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

Hello, everybody, good afternoon. Welcome back to the Bank of America Health Care Conference. It's my pleasure to have our next presenting company with us for the next 30 minutes. We have a couple of members from the Sarepta management team with us; CEO, Doug Ingram; as well as CFO, Ian Estepan. Gentlemen, good afternoon. It's always a pleasure to host you guys, and thanks for doing us the favor of participating in our conference this year.

Tazeen, thank you very much. We're honored to be here.

I don't think we need to waste time asking you to describe to everyone what Sarepta does. I think that is I think everyone is quite familiar, so maybe we can go into details if that's okay, though. Maybe talk about what you think the most important catalysts that are upcoming are for the rest of the year for the company, whether it be for the gene therapy program, and we can go into some details around that, whether it be for PPMO, which we have been focused on with more intensively recently. And we also talk about the state of the commercial organization now with your multiple approved assets. And then if there's time left, we can certainly talk about the early-stage pipeline. But maybe we can talk as a starter about what to expect from the gene therapy program for DMD over the next several months?

Sure. Let's start there. So the micro-dystrophin program, which is 9001, has an enormous number of extraordinarily important milestones over the coming -- frankly, coming month or so and then a couple of quarters into early next year. We obviously had the readout of Part 1 of Study 102 in January of this year. We have learned an enormous amount from that. We've built a protocol for our next study around the learnings from that, and we'll talk about that later. The most acute thing that's going to occur to us, and it's going to occur to us this quarter is the readout for Study 103. This is -- I cannot overstate the importance of the readout for 103. First and foremost, it will characterize the commercial process material. The actual process material that we're going to use for our upcoming trial and equally important or more importantly, the material that we'll use to launch this therapy commercially and serve patients in the United States and around the world. So the characteristics around that therapy are going to be extremely important. We'll get expression biomarker and safety data from that. So that's an enormous deal. And I want to point out something else as well because it's easy to lose sight of this, given how much work goes on at Sarepta, and how fast we've moved over the last few years. The other thing it does is it will -- if it goes well, it will make a -- put a large exclamation point on the work that we've done over the last couple of years. Back at the beginning of 2018, when we realized that we wanted to be one of the most significant leaders in gene therapy. We knew that we had to become leaders in gene therapy manufacturing, and we didn't have essentially a soul at the company that even at that moment, really understood in-depth the concept. If 103 goes well and characterizes our product well, I think it does say a lot about where we've come over the last couple of years and that we have indeed, as we had intended to, have become one of the most significant leaders in gene therapy manufacturing, process development, analytical development, capacity and the like that exists in biotech genetic. The second big moment for us is the company. So 103 is the big one this quarter. The next one that will happen right around the middle of this year is that meeting with the agency. So as a predicate of starting our next trial, which we call 301, we need to meet with the agency, talk to them, get the agency's blessing from a CMC perspective and a protocol perspective and then to start that next trial. That's, of course, enormously important. That'll happen around the middle of this year. And then really, the next big data readout for us will happen right at the beginning of next year. We'll have our last patient, last visit on the second part of 102. Remember, 102 is still a blinded study. And at the beginning of next year, we'll have the readout there. That will be about 41 patients. About half of those patients will have been on therapy for 2 full years or nearly 2 full years. The other half who have been tracked for a year, not on therapy, so we watch their trajectory and then watch them for about a year post the intervention of therapy. And so we'll have those results at the very beginning of next year. So there is a lot that is going to go on with respect to 9001 over the course of the next month and quarters.

Yes. So you talked about 3 specific things to look out for as it relates to this program. So for Study 103, which is the next catalyst happening pretty much in a day now, I think, what kind of dystrophin expression should we expect to see? Because I know that this can be sort of a moving target historically, but in the minds of investors, people always want to have a comfortable bracket of what should we expect, and what you think the agency would be satisfied with?

