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

Good afternoon, everyone. I'm Salveen Richter, Biotechnology Analyst at Goldman Sachs. Thanks for joining us. We're really pleased to have Sarepta with us today. For us Doug Ingram, President and CEO; and Ian Estepan, CFO. With that, Doug, thanks again for joining us.

Thank you.

And with program pipeline here of 42 drugs, of which 26 are gene therapy across multiple neuromuscular disorders, how are you thinking about portfolio management and progress, particularly when so much of your value seems to be driven in your lead clinical asset?

That's a great question because I think, actually, we probably understate the number of total programs that exist in the organization if you really look deeply into research. And so that question is a very good one because if you if you don't focus on getting the rest of that pipeline moving, then it will sit fallow. But if you focus on everything all at the same time, I think the sort of the implication in your questions are good one, which is you won't get any progress on the things that matter most. We have a very well thought out approach to this. Remember, we entered into a number of significant collaborations to help move some of our early research along and some of our early programs along, while allowing us to focus on some of the big movers over the next -- at all sort of then rolling way over the next 18 to 24 months. And also to allow some of our early research focus to early researchers to focus on the advancement of that pipeline when we stay focused on our top priorities. And for us, it's really clear what our top priorities are right now. That's SRP-9001, to your very good point, our micro-dystrophin gene therapy getting that continuing to move as fast as is reasonably possible, it's our limb-girdle franchise as a whole, really starting with 2E and getting to the pivotal trial in 2E this year. And it's advancing our next-generation RNA therapy, which is the PPMO peptide conjugated PMO, the lead of which, of course, is 5051, where we have some results. So we're in a good place. We can, as an organization, really focused in on our top priorities and make sure we're executing against them, but allowing both through a combination of our early research group, and our partners and collaborators to continue to advance the rest of that pipeline. I think we're going to have some interesting readouts from that pipeline in the course of the next 24 months or so.

Perfect. And then you've done some recent collaborations with Genevant and Codiak, Selecta, Hansa, to name a few. How are you integrating these new technologies into your pipeline? And separately, you've been working with gene editing for a little bit on the side. Just curious how you're thinking of that as maybe kind of another modality to bring in?

Yes. Let me start with the last part first. I really want to make clear how excited we are about the potential for gene editing, CRISPR-Cas9, in particular, for the future. I think it's still in the research stage right now. At least that is our view, and it might be there for a bit longer. But we are continuing to bolster what we call our Gene Editing Innovation Center which is Durham, North Carolina, and we're really excited about the individual scientist who runs that. As you may know, our -- the person that runs it is Dr. Charlie Gersbach from Duke. He is, without a doubt, one of the luminaries in the use of CRISPR-Cas9 generally and then specifically for neuromuscular, I am very proud of the fact that not other than Dr. [indiscernible], who is the Nobel Prize winner for CRISPR-Cas9. When asked, I think, earlier this year in a publication, who she was excited about in the CRISPR-Cas9 space when she talks to biotech, she talked specifically and exclusively about Dr. Gersbach. So we're very focused on that. Then you raised another interesting issue, which is we're not only interesting in moving along the programs we have in front of us, but we want to advance the science of genetic medicine and improve it over time. And we think a lot about that being gene therapy, but it's also gene editing. And it also, to some extent, is the RNA itself in addition to PPMO some of these delivery approaches. We have 9 programs right now, focused on improved delivery methodologies. It's everything from lipid nanoparticles and exosomes and polymer nanoparticles and these next-generation concepts of capsids. Either immuno evading, better tropism, all of that. And we actually have some pretty interesting early results on that, that we'll share when the time is appropriate to begin to share that. And in addition to that, of course, we've got programs, both internal and in collaboration to look at ways to address redosing and even knocking down pre-existing neutralizing antibodies. So we're working on all of these things at the same time as we're focusing on our primary programs. I would say the integration of those programs is certainly the external discussion of the integration of those programs will be gated on 2 areas. One, before we even begin discussed them, we got to make sure that we're in a good shape with our primary program. So for instance, SRP-9001, let's get 301 started, have that meeting with the agency gets that next study started this year, and then we can start thinking about it. And then subject to some of the science coming out, some of the data that we have, we can start talking, first, developing our strategy, and we're already in the process of doing that and then discussing publicly how we begin to integrate things like redosing, knocking down a joining antibodies and even down the road, looking for enhanced modalities for delivery and genetic and gene therapy and potentially even RNA.

