Here at the Bank of America Healthcare Conference, I'm Tazeen Ahmad. I'm one of the senior SMID Biotech Analysts at the firm. It's my pleasure to have our next presenting company with us, Sarepta Therapeutics. Here for Sarepta this morning is CEO Doug Ingram. Doug. Thank you. Good morning. Thank you very much for having us. Thanks for making the trip over. Thank you. What's been going on lately? It's been pretty quiet. So a couple of things. First, I have to say my IR folks are giving me a dirty look. I'll be making forward-looking statements today, so please look to our public filings for that. Before we get off, there's going to be a lot of interesting Q&A. We'll talk about guidance and consensus and the like. And I don't want to hide from that, but I do want to contextualize it a bit and talk a bit about our performance in the first quarter, putting to one side the fact that we did not meet our own expectations and we lowered guidance. Nevertheless, I would like to remind us that we did about $612 million in net product revenue for the first quarter, and that is 70% growth over the prior quarter, prior year. ELEVIDYS, while we missed our expectations, it still grew at about $375 million. It grew over the prior quarter, same quarter, prior year at about 180%. And even our PMOs continued to grow, even in the face of ELEVIDYS, grew at about 5%. I think they did about $235 million, if I'm not mistaken. And more important than that, this is missed in all of this. You know, our GAAP operating income stood at about $275 or so million for the quarter. That was growth over the immediately sequential quarter of about 70%. And on a non-GAAP basis, we grew at something like $335 million, which I would remind you is about 45% of sales, which is pretty strong financial performance. And the reason I mention all of this is that we're in a very difficult place as a biotech ecosystem right now. Let's be very direct about it. The market is nearly uninvestable right now. It's in chaos right now. That's a real problem. We're going to need to find our way out of that. If you think about it right now, I think it's about 30% of all public biotechs today are trading below their enterprise, their enterprise values below their cash. Another 32% or 35% are trading at about $100 million or less. So 60%-65% of all biotech is trading somewhere between $100 million enterprise value and literally less than zero from an enterprise value. I got bad news. There's not a drug that I know of in the world that can get developed and approved in the United States alone for $100 million, which means unless these markets open back up and people can start accessing the markets, of which well over 90%, I think it's probably upward of 98% of all biotechs need to get to the equity markets to continue to fuel. That means an enormous number of companies are going to go under, and they're going to take with them programs, some of which will fail, but some of which would have really added significantly to healthcare in the United States and brought a better life to patients. That's a problem. There's no shadow for it in that, from my perspective. I do want to contextualize that we are, while we missed guidance, and I wish we hadn't, and while we changed our guidance, and I wish we hadn't, we are in a different place than other biotechs right now. I would remind you, even with our guidance going down for the year, that's still $2.3 billion-$2.6 billion this year. We are going to be profitable this year and cash flow positive this year. We have a really strong financial position to weather these difficult times. We have a really exciting pipeline. Hopefully, we'll have some time to talk about that, both in the gene therapy side and gene editing, but also in the siRNA side. We have the ability to fund that pipeline without being slaves to the public markets or having to do equity raises or the like. We can do it from our own resources. Finally, I should note, I think we have some of the best and most dedicated folks in the industry that know how to execute and drive forward. I have a very low attrition rate, so we have a lot of great people doing a lot of great things. Just to contextualize it, but I am sure the next thing we need to talk about is guidance. I just wanted to open with some more macro-related questions because every company I cover, not just Sarepta, is now having to think about broader stroke items. Let's start off with the most recent update, which was the executive order that was announced on Monday, talking about most favored nation. Right. Can you, Doug, give us your interpretation of what that ultimately means and how Sarepta might be impacted by that? It is obviously very new, and I think probably brighter minds than mine have looked carefully at it and will have more views on it. I think there is still some ambiguity in what that is going to mean. I do not think it has a significant impact on Sarepta, even if it extended, for instance, and I do not think it currently does. I think there was a theory it was going to extend to Medicare. It really would not impact us. Our direct sales are primarily in the United States today, and we have very little Medicare as part of ours. We have a lot of Medicaid, but very little Medicare. We will all be watching to figure out how that unfolds and what it means for the industry and for patients in the United States. I don't think it's going to have a significant impact on Sarepta, at least on near term. Okay. And then secondly, for manufacturing, can you just remind us where your products are made? Yeah. All of our products are made in the United States. Obviously, considering the overhang and some of the ambiguity that's associated with tariffs, we're still doing analytics on that. We do get some material outside of the United States, but it will have a very modest impact on this company. It'll be a small percentage impact even on cost of goods. It probably would not be anything that anyone external to Allergan or to Sarepta would even say. You mentioned that company earlier. To Sarepta would even notice. We're fairly immune, which is interesting because I think most of biotech is in a favored position with respect to these tariffs. You know, one of the things that, if I can just sort of semi-rant for a second, one of the things that frustrates me about the biotech industry being in such a difficult place today is that we should be generally immune from these tariff issues. We're a uniquely U.S.