Q2 2019 Earnings Call

Operator: Second Quarter 2019 Earnings Goal At this time, all participants are listening. Later we will conduct a question and answer session, and instructions will be given at that time. If anyone should require assistance during a conference, please press star, gem, zero, and your touch-tone telephone. As a reminder, today's program is being recorded, and now I'd like to introduce your host for today's program, Ian Estepan, Senior Vice President, Chief of Staff in Corporate Affairs. Please go ahead.

At this time all participants.

Later, we will conduct the question and answer session and instructions will be given at that time.

Sure Chris just during the conference. Please press Star Zero Touchtone telephone.

<unk> Senior Vice President and Chief of staff and corporate Affairs. Please go ahead.

Ian M. Estepan: Thank you, Demetrius, and thank you all for joining today's call. Earlier today, we released our financial results for the second quarter of 2019. The press release is available on our website at www.sarepta.com, and our 10-Q was filed with the FEC earlier this afternoon. Joining us on the call today are Doug Ingram, Sandy Mahatme, Bo Cumbo, Dr. Gilmour O'Neill, and Dr. Louise Rodino-Klaypeck. After our formal remarks, we'll open up the call for Q&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 risk and uncertainty, any of which could be non-surface control.

Thank you all for joining todays call.

Earlier today, we released financial results for the <unk>.

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The press release is available on our website at Www Dot Com and our 10-Q was filed earlier this afternoon.

Joining us on the call today are sandy Montney, all combo Dr. Gilmore Aneel.

Dr Luis.

After our formal remarks, we'll open up the call for <unk>.

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 contained forward looking statements.

These forward looking statements involve risk and uncertainties any of which are.

Control.

Ian M. Estepan: Actual results can materially differ from these forward-looking statements, and any such risk can materially and adversely affect the business, the results of operations, and the trading prices for Sarepta's common stock. For a detailed description of applicable risk and uncertainty, we encourage you to review the company's most recent quarterly report on Form 10-Q, filed with the Securities and Exchange Commission, 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 with that, I will turn the call over to our CEO, Doug Ingram, who will provide an overview of our recent progress. Doug

Actual results could materially differ from these forward looking statements any such risks can materially and adversely affect the business.

Operation and the trading prices for his comments.

For a detailed description of applicable risks and uncertainties. We encourage you to review the Companys. Most recent quarterly report on Form 10-Q .

With the Securities and Exchange Commission as well as the company's other filings.

The company does not undertake any obligation to publicly update forward looking statements.

Any financial projections provided today based on subsequent events or circumstances and with that let me turn the call over to our CEO , Doug Ingram will provide an overview of our recent progress.

Douglas S. Ingram: Thank you, Ian. Good afternoon, and thank you all for joining us for Sarepta Therapeutics' second quarter 2019 results and corporate update conference call. As we pass through mid-year, let us linger for a moment on our progress to date. As we enter 2019, we set an ambitious path, requiring significant execution and with much still to prove. For the RNA platform, could we continue to drive the Exon with this performance?

Thank you.

Good afternoon, and thank you all for joining restricted therapeutics second quarter 2019 results.

Corporate update conference call.

As we pass through this year, but its linger for a moment our progress to date as we entered 2019, we set an ambitious passed requiring significant execution.

And with much still to proof for the R&D platform should we continue to drive you saw this performance.

Could we consistently create new PMO constructs for other populations of Duchenne that'd be truly forged with the FDA and efficient pathway for approval.

Douglas S. Ingram: Could we consistently create new PMO constructs for other populations of Duchenne, and have we truly forged with the FDA an efficient pathway for approval of efficacious new RNA therapies, one that could bring new treatments to the community rapidly and without unnecessary controversy and contention? For the gene therapy platform, with the stellar initial results that we've seen with our microdistricts in gene therapy, truly read through to any of the other 10 plus gene therapy programs that we possess. For microdystrophin gene therapy itself, can we quickly complete the dosing of the 24 patients in our placebo-controlled trial for microdystrophin? What will be the competitive landscape for microdystrophin when we remain ahead of others both temporally and qualitatively? And when we devote the resources, the talent, the energy necessary to build out our commercial manufacturing process for g-therapy, well, over the course of 2019, the answers to these questions have been positive, in some ways more positive than we could rightly have anticipated as we entered the year. Exodus 51 continues to perform.

Okay, just new already there.

One that could bring new treatments should the community rapidly.

And without unnecessary controversy in contention.

For the gene therapy platform with a stellar initial results that we've seen with our micro dystrophin gene therapy truly read through to any of the other 10, plus gene therapy programs that we possess.

For micro dystrophin gene therapy itself can be quickly complete the dosing of the 24 patients.

Our placebo controlled trial for micro dystrophin.

What would be the competitive landscape for micro dystrophin wouldn't be remain ahead of others.

Orally qualitatively.

And when we devote the resources the talent the energy necessary to build out our commercial manufacturing process for doing well.

Over the course of 2019 the answers to these questions have been positive in some ways more positive than we could rightly have anticipated.

As we entered the year.

They started 51 continues to perform the FDA accepted our filing for goal interruption in the first quarter and we have a PDUFA date of August 19th.

We also will not have an advisory committee meeting as a predicate to approval, which approval. If we obtain it by August 19th will have been among the most efficient and rapid development and approval pathways.

And all the biotech showing the consistency and precision of our R&D platform, we announced positive results for CASM nurse into the first quarter and we intend to submit for update review in 2019 further evidence that through our PMO platform and if it is successful our next generation PPL O platform.

Douglas S. Ingram: The FDA accepted our filing for Gola Dursin in the first quarter, and we have a PDUFA date of August 19th. We also will not have an advisory committee meeting as a predicate to approval, which approval, if we obtain it by August 19th, will have been among the most efficient and rapid development and approval pathways in all of BIOS. Showing the consistency and precision of our RNA platform, we announced positive results for Tazenercin in the first quarter, and we intend to submit it for FDA review in 2019, further evidence that through our PMO platform, and, if it is successful, our next generation PPMO platform, we have the ability to replicate our success and treat greater and greater segments of the Duchenne population.

We have the ability to replicate our success and to treat greater and greater segments.

The Duchenne population.

And the landscape about gene therapy platform has been known as possible.

In the first quarter of 2019, we announced very positive results. The first cohort of our first limb girdle program. The two year data circles like here gene therapy program.

As many of our programs share the same promoter of the same factor the consistency of these results further validated our gene therapy edge. The exceptional work of Dr. Luis Moreno claimed back at a world class nature of our gene therapy Center of excellence in Columbus, Ohio.

As promised with our partner Dr., Jerry Mendell at nationwide Children's Hospital reductions all 24 patients our placebo controlled trial in the first half of 2019, a remarkable feat when one considers that we only announced results from our first proof of concept concept study it micro distributed about one year ago.

Douglas S. Ingram: And the landscape in our gene therapy platform has been no less positive. In the first quarter of 2019, we announced very positive results for the first cohort of our first limb-vernal program, the 2E or beta-sarco-glycan gene therapy program. As many of our programs share the same promoter and the same vector, the consistency of these results further validated our gene therapy engine, the exceptional work of Dr. Louise Rodino-Klepack, and the world-class nature of our Gene Therapy Center of Excellence in Columbus, Ohio. As promised, with our partner, Dr. Jerry Mendel at Nationwide Children's Hospital, we dosed all 24 patients in our placebo-controlled trial in the first half of 2019. A remarkable feat when one considers that we only announced the results of our first proof-of-concept study in microdistrophin about one year ago.

As we enter 2019, we appear to be in the leads but with two other credible companies advancing micro dystrophin programs as well.

Unfortunately for those programs and more profoundly unfortunately for patients initial results from both of those programs have been disappointing.

In terms of both safety signals, and resulting expression levels and both programs have suffered delays in solid has announced that it intends to dose escalate.

For accident effort to show a quantifiable amount of expression and Pfizer has recently disclosed that its program. This on the protocol mandated hold while an ethics committee reviews. Its initial results.

So as compared to the landscape at the start of 2019 Sarepta Cyber Dystrophin program appears to have further distance itself from others.

In time, its substance and it would appear at this early stage in probability of success.

One of the rest of this changing landscape presents is that we might focus we believe that we no longer need to move with the sense of urgency, but such could not be further from the case indeed, while our leadership position does give us the opportunity to bolster our program.

We will discuss shortly how we would be doing this in both our current placebo trial ended manufacturing.

Douglas S. Ingram: As we entered 2019, we appeared to be in the lead, but with two other credible companies advancing microdistrophin programs as well. Unfortunately, for those programs, and more profoundly, unfortunately for patients, initial results from both of those programs have been disappointing, in terms of both safety signals and resulting expression levels, and both programs have suffered delays. SOLID has announced that it intends to dose-escalate 4X in an effort to show a quantifiable amount of expression, and Pfizer has recently disclosed that its program is on a protocol-mandated hold while an ethics committee reviews its initial results. Thus, as compared to the landscape at the start of 2019, Sarepta's microdisturbing program appears to have further distanced itself from others.

It leaves sarepta with enhanced obligation to this community as we are so often said our only real competitor in this space is this disease itself shed muscular dystrophy as you know a relentless focus everyday bops tens of thousands of children of their muscle.

And then in variably of their life, and we must now operate and make decisions with the very real possibility. We alone I hope I hope for a transformative treatment that could battle this disease effectively.

The decisions, we make in the energy with which we work are fully informed by this responsibility so with that let's review performance in the quarter and some recent decisions that we've made starting with our R&D franchise.

In the second quarter, we saw this 51 continuing to perform sales standing at $94.7 million and quarter over same quarter last year growth of a very impressive 29%.

For our other peer most the PDUFA date for Golar Dursun as I've mentioned this August 19th.

2019 by the way the branding of call addressing this now by August 53, So I will also be using this data going forward.

Douglas S. Ingram: In time, in substance, and in probability of success. One of the risks of this changing landscape is that we might falsely believe that we no longer need to move with a sense of urgency, but such could not be further from the case. Indeed, while our leadership position does give us the opportunity to bolster our program, and we will discuss shortly how we will be doing this in both our current placebo trial and in manufacturing, it leaves Sarepta with an enhanced obligation to this community. As we have so often said, our only real competitor in this space is this disease itself, Shenmasu disease. As you know, a relentless foe that every day robs tens of thousands of children of their muscle mass and then, invariably, of their life.

We will be ready to watch I on this immediately upon approval. We will also submit for CASM nursing this year with an approval decision expected in the first half of 2020. If we are successful we will be like early 2021 of a very rare group of biotechs, which has developed and launched three or more internally developed there, but more than that we will have more than doubled the number of patients living with duchenne to have it available PMO therapy.

Our next generation R&D program. The PMO is proceeding having initiated dosing in a multi ascending dose study for SRP 50, 51, our goal is to obtain dosing and safety if site by the first half of 2012.

Now moving onto our gene therapy franchise, we have made significant progress.

This this first half of the year in the second quarter.

As noted earlier is really impressive work of Dr., Jerry Mendell, we have completed dosing of all 24 patients in this blinded placebo controlled trial. The trial will be colleagues study what are two or I call stay too.

Douglas S. Ingram: We must now operate and make decisions with the very real possibility that we alone hold the hope of a transformative treatment that can battle this disease effectively. The decisions we make and the energy with which we work are fully informed by this responsibility. So with that, let's review performance in the corner and some recent decisions that we've made, starting with our RNA franchise. In the second quarter, Exondus 51 continued to perform, with sales standing at $94.7 million and quarter-over-same-quarter growth of a very impressive 29%.

As you May recall. This study is being conducted with clinical material from nationwide children's hospital.

Oh, the internal statistical analysis and review of our first proof of concept cohort suggests that this should be a sufficiently sized study to see a treatment effect in one year.

However, he is also the case that the study was dictated by the amount of state material available for nationwide Children's hospital.

We are very pleased to announce that nationwide children's hospital has been able to provide us with additional study material and on that basis. We have amended the study protocol to increase the study had from 24 to 40 patients increasing the size of the study by nearly 70%.

This will also increase the study power to significantly over a 90% confidence level.

To aid in the rapid enrollment of these additional patients we plan to open another U.S. clinical trial sites in the very near term.

We believe between Dr. Fidel of the additional site, we should be able to complete enrollment and dosing in the fourth quarter of this year.

Douglas S. Ingram: For our other PMOs, the PDUFA date for Golda Durson, as I've mentioned, is August 19, 2019. By the way, the brand name of Coladursin is now Vyondis 53, so I will often be using this name going forward. We will be ready to launch Vyondis immediately upon approval. We will also submit for Kazimirsyn this year, with an approval decision expected in the first half of 2020. If we are successful, we will be, by early 2020, one of a very rare group of biotechs that have developed and launched three or more internally developed therapies. But more than that, we will have more than double the number of patients living with Duchenne who have an available PMO therapy. Our next-generation RNA program, the PPMO, is proceeding, having initiated dosing in our multi-ascending dose study for SRP5051. Our goal is to obtain dosing and safety insights by the first half of 2020. Now moving on to our gene therapy franchise, we have made significant progress this first half of the year and the second quarter.

With the increased and studied two should still read out before the end of 2012.

Now the decision to increase the yen was straightforward and from my perspective at least very compelling and CHS study material available, which will increase the power of the study to greater than 90% and it is the best interest of all patients to ensure that we have as robustly empower trial as as reasonably possible.

We must also acknowledge that the external competitive environment has changed over the course of 2019 and there is simply no axogen is pressure that would justify failing to take advantage of this clinical trial material.

For wins any doubt there's nothing that has changed in our original powering assumptions and certainly we have seen nothing either studies. So the change is our confidence of waste study one on one as you know continue to perform very well studied one or two is blinded we have either unblinded nor are we performed any sort of unblinded analysis. We are simply taking advantage of an opportunity to increase the probability of success in study two.

In light of the increasing the added study too there's less pressure to commence study three in 2019. So instead, we will use the remainder of 2019 to continue optimizing processing analytical development for our commercial process supply and we plan to commence the study in the first half of 2012 as has been our goal. We still plan to have three months biopsy data from study three by the read out of the study to remind you study three is intended to be a study using our commercial supply.

Douglas S. Ingram: As noted earlier, through the impressive work of Dr. Jerry Mandel, we have completed dosing of all 24 patients in this blinded placebo-controlled trial, a trial that we call either Study 102 or I call Study 2. As you may recall, this study is being conducted with clinical material from Nationwide Children's Hospital. Our internal statistical analysis and review of our first proof-of-concept cohort suggest that this should be a sufficiently sized study to see a treatment effect in one year. However, it is also the case that the study design was dictated by the amount of study material available for nationwide children's hospitals.

On that topic, we continue to make very good progress on commercial process and our capacity our commercial facility in Washington is just about complete.

It should be complete by the end of August and city qualified by about October of this year.

We have achieved very good yields in the Marcellus unit.

Sellers nano users and we are in the process of scaling up and working to achieve optimize yields in the commercial I sell this 500 units that is going very well to date.

We are making good progress on analytical develop.

Based on the work that we've done to date, we could reasonably of anticipated commencing study three with commercial supply by the end of 2019, but given the additional time available to us. It is simply not prudent to do so for a number of reasons.

As noted the changing competitive landscape creates significant responsibility for Sarepta, we must plan for the increasingly likely possibility that we will be launching a micro dystrophin gene therapy alone or at least I think very significant advantage and this means for planning purposes, we must ensure that we have optimized yields and process to potentially satisfy alone the needs of the DMD community at launch to that intent yes.

Douglas S. Ingram: We are very pleased to announce that Nationwide Children's Hospital has been able to provide us with additional study material, and on that basis, we have amended the study protocol to increase the study in from 24 to 40 patients, increasing the size of the study by nearly 70%. This will also increase the study power to significantly over a 90% competence. To aid in the rapid enrollment of these additional patients, we plan to open another U.S. clinical trial site in the very near term. We believe, between Dr. Mendel and this additional site, we should be able to complete enrollment and dosing in the fourth quarter of this year. With the increased end, Study 2 should still read out for the end of 2020. Now the decision to increase the end was straightforward, and from my perspective, at least, very compelling.

To that end, we intend to continue to improve processing yields if we artificially locked the process early to commence study three and they are they are after continued to improve process yields as would be our intention we would run the unnecessary risk of having to conduct yet another bridging study to show comparability between the study three supply the ultimate commercial supply. This is an unacceptable risk in light of the timelines and the competitive landscape today.

The approach, we're taking with our micro dystrophin program is informed by the external landscape and most importantly by our obligation to the community. So I'll summarize.

First we are going to take advantage of additional state material to further improve the powering of our current placebo trial and to enhance the probability of success. We are going to take the time available to us to maximize yields a commercial process with the goal. When we are successful we are in that position to satisfy a low the requirements of the DMT community that we serve and we are building on the study three protocol that is designed with the goal of providing sufficient evidence to support rapid access reduced for duchenne patients regardless of age regardless of ambulatory status regardless of mutation.

Douglas S. Ingram: NCH has study material available which will increase the power of this study to greater than 90%, and it is in the best interest of all patients to ensure that we have as robust a power trial as is reasonably possible. We must also acknowledge that the external competitive environment has changed over the course of 2019, and there is simply no exogenous pressure that would justify failing to take advantage of this clinical trial material. For the avoidance of any doubt, there is nothing that has changed from our original powering assumptions.

