Sarepta Therapeutics Announces Recent Corporate Developments

11/6/20

CAMBRIDGE, Mass., Nov. 05, 2020 (GLOBE NEWSWIRE) -- Sarepta Therapeutics, Inc. (NASDAQ:SRPT), the leader in precision genetic medicine for rare diseases, today reported financial results for the third quarter of 2020.

“Even as the pandemic created challenges throughout the third quarter, I am pleased to report that the Sarepta team was able to continue to serve the Duchenne muscular dystrophy community with little interruption, achieving net product revenue of $121.4 million for EXONDYS 51 (eteplirsen) and VYONDYS 53 (golodirsen), representing a 23% increase over the same quarter last year,” said Doug Ingram, Sarepta’s president and CEO. “At the same time, we advanced our RNA pipeline with a filing of and the FDA’s acceptance of the NDA for our next PMO candidate, casimersen, and prepared our next-generation candidate, the peptide-conjugated PMO, SRP-5051 for a data readout by the end of 2020. We also announced, at the World Muscle Society congress, positive data for SRP-9001 and SRP-9003, two critical drivers of our first-in-class gene therapy engine, and in support of these programs continued to build our strength in manufacturing. As we reported in a separate release today, the FDA has agreed on an approach for a potency assay which should permit us to dose patients with commercial process material in Study SRP-9001-103, an important milestone in our goal of bringing a potentially profound therapy to a waiting Duchenne community.”

Third Quarter 2020 and Recent Corporate Developments:

  • Announced positive 2-year functional data of SRP-9001 micro-dystrophin gene therapy in Duchenne muscular dystrophy (DMD) patients: The clinical results, presented at the 25th International Annual Congress of the World Muscle Society (WMS), demonstrated that two years after a one-time infusion of SRP-9001, trial participants exhibited a mean 7.0 point improvement on the North Star Ambulatory Assessment (NSAA) compared to baseline (at one year post treatment the mean increase was 5.5 points from baseline). NSAA is a validated scale developed to measure functional motor abilities in ambulant children with DMD. The data were generated from four ambulatory participants, ages 4 to 7, in Sarepta’s open-label trial, Study 101, and showed continued safety and tolerability of a one-time infusion of SRP-9001 at a dose of 2x1014 vg/kg. All adverse events were considered mild or moderate, and occurred within 90 days of treatment. There were no serious adverse events or evidence of complement activation.
  • Reported positive results for SRP-9003, an investigational gene therapy for limb-girdle muscular dystrophy type 2E (LGMD2E): Results, presented at WMS, included 18-month functional data from three clinical trial participants in the low-dose cohort and 6-month functional data from three participants in the high-dose cohort.

Cohort 1 (low dose) at 18 months:

      • All three participants continued to show improvements from baseline across all functional measures, including the North Star Assessment for Dysferlinopathies (NSAD), time-to-rise, four-stair climb, 100-meter walk test and 10-meter walk test.
      • The mean NSAD improvement from baseline was 3.0 points at 6 months and 5.7 points at 18 months.
      • There have been no new drug-related safety signals observed since the one-year update in June 2020, and no decreases in platelet counts outside of the normal range or signs of complement activation were observed.

Cohort 2 (high dose) at 6 months:

