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

Well, good morning, and welcome to day 2 of the UBS Biopharma Conference. I'm Colin Bristow, one of the biotech analysts. It's my pleasure to have Sarepta Therapeutics here with us today. On behalf of the company, we have CFO, Ian Estepan, Ian, thank you for spending the time with us.

Thank you so much for having us. And obviously, I'm going to be making some forward-looking statements. So obviously, you should refer to our SEC documents for the appropriate warnings around that.

So a busy couple of weeks for you guys. Maybe we could start with just walk us through the chain of events from the unblinding of EMBARK to kind of where we are today.

Yes. So obviously, when we first got the results, we were surprised, but then very quickly saw all the data, the forest plots are obviously very compelling. It's very clear that the drug was having a strong effect on all the primary endpoints. We spoke to the agency to get their view on the data. We had always said that we were going to view the data from a materiality perspective through the lens of whether the label could be expanded or not. So we wanted to get FDA's perspective. So there was a meeting with FDA leadership, got their view. And obviously, as we said previously, the data -- the FDA was very supportive, and reiterated that they wanted to rapidly review the data when we're able to get all of it in. And so we're going to be submitting the data and efficacy supplement in the December time frame and then we'll certainly get more feedback from the agency. So we're very pleased with the interactions we've had and rapidly getting the data in, so that it can be reviewed.

And just remind us like what did FDA or has FDA seen up until now from EMBARK.

So the FDA has essentially seen exactly the same presentation, which we publicly disclosed. So all the slides that were publicly disclosed are what the agencies have already reviewed.

Super. Now on the sort of the EMBARK top line call and your sort of subsequent 3Q call, your turnaround expectations for the label, I'd say it's just been -- I'd characterize it very positive, right? So just what is driving this confidence.

Yes. I mean the strength of the data is driving the confidence and also the feedback we've gotten, the initial feedback we've gotten from the agency is driving the confidence. I think it's very clear when you look at the data, obviously, the level of statistical significance on the key secondary endpoint, which I think is very important because especially time to rise. The progression of Duchenne is very, very predictable. The first thing the boys lose is their ability to get off the floor, which is what time to rise actually measures. Then obviously, they have trouble climbing stairs and then have trouble walking, then using their arms and then essentially have cardiac and pulmonary complications. And so time to rise is extremely predictive not only of progression, but also the loss of future milestones. And so to see such an impact on time to rise and 10-meter walk run, actually all of the key functional endpoints, it's very clear what happened with the primary endpoint, which was just that, a, there wasn't enough time to see the separation happening; and b, the clinical meaningfulness of the secondary endpoints and being able to predict how the boys are going to be predicting and what their trajectories are going to look like, are very apparent from the secondary endpoints. And so the strength of that, if you look at the forest plot, everything shifted to the right, the high level of statistical significance on the secondary endpoints. We've also done subsequent analysis to adjust for multiplicity. We have high statistical significance when you look at all of the key functional endpoints. So it's just clear from the data set, how much of an impact this drug is having on the trajectory of patients. And also one of the very big questions for EMBARK specifically was does the drug work equally well in the 4- to 5-year-old group versus the 6- to 7-year-old group. And actually, in fact, if you look very closely at the data, what you'll see is that the 6- to 7-year-old from just a numeric perspective actually have a larger treatment effect. So why is that happening? It's not because the drug works any better than the 4- to 5-year-old or the 6- to 7-year-old. It's just that you see the placebo group starting to decline already. And so that's why you have an actual larger magnitude of benefit from a numeric perspective, on the 6- to 7-year old, just proving that the drug works via a mechanism of action exactly the way that we would expect in terms of protecting the muscle and slowing the progression of the disease. And so that's very clearly borne out now from a mechanistic perspective through the EMBARK data.

Just going back to the sort of confidence around this, if we look at just the path to where we are now, FDA has made some decisions, which I think have surprised you surprised us. Maybe could you just talk us through why you feel that it's more -- the outcomes maybe more dependable now? Or what drove the sort of the unpredictability earlier on to the extent you can.

In terms of the FDA interaction?

I think you spoked to this a bit on your call, but you had the sort of no AdCom, AdCom and then the narrowed label. To the extent you can address any of that would be helpful.

