Scholar Rock Holding - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 printed as expected for a pre-commercial biotech: no revenue, net loss of $74.7M ($0.67/share) vs. ($56.9M) ($0.59/share) in Q1 2024; results were roughly in line with S&P consensus EPS of ($0.66), a modest miss of $0.01 per share. Management increased operating spend to fund launch readiness and inventory build-out. Consensus values marked with an asterisk are from S&P Global.
• Regulatory momentum strengthened: FDA accepted apitegromab’s BLA with Priority Review and set a PDUFA action date of September 22, 2025; EMA validated the MAA. Management now “anticipate[s]” a U.S. launch beginning in Q3 2025, earlier than prior 4Q 2025 expectations, with Europe to follow in 2026.
• Commercial build-out progressing: payer outreach underway, ~50 field hires targeted by mid‑2025, and home infusion option planned; cash/marketable securities of $364.4M support operations “into 2027,” up from prior guidance of into 4Q 2026.
• Pipeline catalysts: Phase 2 EMBRAZE obesity readout in June 2025 (lean mass preservation on top of tirzepatide), and SRK‑439 IND filing targeted for Q3 2025; OPAL Phase 2 in SMA patients <2 years starts Q3 2025.

What Went Well and What Went Wrong

• What Went Well

  • FDA Priority Review with a PDUFA date (Sept 22, 2025) and EMA MAA validation, de-risking the near-term regulatory path; CEO: “our BLA was granted priority review…with a September 22 PDUFA date”.
  • Commercial readiness accelerated: “hiring and onboarding our customer-facing team of roughly 50…personnel is well underway…fully staffed by mid-2025,” and plan to be “out there the next day” post-approval, with ample supply.
  • Strengthened leadership bench (CEO, President of R&D, COO, CFO) to scale for launch; Hallal: “we joined…at a time of great strength and opportunity as we scale for the next phase of growth”.

• What Went Wrong

  • Higher OpEx to support launch drove a larger quarterly loss: net loss widened to $74.7M vs $56.9M YoY; R&D and G&A rose on commercial manufacturing/launch and headcount.
  • EPS slightly missed S&P consensus by ~$0.01 in Q1 2025; sequential loss per share increased vs Q4 2024 as spending stepped up for commercialization (consensus/actual detail below). Values from S&P Global.
  • Still no product revenue; margin metrics remain not meaningful until commercialization; management refrained from providing quantitative launch guidance and pricing details, citing early stage in payer negotiations and evolving U.S. policy context.

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by and welcome to Scholar Rock's First Quarter Financial Results and Business Update Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Scholar Rock. Please go ahead.

Rushmie Nofsinger (VP of Corporate Affairs and Investor Relations)

Good morning. I'm Rushmie Nofsinger, Vice President of Corporate Affairs and Investor Relations at Scholar Rock. With me today are David Hallal, Chief Executive Officer, Akshay Vaishnaw, President of R&D, Keith Woods, Chief Operating Officer, and Vikas Sinha, Chief Financial Officer. For those of you participating via conference call, the accompanying slides can be accessed by going to the event section of the investors' page on our website. During today's call, as outlined on slide two, David will provide introductory remarks and provide a general business update. Akshay will review our clinical and regulatory progress. Keith will provide an update on our commercial readiness activities, and Vikas will provide commentary on our company financials and a summary of our 2025 priorities. We will open the call for questions.

Before we begin, I'd like to remind you that during this call, we will be making various statements about Scholar Rock's expectations, plans, and prospects that constitute forward-looking statements for the purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any future date. I encourage you to go to the investors' and media section of our website for our most up-to-date SEC statements and filings. With that, I'd like to turn the call over to David. David.

David Hallal (CEO)

Thanks, Rushmie, and good morning. Thanks to everyone for joining us on today's call. 2025 is off to a strong start at Scholar Rock. In the first quarter, we made significant progress against our top priority of bringing apitegromab to patients and families living with and suffering from SMA in the U.S., Europe, and around the world. We were very pleased with the positive phase 3 SAPPHIRE trial, where we showed a statistically significant and clinically meaningful improvement in motor function as measured by the primary endpoint, the gold standard Hammersmith Functional Motor Scale. In Q1, to underscore the body of evidence for apitegromab for patients with SMA, we were gratified that our BLA was granted priority review by the FDA with a September 22, 2025 PDUFA date.