And is the plan to stay a neuromuscular disease focused company? Or is there -- are there plans to expand here?

We'll naturally expand over time. Again, one of the dangers of expanding too rapidly as you enter into areas that you're not sufficiently expert about. So that you don't know what you don't know, and then that increases the chance of failure. So the way we've done it now is we're sort of moving by adjacencies over time. Again, we are a Duchenne muscular dystrophy company and then a neuromuscular dystrophy company, a neuromuscular company. And that, of course, explains why the limb-girdle was the brilliant next step for DMD. We move into other neuromuscular, then we think about the next adjacencies. Neuro is obviously a good adjacency. Cardiomyopathies is an obvious next adjacency. So if we looked up, frankly, in 5 or 6 years, we might be even further afield than that. But we will have grown it, I suspect, through this concept of taking things that we are near that we have some expertise already about them building the expertise around those areas as we grow and we expand.

So maybe focusing on the DMD gene therapy program to start here. What are the key learnings from the clinical-grade Study 102 with the commercial-grade Study 103 that you are now adopting as you think to -- as you plan to start the pivotal 301 trial and maybe talk about the optimization levers here and whether the endpoints are going to remain consistent.

So there has been an enormous amount of insight that's come out of both 102 and certainly 103. Let's take them in order. Part 1 of 102 was fascinating. When you burrow into the data on Study 102 it has, from our perspective, only increased our confidence in our therapy. We -- when you -- it is clear to us that when you get the baseline characteristics right, which unfortunately is a big if in the case of Part 1 you see exactly what we would have expected to see, which is a significant -- clinically significant and statistically significant benefit of our therapy, even when the expression levels that we ultimately got in Part 1 because of the titering method that our partner was using, created an expression that was lower than the expression we'll actually get very consistently going forward. So even with that, that limitation, we're able to see a very significant benefit. And then we can take a lot of learnings from that. I think the endpoints will -- some of the way endpoints are ordered may change slightly. I'm going to be very opaque about some of this because we need to meet with the agency first, get the agency's blessing to all of this. But I'd say, broadly speaking, the endpoints are broadly the same. There'll be some -- perhaps some difference in ordering. It will -- has given us a good insight and stratification and powering. And then we'll come back after we meet with the agency, get the agency's blessing and, of course, in connection with the start of that next trial, which will start as soon as we're able to, after talking to the agency, we'll come back and provide more detail about the protocol and some of the learnings that we have out of 102 that are benefiting us. And remember, we've got an enormous amount of information. With rh74, generally, we've now dosed over 65 kids at the target dose. So we just -- we have a lot of confidence in the program and a lot of confidence in what we should be seeing going forward. 103 is -- it is a monumental moment for Sarepta. It is really a significant moment for a host of reasons. You will recall that back at the beginning of 2018, we started out with this vision of becoming one of the leaders in gene therapy. And we knew that to become one of the leaders or potentially the leader in gene therapy for rare disease, we had to become experts in manufacturing. That was no small feat. I think the 103 results suggest that we are there with that. We're getting very consistent results out of 103. And then really, really significantly, 103 is the material, that material, that we will use to launch this therapy if we're successful. So the signals we're getting in 103 tell us what kind of therapy we're going to have for kids on Duchenne muscular dystrophy. And we're really excited about what we saw. And just to quickly remind you, from a Western blot perspective, just as we had anticipated, when you get the titering right, we have a very precise linear titering that we use now, you get very robust expression on Western blot, we were about 55%. The vast majority of fibers are benefiting from micro-dystrophin. The intensity levels were just I think the scientific word would be through the roof. And the safety profile in 103 was exactly what we would have anticipated. We're seeing a very stable, very predictable safety profile, at least in the first the 65-plus kids that we've dosed with rh74, which is, I would say, far more than anyone else has ever dosed in this area. And as you know, we have a very manageable safety profile. We don't see the kinds of things that are concerning like clinical complement activation or that complement cascade that has been troubling, unfortunately for so many others. So 103, to our mind, is an extremely important piece of information and really important in the way we've not only characterized the program and characterized the therapy and differentiated it. But also, I would hope, have made a statement about who we are as executors and leaders in gene therapy.

