Sarepta Therapeutics Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 28, 2024

There are 14 speakers on the call.

Operator

Good afternoon, and welcome to the Sarepta Therapeutics 4th Quarter and Full Year 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, today's program is being recorded. At this time, I'll turn the call over to Francesca Nolan, Executive Director, Investor Relations and Corporate Communications.

Operator

Please go ahead.

Speaker 1

Thank you, Shannon, and thank you all for joining today's call. Earlier this afternoon, we released our financial results for the Q4 and full year 2023. The press release is available on our website atsarepta.com and our 10 ks was filed with the Securities and Exchange Commission this afternoon. Joining us on the call today are Doug Ingram, Ian Aftapan, Dalen Murray and Doctor. Louise Rodino Klapac.

Speaker 1

After our formal remarks, we'll open the call for Q and A. I'd like to note that during this call, we will be making a number of forward looking statements. Please take a moment to review our slide on the webcast, which contains our forward looking statements. These forward looking statements involve risks and uncertainties, many of which are beyond Sarepta's control. Actual results could materially differ from these forward looking statements, and any such risks can materially and adversely affect the business, the results of operations and trading prices for Sarepta's common stock.

Speaker 1

For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent annual report on Form 10 ks filed with the SEC as well as the company's other SEC filings. The company does not undertake any obligation to publicly update its forward looking statements, including any financial projections provided today based on subsequent events or circumstances. And now I'll turn the call over to our President and CEO, Doug Ingram, who will provide an overview of our recent progress. Doug?

Speaker 2

Thank you, Fran. And by the way, everyone, it was Fran's birthday yesterday, so happy birthday, Fran. And good afternoon, everyone, and thank you for joining Sarepta Therapeutics' Q4 2023 financial results conference call. Led by an exceptional launch of OLEVIUS and continuing performance of our approved PMOs, EXONDYS, VYONDYS and AMONDYS, we announced this afternoon another strong quarter of full year growth and quarterly growth as we serve the patient community. As we preannounced in January at the JPMorgan Conference, 4th quarter total net product revenue came in at $365,100,000 growing some 55% over the same quarter prior year and full year net product revenue achieved $1,140,000,000 growing 36% over the prior year.

Speaker 2

In addition to continuing strong performance among our 3 approved therapies, Alevida's performance was particularly impressive and reflects 1st in class launch excellence. Notwithstanding a label limited to 4 5 year olds representing only about 3% or so of the total Duchenne population. Alevitus net product revenue was $131,200,000 for the quarter and over $200,000,000 for the full year. I'm exceptionally proud of the team's performance here, which speaks to our level of preparation and attention to detail, expert understanding of all aspects of launching innovative rare disease therapies and of course our passion for bringing a better life to those living with Duchenne. Dalen Murray, our Chief Customer Officer will speak to this in his remarks shortly.

Speaker 2

We also continue to exercise the discipline of a fully integrated commercial stage biotech organization. We were profitable on a GAAP basis in the 4th quarter, having achieved non GAAP profitability in the Q3 of 2023. And we exited 2023 with approximately $1,700,000,000 of cash, cash equivalents, restricted cash and investments on our balance sheet. Our CFO, Ian S. De Pen will provide more color on financial performance shortly.

Speaker 2

We also advanced our pipeline in the Q4. In the Q4, we submitted a BLA supplement for Alevitus with the goal of both expanding the label by removing age and ambulation restrictions and transitioning our approval from accelerated to traditional. And in February of this year, the FDA accepted our BLA supplement for review and set June 21 as our target review completion date. In the Q4, we also commenced Emergene, our trial for SRP-nine thousand and three to treat LGMD Type 2E. Also in January of this year, we announced the positive results of our trial Momentum Part B, investigating the use of our next generation peptide conjugated PMO SRP-five thousand and fifty one to treat Duchenne patients that are exon 51 amenable.

Speaker 2

Doctor. Luis Rodino Klapac, our Head of Research and Development will provide more color on our pipeline progress shortly. In 2017, starting with 1 approved therapy, dollars 5,000,000 in sales, a modest pipeline, a short cash runway and little more than ambition and grit, we set out to build a sustainable, mature biotech organization, improve the lives of the greatest possible number of Duchenne patients along the way and to become the leaders in the use of RNA and gene therapy to treat rare genetic disease. If we are successful in our plans this year, we will have achieved that vision. From there, we can and we will expand our ambition and relying on our scientific and financial strength.

Speaker 2

We intend to advance our internal pipeline, but also to bring in external innovation to grow from here, not incrementally, but in great multiples. In short, 2024 is going to be a very important year. And with that, I will turn the call to our Chief Customer Officer, Dallin Murray. Dallin?

Speaker 3

Thank you, Doug, and good afternoon. The Q4 of 2023 represented a strong finish to an already impressive year as the team generated over $1,000,000,000 in net product revenue, a milestone for Sarepta. As previously noted, net product revenue for 2023 totaled 1,140,000,000 dollars consisting of roughly $945,000,000 from our PML franchise $200,000,000 from the launch of Alevitas, the first gene therapy approved for patients with Duchenne muscular dystrophy. Each of these accomplishments stands on their own merits and the performance of both surpassed our internal projections and external consensus. In the 7th year of our PMO franchise, we again grew net product revenue by double digits from the nearly $844,000,000 in net product revenue from 2022.

Speaker 3

As with previous years, we delivered this growth organically without taking price increases on any of our approved PMO products. As such, this growth represents an increase in the number of patients we are serving, reflecting our commitment to the Duchenne community. Turning to Alevitus, we're extremely pleased with the launch execution, exceeding our own lofty expectations. In fact, the $200,000,000 in net product revenue surpassed the combined 2023 revenue of the other 5 gene therapy launches from the past 18 months, remarkable given the Alevitus approval occurred just this past summer. The success of Elevitus shows that gene therapy can be commercially viable, providing hope for those patients with Duchenne and for all those with genetic conditions with unmet need.

