Ladies and gentlemen, thank you for standing by, and welcome to the Sarepta Therapeutics's fourth quarter 2019 earnings call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Ian Estepan, Senior Vice President, Chief of Staff and Corporate Affairs. Please go ahead, sir.
Thank you so much, Jonathan, and thank you all for joining today's call. Earlier today, we released our financial results for the fourth quarter and full year 2019. The press release is available on our website at www.sarepta.com, and our 10-K was filed with the SEC earlier this afternoon. Joining us on the call today are Doug Ingram, Sandy Mahatme, Bo Cumbo, Dr. Gilmore O'Neill, and Dr. Louise Rodino-Klapac. After our formal remarks, we'll open up 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 take a moment to review our slide on the webcast, which contains our forward-looking statements. These forward-looking statements involve risk and uncertainty, any of which are beyond Sarepta's control.
Actual results can materially differ from these forward-looking statements, and any and such risks can materially and adversely affect the business, the results of operation, and trading price for Sarepta's common stock. For a detailed description of applicable risk and uncertainty, we encourage you to review the company's most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as the company's other SEC filings. The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections as provided today based on subsequent events or circumstances. With that, I'd like to turn the call over for Doug Ingram for a corporate update.
Thank you, Ian. Good afternoon, and thank you all for joining Sarepta Therapeutics' fourth quarter 2019 conference call. In 2018, we defined our vision to become one of the world's leaders in precision genetic medicine to treat rare disease, founded both on our precise and efficient RNA platform and on the build of a gene therapy engine capable of rapidly advancing multiple constructs through development into the patient community. In 2019, we executed, further matured, and brought that vision into greater focus. In 2020 through 2020, we will, if successful, realize much of that vision. We have an enormous number of milestones in 2020, but before we discuss them, let us review the progress that we have made in 2019. I will begin with our RNA platform. As we announced at the JP Morgan conference in January, our fourth quarter 2019 revenue stands at $100 million.
In our third full year since launch, our 2019 revenue was $381 million, a 26% increase over prior year. I will remind you that we have never taken a price increase since launch. Our growth comes from continuing to serve the Duchenne community. Our 2020 guidance for Exondys is $420 million-$430 million. As we are just launching VYONDYS, we will wait until later this year before providing revenue guidance. You can expect the launch curve similar to that of Exondys. In the fourth quarter, we obtained FDA approval for our second RNA therapy, VYONDYS 53. The approval of VYONDYS was a win for objective evidence-based decision making. It was a win for hardworking professionals at the Division of Neurology I that was responsible for this review, and most importantly, it was a win for exon 53-amenable patients.
With the regulatory pathway reconfirmed, we submitted our rolling NDA for casimersen, having announced positive results earlier in 2019. Assuming casimersen is approved, we will have three therapies capable of treating approximately 30% of the Duchenne community in the U.S. We will have doubled the number of patients who may benefit from our PMO technology versus EXONDYS alone, and we will be among an exceedingly small number of biotechnology companies who have internally discovered, developed, and brought to the patient community three or more medicines. In 2019, we commenced our multi-ascending dose study for our next generation PMO technology, the peptide conjugated PMO, or PPMO for short. Now let's move on to our gene therapy engine. There we've made great progress in 2019 as well. Starting with SRP-9001, our gene therapy for the treatment of Duchenne muscular dystrophy using our micro-dystrophin construct.
We have completed all dosing in what became a 41-patient placebo-controlled trial, Study 102. Patients are now crossing over at the end of their 48-week period. By now, between our first proof of concept study, our main study for 102, and our crossover, we have dosed more than 30 Duchenne boys with active gene therapy. The study continues uninterrupted. The last patient last visit should occur in December of this year. We have designed our next placebo-controlled trial using our commercial process material. We've taken initial feedback from the agency. This trial, which we call Study 301, is designed as a global placebo-controlled multi-center trial. We have made significant progress on manufacturing. With our partners Thermo Fisher and Catalent, we have built significant capacity with a dedicated facility completed in Lexington, Massachusetts. Even greater capacity than that built at Catalent.
Our hybrid manufacturing approach is taking shape with AD/PD expertise at our Columbus site and a dedicated AD/PD site in Burlington, Massachusetts. This intellectual hub has been responsible for some of our most meaningful advances in 2019. Consider that we have now achieved at-scale commercially viable yields for SRP-9001. We announced to JP Morgan that we had commenced engineering runs. By now, I can tell you that we have commenced our GMP runs for SRP-9001, and we're making great progress on assay development as well. We've made great progress on our limb-girdle pipeline in 2019. To remind you, LGMD, or limb-girdle muscular dystrophy, is an umbrella name for a collection of serious, often fatal neuromuscular diseases. None of these diseases have available therapies, the opportunity to bring a better life for these patients is compelling.
In the first quarter of 2019, we exercised our option and acquired Myonexus, gaining access to its five LGMD programs. We later entered into a license option with NCH to gain access to Dr. Shareece Hesketh's LGMD candidate for LGMD2A. These six programs together have the potential of providing treatments for over 70% of patients with LGMD. In the first quarter of 2019, we presented expression and safety data from our first three-patient proof of concept cohort for LGMD2E, and it was impressive. Expression was 50% on IHC and 37% of normal on Western blot. We came back in the fourth quarter, and we updated with nine-month functional data indicating that every child was improving on every functional endpoint. We commenced one additional higher dose three-patient cohort in 2019 at a four times higher dose with the goal of making a dose selection in 2020 this year.
Moving on to the rest of our gene therapy engine, 2019 was equally consequential. With our partner Lysogene, we commenced a gene therapy trial for MPS 3A, or Sanfilippo syndrome type A, a devastating neurological lysosomal storage disease. We built out our gene therapy center of excellence in Columbus, Ohio. Our center of excellence is already building new constructs and advancing the science of gene therapy. We entered into 14 transactions in 2019. We in-licensed or purchased 18 new constructs, bringing the total number of research and development programs to 42 across our two platforms. We've employed a clever incubation strategy that allows us to build an enormously large pipeline while still permitting us to remain razor-focused on our near-term objectives and milestones.