Yes. I mean I think, obviously, these are always evolving. But I think the agency, if you really want to step back and kind of fundamentally see what was the division really wanting to see, I think they wanted to see placebo-controlled data from a well-controlled study. And obviously EMBARK meets those requirements, obviously, 125 patients, well-controlled, well-balanced, as you see from the baseline characteristics, well-matched across the entire population. . And you now have very clear data, which shows highly statistically significant results in the primary -- in the secondary endpoints and obviously, can clearly see over time based on the leading indicators of, like I said, from time to rise, that the primary endpoint just didn't have enough time in order to achieve statistical significance. But because it's a disease-modifying agent, those results will obviously be supportive over time. And so I think now that the agency has -- I think that was the true source of consternation from the division is that they just wanted to see a large placebo-controlled study. And I think this now answers a lot of those questions. So I think the back and forth was really around a smaller data set, which was obviously confounded by a very large imbalance in a small data set versus now having a well-controlled study that I think you can clearly see across the board, the drug is having a meaningful effect.

Maybe just it's a good segue in terms of the -- how blunt at all NSAA is and I think we've had conversations about the time to rise and how it's simply just that wasn't captured within NSAA. Could you speak to that?

Yes, it's actually really interesting. We've done -- performed an analysis looking at patients who started out as a 1 on the subcomponent of NSAA for time to rise, right? So there's -- just for everyone's background, you can have -- so the way that NSAA is measured, you get a 0, if you can't perform an activity, you get a 1, if you can perform an activity with assistance and you get a 2, if you can perform the activity with no assistance. So it's a very blunt instrument. And there are 17 different measures, and that's why the total score is 34. So just thinking about the subdomain of time to rise, specifically on NSAA, 86% of patients started with a 1 and ended with a 1 on NSAA. And then when you look at those patients and then look at the time function test on time to rise, there was a 0.7 second difference in those patients, in that same 86% of patients. So that's actually a larger effect than what we saw overall for the entire mean of the population and yet all those patients still stay to 1, right? So you can just see how much area there is in that 1 category of the NSAA, which is not -- obviously didn't have an impact on NSAA from a total score perspective, but obviously, from the actual time function test within time to rise, we saw a huge difference. And so it just really highlights that NSAA is a blunt measure. And let's be clear, I'm not criticizing NSAA. I think it's a good measure. But in this population where we enrolled a very mild patient population, you just couldn't pick up that difference because it's so large from going from not being able to do an activity to being able to do an activity with absolutely no assistance. But the time to rise measure clearly indicates even within that 1 group that this drug is having a meaningful effect. And the -- what is also important is that when you look at time to rise being able to predict the future progression of the disease, what we actually see is that we're actually decreasing the odds of losing ambulation by over 91%. So it's a massive clinical significance that the data is providing. But obviously, again, just not being able to be picked up on NSAA.

In terms of time lines now, so you said you're going to -- number one, the plan is an efficacy supplement. And can you confirm, has FDA sort of signed off that the agreed pathway?

Yes. So we have had a subsequent meeting with the division to talk about the actual steps to submit the data. And so we are going to provide an efficacy supplement and we'll be able to get that in December. They wanted the full case study reports. So that just takes slightly longer than what we were initially if we didn't have to do the CSRs, then we would have been able to get it in this month. But with that, we'll be able to get it in December.

And just the benefit of the listeners, can you remind us the benefits of submitting via that pathway.

Yes. So the value of submitting via that pathway is that obviously we can get the data in faster. So the review can start faster and that the agency will be able to start reviewing. They've reiterated that they stand ready to review the application very rapidly as soon as we're able to get that in. So it's really the real advantage there is that we'll be able to submit it quickly. And I don't think the agency is necessarily going to adhere to a true regulatory calendar here just because they've reiterated so many times that they want to -- and they actually asked in advance of the EMBARK data to see where we were so that they could review it rapidly. So I don't think they're necessarily going to adhere to the timing of what a regulatory review time frame might actually support. But I think that also if you adjusted an entire PMR, that review process is actually longer also. So we can get the data in faster and technically, it's a shorter review period if you do an efficacy supplement. But again, the FDA has just been very supportive of trying to review the data rapidly.

