individual net product sales were $129.8 million for EXONDYS 51, $77.4 million for AMONDYS 45 and $31.6 million for VYONDYS 53. The increase in net product revenue primarily reflects the net product revenue associated with sales of ELEVIDYS. For the 3 months ended June 30, 2024, the company recognized $2.4 million of collaboration, other revenues, which primarily relates to royalty revenue from Roche compared to collaboration revenues of $22.3 million for the same period of 2023, a decrease of $19.9 million.

The reimbursement co-development across the Roche agreement totaled $17.9 million for the second quarter of 2024 compared to $28.2 million for the same period of 2023. On a GAAP basis, we reported net income of $6.5 million or $0.07 per basic and diluted share a net loss of $23.9 million or $0.27 per basic and diluted share for the second quarter of 2024 and 2023, respectively. We reported a non-GAAP net income of $46.7 million or $0.44 per share in the second quarter of 2024 compared to a non-GAAP net loss of $89.9 million or $1.01 per diluted share in the second quarter of 2023. In the second quarter of 2024, we recorded approximately $44.5 million in cost of sales compared to $34 million in the same period 2023. The increase in cost of sales primarily reflects the cost of sales related to ELEVIDYS during the three months ended June 30, 2024, following its FDA approval and launch in June of 2023, with no similar activity for the same period 2023.

On a GAAP basis, we recorded $179.7 million and $241.9 million in R&D expenses for the second quarter of 2024 and 2023, respectively, a year-over-year decrease of $62.2 million. The decrease is primarily due to the capitalization of commercial batches of ELEVIDYS and factored after its approval in June of 2023. On a non-GAAP basis, R&D expenses were $153.9 million for the second quarter of 2024 compared to $212.2 million for the same period of 2023, a decrease of $58.3 million. Now turning to SG&A on a GAAP basis, we recorded approximately $138.8 million and $118.6 million of expenses for the second quarter of 2024 and 2023, respectively, an increase of $20.2 million. The increase was primarily driven by an increase in professional services used for the launch of ELEVIDYS and ongoing litigation matters, the timing of charitable contributions as well as the achievement of performance conditions related to certain performance stock units.

On a non-GAAP basis, the SG&A expenses were $106 million for the second quarter of 2024 compared to $90.3 million for the same period of 2023, an increase of $15.7 million. On a GAAP basis, we recorded $14.3 million and other income net for the second quarter of 2024 compared to $16.9 million for the same period of 2023. The change is primarily due to a decrease in the accretion of our investment discount net due to the investment mix of our investment portfolio. We had approximately $1.5 billion in cash, cash equivalents and investments in long-term restricted cash as of June 30, 2024. And with that, I’ll turn the call back over to Doug start the Q&A. Doug?

Doug Ingram: Thank you very much. Again, Lisa, let’s open the lines for Q&A.

Q&A Session

Operator: [Operator Instructions] And our first question today will be coming from Tazeen Ahmad of Bank of America Securities. Your line is open.

Tazeen Ahmad: Hi, guys. Good afternoon. Thanks for taking my questions. Maybe I just want to get an understanding of what the actual bottleneck here is because based on everything that you said and based on work that seemingly a lot of folks have done, demand seems to be quite high from patients and physicians. You talked about start forms and you’re pleased with the number of start forms. But what is the issue with the timing of getting the patient journey from prescription to actual drug in hand. Has that changed from the time that you got approved for the four to five year roles, when did it start lengthening to what you’re saying, what is it three to six months that it’s going to take or —

Doug Ingram: Three to five months

Tazeen Ahmad: 3 to 5 months, when did that start? Is that the key bottleneck here? Thanks.

Doug Ingram: Thank you very much for your question, Tazeen. The short answer is, there really is no bottleneck at all. Now as I think we said in the last earnings call, it’s clearly the case that with the four to five year olds, we were all in — I mean all, not just us, physicians, families and the payers, we’re all in kind of a crisis mode, prioritizing kids that were about to age out of the label, and we’re able to do it more rapidly than is normal. But the normal process is about three to five months. And I mean normal that’s not atypical for these sorts of therapies, but it’s very typical for EXONDYS, VYONDYS, AMONDYS and now ELEVIDYS, ELEVIDYS has some additional requirements, including, for instance, the requirement that one test for and is negative for neutralizing antibodies.