Of course, we entered into a transformational alliance with Roche in the fourth quarter of 2019, where Roche will take SRP-9001 to patients outside the U.S. This alliance, by far the largest ex-US single candidate licensed in biopharmaceutical history, validates our approach, our progress, and the value of our program. It also serves our mission. If SRP-9001 proves successful, Roche, with its very impressive ex-US resources and international expertise, will bring our therapy to far more patients far faster than we could have ever done on our own. It places us in an enviable position with the resources to drive our vision and to execute our plans. With the close of our alliance this quarter, we have well over $2 billion of cash on our balance sheet today.
Add to that the fact that we have just entered into an agreement to sell our VYONDYS priority review voucher for $111 million. Add again to that our revenue this year for Exondys and VYONDYS, and it should become clear that we are well-positioned with the resources, the assets, and the talent to drive our ambitious strategy to fruition. Looking forward, you will see that 2020 is dense with milestones. Starting with our gene therapy portfolio for 2020. With respect to SRP-9001, we will continue to execute Study 102 with our 48-week last patient, last visit in December of this year. We will unblind, evaluate, and release those results, which should occur in the first quarter of 2021. We are preparing to commence our commercial supply trial, Study 301. Broadly, we have three work streams for Study 301. We must complete site initiation and training.
We must complete our assay work, our engineering work, and our GMP runs. If all goes well, we should have GMP material released this July. We need to work with the division to obtain their concurrence on the commencement of Study 301. Of course, there is a lot to do here, but the team is making exceptional progress to date. With respect to our LGMD pipeline, we have dosed all three patients now in our high-dose cohort for LGMD2E. We will have expression and safety results available in the second quarter, and we anticipate announcing that data at an appropriate medical meeting in the second quarter. We will make a formal dose selection decision in the third quarter. We will complete the assay and process development work for LGMD2E with the goal of having GMP material available in time to commence a trial in early 2021.
We will also begin the AD/PD work for other of our LGMD constructs as well. We will continue our dialogue with the FDA and come to a view on the development and regulatory pathway for LGMD2E and then the remainder of the LGMD pipeline. Our goal is to have all of that completed by year-end so we can commence a trial with commercial process material early next year. We'll also dose 17 patients on our MPS IIIA gene therapy program and intend to complete all the dosing by the middle of the year. Our collaborator on CMT, otherwise known as Charcot-Marie-Tooth, Dr. Jerry Mendell at Nationwide Children's Hospital, had intended to commence her proof of concept study for CMT last year but did not have NCH-released material enabling her to do that.
That material should be available this year, and Dr. Mendell intends to commence that study in 2020. In addition to our gene therapy center of excellence in Columbus, Ohio, we are also building a separate gene editing innovation center under the guidance of Dr. Charles Gersbach of Duke University in Durham, North Carolina, and should have that largely complete this year. We have also significant milestones for our RNA platform this year. We should complete our rolling submission for casimersen in the second quarter of 2020. We plan to release the results from our PROMOVI study at the MDA Scientific Conference in March. These results from patients that met the enrollment criteria for 201/202, that's the study which formed the basis for the eteplirsen approval, are consistent with the 201/202 data set.
We will have dosing and safety insight on our next generation RNA platform, the PPMO, this year as well. If the PPMO is successful, it could be a significant advancement in our RNA technology and platform. In summary, we have an enormous amount of work to do this year, but that work will be profoundly consequential for Sarepta and, of course, more importantly for the patients that we serve. To those who may say our plans are ambitious, I would agree, but they are not driven by hubris. They are informed instead by an abiding conviction founded on objective evidence that the science of genetic medicine has come of age, that a revolution in healthcare is upon us now, and that Sarepta is playing a leading role in translating that science to practical therapies that improve countless lives otherwise stolen by serious rare genetic disease.
It is in that spirit that I would invite you to join Sarepta and rare disease patients in the U.S. and around the world in recognizing Rare Disease Day this Saturday, February 29th, as we continue to bring awareness about rare diseases and the work that remains to bring therapies to patients fighting those diseases every day. With that, I will turn the call over to Sandy to provide an update on the financials. Sandy?
Thanks, Doug. Good afternoon, everyone. Over the course of 2019, we advanced the business in several significant ways. We beat revenue guidance for EXONDYS 51, launched another of our RNA medicines, VYONDYS 53, significantly bolstered our financial position, struck several new licensing deals, bringing our total number of development programs up to 42. We also struck a partnership with Roche that closed earlier this month, that brought in $1.15 billion into the company. This collaboration brings significant capital to fully fund our pipeline, including cost-sharing payments, it provides us access to Roche's significant expertise and greatly expands the global opportunity for our lead gene therapy program, SRP-9001. Moving to the financials. This afternoon's press release provided details for the fourth quarter of 2019 on a non-GAAP basis as well as a GAAP basis. The press release is available on Sarepta's websites.
Please refer to it for full reconciliation of GAAP to non-GAAP. Net product revenue for the fourth quarter of 2019 was $100.1 million compared to $84.4 million for the same period of 2018. The increase primarily reflects higher demand for EXONDYS 51. On a GAAP basis, the company reported a net loss of $235.7 million and $140.9 million, or $3.16 and $2.05 per basic and diluted shares for the fourth quarter of 2019 and 2018, respectively. We reported a non-GAAP net loss of $116.9 million or $1.57 per basic and diluted share in the fourth quarter of 2019 compared to a non-GAAP net loss of $58.7 or $0.85 per basic and diluted shares in the fourth quarter of 2018. In the last quarter of 2019, we recorded approximately $15.6 million in cost of sales compared to $13.1 million in the same period of last year.
The increase was driven by royalties due to BioMarin Pharmaceutical and University of Western Australia, as well as higher production costs as a result of increasing demand for EXONDYS 51. On a GAAP basis, we recorded $223.1 million and $146.2 million in R&D expenses for the fourth quarters of 2019 and 2018 respectively, which is a year-over-year increase of $76.9 million. This increase is primarily related to $40 million of increasing expenses in clinical and manufacturing, a $10.8 million increase in compensation and other personnel expenses, as well as a $10.4 million increase in milestone payments. On a non-GAAP basis, R&D expenses were $135.4 million for the fourth quarter of 2019 compared to $77 million for the same period in 2018, an increase of $58.4 million.
