Sarepta Therapeutics, Inc. (NASDAQ:SRPT) Q4 2023 Earnings Call Transcript

Sarepta Therapeutics, Inc. (NASDAQ:SRPT) Q4 2023 Earnings Call Transcript February 28, 2024

Sarepta Therapeutics, Inc. beats earnings expectations. Reported EPS is $0.47, expectations were $-0.03. Sarepta Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon and welcome to the Sarepta Therapeutics Fourth Quarter and Full-Year 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. [Operator Instructions] As a reminder, today’s program is being recorded. At this time, I’ll turn the call over to Francesca Nolan, Executive Director, Investor Relations and Corporate Communications. Please go ahead.

Francesca Nolan: Thank you, Shannon. And thank you all for joining today’s call. Earlier this afternoon, we released our financial results for the fourth quarter and full-year 2023. The press release is available on our Web site at sarepta.com, and our 10-Q was filed with the Securities and Exchange Commission this afternoon. Joining us on the call today are Doug Ingram; Ian Estepan; Dallan Murray; and Dr. Louise Rodino-Klapac. After our formal remarks, we’ll open the call for Q&A. I’d like to note that, during this call, we will be making a number of forward-looking statements. Please take a moment to review our slide on the webcast which contains our forward-looking statements. These forward-looking statements involve risks and uncertainties, many of which are beyond Sarepta’s control.

Actual results could materially differ from these forward-looking statements, and any such risks can materially and adversely affect the business, the results of operations, and trading prices for Sarepta’s common stock. For a detailed description of applicable risks and uncertainties, we encourage you to review the Company’s most recent annual quarterly report on Form 10-K filed with the SEC, as well as the Company’s other SEC filings. The Company does not undertake any obligation to publicly update its forward-looking statement, including any financial projections provided today based on subsequent events or circumstances. 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?

Douglas Ingram: Thank you, Fran. And by the way, everyone, it was Fran’s birthday yesterday, so Happy Birthday, Fran. And good afternoon, everyone, and thank you for joining Sarepta Therapeutics’ fourth quarter 2023 financial results conference call. Led by an exceptional launch of ELEVIDYS and continuing performance of our approved PMOs, EXONDY, VYONDYS, and AMONDYS, we announced, this afternoon, another strong quarter of full-year growth and quarterly growth as we serve the patient community. As we pre-announced in January at the J.P. Morgan conference, fourth quarter total net product revenue came in at $365. 1 million, growing some 55% over the same quarter of prior year and the full-year net product revenue achieved $1.14 billion, growing 36% over the prior year.

In addition to continuing strong performance among our three approved therapies, ELEVIDYS’ performance was particularly impressive, and reflects first-in-class launch excellence, notwithstanding, a label limited to four and five-year-olds, representing only about 3% or so of the total Duchenne population. ELEVIDYS net product revenue was $131.2 million for the quarter, and over $200 million for the full-year. I’m exceptionally proud of the team’s performance here, which speaks to our level of preparation and attention to detail, expert understanding of all aspects of lunching innovative rare disease therapies, and, of course, our passion for bringing a better life to those living with Duchenne. Dallan Murray, our Chief Customer Officer, will speak to this in his remarks shortly.

We also continue to exercise the discipline of a fully integrated commercial-stage biotech organization. We were profitable on a GAAP basis in the fourth quarter, having achieved non-GAAP profitability in the third quarter of 2023. And we exited 2023 with approximately $1.7 billion of cash, cash equivalents, restricted cash and investments on our balance sheet. Our CFO, Ian Estepan, will provide more color on financial performance shortly. We also advanced our pipeline in the fourth quarter. In the fourth quarter, we submitted a BLA supplement for ELEVIDYS with the goal of both expanding the label by removing age and ambulation restriction, and transitioning our approval from accelerated to traditional. And in February of this year, the FDA accepted our supplement for review, and set June 21 as our target review completion date.

In the fourth quarter, we also commenced EMERGENE, our trial for SRP-9003 to treat LGMD Type 2E. Also in January of this year, we announced the positive results of our trial MOMENTUM Part B, investigating the use of our next-generation peptide conjugated PMO, SRP-5051, to treat Duchenne patients that are exon 51 amenable. Dr. Louise Rodino-Klapac, our Head of Research & Development, will provide more color on our pipeline progress shortly. You have 2017, starting with one approved therapy, $5 million in sales, a modest pipeline, a short cash runway, and little more than ambition and grit, we set out to build a sustainable, mature biotech organization, improve the lives of the greatest possible number of Duchenne patients along the way as we’ve become the leaders in the use of RNA and gene therapy to treat rare genetic disease.