So to be very clear, there is no bottleneck here. We’re doing brilliantly. That start forms are great. Patient and physician demand is great. Manufacturing is great. Everything going very, very well. Payer interactions are really, really encouraging. I think Dallan mentioned, we’ve been having conversations for quite a long time, but just recently, we’ve had conversations with payers that cover some 225, almost 0.25 billion lives in the United States. And that’s enormous. And they’ve been very productive, and we’ve already seen pull through good policies. Now a lot of — somebody of these policies is going to take some time. So just we’re very clear, it takes about three to five months from start form to infusion. We’re getting an enormous number of start forms.

We’re getting a crazy number of assay kit requirements. We had to literally go into our own mini crisis mode to make sure we could satisfy all of the assays that were necessary predicate to getting approval. And so this just is going to take that going to take that amount of time. We’re doing brilliant. The last quarter, Q2, of course, was all predicated on the prior label. And we did really well there. You’ll notice that we were basically flat. We would have been perfectly flat, but a couple of kids that were scheduled toward the back half of the quarter actually had a viral infection and they’ve been pushed into this quarter, and they’ll be dosed this quarter. So we’re not losing them. And then it’s three to five months. That means we’re going to have nice growth in the Q3, but it will be moderated and then Q4 will be very strong growth, as we’ve mentioned, we more than double the growth in Q4 of this year.

And then as we model right now, based on everything we’re seeing, we’re going to do between $2.9 billion and $3.1 billion in revenue across the four therapies next year, which speaks to the success that we believe is happening with ELEVIDYS, and it speaks to the continuing success of our PMOs and the fact that we’re seeing fairly modest cannibalization, and we imagine we’ll see fairly cannibalization in the next year. So the short answer is, things are going very well. There is no fundamental bottleneck. It’s just a process that one has to go through. We’ve been dealing with it for a very long time. Like this is what EXONDYS is like, this is what VYONDYS is like. This is what AMONDYS is like. And just I would — I know I’m getting on a bit of a rant here, but hopefully, I’ll answer everybody’s questions upfront, just so we’re very clear, I mean we are seeing exactly the sort of ramp one would have anticipated, in fact, a little bit more optimistic than even we were and as you know, we are optimistic folks, and it’s very consistent with the launch curves that we’ve seen with our other three approved therapies.

So I will end this politically with the statement I made in the earnings script itself, which is, you can say a lot of things about us, but no one should dispute that there is no organization on this planet with more expertise, more ability and a better track record in launching Duchenne therapy, serving this community and making these launch a success. We’re in really good shape right now. But thank you very much for your question, and I appreciate it.

Operator: Thank you. [Operator Instructions] And our next question will be coming from Anupam Rama of JMP. Your line is open.

Anupam Rama: Hey guys. Thanks for taking the question. Also, it’s JPM. The — thanks for providing that 2025 net product guidance. And I think you said multiple times, addressing the prevalent population kind of into the 2030-2031 time frame. Is that — should we be thinking about more linear growth over that time? Or how should we be thinking about, say, like a time to peak scenario over the course of the year.

Doug Ingram: Yes. I mean we’ve given obviously — thank you very much for your question, Anupam. We’ve given obviously more granular longer-term guidance that is typical of us, but we wanted to really reflect accurately what we’re seeing in this launch. I’m not going to get into a time more granularity on the long-term forecast other than to say, peak year sales will occur in the back half of this — significantly in the back half of this decade. And as I said before in the script, we’ll be treating the prevalent population through the entire decade, and we’ll be moving the incident population in the 2030s.

Operator: And our next question will be coming from Gena Wang of Barclays. Your line is open.

Gena Wang: Thank you. I will also ask one more question regarding the revenue. So Doug, did I hear you correctly, 3Q, you still expect modest growth even despite you will take 3 to 5 months for staff warm to infusion. So that was the first question, just to confirm. And then the guidance, sorry, I will ask again in guidance, $2.9 billion to $3.1 billion. But when we look at, that’s in line with first order analytics of a $3 billion 2025 consensus, and they do have the numbers the sell-side consensus number for ELEVIDYS for 2025 is $2 billion. So do you think that, that number is in line with your assumption? And what are the early launch data to support your assumption?

