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

Good afternoon, everyone. My name is Gena Wang. I'm biotech analyst at Barclays. Welcome to our second virtual global healthcare conference. First, I wish everyone stay healthy. And I would like to thank all the participants: investors, companies, and also, particularly our event team and the corporate access team, who made this virtual health care conference possible. With that, I would like to introduce our next presenting company, Sarepta. With us today, we have Doug Ingram, President and Chief Executive Officer. We have Gilmore O'Neill, our Chief Medical Officer. And also, we have Ian Estepan, Chief Financial Officer. With that, I hand over to you, Doug, to give a brief overview of the company, and then we jump into Q&A.

And I'll be very brief. Gena, first, thank you for having us today. We're excited to talk about our various programs. As you know, for those who may be less familiar with Sarepta, we are one of the significant leaders in the use of genetic medicine, RNA, gene therapy and gene editing to treat serious rare disorders, really focusing right now on various muscular disorders with our lead programs in Duchenne muscular dystrophy and limb-girdle. So 2021 is going to be a mild, rich year for us. First and foremost, we need to continue to serve the patients, the Duchenne muscular dystrophy patients that we have therapies for. And I am very proud of the fact that we received our approval for our third therapy for another 8% of children with Duchenne muscular dystrophy called Myonexus very recently. So we're going to spend enormously have time this year continuing to serve that community. We're doing very well there. The growth is going very well, which is an indication of how well I think we are serving those patients. We have -- staying with that RNA franchise, we will have a readout in the second quarter on our potential next-generation version of that RNA therapy called the peptide conjugated, PMO or PPMO for short. And then, of course, we have the significant pipeline of gene therapy, the lead program at which is SRP-9001 for DMD using microdystrophin. In the first quarter, in fact, the early January of this year, we had a readout on our first placebo-controlled trial, effectively the first of any placebo-controlled trial of its kind. A blinded placebo-controlled trial looking at SRP-9001. I think that we missed the primary endpoint on function, which was a frustration to our regulatory strategy, because we have had this ambition that we might be able to accelerate that therapy to the community really fast if we had hit the primary endpoint. But we were very excited about the secondary endpoints, that what we actually saw when we [ profitably batch ] in the 4- to 5-year-old patients. And we have prespecified analysis for those change, as you would have seen. We strongly had statistical significance with a clinically meaningful benefit in the very short 48 weeks. So we are as confident as ever in 9001. There is a host of big milestones over the course of this year, that includes a readout, recall, Study 103, using our commercially representative process material, we'll have that in the second quarter of this year. We'll meet with the division on our next study. Our goal is to give the division -- right around the middle of the year and then hopefully start that trial shortly thereafter, which would be another placebo-controlled trial. And that trial will benefit from all of the learnings that we have on Study 102. And then at the end of this year, we'll have the part -- we'll have the end of Part 2 of our Study 102, and that will be enormously important to us as well. Trajectory analysis and analysis on 2-year data, for kids then have been on SRP-9001 for a significant period of time. And then beyond that, we encountered hurdles which we obviously have to do this year as well. So with that, I should probably open it up to questions, [ Gena, on this ].

Sure. Yes. Thank you, Doug. I think that's a great summary. So I will start with Study 102. It is unfortunate, but there are several thoughts. One is, when we look at the data, we did see the positive fiber also declined quite a lot compared to the early data. And so one question is, what is -- any changes the way how you measure positive fiber? Basically, what is the definition of a positive fiber? Is that the methodology change when you measure positive fiber?

