Sarepta Therapeutics Inc (SRPT) 2015 Q1 法說會逐字稿

Welcome to the Q1 2015 Sarepta Therapeutics, Incorporated earnings conference call. My name is John and I will be your operator for today's call.

(Operator instructions)

Please note this conference is being recorded. I now like to turn the call over to Ian Estepan. Ian, you may begin.

Thank you, John, and thank you all for joining today's call. Earlier today we released our financial results for the first quarter of 2015. The press release is available on our website at www.sarepta.com. and our 10-Q was filed earlier this morning.

Joining me on the call today are Ed Kaye, Sarepta's Interim Chief Executive Officer and Chief Medical Officer; and Sandy Mahatme, Sarepta's Chief Financial Officer.

I would like to note that during this call we will be making a number of forward-looking statements about our focus and priorities, our regulatory and clinical efforts and progress for eteplirsen and our follow-on exon skipping product candidates, including analyzing the muscle tissue from the fourth biopsies and data collected in response to FDA requests.

Our other work towards our goal of compiling a complete and NDA application for plan submission by midyear if our expectations regarding the submission align with those of FDA, our preparations for our planned meeting with the agency later this quarter, our plans for providing updated guidance and releasing data, the EMA's openness to future discussions and potential future Company meetings with the EMA, the number of patients we expect to dose and the expected progress in timelines across our current and planned studies, the potential market for our product candidates, our manufacturing and financial plans, our belief regarding our financial position and our plans for the development of our research programs.

These forward-looking statements involve risks or uncertainties, any of which are beyond Sarepta's control. Actual results could materially differ from those forward-looking statements as any and such risks can materially and adversely affect the business, results of operations and the trading price of Sarepta's common stock. For a detailed description of risks and uncertainties we face, you are encouraged to review the Company's most recently filed annual and quarterly reports and other official corporate documents filed with the Securities and Exchange Commission.

What that, let me turn the call over to Ed for both the corporate and clinical update. Ed?

Thank you, Ed. Good morning, everyone, and thank you for joining us today for a financial and corporate update for the first quarter of 2015. I will be providing a clinical and regulatory update for our lead candidate for Duchenne muscular dystrophy, eteplirsen, along with a review of current clinical programs which includes our follow-on exon drugs for DMD. Sandy Mahatme, our Chief Financial Officer, will provide an update on our financials for the first quarter of 2015 along with a review of our manufacturing capabilities.

To begin our update on our DMD program, I would like to start by saying the team at Sarepta has remained highly focused and committed during the recent transition. As a result, we remain on track towards our goal of compiling a complete NDA application for a plan submission in midyear 2015. We continue to make progress on our clinical and regulatory efforts as well as lead the advancement of our broader pipeline of treatments for rare and other life-threatening diseases.

Our highest priority remains the compilation of the various data requested by the FDA in the pre-NDA meeting minutes we announced last October and preparing for a meeting with the agency later this quarter. Through a tremendous effort on the team at Sarepta, we have submitted our briefing document to the agency to review and serve as the foundation for a discussion in our upcoming meeting with the FDA in the second quarter. We look forward to our focused discussion with the agency on the format and content of the data we plan to submit.

If our expectations regarding the submission are aligned, we will be prepared to submit our NDA by midyear. In the event of a change in guidance results from our pre-NDA meeting with the FDA which impacts our currently disclosed timelines, we will issue revise guidance as necessary. As far as releasing data generated by the FDA guidance, we currently intend to release results at the appropriate scientific venues and medical conferences and publish study results after all analysis are completed.

Switching gears a bit, in March we participated in a scientific discussion at the Dystrophin Methodology Workshop cosponsored by FDA and NIH. Two themes that emerge from this forum were the utility of the open muscle biopsies to collect tissue samples and the value of the currently used methods to quantify dystrophin levels and confirm dystrophin localization and its functional interaction with other components of the dystroglycan complex on the sarcolemma.

We previously announced that 11 of 12 patients from our ongoing extension trial study 202 agreed to participate in a fourth biopsy. At this time we have completed all of the biopsies in those 11 patients. We worked in collaboration with the FDA to develop all the key protocols and methods to assess dystrophin from these muscle samples. We intend to measure dystrophin and our drug's activity through a variety of assays including Western blot, RTPCR and immunohistochemistry.

As a reminder, the FDA did not require data from a fourth biopsy to be included in the NDA in its most recent guidance. However, we plan to include as part of the submission any data that has been fully analyzed at that time.

We went to express our particular gratitude to the boys in the families who have participated in study 202. As this study now approaches four year, we are fully cognizant of the many sacrifices the boys and their families have made to participate for such an extended period of time. Through 168 weeks the compliance rate in this trial is one of the highest I have seen. They only missed doses have been the result of preplanned holidays or vacations. It is a testament to the willingness and determination to contribute to advancing the understanding of exon skipping products and moving research for the Duchenne muscular dystrophy forward.

We recently participated in an EMA workshop in open forum discussion on the regulatory and translational challenges on developing exon skipping therapies for DMD. As we previously said, the EMA is open to discussions based on additional data. We feel encouraged by our previous conversation with the EMA and expect to meet with them in the upcoming months to discuss the new data generated by the guidance we have received from the FDA.