Doug Ingram: Yes. Thank you very much for your question, Gena. So first on Q3, relative to what I would characterize as the explosive growth that we’re going to have as the start forms turn into infusions. In third quarter, I’ve said, we’ll have modest growth, but it’s still 30% quarter over the immediate preceding quarter. So it will be very nice robust growth. But remember, we just got approved at the end of Q2, and then it does take about three to five months. So it will be really kind of back-end loaded in the quarter. But we’ll see, broadly speaking, about 30% growth, then we’ll double it in Q4. And then on 2025, I think we are largely in line with where the external world is, although that wasn’t our goal. I think it’s a happy accident that we happen to be lined up.

And to the question of sort of what are we seeing — it is early days. So what are we seeing early days that gives us confidence. There’s a lot. Just so we’re very clear — again, no one has more experience in launching Duchenne therapies than Sarepta Therapeutics. Our force therapy in some weird ways, it’s our fifth therapy because we launched this very narrow label on ELEVIDYS and now we’re launching with a broader label — so a couple of things. We know Epi [ph] extraordinarily well. We know Epi down to the state level. So we’re very confident on the Epi here. We have a lot of confidence around the launch curves itself. And what we’re envisioning from the launch curve right now is exactly what we envisioned we would see in all of our modeling, and it is consistent with, again, the launch of EXONDYS in august and VYONDYS.

And we have a lot of granular data. Just remember, we have down to patient-level data on start forms and the like. We know all of the sites. We just have an enormous amount of visibility. It’s still early days. So to Ian’s very good point. We will update our views on things as we track to the end of the year, into early next year. But obviously, early days, we felt a pretty significant amount of confidence to provide people with this overall shape of the launch and discuss 2025, which for us is a bit unusual. We wouldn’t provide this kind of level of information is surely other than we wanted to really map out what we’re seeing right now and feel like we’re being transparent with folks. So we feel very good about this launch right now.

Operator: Thank you. Our next question today will be coming from Joseph Schwartz of Leerink. Your line is open.

Unidentified Analyst: Hi, all. This is Will on for Joe. Thanks for taking our question and congrats on the progress this quarter. So one from us. For many years, we’ve seen the company successfully execute on a mission to help boys at DMD. However, this is something that may not be fully appreciated by some of the community. As it appears that the company will continue to invest in next-generation therapies and support these patients. Why do you think there is a disconnect with some of the community? And what are you doing to actively address it, especially with competition or potential competition on the horizon? Thank you.

Doug Ingram: I think anybody who’s been watching us carefully over the last seven to eight years, we’ll know that we’ve been wholly committed to bringing a better life to the Duchenne community. And we’ve at the risk of being a bit of modest, we’ve been pretty brilliant in our ability to do that for therapies later, all of very successful launches and I believe, very transformative, meaningful dystrophin restorative therapies, which we now can reach well over 80% of the Duchenne population. And we’re working on actually making it even greater. We are successful with our attempts to knock down pre-existing neutralizing antibody, and we have a lot of conviction that we will be. We’re already dosing in one of those two studies.

The other one will come very soon. We’ll be getting to much higher even than 80% of the Duchenne community. And the good news is that I think that those who are informed and have been watching us get this. I think to be honest, the great bulk of the patient community fully understands and is cheering us along. I can tell you, we all stay very close with the community and the community understands that and that’s why in addition to cheering us along, people have been watching the data and are very excited and hopeful they can get on the therapy as soon as possible. Same answer with the physician community, I would say to those who are curious, just talked to physicians who have actually dosed this therapy across the spectrum of Duchenne and ask them what their experiences have been.

I think you’ll hear that they’re very excited about that. So I think the right-minded people are getting it. And I think that there’s a lot of enthusiasm for this therapy as well, there should be and it creates for us an enormous responsibility to get this therapy out to these kids. And this team is doing everything they can to do that. And the great news is that, there’s no team better than this team to do it. So I don’t want to give Dallan and his team too big ahead, but the fact is that this team is brilliant at serving this community, and it will not change with the ELEVIDYS. We’re off to a great start.

Operator: Thank you. Our next question will be coming from Brian Abrahams of RBC Capital.

Brian Abrahams: Hey, good afternoon, guys. Thanks for taking my question. And really appreciate all the granularity here on the launch dynamics. You did mention that there were some wait times at centers as they navigate demand. And so it sounds like capacity is somewhat of a gating factor here. Can you give us a sense of what some of the limitations here are at the center level any additional infrastructure or processes that these sites need to put into place to administer ELEVIDYS and monitor patients? And where you think that could expand over time? What’s embedded in your guidance terms of capacity expansion? Thanks.