If we are successful in our plans this year, we will have achieved that vision. From there, we can and we will expand our ambition and rely on our scientific and financial strength, we intend to advance our internal pipeline, but also to bring in external innovation to grow from here, not incrementally, but in great multiples. In short, 2024 is going to be a very important year. And with that, I will turn the call to our Chief Customer Officer, Dallan Murray. Dallan?

Dallan Murray: Thank you, Doug, and good afternoon. The fourth quarter of 2023 represented a strong finish to an already impressive year as the team generated over $1 billion in net product revenue, a milestone for Sarepta. As previously noted, net product revenue for 2023 totaled $1.14 billion, consisting of roughly $945 million from our PMO franchise, and $200 million from the launch of ELEVIDYS, the first gene therapy approved for patients with Duchenne muscular dystrophy. Each of these accomplishments stands on their own merits, and the performance of both surpassed our internal projections and external consensus. In the seventh year of our PMO franchise, we again grew net product revenue by double digits from the nearly $844 million in net product revenue from 2022.

As with previous years, we delivered this growth organically, without taking price increases on any of our approved PMO products. As such, this growth represents an increase in the number of patients we are serving, reflecting our commitment to the Duchenne community. Turning to ELEVIDYS, we’re extremely pleased with launch execution, exceeding our own lofty expectations. In fact, the $200 million in net product revenue surpassed the combined 2023 revenue of the other five gene therapy launches from the past 18 months. Remarkable, given the ELEVIDYS approval occurred just this past summer. The success of ELEVIDYS shows that gene therapy can be commercially viable, providing hope for those patients with Duchenne, and for all those with genetic conditions with unmet need.

While revenue is how we quantify the success of this launch externally, we measure ourselves on how we support patients. Our preparation is deliberate and intense, and our process was put to the test with the narrow label. The team responded to that challenge with an incredible commitment to supporting all eligible four to five-year-old patients. This is our fourth Duchenne launch, and our knowledge and experience played a significant role in how the team rallied, worked together, and rapidly supported those patients who were approaching their sixth birthday, and who were at risk of becoming ineligible for therapy. Ensuring no eligible patients are left behind is what motivates us. Let’s now review the results from the fourth quarter, starting with ELEVIDYS.

Net product revenue for the quarter was roughly $131 million. This represented a nearly 90% increase over Q3. We are pleased with our penetration into the very small and narrow segment of the Duchenne population. This four-to-five-year-old label has presented a number of unique executional challenges that are relevant moving forward. Firstly, a significant proportion of the patients in this age group are not yet diagnosed, given that the average age of diagnosis is around five in the United States. Secondly, those who are diagnosed have not had a lot of time to be fully educated about Duchenne, which means the patients and families need to understand that diagnosis, become aware of therapy options, go through a more involved and longer pretreatment process than the PMOs, one example of this being antibody testing.

And on top of this, the patients must also secure access to a ELEVIDYS in this very short time window. Our team has found themselves in a race against time to help these patients. And finally, the relatively small number of diagnosed four-to-five-year-old patients results in a situation in which we will be working through this prevalent population quickly within the first-half of the year. On the flip side, many of these dynamics are reversed once patients have transitioned over to the decline phase of the disease. This is illustrated by our real-world experience with the PMOs, where we see a larger proportion treated in the older age groups, which is on top of a larger diagnosed patient pool. Because of all this, we do not expect to see significant additional growth within the existing population through the first-half of this year.

Notably, however, by the time of label expansion, we expect to have cleared the way for those older patients to get dosed as rapidly as possible upon eligibility. I would caution analysts, therefore, to not use this current younger population as a frame of reference for our market potential in the overall population. The team is preparing, as we speak, for a broad label with a focus on building upon the successful launch execution to date, and we have the access and capacity in place to execute successfully on any broader label scenario. Let’s now take a look at the PMO franchise as a whole. As previously mentioned, 2023 net product revenue of $945 million exceeded our full-year guidance of $925 million. This performance represents solid revenue growth across all three brands.

