Sarepta Therapeutics - Earnings Call - Q1 2025

Transcript

Operator (participant)

Good afternoon, and welcome to the Sarepta Therapeutics First Quarter 2025 Financial Results Conference Call. As a reminder, today's program is being recorded. At this time, I'll turn the call over to Mary Jenkins, Associate Director of Investor Relations. Please go ahead.

Mary Jenkins (Associate Director of Investor Relations)

Thank you, Marvin, and thank you all for joining today's call. Earlier this afternoon, we released our financial results for the first quarter of 2025. The press release, slides, and supplementary information are available on the investor section of our website at sarepta.com, and our 10-Q was filed with the SEC this afternoon. Joining us on the call today are Doug Ingram, Ian Estepan, Dallan Murray, and Dr. Louise Rodino-Klapac. After our formal remarks, we'll open the call for Q&A. I'd like to note that during this call, we will be making a number of forward-looking statements. Please refer to slide two 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 could materially differ from these forward-looking statements, and any such risks can materially and adversely affect the business, the results of operations, and trading prices for Sarepta's common stock. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent SEC filings. The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today based on subsequent events or circumstances. As noted on slide three, we will discuss non-GAAP financial measures on this webcast. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release and the slide presentation available in the investor section of our website. I will now turn the call over to our President and CEO, Doug Ingram, who will provide an overview of our recent progress. Doug?

Doug Ingram (President and CEO)

Thank you, Mary. Good afternoon, everyone, and thank you for joining Sarepta Therapeutics First Quarter 2025 Financial Results Conference Call. Across biotech and indeed the market more generally, the first quarter of 2025 has been a challenging one. Likewise, for Sarepta, we have faced challenges that have motivated us to take a more measured view for the remainder of 2025. Fortunately, Sarepta is in a better position than most of biotech today, as we have a significant number of approved therapies and significant revenue, a strong P&L and balance sheet, and the ability to continue to independently drive our portfolio of gene therapies and siRNA programs. We are well positioned to weather this chaotic period. In the first quarter of 2025, we achieved $612 million in total net product revenue, representing 70% growth over the same quarter last year.

Our PMO franchise grew 5%, achieving $237 million for the quarter, and ELEVIDYS achieved sales of $375 million in the quarter, representing a 180% increase over the same quarter last year. While our ELEVIDYS first quarter growth still represents the most successful in vivo gene therapy launch yet in history, in fact, in Q1, we treated more patients with gene therapy than ever before in the U.S. in a single quarter, we nevertheless fell short of expectations. In a moment, Dallan will explain some of those quarterly factors, including administrative issues, the severe flu season that resulted in delays, and the effect of the recently reported safety event that motivated some families with scheduled infusions to pause for additional information. Looking forward, we are changing our net product revenue guidance for the year to $2.3 billion-$2.6 billion across our four approved therapies.

This change is driven by three factors. First, as you know, we recently reported that a boy infused with ELEVIDYS suffered an acute liver failure and passed away. This was an unimaginably tragic event for that family, who with ELEVIDYS finally had reason to hope for a brighter future for their son. At Sarepta, we are deeply committed to the patients we serve, so this event, so markedly different than all other experience with ELEVIDYS, was heartbreaking for all of us. While it is of no comfort to the family involved, it's important to remember that more than 800 patients have been infused with ELEVIDYS. The outcome of this event is inconsistent with all other experience with ELEVIDYS, and we are continuing to explore what was uniquely different about this case than every of the other hundreds and hundreds of infusions that have occurred to date.

What we do know is that while this young man's outcome was surprising, this did not represent a new safety signal for AAV-mediated gene therapy generally, or ELEVIDYS more specifically, nor did it change the positive risk-benefit of ELEVIDYS, which has had a stable and laudable safety profile in the context of AAV-mediated gene therapy since first being infused back in January of 2018. Of course, to support optimal outcomes, we have always prioritized patient safety. We have proactively placed significant monitoring requirements in our label. We require all sites to complete training before being permitted to treat, and we have a never-before-seen or executed program, one called Sarepta Exchange, that provides physicians with near real-time access to the most experienced and leading experts around the world so that outcomes are consistent across the country.

We also provide education for our patient community, and we are committed to providing timely information about this life-enhancing therapy. What we have observed is that top thought leaders who understand the data have not changed their treatment approach and informed families understand the positive risk-benefit of ELEVIDYS. There will be an impact on infusions as we roll out education in the broader physician community and families gain better insight into the profile of this disease-modifying therapy and have their questions answered. Second, as we have discussed, the administrative process from start form to infusion is particularly complicated for gene therapy. It includes, for instance, more appointments, more screenings, and steps like single case agreements, far more than other therapies.

As we have launched the broader label and expanded, the actual cadence from start form to infusion is taking about one month to six weeks longer than our original estimates, informing our forward forecasts. For the avoidance of doubt, this is not about ultimate access, but the administrative steps to get infused. As you know, we are quite proficient in working with sites to gain access. In fact, for our PMOs, our ultimate rate for gaining payer access has been well over 90%, and for ELEVIDYS, it currently remains at 100%. We are taking actions to shorten that turnaround time. There are some reasons to believe that our first quarter experience, which includes illness-related delays and the typical first quarter insurance changes that can cause delays, may have been longer than steady state.

For purposes of setting guidance for the year, we are assuming our first quarter experience on turnaround times is representative of the year as a whole. This will have a significant timing impact on infusion and hence a significant impact on revenue in 2025. Finally, three, the success we have seen with top sites has caused an imbalance that we need to address across this year. 60% of our current revenue comes from top sites and top thought leaders. Their experience and enthusiasm for ELEVIDYS has resulted in many of them being fully booked out to 12 months. We need to direct much of our attention going forward to sites with more capacity. We do not take lightly our decision to change guidance. Given the environment and some of the constraints we are working to address, we do believe it prudent.

What we do know is this: ELEVIDYS is the first and only available disease-modifying therapy that offers the possibility of arresting further muscle damage in 80% or more of patients being daily damaged by Duchenne muscular dystrophy. It is a disease-modifying restorer of significant amounts of a form of muscle-protecting dystrophin, and as observed over multiple studies, over eight years of clinical experience and clinical evidence, and in hundreds of patients of data, it is the only gene therapy proven to preserve function in boys dying from Duchenne. Without intervention, every day, muscle of boys with Duchenne is destroyed and permanently replaced by fat and fibrotic tissue. With the FDA following the positive expert advisory panel and approving ELEVIDYS broadly for boys with Duchenne, families finally now have a chance to choose a different journey.

Now that a disease-modifying therapy is finally available to them, if families are delayed in getting a therapy that can finally protect them from Duchenne's relentless damage, and they are delayed either because of administrative issues or other delays or lack of information or even, at times, circulating misinformation, then we will have failed in our mission, and I hope we have proven repeatedly over these last eight years that we do not intend to fail in our mission. After our Chief Customer Officer, Dallan Murray, provides an overview, we will hear from our Head of R&D and Chief Scientific Officer, Dr. Louise Rodino-Klapac. She will speak to you about the continuing evolution of data for the impressive efficacy of ELEVIDYS and our plans to expand even further the population of patients who will have access to ELEVIDYS. Finally, Dr.

Rodino-Klapac will provide an overview of the great progress we are making on our LGMD portfolio and will discuss our progress with our siRNA platform, including our plans to share our proof of biology and proof of concept data from both our FSHD and DM1 programs in the second half of this year. With that, let me turn the call over to our Chief Customer Officer, Dallan Murray. Dallan?

Dallan Murray (Chief Customer Officer)

Thank you, Doug, and good afternoon. My comments today are focused on three areas: context for what happened in Q1, how we plan to achieve our revised full-year guidance for 2025, and what gives us confidence in our ability to achieve that guidance. Regarding our Q1 performance, in addition to the safety event, there were two issues that impacted our results late into the quarter. Firstly, the severe flu season caused a number of patients to delay their infusion dates. Secondly, we faced administrative issues at some sites, the most impactful of which was with Medi-Cal, California's Medicaid program that pushed out patients' infusion dates. Importantly, these specific administrative challenges have now been successfully resolved. Now I'll outline how our first quarter performance informed our revised guidance and the actions we'll take.