We don't think we'll come down to a methodology change. Now we have become more sophisticated in our approach to doing protein positive fibers. We use an automated algorithm to cause -- to create more consistency. But I don't think that explains any differences in the study. I think what this really is, is it's a correlate with the fact that we have lot-to-lot variability, it's an artifact of that. So just to bring everybody up to speed. In our prior -- we had an open label, proof-of-concept study called Study 101 for children, one of the children was a significant outlier with really significant expression that's above what we would normally expect. So let's look at the first 3 children there. You get something in the 70% range, you'll have 70% range on dystrophin-positive fibers. And then on Western blot, you're doing about 53% less chance of normal of Western blot, really a significant amounts of dystrophin. When you look at 102, what we've shown in 102, is we're getting significant -- very significant, statistically significant expression, both for protein protease positive fibers and on Western blot, but they seem to be lower than what we saw in 101. That might be a puzzle to people on -- as you know, on the protein-positive fibers, we saw a significantly lower amount. And on Western blot, we had a very profound increase in dystrophin. We had about 21 -- 28.1%, but it seemed lower than 101. Why is that the case? That is an artifact of the titering and some differences in timing. In Study 102, we're using clinical material that came from Nationwide Children's Hospital. And for the main primary study, we used the titer nationwide used called supercoiled qPCR. Now it turns out with the benefit of hindsight, and we knew this in advance that this would might not be the case. There's a lot of variability in this -- in that titering. And we needed to tighten it up and get a more precise titering for -- on a go-forward basis, and we did that. We now use a linear method of qPCR, that creates a much tighter rate. If you go back and look at a loss in Study 102, there were 3 lots. One of them, when we do the backward look with linear, one of them hit the target, 2 of them were lower. And I think that really explain why we saw a lower amount of expression overall, both in Western blot and on dystrophin-positive players. Now what we've been able to look at right now, both are in crossover and 102, even though it's clinical material, it's the material out of nationwide, we use the linear to qPCRs, the release method for titering there. And then, of course, we're using the linear method for 103 for everything going forward. And we were able to look at the first 11 patients that crossed over. And sure enough, when you get the titering right, we don't have the dystrophin-positive fibers yet, that's still coming, but there'll be a correlate to Western blot and dystrophin-positive fibers, [ steady plus ] correlate. And what you see is essentially the same thing that you see in 101. 101, this first group case is about 53%. And sure enough, if we look at the [ cross ] locations, although there's variability, you're about need of 51%. So I think that, that answer really relates to the lot-to-lot variability in this artifact of that, which will -- which is essentially solved on a go-forward basis. That won't be an issue going forward.

Okay. That's very helpful. So that -- reaching my next question, the Study 103. You will report the biomarker and safety data second quarter this year. So what is your goal of protein level based on all the modified dosing? What is your goal for protein level and also positive fiber there?

Well, we don't really have a set standard. I mean it's -- look, what we're really looking for, broadly speaking, is good, robust expression, both in Western blot versus dystrophin-positive fibers and intensity. We're also looking at genome copies per nucleus. And then significantly looking at savings to make sure that the safety margin all makes sense. Really at the predicate to the comments in the Study 301, it would have been a more -- far more significant issue if we were intending to use the 103 as a bridge driving this therapy to kids immediately. Now we're really imagining as our base case, we could start Study 301. So what we really want to see right now is really good expression and a safety margin and a safety profile that's similar to what we've seen so far. And we're really, I will say, increasingly confident about the safety profile of our therapy. We've now treated over 55 children so far, far more than anyone else. It was a very consistent safety profile. So I do expect, broadly speaking, when we get the titering right, as we will have with the 103, we do expect that expression to start going up, getting closer to the range of what we would have anticipated on 101. But we don't have any actual sort of set standard to what it should look like. I don't know. While we look at 28%, and we say, that's a -- it's an artifact of the titering issue. Nevertheless, it's still a very robust expression. And I would point out that when we had -- just to remind everybody what happened with Study 102, as painful as it is for us to recall this part of it. We missed the primary endpoint. And we missed the primary endpoint pretty clearly for one significant reason, which was we had 2 populations in that study. We had 4- to 5-year olds and 6- to 7-year olds. And we did it. We've all talked about this. You and I have sort of talked about the same time. We knew those were different populations, and they were active. And so we actually had prespecified an analysis at 4 to 5 to 6 and 7 separately. What it turned out to be the case was that we didn't have 2 populations. Ironically, we had 3. In the 4- to 5-year olds, both the treated in the placebo group were almost identical in every functional measure. You could have asked for a better starting point for those kids in the treatment arm and the placebo arm. So very similar population, identical populations really. On the 6 to 7s, we had 2 very different populations. Even though from an age perspective, they were the same. From a functional perspective, they were very different. In fact, the p-value on those differences was a very significant 0.004. So different than they should have occurred in a 4x of thousand where the treated people were very severe and the non-treated kids were much milder. And therefore, it wouldn't have mattered what size then you would have had. You were never [ against these kids ]. And that made the overall analysis number. Now if you go to the 4 to 5s, this is my point on expression. Those 4 to 5s also had -- a significant number of those kids have the lower titers that gets us to the 28% of need. And it was only 16 kids in that study. And then these 16 kids, at what is this degenerative disease is a short period of time, 48 weeks, we saw a very robust statistical significance, 0.17 p-value on statistical significance, and a very significant clinically meaningful benefit in just 48 weeks in this degenerative disease. So I would point out, well, I will be happy to see higher overall mean on dystrophin in the next study with the better titering. 28% still gave us a very significant meaningful benefit to these kids, which should only serve us well as we move forward.

