Q4 2024 Sarepta Therapeutics Inc Earnings Call
Speaker Change: Good afternoon and welcome to the Sarepta Therapeutics 4th Quarter and Full Year 2024 Financial Results Conference Call.
Speaker Change: As a reminder, today's program is being recorded. At this time, I'd like to turn the call over to Mary Jenkins, Associate Director, Investor Relations and Corporate Communications. Please go ahead.
Mary Jenkins: Thank you, Lisa, and thank you all for joining today's call. Earlier this afternoon, we released our financial results for the fourth quarter and full year 2024. The press release, slides, and supplementary information are available on the Investor section of our website at SREPTA.com. Our 10-K will be filed with the SEC later this week.
Speaker Change: Joining us on the call today are Doug Ingram, Ian Estepan, Dallan Murray, and Dr. Louise Rodino-Klapak.
After our formal remarks, we'll open the call for Q&A.
Speaker Change: I'd like to note that during this call, we were making a number of forward-looking statements.
Speaker Change: please refer to slide two on the webcast which contains our forward-looking statements.
Speaker Change: These forward-looking statements involve risks and uncertainties, many of which are beyond structures' control.
Speaker Change: 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 SREPT is common stock.
Speaker Change: As noted on slide three, we will discuss non-GAAP financial measures on this webcast. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP are included in today's press release and the slide presentation available on the investor section of our website.
Speaker Change: 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?
Doug Ingram: Thank you, Mary. Good afternoon, everyone. And thank you for joining Threat for Therapeutics fourth quarter and full year 2024 Financial Results Conference call.
Doug Ingram: As you may know, back in late 2017, we created an expansive strategic plan that we call Project Moonshot.
One that would require that we raise billions of dollars.
Doug Ingram: chart a course through the unknown and overcome multiple unforeseen obstacles, obstacles that would have deterred a less committed team, but also a strategic plan
Doug Ingram: if achieved, which would ensure a better life for thousands of Duchenne patients and cement the durable future of Sarepta. After years of work and reams of new insight into the treatment of Duchenne in 2024, we achieved all of the goals laid out in Project Moonshot.
Doug Ingram: We obtained approval for the broadest possible label for Elevitus, achieving our goal of a transformative therapy that could serve the vast majority of Duchenne patients.
Doug Ingram: We worked with the FDA to reframe the approach to the development of rare and ultra-rare diseases so that therapies previously rendered unviable by FDA requirements now have the potential to help patients.
Doug Ingram: And as a result, our LGND franchise is moving with renewed speed towards three potential approvals over the next three years.
Doug Ingram: We broadly launched the Levitas in 2024 and achieved results greater than all other in vivo gene therapies combined. At the same time,
Doug Ingram: We continue to serve the community with our PMOs, which grew even in the face of a robust gene therapy launch.
Doug Ingram: By the end of 2030, we will do over $16 billion cumulatively in operating income and over $13 billion in free cash flow, and this is after we have closed and made our initial investment.
in the Arrowhead transaction.
across neuromuscular, CNS, cardiomyopathy, and pulmonary.
Doug Ingram: In addition to multiple gene therapy launches in the coming few years, we will have multiple potential blockbuster siRNA launches before the end of this decade.
Doug Ingram: Now, speaking more specifically of performance, we had an exceptionally strong fourth quarter and full year performance with our four approved therapies. For the fourth quarter, our net product revenue stood at $638 million, growing at 75% over the same quarter prior year.
Doug Ingram: This represents more than $60 million in overperformance to our prior guidance. Our full-year net product revenue stood at $1.8 billion, representing year-over-year growth of 56%, and this overperformance to our guidance by over $100 million.
Doug Ingram: Turning to 11, it's in 2024 we had by a wide margin the most successful launch of a gene therapy yet in history.
Doug Ingram: For the fourth quarter, elevative sales stood at $384 million, representing a 112% increase over the prior sequential quarter. And while we have already achieved over $1 billion in sales since our initial approval in 2023,
This represents less than 5% of the on-label addressable opportunity.
Doug Ingram: So clearly, this is just the beginning. Our three PMOs, Exondus 51, Amondus 45, and Vyondus 53, achieved $254 million in the fourth quarter and $967 million for the full year.
Speaker Change: We were profitable on a gap and a non-gap basis in the fourth quarter, and we were cash flow positive. Dallan Murray, our chief customer officer, will provide more color on commercial performance in a moment, and then to round out the call, our CFO Ian Estepan will discuss our financials.
in more detail.
Speaker Change: Looking forward, in 2025 we will capitalize on the successes of 2024.
Speaker Change: As you know, our Net Product Revenue Guidance for 2025, excluding royalties from Roche, is between $2.9 billion and $3.1 billion, approximately one-third of which will come from the PMOs and a bit over two-thirds of which will come from a Levitas.
Speaker Change: This represents year-over-year growth of 70% for total net product revenue, and for Elevitas, this represents over 160% year-over-year growth.
Speaker Change: On the R&D and tech ops sides, we have more upcoming milestones this year than any other time in our history.
Speaker Change: As you know, we already met our important Elevitus milestone in late January. We reported the two-year and one-year crossover results for Elevitus.
Speaker Change: From our pivotal trial in bark and in all pre-specified measures, that includes all functional measures, muscle health, biomarkers, those on a Levitas did strongly, statistically, significantly better than untreated natural history would have predicted.
Speaker Change: We have passed 600 patients now on therapy across a broad range of ages and weights. These data are further proof of the transformative potential of elevatus to change the future course of this disease for patients.
Speaker Change: To continue to serve the global market and improve COGS, we are planning for a move to suspension manufacturing, and after completing our GMP runs, we intend to commence our suspension manufacturing bridging study this year.
Speaker Change: As noted, we are now moving rapidly with our LGND platform. We are continuing to dose our study for SRP9004 to treat LGND type 2D.
Speaker Change: and we have initiated our registration study for SRP 9005 to treat LGMD type 2 C.
Speaker Change: We have completed dosing in our pivotal trial for SRP 9003.
Speaker Change: to treat LGMD Type 2a and we will be submitting our VLA for approval later this year. We also intend to file our IND for SRP 9010 to treat LGMD Type 2a later this year.
If successful, we will launch SRP 9003 next year.
Speaker Change: We will launch SRP 9004 the following year, and SRP 9005 will be launched the year after that. As you know, we have closed our transaction with Arrowhead this month, and already there will be several very significant milestones in 2025.
This year, we will have our initial readout for cohorts.
for AeroDUX4 to treat FSHD type 1.
Again, this could be a very significant proof of biology.
Speaker Change: We will be looking at muscle concentration, downstream gene correction, and safety. We're also very excited about the potential to directly measure knockdown of the aberrant protein of interest, DEX4. No other program to date has been able to achieve this, and this would be a very powerful result.
is successful.
Speaker Change: Likewise, we will have a readout of our initial cohorts for AeroDM1 to treat DM1, where we could obtain proof of biology looking at muscle concentration, knockdown, gene splicing, and safety. If successful, we could launch our therapy for DM1 in 2029.
Speaker Change: Our clinical programs for MMP7 and SCA2 are progressing well as well. We intend to initiate our first in-human clinical study before the end of this year for AeroHTT, which is intended to treat Huntington's disease.
Speaker Change: And finally, we have a significant number of siRNA and gene therapy pipeline programs underway, and so we intend to schedule an R&D day later this year to discuss all of them in more detail. Our head of R&D and chief scientific officer, Dr. Louise Rodino-Klepack, will discuss our pipeline progress in a moment.
Speaker Change: With grit and operational excellence, we achieved all of our multi-year objectives in 2024.
Speaker Change: In 2025, we will continue to execute, we will build on our foundation as one of the very few fully integrated, profitable, and cash-flow positive biotechs in the world today, and we will achieve our next ambition, which is to become the next globally relevant big biotech.
Speaker Change: focused on improving the lives of those among us with life-limiting rare disease. And with that, I will turn the call to Dallan Murray for more detail on commercial performance and plans. Dallan?
Thank you, Doug, and good afternoon.
Dallan Murray: I'm delighted by the exceptional performance the team delivered in the fourth quarter and for the full year 2024.