And regardless of country of citizenship.

So now let's move on to our other gene therapy programs.

Following excellent results of our first leg hurdle to eco work, we will be using nationwide children's hospital supply and dosing one additional three patient dose escalation cohort. This year to remind you. Our prior cohort was five times either the 13th we obtained mean protein positive fibers of 51%, 250% of the predefined miles to the success of this study. We also had mean intensity of an impressive 47% and we have been western blot quantification of 36%, we will dose one additional three patient cohort at a fourfold higher dose and then based on the results you will choose between the two doses for our pivotal trial.

Douglas S. Ingram: And certainly, we have seen nothing in either study itself that changes our confidence. The voice of Study 101, as you know, continues to perform very well. Study 102 is blinded, and we have neither unblinded it, nor have we performed any sort of unblinded analysis.

Douglas S. Ingram: We are simply taking advantage of an opportunity to increase the probability of success in Study 102. In light of the increase in the N in Study 2, there is less pressure to commence Study 3 in 2019, so instead, we will use the remainder of 2019 to continue optimizing process and analytical development for our commercial process supply, and we plan to commence the study in the first half of 2020. We are making good progress on analytical development. Based on the work that we have done to date, we could reasonably have anticipated commencing Study 3 with commercial supply by the end of 2019, but given the additional time available to us, it is simply not possible to do so for a number of reasons. As noted, the change in competitive landscape creates significant responsibility for Sarepta. We must plan for the increasingly likely possibility that we will be launching a micro-dystrophin gene therapy alone, or at least at a very significant advantage. And this means, for planning purposes, we must ensure that we have optimized yields and processes to potentially satisfy alone the needs of the DMV community at large.

With our manufacturing partner Parago will also chart out a pathway for all five of our of the drill programs for my indexes and we report that back out to you.

Early next year.

With our partner Lysa GM, we have so far been seven patients in our phase two three gene therapy program to treat MPS Brigade also noticed stats lipo syndrome.

A devastating neurological disease that loves the life of children before the age of 15.

And we are working to obtain material to commenced dosing before the end of the year in our CMT or shark over reduced program with Dr. SAIC at nationwide Children's hospital.

We have also taken significant steps over the course of 2019 to sure to ensure that we are properly building our vision to become the world's leader in gene therapy and rare genetic disease.

Toward that end our gene therapy team has secured an 80000 square foot facility in Columbus, Ohio. We have also expanded our footprint to Andover, Massachusetts from 26 acres to 36 acres. In addition to taking additional space in our Kendall square facility, we have taken significant space in Burlington, Massachusetts, where we have some 10 meiselas units that we use solely for process analytical development.

Activity.

Forever is near completion of our 75000 square foot gene therapy facility in Lexington, Massachusetts. This will be a single use site dedicated to micro dystrophin commercial supply. We've also taken out additional capacity a paragon and in fact, we have sufficient space at fair gone to more than double the capacity that we have at our brand our Lexington facility.

Douglas S. Ingram: To that end, we intend to continue to improve the process and yields. However, if we artificially lock the process early to commence Study 3 and thereafter continue to improve the process and yields, as would be our intention, we would run the unnecessary risk of having to conduct yet another bridging study to show comparability between the Study 3 supply and the ultimate commercial supply. This is an unacceptable risk in light of the timelines and the competitive landscape.

We have also not been sitting idle for a business development perspective, we have entered into a number importer important partnerships and hid licenses for new technology that we will begin to discuss in more detail as we advance for preclinical and the clinical focus for instance, these include the following.

We have entered into a partnership with the University of Massachusetts Medical School.

And gene therapy leader, its doctors ocwen paying Gal, Mike Green and the Gal Ciena as tevez to advance a novel gene therapy to treat Rett syndrome.

Douglas S. Ingram: The approach we are taking with our microdiscipline program is informed by the external landscape and, most importantly, by our obligation to the community, so I'll summarize. First, we are going to take advantage of additional study material to further improve the powering of our current placebo trial and to enhance the probability of success. We are going to take the time available to us to maximize yields and commercial processes with the goal that when we are successful, we will be in the position to satisfy, alone, the requirements of the DMD community that we serve. And we are building on a study-free protocol that is designed with the goal of providing sufficient evidence to support rapid access for patients, regardless of age, regardless of ambulatory status, regardless of mutation, and regardless of country of citizenship.

A rare it's very easily fatal brain disease that nearly exclusively effects girls.

We have also entered into an agreement with the University of Florida College of Medicine to advanced Dr. Lee Sweeney gene therapy.

The treatment of cardio buyout.

Our gene therapy Center of excellence at Columbus has built an innovative gene therapy, just said to treat every dreyfus muscular dystrophy type one.

Like living like limiting and optimize ending rare girl, unless you're a disease that affects skeletal and cardiac muscle.

We have entered into a collaboration with Columbia University of Dr. Howard women the world's leader in the study of every drive this muscular dystrophy.

To assist us in rapidly advancing our every trial this program.

And importantly, we have entered into a very exciting agreement with the University of Florida College of Medicine to advanced Dr., Brad Hoffman's innovative gene therapy to treat multiple sclerosis, the most common immune mediated disorder affecting the central nervous system.

This is our first program outside of rare diseases and asked effects. Some two plus billion people worldwide and is responsible for about 20000 deaths each and every year.

Douglas S. Ingram: So now let's move on to our other gene therapy program. Following excellent results in our first Lin-Gerdal 2E cohort, we will be using Nationwide Children's Hospital Supply and dosing one additional three-patient dose escalation cohort this year. To remind you, our prior cohort was five times E to the 13th, and we obtained mean protein-positive fibers of 51%, 250% of the predefined milestone of success in the study. We also had mean intensity of an impressive 47%, and we had mean Western blot quantification of 36%.

And while this may seem to venture beyond our core area of focus I would remind you that our head of research and development.

Dr. Gilmore LDL has a rich and very successful background in the development and the approval.

Novel treatments for Emmis.

We're also providing additional tools for our gene therapy Center of Excellence for instance, we have entered into a collaboration with the University of Massachusetts Medical School and the lab of Dr. Guan pick out to develop novel novel human derived sectors and we have also entered into a relationship with the institute of biology to assisting the exploration of the combination of our ppm, most and micro district.

And we have the resources to execute our plans when I joined Sarepta. We were about 200 employees today, we have nearly 700 and we are tracking to approximately 900 employees by the end of this year.

Douglas S. Ingram: We will dose one additional three-patient cohort at a four-fold higher dose, and then, based on the results, we will choose between the two doses for our pivotal trial. With our manufacturing partner Paragon, we will also chart out a pathway for all five of our limb-girdle programs from Myonexus, and we will report that back to you early next year. With our partner LifoGene, we have so far dosed 7 patients in our Phase 2, 3 gene therapy program to treat MPS3A, also known as Sanfilippo Syndrome, a devastating neurological disease that steals the life of children before the age of 15. And we are working to obtain material to commence dosing before the end of the year in our CMT or Charcot-Marie-Tooth program with Dr. Sahank at Nationwide Children's Hospital.

It is a dedicated seasoned group the fitting a commercial stage fully integrated genetic medicine leader and many of our employees are among the most accomplished in genetic medicine today as of the end of Q2, we are also well resourced with about $1.1 billion in cash.

Although things have gone well in the first half of the year, we have much to do in 2019, and 2020 and we cannot take our leadership position for granted we're take our foot off the accelerator and we will not.

For the remainder of 2019, we must continue to serve the community.

Where they saw this 51 ended the proved this month.

Hi, all this 53, we must submit for CASM first of this year.

The most rapidly enroll and dose the remainder of our increased study too.

We must continue our yield optimization process development and analytical development work and be in a position to commenced dosing of study three in the first half of 2020.

We must dos our next cohort of to eat and build out our plans for all of our lives hurdle gene therapy programs, we must dos our first cohort circle Bluetooth for CMT.

Douglas S. Ingram: We have also taken significant steps over the course of 2019 to ensure that we are properly building our vision to become the world's leader in gene therapy and rare genetic disease. Toward that end, our therapy team has secured an 80,000 square foot facility in Columbus, Ohio. We have also expanded our footprint in Andover, Massachusetts from 26 acres to 36 acres. In addition to taking additional space in our Kendall Square facility, we have taken significant space in Burlington, Massachusetts, where we have some 10 isellas units that we use solely for process and analytical development activities. Brammer is near completion of our 75,000-square-foot geothermal facility in Lexington, Massachusetts. This will be a single-use site dedicated to microdystrophin commercial supply.

And we must continue to build out our gene therapy engineered advanced the remainder of our ever increasing.

Genetic medicine pipeline.

I would like to take this opportunity to thank all of the hard working employees asterisk there for their dedication and for their passion to this mission.

I would also like to thank our collaboration partners for their dedication to this mission.

With a very special mention.

Dr., Jerry Mendell, who is working tirelessly to advance our micro dystrophin program in the clinic.

And I would also like to thank the families with rare disease, who believe in us and who have taken the step of participating in clinical trials with syrup.

It is easy to look upon those in our studies as the Lucky few but make no mistake about it participating in trials for other therapy requires courage and it requires dedicate dedication.

Much has asked of the children and their families in our trials and it is through your participation.

Family for Duchenne muscular dystrophy in our trials that we advance promising programs ultimately to the benefit of tens of thousands perhaps even hundreds of thousands.

Douglas S. Ingram: We have also taken out additional capacity at Paragon. And, in fact, we have sufficient space at Paragon to more than double the capacity that we have at our Brammer-Lexington facility. We have also not been sitting idle in terms of business development. We have entered into a number of important partnerships and licenses for new technology that we will begin to discuss in more detail as we advance from preclinical to clinical focus. For instance, these include the following.

Families around the world living with rare diseases that we're fighting.

And with that I will turn the call over to Sandy to provide an update on our financials Sandy.

Thanks Darren.

Good afternoon, everyone.

Let me start by saying that we had another strong quarter.

Revenues continue to grow grow with Q2 net revenue at 94.7 billion.

From a business development perspective, as Doug mentioned in the call. We continue to selectively add to our pipeline and capabilities by external alliances.

Year to date activity, including the acquisition of my Nexus has significantly bolstered our pipeline and for the position of director for long term growth.

While we remain selective we are continuing to find opportunities to partner with the best in the field to bolster our pipeline and add to our capabilities and expand our overall network in gene therapy and R&D technologies.

Douglas S. Ingram: We have entered into a partnership with the University of Massachusetts Medical School and gene therapy leaders, Drs. Guanping Gao, Michael Green, and Miguel Sena Estevez, to advance a novel gene therapy to treat Rett syndrome, a rare, invariably fatal brain disease that nearly exclusively affects girls. We have also entered into an agreement with the University of Florida College of Medicine to advance Dr. Lee Sweeney's gene therapy for the treatment of cardiomyopathy. Our Gene Therapy Center of Excellence in Columbus has built an innovative gene therapy cassette to treat Emory-Dreyfus muscular dystrophy type 1, a life-limiting and often life-ending rare neuromuscular disease that affects skeletal and cardiac muscles. We have entered into a collaboration with Columbia University and Dr. Howard Wurman, the world's leader in the study of Emory-Dreyfus muscular dystrophy, to assist us in rapidly advancing our Emory-Dreyfus program.

Partnering with leading organizations in recent years allows us to maintain our focus in the near term value your front the pipeline.

While assisting our collaborators in advancing their programs and simultaneously, giving us a flexibility in determining whether to bring these programs in house as they become de risk.

I'll, let gene therapy program in multiple sclerosis demonstrates for the right technology, we are willing to make targeted investments beyond rare monogenic diseases.

We expect to continue to invest in building our pipeline I mean, adding technologies in area currently in our pipeline.

As of DMD and continue to compete against ourselves to deliver better and better therapies to patients in need.

Now moving to the financials.

This afternoon's press release provide guidance for the second quarter of 2019 on a non-GAAP basis as well as GAAP basis.

The press release is available on the concept of upsides.

Please refer to our press release for a full reconciliation of GAAP to non-GAAP .

I'd like that a quick reminder, here that are 2019, non-GAAP financials exclude net interest expense and depreciation and amortization expense. In addition to onetime expenses and stock based compensation.

Douglas S. Ingram: And importantly, we have entered into a very exciting agreement with the University of Florida College of Medicine to advance Dr. Brad Hoffman's innovative gene therapy to treat multiple sclerosis. The Most Common Immune-Mediated Disorder Affecting the Central Nervous System. This is our first program outside of rare diseases as MS affects some 2 plus million people worldwide and is responsible for about 20,000 deaths each and every year.

Net product revenue for the second quarter of 2019 was 94.7 million compared to some degree and how committed for the same period in 2018.

The increase primarily reflects higher demand for EXONDYS 51 in the U.S.

We reported non-GAAP net loss of 61.2 million or 83 cents per share compared to non-GAAP net loss of $28 million or 43 cents per share in the second quarter of 2018.

In the second quarter of my 2019 be recorded approximately 15.9 billion in cost of sales compared to 6.7 in the same period in 2018.

Douglas S. Ingram: And while this may seem to venture beyond our core area of focus, I would remind you that our Head of Research and Development, Dr. Gilmore O'Neill, has a rich and very successful background in the development and approval of novel treatments for MS. We are also providing additional tools for our Gene Therapy Center of Excellence. For instance, we have entered into a collaboration with the University of Massachusetts Medical School and the lab of Dr. Guangping Gao to develop novel human vaccines. We have also entered into a relationship with the Institute of Biology to assist in the exploration of the combination of our PPMOs and microdiscs. And we have the resources to execute our plans. When I joined Sarepta, we had about 200 employees.

The increase was driven driven by inventory costs related to higher demand for EXONDYS 51 during 2019.

Depletion of previously Expensed material as one of the crude royalty payments to Biomarin ambiguous your best in Australia.

On a GAAP basis, we recorded $286.5 million and $122.8 million of R&D expenses for the second quarter of 2019, and 2018, respectively, which is the year over year increase of 163.7 million.

This increase is primarily related to a 173 million dollar payments and accrued expenses related to my Nexus.

I note here that our 10-Q brief sub distributors as acquired in process research and development costs.

In addition to the minuses costs, there was an additional $15.1 billion in upfront milestone and other expenses.

Douglas S. Ingram: Today, we have nearly 700 employees, and we are tracking to approximately 900 employees by the end of this year. It is a dedicated, seasoned group befitting a commercial-stage, fully-integrated genetic medicine leader, and many of our employees are among the most accomplished in genetic medicine today. As of the end of Q2, we are also well-resourced with about $1.1 billion in cash. Although things have gone well in the first half of the year, we have much to do in 2019 and 2020, and we cannot take our leadership position for granted or take our foot off the accelerator, and we will not. For the remainder of 2019, we must continue to serve the community with Exodus 51, and it's been approved this month by Ondas 51. We must submit for Kazimersa this year.

On a non-GAAP basis R&D expenses were 87 million for the second quarter of 2019 converted 50 submitted for the same period in 2018, an increase of 30.6 million.

The year over year growth in non-GAAP R&D expenses was driven primarily by advancement of our PMO PBM and micro dystrophin clinical trials.

Ramp up of manufacturing activities related to our gene therapy platform.

As well as continued expansion of internal research and development.

Instructor.

Turning to as Janet on a GAAP basis, we recorded 67.4 million and 47.2 billion of expenses for the second quarters of 2019, and 2018, respectively, a year over year increase of 20.2 million.

On a non-GAAP basis as Jimmy expenses were 52.3 minutes, the second quarter of this year.

Compared to 37.3 million in the same period last year.

An increase of 14.9 million.

The year over year increase was primarily driven by significant organizational growth and continued expansion to support our commercial launch brands globally.

As well as almost 30 therapies in various stages of development across several therapeutic modalities.

On a GAAP basis, we recorded 900000 in other expenses for the second quarter of 2019 compared to $5.2 million of other expenses for the same period last year.

Douglas S. Ingram: You must rapidly enroll and dose the remainder of our increased study too. You must continue our yield optimization, process development, and analytical development work and be in a position to commence dosing of Study 3 in the first half of 2020. We must dose our next cohort of 2E and build out our plans for all of our limb-critical gene therapy programs. We must dose our first cohort of Charcot-Marie-Tooth or CMT.

The favorable change is primarily driven by the payoff of certain debt instruments during the fourth quarter of 2018 as well as higher return on investments in the second quarter of this year.

We had approximately $1.1 billion in cash cash equivalents and investments as of June 32019.

With that I'd like to turn the call over to both for commercial lumpy.

Thank you Sandy good afternoon, everyone.

Sandy: And we must continue to build out our gene therapy engine and advance the remainder of our ever-increasing program. Genetic Medicine Pipeline, I would like to take this opportunity to thank all of the hardworking employees at Sarepta for their dedication and for their passion for this mission. I would also like to thank our collaboration partners for their dedication to this mission, with a very special mention for Dr. Jerry Mandel, who is working tirelessly to advance our microdiscipline program in the clinic. And I would also like to thank the families with rare diseases who believe in us and who have taken the step of participating in clinical trials with Sarepta. It is easy to look upon those in our studies as the lucky few, but make no mistake about it; participating in a trial for another therapy requires courage, and it requires dedication.