Speaker 3

While revenue is how we quantify the success of this launch externally, we measure ourselves on how we support patients. Our preparation was deliberate and intense and our process was put to the test with a narrow label. The team responded to that challenge with an incredible commitment to supporting all eligible 4 to 5 year old patients. This was our 4th Duchenne launch and our knowledge and experience played a significant role in how the team rallied, worked together and rapidly supported those patients who are approaching their 6th birthday and who were at risk of becoming ineligible for therapy. Ensuring no eligible patients are left behind is what motivates us.

Speaker 3

Let's now review the results from the 4th quarter starting with the Levitus. Net product revenue for the quarter was roughly $131,000,000 This represented a nearly 90% increase over Q3. We are pleased with our penetration into the very small and narrow segment of the Duchenne population. This 4 to 5 year old label has presented a number of unique executional challenges that are relevant moving forward. Firstly, a significant proportion of the patients in this age group are not yet diagnosed.

Speaker 3

Given that the average age of diagnosis is around 5 in the United States. Secondly, those who are diagnosed have not had a lot of time to be fully educated about Duchenne, which means the patients and families need to understand that diagnosis, become aware of therapy options, go through a more involved and longer pretreatment process than the PMOs, one example of this being antibody testing. And on top of this, the patients must also secure access to Alevitus in this very short time window. Our team has found themselves in a race against time to help these patients. And finally, the relatively small number of diagnosed 4 to 5 year old patients results in a situation in which we will be working through this prevalent population quickly within the first half of the year.

Speaker 3

On the flip side, many of these dynamics are reversed once patients have transitioned over to the decline phase of the disease. This is illustrated by our real world experience with the PMOs, where we see a larger proportion treated in the older age groups, which is on top of a larger diagnosed patient pool. Because of all this, we do not expect to see significant additional growth within the existing population through the first half of this year. Notably, however, by the time of label expansion, we expect to have cleared the way for those older patients to get dosed as rapidly as possible upon eligibility. I would caution analysts therefore to not use this current younger population as a frame of reference for our market potential in the overall population.

Speaker 3

The team is preparing as we speak for a broad label with a focus on building upon the successful launch execution to date, and we have the access and capacity in place to execute successfully on any broader label scenario. Let's now take a look at the PMO franchise as a whole. As previously mentioned, 2023 net product revenue of $945,000,000 exceeded our full year guidance of $925,000,000 This performance represents solid revenue growth across all three brands. In fact, both Vyondus 53 and Amondus 45 continued their double digit growth trajectory. Looking now at the Q4 of 2023, the team delivered roughly $234,000,000 in net product revenue.

Speaker 3

This was flat versus Q4 of 2022 net product revenue of roughly $236,000,000 As you may recall from our Q4 2022 earnings call, we cautioned around keeping the guidance of $925,000,000 for the year due to an increase in the quarter to quarter lumpiness that we were observing at that time. Looking now in retrospect, it's clear the PMO has performed exactly as we expected and guided. And finally, the performance we just discussed in our PMO business was achieved despite the incredible effort on the Alevitus launch. Notably, we saw minimal impact on our PMO business from Alevitus cannibalization in 2023, given the narrow age range. In closing, in 2023, Sarepta set a new standard for gene therapy launches with Alevitus.

Speaker 3

We beat external expectations and delivered roughly $200,000,000 Equally important, we continue to increase the number of patients we support with our PMOs globally. I continue to be immensely proud of our mission driven team. Combining our PMO and gene therapy businesses, we exceeded $1,000,000,000 in net product revenue for the first time and we have entered 2024 with momentum. And with that, let me turn the call over to our Head of R and D and Chief Scientific Officer, Doctor. Louise Rodino Klapac.

Speaker 3

Louise?

Speaker 1

Thanks, Don. 2023 was a year of great accomplishment for Sarepta, for the advancement of science and for the health and well-being of patients living with rare disease. 2023 will also be remembered as being a defining moment in genetic medicine. In June 2023, the FDA granted accelerated approval through Alevidus, first gene therapy to treat Duchenne muscular dystrophy. Since that time, we've been successfully treating ambulatory pediatric patients aged 4 through 5 years with Duchenne, who have a confirmed mutation in the DMD gene.

Speaker 1

And then just about 2 weeks ago, and as Doug mentioned, we were thrilled to announce that the FDA accepted and filed our efficacy supplement for levidist, whereby they will now evaluate broadening the approved indication of levidist by removing age and ambulation restrictions and converting the lebodis accelerated approval to a traditional approval. Should we receive accelerated approval for olebitis in the non ambulant population in the United States, our ENVISION study also called SRP-nine thousand and thirteen-three will serve as our confirmatory study for this population. ENVISION is a global randomized double blind placebo controlled 2 part study evaluating the safety and efficacy of delandistrogen moxaparvek gene therapy in non ambulatory and older ambulatory individuals with Duchenne. This study is ongoing with all remaining patients being enrolled outside of the United States. With U.

Speaker 1

S. Enrollment completed and the remaining 85% of recruitment occurring ex U. S, we are confident in our ability to complete this trial. Moving now to our Loom girdle muscular dystrophy or LGMD program. On January 16, we announced that screening was underway in study SRP-nine thousand and three-three hundred and one, also known as the EMERGEEN study.

Speaker 1

We are pleased to now share that the first patient has been successfully dosed in that study. To remind you, EMERGEEN is a Phase 3 multinational open label clinical trial of SRP-nine thousand and three for the treatment of limb girdle muscular dystrophy type 2E or beta sarcoglycanopathy. The primary endpoint of EMERGEEN is expression of beta sarcoglycan, which is an extremely important endpoint for this program. For the other sarcoglycanopathies, including LGMD2D and LGMD2C and for the field of gene therapy. I'll explain why.