Dallan Murray: As we pre-announced in January, net product revenue for 2024 totaled $1.79 billion, consisting of roughly $967 million from our PMO franchise and approximately $821 million for 11ists.
Dallan Murray: 2024 marked the eighth year of our PMO franchise, which continues to perform well and grew modestly year over year, even in the face of the transformation brought about by a Levitas.
Dallan Murray: As in prior years, the team delivered this growth organically without taking price increases on any of our approved PMO products. As such, this growth speaks to the increase in patients we are serving in the Duchenne community.
For 2025, the PMOs remain an integral part
Dallan Murray: of our guidance and even in the face of strong Levitas performance we are only seeing modest US net cannibalization.
Dallan Murray: We are comfortable with the current consensus estimates as they stand today for the PMOs.
Dallan Murray: For the fourth quarter, net product revenues for the PMOs totaled roughly $254 million, growing at approximately 9% compared to the fourth quarter of 2023.
Dallan Murray: Individual PMO net product revenues were $137.6 million for Exondys 51, $40.2 million for Vyondys 53, and $76.2 million for Amondys 45.
Now turning to the Elevitas launch and performance.
Thank you.
Dallan Murray: Q4 was our second full quarter with an expanded label and we could not be more pleased with the launch execution. In particular, for the fourth quarter, Elevita's revenue totaled $384.2 million, exceeding our quarterly guidance by over $60 million.
Thank you.
Dallan Murray: And please bear in mind, even with this impressive growth, at this point in the launch, we have treated approximately 5% of the on-label addressable patient population for elevitis. So the opportunity ahead of us remains significant.
Dallan Murray: and we have the wind in our sails at the moment. The recent findings from the Part 2 of the EMBARQ study adds to the existing robust body of clinical evidence.
Dallan Murray: This will undoubtedly help the team with their efforts going forward.
Dallan Murray: As the launch progresses, we remain confident in our understanding of the launch dynamics and the key drivers, which continue to be robust patient demand from both the ambulant and non-ambulant populations.
ample site capacity for both the infusion and follow-up.
Dallan Murray: positive trends in access and reimbursement for both ambulatory and non-ambulatory patients and consistent conversion rates as we continue to see patients gaining access within the three to five month conversion timeline.
Doug Ingram: Doug took some time at the recent J.P. Morgan meeting to give more detail on that conversion timeline.
Doug Ingram: Understanding this process is essential to understanding our business model and the confidence we have in our success and ability to execute both quarter to quarter and in the coming years.
Doug Ingram: Five launches in a decade of working in partnership with the key neuromuscular institutions gives us a deep line of sight into the cadence of dosing each patient, in each center, in each region, and across the country.
Doug Ingram: For each and every gene therapy patient, roughly 20 to 25 people within each institution play an important part in making that dose happen.
Doug Ingram: and those folks are across each institution from the executive team to the pharmacy department as well as the medical finance and various administrative teams.
Doug Ingram: And that's only the people within the institution. We also rely on additional people from our distribution and manufacturing partners, along with others from various internal surreptities.
Doug Ingram: All need to do their individual parts with perfection and under tight timelines to successfully dose each patient.
Doug Ingram: Why is this important? There are two reasons. The first and most critical is that we've now shown as a team we can do this reliably and successfully for over six quarters now since our initial launch.
Doug Ingram: We've built the model and shown we can reliably execute, which has been challenging for others to accomplish.
Doug Ingram: Secondly, it gives us a great deal of confidence in our revenue projections, which are driven by our understanding of the patient journey.
Doug Ingram: There are several factors that contribute to the cadence of patients being treated and we have a good line of sight into each of these factors.
Doug Ingram: With over eight years of commercial experience comes a good understanding of where the patients are and their pathway to treatment.
Doug Ingram: We are also pleased with the continued progress in getting broad coverage for elevators and continue to see patients gaining access who are in plans with more restrictive policies.
Doug Ingram: To date, not a single patient has been permanently denied coverage.
Doug Ingram: And as you can see from our performance, this is a disease state that we understand extremely well. We are very confident in our growth trajectory. And I'd like to reiterate a point that Doug made in January that puts our performance into broader context.
Doug Ingram: We project that in the first 30 months of our Elevitus launch, Elevitus Net Product Revenue will outperform every other in vivo gene therapy combined.
over that same period of time.
Doug Ingram: Our success of the Levitas shows that one-time gene therapy could be commercially viable, providing hope for those with pre-shin and for all those with genetic conditions with unmet need.
Doug Ingram: As a reminder, our 2025 Net Product Revenue Guidance is $2.9 to $3.1 billion, which represents approximately 70% growth over 2024.
Doug Ingram: Thus far, the launch has played out in line with our projections and we remain comfortable with this guidance given our strong finish to 2024 and our long track record of accurately predicting our performance.
Doug Ingram: In summary, we are comfortable with our guidance for the year and with Q1 consensus.
Doug Ingram: We expect to deliver sequential growth, quarter over quarter, throughout 2025.
Speaker Change: And now I'll hand the call over to Dr. Louise Rodino-Kleypak for the R&D update. Louise.
Thanks, Dallan.
Louise Rodino-Kleypak: Building on the accomplishments of 2024, I'm thrilled with the promise before us and the vast opportunities there are to continue to make a difference in patients' lives.
Firstly, Elavidus.
Louise Rodino-Kleypak: Specifically, we shared crossover results from those who received therapy in Part 2 of the study.
Louise Rodino-Kleypak: And we also shared the two-year results of those treated in Part 1 of the study as compared to an external control.
Louise Rodino-Kleypak: Given what we know about a Levitus, what the science and data have shown us, and what we have observed in the large population of patients that have been treated with the Levitus, we were not surprised by such overwhelmingly positive data from the study.
Louise Rodino-Kleypak: which demonstrated that a levitis impacts the trajectory of Duchenne and offers an early treatment option intended to avoid unnecessary and unavoidable muscle damage.
Louise Rodino-Kleypak: Speaking to the therapy's durability, the data are clear. Those not on therapy decline in their functional abilities faster than those on therapy, who stay healthier longer versus the natural history would predict.
Intervention is critical in maintaining precious muscle before it's lost.
Louise Rodino-Kleypak: With that, I'd like to pause for a moment and reiterate the significance of the MRI muscle data.
Louise Rodino-Kleypak: As mentioned on last month's call, these data support long-term function and healthier muscle. Specifically, we saw modest to no increase in fat fraction from baseline to two years.
Louise Rodino-Kleypak: and levels at two years were well below what was seen at one year in the placebo patients.
This is consistent across muscle groups.
Louise Rodino-Kleypak: We look forward to publishing data from EMBARQ at forthcoming scientific meetings and in peer-reviewed journals.
Louise Rodino-Kleypak: In summary and evidenced by the data, Elevitis demonstrated a clinically meaningful response across all of Sarepta's studies with increasing divergence from natural history over time that supports the durability of the therapy.
Louise Rodino-Kleypak: Toward our goal of providing a Levitas to all eligible patients, we are advancing the ENVISION study, or study SRP 9001-303, a global, randomized, double-blind, placebo-controlled, two-part trial.
Louise Rodino-Kleypak: evaluating the safety and efficacy of elevatives in non-ambulatory and older ambulatory individuals with Duchenne.
Louise Rodino-Kleypak: Envision is progressing well and as previously mentioned, enrollment in the United States is complete and our last patient last visit is expected in 2027 following an 18-month placebo control period.
Louise Rodino-Kleypak: In addition, for the approximately 15% of patients who are screened out for pre-existing anti-AEV Rh-74 antibodies, we've commenced two studies, one with embolidase, or Study 104, to cleave antibodies, and a second with plasmapheresis, or Study 105, to remove antibodies.
Louise Rodino-Kleypak: We expect to have expression data from both of these studies in the second half of 2025.
Louise Rodino-Kleypak: Moving now to our programs for the limb-girdle muscular dystrophies or LGMDs.
Louise Rodino-Kleypak: We are thrilled to announce in December 2024 that we completed enrollment and dosing of emergene for study SRP 9003-301, or phase 3 clinical trial of SRP 9003 to treat LGMT type 2E or beta-circle glycanopathy.
Emergine is a global study.
Louise Rodino-Kleypak: And the primary endpoint is biomarker expression of the beta-circle-glycan protein, the absence of which is the sole cause of LgmD2e.