At mid year I'm pleased to report that the commercial organization has continued to execute on our 2019 goals and is on track to hit our revenue forecast for the year.

After a successful quarter delivering net sales of 94.7 million. We expect continued interest in EXONDYS 51.

Driven by our ongoing efforts to ensure existing patients remain on therapy.

Assist those who may be facing unnecessary access and reimbursement hurdles and identify new patients who can benefit from EXONDYS 51.

We are pleased with the success of EXONDYS 51, as we are in the final month of completing three full years post FDA approval.

Our commitment to the Duchenne community rest on our goal to treat all eligible individuals with duchenne.

Toward that goal, we are fully prepared to launch our next R&D borne products should the FDA grant by almost 53 for builders and marketing clearance.

We have an operational plan in place for Compendia contracting distribution and reporting requirements within 24 hours of approval.

We will leverage our current distribution partners and our Sarepta. This network to help give patients access soon as possible.

Sandy: Much is asked of the children and their families in our trials, and it is through your participation, Families with Duchenne Muscular Dystrophy in our trials, that we advance promising programs, ultimately to the benefit of tens of thousands, perhaps even hundreds of thousands, of families around the world living with rare diseases that we're fighting. And with that, I will turn the call over to Sandy to provide an update on our financials.

In addition, our teams will be trained on the BYOD is 53 label immediately so that we can have important conversations with AOL.

Rapid execution on market access initiatives will be essential and we are prepared.

Our goal is to reach patients as soon as possible following approval.

We expect commercial plans to provide faster access that government payers.

Such as state Medicaid player.

But both types of payers will follow normal new drug approval or new NBC processes for each plan Flash state.

Sandy: Thank you, Jeremy. Good afternoon, everyone. Let me start by saying that we had another strong quarter. Revenues continue to grow well, with Q2 net revenue at $94.7 million. From a business development perspective, as Deb mentioned in the call, we continue to selectively add to our pipeline and capabilities via external alliances. Year-to-date activity, including the acquisition of MyNexus, has significantly bolstered our pipeline and further positioned Sarepta for long-term growth. While we remain selective, we are continuing to find opportunities to partner with the best in the field to bolster our pipeline and add to our capabilities and expand our overall network in gene therapy and RNA technology. Partnering with leading organizations and researchers allows us to maintain our focus on the near-term value of our DMT pipeline while assisting our collaborators in advancing their programs, and simultaneously giving us the flexibility in determining whether to bring these programs in-house as they become de- As our gene therapy program in multiple sclerosis demonstrates, for the right technology, we are willing to make targeted investments beyond rare monogenic diseases.

We also expect the commercials and Medicaid patient mix to be similar to that of exon 51, which is roughly 50 50.

If approved we expect most patients will start therapy in the hospital and transition to home infusion at a similar rate as we've seen with EXONDYS 51.

The knowledge, we have gained over the past three years with the approval and launch of EXONDYS 51.

Potentially one of the most successful ultra rare disease launches in history.

Has informed the news the strategies, we now have in place for by almost 53.

I understood degrees, a busload diameter portfolio of Merck or PMO engineered to treat those individuals with duchenne, we haven't genetic mutations amenable to skipping exon 53.

Dystrophin gene.

As a reminder, EXONDYS 51 treats approximately 13% of the Duchenne population and if approved by almost 53 will teach potentially treat up to 8% of the GM.

Moving onto exon 45, or pads immersive, we remain on track to submit our NDA as a person this year with the target approval decision by the first half 2020, if approved CASM or some would treat patients amenable to skipping exon 45, which is approximately an additional 8% of the duchenne community.

What this means that by mid 2020, we could have three approved drugs born out of Barney platform doubling our HMO based opportunity in the United States.

Again, we will apply strategically important learnings from the EXONDYS 51 and by August three launches.

She played CASM immerse them in a position of strength that launch if approved.

Sandy: We expect to continue to invest in building our pipeline and in adding technologies in the area currently in our pipeline, as a DMD, and to continue to compete against ourselves to deliver better and better therapies to patients in need. Now moving to the financials, this afternoon's press release provided details for the second quarter of 2019 on a non-GAAP basis as well as on a GAAP basis. The press releases are available on Sarepta's website.

We will have teams preparing for launch operations immediately for exon 45, if the FDA approved by on this 53.

As for gene therapy preparing for the required in execution and operational excellence needed for our global gene therapy launch of this magnitude is not easy.

But we have a seasoned team in place experienced navigating preparing for what could be one of the most transformative therapies in medicine.

We will ask the right questions.

Challenged convention from prior well and be ready for the opportunities and challenges for us in doing so we will be prepared for launching what could be the first gene therapy to serve the duchenne community and pave the way for Sarepta as many other gene therapy pipeline products.

Sandy: Please refer to our press release for a full reconciliation of GAP to non-GAP. I'd like to add a quick reminder here that our 2019 non-health financials exclude net interest expense and depreciation and amortization expense, in addition to one-time expenses and stock-based compensation. Net product revenue for the second quarter of 2019 was $94.7 million, compared to $73.5 million for the same period in 2018. The increase primarily reflects higher demand for Exodus 51 in the U.S. We reported a non-GAAP net loss of $61.2 million, or $0.83 per share, compared to a non-GAAP net loss of $28 million, or $0.43 per share, in the second quarter of 2018. In the second quarter of 2019, we recorded approximately $15.9 million in cost of sales, compared to $6.7 million in the same period of 2018.

Reaching the regulatory finish line is just the beginning of what we need to accomplish.

We are now focusing on finding new and innovative ways for patients to get access to GE there.

We continue to meet with the largest commercial and Medicaid payers on pricing and again upheld multiple beard meetings with payers across the us over the last quarter.

On topics regarding gene therapy access and finding ways to partner together.

So that all patients will have access to potentially life altering therapies as quickly as possible.

At Sarepta, we can make fleet decisions that are best for patients. We have an extensive gene therapy portfolio with Mike dystrophin limb girdle CMT MPS three eight as well as additional programs.

And we will adapt grow reflect on lessons learned and insights we've gained along the way. So we can refine our strategies importantly.

Outside of the U.S., we are thoughtfully and strategically expanding globally in key markets.

While there is no see single key to unlock the market access tackling common barriers at the country level is a good place to start and were building towards this goal.

Sandy: The increase was driven by inventory costs related to higher demand for Exonus 51 during 2019, and depletion of previously expensed material, as well as accrued royalty payments to Biomarine and the University of Western Australia. On a gap basis, we recorded $286.5 million and $122.8 million of R&D expenses for the second quarter of 2019 and 2018, respectively, which is a year-over-year increase of $163.7 million. This increase is primarily related to a $173 million payment and accrued expenses related to my next... I'll note here that our 10Q breaks out this figure as acquired in-process research and development costs. In addition to the myNexus cost, there was an additional $15.1 million in upfront, milestone, and other expenses.

We've hired the right people individuals who know the importance of pursuing and partnering with the best opinion leaders globally.

We will continue to work with us to discuss access reimbursement and site readiness.

In closing the commercial medical affairs teams are focused on operational excellence, and we will be ready for future potential launches.

We are committed to improving the lives of those suffering from rare neuromuscular CNS diseases.

From our in a gene therapy gene editing and other potential modalities, we remain focused on patients keeping them at the center of all conversations from discovery to global commercialization.

And with that I'll turn the call back over to Doug.

Thank you both teenagers, let's open the call for questions.

Thank you.

Ladies and gentlemen, if you have any questions or comments at this time. Please press. The star then the one key on your Touchtone telephone.

If your question has been answered you whats your limit yourself from the queue. Please press the pound key.

Okay.

Our first question comes from <unk> <unk> with Cantor Fitzgerald you May proceed.

Hey, guys. Thanks for taking my question Congrats on all the progress that fire on two questions for you sorry.

Sandy: On a non-GAAP basis, R&D expenses were $87.5 million for the second quarter of 2019, compared to $57 million for the same period in 2018, an increase of $30.6 million. The year-over-year growth in non-GAAP R&D expenses was driven primarily by the advancement of our PMO, PPMO, and micro-discharge clinical trials. Ramp-up of manufacturing activities related to our gene therapy platform, as well as continued expansion of internal research and development within Sarepta. Turning to SG&A, on a GAAP basis, we recorded $67.4 million and $47.2 million of expenses for the second quarters of 2019 and 2018, respectively, a year-over-year increase of $20.2 million. On a non-GAAP basis, SG&A expenses were $52.3 million for the second quarter of this year, compared to $37.3 million for the same period last year, an increase of $14.9 million.

One I just wanted to know kind of what what and when to your assessment around increasing the sample size study went up to now like was there anything incremental color that you can give us and then the second question is just just curious on what the size of the round the confirmatory trial for Eteplirsen thing.

Sure business.

Good luck this quarter.

I'm showing you the sample size as I said before we were comfortable with the size of the trial before.

And our analysis gave us some comfort around and then certainly that first cohort gave us some comfort but is it is not.

Yes, it does.

Require a lot of imagination to realize the 24 patients is a relatively modest sized trial and it was in fact limited by the fact that we had 12.

Doses from nationwide children's hospital at the time. So we now have an opportunity nationwide has material available for us as we consider that material earlier in the year.

We were in a different landscape competitively than we are today.

For a host of reasons and and so obviously given what we've seen from the other programs, but solids and Pfizers. We are confident that the right decision is to increase the probability of success were very confident of the therapy you want to make sure that in a 12 month period, we'll be able to see a difference between the active group and the placebo group so increasing the trial.

24 to 40.

From my perspective, just thinks brilliant sense from a risk perspective beyond that you know that would've been a question about what else we could use without material for what might have imagined the scenario would want and which one would want to for instance dose escalate, but the issue on that is simple one our preclinical data did not.

I would suggest to us that we should those escalate the dose we have right now which is using super coil, but the two times either the 14, what gave us the best.

Sandy: The year-over-year increase was primarily driven by significant organizational growth and continued expansion to support our commercial launch plans globally, as well as almost 30 therapies in various stages of development across several therapeutic modalities. On a gap basis, we recorded $900,000 in other expenses for the second quarter of 2019, compared to $5.2 million in other expenses for the same period last year. The favorable change is primarily driven by the payoff of certain debt instruments during the fourth quarter of 2018, as well as a high return on investments in the second quarter of this year. We had approximately $1.1 billion in cash, cash equivalents, and investments as of June 30, 2019.

Answer without creating undue burden on the kids and certainly the first four children in our first show were supported that conclusion now it does turn out that there was another company that was running an experiment essentially for US Pfizer was at a very significantly higher dose than ours and while they use a different tighter in that.

We do a dose escalated to something that was multiples higher than ours. It made sense for us to look and see what that that look like and of course, what we saw there was in addition to some issues organic too.

Pfizer's program.

And and both from an 80 perspective and from a firm, especially perspective, we didn't see any significant.

Benefit from dose escalation, we didn't see much of a dose response I think using there's they had about 700 femto holders and they went to.

The next level and it was.

It was.

900 comfortable wars at multiples higher retirement target. So so from our perspective, the best use of that material was clearly to increase the add on this trial. It does it create an enormous amount of additional time in the study at all and I think that increases the probability of success for the avoidance of any doubt I'm struggling to make sure I remind you once again, what I said is that we are.

Bo: With that, I'd like to turn the call over to Bo for a commercial update. Thank you, Sandy. Good afternoon, everyone.

Bo: At mid-year, I'm pleased to report that the commercial organization has continued to execute on our 2019 goals and is on track to hit our revenue forecast for the year. After a successful quarter delivering net sales of $94.7 million, we expect continued interest in Exodus 51. Driven by our ongoing efforts to ensure existing patients remain on therapy, assist those who may be facing unnecessary access and reimbursement hurdles, and identify new patients who could benefit from Exomus 51. We are pleased with the success of Exodmus 51 as we are in the final months of completing three full years post-FDA approval. Our commitment to the Duchenne community rests on our goal to treat all eligible individuals with Duchenne. For that goal, we are fully prepared to launch our next RNA-borne product, should the FDA grant approval by August 53 or go with Dersin Marketing Clearance. We have an operational plan in place for compendia, contracting, distribution, and reporting requirements within 24 hours of approval.

In the script, which is we haven't seen anything in the study that's changed our confidence around the trial. This is an opportunity.

Nationwide children's hospital has material and would allow us to go to 40 patients and increases the probability of success against just your confidence level.

Powering level of well over 90% I think it's the best answer for the patients as well on the confirmatory trial I'll turn that over to Dr. Rovio can talk about the status of our.

Our job for customers.

So the confirmatory trial is actually.

Moving well, we have our protocol is well.

Well developed we are in discussions with regulatory authorities around the world about.

And.

Adams.

We are actually on track with regard to and cited as occasion regulatory dialogues et cetera. So we're very confident that we are in a good position to be able to execute.

As soon as possible.

One other thing so people understand it's not as if there'd been work done, but the confirmatory trial for Eteplirsen is.

It's unusual it is not a simple trial versus the placebo the confirmatory trial for Eteplirsen.

So I am not mistaken sensor.

Right.

Right and I apologize I think I think a confirmatory trial for Tempur says I am so sorry on the television gears real quick.

The request from the agency is bad to test the current dose of a tough worsened versus a higher dose of a tougher soon so its a little unusual in the sense that we have the first do a study in healthy volunteers to ensure.

That consistent with the preclinical data that would suggest is that safe that we're safe. These doses as we've actually completed all of the all of the enrollment for that study read out of us that you'll be September and assuming everything goes well nyquil.

Bo: We will leverage our current distribution partners and our SareptaSys network to help get patients access as soon as possible. In addition, our teams will be trained on the BIONTIS-53 label immediately so that we can have important conversations with KOLs. Rapid execution on market access initiatives will be essential, and we are prepared. Our goal is to reach patients as soon as possible following approval. We expect commercial plans to provide faster access than government payers, such as state Medicaid plans.

I think.

So that we could go well based on all the stuff we have so far we'll start the confirmatory trial before.

Yes, we are as infants I'm I'm forgive me friends No question I just heard your question I apologize.

You know, we're actually existing sites now.

Centrus, though would be ready to.

Right that was it was my fault because I still have us in the first question.

[laughter] my apologies.

Thank God.

Thanks, Larry.

And our next question comes from Tazeen Ahmad with Bank of America Merrill Lynch You May proceed.

Bo: But both types of payers will follow normal new drug approval or new NDC processes for each plan slash state. We also expect the commercial-to-Medicaid patient mix to be similar to that of Exomex 51, which is roughly 50-50. If approved, we expect most patients will start therapy in the hospital and transition to home infusion at a similar rate as we've seen with Exonis 51. The knowledge we have gained over the past three years with the approval and launch of Exodus 51, potentially one of the most successful ultra-rare disease launches in history, has informed the strategies we now have in place for Bionis 53. Bionis 53 is a phosphodiamidate morpholinal oligomer, or PMO, engineered to treat those individuals with Duchenne who have genetic mutations amenable to skipping exon 53 of the distributed gene.

Hi, good afternoon, thanks for taking my questions.

I am sorry, if you've already said this I just want to be clear that I understand all of this correctly.

Can you remind us what data you expect to be in the package for DMD gene therapy. So what time points you need from study three.

To get approval and when should we expect that data and maybe to follow up on that.

What if any interaction have you had with the FDA since fine there might have shown its data PMT.

And did that influence your decision to upsize your study thanks.

So let's start with the last question first said no you have to you Didnt play a role upsizing. The study. This is literally a decision that they would be perfectly fine with the size of the study that we had we simply looked at the opportunity in front of US realize that has made the most sense for patients I mean, if you think about it nothing would be more tragic than to find that you have a very efficacious therapy, but you may stat Sig bye.

Bo: As a reminder, Exondys 51 treats approximately 13% of the Duchenne population, and if approved, Biondys 53 will potentially treat up to 8% of them. Moving on to Exxon 45 or Kazimersan. We remain on track to submit our NDA for Kazimersan this year with a target approval decision by the first half of 2020. If approved, Kazimersan will treat patients admitting to skipping Exxon 45, which is approximately an additional 8% of the Duchenne community. What this means is that by mid-2020, we could have three approved drugs born out of our RNA platform, doubling our PMO-based opportunity in the United States. Again, we will apply strategically important learnings from the Exondus 51 and Biontus 53 launches to place Katherine Merson in a position of strength at launch if approved. We will have teams preparing for launch operations immediately for Exxon 45 if the FDA approves it by August 53.

By top marks some small margin because you didnt take the time to make sure the specialist was.

That was it was a really easy decision that we had 12 doses, but now we have word does it certainly makes brilliant sensed that makes your capsize. This important and that was talking about the time line because it's important to consider timelines now you'll see why it makes so much sense to to upsize. It because let's start with study to itself. We will be done certainly in the fourth quarter dosing. The entire study Dr. Jerry Mendell did a brilliant job earlier this year and dosing those first 24 patients I will remind this year, though for the patient.

Was that was analyzed in that first cohort and was.

That was it your October November forgetting now when we had the Argentina meeting but.

