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

All right. Welcome, everybody, to the JPMorgan Healthcare Conference. My name is Anupam Rama. I'm one of the senior biotech analysts here at JPMorgan. I'm joined by my Squad, Priyanka Grover, Malcolm Kuno and [ Rati Pinhe ]. Our next presenting company is Sarepta, and presenting on behalf of the company, we have CEO, Doug Ingram. Doug?

Thank you very much, Anupam, to those in the room and also online. Thank you for joining Sarepta Therapeutics this morning. I apologize to people on that far side, every once in a while, I'll just take a break and walk down and you can get a look at whether I'm nervous or not. All right. So I think Sarepta has a well-earned reputation for tenacity. But I think these videos here better than any words I could use explain the basis for that tenacity. We're going to talk a lot this morning about performance and numbers and finances. I would like us all to recall that behind those numbers are the lives of patients that we're dedicated to improving. I'm going to be making some forward-looking statements this morning. Please refer to our various public filings for the risks and uncertainties that come whenever one tries to make predictions about the future. There's a lot going on at Sarepta, and we have a short period of time, so I'm going to just get on with it. We're going to talk about 3 big things today. One, we're going to talk broadly about our 4 approved therapies and current performance, then we're going to talk about some of our late-stage development work, in particular, our limb-girdle work before moving on to the exciting new platform we have, which is our siRNA platform. We are exiting 2024 and entering '25 fueled by very, very strong financial performance. In the fourth quarter of last year, our total net product revenue stood at $638 million. That is a 75% increase quarter over -- growth over the prior quarter, prior year. That means our full year total net product revenue was $1.788 billion. That's a 56% growth year-over-year. That's also exceeding our guidance for the full year by well over $100 million. ELEVIDYS, as we sit here today is undoubtedly the most successful gene therapy launch in all of history, our fourth quarter net product revenue for ELEVIDYS stood at $384 million. That is 112% growth over the immediately preceding sequential quarter that also beat our guidance for the fourth quarter for ELEVIDYS by over $60 million. Full year net product revenue for ELEVIDYS stood at $821 million. And as impressive as all that performance is, at least I believe it's impressive. We have barely scratched the surface of the opportunity in front of us. Even after all of that performance, you should know, we have not even treated 5% of the on-label addressable patient population for ELEVIDYS. I am excited also to note that our 3 approved PMOs continue to perform well and grew last year even in the face of our ELEVIDYS launch with fourth quarter net product revenue coming in at $254 million and full year net product revenue standing at $967 million. Over the last 7 or 8 years, we've performed very well. We have 4 approved therapies over that period of time. We have grown revenue at, I think, an impressive 40% -- 42% actually compounded annual growth rate, and I would put this statistic up against just about anyone. Over that period of time, interestingly, we have never -- Jesus Lord -- okay, there's going to be electric outage in a second, so we'll -- we're going to go acoustic in a moment.

The tragedy is here. That fell on your shoes, which look really nice.

