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

Good afternoon and welcome to Sarepta's Second Quarter 2026 Earnings Results Call. As a reminder, today's program is being recorded. At this time, I'll turn the call over to Tam Thornton, Sarepta's Senior Director of Investor Relations. Please go ahead.

Thank you. And thank you all for joining today's call. Earlier this afternoon, we released our financial results for the second quarter of 2026. The press release along with our slides and supplementary information are available on the investor section of our company website. We plan to file a Form 10-Q for the quarter today with the SEC. Joining me on the call are Michael Severino, our CEO, Dr. Louise Rodino-Klapac, President of R&D and Technical Operations, Patrick Moss, our Chief Commercial Officer, and Ryan Wong, our Chief Financial Officer. Additionally joining us in the Q&A portion of the call are Ian Estepan, President and Chief Operating Officer, and Dr. James Richardson, Chief Medical Officer. Before we begin the formal remarks, I would like to note that during this call we will be making a number of forward-looking statements. Please refer to Slide 2 of our presentation to view the formal text of these safe harbor statements. These statements involve varying risks and uncertainties, many of which are beyond Sarepta's control. Actual results could materially differ from these forward-looking statements, and such risks can adversely affect our business, our results of operations, and the trading price with Sarepta's common stock. We strongly encourage all listeners to review the company's most recent SEC filings for a detailed description of these applicable risks. Sarepta explicitly states that it does not undertake any obligation to publicly update or revise its forward-looking statements or financial projections based on subsequent events. Furthermore, please note that we will discuss non-GAAP financial measures during today's webcast. Complete descriptions and reconciliations of our GAAP to non-GAAP financial measures are included in today's press release and the accompanying slide presentation available to investors on our website. And with that, I will now turn the call over to our CEO, Michael Severino.

Thank you, Tam. Good afternoon, and thank you for joining Sarepta Therapeutics' Second Quarter Financial Results Conference Call. This is my first earnings call as CEO of Sarepta, so today I'll offer a few opening remarks and then turn things over to Patrick, Louise, and Ryan to discuss our commercial highlights, pipeline progress, and financial results for the quarter in more detail. As someone who has spent a career evaluating pre-clinical and clinical data and translating scientific breakthroughs into meaningful treatments for patients, it's an honor to be here. Sarepta is uniquely positioned within biotech and has tackled some of the most challenging problems in medicine. Our scientific achievements have helped redefine what is possible for patients with Duchenne, from pioneering work in exon skipping to the development of ELEVIDYS. A growing body of long-term data has established Sarepta as a leader in rare disease innovation. I see tremendous potential untapped value in the opportunity we have in front of us. And that is what brought me to be a part of this team. We have a leading commercial portfolio in Duchenne with 4 approved therapies that are making a difference for patients today. These therapies are backed by a growing body of long-term data and real-world evidence supporting their use. We have an siRNA platform that has already delivered strong pre-clinical and early clinical data. As a physician scientist, I find these data compelling and have been impressed by both the potency of our siRNA constructs and our ability to deliver to the cell type of interest with high efficiency, as evidenced by our ability to achieve high muscle concentrations in a dose-dependent manner in our SAD studies. Based on these features and the strong predictive value pre-clinical models have in this space, I believe our pipeline has the potential to deliver best-in-class therapies across multiple neuromuscular and rare disease indications and drive our next phase of growth. Importantly, we have the financial strength to advance these programs independently, and we have a deeply experienced and talented team with a strong track record of delivering results. We recognize that concerns around ELEVIDYS adoption, competition on the horizon for exon skipping treatments, and capital allocation remain. However, we are prepared to meet these challenges and have multiple upcoming milestones that can clarify our growth trajectory. These include Cohort 8 data, new data in the second half of this year from 2 of our most advanced siRNA programs in FSHD and DM1, and upcoming regulatory decisions around VYONDYS and AMONDYS. Now, turning our attention to the quarter. You will hear more details from Ryan shortly, but I'd highlight 3 things from our quarterly financial results. First, we delivered another quarter of GAAP and non-GAAP operating profitability, reflecting the durability of our base business and disciplined execution. Second, we increased cash and investments by approximately $197 million during the quarter, strengthening our ability to fund future growth. And third, our commercial portfolio continues to provide a strong foundation as we invest in what we believe are significant long-term value and growth opportunities across our emerging siRNA pipeline. Commercially, our PMO franchise has remained stable and ELEVIDYS performed in line with expectations with improving enrollment forms providing early evidence that our expanded commercial initiatives are taking hold. Now that we are in the second half of the year, we have narrowed 2026 total net product revenue guidance to $1.2 billion to $1.3 billion, with a mid-point being the appropriate reference. This is consistent with our prior expectation that results would trend toward the lower end of our original range. Patrick will provide more detail on our commercial performance, outlook, and growth initiatives in his section. Turning to R&D, we continue to make meaningful progress across both our Duchenne and siRNA programs. In Duchenne, enrollment and dosing continue in Cohort 8 of the ENDEAVOR study, and we expect to fully enroll the study by the end of 2026. We were also pleased to see the FDA accept our supplemental NDA submissions of AMONDYS 45 and VYONDYS 53 for review. Beyond Duchenne, our emerging siRNA platform remains central to Sarepta's future growth strategy. With important data readouts expected later this year from our FSHD and DM1 programs, Louise will discuss the biology-first approach that underpins these programs and why we believe our platform can deliver differentiated, potentially best-in-class therapies across multiple rare disease indications. In summary, our focus is clear and our future is bright. Our financial footing is sound, and we continue to execute in Duchenne. And revenue from our approved products enables us to advance our pipeline independently, which we continue to do with discipline and urgency. I'm excited to be on this journey with this team and look forward to creating long-term value for the company and the communities we serve. And with that, I'll turn it over to Patrick to discuss commercial performance for the quarter. Patrick?

