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

Hi, this is Marty Auster. I'm the lead smid-cap biotech analyst at Credit Suisse. Thanks for joining us at the 29th Annual Credit Suisse Health Care Conference. I've got Doug Ingram, CEO, along with some members of the Sarepta Therapeutics team. Very happy to have you here today, Doug. I guess for the folks listening in, haven't gotten one yet, but I think this one might be different. If anybody has any questions they'd like me to work into this fireside chat, please send me an e-mail. It's martin.auster@credit-suisse.com, and I'm happy to try to work in some questions as they come in. But with that, I would like to turn it over to Doug. Thanks again for joining us. And I guess I would just open with -- most of the questions we get on Sarepta over the last year or so have been around 9001, the micro-dystrophin gene therapy, but there's obviously a lot more going on at Sarepta and there's a bigger vision beyond just a single gene therapy program. So maybe give you a chance to kind of intro the company and kind of talk about that big picture.

Sure. Thanks a lot of that. Well, I -- 9001 is extraordinarily important to the company, of course, and it's important to patients with Duchenne muscular dystrophy who are waiting for a transformative therapy like a gene therapy that's SRP-9001. But to your very good point, we have a broad strategy to bring therapies to and transform the lives of patients with the disease across both Duchenne muscular dystrophy, which is near and dear to everything we do. But beyond that, to other rare diseases, we've got limb-girdle muscular dystrophies and a host of other diseases that we're working on, both from a gene therapy perspective, and currently, RNA, but we'll move RNA even into other areas besides DMD as well. We have over 40 programs between RNA and gene therapy. We are doing 2 things at the same time in our RNA therapy. Right now, we're focused on Duchenne muscular dystrophy. We've got both our base technology, the PMO technology that induces exon skipping and creates a truncated form of dystrophin that benefits kids. We have 2 approved therapies there. If all goes well, by early next year, we'll have a third therapy there, and we can keep doing that. And then we have a next-generation version of that, which is a peptide-conjugated version of the same therapy. So that's something called the PPMO, and the goal of that is improve the penetration of the therapy into the cell, greater tissue exposure, greater dystrophin. And if all that worked well and worked safely, it would be transformative to patients with DMD and potentially beyond DMD and other therapies. And then we've got this gene therapy engine that we're building with a number of different pillars, the first of which is, of course, pipeline. We've got -- the lead is SRP-9001 for DMD. We've got limb-girdle gene therapy, 6 of those. And then we have a host of other ones behind that, well over 20, about 27 now, focused on gene therapy. We have manufacturing. If you're going to be serious about gene therapy, you've got to be serious about manufacturing. We have spent an enormous amount of energy and capital and focused building expertise around manufacturing and building what will be ultimately one of the most significant capacities for gene therapy that exists. And of course, we're gathering both the expertise that we can bring into the company and tools that can advance gene therapy, and we're doing lots of interesting things there. We've done 22 transactions this year, 20 of which were done during the pandemic. So our goal is to be an enduring global leader in genetic medicine focused on rare disease, both in RNA and in gene therapy, advancing our PMO as a next-generation version and then building out this very significant gene therapy engine that's taken up a lot of our energy and focus over the last few years.

Great. Okay. I'm going to expose my hypocrisy and then spend the rest of the time talking about 9001.

I expected that.

Well, I wanted to do a couple of things. I wanted -- I mean, obviously, you guys had -- you just had your earnings call last Thursday, and I think that there was -- I think that call -- things got a little circular in terms of explaining. So I want to try to like walk through and get a kind of a clear picture of the development path. I thought, why don't we start -- let's talk about the body of evidence that kind of supports the basis for kind of optimism around that program, just from a clinical -- from an efficacy and safety perspective. And then let's shift it more towards the development path and the regulatory path and those customers -- and those customers talking about -- yes, sorry go ahead.