Again our focus right now is working with the FDA on a potential approval of eteplirsen, but expanding approval for our exon skipping DMD candidates beyond the US remains a priority. To begin our clinical update, I would like to highlight that across the six studies I will outline, we plan to dose nearly 200 patients. Although our regulatory updates are typically focused -- focal point of these calls, we are really pleased to describe the patient scope of our clinical trial development program and feel that it deserves equal acknowledgment.

We have successfully executed on our confirmatory and other clinical trials over the past year. Study 301 PROMOVI, our confirmatory study of eteplirsen in patients 7 to16 years of age who can walk at least 300 meters on the six-minute walk test, is proceeding slightly ahead of schedule in regard to site initiations and enrollment. The projected time for full enrollment remains on track to the end of 2015.

Study 4658204, our study of eteplirsen in primarily nonambulatory boys up to 21 years of age, is expected to complete enrollment later this month or shortly thereafter. We are pleased to announce the initiation of study 4658203 for boys with DMD who are between the ages of four and six years. This study is now posted on clinicaltrials.gov. The study incorporates MRI assessments and includes untreated control arm of patients not amenable to exon 51 skipping and is expected to commence screening later this month.

Outside of eteplirsen, we have other studies evaluating our follow-on exon drugs that are well into development. Study 4053101, European study for patients with mutations amenable to skipping exon 53, has completed the dose titration phase. Following the data safety monitoring board review, we will begin enrolling the second phase of the study which includes an untreated cohort not amenable to exon 53 skipping. Full enrollment of this study is on track to be completed by the end of 2015.

Our remaining confirmatory trial, Study 4045301 essence is progressing nicely towards study initiation. The study is a double-blind, randomized placebo-controlled study which incorporates an innovative study design, including both patients amenable to either exon 45 skipping or exon 53 skipping. The minimum number of patients enrolled for each drug will be approximately 30 patients each, with a two-to-one randomization of patients to either drug or placebo arms. Our target enrollment is at least 90 boys in total. The study is on track for initiation in the US by midyear and EU enrollment is planned for late 2015 or early 2016.

In summary, the successful development of these candidates across three different classes of genotypes, we had the potential to address more than one quarter of the DMD population that is amenable to exon skipping. Data will begin to emerge over the next couple of years to highlight the expansiveness and the breadth of our PMO platform in DMD.

Now like to turn the call over to Sandy Mahatme, our Chief Financial Officer, for an update on our financials for the first quarter of 2015. Sandy?

Thanks, Ed. Good morning, everyone. This morning's press release provided details for the first quarter of 2015 in both an adjusted or on a non-GAAP basis as well as GAAP basis. The SEC press release -- the press release is available on the SEC and Company websites.

The non-GAAP results we will discuss on this call provide a more accurate picture of our ongoing operations and the impact of operations on our cash balance and exclude the impact from devaluation of our prior outstanding warrants and stock compensation expenses. Please refer to our press release for a full reconciliation of GAAP and non-GAAP.

In the first quarter 2015 we reported an adjusted or non-GAAP net loss of $47.4 million or $1.15 per share, compared to a non-GAAP net loss of $20.7 million or $0.55 per share in the first quarter of 2014. The incremental loss is primarily the result of an increase of $26.7 million in expenses due to the timing of manufacturing batches, additional investments in raw materials and increased enrollment in our ongoing DMD clinical trials. Revenue for the fourth quarter 2015 decreased by $6.1 million primarily due to the July 2014 expiration of the Marburg portion of the Company's Ebola Marburg US government contract.

Adjusted research and development expenses were $36.7 million for the first quarter of 2015 compared to $19 million in the first quarter of 2014, an increase of $17.7 million. Adjusted general and administrative expenses were $11 million for the first quarter of 2015, compared to $7.8 million in the first quarter of 2014, an increase of $3.2 million. We had over $167 million in cash and investments at quarter end.

In addition, we have prepared approximately $19 million of our 2015 manufacturing expenses. We believe this cash balance is more than sufficient to carry us into 2016 and are comfortable with the cash [runway] we have.

In terms of an anticipated capital raise, we continue to be opportunistic with respect to our financing decisions, being mindful of our near and mid-term capital requirements, the broad capital market environment and the need to mitigate dilution where possible. We would be prudent in our cash expense where we have flexibility, in particular with respect to manufacturing, which is the biggest component of our cash burn.

Turning to manufacturing, our current mid-scale manufacturing infrastructure is capable of producing enough drug to satisfy the clinical programs that Ed just outlined and to support the launch of eteplirsen into the US market. Our manufacturing ramp beyond these levels will be driven by the timing of our NDA submission and the anticipation of a potential approval of eteplirsen in the US. We will move to large-scale manufacturing when it is necessary to meet commercial demands, which affords us flexibility related to our manufacturing spend. We anticipate providing financial guidance for 2015 once we have clarity from the FDA on our NDA submission.

With that I would like to turn the call back over to Ed.

Thanks, Andy. Before we open the call to questions, I would like to note that we have recently hired Dr. Bruce Wentworth as Vice President of Biology. Bruce joins us from Genzyme where he most recently oversaw rare disease research. In this role he led a team evaluating therapeutic options for various rare diseases such as DMD, congenital muscular dystrophy, FSHD and Pompe disease.

