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

Hi, everyone. Thanks for joining us today for the Sarepta fireside chat at TD Cowen's Second Annual RNA Therapeutics Summit. With us for the fireside chat, we have Sarepta's CEO, Doug Ingram. Also on the line if we need him, we have CFO, Ian Estepan. Thank you so much, Doug, for joining us today. Busy times for you guys, but I did want to take the time today to focus on what is really your foundational technology from back in the day and the foundation for base business, the PMO and PPMO DMD therapies. There's been a lot of discussion about your newly approved DMD gene therapy, ELEVIDYS certainly. But then it turns to what will become of your close to $1 billion DMD PMO franchise and your PPMO pipeline for DMD going forward. So Doug, let's start on a high level. What are the aspects of AAV gene therapies as you see it, that you think RNA therapies, particularly your PPMOs could address?

Well, so let's step back a bit on this. There's a lot of -- sort of layers of questions here. I may answer a lot of questions in my first answer, and then we'll go back and go in any detail if you'd like, but it really -- it's a fascinating question and it's a question, we'll only be able to definitively answer over time with empirical evidence. We're in an interesting place right now, right? We have 3 oligonucleotides, we're doing nearly $1 billion in sales. Our guidance right now is $925 million for the year. And they've really been fantastic. Never mind the revenue. They -- one of the things that I think some have missed is from what was back in 2016, perhaps a controversial beginning of this journey with the oligonucleotides, they've done an immense amount of good. We had some real-world evidence that we provided last year that showed what the PMOs can do, both in delaying ambulation, slowing down pulmonary function and correlating to mortality. So they've done a really good job. So there's this interesting bar there. And then of course, we now have ELEVIDYS gene therapy with an enormous amount of hope making extraordinary amounts of shortened but functional dystrophin. So there's sort of 3 questions from my perspective. The first question, of course, with respect to our PPMO and for those who don't know it, I'm sure everybody does, the PPMO is our next-generation version of our PMOs conjugated with the peptide, the goal of which is to enhance delivery. There would be 2 big values to that. One value is just convenience. The PMOs, even though we have this enormously high compliance rate over 90%, they're weekly infusions, either at home or in a minority of them in the hospital, weekly infusions, the PPMO would be once a month dosing. And then, of course, with an enhanced delivery and is positively charged peptide, you could get significant increases in the amount of dystrophin you're making, one of the big limitations of our oligonucleotides is that they make very little amounts of dystrophin and it turns out even a little does far more than people would have envisioned delaying ambulation like. So the first question for us is where are the PPMOs versus the PMOs? We'll begin to get a hint of that at the end of this year, right? We have a study going on called MOMENTUM Part B, we'll see those results. We'll need to look at both expression and safety for both because there's a very high bar on safety, the PMOs have just been extraordinarily safe, and so we need to look at both of those issues. We're very excited based on what we've already seen early on, and we'll talk about that, but that's our first issue. Then the second issue, which is at higher bar, I believe, yet again, will be [very] question are gene therapy, ELEVIDYS, this is going to be a very high bar, of course, given what we've already seen with ELEVIDYS. But how are they -- how it competes directly with the ELEVIDYS, if it does, in fact, compete directly with ELEVIDYS is going to be an empirically driven question. We need to see what kind of expression we get from it. We need to see the risk benefit of the expression. And then we need to see the functional results over time so that patients can make decisions. I don't think it's unreasonable to envision a world in which both could exist, independent of one another. We've seen this already, right? We see with SMA, with Spinraza and Zolgensma. Zolgensma was remarkably transformative gene therapy and yet there still is a place in the world for Spinraza. And then the third question, I apologize, this probably gets to the question you're actually asking, is where does the PPMO reside in a world in which our gene therapy is successful and it doesn't directly compete with it from an efficacy perspective and expression perspective and the like. And that probably is a potentially likely scenario given that ELEVIDYS makes upwards of 50% of normal. So it makes them more than an order of magnitude more than the PMO as well. What would the P&L really do to compete directly with it? That will be an interesting question that we'll have to look at. But even if that's the case, there still is a potentially interesting place for the PPMOs. We can -- I can think of broadly 3 areas. Today, of course, it's a no-brainer the label we have is limited with ELEVIDYS. Let's assume a world in which that label is much broader. You still have neutralizing antibody positive patients that would be available. If you came up with their -- with PPMOs that addressed earlier mutations, there are mutations that are excluded from gene therapy that could be of interest...