Doug Ingram: Okay. I’m going to turn this question over to Dallan, but let me say a few things in advance. First, we don’t have a fundamental capacity issue. I want to be very clear about that. We have about 75 sites in the US. 75% of which have already dosed patients. The probably the number one metric to the success of therapy is, is the experience with it and how well it’s working. But with that said, then the experience with the actual infusion is really important. So having such a significant number of sites, I believe, more than any other gene therapy ever launched with and having 75% of them already having those patients is significant. And I think one of the things we’re seeing early days is there are definitely some sites that in the absence of more information are just worried about the onslaught and trying to manage the amount of demand that’s coming in because there are some 12,000 or so patients in the United States with Duchenne muscular dystrophy.

80% or more of them can be treated with this therapy. They’ve got to prioritize and things that issue through and they’re pondering it. But with that, Dallan, if you want to provide more granularity than I have on this topic, please.

Dallan Murray: Yeah. Thanks, Doug. And Brian, thanks for the question. And as Doug said, we’ve got more than enough capacity. We’ve got more than enough capacity today to accommodate even the peak years of sales, Brian, but really what is happening out there is, as I said in the — in my remarks that essentially overnight, the vast majority of patients became eligible. So each individual center just have to work through all of their patients. They’ve got all of their patients reaching out and figure out how they’re going to approach who they’re going to prioritize who they’re going to dose first. And this is to be expected and everything is really exactly as we have forecast anticipated and expected. And we’re doing everything we can to support these centers.

What makes it — what should provide a lot of confidence is, these are the centers that are at the forefront of precision genetic medicine. They were the ones that figured out Spinraza. They figured out Zolgensma. They figured out our previous narrow label, and they’re just in the process of figuring this out. And these early stages are just an adjustment period as they ramp up their ability to serve the whole patient population.

Operator: Thank you. Our next question today will be coming from Salveen Richter of Goldman Sachs. Your line is open.

Salveen Richter: Good afternoon. Thanks for taking my question. Just going back here to this guidance. It seems like you have the infusion centers, but there’s some kind of bottleneck or lever you’re using with regard to kind of how you’re determining 2025 guidance. So is — if the gating factor here, as you — given the demand, is it number of patients that can be treated at an infusion center at over a time period? Or is it the manufacturing supply in the context of the demand? And then help us understand, how you’re thinking about cannibalization of the PMO side of the business in your ’25 guidance? Thank you.

Doug Ingram: So again, I would say that — first of all, thank you for your question, Salveen. I would say I think it would be a mischaracterization to ENVISION that there is some significant bottleneck. The shape of the curve is related to a number of things. It’s not related to demand, patient demand, physician demand is going to be very, very significant. But then there’s process — the process of getting through the infusions, payer interaction and the like, all defines the shape of the revenue curve over time, and we’re very pleased with where we are. And we don’t have a problem to solve. We will, if all goes well, and it is going exactly that well, means we’re going to do $2.9 billion to $3.1 billion next year, which means a very significant number of patients are going to significantly benefit from our therapies.

And I would remind everyone that is years away from peak year sales, and we’ll be treating the prevalent population over the entire course of this decade into the early 2030s. And then on cannibalization, there will be cannibalization, if for no other reason, there is a kind of competition for start forms for patients as well. But in this year and into next year, we see that cannibalization is quite modest. Thank you again for your question.

Operator: Thank you. And our next question will be coming from Ritu Baral of TD Cowen. Your line is open.

Ritu Baral: Good afternoon guys. Thanks for taking the question. Doug, you’ve given different sort of aspects of guidance going forward, including the fact that you guys think that peak is going to be towards the end of the decade. You’ve previously given us a rough figure of about $4 billion peak for ELEVIDYS. And this was a few years ago and the centers were all not all up and running and stuff like that. But do you still see that as the general peak in your internal assumptions? And I wanted to also ask about the sort of levers between the top of your guidance and the bottom of your guidance. It’s a really, really tight guidance. So I must say I have to start for that will track all the way out through some element of 2025, can you talk to the volume of start forms and whether — what the levers are for the top and the bottom and how far out those start forms will map your revenues, enhance start forms?

Doug Ingram: So a couple of thoughts. On your first question, yes, some years ago, I provided long-term guidance. There is — we have no basis for amending that guidance at all. We feel very comfortable about the prior guidance that we provided. So there’s no need to update that. It is — does appear still to be very accurate. And on the number one thing, we have a lot of starts forms. They don’t have all the starts forms yet, of course. That’s not the way it works. But remember, we have more than anything else, great experience. Like we know what level of start forms correlate to what, we know what the launch curve should look like we have a ton of algorithmic ways to look at this launch and map our expectations versus the current launch.