So a mid-December submission of the efficacy supplement and then what's the FDA period of acceptance and subsequent PDUFA would be sort of circa July time frame, right?

In July, August, if they adhere and obviously that's...

The outer bound.

That's the outer bound of what it would be. Obviously, they've reiterated that they stand ready to review the data rapidly.

Maybe going back to the statistical plan. I think there has been sort of an early area for investors or -- an area of concern just because of the hierarchical testing, just speak more to why that won't be a sort of glaring issue for the review?

The agency has said in advance to our conversations that they want to look at, this is a cliche, I don't love using it, but the totality of the evidence. And I think that really is important when you're doing development in rare diseases. I think we often look at endpoints from a standpoint of very large diseases that have well validated and well-established endpoints, right? So if you're looking at cardiovascular, diabetes or cancer, right, you have the endpoint, a primary endpoint, if you don't hit that that's it, right, versus in rare diseases, it's really trying to understand is the drug actually having a meaningful effect on the progression of the disease, and there aren't a lot of well-established endpoints and validated endpoints. And so even you remember, from 102 to 301, we obviously changed our inclusion, exclusion criteria to create a more homogeneous patient population. And again, not to say that the drug is not going to work in all those patients. It's just you have to find a very homogeneous patient population so that you're going to be able to study it and actually see an effect and so over time, we've learned, and I think it's actually a huge benefit to the field. And Duchenne, I think everyone, if you're going to enroll very mild patients, you now know that the correct endpoint is likely time to rise. If you're going to do a 52-week endpoint, NSAA, I do think is a good endpoint, if you were going to look longer. But obviously, that's challenging from an ethical perspective to have patients on placebo for that long of a period of time. And so I think now you can see that the time function tests are more sensitive and we'd be able to pick it up in a faster time point. So we've learned over the course of -- over the course of, call it, the last 5 years in terms of us actually doing clinical studies in Duchenne. And I think we have a much clearer pathway on how to conduct studies going forward.

Another question we were getting is why we didn't get the expression data with the top line? And just walk us through that, when we'll see it? When you'll have it?

Yes. So the expression data, we obviously was another key secondary endpoint. We did disclose that we achieved a high level of statistical significance of P less than 0.001. We said the data is very consistent. We don't have all of the expression data yet. So I think people need to remember that there are 3 components to expression data. It's western blot, it's PDPF, and it's also intensity. The intensity is actually done externally to Sarepta. So a third party does that analysis. And so we don't have that data yet. . And obviously, we want to put all of that data out together, so people have a true understanding of what the expression data is and also within a subset of patients it is really kind of driven by the EU regulatory authorities where they didn't want every patient to be biops from an ethical -- biops from an ethical perspective. And so part 2 data is also important for the complete expression results. And obviously, we're not going to have that data for some time. So that's why we haven't fully disclosed those results. And obviously, the big focus of EMBARK specifically was around the functional endpoints.

And what percentage of the boys in part 1 were getting the biopsies?

There were 19 biopsies in total.

Okay. Have you had any interactions with payers since the EMBARK top line? And can you just characterize those.

Yes. I mean we haven't had. Obviously, the data just came out. So we haven't had extensive conversations with payers, but the ones that we have had, we're very positive and constructive. I think it's important for people to realize that payers often want to see clinical data. When there are drugs approved via the accelerated approval pathway it becomes more challenging because payers really do like to look at clinical outcomes. And so this data set actually puts us in a very strong position to have those conversations with payers because we have -- now this is the first time we're actually having real clinical outcomes data to support our conversations. And obviously, when you look at the clinical meaningfulness of the data, like I said before, potentially having patients have a 91% hours reduction of going above 5 seconds, which is predictive of loss of ambulation. That's a really meaningful outcome for patients. And so being able to ground that in those conversations around clinical outcomes, I think, will be very supportive of our payer interactions.

And in the launch to date, how strict have they been in terms of the age restriction, have any patients being 6 years old and receive therapy, for instance. Can you talk us through that?