Bruce helped develop novel methods to treat muscle diseases using [anticentalianucleotides], monoclonal antibodies and small molecules. Bruce will now lead our research team in structuring our research portfolio to maximize our PMO chemistry beyond DMD focusing on moving our other candidates in the pipeline forward, including adult-onset Pompe disease, Myostatin inhibition and other rare CNS and neurogenetic diseases as well as antibacterial agents.

Bruce will also oversee a process we are creating to streamline the development process for follow-on in rare exons. Bruce will be critical in developing leading products for important indications utilizing what we believe is the best in class chemistry across the RNA therapeutic landscape.

What that, operator, we can open the calls to question.

(Operator instructions)

First question, Tim Lugo, William Blair.

Thanks for taking my question and congratulation on the progress during the quarter. I know you didn't want to go too deeply into what was included in the briefing packet for your upcoming meeting, but can you just discuss how you will share with the Street the outcome from the meeting? Are you going to wait for the meeting minutes? Will you hold a call directly after the meeting has occurred?

Yes, as we said, obviously, I think we have a pretty clear path from the FDA what needs to be included and based on their most recent guidance that they had given us. So certainly we are compiling that. And I think as we -- obviously if there is any change in our timeline, we will certainly notify the Street. But I think, really, we will submit as needed, and obviously we will announce if there is any change or just announce what that is completed. And I think, at least for eteplirsen, I think it is a pretty straightforward process.

Okay. And was there any MRI data expected to be included within the package? I know the NIH was leading that study but I'm not quite sure what the status is of that data?

Sure. So that was one of the pieces of data that the FDA did talk to us about. It is a fairly small data set and, again, this was a study that was done as part of the imaging DMD group out of the University of Florida and Lee Sweeney at the Children's Hospital in Philadelphia.

So we only had nine of the boys who had MRIs and only three of the boys actually had baseline MRIs. So the data is rather small. But that will be included in the package and we have compiled that and will be submitting that.

I think more importantly, though, it's because of our discussions with the FDA because they are interested in, really, the MRI data, we have really beefed up our 203 study in the younger boys, four, five and six. So we are collecting data on those boys, and that will, of course, be data at the beginning of the trial and at the end of the trial and comparing it to our non exon 51 amenable cohort that we are collecting data on at the same time. So that will also supplement the MRI data, and we will be, obviously, getting that to the FDA when it becomes available.

All right. And lastly for Study 301, it sounds like enrollment is going well. Can you discuss what your expectations were for enrollment going forward? Was there an initial bolus of patients that perhaps came onto the study early and then incrementally it might slow down? Or are you enrolling from only a few of your hub sites and it should be a smooth enrollment going forward?

Yes, that's a good question. But I think right now we have all of our hub sites that are up and running, and then literally the majority of all the other sites have been initiated. So there are a lot of patients in screening.

The other push that we have had, and it's been very helpful from the community, is that many of the foundations such as MDA and PPMD and certainly Cure Duchenne and the Duchenne Alliance, and Jeff's Foundation have all been working trying to get information out to patients. We have really focused also our efforts on letting patients and the physicians know why the nontreatment arm is important. And initially that was a little behind, but that enrollment has picked up.

So overall I think the team has worked very hard and it's been a pretty steady enrollment and really tracking along to what we had planned and what the timeline is. Not, obviously, based on solely our efforts, but really it is the community and certainly the physicians that have worked very hard to get these patients enrolled, so it's been, so far, a very successful study.

Great' thanks for taking the question.

Brian Skorney, Robert Baird.

Thanks for taking my question. To follow on Tim's question on the confirmatory study, I know in the past this has been sort of vague what the primary analysis is, when the primary analysis is, how many patients will actually see data. If I look on clinical trials it says that the primary estimate would be in May of 2016.

So was just wondering if you can give any more clarity in terms of at what patient level we would actually see a data readout? Is it fair to think that -- given your guidance that that enrollment is going along as scheduled? That sometime relatively soon after next May we would see a readout for a six-minute walk endpoint?

Well, I think the FDA had requested that study to be a 96-week study, because obviously they want to ensure that we have a sufficient amount of time to look at the difference. So it is an open-label study, so we certainly have the ability to look at that data at early time points. And I think our focus is going to be at 96 weeks and clearly that's an important endpoint. But we have the possibility of certainly looking, let's say, at earlier time points and being able to compare to what our control natural history group is actually doing.

So if it was a placebo-controlled study, obviously we would have a very different timeline. But I think because it is open label, we do have some flexibility. But I would say we would not expect to really look at this until at least one year after everyone has been treated.

Great, thanks.

Heather Hanna, Wedbush Securities.

Just a couple of questions and congratulations on all the progress. First on the younger boys, the addition of the untreated control. I feel like that's a slightly new update. Was that based on the feedback from these advocacy groups on getting more boys into the trial, or was this part of the regulatory discussion with FDA?

Well, I think initially we were not required to really have the control group as part of it. But I think because the focus has been on trying to get information on the younger boys, the four-, five- and six-year-olds, and there isn't as much natural history data on that population. So, obviously it's a very helpful cohort to be able to compare to so that we can understand what the expectation is as far as the progression of the disease in that younger group.

