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

So thanks for joining us at the Bank of America Healthcare Conference. This is Day 2 for us here in Las Vegas. I'm Tazeen Ahmad one of the Senior Executive Biotech Analyst here at the bank. It's my pleasure to have our next presenting company with us, Sarepta Therapeutics. Presenting for Sarepta will be CEO, Doug Ingram. So Doug, welcome. I think this will be your first time for participating at our conference as CEO of Sarepta. So thanks for joining us.

It is. I'm great -- I am excited to be here.

So maybe we could start off with a quick 2-minute overview of the company, what's been going on with Sarepta and then we can go into more detailed Q&A if that makes sense for you?

Sure, let me try to be brief about something that's difficult for me to be brief about. And it's -- Sarepta, as I think everybody knows, is a genetic medicine company with multi-platform gene therapy RNA, also versioning gene editing. We have 3 approved therapies. We're commercial -- we're a commercial stage company with preapproved therapies in the United States. And we've done a very deep pipeline, but also we're in late-stage development in both our next-generation PPMO, our next version of RNA. We're actually in a pivotal trial for that as well as being in our pivotal trial for SRP-9001, which is our gene therapy for Duchenne muscular dystrophy. And I think the one thing I'd say about this year and about where we are in what is -- I mean, sorry for reminding us all very extraordinarily challenging market is that I think in the long run, we ought to be the kind of company that people are going to look to as we begin to get past the nature of this biotech downturn and we start thinking about reinvesting. Sarepta is not an early-stage company. We are a company with commercial sales. We've been growing our revenue over the last 5-plus years at about 40% CAGR. In fact, our most recent quarter, we grew at 50% that quarter over the prior quarter of the prior year. We are in late -- we have $2 billion on our balance sheet. So while it is frustrating to look at the external market right now, we are not -- this doesn't have any real effect on our ability to execute. We can keep our head down, continue to execute and wait for this market to become more rational. We are not only advancing the science of genetic medicine. But we -- as I said, we're in pivotal trials for a really exciting next-generation version of RNA. But also what I earnestly believe with enormous amount of conviction will be the most significant launch of a gene therapy -- an in-vivo gene therapy yet in history, and that will happen in a very short time if our trial reads out positively. And I'm very excited about that as well. And we've got a great culture.

Okay. So there's a lot going on at the company. Yes, you did emphasize that you are not an early-stage company. We're, in fact, quite commercial. You have 3 approved assets: EXONDYS, AMONDYS and VYONDYS. And by our estimates, we think that's a $1.5 roughly opportunity. Can you talk about the launch of the 2 newer products and where maybe there was upside to what your expectations were for AMONDYS and VYONDYS?

Yes, so just to remind everybody, EXONDYS was approved back at the end of 2016. Interestingly enough, EXONDYS continued to grow in the first quarter of this year, 5 years out. So that's actually very encouraging. And then we launched VYONDYS at the end of 2019 and we launched AMONDYS last year, February of last year, we got our approval for AMONDYS. They're all -- just so we're clear, they all serve subpopulations of Duchenne muscular dystrophy, and I'm sure everyone knows, devastating invariably life ending disease for these kids. EXONDYS treats about 13% of kids with Duchenne muscular dystrophy. The literature would suggest that AMONDYS would serve about 8% and VYONDYS would serve about 8%. So far, we seem to have gotten that wrong with AMONDYS. Now we'll see. We're not ready to stake our claim on what the real prevalence is for what is called exon 45 amenability -- those are the kids that would be benefited by AMONDYS. But the performance of AMONDYS really exceeded our expectations. We saw a signal of this. We have an ongoing trial, this worldwide trial called ESSENCE where we're -- it's a placebo-controlled trial where we're treating exon 45 kids or AMONDYS as well at the same time as exon 53 kids or VYONDYS. And we did notice even then that while we should have been enrolling them about the same rate, AMONDYS kept eclipsing VYONDYS and in fact, fully enrolled before VYONDYS ever got enrolled. So that gave us a signal that there may be a difference in prevalence. But as it sits right now, we're -- AMONDYS is just doing brilliantly. I think the key not being fairness to the team, both on medical affairs and our commercial colleagues, we are very good at what we do commercially, with all respect and I'm trying my best to be humble. We are very good at serving the rare disease community and the Duchenne muscular dystrophy community. That certainly plays a role in this for my team. But in fairness also, I do think that the prevalence of AMONDYS is probably significantly higher than the literature would have suggested.