What about October so it was the last October and from there. We literally designed got the blessing of the agency started a placebo controlled trial dr. been dealt with all those patients, though so we will between Dr. Vandaele 11, new site up and running very shortly we will have all of the next cohort of patients. They make it to 40 just before the end of this year, which means study two will read out before the end of 2012. So we really haven't taken any significant delay by increasing again, we've only increase the probability of success now the study three our goal is to start.

Bo: As for gene therapy... Preparing for the required execution and operational excellence needed for a global gene therapy launch of this magnitude is not easy. We have a seasoned team in place, experienced in navigating and preparing for what could be one of the most transformative therapies in medicine. We will ask the right questions. At the Challenge Convention, prepare well and be ready for the opportunities and challenges before us.

As early as possible in 2020 with study three and then we'll have a cohort one of the goals right. Now that we have is to have a subset of study three that we are going to look at where expression at the three month level from a biopsy perspective, and our goal is to have that available by the time study to read out as well that was our goal before that's still our goal. We think we're on track for that so before the end of 2020. Our goal is to have 2007 governments have studied to fully dose before the end of this year to have a readout on function in study two before the end of 2020 to have steady three up and running early next year to have the subset of patients.

Bo: In doing so, we will be prepared to launch what could be the first gene therapy to serve the Duchenne community and pave the way for Sarepta's many other gene therapy pipeline products. Reaching the regulatory finish line is just the beginning of what we need to accomplish. We are now focusing on finding new and innovative ways for patients to get access to gene therapy. We continue to meet with the largest commercial and Medicaid payers on pricing, and again have held multiple meetings with payers across the U.S. over the last quarter on topics regarding gene therapy access and finding ways to partner together so that all patients will have access to potentially life-altering therapies as quickly as possible. At Sarepta, we can make quick decisions that are best for patients.

With expression levels from a biopsies read out at the same time as steady two before the end of this year and then our goal that lease is to approach the agency with the with the view assuming that we're successful in all of these that we would be able to stay on that basis and obtaining approval on the basis that we have shown first that the construct that we have is functional and beneficial to children with duchenne muscular dystrophy and that the commercial supply that we're using is comparable to the clinical supply or as far as what discussions we've had with the agents. We've had very good discussions with the agency around CMC and manufacturing issues were designing our study three and then where we are very good essentially designed study three and then we'll take that to the agency and talk through with the agency.

Bo: We have an extensive gene therapy portfolio with microdistribution, Lengernal, CMT, MPS3A, as well as additional programs. And we will adapt, grow, and reflect on lessons learned and insights we've gained along the way so we can refine our strategies accordingly. Outside of the U.S., we are thoughtfully and strategically expanding globally into key markets. While there is no single key to unlock local market access, tackling common barriers at the country level is a good place to start, and we are building towards this goal.

When they married they accept all of that.

Profitability in the right direction and then we'll start that study early next year.

Okay. So it seems like there for that.

Timelines there are clear are you guiding till it starts in a commercial setting of first half of 2020, because it seems to me.

Thank you me your thoughts kind of a wide band on them.

Is it the first half or is that early 2020.

Well, we still we're giving ourselves a little bit of which I give ourselves a breathing room.

Bo: We've hired the right people, individuals who know the importance of pursuing and partnering with the best opinion leaders globally, who we will continue to work with to discuss access, reimbursement, and site readiness. In closing, the Commercial and Medical Affairs teams are focused on Operational Excellence, and we will be ready for future potential launches. We are committed to improving the lives of those suffering from rare neuromuscular and NCNF diseases.

Yes, we want to be as early in 2020 as possible. There's a number of things we want to get done for that we want to.

Theres couple of things one is of course type rating is getting the sites up and running we can get that done before the end of this year. So that won't be an issue we always intended to do that.

Finishing that the design and study three and getting the blessing of the agency and the important agency on that we can get that done before the end of <unk>.

29 team.

And getting the commercial process at the right place that and that from our perspective, we can get to a place before the end of year, where we could use commercial process supply is starting to study, but as I mentioned in my script. Our goal is to really get the yields in a good place. So that as we start study three we're going to continue to improve we don't so improve yield thereafter that we find ourselves in a position that we have to do some additional bridging study for approval. So the short answer is the official word is obviously first half of 2020 that we would commence 73, and we will not surprise you, but those those who know sarepta and our sense of urgency that is its early study in 2020 as as reasonably possible. So we would like to do it as early in 2020 as possible first quarter calls.

Douglas S. Ingram: From RNA, gene therapy, gene editing, and other potential modalities, we remain focused on patients, keeping them at the center of all conversations from discovery to global commercialization. And with that, I'll turn the call back over to Doug. Thank you, Bo.

Operator: Demetrius, I'll open the call for questions. Thank you, ladies and gentlemen. If you have any questions or comments at this time, please press the star and then the one key on your touchtone telephone. If your question has been answered, but you wish to remove yourself from the queue, please press the pound key.

And our next question comes from Brian Abrahams You May proceed.

Hey, Thanks, very much for taking my question and congratulations on all the progress.

Any comments you can make on the safety that you've seen from the ongoing 24 patient study I realize its blinded, but just wondering if there's any sort of safety events that would be considered reportable what would be.

Douglas S. Ingram: And our first question comes from Alethea Young with Cancer Face Zero. You may proceed. Hey guys, thanks for taking my question, and congrats on all the progress so far, two questions for you, sorry. One, I just wanted to know kind of what went into your decision around increasing the sample size for study 102 now, like was there anything incremental color that you can give us? And then the second question is just curious on what the status is around the confirmatory trial for a Teflorson thing. Sure. Thanks a lot for those questions, Olivia. So, I mean, the sample size, as I said before, you know, we were comfortable with the size of the trial before, and our analysis gave us some comfort around it, and certainly the first cohort gave us some comfort, but it is not, you know, it doesn't require a lot of imagination to realize that 24 patients is a relatively modest-sized trial, and it was, in fact, limited by the fact that we had 12 doses from Nationwide Children's Hospital at the time.

A bar for stopping or what had been a bar for stopping or Paul I think that study and did that change.

Over the course of time when the competitors talks issues became known to the FDA and I had a quick follow up.

Yes, thanks, Brian for that says, especially Gilmore here.

So.

As you well know the study would be nine that we do as you quite rightly in part have stopping rules and rigorous oversight of the study we have not at cross that threshold. The stopping rules are not opposed to that the study continues and so.

From that point of view, we are actually very happy with the ongoing study. It is worth noting that do not want to one study you are well aware of this that we had no evidence of significant.

Adverse or serious adverse events and so we actually are pretty happy with that and.

With regard to the readout from the other companies has been solid we have not seen there they have described.

But I bunch of real estate, one thing, which is that we have now we do have stopping rules, we have not hit the stopping rules and at one or two is progressing well.

And remains pretty tight.

One of the things I will also add that obviously.

Douglas S. Ingram: So we now have an opportunity. Nationwide has material available for us. As we considered that material earlier in the year, we were in a different landscape competitively than we are today for a host of reasons. And so, obviously, given what we've seen from the other programs, both Solids and Pfizer's, we are confident that the right decision is to increase the probability of success. We're very confident in the therapy, and we want to make sure that in a 12-month period we'll be able to see a difference between the active group and the placebo group. So increasing the trial from 24 to 40, from my perspective, just makes brilliant sense from a risk perspective. Beyond that, there would have been a question about what else we could use that material for. One might have imagined a scenario in which one would want to, for instance, dose escalate. But the issue with that is simple one.

And really all kudos to Dr. Jerry Mendell for this study is going very well. It's it's progressed well we've got a good inventory patients and that gave us a lot of confidence to increase the end of the study from 24 to 40 I am still.

Ensure ourselves that we'll be able to comfortably.

Yes.

Not create any kind of significant delays in our timelines.

That's really helpful. And then secondly, as you work to optimize yields and margins Im curious what what shapes. Your confidence that you will be able to ultimately get to a point that you potentially supply the whole DMD market and with material that is indeed comparable to the nch product I'm not going to give thanks.

Okay. Thank you.

There's a lot of things that give us confidence that we've got a lot of good data in front of US now we're doing a lot of work. So there are three groups right now working on the process development and then also the analytical development and yield optimization. We've got process development experts at grammar, we've got that process development experts at Parago and we've got our own process development experts in fact, we've got probably one of the world's leader has not received a world leader in process development, Dr. Clark, who I think yes.

And it was done diligence in gene therapy will will find this probably the most were now in a biology and process development that exists right now so we're doing a lot of good work.

Douglas S. Ingram: Our preclinical data did not suggest to us that we should dose escalate. The dose we have right now, which is using the supercoiled method two times more than 14, would give us the best answer without creating undue burden on the kids. And certainly, the first four children in our first cohort supported that conclusion. Now, it does turn out that there was another company that was running an experiment essentially for us. Pfizer was at a significantly higher dose than ours, and while they use a different titering method than we do, they escalated the dose to something that was multiples higher than ours. It made sense for us to look and see what that looked like. And, of course, what we saw there was, in addition to some issues organic to Pfizer's program, and both from an AE perspective and from an expression perspective, we didn't see any significant benefit from dose escalation. We didn't see much of a dose response.

We will get there we are putting them. So got the towns let's start there we got the talent, both external and internal to get it done we've got the resources, we as I've said before we will spend a good $6 million to $650 million in the next 15 months or so making sure that we not only get process and now that the development done right, but then we get the capacity necessary to fully serve this community.

And we've made good progress today, we have very good.

Results from the Astellas now those that ourselves the other units, we scaled up already to I sells five hundreds and we are in the process of optimizing deals at I. sells five hundreds we still have much more to do there but that it's it's just a matter of time from our perspective, we're getting every time, we do runs and optimize we're getting better results. So we do feel very confident that we're going to get to a place where we're going to be able to serve the community. We had always seem to vision to a world in which it might be the case that we would need to serve this community.

Hello.

But today I mean to be direct.

And these are early days, but to be directed we believe there is a very enhanced probability.

That when we launched this product we are going to be launching this product that have to serve this entire community from day, one and for probably a very long time thereafter alone and so we have to take very seriously.

Douglas S. Ingram: I think using theirs, they had about 700 femtomolars, and they went to the next level, and it was 900 femtomolars at multiples higher, three times higher than their prior dose. So from our perspective, the best use of that material was clearly to increase the N in this trial. It doesn't create an enormous amount of additional time in the study at all.

The issue that we have to have the capacity available to us.

Which means we have to have the right deals the right investment the right capital the right manufacturing facilities and we're working on all of US even as we speak process development to slight alarms went well laid out.

The capacity issues are going well, we have the Lexington facility, which will be complete as I mentioned sometime probably in the next 30 days or so that will be qualified certainly before the end of this year.

Douglas S. Ingram: And I think it increases the probabilities. For the avoidance of any doubt, I'm going to make sure I remind you once again what I said in the script, which is that we haven't seen anything in the study that's changed our confidence around the trial. This is an opportunity. The Nationwide Children's Hospital has material, it would allow us to go to 40 patients, it increases the probability of success, it gets us to a confidence level, a powering level of well over 90%, and I think it's the best answer for the patient.

At Ash.

Brammer and Lexington, as a single use facilities about 75000 square feet.

At Paragon actually we have taken out sufficient space to more than double that amount of capacity at Paramount and we can use that space both for micra distribution as well as on the dribble programs. So we are very confident about the the process right now and about the plant down for.

In addition to satisfy for community assuming that our trials.

No.

And our next question comes from Martin <unk> Oster.

Credit Suisse.

Hi, This is mark on for Marty. Thanks for taking my questions. I guess first question. As you know you are expanding your gene therapy pipeline back Spike rat cardio my apathy.

Douglas S. Ingram: On the confirmatory trial, I'll turn that over to Dr. Amiok and talk about the status of our confirmatory trial. So the confirmatory trial is actually moving well; we have, our protocol is very well developed, we are in discussions with regulatory authorities around the world about it, and we are actually on track with regard to site identification, regulatory dialogues, et cetera, so we're very confident that we are in a good position to be able to execute. One other thing, so people understand, it's not as if there hasn't been work done The confirmatory trial for Teflersen is unusual.

Another muscular dystrophy program and multiple sclerosis, I'm sure you've looked at multiple targets I guess I'm just curious how you settled on these specific programs.

And if there are any unifying themes that made these indications, particularly attractive and then my second question is with WMS less than two months away I'm curious what if any you plan on presenting at that conference. Thank you.

Sure. So on the first one I'm going to take the question on these research programs from both Dr. of Yale and Dr. Clayton only because I don't want to spend time going into the underlying.

Programs itself. There are recent stages right now I really want to focus on our clinical programs for the time being.

We're very excited about these programs and we're not done goes have you said for a while we're going to continue to do program.

Transactions like this to bolster our pipeline there are a number of things about these programs and excite US first of all they're all very serious diseases. We are a company focused on the use of genetic medicine, both our games gene therapy to bring a better life for people who are suffering from a dying with serious diseases. We've historically focused on rare diseases that certainly is a big part of us, but im asked while it has done a rare diseases. This serious disease and we have the expertise internally with our own doctor Delaware a deal.

Douglas S. Ingram: It is not a simple trial versus a placebo. The confirmatory trial for Teflersen... Excuse me.

Douglas S. Ingram: Oh, I apologize. I think you need a confirmatory trial for Tufferson. I am so sorry.

Douglas S. Ingram: On a Tufferson, real quick, the request from the agency has been to test the current dose of Tufferson versus a higher dose of Tufferson. So it's a little unusual in the sense that we have to first do a study in healthy human volunteers to ensure that it's consistent with the preclinical data that was suggested. [inaudible] And we are, forgive me for answering your question, I misheard your question, I apologize. You know, we're actually initiating science now, etc., so we'll be ready to execute. That was my fault because I filibustered on the first question. My apologies. Actually,

To progress that so we're excited about it so the seriousness of these diseases as part.

The elegance of the cost structures in these various programs without going into much detail. The elegance of the approach and the elegance of the constructs is something that's given us a lot of excitement and made sense to.

To pursue them. So we're very excited about the approach that's being taken in these in the line where many of the ideas that we have as we said our team has about the approach to Jim genetic medicine.

They ended up.

Beyond that we have the opportunity all of these programs to work with some of the best and brightest in gene therapy and genetic medicine the.

Douglas S. Ingram: And our next question comes from Tazeen Ahmad with Bank of America Merrill Lynch. You may proceed. Hi. Good afternoon.

As Ive listed in the in the text of my.

My initial comments you know that the.

Douglas S. Ingram: Thanks for taking my questions. Doug, I'm sorry if you've already said this. I just want to be clear that I understand all of this correctly. Can you remind us what data you expect to be in this package for DMD gene therapy? So what time points do you need from Study 3 to get approval, and when should we expect that data? And maybe to follow up on that, what, if any, interaction have you had with FDA since Pfizer might have shown its data at PPMG? And did the FDA influence your decision to upsize your study? Thanks. Let's start with the last question first. No, the FDA didn't play a role in sizing the study.

Gene therapy leaders that are running that many of these programs are a who's who in gene therapy.

Luminaries in this area. So so it's all of those together that excite us I'd say.

And this is a really interesting concept than it does take us into a place that is different than rare disease I get that and we will be continuing to look at things like that over time, we are a number of things at the same time first and foremost we're genetic medicine.

So we are focused on genetic thats our intention therapy.

We are to date neuromuscular neuro and rare disease company.

But we are a gene therapy leader, we are as we stand here today, almost certainly the worlds leader in gene therapy, and so we are going to.

There is a lot of opportunity in there to do good and we're going to take gene therapy as far as we can go and that means we are going to without busting our.

Balance sheet, we are going to do interesting things that explore all of the beats imbalance of where genetic medicine in gene therapy can take us and this program was Dr. Robert Hoffman.

Douglas S. Ingram: This is literally a decision that they would be perfectly fine with the size of the study that we had. We simply looked at the opportunity in front of us and realized that it made the most sense for patients. I mean, if you think about it, nothing would be more tragic than to find that you have a very efficacious therapy. I will remind us, the fourth patient was analyzed in that first cohort, and it was either October or November. I'm forgetting now when we had the Argentina meeting, but was it what?

For MMS is a very very interesting work its a research program right now its preclinical or not in humans yet.

I think we're very excited about it as we are excited about our Red program. As we are excited about our every try this program, which are sort of at least for Dino playback enter team.

Develops themselves except for us So we're excited about the future.

This pipeline programs and they are aligned with our strategy, particularly the strategy that we have about building a enduring gene therapy engine that can do good for the world successful for investors.

And our next question comes from Chris Hi, Monterrey Latin America.

You May proceed.

Oh, hi, thanks for taking the question.

Douglas S. Ingram: October. So we really haven't taken any significant delay by increasing the end. We've only increased the probability of success. Now, with study three, our goal is to start as early as possible in 2020 with study three, and then we'll have a cohort. As far as what discussions we've had with the agency, we've had very good discussions with the agency around CMC and manufacturing issues. We're designing study three, and then we have essentially designed study three, and then we'll take that to the agency and talk through it with them. When it comes to merit, they accept all of that and feel confident that we're in the right direction.

Just a couple here on.

