Sarepta Therapeutics, Inc. (SRPT) Earnings Call Transcript & Summary

Hey, everybody. It's Alethia Young here. I cover large cap, small mid cap biotech here at Cantor. Very happy to have Sarepta Therapeutics. It probably needs no introduction, but I will introduce them anyway. We've got our main man, Doug Ingram, here on the left square if you could see my box, President and CEO; and in the lower square, you've got the man of the hour, Ian Estepan, who's SVP, Chief of Staff and Corporate Affairs. You got to keep the intros lively at this hour, right?

I want to just kind of start off, Doug, your gene therapy really needs no introduction, and we'll obviously we'll get into those in a fair amount. But I think one thing that's important to talk about is the breadth of the pipeline and the platform technologies. So talk about that and then just also talk about some of the upcoming catalysts and milestones over the next 12 months since you do have a lot, and then we'll just work through them all.

Right. As you know, we have 2 platforms. I'll talk primarily right now about gene therapy, but I would love to give a little bit of a shout out for the RNA platform as well because things are going quite well there as well. On the gene therapy side, a very good point. We have a very deep pipeline, about 27 programs between development stage programs and preclinical programs in gene therapy, and we're doing that because we're building this gene therapy. This is during gene therapy engine, that's really built on 3 things. It's built on this pipeline itself and to be able to advance it as rapidly as science and regulatory requirements will allow. It is significantly built on this concept of manufacturing as well, which is the -- and that's why we have -- we've really focused a lot on process, analytical development and capacity as well. And what we've seen over the course of this year, we started this year knowing we had a lot to do, but of course, not knowing that a pandemic was upon us. The great news is -- there's really not a lot of great news in a pandemic, but the great news is that we've been able to adapt to that pandemic, and we continue to hit our milestones. Broadly speaking, we had a recent issue, of course, which we'll talk about with respect to commencing our next trial. But in all other regards, things have gone quite well for us across this year and making a point that we're really building a platform and beginning to confirm that this platform is working. We've seen -- before this year, and then we got it reconfirmed in June with the 1-year data of the results for the safety expression and function on the first 4 kids with SRP-9001. And then we saw earlier this year, both to the low dose cohort and then the same dose cohort with SRP-9001 in our limb-girdle 2E program, reconfirmation of this ability to use rh74 of this construct, this promoter or this design approach to deliver neuromuscularly a really robust amount of tropism and get the gene construct to the right place and make an enormous amount of the protein of interest. And then what we see from a manufacturing perspective is that we not only are making enormous amounts of headway with manufacturing but as we look at it across constructs, what we're seeing is that our time lines are collapsing as we're learning. So for instance, the amount of time that it took for process development for SRP-9001 was significantly longer than limb-girdle 2E. That was -- I'm probably going to -- take this with a bit of grain of salt because I may be -- this may be within range, but it probably took us about 1/3 of the time to do all of the process development work for 2E that it took for SRP-9001, so we get to benefit from the prior work. So we're building this concept of a platform and an engine and at least to date, the data that's coming in is -- continues to confirm that we're taking the right approach across the gene therapy landscape that we're working on right now. So we're very excited about that. I can keep talking or you can ask me questions, but I'm always happy to go on a long monologue so...

Okay. Yes. Let's, I guess, ask the obvious question. I've gotten some questions about, which is the potency as per review. And I just want to get your level of confidence on being able to have the information that the FDA needs.

Yes. So first, let's put it in context because it's important to note that in one sense, the reason that we're here right now addressing this issue is that we've made a lot of great progress in other places. Last year, as you may recall, we were doing all the process development work and assay development work for SRP-9001 micro-dystrophin. And the big question there was, can you get there? Can you get the process development done? Can you get the yields in the right place? And we kept saying, we will get there. We're confident about it. We're not quite there yet. The great news is we are there and we got there. We entered this year with a bunch of great work in process development and built a lot of the ability to have future capacity, and then we did all the assay development work and when we started GMP runs. And then those GMP runs begun to finish up in July as we had anticipated, so that we could start our next trial. And then we have the meeting with the agency this Type C meeting, which was on the papers and what we received when -- at the date of the Type C was minutes that suggested in addition to some other issues that can be addressed, the fact that the agency would like a different assay for potency than the assay that we proposed. This is a very resolvable issue. This from our perspective, while we need more dialogue with the agency, this is not a fundamental issue. It's not as if they complained about the fundamental underlying material and the potency of it, they complained about the particular assay used. And so we just need to have dialogue with them. We have the assay that we used, we think is very fit for purposes and it answers the questions that a potency assay is supposed to answer, which is, first and foremost, that the construct gets to the right place and gets there in a very consistent way. And then it answered the second question that you have to answer with respect to potency, which is that when it gets, that it delivers, the gene construct -- that the gene construct has desired biological function that you intend. In this case, it's the making of micro-dystrophin. But if the agency wants some other or orthogonal assay to show the same thing, we're happy to do that. We have numerous assays that would be fit-for-purpose for that. And so this really -- at least as of now, our view is this is really more a process issue and a timing issue than perhaps anything else, and we just need to get in front of the agency and talk. Now the uncertainty around that is because the pathway can be a little uncertain. If you look out sort of at the extreme, if you had to go through a formal dispute resolution process, that's about a 4-month process to have that completed. I think there's a low probability that you have to do that. I don't see any reason why a formal dispute resolution process would be necessary here. The most likely formal process that one would take it as a Type A meeting. The Type C meeting we just had was done on the papers, and that is right now, given the stresses of the agency and how busy that group is in for the number of INDs as well as the confounding variable of the pandemic, how under resourced they are, that was on the papers, and that's typical of companies right now with Type Cs. A Type A meeting will be live. So there will be ability to have a live dialogue. That's about a 60-day process. So that's, I think what we should all assume is probably the most likely outcome that we have a 60-day process. We can talk to them and get resolution on these issues and then get that program going. There's always the possibility of an informal process that is sooner. But given the priorities and given how busy the agency is, I don't think we should count on that right now.