Well, I will say every thing -- every time we've looked at dystrophin, we've seen very robust dystrophin. In Study 101, that was our first 4 patient pilot study. If you took out this one very significant outlier, you'll get -- you're about -- we're about 53% dystrophin -- micro-dystrophin against normal in that study. It's Part 1 of Study 102, the mean was 28.1%. Now let us not kid ourselves, 28% dystrophin is a significant amount of dystrophin. It was lower than we saw in the former study. We believe the reason it was lower was because the titering method that was being used by nationwide, which is our clinical supply manufacturer, which is a supercoiled qPCR approach, created some variability that you could only see later when you actually apply a different standard. We have a linear process that we use at Sarepta now. And 2 of the 3 lots, as a result of that, were lower than the target dose. And we think that drove the expression down from what we would have seen. So I would say, in one very real sense, anything about 28% would be significant amounts of dystrophin, and we'd be happy with it. Well, our real hope, of course, is that with a more precise titering process, we see something that's higher than 28%, maybe even approaching the 40% or more than you would have expected from the results of Study 101. But we'll have to wait to see if that's the case. The next thing, so expression is enormously important. And there's 3 ways to look at expression. There's the Western blot data. There's dystrophin positive fibers, which is important, intensity, they really be on the look at for the intensity level as well. And I think that's an important. And then genome copies per nucleus is a really interesting one. And then the safety profile is going to be something that's going to be important out of 103. One of the things that people worry about rightly were gene therapy is as you change the -- the product is the process or the process is the product in a very real sense. And we have seen out of the clinical material, both in Part 1 of 102 and 101, we have seen a very different and preferable safety profile than one seen from other similar therapies, at least in the clinical process. So I think one of the things that's going to be important to look at with respect to the commercial process material is that are we able to see the same safety profile in Study 103 that we would have expected out of Study 101 and 102. We're not -- and so far, I see in the clinical trials, we have not seen things like clinical manifestations of complement and those kinds of things that have been problems for other studies. So that's going to be an important thing to see out of Study 103. So a lot to look at in Study 103.

Yes. And then I guess, as it relates to -- going back to what you just said about, what you'd be happy with in terms of dystrophin expression [Audio Gap] If you end up seeing something along those lines, similar to what you saw Study 102, does that mean that what you saw in 101 might have just been an anomaly in terms of expression? Or does -- should we not read into that?

Well, we would have to take a careful look at that was the case. I will tell you that we are confident that we'll -- T-cell we'll see less variability in something higher than 28%, given that we'll have much more consistent launch out of the commercial process because this is our process. We own the process, we have developed the linear titrant process. So we'll have to see. I mean, I do want to be very clear, I think 28.1% the dystrophin that we saw in 101 on mean was a very impressive amount of dystrophin that we do think we'll see something a little higher than that, hopefully, out of the commercial process, at least we would predict based on what we've seen historically.

Okay. So just to remind everyone, you put together Study 103 pretty quickly, and it's going to be reading out shortly. What exactly is the procedure? So you had an informal discussion with the agency about we plan to do this study. Now the study will complete. You'll be -- what type of a meeting would you request with them. You talked about Study 102 thus far, presumably and the study. And you would talk about your plans for a pivotal program? Is that what the itinerary would be of the meeting? And I guess, like how do you...

Yes. So the study will be entirely -- we'll have the data from the first cohort of 103. 103 will continue because as, one, they recall, we amended the protocol for 103 to add some additional patients to 103 to balance out the 4 and 5 year olds and the 6 and 7 year olds and got some thoughts for the future around the uses that 103 might be -- the uses that might be made in Study 103. But the first 11 cohorts was really that base for discussion with the agency to characterize the product in advance of what we hope to be the pivotal trial. So the discussion with the agency will be about 2 things really in broader strokes. All the CMC-related information, here's the product, here's the CMC, here's the assay results, et cetera, you agree that this is fit-for-purpose to start the next trial? And the second is to get their blessing broadly speaking, on the protocol for the next study, Study 301. So that's an important touch base with the agency as a predicate to start in the next trial.

And would that be a sufficient interaction with the agency about one meeting where you would presumably talk about the manufacturing as well as propose your pivotal study? Or do you think that potentially could require an additional interaction after that?

I think we'll be in very good shape to have a robust discussion with the agency at this meeting. So I think we'll have a lot to do in one meeting, but I do think we will have -- we're envisioning sufficient time. And certainly, we have sufficient data and evidence have a very good robust discussion. So it's certainly our hope and our goal to have a complete meeting that gives us the blessing to commence our next trial with the agency. And that will happen around the middle of this year.

Okay. So after that meeting occurs, let's say you do get the blessing from the agency. In terms of time lines to let investors know, would you wait for the minutes of that meeting before letting people know how that meeting went? Or should we look out on clinical trials for trial designs to be posted and assume that, that was something that's been passed by agency?