First, the safety event led some patients and families scheduled for late March dosing to delay treatment while they sought out more information. We immediately initiated extensive outreach to our leading treaters in the broader community. Conversations have revealed that access to comprehensive safety data, including our biomarker safety data, which Louise will discuss in her prepared remarks, in conjunction with the two-year embark data, provides the necessary context for healthcare providers and patients to move forward with confidence. Our current focus is on disseminating this information across the wider treating and referring physician landscape, which is a process that takes time. As a result, we anticipate Q2 revenue could be as much as 20% lower than Q1. Looking ahead, we project a pickup in demand beginning in the summer and extending through the remainder of the year.

Therefore, our long-term demand outlook for the therapy remains strong, and we expect only a temporary impact. Furthermore, we are encouraged that we continue to receive enrollment forms for both ambulant and non-ambulant patients. Secondly, as we discussed, the administrative path for gene therapy from initial paperwork to infusion is inherently complex, involving significantly more appointments, tests, and steps than typical therapies. However, with the broader label and our expansion to a wider range of patients, the actual start form to infusion cadence is extending by one to 1.5 months beyond initial estimates. This longer duration is primarily attributable to more rigorous screening protocols implemented to ensure patient safety within this expanded population, coupled with the intricate logistical requirements at the site level, including the navigation of single case agreements with payers.

We are actively working with individual sites to create more efficiencies and less delay and have developed comprehensive tools for families to help navigate the journey. While we are working to shorten turnaround times, we are nonetheless taking a conservative approach and incorporating the longer Q1 turnaround into our revised 2025 guidance. Thirdly, regarding site capacity, we observe a dichotomy across our network. While our total network capacity is robust, our most established and recognized treatment sites are facing substantial demand, resulting in appointment lead times approaching a year due to near full operational capacity. Simultaneously, a significant number of treatment centers across the country have the potential to increase their patient volume and contribute more significantly to our reach. Our strategy involves a proactive approach to engage these centers more deeply through enhanced high-touch support, like we have done with the leading treatment centers.

This focused effort, bolstered by the encouraging two-year clinical data we highlighted earlier, is generating positive momentum in expanding our site engagement and our overall network utilization. Lastly, our teams are now intensifying their efforts to promote the deep and impressive evidence for the benefits of ELEVIDYS. We launched our comprehensive HCP and patient promotional campaign in the first quarter, which includes a fully built-out elevidys.com website and significant direct-to-consumer investment through digital channels designed to drive awareness and understanding. With focused work already underway to address these three key areas: education, tightening turnaround times, and site capacity optimization, we have a clear path forward to effectively support the patient community and achieve our revised guidance. Taken together, we firmly believe that our collective efforts are guided by the critical principle that time is muscle and will ultimately result in more patients gaining access to our therapy faster.

The fundamental size of the opportunity remains unchanged, and we are resolute in our intention to reach every eligible patient and continue to change the course of this devastating disease. Thank you for your attention today. With that, I would like to hand over the call to our Head of R&D and Chief Scientific Officer, Dr. Louise Rodino-Klapac. Louise?

Louise Rodino-Klapac (Chief Scientific Officer)

Thank you, Dallan. The role of science in transforming patient lives has never been more important than it is at this moment. At Sarepta, science is foundational to who we are. I'll focus my comments today in three areas: ELEVIDYS, including additional data that supports safety and efficacy; the progress we've made in advancing our limb-girdle portfolio; solidifying our scientific leadership in neuromuscular diseases; and the momentum behind our siRNA therapies, including the opportunity they hold to be best in class. Further, we are excited to share the depth of our research at our upcoming R&D day later this year. This work will fuel future innovations to treat diseases for which therapies are either nonexistent or inadequate. Beginning with ELEVIDYS, we've provided data to the FDA and will continue to work with them on any necessary updates to the ELEVIDYS label or monitoring requirements.

Safety remains our top priority, and as we have these past weeks beginning at MDA, we will continue to ensure that our community stakeholders are informed in a timely manner and that we address their questions. Regarding safety, in patients treated with ELEVIDYS, we see no difference in the rates of adverse events in relationship to age or weight. Furthermore, no relationships have been identified between the liver safety biomarkers, bilirubin, GGT, and INR, and the total dose administered for patient age or patient weight. Shown on this slide are bilirubin values versus all cohorts in study 103 and EMBARK. Regardless of whether it's changed from baseline, absolute peak, or peak value, there is no correlation with weight or age. The same holds true for cardiac safety biomarkers, including troponin.

The totality of our data in over 800 patients supports safety of ELEVIDYS weight-based dosing across the labeled population of patients with Duchenne, regardless of ambulatory status. Lifecycle development for ELEVIDYS continues to progress, highlighted by multiple activities. Starting with ENVISION, our post-marketing commitment trial for ELEVIDYS. ENVISION is a phase III global placebo-controlled trial in older ambulatory and non-ambulatory individuals with Duchenne and has progressed well. In the U.S., enrollment is complete, and we continue to dose ex-U.S. Our last patient, last visit, is expected in 2027, following an 18-month placebo-controlled period. Next, for AAV-rh74 antibody-positive patients, we are conducting two studies: study 104 with imlifidase to cleave antibodies and study 105 to remove antibodies with plasmapheresis. We expect to have expression and safety data from both of these studies in the second half of 2025.

We continue to advance our understanding of ELEVIDYS and publish and share these scientific data in support of the DMD population. The evidence continues to build, supporting safety and efficacy of ELEVIDYS, particularly as time progresses as compared to the natural history. In that spirit, we shared important updates at this year's MDA meeting, including results from our two-year EMBARK and three-year pooled analyses indicating stabilization or slowing of disease progression compared with well-matched external control assessed by functional outcomes predictive for delaying loss of ambulation. At two years, EMBARK part one ELEVIDYS-treated patients demonstrated statistically significant and clinically meaningful functional benefit in NSAA total score, time to rise, and 10 m walk run versus a propensity score-weighted external control cohort.

In addition, and as previously mentioned on last quarter's call, the muscle MRI data we observed showed minimal progression in underlying muscle pathology in ELEVIDYS-treated patients, underscoring the importance of treating as soon as possible to preserve muscle. Lastly, we're looking forward to sharing additional data from the EMBARK study at this year's ASGCT annual meeting this month in New Orleans, Louisiana. Moving now to our programs for the limb-girdle muscular dystrophies, or LGMDs. Each of the LGMD programs builds on our experience with ELEVIDYS. We use the same vector, rh74, in both ELEVIDYS and our LGMD programs, which has a differentiated safety profile and high transduction efficiency. To this end, we've requested a platform technology designation to enable leveraging of shared technology in future applications.

We were thrilled to announce in December 2024 that we completed enrollment and dosing of study SRP-9003-301, or EMERGENE, our phase III clinical trial of SRP-9003 to treat LGMD type 2E or beta-sarcoglycanopathy. EMERGENE is a global study, and the primary endpoint is biomarker expression of the beta-sarcoglycan protein. A pre-BLA meeting has occurred, and the Office of Therapeutic Products, or OTP, has confirmed eligibility for the accelerated approval pathway for this program. Due to the similarities between ELEVIDYS and SRP-9003, we have agreement to leverage ELEVIDYS data in the SRP-9003 BLA. Sarepta remains on track to submit a BLA to the FDA in the second half of 2025. We are also encouraged by the progress of our other LGMD programs. Just last month, we announced that we completed enrollment and dosing in study SRP-9004-102, or our DISCOVERY study.