Speaker 1

Beta sarcoglycanopathy is characterized by mutation of the beta sarcoglycan gene, which fits in a complex of the membrane called the sarcoglycan complex and is important for function and for preventing muscle damage during contraction. The sarcoglycan complex is a sub complex of the dystrophin associated protein complex or DAPC. A defective sarcoglycan protein results in loss or reduced expression of the other sarcoglycan as well as other proteins in the complex such as dystrophin. Therefore, by restoring the missing proteins such as beta sarcoglycan, we were able to restore that functional complex at the membrane and thereby restore function to the muscle. Further, earlier this month, I had the opportunity to participate in the SPEAK Foundation's LGMD Scientific Workshop, which also featured officials from FDA, including Doctors Marks and Verdun, as well as patients, caregivers and clinicians among others.

Speaker 1

The key takeaways from the workshop included the perspective that traditional trial designs are not suitable for certain types of LGMD and that to ensure these therapies have the best chance of success, the totality of evidence must be considered. Doctors Marks and Verdun also expressed their strong support for regulatory flexibility and a higher tolerance for uncertainty for rare diseases such as LGMD when you're replacing the native protein as well as support for surrogate endpoints for gene therapies. Currently, no treatments exist to effectively treat LGMD2E or the other LGMDs. The emerging study, which will enroll 15 participants who are ambulatory and non ambulatory, ages 4 and older, not only holds great promise for individuals suffering from LGMD2E, but will lay the foundation for our other LGMD programs, as well as provide a viable regulatory pathway that supports the development of future gene therapies for rare and ultra rare diseases. These data combined with positive expression and functional data shared from our initial LGMD2E study, SRP9003-1 101, which is also published in Nature Medicine earlier this year and our VOYAGEN study, SRP-nine thousand and three-one hundred and two, which establishes safety experience across a broader patient population, serve together as totality of evidence.

Speaker 1

As a reminder, Voyaging is a Phase 1 study evaluating SRP-nine thousand and three for the treatment of LGMD2E in patients ages 18 and older in the ambulant population and ages 4 to 50 in the non ambulant population. The primary endpoints are safety and change in beta sarcoglycan expression. We expect to have the clinical results this year. Moving now to our RNA platform. We were also pleased to recently announce positive results from Part B of our MOMENTUM study, study SRP-five thousand and fifty one-two hundred and one.

Speaker 1

Based on the data we've generated to date, we believe SRP-five thousand and fifty one represents a best in class therapy from an efficacy perspective. MOMENTUM is a global multi ascending dose clinical trial of SRP-five thousand and fifty one, our next generation peptide phosphorodiaminatemorphylinalogimer treatment for patients with Duchenne were amenable to exon 51 skipping. As previously discussed and based on these results, we believe we have a path forward to an NDA and are planning a meeting with FDA to discuss an accelerated approval. We anticipate that this meeting will occur in the Q3 of 2024. Regarding our post marketing studies for the PMOs, as mentioned, we completed enrollment in the ESSENCE trial, our post marketing requirement for golodirsen and casimersen.

Speaker 1

As a reminder, ESSENCE is a 2 year study and is due to readout in early 2026. In addition, we are pleased to have completed enrollment in our MISSION study, our dose ranging post marketing commitment for Axondis. MISSION is a randomized double blind safety and efficacy dose finding study comparing the approved dosage of ateplirsen 30 mgs per kg weekly to a dosage that provides significantly higher exposure up to 200 mgs per kg weekly. MISSION is a 2 part Phase 3 study. It was fully enrolled in October 2023 with 160 patients.

Speaker 1

We remain committed to rapidly and diligently advancing MISSION and sharing data as soon as it becomes available. In conclusion, the months ahead are filled with great promise to advance our mission and serve patients around the world living with rare disease. I will now turn the call over to Ian Estepan for an update on our financial results. Ian?

Speaker 4

Thanks, LRK, and good afternoon, everyone. This afternoon's financial results press release provided details for the Q4 of 2023 on a non GAAP basis as well as a GAAP basis. Please refer to our press release available on Sarepta's website for a full reconciliation of GAAP to non GAAP financial results. Before we get to the results, I just wanted to flag that beginning in Q4 of 2023, amortization of in license rights and income tax expense or benefit are no longer excluded from non GAAP results. The company has added income tax effective adjustments, which represents the estimated income tax impact of each pre tax non GAAP adjustment based on the applicable effective income tax rate.

Speaker 4

Non GAAP financial results for the Q4 and full year 2022 have been updated to reflect this change for comparability purposes. So for the 3 months ended December 31, 2023, the company recorded total revenues of $396,800,000 which consists of net product revenues and collaboration and other revenues compared to revenues of $258,400,000 for the same period of 2022, an increase of $138,400,000 Net product revenue for the Q4 of 2023 from Alevedis was $131,200,000 Net product revenue for the Q4 of 2023 from our PMO exon skipping franchise was $233,800,000 compared to $235,900,000 for the same period of 2022. For the Q4 of 2023, individual and net product sales were $131,000,000 for EXONDYS 51, dollars 69,900,000 for IMONDYS 45 and $32,900,000 for VIONYS 53. The increase in net product revenue primarily reflecting increasing demand for our PMO products as well as net product revenue associated with sales of ELEVITIS. In the quarter ended December 31, 2023, we recognized $31,700,000 of collaboration and other revenues compared to $22,500,000 for the same period of 2022.