So what does this mean for the pivotal program? And I guess I'm asking this in the sense of there are clearly things that were variable or there is a variation, which you would need to manage going forward. And how do you do that without it looking like a similar risk type situation as we think about what played out previously?

Well, the good news is we know a lot about what played out in 102 and we -- while we're excited about the secondary endpoints that we saw, we wish we had hit the top line, but we know exactly why we didn't hit the top line. And at least from our perspective, it wasn't the therapy. It was the conduct -- that was the [indiscernible]. And frankly, more than anything else, it was the difference in baseline characteristics in the 6 to 7. So we will control for that going forward. We will stratify both on the basis of age, which we did before and which was, I think, very important to do, we will also separately stratify for baseline characteristics to ensure that, even though that was an improbable event, it shouldn't have happened. I mean, let's be clear, and it's amazingly Improbable. It should have happened with about 4 out of 1,000 times of a chance. We're not going to take even a 4 in 1,000 chance. We're going to stratify for that. So that should be fully solved. On the variability in the dosing itself, there were the different lots and one-hit the target, and 1 was -- 2 were below the target. That will not happen again. We have a linear titering method. We've already applied it to the crossover kids even before we got to 103 in our commercial process. And we've seen in 103, the titering method works really well. And as a result of that, the expression is very -- the mean expression is very predictable. So I think we're in great shape as we track to Study 301. I think the protocol that we have for Study 301 is not only thoughtful but is informed by a granular amount of information that others would have and could benefit from. So I think we're in good shape.

Is there a regulatory path based on the data that you've seen for the ages 4 to 5 cohort?

Yes. I think let's -- let me say [indiscernible]. I think, first and foremost, we need to get Study 301 starting. So I think if I was an investor, I was looking to this company, I would -- my primary goal would be to get 301 going and to assume as the base case and probably the most probable case, that Study 301 is the basis for approval in the United States and around the world. And I think that's a very fair sort of baseline assumption. Obviously, we've seen some very exciting information out of Part 1 of Study 102. I would remind you that study -- that in the 4 to 5-year-old range and a placebo-controlled blinded way, those kids were significantly improved versus the placebo and statistically significantly improved. And we're very excited about that. And then at the end of this year, right, at the beginning of next year, we're going to see this Part 2 data, all of which is currently blinded, and that could be very insightful. And thereafter, we can consider what the art of the possible is. But I think for planning purposes, one ought to assume that Study 301 is our pathway for approval and, therefore, getting that next study going, and getting it enrolled as fast as possible is of paramount importance for SRP-9001 and, frankly, paramount importance for children and their families with Duchenne muscular dystrophy waiting for this therapy.

And all the assay work that was being discussed with the FDA is that well understood at this point?

All great, all done. I don't want to overpromise. One can't predict the outcome of meetings with agencies. There -- obviously, they have independent agency, of course. But I will say I'm very, very pleased with the package that we have, both from a CMC perspective and a protocol perspective. And so I think we should have a very robust and good discussion with the agency. I'm very proud of the team. I think our assay work looks great. Our CMC work looks fantastic. I think our protocol is very thoughtful. It's not exotic. Frankly, it's a placebo controlled, and I'm not getting in the details, but it's a placebo-controlled blinded study, double-blinded study. So it's very -- in that regard, very traditional. So I think we're going to have a very good discussion with the agencies.

So turning to limb-girdle 2E, your gene therapy program there. You reported nice functional and safety there from the high dose and low dose cohort. Could you help us understand what next steps are here, and when we might see the next update on data.