In fact, both VYONDYS 53 and AMONDYS 45 continued their double-digit growth trajectory. Looking now at the fourth quarter of 2023, the team delivered roughly 234 million in net product revenue. This was flat versus Q4 of 2022, net product revenue of roughly 236 million. As you may recall from our Q4 2022 earnings call, we cautioned around keeping the guidance of $925 million for the year due to an increase in the quarter-to-quarter lumpiness that we were observing at that time. Looking now in retrospect, it’s clear the PMO has performed exactly as we expected and guided. And finally the performance we just discussed in our PMO business was achieved despite the incredible effort on the ELEVIDYS launch. Notably, we saw minimal impact on our PMO business from ELEVIDYS cannibalization in 2023, given the narrow age range.

In closing, in 2023, Sarepta set a new standard for gene therapy launches with ELEVIDYS. We beat external expectations and delivered roughly $200 million. Equally important, we continue to increase the number of patients we support with our PMOs globally. I continue to be immensely proud of our mission-driven team. Combining our PMO and gene therapy businesses, we exceeded a billion in net product revenue for the first time, and we have entered 2024 with momentum. 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. 2023 was a year of great accomplishment for Sarepta, for the advancement of science, and for the health and well-being of patients living with rare disease. 2023 will also be remembered as being a defining moment in genetic medicine. In June 2023, the FDA granted accelerated approval to ELEVIDYS, first gene therapy to treat to Duchenne muscular dystrophy. Since that time, we’ve been successfully treating ambulatory pediatric patients aged four through five years with Duchenne, who have a confirmed mutation in the DMD gene. And then, just about two weeks ago, and as Doug mentioned, we were thrilled to announce that the FDA accepted and filed our efficacy supplement for ELEVIDYS, whereby they will now evaluate broadening the approved indication of ELEVIDYS.

By removing age and emulation restrictions and converting the ELEVIDYS accelerated approval to a traditional approval. Should we receive accelerated approval for ELEVIDYS in the non-ambulant population in the United States? Our ENVISION study also called SRP-9001-303 will serve as our confirmatory study for this population. ENVISION is a global randomized double-blind placebo-controlled two-part study evaluating the safety and efficacy of delandistrogene moxeparvovec-rokl gene therapy in non-ambulatory and older ambulatory individuals with Duchenne. This study is ongoing with all remaining patients being enrolled outside of the United States. With U.S. enrollment completed and the remaining 85% of recruitment occurring ex-U.S., we are confident in our ability to complete this trial.

Moving now to our limb-girdle muscular dystrophy or LGMD program, on January 16th, we announced that screening was underway in study SRP-9003-301, also known as the EMERGENE study. We are pleased to now share that the first patient has been successfully dosed in that study. To remind you, EMERGENE is a Phase 3, multi-national, open-label clinical trial of SRP-9003 for the treatment of limb-girdle muscular dystrophy Type 2E or beta-sarcoglycanopathy. The primary endpoint of EMERGENE is expression of beta-sarcoglycan, which is an extremely important endpoint for this program, for the other sarcoglycanopathies, including LGM2D and LGMD2C, and for the field of gene therapy. I’ll explain why? Beta-sarcoglycanopathy is characterized by a mutation of the beta-sarcoglycan gene, which sits in a complex of the membrane called the sarcoglycan complex, and is important for function and for preventing muscle damage during contraction.

The sarcoglycan complex is a subcomplex of the dystrophin-associated protein complex, or DAPC. A defective sarcoglycan protein results in loss or reduced expression of the other sarcoglycan, as well as other proteins in the complex, such as dystrophin. Therefore, by restoring the missing protein, such as beta-sarcoglycan, we’re able to restore that functional complex at the membrane and thereby restore function to the muscle. Further, earlier this month, I had the opportunity to participate in the Speak Foundation’s LGMD Scientific Workshop, which also featured officials from FDA, including Doctors Marks and Verdun, as well as patients, caregivers, and clinicians, among others. The key takeaways from the workshop included the perspective that traditional trial designs are not suitable for certain types of LGMD, and that to ensure these therapies have the best chance of success, the totality of evidence must be considered.

Doctors Marks and Verdun also expressed their strong support for regulatory flexibility and a higher tolerance for uncertainty for rare diseases such as LGMD, when you’re replacing the native protein, as well as support for surrogate endpoints for gene therapies. Currently, no treatments exist to effectively treat LGMD2E or the other LGMDs. The EMERGENE study, which will enroll 15 participants who are ambulatory and non-ambulatory, ages four and older, not only holds great promise for individuals suffering from LGMD2E, but will lay the foundation for other LGMD programs, as well as provide a viable regulatory pathway that supports the development of future gene therapies for rare and ultra-rare diseases. These data, combined with positive expression and functional data shared from our initial LGMD2E study, SRP-9003-101, which was also published in Nature Medicine earlier this year, and our Voyagene study, SRP-9003-102, which establishes safety experience across a broader patient population.