DISCOVERY is a phase I proof of concept study evaluating safety and expression of the alpha-sarcoglycan protein after treatment with SRP-9004. SRP-9004 is in development to treat LGMD type 2D or alpha-sarcoglycanopathy. We plan to initiate our phase three trial before the end of the year. Also last month, we announced that following input from OTP, we were cleared to proceed with study SRP-9005-101, or our COMPASS study in the United States. COMPASS is a first-in-human clinical study of SRP-9005, which is in development for the treatment of LGMD type 2C or gamma-sarcoglycanopathy. As a reminder, and with support from the agency, we adopted a phase one three seamless design clinical trial for SRP-9005 with the aim of facilitating a more efficient and faster path to BLA. We also look forward to highlighting our impressive pipeline and research at an upcoming R&D day in the latter half of 2025.

As a preview, we have numerous programs in various stages of development across neuromuscular, central nervous system, cardiac, and pulmonary indications. Many of these programs are nearing IND. On the research side, we've continued to innovate across platforms, developing new AAV capsids, as well as driving innovation in gene editing and enhanced delivery for RNA. The momentum around our other programs continues, and we look forward to sharing data with you later this year around our FSHD1 and DM1 programs. Beyond the multiple high-value catalysts to come this year and into the coming years, our siRNA programs leverage Sarepta's successful track record in developing and commercializing neuromuscular therapies. We're also expanding our portfolio into CNS and pulmonary and broadening our focus into chronic therapies alongside one-time therapies. SRP-1001 is currently in clinical development to treat FSHD1, and we are encouraged by the non-clinical data generated thus far.

Cohort two in the SAD study is now fully enrolled, and we look forward to the data readout later this year. Turning to myotonic dystrophy type 1, or DM1, cohort one in the SAD study is now fully enrolled, and we look forward to sharing the data from that study later in the year. Now to discuss our PMO platform. The ESSENCE trial, our post-marketing requirement for golodirsen and casimersen, as well as Mission, our post-marketing commitment for EXONDYS, are both fully enrolled and remain on track. We look forward to sharing data as soon as these studies are completed and continue to collect and publish real-world data on the long-term effects of our PMOs. In closing, I'd like to take this opportunity to thank my Sarepta colleagues and those in the patient and clinical community.

For those of us in the field of genetic medicine, the work continues, and good science will always prevail. We must grab the opportunities before us because patients are waiting. I'll now turn the call over to Ian for an update on the financials. Ian.

Ian Estepan (CFO)

Thanks, Louise, and good afternoon, everyone. This afternoon's financial results press release provided details for the first quarter of 2025 on a GAAP basis as well as a non-GAAP basis. Please refer to our press release available on Sarepta's website for a full reconciliation of GAAP to non-GAAP financial results. Beginning in the first quarter of 2025, the gains and losses on mark-to-market of strategic investments are excluded from our non-GAAP results. For comparison purposes, non-GAAP financial results for the first quarter of 2024 have been updated to reflect this change. In Q1, we delivered strong year-over-year growth in revenue, a continued disciplined approach to investment in R&D and SG&A, and maintained our strong cash position with $647 million in cash, cash equivalents and investments, and restricted cash at the end of the quarter, and $600 million of additional liquidity available through our revolver.

The decrease in our cash balance from last quarter was due to the funding of the Arrowhead collaboration upfront consideration of $825 million with cash on hand. Note, we have reported a Q1 GAAP and non-GAAP operating loss of $300 million and $250 million, respectively, both included a $584 million of R&D expense associated with our global licensing and collaboration and stock purchase agreement with Arrowhead. Excluding this transaction, we reported a GAAP and non-GAAP operating profit of $283 million and $334 million, respectively. In the first quarter, we delivered $612 million in total net product revenue, representing year-over-year growth of 70%. ELEVIDYS net product revenue was $375 million and grew 180% year-over-year, and net product revenue from our PMO exon-skipping franchise was $237 million, up 5% over the prior year. In Q1, we recognized $133 million of collaboration and other revenues.

This primarily reflects $112 million of collaboration revenues related to Roche expired option of a certain program, as well as $17 million of contract manufacturing revenues for sales of commercial ELEVIDYS supply to Roche. The reimbursable co-development costs under the Roche agreement, which is recorded as a contra operating expense, totaled $29 million in Q1 compared to $22 million for the same prior year period. Total revenues were $745 million in the first quarter and increased $331 million, or 80% year-over-year. Q1 cost of sales totaled $138 million compared to $51 million in the same period of 2024. The increase was driven by increase in ELEVIDYS sales as well as an increase in cost of sales related to products sold to Roche.

Now moving to our R&D expenses, on a GAAP basis, we recorded $773 million and $200 million in R&D expenses for the first quarter of 2025 and 2024, respectively, a year-over-year increase of $573 million. The increase is primarily due to the $584 million upfront and milestone expenses associated with the aforementioned Arrowhead collaboration. On a non-GAAP basis, R&D expenses were $749 million for the first quarter of 2025 compared to $178 million for the same period of 2024, an increase of $571 million. Now turning to SG&A, on a GAAP basis, SG&A totaled $134 million, up 5% year-over-year. This increase was primarily driven by an increase in compensation and other personnel expenses and higher sales and marketing spending to commercialize ELEVIDYS. On a non-GAAP basis, SG&A expenses totaled $107 million, up 7% year-over-year. On a GAAP basis, we recorded an $83 million charge in other expense, net, in Q1 2025.

This was primarily due to the loss on strategic investments, which includes a recurring fair value adjustment of investments of publicly traded companies, including Arrowhead. GAAP income taxes were $64 million in the quarter compared to $5 million in the prior year. The increase is driven primarily by increased taxable profit, largely due to ELEVIDYS revenues. Also, on a GAAP basis, we reported a net loss of $448 million, or $4.60 per basic and diluted share for the first quarter of 2025. We reported a non-GAAP net loss of $332 million, or $3.42 per diluted share. Now turning to our outlook for 2025, as mentioned earlier, we are revising our total product revenue guidance to $2.3 billion-$2.6 billion. This still represents a 37% increase from our 2024 total product revenue at the midpoint. Our PMO guidance remains the same at around $900 million.

Our combined 2025 non-GAAP R&D and SG&A expenses, excluding the impact of the Arrowhead Collaboration upfront transaction expense and potential DM1 development milestones, remains at $1.2 billion-$1.3 billion. However, we anticipate to be at the closer to the low end of the range. With our undrawn $600 million revolving credit facility, we are in a strong position to further invest in internal and external innovation and to support our capital allocation strategy. We believe our recent share price levels do not reflect the current value of the company today, nor the growth potential we expect to achieve in the future. As such, we remain opportunistic and disciplined within our capital allocation strategy to deliver value to our shareholders while also preserving financial flexibility to invest in our long-term growth opportunities.

We remain well-positioned for the future with four approved therapies generating significant revenue and revenue growth, and we remain committed to sustained profit, operating expense leverage, and positive cash flow for the remainder of the year. With that, I'll turn the call over to Doug to start the Q&A. Doug?

Doug Ingram (President and CEO)

Thank you very much, Ian. Marvin, let's open the lines for Q&A.

Operator (participant)

Thank you. At this time, we'll conduct the question-and-answer session. To ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Tazeen Ahmad of Bank of America Securities. Tazeen, is that open?

Tazeen Ahmad (Analyst)

Hi, guys. Good afternoon. Thanks for taking my question. Doug, I just wanted to ask you, on those three factors that you mentioned right at the beginning of the call, the capacity issues, the administrative processes that you mentioned, and the results of the patient death leading families to have questions, which one, if any, has been the biggest driver of potential downside pressure leading you to revise guidance? As Q2 has progressed, have any of those, I guess, gotten worse because you're talking about 20% lower sales relative to 1Q, and we're still pretty, I guess, relatively early into the quarter? Thanks.

Doug Ingram (President and CEO)

Yeah, thank you for your question. First, on the balance, you know it is a mix of all three. I think the cycle times is probably the one that mechanically affects forward guidance the most. There is a bit of a mix there. What we are seeing going forward is not a worsening. In fact, again, we do not have enough data on the cycle time issue to suggest that we are being overly conservative, but we are at a minimum confident that we have hit steady state. There is some reason to believe it might be a bit conservative. I mentioned earlier in the call, the first quarter had the most severe flu season, I think, in 15 years, and that caused some delays. There are the typical insurance changes that occur in the first quarter of every year. That causes some delays.