The new study to sizing your powering assumptions could you maybe talk about some of the effects size here, you're expecting to see their numbers that went into that powering assumption and then three thinking about the subset that you're going to look at the treatment biopsy.

What biopsy data will you typically be looking at and then when we think about the size of that subset and three patients 32 patients sort of like your current Courier New study too.

Hi size, how should we think about that and then some.

Just because it wasn't answered on the last.

Question.

Do we expect any like limb girdle data or anything else that at world muscle and even safety data on a program like that or CK. Thank you.

Yes, let me answer the last question first as I I.

Douglas S. Ingram: And then we'll start that study group. Okay, so just so that timelines are clear, are you guiding to a start of the commercial study in the first half of 2020? Because it seems to be you are giving yourself kind of a wide band on this. Is it the first half, or is it early 2020?

Failed to answer the world muscle question for the last question that was just the error on my part and thank you for mentioning them girl because that that is likely the thing that would be presented at world muscle. So one of the things were looking at right. Now is the following Dr. mendell is very interested and excited about the possibility of presenting data on the first coat the functional data on the first cohort of limb girdle to eat that we announced were expression results and safety results for earlier in the year and while it hasn't been nailed down right now I would suspect that that is going to be something that's going to be.

Douglas S. Ingram: It's, well, we, you know, we're giving ourselves a little bit of, we're trying to give ourselves a breathing room, but we want to be as early in 2020 as possible. There's a number of things we want to get done for that. We want to, there's a couple of things. One is, of course, site readiness, getting the sites up and running.

Presented at World muscle. This document that was available and add them and has the data available in an appropriate place by then.

With that I'll turn it over to Dr. nobody else to talk about the powering great. Thanks very much for that question about the powering I feel more here. So as I think you understand that for many reasons and others that we hope to disclose the specifics and details of our power assumptions, particularly the effects side, what I will say is that the assumptions around variants et cetera are strong.

Douglas S. Ingram: We can get that done before the end of this year. So that won't be an issue. We always intend to. Finishing the design of Study 3 and getting the blessing of the agency and the input of the agency on that, we can get that done before the end of 2019. And getting the commercial process in the right place.

They haven't changed since our original calculations and they are backed by a very strong data set of role of data internally generation externally generation from various registries.

Douglas S. Ingram: And that, from our perspective, we can get to a place before the end of the year where we can use commercial process supply and start the study. But as I mentioned in my script, our goal is to really get the yields in a good place so that as we start Study 3, we're going to continue to improve. We don't improve yields thereafter so much that we find ourselves in a position that we have to do some additional bridging studies for approval. So the short answer is, you know, our official word is obviously the first half of 2020 that we would commence Study 3. It will not surprise you, those who know Sarepta and our sense of urgency, that it is as early a study in 2020 as is reasonably possible. So we would like to do it as early in 2020 as is possible. First quarter, if possible.

So I think what I can say is that we're very confident about.

The strength of our calculations, there and forgive me for not just squeeze this effect size.

For obvious reasons for that then with regard to the sub cohort in study three from which we will do the muscle biopsies are those most of us it will be Scully from muscle they arent NIM and the current thinking right. Now is that they are just lower extremity gas drops with regard to the size of the cohort as you could imagine based on the.

The strength of the expression data receives data, we don't believe that you'd need a large number but I think that final number is going to be a matter of discussions with regulatory agencies are they want to see but we believe that that number would be smaller that represents really at a small fraction of the global population that were in building.

Douglas S. Ingram: And our next question comes from Brian Abrahams. You may proceed. Hey, thanks very much for taking my question. And congratulations on all the progress. Any comments you could make on the safety that you're seeing from the ongoing 24 patient study? I realize it's blinded, but just wondering if there are any sort of safety events that would be considered reportable?

Most of the countries in that study.

I think and the third question.

Great. Thanks, good question.

And our next question comes from Matthew Harrison with Morgan Stanley You May proceed.

Hi, This is Mac score on for Matthew Harrison regarding the ppm Oh.

The program could you talk about the safety profile was single doses and how we should think about your ability to release data from the multi dose study one will you be taking muscle biopsies and will you wait for all patients. Thank you very much.

So I'll give you a broad strokes on the the our goal is to get insight from the PMO program in the Mad study.

Douglas S. Ingram: What would be a bar for stopping or what would have been a bar for stopping or pausing that study? And did that change over the course of time when your competitor's tox issues became known to the FDA? And then a quick follow-up. Yeah, thanks, Brian, for that discussion. Gilmore here.

By early next year, so that is our goal.

What we know from preclinical work is that if we get a good dosing levels with our program.

That we should get.

Significantly enhanced expression versus PML in fact in animal models, we get an order of magnitude greater expression. So we're very excited about that but the issue that you that we're talking about here is the issue of the safety profile. That's what we're going to find out now over the course of this year into early next year things have gone very well so far we've been in a single ascending dose study were you know.

Douglas S. Ingram: So, as you well know, the study remains blinded. We do, as you quite rightly inferred, have stopping rules and rigorous oversight of the study. We have not crossed the threshold for the stopping rules.

Douglas S. Ingram: We've not come close to that. The study continues. And so from that point of view, we are actually very happy with the ongoing study. It is worth noting that in our 101 study, if you're well aware of this, But I want to re-establish one thing, which is that we have not, we do have stopping rules. We have not hit the stopping rules.

Getting great results, so far and we started dosing the multi ascending dose study, we're getting great results, there as well but.

I want to be cautious that it's too early to say that because we're not at that dose levels that we really want to get too to be correlated with grand expression. So this is still in a very real sense too early to declare victory.

We are we started I think the Nash study.

When we started five mixed Virgin.

For sure that for me for Chegg, and we're going to continue to dose that out so things are going very well within our study.

Douglas S. Ingram: And 102 is progressing well and remains fully blinded. One of the things I will also add is that, obviously, and really all kudos to Dr. Jerry Mandel for this. The study is going very well. It's progressed well. We've got a good inventory of patients, and that gave us a lot of confidence to increase the end of the study from 24 to 40 and still ensure ourselves that we'll be able to comfortably finish the dosing of the study before the end of this year and not create any kind of significant delays in our timeline. That's really helpful. And then secondly, as you work to optimize yields and margins, I'm curious, what shapes your confidence that you will be able to ultimately get to a point where you could potentially supply the whole DMD market and with material that is indeed comparable to the NCH product? And I'll hop back in the queue.

If not a little slower than I would have anticipated a year ago, the doctor and Dr. Neil has come on board. So she's got that in order.

And we'll know by early next year.

If what we've seen in preclinical models fares out with these kids and so far things are looking very good. So we'll give you a good update on it early next year.

And our next question comes from.

Pam Rama with JP Morgan you May proceed.

Hey, guys. This is Matt on its on Tonight. Thanks, So much for taking our question and congrats on the progress.

So just sort of high level questions from us.

You mentioned that you'll be nearing 900 in place by year end, so kind of just as you expand your processing fees and potentially you cheat geographical reach where do you see this never going over the next few years and then on your gene therapy manufacturing effort can you just remind us of how much cash you remarked on this front.

Kind of in the same timeframe.

Thanks, so much.

Yes, so good questions great questions actually so we're going to end the year at around 900, maybe a little shy of 900 employees worldwide.

But we're going to begin to moderate the growth of our employee base. We already are over the course of this year for gross reasons you know that the reason that we grew we haven't grown from 200 to 700 simply because we have the ability to we had the need to we really expanded our ambition, we have probably going on now with programs both disclosed disclosed an undisclosed we're probably well over 30.

Douglas S. Ingram: Thanks. We've got a lot of good data in front of us now. We're doing a lot of work. So there are three groups right now working on process development and then also analytical development and yield optimization. We've got process development experts at Grammar.

Programs in R&D and gene therapy together right now so we've needed to really bolster in all areas of the company, but specifically in the research and development and manufacturing technology and see areas.

Douglas S. Ingram: We've got process development experts at Paragon, and we've got our own process development experts. In fact, we've got probably one of the world's leaders, if not the single world leader in process development, Dr. Reid Clark, who I think anyone who's done diligence in gene therapy will find is probably the most renowned in AAV biology and process development that exists right now. So we're doing a lot of good work. We will get there. We've got the talent.

But we're getting to a place now we're comfortably.

We're getting a very comfortable place from a play perspective, both quantitatively and qualitatively. We've got great people here right. Now we are a magnet for good people right now I'm proud to say and we'll start moderating bankruptcy will have growth next year over the 900 that we have this year, but we will not be doing what we did this year I would imagine that we're going to double yet again in the year the size of this will start.

Moving more to a rational growth rate on employees.

After this year.

Yes, we're going to get through we have too many fixed costs as we move forward and we go next into place member recoverable with a number of ways the quality of the floors.

That we have with respect to gene therapy, and as I said before in broad strokes between milestones capital expense and prepaid cost of goods. So actually benefit from a lot of these expenses, there and not simply caterpillar or.

Douglas S. Ingram: Let's start there. We've got the talent, both external and internal, to get it done. We've got the resources. As I said before, we will spend a good $650 million in the next 15 months or so making sure that we not only get process and analytical development done right, but that we get the capacity necessary to fully serve this community. And we've made good progress today. We have very good results from the Icellus nanos, the Icellus nano units. We've scaled up already to Icellus 500s, and we are in the process of optimizing deals at Icellus 500. We still have much more to do there, but it's just a matter of time from our perspective. Every time we do the runs and optimize, we're getting better results. So we do feel very confident that we're going to get to a place where we're going to be able to serve the community. We had always envisioned a world in which it might be the case that we would need to serve this community alone.

<unk> expenses will spend to something like $600 million over the next well for the kids, including what we've already spent this year.

Into the end of next year and kind of into that little bit into the following year $600 million either that yes, I would agree and sodium you'll be starting to ramp up our goods then if I could maybe go into inventory. So some portion of that we'd be in cost of goods. If you will.

And our next question comes from Gena Wang with Barclays. You May proceed.

Hi, This is Peter for Gino and thanks for taking my question.

Couple of Tomorrow.

Right I guess first and I think this has been asked before but just to make sure.

Was there any like.

Measurements from putting to that prompted expansion and.

Oh good.

Would you be able to measure or anything like that.

May inform a pivotal study design at all or is that does that it's completely independent.

So thank you for giving the opportunity to get to answer. This question again excellent really do appreciate Peter So let me be very clear. So theres no avoidance of any doubt there's nothing in there doing analysis blinded her unblinded or otherwise out of study two that motivated the increase in the AD at all in fact, the only data that we've had in the data from the first four patients. The study one and that's given us tons of confidence in where we are the reason that we've increased the end is quite simply because we have opportunity in front of us and I think that you know.

Douglas S. Ingram: But today, I mean, to be direct, and these are early days, but to be direct, we believe there is a very enhanced probability that when we launch this product, we are going to be launching this product and have to serve this entire community from day one and for probably a very long time thereafter alone. And so we have to take very seriously the issue that we have to have the capacity available to us, which means we have to have the right deals, the right investment, the right capital, the right manufacturing facilities, and we're working on all those deals. The capacity issues are going well. We have the Lexington facility which will be complete in the next 30 days or so and will be ready for testing before the end of this year. That's Brammer in Lexington.

It is a small price temporarily to pay.

Literally measured in the <unk> and reach to maybe you know months couple of months to be in a position to feel that we have the study that's really robustly powered power to over 90% now.

Which increases.

Probability of success and gives us gives us really comfortable with study too as we plan for study three and there's just you know to say something that is obvious without being overly snarky about it theres no histology. This reason why we would do this right now we are the rates that we're doing right now is a race against the disease itself.

Douglas S. Ingram: That's a single-use facility. About 75,000 sq. ft. At Paragon, actually, we have taken out sufficient space to more than double that amount of capacity at Paragon, and we can use that space both for microdystrophin as well as our verbal program. So we are very confident about the process right now and about the black path in the app for people that have been using it to satisfy their needs. Hudson House Public Television. And our next question comes from Martin Osler with Credit Suisse. You may proceed. Hi, this is Mark on behalf of Marty.

It's not a race against another company as it stands right now we are I think significantly in the lease versus others around us both temporarily but frankly, maybe even more importantly, qualitatively and so we really need to think about these families. In these patients first and foremost and while it may delay us by some number of weeks or maybe even a month or two to ensure that we have the right power of the study it increases the probability that we don't have additional delays in the backend because we powered the study at the right level. So it's the best answer from the program is more important than all of that the best answer for the families.

Around the world, we're waiting for a transformative therapy in Duchenne muscular dystrophy. So we really I'll just be really direct about it we feel really really.

Douglas S. Ingram: Thanks for taking my questions. I guess the first question is you announced that you're expanding your gene therapy pipeline by exploring RET, cardiomyopathy, another muscular dystrophy program, and multiple sclerosis. I'm sure you looked at multiple targets. I guess I'm just curious how you settled on these specific programs.

Good about this opportunity to increase again.

And we think it's a real opportunity for the program.

Yes.

And our next question comes from Vincent Chen with Bernstein, You May proceed.

Congrats on the progress and thanks for taking the questions. A couple of specific one on study to first about your statistical assumptions.

Douglas S. Ingram: And if there were any unifying themes that made these indications particularly attractive. And then my second question is, with WMS less than two months away, I'm curious what data, if any, you plan on presenting at that conference. Thank you.

How would you expect the mean effect size from the gene therapy to compare to the likely standard deviation because not just in ballpark numbers would you say that roughly about the same size would you say, it's likely larger or smaller and then the second question would be.

Douglas S. Ingram: Sure, so on the first one, I'm going to take the question on these new research programs from both Dr. O'Neill and Dr. Rodino-Kleinfeldt, only because I don't want to spend time going into the underlying programs themselves. They're in the research stage right now. I really want to focus on our clinical programs for the time being.

If if you had wanted to could you have increased the study size for study to even further to 40 patients how much longer with the trough and extended for example, if you decided to increase the say 50 or 60 patients.

Yeah I'll answer the last question, then I'll turn it over to Dr. Neil.

[laughter].

Oh.

Yes, as you see the valley.

No no we could modestly increase the size of the study even even greater than we did with material available, but we're very comfortable with.

Douglas S. Ingram: We're very excited about these programs, and we're not done. We've said for a while that we're going to continue to do transactions like this to bolster our pipeline. There are a number of things about these programs that excite us. First of all, they're all very serious diseases.

40 patient study.

It's the rights right level for us and we don't and we were we didnt start to compromise. This year wasn't a timing issue. We feel we felt good about the editorial board we felt good about the 24.

And frankly, the data involved in the study what a one as you know we got nine month data from the kids in the study one to one and it only confirmed even more than we were feeling very good about the assumptions, we were making in the power and we have for study two but.

Douglas S. Ingram: We are a company focused on the use of genetic medicine, both RNA and gene therapy, to bring a better life to people who are suffering from and dying from serious diseases. We've historically focused on rare diseases, and that certainly is a big part of us, but MS, while it is not a rare disease, is a serious disease.

Fourth 40 patients and getting to a significantly over 90%.

Power just gives us even more confidence that we're doing the right thing for themselves.

Douglas S. Ingram: We have the expertise internally with our own Dr. Gilmore O'Neill to progress that, so we're excited about it. So the seriousness of these diseases is part of the problem. The elegance of the constructs in these various programs, without going into much detail, the elegance of the approach and the elegance of the constructs is something that's given us a lot of excitement and makes sense to pursue.

And to add Vincent Thanks for the other question you know again I'm not going to go into specifics our assumptions around that size and as a standard deviation.

I mean, you would make sense for Teddy budget negotiations is that based on our own data. The standard deviation as that are published literature are you know in the ballpark of what we're seeing.

For the Northstar et cetera, but forgive me for not again not going in.

So we just want to.

Internal right now.

Douglas S. Ingram: So we're very excited about the approach that's being taken, and it may align with many of the ideas that we have about the approach to genetic medicine. Beyond that, we have the opportunity in all of these programs to work with some of the best and brightest in gene therapy and genetic medicine. As I mentioned in the text of my initial comment, the gene therapy leaders that are running many of these programs are a who's who of gene therapy luminaries in this area. So it's all of those together that excite us. I'd say, you know, MS is a really interesting concept, and it does take us into a place that is different than a rare disease. I understand that.

I see well, maybe one follow up then.

You mentioned that the data you're seeing from the initial study you kind of corroborated what you had expected in terms of your powering the effect sizes and so forth is it fair to say that beef. The is it fair to say that the data you've seen for the first four patients is pretty much in line with what you would have expected in terms of the the likely gene therapy effect size.

It so I'd say couple of things on that one we were what I would say we took that we've taken the results from the first study.

What we've seen and then we've been more conservative I'm, just I will give you the qualitative answer we've been more conservative in our powerful okay. So we're not taking about meeting all of our assumptions in an aggressive directionally to see now I think when you can get price ever fooling ourselves and in our power calculation.

Douglas S. Ingram: And we will be continuing to look at things like that over time. We are a number of things at the same time. First and foremost, we are in genetic medicine. So we are focused on genetic medicine, RNA, and gene therapy. We are, to date, a neuromuscular, neuro, and rare disease company.

Obviously given that right.

And if you want to know what our view is it's hard to say what one should have anticipated from a study going into it because frankly in the history of all Duchenne muscular dystrophy no. One has ever seen this that these kinds of transformative results.