And the short answer is based on all of our experience and knowledge and algos, we are doing very well. As I’ve said, the early signals exceed our optimistic view on this launch. So we’re — I’ll just say again, we are comfortable with the guidance that we’re providing right now. And to your point, it is — we’re getting to the relatively big companies. So while it’s tight. I mean there’s still $100 million on each side. But to your point, it’s getting to be pretty tight, but we feel very comfortable about providing that level of guidance.

Operator: Thank you. And our next question will be coming from Mike Ulz of Morgan Stanley. Your line is open.

Mike Ulz: Hey, guys. Thanks for taking the question. Maybe just a quick follow-up on the PMO cannibalization. You’re expecting modest cannibalization in 2025. But just curious how you’re thinking about that longer-term? Should we still be thinking some modest impact? Or should that ramp up as sales start to ramp up? Thanks.

Doug Ingram: Well, it’s — so first of all, thank you for your question, Mike. It’s an interesting issue. We have always modeled some robust — eventually some robust cannibalization of the PMO franchise what we’ve seen so far has been fairly been very modest. And what we’re modeling into next year is modest. It might be more significant in years beyond that, but there’s also some reason to believe that our views have been a little bit conservative on how much cannibalization there will be, or I should say, aggressive on the amount of cannibalization. We may have been a bit — our own internal malls may be a bit aggressive on the amount of cannibalization. But what I would say right now is our model suggests that the cannibalization is very modest now. It will remain pretty modest next year, and it might be more significant in the years after that.

Operator: Thank you. And our next question will be coming from Brian Skorney of Baird. Your line is open.

Brian Skorney: Good afternoon, guys. My question is on the cannibalization of PMO as well. And just trying to contextualize when you say early modest cannibalization, why isn’t it just a straight-up equation based on the prevalence of the exon amenable patients and the penetration that you have into PMO. Like I would sort of calculate that somewhere between eight and 10 ELEVIDYS patients should result in one PMO patient cannibalization assuming that person would have to be forced by the insurance company to choose to take ELEVIDYS and come off the PMO. Is that not the case? Are you seeing patients who are getting commercially treated with ELEVIDYS and maintaining their PMO post- ELEVIDYS?

Doug Ingram: Dallan, do you want to touch on this? .

Dallan Murray: Yes, it’s a good question. One of the reasons it’s not a — you can’t map it out that way, is that right now, there’s a significant percentage of our PMO business that doesn’t come from the U.S. In terms of commercially right now, are there patients that have been dosed with gene therapies that have gotten PMOs. We haven’t seen that to-date, but we’ve seen that in the SMA space. And I think we’re aware of some patients that are — that are trying to get access that have dosed with ELEVIDYS before, but we haven’t seen that to-date.

Doug Ingram: So, noting that, that’s the problem. Dallan touched on one of the confounders to your analysis, Brian, which is that ex-U.S. sales exist and have been relatively robust. So, your math is seen with the closed system and we don’t have a close system, we actually have an open system with ex-THANK YOU PMO sales.

Operator: Thank you. Our next question is coming from Uy Ear of Mizuho. Your line is open.

Uy Ear: Thanks for taking our questions. So, I guess maybe just going back to the start form. You said that since the approval in 2023, you’ve been receiving forms from all these sites and physicians. Just wondering if there were any forms that will be filled in patients who aged out before they can get treatment. And could you maybe also sort of define what you mean by patients who are declining? Are these older patients? Or does it ages doesn’t matter at all? Thanks.

Doug Ingram: I want to apologize. Dallan, if you understand — I didn’t quite understand the question, apologies.

Dallan Murray: Yes. No, I think understood it, and please let me know if I did. In terms of the last part of your question, the where the doctors seem to be prioritizing, no two sites or doing it exactly the same way. But they — as we’ve seen with our PMO launches, patients who are in declining ambulatory phase. So, that’s kind of in the 9 to 11 year old age ranges, those patients were predominantly prioritizing the previous three broad label exon skipping launches, and we’ve seen the same thing here. And what was the first part of your question again?

Doug Ingram: I think you may have been asking if we — any patients that would have otherwise aged out.