There's a thesis that may be embedded in this four to six-week additional cycle time might be some of those particular first quarter issues. I think for planning purposes, we're assuming, and I certainly think you should also assume that we're at steady state for the year. We've got a lot of work to do. We're trying to do it even more efficiently, but I don't think we should assume that we will. On the safety event, the issue, of course, to remember is that when the safety event occurred, it was right before March, right at the last month of the quarter. Of course, those who needed additional information were going to have delays, and that is going to flow through into the second quarter as well. It shouldn't be at all surprising that the second quarter would be soft as a result of that.

We're, of course, seeing that. That's going to take some time. We need to get out there. We need to get to the broader community, as I mentioned before in my prepared remarks. When we get to folks, when the top thought leaders, which we were able to see right at the MDA conference when this all came out, it was quite clear that they were, to a person, at least from my interactions with them, did not see this as changing their prescribing behavior at all. We get the same answer when we talk to families. We just need to get out to more and more families. If you wanted to say, what are the signals kind of as we sit here today? The signals are, I guess, what you would call the green shoots because we are seeing start forms are coming in.

I can't give you a split right now, but start forms are coming in both for ambulatory and non-ambulatory right now. I think we are seeing the, as we communicate and as we talk and as we educate, we're seeing that occur. Over time, there should be no difference in the reaction to this depending on whether you're ambulatory or non-ambulatory because, as you saw and as Dr. Louise Rodino-Klapac showed you, in fact, the data is quite clear that this minority of patients that get liver enzymes, it doesn't occur in any greater amount or any more severity either on liver enzymes or bilirubin on non-ambulatory versus ambulatory patients. I would say we're seeing positivity when we actually get out there and we educate.

We have got a lot of work to do over the course of this year to get to the secondary sites where there is capacity. One of our, as I said earlier, one of our significant issues is we have been very, very successful with the big thought leaders, but those sites are often fully booked. We really need to get to other sites and make sure that we are getting people to sites that have capacity. We need to get more education out there, both to those physicians and to the broader family community. We will continue to work on cycle times.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Ritu Baral of TD Cowen. Your line is now open.

Ritu Baral (Managing Director and Senior Biotechnology Analyst)

Good afternoon, guys. Thanks for taking the question. Doug, I want to follow up on that last phrase that you mentioned. How do you direct patients to those sites with more capacity? Are we talking more community sites? Why aren't these sites sort of at capacity like the main centers? Is it a staffing issue? Is it a demand issue? How do you plan on doing that? Is this the point where you think about opening more sites?

Doug Ingram (President and CEO)

I don't think, as we sit here today, that it's a number of sites issue. I think it's a focus issue. Really, the issue is, and it should be of no surprise when you first launch a therapy, we really prioritize the big sites with the real thought leaders with a lot of experience and a lot of start forms. We've spent a lot of time there. We've spent, obviously, time on other sites, and they're all well-trained, but we haven't spent as much time there with a lot of the good educational work that we need to do, including responding to this most recent safety event. Even beyond that, and frankly, on a more positive note, really getting out and talking about the brilliant data that came out on the crossover. Remember, that data just lights out.

I mean, the kids on the therapy for two years were statistically significantly better than natural history on every single functional measure. Even at the one-year mark, when you get to the older ages, because, of course, the kids dosed in the second phase of the trial were older now, now they're in the decline phase, which is one of the problems with our original study as it relates to NSA. They are significant statistically on every measure, including NSA. You saw the trajectory analysis, and you saw the muscle MRI. I do want to linger on that muscle MRI. That is a really powerful thing. I think there was probably a moment when some of us wondered whether you would actually be able to see in one year a really significant difference in muscle quality.

What you do across a significant number of muscles, you see this very different result where kids that have been dosed with ELEVIDYS have their muscle preserved and much less fat and fibrotic tissue, and kids that did not get dosed a year later are missing a lot of that muscle and have a lot of infiltration of fat and fibrotic tissue. We just need to get all of that information and have those conversations with those secondary sites. What we cannot do in any real way or in any thoughtful way is to redirect people's start forms from one site to another. That is really not possible. What we can do is really spend a lot of time with them, spend a lot of energy with them, and spend a lot of education with them, as well as making sure that we are educating the patient community across the United States.

I think it is going to, it is going to create significant dividends, both, I think, for us and our revenue, but far more important than that, getting kids infused that are going to benefit from this life-changing therapy. Thank you for your questions, Ritu.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Louise Chen of Scotiabank. Your line is now open.

Louise Chen (Managing Director)

Hi. Thanks for taking my question here. I wanted to ask you, of the new guidance you gave, what percent of sales does ELEVIDYS represent? Also, are you planning or expecting that sales will recover starting in the third quarter? Thank you.

Doug Ingram (President and CEO)

Two answers to that. Obviously, we're pulling our guidance down primarily, well, exclusively, really, from ELEVIDYS, so you can do the math on that. This is an ELEVIDYS-related issue. Yeah, we are assuming starting in the summertime and starting really in the second half of the year that we're going to see a significant uptick. We're already seeing, again, using a hackneyed phrase, the green shoots of that. What we really do know, because we've talked to a lot of physicians, is there are a lot of families that prioritize the summer program. There's a lot of monitoring that goes on with this therapy. A lot of times, people have to travel with this therapy. There are other family members and brothers and sisters to be considered.

We really are expecting, and we believe we're going to see a significant uptick starting in the summertime and then across the back half of the year as we execute, and we will execute.

Ian Estepan (CFO)

Yeah. Very specifically, we gave guidance of $900 million for our PMO. We maintain the guidance of $900 million from our PMO franchise. So the revision in our total net product revenue was all related to ELEVIDYS.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Andrew Tsai of Jefferies. Your line is now open.

Andrew Tsai (SVP)

Hi. Thanks for taking my question. My question is around following this patient death, some investors are wondering about a worst-case scenario where ELEVIDYS is pulled from the market, something more drastic, basically, than what your revised guidance assumes. The appointment of Dr. Prasad today might not help with that narrative. Can you walk us through how you think about that potential risk, especially since you do have an accelerated approval in the non-ambulatory DMD? Thanks.

Doug Ingram (President and CEO)

Sure. Sure. First, on the appointment, I want to be clear. I'm not going to obviously comment on any particular appointment, which we just got news of today. What I do remain confident about is that the FDA is going to be the FDA that it's been for the last 100 years, which is an organization dedicated to following great science and fulfilling its mission of bringing life-enhancing therapies that are safe and efficacious to patients. There's no reason to believe that that should change or that anyone would permit that to change. I would remind you, as it relates to ELEVIDYS, the evidence for its approval was brilliant at the time, absolutely remarkable. It only got more impressive over time. Following a positive advisory committee meeting, we got the original approval.

The totality of evidence was clear that we were changing the trajectory of this disease. Thereafter, we had the crossover data that we unblinded all pre-specified. Every functional measure was strongly statistically positive. The muscle MRI is brilliant. There is no doubt that this therapy is changing the lives of patients. There is no reason to believe that this safety event would be the motivator, as an example, for something drastic with this therapy. I would remind you that ELEVIDYS has one of the most impressive safety profiles in the context of AAV-mediated gene therapy that has ever existed. It is true that every AAV-mediated gene therapy comes with a risk of elevated liver enzymes. In other cases, there have been significant consequences for that. They are rare. With respect to us, they are particularly rare.

In fact, this one incident is unique, not only in its outcome, but even in the sort of the course of it. There is something very different about it. It is in the context of AAV-mediated gene therapy. It is in the context of the understanding that there is always a risk of elevated liver enzymes in the vast majority of cases. With this one case being the only exception, they respond very rapidly to a modest increase in steroids and come back down to baseline. There is no reason to believe that a science-driven organization and science-minded regulators would be considering anything other than the fact that they should be proud that they approved this brilliant therapy.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Eliana Merle of UBS. Your line is now open.