I do like your brand and [indiscernible].

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So as we think about the gene therapy readout for DMD, I think you've been asked every question in 10 different ways now. But how is enrollment going? Was there any impact from Omicron early on in the year? You only recently started fully enrolling, right? And how do you expect the announcement from your competitor, in this case Pfizer, that they will be or they are, maybe at this point, starting to enroll patients again in the U.S.?

So first thing's first, just to remind everybody, the SRP-9001 are a gene therapy for a truncated, but functional form of dystrophin 9001 protein. It's a EMBARK. It's 120-patient placebo-controlled trial. It's a global trial. We started dosing nearly in the United States and now we're opening sites up around the world. Enrollment is going great. The big challenge for enrollment for us is continuing to execute and get sites up and running. We are not going to have a problem with demand. The amount of interest and demand for SRP-9001 is frankly enormous, both from the physician community and the investigator community, but with ferocity, the patient community. So these are going very well. The big issue for us is just continuing to get sites up and running. So we are on track there and it's going well. For those who may not know, we have a -- there's another company that has a gene therapy. There's 2 other companies that have a gene therapy for the treatment of Duchenne muscular dystrophy. One is a company called Solid. I'm not sure if they're on clinical over now, but they're not dosing patients and they haven't for quite some time because of some safety issues they've had. They use the AAV-9 and that's had -- at least had some real significant issues with safety. Pfizer likewise has a -- very similar to Solid, has a gene therapy that deploys AAV-9. They have struggled with some pretty significant and frankly worse than significant outcomes from a safety perspective. They just announced recently that they are going to begin to start enrolling their trial again around the world. But that won't impact us. And it won't impact us from an enrollment perspective certainly for a number of reasons. One, it won't impact us because the demand is through to roof for a gene therapy like SRP-9001. I also think it won't impact us because their protocol is very different than ours. Their protocol relative to our own is very onerous. So as a result, I suspect that the safety issues that have been observed with their therapy over the last many years, their protocol requires that the children be dosed in the hospital and remain in the hospital for 7 days. Our protocol with the exception of Japan, which has a different perspective on infusions, everywhere else in the world, our protocol is an outpatient protocol. So that's going to be very different. We also have never had the clinical complement manifestation that saw that Pfizer had as well. And I think that's going to put us in a good place from a recruitment perspective.

Yes. So you said a lot there. So mechanistically, why do you think you haven't seen the type of safety observations that the other companies have seen, at least so far?

Yes. So there's a lot of working hypotheses on that, and let's be very clear. Let's take off the table I think the early days, there was this thesis that maybe we've just got lucky, right? But there's no luck in this. We have dosed far more patients than anyone else with SRP-9001. Before we even started EMBARK, we had already dosed over 80 patients. And not only did we dosed over 80 patients, we've dosed the youngest children with Duchenne of anyone. We've dosed the oldest children with Duchenne. We've dosed the lightest kids with Duchenne. We dosed, by a long shot, the heaviest kids with Duchenne. We've dosed kids that are nearly 20 years old. We've dosed kids over 80 kilograms as well as very young children as well. And we just never seen this clinical complement activation or this [indiscernible] TMA or obviously any of the kidney involvement or worse than others have seen. I think, look, in the end, the most likely reason for this is the choice of rh74. There may be other compound, other contributing factors, but it is almost certainly the difference in vectors because it is striking that you see this with Solid AAV-9. You now see this with Pfizer AAV-9. And we never got a hint of this pre-clinically, and we don't see it clinically. Rh74 clears the body much faster with AAV-9. That may play a role and AAV-9, they just be around longer, they have the opportunity to start involving itself in the clinical complement cascade and the like. But we're feeling very good about where we are from a safety perspective right now.

So at this juncture, what are the chances that there could be an unexpected safety observation just given everything that you said about the length of time you've already spent enrolling patients, the number of patients, the follow-up has been had?