Dallan Murray: Aged out. Yes, the age, Yes, I was excited about that one because the team did such a great job in execution. There were very few patients that did age out with the — in the initial narrow label. There were a few. And of course, team never gives up on any patient. And we will — those patients that had aged out in the prior label will now be eligible again. So, we will do everything we can to support anybody who did age out and comes back into the into the system.

Doug Ingram: And then finally, what Dallan is suggesting on the prioritizing the rate declining — and simply, that’s just — it’s just a mathematical fact. You’re seeing patients start function as early as four years into their old 30s. And then you see kind of a peak right now in the — right in that kind of 10, 11, 9 age range. And that’s what we’ve seen with the PMOs as well. But the good news is we’re seeing a robust start forms across that entire group, which gives us a lot of confidence in where we’re heading as an organization.

Operator: Thank you. Our next question today will be coming from Robert Finke of Guggenheim. Your line is open.

Robert Finke: Hey, thank you for taking our question. This is Robert on for Debjit. From our side, a couple of questions here. Do you anticipate manufacturing capacity will be a gating factor at any point between now and peak sales?

Doug Ingram: So the short answer is we don’t envision that manufacturing is going to be the bottleneck for the next few years. And by the time that we would see it as being a rate limiter will be hopefully in suspension by that point, and then we shouldn’t see any limitation. So we’re very good where we are right now.

Robert Finke: Thank you. Our next question is from David Hoang of Citigroup. Your line is open.

David Hoang: Hi, there. Thanks for all the great updates, and taking my question. I just wanted to ask if you’ve got any feedback from your centers about post-administration monitoring of these patients. There’s obviously a number of labs that need to be followed for a period of time for safety. And I just wanted to ask whether value consideration and sort of the speed of how fast patients can be done and then ultimately, overall, the shape of the launch curve?

Doug Ingram: Yeah. Thank you very much for that question, and it’s very insightful. A lot of times, you think about the infusion at the last moment and that — that sort of the cadence of infusion describes the amount of patients that can be dosed. But of course, if 1 is going to do this in a thoughtful way, it’s important that there’s a lot of very good follow-up, and there is. So that amount of infusions you can do relate not just the amount of infusion room infusion appointments you can have, but good follow-up, and we’re very, very supportive of great follow-up. So that is a part of the entire process — and to the best of my knowledge, we’re seeing a very stable safety profile as well based on that monitoring, but Louise or — Louise in particular, that on getting any of that wrong revenue.

Operator: Thank you. Our next question will be coming from Kristen Kluska of Cantor Fitzgerald. Your line is open.

Kristen Kluska: Hi, everyone. All the best with the expanded launch here. I wanted to ask, if your 2025 numbers assume anything related to a European approval? Is that baked in here? And then I understand that this process takes a few months’ time. But what’s the key driver behind reaching peak sales in a few years versus, say, the 2020 time frame? Thank you.

Doug Ingram: Yeah. So our guidance does not assume — first I want to be very clear. We’ll leave it to Roche to talk about their ex US approvals. And as everybody knows, EMA has already accepted their submission for review and that should result in an action in 2025. But the numbers that we’re giving here right now don’t presume that issue either way, just really relating to our US sales. And the short answer on the revenue curve is, of course, there is a revenue curve that occurs and it is a function of everything from the process to the site, the monitoring and site infusions and payer interactions and the like. And so as I’ve said, we believe right now that we’re going to do $2.9 billion to $3.1 billion next year across all our therapies. We will continue to treat the prevalent population over the course of this entire decade. Peak year sales will be some years after 2025, and we feel very good about where we are and the good work we’re doing for patients.

Operator: Thank you. Our next question will be coming from Biren Amin of Piper Sandler. Your line is open.

Biren Amin: Thanks for taking my guys. You commented on the number of infusing sites over the last few quarters with the number of infusing sites increasing in Q2 from Q1 by about 13 to 15 sites according to our calculation. So how do we think about patient treated per site and the consistency of the volume of patients treated per site?

Doug Ingram: Well, so let’s first — I’ll turn this over to Dallan, and he can chat a bit about that. But just so we’re very clear, we are very comfortable with the number of sites that we see. Now what you may see over time is a general increase in some sites. That is not part of some grand proactive strategy, but really relates more than anything else, but being responsive to requests from site. So, if an appropriate site asked to be a site, I want to go through the educational process and to be validated to be a site we would certainly consider that. But as it sits here right now, we are very comfortable. And I will remind everyone in advance of this of this launch, we had an aspiration to be 50 sites with a goal of maybe even someday getting to 70 sites, all of which would be much higher than any other launch on with gene therapy.