-driven enterprise. Biotech really came out of the U.S. Most of the really innovative companies are in the U.S. Most manufacturing occurs in the U.S. We should be a flight to value in the midst of chaos, and here we are. We have to solve that issue as an industry. Okay. We'll work on that next. How about, I guess the last question is, how are you thinking about FDA interactions? There's sort of multi-asset interactions that you have with them. Let's just talk about your pipeline interactions. So Limb Girdle, for example, just talk to us about what kind of interactions you have been having for the last two months and if anything has changed there. Since the departure of Peter Marks, that would be really the moment one would wonder, things have gone exactly as we would have hoped they would go. As everyone knows, the Office of Therapeutic Products in CBER, which is primarily responsible for cell and gene therapy, has been for some time now headed up by Dr. Verdun. Dr. Verdun is a very capable and thoughtful leader and remains at the FDA. Our interactions have been great. We have not seen any delays so far in any of our programs. We have not seen any shift or change in perspective. In fact, they have reconfirmed with us their perspective on our Limb Girdles. We have a very innovative approach to our Limb Girdles. Let me start with 9003. First of all, we've had a pre-BLA meeting with the division. The division has confirmed their perspective on that pathway. To remind everyone, with respect to all of our sarcoglycans, there's three of those limb-girdles. They all have very innovative approaches. All of them code for their gene therapies for ultra-rare diseases. They code for the native protein, unaltered, the absence of which is the sole and exclusive cause of the disease, the degeneration, and ultimately, often the demise of the patients who have one of these sarcoglycanopathies. It has an extraordinarily high probability of bringing a better life to patients so long as you can get good expression of this native protein properly localized. They have confirmed that that's the approach that we're taking. We have single-arm studies for all of those three. We have fairly small studies in consideration of the size of the patient population. The primary endpoint for accelerated approval is expression of the native protein as relates to 9003 as an example. We now have the results of the 9003 program. I'm not going to give you the details on those results. Dr. Louise Rodino-Klapac would be very unhappy with me, as she wants to provide that information at an upcoming medical meeting at the appropriate time. The good news is strongly positive. We were strongly positive on the primary endpoint, which was expression, very, very strong, statistically significant increase in beta-sarcoglycan, which is fantastic. We hit the primary bar. No new safety signals, all very consistent with what we have seen in prior cohorts and is what we've seen more generally across this RH75 platform that we have. It is all a go right now. We're going to submit a BLA for approval later this year. That means if successful, and we have a lot of conviction around this, we'll have an approval in the first half of next year, and then we'll roll that forward. In 2026, we'll have an approval for a Limb Girdle. In 2027, we'll have an approval for the next Limb Girdle. In 2028, we'll have the approval for the next Limb Girdle. That is where we are from an LGMD perspective. All of which, kind of to answer your broader question, we are continuing to have very productive discussions with the agency. We have not seen either a, so far, we have not seen any shift in their approach to cell and gene therapy. We have not seen so far any situation where, just as a result of staffing or the like, they've missed deadlines. So far, very good. Has Sarepta had recent interactions? Yeah, over the last couple of months, we have. Okay, good. Let's move on to the PMO franchise. For those, they're approved under accelerated. There's been some questions of late, just given the new people in the administration that might be responsible at FDA, namely CBER, about what's required to turn an accelerated approval into a permanent approval. Any interactions with the agency on that particular question as it relates to PMOs? Two things. No, not yet. We're in the middle. First of all, just to remind everybody, we have three PMOs. Two of those PMOs are subject to sort of traditional post-marketing confirmatory trial, a trial called Essence. The other program is Exondys 51. Exondys 51 actually doesn't have a post-marketing confirmatory trial. It only has a dose-ranging trial. There's no trial, the goal of which is to disconfirm or confirm Exondys 51. Should we assume that that's a permanent approval? We have to assume that when we get to the, so the question for the FDA, we actually proposed a confirmatory trial, and the FDA rejected it. This is years ago. This is before my time, actually. I think it was in late 2016. The FDA instead wanted to ask a different question, which is, you're distributing a 30 mg per kg version of Exondys 51. Would it be more effective at 100 mg per kg or even up to 200 mg per kg? We're in the midst of that. The real result of that study is either you confirm that 30 mg per kg is the right dose, or you have a higher dose, 100 or maybe in the most extreme case, 200 mg per kg. Of course, we'll let the data drive us in the