The year-over-year growth in non-GAAP R&D expenses was driven primarily due to a continuing ramp-up of a micro-dystrophin program, our ESSENCE program, and initiation of certain post-marketing studies for EXONDYS 51. Turning to SG&A. On a GAAP basis, we recorded $81.4 million and $64.2 million of expenses in the 4th quarters of 2019 and 2018, respectively, a year-over-year increase of $17.2 million. On a non-GAAP basis, the SG&A expenses were $65.8 million for the 4th quarter of last year, compared to $52.9 million for the same period of 2018, an increase of $12.9 million. The year-over-year increase was driven by significant organizational growth and expansion supporting our commercial launch, as well as 40 therapies in various stages of development across several therapeutic modalities.
On a GAAP basis, we recorded $4.8 million of other expenses for the fourth quarter of 2019, compared to $2.3 million of expenses for the same period of 2018. The unfavorable change is primarily driven by an increase in interest expense, which is recognized for our new term loan that was received by the company in December of 2019. We had approximately $1.1 billion in cash equivalents, and investments as of the end of last year. In addition, with the close of our alliance with Roche this quarter, we have well over $2 billion in cash on our balance sheet today. With that, I'd like to turn the call over to Bo for a commercial update. Bo?
Thank you, Sandy. Good afternoon, everyone. Toward our 2019 objectives around execution and our commitment to deliver on our stated goals, I am pleased to report the following on behalf of the organization. We exceeded revenue consensus expectations for both the fourth quarter and the full year of 2019, totaling $100.1 million and $380.8 million, respectively. As Doug mentioned, our 2020 guidance for EXONDYS 51 is $420 million to $430 million. In terms of continuing to serve the community, we know that there are additional patients who may benefit from EXONDYS 51, and we will continue to overcome access and reimbursement challenges to get patients on therapy. golodirsen, or VYONDYS 53, received accelerated approval by the FDA on December 12, 2019. VYONDYS 53 treats Duchenne muscular dystrophy patients who are amenable to skipping exon 53.
Acting with urgency and the knowledge that patients were waiting, we launched VYONDYS 53 within 24 hours of FDA approval, just as we did with EXONDYS 51. We submitted all of our compendia, contracting, and reporting requirements, and vyondys53.com, a critically important resource for families, went live. While we are leveraging our deep knowledge and expertise from the EXONDYS 51 launch, it is important to understand that there will be standard procedures and required reimbursement policies associated with launching a new drug with a unique NDC, or National Drug Code. Our team is prepared to work through these requirements as we have in the past, and we anticipate a measured and steady launch trajectory for VYONDYS 53, resembling the launch curve for EXONDYS 51. The only difference is that we are preparing and planning for the amenable exon 53 space to be competitive.
In support of our goal to increase access for VYONDYS 53, we are pursuing a multi-pronged strategy. Although commercial and state Medicaid plans now have a much better understanding of Duchenne, we are continuing to educate about disease progression and the benefits of treatment. Our goal is to work towards coverage to be all-inclusive, regardless of ambulation status, age, or gender. We do expect commercial payers to have medical policies in place faster than Medicaid. We also understand that from our previous launch, that the mix of commercial to Medicaid patients will adjust over time, and we believe it will eventually move towards a 50/50 mix or higher for Medicaid. We are continuing to engage with state Medicaid plans regarding the CMS guidance letter on the obligation of state Medicaid to make accelerated approval treatments available to patients.
As you know, this is critically important for Duchenne based on the 80% of patients covered under Medicaid plans. While the launch over Christmas holiday did delay some physician and patients seeking treatment during that period of time, we have been receiving start forms from top tier centers across the U.S. and are working with healthcare providers to ensure they are educated around amenability for skipping exon 53, as this population is different from exon 51, with some exceptions. Epidemiology suggests that VYONDYS 53 can serve approximately 80% of the Duchenne community. We will have to take into consideration that there are a number of patients already enrolled in or being recruited for clinical trials, or have a deletion that would be amenable to exon 51, and therefore could already be on EXONDYS 51.
With that said, we continue to have conversations with healthcare providers about the number of patients within their clinics and with payers about the number of patients eligible for treatment under their plan. We are working with both healthcare providers and payers to get all amenable patients on VYONDYS 53 as soon as possible. Our mission to be the global leader in precision genetic medicine started with EXONDYS 51 and has continued with the approval and launch of VYONDYS 53. We are now preparing for the potential launch of casimersen for patients amenable to skipping exon 45. Behind these important medicines is an industry-leading pipeline of programs, 42 in all, driven by new modalities designed to treat complex rare diseases, including MPS IIIA and Limb-Girdle Muscular Dystrophy. Sarepta is working with urgency and is focused on understanding the epidemiology and global prevalence of these diseases.
We are continuing to refine our analysis and uncover additional insights while collaborating with top neuromuscular specialists. Each day, we are learning more about these diseases, and with each piece of evidence that we gather, we are able to apply these insights to our disease awareness and patient identification efforts that are already underway. 2019 was a year of great accomplishments, not only for the commercial organization, but the company overall. Looking to the future, patient care will continue to be our driving force as we translate scientific innovations into medicines designed to improve the lives of patients around the world. With that, I'll turn the call back over to Doug.
Thank you, Bo, and thank you before Bo. Sandy, with that, let's open the call for questions.
Certainly. Once again, ladies and gentlemen, if you have a question at this time, please press star then one on your touchtone telephone. If your question has been answered and you would like to remove yourself from the queue, please press the pound key. We would like to ask that you please limit yourself to one question. You may get back in the queue as time allows. Our first question comes from the line of Ritu Baral from Cowen. Your question, please.