Okay. So you did adding some more 4- to 5-years-old in the Study 103. So what would be the final data set for 4 to 5 years versus 6 to 7 years for...

Yes. Pretty generally, pretty easily balanced. I think it's [ a balance, somewhat -- ] I think it's about 20 kids total. The first 11 kids, I look at it's really the first 12 or 11 kids, 11 kids, we'll read out in the second quarter. We've always said that we'll have that readout in the second quarter. The only reason I even mentioned that we'd add additional kids is, that frankly, while it's not really material, it's going to end up on clinicaltrials.gov. I didn't want people to think that this was -- this is not anything more than we just wanted to get a nice balance of 4 to 5s and 6 to 7s in the overall data set. And we already have the IP. We are already enrolling. So it makes sense to put in another cohort. This was -- we did look at data that drove it. This wasn't a request from the agency. This will not in any way slow us down in the release of information on the first 11 kids, nor do I think it has any impact on the commencement of our next trial. It was just ensuring as long as we have an open IND to get a nice balance at 4 to 5s and 6- to 7-year olds.

Okay. So then does that mean like why enroll more 4- to 5-years old, did it be request a more issue? Or is that possible you could use that together with the existing Study 102 4- to 5-year-old data for potential upsell?

So [ they have assets for this ]. So I want to be very clear about this. They have the assets more in order to be or seeing data. They just think we should have. Certainly, I would be very careful with the way I talk about this thing. I don't want to create -- I'm -- I don't want to create an unfair expectations. But you are right, one of the goals of ensuring that we have a nice balance of 4 to 5s and 6 to 7s in 103 is that it probably will be helpful in dialogue we have with the agency down the road about the pathways for approval and the like. And so we're going to have those kind of discussions. And certainly, those discussions will benefit from ensuring that we have a nice balance of 4- to 5-year olds and 6- to 7-year olds in the trial that we're doing right now to look at our commercially representative material about our safety discussion. With that said, I do want to be very clear to everyone, that I think the working assumption that everyone should think, and it is the working assumption that we are making, is that the pathway for approval, both in the United States and Europe, will be through the next study, which we -- our place marker port is Study 301, which will be a total placebo-controlled trial, and we intend to start that trial later this year.

Okay. When will we see the data -- all market data from 4- to 5-years old to additional cohort?

Well, the additional cohort will be some time because we're just starting to recruit the right down. But we will have data in the second quarter for the first 11 patients. Some of them were 4 to 5 and some of them were 6 to 7. So we'll get that data in the second quarter. And there's no reason to believe that it will be substantially different in the next cohort. So we can get a nice look at data both in safety and expression from Study 103 in the second quarter of this year. And then the next role of data probably is going to be still out next -- later, maybe Q3 and maybe even touching the Q4, but I don't think that should be considered [ definite read from us ].