direction of that. With Essence, it is a traditional confirmatory trial. We have not had any new interactions. The individual that I assume you are referring to at the FDA is Dr. Vinay Prasad. He is the Center Director for CBER. He is not over at CDER in any of them. I do not think we have a new leader for CDER yet. Is it your expectation that everything that you understood from the agency before will still hold as it relates to the requirements that you need to show for PMO? It is. Because it's not only the expectations from the agency, but also the regulations themselves are fairly clear. For an accelerated approval, what one does is you've got some post-market, typically you have a post-marketing commitment, usually a post-marketing confirmatory trial. You are required to complete that trial. At the end of that trial, you look at the totality of the evidence associated with the therapy and then ask the question, is there any reason to believe that this therapy, is there any evidence that the therapy is safe and efficacious, or is there strong evidence based on the totality of evidence that it's not? It is on that basis. It is a totality of evidence look. At the end of Essence, we'll look at that. We'll also look at all of the real-world data. One of the nice things about having had these therapies in the community for some time now is that we have the ability to do very thoughtful post-marketing analysis ourself and do long-term real-world evidence type of studies. That is what is really required. Because remember, with respect to our PMOs, we are not arresting the decline in patients who have Duchenne. We are slowing the decline given the amount of dystrophin we are making. To see those differences requires a lot of time. You are not going to see them in six months. We saw that recently with Viltepso, who had a very short study and was unsuccessful there and had to do yet another post-marketing trial. It was not that surprising to us, not because I think in the long run, Viltepso will not work, but because with these long degenerative diseases, you really need to watch patients over a long period of time. We have had the opportunity to do that, particularly with Exondys. What we have seen with Exondys is that you look out over six years, it is keeping kids out of a wheelchair by years. It is keeping them off of a ventilator by years. It is greatly reducing emergency room visits and contractures. The hazard ratio suggests that we are extending their lives by years. We will take all of that information, plus whatever else we glean, for instance, from Essence, and then we will have a thoughtful discussion with the agency about where we are and whether we can translate these accelerated approvals to traditional approvals. Okay. Just remind us, when does Essence read out? I think we've said early next year. Okay. And then the last part. It should be completed at the back half of this year. So it's ongoing. The last part of the question is on ELEVIDYS and on the accelerated portion of non-ambulant patients. Any queries or interactions with the agency on that? No. No. I mean, one thing I will remind us all that an accelerated approval and a traditional approval are both approvals. This is not like in Europe where an accelerated approval is a conditional approval. That's a wrong way to look at it. They both have satisfied the obligation for substantial evidence to justify them. The difference between a traditional approval and an accelerated approval is you have a post-marketing commitment with your accelerated approval that is a confirmatory. Typically, Exondys is a little different, but very, very, very typically, you have a post-marketing confirmatory trial obligation. In this case, we do. We have a trial that's ongoing for that. When that trial reads out, which should be sometime in 2027, we'll have the discussion about the ability to convert that accelerated approval to a traditional approval, similar to what we have with all ambulatory children. Okay. Got it. Now let's move on to the guidance question. Take a sip of your coffee, and then we can talk about it. All right. All right. So let's be forward-looking as opposed to looking back. Talk to us about the factors that you've taken into account with your revised guidance and why you're confident in that. Yeah. Okay. There's two parts of this. I'll be happy to talk about Q1 if you'd like. We were short of what our own expectations were in the first quarter by, I don't know, 15 kids or something like that, maybe a little more than that. There's a lot of reasons for that, some of which are not replicable, but some of which were insightful for the long-term guidance. I'll just talk about our guidance over the course of this year. There's three things that informed our decision to reduce our guidance for the rest of the year. I will say I've been doing this for a very, very long time. This is the first time in all my entire career that I've ever reduced guidance. I do want everyone to know I didn't do it hastily. I did it after a lot of analysis. There really are three things. One is, as you would know, late in the first quarter, there was a really unfortunate safety event for a young man on ELEVIDYS who passed away with a liver injury subsequent to being dosed with ELEVIDYS. That required in the first quarter, and it is going to require for some time forward, us getting out there and really contextualizing and giving the information and giving the context both to families so that they are well armed to have good conversations and physicians. One of the errors that we can make, and I think I would make it personally as well, and I think some of our analysts would make it as well, is if we go out and talk to the people that we normally talk to, all of the big thought leaders who are really well informed about gene therapy and AAV and the like and the context of this fatal disease, they would say this does not affect our practice at all. That is