Thank you, Mike, and welcome to the team. Today I'll review our second quarter commercial performance, progress we are making to support physicians, patients, and families across our 4 approved Duchenne therapies and our outlook for the remainder of 2026. For the second quarter, total net product revenue was $329 million, consisting of $98 million from ELEVIDYS and $231 million from our PMO franchise. PMO performance continues to reflect stable demand and sustained patient and physician competence supported by extensive real-world experience and evidence. ELEVIDYS performance was in line with our expectations for the quarter, with sales remaining relatively steady and quarter-over-quarter growth in enrollment forms signaling that demand is increasing. We view that trend as an encouraging sign that momentum is building. Our focus is on sustaining that progress and supporting informed treatment decisions through continued science, education, and engagement. Throughout the first half of the year, we completed the expansion of our commercial footprint. The strategy is set, our sales team is trained and deployed, and our initiatives are now fully operational. Our focus is now on execution, improving patient identification, expanding education for patients and families, and continuing to strengthen healthcare providers' confidence to drive demand. At a recent mid-year meeting, the energy across the team was clear. They are reaching more referring physicians, engaging more deeply at treatment centers, and participating in a more balanced discussion about the totality of evidence demonstrating ELEVIDYS' benefit-risk profile. In Q2, our sales team delivered a record number of healthcare provider interactions. HCPs are engaging more deeply on the sustained functional outcomes and durability supported by ELEVIDYS EMBARK Part 2 and, more importantly, the 3-year data. Enrollment form activity provides early evidence that these efforts are taking hold. A majority of Q2 enrollment forms were from HCPs who had interacted with our sales team in the prior 90 days, including a meaningful portion within 30 days. This pattern was consistent with Q1 and reinforces the importance of focused, timely engagement. The breadth of site activity expanded in Q2 as well, through both re-engagement and new interest. More returning sites submitted enrollment forms than in Q1, while submissions from referral sites outside our current ne2rk signal broader interest in ELEVIDYS. Taken together, these indicators support our view that our sales team initiatives are taking hold. Understanding of the ELEVIDYS benefit-risk profile is improving and competence is rebuilding across the Duchenne community. In addition, our patient education team is bringing that same commitment directly to families, connecting with many who have turned to Sarepta seeking information that will help them navigate Duchenne and the treatment decisions they face with greater clarity and confidence. Turning to our outlook. As Mike mentioned, consistent with our previous direction of model towards the lower end of the $1.2 billion to $1.4 billion range, we are narrowing our 2026 total net product revenue guidance to $1.2 billion to $1.3 billion. The timing of revenue reflects how patients progress from enrollment form through the treatment journey. ELEVIDYS revenue in the first half of 2026 was supported by patients who entered the pipeline following the late 2024 label expansion and progressed to infusion during the first half of the year. As a result, first half revenue benefited from the conversion of that backlog of demand. ELEVIDYS revenue in the second half of 2026 will reflect a period when enrollment form activity was lower before expanded commercial initiatives were fully deployed and beginning to take hold. We are encouraged by the quarter-over-quarter improvement in enrollment forms we are seeing today. However, given the length and variability of the treatment journey, that activity is expected to contribute more meaningfully to revenue in 2027. As a result, we expect total net product revenue in the second half of 2026 to be modestly lower than in the first half. We also currently expect ELEVIDYS revenue in the third quarter to trend lower than Q2, acknowledging that the quarter-to-quarter variability is the reality of a one-time gene therapy. We do remain confident in the long-term opportunity for ELEVIDYS, and our team remains focused on sustainable execution. Now, turning to our PMOs. Stable demand, extensive real-world experience, a well-established safety profile, and adherence rates exceeding 90% continue to underscore the durability of this business. More than 1,800 patients worldwide have been treated with Sarepta's exon skipping therapies, underscoring their enduring value to patients and families. This year marks an especially meaningful milestone for Sarepta and the Duchenne community. On September 19th, EXONDYS 51 will celebrate 10 years since its U.S. approval. For us, this is more than an anniversary. It represents a decade of Sarepta's leadership, close partnership with the Duchenne community, and progress that has helped us transform the treatment landscape. Over that time, Sarepta has helped establish exon skipping as a foundational treatment approach and build a substantial body of real-world evidence across important outcomes, including ambulation, pulmonary function, cardiac function, and survival. We are proud of the progress made over that past decade and deeply honored to have served the Duchenne community throughout that journey. In closing, our priorities remain clear. Execute with discipline, support informed treatment decisions through science and education, and drive sustainable growth across our Duchenne portfolio. We remain confident in the long-term opportunity for ELEVIDYS and the strength and durability of our PMO franchise. Importantly, we remain deeply committed to transforming what is possible for patients and families living with Duchenne and bringing that same commitment to patients across other serious rare diseases. And with that, I'll turn the call over to Louise. Louise?