The team at Scholar Rock is working urgently to prepare for our U.S. commercial launch, which will be the first country in a series of launches over the coming years. I am confident under Keith's leadership, we will assemble and deploy an experienced, talented, and patient-centric team committed to the SMA community. Along with Keith, Akshay, and Vikas, we now have the responsibility to bolster Scholar Rock's capabilities as we advance our mission to deliver apitegromab to patients with SMA. This is what we know well and what we do well. We join Scholar Rock at a time of great strength and opportunity as we scale for the next phase of growth to a commercial stage, fully integrated global biopharmaceutical company.

Globally, nearly 35,000 patients with SMA have received SMN-targeted therapies, and at Scholar Rock, we are working with urgency to prepare for our global launch, which we anticipate will commence in the U.S. in Q3. We are also beginning to set the table to serve patients with SMA in Europe, Asia-Pacific, and Latin America. Our ambition at Scholar Rock is that any patient with SMA that can benefit from apitegromab should have access to apitegromab. I am confident that the global opportunity with apitegromab and SMA alone offers the potential for many years of sustainable growth that will power our company through the end of this decade and into the next.

While we are very focused on our large opportunity to serve patients with SMA, we are continuing to evaluate expanding the study of apitegromab into other rare, severe, and debilitating neuromuscular disorders. Akshay will touch upon this shortly. Now, I'd like to turn to our exploratory cardiometabolic program, the EMBRAZE Proof of Concept study. Our effort here is to understand the role we may play in the treatment of obesity. We are the world leaders in myostatin biology and know well that GLP-1s have brought needed innovation to patients with obesity and cardiometabolic disorders. While the benefits outweigh the risks, muscle wasting and lean mass loss is something that the medical community is trying to address. The EMBRAZE study is our initial effort in the cardiometabolic space and will provide insights that will guide us moving forward. We remain on track to share top-line results in June.

Our achievements in 2025 to date underpin the opportunity before us to bring the potentially life-transforming benefits of apitegromab to patients and families with SMA. We are focused on delivering for patients, with Akshay leading efforts and collaborating with U.S. and EU regulators. Keith, applying a similar approach from Vyvgart and MG to the commercial opportunity for apitegromab, and Vikas focused on disciplined capital allocation to fuel near and long-term growth. With that, I'll turn the call over to Akshay to provide a more detailed update on our R&D progress. Akshay?

Akshay Vaishnaw (President of R&D)

Thanks, David. I'm delighted to be here after six years on the board of Scholar Rock. As a physician scientist, I could not be more excited to have seen the concept of apitegromab, our highly innovative anti-myostatin antibody, go from bench to bedside with our remarkable SAPPHIRE data. SAPPHIRE showed that apitegromab has the potential to reverse the progression of SMA from a loss of motor function to a gain of motor function. Specifically, the study demonstrated a statistically significant improvement in Hammersmith as patients on placebo worsened. Importantly, patients treated with apitegromab had an approximately threefold higher chance of a three-point or greater increase in Hammersmith versus those on placebo.

Along with the very encouraging safety profile, the SAPPHIRE data suggests that apitegromab has great potential to provide clinically significant benefit to patients with SMA despite the use of background SMN-targeted therapies. Additionally, at the Muscular Dystrophy Association conference in Dallas in March, the detailed data from the SAPPHIRE trial were presented for the first time. These data demonstrated that treatment with apitegromab achieved clinically meaningful and consistent benefit in motor function across three specified SMA patient subgroups, including the type of SMN-targeted therapy, age, age of initiation of SMN therapy, and geography. Efficacy was also supported by additional analyses of outcome measures of motor function, such as the revised upper limb module and the World Health Organization Motor Development Index. As David mentioned, our BLA was accepted under priority review by the FDA, and the MAA was validated by the EMA in Europe.

Turning first to the FDA, we were gratified that our BLA for apitegromab was granted priority review by the agency with a September 22 PDUFA date. We feel the potential clinical benefits of apitegromab, as demonstrated by our phase 3 trial, are underscored by the FDA's priority review designation. By definition, a priority review designation by the agency conveys the capacity of apitegromab to potentially impact unmet need in SMA by either being a treatment for a serious or life-threatening condition or provide a significant improvement in safety or effectiveness over existing treatments. I'm excited that our team continues to work collaboratively with regulators and that we remain on track. With the success of SAPPHIRE, we're just beginning to tap into the broader potential of our truly innovative myostatin platform.