      • All three participants demonstrated improvements from baseline across all functional measures, including the NSAD, time-to-rise, four-stair climb, 100-meter walk test and 10-meter walk test.
      • The mean NSAD improvement from baseline was 3.7 points.
      • There have been no new drug-related safety signals observed since expression results were shared in June 2020, and no decreases in platelet counts outside of the normal range or signs of complement activation were observed.
  • U.S. Food and Drug Administration (FDA) accepted casimersen (SRP-4045) new drug application (NDA) for patients with DMD amenable to skipping exon 45; grants Priority Review Status: The FDA accepted Sarepta’s NDA seeking accelerated approval for casimersen (SRP-4045); regulatory action date set for February 25, 2021. FDA also granted priority review status for casimersen. The FDA has indicated it does not currently plan to hold an advisory committee meeting to discuss the application. Sarepta also received FDA's conditional approval of AMONDYS 45™ as the brand name for casimersen, a phosphorodiamidate morpholino oligomer (PMO) engineered to treat patients with DMD who have genetic mutations that are amenable to skipping exon 45 of the dystrophin gene.
  • Invested $15.0 million in AavantiBio, Inc.: Sarepta, along with Perceptive Advisors, Bain Capital Life Sciences, and RA Capital Management participated in a $107.0 million Series A financing to fund AavantiBio, a gene therapy company focused on Friedrich’s Ataxia. Bo Combo, most recently Sarepta’s Chief Commercial Officer and Executive Vice President, was appointed Chief Executive Officer and President of AavantiBio, which was co-founded by renowned gene therapy researchers Barry Byrne, M.D., Ph.D., and Manuela Corti, P.T., Ph.D., both from the University of Florida’s Powell Gene Therapy Center.
  • Announced collaboration with University of Florida (UF) to accelerate the discovery and development of therapies for rare genetic diseases: Sarepta will fund multiple research programs at UF and will have an exclusive option to further develop any new therapeutic compounds that result from the funded research programs. Funding has been allocated for four innovative projects, including: exploratory research in novel gene therapy vectors, next-generation capsids and gene editing technologies, as well as work in new therapeutic areas in degenerative genetic diseases.

Conference Call
The Company will be hosting a conference call at 4:30 p.m. Eastern Time to discuss Sarepta’s financial results and provide a corporate update. The conference call may be accessed by dialing (844) 534-7313 for domestic callers and (574) 990-1451 for international callers. The passcode for the call is 9452027. Please specify to the operator that you would like to join the “Sarepta Third Quarter 2020 Earnings Call.” The conference call will be webcast live under the investor relations section of Sarepta's website at www.sarepta.com and will be archived there following the call for 90 days. Please connect to Sarepta's website several minutes prior to the start of the broadcast to ensure adequate time for any software download that may be necessary.­

Financial Results

On a GAAP basis, for the three months ended September 30, 2020 and 2019, the Company reported a net loss of $196.5 million and $126.3 million, or $2.50 and $1.70 per basic and diluted share, respectively. On a non-GAAP basis, the net loss for the three months ended September 30, 2020 and 2019 was $111.5 million and $84.4 million, or $1.42 and $1.14 per basic and diluted share, respectively.

On a GAAP basis, for the nine months ended September 30, 2020 and 2019, the Company reported a net loss of $364.8 million and $479.4 million, or $4.70 and $6.54 per basic and diluted share, respectively. On a non-GAAP basis, the net loss for the nine months ended September 30, 2020 and 2019 was $309.2 million and $199.4 million, or $3.98 and $2.72 per basic and diluted share, respectively.

Revenues

For the three months ended September 30, 2020, the Company recorded net product revenues of $121.4 million, compared to net product revenues of $99.0 million for the same period of 2019, an increase of $22.4 million. For the nine months ended September 30, 2020, the Company recorded net product revenues of $333.2 million, compared to net product revenues of $280.7 million for nine months ended September 30, 2019, an increase of $52.5 million. The increase primarily reflects the continuing increase in demand for the Company’s products in the U.S.

For the three and nine months ended September 30, 2020, the Company recognized $22.5 million and $61.7 million of collaboration revenue, respectively, which primarily relates to the Company’s collaboration arrangement with F. Hoffman-La Roche Ltd. (“Roche”). In February 2020, the Company received an aggregate of approximately $1.2 billion in cash consideration from Roche, consisting of an up-front payment and an equity investment in the Company. Of that amount, $348.7 million is being recognized as revenue on a straight-line basis over the performance period, estimated to be through the fourth quarter of 2023.

Cost and Operating Expenses

Cost of sales (excluding amortization of in-licensed rights)
For the three months ended September 30, 2020, cost of sales (excluding amortization of in-licensed rights) was $15.0 million, compared to $13.0 million for the same period of 2019, an increase of $2.0 million. For the nine months ended September 30, 2020 and 2019, cost of sales (excluding amortization of in-licensed rights) was approximately $41.0 million. The increase in cost of sales for the three months ended September 30, 2020 is primarily due to increasing demand for the Company’s products, partially offset by write-offs of certain batches of EXONDYS 51 not meeting the Company’s quality specifications for the three months ended September 30, 2019, with no similar activity for the three months ended September 30, 2020 and an increase in royalty payments to BioMarin Pharmaceutical (“BioMarin”) and University of Western Australia (“UWA”) as a result of increasing demand for the Company’s products.