They’re together as totality of evidence. As a reminder, Voyagene is a Phase 1 study evaluating SRP-9003 for the treatment of LGMD2E in patients ages 18 and older in the ambulant population and ages 4 to 50 in the non-ambulant population. The primary endpoints are safety and change in beta-sarcoglycan expression. We expect to have the clinical results this year. Moving now to our RNA platform, we were also pleased to recently announce positive results from Part B of our MOMENTUM study, study SRP-5051-201. Based on the data we’ve generated to date, we believe SRP-5051 represents a best-in-class therapy from an efficacy perspective. MOMENTUM is a global, multi-ascending dose clinical trial of SRP-5051. Our next generation peptide phosphorodiamidate morpholino oligomer treatment for patients with Duchenne were amenable to exon 51 skipping.

As previously discussed and based on these results, we believe we have a path forward to an NDA and are planning a meeting with FDA to discuss an accelerated approval. We anticipate that this meeting will occur in the third quarter of 2024. Regarding our post-marketing studies for the PMOs as mentioned, we completed enrollment in the ESSANCE trial, our post marketing requirement for golodirsen and casimersen. As a reminder, ESSANCE is a two-year study and is due to readout in early 2026. In addition, we are pleased to have completed enrollment in our MIS51ON study, our dose-ranging post-marketing commitment for EXONDYS. MIS51ON is a randomized double-blind safety and efficacy dose-finding study comparing the approved dosage of the Eteplirsen, 30 mg/kg/weekly, to a dosage that provides significantly higher exposure, up to 200 mg/kg/weekly.

MIS51ON is a two-part Phase 3 study. It was fully enrolled in October 2023 with 160 patients. We remain committed to rapidly and diligently advancing MIS51ON and sharing data as soon as it becomes available. In conclusion, the months ahead are filled with great promise to advance our mission and serve patients around the world living with rare disease. I will now turn the call over to Ian Estepan for an update on our financial results. Ian.

Ian Estepan: Thanks, LRK. Good afternoon everyone. This afternoon’s financial results press release provided details for the 4th quarter of 2023 on a non-GAAP basis as well as a GAAP basis. Please refer to our press release available on Sarepta’s website for a full reconciliation of GAAP to non-GAAP financial results. Before we get to the results, I just wanted to flag that beginning in the fourth quarter of 2023, amortization of in-licensed rights and income tax expense or benefit are no longer excluded from non-GAAP results. The company has added income tax effective adjustments, which represents the estimated income tax impact of each pre-tax non-GAAP adjustment based on the applicable effective income tax rate. Non-GAAP financial results for the fourth quarter and full-year 2022 have been updated to reflect this change for comparability purposes.

So, for the three months ended December 31, 2023, the company recorded total revenues of $396.8 million, which consists of net product revenues and collaboration and other revenues compared to revenues of $258.4 million for the same period of 2022, an increase of $138.4 million. Net product revenue for the fourth quarter of 2023 from ELEVIDYS was $131.2 million. Net product revenue for the fourth quarter of 2023 from our PMO exon skipping franchise was $233.8 million, compared to $235.9 million for the same period of ’22. For the fourth quarter of 2023, individual net product sales were $131 million for EXONDYS 51, $69.9 million for AMONDYS 45, and $32.9 million for VYONDYS 53. The increase in net product revenue primarily reflecting increasing demand for our PMO products as well as net product revenue associated with sales of ELEVIDYS.

In the quarter ended December 31, 2023, we recognized $31.7 million of collaboration and other revenues compared to $22.5 million for the same period of 2022. This revenue primarily relates to our collaboration arrangement with Roche. So, the quarter ended December 31, 2023. The company recognized $9.2 million of contract manufacturing collaboration revenue associated with multiple batches of commercial ELEVIDYS supply delivered to Roche with no similar activity ended December 31, 2022. The reimbursable co-development costs under the Roche agreement totaled $23.5 million for the fourth quarter of 2023, compared to $51.7 million for the same period of 2022. On a GAAP basis, we reported net income of $45.7 million or $0.49 per basic and $0.47 per diluted share, and a net loss of $109.2 million or $1.24 per basic and diluted share for the fourth quarter of 2023 and 2022, respectively.