There's much more we can do with the promise of apitegromab and our platform by delivering advances in severe neuromuscular diseases, including the muscular dystrophies such as DMD and FSHD. Additionally, we're advancing SRK-439, a highly innovative and potent subcutaneous anti-myostatin antibody to the clinic. Based on preclinical data, SRK-439 has the potential to inhibit myostatin and increase muscle mass and creates options for our pipeline. We remain on track to file the IND application for SRK-439 to support the first in-human study in Q3. Now, earlier, David mentioned the potential role Scholar Rock can play in addressing lean mass in cardiometabolic diseases. As we all appreciate, whilst GLP-1s offer quantitative benefits in terms of weight loss, much more needs to be done from a qualitative perspective regarding preserving lean mass.

Notably, a quarter to a third of the weight loss with GLP-1s is due to the loss of muscle. Looking forward, it will be important to preserve muscle from the viewpoint of the associated metabolic benefits and a healthier approach to weight loss. Our Embrace study is our ongoing phase 2 trial to investigate preliminarily the potential of further developing our highly selective anti-myostatin approaches in patients with obesity with the goal of reducing the loss of lean mass. We look forward to the upcoming readout of our initial data from Embrace in June 2025. In summary, we remain focused and on track to deliver on our key priorities this year. We will, one, drive the U.S. approval of apitegromab in Q3 2025 and advance the EU approval in 2026.

Two, initiate a study of apitegromab for infants and toddlers with SMA under the age of two starting in Q3. Three, file an IND for SRK-439 in the third quarter. Finally, complete our clinical development plans for apitegromab in additional neuromuscular indications. With that, I'll turn it over to Keith to provide a commercial update. Keith.

Keith Woods (COO)

Thanks, Akshay. Good morning, everyone. I'd first like to thank our colleagues from Research and Development for their focus and commitment over the years to make the September 22 PDUFA date for apitegromab a reality. SMA is a disease impacted by both motor neuron degeneration and muscle atrophy. Today's therapies only address one piece of the puzzle, the motor neurons. Currently, there are no approved muscle-targeted therapeutics to treat muscle atrophy. With apitegromab, we have the opportunity to usher in a new era for the treatment of patients with SMA. This is a progressive and devastating disease that leads to the loss of mobility, limited activities of daily living, and a lack of independence.

Despite the advances made in treating SMA with SMN-targeted therapies over the last decade, the contemporaneous natural history data shows that the majority of patients still experience progressive muscle degeneration over time. The bottom line: nearly all patients and families living with SMA are demanding a transformative new therapy. This is supported by a Cure SMA survey published last month, where 90% of patients identified that new SMA treatment options improving muscle strength is an important need. Our market research and interactions with healthcare professionals tell us that 80% of treating neurologists agree that preserving muscle should start as early as possible in treating patients living with SMA. Today, there are approximately 10,000 patients with SMA in the United States, and roughly two-thirds of them have received an SMN-targeted therapy.

For these patients, as Akshay shared with our SAPPHIRE data, apitegromab showed the potential to reverse the progression of SMA from a loss of motor function to a gain of motor function. Furthermore, globally, there are approximately 35,000 individuals that have already received an SMN-targeted therapy. Neurologists recognize that in the future, a treatment approach of dual modalities to target the motor neuron and the muscle will be necessary to treat SMA. At Scholar Rock, we have the opportunity to make a meaningful difference for both children and adults living with SMA, first starting in the U.S., then Europe, Asia-Pacific, and Latin America. We are currently building on the momentum that has already been established for a successful U.S. launch. Last weekend, several of us at Scholar Rock had the opportunity to meet with patients and their families at the Cure SMA walk and roll in Boston.

We continue our stakeholder engagement and SMA disease education. Life Takes Muscle is the first muscle-focused SMA disease awareness initiative. Our fully staffed U.S. market access team is currently meeting with key U.S. commercial and federal payers. Our process of hiring and onboarding our customer-facing team of roughly 50 sales, reimbursement, and patient support personnel is well underway. We expect to be fully staffed by mid-2025, well ahead of our potential launch in late September. Finally, we believe that apitegromab has the potential to be a first-in-class, best-in-class therapeutic to establish a new standard of care in SMA. Now, I will turn the call over to Vikas. Vikas.