Good afternoon. Thanks for taking the question so early and accommodating the Rare Disease Week agenda here in D.C., guys. Appreciate it. Doug, can you let us know when the last patient for gene therapy was dosed? Basically, what is the shortest follow-up period, both for micro-dystrophin as well as limb-girdle? Can you talk about the safety profile, especially liver, especially platelets, that you've seen in that time period for both programs? Thanks.
Well, I can just tell you very broadly that you can sort of backward engineer, we're going to have for the 41-patient Study 102, the last patient, last visit will be in December. If you work backwards, you'll see that the last patient was right at the, I think it actually might have been the very first week in 2020. That was the first 41 patients dosed. We're continuing on an ongoing basis to dose patients on crossover as well. We've dosed a significant number, as I've mentioned to you now. In Study 102, between the proof of concept 101, between the main 41-patient study, and between the crossovers, we've dosed over 30 patients with active therapy. We have now dosed six patients with Limb-Girdle, both the previous dose and now the higher dose in Limb-Girdle.
Of course, a lot of that's blinded, so we'll all see together both the safety and the full safety and efficacy. Broadly speaking, I will say again, consistent with our preclinical models, we have never seen anything that looks like complement or reductions in platelet counts below the normal level. Things continue as they were. Study 102 continues completely uninterrupted. We're making great progress there. The exciting thing about 102 is that we'll have last patient in December, and we'll have a readout in the first quarter of 2021. I will remind you that is a readout not merely on expression and on safety, but also on function using NSAA.
Thank you for that question.
You're welcome.
Our next question comes from the line of Tazeen Ahmad from Bank of America. Your question, please.
Hi. Good afternoon, guys. Thanks for taking my question. I just want to ask about PPMO. You've talked about data for this year, specifically, Doug, what kind of data do you think that we'd be able to see? Can you just narrow the timeline for us on what part of the year that would be? I guess related to that, assuming that this data looks better ultimately than PMO and that you also do have gene therapy approved, how do you think about the package that you're offering overall to DMD patients? Why would they need to be, let's say, on PPMO and gene therapy potentially? Thanks.
Thanks for that. I'm really glad you're asking about PPMO because we're very excited. We're excited about our RNA technology generally. We're very excited about what PPMO may mean. Of course, we don't have the results yet. I'm going to turn this over briefly to Dr. O'Neill to talk about some of the data that we'll get. Let me give you a couple broad strokes. We're targeting the middle of the year for some data. We're continuing to dose escalate. If things look great, we might even dose escalate beyond the middle of the year, but we'll have safety and safety exposure and dosing information by the middle of the year, and I'll let Dr. O'Neill sort of give you some more detail on that.
On the broader question about what this might mean for patients if we have both gene therapy and either our current RNA or a next-generation version of RNA PPMO in the future, that's work that we're doing right now. I know that there are a lot of investors that have kind of assumed, for planning purposes, that there would be great cannibalization of the RNA franchise when gene therapy comes. If it turns out in the end that the gene therapy that we're working on is so profoundly impactful that it alone is meaningful and that it cannibalizes it, then so be it. We'll be thrilled with that answer for patients. I think there is a lot of hypotheses and some theses and some literature, actually, that would support the conclusion that there may be a combinative value of gene therapy and RNA.
I think with the PPMO, if it really was a profoundly significant advancement over our current technology, it might make that even more meaningful. We're doing a bunch of work on that right now. We'll come back likely early next year and provide additional insight and views on what the combination of our RNA technology and gene therapy might mean. There's two things to look at. There's science, obviously, the science of that, and of course, there's the access and reimbursement-related issues that Bo and his team are working on. With that, I will turn it over to Dr. O'Neill to talk a bit about the information that we'll receive around the middle of this year.
Thanks very much, Doug, and hi, Tazeen. Thanks for your question. What we actually will be looking at will be a combined data set in the second quarter from both healthy volunteers, which is a single ascending dose study, and a serial cohort multi-ascending dose study in Duchenne patients, in which we will have comprehensive safety data. We will have systemic exposure, that is blood exposure. We will actually have muscle exposure using muscle biopsy, and we will actually also be looking at some pharmacokinetic data with a particular focus on exon skipping, because these will be short follow-ups at this point.
Sure.
Thank you. Our next question comes on the line of Joel Beatty from Citi. Your question, please.
Hi, this is Shawn Egan calling in for Joel. Thanks for the updates today and also for taking my questions. On the DMD gene therapy, I know that you guys have previously said that you plan to have adequate supply to address the market. In a scenario where supply is limited, are there conditions in the agreement with Roche that dictate how product will be allocated between the U.S. and rest of world? Thank you.
The short answer is, again, we are chugging to our goal, and our goal is to ensure at the moment of launch and the availability to the community in each of the various regions that we, and then in the U.S. and then Roche with us outside the U.S., will go, that we'll have adequate supply for patients. Obviously, we've got much work to do with Roche on that, particularly as we think about how broad this could be outside of the U.S., when you have a partner with the resources of Roche. We'll just plan for that. The most significant work, at least for us now, is on the assay development and process development and getting GMP runs and getting buy-in from the agency and commencing this trial. We've built already a significant amount of capacity. We've got a standalone site at Lexington, Massachusetts.
We've got significantly more already over at Paragon Bioservices. As we do the work and we progress, if we need more capacity still, we can certainly do that. We've got a relationship with Paragon alone that would provide us with that ability to take additional suites and add additional capacity as we proceed. We're planning for success, and I'm quite confident in our relationship with Roche. We'll both be planning for success.
Thank you. Our next question comes from the line of Christopher Marai from Nomura Institute. Your question, please.
Yes, Hi. Hey, thanks for taking the question. One on MPS IIIA and your progress there. I was wondering, given the clinical label, if you could comment a little bit on the age of the patients that are being enrolled, then perhaps a little bit on the type of endpoints you're going to be looking at, then your confidence in being able to see a difference between, I believe it is, the natural history that you're seeing.
I'll turn to-
That's it. Thank you.
Great. Dr. O'Neill, do you want this one?