Eliana Merle (Executive Director of Biotech Equity Research)

Hey, guys. Thanks for taking the question. Just in terms of the potential label update for ELEVIDYS, can you talk us through your latest expectations there for any potential update or conversations with the FDA after the patient death? I guess, when could we potentially hear about a label update and what your expectations are for what this could look like? Just in terms of the commercial uptake, you mentioned that there were some patients who were scheduled for late March that delayed their dosing. What proportion of those have now rescheduled their infusions? Thanks.

Doug Ingram (President and CEO)

Let me answer the second question first by simply telling you that I do not have the data available to me right now. It was really, those were primarily a function of patients or their physicians who saw the news of the event and needed information. They are coming up to an infusion in a week, and they had to either pause or, most likely, in almost every case, reschedule immediately so they could get access to that information. As it relates to your first question, I will turn the call to Louise who can provide an update on the label update.

Louise Rodino-Klapac (Chief Scientific Officer)

Sure. In April, we submitted a labeling supplement. We already had one planned and anticipated. At that time, we also updated the label to include this patient death and the case of ALF. FDA confirmed receipt of that and set a target review date. The target completion date will be no later than the fourth quarter of this year for those label updates.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Brian Abrahams of RBC Capital Markets. Your line is now open.

Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)

Hi, good afternoon. Thanks for taking my question. Maybe shifting gears to limb-girdle. Following the pre-BLA meeting, have you had any additional meetings with the new FDA leadership on the limb-girdle programs? I am curious about their updated feedback on the accelerated approval path for 2E. On 2E, is the emerging data still expected to be disclosed publicly by the middle of 2025, or should we expect that is going to be initially submitted to the agency? I did not see anything in the press release or hear anything in your prepared remarks on the data. Thanks.

Doug Ingram (President and CEO)

Yeah. I'm going to turn this over to Louise, but let me briefly say the following regarding our interactions with OTP and the LGMD portfolio. Since the change in administration, we have had a number of discussions with OTP and interactions. Everything has remained on course. The approach that they had previously confirmed with us is the approach that they've taken today. Nothing has changed there, which is all very positive. I would also say, I know there's a lot of concern over the fact that the FDA has gone through a lot of dislocation. I think there was an announcement of some 3,500 potential layoffs and that there may be, as a result of that, delays or slowing downs of reviews. I must give credit where credit is due.

We have not yet seen that at all with our colleagues over at OTP led by Dr. Verdun. Things seem to be quite on track. Certainly, the approach that they were historically taking is the approach they're taking today. Louise, are going to want to provide more color about that.

Louise Rodino-Klapac (Chief Scientific Officer)

Sure. As we've seen over the past several weeks, we've seen consistent interactions with OTP as we've seen previously. We've had a number of interactions. On 9003, as noted, they confirmed the accelerated approval pathway is open just as early as last week. They accepted a rolling review for SRP-9003. Things continue to progress as planned. Also, as we announced, the same review division cleared the IND for SRP-9005 for 2C. Things are progressing as planned with the agency.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Debjit of Guggenheim Securities. Your line is now open.

Debjit Chattopadhyay (Senior Managing Director)

Hey, good afternoon, and thanks for taking my questions. A couple of questions, one on limb-girdle. Is there a threshold for protein expression that the OTP wants to see? Number two, could you sort of quantify the number of non-ambulant boys who have been treated on the commercial ELEVIDYS product? Thank you.

Doug Ingram (President and CEO)

On the second question, we're not providing that level of data, although I will tell you, we've obviously historically been dosing non-ambulatory kids. We're continuing to dose non-ambulatory kids. And we're getting start forms for non-ambulatory kids. On the first question, I will turn that question over to Louise Rodino-Klapac.

Louise Rodino-Klapac (Chief Scientific Officer)

Sure. I think I forgot to answer the question in the previous time about we will have the emerging data in the first half of this year, which will go into the BLA. That will be expression of beta-sarcoglycan protein and safety. On the question around expression levels, as you know, from the 101 trial, we saw expression levels with both doses, both the low and the high dose, around the 50% mark. We know from preclinical data that much lower expression leads to functional benefit. We anticipate the results that we see from EMERGENE will be consistent with that and will certainly lead to functional benefit and above any threshold of relevance.

Doug Ingram (President and CEO)

Just to add to its first question around the number of non-ambulant patients, I think we have previously disclosed that it is well over 100 patients between the clinical and commercial setting. We have had good experience there.

Ian Estepan (CFO)

Yeah. I think our enrollment forms, our start forms, are something like 40% non-ambulatory, 60% ambulatory.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Salveen Richter of Goldman Sachs. Your line is now open.

Salveen Richter (Managing Director of Global Investment Research)

Thank you. Good afternoon. Can you remind us as to the timelines for seeing data from your confirmatory studies across both the exon-skipping franchise, but also ELEVIDYS? Thank you.

Doug Ingram (President and CEO)

The confirmatory trial for, okay. Yeah, I guess you mean the ENVISION trial. Louise, I'll turn this to you.

Louise Rodino-Klapac (Chief Scientific Officer)

Sure. The last patient last visit for ENVISION was in 2027.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Brian Skorney of Baird. Your line is now open.

Brian Skorney (Senior Research Analyst)

Hey, good afternoon. Thanks for taking the question. I guess just in regards to the changes at CBER and meetings with the FDA, you said that you're expecting a decision on labeling update to ELEVIDYS no later than the fourth quarter. I'm just wondering, is there any sort of formal meetings that are held with CBER along with that, or is it just sort of an internal review until they make that decision? When we first heard about the patient death, I know there's a complicating factor with the reactivation of latent virus. I was just wondering if there wound up being a biopsy and if you had anything informative on that front.

Doug Ingram (President and CEO)

I'll answer the last part of it to make it easier on Louise. We don't have the autopsy results yet. We're waiting for them. We should get them in the next month or two. They may or may not be additionally informative. As to the first of your questions, I'll turn this to Louise.

Louise Rodino-Klapac (Chief Scientific Officer)

Regarding the label update, FDA would just come back with any questions along the way if needed. Really, it's more of finalizing the label update. It's not necessarily that we're awaiting a decision on it. They've already confirmed that they're in general agreement. It's really just going through the process now.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Michael Ulz of Morgan Stanley. Your line is now open.

Michael Ulz (Executive Director of Biotechnology Equity Research)

Good afternoon, and thanks for taking the question. Maybe just another one on ELEVIDYS trends and more recently, just curious if there's been a shift in the age of the patients being treated or in the ambulatory status of those patients being treated. Thanks.

Doug Ingram (President and CEO)

Yeah. Thanks for your question. I think it's too early to know precisely what the trend is. What I can tell you, which is a little more anecdote than precise trending, is that we are continuing to see both ambulatory and non-ambulatory start forms coming in. I don't know if we track this out two months if that 40% will go down to 35%. As it stands right now, we're seeing good uptake in both ambulatory and non-ambulatory from a start form perspective. I will say, let me forecast the future a bit. Of course, the real issue is what happens when the information gets out to patients. One of the things I want to remind us about is that there is no difference in any of the markers, any of the elevated liver enzyme markers, any of the bilirubin marker.

There is no difference between ambulatory and non-ambulatory in, for instance, risk of elevated liver enzymes or liver injury. There really should be no reason if we educate properly why there would be a significant difference in start forms.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Gil Blum of Needham & Company. Your line is now open.

Gil Blum (Senior Analyst)

Good afternoon, and thanks for taking our question. Maybe a different approach for kind of the same topic as it relates to the patients who kind of took a minute to think about whether to go on treatment post the event. Was there any commonality across them, more ambulatory, non-ambulatory, or was it just a timing thing? Thank you.

Doug Ingram (President and CEO)

Hi. I'm sorry. Let me interrupt you, Gil. Timing. It's just a timing thing. They were in March, and that was approximately very end of February, early March was the announcement.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Joe Schwartz of Leerink Partners. Your line is now open.

Joe Schwartz (Senior Managing Director of Rare Diseases)

Thanks very much. We noticed the company recently hosted a meeting with PPMD after the patient death. I'm just wondering how impactful were these interactions? I know that there's an upcoming annual conference in June. I'm wondering, what are the company's plans now to interact with these organizations? What do you think you need to emphasize with these families in order to underscore the positive risk-benefit of ELEVIDYS?