Thanks, Patrick. And let me add my welcome, Mike. We're happy to have you on board. As we move into the few last months of 2026, we remain excited by the science that underlies our rare disease portfolio and the data we're preparing to share with you soon. Before turning to the individual programs, I want to briefly frame how we think about our next-generation RNA platform. Our strategy is built on a simple premise, biology first. Rather than applying 1 delivery approach across all tissues, we select the receptor and delivery architecture that is intended to best address the key biological barrier in each disease. In muscle, that means leveraging alpha-v beta-6 integrin targeting, which was selected for its strong muscle exposure and delivery characteristics. In the CNS, where the dominant barrier is transport across the blood-brain barrier, we use a unique transferrin receptor-based approach. Across both settings, our goal is the same, to move beyond systemic exposure and achieve productive intracellular delivery, target engagement, molecular correction, and ultimately, the potential for functional benefit. Combined, we believe this approach will distinguish our therapies from others in earlier and later stage development. This is also where siRNA biology is important. SiRNA uses catalytic multi-turnover risk activity that continually silence. We believe this enables deeper and potentially more durable suppression of disease-causing RNA than approaches that rely on anti-sense mechanisms that require RNase H, a rate-limiting enzyme. Together, biology-driven delivery and catalytic siRNA potency creates the foundation for our belief that these programs have the potential to be best-in-class. Building on the positive SAD data from our lead programs to treat FSHD and DM1, we remain on track to announce interim results from our Multi-Ascending Study, or our MAD study, in the second half of this year. We believe these programs are differentiated through a unique targeting mechanism and high muscle bioavailability, positioning them as potential best-in-class therapies compared to more mature competitor programs in the space. To remind you, data from our readout this year showed high muscle concentration with alpha-v beta-6 and a strong safety profile. Beginning with SRP-1001, which is our siRNA-based treatment designed to reduce or knock down the production of the DUX4 protein in skeletal muscle in patients living with FSHD. FSHD is caused by abnormal activation of the DUX4 gene, leading to expression of the DUX4 protein. DUX4 is a transcription factor that affects the expression of multiple genes within muscle. It's normally expressed during embryonic development, but when reactivated later in life, it creates a toxic intracellular environment that contributes to muscle degeneration. The underlying pathology is well-understood and the pathological role of DUX4 in the progression of the disease is well-accepted. Our therapeutic thesis is that deeper DUX4 knockdown in muscle should translate into greater molecular correction and, over time, the potential for improved functional outcomes. The MAD data we plan to share will include safety, PK, DUX4-related gene panel, circulating DUX4-related biomarkers, PK, and preliminary functional assessments. Importantly, because FSHD is a slow, progressive disease, and this is an early study including 6 months of follow-up, the objective is not to definitively demonstrate functional benefit at this time, given the trajectory of the disease. Rather, the goal is to establish the biological chain from tissue exposure to target knockdown to molecular biomarkers known to drive the underlying pathology of the disease, and also to select an appropriate dose to take on to the next stage of development. In summary, our goal is to generate the highest levels of knockdowns that improves biomarkers and leads to best functional outcomes. Confirming our ability to safely dose escalate and deliver a drug with proven biological efficacy efficiently to the target tissue would strengthen the evidence supporting SRP-1001 as a potentially best-in-class treatment for FSHD and provide an important foundation for our discussions with FDA as we prepare for the next phase of the study to advance a registrational study. Moving on to DM1. SRP-1003 is our siRNA-based treatment for DM1 designed to target and knock down or silence the DMPK mRNA in target cells. The early data we generated for DM1 is important for 2 reasons: first, our preclinical models are predictive of what we have seen in the clinic with respect to muscle concentration. Of note, an increase in plasma exposure has translated into enhanced dose-dependent delivery to the muscle, resulting in robust target engagement. And second, the DMPK knockdown observed to-date has been directionally strong and supports the potential of siRNA to address the root molecular driver of disease. As you are aware, DM1 is driven by an expanded CUG trinucleotide repeat in DMPK transcripts, causing mutant DMPK mRNA to accumulate in the nucleus and disrupt normal RNA splicing. As a result, for any therapy to be therapeutically effective, it must reach the target tissue, enter the cell, and reduce nuclear-retained DMPK RNA. SRP-1003 is being developed to achieve exactly that, with the goal of driving downstream splicing correction. The results we plan to share from the MAD study will include safety, serum and muscle PK, DMPK knockdown, CASI-22 splicing index, and vHOT analyses. The importance of these results, should they be positive, will differentiate SRP-1003 as a best-in-class treatment for DM1 and offer a clear path to a registration study. It's important to note that our FSHD and DM1 programs demonstrate why we believe delivery efficiency is a primary competitive advantage. The key differentiator is not simply reaching the bloodstream, it's reaching enough muscle fibers, maintaining exposure long enough, achieving sufficient intracellular