Likely, let me say in advance, likely, if there was going to be a posting on clinicaltrials.gov, we would go ahead and start talking to people because we wouldn't want you to just -- I mean, it would be such an important moment we wouldn't want you to just bump into it. We often wait for the minutes of the meetings before we go out publicly just to ensure that there is no misunderstanding between the agency and the company, around the outcomes of meeting. So there's a real value off and to getting the minutes and making sure that everybody was indeed as we would have envisioned off the same page around something. So I'd say once we had certainty around where we were going and confidence about it, then we would talk to the investment in the patient and the physician community about where we're going.

Okay. And then so after that happens, would you -- how are you thinking about, I guess, the pivotal study design? So you've already gotten the -- how Pfizer's approach will be for a pivotal study. And we can talk about their program in a second. But in terms of number of patients and [Audio Gap] and endpoints, how are you thinking just broad strokes, rough size of the study, et cetera?

So we've all -- so let me say this. We -- I think we've talked historically about the study design and then it would -- in the age ranges and the broad strokes around the end of the study, which at least at one point was around 70-or-so patients. We have taken a lot of time post the January readout of Part 1 of Study 102 to really dig in and get insight from that study that we believe can increase the probability of success of the next study. And I think we're in a unique position to build a protocol with the maximum probability to that. So for the confidentiality and competitive reasons and the like and also because I don't want to say the protocol is going to be x and then meet with the agency and they want something slightly different, I'm going to sort of beg off talking about the details of the protocol until we've met with the agency, and we have their blessing. But I will say one thing. We have obtained an enormous amount of insight. I think, unique insight that has helped us develop the protocol for the next Study 301. And I think we've really benefited from the readout of Part 1 of Study 102.

Okay. So now to go back to Pfizer for a second, be on their earnings call, provided an update on that program. And it does seem like they have -- the agency has some questions for them that they're trying to address. They were clear to specifically state that they likely wouldn't resolve this in the first half of the year, which in and of itself is, I think, revealing. But is there anything based on what you can deduce from that update that potentially is a learning for how you're going to go forward with your program?

Yes, we saw that. And we can't read much more into it than others who have seen it. So I want to be very fair about that. We don't have any unique insight into Pfizer's discussions with the agency or the particular issues that they're having. I can talk a bit about just broadest of strokes where we are. And at least I can tell you, I'll tell you 2 things at the same time. So I don't to -- I want to make sure we're on the same page. We need to meet with the agency as they predicate to us starting our next trial. And we need to get their blessing into all of the various related issues associated with that, both CMC and protocol. Now last year, we had a written minutes from the agency in early September of last year, where they took issue with the potency assay that we were using for the -- the purpose of what was going to be Study 103, we were able to meet with the agency very rapidly thereafter. We had a live meeting with them. I think within 2 weeks of that meeting, which I think was -- you said enormous amount, both about the ability of the team to execute, but frankly, about the willingness of the division to work with us. And we got a lot of insights from that meeting. We understood much better. We -- I'll be honest. We tracked into the meeting with some confusion about what the agency perspective was on potency assays and the issue -- the like, and we left that meeting really having, I think, a much better understanding, at least we believe we had a much better understanding of what the division wanted to see in the way of potency assays. As a result of that, we were able to build a potency assays for purpose of 103 that the agency agreed with, and we were able to start 103. And of course, that's what we're going to read out just this quarter. And then we'll -- and we've done actually more work, knowing what the agency wants. We continue to do work on potency assays. We think we're in really good shape right now. We think the data looks compelling. We think we've really got ourselves button down from a CMC perspective. Assuming 103 comes out the right way, and that's a big if for us. And so while we do have to meet with the division and get their blessing, we feel very good about the package that we're putting in front of the agency to support the next study and the ability to start dosing the next study. That's really important to us. Really important to us is obviously getting going on that next study, and it would be -- we really want to be able to get going in that study in the United States, of course.

Yes. And to the extent that it matters, I don't know if it does, but it does seem like Pfizer is going to be delayed reading out that study just based on what they said up until now. How important is it to Sarepta now to really be able to start this study, ASAP. And if you do start the study this calendar year, when should we expect to see the readout top line?

Well, one, I'll say it is important for us to start this study as soon as possible for -- if for no other reason than patients are waiting for this therapy around the world. We are convinced that this therapy is going to be transformative. We need to confirm that in the next trial. And so we need to get going on it. Kids every day are generating while they're waiting for this therapy. So we definitely want to get that started as soon as possible. I'm sorry, the second part of your question, Tazeen, was?