Speaker 4

This revenue primarily relates to our collaboration arrangement with Roche. For the quarter ended December 31, 2023, the company recognized $9,200,000 of contract manufacturing collaboration revenue associated with multiple batches of commercial Levitus supply delivered to Roche with no similar activity ended December 31, 2022. The reimbursable co development costs under the Roche agreement totaled $23,500,000 for the Q4 of 2023 compared to $51,700,000 for the same period of 2022. On a GAAP basis, we reported a net income of $45,700,000 or $0.49 per basic and $0.47 per diluted share and a net loss of $109,200,000 or $1.24 per basic and diluted share for the Q4 of 2023 2022 respectively. We reported a non GAAP net income of $86,600,000 or $0.82 per diluted share in the Q4 of 2023 compared to a non GAAP net loss of $53,600,000 or $0.61 per diluted share in the Q4 of 2022.

Speaker 4

In the Q4 of 2023, we recorded approximately $44,200,000 in cost of sales compared to 30.8 $1,000,000 for the same period of 2022. The increase in cost of sales primarily reflects increasing demand for our PMO products, an increase in royalty payments due to the Levittus sales in 2023 with no similar activity in 2022 and write off of certain batches of our not meeting our quality specifications in the 3 months ended December 31, 2023 with no similar activity for the same period of 2022. On a GAAP basis, we recorded $195,500,000 213,800,000 expenses for the Q4 of 2023 and 2022 respectively, a year over year decrease of $18,300,000 The decrease is primarily due to a decrease in manufacturing expenses and upfront milestone and other expenses. On a non GAAP basis, R and D expenses were $165,100,000 for the Q4 of 2023 compared to $186,800,000 for the same period of 2022, a decrease of $21,700,000 Now turning to SG and A. On a GAAP basis, we recorded approximately $131,700,000 100 $20,500,000 of expenses for the Q4 of 2023 2022 respectively, an increase of $11,200,000 The increase was driven primarily by an increase in professional services and compensation and other personnel expenses, partially offset by a decrease in stock based compensation.

Speaker 4

On a non GAAP basis, the SG and A expenses were $105,700,000 for the Q4 of 2023 compared to $86,600,000 for the same period of 2022, an increase of $19,100,000 On a GAAP basis, we recorded $15,700,000 in other income net for the Q4 of 2023 compared to $5,500,000 for the same period of 2022. The change was primarily due to an increase in the accretion investment discount net due to an increase in interest rates. We had approximately $1,700,000,000 in cash, cash equivalents and investments restricted cash as of December 31, 2023. So to conclude, we're incredibly pleased to achieve our Q1 profitability from a GAAP perspective. It is impressive to reach this milestone in just the Q2 of the 11x launch and highlights the leverage in our business.

Speaker 4

For the reasons Alan outlined, there may be some lumpiness on the bottom line in the first half. That said, with an expansion of the label, we expect to be highly profitable for the full year. Also, as I previously noted, in preparation to serve the community in the event of a label expansion, we're continuing to ramp our manufacturing of Alevidus. This continued investment will be apparent in the Q1 financials and the remainder of the year.

Speaker 2

We are

Speaker 4

thrilled to have the resources on hand to continue to build the inventory needed to deliver Alevitus to the Duchenne community. And with that, I'll turn the call back over to Doug to start the Q and A. Doug?

Speaker 2

Thank you very much, Ian, Shannon. Let's open the call for questions.

Operator

Thank you. Our first question comes from the line of Gena Wang with Barclays. Your line is now open.

Speaker 5

Thank you. I think, operator, your voice was cut off. So I don't know how many questions I can ask. I just ask 2 very quick questions. So one is levidis.

Speaker 5

So for the proposed label, was that based on FDA feedback or was purely from Sarepta's end? And the second regarding the emerging Phase 3 study in LINGURDO 2E, was it confirmed with the FDA that 15 patient would be sufficient? And what protein level will be approvable?

Speaker 2

Yes. Thank you very much for your Gina, just for the future, it is one question for Alex, but I appreciate your questions. Let me answer them. So the basis for our request to expand the label by removing both the age and ambulation restriction, that is driven by the science. I want to be very clear about that.

Speaker 2

We're in the midst of a review. We're very we're pleased with the progress of the review so far, but it's too early right now to give you a substantive view on the division's perspective on that. But our view is that, the science and the totality of the evidence supports the label expansion that we've asked for, and it's the right answer from our perspective. It's the right answer from the science. It's the right answer from a policy perspective and most of all, it's the right answer for patients living with Duchenne muscular redistricting, which I hope will be all of our North Stars in this regard.

Speaker 2

With respect to IMERGENE or IMERGENE, I should say, that the protocol for that has been shared with and reviewed with by the FDA and they have on the basis of those discussions including the end of the study, given us their blessing to commence that study. And we'll provide additional information on the level of expression likely to predict the clinical benefit at a later date. I would note in our prior studies, we've had 2 cohorts. We've seen very robust expression of the missing beta sarcoglycan protein, the absence of which is the sole and exclusive cause of the degeneration in patients who have LGMD type 2e. Thank you.

Operator

Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is now open.

Speaker 6

Hi, good evening and thanks for taking my question. I just wanted to get a sense as you look for the expansion of label and how to model COGS, especially as more patients get on therapy over time and the weight of the patients presumably will go higher as you get to older patients. What's a reasonable range of COGS that we should be assuming? Thanks.

Speaker 2

Yes. Ian, I'll turn this to you.

Speaker 4

Sure. So from a COGS perspective, we've been pretty clear, that we're targeting 80, obviously, From our financials that we reported today, you see it's much higher than that. But over time, as heavier patients get on the therapy and obviously our pre expense inventory is exhausted, you'll see the COGS obviously start to increase and our margin to start to decline more to that 80% range, which we've been guiding. Obviously, we can't give complete clarity around that because we have a suspension which could be coming online, which is much higher yielding process in time for some of the older heavier patients to be coming on, which would offset their weight. So as we said, over time, you'd see some erosion of the margin from where we currently are, but modeling in around 80% is probably reasonable.