That's okay. They're not real leather, Anupam. Apologies, over that entire period of time, as I was saying before, I interrupted myself. We have never missed any quarterly or yearly guidance, in fact, more often than not, if we don't meet our guidance, we exceed our guidance. And speaking of guidance, you will recall, as we tracked out of 2024, we said we would do $2.9 billion to $3.1 billion in net product revenue for 2025. Please understand that the way we have set that guidance is consistent with our very long track record of accurately predicting where we're moving and feeling comfortable. And as you can imagine, we feel very comfortable about that guidance today, given the strength with which we exited 2024 and our overperformance in 2024. But a couple of things to note about that guidance. For total net product revenue, that is a 70% or so growth over the prior year. But for ELEVIDYS, in particular, year-over-year, that's greater than 160% growth year-over-year. We'll continue to monitor this. And if there's a compelling reason to increase it over the year, we'll look to do that. But as it stands right now, we feel very good about where we are and where we're heading. All right. Talking about where we're heading and how we're doing. This slide is an interesting one. This describes the success of Sarepta -- of ELEVIDYS over '24 and '25. In the first 30 months of our launch of ELEVIDYS. We will do more net product revenue in ELEVIDYS than every other in vivo gene therapy over that same period of time, in fact, by quite a bit. Now our performance means a lot to us. It means that kids live better, longer lives. And that's why we exist. It also is an extraordinary opportunity for those interested in investing in companies focused on financial performance and execution, consider a couple of things. As you all know, there are thousands of biotechs, both private and public that exist today. We are one of only about 14 that have ever been profitable, and we are profitable and durably cash flow positive. In fact, from the closing of our Arrowhead transaction, which I'm going to talk about in a little bit, through 2030, we're going to do greater than $16 billion in operating income. At the same time, we're going to do better than $13 billion in free cash flow and consider how derisked those numbers are. They do not rely on big risky new approvals. For the most part, they do not require big, risky binary developments, readouts. This primarily comes from our existing therapies and continuing execution by us. So we feel very good about where we're heading. Speaking just a moment about the opportunity for ELEVIDYS. Hopefully, you all know that today, the labeled indication for ELEVIDYS would allow us to treat and bring a better life to boys that are about 80% of the Duchenne population. That comes from multiple studies across a continuum of Duchenne muscular dystrophy proving out both the safety and efficacy of ELEVIDYS. Consider a few things as we sit here today. More than 600 patients have been dosed with ELEVIDYS today. As you may know, ELEVIDYS when it was approved, was approved not only for ambulatory patients for nonambulatory patients. At the time of its approval, we had dosed more nonambulatory patients with ELEVIDYS than any other Duchenne therapy, ever approved at the time of its approval. And as we sit here today, we've dosed going on 100 nonambulatory patients. Consider some other things as well. We've dosed children as young as 2 years old with ELEVIDYS. We've dosed men in their mid-20s with ELEVIDYS. We've dosed children as light as 26 pounds with ELEVIDYS. We've dosed men that are 290-plus pounds with ELEVIDYS. And I did not misspeak, over 290 pounds and across that entire continuum of ambulatory, nonambulatory, young, older, lighter, heavier. The profile of ELEVIDYS both from a safety and efficacy remains consistent and the same. And while we understand that continuum for ELEVIDYS and we understand the safety and efficacy of ELEVIDYS very well. We're not slowing down. We're continuing to do work to understand this brilliant therapy even better, but also to unleash more opportunity with ELEVIDYS. So let me talk about that. There are a number of opportunities here that I think have gone somewhat underrecognized. The first one is this. Those numbers that I've shown you earlier about our performance, they do not include royalties from ex U.S. sales. When one starts including the royalties that we receive on ex U.S. sales for ELEVIDYS, our estimate is our peak year sales for that, our peak year royalties will be over $500 million, all of which, of course, drops to the bottom line. We're going to work right now in an effort to be able to dose antibody-positive boys that will increase the opportunity by 15%. It will bring the addressable patient population for ELEVIDYS to about 95%. We're doing the work right now to move to suspension. And if we're successful with suspension that will reduce COGS. It will increase our margins for over 90%, and it will ensure that we can get ELEVIDYS across the globe into all corners of the globe. And building on the antibody work that we're already doing, our long-term goal is to be able to redose boys with ELEVIDYS, which if we are successful in doing that, will be an entire paradigm shift for the concept of gene therapy. Let's talk now about our limb-girdle programs. To remind you, we have 6 programs for 6 different diseases all under this broad umbrella called limb-girdle, and to also remind you, we divide these up 3 and 3 between what we call the [ SARCs and non-SARCs ]. When we look across all of the programs we currently have for limb-girdle, all 6 of them, there are 2 things that you should know about them. The first is that each of these diseases is a deadly disease and entirely unserved. There is a desperate need among these patients. So a real opportunity to do good by these patients. The second thing to understand as an investor is there's an enormous commercial opportunity in here. Together, these represent about 71% of the ELEVIDYS opportunity. If