And when we get to that latter part, what I'll do is I'll sort of walk through a time line that explains how we got where we are right now and why we think this is a really good result for now. And the short answer on the evidence set is, remember, first, we -- SRP-9001 has been in development and design for a very long time, really with Dr. Louise Rodino-Klapac back when she was at Nationwide Children's Hospital, building a very elegant approach to treating children with Duchenne muscular dystrophy through the use of this form of dystrophin called micro-dystrophin, which in many animal models shows that it's not only potentially safe but transformative, and you can see that across a number of different animal models. And that all was based on a natural history set that came out of the '80s. And then from there, when we got that optimized. And by the way, of course, over that period of time, Louise went from -- Dr. Rodino-Klapac went from being at Nationwide Children's Hospital, along with Dr. Jerry Mendell, to coming over to being our Head of Gene Therapy and running our Gene Therapy Center of Excellence in Columbus, Ohio. We then went to patients, and we dosed a small but a very important proof-of-concept trial, something we called Study 101 in 4 patients. And the first thing we saw was -- the biggest question with gene therapy, particularly full-body infusion gene therapy was, number one, can you do it safely, right? Because it's an enormous amount of therapy. Let me be clear. This is trillions times trillions of viral capsid. Can you do it safely? And equally challenging, can you get the gene to the right place and have it stay there and have it actually make a sufficient of protein to make a meaningful difference? Because you're asking a lot. This is not like an injection in the eye or something. This is a full-body infusion that has to go to cardiac muscle, diaphragm muscle and skeletal muscle. And the short answer in these first 4 kids is, it was brilliant. They had expression levels that were approaching normal levels of the dystrophin. But in this case, micro-dystrophin, the genome copies made that point. Can you get it to the right place? We had 3.3 genome copies per nucleus. It was well tolerated, and we weren't seeing some of the issues that some other programs had been plagued with. And then functionally, we've looked out both at a year and at 2 years. And the short answer on these children all the way out to 2 years is that they're all improving on all functional endpoints in significant ways versus baseline and significantly greater than what you would have expected from natural history, giving us a lot of excitement and forcing us, frankly, to think aggressively about how we bring this therapy forward as kids are waiting and frankly, degenerating every day while they wait. So we started this next trial, 102. 102 is a blinded, placebo-controlled trial using clinical material from Nationwide Children's Hospital, and it's a 41-patient trial. We'll have last patient last visit in December. It's proceeding very well even in the face of this pandemic in large measure because the children were all dosed before the pandemic arose for the main analysis. And we'll have results from that study, both efficacy, is the therapy efficacious? Is it transformative like we imagine that it is? And is it safe like we imagine it is? And we'll have that early next year, right? And that -- and so that's where we are with that. And then if you want to sort of lean over in what we need to do next, which kind of gets to some of the updates we made recently, I can do that, if that makes sense for you.

Yes. So maybe to start that conversation and talking about the time line, maybe talk about from your perspective, from FDA's perspective. But what is the agency looking for to support registration of a gene therapy for DMD boys?

Well, I would say, the short answer on that one is that we haven't had those -- that dialogue with the agency yet. So please -- so I'd really want to be careful that people don't misread into anything I say, some tacit understanding with the agency that this is the development or regulatory pathway for the therapy. Indeed, we have explicitly not had that dialogue with them. And we've -- I think if I'm not mistaken, our briefing book said we're -- this is our view, but we don't want to have the dialogue because I think that's a better discussion to have with data in hand. And I think it will be a much more tangible, real conversation than trying to have a theoretical discussion in advance. But I can tell you where we were and where we are. So we're -- so remember...

And also address conceptually what you're trying to put together to bring to agency when you have that conversation.