Operator

Thank you. Our next question comes from the line of Joseph Schwartz with Leerink Partners. Your line is now open.

Speaker 3

Hi, all. Thanks for taking our questions. This is Will on for Joe. Congrats on the great quarter here. So one question for us on manufacturing.

Speaker 3

With the recent acquisition of Catalent by Novo and the expected exploration of your agreement with Catalent at the end of this year, how are you guys thinking about manufacturing moving forward? And then in terms of capacity and the potential for an expanded label this year, are there any potential for supply constraints in the near term? Thank you.

Speaker 2

Yes. So, essentially for your questions, well, first of all, I think there might be a misunderstanding of some sort. Let me be very clear. Our agreement with Catalent does not end at the end of this year. We have a long term relationship with Catalent.

Speaker 2

They've been very good partners of ours. So there will be, from our perspective, no impact from the acquisition of Catalent by Novo Holdings. As we understand it, Novo Holdings would be acquiring the entity as a whole, the GLP-one related manufacturing, I think it's going to be sold down to Novo Nordisk and then Novo Holdings will hold the rest of Catalent and it will be run the way it's run today. And we've had I have had direct discussions with the senior management at Catalent and I'm quite confident that it is business as usual with them. So we're feeling very good about that.

Speaker 2

And generally from a supply perspective, I will say what we have done together over the last since 2018 at the beginning of this journey from a manufacturing and CMC perspective, yes, would be nothing other than miraculous if it wasn't for the fact that it's science and hard work driven. As we sit here today, we're doing a really a brilliant job of serving the community and we'll be continuing to do a brilliant job of serving the community over the course of this year with our partner, Kevlar. So we're feeling very good about where we are.

Operator

Thank you. Our next question comes from the line of Gil Blum with Needham and Company. Your line is now open.

Speaker 3

Hi, everyone. Good afternoon and thanks for taking our question. So I know this may be knowable, but now can you remind us what the population divide is between ambulatory and non ambulatory patients and what is kind of the median age for loss of ambulation? Thanks.

Speaker 2

So I can give you the broad strokes. It is about epidemiologically about fifty-fifty between ambulatory and non ambulatory patients. And Dalen, do you have the recent estimates of the loss of ambulation?

Speaker 3

You cut out there for a second. Did you say the diagnosed patients?

Speaker 2

No, I said what is the average age of loss of ambulation?

Speaker 3

Average age of loss of ambulation. I think Louise would probably have better data than me, but it would be depending on different publications in the 11 to 12 range. Louise, does that sound right from what?

Speaker 1

Yes. Some are slightly earlier to your point. There are some differences.

Speaker 2

Thank you, Mel.

Operator

Thank you. Our next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is now open.

Speaker 7

Hi, this is Leonid on for Brian. So maybe I'll ask one point 5 questions, if that's okay, not quite 2. So I guess can you clarify the application process with respect to a Levitus? I guess, is the conversion to a full approval and the label expansion 2 separate questions before the FDA that have potentially separate timelines, reviews, discussions around them? Can they be separated?

Speaker 7

And then I guess just related to that, you mentioned in the prepared remarks, you're thinking through broad label scenarios. So and you mentioned if you get an accelerated approval in the non ambulatory setting, I guess is that part of those scenarios? Is that something you've heard from the FDA? Or is this just preparing for all the possibilities? Thanks.

Speaker 2

So a couple of things. Yes, there are essentially 2 issues at the agency at the same time. 1 is modifying the label to expand the label, and to provide access to a much broader population of patients. And as we said, and it bears repeating, our BLA supplements requested the removal of all age and ambulation related restrictions from the label, because we believe that's founded on science. And of course, the second question then is this the view that we have satisfied the requirements for our confirmatory trial and that the entire approval should be translated from accelerated to a traditional approval.

Speaker 2

There are many different scenarios there. There's obviously going to be dialogue about the breadth of the label and then of course there'll be this dialogue about what portions of that are confirmed for traditional approval and what portions of that are confirmed for an or will remain an accelerated approval. So there are many iterations. We have a strong view on what we think the science justifies. So first from an administrative perspective, the timelines are identical.

Speaker 2

So we have a June 2021 target completion date that is for both of those issues. So we'll address both of those issues with June 21. And we're very pleased with June 21, as you know, because we had been guiding people to end of August from that perspective. On the substantive issues or what's going to happen in the review, that's going to be subject to the review and we're in the early days. Again, I'd say we're very pleased at least with the engagement of the division thus far, but we have more work to do and more discussions to be had and I don't want to overpromise before the end of this.

Speaker 2

I will also say there are a lot of different iterations from our perspective. Priority number 1 is the broadest possible label. So as between the two issues that we're discussing, we are 1st and foremost focused on the broadest possible label, giving the potential of access and hopefully a better life to the greatest number of patients. And then of course, we also it's important to us, but the secondary issue is translating this from accelerated to traditional and the breadth of that will be a separate discussion. But we have more work to do and more discussions and work to do with the agency and June 21 will be our return date on all of that.

Operator

Thank you. Our next question comes from the line of Costas Bill Uris with BMO Capital Markets. Your line is now open.

Speaker 3

Thanks for taking our question and congrats on the impressive progress. So one quick question from us. If we assume that your label will restrict and levitis used to ambulatory patients only for all AEs, How straightforward would it be for physicians and importantly payers to clearly determine whether someone is ambulatory or not given that patients are losing ambulation progressively. So there may be a stage where the ambulation status is unclear. So would it be clear for physicians and payers to determine if someone is eligible or not?

Speaker 3

Thank you.

Speaker 2

Yes. Okay. Thank you very much for your question. First, let me be clear. I resist the assumption that we may only get ambulatory loan, of course, because we are at this point seeking the removal of the ambulatory restriction.