Louise Rodino-Kleypak: Data from Emergene are expected in the first half of 2025.
Louise Rodino-Kleypak: Further, we were pleased with the outcomes of our prebiologics license application meeting with FDA, including endorsement for a rolling DLA submission.
Louise Rodino-Kleypak: We are on track to submit our BLA filings seeking accelerated approval for SRP 9003 in the second half of 2025.
Louise Rodino-Kleypak: We're also encouraged by the progress of our other LG&E programs.
Louise Rodino-Kleypak: At the end of 2024, we initiated Phase I of SRP 9004 in development to treat LGMT2D.
Louise Rodino-Kleypak: And in early 2025, we will initiate our Phase I-III Seamless Design Clinical Trial for SRP 9005, which is in development for the treatment of LGMD2C.
Louise Rodino-Kleypak: This March, we look forward to sharing with you a wealth of data from our Duchenne and LGMB programs at the MDA Clinical and Scientific Conference taking place March 16-19 in Dallas, Texas.
Louise Rodino-Kleypak: And we also look forward to highlighting our impressive pipeline at an upcoming R&D day in 2025.
Louise Rodino-Kleypak: As a preview, we have numerous programs in various stages of development across neuromuscular, central nervous system, cardiac, and pulmonary indications, many of which are nearing INDs.
Louise Rodino-Kleypak: Of note, for neurotrophin 3, or NT3, we have optimized the constructs for Charcot-Marie-Tooth type 1A, or CMT1A, using AAV-RH74, and are now rapidly advancing to the clinic following exciting preclinical data.
Louise Rodino-Kleypak: As a reminder, we are using a surrogate approach for delivery of the NT3 gene to improve myelination and nerve regeneration in CMT1A. This pipeline-in-product approach has applicability to other CMTs as well as other demyelinating indications.
Louise Rodino-Kleypak: On the research side, we've continued to innovate across platforms. We've optimized, developed, and characterized new AAV capsids that will change the landscape for neuromuscular gene therapy and unlock potential in cardiac and CNS disease areas.
Louise Rodino-Kleypak: We are also driving innovation in gene editing, enhanced delivery for RNA, and are pioneering new mechanisms to upregulate gene expression.
The future cannot be brighter for genetic medicine.
Louise Rodino-Kleypak: Further, we look forward to sharing data with you later this year around our FSHD-1 and DM-1 programs.
As a reminder, SRP 1001, formerly known as AeroDUX 4.
is currently in clinical development to treat FFHD1.
Louise Rodino-Kleypak: an autosomal dominant disease associated with the failure to maintain complete epigenetic suppression of DEX4 expression.
Louise Rodino-Kleypak: and differentiated skeletal muscle, leading to overexpression of duct floor, which is myotoxic and can lead to muscle degeneration.
Doug Ingram: We are encouraged by the non-clinical data generated thus far and look forward to the data readout later this year.
Turning to myotonic dystrophy type 1, or DM1.
Doug Ingram: DM1 is driven by an expanded CUG trinucleotide repeat in the 3' untranslated region of DMPK transcripts.
Doug Ingram: These abnormal transcripts cause misregulated splicing, known as spliceophathy, for certain messenger RNAs, which are directly linked to the clinical manifestations of DM1.
Doug Ingram: We believe that silencing the inherently transcribed DMPK mRNA using SRP1003, formerly known as Arrow DM1, may halt CUG-expansion-related splice defects in patients with DM1, and thereby improve muscle strength and function.
Doug Ingram: We look forward to sharing the data from the SAD Study later this year as well.
Now to discuss our RNA PMO platform.
Doug Ingram: The ESSENCE trial, or Post-Marketing Requirements for Gola Dursun and Kazimersan, as well as MISSION, or Post-Marketing Commitments for Exondus, are both fully enrolled and remain on track. We look forward to sharing data as soon as the studies are completed.
Doug Ingram: In summary, I'd like to take the opportunity to thank the patient community, investigators, and my SIRREPTA colleagues. All this progress would not be possible without you.
Doug Ingram: And finally, I'd like to recognize this Friday is Rare Disease Day. There are more than 7,000 rare diseases, only a small percent of which have any treatment.
Doug Ingram: As a company dedicated to bringing forth new treatments for rare disease, it's an important day for our employees and the patients we serve.
Doug Ingram: It's a day to reflect on the impact of rare disease on the affected individuals and their families, and to acknowledge all the work that still needs to be done, and to celebrate the progress that we've made.
Doug Ingram: With that, I'll turn the call over to Ian for an update on the financials.
Ian?
Speaker Change: Thanks, LRK. Well said. Good afternoon, everyone. This afternoon's financial results press release provided details for the fourth quarter of 2024 on a GAAP as well as a non-GAAP basis.
Speaker Change: Please refer to the press release and slide deck available on Surruptive's website for full reconciliation of GAAP to non-GAAP financial results.
For the three-month ended December 31st, 2024, the company recorded
Speaker Change: Total revenues of $658.4 million, which consists of net product revenues and collaboration and other revenues, compared to revenues of $396.8 million for the same period of 2023, an increase of $261.6 million.
Speaker Change: Net product revenue for the fourth quarter of 2024 from a Levitas was $384.2 million compared to $131.2 million for the same period of 2023.
Speaker Change: Net product revenue for the fourth quarter of 2024 from our PMO Exxon skipping franchise was $254 million compared to $233.8 million for the same period of 2023
Speaker Change: The increase in net product revenue primarily reflects the net product revenue from sales of Elevitus.
Speaker Change: In the quarter ended December 31, 2024, we recognized $20.3 million of collaboration and other revenues compared to $31.7 million for the same period of 2023.
Speaker Change: This revenue primarily relates to our commercial levitas supply delivered to Roche, royalty revenue, and our collaboration arrangement with Roche.
Speaker Change: The reimbursable co-development costs under the Roche Agreement totaled $26 million for the fourth quarter of 2024, compared to $23.5 million for the same period of 2023. As a reminder, these Roche reimbursable co-development costs are an offset to operating expenses.
Speaker Change: On a gap basis, we reported a net income of $159 million, or $1.65 per basic income.
Speaker Change: share and $1.50 per diluted share and a net income of $45.7 million or $0.49 per basic share and $0.47 per diluted share for the fourth quarter of 2024 and 2023 respectively.
Speaker Change: We reported a non-GAAP net income of $206 million, or $1.90 per diluted share, in the fourth quarter of 2024, compared to a non-GAAP net income of $86.6 million, or $0.82 per diluted share, in the fourth quarter of 2023.
Speaker Change: In the fourth quarter of 2024, we recorded approximately $132.3 million in cost of sales.
Speaker Change: compared to $44.2 million in the same period of 2023. The increase primarily reflects cost of sales related to a levitas during the three months ended December 31, 2024, following the label expansion in June of 2024.
Speaker Change: On a gap basis, we recorded $200 million and $195.5 million in R&D expenses for the fourth quarter of 2024 and 2023, respectively, a year-over-year increase of $4.5 million.
Speaker Change: The increase is primarily due to an increase in our manufacturing expenses related to a ramp-up of batches produced for our Lamberto program, partially offset by a decrease in clinical trial expenses related to the discontinuation of the PPML program.
Speaker Change: On a non-GAAP basis, R&D expenses were $172.7 million for the fourth quarter of 2024, compared to $165.1 million for the same period of 2023, an increase of $7.6 million.
Speaker Change: Now turning to SG&A, on a GAAP basis, we recorded approximately $163.9 million and $131.7 million of expenses for the fourth quarter of 2024 and 2023, respectively, an increase of $32.2 million.
Speaker Change: The increase was driven primarily by an increase in professional services used to support the continued efforts to commercialize the Levitas and ongoing litigation matters, and an increase in compensation and other personnel expenses primarily related to changes in headcount.
Speaker Change: On a gap basis, the SG&A expenses were $131.6 million for the fourth quarter of 2024 compared to $105.7 million for the same period of 2022, an increase of $25.9 million.
Speaker Change: On a gap basis, we recorded $10.1 million in other income met for the fourth quarter of 2024.
Speaker Change: Compared to $15.7 million for the same period of 2023, the change was primarily due to a decrease in interest income and an accretion of investment discount net as a result of lower interest rates and a mix of our investment portfolio.