Well he was -- or maybe scientific, we have to say, we -- obviously, all of our conclusions always have to be tentative, but we do have an enormous amount of experience. I mean our first -- we've done -- we're now in our fourth trial, our first trial dosed our first kid was dosed in January of 2018, if I'm not mistaken we've seen those kids 3 years out. So -- and we've got, as I said, we're well over 100 kids that have been dosed with SRP-9001 right now. So while this is a place where humility -- we should have a ton of humility and be very thoughtful and careful about it, not the arrogant about our views. I think we're -- the evidence is certainly mounting that we have a very consistent safety profile. And just one other thing to know, 9001 is one of a number of gene therapies in a platform that we use based on rh74 and MHCK7. We have 9003 as well its limb-girdle, the 2E, which is for a beta-sarcoglycanopathy. And those kids have been dosed with an rh74 as well, same 2 one of them 2 pillars have exactly the same dose amount, and we've seen exactly the same safety profile there. So we are getting very confident about the safety profile of SRP-9001.

Pfizer has had a pretty high screen out rate for enrollment of its own pivotal trial. Can you give us just some qualitative feedback on what kind of screen out rates you're seeing so far?

Yes, I can give you quantitative because we've done a seroprevalence study. And so in addition to all -- we do a lot of screening and know that we've done a lot of screening for a very long time, and it's not just about our trials, but we do a lot of screening for limb-girdles as well. And the good news about that is you can screen much older folks as well as you can screen adults because a lot of some limb-girdles are adults as well. And we use -- so first of all, I understand the way we screen. We screen in a very conservative way. We screen for binding antibodies, right? Neutralizing antibodies are a subset of a broader group, which are binding antibodies, but we have taken a very conservative approach and we screen for binding antibodies. And the good news is we have a very low screen-out rate relative to others. So our screen out rate is just -- our seroprevalence study screen-out rate is just under 14%. So soon, somewhere between 14% and 15%, maybe 16% is the screen out rate for rh74. And another really interesting and observation is you would assume naturally the screen-out rate would increase over time. So if you look to 20-year-olds and 30-year-olds, you'd really start to see a significant difference, right, environmental exposure. But interestingly enough, we don't see that. You do not see a kick-up in screen-outs as we begin to screen very older patients. And that probably is because having chosen rh74, which our agents for RECs comes from a primate, I think the potential for an environmental exposure to something that would react to an AAV of rh74 is just much lower. Our compatriots Pfizer as an example does appear to have a much higher screen out rate and they screen for a subset, they don't screen for binding antibodies they screen for neutralizing antibodies. So there does appear to be a significant difference in the environmental exposure to AAV-9 versus rh74.

Okay. So are you still on track for a, midyear 2023 readout?

Read out.

Okay. Next question is what are you defining as midyear?

I'm not going to tell you that. We have those standard air around that of course. So we obviously.

So midyear for me means for summertime?

I think that's a fair way to look at midyear.

But the summer could last until September.

We are doing very well from a recruitment perspective. We're doing very well from a site activation perspective, getting ourselves a little – we're maneuvering room.

I'm really asking so that we can set the expectations early on so that people after this can say well, you said midyear and when is your data - realistically, I'm not trying to be kidding?

Midyear is going to be in the summer -- just like we had imagined it would be at the beginning of this. Now things are going great. So things are going really well right now. Obviously, and just so we're very clear, we're not lazy we're not like to share about this. Every day, we can get these kids dosed it’s a day that we can get the readout, which is a day earlier for the BLA filing, which is a day earlier for the BLA approval, which is a day earlier for a game to get a sucker they can save the last. So we're working like mad, but it will be around the middle of this year, we'll be fully dosed.

And you'll tell us when those studies are enrolled?

Yes.

Okay. So that will help us with that as well. All right so now if we fast forward to the readout, what are you going -- or what would be the plan on what we should expect to see at top line?