And then, of course, when we added the MRI to it, we wanted to have a comparison group that were similar but were a non-exon 51 amenable group of deletions. So I think what we're just trying to increase is the robustness of the natural history, making sure we understand all the populations.

And again our focus is -- and certainly since -- in the last month since I started, is not only eteplirsen. We know what we need to do for eteplirsen, but also we are really focused on the follow-on exons and trying to get as much information as we can so that we can try to expedite the follow-on exons. And the best way to do that is to understand the natural history, and the more natural history studies' information that we have, hopefully the less onerous the studies will be as we proceed going forward with some of the other non-51 DMD products.

Great, thanks. That's definitely helpful. And to follow up a little bit on the broader picture, when you think about your role and how it's evolved, obviously, in the past month or two, can you just talk about what changes we might see as you move forward as your philosophy for the Company, or what your experience has been so far?

Sure. I will have to say I have truly enjoyed myself for the last month. And it is more fun than I thought it would be. And the reason, I think, is my philosophy, and really I think now the philosophy of the Company is that Sarepta really exists to develop drugs for boys with DMD and other rare genetic diseases. And I think everyone who has stayed at this Company is bought on to that commitment to the DMD community and to other rare genetic diseases.

And in order for us to fulfill that commitment, we have to be financially successful. And so really what's happened, I think, is there is a group of people, very smart people, that are working hard really with the same purpose and that is to provide drugs for these people. And whatever is best for the DMD boys then makes good financial soundness.

And I think part of this is what I'm looking at as an example, for our first three exons 51 and 45 and 53, we're really developing very robust safety packages, other clinical data. And the reason why we're doing that is really to make sure that we can expedite our other follow-on exons. An example of this is one of the things we are doing for our 45 study is we're doing a very small study and it's just a dose titration in a non-ambulant population. And the reason for that is it gives us a broader experience in the entire population for exon 45. It gets us there faster and, again, it builds the data set we need for all the follow-on exons.

So I think the focus is not only just eteplirsen, and we know what we need to do for eteplirsen, but the focus is what do we do for all of the other exons and how do we expedite that? So we have people like Bruce Wentworth who is trying to develop what is the minimum safety package that we need for the follow-on exons? But also remember we have a commitment to these patients to make sure that it is safe and effective.

So we are not going to do any shortcuts but we have to do a faster job in getting these drugs, a number of drugs, out to the community as quickly as possible. So that really is the focus. And I think it really is nice to work with a group of people that share the same philosophy. And the value of this Company is actually in the people, and hopefully that value will bring commercial value to everyone who is interested in Sarepta.

Fantastic. And it also seems like the manufacturing is now at a point where it's not as much of a rate-limiting factor? Do you think that is fair to say?

No, I think that is fair to say. I think Jan's [follies] group has done a very good job of really getting the contract manufacturer. So I think we feel very comfortable now with the manufacturing and we'll be able to expand that as the need arises. And obviously we don't want to do that too early because of the expense. But when it's necessary and as we get closer, we will turn the spigot up on that and really increase the manufacturing.

Great; thank you.

Steve Byrne, Bank of America.

Ed, what data are you collecting in the 204 study on the nonambulatory boys? And what do you see as the timeline of observing some of those data?

Okay. Obviously this is primarily a safety study and that was the focus that the FDA asked us to get more experience in the nonambulatory population, because they are certainly aware that once we get approval, the nonambulatory boys will want therapy and we want to be able to understand the safety, but also what can we expect?

So as you obviously know if you've been following DMD, one of the major problems, of course, is pulmonary. And so we are very interested in following this population and can we slow down the rate of progression of the pulmonary disease and hopefully slow down when these boys will need any type of assisted ventilation. So that will be a focus.

We're also looking at some novel measures for the upper extremity, the performance upper limb test. That's been some innovative work that has come out of the European group and actually the international consortium that has look at this performance upper limb that looks at muscle function in the upper extremities. And so some of those activities in really looking at range of motion and monitoring that, so we're really going to be focused on upper extremity function and also pulmonary as, really, the outcome measures for our 204 study.

And can you confirm the meeting you have scheduled is considered a Type B meeting, and who will represent Sarepta and who from the agency will be there?

Well, we don't have the basically the response to our briefing package. And there will be certain questions that they will give to us shortly before the meeting. And so clearly our head of regulatory, Shamim Ruff will be there and myself, key people such as Bruce Wentworth and the preclinical. But I think to some extent it will depend on the questions. So we will determine how many people we need depending on the questions that we receive just prior to that meeting.

And obviously the review division will be there, the neurology review division, and we expect some of the members of Senior Management also to be available.

And it is a Type B meeting?

It is an in-person meeting, yes.

And then I have for one for you, Sandy, and it's regarding the G&A for the quarter seems to take a jump. Is that where you expect it to remain on an ongoing basis, or was it somewhat of a surge in comp? The non-cash portion in absolute and percent levels was quite a bit higher and it doesn't seem consistent with the share price. So can you comment on that?

Certainly, Steve. So as a general matter our spend is really geared towards a success scenario. This quarter we burned about $44 million and if you look at the components, I would say almost 75% of that is spent on clinical and on manufacturing. So certainly being spent in the right areas, if you will.