So if you start enrolling patients as you [Audio gap].

And so yes, understand that. So that will, of course, depend on the end. I'm not disclosing the end yet, so we'll talk about that after we have a meeting with the agency. The one thing I would say on the liquidity with which we should be able to enroll the study with the blessing of the FDA to do so is that we'll have a significant number of sites, at least as the last time we looked, we're thinking of 30 or so total sites when we got them all up and running. So we have a significant amount of sites around the world. At least that was our target. And the second one is, I think this is going to be a very -- there's going to be a lot of demand for this trial, both for patients and their families and also for investigators. So I do think this trial when we get it up and running, will enroll with the rapidity.

Okay. And how do you feel about the endpoint? So principally, I'm going to make an assumption that you'd want to look at North Star. Just based on the interim read that we had earlier this year from 102, it does seem that different patients might advance at different rates. And how do you kind of get comfortable with that?

Couple of things. One, there are some things we're going to do in the protocol to ensure that we're taking advantage of the learning out of Study 102. Some things I won't -- I'm going to beg off talking about, we'll talk about later. One obvious thing that we're going to do is stratify on the basis of baseline characteristics across the age ranges. We had -- in Study 102, we had done something that was informed by our understanding of the disease, that sometimes you don't even see in the literature. So it was really -- it was -- we thought fairly nuance, which was we were able to stratify not simply by taking what was already a fairly tight population, 4 to 7, but actually stratify in 4 to 5 and 6 to 7. Now it turns out that wasn't enough. As we all know, the 6 and 7 baseline characteristics were, I don't think I'm being hyperbolic, when I say they were wildly different, where the treated group was very severe relative to the non-treated group, which were very mild, and there's no way to compare those groups, and that was the basis for having missed that SIG. Now you could say, let's not even worry about it because the chance of that happening is still incidentally small. The p-value on those baselines were 0.004. So 4x that of 1,000 with something like this happens. Nevertheless, we're not going to leave it to chance, okay? So we're going to stratify on the basis of baseline characteristics. So we will have resolved that issue. And in addition to that, there are a number of other things we're looking at carefully to make sure that we're able to -- nothing is more important than the situation is if the therapy is working to be able to show that it's working, right? It's -- nothing is more tragic than a trial that fails not because of the therapy, but because of the trial design, and I really do believe it wasn't the trial design, but the trial conducted these baseline characteristics that define the reason that we missed the top line, and we want to make sure that doesn't happen again. Because when you get the top line right, and you saw this in the group in 4 to 5 year olds, in the 4 to 5 year olds, we got the baseline characteristics right, and we saw a very statistically significant and clinically meaningful benefit in the short 48 weeks that we were able to look at these kids. So we're confident if we can get the trial conduct right, the results should follow.

Okay. So I guess based on what you just said about the post mortem of the interim of Study 102. Does that in any way kind of diminish the importance of the 2-year data just because you were able to identify areas where the population of roles could have been improved?

Yes. I think we can address some of that before the Part 2. Part 2 is a very different kind of analysis. So remember, in Part 1, the problem with Part 1 was that in the 5 to 6 -- the 6 to 7 year old group, there is -- they had to be compared to one another and their baselines were wildly off. If you ignored the placebo arm and you just looked at the treated arm, they were severe, and they would have -- I think the analysis that one of our outside experts did would have suggested that there's half of those children would have been in a wheelchair in 48 weeks. And yet there they were complete -- almost completely stable over the course of the year. But that's not a fair way to look at it because versus the placebo, you didn't see that difference you would have seen. So that was fatal to that analysis. Part 2 is an entirely different approach. Part 2, we're going to look at natural history, of course, all defined in advance -- this is about post talking now. We'll all be defined in advance of unblinding. And we get to look at trajectory analysis. So you can kind of look at a patient-focused, patient-tailored trajectory analysis. And we can look at these kids over 2 years against natural history. So I do think there will be a lot of insight and probably the ability to address some of those issues that occurred in Part 1 and Part 2. When Part 2 reads out, the -- there is no other trial that will have provided as much data on this sort of therapy as that Part 2. So we're very excited to take a look at it early next year.