Speaker Change: As mentioned earlier, we're maintaining our 2025 Total Product Revenue Guidance, which reflects a 68% growth from 2024 at the midpoint.
Speaker Change: We also are introducing expense guidance for 2025. We anticipate combined 2025 non-GAAP R&D and SG&A expenses.
to be in the range of $1.2 to $1.3 billion.
Speaker Change: The incremental expense is almost exclusively related to Arrowhead development programs. Excluding these costs, our expenses would be essentially flat compared to the prior year.
Speaker Change: We project returning to similar cash levels by year-end of 2025, driven by the strong Elevitas launch. Further bolstering our financial position, we secured a $600 million revolving credit facility.
Doug Ingram: The combination of a positive business outlook and our strong financial position us really well to execute on our 2030 strategic goals. And with that, I'll turn the call back over to Doug for Q&A. Doug?
Doug Ingram: Thank you very much for that, Ian. And Lisa, let's open the call for questions.
Doug Ingram: Thank you. If you would like to ask a question, please press star 1-1 on your telephone.
Doug Ingram: You will then hear an automated message as your hand is raised. If you would like to withdraw yourself from the queue, press star 1 again.
Doug Ingram: We also ask that you please wait for your name and company to be announced before proceeding with your question, and please limit yourself to one question. One moment while we compile the Q&A roster.
Go to Beadaholique.com for all of your beading supply needs!
Speaker Change: And our first question for today will be coming from the line of Tazeen Ahmad of Bank of America Securities. Your line is open.
Tazeen Ahmad: Okay, great. Thank you for taking my question. I wanted to ask Doug about the cadence of what you're seeing in OneCue so far with regards to patients that are being onboarded.
Tazeen Ahmad: You've talked extensively about certain things that cannot be changed and you've reiterated your confidence.
Tazeen Ahmad: about guidance for 2025. But can you give us a little bit more granularity on, again, what you're seeing in wave two and how we should be thinking about the cadence of uptake for the rest of the quarters this year? Thanks.
Tazeen Ahmad: Yeah, thank you very much for your question, Tazeen. A couple of things. First, let me reiterate my confidence on the guidance for the year. We're still very good about the guidance that we have, and I would remind everyone we have a very good track record.
Tazeen Ahmad: of setting reasonable guidance and meeting or very often exceeding that guidance.
Tazeen Ahmad: The only thing I'll say about quarters going forward is that we will continue to see growth quarter over quarter as we ramp this launch. Things obviously are going very well for this launch through 2024, and I think our guidance should imply it's going very well in 2025.
Tazeen Ahmad: as well. There is a certain cadence to all of this, everything, you know, from the start form, the single-case contracts that I've talked about before.
Tazeen Ahmad: the infusions, the need for pre-existing neutralizing antibody assays and the like that describes the cadence. But it's going very well.
Tazeen Ahmad: And what we'll see over the course of this year is growth quarter over quarter over quarter to achieve our guidance for the full year, which, of course, is.
Tazeen Ahmad: $3 billion in total, a little over two-thirds of that will be coming from a Levitas and the remainder from our three PMOs.
So, thank you for that.
Thank you.
Thank you and one moment for the next question.
Speaker Change: Our next question will be coming from the line of Ellie Murrell of UBS. Your line is open.
Speaker Change: Hey guys, thanks so much for taking the question. For Lim Girdle, just from your work in the space, what's the latest on what you see for the prevalence of 2E and how many in the U.S. are diagnosed today?
Speaker Change: and the mix of ambulatory versus non-ambulatory patients. Basically, if you will be launching here next year, how should we be thinking about the contribution potentially to revenue and how many patients there might be kind of waiting for therapy? Thanks.
Speaker Change: I'll give you the broadest strokes, then I'm going to turn the call over to Louise if she has any information on the split between ambulatory and non-ambulatory. Obviously, type 2 E is a very rare disease. It's an ultra rare disease.
Speaker Change: In fact, all of the three SarcoGlycan launches that we'll have over the next three years are individually.
Speaker Change: very rare, but collectively they will represent about 25% of the Duchenne Levitas opportunities, so they will be important contributors first and foremost
Speaker Change: To be clear, there'll be enormous contributors in the lives of patients living with and being degenerated from these really devastating mustard dystrophies. And then they will be important for the organization as well. But they'll be modest. They'll be about 25% of Duchenne, so they'll be important but modest.
Speaker Change: With that said, an additional question that had been asked was the split of ambulatory and non-ambulatory, specifically as it relates to type 2A, and I don't know, Louise, if you have any information on that.
Speaker Change: Yeah there's there's generally an even split I would say as genetic diagnosis especially the loam girdles has
Speaker Change: come along, we're seeing more of the ambulatory population. I think historically you would have said it would be geared to the words that are ambulatory, but now it's generally a 50-50 split.
Thank you. One moment for the next question.
Thank you.
Speaker Change: And our next question will be coming from the line of Jenna Wang of Barclays. Your line is open.
Jenna Wang: Thank you for taking my questions. I have one question regarding the data update later this year for both FSHD and the DM-1. If I hear correctly, DM-1 will be...
Jenna Wang: the SADD data. Is FSHD also SADD data? If it are the SADD data, how many cohorts and how long follow-up? And what kind of data you will share with us?
Speaker Change: Yeah, I will turn this to Dr. Rodino-Klapak to provide some color on that.
Louise Rodino-Klapak: For both FSHD-1 and DM-1, it'll be the SADS data. So early, we'll be focusing on single ascending dose study data, which will be focused on safety, early signals of biomarker efficacy, which will be muscle concentration, knockdown, especially splicing.
Louise Rodino-Klapak: restoration as well. So it'll be early data but we look forward to showing that in the second half of the year for for both.
Also really excited with FSHT as well that
Louise Rodino-Klapak: Our hope, and of course we'll only know when the data comes in, is that we'll be able to show through an assay the actual direct knockdown.
Louise Rodino-Klapak: of DUX4, which of course is the goal of the therapy for FSHD. If we can do that, that is a really significant proof of biology because no program before has been able yet to achieve that goal. So we're very excited to see that as well.
Speaker Change: Thank you. And our next question will be coming from the line of Brian Abrams of RBC. Your line is open.
Speaker Change: Hi, this is Kevin for Bryan. Thanks for taking our questions. So maybe just on LIMGIRL type 2e, can you maybe tell us a little bit about what you think the bar is for your upcoming 2e data? And then maybe how do you think that bar translates to other LGMD subtypes that we'll eventually see data from? Thanks so much.
Speaker Change: We've done, I'll comment on it and then Louise, you update with any more precision. Broadly speaking, we have been working with the agency over a very long period of time.
Speaker Change: and therapies like SRP 9003 for limb girdle type 2e where you're dealing with the replacement of the native protein, unaltered.
Speaker Change: which the absence of that protein is the sole and exclusive.
Speaker Change: cause of the disease. So, I'm very proud to say we have very small end studies. They're single-arm studies. They look to expression and safety. So, in the broadest of strokes, the bar will be that we're getting nice expression. And I would hope largely consistent with the expression that we've seen in the past, because remember we've
Speaker Change: actually dosed on SRP 9003 in prior cohorts and, of course, a good safety profile. We have a lot of conviction around this, as you can well imagine.
Speaker Change: First, because we've already actually dosed patients with SRP-9003, but also because SRP-9003 stands on the shoulders of all of the work that we've done with 9001 malolevitis.
We have dosed hundreds and hundreds and hundreds of patients.
Speaker Change: with Elevitas. We understand the laudable safety profile and we understand the power of our constructs and our promoter to get really good expression and get it safely. So that's sort of the bar and we're very confident about where we're going to go with that. And on your other question, this will be
similar across.
Speaker Change: that we have already aligned with the agency on the approach that we're taking for 9003 and 9004 and 9005 and we're confident that this affects a modernization in the way the agency's looking at transformative therapies for ultra-rare diseases.
Louise, is there any more detail that I have omitted?
Speaker Change: And you summarized it well, maybe I'll just linger on one point in the fact that
Speaker Change: for the sarcoglycans, LGMD2E being the first. These are the full-length genes. So in this case, beta-sarcoglycan is both the gene therapy, it's also the biomarker. We've demonstrated extensively preclinically how the biomarker expression leads to functional improvement.
and then that translated in our studies.
Speaker Change: clinically, and we saw two different doses. We saw improvements in both expression that led to functional improvements over time. Those patients will be sharing five-year safety follow-up data for those patients continuing to do well.
Speaker Change: So, that will be our first study, and then the other sarcoglicans will follow suit.
Speaker Change: We're all using RH-74 across that platform, so not only are we leveraging the 9001,
Speaker Change: data, but then also the other sarcoglicans. So we're in good position in terms of the outcomes of these studies and the outcome of the BLA.
Thank you. One moment for the next question.
Speaker Change: And our next question is coming from the line of Andrew Fay of Jeffries. Your line is open.
Andrew Fay: Thanks. I appreciate the update. Congrats on all the progress. Maybe one more question on the DM1 FSHD data you'll be sharing later this year. Do you think that initial SAD, F-A-D data will be conclusive to the point where investors can determine whether these programs are looking superior or not, or do you need MAD data, and how would you define superiority in these two programs? Thank you.
Doug Ingram: I'm going to turn this over broadly to Louise to talk about it. Let me say at the inception, first of all, I don't want to do what other small biotech companies often do, which is oversell early data. You know, the data has to evolve. These are, however,
Very, very important.
Proofs of Biology.
Doug Ingram: So I want to be very clear, both from a safety perspective, a muscle concentration perspective, a knockdown perspective, a downstream gene splicing perspective, and as it relates to FSHT, where you can actually directly see the knockdown of DUX4. So while there'll still be lots of work to do from there, and we don't want to oversell the data, this is a really, really important moment.
Louise Rodino-Klapak: signals of potential future product profiles that versus you know other potential approaches to FSHD and DM1. But Louise you can provide more detail.
Louise Rodino-Klapak: Yep, just to add to that, I would say that what we know from the ARAHEAD platform, what we've seen in their other programs and from the preclinical data is the translation
from preclinical to clinical, and so we've been...
Louise Rodino-Klapak: I'm excited to see that and that's what we'll be looking for is that translation into the clinic. So it'll certainly be a good indicator in terms of the knockdown that we're seeing, the muscle concentration, those are the things we'll be looking for as robust clinical developers. We're obviously looking to the MADD data to come following that, but certainly we're excited to see the SADD data and the translation from preclinical and just an extension of their already promising data across the platform for OHEAD.
Speaker Change: Thank you. One moment for the next question. And our next question is coming from the line of Costas Valerius of BMO Capital Markets. Please go ahead.
Thanks for taking
Costas Valerius: Thanks for taking our question and congrats on the progress. A question on Elevitis from us.
Costas Valerius: Given that it's been about eight months now since the label expansion, can you comment on whether you have seen any reinvestments for PMOs in a levy-distributed patient? And if not, are you hearing anything from payers around their willingness to reinvest?
PMOs following a levity treatment. Thank you.
Costas Valerius: Yeah, so let me say, Kostas, thank you for your question. In broad strokes, I will still note that it's still very early days. And so, you know, trying to draw broad conclusions.
Costas Valerius: is challenging. As we've noted, one of the most interesting, I think, data points we should linger on for a second is, while we've had all this success,
Costas Valerius: We're still only treating less than 5% of the addressable on-label patient population for Levitas. And so you've got to really test this issue. You've got to have Levitas, and then you have to have the fact that a Levitas is treating a patient previously on.
Costas Valerius: a PMO, but we do have instances of reimbursement of both. So we've already seen that. I don't want to oversell it right now. And I'm sure we also have instances where that wasn't possible.
But it's not black or white or binary right now.
Costas Valerius: One of the things that we're very excited about is that so far we haven't seen significant net cannibalization. We'll see some cannibalization in the U.S., we're seeing very good growth of our PMOs.
Costas Valerius: XUS, of course the overlap is modest given that we only treat 29% of patients with Duchenne Muscular Dystrophy with our PMOs, and it's nice to see that we have seen some payers interested and willing.
Costas Valerius: to put kids on sequential therapy, post-gene therapy. But it's still very early days, and I wouldn't over-read that.
Costas Valerius: Dallan, am I right? No, that's absolutely right. That's absolutely right, yeah.
Thank you. Nothing ruined, thanks.
Speaker Change: The next question will be coming from the line of Mike Oltz of Morgan Stanley. Your line is open.
Mike Oltz: Hey guys, thanks for taking the question. Maybe just a quick one on the 500 million share repurchase program. Can you just remind us, you know, what the time frame is there and then some of the considerations as you decide, you know, when you might deploy that. Thanks.
Sure, I'll turn this to Ian for his thoughts.
Sure, so the time period is 18 months.
Like I said, obviously, we just...
Mike Oltz: completed the Arrowhead transaction and so you know we're going to be quickly building back our cash reserves over the course of the year like I said in our prepared remarks we're going to be back to the same level at the end of 25 is where we started.
Mike Oltz: where we ended in 24. So, it just talks to the strength of the launch. And so, as we continue to build our cash reserves, we're going to look
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. The Goldstein on Gelt radio show is a production of the Goldstein on Gelt radio show and is headquartered in the U.S. It is solely at our disposal and we're looking at the right time to do tax adjustments.
Thank you. One moment for the next question.
Speaker Change: And the next question is coming from the line of Joe Schwartz of Lyric Partners. Your line is open.
Joe Schwartz: Great, thanks very much. So, since approval in 23, it seems like the Levitas launch has had a few different stages with great growth early on, following accelerated approval, then a couple of flat to down quarters in early 24, followed by nice
Joe Schwartz: Really nice return to growth following the expanded label in mid-24.
Joe Schwartz: So, since your 25 guidance seems to imply that growth this year should be more moderate, I'm just wondering if you can give us your view about the stage of the launch that we're in now and how you see it evolving this year. Are there any important constraints to growth that we should keep in mind this year?
So...
Joe Schwartz: which is a very, very broad label, but of course the cadence for that broader launch requires the natural cadence of kids getting on therapy, which to remind everyone, even though we had done a brilliant job in site readiness and accident reimbursement, we're all ready. There's just a cadence to getting the kids.
Joe Schwartz: the cadence of the single case contract and the scheduling and the infusion beds and the amount of follow-up and the assay work and the like, so there's a certain cadence.
Joe Schwartz: We had anticipated exactly what we saw in 24, which was we would see this hockey stick ramp towards the back half of the year, which
Joe Schwartz: is exactly what we saw, and as you know, we grew in the fourth quarter by 112%. And then I would note for this year, I mean...
Joe Schwartz: With respect against the statement that the growth is modest this year, we're going to grow with a levitas over 160% year over year. And I would put that up. Well, first, I can't put it up against any other gene therapy, let's be clear, because we have...
Joe Schwartz: blown away every other gene therapy cumulatively. But also I think for launches, this is just about as successful a launch as one could have imagined. And we're still in the robust, robust growth phase of this launch.
Speaker Change: Thank you. And our next question will be coming from the line of Gil Blum of Needham & Company. Your line is open.
Speaker Change: Hi, good afternoon, everyone, and again, congrats on all the progress. So maybe a question here on the move to suspension manufacturing with a bridging study later this year. Can you remind us?
Speaker Change: What are the potential associated cost savings, and also, how broadly applicable is this? I mean, you guys use a lot of different programs for this in gene therapy. Is this translatable, you know, just outside of DMV, or is this very narrow? Thank you.
Speaker Change: Yeah, so let me answer the last question first. So our goal, if successful, is to involve almost all of our gene therapy programs.
Speaker Change: to suspension. In fact, if I'm not mistaken, Louise, you'll correct me if I am.
Speaker Change: The only program that will remain in adherence, just the timing of it and we didn't want to slow down the approval as kids are waiting for it, is 9003. Even all the other sarcoglycans will be in suspension.
Speaker Change: And, you know, broadly speaking, of course, it's very dangerous to sort of...
Speaker Change: to try to estimate the COGS impact. We've got more work to do, but it will be very, very significant. We're seeing upwards of five times to even greater times more yield efficiency. So you could envision a margins.
Significantly over 90% eventually with this.
Speaker Change: and also the ability to really bring this therapy to the far reaches of the world.
Speaker Change: of course one of our big goals. So to remind everyone we said it already in the in our prepared remarks but our goal is to complete our GMP runs and to start our bridging study before the end of this year certainly and then the goal of course is if all goes well and we're successful to evolve to suspension in 2027.
Speaker Change: which would be really, really an elegant timing for us as we think about our global plans.
and Mary Jenkins. Thank you. Thank you.
Speaker Change: Thank you. And the next question will be coming from the line of virtual borough of T.D. Cowan. Your line is open.
splicing biomarker-based.
Speaker Change: accelerated approval for your FSHD and DM1 programs. I know it's far in the future, but obviously this is a hot topic of the space. And then actually if I could follow up on Gil's question. He asked about the bridging study.
Speaker Change: Can you describe what that bridging study is? It sounds like...
It's going to go fast.
Speaker Change: Yeah, on the bridging study it's a relatively, I don't know who's given the actual letter, it's a relatively small study.
Speaker Change: looking at, empirically looking at expression and safety to confirm that it's substantially similar to the adherent approach. So it should go relatively fast. You know, everything's a work, but it should go relatively fast and we intend to start that bridging study.
Louise Rodino-Klapak: you know, later this year. And then with that, I'll turn it over to Louise if you have any thoughts or comments on the potential for an accelerated approval approach with either FSHC or DM-1.
Louise Rodino-Klapak: Yeah, you know, we're in the early stages, I would say, for FSHD. Doug alluded to it, but we're in a unique position with FSHD where we have an assay that actually
Louise Rodino-Klapak: can quantify the knockdown of the primary defect in the indication, which is DEX4. And so that gives us unique opportunity in terms of potential biomarkers as well. In these early studies, we are looking at
Louise Rodino-Klapak: multiple biomarkers and functional outcomes and that's really what these phase one studies are intended to do so that you can optimize and pick the best path forward.
Louise Rodino-Klapak: I think it's an opportunity to evaluate, as far as splicing, I think it is one of many biomarkers, but whether it would be the sole biomarker is something left to be explored.
Louise Rodino-Klapak: And of course, we recognize, we know amongst others there is a lot of open discussion and dialogue and even some, you know, differences of opinion regarding the pathway for approval. This is one of these really rare moments, maybe in my time it's for up to the first time, where we get to be informed by others.
Louise Rodino-Klapak: And so, you know, we're going to get informed by not only our direct conversations with the FDA, but what others are seeing when they're looking with the FDA. And that will help inform our path forward.
Louise Rodino-Klapak: It's an interesting place to be where we get to be informed by others as opposed to with most of our other therapies having been the one to inform the world and chart the path forward.
Speaker Change: Thank you. And our next question will be coming from the line of Brian Scorney of BEARD. Your line is open.
Order of
Speaker Change: Potential rate limiting steps to commercial elevatus revenue recognition. I'm just trying to understand What it doesn't seem like it's it's demand in any sense right now. So what's sort of the the step throughs that are kind of Creating blocks from realizing the full demand isn't like would one be like insurance authorization would to be centric capacity Could you like kind of rank order those? Yeah, rank ordering is hard. I mean turn this over and down and force them to rank order, but let me say a couple things
Speaker Change: I don't want to call them blocks because it's just a cadence issue.
It'd be like saying, you know, Dallan often uses...
Speaker Change: a metaphor that this is often like, you know, think of this more than this is not like prescribing a drug. This is almost more like, you know, organ transplant. There's just a lot of steps that have to go through.
Speaker Change: to get from here to a CAID dose. That's why it's about a four-month process. And, you know, I'll give you some data on that. There are something like...
Speaker Change: Twenty-five individuals at a site of care that touched this therapy.
Speaker Change: moving from the SART form to the infusion. And that goes through lots of different departments. It's not just the internal pharmacy and the infusion center and the nurses and the physician. It's also all the way back into the financial area and the CFO of the organization.
Speaker Change: and the like. And so there's just a cadence. I mean, I'll give you an example.
Speaker Change: Brian, that there is, it's about a, can be as much as a four week or longer process to do the single case contract every, almost every time a patient gets dosed.
Speaker Change: The site and the payer enter into a specific site contract. It's an administrative step that has to be done. It is done. It's done very well. We understand the process.
Speaker Change: exceptionally well. I'm quite confident now I can say it without fear of being arrogant. There's no...
Speaker Change: organization in the world that understands this process as well as we do, but there's just a cadence to this.
Speaker Change: And it is all the things you're mentioning. It's the very process of getting the first meeting and then getting to the assay and then getting the infusion site ready. At the same time, it's the start form and the single case contract. It's negotiating with the payers if you have to. It's the, when necessary, negotiating with the payers around it. Remember.
Speaker Change: I will comment on this. There's been certainly some misunderstanding regarding payers and some, you know, relatively superficial...
Speaker Change: Policies really set themselves into three buckets. Policies, there's a lot of policies that are just those to label, give access to label more than there were with the PMO. So we're really excited about that. Some of our bigger payers are in that camp. There are some payers that have restrictions, and there are some payers that have a lot of restrictions.
Speaker Change: The interesting thing is that those different policies will not affect
Speaker Change: Today, the ultimate kid getting on a therapy, what they do do is internally they define the amount of time to get a kid on therapy and the amount of work that needs to be done to get a kid on therapy, but they get on therapy.
Speaker Change: So I just want to get everyone's head around that idea. And our PMOs, with eight years of...
Speaker Change: battle-hardened experience. Our win rate, if a payer is going to be very resistant and take us to an internal or external appeal, is over 90%. With 11ists right now, we're sitting right now at a hundred percent.
Speaker Change: So, no kid has been permanently denied therapy thus far. So, in any event, all of these things describe this broad cadence that is about, you know, a four-month process.
Dallan Murray: Dallan, if you want to rank order them for us. Well, Brian, you know, I think you can summarize everything that Doug is saying with one word, which is time, right? Everything here takes time. And so you really, therefore, cannot point to one thing. As I said in my prepared remarks.
Dallan Murray: We have robust patient demand. We have more demand than can be treated today. We have ample site capacity. We have enough site capacity to treat our peak forecast.
We've got positive trends in access and reimbursement.
that we're allowing to...
to convert patients within that consistent.
Doug Ingram: three to five month time frame. So those together, then when you layer in what Doug said.
Dallan Murray: It's just a game of time to get these patients on therapy and that is all fact because we've got a deep and very detailed.
line of sight into all of this.
Dallan Murray: This is what informs our quarter-to-quarter growth and our, you know, our guidance for the year. And I will say, it's probably two things. It's time.
and an insane attention to detail.
Dallan Murray: which Sarepta is really good at. I am sitting here, I will tell you.
Dallan Murray: at our national training meeting today with all of our folks focused on this. And they, the amount and attention obsessed into detail and the passion to make sure a kid never slips through the cracks, but can get on this therapy and benefit from Levitas is insane. And that explains why we've been so successful.
Dallan Murray: And it explains why we are so comfortable with our guidance for 2025, which I would say is very robust guidance. Three billion dollars is a 70% growth overall for the year, and as relates to Levitas, over 160% growth year over year, which speaks to the execution ability of this team out here in Scottsdale.
Speaker Change: Thank you. And our next question will be coming from the line of David Hohen of Deutsche Bank. Your line is open.
Speaker Change: Hi there. Thanks for taking my question. So, I just had one on if you have any thoughts on a recent data set that was generated by a next generation DMD gene therapy competitor, and do you have any insights from your field force on how families, patients might think about receiving treatment with commercial elevators versus enrolling in a clinical trial for one of these other products?
Thank you
Well, first, there are no next generation.
team therapy programs.
Speaker Change: So I'm going to correct the record on that. That's a misstatement. But look, a couple of thoughts on it. We do understand that Dallan put out some very, very early first in human data. Couple of thoughts. First.
Speaker Change: kids with Duchenne mustard dystrophy, and to be honest, we take a lot of pride in it because I think...
Speaker Change: but for the success that we've had with our PMOs and with Elevitas.
Speaker Change: They wouldn't have this robust focus on finding new therapies for kids, so we're very excited about that.
Speaker Change: I do want to note that we have to remember that the families with Duchenne Muscular Dystrophy have to make difficult decisions today, and they need accurate information to make them. That's for the families to make. Clearly there is one...
Speaker Change: absolute overarching fact, which is there is one approved therapy that is transformative in nature, that is a disease-modifying gene therapy, and that is the Levitas, and that can treat 80% of children with Duchenne muscular dystrophy in young men.
Speaker Change: and occasionally women with Duchenne muscular dystrophy. And our goal is to ensure that families have the right information so they can make the right
Speaker Change: decisions, which is often a very difficult decision. Do you go, do you get the current therapy? Do you look at a clinical trial?
Speaker Change: and take a therapy that's been tested less and the like. But I just want to make sure, the only thing, I'm very thrilled with the others focusing on this. I think it's really positive for the Duchenne community and everybody should applaud it.
Speaker Change: But I do want to make sure people are providing the right, balanced, reasonable information so people can make intelligent decisions and not make the wrong decisions.
Speaker Change: And the actual decision that people make between entering into a clinical trial for a new experimental therapy versus getting on an approved therapy that's been shown to be safe and efficacious is a difficult decision that's going to be made between the families.
Speaker Change: and their health care provider hopefully properly informed with all the current data.
Speaker Change: Thank you. Maybe this is just one thing to add to that, and I'll turn it to Louise to...
to go into more depth, but.
Speaker Change: You know, I do think it's important for people to recognize, and certainly Louise has done a lot of work, empirical work,
Speaker Change: for over many years looking at constructs and seeing their functionality.
and, you know, certainly as we've seen...
with other development programs.
Speaker Change: that different constructs have different efficacy and safety profiles and therefore when Louise tested all these programs
Speaker Change: to really move forward with the optimized construct from a functional perspective, and that's why we're able to see data.
Doug Ingram: based on our expression lead to functional outcomes. And so, you know, that's really important when patients are thinking about therapies that, you know, it's not just only expression, but actually the functionality of the construct. And to Doug's point, we've been able to show that in clinical studies. But Louise, since you did the work, you probably have the best point of view on that.
Louise Rodino-Klapak: Yeah, thanks for that. Yeah, I think it's important in the fact that the dystrophin space is unique for gene therapy and that in the small distribution space that you are looking at.
different functional contributions from these constructs.
Louise Rodino-Klapak: And so the quality of the dystrophin that you're producing is extremely important. Just one of the things that we noted in our studies when we compared it to other constructs was the inclusion of spectrum repeat 3 for stability of the constructs, and we found that over time that this was...
Louise Rodino-Klapak: critical to the functionality of our construct and the corresponding functional improvement that we saw that corresponded from preclinical work to clinical work.
Louise Rodino-Klapak: And so it was, as you all know, you've been on this journey with us, hundreds of patients over many years and multiple clinical studies showing the same thing in terms of the expression leading to.
Functional Benefit.
Louise Rodino-Klapak: and obviously with a traditional approval now and over 600 patients treated both clinically and commercially so.
Louise Rodino-Klapak: Certainly, the quality of the constructs and the functional data that's demonstrated in the clinic is critical to making a decision about the therapy that a patient chooses with their family.
Speaker Change: Thank you. And the next question will be coming from the line of Rye Forsett of Guggenheim Securities. Your line is open.
Speaker Change: Hi, this is Rai from Debjit's team. We have two questions. Number one, how is Sereptin modeling the impact of competitive gene therapies in DMD, especially on the annual incidence population, under the assumption that the prevalence pool is saturated?
Speaker Change: And number two, for the 2E program, should we expect higher vector genomes per nucleus relative to historical SREPTA data and protein expression above 50% and is there a threshold for regulatory submission?
Speaker Change: I think I've answered the threshold question. Thank you for that. I think if we get expression consistent with what we've seen before with 9003 and before that with 9001 and I would remind you we got really extraordinary vector genome copies per nucleus and I and I and we do it with a very
Speaker Change: rigorous approach, fairly unassailable approach to looking at things like sectored genome copies and expression, ones that we worked on for years and years with input from the FDA.
Speaker Change: I'm going to have to be very careful about that because it's very easy to do these things in ways that give false information. But if we get those levels of vector genome copies per nucleus and we get the kind of expression that we've seen both in 9003 and 9001, we're very confident that we'll get an approval, assuming the safety is there, and we're very confident about that.
Speaker Change: As far as modeling, it's way too early to be modeling competition from people that have one, two, and three patients in these early experimental therapies.
Speaker Change: probably haven't even figured out manufacturing at that point. Certainly we wouldn't be modeling anything this decade in any event. It's something we can look to if people will actually start progressing. Although I would say you know thank you for that question because
Doug Ingram: The size of that incident population is really underappreciated. It's really double the size of the Zolgen supermarket currently. We'll be ready for any competition when it comes. We, you know, as Doug said,
Doug Ingram: It's going to be a long time coming, and we really are excited about the possibility of treating patients earlier and preserving function earlier in that patient journey. So it's a great question from the perspective of a very underappreciated part of the Duchenne market opportunity.
Thank you very much.
Speaker Change: Thank you. And the next question will be coming from the line of Anupam.
of J.P. Morgan. Your line is open.
Speaker Change: Hi guys, this is Priyanka on for Unupon. Thank you for taking our quick question. As the R&D day is in the second half of the year, can we assume potential new data could be presented there from Arrowhead or other non-Arrowhead pipeline programs? Thank you.
I'll turn that to Louise to comment.
For more information visit www.FEMA.gov
Speaker Change: I don't think we've set exactly the timing of when we will present the Arrowhead data.
Speaker Change: It'll all depend on the timing of the data release and how that lines up with R&D Day. We're excited to talk about the platform, generally I would say that as part of R&D Day and our deep pipeline that we haven't really been able to share in detail. So we look forward to that. As we have more timing, we'll share with you.
Speaker Change: Thank you. And the next question will be coming from the line of Byron Amen of Piper Sandler. Your line is open.
Yeah. Hi, guys. Thanks for taking my questions.
Speaker Change: for the eMERGENE trial. I think you're enrolling both ambulatory and non-ambulatory patients while the phase one enrolled ambulatory
Speaker Change: So, should we expect expression would be similar in non-ambulatory patients to what was observed in the phase one?
Speaker Change: ambulatory data. And then when you report these data, will you be comparing these to the NCH National History Cohort?
and Louise.
Louise: Yeah, a couple of things in there. So, we've treated both ambulatory and non-ambulatory patients, and we see similar levels of expression. So, the emerging...
Louise: The analysis will analyze those two populations separate from a functional perspective, that will be the follow-on study, the confirmatory study, but from an expression level, yes, we will evaluate both.
Louise: In terms of what we're comparing it to, we have our own journey natural history study, and that will be the comparator for the confirmatory study.
Louise: And just, you know, our history has shown that we get great expression across the continuum of disease from very young to very advanced.
For more information visit www.casagrandeaz.gov
Speaker Change: Thank you. And our next question will be coming from the line of Gavin Clark Gardner of Evercore. Your line is open.
Hey guys, thanks for taking the question.
I just wanted to focus on terminal value.
Speaker Change: So if I look at the outer year of consensus estimates, take 2033, I see about $2.2 billion in U.S. Levitas sales. So that implies about 850 to 900 treated patients annually. Maybe, Dallan, you could just remind us, like, specifically what you're seeing on U.S. incidents. But more broadly, do you believe this consensus estimate is plausible? And maybe explain what has to happen for Levitas to reach and stay into that range into the next decade? Thank you.
Thank you.
This is the...
Speaker Change: The incident population, you're sort of looking at what the terminal incident population would be. In the U.S., the incident population will be somewhere in the low 400s, 420, 430, so you can do the math on that. And then, of course, we'll have the PMOs on top of it because the PMOs are enduring.
Speaker Change: as well. And then by that point, although, you know, this might be speculative until we've solved it, we will likely have solved the redosing issue by the 2030s as well. So you can, you'll have to add to that concept as well.
Speaker Change: And of course, if you're talking, that's the terminal value on a Levitas.
Speaker Change: It's not the terminal value of the company, as you know. As well, we'll be launching three Lynn Girdle programs in the next, you know, literally every year for the next few years. We have new ones coming. We have new INDs.
Speaker Change: If all goes well, we'll be launching FSHD in 2028. We'll be launching DM1 in 2029. Both of those are multi-billion dollar peak year sales opportunities, so obviously the terminal value will be significant on the organization as well.