Speaker 2

But to your point, ambulation is in the label today. And the question then is, what is how did physicians determine what ambulation means? The short answer is that, that is left to the medical judgment of physicians, but there is good guidance in medical practice for that. It is based on functional assessments and functional tests. There are well defined approaches, probably the most common perhaps, the most gold standard approach is the definition from synergy, which is that there is a patient reported continuous use of a wheelchair without ambulation and then that is verified by the physician by the inability of the patient to walk 10 meters unassisted.

Speaker 2

So that would be a typical functional assessment that a physician would use to determine ambulatory status. So this isn't an enormously difficult functional assessment and conclusion to make by physicians.

Operator

Thank you. Our next question comes from the line of Neena Bijrita Garg with Deutsche Bank. Your line is now open.

Speaker 1

Hey guys, thanks for Just a follow-up on the last question. Can you just remind us what data was included in the filing on patients with that are non ambulatory, if any, just to kind of clarify that? Thanks.

Speaker 2

Yes. We had data from children up to 20 years old from a separate study that we've all studied 103 that went in with it. We obviously also have an ongoing study ENVISION, which is a study for non ambulatory patients. Now that is an ongoing placebo controlled trial, but the safety from that study is obviously made available to the FDA on a continuous basis. And all of that supports our BLA supplements.

Operator

Thank you. Our next question comes from the line of Tim Lugo with William Blair. Your line is now open.

Speaker 3

Thanks for the question. Can you discuss the level of warehousing currently occurring in the DMD community and maybe any subpopulations that ahead of this potential expansion this summer, which we should be aware of? I know we all focus on ambulatory and age related. Is there anything else though that we should be also looking at maybe lung function or other subpopulations?

Speaker 2

Well, I don't I'm not 100% sure what we mean by warehousing to be honest. There is going to be an exceptional amount of demand for this therapy when the label is expanded both from the physician community, but from And we stand prepared to build the material and have lots available to fully serve that demand over the course of 2024. But, Alan, do you have other thoughts on the warehousing question itself?

Speaker 3

Yes. I think it's related to the PMOs and warehousing with the PMOs in anticipation of the gene therapy. We were worried about that leading up to the initial launch and the team did an exceptional job of making sure that that did not happen. And we don't see widespread warehousing where patients are getting delayed or really at any warehouse where people are foregoing PMO in anticipation of the gene therapy. So I think as I mentioned in the script, we were one of the things we're particularly pleased with this year is the continued incredibly excellent execution of the PMO team for patients who were not eligible for the gene therapy for

Speaker 8

So just going back to the exon skipping products, could you I'm not asking for full guidance or anything to that effect. Maybe just help us understand the first half of the year. In the prior quarter, growth year over year growth was relatively strong in the first half. Just wondering how we should sort of think about the first half of twenty twenty four for those three products? Thanks.

Speaker 2

We haven't provided guidance on the PMOs for this year, but we're doing very well. I think you saw very good performance of all three of the PMOs last year. In fact, Amandis and Viandis were still growing at double digits. And one of the things that's interesting is that we are not seeing right now and probably won't see a significant amount of cannibalization from Alevitus over the course of 2024 that will have a significant impact on the PMO. So we feel very good about where we are with our 3 RNA based therapies in 2024.

Operator

Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.

Speaker 6

Hi, this is Lydia on for Salveen.

Speaker 9

Thanks so much for taking our question. So if the label for elevators is expanded and the broader population opens up, how do you think that physicians might prioritize which patients to treat first, in the context

Speaker 3

of

Speaker 9

plate constraints? Thank you so much.

Speaker 2

Yes. That will be an issue that physicians are going to have to grapple with. A number of constraints. One of the things that you have to recall or remember is that we need to ensure that we are always prioritizing great outcomes and safety over, for instance, short term revenue. So we need to make sure that physicians and physicians will know this and they're to certainly consider this.

Speaker 2

They need to make sure that they can not only infuse patients but follow-up appropriately. And so that will likely require them to prioritize patients as they consider this therapy. The short answer is that we can't invade the practice of medicine and decide for them what to do. There is compelling arguments on both across the spectrum. On the one hand, there may very well be physicians who want to prioritize very young children to get in and intervene before damage is done.

Speaker 2

On the other hand, for the non ambulatory patients and later patients, there is a race against time for those patients. And so getting to those patients and stopping damage before it's too late is extraordinarily important. So these are going to be difficult decisions. Physicians are going to have to work that out and I'm sure there'll be white papers and discussions among thought leaders on that topic. The issue today is a slightly different one.

Speaker 2

The prioritization today, given the label that we have is to ensure that we get kids on the label. This really comes from the physician, more than from us to get kids on the label before they age out and then the therapy won't be available to them. So if you looked at the bias here, the bias tends to be to the in this tight age range of 45 to be in the later ages because they're really trying to get to those kids who if they don't get through the administrative process will age out to 6 years old. The good news is that if we can expand this label, that issue goes to the side, then we'll have to deal with the other issues about prioritization and the like. But it ultimately will be a physician decision and the issue of the practice of medicine for physicians.

Operator

Thank you. Our next question comes from the line of Ritu Baral with TD Cowen. Your line is now open.

Speaker 10

Hi, guys. Thanks for taking the question. I want to just follow-up on the sort of guidance given, your comment on how not to expect additional growth in Alevitus through the first half of the year, at least until the PDUFA. Is that a comment or a reflection on just the fact that you've reached sort of a run rate on 4 to 5 year old? Or is that a comment on sort of capacity of the systems throughput?

Speaker 10

Are you getting through as many patients as possible? And can you comment on what that sort of throughput capacity of like the centers is at this point for when hopefully the label expands? Thanks.

Speaker 2

Yes. This really isn't a capacity issue right now. So I think as Alan commented in his opening remarks, the label that we have today in this population is it's really a fairly unique population. First, as we all know, it's a very narrow age range, 4 to 5 years old. But that alone doesn't really describe the unique nature of this population because beyond that, there is a significant percentage of those patients that are not yet diagnosed.