Yes. Just to briefly remind you, we are very -- so we're really excited about 2E, and we're excited about 2E and then the rest of the limb-girdle program. Remember, if you take all of our limb-girdles together, that's about 70% or more of the population of Duchenne muscular dystrophy. So there's a really significant opportunity to do a lot of good with the limb-girdle program. And for many of these programs, most of them, and let's talk about 2E, you're dealing with a gene that codes for the native protein. So this is a fairly straightforward sort of ideal place for gene therapy, monogenic disease, lack of a structural protein, and we can insert a gene that, if we can get there safely and do it in a robust ways, can literally code for the native protein, the absence of which is causing the demise of these kids. And in the high-dose cohort for limb-girdle 2E, the data that we saw was absolutely fantastic. As you know, we saw over 60% expression on Western blot, just like DMD and SRP-9001. The vast majority of the fibers were protected by the structural protein, the intensity level was tremendous. And the safety profile was nearly identical to what we saw with DMD, which isn't surprising. Because remember, we have a platform approach with rh74 and in many of these with the same -- even the same promoter MHCK7. So the next big step for us, there's 2 big moments for us. One, we've got some assay work still to do. We have the material, we just need to get all the assay work done. We benefited enormously from the work we've already done with SRP-9001, but a lot of these assays have to be bespoke, that you built for this specific program. And then the big, big issue for us, and we'll do this prioritized after our meeting on 9001, is we have to have a dialogue with the agency about the pathway forward for SRP-9003. We want to start pivotal trial this year, if at all possible, with the agency, and that's going to depend on the pathway for that and the development program. We're not shy about saying our view, which our view is you're dealing with the ultra-rare disease, you're dealing with the native protein, and you're dealing with the ability to, in a very safe way with a very stable safety trial, be able to get really high expression of this data of protein. So we're going to go in with a pretty strong view that this should be a very lean approach, perhaps an accelerated approval approach would be our kind of going in assumption. But we need to have those -- that dialogue with the agency, and we'll do that in the second half of this year. And hopefully, based on that, we'll be able to start the next trial, which will be the pivotal trial this year. And then we can, based on that, think about what it means for the rest of the programs, and perhaps we can do something that's a little more creative than simply having independent programs, but it's something we're going to have to have additional discussions with the agency at that before we can confidently discuss.

Is a basket study approach on the [ 40 ] possible?

Potentially.

And then what is the status here of the GMP material?

For?

For this trial, was there some work that was being done on the GMP material?

Yes. For 9003, it's just the assay release work. So the material is there. So the good news is the material is there, we just see all the assay were completed, so we can actually release the material. So we're in good shape. We just have a few more things to tie-up.

And then on the PPMO, PMO platform, we saw the positive data from Part A of the Phase II MOMENTUM trial. And you plan to engage with the FDA on a registrational study here. Can you just help us understand how you're thinking of what that study would entail?

Yes. So just to remind everybody that we are very excited about the PPMO. I can tell you, it was an important day for me. The PPMO was one of the reasons, frankly, that I had a tice to come to [ disruptive ] a U.S. at the time that I became disruptive, we weren't actually a gene therapy focused organization. and we were excited about the data. So what we saw in the broadest of structure over there. We saw -- in the PPMO at the 30 mg per kg dose, we saw a therapy that could have at 18x more exon skipping than our currently approved therapy eteplirsen. It had an order of magnitude more dystrophin on Western blot. And it had that in half the time and about 12% of the exposure. So from an efficacy perspective, we were right in the sweet spot of what we were hoping to get. And remember, for patients, what's exciting about PPMO, in addition to all of that benefit is, this is a once a month dose. So you get 1 infusion a month as opposed to what the current PMO's, which require weekly dosing. So there's just lots of really exciting reasons why PPMO is important for Duchenne muscular dystrophy and probably opens the door, if successful, to reasons that have -- outside the United States that have been frustrating for us to get to from an approval perspective, simply because of the accelerated approval pathway that we've used in the United States. So we need to talk to the agency about getting going on what we call Part B of this MOMENTUM study, which will be -- if we are successful in our discussions would be a pivotal trial. And our goal -- we know already, we have guidance from the neuro division and Cedar on this issue that these levels of truncated dystrophin would be sort of endpoints for being reasonably likely to lead to clinical benefit. So our view is Part B would be an accelerated approval pathway based on expression when the follow-up of functional data post approval. So that's kind of the goal and the discussions that we're going to have. The exact timing of the trial, is it a 1-year trial or a shorter than 1 year trial is going to be something that's going to be subject to discussions with the agency. It's an interesting discussion point. Normally, historically for PMO, you look at this in 1 year. It takes a long time to start making dystrophin over time. One of the things I said earlier, then you'll note is that we're able to induce a very significant amount of truncated dystrophin in a relatively short period of time, but we need to have additional discussions with the agency about the -- what the real timing ought to be for this trial is 12 months or something shorter than 12 months would be the subject of some discussions.