Okay. So understand what we're doing. Number one, we're in the summer of 2020. So think about where we are. We've seen really exciting results from Study 101, first 4 kids and very, very excited and giving us a lot of confidence. And then giving us confidence in Study 102. That's our placebo-controlled trial, and that trial is going to track to functional results and safety results and expression results early next year. Now the thing that we definitely have to do is dose kids with commercial material. So the first 2 studies have all been dosed with clinical material out of Nationwide Children's Hospital. It's very similar to -- if you look back at time, the sort of AveXis Zolgensma approach. Zolgensma and AveXis started it in Nationwide with clinical material, evolved over to a very similar process but a scalable process using the same kind of adherent [indiscernible] approach, but using this 3-dimensional structure of iCELLis, so they can make more material. We're doing the same thing. And we need to dose kids with that commercial material, and we need to prove that the commercial material is -- operates in a similar way from an expression and safety perspective to what one would see with the clinical material. So we're sitting in the summer of 2020, and we have proposed sort of a larger study for us, about a 70-patient-or-so study, a global study because we have global aspirations, of course, with our partner, Roche, and a placebo-controlled trial with the same age range of children but using commercial material. It's doing a lot of different things in this study. It was going to be for our global purposes and approvals. We also realized we need to fairly rapidly validate the commercial material from an expression and safety perspective. And so we're going to do an interim cut of that material on about 10 patients early next year. And we sat in the summer of this year, and we realized we're in the middle of a pandemic. And there is a real chance that right as we are going to start Study 301, this pandemic is going to go through a second wave, and there's 2 problems with that if it occurs. One is we're putting lots of kids at risk and putting even placebo kids potentially at risk right as there is a spike. And also, the integrity of the study could be risked if it turns out, we're launching right at the wrong time. And then we realized, we should do -- we should split these ideas up. We should do 301. So just so we're clear, I think there's been some misunderstanding that somehow we're walking away from 301. 301, we're going to start up 301. 301 is going to happen, that placebo-controlled global study. Well, let's pull out the commercial material validation study, the -- let's -- looking at expression and safety, let's pull it away and have a separate study, Study 103. So we tracked into our September meeting with the agency, we had a Type C meeting with the agency. It was entirely on the paper. So there wasn't any lab dialogue for this meeting. With the proposal, we went -- we this 301 proposal, we had some other things too, but we have 103 for commercial material validation, which is really important that we see this as soon as possible next year. And of course, I think everyone knows what happened. In early September, the agency questioned the approach that we were taking to our potency release assay, which means we couldn't start any study until we had that results, certainly not with the commercial material that we had built with our iCELLis units and our hybrid manufacturing model. Now what -- technically, it could take many months to resolve that issue. And others have had much longer periods of time to resolve some of these potency-related -- potency assay release-related issues with the agency. And to us, that would be an unacceptable result. As we all know, the children are waiting for this therapy, and we need to get that material validated and see the performance of the commercial material and see if it acts the way we envision it well with clinical. And we have lots of good reasons to believe that. We've got lots of CMC that tells us they should act the same. So we were able to get -- and I really want to give kudos to the division as well. I know they're very stretched. We were able to get an actual live meeting with the division, which has been somewhat difficult recently, literally only 2 weeks after this setback that we had. And we made a decision at that time that we need to go into this meeting, and if at all possible, come out of that meeting with a solution because in the absence of a solution, who knows when we might get another meeting where we could explore these issues. And so we made the call going ahead as #1 issue, we need to understand better what the division's perspective is on the approach to potency assays and solve that issue in the meeting. And number two, we need to make sure that we can start our commercial material validation study that we've pulled aside, which we call 103. We went into the meeting, and I'm proud to say that in relatively short meeting, we were able to get to both of those answers. We understood better what the agency's perspective was on the potency assay approach. We proposed a solution that they accepted. We built the data for that already, so that should be good to go. And we suggested that we would like to start 103, and we'll start 301 after we get a data readout on 103, and they concurred in that result. And so that's where we are right now, which means that by relatively early next year, depending on how fast we can recruit and dose patients in 103, we will have the readout of 102, so we'll have functional results of 102, if all goes well and science cooperates, showing that this therapy is transformative to children with Duchenne muscular dystrophy. We'll have safety results from 102, and we'll have the material validation results from Study 103, both from an expression perspective and from a safety perspective. And then we'll do a couple of things at the same time. We'll obviously start Study 301. So this does affect maybe a 5-month delay or so on the start of Study 301. But we'll also sit down with the agency with data in hand to talk to them about what the development and regulatory pathways...

So a couple of things. Is the -- well, it's probably the second answer, but I'm going to start. Is the potency assay question, is that completed within the timing of 103 versus 301? I guess, what I want to start with, though, is could 301 start today? And if so, why are you choosing to do it sequentially and conduct that study after the -- kind of the answer has come out of 103? And the second part of that is, I think you said on the earnings call that 301 would likely be required for European approval. So there's been more guidance from Europe about specifically what will be required for approval. And so I just want to make sure I understood that. Was your partner then involved in kind of this step-wise process of 103 to 301?

