Title

Presentation

Sarepta Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.27, expectations were $-1.89.

Operator: Good afternoon and welcome to the Sarepta Therapeutics Second Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s program is being recorded. At this time. I’ll turn the call over to Francesca Nolan, Executive Director, Investor Relations and Corporate Communications. Please go ahead.

Francesca Nolan : Thank you, Jonathan. And thank you all for joining today’s call. Earlier this afternoon, we released our financial results for the second quarter 2023. The press release is available on our website at sarepta.com and our 10-Q was filed with the Securities and Exchange Commission this afternoon. Joining us on the call today, are Doug Ingram; Ian Estepan; Dallan Murray and Dr. Louise Rodino-Klapac. After our further remarks, we’ll open the call for Q&A. I’d like to know that during this call, we will be making a number of forward-looking statements. Please take a moment to review our slides on the webcast which contains our forward-looking statements. These forward-looking statements involve risks and uncertainties many of which are beyond Sarepta’s control.

Actual results can materially differ from the forward-looking statements and any such risks can materially adversely affect the business, the results of operations and trading prices for Sarepta’s common stock. For a detailed description of applicable risks and uncertainties, we encourage you to review the company’s most recent quarterly report on form 10-Q filed with the SEC, as well as the company’s other SEC filings. The company does not undertake any obligation to publicly update forward-looking statement, including any financial projections provided today based on subsequent events or circumstances. And now we’ll turn the call over to our president and CEO, Doug Ingram, who will provide an overview of our recent product progress. Doug?

Doug Ingram : Thank you, Fran. Good afternoon, and thank you for joining our second quarter 2023 financial results conference call. The second quarter of this year was perhaps the most consequential period in the long consequential history of Sarepta. For families living with Duchenne, it was far more than that still. Buddy Cassidy living with Duchenne and then an ELEVIDYS advisory committee member shared the collective view of the Duchenne community on the June approval in words far more eloquent than I could possibly muster. As Buddy said, and I quote, there is more to do. But now let us pause and bask in the glow of our achievement. Let us bask in gratitude. Let us pause in celebration. Let us watch as dawn rises and brings in the day, close quote.

In May of this year, the FDA held an advisory committee meeting on our gene therapy SRP-9001, now called the ELEVIDYS. With a majority vote, the advisory committee recommended the approval of an ELEVIDYS for the treatment of Ambulatory patients with Duchenne muscular dystrophy. On June 22, the FDA granted and accelerated approval for ELEVIDYS to treat Duchenne muscular dystrophy, currently labeled for four and five year old patients. At the time of the approval, FDA leadership informed Sarepta and the patient community that if our confirmatory trial EMBARK meets its objectives, the FDA will in the words of Dr. Peter Marks move with maximum speed following submission of the data to the agency, minimizing any impediments to review results rapidly and broadening the label by removing any age restrictions.

So we have our path. Our confirmatory trial is well designed and powered to show a statistically significant benefit in the studied population. For the avoidance of doubt, we have powered this study to show a benefit in the studied population that’s four to seven years old. And with that, we will have confirmed the mechanism of action in Duchenne patients applicable to all age ranges. We will have the top-line for EMBARK in the fourth quarter of this year. We will announce top line results as we submit them to the division followed shortly by a label supplement. If successful, we should be able to expand our label in the first half of 2024 to include the majority of Duchenne patients. Additionally, we have already commenced our non-ambulatory trial ENVISION or Study-303.

And we intend to commence two trials with alternative approaches to cleaving or clearing pre-existing antibodies. Our goal is to expand our label for ELEVIDYS to cover as much as 95% of the Duchenne patients. In a moment, our Chief Customer Officer, Dallan Murray will provide details on the early days of the ELEVIDYS launch. ELEVIDYS is our fourth approved Duchenne therapy, and we have been very successful with all of our prior launches, consistent with our track record, the ELEVIDYS launch is going well. A significant number of sites are now initiated and ready to infuse, payer discussions and negotiations have been more positive than our prior successful therapies. And there’s a significant amount of enthusiasm from physicians and families as we have a substantial number of start forms, and more coming weekly.

In fact, I am pleased to announce that the first reimbursed ELEVIDYS infusion occurred earlier today, that is faster than we projected and speaks to the team’s ability to execute. And now as positive as this is, please bear in mind that the significant ramping infusions will begin later this year. This is primarily due to payer logistics and to the release protocol for an ELEVIDYS which requires that both we and the FDA released each lot. Shortly our Head of Research and Development and Chief Scientific Officer Dr. Louise Rodino-Klapac will provide an overview of our development activities including progress with our next generation PPMO. SRP-5051, and on the gene therapy side with our LGMD portfolio. To remind you, in addition to ELEVIDYS we have a deep pipeline and are advancing a number of therapies in 2023.

In fact, we have 24 ongoing human clinical trials by the end of this year. And we continue to advance our next generation viral cassette, MyoAAV which in early animal models, looks to be as much as 10-fold more tropic than current AAVs. From a manufacturing perspective, our technical operations professionals more than 400 and all our focus with our partner Catalent on producing and releasing launch to support our launch. Looking to the midterm, we will also continue to work to establish comparability at our Thermo Fisher plant for ELEVIDYS. And then looking to the future we are advancing our approach to manufacturing to support our entire pipeline. In fact, we have made great progress in next generation suspension technology, which we will use across our gene therapy portfolio, including the LGMD programs, and even potentially for ELEVIDYS.