Yes. So the payers -- I actually have to really commend them in the way that they've pretty much insured as of today, there's been no patients who have been turning 6 who have not gotten on therapy. And that obviously speaks to huge volumes of credit to, obviously, the internal team at Sarepta and Sarepta sis team but also the physicians have really identified -- helped identify the patients and put justifications in. And then the payers have really supported that and made sure that patients were being dosed before their sixth birthday and there have been a couple of occasions where payers have supported the START form been in, but prior to their 6 birthday, but for just a couple of different reasons, they haven't been able to dose right before their sixth birthday still supported the patients being dosed. So I really do have to commend the payers for the way that they've handled this transition of patients potentially aging out and really supporting patients getting on therapy. It's been really, really impressive.

Where are you right now from a manufacturing capacity standpoint? And then if you just look through sort of the life cycle of ELEVIDYS, you obviously have this interesting dynamic where you're going to treat a prevalent pool and at some point, the numbers going to come down and you're just going to purely treat an instant population because frankly because of the therapy success. How do you think about managing that from a capacity perspective?

Yes. I mean when we first started this, there wasn't enough gene therapy capacity in the world to be able to treat all patients with DMD just in the U.S., right? So the effort and I've to commend our CMC team for just doing absolute -- amazing work, no one thought this was possible, right? In 2018, when we got the first data from 101, everyone. Every question wasn't even around the data, it was around manufacturing. And no one actually thought that we would be able to come up with the commercial manufacturing process that would be able to support being able to treat patients with DMD. So we've come so far from that and actually been able to do it. We're currently building supply 24/7 essentially and increasing our ramp. We've also had really good progress on even higher yielding suspension process, which will be going -- coming online likely in the '26 time frame or the like so. While we're getting patients on the therapy, through the ambulant patient population and then obviously heavier patients from the nonambulant patient population. And obviously, Roche is going to be going to seek scientific advice. So we're also building capacity to support this launch from a worldwide perspective. We're continuing to ramp and just build as much inventory as we possibly can. And it's been going incredibly well. And so we're just going to continue to ramp throughout this process to be able to serve all the patients. Now obviously, there's a -- there are factors kind of limiting the number of patients that are going to be able to be dosed per year. Those 3 big factors are site capacity, our supply, and then access and reimbursement, because you're just not going to be able to get every single patient on the therapy at once. And so we're -- obviously have planned that out and kind of as we think about the launch curve, which is likely going to be because of those factors, slightly more protracted than being able to dose all the patients at one time where the peak and then the transition to the incident population would be very steep. I think it's going to be longer just based on those features. And obviously, with the rest of the world coming on slightly later in the launch also you're going to see a more steady launch curve that will likely last longer than one we just predict if you were able to treat all the patients at the same amount of time, especially because from a site perspective, monitoring is incredibly important. Obviously, the safety profile, especially for Rh74 is very manageable, but it's important to monitor these patients for time because when you are tapering patients off of steroids, that's where you could see a rebound and increase in liver enzymes. They have been -- there were unfortunately 2 deaths on the SMA drug when you look back and kind of see the history there, it seems like those patients were tapered off of steroids and then they had an increase in liver enzymes which ended up leading to their death. And so to monitor these patients for a long time very acutely to make sure that the liver enzymes are well managed is very, very important to outcomes. And so sites are really making sure that they have the capacity not only to dose patients but really to do the effect of monitoring to make sure that the boys are safe throughout the entire process. And so that is an extra element that we have to model in, in terms of a capacity perspective.

Can you talk about the path to nonambulant patients. And the data you currently have, which would reasonably extrapolate or predict a benefit in those patients.