Okay. And so I assume you probably have reached out for a Type A meeting, and then that's like 30 days to book it and then -- or is that 60 days including the booking time? I guess, kind of is there still a possibility you can make the end of the year or should we be thinking about this kind of rolling into next year?

I am not willing yet to give up on the idea that we can start this year. I mean, I will be -- let us all be realistic. The fact that we were unable to commence our next trial after our Type C places the end of the year at risk. But I don't think we're in a place right now, we ought to assume that, that is definitely off the table. We're continuing to move clinical operations and the like, continuing to track with the goal of just commencing this trial this year, but it will be subject to our ability to have dialogue with the agency, come to an understanding on the assay and then commence the next trial.

So has this 60-day period started or not?

It's approximately 60 days. I would look at approximately 60 days from now.

Okay.

That was cagey. I'm going to be cagey about that. You can imagine. For anyone who's worked with Sarepta, you would probably not imagine that we are taking the casual approach to this. We are going to move as fast as we can and as diligently as we can as an organization. I'm sure everyone would expect nothing less of a company working in a rare fatal disease like this.

Yes. I know you guys don't play, that's for sure. So we'll see how it shakes out. But I guess, we've gotten that question a lot. And I guess I want to just take another high-level question, and I know it's sort of a bear case that I've heard, all the -- there's a lot of pushback, seemingly from approvals with the FDA across the board actually, but in particular, gene therapy. And so can you just tease out for us your situation versus like -- maybe we say like a BioMarin or others who've kind of run off behind tougher times?

Yes. So I know there is this concern that exists in the community right now given some of the -- what would appear externally, and ours is no exception to that, surprises in development in cell and gene therapy. There has been this concern that's arisen that perhaps the agency is now taking a different perspective on cell and gene therapy versus the way the agency was looking at cell and gene therapy just a couple of years ago. I am among them those who do not believe that's the case at all, and we can see that through the public comments of Dr. Peter Marks, who really has been one of the significant leaders in driving the FDA's vision in cell and gene therapy, started this some years ago. I think the role that Peter Marks has played and the role that the FDA's flexible and thoughtful guidance in the LNG therapy have played in spurring both investment in gene therapies and innovation in gene therapies has been one of the big drivers in the last few years. And you will see from public comments that Dr. Marks is making, that he has literally, explicitly said that not -- he has not changed his view on that. I think recently, there was a blog where he was quoted as continuing to be very focused on advancing cell and gene therapy. So I, for one, do not believe that it's -- that we should take from some of the setbacks and some of the disappointments that we've seen over the last period of time that this is some kind of change in perspective at the FDA. I do think it may very well result from how busy the agency is. The FDA's perspective on gene and cell therapy, and it's very flexible and visionary approach to it, I think, spurred an enormous amount of focus in investment in gene therapy and innovation and that resulted in an enormous number of INDs. I don't know the exact number, but last time I was pretty to public information, it was something like 900 INDs in cell and gene therapy. And that places an enormous amount of pressure on the review division and in this case, OTAT. Then you layer on top of that, the pandemic and the fact that pandemic is going to create a distraction inside of the FDA generally and certainly inside of CBER. And of course, we all know CBER's playing a crucial, crucial role and trying to solve this pandemic with vaccines. So I think that -- if we see a delta between the vision, the agency has for cell and gene therapy and some of the recent the surprises that have occurred, one would -- I think, at least, based on what I've seen publicly from Dr. Marks and others, I think one should chalk that up mostly to how busy the organization is coupled with how much additional pressure is placed on an organization by the unfortunate reality that one has to address this pandemic.

Okay. Well, obviously, yesterday, I think [indiscernible] all the days on together now, but there was Pfizer data sometime this week and I just wanted to get your perspective on that update and the competition in general for obviously, CMDT therapy?