Chris, thanks for your question. I think there were two elements you wanted to know about, outcomes of the age of the patients. The study, and actually you can see it on clinicaltrials.gov, actually requires patients to have at least an age of six months. The key ceiling for age is really created by a requirement that they have a development quotient of 50% or greater. That naturally restricts the upper age group there. With regard to the outcome measure, I've kind of hinted at it, which is the development quotient is the primary outcome measure. Essentially, that is a way of capturing the cognitive behavioral development of the children in this trial.
That quotient essentially is, not surprisingly, a ratio determined by the outcome measured in one of two measures, the Bayley Scales which is a development measure for infants and toddlers, or the Kaufman Assessment Battery. Each one is used depending on the age of the patient. To your point, yes, we are looking at the outcome versus a natural history, which is again described in clinicaltrials.gov. Thanks for your question.
Thank you. Our next question comes from the line of Brian Abrahams from RBC Capital Markets. Your question, please.
Hi, it's Brian for Brian. Thank you very much for taking our question. I was just interested to get your thoughts on Pfizer's Phase 3 study design and timing and see, I guess, how much of a lead you think you have at this point in DMD. After your initial feedback from the FDA on Study 3, have there been any changes to your plan to approach the agency with the 12-month functional data from Study 2 with the three-month expression data from Study 3, presumably in early 2021, to determine the potential for that making up sufficient filing data set?
Yeah. A couple thoughts. First, on the latter thought, there's nothing in our discussions with the agency that's impacted our broad perspective on the approach both to 301 and our current Study 102. Obviously, we've taken views of the agency into consideration and made modifications, but they've been modest to date. Going back to the Pfizer posting on clinicaltrials.gov, I'm going to turn this over briefly to Dr. O'Neill, who can provide insight into that. Broadly speaking, I will say, of course, that anybody working in this area of Duchenne muscular dystrophy should deserve kudos. This is, of course, an important area, and all of us working and driving in this direction is a positive. You can imagine our views on our own construct and its value, particularly given the results that we've seen so far, both in safety and in expression.
We've had enormous expression, as you've seen in the first four patients dosed with our current dosing. From a functional perspective, I think you've seen all four of those boys at nine months showed significant improvement and improvement over natural history at every single functional endpoint. We're very excited about where we are and where we're driving, and certainly we see ourselves as a leader in Duchenne muscular dystrophy and in the leader of gene therapy for Duchenne muscular dystrophy. Kudos to anyone working in this area. With that said, I would turn this over to Dr. O'Neill to give you a view on the submission.
Thank you, Doug. Thanks, Bertel. As a group of people who are passionately committed to Duchenne boys and helping them take on this disease, we're obviously always very happy to see the increasing investment and increasing attention of the scientific community. Frankly, the commercial sponsor community in treating Duchenne. I think what's important to say is that we are on track with all our activities with regard to clinical trial site set up. We have very excited investigators, very enthusiastic investigators, and patients, and are very happy about the progress and the commitment that we are receiving. I think it's also important to see that as our program has evolved, we're seeing some emerging differentiation factors, some of which I'll name about four. One, obviously, is our promoter, in which we have a specific promoter which is both highly efficient and very precise in targeting expression of micro-dystrophin.
Why does that matter? Because it targets that expression to skeletal and cardiac muscle, which are the two critical organs or tissues adversely impacted by Duchenne. Second, as Doug has said, we have seen high degrees of expression of micro-dystrophin in muscle in treated Duchenne boys in our proof of concept study. Three, we have not seen complement activation. Four, and very importantly, with regard to our program, we have fully enrolled a 41-patient, double-blind, randomized, placebo-controlled study. We are on track to actually get a readout of its evaluation of the clinical benefit of micro-dystrophin expression in Duchenne boys in the first quarter of next year. Thanks very much.
Thank you. Our next question comes from the line of Alethia Young from Cantor Fitzgerald. Your question, please.
Hey, guys. Thanks for taking my question. I guess I just wanted to ask a little bit about upcoming limb-girdle readout. Obviously, you got a quite good response in the low dose of about 50% expression. Is that, do you think, sufficient? If you're able to see more, would you potentially go into the higher dose? Just help us think about what are the plans forward with that.
It's a great question. Again, just to remind everyone, we dosed three patients in our first dose last year. We saw a couple of things. One, the therapy was well-tolerated with some elevated liver enzymes. I think everyone by now sees that with AAVs, you're going to see elevated liver enzymes. The good news is both in our micro-dystrophin program and in this limb-girdle program, elevated liver enzymes have responded well to steroids and are manageable to come back down to baseline. From an expression perspective in our first dose cohort, as I mentioned in my prepared remarks, we saw on immunohistochemistry about 51% protein-positive fibers, very good intensity, which is an important thing to consider. Whenever anyone looks at protein-positive fibers, you should always be asking about intensity as well. I think the intensity here was, if memory is correct, something like 47%.
Someone tell me if I'm incorrect. No one's telling me I'm incorrect. We saw in Western blot about 37% of normal. On top of that, as you know, we had nine-month functional data from these three children, and the good news is every child on every functional measure was improving. What are we doing now? We're doing one dose higher, 4X that dose, so we can make a dose decision between those two. We are, I think, in a very good position right now, because from our perspective, from what we've seen both in animal models and the like, the expression that we're getting right now are sufficient to envision that we have a very transformative therapy for Limb-Girdle Type 2E, and so we want to explore one dose higher.
We're going to make a dose decision. It's going to obviously be a risk-benefit analysis, and we're going to look at the benefits, and we're going to see if we see significantly increased expression with the same safety profile. Let's imagine that is one scenario. Certainly we'd go to a higher dose. If we see about the same expression between the two, then there would be no value to it, and of course, we're going to have to look at tolerability and safety as well. The good news is I think either decision, the decisions will be made based on the objective evidence. We'll see that evidence in the second quarter. We'll make an official decision in the third quarter. I think there's no answer that will be a bad one for us. It'll just be objectively driven.
More important than us, I think that'll be a good decision in either event for patients that are living with and degenerating from Limb-Girdle Type 2E.
Thank you. Our next question comes from the line of Matthew Harrison from Morgan Stanley. Your question, please.