we focus down on our [ SARCs ], more specifically, there are 3 of those, they represent still about 25% of the ELEVIDYS opportunities. So if we're successful and you consider them together, these will be likely in the top 3 most successful gene therapy launches when they come. And as it relates to the [ SARCs ], there's 2 things to know about them. They are both significantly derisked and they are relatively late stage. They are derisked for a number of reasons. First, know this, they all rely upon the same Rh74 platform as ELEVIDYS, so we have a very good understanding of what we may see, both from an expression perspective and a safety perspective, for all of these [ SARCs ]. The second thing you should know is that the gene therapy itself and the gene here for each of them, codes for the unaltered native protein, the absence of which is the sole and exclusive cause of degeneration and ultimate death in these patients. And the third thing to know is that the development programs, all in alignment with the FDA are very lean, fast approaches. They all involve small single-arm studies, and they all involve looking at expression and safety as the basis for approval. They're also a late stage in a number of regards. First, let's think about SRP-9003. With 9003, we've already dosed all of the patients in its registration trial. We will have a readout on that program this year. We'll be submitting a BLA for an approval this year. With respect to 9005 -- 9004 we're already dosing those patients as we speak. And with respect to 9005, we'll be starting its registration trial this quarter. So if we're successful with these programs, and we have an enormous amount of conviction that we are going to be successful, with these programs, we're going to translate this development work to successful launches very rapidly. Now with that, let's move on to our newest platform, which is our siRNA platform, that we received from Arrowhead Pharmaceuticals. To remind everybody in the fourth quarter of last year, we entered into a broad partnership with the innovator, Arrowhead Pharmaceuticals to gain access to a very broad platform of siRNA. We have 4 clinical stage programs. We have 3 preclinical programs heading to the clinic, and we have 6 research programs with Arrowhead across neuromuscular CNS, cardiomyopathy and pulmonary, all right? This platform that we have is going to play a really strategically important part of the future of Sarepta for a host of reasons. First, this is a chronic therapy platform. It nicely diversifies us as we have a very strong onetime gene therapy platform as well. So there's a nice balance and diversification with this. Second, the lead programs, in particular, DM1 and FSHD leverage our deep understanding in the neuromuscular space. At the same time, this really broadens and diversifies us. It diversifies us into CNS and cardiomyopathy and even pulmonary. And finally, there are a significant number of big blockbuster potential opportunities if we're successful from a scientific perspective here. As an example, if we're successful, we'll launch FSHD in 2028. And if we're successful, we'll launch DM1 in 2029, both are multibillion-dollar opportunities. So why did we get so excited about siRNA? It's broadly probably 2 reasons. One, let's just talk about the technology itself in the broadest of terms. We're really excited because siRNA is a very, very powerful modality for the purpose of which is to silence gene expression and knockdown proteins, probably the most powerful approach to doing that right now that currently exists, at least in our opinion. We're also really excited about the approach that Arrowhead has taken here and the work that Arrowhead has done in particular. The first thing to know is that Arrowhead as experts in RNAi has made a number of modifications to the backbone, which they believe will increase targeting and reduce off-target effects. The second thing that really excites us about Arrowhead is they've done a great job of getting out of the liver and getting into other tissue. The example I'll use that we're really excited about right here is their approach to muscle. So Arrowhead uses this approach where they take the RGD peptide ligand and it targets to this thing called the alpha V beta 6 integrin receptor. And they believe that approach to targeting will increase muscle concentration and therefore, enhance efficacy and enhanced safety at the same time. We also have an enormous amount of conviction around this approach. And that conviction comes not only from the diligence that we've done. It also comes from our own work as well. Know this, we have, as some may know, a next-generation capsid, something that we call Myo-R874. Interestingly enough, Myo-R874 uses the same RGD motif to target the same integrin receptor. And in our hands, we're seeing just exceptional tropism with that approach. So we're really excited about that. The final thing that we love about this Arrowhead approach is that Arrowhead's made a lot of progress as evidenced by the fact that we're currently in clinical trials with 4 programs with this siRNA platform. Let's talk briefly about each. The lead program here is FSHD. FSHD is a devastating neuromuscular disease. There are no good treatments for it today. There are about 13,000 patients in the U.S. alone who have FSHD, understand I'm going to use U.S. numbers, but we have global rights here. We're in a Phase I/II for FSHD. And if we are successful, we'll be launching FSHD in 2028. The next program we have is DM1. DM1 also is a devastating neuromuscular disease. It also is a disease that is not well served today. There are some 30,000 patients in the U.S. alone with DM1. So this is about 3x the size of DMD. We're in a Phase I/II with a DM1. And again, if we're successful with this program, we'll be launching it in 2029. That means with those first 2 programs alone, we'll have multibillion dollar opportunities before the end of this decade, if we're successful and the science breaks the right way. The next program we have is