Doug Ingram (President and CEO)

Yeah. I mean, I think that webinar was very meaningful, but it's not the end. I think we are committed to giving the broad community—remember, there's some 10,000, 12,000, 13,000 Duchenne patients in the United States—and we need to get the information out to that broad community so they can make intelligent decisions and evidence-based decisions with their physicians. At the same time, by the way, side note, we have to do the same thing with the physicians because the physician is the ultimate guider for the decisions of the families. The information that we have to get out to the world is both the safety profile of this therapy, but also the efficacy profile of this therapy. We can't leave one behind because you can't make a good risk-benefit decision without it. That's one of the things that we need to do.

I think in part because of the amount of data we have and the fact that that data has come in over a significant period of time, I sometimes worry that people aren't seeing all of the information and all of the evidence of the benefits of ELEVIDYS together because it's a really impressive package that I think to any rational physician will indicate that this therapy is a significant disease modifier that has the potential for stopping this ferocious muscle damage or at least a significant amount of the muscle damage and then slowing or fully arresting the decline that is inevitable with Duchenne for anyone that doesn't get treatment. We just need to get that. We need to get all of that out.

I think one of the things we focused on very significantly in that recent webinar, of course, was sharing the most recent information about the safety event. I think that was extraordinarily appropriate. On a go-forward basis, we need to talk about all of it, the context of all the safety and the efficacy available to us. We are committed to doing that.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Yanan Zhu of Wells Fargo. Your line is now open.

Yanan Zhu (Senior Analyst of Biotechnology Equity Research)

Great. Thanks for taking our questions. First, I would like to ask for a clarification question regarding the uptick that you anticipate in the summertime for patient demand based on some leading indicator you're seeing. The question is, there must also be leading indicator of some decline, and that's probably because you're lowering guidance. How do we reconcile a decline and also an uptick? Could we assume that you're seeing the pickup in pace of the patient start forms coming in towards the more recent period? Sorry about that long-winded question. A follow-up is a much straightforward question about peak sales estimate. Do you have any comment on whether you're changing your guidance on the peak sales and the time to reach that peak? Thank you.

Dallan Murray (Chief Customer Officer)

Yeah. On your first question, both are great questions. Let me answer both. On your first question, the lowering of guidance is multifactorial, as I've mentioned. There is no doubt that as a result of the safety event and the need to get more information to patients, we saw a drop-off initially. Now, when we say we're already seeing an uptick and we're going to see a more significant uptick in the summer, that is what we're seeing. Someone asked earlier, "Why are you assuming a flat to down second quarter?" It is because this is a long cycle time therapy, and a lot of people need more information to contextualize things, and that caused it. As we're getting that information out, we're already seeing that uptick in start forms.

When we talk to both families, but also sites, it is quite clear that there is a belief among everyone that they are going to see a very significant uptick in the summertime when you get past the school year and some of those issues. I hope that answers your question. The second issue was on peak year sales. We are not prepared yet to talk about peak year sales, but I want to put the concept of peak year sales in the context of a one-time therapy. Normally, peak year sales is an indication of the ultimate opportunity of a therapy. In a one-time therapy, it is different. It is essentially an area under the curve analysis. How long it takes to get to peak will change the actual peak, but the same opportunity exists essentially under the curve.

There is no reason to believe that the opportunity has become any less diminished now, even though we are reducing our guidance for this year because of some of it being cycle time, some of it being some educational needs, some of it being some imbalances in sites that we need to address. The ultimate opportunity remains the same. We are correct in our epidemiology. We know the patient population and the size of it. There is no reason to believe there is any smaller population that this is amenable to. The same opportunity exists. What a delay in uptake implied by the $500 million delta in our guidance implies, and what that means for peak year sales is something we will have to calculate and then look at and talk later, maybe later this year, maybe early next year, something along those lines. The opportunity remains the same.

The same ultimate NPV should exist in either case.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Kostas Biliouris of BMO Capital Markets. Your line is now open.

Brian Skorney (Senior Research Analyst)

Hi, everyone. Thanks for taking our question. To the extent you can comment on that, can you talk a little bit about the decline of ELEVIDYS ex-U.S. sales quarter-over-quarter and to what extent those three headwinds you mentioned for U.S. may also apply ex-U.S., at least anecdotally? Thank you.

Doug Ingram (President and CEO)

I'm hesitant to discuss our partner's sales, and I would allow our partner to comment on it. I'd be surprised if it related to any of the cycle time issues or even the safety event or the like that we have in the United States. I would have to beg off that question and ask you to ask Roche about that.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Anupam Rama of JPMorgan. Your line is now open. Anupam, your line is now open.

Anupam Rama (Analyst)

Oh, sorry about that. Thanks so much for taking the question, guys. Just a quick clarification question. Louise, I think you said in April you submitted a labeling update and had some of the patient, what you knew about the patient death information. What else was included within that labeling update? Did it include the two-year EMBARK safety update? Did it include any real-world safety updates? What all was included in that.

Doug Ingram (President and CEO)

Louise.

Louise Rodino-Klapac (Chief Scientific Officer)

This is just updating the safety information. This is about including the information around this particular case. Previously, it was just around ALI, so now this included ALF and the case. That was the breadth of the update.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Biren Amin of Piper Sandler. Your line is now open.

Biren Amin (Managing Director and Senior Research Analyst)

Yeah. Hi, guys. Thanks for taking my question. At the end of February, the company mentioned on its year-end call that there was ample site capacity for both infusion and follow-up. I just want to kind of ask how site capacity changed over the last two months, or do you think it was more driven by patients being more cautious and need more hand-holding before they sign up for administration? I think on that last point, is there anything the company can do to provide risk mitigation strategies to physicians, given I think the community is looking for clarity that would de-risk future events?

Doug Ingram (President and CEO)

Let me say a couple of things. One, we do in aggregate have good site capacity. The issue that we have, as I mentioned in my opening remarks, is a bit of an imbalance where if you just focus on the top sites—by the way, the top sites are responsible for about 60% of our current sales—they've been so sufficiently successful and enthusiastic along with their patients that they're often booked all the way out. Some are booked a year or more out. It is not simply about capacity because we can't—let's be clear—you can't redirect a start form that's sitting at site X that's got a one-year delay to site Y over in fill-in-the-blank Indiana. It is just sitting there. We have to make all of the sites more productive, which is on us. We have to get out and educate and work with them and the like.

That's the issue. Do I think that there was some drop-off in March from families that you would say hand-holding, in my view, would be needed, more information and the like? Absolutely. I think that absolutely did happen. I think we're doing the work there. I think it works very well because the data and evidence is very supportive of the risk-benefit of this therapy. On risk mitigation, I'll just say we have a wealth of risk mitigation in this very laudable safety profile therapy. Let me be very clear. We proactively placed into the label a significant amount of monitoring, which physicians follow.

We have this concept called Sarepta Exchange, which is really one of a kind where physicians in any site can get access to some of the world's leaders nearly on a real-time basis if they have questions or the like when they're infusing. I think the thing that's going to give people the greatest confidence is the data itself because the safety event that we saw earlier this year was a tragic one for that family, no doubt. It's horrible. That is in the context of AAV gene-mediated gene therapy generally. It has to be put in context of the number of patients that we've dosed. I mean, I would remind you, we hear often of people that announce data, one patient or two patients or three patients. We've dosed well over 800 patients. Generally speaking, we know the safety profile of this therapy.

If something comes out, there's going to be an autopsy that we're going to have access to in the next couple of months. If something comes out there that can provide additional insight, there were some signals, a signal of a CMV, which is unusual, a signal of another illness perhaps in December. If something comes out of that autopsy that's enlightening, we'll certainly bring it to the community. I think the experts, of which I am not one, are not yet confident that there'll be something out of the autopsy that will provide additional insight. I think the greatest insight that families can have to make risk-based decisions is to understand this therapy, what it can do for these families, how it can protect muscle, and on the other side, what a generally laudable safety profile it has in the context of a serious AAV-mediated gene therapy.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from David Hoang of Deutsche Bank. Your line is now open.