siRNA concentrations, and driving meaningful target knockdown in the nucleus. Further, our non-clinical data has shown that targeting endocrine receptors via small peptides leads to enhanced skeletal muscle uptake compared to using a much larger TfR1 antibody-based approach. It's also important to note that based on data to-date, our alpha-v beta-6 integrin targeting ligand provides superior muscle concentration compared to current transferrin-based approaches without dose-limiting toxicity. More specifically, due to its role in intracellular transfer and trafficking, only approximately 5% of expressed TfR1 receptors are available on the cell surface for binding at any one-time versus alpha-v beta-6 with approximately 40% of expressors at receptors available at any one-time. This high level of surface availability and high levels of expression leads to a greater potential for ligands targeting alpha-v beta-6 to drive significantly higher muscle uptake than TfR1. These delivery characteristics help establish the rationale for advancing SRP-1001 for FSHD and SRP-1003 for DM1 in first-in-human studies and continue to support our confidence in the platform. In summary, we believe Sarepta's next-generation RNA platform is differentiated by biology-driven tissue targeting, efficient intracellular delivery, and the catalytic potency of siRNA. Our focuses on connecting the full chain from tissue delivery to target engagement to molecular correction, and ultimately, to the potential for functional outcomes. We are applying the same biology-first framework to our CNS programs. Our Huntington's program is ongoing, having dosed its first patients earlier this year. In these programs, our receptor selection is driven by the biological requirement for transport across the blood-brain barrier. If successful, the early CNS data would provide important validation of our transferrin receptor-based blood-brain barrier delivery approach. Our second generation DM1 program is the first example where we aim to impact the CNS in addition to muscle to address the significant unmet need. We look forward to sharing this data as soon as it becomes available. Now, turning to ELEVIDYS. We were pleased to announce in March that screening and enrollment were underway in Cohort 8 of ENDEAVOR for study SRP-9001-103. To remind you, the purpose of Cohort 8 is to assess prophylactic sirolimus treatment as part of an enhanced safety protocol during treatment with ELEVIDYS in non-ambulant individuals with Duchenne. Data from Cohort 8 will be used to determine whether administering sirolimus prior to and after ELEVIDYS infusion can help reduce acute liver injury or ALI. A known risk associated with AAV gene therapy is a class effects. The cohort is enrolling approximately 25 participants in the United States who are non-ambulatory and this is currently underway. As a reminder, the immunosuppression regimen will include 14 days of peri-infusion sirolimus, prior to ELEVIDYS administration and will continue for 12 weeks after ELEVIDYS administration. Primary endpoints includes incidence of ALI and ELEVIDYS dystrophin expression at 12 weeks. Participants will be followed for safety and functional outcomes for 72 weeks. The approach with sirolimus is based on pre-clinical data and shaped by real-world clinical experience, including guidance from independent specialists in Duchenne and liver health. The evidence base continues to build. As previously shared, there have been independent published reports on the use of sirolimus to mitigate ALI with ELEVIDYS. Dr. Soslow and colleagues very recently published a study in human gene therapy demonstrating that none of the patients treated with prophylactic sirolimus had ALI. We will also present what we believe are encouraging interim safety data from our Phase 4 ENDURE study at the Neuromuscular Study Group meeting in September that showed zero incidence of ALI in patients treated prophylactically with sirolimus. We expect to fully enroll the ENDEAVOR Cohort 8 study by the end of 2026. Based on observations that our study investigators are dosing participants sequentially, we now expect 12-week data from the full cohort in the first quarter of 2027. Further, we continue to plan to meet with FDA in early 2027. In addition to safety, we continue to build the ELEVIDYS 'evidence base through upcoming disclosures. At the Neuromuscular Study Group meeting, key de novo disclosures include micro-dystrophin and muscle MRI correlations with function. Next, the impact of treatment delay modeling, the ENDURE Phase 4 Interim Safety and Liver Safety, U.S. post-marketing safety, and finally, the promised mobility outcomes versus external controls. At the World Muscle Society meeting, we will highlight expression and safety data in ELEVIDYS distributed patients under 4, along with encore presentations that will EMBARK 3-year outcomes, cardiac functional data, pooled safety, and early intervention pre-clinical data. We look forward to sharing this data with the community. Moving now to AMONDYS 45 and VYONDYS 53, our exon skipping therapies to treat Duchenne. At the end of June, we were excited to announce that the FDA accepted our supplemental new drug applications for both therapies. The signing produced a target action date of February 28, 2027. The SNDA submissions seek conversion of the accelerated approvals of AMONDYS 45 and VYONDYS 53 to traditional approvals. The applications are supported by the data from the ESSENCE confirmatory study, as well as substantial published real-world evidence and the favorable and consistent safety profiles of both exon skipping therapies. We look forward to sharing important updates with you in the coming months, including readouts from our FSHD and DM1 MAD studies, proof of biology from our Huntington's disease program, and data from the ENDEAVOR Cohort 8 study. Thank you. And I'll now turn the call over to Ryan for an update on our financial performance. Ryan?