And so sitting at 75 sites, we feel very, very good about it. But if you want to provide any other metrics down on kind of productivity by side of the life. Feel free.

Dallan Murray: Yes. No, thank you for the question. And I don’t know where those numbers came from because our site — the number of sites has been very consistent. We have a rightsized model and we’ve been hovering right around 75%. Now that said, just as Doug said, our model is flexible. So we can bring new sites on, get them up to speed and bring them on very rapidly. And one of the things with broad label is the possibility that we’ll be bringing on some adult neuromuscular sites to accommodate older patients as well. So, as Doug alluded, we have more than enough capacity today, but importantly, to serve patients. We have built flexibility into our model, so that as needed to support patients, we can bring on new sites very, very rapidly. The team is very responsive.

Operator: Thank you. And our next question will be coming from Gavin Clark-Gartner of Evercore. Your line is open.

Gavin Clark-Gartner: Hey guys. Thanks for taking the question. So I fully appreciate the longer conversion cycle as we’re looking at the back half of ’24 and into 2025. But you’ve also referenced your approved PMOs as analog for adoption. Those themselves are the largest ramps within the first 1 to 2 years after approval when we’re talking about new patient adds. And that’s basically how all other rare disease launches go with very high unmet need. So I guess like even with a few months of the lag process, why would peak sales not be at some point in 2026?

Doug Ingram: Because it won’t be. We have good modeling. We know exactly — we have a very good view of where we’re heading with capacities and the process and the like, and we’re confident that it won’t be to your sales in 2026. Another thing you have to remember — and by the way, I think the people are trying to solve for whether varies symbolically, there’s not we’re very pleased with this approach. One has to remember that there’s a one-time therapy that we have to be — we have to prioritize being responsible and we want to make sure that all of these sites are in a good place where they’re not prioritizing, getting as many patients as possible dosed without regard to safety and follow-up and the like. And we’ve done a really good job of that.

The sites are doing a very good job of that, all of which means we’re going to be very successful this year. We’re going to have good modest growth in the Q3. We have a very, very robust growth in Q4, doubling in Q4, we’re going to do $2.9 billion, $3.1 billion across our therapies in 2025. And then as it relates to 3Q sales, it will be in the back half of this decade.

Dallan Murray: And Doug, can I just jump in? I think you’ve been alluding to this, but Gavin, your question is a good one, and I think Doug has been alluding to the fact we have visibility at these sites at a very granular level. We haven’t mapped out by payer coverage by patient. We know exactly who’s lined up, how they’re going to be lined up. We map this out in a very, very granular detail. And this is why we have a very high level of confidence in our forecast assumptions. So I hope that added level of detail helps a bit.

Doug Ingram: Thank you, Dallan.

Operator: Thank you. And our next question will be coming from Kostas Biliouris of BMO Capital Markets. Your line is open.

Unidentified Analyst: This is Dale on for Kostas. Thank you for taking our question. So our question is on the LGMD gene therapy portfolio. Given that half of your LGMD gene therapy portfolio uses the same vector and promoter — and actually, all of them are using the same vector as ELEVIDYS. So how are you thinking about potentially leveraging FDA platform designation platform to accelerate the development of the LGMD gene therapies and other early pipeline assets. And also if you can comment on the potential impact from the inclusion ELEVIDYS effect on the time function test in the label on patients and physician uptick payer negotiations and potential future competition? Thank you.

Doug Ingram: I’ll turn the LGMD question over to Louise and our approach to accelerating the LGMD development.

Louise Rodino-Klapac: Yes. Thanks for the question. I think you’re exactly right in terms of using the ELEVIDYS experience to help accelerate the LGMD platform. We’ve been using the same rh74 vector for these programs and just to cite the sarcoglycanopathy, similarities between them. We’ve received Fast Track Designation, as I mentioned in my remarks, and pulling on every lever possible with FDA to make sure that we’re moving in the fastest speed possible. We’ve been very happy with the interactions so far, and our 9003 pivotal trial, as noted is our open-label trial with in terms of looking at this ultra-rare population and being thoughtful about the way that we develop these with LGMD2D and QC coming along. So certainly, we’re leveraging everything possible and our safety experience is ELEVIDYS for the LGMD portfolio.

Doug Ingram: Before we move on Dallan, did you have something else to add?

