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Sarepta Therapeutics, Inc. (SRPT)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 was Sarepta’s strongest quarter to date: total revenues rose to $396.8M, driven by net product revenue of $365.1M (+55% y/y), with ELEVIDYS at $131.2M and PMO franchise at $233.8M; GAAP net income reached $45.7M (diluted EPS $0.47), and non-GAAP net income was $86.6M ($0.82) .
  • ELEVIDYS delivered a first-in-class launch: Q4 revenue of $131.2M (nearly 90% sequential growth), with management noting minimal cannibalization of PMOs; however, with the narrow 4–5-year-old label, management does not expect significant additional growth through 1H24 before label expansion .
  • The FDA accepted Sarepta’s BLA supplement to remove age/ambulation restrictions and convert to traditional approval; target review completion date is June 21, 2024—management is prioritizing the broadest possible label outcome .
  • S&P Global consensus estimates were unavailable due to request limits; the company said ELEVIDYS and PMO results exceeded external expectations in 2023, with preliminary full-year PMO revenue above guidance ($945M vs $925M) and ELEVIDYS Q4 “significantly exceeding consensus” (company claim) .

What Went Well and What Went Wrong

  • What Went Well

    • ELEVIDYS commercial launch momentum: $131.2M in Q4 and >$200M for FY 2023; “first-in-class launch excellence,” with 70+ sites trained by year-end and ~60% of sites having dosed by early 2024 .
    • PMO resilience: PMO net product revenue of $233.8M in Q4 (flat y/y vs ~$236M), minimal cannibalization in 2023, and FY PMO revenue of $945M exceeded guidance ($925M) .
    • Profit inflection and liquidity: Q4 GAAP profitability of $45.7M and non-GAAP profit of $86.6M; ended the year with ~$1.7B in cash and investments .
    • Quote: “We were profitable on a GAAP basis in the fourth quarter… and we exited 2023 with approximately $1.7 billion of cash…” .

  • What Went Wrong

    • Near-term growth limits for ELEVIDYS: With the narrow 4–5-year-old label, management expects limited incremental growth in 1H24 as the prevalent cohort is worked through, pending label expansion .
    • Margin headwinds to normalize: Management reiterated long-term gross margin targets around ~80% for ELEVIDYS as heavier/older patients enter and pre-expensed inventory normalizes (implies margin erosion from current levels) .
    • Q4 PMO flat vs prior year: PMO Q4 revenue ~$234M vs ~$236M in Q4 2022 (reflects expected lumpiness/ex-US variability), though management highlighted broader annual outperformance .

Financial Results

  • Consolidated P&L and EPS (oldest → newest)
MetricQ2 2023Q3 2023Q4 2023
Total Revenues ($M)$261.2 $331.8 $396.8
Net Product Revenue ($M)$239.0 $309.3 $365.1
Collaboration & Other Revenue ($M)$22.3 $22.5 $31.7
GAAP Net Income (Loss) ($M)$(23.9) $(40.9) $45.7
GAAP Diluted EPS ($)$(0.27) $(0.46) $0.47
Non-GAAP Net Income (Loss) ($M)$(75.2) $37.7 $86.6
Non-GAAP Diluted EPS ($)$(0.85) $0.37 $0.82
Cash & Investments ($B, period-end)$1.9 $1.8 ~$1.7
  • Segment/Product revenue detail (oldest → newest)
MetricQ2 2023Q3 2023Q4 2023
EXONDYS 51 net product revenue ($M)$134.7 $142.3 $131.0
AMONDYS 45 net product revenue ($M)$71.7 $66.3 $69.9
VYONDYS 53 net product revenue ($M)$32.6 $31.7 $32.9
ELEVIDYS net product revenue ($M)—$69.1 $131.2
PMO franchise net product revenue ($M)$239.0 $240.2 $233.8
Total net product revenue ($M)$239.0 $309.3 $365.1
  • Operational KPIs (oldest → newest)
KPIQ2 2023Q3 2023Q4 2023
ELEVIDYS sites trained/activated>50 sites ~70 sites ready >70 sites (2023 year-end)
% of activated sites with at least one dose——Closing in on ~60%
Commentary on near-term ELEVIDYS growthInitial ramp; payer/logistics setup Strong first full quarter Limited growth likely in 1H24 under current label

Notes:

  • Company also furnished a preliminary 8-K on Jan 8, 2024: Q4 PMO ~$234.3M, Q4 ELEVIDYS ~$131.3M; FY 2023 PMO ~$945.0M; FY 2023 ELEVIDYS ~$200.4M; cash ~$1.7B (unaudited) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/UpdateChange
PMO Net Product RevenueFY 2023≥$925M Actual: $945.0M (prelim) Beat guidance
ELEVIDYS Net Product RevenueFY 2023—~$200.4M (prelim) New disclosure
Profitability outlookFY 2024—“Expect to be highly profitable for the full year,” contingent on label expansion New qualitative
ELEVIDYS margin frameworkLT~80% gross margin target as label broadens (COGS rises with heavier pts) ReiteratedMaintained
Label expansion timeline2024—FDA accepted sBLA; target date June 21, 2024 New milestone