In fact, we have largely completed our suspension- based process development for ELEVIDYS. And we’ve made three runs with 250 leaders, with a fourth run to occur later this year, with the goal of scaling to 1,000 leaders in the near term. We have seen yields that are multiples greater than the current standard. As the leader in gene therapy for rare diseases, we will continue to focus on improving the science and the delivery of our therapies. Moving finally to quarterly performance, we have had another strong quarter with our three approved PMOs, EXONDYS, AMONDYS and VYONDYS. I am pleased to announce that second quarter total revenue came in at $261.2 million in net product revenue from our PMos came in at $239 million exceeding internal estimates and analysts consensus.

In the second quarter we saw no negative impact on the approved PMOs for many warehousing related to the ELEVIDYS approval, and do not anticipate substantial impact over the course of the year. We remain comfortable with our full year guidance of $925 million for total PMO, net product revenue, with a current bias to modestly exceeding that guidance. It is too early in the launch to provide an accurate guidance for ELEVIDYS, but we will continue to evaluate that. At Sarepta, we have a distinct culture. It is easy to say one is patient focused but our words are backed by action. We put the welfare of our patients above all other considerations and when necessary, we fight for them. And the tools we use for that fight include our commitment to scientific excellence, and the courage to represent the patients who depend upon us.

Our fight may not always be easy, but it is paying off. We have four approved therapies and a wealth of potentially life enhancing programs in our pipeline. We will achieve $925 million on the first three of our four approved therapies this year and far more next year when our newest approval is considered. We have a near term high probability success plan to broaden the label of the first and only gene therapy for Duchenne. And if our plans are successful, we could be profitable in the next few quarters. We have done a lot already. But with our plans, our pipeline and our commitment to dogged execution, we have only just begun. And with that I will turn the call over to Dr. Rodino-Klapac, who will provide an update on our research and development progress.

Louise?

Louise Rodino-Klapac : Thanks, Doug. The accomplishments within R&D over the last quarter are many and highlighted by the approval of ELEVIDYS on June 22, 2023. The approval the ELEVIDYS view the accelerated approval pathway represents a win for the Duchenne community and an important step towards the broad approval for individuals living with Duchenne regardless of age or ambulatory status. As we look forward to the weeks and months ahead, we remain firmly committed to our values to follow the science and present objective evidence that supports an ELEVIDYS’s ability to change the trajectory of Duchenne muscular dystrophy. Since 2018, and across multiple studies, we dosed the largest number of Duchenne patients, more than any other gene therapy in development for this disease.

To remind you, we’ve shown consistent results across three clinical studies with respect to both biomarker expression and functional results. In clinical trials, ELEVIDYS demonstrated positive results at multiple time points, including one two and four years after treatment in addition to consistent safety profile. The BLA for ELEVIDYS included efficacy and safety data from studies 101, 102, and 103 for ENDEAVOR, as well as an integrated analysis across these three clinical studies, comparing functional results to propensity score matched external control. Importantly, the functional data reinforce the consistency of NSA improvement across these three independent trials and showing the improvement across key secondary functional endpoints, such as time to rise and 10-meter walk run.

The data from studies 101, 102 and 103 Cohort 1, which is ages four to seven have now been either published or accepted for publication in peer-reviewed journals. When compared to appropriate control populations, ELEVIDYS has consistently shown a treatment effect as measured by change in MSA score at one year. We applied the learnings from studies 101, 102 and 103 in the design, the execution and statistical analysis plan for Phase 3 EMBARK study. To remind you, EMBARK, is a double-blind randomized placebo-controlled trial of ELEVIDYS and Duchenne patients ages four to seven. We completed enrollment in the fall of 2022. The trial will be considered successful if the entire treated population shows a statistically significant positive difference in NSAA scores at one year compared to placebo.

Our conviction around EMBARK is founded in data and was designed based on our experience with studies 101, 102 and 103 along with our propensity, weighted external controls, and natural history data sources. We took extensive measures to ensure success, which includes the following. The EMBARK study design improves on Study 102 with measures to increase homogeneity, including a floor and a ceiling on baseline NSAA and a requirement for ricin floors to be less than five seconds at screening. We also ensured a balanced distribution between treatment arms, by including a stratification factor for baseline NSAA a score. We also increased the target sample size to 120 to increase power and enrolled 125 patients. All of these measures results in a study powered well over 90% As discussed at the advisory committee in May, when it assumes better deviation of 3.5 points, and 120 patients EMBARK was powered greater than 90% to see a 2.2 point difference on NSAA.

That’s we’ve always been confident in the powering of the study. We’ve also done extensive analysis and modeling that provides additional confidence in the success of EMBARK. First when the integrated summary of efficacy population included in the BLA, which was an [indiscernible] that’s narrowed to those who meet through one entry criteria for an NF 33. The standard deviation goes down, confirming increased homogeneity. We also perform simulation models for scenarios drawn from existing program data that have all yielded greater than 90% power. Given the entire protocol, we’re able to detect and even lower treatment effects. For example, with an assumed standard deviation of 3.5 points, our analysis would predict statistical significance at observed treatment effects and the overall intent to treat population as low as 1.3 points.

Taken together, we have strong confidence in the Part 1 readout of EMBARK. With regards to additional ELEVIDYS studies, we’ve commenced dosing in ENVISION our placebo-controlled Phase 3 study in non-ambulant and older ambulant patients with Duchenne. We are also on track to commence an [indiscernible] study as well as an ELEVIDYS study in AAVrh74 antibody-positive Duchenne patients this year. This is all with the goal of serving the entire Duchenne population. Now moving to limb girdle muscular dystrophy or LGMD. We remain committed to advancing our LGMD portfolio across a variety of subtypes and look forward to providing updates on these important programs in the months ahead. We’re pleased to report that we have fully enrolled journey for LGMD natural history study, 126 patients with circle glycan oppositely have been enrolled and will be followed for 36 months.