So the [null] mutations, the highly immunogenic become.

Those sort of early mutations that exist around the exon 8, 9...

We think early for the sequence.

Yes. Yes, those ones but we don't have constructs built for those, but that's a possibility. There's also, of course, even in a world in which gene therapy has been wildly successful and the PPMOs are wonderful and better than the PMOs. But objectively, may be difficult to compete there still will be family choices. There will still be moments where families will choose a chronic therapy over a onetime therapy. I envision that occurs. And it occurs I think at times with Spinraza, even though it's old [indiscernible] have been so successful. And then there are obviously access issues, payer issues that might drive chronic therapies. So all of this is to say -- okay, that's -- so all of this is broadly to say, we don't yet know. But we have -- but there is a lot of potential in this, and we need to just let the data and evidence drive us. Down the road, long term, there are things that the PPMO could do that the gene therapy will not do, which is work in smooth muscle as an example. Smooth muscle has dystrophin, but the AAVs don't deliver the smooth muscle. So that's always -- that's not one of the most significant issues for Duchenne muscular dystrophin, but it's an interesting one down the road. And then, of course, we always have the idea of cognitive or adjunctive therapy where we can build over time an evidence set, an evidence set that we don't currently have available to us. But an evidence set that could suggest that the combination use of Zolgensma and ELEVIDYS -- ELEVIDYS and our PPMOs could add some enhanced value. And we have seen that with as an example, with Zolgensma and Spinraza.

Your comment on the payers, is that in any way driven by the last few weeks of conversations with payers or your -- the discussions around PPMD about coverage at this point? Or has that informed the ramp at all?

Well, no. We're in a little bit in the honeymoon period where I'm falsely imagining it's going to be easier than it really is going to be. Look, payer issues are always significant. But we're now talking about ELEVIDYS, we're in a really interesting place where we have -- the data set for ELEVIDYS was -- is more than an order of magnitude, more substantial and robust than, for instance, when we launched -- successfully launched EXONDYS, we started discussing ELEVIDYS with payers years ago. We had recent granular discussions before approval with payers that covered 220-plus million lives. So I think we've been in a really good position to have very thoughtful discussions there. So no, I actually think it's going to go very well. So don't misread that. I think as it sits right now, we're in that kind of honeymoon period where I think it's going to go well. And ironically, maybe in this world, payers were e-mailing us. Congratulations, when ELEVIDYS was approved. And then one other thing to sort of proof point on that, lingering on gene therapy over [indiscernible] apologies, but we did -- I think we did a really thoughtful job of doing the cost-effectiveness analysis, the pharmacovigilance work and then the pricing of this therapy in the context of that, that I think has made those discussions go very well right now. As you know, we had created a cost-effectiveness model. We did a [really] objective approach. We had it published in a peer-reviewed journal. We priced below the bottom of that and we didn't price at the top end of current gene therapy pricing. And so I think we're not getting enormous payer pushback on those issues. So I think it's going to go very well.

So there -- so they see the cost effectiveness of a gene therapy as being greater than saving the existing PMO right now, EXONDYS [indiscernible] Is that a takeaway from...

I think -- Yes, I would look at it -- I would -- if I judged it in one way, I would say that's already the case. I wouldn't say the existing payers with the existing data set for the existing oligonucleotides. Because remember, we've now had 6 years of great data that justifies the benefits of those therapies. So that -- so we're in a good place today. But if you look at the launch of EXONDYS or the launch of VYONDYS and you compare the data sets available there with the data sets we have for ELEVIDYS, the cost effectiveness, the pricing, the way we look at it, is just much more evolved. And I think payers have appreciated.

Understood. So Doug, you've talked to a few aspects of, I guess, the world in general as we live in it for comparing and contrasting PPMO versus ELEVIDYS neutralizing antibodies, early mutations, family access, et cetera. But what about the inherent clinical profile of ELEVIDYS and where PPMOs? Where does the science take you? So you talked about smooth muscle. What sort of pathologies within DMD are related to smooth muscle? But one of the questions really hypothetical at this point, nobody is talking about it all that much, post-approval, but duration, duration of effect. How are you looking at data generation for durability and how PPMOs could sort of roll into that?