Vikas Sinha (CFO)

Thank you, Keith. Good morning, everyone. I'm pleased to provide a business update and provide insights into how we are thinking about resource allocation in the future. The opportunity with apitegromab in SMA alone offers the potential for many years of sustainable growth and will enable strategic, thoughtful investment in our pipeline to develop new indications and new therapies for an increasing number of patients. These pipeline investments will be aligned to our commercial success. We ended the quarter with $364.4 million. During the quarter, we continued to increase our investments in commercial readiness and inventory build-out. As we look ahead, we are prioritizing the commercial launch and ongoing clinical programs. We have an additional $100 million under our debt facility that we can draw down this year to support the upcoming launch, bringing our anticipated runway into 2027.

We are working on building a tighter financial plan and will share more details over the next few quarters. As we move forward, I will focus first on driving strong performance with financial discipline, next, investing in capital-efficient commercial build-out, and thoughtful capital allocation to advance our pipeline. With that, I will turn it back to David.

David Hallal (CEO)

Thanks, Vikas. In closing, we are acutely focused on the key priorities that will enable us to build and scale Scholar Rock into the next global biotech powerhouse. First, regulatory approvals and the upcoming U.S. launch of apitegromab for patients with SMA, followed by a series of country launches in the coming years. Next, develop apitegromab for additional rare, severe, and debilitating neuromuscular diseases. Finally, phase our capital allocation and investments thoughtfully to support our high-value commercial and development initiatives. On behalf of every member of the Scholar Rock team, we are deeply aware of our responsibility to patients and their families and will work with urgency to ensure that no patient with SMA is left behind. With that, we'll now open the line for questions. Operator.

Operator (participant)

Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. The first question comes from Allison Bratzel with Piper Sandler. Your line is now open.

Allison Bratzel (Analyst)

Hey, good morning, team. Thanks for taking the questions. Just two from me. Ahead of apitegromab launch, could you just frame for us how your discussions with U.S. payers have gone? How receptive are they to coverage of combination therapy for both an SMN-targeting and a muscle-targeting therapy in SMA patients? Can you also describe that feedback for ex-U.S. payers and governments as well? Second, could you just characterize interactions with FDA on the apitegromab review? Obviously, there's a lot of concern about the state of the agency right now. Just want to know if you have anything to report on there. Thank you.

David Hallal (CEO)

Thanks, Allie. Why don't I just touch on pricing, then Keith will comment more specifically, and then Akshay will take on the regulatory update question. One of the things that Keith and I have spent a long time sort of thinking about and sort of doing as it relates to, in general, really what we're talking about is access for a potentially transformative therapy for a small population of patients. We would sort of expect, as we think about establishing access plans, that we'd consider sort of pricing for our therapies that would be reflective of the rarity of the disease, the severity of the disease, and the value that our therapy would provide to patients, in this specific case, patients with SMA.

I think one of the other things that Keith and I think a lot about is also, given the rarity of disease, we would expect that the budget impact to any one single payer in the U.S. or even globally would be very limited for the high-value proposition. As it relates to sort of the engagement with payers largely in the U.S., I'll turn it over to Keith for some more commentary.

Keith Woods (COO)

Thanks, David. Allie, what we know in speaking with payers is that with SMN-targeted therapies alone, patients can still have progressive motor function loss. At the MDA in Dallas in March, we heard that a proportion of patients are already receiving more than one SMN-targeted therapy. Right now, it's not uncommon that you'll see a payer pay for more than one of these therapies. As you know with our data, when we go in addition to an SMN-targeted therapy, we see improvement consistent across all age groups of 2 to 21. With that in mind, these patients need a better therapeutic, and our early discussions with payers have proven to be positive and we will continue those discussions. As for Europe, we plan to, as you know, we filed and we're going through the regulatory process right now.

We will be preparing to go into reimbursement discussions. Let's remember that we are going to sequence through Europe, and we will start with Germany in 2026. We will roll out over time how we will sequence through the remainder of the countries in Europe. Thanks for the question.

David Hallal (CEO)

Akshay, maybe a closer look at the regulatory.

Akshay Vaishnaw (President of R&D)

Sure. Thanks, David. Thanks, Allie, for the question on FDA interactions. Look, it's a time of evolution and change at the FDA. We all recognize that. What I'm delighted by is that the pace and the collaborative conversations we've had with the FDA are all going as per routine. We continue to guide that we're focused on working with the FDA and delivering on that September 22, 2025 PDUFA date. Really, we're seeing no issues specific to apitegromab and the SMA approval. We're also delighted that FDA Commissioner Martin McCreary actually made a point that with all the changes, one of the main areas of focus continues to be rare disease and delivering on what patients need for rare disease. It's all systems go here, and we continue to work productively with regulators here and in Europe.