Research and development

Research and development expenses were $190.4 million for the three months ended September 30, 2020, compared to $133.9 million for the same period of 2019, an increase of $56.5 million. The increase in research and development expenses primarily reflects the following:

  • $42.5 million increase in manufacturing expenses primarily due to a continuing ramp-up of the Company’s gene therapy programs;
  • $11.2 million increase in clinical trial expenses primarily due to increased patient enrollment for the Company’s ESSENCE program as well as certain start-up activities for the Company’s micro-dystrophin program;
  • $5.6 million increase in collaboration cost sharing with Genethon on its micro-dystrophin drug candidates and Lysogene on its MPS IIIA drug candidate;
  • $4.2 million increase in compensation and other personnel expenses primarily due to a net increase in headcount;
  • $3.7 million increase in stock-based compensation expense primarily driven by increases in headcount and stock price;
  • $3.2 million increase in up-front, milestone and other expenses primarily due to $15.1 million of up-front payments as a result of the execution of certain research, option, and license agreements during the third quarter of 2020, offset primarily by $10.0 million of similar activity during the third quarter of 2019;
  • $2.2 million increase in facility- and technology-related expenses due to the Company’s continuing global expansion efforts;
  • $1.0 million increase in pre-clinical expenses primarily due to an increase of toxicology studies in the Company’s gene therapy platforms during the third quarter of 2020, offset by the completion of certain toxicology studies in the Company’s PPMO platform;
  • $2.1 million decrease in professional service expenses primarily due to a decrease in reliance on third-party research and development contractors as a result of an increase in hiring and headcount; and
  • $16.7 million offset to expense incurred in the third quarter of 2020 associated with a collaboration reimbursement from Roche.

Research and development expenses were $515.1 million for the nine months ended September 30, 2020, compared to $337.8 million for the same period of 2019, an increase of $177.3 million. The increase in research and development expenses primarily reflects the following:

  • $165.8 million increase in manufacturing expenses primarily due to a continuing ramp-up of the Company’s gene therapy programs;
  • $15.3 million increase in compensation and other personnel expenses primarily due to a net increase in headcount;
  • $12.1 million increase in stock-based compensation expense primarily driven by increases in headcount and stock price;
  • $9.5 million increase in collaboration cost sharing with Genethon on its micro-dystrophin drug candidates and Lysogene on its MPS IIIA drug candidate;
  • $8.3 million increase in up-front, milestone and other expenses primarily due to $9.3 million of milestone expense related to payments accrued to an academic institution and $27.1 million of up-front payments as a result of the execution of certain research, option and license agreements during the nine months ended September 30, 2020, offset primarily by $25.5 million of up-front payments as a result of license agreements executed during the same period of 2019;
  • $6.3 million increase in clinical trial expenses primarily due to increased patient enrollment for the Company’s ESSENCE program as well as certain start-up activities for the Company’s micro-dystrophin program;
  • $6.2 million increase in facility- and technology-related expenses due to the Company’s continuing global expansion efforts;
  • $2.7 million increase in research and other primarily driven by an increase in sponsored research with academic institutions during the nine months ended September 30, 2020;
  • $3.2 million decrease in professional service expenses primarily due to a decrease in reliance on third-party research and development contractors as a result of an increase in hiring and headcount;
  • $3.8 million decrease in pre-clinical expenses primarily due to completion of certain toxicology studies in the Company’s PPMO platform, offset by an increase of toxicology studies in the Company’s gene therapy platforms; and
  • $41.9 million offset to expense associated with a collaboration reimbursement from Roche during the nine months ended September 30, 2020.

Non-GAAP research and development expenses were $159.9 million and $110.5 million for the three months ended September 30, 2020 and 2019, respectively, an increase of $49.4 million. Non-GAAP research and development expenses were $434.5 million and $279.4 million for the nine months ended September 30, 2020 and 2019, respectively, an increase of $155.1 million.