We’ve also made excellent progress enrolling Voyagene, our Phase 1 study evaluating SRP-9003 for the treatment of limb girdle muscular dystrophy Type 2E, in ambulant adult patients and non-ambulant patients using clinical process SRP-9003 material. Combined with positive expression and functional data shared from our initial study, SRP-9003-101, we believe the data from Voyagene will give us insights into a broader patient population. Our next milestone for Voyagene include completing enrollment and Q3 of this year and initiating our Phase 3 study using commercially representative process material later in the year. Finally, we’ve commenced dosing of a systemic pilot study NAVIGENE for SRP-6004 dual vector RH74 mediated gene therapy, to treat LGMD2B to be characterized by the absence of the associated [indiscernible].

The innovative dual vector strategy allows us to deliver the full length of Ferland gene, the sole cause of LGMD2B. We also continue to make progress in manufacturing for all LGMD candidates in our pipeline, and look forward to initiating clinical studies as rapidly as possible. Turning now to the progress we’ve made with our RNA platform. We were pleased to complete enrollment in the first quarter of 2023 for a MOMENTUM study for SRP-5051. And we remain on track to announce data from the study in the back half of 2023. In regards to our post-marketing studies for the PMOs as mentioned last quarter, we completed enrollment in the ESSANCE trial, or post marketing requirements for golodirsen and casimersen and continue to make good progress with our MIS51ON study which is on track to be fully enrolled this year.

The accomplishments of 2023 and the opportunities before us seek to the promise of science to fundamentally impact and change the lives of patients around the world. In the research side, we can see to make excellent progress on the MyoAAV platform, along with an exciting pipeline of genetic medicine candidates. My deepest gratitude to our R&D colleagues across RNA, gene therapy and gene editing, for their extraordinary work to get us where we are today. Finally, to the patient community, we understand the urgency and we’re working tirelessly to bring forth transformative genetic medicines as rapidly as science will allow. We’re doing everything we can to expedite the EMBARK study read up, that we can expand the ELEVIDYS label. We expect the data will be available in the next three or four months.

I will now turn the call over to Dallan for an update on our commercial activities. Dallan?

Dallan Murray : Thank you, Louise, and good afternoon. We were thrilled to receive approval for ELEVIDYS on June 22. And we owe a tremendous debt of gratitude to the patients who participated in the trials, the KOLs and our R&D colleagues for getting us to this point. As Doug and Louise have said, we are deeply committed to broadening the label at the earliest time point that is feasible. And during this time, the team has diligently working day and night to expedite access to this potentially transformative therapy for all eligible four to five year old Duchenne patients. Their dedication is focused on ensuring swift and seamless access for those who can benefit from ELEVIDYS. In these early stages, much of our focus is on supporting those sites who are boys turning six years old.

At the same time, we are also rapidly preparing the sites to treat all of the patients who are eligible today and laying the groundwork to be ready for a broader patient population when the time comes. The team’s remarkable progress and unwavering sense of urgency and executing are now for Duchenne launches are truly commendable and reflect our commitment to providing timely access to potentially transformative patients’ — therapies for patients. The commercial and medical teams began educating the centers within 24 hours of approval, as we’ve done in our previous three launches. Right from day one, our case managers were fully prepared to assist patients in navigating the intricate aspects of the gene therapy treatment journey. Doug has previously highlighted the unique components of a gene therapy launch, which we must get right in order to serve the community.

The three areas of focus are site readiness, peer engagement, and building the capabilities for antibody testing. In terms of gene therapy site readiness. As of today, we have over 50 sites trained, activated and ready to receive product. We have achieved this ahead of our own aggressive timelines. On the payer front. Since approval, the team has engaged both commercial and Medicaid payers, representing approximately 250 million lives. Continued progress has been made in educating and informing them on the clinical data to support policy formation to our approved FDA label. As an example, United Healthcare one of the largest commercial insurers in the United States, published their coverage policy for ELEVIDYS yesterday, aligning the therapy to its FDA-approved label.

And finally to touch on antibody testing, over 700 kits are in the hands of our key sites within a day or two of approval. Testing is currently underway, and the process is working smoothly. We’ve seen very strong demand for ELEVIDYS and are encouraged by the discussions with KOLs, payers and the broader community. We began receiving enrollment forms within hours of approval, and we continue to see them come in on a daily basis. Since June 22, the team has had over 500 interactions with both treating and referring sites. In these early discussions. Our focus has been first and foremost on patient safety, eligibility, procurement, dosing and preparation and reimbursement. Launching the first gene therapy for Duchenne patients requires a multifaceted approach with a high level of communication not only with HCPs and sites, but also patients, families and payers to ensure patients have timely access to this groundbreaking therapy.

As a result of our preparation and diligent efforts, we are now at the point where patients can begin receiving ELEVIDYS with confidence. As I previously highlighted, our engagement with payers has been constructive, the team is optimistic and making progress towards our goal of ensuring timely access. Of note we are seeing states reach out to their local KOLs and experts to inform policies. We expect to have payer policies in place within three to six months depending on the plan. In the interim, we are working with payers on a case-by-case basis to obtain access for patients. To that end, we have received multiple authorizations. And as Doug mentioned, we were thrilled to announce that the first patient was dosed today. Over the course of the next week and a half, we have a handful of additional infusions across the country scheduled with patients representing a combination of commercial and Medicaid insurance coverage.