In terms of the G&A piece, two comments. Firstly, as you know, in the first quarter we pay our bonus so that makes a quarter-over-quarter comparison a little bit skewed. But I think the biggest component of that, and this is from a GAAP perspective as opposed from a non-GAAP perspective, which is, I believe, where your question is coming from, in the GAAP component we have our former CEO's compensation which was geared off his contract and that is the reason for the large bump up that you see.

But from a non-GAAP perspective, those numbers get factored out. So when you look at the quarter-over-quarter comparison for non-GAAP, it's really essentially manufacturing and clinical. I should also highlight, as I pointed out in my prepared remarks, that we do have flexibility in our cash spend due to the nature of our expenses. Almost 1/2 of the $44 billion spend is the manufacturing. And, if necessary, that's an area that we have significant flexibility to manage those down. So we do plan to continue to prudently manage our spend along being well-capitalized to effectively manage the business.

Thank you.

Lisa Bayko, JMP securities.

Good morning and thanks for taking my question. I was wondering if just ahead of this meeting if you wouldn't mind reviewing the prior guidance from FDA, just like top-level: what the requirements, what they were asking for, and then what you're going to have going into that meeting?

Sure, Lisa. So, again, the focus has been on really trying to supplement the data, so we have -- they have already received our 168-week efficacy data. What they have requested is a comparison to the natural history to a similar cohort in the six-minute walk test.

They've asked for a reread of the dystrophin analysis. They asked for, really, an analysis of what we could expect if we are creating boys with a specific genotype based on our exon 51 skipping, and what is the natural history that is available?

Obviously they have requested for further safety data, which we have collected and will be submitting. And as I mentioned previously, the MRI data that we're submitting to them. And obviously there is all of the standard things that go as part of the NDA package. So this would be, I guess, the supplement that they've requested and that is what we're compiling right now to present to them.

Okay. Just looking back at my notes, I remember there was something about you would have a dozen to two dozen newly exposed patients for up to three months? Will you have that data?

Yes, we will. And we will have, in fact, many other patients who are less than three months, because we will be including patients from the 301 study and from the 204 study. So there will be a fair amount of data.

And remember, Lisa, at the 120-day, we will be giving them a lot of other safety data update as part of the package and submission.

Okay. I'm assuming that those new expectations are primarily a safety analysis that you wouldn't have seen such efficacy at, or will you be overlaying on what you (multiple speakers) --

Yes, no, it's only for safety, obviously, because it's very short period of time.

Okay. And then you're also talking about the fourth biopsy? Will you have any data for that, or what do we think about that?

Yes, no, it is a little complicated, because in their last guidance they didn't request that the fourth biopsy be submitted. And as I said in my prepared remarks, we have completed the biopsies. The other important aspect, as we have worked very closely in collaboration with the FDA to develop all the protocols.

And that's been completed, so we will have a discussion during our meeting with the FDA in regards to how much data is available and what would need to be included in the package. So we're adding this as a supplement if they wish to look at it. But, again, it's not something that was actually required.

Okay. And then for the MRI data that you at least seem to be able to compare in those three boys, what was observed?

Again, so we're just really looking at primarily focusing on the MRS data as far as the fat fraction on that and trying to compare it to the natural history. The challenge, of course, is that we only have baseline on three of the boys, so it's a little hard to generalize on a very small data set.

But that's why we're really looking at the younger population also, to try to get a much bigger data set. So I think it's probably a little too early to give any broad statements about the MRI until we can confirm it with the larger study.

Okay. Can you explain the reread of the dystrophin analysis a little bit? What was done and what was observed?

Sure. I think probably the best way to frame this is typically for a confirmatory phase 3 trial. If you're using an endpoint such as dystrophin -- and some of the things that I've done in the past is you usually will have three independent pathologists who will read the sample and then come to agreement on the data. So what was done in our 201 and 202 study is it was done at one site with one pathologist.

Typically the FDA does not like only one person reviewing the data. They want confirmation by at least two other sources. So what we have done is we have used the same images that were read by Nationwide Children's Hospital, but they have been mixed and blinded along with other samples so we had pre and post samples that are blinded. And some of the same samples were reread, turned 180 degrees and reread. And the three pathologists then read the samples, we looked at concordance among the reads, and then also looking at basically what the outcome was. So all of that data is completed and will be presented to the FDA.

And was there concordance or what's the way to think about that?

All of this data we are obviously preparing -- and really, again the focus is not so much what we believe, but it is really what the FDA believes. And we're making sure that all of this information is given. And at the appropriate time -- and obviously all of this data will be put together and will be presented as at various different scientific meetings.

Okay, thanks. And one final question, I guess now that you're at the helm and headed into the meeting and regulatory time period, what's your level of confidence in submitting midyear versus maybe waiting for some of this data? I mean with all the vast studies you've got going on which are very helpful to really mature?

Yes, I think, Lisa, it is obviously a little premature to give a probability. I think what I can say is that we are doing everything possible here to make sure that we meet the expectations for the FDA and we're compiling that data.

Obviously what we need to do is -- will the FDA agree that this is a sufficient data package and are we both in alignment? That one I can't necessarily guess on. Obviously, our hope is that we are all in agreement and that certainly, if we are in agreement, we plan to submit on time.

Okay. Thanks and best of luck.

Thank you. Ritu Baral.

Thanks for taking the question. Ed, not to beat a dead horse, but you said this was going to be an in-person meeting. Can you just confirm that it is a Type B meeting rather than a Type C meeting?