spinocerebellar ataxia type 2, otherwise known as SCA2. SCA2 is actually a neurodegenerative disease. There are about 2,000 patients in the U.S. that have SCA2. So by our estimates, if we're successful, the peak year sales on this program is about $700 million. But know this also, we have SCA1 and SCA3 also heading to the clinic. And if you take all of those programs together, our peak year sales estimate for these is about $2 billion for this and the other programs. And finally, we have a program using ARO-MMP7 to target idiopathic pulmonary fibrosis or IPF. Now, IPF is a rare disease and Sarepta knows rare disease. But it's pulmonary, and this is very new to us. So why are we doing this? We're doing this because the opportunity to do good by patients and do well by investors here if we are successful is enormous. There are some 60,000 patients in the U.S. suffering from IPF. From the time of diagnosis, the life expectancy of one of these folks is about 5 years, and we're in Phase I/II with this program as well. Those are our clinical programs, but I will remind you, yet again, that behind that, we have 3 preclinical programs for siRNA heading to the clinic, and we have 6 programs from a research perspective with Arrowhead. When I think about the things I'm most proud of at Sarepta, probably the one thing that I'm overarching proud of is that we're not afraid to take big swings, that Sarepta is not afraid to set ambitious goals and then through a combination of great science, execution and an obsessive attention to detail overcome obstacles and achieve those goals. I'll give you an example. In 2017, we entered into a written strategic plan that was so ambitious that we called it at the time, project Moonshot. As we sit here today, I'm proud to say we have achieved every single obstacle that was set out in Project Moonshot back in 2017. Over that 7 or 8 years, we've gained approval on 4 therapies. We've launched all of those therapies. Those launches have all gone exceptionally well. We've grown revenue, as you've seen, at 42% compounded annual growth rate, and we're accelerating in that regard. At the same time, our peak year sales this decade, if we're successful, will be greater than $5 billion. If you include our ex U.S. royalty revenue, it will actually be $16 billion in operating income because we're profitable today, and we're consistently cash flow positive today and we'll be that over the rest of this decade. You'll remember back in 2017 before we'd ever dosed a patient, we have a lot of conviction over this thing we at the time called 9001, now called ELEVIDYS. In our strategic plan, we said we were going to develop that therapy as fast as possible, and we were going to make it available to the vast majority of patients living with and ultimately dying from Duchenne muscular dystrophy. And as we sit here today, we have done exactly that. Another thing that we said back in 2017 all the way back then, was that if we were successful with ELEVIDYS, we knew that we needed to take advantage of that success as rapidly as possible and to diversify and leverage that success with another big acquisition and another modality. And we did exactly that, as you know, in the fourth quarter of this year, we got the siRNA platform. So as we sit here today, we have a pipeline of really deep pipeline of gene therapy and also a chronic therapy pipeline of siRNA that's moving rapidly towards, hopefully, approvals before the end of this decade. And probably, most durably for us as an organization, over this period of time, we have built a team that, at least in my opinion, is one of the best in biotech, a team that is passionate and patient-focused, but frankly, is expert in what they do and knows how to get things done. And we are getting things done. As we look at 2025, we have a lot to do in 2025, when we have a lot of readouts and milestones in 2025. In fact, we have, frankly, more milestones than I can probably discuss today, but let me touch on a few of them. We have a lot of work to do still with ELEVIDYS and a lot of readouts from ELEVIDYS. The one I'm really excited to see is the 2-year data on EMBARK. EMBARK is our pivotal trial for ELEVIDYS. So this will be a really exciting opportunity to see the effect of this therapy on the lives of patients over 2 years and in a larger set of patients. So we're excited about that. We have a ton to do with respect to our limb-girdle program. To remind you, we need to keep dosing 9004. We need to start 9005 this quarter. We need to get our readout for 9003 and we need to submit a BLA for an approval for 9003 this year. We're also going to be filing some INDs this year. We're going to be -- we're going to file an IND for our next gene therapy for limb-girdle Type 2A. We're going to file an IND this year for our Huntington's disease program and our Huntington's disease program is an siRNA program. And interestingly enough, the Arrowhead deal has not yet closed. I should be clear about that. But already this year, we're planning for a number of readouts in our siRNA platform once closed, including in the second half of this year, a readout for FSHD and in the second half of this year, a readout for DM1. So look for all of that. Also, over the last 7 or 8 years, we've done a lot of research, and we've been fairly quiet about it focusing more on our late-stage development work and our approvals. So we're going to start to pull back the curtain on some of the brilliant research and development work that Louise and her team have done. So look for an R&D day later this year. Now I said earlier, a few slides back that in 2017, we had a strategic plan that we called Project Moonshot, and that we've hit all those objectives. We have a new strategic plan at Sarepta. It's called Sarepta 2030, and there is a ton of detail inside that strategic plan. But the overarching goal is easy to describe. And that is simply we want to be the next globally relevant, big biotech that is durable and spends its time bringing a better life to a broad array of rare disease patients. Thank you.