Speaker Change: Thank you. One moment for the next question. And the next question is coming from the line of Sammy Corwin of William Blair. Your line is open.
Sammy Corwin: Great, thank you. Congrats on the progress and thanks for taking my questions.
Sammy Corwin: I was curious how you're thinking about the evolution of your growth margins in 2025 and 2026.
Speaker Change: as Levitas begins to compromise a larger percentage of your revenue. And then a quick question on your FSHD program, is this DUX4 assay new or was it developed in-house and could you just elaborate on it a little more? Thank you.
Speaker Change: So I'll turn the abolition question to Ian and then Louise can touch on the DUX4 assay issue.
Speaker Change: Yeah, so from a margin perspective, what we've said is that obviously is that
Speaker Change: We've already expensed the inventory already, and so that's starting to come off.
Thank you.
Speaker Change: And then over time, as we continue to treat heavier patients, you're going to see the margin go down. We expect it to be in the, you know, kind of high 70s.
as we continue to penetrate into
the non-ambulant patient population, but as Doug said,
Speaker Change: As we continue to work on our suspension manufacturing process, we expect that to start getting much significantly higher, trending towards 90%. So, as we're treating the heavier population, we expect...
Speaker Change: You know, we expect the margins to improve in the, you know, 27 timeframe.
Thank you.
Speaker Change: Yeah, and just on the DEX4 assay, this is a quantitative assay developed by Arrowhead. As we've mentioned, DEX4 is expressed at low levels somewhere around the instance of one in a thousand nuclei, so it's difficult to measure, but Arrowhead has expressed
Speaker Change: successfully done that, and so this is an assay that will be onboarding as well, but we're excited to see it because it's not something that's been able to be accomplished in the field.
Speaker Change: Thank you. And the next question will be coming from the line of Mitchell Kapoor of H.C. Wright. Your line is open.
Speaker Change: Good afternoon. This is Dan on for Mitch. Thanks for taking our question and congratulations on the positive cash flow for the year. So, pairs we've spoken with have said that they have had patients experience two rounds of appeals and were ultimately denied. Would an IRO denial not count as permanent denial? And if not, what qualifies as a permanent denial? Thank you.
Speaker Change: I'm not sure who you spoke to. I know you did a survey. One was actually not a payer, it was PBM.
Speaker Change: and I think you might have talked to one today. We have no kids that have been permanently denied therapy.
Speaker Change: I'm not suggesting that it will always be 100%, our PMO's trend above 90% over the last 8 years, but we're seeing even a better response than the PMO's of the Levitas, so we're doing quite well.
Speaker Change: We don't have any kid that's been permanently denied therapy. Some are still in process, but no kid's been permanently denied therapy. Yeah, Dan, we've dosed patients in the plan that you're talking about. We're not going to provide you any more details other than that.
Speaker Change: Thank you. And the next question will be coming from the line of Y-Ear of Ms. Huhu. Your line is open.
Speaker Change: Hi, guys. This is Leo on for OI. Thanks for taking our question. Could you provide some detail on the learnings from the pre-BLA meeting with the FDA on 9003 and how these learnings might be applied to the follow-on limb-girdle programs? And then also, based on the recent changes within the agency, how do you think FDA interactions might change going forward? Thanks.
Speaker Change: So Louise, do you want to touch on the sort of pre-BLA discussions broadly?
Louise Rodino-Klapak: Broadly, it was an extremely positive meeting, I think, across all of the different things that you would speak to in terms of the non-clinical data. The clinical plan for the clinical trial was endorsed CMC in terms of our plan. So that was.
Louise Rodino-Klapak: endorse the using beta-cycloglycan as a surrogate biomarker for accelerated approval.
was endorsed.
Louise Rodino-Klapak: So, it was a very positive meeting that the agency certainly understands in ultra-rare diseases the challenges that are faced with that in terms of trial design.
in terms of manufacturing.
Louise Rodino-Klapak: So, we've already set the stage for the other follow-on circle glycan, so I think it bodes well for the entire platform, and we're certainly encouraged by it, and certainly seen a change in the agency over the last two years, and really...
Louise Rodino-Klapak: promising and that's something we look forward to as we complete the other two sarcoglicans as well.
And I do want to say, you know, we...
Speaker Change: I am very proud of the work that Louise and her team have done working with the agency.
Speaker Change: to evolve and modernize the approach to ultra-rare disease and its paid dividends for the limb girdle programs, not only 9-0-0-3-B and beyond. But I also want to give credit to the division itself. I have to say, you know,
Speaker Change: The Senate Director, Dr. Marks, has had a vision for being thoughtful and modernizing the division and comporting with modern science and not creating barriers that make it unviable to treat ultra-rare disease patients.
Speaker Change: And I think that Dr. Verdun, the head of OTP, has done really an exceptional job of taking that vision and operationalizing it in ways that we're seeing and I think others are seeing as well.
Speaker Change: which is which which you know as we think about rare disease day coming up on Friday and I think we said some really brilliant thoughts on that I mean just poignant that I think we're moving in the right direction as a people to be able to bring a better life to patients with ultra rare disease.
Speaker Change: And I give enormous kudos to OTP for playing their part in that.
Speaker Change: Thank you, and our next question will be coming from the line of Salveen Richter of Goldman Sachs. Your line is open.
Speaker Change: Thanks for taking our questions. This is Tommy on for Salveen. Just overall, what do you see as Arrowhead's differentiation in terms of kind of their chemistry or structure versus some other RNA approaches in DM1 and FSHD? And on Elevitas, is there flexibility to expand upon existing infusion center capacity, including, for instance, staffing needs?
Thank you.
For more information visit www.FEMA.gov
Speaker Change: I'm going to turn the first part of the question to Louise. Let me briefly talk about a levitas. So what we really need to understand is that this is a very detailed.
Speaker Change: cadence from beginning to get a kid dosed. So the sight capacity isn't alone the issue.
Speaker Change: You know, people often say, well, what if you found a way to have, you know, more infusion days? That'd be great. But then you'd need infusion nurses. Then you'd need follow-up.
Speaker Change: Then you need more single case contracts. Then you need to think about, back in the finance function, what are the credit limits associated with all of that?
Speaker Change: So it really is just a certain cadence, and the thing that I'm excited about is this team has unlocked this opportunity and really become experts in that cadence, and that's why we're able to provide guidance of $3 billion for the year, because the team's figured it out. But the cadence is the cadence.
Louise Rodino-Klapak: And I don't think the opportunity for dramatically changing that exists. And with that, I'll turn the first part of the question over to Louise.
Yeah, on Arrowhead, the...
I think.
Louise Rodino-Klapak: The comprehensive answer is that Arrowhead is focused on every aspect of the construct and so we like the diligence of their approach.
Speaker Change: I would like to call out their targeting lag as being a differentiator, because getting to the right tissue, in the case of muscle for FSHD and DM1, using the
Alpha Phi, d beta
Speaker Change: targeting ligand that we use the same one with myoAAV, for example, we know that it works well in muscle. So that's a differentiator. But they focus on the design from the siRNA, from the targeting ligands.
Speaker Change: from every aspect of the construct. And so we just like their comprehensive diligent approach is something that we model with gene therapy, for example. And so I think it's all of the above, but we certainly appreciate their targeting ligands for the various tissues.
Thank you.
Speaker Change: Thank you and that concludes today's Q&A session. I would like to turn the call back over to Douglas Ingram for closing remarks. Please go ahead.
Well, thank you everyone for your questions this evening.
Appreciate them.
Speaker Change: We've had a really tremendous 2024 and a great Q4 of 2024.
Speaker Change: and as we track into 2025 things are going very well. A couple things, you know, we're obviously going to continue to drive this launch of a Levitas and the team's done a really great job on that and I think they will continue to do that. We're going to continue to focus on our PMOs and ensuring that patients are benefiting from our PMOs over this year and then we have more milestones.
Speaker Change: move forward. Lynn Girdles is an example. We get the FSHD data and we get the DM1 data and we keep driving as an organization. So, thank you all very much and have a wonderful evening.
Peace.
Speaker Change: This concludes today's program and thank you for joining this conference call. You may all disconnect.