Before so.

I think you know probably people they have different views I think broadly speaking the results we sell from the first cohort of kids.

Douglas S. Ingram: But we are a gene therapy leader. We are, as we stand here today, almost certainly the world's leader in gene therapy. And so we are going to, and there is a lot of opportunity there to do good. And we're going to take gene therapy as far as it can go. And that means we are going to, without busting our balance on the gene, we are going to do interesting things that explore all of the limits and bounds of where genetic medicine and gene therapy can take us. And this program with Dr. Brad Hoffman for MS is a very, very interesting one. It's a research program right now. It's a free clinical trial.

Was.

Pretty shockingly positive it was probably greater than one could have normally anticipated we're used to dealing with therapies that piece out differences from background over a long period of time and what we saw with these kids was a fairly dramatic benefit open label for kids. Please understand I understand that as well, but early days, both quantitatively and qualitatively we saw a fairly dramatic change in these kids I say the preclinical models generally support that same kind of common sense, if you've ever looked at the gene therapy micro dystrophin Golden Retriever.

Bottles and video you would you might have anticipated this kind of transformative effect, but.

We were very pleased with very pleased with what we saw is that he wants still took a very conservative approach it.

Douglas S. Ingram: We're not in humans yet, but we're very excited about it. As we are excited about our RET program, as we are excited about our Emory-Dreyfus program, which Dr. Louise Rodino and her team, and the team that developed the Cassette for us. We're excited about these pipeline programs and think they align with our strategy, particularly the strategy we have about building an enduring gene therapy engine that can do good in the world and be successful for investors in this industry. And our next question comes from Christopher Murray with Nomura. Please proceed.

Powering the study to without taking.

I think that appropriate not overly conservative approach to increase that that and to increase the powering of the study and to increase the chance that we get this therapy as fast as possible, but with the highest pls to patients waiting around the world.

Frankly waiting into generating along the way so we feel good.

Making these decisions intelligent reason for.

And our next question comes from Rick Baron Cohen, You May proceed.

Hi, guys. Thanks for taking the question.

Going back to steady three.

Doug is it still your.

He had to keep that up.

Seadrill controlled study.

In that case, how would you handle.

Placebo biopsies in a study like that and you mentioned that the.

Douglas S. Ingram: Hi, thanks for taking the question. Just a couple here on the new Study 2 size and your powering assumptions. Could you maybe talk about some of the effect size you're expecting to see there? You know, the numbers that went into that powering assumption.

The biopsies, you're going to be taken from a subset of patients how are you thinking about.

Other patients as part of city three in your Ftn negotiations like who else are you going to include age range et cetera, and then I've got a follow up.

Douglas S. Ingram: And then on Study 3, thinking about the subset that you're going to look at, the three-month biopsy data, you know, what biopsy data will you specifically be looking at? And then, you know, when we think about the size of that subset, is it sort of three patients, 32 patients, sort of like your current or your new Study 2 size? How should we think about that? And then just because it wasn't answered in the last question, do we expect any limb girdle data or anything else at WorldMuscle, even safety data on a program like that or CK? Thank you. Let me answer the last question first because I failed to answer the world muscle question from the last question, and that was just an error on my part.

Let's go a couple of broad stroke issues, I guess theres a lot to unpack that the question about the ability to take a subset of patients and do a biopsy at them on a blinded study I can give you sort of some proof that that's possible. We just did so we did have a CASM theirs. So.

So it is possible to do without Unblinding the study yes.

Yes, it's actually this is deal against what actually is that been you know with regard to the biopsy. Our attendance has is to biopsy on patients.

Corporate segment is not a sub cohort of biopsy patient is just a cohort in time. That's the first thing I want to say I think the second thing I want to save a placebo controlled is that we do anticipate to be received study and I think to doug's point.

There are a couple of important thats.

That's worth pointing out which is one that we actually have our successfully running placebo control studies been duchenne patients context of our customers.

The president proposed pending our study too.

We're actually execute on that and it caused you know that really comes down to a very important thing that we have built some of that business organization, which strong relationships with patients strong initiatives and investigators had a very good patient advocacy group, where we actually sit down and explain in detail the rationale thinking and the importance of this work to patients and their and their family.

Douglas S. Ingram: And thank you for mentioning Lynn Girdle because that is likely the thing that would be presented at World Muscle. So one of the things we're looking at right now is the following. Dr. Mendel is very interested and excited about the possibility of presenting data on the functional data on the first cohort of Lynn Girdle 2E that we announced the expression results and safety results for earlier in the year. And while it hasn't been nailed down right now, I would suspect that that is going to be something that's going to be presented at World Muscle if Dr. Mendel is available and has the data available in an appropriate place by With that, I'll turn it over to Dr. O'Neill to talk about the powering. Great.

And then you've got the placebo controlled nature of the main study three as it was EUR 32.

He is a difficult one and it's one that takes a lot of thought or when does because you know there there's a price to pay for these placebo trials and I want everyone to understand that we're very mindful of that but our goal you know one of the things I said in my text is you may have noted this our goal is to have such a robust.

Set of evidence at the time that we launched this therapy.

We can get kids of all ages, and mutations and status on therapy rapidly and to do it around the world, but simply in the United States of America as important as the United States of America is.

Douglas S. Ingram: Thanks very much for that question about powering at Gilmore here. So I think you'll understand that for many reasons, we won't disclose the specifics and details of our power assumptions, particularly the effect side. What I will say is that the assumptions around variance, etc. are strong.

To us and to our company into that to our to the families in the United States. We want to create a program that is fit for purpose around the world and so we do believe is as typical does that decisions to make that a placebo trial at least for the main trial.

Douglas S. Ingram: They haven't changed since our original calculations, and they are backed by a very strong data set of raw data both internally generated and externally generated from various registries. So I think what I can say is that we're very confident about the strength of our calculations there. And forgive me for not just going into the effect side. There are obvious reasons for that. Then, with regard to the sub-cohort in Study 3 from which we will do the muscle biopsies, those muscle biopsies will be of skeletal muscle. They are limbs.

Is appropriate in that May trial will very likely be kids that will match. The work that we're looking at right now for a seven year old range.

With respect to other cohorts different age ranges, it's something we're still talking about but as really as it relates to that mean cohort of patients in the next study level certainly vehicles.

I agree with that Dr. Yeh.

Great.

And our next question comes from Brian Cornell Baird You May proceed.

Hey, good afternoon, guys just a couple of quick ones from me.

Just one.

We've been getting a lot of questions with the FDA release yesterday about some data integrity issues with the Novartis vaccines gene therapies, all Jens Mark.

And just want to know given a similar origins of that program and nine 001, if you've looked into the issues there and what level of confidence you can get and New York on truck.

Douglas S. Ingram: And the current thinking right now is that they are just a lower extremity, you know, gastrops. With regard to the size of the cohort, as you can imagine, based on the strength of the expression data we've seen to date, we don't believe that you need a large number. But I think that final number is going to be a matter of discussions with regulatory agencies and what they want to see, and Doug to the third panelist. And our next question comes from Matthew Harrison with Morgan Stanley. You may proceed. Hi, this is Max Gore. I'm from Matthew Harrison.

These trends my true SAR specific to those old Transmode and then.

As you're talking about ramping up inventory with competitors and gene therapy, seemingly falling behind I think you'd previously anticipated having a couple thousand doses at launch and just wondering if.

Kind of these new efforts.

To.

Meet demand, if you're changing to a higher number now or you think you can make it to a higher number one and should we expect to see the manufacturing costs of these doses effectively expense done to R&D over the next two years.

Douglas S. Ingram: Regarding the PPMO program, could you talk about the safety profile of single doses and how we should think about your ability to release data from the multi-dose study? When will you be taking muscle biopsies, and will you wait for all patients? Thank you very much.

Yes, so a couple let's go to the first question the Abaxis Novartis issue that occurred yesterday, so what we know nothing more than others.

Been able to read the documents that currently exists looks directly into 43, just so we're all the same thing theres nothing about that issue that reach through anything that we're doing.

Douglas S. Ingram: So I'll give you the broad strokes on it. Our goal is to get insight from the PPMO program and the MAD study by early next year. So that is our goal. What we know from preclinical work is that if we get to good dosing levels with our program, we should get significantly enhanced expression versus the PMO, in fact, in animal models. We get an order of magnitude greater expression.

Addle appears to be a very specific issue. There are very specific person or a couple of people at that company on a particular data entry is nothing to do with us at all or nothing to do with any of our program. So there is just there were unequivocal about there's zero beyond zero read through in anything that may have occurred there too.

To anything that we're doing so no nothing no no quarrel that whatsoever at all.

And then with respect to the dosing, there's sort of two things aren't getting yields right Hawaii.

One is the target we have for the number of doses available and the ability to treat the community and the other is just probability of success. They will have at those at the time getting the yields right does book.

Douglas S. Ingram: So we're very excited about that. But the issue that we're talking about here is the issue of the safety profile. And that's what we're going to find out over the course of this year into early next year. Things have gone very well so far. We've been in a single ascending dose study, and we're getting great results so far. And we've started dosing the multi-ascending dose study, and we're getting great results there as well. But I want to be cautious that it's too early to say that because we're not at those levels that we really want to get to, to be correlated with grand expressions, so this is still, in a very real sense, too early to declare victory. We are, we started, I think, the mass study at, what did we start at, five? We're kidding. 4, started at 4 mgs per kg, and we're going to continue to dose that up.

Gets us to a place where we feel confident not only in the number of doses. The probability of success, but we can also mix is just around the amount of dosing I still think the kind of.

Couple of thousand at lunch is a is a good aspirationally target for us, but we'll take it more careful look at that.

Over the next couple of months and we might make some additional decisions depending on what yields we achieve them and we have lots of room for capacity as well so.

The short answer is that we want to be in a position if at all possible to fully.

Served this community first in the United States and that around the world at launches without any risk that patients will have to wait.

For our therapy and that's why we're taking the time now that we have in that time.

We study too to ensure that we continue to cross sensitive to enhance our cross sell that into that answer our yields before it starts.

And our next question comes from Daniel Burke with Piper Jaffray. You May proceed.

Douglas S. Ingram: So things are going very well with the MATCH study. If not a little slower than I would have anticipated a year ago, Dr. O'Neill has come on board. She's got that in order.

Hi, guys. Thanks for the question a quick follow up to a previous question. When you decided to expand enrollment in study two did you consider including other patient all their patients with signs of function the Cline.

Douglas S. Ingram: And we'll know by early next year if what we've seen in preclinical models bears out with these kids, and so far, things are looking very good. We'll give you a good update on it early next week. And our next question comes from Anupam Rama with J.P. Morgan. You may proceed. Hey guys, this is Matt on for Anupam tonight.

And any specific reasons why you stuck with that seven or to seven year age range and then I think you mentioned you are planning to open an additional site is that.

For study two and I'm just curious from a safety perspective, how do you get comfortable with someone other than Gary administering the Jag bank.

Douglas S. Ingram: Thanks so much for taking our question and congratulations on the progress. Um, so just some higher level questions from us. You mentioned that you'll be nearing 900 employees by year end, so kind of just, as you expand your processes and potentially your geographical reach, where do you see this number going over the next few years? And then on your gene therapy manufacturing efforts, can you just remind us of how much cash you've earmarked on this front, kind of in the same time frame? Thanks so much.

I think that last question is a great. One he is he is fantastic.

We are going to happen we have no other sites some back so.

The good news is the document Dallas very committed to ensuring that we maintain consistent quality as we bring other sites along as well in fact, we got good detailed discussions about the fact that we need to have essentially a mendell university around the way we approach to therapy. The way we approach you fusions and the like and soccer My Dallas is very much onboard for all of that so we're very confident about what we're doing and the sites that were going to be.

Bringing online are going to be really top quality neuromuscular sites, we've experienced there.

Douglas S. Ingram: Yeah, so good questions. Great questions, actually. So we're going to end the year at around 900, maybe a little shy of 900 employees worldwide. We are going to begin to moderate the growth of our employee base, which we already are doing for a host of reasons.

As it relates to study to they will be in the four to seven year old range. They will be exactly the same cohort and they must they must be in the reason they must be it because our goal is to increase the probability of success increase the power. If we went to other age ranges, we would actually create more standard deviation and we were not reduce the power in fact, we couldn't do it because you want to for instance, older non ambulatory kids, we'd have to use a different measurement and the same can you Dennis so.

Douglas S. Ingram: You know, the reason that we grew, we didn't grow from 200 to 700 simply because we had the ability to; we had the need to. We've really expanded our ambition. We probably have going on now with programs, you know, both disclosed and undisclosed. We're probably well over 30 programs in RNA and gene therapy together right now. So we've needed to really bolster all areas of the company, but, you know, specifically in the research and development and manufacturing tech ops areas. But we're getting to a place now where we're comfortable. We're getting to a very comfortable place from an employee perspective, both quantitatively and qualitatively. We've got great people here right now. We are a magnet for good people right now, and I'm proud to say.

For this study we have to narrow the focus and ensure that we have the same matched populations to that we have the same confidence around the powering ahead as I said before to be 90% in study three such will not be the case in study three we are going to have.

A number of different studies. This document that was giving a dirty look but I always.

Okay, all right when I told him one study it will be in three I think it'll be a main show we noticed that their patients will have older non ambulatory patients in a separate.

Study as well, but we'll we'll cover a larger each ranges and different measures.

In the next year.

And our next question comes from Delphine CD.

You May proceed.

Hi, This is Sean Egan on for Joel. Thank you for taking my question.

I have a few more specifically on yield than capacity.

So first have your initial I fell on Flatout satisfied your yield goals.

And at this point is that the expectation that the extra yield optimization process time, you described today will raise your maximum capacity estimates or help you reach your original estimates.

Douglas S. Ingram: And we'll start moderating that growth. So we'll have growth next year over the 900 that we have this year, but we will not be doing what we did this year. We don't imagine that we're going to double again in a year the size of this.

I have a follow on question as well.

Yeah. So we have weve reached very good.

Yields in the Marcellus and all this we are in the process of scaling diet sells 500 right now.

Douglas S. Ingram: We'll start moving more to a rational growth rate on employees after this year. Otherwise, we're going to get, we're going to have too many fixed costs as we move forward, and we won't. We're actually getting to a place where we're comfortable with the number of employees and the quality of their work. With respect to gene therapy, you know, as I said before, in broad strokes, between milestones, capital expenditure, and prepaid cost of goods. So we'll actually benefit from a lot of these expenses. They're not simply capital or direct expenses.

And I sounds like others, we are not at the optimized number yet, but we're getting we're getting there we'll get there the issue with Im just trying to understand why what that means. This process is just takes time every time you do a run you find opportunities to enhance it you make changes and then we do have a run in a run case somewhere in a month or more timeframe. So it just takes some time. So the short answer is we are getting very good yields in the heart of what we want to be ourselves now, though we scale ties tells 500 is we've made a number of runs it ourselves five hundreds we have made a number of improvements significant improvements every time, we do it we're very confident we're going to get to the same kinds of yields we've gotten ourselves by that or my sells 500 overtime and then there's sort of two targets theres kind of a BAFTA theres sort of optimize target that gets us to where we want to go and of course, if we can get even beyond that.

Douglas S. Ingram: We'll spend something like $600 million over the next few years, including what we've already spent this year, into the end of next year and kind of into a little bit into the following year. And slowly, we'll be starting to ramp up our goods that will effectively be going into inventory. So some portion of that will be the cost of goods, if you will. And our next question comes from Gena Wang with Barclays. Please proceed. Hi, this is Peter speaking on behalf of Gena Wang.

Fantastic could give us which would give us both more capacity as well as lower cost of goods.

The goal here is to get to as optimized as is possible deal really.

Before we start ups and three if at all possible.

And our next question comes from Salveen Richter Goldman Sachs.

Thanks for taking the question. This is Ross on for Salveen, Doug can you just elaborate a little bit further on the current manufacturing the tracing here things like regardless of the competitive dynamics that you mentioned earlier you would need to have your yields fully maximized and your process development optimize so you just define what this looks like today versus what it looked like previously and then I have follow up.

Douglas S. Ingram: Thanks for taking our question. Just a couple from us, if you don't mind. I guess the first is, I think this has been asked before, but just to make sure, were there any measurements from study two that prompted the expansion and, would you be able to measure anything that may inform the pivotal study design at all, or is that does that it's completely independent? So, thank you for giving me the opportunity to answer this question again. Actually, I really do appreciate So, let me be very clear, so there's no avoidance of any doubt, there's nothing in the analysis, blinded or unblinded or otherwise, out of Study 2 that motivated the increase in the N at all.

I'm trying to sort of what were kind of midway through a process I'd say.

You know, we're midway through a very.

So far successful process were sort of a number of things to do from a manufacturing perspective, a place to launch the therapy.

The first thing of course is just capacity itself. We've got we're building a facility with brammer were just about done with that that's in Lexington. The next issue is you haven't talked much about today, we'll talk about it over time as analytical development, we're doing we're making very good progress there.