Do you want to introduce who's on stage with you?

Yes. So I have Ian Estepan, our CFO; I have Dallan Murray who is our Head of Customer. He's commercial and medical affairs, and I have Dr. Louise Rodino-Klapac, who is our Head of Research and Development, and by the way, the co-inventor of this little chunk we call ELEVIDYS.

So I just want to remind everybody that there are 3 ways to ask a question, right? There's the old way, raise your hand, they now call on you. There is -- you can submit a question in the e-mail portal and -- or you could just e-mail me. But maybe I'll start. You guys obviously beat consensus in 4Q for ELEVIDYS pretty handily actually. And -- but I'm just wondering now with that beat, how you think about the push-pull levers for the ELEVIDYS guidance?

Well, let me say this, in the broadest of strokes, we set the guidance for ELEVIDYS the way we set all of our guidance. I said jokingly recently, like not to be snarky, this isn't our first rodeo. And we've been doing this for a very long time. We've had an exceptional track record of being able to set guidance well and then to meet or exceed that guidance. And it's in that context that we set the guidance for ELEVIDYS. And I would remind you of how significant that guidance is, first of all, let's be clear. No one is going to question the fact that ELEVIDYS is the single most successful gene therapy that has ever been launched. Our overall guidance for the year is just about 70% growth over the prior year. I don't think anyone is going to suggest 70% year-on-year growth. After what is, by most people's standards, relatively big base is impressive. But with respect to ELEVIDYS in particular, which is really the driver for guidance, the growth year-over-year is 160%. There's an enormous demand for ELEVIDYS, but we're feeling very good about the guidance that we have right now. We'll continue to monitor it. And if we think there's a big appropriate time to update guidance, we'll consider it, but we feel very good about where we are.

We have a -- yes, a question in the audience. Great, raise the hand.

Question on the redosing technology in the 2- and 3-year follow-up data, what your expectation for the need for redosing? [indiscernible] turn over the transcript [indiscernible].

Yes. So first things first. We have never -- and you can correct me, Louise or add to it. So first of all, over the long period of time that we've been evaluating this therapy, starting the nonclinical space first. We've never seen the need yet for a redosing concept. As long as we've been able to look in the animal models, nonhuman primate and the mouse model, we've never seen a diminution in expression or function. And in the clinical setting, we have patients that are now out 6 years or more. We have data on 5 years on these patients that has already been published, and you see no diminution in effect. So this isn't about immediately anticipating an issue with the long-term durability for ELEVIDYS. This is a broader concept of increasing the long-term utility of gene therapy more generally. If we could redose, it's not just about the concept of redosing, and it's not just about the idea of dealing with durability. If we could redose, we would completely turn on its head to paradigm. Today, what you do with a onetime therapy is this. You pick the highest dose you can pick. It's safe, right? And unless you're getting to a place where you're getting real diminishing returns, then you dose and you cross your fingers and you get what you get, right? If we lived in a world where you could do serial dosing, we would change that paradigm in different ways. It works brilliantly with ELEVIDYS, the current approach we have. But in the future, there may be gene therapies where you would benefit from smaller doses over a longer period of time. We're topping up doses over time. So this isn't about anticipating some monstrous durability issue. We have not seen anything like it. And we won't probably know whether there's a need for that for the next 15 or more years before we even know whether there's the concept of even needing this. But if we could redose an AAV-mediated gene therapy, I think it would be a game changer for the entire field. Louise, did I get that wrong?

The only thing I'll add is the technology that we're using for the -- to treat antibody-positive patients, the 2 different trials imlifidase and plasmapheresis are the exact technology that we would try for redosing. And so the work that we're doing now will really inform that. And so that's why we're really excited about it.

We have a question in the portal, which is related to the $30 billion in cumulative revenue by 2030, what contribution are you expecting from limb-girdle and other pipeline programs? Is this assuming success or risk adjusted?

The $30 billion, I believe, will include limb-girdle launches. It's unrisk adjusted, but you should know we fill an enormous amount of conviction around it. Just remember with the limb-girdles, and I don't mean to oversell. We still have development work to do and remember the forward-looking statement concept. But at the same time, this is the same platform as ELEVIDYS. So we have a pretty good understanding of what we're going to see from a safety perspective after having dosed 600 patients and an expression perspective. And with respect to these limb-girdles also understand that these -- this is the native protein, the absence of which is the sole and exclusive cause of disease, and we're replacing it with this gene therapy and what will be, I'm quite confident very robust expression. And finally, understand our approvals are based on expression and safety. So if you believe that we understand safety and expression fairly well, you'll have a significant conviction for the pathway for these programs as well. With that said, there will be modest contribution from the limb-girdle programs to that $30 billion. But I will still note this that the predominant sales that we're talking about over this decade and the predominant operating income that we're talking about this decade and the predominant cash flow that we're talking about this decade come from currently approved therapies, and just continuing to execute. So I guess the bet you need to make is whether we have proven ourselves capable of executing as an organization.

Questions from the audience? Maybe one for me. So what are you seeing in the field in terms of how physicians are prioritizing patients on ELEVIDYS therapy, because you've got a pretty wide label, right?