I'll start with the first statement that -- the competition is good. I mean the great thing about competitors are they are the burning platform that keeps us moving as fast as possible, not that we should have -- not that we should need a burning platform. We are -- we've got an enormous position in front of us every day, kids with Duchenne muscular dystrophy are degenerating and unfortunately, every day, some of them are being taken by the disease. But generally speaking, competition is a good thing. My understanding, although I didn't see it directly. I don't think Pfizer provided any new data in that update on expression or safety or the like. To the best of my knowledge, there was nothing new in there. And of course, it will not surprise you that we're very excited about our program. We think that this SRP-9001, for a host of different reasons, is differentiated -- positively differentiated from other program safety and expression and therefore, efficacy. But with that said, we're going to have to focus our time and attention on moving our program forward and making sure we stay on mission.

Okay. One more before we go to on PPMO. But Study 102, obviously, we're getting close to probably having some data in-house. So just question one, in light of dosing all the children, like what's your confidence level on safety? And then two, just again, your confidence level on that micro-dystrophin levels are enough to kind of translate into functional improvement, even though we don't exactly know. Tit for tat for micro-dystrophin?

Well, a couple of thoughts. One, look, we're -- I've drank the Kool-Aid. I'm very confident about where we're going. We have seen Study 101, so a couple of things. We've seen the results of Study 101. We've seen the 1-year data on the first kids. We know the preclinical data on the correlate between micro-dystrophin and how it was designed and how it impacts first, in animal studies, both in mice and micro-dystrophin and the golden retriever model, which is the largest the largest Duchenne muscular dystrophy model that we have and obviously shows very functional. We then look at the children. We see in the first 4 kids, a significant expression. I mean, nearly approaching normal expression in those kids and well tolerated. And then we see all the other indicia of functionality even before we go to the function, not only is it at the right place, not only is it significantly -- a significant amount of distribution there. It's properly localized to the sarcolemma. It is -- when you upregulate micro-dystrophin, you see an upregulation of the dystrophin associated protein complex, all the other proteins start coming together that should be there, but aren't there because dystrophin is not there and get another indicia of its function and then we look at the kids. And again, small data set, but all those kids across all of the functional measures. And when you look inside the composite of NSAA, the composite, the individual scores across those kids, we're significantly improving over the course of that 1 year, which gives us a lot of excitement. And qualitatively, if you see the kids on video, you would get excited about what this might mean for Duchenne kids. So then we started 102. We did the powering for 102 -- the powering, and it was well informed by our understanding of Duchenne. And I think we're very thoughtful in the design of that protocol. That powering was over 90% at the time that we did it. There's no reason to be any less confident today than we were then. The biggest issue probably during this year on Study 102 is just making sure that it executes, given the pandemic. The good news is the team and frankly, our investigators, both at UCLA and significantly, our principal investigator, Jerry Mendell, at Nationwide have done an enormous job of making sure that trial stays on track and intact and all the kids were dosed for the main study before the pandemic hit, that it addressed any out of window functional assessments. So the study remains viable and intact and powering is not a problem. And that will be last patient, last visit in December, and then we'll get to read it out in early next year. Obviously, very excited about that and very excited for what that could mean for kids with Duchenne muscular dystrophin.

So to follow-up on that timing, you'll get the readout and then you -- can you walk us through the steps from there out to what would be the best case scenario on potential approval?

Yes. There's a couple -- so there's -- the best case scenario for us is we rapidly resolve any outstanding issues with the division so that we can start the commercial process trial. That's the -- that is obviously the first next big rate limiting step. Then we start that trial. Then if all goes well and we get to the next year, hopefully, it's still early next year, and that depends on when we can start the trial, then we should have in 2021, 3 things, at least. We should have -- we'll have a readout on Study 102. So what will we have there? So placebo-controlled, blinded -- one-to-one, placebo-controlled, blinded study, and that should tell us -- assume that I'm right, my optimism, that this therapy is transformational for these kids and is benefiting them. And this is -- it's not only functional but significantly efficacious. We'll see safety from that trial, then we could have bridged data from the next study, the commercial process trial. We have the safety, but also not only the CMC-related information, but we would have actual biopsies of kids showing that we get the same kinds of expression from the commercial material as we would anticipate from all of our CMC work that we can show it, insight to you, that we're getting the same expression. And so then we would have that it's efficacious, that it's safe, and that the commercial materials bridge to the clinical material. And then on that basis, we would meet with the agency. And we would -- obviously, it would be our -- if we won on all those things, we would -- started to dialogue with the agency about being able to file for a BLA.

Got it. Let's pivot to PPMO. Well -- oh, you know what, let me just ask you this. It sounds like you might have a Type A meeting. I mean, will that give you an opportunity to maybe top it up with them a little bit and maybe address some of these concerns and issues and try to get in front of some of the things that blindsided others?