We are gratified by the tremendous work being done across the country to support patients. In particular, there has been a concerted effort since approval to rally around those patients who are approaching their sixth birthday. The incredible efforts to support those patients from all involved has been truly humbling. While we are encouraged by our progress, and accomplishments to date, it’s important to reiterate that we are not providing revenue guidance in the early stages of this one-of-a-kind launch. As Doug made clear on the approval call, we expect this to take some time in the early stages before dosing can begin in earnest to generate the launch ramp we are confident will come I want to take a moment prior to reflecting on our PMO business to thank everyone within Sarepta and our key partners who have worked so hard to make this launch a reality and allowed us to be ready to serve these patients right from day one.

Now regarding our PMO business, it’s critical to highlight the fact that we have not lost a step supporting our PMO patient community, while we’ve risen to the challenge of the first Duchenne gene therapy launch. As Doug mentioned, we delivered $239 million in net product revenue in the second quarter representing 13.1% growth over the second quarter of 2022. EXONDYS 51 totaled $134.7 million, representing 6.6% growth over Q2 of ’22. For VYONDYS 53, sales were $32.6 million, growing roughly 8.2% over the second quarter of 2022. And for AMONDYS 45, sales totaled $71.7 million, representing more than 31% growth versus Q2 of 2022. Total ex-U.S. net product revenue in the second quarter was roughly $35 million. This represented an increase over the prior quarter, which was expected and fully reflected in our annual guidance and forecast.

As discussed on last quarter’s call, we expect to see even more quarter-to-quarter fluctuations in the overall net product revenue as the ex-U.S. becomes a bigger percentage of the overall PMO mix. Importantly, these quarter-to-quarter fluctuations along with the shifting mix of the PMO revenue base have all been anticipated and fully reflected in our annual guidance. Overall, the fundamentals of the PMO business coming out of Q2 are completely in line with what we expected at this point in the year. And we reiterate our full year guidance of $925 million in net product revenue for our PMO therapies. In closing, our teams are fully engaged and executing today to support patients with all four of our approved therapies. I’m particularly pleased to see the continued success of our PMO business in the second quarter.

In fact, looking back on the execution of all three of our PMO launches should provide a high level of confidence in the future of Sarepta and our potential to transform the Duchenne space with ELEVIDYS and pave the way for precision genetic medicines for other rare patient populations such as limb-girdle muscular dystrophy. And with that, I’ll turn the call over to Ian Estepan for an update on our financials. Ian?

Ian Estepan : Thanks, Dallan, and good afternoon, everyone. This afternoon’s financial results press release provided details for the second quarter of 2023 on a non-GAAP basis as well as a GAAP basis. Please refer to the press release available on Sarepta’s website for a full reconciliation of GAAP to non-GAAP financial results. . For the three months ended June 30, 2023, the company recorded total revenues of $261.2 million, which consists of net product revenues and collaboration revenues compared to revenues of $233.5 million for the same period of 2022, an increase of $27.7 million. Net product revenue for the second quarter of 2023 from our PMO exon skipping franchise was $239 million compared to $211.2 million for the same period of 2022.

The increase in net product revenue primarily reflects increasing demand for our PMO products. In each of the quarters ended June 30, 2023 and 2022, we recognized $22.3 million of collaboration revenues, which relates to our collaboration arrangement with Roche. The reimbursable co-development costs under the Roche agreement totaled $28.2 million for the second quarter of 2023 compared to $26.4 million for the same period of 2022. On a GAAP basis, we reported a net loss of $23.9 million or $0.27 per basic and diluted share and $231.5 million or $2.65 per basic and diluted share for the second quarter of 2023 and 2022, respectively. We reported a non-GAAP net loss of $75.2 million or $0.85 per basic and diluted share in the second quarter of 2023 compared to a non-GAAP net loss of $103 million or $1.18 per basic and diluted share in the second quarter of 2022.

In the second quarter 2023, we recorded approximately $34.1 million in cost of sales compared to $37.8 million in the same period of 2022. The decrease in cost of sales primarily reflects a decrease in our royalty payments during the three months ended June 30, 2023, due to changes in the BioMarin royalty terms and a decrease in write-offs of certain batches of our products not meeting our quality specifications for the three months ended June 30, 2023, as compared to the same period of 2022, partially offset by an increase in demand for our PMO products. On a GAAP basis, we recorded $241.9 million and $252.3 million in R&D expenses for the second quarter of 2023 and 2022, respectively, a year-over-year decrease of $10.4 million. The decrease is primarily due to a decrease in manufacturing expenses partially offset by increase in clinical trial expenses and compensation and other personnel expenses.

On a non-GAAP basis, R&D expenses were $212.2 million for the second quarter of 2023 compared to $230.4 million for the same period of 2022 and a decrease of $18.2 million. Now turning to SG&A. On a GAAP basis, we recorded approximately $118.6 million and $154.3 million of expenses for the second quarter of 2023 and 2022, respectively, a decrease of $35.7 million. The decrease was driven primarily by a decrease in stock-based compensation expense. On a non-GAAP basis, SG&A expenses were $90.3 million for the second quarter of 2023 compared to $63.7 million for the same period of 2022, an increase of $26.6 million. On a GAAP basis, we recorded $16.9 million in other income net for the second quarter of 2023 compared to $17 million in other expense net for the same period of 2022.