Yes, it's a Type B in-person meeting, so we will be going.

Okay. Sandy, what percent of the market of the exon 51 market do you think could be supplied by drug in a best-case scenario right now with your capabilities?

Yes, at this point we're comfortable that we should be able to supply the US market from our midscale capacity. So we're fully geared towards that. As I pointed out, our spend is really primarily on manufacturing, because we are planning for success scenario and that contemplates making sure that we have enough inventory to supply the US market were the drug to be approved at this point.

100% of the US market, if needed?

Yes, more or less. The epidemiology is still hard to determine, but from the numbers that we have for the likely patient population is, yes, it would be 100%.

Okay. And of the manufacturing spend that you just outlined, the 50% of the $44 million, how much of that is for exon 51 versus the other exons?

It's hard to break it up, Ritu, because our manufacturing process is broken up into sub units, into API and then fill and finish. The subunits could be reconfigured for any of the exons, so a good portion of it, obviously is going to our clinical spend and for exon 51. But enough of that is kept aside so we can customize it for the other follow-on exons, depending upon how the clinical program unfolds. So 45 and 53 would be an area of focus, but again it would be too early to speculate as to what the exact split would be.

How much do you think, worst-case scenario, you could ratchet down the manufacturing spend? Are we talking 50%? Are we talking 80%? Just a rough bracket?

It would be an extremely significant number. We have flexibility in our manufacturing contracts that contemplates a situation where the timeline changes significantly for us, which is why I indicated previously in my prepared remarks that we do have a lot of flexibility to manage our spend. So the $44 million that you see would go down significantly if it were to come to that.

Okay. And I know that the FDA meeting has been an incredible focus but might there have been any progress on freedom to operate in the EU for eteplirsen?

We really have made a commitment. And again, the commitment to the community, of course, is not only to the US but to the EU. And so we are looking at, obviously, a lot of different pathways, both legal -- and what I can say is it remains a focus. And we are looking at a number of different possibilities to get freedom to operate in Europe and we are really trying -- anything that is reasonable and good for the community we will consider.

And, Ed, do you think your approach to that situation, the IP situation in Europe, is materially different than previous management, or maybe you haven't even had the time to flesh that out?

Well, I think our focus really has been taking a realistic look at our IP portfolio and understanding that. And Ty Houghton and his group have been very good about that. And we are trying to be flexible. And, again, we really want to make sure that we get the drug to people in the EU. And that is a very important focus for us.

And, Ritu, just to add to that, we are still awaiting -- we have appealed the decision, as you obviously know, and we don't know when that would be rendered, but we think it's going to be a couple of years out. In the meanwhile, the Company remains committed to the patients in Europe, so certainly we will do what it takes to get the drug on the market from a commercial standpoint. Certainly there is a huge focus on that from the Company's perspective, but it's hard to get into the exact tactics right now.

Got it. And just a follow-up to Lisa's question. All of the supplemental analysis looks pretty sizable. Is all of the supplemental data contained in the briefing book that you just submitted? Or will FDA be seeing some of it real-time in the meeting and evaluating it during your one-hour meeting?

Most of the data we have submitted. I think, as I said, really the focus -- one of the things that was not placed into the briefing document has been the fourth biopsy and that will be our discussion. If that's allowed by the FDA, that will certainly be something that we will have a discussion point about.

Got it; thanks for taking all the questions.

Okay.

Brian Klein, Stifel.

Just two quick questions.

First can you just confirm that the dozen patients that you recently treated for safety, that that safety profile is consistent with what we have seen previously? And then second question is in regards to the timelines that you laid out for your ongoing studies, do you anticipate any competition from potentially newly approved products?

Thank you.

Sure. So in regards to, obviously to competition from newly approved products, I think there is -- it's important to note there is a lot of competition for ongoing trials, so clearly that is always there. What I can say is that despite all of the competition for competing trials, we have been able to really maintain our focus as far as on enrollment.

So I think, despite all of the challenges, we have been able to continue the enrollment and have -- sorry, what was the first part of your question?

If you could just confirm that those dozen patients you treated to look at safety as required by the FDA for your NDA submission, if the safety profile is consistent with what we've seen previously with the original 12 patients treated?

Sure, no. But also remember it's -- obviously we've had that 12 patients for 12 months, but we have -- obviously we've been monitoring patients, many more patients who are currently on eteplirsen. And, yes, we have not -- we've looked at that, we've done our safety review and we have not seen any difference in the safety profile. That is also true, it will be the DSMB for the exon 53 drug.

It's also being reviewed and so far we also have not seen any difference in the profile for exon 53. So the safety has been changed.

Great; thank you.

Yaron Werber, Citi.

Hi, this is [Joel Bidi] on for Yaron. Thanks for taking the question. I think earlier in the call you mentioned you plan to meet with EMA in upcoming months. Could you discuss at one time or potentially after which data you see an opportunity to meet with the [EMEI]?

Sure. No, that's an obviously important question. So we did have the recent meeting and I had a presentation at the EMA along with the other companies and the advocacy groups. And there was really focus on what is necessary from regulatory pathway to get drugs for DMD. I think the EMA has looked at a lot of flexibility and we did have a discussion last December that we had reported with EMA. What they had asked is when we have new data available, that they would like to see it.