Operator (participant)

Our next question comes from Michael Yee with Jefferies. Your line is open.

Michael Yee (Analyst)

Hey, guys. Good morning. Maybe just two questions on obesity coming up in June. Given that it's towards the end of the second quarter, but also that there's two different endpoints, I think 24 and 32 weeks, are you thinking about providing more data to be a more complete package of information to help people out in terms of longer-term follow-up data on some of the metabolic parameters that could come out in June? Have you thought about that? Also, just holistically, the prior CEO, Jay, has mentioned a 20-40% reduction of muscle loss would be great. I think people are still sort of trying to grasp what you think a good result is and what is exciting. Can you give some color on that? Thanks.

David Hallal (CEO)

Yeah, great questions, Mike. As Akshay and I noted, this is our first effort at really understanding what role we may be able to play in this space. We know that there is a need that the medical community is trying to address. I will turn it over to Akshay for sort of a closer look at what one might expect in terms of, as you were saying, the 24-week endpoint, but then the 8-week sort of withdrawal of the therapies as well. Akshay?

Akshay Vaishnaw (President of R&D)

Yeah, thanks, Mike. The core of it will be providing the 24-week data. That's the main study. We'll certainly provide any necessary follow-up information that we have that helps us understand and helps everybody else understand the potential of an anti-myostatin approach in the obesity space. We're excited to test this hypothesis preliminarily. It's an important one. I think we all appreciate that loss of muscle is almost certainly not a good thing as people lose weight, especially when it's a quarter to a third of the weight loss is due to muscle. The primary focus will be the 24-week data, changing lean mass, the safety, and helping us understand the path forward. I'll leave it at that, but it's not so long to wait now until we get the data.

Operator (participant)

The next question comes from Tessa Romero with JPMorgan. Your line is open.

Tessa Romero (Analyst)

Hey, David and team. Thanks so much for taking our questions this morning. In the U.S., you noted collaboration with regulators and that you remain on track here. Can you confirm or not if you have completed your mid-cycle meeting? If so, can you comment on any high-level discussions you have had around labeling? At this time, what has the agency said about the need or lack thereof for an adcom? Thank you.

David Hallal (CEO)

Thanks, Tess. As Akshay and I both noted in the call today, we remain on track. Maybe for a closer look on just kind of where we are, Akshay can provide a little bit more detail.

Akshay Vaishnaw (President of R&D)

Yeah. I mean, there's not much more to provide other than the conversations have been extremely constructive and right on track, I would say. As for the detail of when and how the various interactions occurred, I don't really think this is the time or space. I do want to reassure everybody that our ability today to guide on the call that we're heading to that September 22 PDUFA date is based on a series of very constructive conversations. I'll leave it at that and more news as we get it.

Operator (participant)

The next question will come from David Nierengarten with Wedbush. Your line is open.

David Nierengarten (Analyst)

Hey, thanks for taking the question. I just had one on the additional potential indications for apitegromab. As I recall, there's a lot of exploration in preclinical models, at least, of DMD and related disorders. Is there any particular new development or new treatments that you think are particularly attractive to bring apitegromab forward into one of the other neuromuscular indications? And just kind of help us out with thinking about the expansion plans. Thanks.

David Hallal (CEO)

Thanks very much, David. Akshay?

Akshay Vaishnaw (President of R&D)

Yeah. Thanks, David. Look, I think with apitegromab and a really unique and potent anti-myostatin platform, we're having incredible opportunity to not just help in SMA across the spectrum of disease there, but well beyond that into other neuromuscular disorders, many of which are very severe and life-threatening. As you said, we've certainly spoken about and done a lot of good work on DMD and FSHD models, two very important muscular dystrophies. We've shared those data. People are very excited about them. The fact that we've validated apitegromab as having the ability to put on the degree of muscle that it can in such a serious disease as SMA obviously bodes well in these other neuromuscular disorders. There are other indications beyond DMD and FSHD. ALS is one that we can talk about as well, and we've got some thinking there.