Dallan Murray: I think Dale asked about the time function test, the data that’s in our label and how those may be impacting the payer conversations. And Dale, it’s a great — really, really great question because that is really what the team is focused on with the payers is that incredible new data that’s in our label. And there has been — as Doug outlined in his comments, I did a little bit in mine, the engagement, the interest from the payers to understand that data. And so that’s a big part of that engagement with the payers right now going through that new data that supports a broader label.

Doug Ingram: Just to remind everyone that not only did we hit all of those not only statistically significantly. The importance of that can’t be overstated. I would remind people that time to rise, the benefit we’ve seen on time to rise is correlated with over a 90% decrease in the risk of early loss of ambulation. So, I mean these are not only important metrics, but they correlate importantly, the very — things that matter a lot to patients.

Operator: Thank you. And our next question will be coming from Tim Lugo of William Blair. Your line is open.

Unidentified Analyst: Hey team. This is John on for Tim. Thanks so much for taking our question. Maybe a follow-up on the last one. Beyond the internal pipeline, with your healthy balance sheet and your expanded launch in front of you. Just wondering if you can give us any updated thoughts on how you’re thinking about potentially in-licensing new programs?

Doug Ingram: Sure. I will turn this to Ian. Ian?

Ian Estepan: Hey thanks for the questions. This is what I discussed in our prepared remarks, I mean as an organization that’s been developing therapies and successfully manufacturing them and all the way to commercialization, it gives us a wide amount of substrate to evaluate — and so we’re going to be just looking at ones that fit very well with our existing capabilities and being able to leverage that and being able to deliver to patients quickly. So, — we’ve been really fiscally responsible at the transactions we’ve done in the in the past. Like I said prepared remarks, we’re going to have a lot more resources to deploy, but we’re still going to use that same approach. There are a lot of interesting therapies that are being developed.

But before maybe this week, the valuations were incredibly high, and we’re not going to chase opportunities. We’re going to look for ways to build value from a development perspective for patients, but also for investors. So, we’re very keen on looking at valuation and making sure that it makes sense based on the market opportunities.

Operator: Thank you. And our next question will be coming from Gil Blum of Needham & Company. Your line is open..

Gil Blum: Hi everyone and thanks for squeezing us in. Maybe a last question, I’m trying to understand the potential bottle next year. But does on the really just boil down to how many treating physicians you have at each center? And if you can provide any thoughts on how that metric works? Thanks.

Doug Ingram: So, again, I’m going to frustrate you by answering this question again the same way, which is we don’t have bottlenecks. We have a launch curve. We’re doing very, very well. We have a significant number of sites, a significant number of treating physicians at sites, a lot of enthusiasm. We have more than enough sites, more than enough positions, extraordinary demand from patients and those physicians, great interactions with payers, a very strong manufacturing approach right now. We feel very good about that from a capacity and supply perspective and a great distribution channel. As a result of that, we’re going to have a really successful back half of this year, and we’re going to have a 2025 that will mean that we’re going to do revenue across our four approved therapies of some $2.9 billion $3.1 billion.

We are profitable today. We were cash flow positive this quarter. We will be in the next couple of quarters, very consistently cash flow positive on a go-forward basis. We’re in a very different place than the vast majority of biotech today. We have a very strong, very sustainable business, all of which is focused first and foremost on bringing a better life to these patients. We’re going to bring a better life to a lot of patients over the next many years this decade. And secondarily, but also importantly, rewarding those investors who have stuck with us and have committed themselves to this mission. So we’re in great shape, and not to be overly defensive, but we don’t have a bottleneck that we need to solve for. We feel very good about where we are.

Operator: This concludes today’s Q&A session. I would like to turn the call over to Doug for closing remarks. Please go ahead.

Doug Ingram: Thank you very much. Thank you all for your questions. Your incite questions this evening, and thank you my team for those great answers. Very excited about where we’re going for the rest of this year. We have a lot of work to do this year. ELEVIDYS launch is going well. Our continuing service of our PMOs are going very well. We understand the enormous responsibility we have to these patients to ensure that the greatest number of these patients can benefit from our therapies, and we’re going to make the ELEVIDYS launch brilliant. I look forward to updating you across this year on launch, performance and with the team update you on our pipeline advancement as well. And with that, have a lovely evening, and we look forward to talking you soon. Thanks.

Operator: This does conclude today’s conference call. You may all disconnect.