David Hoang (Director and Senior Analyst of Biotechnology)

Hi there. Thanks for taking the question. I just wanted to ask one on any anecdotal experience broadly for patients that have been dosed to date with commercial ELEVIDYS, what you hear from the docs and families, does it match up with what you know from EMBARK and the clinical trial experience? Just with the PMOs, how should we think about cannibalization of the products given how the ELEVIDYS commercial uptake curve may be changing? Thanks a lot.

Doug Ingram (President and CEO)

Yeah. On the first one, you referenced that it's anecdotal. Take that with a grain of salt. It's anecdotal. Unfortunately, we don't get approvals on anecdote. We get approvals on evidence. The anecdote's amazing. Let me be very clear. I mean, one of the things that during this very difficult and chaotic time that's existing in the broader market in biotech specifically and certainly at Sarepta specifically, it is a comfort to me when I get videos from families. We've got, we're seeing a lot of extraordinary stories from families. Kids that are riding bikes. Kids are running up and down at an age when they ought to be in a power wheelchair. Kids outpacing their father who's trying to catch them in the woods. That's one particular individual, a video I watch often. That doesn't mean much.

It's only anecdote, but we get a lot of great anecdote. I think when families begin to get the opportunity to talk to other families and see the experience they're having, not only the experience of going through the process to get infused and the infusion process and the like, but then seeing what it may mean to them and their life going forward, I think it's going to be very, very motivating for families who as yet maybe don't have a start form in.

Operator (participant)

Thank you. One moment for our next question.

Doug Ingram (President and CEO)

One other thing I should say. I think there is some interesting information on that in our website, I believe. Yeah.

Operator (participant)

Thank you. Our next question comes from Mitchell Kapoor of H.C. Wainwright & Co. Your line is now open.

Good afternoon. This is Dan on for Mitchell. Thanks for taking our questions. We were wondering with the FDA changes, specifically Dr. Vinay Prasad now homing fever, and given his expectation of having more data for approvals, how might your approach to clinical trial designs change? Do you see any impact to your development timelines? Thank you.

Doug Ingram (President and CEO)

Let me speak to what we know today. Of course, that appointment occurred only today. What I can tell you is that subsequent to the change of Commissioner Makary and then the departure of Dr. Marks, we've had a significant number of interactions with our primary reviewer on the biologic side, which is OTP at CBER. We have seen so far no changes in the approach they're taking. In fact, Dr. Verdun appears to be quite innovative in her goal of moving therapies along and relying upon modern tools for drug development. I would also note that Dr. Makary has not made many public statements, so it's difficult to deduce precisely what his views are on things. He did say in a few recent interviews that he does believe, for instance, with respect to rare disease, that relying upon biomarkers and plausible mechanisms of action makes sense.

On hold, I'm going to remain confident that the FDA is going to be a science-based, evidence-based organization. Hopefully, if the interactions that we've had in the last few months are any indication, they are going to continue the march towards ensuring that regulatory science can keep pace with actual science and we can begin to really accelerate. To that very end, one of the things that we speak of all of the time is the cost of healthcare in the United States. We talk about a lot of concepts in there. Truthfully, we talk about discounts and rebates and outcome-based agreements. All of those things are interesting and probably worth discussing. There is one thing more than anything else that, from a drug perspective, can reduce the ultimate cost of healthcare in the United States.

That is the ability to make our therapies, get them through the regulatory process with less unnecessary burden, stripping down to those things that truly add insight on safety and efficacy, collapsing timelines, and reducing the cost and risk of them. If you do that, you can start getting therapies out in the U.S. and then around the world that will be far less expensive but equally efficacious and beneficial to patients. That is the direction in which I see the FDA historically heading. I am confident that the FDA will see that that is a brilliant answer for society.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Kristen Kluska of Cantor Fitzgerald. Your line is now open.

Rick Miller (VP of Biotech Equity Research)

Hi, this is Rick Miller on for Kristen. Thanks for taking our question. Can you just talk about some of the administrative delays in infusion? I think you mentioned a specific Medi-Cal delay that you said was resolved. Was there something specific driving this, any information requests from organization or anything like that you could speak about? Thank you.

Doug Ingram (President and CEO)

Yeah. That very specific issue, which is the administrative delay specifically in the first quarter, that was really just an administrative issue. It was an administrative issue between the sites of care in Los Angeles County and Medi-Cal. Let me give you more detail than you want. Normally, the thing that decides whether a patient gets dosed is a pre-authorization. You get a pre-auth. This is not about that. This is not about patients ultimately getting dosed. This was not a fight over access or anything along those lines. This is all about families that already had scheduled infusions and had already gotten prior auths from the payer. This is not about access or anything.

It's a really specific administrative issue, which is given the cost of these one-time therapies, sites of care often, in fact, very, very often, maybe almost universally, are asking of the payers that they sign single-case agreements for that particular infusion, which is sort of a belt and suspension concept of saying, "I know I'm going to get reimbursed if I do this." There was this hiccup in the first quarter where there was a delay in those single-case agreements. That caused people just couldn't get dosed. They all got rescheduled, by the way. They all got rescheduled, but outside of the first quarter into the second quarter. That issue got resolved between the payers and the state. Yeah, go ahead.

Dallan Murray (Chief Customer Officer)

It's a good question. It does really underscore the dynamics of a one-time therapy that if you compare it to our PMO experience, delays in, let's say, 15 patients in the gene therapy world, to get the same kind of financial impact, you'd have to have that delay of 150. It's a tenfold impact for a one-time gene therapy versus a chronic therapy. Small swings matter, but that works both on the upside and the downside.

Doug Ingram (President and CEO)

Yeah. I do want to make sure we're absolutely clear. That was purely an administrative issue. It's not an issue we've seen before. We understand the single-case agreement concept well. One of the things you need to know, though, is that we don't participate in the single-case agreement. That is between the site and the payer itself. It's not an access issue. It's an administration issue.

Operator (participant)

Thank you.

Doug Ingram (President and CEO)

That is all.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Sami Corwin of William Blair. Your line is now open.

Hi. This is Caleb for Sami Corwin. Thanks for taking our question. In regards to patient education, are there any particular data sets that families want to see to gain a little bit more confidence in ELEVIDYS following the safety event? I know you guys presented a lot of safety data thus far, but are you hearing anything that families want to see more data in possibly the older non-ambulatory patients to get more confidence there for them? Thanks.

Doug Ingram (President and CEO)

I'm going to speculate a bit on it. I mean, I think the things that are important to families broadly, so specifically about the safety event, they want to hear about it. What was it exactly? And put it in context. One of the things that families sometimes did not know is, is this one of five? If you dose seven kids, if you dose 10 kids, no, we've dosed well over 800 kids. That data point is probably becoming stale. We've dosed over 800 kids. So sort of contextualizing it and what that was about and what that meant. The second piece of information I think that's really important to families to contextualize is, do you see anything different here? Is there something about being ambulatory versus non-ambulatory that plays a role? And the answer to that is no. We looked at all the signals.

There is no reason to believe that at all. All of the liver enzyme issues are the same across ambulatory and non-ambulatory bilirubin. It is the same. I think the next big thing that families need to understand is the efficacy. They really need to see the efficacy. That is a lot. There is a lot to talk about there, right? Because we have a lot of data that supports how beneficial this therapy is. All of the data that supported the original approval, the totality of the evidence was lights out supportive of it. The data that came out a year later from the original study was just, again, completely lights out. On the two years, kids that are on the therapy for two years were significantly better than natural history on every single measure. The same was true for the older kids.

Even at one year, the trajectory analysis was just in a really interesting opportunity where you got these kids all blinded for two years. Some were on placebo. Some were on full drug. You crossed them over at one year. They're all blinded. They do not know if they had the therapy before or now they're getting the therapy. What did you see? Kids that had previously gotten the therapy were doing great, got a big benefit, and then were stable and doing great. They got a placebo. They did not do anything. They just continued to stay stable. They did not have a placebo effect even. They just became stable. The kids that were on placebo, when they hit one year and they got the therapy, again, they did not know they got it, they just rocketed up and did brilliant. You saw this huge gap.

