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

Hey, everybody. It's Alethia Young here. I cover large-cap, small, mid-cap at Cantor, biotech, of course. Very happy to have Sarepta Therapeutics. I have Doug Ingram, who's the President and CEO and Ian Estepan, who's the EVP and CFO. So obviously, you guys issued a press release this morning on 5051, so it was exciting to me at least. So let's start with that. Just give us the highlights of that release. And then, it also just seems like maybe a positive on the faster pathway to market and it seems like it was a little bit ahead of what I thought was the scheduled time for this. So maybe we start with there?

Sure, Alethia. First, thank you for having us today. We're really excited to talk about the progress we're making. And we are also very excited about that press release this morning. I think I've said before, this broad strokes, we have been -- while we started the year with the results that were confusing in the 102 and then we've had to execute throughout the rest of the year, we've been just executing as an organization. I'm really proud of the team. And it's proof in this most recent release. So I mean, the short answer is that it is ahead of schedule. So we were working -- our aspiration was to be in a place where we could dose our first patient by the end of the year, and there's a lot that had to happen for that to occur. And this, of course, is what we call Part B of MOMENTUM or what will be the pivotal trial for an accelerated approval. We've had great interaction with the division, got great insight from the division on that basis. We are ahead of schedule, and we will be submitting our final protocol, all of which has already been reviewed with and essentially blessed with the division in advance. We'll do that in the next week or so. And so we should exceed our goal of being able to dose our first patient by the end of the year. We should actually be more like the middle of this quarter, we should be in a position where we're -- Q4 where we're dosing our first patient. So -- and we're really excited about it. You can imagine why we're excited about it. In our initial review of the data that we had from MOMENTUM Part A at the 30 mg per kg dose, we saw exon skipping that was about 18x greater than what we would see with eteplirsen. We saw almost an order of magnitude, more dystrophin than what we've seen with eteplirsen. We did that with about 20% of the dose exposure in half the time. So we were looking at dystrophin at about 6%, and we looked at that in about 12 weeks. When we get out to a year, the modeling says we should very comfortably be over 10%. So we think we -- this all bears out and it proves to be safe and efficacious, we'll seek an accelerated approval on the basis of Part B and I think this will be potentially significant transformative new therapy for Duchenne muscular dystrophy and proof that our platform can reliably create more and more of these therapies to treat kids with Duchenne muscular dystrophy across different mutations.

I guess as it relates to the FDA, just -- I mean, I know you can't give away the whole thing, but just -- I actually was pleasantly surprised that they were agreeing with accelerating on relatively small sample size for the study. But just maybe talk about kind of their perspective right now in DMD, whether it'd be in the case of PPMO or whether it'd be in the case of gene therapy?

Well, let's talk specifically. Let me remind you that we're talking now about Cedar and about neuro -- the Neurology division -- actually Neurology I over in Cedar. The great news about those folks is that they have an enormous amount of experience with respect to Duchenne muscular dystrophy. And we've worked over the last 4.5 years to drive a very positive science-driven interaction and relationship with the division. So we have a good understanding of what they want, and they have a very good understanding of Duchenne muscular dystrophy and what Duchenne needs. And so just to remind you, the approach we're taking is actually fairly well trodden. The agency already has a guidance on dystrophinopathies and the use of dystrophin as a surrogate endpoint. So it doesn't surprise me at all actually that we're in a good place right now. Part B, as you've seen, well, it will be about 20 to 40 naive patients. There'll be another 20 or 30 patients invited to participate from 1 of the 2 studies that we had that led up to this, either the single ascending dose or the first part of the multi-ascending dose study. We'll be looking at dystrophin production at 28 weeks. So that will be sooner than we've ever in a pivotal trial looked for dystrophin. And then on that basis, if all goes well. And if the safety looks good and the dystrophin expression looks good, we'll pursue accelerated approval. Obviously, no guarantees until we do. The agency doesn't guarantee things of that sort. But I will say that the division has been very consistent historically over its willingness to consider dystrophin production as a surrogate endpoint for an accelerated approval and they've confirmed in writing that precedent with us.

Okay. So dystrophin is the primary endpoint in the study because I wanted to just confirm that in the release.

Exactly.

Oh, that's great. And is it 28 weeks, too?

28-week look, yes.

Okay. And then, so you don't have like a comparator in the study?

No.

And so notionally, like how does the FDA, I guess, think about like what's the hurdle over dystrophin they need to show? Is it kind of compared to a eteplirsen or how do they think about that?