Okay. So before we run out of time, I did want to spend a few minutes on the PPMO program. The level of dystrophin expression that you guys were able to show, in our view, was encouraging as indicative that certainly further study is warranted. As you advance with that program, how should we be thinking, again, I guess, a couple of things about what the meaning of dystrophin expression actually is, even if you're getting 10x more dystrophin expression than you are getting with eteplirsen, how -- where in the scale of importance is that in terms of potential impact to quality of life for a patient? That's the first question. And then second, in a world where, hopefully, gene therapy would be approved, how would you see PPMO coexisting with that?

Right. Great. So on the first question about how important is this data. Just to remind everybody, we saw about 6.55% dystrophin in a short 12-week period, which was an 18x more eteplirsen, giving 400% more eteplirsen half the time and about 12% of the dose. And the modeling would say you would comfortably get above 10% with chronic dosing, 10% or more. We have -- even in that study, we had evidence of that. So first of all, that is an enormous amount of dystrophin. Remember that this is truncated dystrophin that exists in natural history. There are kids that have this exact form of dystrophin. There was a recent paper, the so-called [indiscernible] paper that showed 2 things. One, that very small amounts of dystrophin make phenotypic benefits. In the realm of the eteplirsen will significantly benefit kids slow down their time to wheelchair and increase their freedom. But if you can get about 5% dystrophin, that's kind of a pivot point where you get a really significant benefit. And so with 10%, I think that is enormously important. If we can confirm it in the next trial, and if we can confirm it safely, and that's what we're going to do in Part B of the trial of our MOMENTUM trial. So then the next question is a really interesting one is, which is, let's imagine, theoretically, that we have 2 transformative therapies. Gene therapy, and it works brilliantly and the PPMO and it works brilliantly, first thing is I think it will be exciting to have 2 potentially transformative therapies to bring a benefit to these kids. There is going to be an opportunity for, I think, both of these therapies to coexist, either because there'll be places where gene therapy is available and RNA therapy is not around the world. But also, I think there is if we can build this thesis out over the next couple of years, and we're working on it, I think a real opportunity to provide a synergistic benefit to children, either by pretreating them with the RNA in advance or as maintenance therapy after gene therapy with the goal of extending their lives and providing the greatest quality of life possible. Now we won't know that until we do more work. So I'm just excited that at least based on the signals we're seeing right now, we have 2 real potential to bring a transformative benefit to kids with Duchenne muscular dystrophy, and then we can -- would the science in hand start sorting out how they coexist, if they both exist.

Okay. So we have 2 minutes left, and I'm hoping in last 2 minutes, you can give us a little bit of color on how you're thinking about PPMO, specifically in the subset of patients that are -- that can no longer walk, so the non-ambulatory patients. What is your view of what would be successful data in that subgroup?

Well, the goal for the PPMO right now, and it's all subject to discussions with the agency is that we're going to seek an accelerated approval in the same way that a pathway for accelerated approval with new data, we're going to have to start this Part B, we would want that trial to include non-ambulatory patients as well. We really see a great opportunity to benefit them. And it would be on the basis of these levels of dystrophin, which the agency has already said, both in guidances and in its actions with respect to EXONDYS and Biomet and monitors that they are reasonably likely to lead the clinical benefit. So I think there'll be an enormous benefit to getting this therapy not only to the ambulatory kids, but the non-ambulatory kids. Indeed, it's really compelling with the non-ambulatory kids, that's why we need to get this therapy if possible, moving as fast as possible and getting an accelerated approval as a pathway because we can get the therapy of these kids where they still have the use of their limbs and the like, and we can hopefully provide some protection with the PPMO as we are currently doing with the PMOs.

Okay. And then do you expect there to be any kind of potential competition in enrolling, let's say, your pivotal study for the gene therapy program versus advancing the program for PPMO? Would it be 2 different types that would enroll?

Well, there will be more specific patients for the PPMO because it's a mutation, collection of mutation specific. I think if we go around the world, there's so much demand for transformative therapies that I think we will have -- I think we'll have no real problem enrolling both studies.

Okay. Got it. And with that, we are just now out of time. So I wanted to say thank you, Doug. Thank you, Ian, for participating in our conference again. It's always good to see you. We got to see each other virtually this time. Hopefully, we'll see each other in-person next year in Vegas, keep our fingers crossed. There's a lot going on at the company, and there is a lot still to happen in the rest of the year. So we're going to be looking forward to all those updates. So thanks again, and good luck with everything.

Thank you, Tazeen. Thank you for your time.

Have a good rest of the afternoon.