We reported non-GAAP net income of $86.6 million or $0.82 per diluted share in the fourth quarter of 2023, compared to a non-GAAP net loss of $53.6 million or $0.61 per diluted share in the fourth quarter of 2022. In the fourth quarter of 2023, we recorded approximately $44.2 million in cost of sales, compared to $30.8 million for the same period of 2022. The increase in cost of sales primarily reflect increasing demand for our PMO products, and increase in royalty payments due to ELEVIDYS sales in 2023, with no similar activity in 2022, and write-off of certain batches of our products not meeting our quality specifications in the three months ended December 31, 2023, with no similar activities for the same period of 2022. On a GAAP basis, we recorded $195.5 million and $213.8 million in R&D expenses for the fourth quarter of 2023 and 2022, respectively; a year-over-year decrease of $18.3 million.

The decrease is primarily due to a decrease in manufacturing expenses and upfront milestone and other expenses. On a non-GAAP basis, R&D expenses were $165.1 million for the fourth quarter of 2023, compared to $186.8 million for the same period of 2022, a decrease of $21.7 million. Now, turning to SG&A on a GAAP basis, we recorded approximately $131.7 million and $120.5 million of expenses for the fourth quarter of 2023 and 2022, respectively, an increase of $11.2 million. The increase was driven primarily by an increase in professional services in compensation and other personnel expenses partially offset by a decrease in stock-based compensation. On a non-GAAP basis, the SG&A expenses were $105.7 million for the fourth quarter of 2023, compared to $86.6 million for the same period, 2022, an increase of $19.1 million.

On a GAAP basis, we recorded $15.7 million in other income net for the fourth quarter of 2023, compared to $5.5 million for the same period of 2022. The change was primarily due to an increase in the accretion investment discount net due to an increase in interest rates. We had approximately $1.7 billion in cash, cash equivalents and investments in long-term restricted cash as of December 31, 2023. So, to conclude, we are incredibly pleased to achieve our first quarter of profitability from a GAAP perspective. It is impressive to reach this milestone in just the second quarter of the ELEVIDYS launch, and highlights the leverage in our business. For the reasons Dallan outlined and maybe some lumpiness on the bottom line in the first-half, that said, with an expansion of the label, we expect to be highly profitable for the full-year.

Also, as I previously noted, in preparation to serve the community in the event of a label expansion, we’re continuing to ramp our manufacturing of ELEVIDYS. Its continued investment will be apparent in the first quarter financials and the remainder of the year. We are thrilled to have the resources on hand to continue to build the inventory needed to deliver ELEVIDYS to the Duchenne community. Now with that, I’ll turn the call back over to Doug to start the Q&A. Doug?

Douglas Ingram: Thank you very much, Ian. Shannon, let’s open the call for questions.

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Q&A Session

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

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

Douglas Ingram: Yes, thank you very much for your questions, Gena. Just, for the future, it is one question per analyst. But I appreciate your questions, so let me answer them. So, the basis for our request to expand the label by removing both the age and ambulation restrictions, that is driven by the science, I want to be very clear about that. We’re in the midst of a review. We’re very — we’re pleased with the progress of the review so far, but it’s too early right now to give you a substantive view on the division’s perspective on that. But our view is that the science and the totality of the evidence supports the label extension that we’ve asked for. And it’s the right answer from our perspective. It’s the right answer from the science.

It’s the right answer from a policy perspective. And most of all, it’s the right answer for patients living with Duchenne muscular dystrophy, which I hope will be all of our north stars in this regard. With respect to emerging — or emerging, I should say, the — that the protocol for that has been shared with and reviewed with by the FDA. And they have, on the basis of those discussions, including the end of the study, given us their blessings to commence that study. And we’ll provide additional information on the level of expression likely to predict the clinical benefit at a later date. I would note, in our prior studies, we’ve had two cohorts; we’ve seen very robust expression of the beta-sarcoglycan protein, the absence of which is the sole and exclusive cause of the degeneration in patients who have LGMD Type 2E.

Thank you.

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

Douglas Ingram: Yes, and, Ian, I’ll turn this to you.

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

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

Unidentified Analyst: Hi, all. Thanks for taking our questions. This is [Will] (ph) on for Joe. Congrats on the great question here. So, one question for us on manufacturing, with the recent acquisition of Catalent by Novo, and the expected expiration of your agreement with Catalent at the end of this year, how are you guys thinking about manufacturing moving forward? And then in terms of capacity, the potential for an expanded label this year, are there any potential for supply constraints in the near-term? Thank you.