So yes, it's very interesting that you asked it. So if you look at it scientifically, so first thing -- before we think about ways in which they could address issues in gene therapy, we first have to acknowledge, interestingly enough that they are very different modalities that ultimately do basically the same thing, right? The oligonucleotides through a very different mechanism, put messenger RNA back in frame and then make shortened but functional forms of dystrophin. The ELEVIDYS doesn't do that, but what it does is deliver a gene [concept] that makes a shortened but functional form of dystrophin. It just makes it in much greater abundance. The differences in sort of the Duchenne and the like are maybe threefold or -- well, 1 is the same and 2 are different. One is could we get dystrophin into the brain, right? There's not -- cognitive issues are not degenerative. So that doesn't exist, but there definitely is a cognitive aspect to a minority of Duchenne patients. Neither of these therapies are going to do a brilliant job of getting -- well, first of all, we don't know if getting dystrophin into the brain is even meaningful at this point. We have no idea, right, because it's not degenerative, but neither of these are going to address that issue in any [event]. Then I did raise the issue of smooth muscle. Smooth muscle is really not -- you hear very little about this being an issue. It may very well be that it's not a significant issue because, unfortunately, the Duchenne patient dies. And he dies much earlier in life than perhaps smooth muscle issues become a major issue. So there may be in the long run, some value to protecting smooth muscle given that if all goes well and ELEVIDYS is as successful as we all hope it will be will be greatly extending life and then GI and other smooth muscle related issues could be meaningful.

Can you [indiscernible] this -- I'm sorry to interrupt it. But are you keeping track of this as part of your end points in the studies because what you're saying is reminding me of the cystinosis and how it wasn't until there was an actual treatment that they found out patients in their 20s and 30s lost the ability to swallow. Do you have [indiscernible] ability and stuff?

In the study itself, I do not believe that's the case because we're looking at too short a period of time to see a significant issue. This is beyond -- this is [in-depth] theoretical. I think most physicians don't even talk to these kinds of issues. This is something that we'll be thinking about, if we're thinking about it at all when a Duchenne boy is now in his 30s, he's not a Duchenne boy, he's a man in his 40s. He's a late middle aged man. I like to remind [me at this point], that a young middle aged man but et cetera. And then, of course, then there is the durability issue. Again, that's something we're going to have to live with over the long term. The interesting thing about gene therapy for muscle and about ELEVIDYS and about shortened dystrophin delivered by a gene cassette is that muscle is a hard place to get to. Fortunately, we get there now, right, 3 genome copies per nucleus on average. But it's not -- it doesn't turn over very, very fast. It's not like the liver. And so the durability we've seen both empirically in the patients, we've only been able to look at them for 4 or 5 years but we haven't seen any kind of functional durability issues and in the animal models, both nonhuman primate, golden retriever and mouse model for what it's worth, we just have not yet seen any signal of durability. Does that mean there won't be a durability issue in 10, 15 or years? No, it certainly doesn't mean that it's something we have to keep an eye on. And you could envision a world in which either the PMO or PPMO could intervene if there was a durability issue or theoretically, at least, be dosed early and actually participate in reducing the risk of a durability waning out there in the later years, right? You could envision that by the various of thesis there was at least 1 paper Dr. [ Void ] did some work in a rat model some years ago, where he suggested that the use of a PPMO actually in the rat model, strengthened the muscle membrane and actually reduce any risk of the loss of the gene cassette as it was making dystrophin. So that there wasn't the synergistic value of having both the PPMO and the gene therapy. But we need to do more work on that before we can stand here and [indiscernible].

You said there is no evidence of durability for preclinical. Do you mean that the data has been rolling off? Or do you mean that the studies have just not gone out that far to show durability?

They mean that it's durable for as long as we've been able to look. So if you think about it for a mouse, not very long because the natural life of the mouse isn't very long. For Golden Retriever, I believe we've looked out to 7 years with these kinds of gene cassette constructs. And in the nonhuman primates, the last time we looked or I looked at least, it was out to 9 years, and we just did not see waning of durability yet. So that's [indiscernible].

So nothing representative of a 30-year-old DMD patient essentially, yes, right.

Not yet. Not yet.