And any mitigation strategies here for the hypocalcemia or magnesia?

Yes, primarily type of magnesia. So just to remind everybody, we did see a dose-dependent issue of hypomagnesemia in these children as you dosed up to the 30 mg per kg. Here's what we know about it so far. It is -- number one, it does not correlate as far as anything we can see with the diminution in -- so the issue, for everybody to understand, is this. Either hypomagnesemia is a very manageable thing or to signal of something else. And on the signal of something else side of things, there is no signal of something else. There is no correlate between a diminution in kidney function or kidney damage as a result of the hypomagnesemia, which would lead one to hypothesize, and actually, it's something else. It may very well be the primary hypothesis the team has is that it probably is, at infusion, some competition with the magnesium transport proteins at infusion. And the good news is when we look at it carefully, it doesn't build over time. It appears to be quite manageable with oral magnesium. So the proposal we're going to make to the agency as we think about the pivotal trial, is to give prophylactic oral magnesium at the time of infusion. That -- our hope is that, that would mitigate this issue and allow for these great efficacy results that we've seen.

And then with your pipeline of gene therapy programs, you're particularly CMT and I think MPS IIIA that were at the forefront, what's happening there? And when do you think you could take your next program into the clinic?

Yes. So we have some capacity on both of those, unfortunately, so for independent reasons. One, with MPS IIIA, unfortunately partner licensing has seen -- it's on clinical hold right now. They've seen MRI-related signals at the side of the -- just to remind everybody, with respect to MPS IIIA, this is a direct brand infusion. I think you use, if I'm not mistaken, 6 trocars to deliver the therapy. And at the point of infusion, they're seeing some abnormalities that they need to look at and figure out as well as -- and then that's going to be licensing and is going to primarily figure that out. To the best of my knowledge, they have yet to have an update. So they remain on a clinical hold. I don't have any update on when they might be getting off of clinical hold with respect to that, which is unfortunate because MPS IIIA is a deadly disease. And these children and families with MPS IIIA do need a transformative therapy. So we're just essentially waiting for our partners with respect to that. With respect to CMT, frustratingly, it's a simply -- a simple issue about clinical material. We are -- we have made a decision, broadly speaking as an organization, to move to our own commercial manufacturing process whenever possible with respect to the materials. We think that, that has the greatest chance of moving things along more rapidly and ensure you don't have the bridge. CMT is one of those areas where because it was a sponsored research and relationship with a brilliant scientist over at Nationwide, Dr. Zarife Sahenk that we've left with, nationwide, the obligation to make the material for that trial, they simply haven't been able to make the material yet. So it's been a -- quite a delay. And again, I don't know when that delay would cease. But we are essentially waiting for material, which I know is -- I'm sure it's the frustration for Nationwide. It's certainly a frustration for ours. And I can tell you, I haven't spoken with Zarife Sahenk, it's definitely a definitely a frustration to the [indiscernible] principle investigator.

I guess is there any other program then that's kind of moving to the forefront preclinically versus these 2?

We have a few programs, but I don't -- we have a few really exciting programs, to be direct with you. But they're all preclinical, and I don't want to oversell them right now because I want to -- everyone -- we would fall in deaf ears anyways because people really need to get through 9001 in 9003, limb-girdle and 5051. But I think as we track into next year, we have, hopefully, from our perspective, very good clarity on the pathway of all of these programs, I think, sharing some additional information about these other programs will be very interesting, including hopefully getting into patients with some of these other programs as well.

And then with EXONDYS 51 at this point, how much room for further growth do you see there? And maybe help put that in context with VYONDYS 53 and AMONDYS 45.