Well, I think our primary functional endpoint is NSAA. I think it's a 120-patient study, 1:1 randomization. So the NSAA, would be our primary. And then we'll -- we would this is going to be our BLA filing. So we would be very transparent. It will be NSAA we have a number of other really interesting secondaries, we've got time to test secondaries that are very interesting. One of the exciting things about our data, 101, 102, 103 even some data we have yet to disclose, but we'll disclose later is you see very consistent results and you see them across measures. NSAA, the primary, but we have a lot of time tests. We see these kids doing brilliantly on time test. We would be able to -- we would show that as well. And then, of course, then there's a really interesting exploratory endpoint, but I myself am very excited about, and we'll see how it ends up working, but these kids have a wearables as well. So there's a -- I think the real opportunity would be potential use of wearables in the future for these neurodegenerative diseases. We just get a wealth of additional information about how these kids move and the likes. So I'm very excited about that. But we'll have to see how that works out. And then of course, expression and then finally, safety, which I think is paramount with respect to gene therapies. So on NSAA is it good enough to be static or does there have to be a threshold to make it clinically meaningful? What we've seen so far, which I hope we would replicate and EMBARK is not only enormously statistically significant across all of our studies in our last study with .0009. But it was clearly clinically meaningful. We saw a 2-point downside on our 34-point scale in 48 weeks. And just so we're clear, this is a snapshot and along degenerative disease. So if you can see a change in a small cohort at 1 year, that says that you're going to see a significant benefit to these kids as this ferociously degenerative disease is robbing non-treated kids of their movement wellness therapy is protecting them. That's exactly what we see. So we -- you look at our data, and you'll see it 1 year these kids will have depending on the study to 2.5, 2.8 points benefit over a well-matched propensity-matched cohort. And then if you start looking out a few years, you see exactly what you'd expect for a disease-modifying therapy. Our first kids, there's only 4 of them open label, but already telling data. These kids have now -- will have data on 4 years, I think, sometime this year, but we've had -- we've announced 3-year data on these kids. And these kids now 3 years out are almost 9 points different than natural history would say they are. And they're getting -- by Duchenne unfortunately, by Duchenne standards, they are getting significantly older. These kids are 9 years old, maybe some of them might even be 10 years old now. If you've seen a kid with Duchenne muscular dystrophy, I mean they are unfortunately falling off a cliff in this age range, very typically, many of them will end up in a wheelchair in 9 10. By the time they're 11, I think the majority of kids will end up in a wheelchair. So the ability to see this over time and to see this gapping versus natural history is, frankly, everything we would have hoped if the exception of this journey.

Okay. The other big question that we get is -- to me, it's been pretty clear on what your plan for path forward is you're going to wait for your sort of Phase III EMBARK study to read out and your assumption is you will then assuming the study is positive, applied for approval. But there is this constant conversation about they could definitely imply early. So I'm not human you say that, but why is it out there that people think that that's what you're going to do maybe explain the premise of how you could potentially apply it early?