Speaker 2

And so that makes it unusual. And then when they are diagnosed, remember that they're not all getting diagnosed on 4 years in one day. Some of these kids are getting diagnosed deep into their fives. And so what does that mean? It means that a family is faced with what is very likely the most devastating piece of news so far in their life has to come to grips with that news, then understand it well enough and then go through the administrative process that exists to get approval, to get antibody tests, to get an infusion date and to get infused.

Speaker 2

So this is a very unique population in light of that. Just to give a shout out to the team, it is particularly impressive when one considers that we did $200,000,000 in net product revenue this year. So what Dowen is really talking about when we talk about this is just simply that as we work through the prevalent population, this is a really unique population and much narrower than you might imagine the 4 to 5. And so by the middle of this year, assuming no label expansion, you would get to a place where you begin to be treating the incident population as opposed to some Ebola prevalent population in this group. Now the good news is that we have a June 2021 date for our request for a label extension.

Speaker 2

So hopefully by July, we'll have a broader label and we'll be able to serve a much greater percentage of the population.

Operator

Thank you. Our next question comes from the line of David Hoang with Citigroup. Your line is now open.

Speaker 3

Hi, thanks for taking the question. I just wanted to ask a little bit more about the suspension culture manufacturing you have in the works. How fast did something like that come online? And once that is operationalized, how might that improve your margins?

Speaker 2

So we're very excited about where we are from a suspension perspective. There's still a ton of more work to do, but a couple of things to think about. We are very advanced actually in the suspension work that we're doing, not just with 9,001, but we're actually getting great results from a suspension perspective with our some of our limb girdle programs. A couple of our sarcoglycan programs actually transitioned to suspension and we're making great progress there. When we focus specifically on Alevitus, we are in engineering runs right now on suspension.

Speaker 2

We've done 500 liter. We're doing another 500 liter. We'll do we'll start in the next month or so, 2000 liter. We're so far getting, not only really tremendous enhancement on yield, but really good product qualities. If all goes well, our goal is to have this suspension process available commercially by 2026.

Speaker 2

Now that's a moonshot goal on our part and with keeping the patients front and center, we're going to try to move as fast as possible. But hopefully, we have the history to prove that we can make we can come up with audacious plans and serve them. So we're really excited about that. As far as what that might do both from a capacity perspective as we go around the world with our partner Roche and a COGS perspective, that's going to require more work and more clarification as we get these runs done, but it won't be modest. It'll be multiples.

Speaker 2

And we are seeing multiple times greater yields with suspension than we get with our iCELLis process, which is, Ian mentioned, still drives right now an 80% margin. So we're I mean, you probably hear in my voice a certain amount of enthusiasm for our manufacturing approach and our suspension approach. And this is it is still early days and we're just in engineering runs right now, but we're very, very excited about what this could mean for our ability to bring this therapy across the world and at a lower cost of goods as we go across the world.

Operator

Thank you. Our next question comes from the line of Mike Ulz with Morgan Stanley. Your line is now open.

Speaker 11

Hey guys, thanks for taking the question. Maybe just a quick one on timing. Since the PDUFA date was granted 2 months ahead of expectations, Just curious if the thinking now is you'll probably get a decision close to the PDUFA date or is the FDA still really committed to rapidly reviewing this and we might get an answer sooner? Thanks.

Speaker 2

Well, I have no reason to believe that the FDA isn't committed to rapidly reviewing this. With that said, there's still a lot of work to be done and I think it would be prudent for all of us to assume that our target completion date of June 2021 is the date on which we're going to get the answer on this. So we're planning for June 2021 even though we are I don't think anyone thinks we settle around, we try to move as fast as possible. But we're assuming June 2021 is when we're going to get our label expansion request answered.

Operator

Thank you. Our next question comes from the line of Danielle Brill with Raymond James. Your line is now open.

Speaker 3

Guys, this is Alex on for Danielle. Thanks for taking the question. I know the PMO confirmatory trials are fully enrolled. Could you just remind us whether we should expect data for admission this year?

Speaker 2

No, we shouldn't. It doesn't read out for 2026.

Operator

Thank you. Our next question comes from the line of Brian Skorney with Baird. Your line is now open. Brian Skorney with Baird. Your line is now open.

Speaker 12

Hi. This is Charlie on for Brian. Thanks for taking our questions. So we were just wondering, if you've heard anything from Roche regarding timelines with the EMA as well as, if the European opportunity were to come online, would there be any supply limitations resulting from that? I know you're very comfortable with the expansion of the label, but bringing on a whole another continent.

Speaker 12

Do you think you'd have to do any prioritization between regions? Thank you.

Speaker 2

Roche is publicly saying that their goal is to submit in 2024. And then as it relates to supply, our supply plans include our partner Roche.

Operator

Thank you.

Speaker 3

And

Speaker 4

just one quick follow-up just to the previous question around mission and the timing. Just one thing to remind everyone is that this is a dose compared to doses of the drug. And so the data which we'll read out will be comparative from the 30 mg per kg compared to either the 100 mg or 200 mg per kg and there's no risk of the drug being pulled off the market.

Operator

Thank you. Our next question comes from the line of Kristen Koska with Cantor Fitzgerald. Your line is now open.

Speaker 13

Hi, this is Rick Miller on for Kristen. Thanks for taking our question. Since launching, are you able to talk about if and how the profiles of DMD patients that are looking to get on Alevitus have changed? Or to put it another way, I imagine you had highly engaged caregivers who are ready for alevitis on day 1. So are you seeing more patients coming forward now after a few months of commercial experience or caregivers to get their child in line for alevitis?

Speaker 13

Thanks.