Well, historically, the way they've looked at it is really eteplirsen set the standard. So if you could make equal to or more dystrophin than eteplirsen, then that is sufficient for a surrogate endpoint. Now obvious -- so if we could show a 28-weeks dystrophin equivalent to what we've seen with EXONDYS, on the face of it, that would be sufficient for an accelerated approval. That is not in our goal nor is it the product profile for us. Our intention is to show significantly greater dystrophin than that. And then we'll get -- I mean there are a number of reasons why this SRP-5051 could be a step order change and benefit to children with Duchenne muscular dystrophy. It's the amount of dystrophin that it can make or at least the early modeling, which suggests it is an order of magnitude greater than what we're seeing with EXONDYS, which is already providing an enormous amount of benefit to kids. It's the fact that we go to monthly dosing, which is tremendous that kids right now go have weekly doses, either in the hospital or in their -- more often than not over time in their homes. Speaking -- I think this speaks reams to the PMO franchise itself, both EXONDYS, VYONDYS and AMONDYS, even in the midst of the pandemic, these kids fight to stay on therapy and our compliance rate is well over 90%. But the ability to actually get a more profound therapy, even than EXONDYS, maybe even in order of magnitude, more profound and only have to dose it and get an infusion once a month will be just tremendous, if it all bears out.

Yes. That seems super exciting and certainly, ahead of kind of where my brain was at on this. Maybe just go back and just kind of talk about Part A. I mean, I feel like you were modeling -- like if you think about it, you probably could get to like that 10% level. I mean -- but you really don't have to because 10% is probably more like what, 1% or 2%, right? So it's like you don't need like a fivefold increase, but it seems like you're pretty much set up to have some sort of increased benefit in efficacy with this model.

Yes. Look, we -- it's interesting. I mean if you had told us -- when I joined Sarepta, if you had told us we had the early results that we were going to have for the PPMO, I think we would have been a little slack jaw, not sure we would have even believed that was possible because we have never looked at dystrophin this early. Remember, we looked at dystrophin at 12 weeks. Like, that makes a ton of sense for gene therapy because gene therapy just works much faster. The PMO technology takes a long time to create dystrophin. And in 12 weeks, we saw over 6% dystrophin. I would remind you, compared to eteplirsen, we looked at -- eteplirsen is about 0.5% in a year, and then it continued to grow over time. So while this is only modeling -- 6% is wonderful. But if you do the modeling, we're pretty confident that if you stay consistent on the therapy for, let's say, 12 months, you should be pretty comfortably above 10%. And that's -- there's a lot of literature that would say you get -- even very small amounts of dystrophin are beneficial. The Amthor papers, literature that came out within the last 2 years, did a really interesting review and showed that even very small amounts of dystrophin provide phenotypic benefit. But if you can get over to -- up to like 5%, you're going to see a profound change. And so when we think about 10%, the potential at least to play a really profound role in slowing this disease down and giving these kids more freedom and more time with their families, I think is just really, really possible.

So maybe just -- I know when the data first came out in May, people were kind of like a little bit focused on this hypomagnesemia, which I think is manageable. But like talk about what -- you obviously had the conversation with the FDA and also just talk about how you look at it now from a patient perspective, if this becomes a commercial asset.

Yes. Well, look, if we are ultimately right in our hypothesis -- we have to take hypomagnesemia very seriously, right? There is -- for a host of reasons, we've got to make sure that this is as we believe manageable and monitorable. But what we've seen so far leads us to believe that the hypomagnesemia that we've seen is both manageable and monitorable and can be addressed through the use of oral magnesium supplements. So frankly, in the context of the disease that we're dealing with, if this all works the way we hypothesized that it will, and we see great dystrophin and a very manageable safety profile and children on this therapy are required to prophylactically take some oral magnesium along the way, it is not going to be an issue in the slightest. I am quite confident there is -- there won't be a patient or a family anywhere that would complain about that. So at least as we know right now, this is the one thing that we need to look at in the next -- there's 2 aspects, of course, of therapy. You've got to make sure the therapy is efficacious that is doing something that's very significant for patients in a positive way. And of course you got to make sure it has a manageable safety profile. So we've taken the issue of hypomagnesemia very seriously. But all of the data that we have so far gives us confidence that we can, first of all, monitor it to make sure that no child in the study is going to be an untoward safety risk and also very manageable, at least, as we've seen so far. So we feel very good as we track toward the next study, which will start very soon.

Soon. Is it something people would just kind of prophylactically take magnesium or would they have to be monitored? I guess, it's kind of a little bit of a different kettle of fish for people?