There will be more beyond that. I think at the current time, we're very encouraged by the model data, both from DMD and FSHD. We're working through details of exactly how to begin to study in those disorders. We'll share more details around that later in the year. There is no question that an agent that is as strong as apitegromab clearly has to be investigating additional indications.

Operator (participant)

Our next question comes from Gary Nachman with Raymond James. Your line is open.

Gary Nachman (Analyst)

Thanks, and good morning. If you get the SMA approval on the PDUFA, how quickly will you be able to launch? Will everything be completely in place already on the sales and marketing side, including with access and patient support programs? How much commercial supply will you have at launch just in terms of meeting the demand? Also, if the proof of concept data in obesity are positive, just talk about the likely next steps with 439 after you file the IND. What type of phase one study will you run, and how long before it can potentially move into a phase two? Thanks.

David Hallal (CEO)

Yeah, thank you. As Keith noted on the call, he's working with urgency here by mid-year to have the team in place for more commentary on readiness to serve patients and approval. Keith?

Keith Woods (COO)

Yeah. Gary, thanks for the question. I mean, I think the first thing that I want to call out is that the team here has already been at work and has already been building, preparing for this launch for some time. We are fully staffed when it comes to our marketing team and, as I mentioned, our market access team. We have also been fully staffed in our leadership team for our patient support programs. As I mentioned in the prepared remarks, we will have the entire commercial team fully staffed by mid-2025, so we should have a couple of months prior to launch. In regard to how soon will we launch after a September 22 date, we're going to be prepared to be out there the next day.

I know that the supply chain team is working so that we can have product available to patients as soon as possible. I think the last thing that you had asked was in regard to supply. I want to assure you that we have ample supply to be able to have a very successful launch.

David Hallal (CEO)

Thanks, Keith. Regarding sort of the Embrace study, the proof of concept, and I think, Gary, as you noted, how do we think about 439? As Akshay mentioned, we're moving forward with an anticipated IND for SRK-439 in Q3 no matter what. We see this as just another indication for us that we are the world leaders in myostatin biology. We're very excited to move this into first-in-human studies. The beautiful thing about SRK-439 is we have optionality. It can support our ambition in SMA and other additional rare, severe, and debilitating neuromuscular disorders. Depending upon the sort of results that we see with Embrace, depending upon our thoughts about further study there and how we might approach it, 439, as I think was previously noted by our team, could have some optionality for us in a different space, that being cardiometabolic disorders and obesity.

We'll be guided by the data. We absolutely will sort of focus on what we see in this first exploratory readout in the EMBRACE study. Then we'll provide you all here in the coming month or two further plans for SRK-439.

Gary Nachman (Analyst)

All right. Great. Thank you.

Operator (participant)

Our next question comes from Kripa Devarakonda with Truist. Your line is open.

Kripa Devarakonda (Analyst)

Good morning, team. Thank you so much for taking our question today. Given that we're getting close to the PDUFA date, just a follow-up question from one of the prior analysts. Would you be able to provide any kind of metrics or guidance once the drug is approved or any color on how you see the early demand? Not sure how much you expect the recent executive order on drug pricing to have an impact on orphan disease area. In light of that executive order, any comments on how you think about pricing in the U.S. versus ex-U.S.? I know it's early to give us exact numbers, but just qualitatively.

David Hallal (CEO)

Kripa, two great questions. Why do not I take sort of the President's executive order first, and then Keith can comment a little bit about launch dynamics and kinetics? As you know, and I think you have just noted it in your question, it is very early to really comment on the President's executive order on MFN pricing. However, it really does not change in any way our plans to commercialize apitegromab, not only in the U.S., but in Europe, Asia-Pacific, and Latin America. We do believe should any elements of the executive order be implemented, be implementable, it would obviously be better to have not yet established pricing for a therapy versus, let us just say, products that are already out there with established pricing.

In all countries, we would expect that the price of apitegromab will be reflective of the rarity of SMA, the severity of SMA, despite the use of all sorts of SMN-targeted therapies, as we noted, still a loss of motor function despite the use of those over time. Of course, the strong value proposition that apitegromab may be able to provide to patients and families with SMA. As I also noted a bit earlier, we think that given the rarity of the disease, apitegromab would not really impact tremendously any real budget of any magnitude of any single payer, let's just say, in the U.S. or in any country around the world.

We think no matter what happens with the president's executive order for MFN, we think we're going to be in a position of strength when we think about the launch of apitegromab globally for the 35,000 patients in the world that have received an SMN-targeted therapy. For a closer look at sort of your first part of your question on launch dynamics and kinetics, I'll ask Keith to comment.