Okay. Okay. That's good. So then the Study 301, what is the gating factor for initiation?

The significant gating factors are these: First and foremost, we need to get -- we need to take masteral learning from Study 102. I mean one of the things about Study 102, when you get past the disappointment that our regulatory strategy is changing, when you underline it, it's not only a really strong proof of concept for us, both on efficacy, function, expression and safety, but also an enormous amount of learning, a learning that nobody else has, that will inform the protocol for our next trial. So the first thing that we're doing right now, and the team has done an enormous amount of very good work already on it, is learning from 102 to adapt the protocol for 301. We're not going to discuss it on what that will look like yet because we're not done with it. And for that -- another competitive reason is we might get that further on. The second one, of course, is we need to get the data on 103. We're not going to start the next trial until we see the first 11 patients on 103 confirm expression and safety. And we'll have that in the second quarter. And then the final one, a significant one, of course, is meeting with the division. So we need to get that. With that information in hand, we have a set meeting with the agency, brief it, sit down with the agency, share our protocol with the agency. And then get their buy-in for the start of the next trial. So we're doing all of these things right now. But we can't really ask for the meeting until we have the data. So right now, the most significant [ regulatory one ] is going to be the meeting, and I think that will happen right now.

Okay. Okay. Very helpful. And at the earnings call, you actually said you guided 301 initiation mid-'21 and complete enrollment by year-end '21. What gives you the confidence you will able to start on time and complete enrollment, actually pretty rapid enrollment? Can you give a little bit more color there?

Sure. First, I want to be very clear that it is ambitious. I don't want to create the false impression that's not ambitious. We are never accused of not being ambitious. That if we're not ambitious, we won't get anywhere. We're not optimistic. We will push forward. So there's a lot to do to get you that flex. As I said, we've got 3 significant work streams to get to that meeting with the division that -- when I say middle of 2021, I'm using that as an error margin around this certainly, to get to that meeting, to get their blessing, and then to get the finalized start. And then as soon as we start, we should be able to get this very rapidly enroll. We'll have a significant number of sites enrolled. We have it nailed the full number of sites right now when we look at everything, but it will be over -- certainly over 30-plus sites in a minimum. And there is an enormous need in Duchenne muscular dystrophy for transformative therapies like SRP-9001, which gives me a lot of confidence that we should be able to enroll rapidly. And I think that also goes for our competitors as well. I think that there is an enormous need that you drive a lot of -- to drive fast enrollment.

Okay. I think Pfizer actually will enroll 99 patients? Do you think your trial will be bigger than that or will be comparable side?

We haven't -- so again, this is one of the things we're revisit -- we're revisiting everything based on 102. I think that it would be a real shame if we didn't benefit from all learnings out of 102. I don't imagine that our trials would be any larger than that. In fact, our initial N for a trial was a little bit lower than that. It was more in the 70 range. We're revisiting everything. So I don't want to say in advance that we'll not rethink all those, but I don't think that anything is going to come out of 102 that on its face is going to drive some significant change in our view on the interim setting. So I think it will be something -- it will probably be something in the hunt, we're probably south of the Pfizer's trial. But we're going to look at everything. So everything is on the table.

Okay. Okay. Great. And then I -- you wanted to ask, that was actually feedback from -- when we talked to several KLOs. And one feedback was very interesting. I never thought about before. We talked to so many doctors in the past, that, including German Dell, and nobody brought up about the stero impact to the North Star. And that was brought up. And then when we look at the Pfizer clinical trial, actually, they follow very strict daily, oral steroid regimen, and that could minimize the impact from steroids. And then we do notice in Dr. German Dell's using weekend regimen. And then that itself, by switching steroid, it could change some of the measurements. So we don't know that could be calling some of the noise in the placebo arm or -- versus drug arm. So any thoughts regarding your steroid regimen going forward? And will you require also similar -- Pfizer required daily oral dosing for 3 months. And then all those patient has to be on -- once you start the clinical trial, be on daily oral steroid for 2 years, whatever throughout the study time. So what is your thoughts there? And I think your Study 102 actually does not very rigorously follow one regimen. It's a little bit up to investigator's decision. So any thoughts there regarding the steroids?