Douglas Ingram: Yes, it sounds like your questions, Will — first of all, I think there might be a misunderstanding of some sort, let me be very clear. Our agreement with Catalent does not end at the end of this year. We have a long-term relationship with Catalent there. They’ve been very good partners of ours. So, the — there will be, from our perspective, no impact from the acquisition of Catalent by Novo Holdings. As we understand it, Novo Holdings would be acquiring the entity as a whole. The GLP-1-related manufacturing, I think, is going to be sold down to Novo Nordisk. And then, the Novo Holdings will hold the rest of Catalent, and it’ll be run the way it’s run today. And we’ve had — I am — have had direction discussions with the senior management at Catalent, and then I’m quite confident that it is business as usual with them.

So, we’re very, very good about that. And then generally from a supply perspective, I will say what we have done together over the last, since, well, 2018, at the beginning of this journey, from a manufacturing and CMC perspective, yes, would be nothing other than miraculous if it wasn’t for the fact that it’s science and hard work-driven. And as we sit here today, we’re done a — really a brilliant job of serving the community and we’ll be continuing to do a brilliant job of serving the community over the course of this year with our partner Catalent, and we’re feeling very good about where we are.

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

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

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

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

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

Dallan Murray: Oh, average age of loss of ambulation. I think, Louise would probably have better data than me, but it would be depending on different publications in the 11 to 12 range. Louise, is that right, from me?

Louise Rodino-Klapac: Yes, some are slightly earlier. To your point, there are some differences. Yeah.

Gil Blum: Thank you, Louise.

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

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

Douglas Ingram: So, a couple of things, yes, there are essentially two issues at the agency at the same time. One is modifying the label to expand the label and to provide access to a much broader population of patients. And as we said, and it bears repeating, our BLA supplements requested the removal of all age and ambulation-related restrictions from the label, because we believe that’s founded on science. And of course, the second question, then is this the view that we have satisfied the requirements for our confirmatory trial and that the entire approval should be translated from accelerated to a traditional approval. There are many different scenarios there. There’s obviously going to be dialogue about the breadth of the label, and then of course there’ll be this dialogue about what portions of that are confirmed for traditional approval and what portions of that are confirmed for an accelerated — will remain an accelerated approval.

So, there are many iterations. We have a strong view on what we think the science justifies. So, first from an administrative perspective, the timelines are identical. So, we have a June 21 target completion date. That is for both of those issues. So, we’ll address both of those issues with June 21. And we’re very pleased with June 21, as you know, because we had them guiding people to end of August from that perspective. On the substantive issues or what’s going to happen in the review, that’s going to be subject to the review and we’re in the early days. Again, I’d say we’re very pleased at least with the engagement of the division thus far, but we have more work to do and more discussions to be had and I don’t want to over promise before the end of this.

I will also say, there are a lot of different iterations from our perspective. Priority number one is the broadest possible label. So, as between the two issues that we’re discussing, we are first and foremost focused on the broadest possible label, giving the potential of access and hopefully a better life to the greatest number of patients. And then, of course, we also, it’s important to us, but the secondary issue is translating this from accelerated to traditional, and the breadth of that will be a separate discussion. But we have more work to do and more discussions and work to do with the agency, and June 21 will be our return date on all of that.

Operator: Thank you. Our next question comes from the line of Kostas Biliouris with BMO Capital Markets. Your line is now open.

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

Douglas Ingram: Yes, okay. Thank you very much for your question. First, let me be clear. I resist the assumption that we may only get ambulatory alone, of course, because we are at this point seeking a removal of the ambulatory restrictions. But to your point, ambulation is in the label today. And the question then is, what is — how do physicians determine what ambulation means? The short answer is that, that is left to the medical judgment of physicians, but there is good guidance in medical practice for that. It is based on functional assessments and functional tests. There are well-defined approaches. Probably the most common, perhaps the most gold standard approach is the definition from synergy, which is that there is a patient reported continuous use of a wheelchair without ambulation and then that is verified by the physician by the inability of the patient to walk 10 meters unassisted.

So, that would be a typical functional assessment that a physician would use to determine ambulatory status. So, this is an enormously difficult functional assessment and conclusion to make by physicians.

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

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

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

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

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

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

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

Operator: Thank you. Our next question comes from the line of Uy Ear with Mizuho. Your line is now open.