The change is primarily due to an increase in interest income and accretion of investment discount due to the investment mix of our investment portfolio as well as a reduction of interest expense incurred as a result of the repayment of our December 2019 term loan during 2022. In the second quarter, we entered into an agreement to sell the rare pediatric disease priority review voucher received from the FDA in connection with the approval of ELEVIDYS for a consideration of $102 million with no commission cost. The net proceeds were recorded as a gain from the sale of the PRV as ELEVIDYS did not have a carrying value at the time of the sale. And finally, we had approximately $1.9 billion in cash, cash equivalents, investments and long-term restricted cash as of June 30, 2023.

So in closing, I’d just like to reiterate how exciting a time it is for Sarepta and the patients we serve, seeing the first patient dosed today, brought true joy to all of our hearts. And then from a financial perspective, we’re looking forward to being one of the rare biotech companies to actually make the transition to profitability. In fact, we anticipate becoming non-GAAP EPS positive in the upcoming quarters. So this has truly been quite an accomplishment on all fronts for us and we’re particularly proud of what we’ve been able to do. And with that, I’ll turn the call over back to Doug to start the Q&A.

Doug Ingram: Thank you very much, Ian, and hear, hear to those last comments. Jonathan, let’s open the call for questions.

Operator: Certainly. [Operator Instructions] Our first question comes from the line of Colin Bristow from UBS. Your question please.

Colin Bristow : Hey, good afternoon. And congrats on another milestone with the first patient dosed. I guess sort of two part question around the comments you made around EMBARK, hitting with as low as 1.3 point delta. I’m curious what is powering the 1.3 delta is at. And has there been any discussion with FDA whether this would be considered clinically meaningful. And then sort of formal to that, I think the common question we’re getting is that is EMBARK this is the primary in your overall population, which shows a directional benefit in 4- to 5-year-olds, given there’s no multiplicity strategy, has the FDA given any indication on whether this would be sufficient to maintain the approval status? Thank you.

Doug Ingram : So I’m going to turn the question over to Louise on the powering issue. But real quickly, just on the latter question, the — so we haven’t had discussions with the agency directly about clinical meaningfulness of a particular number. But I want to remind you that the effect one sees at 52 weeks isn’t the effect. It’s a signal of the long-term effect. Using an artful metaphor, if we took off in — from Los Angeles, and we were 1 degree off trying to get to Tokyo, by the time we hit Catalina Island, we wouldn’t be that far off. But if we continue with that 1 degree, we’d be 500, 600-700 miles away from Tokyo. That’s what we’re dealing with here. This is a disease that is degenerative over time. If we can see a statistically significant benefit in a mere 52 weeks, we have clearly changed the trajectory of this disease in a very positive way. So with that said, let me turn the technical question on the powering calculations over to Dr. Rodino-Klapac.

Louise Rodino-Klapac : Thanks, Doug. So based on the modeling that we did, this isn’t a traditional power calculation. So this was a simulation model in order to determine the lowest effect size that we could see in order to hit stat sig. So we put the following assumptions into our model, which was in 125 patients, which is the number of patients we enrolled. No dropouts because we’ve not seen any dropouts in EMBARK. We assumed a standard deviation of 3.5% across the entire four to seven year-old population. And then we varied the effect size in order to see how low we could go in order to still hit statistical significance. And that’s how we arrive at the equal to or greater than 1.3 as the lowest number. This isn’t the assumed effect size. This is as low as the modeling will show us to still see statistical significance.

Doug Ingram : And then one final thing. Colin, you had asked about the way the agency would look at the data. Again, we are powered for success and EMBARK, and our goal is to see a statistically significant meaningful benefit from the therapy in 52 weeks. At the end of the day, the agency standard is to look at the totality of evidence across the primary and the secondary. So sort of statistical significance, we look at the — presumably, we look at the totality of evidence to justify the mechanism of action and expand the label to the broader population.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Brian Abrahams from RBC Capital Markets. Your question please?

Brian Abrahams : Hey, guys. Good afternoon. Thanks for taking my question. So in the back half of this year, we’re going to see data from several late-stage DMD gene therapies. I guess I’m curious, based on what you’re seeing on the ground so far. If you have a sense as to what physicians and patients are going to be looking for as they potentially choose a gene therapy to take, assuming there’s multiple therapies available. What are your views on the potential approval paths based on interim functional analysis? Is that something that you guys ever explored with or contemplated or explore with the FDA?

Doug Ingram : We are not — we have — there’s one therapy that’s approved for Duchenne muscular dystrophy that’s a gene therapy. And to be honest, we think very little about other organizations right now. We have a path in front of us. We have to serve the patients that are available to benefit from our therapy today, and we need to broaden that label. And that’s what we’re focused on right now. And of the things that we worry about right now, those are the — all of the top priorities and worrying about other organizations and their plans is tertiary or less than tertiary to us.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Tazeen Ahmad from Bank of America. Your question please?

Tazeen Ahmad : Hi, guys. Good afternoon, thanks for taking my question. I was hoping to get a little bit more detail on the one patient that was just dosed today. Maybe if you can share the age of the patient and also how long it took from the time the doctor identified the patient as appropriate for the drug to today. And do you expect that time line to be representative on a go-forward basis, at least for the next few months, for uptake? Thanks.

Doug Ingram : So on the patient, the patient, I believe this was — I would normally not answer this question because of patient privacy, but I think it’s already out on social media. The patient was one day away from their sixth birthday. So as you can appreciate, there was an enormous amount of work, not merely on our team’s sake, but frankly, on the physician and their staff’s part, to ensure that this patient didn’t age out. And frankly, kudos to the payer for prioritizing this to ensure this patient received access, which I think speaks — it speaks to the execution of the team. It speaks to the passion and ability of the physicians that we’re working with. And frankly, it speaks to the willingness of payers to provide access and to be thoughtful about patients, which I think is a wonderful answer for all of us.