Yes. A couple of thoughts. One, just so we're clear about what 102 require. 102 require a significant many-month regimen of steroids, consistent steroids. The standard of care for steroid use is, in some places, daily, and some is weekend dose. And so we made the decision in consultation with our investigators to allow standard of care to drive this, right? So we could have done something else. We could have said, we don't care what you're on. You're going to follow our steroid regimen. And we didn't. We said, if you are more comfortable with weekend dosing, you can stay on weekend dosing. If you're more comfortable with daily dosing, that should be done on, stay on daily dosing. I can tell you that we have taken a very careful look. That does not drive any of the outcomes for Study 102. It has no outcomes. It's not a factor at all. So again, we're going to look at everything with respect to 301. So I don't want to say that anything is off the table. But I would say there's nothing that we've seen in our analysis that would suggest that there was anything significant or influential about the protocol that people have used [ leading up to ] last year. And I will say that, with all respect to those who may feel otherwise, we have access to all of that [ if that's the case ].

Okay. Okay. Very, very good to know. And regarding the baseline characteristics, what initial thoughts do you have? Or the studies will want to minimize the similar unfortunate event you see in the past? Like what kind of things you will be consider in place to minimize any imbalance in the baseline patient population?

So remember what we did for -- I'm going to be a little bit in the offensive and remind everyone that, we identified what many had not identified, that there was a difference between 4 and 5s and 6 to 7s. So we stratified on the basis of age, which, by the way, I think is a very -- it's a must, it's a must. You cannot have -- I don't think there's a way to not stratified in the 4 to 5s, 6- to 7-year-old range. They are already independent of anything else, different populations. Even if you have, [ say, a starting point ], I think they're in a different place in their journey, and they'll have a different trajectory. So that was, I think, very wise that the team have done. The argument that some people may make is that you should have also at that time stratified independently of that for base line characteristics down. The problem with that, I will say, and I want to be very clear. Dr. I will tell you, that would be my immediate response as well. But what I'll say is, hold out there. The study started as a -- I think it was a 21-patient study before we upsized. We're starting with a very small study. If we have with a very small study, put in 2 independent stratification requirements. You could put yourself in a position where you get weird artifacts out of it, you actually screw things up from a statistical issue. We're in a different place with a larger study. 301 is in a larger study. It's going to be 70 plus. And I think in that scenario, we can put in some prophylactic measures to ensure that we don't have. I can tell you with certainty. We're not going to replicate this problem again. We will very likely get -- finalize the protocol. We'll very likely include an independent stratification on baseline functional characteristics. And I think the team is also pondering something we can do while blinding in the study, to ensure before on line is that there is no outliers in that. It is a problem in that set. So I will take on. One, honestly, the team did a very nice job. It was bad, bad luck that we have this base line characteristics really given where we were at the time, the team with the knowledge [ have found ] the size of the [ gearing ], and did a very nice job. It's just unfortunate we had this bad luck. Number two, we're not going to rely on statistics to get us there. [ We're going to -- ] spender this to make sure that we don't have this issue ever again long after this 301 through, and the number of revisions to the protocol, and we can do that because of the size of the study.

Okay. Great. Well, thank you. We are running out of time, but this is a very productive discussion. And we'll keep our fingers crossed, and hopefully, 2021 will be a better year.

Anyway, we look forward to coming back later this year and talk about this, [ anything could come up ].

Yes.

And of course, the revenue, so...

Okay.

Thank you, Gena.

Buh-bye, guys. Okay.

Bye.