Thank you, Louise, and good afternoon, everyone. We delivered a strong financial performance in the second quarter, and we are pleased with the continued operating discipline reflected across the business. Our results underscore the durability of our commercial DMD franchise, the progress we are making with our pipeline, and our ability to fund our most important commercial and R&D initiatives from a position of financial strength. In my remarks, I'll walk through the quarter's key financial highlights and how we are positioned for the second half of 2026. Beginning with second quarter revenue performance. Total revenues were $401 million, a decrease of 34% year-over-year, driven by the decrease in net product revenues, primarily ELEVIDYS, to a lower demand. The total revenue in the quarter included $73 million of collaboration and other revenues, consisting primarily of contract manufacturing revenue from our partnership with Roche. Through the first half of the year, we have now recorded $659 million in total net product revenue and over $1.13 billion in total revenue. Q2 year-to-date total revenues decreased 17% compared to prior years, driven by lower ELEVIDYS product revenue, partially offset by higher collaboration and contract manufacturing revenue. Moving next to gross margins. Total cost of sales for the quarter were $149 million, a decrease of 2% compared to the prior year period. The change year-over-year is reflective of lower cost of goods due to the decrease in our product sales partially offset by higher cost of goods related to contract manufacturing revenues. On a year-to-date basis, total cost of sales were $248 million, a decrease of 11% year-over-year, driven by similar dynamics. Gross margins on net product revenues were 75% in the quarter and 78% for the first half of the year. Operating expenses continue to reflect our focus on disciplined cost management. Combined R&D and SG&A expenses in the second quarter on a GAAP and non-GAAP basis were $199 million and $165 million, respectively. Non-GAAP expenses in Q2 decreased 44% compared to the prior year period, reflecting the benefit of our cost restructuring initiatives and the prioritization of our promising siRNA programs in our R&D portfolio. First half combined R&D and SG&A expenses on a GAAP and non-GAAP basis were $462 million and $388 million, respectively. Year-to-date non-GAAP expenses were down 66% compared to the same period prior year, also driven by the restructuring and pipeline reprioritization, as well as the Arrowhead collaboration upfront expense recognized in the prior year. This operating discipline translated into meaningful profitability for the quarter. We delivered GAAP operating income of $13 million and non-GAAP operating income of $86 million. For the first half of the year, GAAP and non-GAAP operating income came in at a robust $372 million and $484 million, respectively. In addition to the results I just highlighted, our GAAP results include a $39 million litigation contingency charge to potentially resolve certain outstanding patent claims. From a balance sheet perspective, we ended the second quarter with $945 million of cash and investments, growing a $197 million increase from the prior quarter. The robust cash increase in the quarter is a result of our strong operating performance and includes a receipt of $40 million from the Roche commercial sale milestone earned in Q1. For the first half of the year, if you exclude $250 million of collaboration payments made to Arrowhead in the first quarter, our base business has generated over $240 million in cash. In closing, I'll provide color on our outlook for the second half of 2026. First and foremost, we remain focused on disciplined execution and prudent capital allocation as we advance our commercial and pipeline priorities. As you heard earlier on the call, we have narrowed our net product revenue guidance to between $1.2 billion and $1.3 billion, with the mid-point of this range an appropriate reference. In addition, we are revising upward our total collaboration and other revenue guidance between $550 million and $600 million, which is an increase of $75 million from the mid-point of our previous guidance. This is driven primarily by higher contract manufacturing revenues. I'd like to highlight for modeling purposes, this increase in expected contract manufacturing revenues will also result in a roughly equivalent increase in cost of goods for products sold to Roche. Now moving to expenses. Given we are halfway through the year, we are tightening our non-GAAP OpEx guidance to $800 million to $850 million, the low end of our previous range. And finally, from a cash flow perspective, looking back at the last 12 months, we have reset our cost structure, fulfilled our large collaboration obligations to Arrowhead, and refinanced the majority of our 2027 debt, while the base business generated nearly $400 million in cash. On a forward-looking basis, given the strength of our execution, we believe our medium-term liabilities and remaining 2027 notes are well-funded, and we remain in a strong financial position to fund our promising pipeline using cash flow from our business. With that, I'll turn the call back to Mike for Q&A. Mike?