Uy Ear: Hey, guys. Thanks for taking my question. So, just going back to the exon skipping products, could you — I’m not asking for guidance or anything, but can you just help us understand on the first-half of the year, and the prior quarter year-over-year growth is relatively strong in the first-half, just wondering how we should think about the first-half of 2024 for those three products. Thanks.

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

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

Unidentified Analyst: Hi. This is [Rudy] (ph) on for Salveen. Thank you so much for taking my question. So, if the label for ELEVIDYS is expanded and the broader population opens up, how do you think the physicians might prioritize which patients to treat first in the context of their constraints? Thank you so much.

Douglas Ingram: Yes, that will be an issue that physicians are going have to grapple with. There are number of constraints. One of the things that you asked that I remember is that we need to ensure that we are always prioritizing great outcomes in safety over, for instance, short-term revenue. So, we need to make sure that physicians — and physicians will know that they’re going to certainly consider this, and they need to make sure that they can not only infuse stations, but follow-up appropriately, and so, that will likely require them to prioritize stations as they consider this therapy. The short answer is that we can’t invade the process of medicine and decide for them what to do. There is a compelling argument on both, across the spectrum.

On the one hand, there may very well be physicians who want to prioritize very young children to get in and intervene before damage is done. On the other hand, the non-ambulatory patients and later patients, there is a race against time in those stations. And so, getting to those patients, and stopping damage before its too late is extraordinarily important. So, these are going to be difficult decisions physicians are going to have to work that out. And I’m sure there will be whitepapers and discussions amongst our leaders on that topic. The issue today is a slightly different one. The prioritization today, given the label that we have is to ensure that we get kids on the label, and this really comes from the physician more than from us, to get kids on the label before they age out and then the frailty won’t be available to them.

So, if you look at the bias here, the bias tends to be in this type age range of four and five to be in the later ages, because we’re really trying to get to those kids through ADOC, get through the administrative process will age out to six years old. The good news is that if we can expand this label that issue goes to the side, then we will have to deal with the other issues and then prioritization and like. But it ultimately will be a physician’s decision and the issue of the practicing medicine for physicians.

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

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

Douglas Ingram: Yes. This really isn’t a capacity issue right now. So, I think as Dallan commented in his opening remarks, the label that we have today in this population is really a fairly unique population. First, as we call know, it’s a very narrow age range, four to five years old, but that alone doesn’t really describe the unique nature of this population, because beyond that there is a significant percentage of those patients that are not yet diagnosed. And so, that makes it unusual. And when they’re diagnosed, remember, they’re not all getting diagnosed on four years in one day. Some of these kids are getting diagnosed until they’re five. And so, what does it mean? It means that a family is faced with what is very likely the most devastating piece of news so far in their life has to come to groves with that news.

Then understanding well enough, and then go through the administrative process that exists to get approvals, to get antibody tests, to get an infusion date and to get infused. So, this is a really unique population in light of that, obviously give a shout up to the team, it is particularly impressive when one considers that we did $200 million in that product revenue this year. So, what Dallan was really talking about, when we were talking about, this is just simply that as we work through the prevalent population, this is a really unique population, and much narrowed than you might imagine the four to five. And so, by the middle of this year, assuming now label expansion, you would get to a place where you begin to be treating the incident population as opposed to some abolished prevalent population in this group.

Now, the good news is that we have a June 21 date for our request for label expansion. So, hopefully by July we will have a broader label, and we will be able to serve a much greater percentage of the population.

Operator: Thank you. Our next question comes from the line of David Hoang with Citigroup. Your line is now open.

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

Douglas Ingram: So, we are excited about where we are from a suspension perspective. There’s still a ton of more work to do, but a couple of things to think about. We are very advanced actually in those suspension works that we are doing, not just SRP-9001, but we are actually getting great results from a suspension perspective with some of our limb-girdle programs. A couple of our sarcoglycan programs actually transitioned through suspension, and we are making great progress there. When we focus specifically on ELEVIDYS, we are in engineering realms right now. On suspension, we have done 500 liter, we are doing another 500 liter. We will start in the next month or so, 2,000 liter. We are so far getting not only really tremendous enhancement on yields, but really good product qualities.

If all goes well, our goal is to have this suspension process available commercially by 2026. That’s a moon shot goal on our part, and we are keeping the patients front and center, we are going to try to move as fast as possible. But hopefully we have the history to prove that we can cope with audacious plans and serve them. So, we are really excited about that. As far as what that might do, both from a capacity perspective as we go around the world with our partnership, and a COGS perspective, that’s going to require more work and more clarification as we get these runs done, but it won’t be modest. It will be multiples. And we are seeing multiple times greater yields with suspension than we get with our ICLS process, which Ian mentioned; filter it right now and 80% margin.