Our plan is once we have compiled the data for the FDA, we will have that same data package, present that to the EMA to the scientific working group and get their -- and judge their interest in trying to file in Europe for an MAA. We are in the process of arranging and setting up that time with them. There is some delay in getting a meeting with the EMA, so we are in the process of trying to finalize a meeting with them.

The other thing that we have done in Europe is that we have filed the pediatric investigational plan, because as you know, in order to file your MAA you have to have agreement on the PIP. So we are in the process of doing that and we have had comments back from them so we are working on the PIP right now as we speak trying to get that done. So it's not only meeting with the EMA, it is completing the pediatric investigational plan. So that is ongoing right now.

Thank you.

[Samos Samenondis], RBC Capital.

Thank you for taking the questions.

Ed, one of the reasons that was given when the change of the CEO level happened, both implicitly and I think explicitly, was that the Board was hoping to pretty quickly improve the Company's image and its interactions with the agency. In the past five weeks, and given that time is of the essence here, can you describe for us how that may have started to materialize?

Well, I think, obviously, since we haven't had the meeting with the FDA, obviously we will know certainly a lot more information following that meeting. But I think really our focus has been can we really make sure that we are as collaborative as possible in regards to working with the FDA and giving them the information that they requested. So that certainly is a focus for us.

But also we've made sure that we have really reached out to all of our key opinion leaders, got their help and support and certainly the community has been very helpful for us and really behind us and trying to help us as we have our discussions with the FDA. So we're really looking at a community approach and the community is expressing to the FDA what the need is in their ability to tolerate risk. And we are really compiling the data to give them the best possible data package that they can in order to be able to make a decision.

Okay. Again, a few weeks ago before you joined, there was the open meeting sponsored by FDA and NIH on dystrophin, where there seemed to be a few concerns raised regarding the methodology over all. Have you had any discussions -- I know you haven't had a meeting about the NDA, but any informal discussions to help the agency be more educated or understand your processes and help alleviate some of these concerns?

So as I had mentioned earlier in the call, I think the outcome of the meeting on dystrophin sponsored by the FDA and the NIH was helpful. Really, I looked at the purpose of this meeting was to inform the FDA about dystrophin. And a few things came out of that meeting, one of which was that open biopsies were necessary. Was one of the considerations is can you do all this information on a needle-aspirate biopsy?

And so I think that was confirmed. And I think summarized at the end of the call of the end of the meeting by the FDA was they did believe that we have the technology at present to actually measure dystrophin, and that there isn't one single measurement that is necessary. So it really is a compilation of various different techniques. It's the RTPCR that shows that you have the transcript; it's the Western to show that you have the right size protein; it is the immunofluorescence to show that the protein is attached to the sarcolemma. It's the stains for looking at the dystroglycan complex such as N-naws and sarcoglycans and dystroglycans that show that these other important glycoproteins are connecting to the dystrophin.

So I think my understanding of what the FDA had said at the end of that meeting is that even though we don't really understand the full impact as a biomarker, dystrophin is important, it's part of the disease process, and we have the ability to actually measure it now. So I think it became quite clear that it wasn't necessary to wait for another technique, that the techniques that are available can actually measure dystrophin.

And I think one of our focuses has been after that meeting is that we had a very good collaboration with the FDA to try to assure them that the protocols that we've developed to measure all of these outcome measures are robust. And hopefully when they see the data, there will be a certain comfort level.

You had another formal meeting with the agency?

No, no, this has been actually a continuing dialogue reviewing the protocols and having discussions with the FDA, and that occurred over weeks.

Okay, final question.

In terms of understanding the spending aspect going forward on the follow-on exon-skipping programs, if we were to look at -- not giving guidance but trying to understand why this has been such a big burden to the Company and the P&L, if you were to look at the next programs, should we be starting from where you were a couple of years ago or three years ago or five years ago, one year ago in terms of what you have to do in order to get a program going? Or the things you have done, in terms of processes, can help you reduce that cost down to a more reasonable level.

Sure. No, actually there has been a lot of progress that has occurred and one of the -- probably the only advantages of some of the delays we have had is we have been able to really be much more efficient in the manufacturing. And as Sandy said, we are midscale; we have the ability to be even more efficient as we go forward. And so I think overall the ability to manufacture has become less and less of an issue. And remember, that it is the same technology.

It's not like we're developing a whole new platform for manufacturing. It's the same subunits; same backbone; and the same components that we're manufacturing can be used in any one of these products. So we certainly have gotten more efficient. The expectation is that are costs for this will continue to go down.

And I think the other thing that we have done and one of really my major focuses is how do we streamline the follow-on exons? And that includes not only the preclinical development to have a more abbreviated but yet robust package that we can submit to the regulatory authorities, and really accelerate the other exons? And that's really been our focus.

That means, hopefully, we will have to have less drug in some of the preclinical packages because we have already accumulated, I think, very good safety packages for the first three. So hopefully that will help us be a lot more efficient and overall we will reduce our spend.

Sandy, any other comments on that?

No, I couldn't have said it better. Very simply, at this point we have a running start compared to where we were two years ago. And that's across the board, whether it's manufacturing or regulatory or clinical or at KOLs. And importantly, the team that has been built in here internally, so we have very good in terms of being able to get the other follow-on exons to the market much, much sooner and in a more economically efficient manner.