Yes so let me say, I'm going to tell you what I've said in every single meeting, public or private from the beginning. I've never varied this statement. So let's be very direct about it. And in a sense, I caused some of the confusion because we're so transparent, but I don't feel that we would -- we could be anything but at the size transparent. So let's start. We have this really exciting placebo-controlled trial, very well-powered study EMBARK. That is our pathway to approval and our pathway to success. And that's not going to happen in some distant future time. That's going to be right around the corner. We're dosing those kids. Even as we speak, we're getting the sites up and running, even as we speak around the middle of the year, we'll be fully dosed around the middle of next year we'll have the top line on that study. I have an enormous amount of conviction as to all of our scientists and development people at Sarepta that we're going to be successful given all of what we've seen and how well powered that study is. And then we are going to probably sooner than people would normally imagine we're going to be able to file a BLA because we're going to do a lot of really innovative stuff to put ourselves in a position to file a BLA very quickly. And then sometime in hopefully, the earlier part of 2024, we'll have our approval in the United States and then around the world, and we'll start bringing this therapy not to hundreds of Duchenne muscular kids and bringing them a better life, but thousands of kids around the world who will have a better life because of 9001. Now I've also said, and I'll say again, of course, the question comes, people have been asking. Well, look at your -- the believers say, look at your data. I mean it's very consistent. It's very clear that you're getting great functional results. These kids are very different than natural history. You've dosed over 80 kids. You have 102, 103. We have and integrated analyses across all of them. Why are you not talking to the FDA about the potential for the use of, for instance, dystrophin as a surrogate biomarker to get an accelerated approval. And it's not a silly question because that's exactly how EXONDYS, VYONDYS and AMONDYS were approved. And in fact, I can tell you EXONDYS, VYONDYS and AMONDYS have been a much better life to kids and they do it with a much lower level of dystrophin than we see by orders of magnitude versus what we see with 9001. And so I've been very honest with people that we are going to have those conversations. I'm going to teach about when and to what extent is it probably isn't going to be one conversation, it will be a couple. But over the course of this year, we're going to have exactly that discussion with our division, OTAT, and senior leadership at the FDA about whether this is the right opportunity to bring this therapy faster than kids who are waiting. But with that said, I want to be very clear, I think the probability of that is not the base case probability, I think it's lower than 50% for the simple reason that we don't have a precedent in OTAT in the CBER side on cell and gene therapy for an accelerated approval to the best of my knowledge, there's never yet been an accelerated approval approach for cell and gene therapy outside of oncology. And so that makes it very difficult to feel an enormous amount of confidence that, that could occur. Why are we doing it? It's the low probability, why are we having the conversation. We're having a conversation for the simple reason that we are a mission-driven company every single day in the United States, a child with Duchenne muscle dystrophy dies. And then some other group of kids are going to lose their ambulation. And then some other group of kids are not least their upper in mobility and then some other group of kids are going to go one of them later and then eventually die. And our therapy doesn't bring them back. It stops the generation. It doesn't bring muscle back. So we have to at least try and have that conversation. By the end of this discussion, I think somewhere in the United States, probably somewhere in the world with Duchenne will buy. So we're going to have those conversations. But I want to be very clear, that's not the base case. And that's not the assumption. I invested in throughout the last year, as I've done, I think most years. And I think when people ask me about my investment, I said, look, as an investor, I'm investing on the thesis that EMBARK's going to be successful, and that's going to be the basis for our approval. And I would suggest that, that's what investors ought to do as well. But I'll use EMBARK as their investment thesis.

Okay. Thank you for all that color. So with that, also, you've got Robert Califf for his FDA Commissioner now. He's been pretty public about his view that he doesn't want to eliminate the accelerated review process but he does want to, I guess, revamp it a bit. How does that come to slate, if at all, in your upcoming meeting?

Yes, there's been a lot of color around the accelerated approval pathway over the last many months, some of it politicized due to the Biogen approval and the like. And I think -- and that's -- we have to be very careful. The accelerated approval pathway, let me make a pitch for this pathway. This is a science-based pathway that has done an enormous good for society, right? AIDS patients, HIV patients have lived that would otherwise die for accelerated approval. You yourselves may have family members or relatives who had cancer who are alive today or live a longer life because of accelerated approval. And of course, muscular dystrophy with VYONDYS, EXONDYS and AMONDYS are living better lives and fuller lives and hopefully longer lives as the result of the accelerated approval pathway. I think that the good news right now is that when Congress talks about really showing up the accelerated approval pathway, the things they're looking at right now make a ton of sense. So really, primarily, it's the concept to make sure that companies are taking their post-marketing commitment seriously and completing their post-marketing commitments that they don't -- they don't use commitments to get approvals and then ignore the commitments they're making. The good news is that really hasn't happened shortly but that is pretty good on that issue, but that's the kind of focus that Congress has. He look as publicly these studies are committed to the accelerated approval pathway. Dr. Marks, who is the leader of CBER, has also been very clear that the accelerated approval pathway is an important innovative approach and that they ought to come when it's applied to a cell and gene therapy as well. So I'm not overly concerned about where we're going right now as an industry and as -- from an FDA and [ congressional ] perspective, but we do have to make sure that in this whole process, people understand the value that accelerated approval was brought to the world. and it is pretty significant.

I think with that, we've run out of time. So thank you very much for participating with us at the conference this year. Thanks, everybody, for attending the session.

Thank you very much. I really appreciate the opportunity to talk to you.

Thanks, Doug.