Douglas S. Ingram: In fact, the only data that we've had is from the first four patients in Study 1, and that gives us tons of confidence in where we are. The reason that we've increased the N is, you know, quite simply because we have an opportunity. And I think that, you know, it is a small price, temporally, to pay, literally measured in weeks and maybe, you know, months, a couple months, to be in a position to feel that we have a study that's really robustly powered, powered at over 90% now, which increases the probability of success and gets us really comfortable with study two as we plan for study three. And so we really need to think about these families and these patients first and foremost, and while it may delay us by some number of weeks or maybe even a month or two to ensure that we have the right power for this study, it increases the probability that we won't have additional delays on the back end because we've powered the study at the right level. So it's the best answer.

As I said, we've got Dr. Rob Clark onboard so we feel very confident that we have the talent in place to get all the analytical development done in a way that's affected and then the final one is process development yield optimization and as I said. This is a step wise, where we are first thing you do is work in smaller units that meiselas. We've done that we've got to be good numbers. There now we're moving up to the Marcellus 500, we've done a number of runs there we continue to prove that so we're kind of in the middle of a process. Our goal. There is a number of things we have to get through before the the commercial trial I don't want to suggest that there is not opportunities to continue to optimize after the trial, but we want to get as far along as possible before we start the trials so that even as we're making additional improvements in yield for instance, and there's no reason why we would continue to do that we don't want to find ourselves in a position that we have so dramatically increase yield that we you know we have an argument around a new product that we have to do it.

Bridging studies, yet again prove that we have the same product so.

We're in the middle of the process things are going very well.

You know Weve got great partners, and we've got a lot of folks working on a lot of really smart expert folks we got brammer joined the word Paragon derica.

Is fantastic clinically they were the behind a lot of the effects. This work.

Douglas S. Ingram: The program is more important than all of that, the best answer for families around the world who are waiting for a transformative therapy inducement. So we really, I'll just be really direct about it. We feel really, really good about this opportunity to increase. And we think it's a real opportunity for the program and a real opportunity for us. And our next question comes from Vincent Chin with Bernstein. You may proceed. Congratulations on the progress and thanks for taking the questions. There are a couple of specific ones on study two. First, about your statistical assumptions, how would you expect the mean effect size from the gene therapy to compare to the likely standard deviation? Because, just by looking at ballpark numbers, would you say it's roughly about the same size?

Next is Kevin has come back to Varagon, but more than all that we've got our own folks like to read a card. We've got had ice Ellis units. So we're we're doing very well, it's going very well so far.

And our next question comes from Tim Lugo.

William Blair you May proceed.

Hi, Thanks for the question and open new gene therapy programs announced during the quarter.

Any of those being the clinic over the next year and can you.

And are you maybe deemphasizing some of the other previously announced preclinical programs and May have missed it but do you have a total number for gene therapy programs currently in the pipeline.

We'll have to.

I can flow in number of gene therapy programs, but I fear I might be right, we'll update our pipeline, we're well over probably nearly 15 or more programs into preclinical and clinical actually I think that would be a good looking at me like a woefully inadequate number.

It's higher.

Hi, Jim.

As I said before I was going to make an error I tried to get.

Let's turn to over 15.

Moreover, the yes, the good thing about an hour ago policies, but over 50 programs clinical or preclinical we're not de emphasizing preclinical programs that now this.

Douglas S. Ingram: Would you say it's likely to be larger or smaller? And then the second question would be, if you had wanted to, could you have increased the study size for study two even further than 40 patients? How much longer would the trial have been extended, for example, if you decided to increase it to say 50 or 60 patients? I'll answer the last question and then I'll turn it over to Dr. O'Neill, who will likely not answer your first question. We could have modestly increased the size of the study even greater than we did with the material available, but we are very comfortable with 40 patient studies. It's the right level for us. We didn't set a compromise issue.

For clinical programs that we have one of the things that we had suggested sometime ago is that we're building an engine and we have an aspiration to continue to fuel that pipeline, we're going to continue to do that so we're we're.

We're very excited about programs have been where we don't want to spend a lot of time talking about the death right now simply because their preclinical we doubled the number of promotional with what are currently really exciting cassettes that but research programs.

Needless to say these are great areas of focus with great leaders behind them we've got.

Every dreyfus and the leadership there in addition to the world's leader Dr.

Roman.

On that we've got our own gene therapy Center of excellence in movies video playback built the very concept that we're working on there. We got Rett syndrome. We're very excited about registered room as a focus aligns perfectly with where we're going we've got a very exciting gene therapy program there.

Douglas S. Ingram: It wasn't a timing issue. We felt good about the end of 24. We felt good about the end of 24. And frankly, the data evolved in Study 101. As you know, we got nine-month data from the kids in Study 101, and it only confirmed even more that we were feeling very good about the assumptions we were making and the powering we had for Study 2. But 40 patients and getting to significantly over 90% power just gives us even more confidence that we're doing it right. And Vincent, thanks for the other question.

We're very excited about our cardiovascular program with Dr. Sweeney.

Obviously, one of the big luminaries in gene therapy. So we're very excited about that cardio out with these is it sort of a natural extension.

The area that we benefited neuromuscular and then of course, it goes without saying.

We are excited about on us and we're very excited about working with Brett Huff and he's got a very innovative approach is still research.

But it's a very innovative approach and we're going to lean into that as well. So we're excited about our research programs were not down.

And our next question comes from Chesapeake Schwartz with Leerink you May proceed.

Great. Good afternoon, thanks for squeezing us and just two quick questions from us.

Douglas S. Ingram: You know, again, I'm not going to go into specifics or assumptions around effect sizes and standard deviations. I mean, the only thing I can sort of tell you about standard deviations is that, based on our raw data, the standard deviations that are published in literature are, you know, in the ballpark of what we're seeing for the North Star, etc. But forgive me for, again, not going into specific effect sizes. I see. Well, maybe one follow-up then. You mentioned that the data you were seeing from the initial study kind of corroborated what you had expected in terms of your powering the effect sizes and so forth. Is it fair to say that the data you've seen from the first four patients is pretty much in line with what you would have expected in terms of the likely gene therapy effect sizes? There are, um, I would say a couple of things about that. One, we were, what I would say, we took the results from the first study, what we'd seen, and then we've been more conservative. I'm just, I will give you a qualitative answer. We've been more conservative in our power assumptions, okay?

So just going back to an earlier question on Zogenix and the revelation yesterday.

I guess given the numerous similarities I was wondering how do you see the revelation affecting the way the agency will review adjudicator scrutinize or your CMC module.

Or even as you continue the optimization work here.

Second and strategically speaking as we look forward you mentioned the status update on DPM or the SRP 50, 51, so congrats on that but I guess, there's growing competition in DMD with gene therapy gene editing as well as antibody conjugate it sounds emerging so I guess as you think about your base business of AD spent all that goes what are your strategies. There given how p. pianos may have had a little bit of a delay with safety here and you only have 50 51.

Do you have alternative to maintain that base business and if so what would that be thanks.

Okay, let's take this in order. So xeljanz has zero effect zero read through any more than that I'm confident will have zero effect on the way the agency looks the other programs one look past.

Well really salacious headlines about this the hardest thing Wasnt, one close that when you show and actually look at the 43 is this is a very specific issue not about gene therapy, but about.

Douglas S. Ingram: So we're not taking, we're not leaning all of our assumptions in an aggressive direction, just so you know. I don't want you to get the impression that we're fooling ourselves into our power calculations. I think it would be obvious, given that we're increasing the number of things like that. And if you want to know what our view is, you know, it's hard to say what one should have anticipated from a study going into it, because, frankly, in the history of all Duchenne Muscular Dystrophy, no one has ever seen these kinds of transformative results before. So, I think, you know, probably people may have different views.

Individuals who may have done something with data manipulation is that's the frequency of use.

Spectra study and something that didn't affect the integrity apparently did you for what we read the papers every the study did not affect the actual outcome safety ethics year, even the approvability of the program, but what's concerning because I think what we've read there was some question about intentionality and all of that is a very specific issue about specific human beings.

Specific company it does not relate in any way to our program nor do I believe that there is any reason to believe that they would change.

Douglas S. Ingram: I think, broadly speaking, the results we saw from the first... Court Order Kids, was you know pretty shockingly positive it was probably greater than one could have normally anticipated we're used to dealing with therapies that tease out differences from background over a long period of time and what we saw with these kids was a fairly dramatic benefit open label for kids please understand I understand that as well but you know early days both quantitatively qualitatively we saw a fairly dramatic change in these kids I think the preclinical models generally support that same kind of concept if you've ever looked at the gene therapy micro dystrophin golden retriever you know models and video you would you might have anticipated this kind of transformative effect but we were very pleased with very pleased with what we saw in study one still took a very conservative approach in powering study two and now we're taking a you know I think an appropriate not overly conservative approach to increase that that and to increase the powering of that study and to increase the chance that we get this therapy as fast as possible but with the highest POS patients waiting around the world. Frankly waiting and degenerating along the way, so we're making these decisions intelligently. And our next question comes from Ritu Baran with Cowan, you may proceed. Hey guys, thanks for taking the question. I'm going back to study three.

The agency would approach other subs. This program I mean, it is goes without saying.

You know what has to be very thoughtful and careful to follow Esso keys, good clinical practice and.

Research and the data and that's this that was the same answer the day before yesterday, it's the same answer today I'm not.

At all concerned that this impacts the way the agency or purchase programs I think it's a very specific issue.

The status of as our Chief 50, if you want it well they have you want to be clear, we haven't had any status on safety consumer brilliant.

The issue that we've always had the open issue with respect to the PPL always can you get safely to the to a high dose. If you can get safely join acceptably high dose. We are very confident mechanistically that we're going to see significant increases in dystrophin production over.

Our PMO is in fact as I said before.

Literally an order of magnitude better expression. So there's a lot of reason to be excited about the TPS rose. The only reason that we don't promote that concept is I want to see how high we get in the multi ascending dose before we start declaring victory on them.

As it relates to the base business and what that means.

Gene therapy of a like I would say a couple of things there as well. So first I would start with this issue about increasing competition I actually think the competition has moderated over the last six to nine months frankly.

Douglas S. Ingram: Doug, is it still your idea to keep that placebo-controlled study? In that case, how would you handle, (inaudible) There's a couple broad stroke issues. I guess there's a lot to unpack.

The biggest competition to our PMO NPV of no franchise is our own gene therapy.

Douglas S. Ingram: The question about the ability to take a subset of patients and do a biopsy of them in a blinded study, I can give you sort of some proof that that's possible. We just did it. So we did it with Kazimierz.

And so you know frankly, we think there is a real possibility that there is a room for both the PMO or if you have all been successful on the money had added jumped to me with a gene therapy or Mike or just from a program or the other and we're doing work right now to look at that we actually have a partnership looking at that as well and we'll have better information about that probably by the middle or so next year.

Douglas S. Ingram: So, you know, it is possible to do without unblinding the study. So, since this is Gil's work, I just want to actually step in and, you know, with regard to the biopsy, our intent is to biopsy all of them. This sub-cohort we're talking about is not a sub-cohort of biopsy patients. It's just a cohort. That's the first thing I want to say.

If it turns out in the long run that the gene therapy. So transformative that there is an agreement for a PML are few PMO. Thereafter, then so be it.

The patient communities benefited from that but we think is the stature today, there may very well be a good synergistic benefit of having a TM our PBM on one hand and I like your distributor program on the hour. So we feel very confident about a quarter ago.

Douglas S. Ingram: I think the second thing I want to say about placebo control is that we do anticipate this to be a placebo-controlled study. And I think, to Doug's point, there are a couple of important lessons that we're pointing out, one of which is that we actually have successfully running placebo-controlled studies with Duchenne patients in the context of our Kazimersan and Goddersen protocols and in our Study 2 protocols. So we're confident that we can actually execute on that. And of course, you know, that really comes down to a very important thing that we have built and the capability that we've built in this organization, which is strong relationships with patients, strong relationships with investigators, and a very good patient advocacy group, where we actually sit down and explain in detail the rationale, the thinking, and the importance of this work to patients and their families.

And our next question comes from Justin Kim.

You May proceed.

Hi, Thanks for taking the questions don't hesitate to give me.

Maybe just want to circle back on the excess gene therapy supply and DMT, where there any thought to leasing the age criteria in order to establish a longer term safety experience and people their patients for a regulatory review.

I apologize I'm not sure what I'm not sure. The question I couldn't do it in study two because im starting to we have to get the powering right. We will be looking in older patients in study three as well. So we will have evidenced both from an efficacy perspective, I think you perspective on non ambulatory patients in older patients and heavier patients is in what I call study three that Dr. Phil on the old rightly notes is actually a series of some studies.

Douglas S. Ingram: The placebo-controlled nature of the main Study 3, as it was with Study 2, is a difficult one, and it's one that takes a lot of thought before one does it, because, you know, there's a price to pay for these placebo trials, and I want everyone to understand that we're mindful of that. But our goal, you know, one of the things I said in my text, as you may have noticed, is our goal is to have such a robust, is appropriate. That main trial will very likely be kids that will match the cohort that we're looking at right now, the four to seven-year-old range. With respect to other cohorts, different age ranges, it's something we're still talking about, but as it relates to that main cohort of patients in the next study, we'll almost certainly agree with that, Doctor. Yeah, Agreed.

Okay got it and then is there a target goal of what proportion of the additional patients would come from the second clinical right.

We're going to you know, we're going to dose as fast as we can so we're opening the second sight.

Dose both as fast as possible.

Yeah, No target, we'll take all from Chango and delegates among those.

From a nationwide, but we'll have a second site very reputed well reputed second sight to assist event dosing to make sure. There's no risk there we're not going to have it all there was before.

[laughter].

And our next question comes from Robby Gracia.

Macquarie Your bank.

Yeah. Thank you.

I haven't done question, but I just want to clarify the very specific functional endpoint for the what I'd say steady bomb, which increased the n. that make us great confidence empowering.

Absolutely great gaming specific focused on.

Douglas S. Ingram: And our next question comes from Brian Skorney with the Bayard. You may proceed. Hey, good afternoon, guys. Just a couple of quick ones for me.

Yes, I can you just confirm that I can we presume that the same endpoint and that's a.

Douglas S. Ingram: Just one, I've been getting a lot of questions with the FDA release yesterday about some data integrity issues with the Novartis Avexis gene therapy Zolgensma. And just wanted to know, given the similar origins of that program in 9001, if you've looked into the issues there, and what level of confidence you can give in your construct that these Zolgensma issues are specific to Zolgensma. And then, as you talk about ramping up inventory with the competitors in gene therapy seemingly falling behind, I think you'd previously anticipated having a couple thousand doses at launch, and just wondering if kind of these new efforts to meet demand, if you're changing that to a higher number now, or you think you can make it to a higher number, and should we expect to see the manufacturing costs of these doses effectively expensed into R&D over the next two years?

Well be safe when used then when it creates a primary functional endpoint.

And then as a continuation of the one to three study when would you be able to give us specifics on the and within the main cohorts a full seven and the additional kind of cool. Thank you.

So I would say a couple so first on the first two I can confirm it and they say in study two and it will be the primary endpoint for study three.

As well and given that we're going to start study three as early as this is rationally possible.

In 2020 that we'll we'll certainly come back to you.

In early 2020, and give you an update with worst particulars around.

Cost them.

And our next question, Tim Chiang with E T I.

Hi, Christine.

Hi, Thanks, Doug I think you mentioned.

Douglas S. Ingram: Yeah, so a couple of things, so let's go to the first question, the Obexus No Martyrs issue that occurred yesterday. So we know nothing more than others now who have been able to read the documents that currently exist. We've looked directly at 483, just so we're all on the same page. There's nothing about that issue that relates to anything that we're doing at all. There appears to be a very specific issue with a very specific person or a couple people at that company on a particular data entry issue. It's nothing to do with us at all and nothing to do with any of our programs.

But Dr Mundo might be presenting some limit girdle data WMS.

With the functional data would be.

Just the three patients that have been posts that are the data that you've shown in the three patients were dosed.

And while the one on one is that right.

It'll be the functional data yeah.

So yes as you may recall, we did we announced data and the first quarter. This year and to eat program. We're very pleased with the results, but as my expression level in a safety perspective as well given the size of these kids you know one of the interesting thing is these are the largest kids than it's ever been dosed as far as I'm aware before infusion gene therapy. There are 13 year olds two of them.

But we were to assume there was too early we just literally dose that their child, some could give functional data so the goal at world muscle.

Douglas S. Ingram: So there is, just so we're unequivocal about this, zero, beyond zero read through in anything that may have occurred there to anything that we're doing. So there's nothing, no correlate whatsoever at all. And then with respect to getting the yields right and the like. One is the target we have for the number of doses available and the ability to treat the community, and the other is just the probability of success that we'll have that amount of doses at the time. Getting the yields right does both.

It would be the two to present functional data on the first three kids.

And our final question comes from Liisa Bayko with JMP Securities You May proceed.

Hi, Thanks for taking the question and squeezing me and I'm just to clarify study two will capture the functional end point that you'll use for filing in addition to studies a three.

You know showing expression is and at that point when you got expression data combined with study to functional you'll file you're not going to wait for that functional data from study three is that correct.