Yes. So look, the mechanism of action of ELEVIDYS is clear. If there's muscle, it's going to help preserve the function of that muscle. So the drug -- and this is something that was written in the FDA guidance for Duchenne and dystrophinopathies that if the mechanism of action supports a broad label, you can essentially get a broad label as long as you have safety data in a broad patient population. And so from a mechanistic perspective, it's very clear that this drug should benefit everyone. Now obviously, this is a weight-based dose therapy. And obviously, you were dosing at either the 14th. So you're introducing a tremendous amount of viral load, and obviously, as the patients get heavier, they're getting even more of a dose. And so I think from a safety perspective, it does make sense to look at a nonambulant patient population ensure that -- and obviously, they could be much more progressive in introduction of such a high viral load, maybe slightly different than younger patients. So from a safety perspective, it's fair to look at. The good news is that we obviously have enrolled several patients in the 103 study. So we have good experience in the nonambulant patient population. I believe we've dosed a 24-year-old and over an 80 kg patient, so both from an age and weight perspective, we're getting experience. And we're enrolling the ENVISION study which is a nonambulant study. So we're getting even -- so we've dosed several patients in that study now, and we're getting safety data from that study also, which will be included when we submit our efficacy supplement for the expansion of the label. And so we have -- we're starting to generate a wealth of data from a safety perspective in the nonambulant patient population to characterize the safety profile. And so far, it's been very consistent with what we've seen in the younger population. So we're very pleased with the results from that.

And the ask or the potential hope would be that you could actually see a -- you get the full open label to ambulant and nonambulant or do you think that's unlikely until we get ENVISION?

No, I think the pathway certainly -- I know the FDA is considering what a label would look like for the entire population. That's not to say that it will be exactly the same. But certainly, understand based on the data that we've seen and the mechanism of action that to the fullest extent possible based on the data that we've generated that patients should be getting access to this therapy. And so I know they're evaluating the data in the context of the full population.

Maybe switching gears and just a quick question on PPMO. I think in your last update we're expecting to read out before year-end. Is that still the case? And just what's your overall level of enthusiasm around that assay?

Yes. So PPMO is very exciting. Obviously, we've done tremendously with the PMOs. We generated real-world evidence where we're seeing potentially a survival benefit of 5 -- greater than 5 years. And so we know that even small amounts of dystrophin lead to huge impact on the progression of the disease. Obviously, the PPMO are cell-penetrating peptide conjugate should drive more of the PMO into the cell and therefore, derive even more higher expression levels. We saw that in our MOMENTUM Part A study. And so obviously, we're awaiting the results of MOMENTUM Part B to your point, which is likely to come before the end of the year, first quarter as we're just kind of managing a couple of last biopsies and the exact timing of when they're going to be coming in. And so there's enthusiasm around the mechanism and the program. And I think it's also more challenging, though, in a world where ELEVIDYS is just produced such amazing results in terms of the level of expression and what we're seeing from a functional perspective. So we have a lot of excitement in terms of the program specifically. But in the context of 9001, I think development can be potentially more challenging, and that's not just for PPMO. That's for all drugs because it's going to be challenging to show a benefit on top of ELEVIDYS from a functional perspective just because the level of expression that we've seen with ELEVIDYS is so high. So I think the SMA market you haven't currently seen a lot of combination use being reimbursed. I know that the people cite that you've seen patients on more than one therapy, which is true, but a lot of those patients have been getting the therapy -- one of the therapies through a clinical trial. And so obviously, it's somewhat challenging to generate functional data, which would help really support reimbursement from a combination perspective, but obviously, mechanistically, if you look at it, would the 2 be beneficial if you're getting both? Absolutely. So I think the jury is still out in terms of how you'll actually be able to get reimbursement from both. Now obviously, I think there's a big advantage for it being under one company. So we'll obviously be looking at ways to show that the data are supportive. But I think right now, as we're trying to generate data and having discussions with payers, I think it's premature to say that you're definitely going to get a combination. So you have to think about that in the context of the landscape of the way that development is rapidly changing right now. And obviously, the results from 9001, I just think are very compelling. And so it's -- you have to see how the 2 are going to be able to work together.

That makes sense. What are the next updates we're going to get on the limb-girdle program? Just walk us through those.

Yes. So limb-girdle, obviously making good progress. We should see the expression results from our Phase I/II study early -- in the next year. And I think the ELEVIDYS results really help support the development pathway for limb-girdle, there was a big limb-girdle conference last Sunday and few remarks, actually outlined kind of the pathway for accelerated approval for those therapies. I certainly think the 9001 results now seeing a functional benefit on the secondaries help support what we're seeing between both programs, which is an upregulation of the dystrophin-associated protein complex, which provides the mechanism as to why these drugs should theoretically be working. And we've seen that both in Duchenne and limb-girdle. So I think -- and we're going to engage with the agency to discuss what would be necessary from a post-marketing commitment that would enable an accelerated approval for the limb-girdle. So very pleased with the way that's progressing.

So one of your local competitors just announced a delay to their CRISPR-based DMD program. And so how -- what is Sarepta got going on internally that -- what work are you doing other than what we see in here every day to sort of preserve your leadership in the DMD space?

Yes. So I think gene editing is obviously a very promising approach. Just to remind everyone, though, it still does use AAV9 in order to target the muscle. Gene editing is still early, there are still challenges as it relates to delivering, there's a trade-off. If you want to get high expression, then there's going to be off-target binding, if you're really targeting a very specific sequence to limit off-target binding then you're going to end up not getting a meaningful amount of expression. And so there's still a lot of work to be done in order to advance that. Obviously, the -- what would be a big step forward is not viral delivery. And we've done some very early work in that area where we are starting to see some good progress there, but it's still very, very early and not close to being in the clinic. So there's still challenges related gene editing. We're looking to be very clear, we're leaders in DMD, and we're looking at all technologies. And so certainly, between -- the most viable right now, obviously, are gene replacement and RNA. And obviously, between the ELEVIDYS and PPMO, we're very well positioned in the leading technologies, but we'll continue to evaluate all approaches as we consider what will be the best outcome for patients.

And also -- so you have a pretty healthy balance sheet. And so with the biotech market where it is right now, are you seeing more opportunity, an increased appetite from your side to do business development?

So we've probably gotten more calls in the last 3 months than we've gotten in the last 6 years. Obviously, the backdrop for biotech is incredibly challenging as we made new lows last week. And obviously, the company's balance sheets are starting to get stretched and it's still challenging to raise capital. So I do think people are open to finding ways to bring their therapies forward, and we'll consider a lot more approaches than people were willing to before if they could just raise money on their own. And I mean you mentioned before, obviously, that we're going to see a different shape launch curve as it relates to a onetime therapy, which everyone is aware of. And so this is the reason why our pipeline is 40 programs to help manage the growth of a onetime therapy. But we're going to be very active as leaders in this space to look at ways to continually to build out our capabilities as an organization. I mean I think it's very impressive what we've been able to do at Sarepta. I think we're the 13th. Obviously, this past quarter, we just announced that we're non-GAAP profitable above the 1,200 biotech companies in this universe. I think there are 13 right now that are profitable. We just became the 13th. And so that gives us a lot of flexibility and ability to be in a different position and continue to build out our pipeline. Like you said, we have $1.8 billion in cash. We're going to be cash flow positive next year and the ELEVIDYS launch should generate significant cash. And so we are not shy, look at the way that we've built the organization in the past, right, with less resources, we've been able to build an absolutely stellar pipeline and bring in incredibly promising approaches. And so that same mindset is what we're going to continue to do. And I think we've proven that we've been able to do that successfully before. And we can leverage our development capabilities, our regulatory capabilities, our manufacturing capabilities and our commercial capabilities to bring a lot of programs forward and be able to serve a lot of patients. And so not that many companies that are really run the gamut from concept all the way to commercialization and we have the infrastructure to do that.

Maybe we're getting to the end of time. But maybe just to wrap it up, in terms of what we'll hear from you on ELEVIDYS specifically in terms of data and disclosures, just help us think through that from now through to what would be the outer bounds of the PDUFA?

Yes. I'm going to caveat this that we haven't even thought about, we're just coming off the back end of releasing the results for ELEVIDYS. So we haven't internally decided. That being said, I suspect we will probably make an announcement when we submit the data when the filing is accepted. And then obviously, we will keep the market abreast along the way as we get more information our goal is just to be transparent so that people can make informed investment decisions. It's the way that we've always operated and will continue to so.

And in terms of any additional data presentations on ELEVIDYS or that's all going to just be with FDA and...

Yes, we haven't mapped that out yet. Obviously, the full results were still analyzing and -- but expect to release that data either in publications or upcoming scientific meetings.

Well, I think we'll wrap it there. Ian, thank you for coming. Congrats on all the progress. And thank you, everyone.

Thank you.