Looking forward, as I’ve said before, and I think Dallan reiterated in his remarks, you should assume that the significant ramp in this therapy is going to occur later this year. There are obvious administrative reasons for that. Payers, policies and the like have to get completed. And then administratively, we have to release product and that’s a dual-release process right now. We release it and then the FDA releases it as well. But as Dallan noted, we do have a handful of patients over the next literally coming few days that are currently scheduled for infusion. But I really want to reiterate, you should look out to really see that ramp in infusions later this year.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Gena Wang from Barclays. Your question please.

Gena Wang : Thank you. I will also ask the peer questions. So based on your initial interaction with other hospitals, how many of these like DMD patients approaching six years old? And what strategy you have tried to treat those patients before payers’ policy in place? And is there a way you can book revenue before the payer policy in place?

Doug Ingram : I apologize. I missed the last part of your question. I’m going to turn this over to Dallan to answer, but you’ll see that strategy, which is not our own strategy alone, but it is shared strategy with these fairly passionate physicians working in closure with payers, is to prioritize children so that they can get access of all possible for the age out of the label. And you saw that [indiscernible] today with the boy who received access today one day before his sixth birthday. But Dallan, do you have any other thoughts on that?

Dallan Murray : Yeah, Gena, thank you for the question. In the short term, we’ve been focused on those boys that are turning six in the next while. We — as Doug said in the earnings call, we — there’s an incident population in Duchenne of 400 patients born each year. Now not all of those patients are diagnosed by the age of their sixth birthday. There’s actually a pretty good percentage that don’t get diagnosed by their sixth birthday. But there is a good number of patients sitting in the sites that are turning six and a big focus in terms of our execution. As Doug also said and as we’ve said before, we aren’t guiding around patient numbers. We’re going to focus on net revenue as we’ve done with the other launches.

Operator: Thank you. One moment for our next question. And our next question comes from Salveen Richter from Goldman Sachs. Your question please.

Salveen Richter : Good afternoon. Thanks for taking my question. And congrats as well on treating the first patient here. With regard to the 3.5 standard deviation assumption, recognize that, that’s what you saw, I believe, in study 103. I guess, is there anything else that you’re using to support that assumption? And in the context of heterogeneity and even with stratification, what would be — how you’re thinking about the impact here if it’s higher? Thank you.

Doug Ingram : Well, actually, one would actually presume potentially the opposite. So the 3.5 standard deviation was the original powering for EMBARK that considered the historical trials but didn’t take into consideration the various tightening of the protocol that occurred with respect to Study 303, 301 or EMBARK to reduce heterogeneity and create more homogeneity. You’ll recall we have a very strong ceiling and floor in that trial. You’ll recall that we have stratified not only on the basis of NSAA baselines but also on age, the four to five and six to seven year-old range. You’ll recall that we have restricted all of the patients to rise time under five seconds. All of that should theoretically at least reduce heterogeneity, create more homogeneity across the population and reduce standard deviation.

But the 3.5 points that Louise mentioned was considered before those. It didn’t take those into consideration. And indeed, when the research team did their modeling, they didn’t change the standard deviation, so they didn’t actually amend that for their modeling purposes. So we feel very good about where we are right now. And then to remind you, we — the study was powered off of 120 patients with a presumption of some dropouts. We sit here today, the study was overenrolled. It’s now 125 patients, and we’ve had absolutely 0 dropouts and frankly, don’t anticipate any dropouts before the last patient last visit, which will occur in mid-September. So we feel very good about where we are right now.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Gil Blum from Needham & Company. Your question please.

Gil Blum : Good afternoon, everyone. And thanks for taking our question. Maybe a bit of a rephrasing on an earlier question here. Is there a situation in what you think the data from EMBARK will be broken up based on age, given potential different feedback from the agency? Thank you.

Doug Ingram : No, no, we don’t. The study has been powered to see a treatment effect in the study population, which is four to seven. It’s very well powered to see that. And we’ve had conversations with the FDA and FDA leadership, which has confirmed that if we’re successful in our trial, they will move rapidly once we’ve submitted data to them to review that data and to remove the age limitations.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Uy Ear from Mizuho. Your question please.

Uy Ear : Hey, guys. Congrats on the dosing the first patients. So my question is just referring to what Doug said in the prepared remarks. You said you’re going to expand the label in the first half to the majority of patients. Can you kind of elaborate by what you mean by that? Will the older patients and the non-ambulatory patients, would those be included? Or would that come much later where I think your goal is to reach 95% of the patients? Thanks.

Doug Ingram : Yeah. Thank you very much for your question. So let’s go. There are sort of two steps to this. So as we stand here today, we have a label for four and five-year old patients. When EMBARK is successful, and we have a lot of conviction around EMBARK and the success of EMBARK, we will immediately submit that data to the agency before we’ve even submitted a BLA supplement with the goal of them beginning the review as soon as they receive that data. Assuming that EMBARK is successful, we would assume that all age limitations will be removed from the label and that gets us to the majority of patients, both ambulatory, non-ambulatory and all age ranges. As we’ve said, we’ve had conversations with the agency about removing all of the age ranges.