Hi, this is Max Skor on for Matthew Harrison. Regarding the LGMD2E program, could you provide an update on discussions with regulators? Has your view changed at all on a potential accelerated approval pathway? Thank you very much.
We've just started that process. I think we may have mentioned at the JPMorgan conference that we've just opened up the dialogue with the agency. We're envisioning that this is going to be a process that's going to take dialogue and education in fairness to the division. One of the things that makes this study and this focus on limb-girdle so compelling is that there are no therapies for it. Because there are no therapies for it is not characterized as well as, for instance, Duchenne muscular dystrophy. Education is part of this process. We've got an ongoing dialogue with the FDA, where we'll share information, and we'll dialogue, we'll come to the right development and regulatory approach.
We have some time to do that because at the same time, we've got to do the assay development and the process development, and then we've got to build GMP material. Our goal is to actually have GMP material released by the end of this year. We want to complete that discussion before the end of this year, have a regulatory and development pathway developed by the end of this year, and start a trial by early next year.
Our view remains the same, which is that for an ultra-rare disease like Limb-Girdle 2E, where this is a gene therapy and the gene therapy here intends to insert a gene that codes for the actual native unaltered protein, a structural protein in a monogenic disease distinguished by the fact that it is the missing protein that is causing degeneration and death in these children, that we should be able, in dialogue with the agency, to come with the agency to an efficient pathway to bring these therapies to these patients as fast as possible, and reasonably considered in light of the constraints that come from dealing with a rare, very ultra-rare, and heterogeneous disease. It's a long-winded way of saying we have more dialogue with the agency to have, and we'll have a good answer on that by the end of this year.
Thank you. Our next question comes from the line of Gena Wang from Barclays. Your question, please.
Here for Gena Wang. Congratulations on the update in August, and thanks for taking our question.
Hi, Paul.
Hi. One question on-
I'm sorry. I apologize, but we cannot hear you. Apologies for that.
Can you hear me okay?
Indeed, we can. Yes.
Hello?
Yeah, we can hear you now. Thank you.
Okay, great. I guess my question on our modeling. I guess, how should we think about the impact of the Roche or US deal on OPEX over the next few years? For example, I think your R&D 2019 was roughly $560. How much of that is attributed to DMD gene therapy, and how should we think about modeling cost savings based on the cost-sharing payments?
Yeah. Just to remind, I'm going to turn this over to Sandy, but just to remind everyone on the call so that people track. The relationship that we've entered into with Roche has a number of components. We had an upfront payment that was between a fee and a premium-based equity purchase, just shy of about $1.2 billion. We have additional milestone payments along the way, about $1.7 billion, if I'm not mistaken. We have significant mid-teen royalties associated with revenue ex U.S., net sales ex U.S., upon rolling that out ex U.S., and then we have cost-sharing. The cost-sharing is that from the execution of the agreement, actually, not the closing of the agreement, but from the execution of that agreement, Roche is responsible for half of all of the global expenses for our development program for our micro-dystrophin program, SRP-9001.
To the extent along the way there was any additional ex U.S. required studies, Roche would be 100% responsible for that. With that, Sandy, do you want to comment on its impact on the burn rate over the next year?
Thanks for the question. In terms of the burn rate, to go to your question, the Roche deal should bring us cost-sharing payments, and that'll help with the burn rate, about $75, maybe even $100 million this year and in the next few years. Aside from that, the Roche deal is primarily about bulking up our finances. It gives us a significant longer cash rate because it's almost $1.2 billion it brings in. In addition, the PRV also adds another $110 million to our
To our balance sheet, I don't think this should be significant enhancement to the modeling work that you'll be doing in terms of modeling out the cash spend. Just to talk about the cash spend, if you remember last year, we had almost $300 million of business development deals, primarily due to the $170 million we spent on Myonexus Therapeutics. In addition, we had also guided that we will be investing heavily in gene therapy, both in 2019 as well as in 2020. I think we had indicated about $600 million-$650 million of spend. That's really where the bulk of our spend is, between business development and gene therapy manufacturing.
In anticipation of a Biogen disapproval and also bulking up our inventory for a potential casimersen's approval, this is another area that, from an RNA manufacturing perspective, that we are directing some of our spend. Aside from that, I don't think our core spend should increase dramatically over what you saw in the fourth quarter. Just going back to your question, I don't think the Roche transaction significantly impacts what you're modeling aside from the cash run rate that we have.
Thank you. Our next question comes from the line of Debjit Chattopadhyay from H.C. Wainwright. Your question, please.
Hey, good afternoon. First clarification on the PPMO program. I believe the update will be 12-week biopsy. If that's the case, how would you set expectations in terms of dealing with dystrophin expression? Number two, for the limb-girdle program, would you automatically expect a dose-dependent increase in a beta-sarcoglycan, given that historically when we look at the XLMTM program from Audentes, a 3x increase in dose did not necessarily translate into more protein, but provided a much better morphology and higher genomes per cell. That should give more durability. Just thoughts around what the expectation should be for both the dystrophin in PPMO and the protein expression for limb-girdle muscular dystrophy. Thank you.
Okay. I'm going to give the second question to Louise, but before I do, let me touch briefly on the PPMO results. You're exactly right. It's 12-week biopsies, the expectations on dystrophin shouldn't exist because we aren't even going to look at for dystrophin at this early stage. As you may recall, for dystrophin expression for our PMO, it was a 48-week expression before we really started looking to receive expression. This is early for dystrophin production. We will see exon skipping. That will be a strong correlate to the kinds of dystrophin that you would see over time as it builds over time. That's fine because the actual value of this update, this real significant go, no go on PPMO, is frankly dose and safety.
Our RNA technology has the PMO, the base PMO, has two things about it that have been very laudable. It's precise and it's safe. It creates exon skipping, and it creates dystrophin, and it's very safe and safe even at high doses. It has a limitation associated with it, and that limitation is that it is a neutrally charged molecule that gets into cells passively, and that's a limitation. Our goal with the PPMO is to remove that limitation by using a positively charged peptide that interacts with negatively charged proteoglycans and drags the PMO into the cell in greater abundance. Animal models tell us that it works brilliantly, at least in animal models, doing that. That if we can get to the right doses, we get very high increases in exon skipping and therefore in dystrophin production.