Selling, general and administration
Selling general and administrative expenses were approximately $75.4 million for both the three months ended September 30, 2020 and 2019. The changes in selling, general and administrative expenses primarily reflect the following:

  • $3.0 million decrease in professional services primarily due to a decrease in reliance on third-party contractors as a result of an increase in hiring and headcount; and
  • $2.6 million increase in stock-based compensation primarily due to increases in headcount and stock price.

Selling general and administrative expenses were $231.8 million for the nine months ended September 30, 2020, compared to $203.4 million for the same period of 2019, an increase of $28.4 million. The increase in selling, general and administrative expenses primarily reflects the following:

  • $11.3 million increase in professional services primarily due to a transaction fee for the Roche transaction;
  • $10.0 million increase in stock-based compensation primarily due to increases in headcount and stock price;
  • $2.8 million increase in compensation and other personnel expenses primarily due to a net increase in headcount; and
  • $1.3 million increase in facility- and technology-related expense primarily due to continuing global expansion.

Non-GAAP selling, general and administrative expenses were $57.2 million and $59.6 million for the three months ended September 30, 2020 and 2019, respectively, a decrease of $2.4 million. Non-GAAP selling, general and administrative expenses were $166.8 million and $159.7 million for the nine months ended September 30, 2020 and 2019, respectively, an increase of $7.1 million.

Acquired in-process research and development

As a result of the Myonexus acquisition, the Company recorded acquired in-process research and development expense of approximately $173.2 million during the nine months ended September 30, 2019. There was no such transaction during the nine months ended September 30, 2020.

Amortization of in-licensed rights

For both the three months ended September 30, 2020 and 2019, the Company recorded amortization of in-licensed rights of approximately $0.2 million. For the nine months ended September 30, 2020 and 2019, the Company recorded amortization of in-licensed rights of approximately $0.5 million and $0.6 million, respectively. This is related to the amortization of the in-licensed right assets recognized as a result of agreements the Company entered into with BioMarin and UWA upon the first commercial sale of EXONDYS 51 and VYONDYS 53.

Gain from Sale of Priority Review Voucher

In February 2020, the Company entered into an agreement with Vifor (International) Ltd. to sell the rare pediatric disease Priority Review Voucher (“PRV”) it received from the FDA in connection with the approval of VYONDYS 53. Following the early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in March 2020, the Company completed its sale of the PRV and received proceeds of $108.1 million, net of commission, which was recorded as a gain from sale of the PRV as it did not have a carrying value at the time of the sale. There was no similar activity during the nine months ended September 30, 2019.

Loss on contingent consideration

The loss on contingent consideration relates to the fair value adjustment of the Company’s contingent consideration liability related to regulatory-related contingent payments to Myonexus selling shareholders as well as to an academic institution under separate license agreements that meet the definition of a derivative. During the three months ended September 30, 2020, the Company recognized $45.0 million of expense to adjust the fair value of the contingent consideration based on the most current assumptions relating to the achievement of the milestone. There was no similar activity during the three or nine months ended September 30, 2019.

Other expense, net

For the three months and nine months ended September 30, 2020, other expense, net was approximately $14.3 million and $34.2 million, respectively. For the three and nine months ended September 30, 2019, other expense, net was approximately $2.5 million and $3.5 million, respectively. The increase primarily reflects the interest expense on the Company’s debt facility entered into in December 2019 as well as a decrease in interest income and the amortization of investment discounts due to the investment mix of the Company’s investment portfolio.

Cash, Cash Equivalents, Investments and Restricted Cash and Investments

The Company had approximately $1.8 billion in cash, cash equivalents and investments as of September 30, 2020 compared to $1.1 billion as of December 31, 2019. The increase is primarily driven by the $1.2 billion up-front payments received from the Roche as a result of the execution of the collaboration and equity investment agreements offset by cash used to fund the Company’s ongoing operations during 2020.

About EXONDYS 51

EXONDYS 51 uses Sarepta’s proprietary phosphorodiamidate morpholino oligomer (PMO) chemistry and exon-skipping technology to bind to exon 51 of dystrophin pre-mRNA, resulting in “skipping” of this exon during mRNA processing in patients with genetic mutations that are amenable to exon 51 skipping. Exon skipping is intended to allow for production of an internally truncated dystrophin protein.