Keith Woods (COO)

Yeah, Kripa, thank you for the question. First of all, in regard to guidance, we are not going to be providing guidance at this time. I can give you some aspects from working in rare disease for now two decades. One thing that I'm very excited about in the SMA marketplace is that 100% of newborn screening in the U.S. And as we noted in the prepared statements, we know of the two-thirds of SMA patients of the 10,000 in the U.S. that have already had an SMN-targeted therapy. These are good aspects to begin in a launch. Also, the fact that we have the centers of excellence, it's highly concentrated because of the Cure SMA model. All of these things give me optimism. Now, think about this. These centers of excellence are also going to be many at your academic hospitals.

We will be going through formulary processes and such. Some of them are quite timely. They're not just set based on our launch date, but when the academic centers and other centers are going through it. We expect that between that as well as applying for a J code that we would receive sometime six-plus months later, that we'll prepare for a consistent and steady launch.

Allison Bratzel (Analyst)

Great. Thank you so much.

David Hallal (CEO)

Thanks, Kripa.

Operator (participant)

The next question comes from Marc Frahm with TD Cowen. Your line is open.

Marc Frahm (Analyst)

Hi, thanks for taking my question. Maybe just following up a little bit on Kripa's question before, just on launch trajectory. As you mentioned, the SMA population now has 100% newborn screening in the U.S. They've gotten very concentrated into these centers of excellence to receive SMN therapy. Those would seem to be kind of tailwinds to the launch relative to prior SMA launches. While there's certainly unmet need, maybe it's not quite as dramatic as it was before the original SMN correctors launched, which would maybe be a headwind. I mean, do you think those net out? We should look at prior SMA launches as a good proxy for the trajectory that apitegromab might have.

I guess to the extent that you don't think those are good proxies, is there other launches out there in the rare disease space that you think maybe are more analogous to what we should expect with apitegromab?

David Hallal (CEO)

It's a great question, Mark. I think, first of all, one of the things that our team has always focused on as opposed to looking at other sort of proxies or other launches, we just kind of look in the mirror and try to compete with ourselves and think about the best way that we can serve patients immediately and then over time. You're right. There's probably some headwinds. There's probably some tailwinds. I think a couple of things that I would just underscore. SMN-targeted therapies in and of themselves, with longer-term data that's been presented absent of Scholar Rock, have shown that there can be a return to the progressive motor function loss of the disease despite what happens earlier when treatment is initiated.

We ourselves showed in the Sapphire study, obviously, at the time in which we were capturing patients and enrolling them in the study, there was overall loss of motor function rather than what we demonstrated with our primary endpoint, the gold standard Hammersmith scale, a gain of motor function. We do think that there's a lot of urgency still for patients. I think Keith even commented on how that was underscored at last month's presentation by Cure SMA of what patients and families were looking for. At the same time, we really want to play the long game. Independent of sort of launch trajectory, we want to build a team and a model to serve patients immediately and then over time for sort of a steady, consistent growth of our business by serving patients in a very meaningful way.

I don't know if Keith would like to add a little bit more onto that as well. Keith?

Vikas Sinha (CFO)

Yeah. I mean, you bring up the point of the launch compared to other SMN-targeted therapies when there was nothing else available. Okay? So they truly had no other treatment. So I think this sense of urgency to be able to get to that product was great. As we take a look at the information, we find that patients that are on SMN-targeted therapies, most of them see their doctor on average two times per year. So it is not like September 22 happens and they have an appointment the next week. So I just want to guide you on that. I agree with your statement that the fact that we know where these patients are is an advantage. However, there are going to be some headwinds, as David mentioned. Thanks.

Operator (participant)

Our next question will come from Evan Siegerman with BMO Capital. Your line is open.

Mark Moffman (Analyst)

Hi, I'm Mark Moffman on for Evan. Thank you for taking our question. Recently, we had noted some stronger rebound in Spinraza sales to start 2025. We were hoping to get your updated thoughts on long-term changes that may occur in the SMA market, specifically with apitegromab being used in conjunction with Spinraza. Are you internally expecting any longer-term growth in Spinraza that may benefit apitegromab upon launch? Thanks. Appreciate it.