There are literally at the right dose, you could get as much as an order of magnitude increase. Real opportunity to be a significant improvement. The one significant question for us is that, can we get to those doses? Can one actually get up to the kinds of doses that we would believe over time would develop dystrophin significantly greater than the PMO? That's what we will have insight into by the middle of this year, as we will have safety insight, some exposure insight, exon skipping insight, and we'll have a view on our ability to get to those doses, and then we can envision what dystrophin would look like if we looked out at a year or so. With that, I will turn over to Louise to answer some of the questions about the limb-girdle.
Sorry, I think the question was around, would we expect to see a higher expression at this higher dose given the preclinical data? Based on our non-clinical data, you're right to say that we typically don't see changes in expression unless you're at a threefold or a half log higher dose. In this case, we're at a fourfold higher dose in our high dose cohort. Based on our non-clinical data, we would expect to see higher levels of expression. Getting back to Doug's point, we see very good levels of expression, 50% in our low dose, and this is already a transformative dose. We would, based on the non-clinical data, expect to see above that, this will be a decision based on both safety and efficacy in the end, and we'll look at the data collectively.
I think to your point about higher doses, since our high dose in Limb-Girdle is equivalent to micro-dystrophin, we're quite happy with where we'd be at. If you were pushing the dose even higher is where you might end up seeing saturation and you might not see increased levels of expression. In the dosing levels that we're on based on non-clinical data, we feel like we're in a very good range to see increased expression.
Thank you. Our next question comes from the line of Anupam Rama from JPMorgan. Your question, please.
Hey, guys. Thanks so much for taking the question.
Just a quick one from me. I guess following on some of the Limb-Girdle questions, it sounds like we're going to have a pretty good look in 2Q of kind of expression and then safety and other factors. What's that incremental work that needs to be done between the 2Q update and then when we get sort of dose selection? Thanks so much.
That's a great question. Not a ton. We're going to look at that data. We'll have it presented at a medical meeting in the second quarter. We just want to make sure that we're thoughtful, that we make sure we've looped in the DSMB in the process and the like. Honestly, there's not a ton of work to do from reviewing the data and releasing the data to the actual dose selection. We just want to make sure for technical reasons that we don't overpromise and that we can make a formal dose selection in the third quarter. Not an enormous amount of work.
Thank you. Our next question comes from the line of Salveen Richter from Goldman Sachs. Your question, please.
Thanks for taking the question. This is Ross on for Salveen. Just given the current timelines with Study 102 and Study 103, and expectations for Study 102 to have last patient in in December of 2020, do you guys think you're still in a position to conduct that three-month comparability in, I guess, by year-end or even early one Q 2020? If not, when should we expect that to occur? I just have a follow-up on the MPS III study.
Yeah. On that, the short answer is yes, we are still progressing well. In fact, Study 301, to remind everyone, is a significant international multicenter trial. We also believe there's going to be significant demand for that trial. We'll be recruiting, I think, briskly when that study starts. We feel right now, we have a lot to do. It's always risky predicting the future, but we feel good that we'll be in a position to look at both functional data out of Study 102 and at the same time look at, with respect to a subset of Study 301, an appropriate subset of Study 301, expression, safety, and CMC related work in early 2021. We think we're on track.
If I might intervene just for a second, Doug. I just want to make sure it's quite clear the last patient into 102 has already occurred. We're talking the last patient in question actually applied to this last patient in. Essentially, it's the last patient's last visit.
Yeah. That's right.
for the one year of functional data. Just to be sure that everyone's clear on that.
Yeah. The bulk of Study 102 was all dosed in 2019. As you know, it was a 40-patient study, it is now a 41-patient study. One patient was dosed in early 2020. That will result in the last patient last visit in December. We will be able to compile that information unblinded and have those results in the first quarter of 2021. At that same time, if everything goes to plan, we should also have expression CMC and safety data from a subset of Study 301, which is the commercial material trial.
Thank you.
Thank you. Our next question comes from the line from Vincent Chen from Bernstein. Your question, please.
Great. Thank you very much for taking the question. On the manufacturing process for your DMD gene therapy, what are the major analytical assays that are remaining to be developed or finalized? One specific question, what is the potency assay that you use? Have regulators indicated it's satisfactory or is that still being sorted out?
Louise, do you want to touch on that question?
Sure. All of the release assays have been developed. They're just in final stages of validation. Currently, we're using an in vivo potency assay with an in vitro potency assay in development.
Thank you.
Our next question comes from the line of Whitney Ijem from Guggenheim. Your question, please.
Hey, guys, just a quick one from me, and sorry if I missed it. For the MPS IIIA program, I think you said 17 patients treated. Can you remind us what the time point for the primary endpoint is? Are there any interims or any potential to get kind of an interim read on that, given you have treated a significant number of patients there? Thanks.
Yeah. The current protocol, it's a 20-patient study. Our goal is to have all of the patients dosed before the middle of this year. We're obviously well on the way towards that, 17 of 20 already dosed. It's against a matched natural history cohort. It's a two-year study with a one-year interim, so there is the chance of an interim look at the data in the middle of 2021.
Thank you. Our next question comes from the line of Joseph Schwartz from SVB Leerink. Your question, please.
Good afternoon. Thanks for taking our question. This is Dae Gon dialing in for Joe. Just a question and a follow-up, if I may, regarding your PMO filing strategy. With your rolling NDA submission initiative for casimersen, following your golodirsen experience, I was wondering if there is any additional requirements to submit that NDA or any particular commitments on your part, either prior on or after the potential approval. Sorry if I missed this, but can you clarify the guidance for the MIS51ON confirmatory trial for eteplirsen? I understand ESSENCE is due to complete by 2024, but I wanted to get the number for MIS51ON, please.