In the study, we're going to obviously monitor the kids very closely along the way. Ultimately -- and I'm sure they'll still be monitoring post approval, and that's not -- that will be an issue because remember, these kids are going to be seeing a health care professional every month, which is down from every week today. And then, I would envision a world in which kids would be -- would take prophylactic magnesium likely.

Yes. What percentage of people kind of get eteplirsen at home now?

Goodness. Once a lot of kids get the therapy in the hospital setting to begin with, but I'm going to say and if I've got the number wrong, let me know, but I think we get up to about 80% or more of kids over time that eventually move over to in-home infusion. This is much more convenient for the children and their families. So we have nurses that come to their homes once a week.

Awesome. One thing -- I mean maybe you can agree or disagree or further the commentary. Just it seems like, to some degree, like this is another optionality on gene therapy DMD as well as that you could have something very, very efficacious beyond eteplirsen that is in the world of DMD, and you can obviously go across multiple exons. And I mean, I guess, how do you think about that -- this product suite in light of what's going on with gene therapy as well?

Well, there's a whole bunch of thoughts there. So first of all, let's talk about what the opportunity is for the PPMO platform. So at least theoretically, we can treat about 80% of kids with the PMO or if the peptide-conjugated PMO works, the PPMO. And the reason I say 80% is they're about 20% of mutations, fairly rare. They are just not amenable to exon skipping. So technologically it's not possible. Now the truth is the first 50% or so we can do this simply like we're doing right now, very simple. The last 40% or so are so rare that we need to come up with a different -- we have this idea of a basket approach for the real rare exons and we're going to work on that. But theoretically, we can get to about 80% of kids with Duchenne muscular dystrophy right there. And then, of course, we've got gene therapy as well. There's a whole -- we're going to take every modality possible in an effort to save the lives and extend the lives of kids with Duchenne, extraordinarily excited about SRP-9001,our gene therapy as well. So we've got essentially multiple shots on goal to bring a better life to kids with Duchenne muscular dystrophy. But I also think there's a real possibility, if both work, that these therapies will be synergistic. They will work together in many ways. One -- some of them may be monotherapy in different parts of the population. There will be -- for instance, there will be kids that will screen out of our gene therapy. There is about 15% to 17% of folks that will be rh74 antibody positive. So until we fix that, and we're working on it, there's about 15% to 17% of kids that will screen out not be amenable to getting gene therapy. So there's an opportunity for the PPMO. There will be places in the world and even maybe around the country where certain therapies are available for other therapies. So there's an opportunity to sort of fill in all the gaps, both with a chronic therapy of PPMO as well. It was a one-time therapy with gene therapy, ex U.S. and even maybe in the U.S. to some extent. But there is also a real possibility, and we need to do more work on this. I don't want to oversell this, but there is a real possibility that the carminative use of a one-time therapy like our SRP-9001 that will -- if all works well, and I certainly have drank the Kool-Aid on this, will be this profound improvement in the lives of kids plus a longer-term chronic therapy as they get older. That could really be an optimal way to ensure the long life and as rich a life as possible for these kids. But we have to do work there before we can confidently say that that works from a pharmacoeconomic perspective. But I think it's a real possibility. I'll give you an example. Our PPMOs and our PMOs -- or I'm sorry, our gene therapy. Our gene therapy works on skeletal muscle and cardiac muscle and diaphragm muscle. All extraordinarily important as this disease, when it takes kids, takes them often because of either pulmonary issue or a cardiac issue. So that's extraordinarily important. Less important today, but something to consider is that smooth muscle needs dystrophin as well. Gene therapy doesn't go to smooth muscle. There's no tropism in the smooth muscle. If we're able to extend greatly the lives of children with Duchenne muscular dystrophy, so that the day comes, and we're not talking about children with Duchenne muscular dystrophy. We're talking about people with Duchenne muscular dystrophy and middle-aged people and thinking maybe even elderly people, well, then we're going to have to really think about addressing the smooth muscle issues as well and the PPMO has an opportunity to do that because the PPMO would affect the smooth muscle. So I think there's a real possibility for -- in addition to use in different places, in addition to essentially risk reduction across platforms, I think there's a possibility these therapies could be used synergistically if both work.

That's interesting. Maybe talk about how this -- your PPMO platform and the data you've generated so far stacks up against some of the other competitors that are kind of roaming around kind of with next-generation skippers of sort?