what I heard at MDA. I was actually at the MDA conference at the time that this came out, and that is what I heard from every physician. The issue is that we have got to get beyond them. We have got to get out around the country. We've got to get to secondary sites and tertiary sites and referring sites, and we've got to get to the broader patient community. That is going to have an impact. It had an impact in the first quarter, not at all surprisingly. If you hear about this issue and you're going to get either going to infuse someone as a physician or be infused five days later, you're probably going to want to pause and figure out what was that about, make sure that nothing's changed in your metric. That is going to continue to occur, I suspect, through the second quarter just because of the cycle time. Then we'll get on the other side of that as we get good information out. That is kind of the one big issue. The other learning from the first quarter was that we've always said that there's a long cycle time from start form to infusion. It's about four to six weeks longer than we had assumed. Now, I want to be very clear. This is not ultimately an access issue because the fact is that all of the kids so far, whether they've had to go seamlessly through the process or even go through the appeal process, which often happens, they've gotten on therapy. Our success rate today is 100% with ELEVIDYS. It's more in the mid-90% percentile with the PMO. If you asked me what would I anticipate five years from now, I bet it's kind of in the mid-90%. Today, it's 100%. It's not about whether kids are getting on therapy. It's the length of time it takes to get on therapy. There is a bunch of reasons for that. There is a single case agreement concept that takes some four, could even take six weeks. There is more screening with a gene therapy than there are. There are multiple more appointments. There is the antibody test. It just takes longer. It might be the case. If you want to be a Pollyanna, like I sometimes am accused of being, you might assume that there were things that happened in the first quarter that made it particularly long, and maybe it will not be as long going forward. Our assumption for the rest of the year is that cycle time is going to be the stable cycle time for the rest of this year. That has a pretty significant impact on revenue and revenue recognition. The third thing is we're looking at it, which is a little bit tertiary to the other two, but as important is when we really think about getting information to physicians. We've done such a good job with the big thought leaders that focusing in that area is not going to help kids this year because those folks, if you went out and talked to most of the big sites, you know all the names, they're going to tell you, "I'm booked for a year." If you want to bring a start form to me right now, you'll get maybe dosed in May of 2026. You're not getting dosed this year. We really need to think from a call perspective, getting to the secondary sites, all well-trained. It is not an issue of quality and just really focusing on how we get more productivity and new start forms there. Those three things together, the first two probably most significantly drive our guidance for the year. Okay. Thanks for that color. On that third point, that is something that Sarepta effectively can control. What are you doing exactly to get those other sites up and running? I do not want to say capacity constraints, but you do need to, for a child to wait a year, their symptoms would meaningfully progress during that time. How do you kind of balance needing to make sure that everything is taken in the proper steps with the time urgency to get these patients on therapy? A couple of things. First, let's be very clear. When we're talking about these other sites, these are not lower-quality sites. They are well-trained. We don't allow someone to get ELEVIDYS unless they've been well-trained. They're great sites. There is no issue from a quality perspective there. To your very good point, why am I so passionate about this as an issue? You should see our data right now. For those who don't know, if you've seen our crossover data and you've seen the MRI data on muscle, I mean, I think we've probably buried the lead on this muscle MRI data too much. One year and then even at one year and two years for muscle MRI, it's stark. In just 52 weeks, if you're on this therapy versus not on this therapy, it's the difference from having a lot more muscle. You'll lose a lot of muscle if you're not on it. You'll have a lot more inflammation. You'll have a lot more fat and fibrotic tissue infiltration. To your very good point, there's no waiting. Any informed patient that saw the data and any informed physician that saw the data would realize that I got to find a way to get these kids dosed. Maybe I can wait two or three months, but I can't wait 12 months. It would be a travesty. It's very much in our control. It's just a matter of focus. We just need to focus hard on those areas that have the opportunity to dose kids this year. What do you define as focus? What is your Salesforce goal? All Salesforce, MSLs, just giving them all the support they need. Our finance part of our commercial organization, one of the interesting things with the gene therapy is that you have to actually be in there in the finance department because you have credit issues and the like that you have to work with. There is a multidisciplinary approach that we take with our sites. As we think about it, we just need to make sure that we continue to provide appropriate support to our big thought leaders, but really focus a lot of time and attention to education, efficacy education, safety education, process-related education, and the like. It is very complicated. I have said this many times before. At an individual site to dose a single kid, it takes something like 22, 23 people across the whole internal site