David Hallal (CEO)

No, it's a great question. I think one of the things that we would note is that, as Akshay shared earlier in the SAPPHIRE study, really in a pre-specified way, depending upon which SMN-targeted therapy a patient received, we feel like we can help all patients independent of whether or not they receive Spinraza or Evrysdi. We'll continue to sort of assess the nearly $5 billion annual market across the three different SMN-targeted therapies, whether or not it's the highly innovative gene therapy, Zolgensma, or the other highly innovative SMN-targeted therapies like Spinraza and Evrysdi. We would just expect to follow those dynamics, but recognize with the SAPPHIRE data, and then, as Akshay noted earlier in today's call, the upcoming UNDER TWO study, the OPAL study, where we would expect more experience for apitegromab for patients who have received Zolgensma.

We think we're going to be in a position of strength to really help and provide potential transformational benefits for all patients that have received SMN-targeted therapies over time. Thank you for your question.

Mark Moffman (Analyst)

Appreciate it. Thanks.

Operator (participant)

Our next question comes from Andres Maldonado with H.C. Wainwright. Your line is open.

Andres Maldonado (Analyst)

Hi, everyone. Thanks for taking my question. Just a quick one from me. Given the progress towards U.S. launch and your ongoing readiness in Europe, I guess, how are you evaluating the potential to secure a commercial partner for Europe? In this context, obviously, you want to fire on all cylinders across the pipeline, but how would you prioritize the additional indications for apitegromab in this situation? Thank you.

David Hallal (CEO)

Yeah, thank you. I think we noted this just a few weeks ago on our April 28th call. Given the experience that this collective team has had between Alexion and Mylan Argenx, we feel like there is nobody better suited to serve patients globally than us directly. It is not a priority of ours to think about a partner outside of the U.S. We feel like this is something that we know well and, in fact, do well. We'll continue to run a playbook that not only do we know the playbook, we feel like we wrote that playbook. As it relates to other indications, as Akshay noted, we'll be data-driven. The team's been doing some wonderful work in looking preclinically at additional rare, severe, and debilitating neuromuscular diseases. Akshay will be providing further guidance on that toward the end of this year and into next.

Thank you.

Operator (participant)

The next question comes from Dennis Kennedy with LifeSci Capital. Your line is open.

Dennis Kennedy (Analyst)

Thanks for taking the question. As we look towards the Embrace data in June, could you just help frame expectations for the tirzepatide monotherapy arm? Specifically, how much of the lean mass loss that we'd expect at one year with tirzepatide do you think typically occurs by week 24? And related to that, do you think eight weeks of follow-up post-treatment is sufficient time to demonstrate a weight regain in patients in the tirzepatide monotherapy arm?

David Hallal (CEO)

Yeah, Dennis, these are great questions. In fact, I think within your questions, you sort of highlight some of the limitations for us in sort of a 24-week endpoint and then eight weeks following. Nonetheless, as Akshay and I have noted, we feel like it's important to understand for a first time if there is a role that we can play. Akshay?

Akshay Vaishnaw (President of R&D)

Yeah, thanks. Dennis, I mean, tirzepatide consistently has shed loss of lean mass as have the other GLP-1. That mass is symmetrical to the overall loss in body mass. You can expect that at week 24, about 25%-30% of the weight loss that will have occurred in the tirzepatide alone arm will be due to loss of muscle. We're projecting that based on historical data. There's no reason to believe that it'll be any different in the context of this study. Now, will that be the maximal amount of lean mass loss at week 24? I don't think so. Because in the pivotal studies, tirzepatide will study for much longer. Overall, the impact on muscle mass is even greater, obviously, as we continue as the patients lose more weight.

Within the context of Embrace, a quarter to a third of weight loss at week 24 will be lean mass loss. We expect your other point about is eight weeks of follow-up sufficient? This study was an exploratory study to understand the potential of apitegromab in a pure, clean, safe, potent anti-myostatin approach in the context of obesity. I do not think the eight-week follow-up answers the whole question, but you can anticipate that there will be some weight regain during that period. The trajectory of that will be quite important to monitor between the two arms.

Dennis Kennedy (Analyst)

Great. Thank you.

David Hallal (CEO)

Thanks, Dennis.

Operator (participant)

At this time, I am showing no further questions in the queue.

David Hallal (CEO)

Thank you, Operator. Thank you for everybody joining the call today. We look forward to continuing to update you and keeping you apprised of our progress as an organization. Thank you.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.