All right; thank you very much.

In the interest of time, we ask that you please limit yourself to one question. [Christopher Ari], Oppenheimer.

Thanks for taking the questions. First I wanted to ask disregarding those fourth biopsies, you said they were complete. I was wondering if the dystrophin is analyzed. And second, I was wondering if you could review in full how many patients' work with data you will be submitting to the FDA with the submission should you choose to go forward with that? Will that include that phase 1, 2 study, the dose-response study previously conducted by AVII Sarepta and then the additional patient numbers for the current studies that are ongoing? Thank you.

Okay, Chris, the fourth biopsies have been completed; the analyses are not complete as yet. It is ongoing. And in regards to as far as the supplementation, so obviously all of the studies that were completed under the IND will be submitted to the FDA. So that includes our Study 33, which was a seven- patient study intramuscular; that includes the 19 patients that were done in Study 28 in the UK.

And certainly from a safety perspective, all of those have been integrated. Obviously we will be submitting all of the data on our 12 patients from 201 and 202, and safety data that was requested from the 301 and Study 204. There will not be any other efficacy data from those studies because, obviously, those studies are just ongoing. And the only other thing that will be supplemented is the day 120, the safety from all of the ongoing studies that will be supplemented to our filing.

Okay, thank you.

Steve Brozak, WBB.

Thanks for taking the question. I'll make it brief, since most questions have been asked and answered. You have an extensive track record with FDA, and obviously you've not sat down with them. I don't want you to speculate, but obviously in the upcoming meetings in some situations you have had literally tons of people from the FDA, more than is ever normal.

How much transparency are you planning on giving in terms of -- obviously since it is new management in a lot of ways, on the meeting, the tenor of the meeting and all questions asked and answered? And I know there is a lot of body language and things like that because it is obviously the most critical meeting that is going to be had. So I just want an understanding of what we should basically begin to expect?

Yes, no, I think the outcome of that meeting is whether we will be filing midyear and everything else pales in comparison, so that really is the focus. I think it should be a fairly concise meeting. And we're really looking at the data, getting their agreement that it is going to be -- what's going to be submitted. And also how the formatting. So it is the compilation and the formatting, and that's really the focus of the meeting. And primarily it is going to be focused with our review division to make sure that they are comfortable with what we are submitting.

Okay. So the quick follow-up is, usually with FDA, there's many different shades of gray, you don't always see a yes or no, but the idea would be that you are both comfortable on both ends in terms of what you're planning on submitting, time frames and things like that. And obviously this will be critical, so you will report it back as quickly as possible.

Right. So, yes, no, I think -- obviously you are correct. In essence, they can't guarantee that they will file for you once we submit. There's never any guarantees certainly in my experience. But I think what we would hope is that we would have an agreement on what's reasonable to submit, and then obviously we will go ahead with that guideline.

Great, great; thanks so much.

Final question, Joe Schwartz, Leerink Partners.

Hi guys; thanks for taking my question. Just a short question with regards to the upcoming FDA meeting and the schedule that you had outlined in the press release. I'm assuming, given the timing of the pre-NDA meeting and the NDA submission in mid 2015, that gives a pretty short or small buffer. So my question being that do you anticipate any kind of curveball from the FDA pre-NDA meeting? And if so could you maybe disclose or discuss what those could be and how we could put that in our model?

Sure, obviously this is all speculation. Certainly in previous experiences I've had with the FDA, sometimes some things come up. I think really the only curveball, potentially, could be is if they request any other data that hasn't been discussed and that, obviously, is always a possibility.

But other than that, given the number of discussions we had and given, based on their previous guidance to us, they have outlined what they have said was a pathway. And what we've tried to do is to follow that guidance and that pathway and hopefully that hasn't changed and that will be adequate.

A quick follow-up, if I may. Would you imagine -- you said you were going to try and expedite the progress in terms of other exon-skipping mechanisms and products in the pipeline. Do you envision that to be accelerated or materially impacted by the outcome of the FDA meeting?

Obviously certainly our 45 and 53 study are well underway. And all of the studies we're very committed to and they will be completed. The other focus, of course, is there's a lot of work that we need to do for the other exons and we are really looking at that very carefully, looking at identifying the sequences, making sure that we can manufacture them, looking at what is going to be required for the preclinical packages. All of that, of course, is going to hinge on discussions with the regulatory authorities to make sure they agree.

So in essence, we're going to continue as planned for all of our programs and they continue -- obviously, our hope is that we can have -- really to continue to accelerate the eteplirsen program. But everything else is going to remain as it is and we're going to focus on what needs to get done for all of the exons.

Great. Thank you for taking my question again.

All right. Before ending the call, I would really like to thank everyone for all the support that I have received certainly from our dedicated employees, the entire DMD community, which includes the patients, parents, caregivers, all of our advocates, our key opinion leaders and principal investigators in the study and the physicians. And I really do have a new appreciation for the word community.

And I want to thank everyone for joining today's call. We are really looking forward to the upcoming milestones for both Sarepta and the entire Duchenne community. And thanks again and have a great day.

Thank you, ladies and gentlemen. That concludes today's call. Thank you for participating. You may now disconnect.