ecosystem to get that kid dosed. It is just a matter of focus. To me, that is very much in our hands. The safety information and getting that information, that is very much in our hands. Whether we can shorten the cycle times remains to be seen, whether we can actually do that or whether we are stable. Okay. On the question of safety, for the parents who decided to hold off their appointments after they found out about that unfortunate patient death, is there a way that Sarepta is able to track those families and have a sense of if they have decided to go ahead and reschedule their son for the treatment? Yeah. I mean, I do not have the information, but we have some visibility into those issues. We are tracking that and the like. I am very confident. The issue is one of the things you would imagine is that if you postponed and then you immediately could get a new appointment in a month, everything would be great. There are a couple of different problems with that. The first issue is that if you get out of the system, it may take months to get back in the system. It may take a brand new start form because you may need a new authorization. Your authorization may be stale. In fact, more often than not, it is stale. You probably need a new antibody test. You are going to go through a whole new screening cycle. That complicates it. Another thing that is interesting and complicates it is in our first quarter, I did not mention this, we had this administrative issue in Los Angeles where there was kind of a pure administrative dust-up on single case agreements between the local Medi-Cal provider and the site or payer in the site. It was just an administrative issue. It caused nine kids to get kicked. Got solved. Got solved in March. Again, getting solved in March means your kid is not going to get dosed in March. Because those kids were all at top sites, if those kids get slotted in in the next quarter, other kids get pushed back. It just rolls forward, which is another reason we really need to focus on getting to some of the sites that have the opportunity to dose kids today. On average, how many kids can a site dose per day? It's per, per week. I mean, it's. In a day, how many? Is it only one child per day? Yeah. I mean, it depends on the site. It is very, I can give you big numbers, but it is very, very, it is very variable. It is variable. Once a week would be the kind of thing that a top site might do. How many of those? Because remember, you say, "Oh, well, you can fix that." Find a way for them to have more infusion rooms or find a way to have more nurses. Or you would imagine there's some easy fix, but there isn't because it's really complicated. You got credit issues. The finance folks are going to be like, "There's only so much credit risk I'm going to take with these payers in any one quarter." You bump up against those kinds of issues. That kind of defines the cadence of all of this. I'm assuming that all of these are new observations to the company relative to what you thought last year. I guess what was the disconnect? Was it that you were confident that you had enough sites or that the demand is just outpacing what you thought it would be at this point? I think that there was I think number one, let's go through each of them probably. I think that. One minute and 30 seconds. I'll do it quickly. I can speak very fast. One on the safety issue. Safety issue was new. By the way, not a new safety signal for AAV-mediated gene therapy. Let me be clear. Every AAV-mediated gene therapy has some risk of liver injury. Real quick, this was a shocker to us because we've dosed over 800 kids. We've never had anything like this before. There is, I posit without yet substantial evidence, I posit there is something unique about this case that was very different than the other cases. We're continuing to explore it. We'll have the autopsy results hopefully in the next month or two. Let's hope that we can get to a place where we can understand what was unique about it because we've dosed over 800 kids. On whole, I can tell you that ELEVIDYS for a full body infusion is almost certainly the safest gene therapy yet approved. The safety event was new. The cycle times was new to us because in the fourth quarter, we were seeing it lower. That may very well have been because we were just approved and people were prioritizing their easiest cases. As you get to more difficult cases where you have to go through multiple rounds with a payer, you just extend a bit. That was just new to us. On the division, I think that is just a Q1 learning. Perhaps we could have been more forward-thinking about it and learned it earlier. I think those first two were the greater impacts. Okay. So just to wrap it up, how should we be thinking about you talked about 2Q. How should we be thinking about the back half of the year? So you've given us a range for numbers. Should we account for any seasonality in 4Q, for example, because of the holidays? What we see we're not going to know fully on seasonality. We're going to live with this for some time. We do have some belief that there is going to be a pickup in the summer season because this is a very burdensome concept to be away from. You have to do a lot of things to have the therapy and the monitoring. I do think that some families have prioritized the summer and said we may see a pickup there. Against that, in the second quarter, we're just going to have this read-through of the safety event and have them get that information out and get that done. What we're envisioning, you'll see in our guidance, is that we're going to be down a little bit in the second quarter, still the hangover from all the things we talked about in Q1. We'll start to see a pickup in the Q3, Q4 to get to our guidance. Okay. Got it. We're out of time for this morning. Thank you for making the trip out here. Thanks, everybody, for sitting with us with this fireside chat. We'll talk soon. Thank you all very much.