Yes. Our partner is involved. So we -- obviously, we communicate closely with Roche. They are well aware of what we're doing and understand and concurring the approach that we're taking. Yes, and we've taken advice outside the U.S. and there are a number of places around the world where the -- we would need 301 completion as a predicate to an approval. So we need -- and there's lots of other good reasons why 301 needs to start. So let's just be very clear, we're going to start 301. And 103, the short answer is one couldn't start another trial right now without getting the concurrence of the agency, which would obviously require an additional lot of other things, setting up more meetings and that probably wouldn't be able to happen even this year even if we wanted it. And in any of that, it turns out, not that we're overly passionate about this, but our concerns about the second wave are not unfounded right now, it's upon us right now not only in the U.S., but obviously in Europe as well. So our goal right now is to get Study 103 up and running as soon as possible to get kids dosed on that. And then -- so by as early as possible next year, we have both functional results from the construct, safety results from the clinical material, safety and expression results from the commercial material. And then we'll sit down with the agency and talk about next steps.

So is it that FDA would have -- would like to -- I'm trying to understand the Study 301 start would have required agency input sign off, et cetera. And you need that commercial validation data from 103 to kind of facilitate that pathway? Or it just would have taken longer to start 301 than 103, so it made more sense to do the 103 pathway?

It would start -- it would take longer to start 301 to 103. It would create more risk both for the program and the patients. Any study that we would start requires the concurrence of the agency, obviously, to start. And we went in with the -- we went into this -- we were stalled as a result of the minutes from the September -- early September meeting. And we went into the later meeting, realized that we need to get -- we need to be surgical in what we ask for, so we get the information most valuable to the program and the patients now. And from our perspective, while 301 is very important, and I don't want to suggest for a second that it's not. We will indeed start it as soon as it is reasonably possible and do that with the concurrence of the agency. It is absolutely necessary that we dose children on the commercial material and that we get the -- we see the performance of the commercial material to see if as we -- as our CMC predicts, it performs in the same way one would have anticipated from the clinical material.

Okay. And so it sounds like there's been European guidance to Sarepta and to your partner around setting through on completion in advance of filing approval. In the U.S., it sounds like you haven't had those specific conversations. And so your interpretation is FDA is maybe flexible around -- a little more flexible around the review, and they're going to let the data drive their review as opposed to having a fixed kind of outlook in mind before you start the clinical program. Is that a fair way to think about it?

Yes, I mean I wouldn't -- again, I don't want to create the impression that we have some tacit understanding with them that we don't have. I just would say we haven't had this conversation with the agency.

Okay. So Sarepta's view is that the approval path could be data-driven in the U.S., whereas it's kind of more protocol-driven in Europe?

I think that's a much fair way to say that.

Okay. And so I guess, can I ask you to kind of frame what you consider -- what is that robust data set? What -- like, if you were to imagine some parameters around that, what does that sort of look like? And then I guess you referred to the Zolgensma approval, and that was a somewhat accelerated approval. There's similarities and there's differences between these diseases and these programs. I'm curious how you've kind of thought about how much of a comp Zolgensma is to 9001.

So Zolgensma has been, for a large measure, a significant blueprint. And -- because remember, we're in a nascent field, of course, with gene therapy. There aren't that many examples one can use. And certainly, Zolgensma is a -- there are differences between the disease states, certainly, and between the therapies themselves. But the programs are strikingly similar and not by accident. They both came out of Nationwide Children's Hospital. They both started with hyperstacks. They both evolved over to commercial iCELLis units. That's not by accident. I mean we thought it was a very intelligent concept of AveXis to have chosen iCELLis for the reason that, that is a commercially scalable approach to manufacturing that doesn't get too far away from -- technically from using hyperstacks. So you're taking less risk. There are less reasons why you would envision the commercial process and the commercial material to act in any way different than the clinical material. So in a lot of regards, I think we've looked at the Zolgensma approach as something that's been at least informative to us as we've tracked forward.