There would be no logical basis to assume that ambulation status would be a reason to limit access. It’s not as if this protein is aware that a patient is in a wheelchair or not. So we feel very confident about that. There is one additional thing we’ll do, which is we’ll take a cut from our current non-ambulatory study to have additional safety data that supplements the safety data we already have on the older and non-ambulatory patients as well. So that’s our goal first early next year to have a broad label that covers all patients. There are two — there will still remain two limitations in the ability to receive that therapy. One of them is this 5% or so of mutations that cover exon 8 and or 9 that are contraindicated for those mutations.

That will remain for some time. We’re going to continue to do work on that and hopefully narrow that. But for the time being, that will be in the label. And then the second one is preexisting antibodies. About 13.9% based on our seroprevalence study represent patients that have some environmental exposure to something that looks like an antibody for RA 74. Those patients cannot currently be dosed. But as Dr. Rodino-Klapac mentioned in her prepared remarks, we’re starting two different alternative approaches to clear those antibodies, one in telipidase to cleave them and apheresis as a second alternative to clear antibodies. And if one or both of those are successful, then in the near term, we could start presumably empowering physicians to safely and effectively dose even patients that have pre-existing antibodies.

That would get us to more than just the majority of patients to potentially as much as 95% of patients. So that’s our goal.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Michael Ulz from Morgan Stanley. Your question please.

Michael Ulz : Hey, guys. Thanks for taking the question. Maybe just another one on the ELEVIDYS launch. In your prepared remarks, you mentioned greater than 50 sites are trained and activated currently. Just curious if you can give us the total number of sites expected? Just trying to get a sense of whether that represents a majority currently or where you’re at in that process? Thanks.

Doug Ingram : 50 sites is a tremendous number of sites. We are — I am completely thrilled with the team’s ability. So about 80% of all Duchenne patients are covered by about 50 centers of care in the United States. So 50 sites is an enormous number of sites to infuse ELEVIDYS. Our goal is to get to as many as 70 sites over time, and we’re significantly ahead of schedule in our goal to do that. So we’re in really, really great shape from a site perspective and Dallan and his team deserve an enormous amount of kudos for where we’ve gotten right now.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Danielle Brill from Raymond James. Your question please.

Danielle Brill : Hey, guys. Good afternoon. I have a quick follow-up to Salveen’s question on the standard deviation. I guess I’m curious, are you able to see blinded SD data or any other blinded data from EMBARK that allows you to stress test your powering assumptions? Just kind of hoping you can elaborate further on your confidence in the assumptions. Thanks.

Doug Ingram : We do not have access to — so looking at the blinded data wouldn’t be very insightful, and we don’t have access to the unblinded data. So we feel very comfortable with is that our initial study was powered with the standard deviation that we were seeing in studies that did not have the homogenizing restrictions that EMBARK has in it. And yet when we did the simulations, when Louise and her team and our stats group did the simulations to test the powering assumptions and the like, they did not actually take into account the homogenizing aspects of the change in protocol. Things like, as I mentioned before, stratifying on age and making sure that all kids had a rise time under five seconds and having strong floors and ceilings and the like. So we feel very good about the powering of the study, and we feel good as we sit here today on the standard deviation. But we haven’t had access to unblinded data to test those assumptions.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Ritu Baral from TD Cowen. Your question please.

Ritu Baral : Good afternoon, guys. Thanks for taking the question. Just back to the centers for a second. Doug, can you say if the handful of patients that you were referencing in the next couple of weeks, will they be at five different centers and — of the 50? And then can you talk a little bit about are there centers that you expect to move faster than others, maybe given their history with Zolgensma and how comfortable they are? And then if I can squeak another one in. Do you know how many antibody tests have been run? And can you release that?

Doug Ingram : So I don’t know the last answer for you. I can answer the first two. All of them — so all of the handful are at different sites. So they’re broadly across different sites. And then if any sites are faster, the good news on these — first of all, the amount of passion from the physicians is really wonderful. And everyone’s is trying to move as fast as possible to get kids infused and benefit these kids, particularly kids that might otherwise age out. We have really benefited and the team has really benefited from the fact that these — most of these sites, the majority of these sites have had experience with Zolgensma know how to infuse gene therapies. So they were well prepared before we went in and got the process of initiating them and getting them site ready. So I would say broadly speaking, there’s a lot of enthusiasm to move as fast as reasonably possible to get patients benefiting from ELEVIDYS.

Dallan Murray : And in terms of the antibody testing, it’s going smoothly and functioning well, and we aren’t disclosing the numbers right now, but it is working well and going smoothly. And we’re happy with the demand.

Operator: Thank you. Our next question comes from the line of Anupam Rama from JPMorgan. Your question please?

Anupam Rama : Hey, guys. Thanks for taking the question. Just a clarification point. Sorry if I missed this. What are the gating factors to starting the SRP-9003 pivotal study later this year? Thanks so much.

Doug Ingram : I’ll turn this over to Louise without getting any of it wrong, but I think it’s all just CMC and manufacturing, if I’m not mistaken. But Louise, you tell me if I’m missing a nuance.

Louise Rodino-Klapac : No, that’s accurate. So just making sure the release assays are in place and we’re all set. But we — as we mentioned, we fully enrolled Journey and have a great deal of patients lined up, and most of them having natural history data as well. .

Operator: Thank you. One moment for our next question. And our next question comes from the line of Josh Schwartz from Leerink Partners. Your question please.

Unidentified Analyst: Hi, all. This is Will on for Joe today. Thanks for taking our questions. I’ll add my congrats on the progress this quarter. So one for us, wondering what the opportunity is for SRP 5051 relative to the PMOs that you currently market. Is this a potential franchise expander? And are there any reasons why a patient is not currently on a PMO, but would be a candidate for PPMO? Thank you.