Thank you, Ryan. Operator, can you please open the call for Q&A?

At this time we will conduct the question and answer session. [Operator Instructions] Our first question comes from the line of Anupam Rama of J.P. Morgan.

When you look at the pipeline, what really excites you about what you have going on in the pipeline? Is it something particular about the Arrowhead products or something like what Cohort 8 do for the ELEVIDYS franchise? I was wondering if you could expand on that.

Certainly. Thanks for the question, Anupam, and I'm very happy to be here. There are a number of things that excite me about the pipeline, and so maybe I'll talk about them in 2 parts. The Cohort 8 data, I think, are very promising. The potential for sirolimus to improve the benefit-risk in the non-ambulatory population, I think, can have a big impact over time. Obviously, we're still in the data generation. And as we said, we expect to complete that cohort's enrollment by the end of this year and have data in the first quarter of next year. But I think that's something that we're very much looking forward to. But when I look at the earlier pipeline in the siRNA programs that we're advancing, I believe they have tremendous potential. First of all, what I would say is in this space, pre-clinical models and early clinical data have a very high degree of predictive power. This is very different than what we see in most areas of drug discovery and development. We essentially know the biology that drives these conditions unambiguously. And if we can achieve high levels of knockdown, we have a high degree of confidence that we can achieve a benefit for patients in the long term. And when I look at both the pre-clinical data and the early clinical data, I see both the delivery aspects of the technology performing very, very well with dose-dependent increases in muscle concentration up to the highest dose tested in our SAD studies, without any dose-limiting toxicities, we have very potent RNA silencing technology. As Louise pointed out, we are able to achieve very robust knockdown. And so I think there's a real opportunity to bring forward some tremendous therapies, not only in neuromuscular conditions, but also potentially, in conditions like Huntington's, where our delivery technology also plays a key role in getting to deep brain nuclei in the pre-clinical models that we've studied. And obviously that clinical trial is now underway to see how those data translate into the clinic. So I just think there are a wide range of opportunities that can drive value for the company and value for patients in the future.

One moment for our next question. Our next question comes from the line Konstant Biliouris of Oppenheimer. Your line is now open.

Congrats on the progress and congrats on the new role, Michael. A question for Michael, based on our discussions, there is a high number of investors who are very interested in the DM1 and FSHD program, but are hesitating to underwrite the DMD pipeline risk. Although I understand it may be a little early for this question, but how are you thinking about the potential separation of the 2 businesses, the DMD pipeline and the DM1 FSHD programs?

I think there's tremendous synergy between those aspects of what we do here at Sarepta in the big picture. So we're very committed to Duchenne. We've been in Duchenne for more than a decade now. Our marketed products, we believe, are making a tremendous favorable impact on patients' lives. You see that in the long-term data. You see that in the preservation of function, the increased duration of ambulation, reduction in progression of cardiac and pulmonary disease, and even overall survival across various aspects of our DMD portfolio. And so we think those programs are a real asset to the company. When we look at their performance, we see very solid, very stable, and very durable performance, which I think is very consistent with that benefit that is being delivered. And importantly, the revenue that those programs generate is what allows us to drive the earlier parts of our pipeline, the siRNA programs in particular. And so they're really very complementary to each other. And I think as we move through the year, we have a number of data readouts that will clarify the long-term role of our DMD portfolio, which I think is very promising and will have a very bright future, as well as turn over new important data cards on the siRNA pipeline, I think can open up some very new and very important venues for the company's future growth. And so, again, I think those areas are very synergistic.

One moment for our next question. Our next question comes from the line of Brian Abrahams of RBC Capital Markets.

On the expense side, it looks like you've lowered your OpEx guidance for this year, and I think you've talked in the past about the $800 million-ish range being a good steady state to think about. I'm curious if we could talk a little bit more about the puts and takes around the OpEx run rate here. Is there any further wiggle room? And, I guess, how will resonance of the ELEVIDYS commercial efforts as well as the competitive dynamics impact for the exon skippers potentially influence how you think about long-term OpEx?

Ryan, do you want to take that?

Yes, absolutely. Thanks for the question. Yes, so we've talked previously around, we're very comfortable in that $800 million and $900 million range in terms of OpEx both being able to fund our commercial initiatives and to advance our pipeline. And as you saw, we believe in the durability of the DMD franchise. So although acknowledging that competitors are in the mix, we think there's high value in both our exon skipping and gene therapy programs. And so we're continuing to invest to -- in that durable DMD franchise. And then given the cash flow generation profile of our company, we feel really confident we can advance the siRNA program to value inflection points. And that being said, we continue to be very prudent about capital allocation. We're going to think about where the science leads us in terms of what has the highest probability of success and what's going to ultimately generate long-term value for the company as we think about where we invest. So that type of focus will continue to remain, even though we feel, again, very comfortable within that $800 million and $900 million range to advance our programs.

One moment for our next question. Our next question comes from the line of Andrew Tsai of Jefferies.

I have a question about the regulatory strategy for the siRNA programs, because given you guys have the desire to start pivotal studies, can you maybe talk about your latest thinking and whether you plan to pursue accelerated approval or full approval for both indications, and what do you envision your primary endpoint to be ultimately?

And I'll ask Louise to address that.

Sure. Thanks for the question. Now, for both FSHD and DM1, in terms of the regulatory pathway, as we've described before, the way we've thought about it and set it up is that we have the ability to apply for both accelerated approval and traditional approval depending on the regulatory framework at that time, the landscape, and the data that's generated. And in terms of the outcomes that we will use in our Phase 3 trial, that's really what the MAD study readout will help us inform of that. Obviously, in these early studies, we're looking at a variety of endpoints and evaluating all of them, and it'll be a data-driven discussion. We'll also be looking at the landscape in general. It's a great opportunity for these -- both of these communities that there's so much interest in this space and so many developers in this space. So it'll be both our internal data and the entire landscape that informs our approach to the next phase, and we look forward to having that discussion with regulators.

One moment for our next question. Our next question comes from the line of Eli Merle of Barclays.

Just a clarification on some of your ELEVIDYS commentary. You mentioned you saw a quarter-over-quarter increase in ELEVIDYS enrollment forms. Just to clarify, are you also seeing an increase in start forms in 3Q versus 2Q? Or if you could just characterize that trajectory. And then in your comments you said you expect modestly lower ELEVIDYS revenue in the second half versus the first half, but more contribution from start forms in 2027. I guess, just to clarify, should we be expecting revenues to grow in 2027 from that?

So with respect to start forms, I'll say a bit and then I'll ask Patrick to provide some more detail. We're encouraged with the trends that we see. As you know, we spent a good portion of the first half of the year getting our expanded commercial footprint in place and putting our initiatives in place in order to have a balanced communication of benefit-risk around ELEVIDYS. And we're seeing those efforts start to take hold. We are seeing improvement in start forms, and we would expect those trends to continue. It's early to be talking about 2027, but we do feel quite confident in the nature of the benefit-risk discussions that we're having and the trends that we're seeing. Patrick, do you want to add a little bit more detail?

Absolutely. What I would say from a commercial perspective, the indicators that we're seeing today are moving in the right direction. Our strategy is set, our sales team is trained and out there and deployed, and our broader commercial initiatives are fully operational. With the enrollment form activity, it has stabilized and improved. Returning sites are engaging. And we are seeing interest from new sites. I would say all of this signals that these initiatives are taking hold and strengthening that patient pipeline, even though the associated revenue, it will come, but it's going to take time. And really, the team is just focused on consistent execution and helping those patients progress through the journey.

One moment for our next question. Our next question comes from the line of Yigal Nochomovitz at Citi. Your line is now open.

This is [ Charlene ] on for Yugal. With DM1 and FSHD data approaching, can you tell us what disease characteristics make a target particularly well-suited for the alpha-v beta-6 delivery platform and what additional muscle diseases could become attractive expansion opportunities if the upcoming data sets are successful?

Certainly. Louise, would you like to take that?

Sure. So for our platform for FSHD and DM1, we're using -- what really got us excited about working on these indications was the alpha-v beta-6 targeting ligand. And really because of the wide distribution across muscle, and that's why we selected it. We've also talked about the receptors available for high muscle concentration, and that's exactly what we saw translating the pre-clinical data to early clinical data, is that we were able to achieve high levels of muscle concentration in DM1 and FSHD without dose-limiting toxicity. And so really when looking at an indication, why the alpha-v beta-6 is attractive is because you are broadly getting high levels of muscle concentration and so in terms of potential other indications, it's really those affecting muscle diseases with widespread need in terms of the muscle pathology. And so in now speaking to the other part of the equation with siRNA, DM1 and FSHD have very clear pathological roles by toxic gain of function, mRNA, DMPK, and then proteins with DUX4. And so there, the technology to reduce, we know that it's due to this toxic protein or mRNA, and we know that efficiently reducing that with the siRNA, the potent siRNA is important. So it's those 2 things together. It's the targeting technology, it's the siRNA, and the ability to do that. And so with the alpha-v beta-6, you could target any muscle disease. With the siRNA, we're really looking at gain of function toxic diseases where you could get efficient knockdown of that indication. So we're, as you can tell, really excited about this platform generally and the potential in these indications and beyond.

Thank you. One moment for our next question. Our next question comes in the line of Ritu Baral of TD Cowen. Their line is now open.

I've got 2 questions. One is related to just the time lag to revenues for ELEVIDYS. Given you guys mentioned that there is a quarter-over-quarter increase in demand, but that real revenue increases maybe not happen until 2027. Does this imply that there is a longer time to fill, a longer time in the pipeline until revenue recognition than the previously indicated, I think, 5 to 6 months? Is that the lag we should be modeling going forward? And then with your Cohort 8 data in Q1 of next year, will you have expression data as part of that top line release beyond just liver safety? And if so, what should our expectations be both for expression and for liver safety?

Thank you. I'm happy to take those questions and I'll ask Patrick and Louise to provide some additional detail. With respect to the time lag between enrollment forms and revenue, it's generally between -- it's generally about 6 months, as we have said previously. There can be some variability around that, but it's around 6 months and I think that's very consistent with what we're saying now that we're seeing enrollment forms improving and given where we are in the year, that's going to translate into revenue meaningfully in the 2027 time frame. So there hasn't been any change there. Patrick, do you want to add any detail?

We say cohorts that have come in are not mature enough really to conclude whether the overall journey is getting longer or shorter. However, we continue to use that 6 months as the enrollment form to infusion for planning assumptions knowing that timing is going to vary from patient to patient. And, Louise, do you want to take the question about the timing of expression data in Cohort 8?

Sure. So the -- you asked about the endpoint. So we expect to have the data on ALI. The primary goal of that study was to reduce that. We are collecting the biopsy data at this point. I'm not sure about the timing of that data, but the primary goal of that readout, especially with taking data to the agency, will be for the ALI, and we will produce the biopsy data. I'm not sure on the timing of that at this point.

One moment for our next question. Our next question comes from the line of Mike Ulz of Morgan Stanley.

Maybe just with respect to the RNA data updates, it's expected later in the second half. Should we expect those more towards year end? And will you share those updates together, or do you plan to separate them out? If I remember correctly, I think FSHD may be a little bit ahead of DM1.

Well, we've said that those data will be available later on in this year, and at this point we're not able to be more specific about the timing. We're going to look at each data set as they become available and make them public in an appropriate fashion. So I really can't comment today as to whether it would be at the same time or staggered. It depends on the availability of those data, but again, both are expected in the second half of this year and we're on track to meet that timeline. Louise, is there anything you'd like to add?

No, that's correct. Thank you.

Okay, and maybe just very quickly, just to add, Mike's exactly right. We do think about these programs as separate programs, though. Obviously, the timing on the SAD data, they were very close, and it made sense to release the data at the same time. But just generally speaking, we do think of these programs separately, so to Mike's point, when they become available is likely when we would release it. That's how we're thinking about it generally as a program.

One moment for our next question. Our next question comes from the line of Salveen Richter of Goldman Sachs. Your line is now open.

This is [ Matt ] on for Salveen. Maybe building on a prior question, could you provide any more color on the metrics being beyond start forms that you are seeing that support deeper ELEVIDYS penetration in the ambulatory patients? And how are you thinking of the longer-term trajectory now? And then also, how might you be able to leverage some of your efforts here to support non-ambulatory use if that's eventually included back in the label?

Absolutely. Now, our strategy is set, and as I mentioned, the sales team is out there. They've been trained, they're deployed, and the broader commercial initiatives are fully operational. So, we're seeing enrollment form activities stabilize and improve. We've got returning sites that are re-engaging, and we're seeing interest from new sites. We're also seeing a directional alignment between healthcare provider engagement and enrollment form submission. So when our sales teams goes in and speaks with an HCP we see enrollment forms result after it. As I mentioned in some cases as soon as 30 days after that engagement, those signals that, to us, that those initiatives that we put in place are starting to take hold, and it's strengthening our patient pipeline, even though the associated revenue contribution, it's going to take time. And our team is just focused on consistent execution and helping those patients progress through the journey.