So it's interesting. Theoretically, there would be an enormous amount of additional growth in EXONDYS 51, but that's only because that we are primarily in the United States right now. We have a managed access program outside of the United States, and we are -- the team is doing a very nice job with respect to it. But that, of course, is very limited. It's reactive, it's not an approval. So if we can't market it, it's only from a reactive perspective. And of course, that you don't get the kind of reimbursement and access that you would get if you have an approval. That's our biggest limit with EXONDYS. That's one of the exciting things about the PPMO. Probably unlocks the ex-U.S. opportunity in ways that the PMOs have been unable to do given their history and their -- the history of their clinical trials. So in the -- I would say in the U.S., EXONDYS continues to grow, but it is definitely moderating. We had said this that this is going to happen. Probably a couple of years ago when we're sort of predicting the day will come. The great thing is that we're serving the community with EXONDYS, and one thing I'll tell you for those who are people don't ask enough about this right now. And the compliance rate is really off chart with EXONDYS, AMONDYS and VYONDYS. And I think that speaks [indiscernible] to the benefits that we're seeing with these therapies. But as we're treating and serving the EXONDYS community, my VYONDYS and AMONDYS are doing brilliantly right now. Starting with the VYONDYS, VYONDYS is doing fantastic. Patients are benefiting from it. They are -- the compliance rates for it are great. It continues to grow very robustly. And we have a competitor there. But the competitor is not seeing a lot of traction thus far. I think there's a lot of reasons for that, including the fact that this team really understands how to serve that community and work with families to ensure that they have access to therapy and the like. And then AMONDYS is just the early days, but it's going brilliantly. I am still proud of the team. We -- AMONDYS got approved in February. The first infusion for AMONDYS occurred, I think, within a week of the approval, which you have to go behind the scenes to understand the amount of work that has to happen for that. I mean, it means they have to get label and get to warehouses and get through the entire start form process. That was brilliant. And the amount of demand for AMONDYS is probably greater than we had anticipated, and the team has just done a really good job of serving the community and the patient and the physician community with AMONDYS. So I'm really excited about where we are from a PMO perspective, EXONDYS, VYONDYS and AMONDYS. I think the team has done a very nice job serving that community really.

And Doug, maybe a last question here. How are you thinking about in-house manufacturing capabilities you're using outside companies at this point, I think, like Brammer, Thermo Fisher and others. But how are you thinking about that bringing that in house?

Yes. Interesting. So let's talk a little bit about the strategy that we had. And this is another one where we are very proud of where we are today. Again, when we sat down at the beginning of '18 and we said we've got to become the world leader in gene therapy, which means we've got to figure out the technical operations aspect of this. We have to make a decision. And the decision was an interesting one. The traditional decision is either you build it internally or you do a third-party manufacturing relationship. Now neither of those worked for us. If we built it all internally, we would have been years delayed because it really -- early '18, honestly, when we sat down and came up with this grand vision of being the leaders of gene therapy, we didn't have much, if any, real expertise in how to manufacture gene therapy. Today, by the way, we have hundreds of technical operations, professionals in the company. So we're very different [indiscernible]. So building ourselves didn't makes sense. Throwing it over to someone else and not becoming the experts in gene therapy manufacturing also didn't make sense to us. If we're going to really be the leaders. We have to be the leaders. And the good news is we sit here today, is that we came up with this hybrid model, where we would become the experts in the intellectually differentiating aspects of gene therapy manufacturing. That really is process development, analytical development. The great thing about where we are today, as we sit here with 9001 and 103 as an example, and 9003 where we are with 9003 and the like, is that while we have these partners, and we're thrilled with our partners and they are great partners, we are driving the process development, analytical development. As you may recall 2019, the big issue for everyone in 2019 was, are you going to get there from a process development perspective, from a yield perspective, are you going to get there? And as you may recall, the interesting and uncomfortable place we were in, in 2019 is that I was saying, we're going to get there, but we're not there yet. And the good news, of course, is we got there. But the better news even still is that we got there, that it was Sarepta's internal expertise that got us there. So already, we're in a great place. Now it may make sense for us to have our own manufacturing facility as well. And we're looking at that right now. And again, we'll probably look even more closely at that over the course of 2022 about how that makes sense. But even as we did that, it would still fit into a network or affiliate perspective for manufacturing because the amount of capacity that we need for all of these programs is voracious. And so it would never be the case where we would just, tomorrow, build the facility and say we're done and we don't need third parties. We'll always need some affiliation, I believe, between external and internal manufacturing. But the really intellectually differentiating aspect of manufacturing, at least from our perspective, is the expertise on how to make this stuff and how to release this stuff, which is process development, analytical development and the like. And the work that our technical operations team has made and the progress they've made over the last couple of years is truly remarkable.

Great. Well, with that, thank you so much, Doug. Thanks, Ian. Really appreciate the time.

Thank you very much. Have a great afternoon.