Going to the PML strategy, the short answer is no. We had a very positive, very thorough review from the Neurology Division, at the end of which the Neurology Division firmly recommended the approval of that therapy. Of course, while there was a delay, it got that approval for us. We're going to follow the same pathway for casimersen. We're in the midst of a rolling NDA. We should have that rolling NDA completed in the second quarter. We'll have our PDUFA date, and we'll be providing updates along the way. With respect to eteplirsen, I apologize I missed the exact question. The short answer with eteplirsen, just to remind everyone, is that we have a confirmatory study with respect to eteplirsen. It really is two studies. It required, first, a healthy human volunteer study.
I would remind everyone that this is a bit of an unusual confirmatory trial. If you imagine the normal confirmatory trial using a placebo control, you would have the current dose approved versus a placebo control. This is different. This is our current dose versus an escalating higher dose of eteplirsen to really ask the question if even higher doses of eteplirsen would confer additional benefit over the benefits already achieved with the current dose of eteplirsen. Those doses were not yet approved, that required, as a predicate, a healthy human volunteer study to be conducted to ensure that it was safe, and that was completed and read out, and it was safe, and we have commenced Study 402 admission, and we're on our way with it. It was a very specific question. I mean, the short answer is we're on our way.
Obviously, it'll take some time to complete that study.
Thank you. Our next question comes on the line of Tim Dunn from William Blair. Your question, please.
Hey, this is Lachlan on for Tim. Thanks for taking the question. I was wondering if you could provide an update on the number of patients that have enrolled in the second site for the micro-dystrophin studies at UCLA, and whether you've sort of seen or heard any differences in the experience there compared to dosing in the prior patients at Nationwide, especially as it pertains to safety and tolerability.
Sure. Answering your first question first, the bulk of the patients obviously were enrolled and dosed at Nationwide Children's Hospital under Dr. Jerry Mendell. He had the bulk of the patients before we had increased the end of the trial from 24 to 40, and what became 41. The bulk of the patients were at Nationwide. Answering your second question, the answer is no. We have heard of no significant differences in experience between the two sites.
May I just add that, of course, this is a blinded study, so the blind has been maintained. When we talk about the experiences, the experience at the site level, we can't comment on safety or efficacy experiences. That data remains blind. Sorry, that was Gilmore intervening.
We recognize your accent.
Thank you. Our next question comes from the line of Liisa Bayko from JMP Securities. Your question, please.
Hi. Thanks for taking the question. Doug, you seem a little hesitant on the commercial supply Study 301. Can you maybe comment, are you tracking, is everything going as planned thus far? Just to clarify, are you expecting GMP product to be available in July, or is that when the Study will actually start enrolling? If you could just clarify that. Thanks.
Look, the short answer is the team's doing brilliantly. I can give nothing but kudos to our technical operations team and our clinical operations team in progressing towards the commencement of Study 301. We've done great work from a process development, analytical development, and site readiness. We're tracking right now, and we will have GMP material released in July. The precise date that we will commence the trial is predicated on three things. It is certainly predicated on having that material available. That is an enormously significant part of this, and that's why we were so excited to be achieving commercially viable yields by the end of 2019. The fact that we were able to start engineering runs was exciting for all of us. The idea that we were able to start GMP runs was exciting for us as well.
Of course, we've built an enormous amount of capacity to be ready for that. The two other things that we have to do across the way are we have site readiness. That means we have to get all the sites initiated and trained and the like. I think we're well on the way to getting all of that done, and the team's very focused on that. The third thing that we're going to have to do as a predicate is to gather the data and engage with the agency and ensure that we're on the same page with the agency to commence the Study 301. Much to do, but we have made an enormous amount of progress if one stands back for a bit and considers where we were at the beginning of this journey just a year and a half or so ago.
We're tracking well to the commencement of 301, and we're tracking well to the completion of Study 102.
Thank you. Our next question is a follow-up from the line of Christopher Marai from Nomura Institute . Your question, please.
Hi. Yeah, thanks for taking the follow-up. I was wondering if you can comment perhaps on the phase III trial and its design for the gene therapy product SRP-9001. I guess Pfizer reported their trial design, or recently announced their trial design on clinicaltrials.gov, and it appears they are dosing patients with their gene therapy as well as a staple dose of steroids throughout
The period of the trial, it seems to be on top of steroids. I was wondering if you could comment on your plans or any regulatory discussions in that regard, because as I recall, you are not dosing on top of regular steroid doses. Thanks.
The boys with Duchenne muscular dystrophy are standard of care on steroids. We also have a protocol to modestly increase steroids in advance of the treatment as a prophylactic, which is typical. The Study 301 tracks toward the commencement, and we've talked about the design before. It hasn't changed in a significant way. It is currently envisioned to be a one-to-one placebo-controlled trial in the main Study 301. It's currently envisioned to be four to seven years old. It'll be a multi-center trial as well, obviously blinded. We will have separate studies as well along the way, and we're moving as fast as possible both for them as well. One of those is a Study 303, which is for a study focused on non-ambulatory patients.
We think it's extraordinarily important to focus as well on non-ambulatory patients. Even though I think there's a strong argument that in the U.S., one can achieve an approval across a broader age group when the mechanism of action would presume that all age groups would benefit, even if you studied a smaller age group. Both for access and reimbursement purposes in the U.S., as well as for approval of ex-U.S., it's important that we study a broad age population, and we'll do that through Study 303 as well as through 301.
Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Doug Ingram for any further remarks.
Thank you all for joining us this evening and for your questions. We appreciate them all. I think everyone can see, we've made a lot of progress over the last few years toward our broader vision of becoming one of the most significant leaders in genetic medicine, focused both on RNA and the build of this, what we believe to be profound gene therapy engine upon which we are working. 2020 will be an enormously important year for us. We've got a lot to do here, and if we're successful in doing it, and if science cooperates with us, then we will make an enormous leap towards achieving our vision of bringing a better life to countless patients who are living with, degenerating from, and far too often dying from, rare genetic disease. Thank you very much for that.
I look forward to the opportunity over the course of 2020 to keep everyone updated as we progress. Thank you.
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.