So, you will probably hear in my voice certain amount of enthusiasm for our manufacturing approach and our suspension approach, and it is still early days and we are just in engineering realm trying out. But we are very, very excited about this could mean for our ability to bring this therapy across the world and at a lower cost of goods as we go across the world.

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

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

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

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

Douglas Ingram: No, we shouldn’t. It doesn’t read out until 2026.

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

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

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

Operator: Thank you.

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

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

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

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

Dallan Murray: No, I think broadly speaking, you’re exactly right, Doug. It’s — we’re not seeing a real major change in terms of the patients coming in. It is, as we set up, we’re on a small population. And so, as soon as they’re getting diagnosed and have had their discussions with the docs, they’re coming in through the enrollment forms. And so, we’re just working through those patients as fast as they can — as we can, prior to them aging out. But no major differences in for example, there wasn’t a big kind of bolus of patients that initially came in, and now that’s different. It’s just a — it’s been a steady clip, essentially.

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

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

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

Dallan Murray: No, Anupam, it really hasn’t changed all that much. There’s obviously more than there was then, and there’s a higher proportion of sites that have dosed, but we’re actively looking at this on a daily basis, and we have this flexible model where we can bring on new sites, get them trained and up and ready as needed. So, we’ve got more than enough sites up and running and we’ve throughout — we’ve got great geographic coverage, but the team is also ready to support and serve as needed out there.

Douglas Ingram: I really do want to give kudos to this team for where we are. The — I think everybody knows the goal was to try to get to 50 — as much as 50 sites in 2024. 2023 — by the end of 2023, which would have been — would have been record-smashing for a gene therapy launch, and that there was going to be this aspiration that maybe someday we could get to 70 sites that would be trained and up and running. And this team got, as you know, to over 70 sites in 2023, but also the way they got there is something that gives me an enormous amount of pride, which is, as I said earlier in this call, recall, we don’t prioritize revenue over patient safety and great outcomes. Far more important for us to ensure great outcomes, and this team has done a ton in that direction.

These 70 sites that are activated because they’ve all been well-trained, they’re in good shape to be able to safely infuse this therapy and get good outcomes and consistent outcomes, which is important. We have a very laudable safety profile for a full body infusion gene therapy, and we want to ensure that remains the case over the long-term, not the short-term. And then, of course, there’s a lot of other programs around that, the ability to access experts so that every physician has an opportunity to get the right kinds of information to inform the way they not only infuse, but monitor patients and react is something that has been — that is unique. I’m not sure anyone else has ever done the kind of work we’ve done. So, we’re in great shape right now to serve this community and serve it responsibly.

So, I’m really proud of where the team is right now. And frankly, it also explains our revenue in 2023.

Dallan Murray: Thanks, Doug. And as you were speaking, that team did get us just a direct answer to Anupam’s question. And we’re closing in on 60% of the sites have dosed. So, it just, exactly as you said, it’s just increasing as we go.

Anupam Rama: Okay. Thank you.

Operator: Thank you. I’d now like to turn the call back over to Doug Ingram for closing remarks.

Douglas Ingram: Thank you, Shannon, and thank you all for joining us today. Thank you for your insightful questions. We appreciate it. At the risk of repeating myself I think 2023 was an extraordinarily important year for Sarepta. We — a lot of folks on this team, in concert with the patient community and investigators and physicians, frankly, moved heaven and earth to get us where we are today, which is, I think, a fast-maturing, fully integrated biotech organization committed to bringing a better life to patients with Duchenne muscular dystrophy, limb-girdles, and other serious rare diseases. 2024 is actually going to be even more significant if we’re successful, and that’s going to put us in a position where we can do a lot of good for a lot of rare disease patients and where we can reward those who have stuck with us and invested in a better life for these patients.

So, I will remind you with the — if we are successful this year and we broaden the label for ELEVIDYS and we can meet our goals this year. We are going to leverage our acumen and our financial strength and the talent of this team. And through both advancing our internal pipeline but looking to external innovation, we will have the goal of growing even after ELEVIDYS. Not incrementally, but in multiples. So, we are going to build for ourselves a very big ambition if we are successful in 2024. With that said, we need to focus on 2024 and be successful, and the team is prepared to do that. And I look forward to updating you along the way as well. So, thank you and have a lovely evening.

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