Speaker 2

Yes. And I would say the broadest of strokes, there is going to be substantial demand for this therapy. I don't think that's changed. I think it's what we anticipated before launch. I don't think it's changed after launch.

Speaker 2

Duchenne muscular dystrophy is a devastating disease and the opportunity that's offered by Alevitus is an important one. I think physicians understand that, families with Duchenne muscular dystrophy, boys understand that as well. But Dalen, if you have any additional color on this or views, please share them.

Speaker 3

No, I think broadly speaking, you're exactly right, Doug. It's we're not seeing a real major change in terms of the patients coming in. It is as we set up front a small population. And so as soon as they're getting diagnosed and have had their discussions with the docs. They're coming in through the enrollment forms.

Speaker 3

And so we're just working through those patients as fast as they can as we can prior to them aging out, but no major differences in for example, there wasn't a big kind of bolus of patients that initially came in and now that's different. It's just a it's been a steady clip essentially.

Operator

Thank you. Our next question comes from the line of Anupam Rama with JPMorgan. Your line is now open.

Speaker 3

Hey, guys. Thanks so much for taking the question. At the conference in January, you talked about 70 sites being active and about half of those sites had dosed patients.

Speaker 2

Can you give us a sense of

Speaker 3

where you are kind of now in the 1st couple of months of the year? Thanks so much.

Speaker 2

Yes. I mean, I believe that that remains the accurate answer, but Talon, you can give us an update if there's any change in that?

Speaker 3

No, Anupam, that really hasn't changed all that much. There's obviously more than there was then, and there's a higher proportion of sites that have dosed. But we're actively looking at this on a daily basis and we have this flexible model where we can bring on new sites, get them trained and up and ready as needed. So we've got more than enough sites up and running and throughout we've got great geographic coverage, but the team is also ready to support and serve as needed out there.

Speaker 2

I really do want to give kudos to this team for where we are. I think everybody knows the goal was to try to get to 50 as much as 50 sites in 2024, 2023 by the end of 2023, which would have been record smashing for a gene therapy launch. And that there was going to be this aspiration that maybe someday we could get to 70 sites that would be trained and up and running. And this team got, as you know, over 70 sites in 2023, but also the way they got there is something that gives me an enormous amount of pride, which is we as I said earlier in this call, we don't prioritize revenue over patient safety and great outcomes, far more important for us to ensure great outcomes. And this team has done a ton in that direction.

Speaker 2

These 70 sites that are activated are activated because they've all been well trained. They're in good shape to be able to safely, infuse this therapy and get good outcomes and consistent outcomes, which is important. We have a very laudable safety profile for a full body infusion gene therapy and we want to ensure that remains the case over the long term, not in the short term. And then of course, there's a lot of other programs around that, the ability to access experts so that every physician has an opportunity to get the right kinds of information to inform the way they not only infuse but monitor patients and react to something that has been, that is unique. I'm not sure anyone else has ever done the kind of work we've done.

Speaker 2

So we're in great shape right now to serve this community and serve it responsibly. So I'm really proud of where the team is right now. And frankly, it also explains our revenue in 2023.

Speaker 3

Thanks, Doug. And as you were speaking, that team did get us just a direct answer to Anupam's question. And we're closing in on 60% of the sites have dosed. So it's just exactly as you said, it's just increasing as we go.

Speaker 2

All right. Thank you.

Operator

Thank you. I'd now like to turn the call back over to Doug Ingram for closing remarks.

Speaker 2

Thank you, Shannon. Thank you all for joining us today. Thank you for your insightful questions. We appreciate it. At the risk of repeating myself, I think 2023 was an extraordinarily important year for Sarepta.

Speaker 2

We a lot of folks on this team in concert with the patient community and investigators and physicians frankly moved heaven and earth to get us where we are today, which is I think fast maturing, fully integrated biotech organization committed to bringing a better life to patients with Duchenne muscular dystrophy, limb girdles and other serious rare diseases. 2024 is actually going to be even more significant if we are successful. And that's going to put us in a position where we can do a lot of good for a lot of rare disease patients and where we can reward those who have stuck with us and invested in a better life for these patients. So I will remind you, if we are successful this year and we've broadened the label for 11us and we can meet our goals this year, we are going to leverage our Acumen and our financial strength and the talent of this team and through both advancing our internal pipeline, but looking to external innovation, we will have the goal of growing even after 11 is, not incrementally, but in multiples. So we're going to build for ourselves a very big ambition if we are successful in 2024.

Speaker 2

With that said, we need to focus on 2024 and be successful and the team is prepared to do that and I look forward to updating you along the way as well. So thank you and have a lovely evening.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.

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Key Takeaways

  • Sarepta reported Q4 2023 net product revenue of $365.1 million (up 55% y/y) and full-year net product revenue of $1.14 billion (up 36% y/y), driven by strong PMO sales and the launch of Alevitus.
  • The first-in-class gene therapy Alevitus achieved $131.2 million in Q4 and over $200 million in 2023 despite a narrow 4–5 year-old label, and the FDA accepted a BLA supplement aiming to remove age/ambulation restrictions and convert to traditional approval with a June 21 PDUFA date.
  • Sarepta advanced its pipeline with the EMERGE Phase 3 trial (SRP-9003-301) dosing the first LGMD 2E patient and announced positive results from the Momentum Part B study of SRP-5051, planning a Q3 2024 FDA meeting toward an NDA.
  • The company achieved GAAP profitability in Q4, held approximately $1.7 billion in cash, cash equivalents and investments at year-end 2023, and expects full-year 2024 profitability to improve with label expansion.
  • Sarepta is scaling manufacturing capacity, including ongoing suspension culture development to boost yields and reduce COGS, targeting commercial readiness by 2026.
AI Generated. May Contain Errors.
Earnings Conference Call
Sarepta Therapeutics Q4 2023
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