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2023)Current Period (Q4 2023)Trend
Label expansion/regulatoryQ2: FDA “maximum speed” post-EMBARK to broaden label; plan to submit swiftly . Q3: Broad label sought; BLA supplement “very soon” .FDA accepted sBLA; June 21, 2024 decision; prioritizing “broadest possible label” and conversion to traditional approval .Progressing with firm timeline
ELEVIDYS launch trajectoryQ3: $69.1M; exceeded consensus; ~70 sites ready .$131.2M; ~60% of sites have dosed; near-term growth capped until label expands (prevalent 4–5 cohort) .Strong → near-term plateau pre-expansion
PMO durability/cannibalizationQ2: Strong PMO; guidance reiterated . Q3: PMO $240.2M; minimal cannibalization .Q4 PMO $233.8M, flat y/y; minimal cannibalization in 2023 .Stable
Manufacturing/COGSQ2: Suspension process development (250L), “multiples” yield, scale to 1,000L .Engineering runs at 500L and 2,000L; commercial availability goal 2026; ELEVIDYS LT margin modeled ~80% .Advancing capacity/efficiency
Profitability/cashQ3: Non-GAAP profitable .Q4: GAAP profitable; ~$1.7B cash; invest to build inventory ahead of expansion .Improving
Payer/accessQ2: UHC aligned to label; 250M covered lives engaged .Continued access; focus on patients aging out; prepare for broader label scenarios .Broadly supportive

Management Commentary

  • “Notwithstanding a label limited to 4- and 5-year-olds… ELEVIDYS net product revenue was $131.2 million for the quarter, and over $200 million for the full year.”
  • “We were profitable on a GAAP basis in the fourth quarter… and we exited 2023 with approximately $1.7 billion of cash, cash equivalents, restricted cash and investments…”
  • “By the time of label expansion, we expect to have cleared the way for those older patients to get dosed as rapidly as possible… do not expect to see significant additional growth within the existing population through the first half of this year.”
  • “From a cost perspective… targeting 80% [gross margin]… over time, as heavier patients get on therapy… margins start to decline more to that 80% range…”
  • “On suspension… engineering runs… 500 liter… 2,000 liter… our goal is to have this suspension process available commercially by 2026… yields… multiples [higher].”
  • “Priority #1 is the broadest possible label… time lines are identical [label expansion and conversion to traditional approval] with June 21 [target].”

Q&A Highlights

  • Margin framework and COGS: Long-term gross margin modeled around ~80% as label broadens and weight increases; pre-expensed inventory temporarily boosts early margins .
  • Manufacturing partners: Long-term Catalent relationship intact; management expects “business as usual” despite ownership changes; no near-term supply constraints anticipated .
  • Label expansion process: Two issues at FDA—(1) broaden label (remove age/ambulation), (2) convert accelerated to traditional; both targeted for June 21 decision; focus on breadth of label .
  • Near-term ELEVIDYS growth: Prevalent 4–5 cohort worked through in 1H24; limited additional growth expected until label expansion .
  • Capacity/throughput: ~70+ sites activated with ~60% already dosed by early 2024; prepared for broader label scenarios; aim to dose older cohorts rapidly upon eligibility .

Estimates Context

  • Wall Street consensus (S&P Global) could not be retrieved due to request limits at the time of analysis; therefore, we cannot present revenue/EPS consensus vs. actual for Q4 2023. Values from S&P Global were unavailable at query time.
  • Company assertions: Preliminary ELEVIDYS Q4 net product revenue ($131.3M) “significantly exceed[ed] consensus,” and FY 2023 PMO revenue ($945.0M) exceeded full-year guidance ($925M) .
  • Implication: In the absence of S&P Global figures, we treat estimate beats as management claims; post-publication, we expect upward estimate revisions for 2024 profitability contingent on label expansion and margin normalization trajectory .

Key Takeaways for Investors

  • Q4 print demonstrates operating leverage: GAAP profitability achieved with $396.8M revenue; mix shift (ELEVIDYS ramp) plus disciplined OpEx drove earnings inflection .
  • Near-term narrative hinges on FDA decision (June 21): A broad label would unlock a materially larger DMD population and likely re-accelerate ELEVIDYS growth post-1H24 .
  • Margin path: Expect gross margin to normalize to ~80% as older/heavier patients are treated; medium-term structural upside from suspension manufacturing (target 2026) with “multiples” yield improvements .
  • PMO franchise remains resilient with minimal cannibalization to date, serving as a ballast to revenue while gene therapy access broadens .
  • Liquidity (~$1.7B) supports inventory build and scaling ahead of label expansion; management explicitly preparing capacity/access pathways for rapid uptake .
  • Trading setup: Near-term could be range-bound given H1 growth constraints for ELEVIDYS; the June 21 PDUFA-equivalent is the key catalyst with asymmetric impact on growth, profitability trajectory, and multiple .

Appendix: Additional Company Disclosures Relevant to Q4 2023

  • Preliminary 8-K (Jan 8, 2024) reiterated unaudited Q4 and FY revenue by product (PMO and ELEVIDYS) and cash balance; company emphasized exceeding consensus and guidance in 2023 .
  • ELEVIDYS label safety and use parameters remain as previously approved; company is pursuing removal of age/ambulation restrictions and conversion to full approval .

References:

  • Q4 2023 Earnings Call Transcript (Feb 28, 2024):
  • 8-K with Preliminary Q4/FY 2023 (Jan 8, 2024):
  • Q3 2023 Earnings Call Transcript (Nov 1, 2023):
  • Q2 2023 Earnings Call Transcript (Aug 2, 2023):