I don't -- well, I'm going to do work really [indiscernible]. Whenever you ask me competitive issues, I always get too competitive. So I'm going to be -- I'll try my best not to do it. I will only say that we alone, among those out there right now to the best of my knowledge, have actual results in actual human beings. I think that's important to remember. It is very difficult as we have seen over and over again over time. not only to construct a therapy that can work at the right place, but to get it to the right place. I mean that is the limit on our PMOs. And yet, we get enough to the right place that we've been able to make significant phenotypic change. And I think the gold standard right now is EXONDYS, VYONDYS and AMONDYS, but it's very difficult to do. We tried this once before with a peptide-conjugated PMO, this B-peptide significant years ago, and it didn't work in fact. It was in animal models. We found very quickly that it was not possible to do this. So what we've been able to do with the PPMO is enormous. And the fact that we've been able to do it in patients and seeing these great results is different. Because as we've seen before, and not to -- I'll just throw out names from the past, and we've seen with drisapersen and we've seen with Wave that it's one thing to do something in a cell culture that looks interesting or maybe even in an animal model, but it's not the same thing to do it in patients. It's a very, very difficult thing to do. So this is enormous. No one -- there is no one today -- there's no one today that has the results that we have with our PMOs, EXONDYS, AMONDYS, and VYONDYS, which, by the way, shout out to my commercial team is doing brilliantly right now. We're really doing exceptionally well. And there's certainly no one that has the results in patients that we have with our peptide-conjugated PMO. So we're very confident about it. Because what our peptide does, it's exciting and the PMO does. So we know when it gets to the right place what it does. We know it very reliably induces exon skipping, like microsurgery. We know that in the PMO safety profile, we're confident about where we're going to end up with the PPMOs. What the peptide does that's brilliant is it is not enough to get to the muscle cell as we know. It's not enough. This is something that people often get wrong. It's not enough to get inside the cell, by the way, because a lot of products will be trapped inside the endosome. So you can get in the cell, but then you're trapped inside the endosome and you don't traffic to the nucleus and so you don't do your job. The great thing about the peptide is it gets in and it's not trapped. It disassociates from the endosome and it gets the PML into the right place. So that's a lot of work. And you can show a lot of really interesting things on a PowerPoint slide. But empirically doing it with patients and seeing great results is a different thing. And there just simply today isn't anyone that's been able to replicate what we've done with the PPMO.

That's fair. Maybe to round out PPMO, just one last question. I know it's a little bit of what have you done for me lately complex, but where might one go next with the PPMO technology? Obviously, you talked a little bit about the utility beyond DMD and to other neuromuscular or other neuro-based diseases?

I'll tell you what. We'll come back and probably on earnings call or maybe early next year and talk about other places. There are a lot of diseases that can benefit from the type of steric blocking that the PMO induces. And if we have a therapy that can get to the right place far more reliably and easier than the PMO technology can do because the base PMO technology is a neutrally-charged molecule, and it's more difficult. Then, I think there's a real opportunity to think about other areas we can go. Before we even get there, we need to get to more Duchenne kids. So the very next thing we need to do is we've created a lot of additional constructs for other skip amenable mutations. We need to get those therapies moving as well because it's not our goal simply to do a proof of concept and have a better therapy for kids that are exon 51 amenable which is about 13% in Duchenne. We want to get to first the next 50% and then beyond that with a more innovative approach with a basket approach to get to even greater than 50% of Duchenne and then also get to start exploring other disease states as well.

Awesome. We'll talk a little bit about 9001. I guess maybe I'll try to group it together like you have the Part 1, Study 102 and learnings from there. Talk a little bit about like now that there's been a very long period of time now from the data coming out to now, some learning in your perspective. And then, you obviously showed data from Study 103, which is positive. And so when you put those together, just like kind of talk about your confidence level as you head into 301 and just what the learnings were over this year?