That is really important data for them to see. I would argue that another thing that they really need to see, because this goes not only to the efficacy of the therapy, but to the importance of prioritizing getting this therapy. There are a lot of things you can do for your kid. There are interesting therapies out there. This is a disease-modifying therapy. Before you do anything else, you have to modify the disease. I would argue the muscle MRI data that they see is really impactful because that does not just say that this therapy is important. It says you do not have the luxury of waiting. I am not going to criticize families. I do not know families' personal issues and why a family might want to wait till the summer versus getting it in the late winter.

I would argue that if you see the muscle MRI data, you're going to feel very motivated. I got to get this kid on this therapy as soon as my family situation would allow it. Because what we saw, again, is in just one year, if you were not on this therapy, you were going to have a lot more muscle damage that's not coming back. Our therapy doesn't bring the muscle back. You're going to have a lot more fat and fibrotic tissue that's not going to be helpful. Anyways, I think that sort of whole package of data. By the way, that's not just for families.

This is the kind of information that we really need to share robustly with treating physicians, not only our top treating physicians who get this in spades, but physicians throughout the country and referrers around the country so that everybody understands, feels not only the value of the therapy, but feels the urgency that these kids need to get infused as soon as an infusion site is available to them and an infusion date is available to them.

Dallan Murray (Chief Customer Officer)

You can see some of the tools that we're offering patients now on elevidys.com. You can go in and see the various videos, educational tools, including the tools, how we educate them across the treatment journey of what to expect and how to manage that treatment journey.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Uy Ear of Mizuho. Your line is now open.

Hi guys. This is Leo on for Uy. Thanks for taking our question. Is there a reason that patients appear to be flocking towards bleeding centers that have full capacity? Do you expect any of these bleeding sites to increase their site capacity? To what extent does your updated guidance account for increased number of infusions at these secondary sites that you're now targeting? Thanks.

Doug Ingram (President and CEO)

I think it's not at all a surprise that there are so many start forms at the top sites. They are also the top sites. These are the world-leading Duchenne sites. I don't want to start naming them because I might forget one and then I'll be accidentally insulting somebody. These are the world's leaders in the treatment of Duchenne muscular dystrophy. These are the most renowned sites around the country and frankly around the world. It should be of no surprise that a family, when they hear about this horrible diagnosis, would want to go to one of those sites potentially. That's why it's there. I'm sorry, what was the other part of the question? I'm missing it. Anyways, that's the reason that there was this imbalance.

I guess on our forward, yes, we're assuming that we're going to get a lot more capacity. We're going to exploit a lot of the capacity in these secondary sites going forward, and that's going to help us not only hopefully even get to or even exceed our guidance over the course of the year. One thing I should remind everybody, all of the sites that are permitted to infuse Sarepta, I mean, ELEVIDYS, are well-trained and validated sites. They are themselves all brilliant sites. There is no reason to believe you're going to get a different quality of care in one of these sites. They're going to all do a great job for you, which you need to focus on.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Andreas Argyrides of Oppenheimer & Co. Your line is now open.

Andreas Argyrides (Executive Director and Senior Analyst)

Good afternoon, and thanks for taking our question. With shares at current levels, how are you guys thinking about the opportunity for implementing the approved buyback? Thanks.

Doug Ingram (President and CEO)

I'll turn this to Ian.

Ian Estepan (CFO)

As I said in our prepared remarks, obviously, the stock does not reflect. Our guidance still remains $2.3 billion-$2.6 billion. The stock is trading at levels that are not even recognizing that. We certainly think that it is undervalued. We have just outlined multiple data readouts from our pipeline also to continue to drive growth. We have to balance, obviously, both our investment in R&D and then our investment in a potential allocation strategy. That is what we are going to do going forward. Obviously, we are not going to be too direct about how much we are doing or the like, but it is certainly a consideration that we are looking at.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Gena Wang of Barclays. Your line is now open.

Hi. This is Tony on for Gena. Thanks for taking our question. Some of our own channel checks have suggested that there are some payers deciding not to cover ELEVIDYS. We were wondering if you could provide any additional color on your experience with coverage so far. Second question, when could we potentially expect an update regarding the halt on studies in the EU?

Doug Ingram (President and CEO)

Sure. First, on the first one, just be clear. I can use the PMOs as the answer. There are always some subset of payers that resist access and require more work. It is one of the reasons that cycle times sometimes get extended because you have to go through appeals processes and the like. There is nothing different about ELEVIDYS and the PMOs, with the exception that probably on a whole, the ELEVIDYS policies are better. ELEVIDYS policies on a whole are better, part because we have a traditional approval for a significant percentage of that approval, and in part because we have so much data that supports it. What I will say, and ultimately, regardless of policy, the differences in policies, there are policies to label. There are a lot of them with ELEVIDYS. I am really proud of that.

There are some policies that try to put some restrictions in, and then there are some policies that are very restrictive. The ultimate answer is an issue for us, but not actually ultimately for the revenue or for you, because we will get the kids on the therapy in any of those scenarios. Some will take a little longer than others. That is why I can tell you that with respect to the PMOs, we are well over 90% success rate in getting those kids on therapy, even when a payer might try to take us to an appeal or something. With ELEVIDYS, our current success rate stands at 100%. That is not suggesting that five years from now, we will still be at exactly 100%. There is no reason to believe we will be worse than our PMOs, and our PMOs are doing great. We feel very good about it.

As it relates to the halt, Louise, do you want to chat about that?

Louise Rodino-Klapac (Chief Scientific Officer)

Sure. Yeah. The EU process requires a need for a substantial amendment. That typical review time is around 95 days. That approval to restart is expected around the end of summer. Just to remind you, we are still enrolling outside of the EU as well. The trial continues to enroll, and we're on track.

Operator (participant)

Thank you. I'm showing no further questions at this time. I'll now turn it back to Doug Ingram for closing remarks.

Doug Ingram (President and CEO)

All right. Thank you all for joining us this evening. I will tell you, it's not enjoyable to bring guidance down. It's the first time, frankly, in my career when I've done it, and I don't intend to do it again. I do think it was the prudent thing for us to do as we're working through some of these issues. I feel very confident the team's prepared to work through the issues, and we will achieve our guidance. I mean, I'm just talking extemporaneously now. I came to it's more than revenue to me, okay? It's not about revenue. That's not what upsets me. Revenue is the scorecard for what upsets me.

The fact is that I came to Sarepta just about eight years ago with a belief that along with some other really dedicated people, we might actually be able to intervene and change the course of a disease that's just horrific for families. I feel particularly strong about that right now because I literally had to go to a funeral yesterday for a young man who died of Duchenne muscular dystrophy. It's a disease that takes often brilliant human beings and steals them from their family little bits by bits. For almost all of history, it was nothing but nihilism. It was nothing but a physician that got to tell a family a diagnosis, "There's nothing we can do for this boy.

Go home and love him and watch him grow and then die in front of you." The thought that we might be able to do something about that was extraordinarily motivated. It is why I came here and why me and 15 other people at Sarepta fight every day for the families that we serve. This is not just a revenue issue for us. This is who we are. The very idea that we have gotten to where we have gotten is impressive. Okay? We have four approved therapies. We have three PMOs doing a lot of good for kids. We have a gene therapy that is the best gene therapy and the most successful gene therapy ever launched. It is not good enough. I want to be very clear. That is not good enough, all right?

Because every day when a kid who could have gotten infused doesn't because of an administrative issue or because of a misinformation issue or because we didn't get out to the site, that's a day we failed in our mission, and we're not going to fail in our mission. I look forward to updating you over the course of this year. We've got a lot of other things going on at Sarepta that we're excited to talk to you about later this year. I thank you all for your support and for your great questions this evening.

Operator (participant)

Thank you for your participation in today's conference. To just conclude the program, you may now disconnect.