Doug Ingram : So not on it. So I think, broadly speaking, if it was successful, so we’ll see the data later this year, and then we’ll — if we’re successful with the data later this year and the risk benefit justifies it, we’re going to seek an NDA for 5051 next year. The goal then would be — there’s a couple of things. The first goal is that it would be more convenient and potentially much more powerful version our PMOs. So for patients already on the therapy, it would be a great transition to this therapy for them and benefit them. You could envision in the United States, we might have even — we’ve had a great success record with access. We might have even greater success with access if we were making 3%-4%-5%, which would be multiple folds more dystrophin than the PMOs. And then it does always offer the theoretical opportunity to move outside of the United States, which is something we’re very excited to do, which is bringing our RNA technology more broadly around the world to benefit patients.

So there’s a lot of potential opportunity with the PPMOs, if successful. So we’re looking forward to looking at the Part B of momentum later this year and then making some decisions across the portfolio and aggressively bringing things forward if we see success with 5051.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Kristen Kluska from Cantor Fitzgerald. Your question please.

Kristen Kluska : Hi, everyone. Congrats on today’s milestone. Given that you’re taking all these steps now across sites, payers and antibody testing, is it your expectation that if you end up getting a broader label in the first half of next year, that the three to four month time line you’ve commuted you’ve communicated to us in terms of patients getting on therapy could be shortened? Thank you.

Doug Ingram : Yeah. The answer is generally speaking, yes. This really is an initiation issue with the launch of the therapy, policies have to be in place. In some places, codes have to be in place and the like. And then, of course, we have this current release process. So we ought to be in a position to move faster over time. But as I said before, we’ve had a lot of very fantastic early success but we should assume that the real ramp begins later this year .

Operator: Thank you. One moment for our next question. And our next question comes from the line of Tim Lugo from William Blair. Your question please.

John Boyle : Hi, team. This is John on for Tim. Thanks for taking our question. So I was just wondering beyond the effort that the team is making to get access to patients approaching six years of age, just wondering if you could talk a little bit about any higher demand you’re seeing from the patients approaching that age cutoff and if you’re seeing more patient starts from those patients. .

Doug Ingram : I’ll turn this over to Dallan.

Dallan Murray : Yes. Thanks for the question. We’re seeing demand broadly in both the four and five year-old age group. In terms of access early on, it is skewing heavily to those patients that have the birthdays and just more so maybe because of the urgency and the dialogue that’s happening between KOLs, payers and the teams right now. So early on, yes, we are seeing it skewed towards six year — the people with birthdays turning six, but we expect that to normalize very quickly as we start to work towards all of the patients that are eligible, that 4 to 5 age group.

Doug Ingram : So we’re seeing demand in start forms across the ages. We’ll likely get access skewing to the older kids in that age range for the obvious reason that we want to get them dosed before there’s an issue with the label.

Dallan Murray : Yeah.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Brian Skorney from Baird. Your question please.

Unidentified Analyst: Hi. This is Luke on for Brian. Thanks for taking our question. Regarding the pace of progress getting the ENVISION trial up and running, have you seen any signals that the availability of commercial products might be a headwind to enrollment in the ambulatory population?

Doug Ingram : The answer to that is going to be no. So we were very thoughtful about the protocol for ENVISION. In fact, we’ve significantly limited the number of patients that are going to come out of the United States to ensure that we don’t have an issue with the progress of that therapy as we broaden the label. Now that does mean that the enrollment for ENVISION will move slower than for instance, EMBARK, which rapidly enrolled as everyone may recall. But ultimately, we’re not seeing an impact from this approval on that basis and part of it is because we’re going to enroll the majority of subjects outside of the United States.

Operator: Thank you. One moment for our final question for today. And our final question for today comes from the line of Debjit Chattopadhyay from Guggenheim. Your question please.

Debjit Chattopadhyay : Hey, good afternoon. What is the current gross margin for ELEVIDYS? And where do you think it will migrate either on peak capacity or if you could successfully migrate to the 1,000-liter scale?

Doug Ingram : Sure. I’ll turn this over to Ian.

Ian Estepan : Sure. So we’ve said that we would expect the margins to be like high-quality targeted agents, so kind of in that 80% range similar to what we’re seeing with our PMOs. Now obviously, it’s going to be higher when the earlier patients are being dosed. And then as heavier patients enlist in the label trend down, but basically into kind of that 80% range. And then obviously, to your good point, we could see a big change. We’re not in a position to quantify that from where we are from a manufacturing perspective on our suspension process. But obviously, it has — to Doug’s point, a big impact on our yield. And so we could see that driving that number higher. But obviously, we’re not willing to commit to that just yet.

Operator: Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to management for any further remarks.

Doug Ingram : Thank you, Jonathan, and thank you, everyone, for joining us this evening and for your questions. I appreciate it. We’ve obviously made, from my perspective, great progress so far this year, both with the approval of ELEVIDYS and then serving patients, both with ELEVIDYS and with our existing PMOs. I will remind us that the team has done a brilliant job of continuing to serve the community with our PMOs. And we are — we feel very confident about our current guidance on the PMOs. We have a lot to do for the rest of the year, both serving these patients, continuing to serve the patients with the PMOs, getting the EMBARK readout about which we have an enormous amount of condition, and then we will share that with you at essentially at the same time that we share with our colleagues at the FDA.

And our goal, of course, is to broaden this label as soon as reasonably possible and bring ELEVIDYS to the vast majority of patients living with Duchenne and their families. With that, I look forward to updating everyone over the course of the quarter, and I would ask everyone to have a lovely evening.

Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.