Well, the first thing I'll say is I'm extraordinarily confident it won't come as a surprise to anybody. But I am very, very confident. Now the truth is my confidence means nothing. The evidence is what's going to matter. But 102 -- the top line of 102 disappointed all of us, of course. But it was very obvious, very quickly why that occurred. And the primary issue was that in the 6- to 7-year-olds, the baseline imbalances were insane. They were just insane. They were almost 5 point delta between the 2. So all the kids on therapy were really severe. All the kids, they were going to be measured against the placebo arm were mild relative to them. I don't want to -- it's a always painful to say mild with Duchenne. There's no such thing as mild to Duchenne. But significantly earlier in their disease progression than those kids. And that just made it impossible to tease that difference. How important is that, walkover to the 4- to 5-year-olds and 16 children, they had the same baseline characteristics. We saw a very significant, both clinically and statistically significant difference between those 2 in only 48 weeks in a degenerative disease that's going to only become more profound over time. So we feel very confident about it. The baselines were the big one. The second thing that occurred as we know, is that because of the titering method that Nationwide used, when we went back and used a more precise titering method after the fact, what we saw was that about 60% of the kids had a lower dose than what we would have intended for them to have. That no doubt has an impact on the results of the study. But I do want to point out that microdystrophin, again, you can take this all with a grain of salt. I'm the CEO of Sarepta, you can imagine what I believe. But microdystrophin is so powerful that even if we didn't hit the target dose, and that happened with the 4- to 5-year-olds, we still saw a very clinically significant and statistically significant benefit. And we saw it in 16 children. It was pretty surprisingly good. So that results were great. 103 was extraordinary watershed for us -- moment for us because that's the commercial material. That's the material we're going to use for the commercial launch, both in the United States and around the world for this therapy. As you know, we saw great expression. We saw the same safety profile that we've seen with the clinical material. That's important. That's extraordinarily important. And then, we saw tremendous genome copies per nucleus. That's probably the -- people probably overlook at that. That's one of the most significant things because that great genome copies per nucleus, you're not going to get great anything in the long run. And we had about 3.8 genome copies per nucleus. So a really good expression in microdystrophin over 50%, 54%, I think, if I'm not misremembering. And then great intensity, great -- the vast majority of the kids' fibers were protected. So that was just really exciting for us. So we took all that. We've gone to the division. We had a meeting with the division middle of this year. That went very well, good dialogue from them. On that basis, we're going to be starting 301 any moment. And we're going to have a meeting in the -- hopefully, it won't be -- it won't be in September, but it will be in October. We'll come together and have a discussion where we talk about -- we'll talk about a number of things together. We're going to talk a bit about the design. I've been a little bit -- I've been a little sketchy on the design. So we'll come together and I'll really talk about the design for the 301. We'll talk about why we decide it, why we're excited about it, why we think it has an enhanced probability of success. And then, we'll go over some data. We'll go over some additional data. So we'll have -- primarily, we'll have the 103 data for the first cohort and some of the functional data for 6 months out of that first cohort of 101. Once we get that all collated and looked at and then we'll look at that versus a natural history cohort we'll also have a 3-year data from the 101, which I think if you put those 2 together, that will be really a pretty interesting look and we can look at what we think about the therapy, and we'll do that in the next -- sometime in the next few weeks when we get everything together and we're ready to do it.

All right. Well, that was going to be my next question was how to think about design to 301, but it sounds like I'm not going to get a lot...

I'll give you the broad strokes, but I'd frustrate you on the detail. I mean, the broadest -- what we'll say in advance, it's not going to be particularly exotic, okay? So I don't want to create the impression that there's something weird in there. It is a double-blind, placebo-controlled trial. It is a 52-week endpoint, primary endpoint. It is using NSA as the primary functional output. So essentially, there's nothing particularly surprising that's coming out of that. It's going to be fairly traditional in that regard. We will have -- we will -- we stratified in 102 on age, and that's really important, of course, because the trajectories do relate to age. But it turns out with the benefit of our information from 102, it's not enough. So we will also stratify on some baseline characteristics as well so that I can fairly, confidently predict that we will not have a problem with baseline characteristics issues in 301. And then, there'll be other things in 301 that we'll talk about in more detail. And I'll give you -- I haven't given and I won't give you the [ end ] of the study yet, but I'll give you all of that, talk about that when we come together.

All right, sometime in October, right?

Yes.

All right. Just broadly, how the conversations been going with the FDA around 9001 as data has emerged?

Well, the short answer is we had that meeting in the middle of the summer that we talked about afterwards, the OTAT to remind you. Remember, the group that deals with the gene therapy, I'm sure everyone knows this, is different than Cedar and Neuro. This is a group called OTAT. It's in CBER, a different part of the division. Those -- the very, very overworked group of -- very busy, obviously, the amount of INDs for cell and gene therapy are enormous. So the meetings that one has tend to be very formal. We don't have informal discussions or dialogue with the divisions. We had a formal live meeting with them virtual, but live meeting with them earlier in the summer, and that meeting went very well, and we were given the green light on the protocol. So we're in good shape.

Maybe the last one, just anything that you found very interesting that you want to highlight from World Muscle that recently just came out?

I've been really focused on the PPMO right now. So nothing real significant. We're pretty myopically focused on our own stuff right now.

Well, that's kind of exciting. Well, with that, we're at the time. And thank you, Doug. Thank you, and look forward to this update in October and congratulations on the agreement with the FDA today.

Alethia, thank you so much. Really appreciate the opportunity.

Take care, guys.