Douglas S. Ingram: It gets us to a place where we feel confident not only in the number of doses and the probability of success, but we can also make decisions around the amount of dosing. I still think the couple thousand at launch is a good aspirational target for us, but we'll take a more careful look at that over the next couple of months, and we might make some additional decisions depending on what yields we achieve. And we have lots of room for capacity as well. The short answer is that we want to be in a position, if at all possible, to fully serve this community, first in the United States and then around the world, at launches, without any risk that patients will have to wait for our therapy. And that's why we're taking the time, now that we have the time, and we're working on study two to ensure that we continue to enhance our prosperity, and enhance our yields before we start study two And our next question comes from Danielle Brobe with Piper Jaffray. You may proceed. Hi guys, thanks for the questions.

That is our goal our weather.

To do when you go down to study three our plans is to sit down with the agency confirmed with the agency and get their thereby into the approach that we're taking but our current goal is to have for study three will have most of that as well eventually but to have.

As a sub cohort study three since it to look at expression level and show comparability between critical supply and commercial.

And.

Yes.

We're talking about FDA issues right now that you have that thats the approach and the U.S. assuming.

If the FDA agrees with the approach that we're taking.

And then of course, we'll have to consider what approach we take ex us because as you as I'm sure. You know our goal is is to bring this therapy to as many patients around the world as could benefit from it as rapidly as possible.

Okay, Great and then just to also how do we think about or how do you think about what is comparable because obviously, there's variability expression for patient to patient and this is kind of.

Not exactly like a bio equivalency studies, so what I guess, what does the tolerance around some of those things I say, it's actually the same.

I'm curious about how you think about that.

Well that will be obviously, a subject of discussion with the agency. Obviously of this is early days and gene therapy. So.

Douglas S. Ingram: A quick follow-up to a previous one. When you decided to expand enrollment in Study 2, did you consider including other patients, older patients, with signs of functional decline? and any specific reasons why you stuck with that seven-four to seven-year age range, and then I think you mentioned you're planning to open an additional site. Is that also for study, too? And I'm just curious from a safety perspective, how do you get comfortable with someone other than Jerry administering the drug? Well, I think that last question is a great one.

We'll have a lot of things to talk about but there's a lot of different ways to look at measurements disposing plus CFC related issues and we also have what others working have a number of other programs. For instance, you wouldn't have had an estimate we have biopsy. So we have a we do have a good way to triangulate on comparability between commercial supply and clinical supply and of course, what the Doctor. The agency about what level of tolerance is permissible between clinical supply promotions.

Okay, great. Thanks, a lot.

Thank you very much.

Ladies and gentlemen, this now concludes that your next question todays call I'd now like to turn the call back over to Doug CEO for closing remarks.

Well. Thank you all very much for spending this evening with us.

As we updated for the second quarter.

On our performance in the second quarter and our flight path forward, we have a lot to do in 2019, I hope I make impress upon everyone our perspective on this.

Douglas S. Ingram: He is fantastic, but you know, we're going to have to have other sites someday, so the good news is that Dr. Mandel is very committed to ensuring that we maintain consistent quality as we bring other sites along as well. In fact, we've had good, detailed discussions about the fact that we need to have essentially a Mandela University around the way we approach gene therapy, the way we approach these fusions and the like, and Dr. Mandel As it relates to study two, they will be in the four to seven-year-old range, they will be exactly the same cohort, and they must, they must be, and the reason they must be is because our goal is to increase the probability of success, increase the power. If we went to other age ranges, we would actually create more standard deviation, and we would reduce the power.

We have we are in a privileged position as an organization with respect to some of our programs right now we don't take that privileged position for granted we don't tend to slow down as a result of that.

And we don't intend to develop any form of arrogance. In fact, we will approach all of the work that we have to do in front of us with an enormous amount of humility. We have a lot to do this year got the continued to perform as they start is 51, we have to bring forward goal. The dursun assuming that we're successful by August 19th we have to submit for CASM year. Since we have to continue to push forward. Our various gene therapy programs get these kids dose in the micro dystrophin study to get our process development and capacity for micro Dystrophin gene therapy program done by the end of this year soon to start dosing patients in our study three and will give you additional updates over the course of the year as we progress against our goal. So thank you very much. Thanks for your support and have a lovely evening.

Ladies and gentlemen, thank you Christian in today's conference. This does conclude the program you may all disconnect everyone have a great day.

Douglas S. Ingram: In fact, we couldn't do it because if you went to, for instance, older non-ambulatory kids, we'd have to use a different measure than NSAA; we couldn't use NSAA. So, for this study, we have to narrow the focus and ensure that we have the same matched populations so that we have the same confidence around the power, and as I said before, it's going to be 90%. In study three, such will not be the case.

Douglas S. Ingram: In study three, we are going to have a number of different studies, as Dr. Mandel has given you. When I call one study, it will be 3A, it will be a main cohort of patients. We'll have older non-ambulatory patients in a separate study as well, but we will cover larger age ranges and different measures in the next study. And our next question comes from Joel Beattie with Citi. Hi, this is Sean Egan on Perjul.

And.

Douglas S. Ingram: Thank you for taking my questions. I have a few more, specifically on yields and capacity. So first, have your initial ICLOS lot test satisfied your yield goals? And at this point, is it expected that the extra yield optimization process time you described today will raise your maximum capacity estimates or help you reach your original estimates? And I have a follow-on question as well. Yeah, so we have achieved a very good yield in the iSellas Nanos. We are in the process of scaling to iSellas 500s right now, and the iSellas 500s, we are not at the optimized number yet, but we're getting, we're getting there, we'll get there. The issue with, and just to understand why, what that means, this process just takes time. Every time you do a run, you find opportunities to enhance it, you make changes, and then you do another run, and a run takes somewhere in the month or more time frame, so it just takes some time.

Douglas S. Ingram: So, the short answer is, we are getting very good yields in the hunt for what we want in the iSellas Nano. We've scaled to iSellas 500s, we've made a number of runs in iSellas 500s, we have made a number of improvements, significant improvements every time we do it, and we're very confident we're going to get to the same kinds of yields we got There's kind of a, you know, an optimized target that gets us to where we want to go, and of course, if we can get even beyond that, fantastic, which would give us both more capacity as well as lower cost of goods. So, you know, the goal here is to get to as optimized a possible yield, you know, really, before we start study three, if at all possible. And our next question comes from Salveen Richter of Goldman Sachs. Thanks for taking the time to answer the question. This is Rahsaan for Salveen.

And.

Douglas S. Ingram: Doug, can you just elaborate a little bit further on the current manufacturing situation here? So, like, regardless of the competitive dynamics that you mentioned earlier, you would need to have your yields fully maximized and your process development optimized. So, can you just define what this looks like today versus what it looked like previously? And then I'll have a follow-up.

Douglas S. Ingram: I'm trying to, we're kind of midway through a process. I'd say, you know, we're midway through a very, so far, successful process. There's sort of a number of things to do from a manufacturing perspective to be in a place to launch the therapy. The first thing, of course, is just capacity itself.

Douglas S. Ingram: We've got, we're building a facility with Brammer, we're just about done with that, that's in Lexington. The next issue, which we haven't talked much about today, we'll talk about it over time, is analytical development. We're making very good progress there. As I said, we have Dr. Reid Clark on board, so we feel very confident that we have the talent in place to get all the analytical developments done in a way that's effective. And then the final one is process development and yield optimization. And as I said, sort of stepwise where we are, the first thing you do is work in smaller units of iSellus. We've done that. We've gotten the good numbers there. Now we're moving up to the iSellus 500. We've done a number of runs on it.

Douglas S. Ingram: We're continuing to improve that, so we're kind of in the middle of a process. Our goal, there's a number of things we have to get to before the commercial trial. I don't want to suggest that there aren't opportunities to continue to optimize after the trial, but we want to get as far along as possible before we start the trial so that even as we're making additional improvements in yield, for instance, and there's no reason why we wouldn't continue to do that, we don't want to find ourselves in a position that we've so dramatically increased yield that we, you know, we have an argument around So we're in the middle of the process, and things are going very well.

Douglas S. Ingram: You know, we've got great partners. We've got a lot of folks working on it, a lot of really smart, expert folks. We've got Bramberg doing the work. We've got Paragon. Paragon is fantastic, frankly.

Douglas S. Ingram: They were behind a lot of the Avexis work. Avexis has come back to Paragon, but more than all that, we've got our own folks. We've got Dr. Reid, and Clark. We've got 10 Icellus units. So we're doing very well. It's going very well so far. And our next question comes from Tim Lugo. William Blair, Thanks for the question.

Douglas S. Ingram: And of the new gene therapy programs announced during the quarter, will any of those be in the clinic over the next year? And can you, and are you maybe deemphasizing some of the other previously announced preclinical programs? And I might have missed it, but do you have a total number of gene therapy programs currently in the pipeline? We'll have to, I could throw a number out on Chief Therapy Programs, but I fear I might be wrong.

Douglas S. Ingram: We'll update our pipeline. We're well over, probably nearly 15 or more programs between pre-clinical and clinical. Actually, I think Dr. Urvina could be looking at me like I'm Will Felice. That's inadequate, that number. I think it's higher than that.

Douglas S. Ingram: And our next question comes from Joseph Schwartz with SBB Lyrics. Good afternoon, thanks for squeezing in questions from us. So just going back to an earlier question, I guess given the numerous similarities, I was wondering, how do... The Bulletproof Executive 2013, I guess there's growing competition for therapy. I guess, as you think about... What are your strategies there? Do you have alternatives?

Douglas S. Ingram: Okay, let's take this in order. So, Zolgensma has zero effect. Zero read-through. And more than that, I'm confident we'll have zero effect on the way the agency looks at other programs.

Douglas S. Ingram: If one looks, you know, past... What are really salacious headlines about this film artist thing, what one looks at when you go and actually look at the 43, is this is a very specific issue, not about gene therapy, but about individuals who may have done something with data manipulation, that's the phrase that's being used, with respect to a study, something that didn't affect the integrity, apparently didn't, from what we've read, didn't affect the integrity of the study, didn't affect the actual outcome, safety, efficacy, or even the approvability of the program, but was concerning because I think, from what we read, there was some question about intentionality and all of that. It is a very specific issue about specific human beings, a specific company, it does not relate in any way to our program, nor do I believe that there's any reason to believe that they would change how the agency would approach other folks in this program.

Douglas S. Ingram: I mean, it goes without saying that one has to be very thoughtful and careful and follow SOPs, good clinical practice, and research and data, and that was the same answer the day before yesterday, and it's the same answer today, so I'm not at all concerned that this impacts the way the agency approaches programs. I think it's a very specific issue. The status of SRP5051, one thing I do want to make clear is that we haven't hit any snags on safety, and things are going brilliantly.

Douglas S. Ingram: The issue that we've always had, the open issue with respect to the PPMO, is can you get safely to a high dose? If you can get safely to an acceptably high dose, we are very confident mechanistically that we're going to see significant increases in dystrophin production over our PMOs. In fact, as I said before, we could have literally an order of magnitude better expression.

Douglas S. Ingram: So there is a lot of reason to be excited about the PPMOs. The only reason that we don't sort of promote that concept is that I want to see how high we get in the multi-ascending dose before we start declaring victory on there. As it relates to the base business and what that means from chemotherapy and the like, I would say a couple of things there as well. But first, I would start with this issue about increasing competition. I actually think the competition has moderated over the last six to nine months.

Douglas S. Ingram: The biggest competition to our PMO and PPMO franchise is our own gene therapy. And so, frankly, we think there is a real possibility that there is room for both the PMO or PPMO if it's successful on the one hand, and adjunctively with gene therapy or microdystrophin programs on the other. And we're doing work right now to look at that. And we actually have a partnership looking at that as well. And we'll probably have better information about that probably by the middle or so of next year. But if it turns out in the long run that gene therapy is so transformative that there isn't room for a PMO or PPMO thereafter, then so be it. The patient community has benefited from that, but we think as of today, there may very well be a good synergistic benefit of having a PMO or PPMO on the one hand and our microdystrophin program on the other. So we feel very confident about what we're doing.

Douglas S. Ingram: And our next question... F-N-I-M-E-R-D Hi, thanks for taking the question from Hartaj and me. Maybe I just wanted to circle back on the excess gene therapy supply in DMD. Were there any thoughts to loosening the age criteria in order to establish a longer-term safety experience in these older patients before a regulatory review? I apologize; I'm not sure of the question. I couldn't do it in study 2 because in study 2, we have to get the powering right.

Douglas S. Ingram: We will be looking at older patients in study 3 as well. So we will have evidence both from an efficacy perspective and a safety perspective on non-ambulatory patients and older patients and heavier patients in what I call study 3, which Dr. Bill O'Neill rightly notes is actually a series of sub-studies. Okay.

Douglas S. Ingram: And then is there a target goal of what proportion of the additional patients would come from a second clinical site? We're gonna, you know, we're gonna dose as fast as we can, so we're opening a second site to dose both as fast as possible. There's no target; we'll take them all from Dr. Mandela if he gets them all dosed for us from Nationwide. We'll have a second site, a very reputed, well-reputed second site to assist in that dosing to make sure that there's no risk that we're not going to have it all dosed before we get to the second site. And our next question comes from Rob. Rahaja with Evercore. Yeah, thank you.

Douglas S. Ingram: Perhaps a dumb question, but I just wanted to clarify the very specific functional end point of the 102 study from which increasing the N number gives you greater confidence and power, us and the trees. Specific Post Line Point is NSAA, Unknown Executive, Huidong Wang, Anvita Gupta, Zhiqiang Shu, Mary Jenkins, John Boyle, Ian, This will be the same one used in 103 as a primary function, and then as a continuation for the 103 study when will you be able to give us specifics on the end number within the main cohorts of four to seven and the additional, So on the first two, I can confirm NSAA in study two, and it will be the primary endpoint for study three as well.

Douglas S. Ingram: And given that we're going to start study three as early as is rationally possible in 2020, we'll certainly come back to you in early 2020 and give you an update with more particulars around what I'm calling studies. And our next question comes from Tim Chang with ETI. All right, thanks, Doug. You know, I think you've mentioned... Dr. Mandel might be presenting some limb girdle data at WMS. The functional data would be just the three patients that have been dosed, or the data that you've shown in the three patients that have been dosed, MY-0101, is that right?

Douglas S. Ingram: It's going to be the functional data, yeah. So, as you may recall, we announced the data in the first quarter of this year on the 2E program. We were very pleased with the results, both from an expression level and a safety perspective as well, given the size of these kids. One of the interesting things is that these are the largest kids that have ever been dosed, as far as I'm aware, with full infusion gene therapy there, and 13-year-olds, two of them. But we were, it was too, it was too early.

Douglas S. Ingram: We had just literally dosed the third child, so we couldn't get functional data. So the goal at WorldMuscle would be to present functional data on those first three kids. And our final question comes from Lisa Baco with JMP Securities. Hi, thanks for taking the question and squeezing me in. Just to clarify, Study 2 will capture the functional endpoint that you'll use for filing in addition to Study 3, you know, showing expression, and at that point, when you get expression data combined with Study 2 functionality, you'll file; you're not going to wait for the functional data from Study 3, is that correct? That is our goal.

Douglas S. Ingram: Now, one of the things we need to do when we build out Study 3 in our plans is to sit down with the agency, confer with the agency, and get their buy-in for the approach that we're taking. But our current goal is to have, for Study 3, we'll have functional data as well eventually, but to have a sub-cohort of Study 3 to look at expression levels and show comparability between clinical supply and commercial supply. We're talking about FDA issues right now. That's the approach in the U.S., assuming that the FDA agrees with the approach that we're taking. And then, of course, we'll have to consider what approach we take in the U.S. because, as I'm sure you know, our goal is to bring this therapy to as many patients around the world who can benefit from it as rapidly as it can. Okay, great. And also, how do we think about, or how do you think about, what is comparable? Because obviously, there's variability in expression from patient to patient. And this is kind of not exactly like a bioequivalency study. So I guess what the tolerance level around some of those things is to say it's actually the same?

Douglas S. Ingram: I'm curious about how you think about that. Well, that'll be obviously a subject of discussion with the agency, obviously, and this is early days in gene therapy, so we'll have a lot of things to talk about. But there are a lot of different ways to look at measurements.

Douglas S. Ingram: There's potency. So I have CFC-related issues. And we also have what others wouldn't have in a number of other programs. For instance, you wouldn't have it in SMA.

Douglas S. Ingram: We have biopsies, so we do have a good way to triangulate on comparability between commercial supply and clinical supply. And then, of course, we'll have to talk to the agency about what level of tolerance they should have.

Douglas S. Ingram: Permissible Between Clinical Suppliers, Okay, great. Thanks a lot. Thank you very much. Ladies and gentlemen, this now concludes our Q&A portion of today's call. I'd now like to turn the call back over to Doug Ingram, CEO, for closing remarks. Well, thank you all very much for spending this evening with us as we updated for the second quarter on our performance of the second quarter and our flight path forward. We have a lot to do in 2019. I hope I've impressed upon everyone our perspective on this. Ladies and gentlemen, thank you for attending today's conference. This does conclude the program. You may all disconnect. Everyone have a great day. ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? © BF-WATCH TV 2021 [inaudible] © BF-WATCH TV 2021, ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ???