Good day, ladies and gentlemen, welcome to the Sarepta Therapeutics Second Quarter 2019 earnings call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. If anyone should require assistance during the conference, please press star zero on your touch-tone telephone. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Ian Estepan, Senior Vice President, Chief of Staff and Corporate Affairs. Please go ahead.
Thank you, Demetria, thank you all for joining today's call. Earlier today, we released our financial results for the second quarter of 2019. The press release is available on our website at sarepta.com, our 10-Q 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 risks and uncertainties, any of which are beyond Sarepta's control.
Actual results could materially differ from these forward-looking statements, and any such risk can materially and adversely affect the business, the results of operation, and the trading prices for Sarepta's common stock. For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission, as well as the company's other SEC filings. With that, let me turn the call over to our CEO, Doug Ingram, who will provide an overview of our recent progress. Doug?
Thank you, Ian. Good afternoon, and thank you all for joining us for Sarepta Therapeutics' second quarter 2019 results and corporate update conference call. As we pass through mid-year, let us linger for a moment on our progress to date. As we entered 2019, we set an ambitious path requiring significant execution and with much still to prove. For the RNA platform, could we continue to drive the EXONDYS performance? Could we consistently create new PMO constructs for other populations of Duchenne? Have we truly forged with the FDA an efficient pathway for approval of efficacious new RNA therapies, one that could bring new treatments to the community rapidly and without unnecessary controversy and contention? For the gene therapy platform, would the stellar initial results that we've seen with our micro-dystrophin gene therapy truly read through to any of the other 10 plus gene therapy programs that we possess?
For micro-dystrophin gene therapy itself, could we quickly complete the dosing of the 24 patients in our placebo-controlled trial for micro-dystrophin? What would be the competitive landscape for micro-dystrophin? Would we remain ahead of others, both temporally and qualitatively? Would we devote the resources, the talent, the energy necessary to build out our commercial manufacturing process for gene therapy? Well, over the course of 2019, the answers to these questions have been positive, in some ways more positive than we could rightly have anticipated as we entered the year. EXONDYS 51 continues to perform. The FDA accepted our filing for Golodirsen in the first quarter, and we have a PDUFA date of August 19th.
We also will not have an advisory committee meeting as a predicate to approval, which approval, if we obtain it by August 19th, will have been among the most efficient and rapid development and approval pathways in all of biotech. Showing the consistency and precision of our RNA platform, we announced positive results for Casimersen in the first quarter, and we intend to submit for FDA review in 2019, further evidence that through our PMO platform, and if it is successful, our next generation PPMO platform, we have the ability to replicate our success and to treat greater and greater segments of the Duchenne population. The landscape in our gene therapy platform has been no less positive. In the first quarter of 2019, we announced very positive results for the first cohort of our first limb girdle program, the 2E, or beta-sarcoglycan gene therapy program.
As many of our programs share the same promoter and the same vector, the consistency of these results further validated our gene therapy engine, the exceptional work of Dr. Luis Rodino-Klapac, and the world-class nature of our gene therapy center of excellence in Columbus, Ohio. As promised with our partner, Dr. Jerry Mendell at Nationwide Children's Hospital, we dosed all 24 patients in our placebo-controlled trial in the first half of 2019. A remarkable feat when one considers that we only announced results from our first proof of concept study in micro-dystrophin about one year ago. As we entered 2019, we appeared to be in the lead, but with two other credible companies advancing micro-dystrophin programs as well.
Unfortunately for those programs, more profoundly unfortunately for patients, initial results from both of those programs have been disappointing in terms of both safety signals and resulting expression levels. Both programs have suffered delays, as Solid has announced that it intends to dose escalate 4x in an effort to show a quantifiable amount of expression. Pfizer has recently disclosed that its program is on a protocol-mandated hold while an ethics committee reviews its initial results.
As compared to the landscape at the start of 2019, Sarepta's micro-dystrophin program appears to have further distanced itself from others in time, in substance, and it would appear at this early stage, in probability of success. One of the risks that this changing landscape presents is that we might falsely believe that we no longer need to move with a sense of urgency, but such could not be further from the case. Indeed, while our leadership position does give us the opportunity to bolster our program, and we will discuss shortly how we will be doing this in both our current placebo trial and in manufacturing, it leaves Sarepta with an enhanced obligation to this community. As we have so often said, our only real competitor in this space is this disease itself, Duchenne muscular dystrophy.
As you know, a relentless foe that every day robs tens of thousands of children of their muscle, and then invariably of their life. We must now operate and make decisions with the very real possibility that we alone hold the hope for a transformative treatment that can battle this disease effectively. The decisions we make and the energy with which we work are fully informed by this responsibility. With that, let's review performance in the quarter and some recent decisions that we've made. Starting with our RNA franchise. In the second quarter, EXONDYS 51 continued to perform, with sales standing at $94.7 million, and quarter over same quarter last year growth of a very impressive 29%. For our other PMOs, the PDUFA date for Golodirsen, as I've mentioned, is August 19, 2019.
By the way, the brand name of Golodirsen is now VYONDYS 53. I will often be using this name going forward. We will be ready to launch VYONDYS immediately upon approval. We will also submit for Casimersen this year, with an approval decision expected in the first half of 2020. If we are successful, we will be, by early 2020, one of a very rare group of biotechs which has developed and launched three or more internally developed therapies. More than that, we will have more than doubled the number of patients living with Duchenne who have an available PMO therapy. Our next generation RNA program, the PPMO, is proceeding, having initiated dosing in our multi-ascending dose study for SRP-5051. Our goal is to obtain dosing and safety insight by the first half of 2020.
Now moving on to our gene therapy franchise, we have made significant progress this first half of the year in the second quarter. As noted earlier, through the impressive work of Dr. Jerry Mendell, we have completed dosing of all 24 patients in this blinded placebo-controlled trial, a trial that we call either Study 102, or I call Study 2. As you may recall, this study is being conducted with clinical material from Nationwide Children's Hospital. Our internal statistical analysis and review of our first proof of concept cohort suggests that this should be a sufficiently sized study to see a treatment effect in one year. However, it is also the case that the study was dictated by the amount of study material available from Nationwide Children's Hospital.
We are very pleased to announce that Nationwide Children's Hospital has been able to provide us with additional study material. On that basis, we have amended the study protocol to increase the study end from 24 to 40 patients, increasing the size of the study by nearly 70%. This will also increase the study power to significantly over a 90% confidence level. To aid in the rapid enrollment of these additional patients, we plan to open another U.S. clinical trial site in the very near term. We believe between Dr. Mendell and the additional site, we should be able to complete enrollment and dosing in the fourth quarter of this year. With the increased end, Study 2 should still read out before the end of 2020. The decision to increase the end was straightforward, and from my perspective at least, very compelling.
NCH has study material available which will increase the power of this study to greater than 90%, and it is in the best interest of all patients to ensure that we have as robustly a powered trial as is reasonably possible. There is simply no exogenous pressure that would justify failing to take advantage of this clinical trial material. For the avoidance of any doubt, there is nothing that has changed in our original powering assumptions. Certainly, we have seen nothing in either study itself that changes our confidence. The boys in Study 101, as you know, continue to perform very well. Study 102 is blinded. We have neither unblinded it, nor have we performed any sort of unblinded analysis.
We are simply taking advantage of an opportunity to increase the probability of success in Study 2. In light of increasing the N in Study 2, there is less pressure to commence Study 3 in 2019. Instead, we will use the remainder of 2019 to continue optimizing process and analytical development for our commercial process supply, and we plan to commence the study in the first half of 2020. As has been our goal, we still plan to have three-month biopsy data from Study 3 by the readout of Study 2. To remind you, Study 3 is intended to be a study using our commercial process supply. On that topic, we continue to make very good progress on commercial process and on capacity. Our commercial facility in Lexington is just about complete.
It should be complete by the end of August, and it should be qualified by about October of this year. We have achieved very good yields in the iCELLis Nano units, and we are in the process of scaling up and working to achieve optimized yields in the commercial iCELLis 500 units, and that is going very well to date. We are making good progress on analytical development. Based on the work that we have done to date, we could reasonably have anticipated commencing Study 3 with commercial supply by the end of 2019. Given the additional time available to us, it is simply not prudent to do so for a number of reasons. As noted, the change in competitive landscape creates significant responsibility for Sarepta.
We must plan for the increasingly likely possibility that we will be launching a micro-dystrophin gene therapy alone, or at least at a very significant advantage. This means for planning purposes, we must ensure that we have optimized yields and process to potentially satisfy alone the needs of the DMD community at launch. To that end, we intend to continue to improve process and yields. If we artificially lock the process early to commence study 3, and thereafter continue to improve process and yield, as would be our intention, we would run the unnecessary risk of having to conduct yet another bridging study to show comparability between the study 3 supply and the ultimate commercial supply. This is an unacceptable risk in light of the timelines and the competitive landscape today.
The approach we are taking with our micro-dystrophin program is informed by the external landscape, and most importantly, by our obligation to the community. I'll summarize. First, we are going to take advantage of additional study material to further improve the powering of our current placebo trial and to enhance the probability of success. We are going to take the time available to us to maximize yields and commercial process with the goal that when we are successful, we are in the position to satisfy alone the requirements of the DMD community that we serve. We are building out a study 3 protocol that is designed with the goal of providing sufficient evidence to support rapid access to Duchenne patients, regardless of age, regardless of ambulatory status, regardless of mutation, and regardless of country of citizenship. Now let's move on to our other gene therapy programs.
Following excellent results in our first limb-girdle 2E cohort, we will be using Nationwide Children's Hospital supply and dosing one additional 3-patient dose escalation cohort this year. To remind you, our prior cohort was five times E to the 13th, and we obtained mean protein-positive fibers of 51%, 250% of the predefined milestone of success in the study. We also had mean intensity of an impressive 47%, and we had mean western blot quantification of 36%. We will dose one additional 3-patient cohort at a fourfold higher dose, and then based on the results, we will choose between the two doses for our pivotal trial. With our manufacturing partner, Paragon, we will also chart out a pathway for all five of our limb-girdle programs for Myonexus, and we will report that back out to you early next year.
With our partner, Lysogene, we have so far dosed seven patients in our phase II, III gene therapy program to treat MPS 3A, also known as Sanfilippo syndrome, a devastating neurological disease that robs the life of children before the age of 15. We are working to obtain material to commence dosing before the end of the year in our CMT or Charcot-Marie-Tooth program with Dr. Sahenk at Nationwide Children's Hospital. We have also taken significant steps over the course of 2019 to ensure that we are properly building our vision to become the world's leader in gene therapy and rare genetic disease. Toward that end, our gene therapy team has secured an 80,000 sq ft facility in Columbus, Ohio. We have also expanded our footprint in Andover, Massachusetts from 26 acres to 36 acres.
In addition to taking additional space in our Kendall Square facility, we have taken significant space in Burlington, Massachusetts, where we have some 10 isolator units that we use solely for process and analytical development activity. Brammer Bio is near completion of our 75,000 square foot gene therapy facility in Lexington, Massachusetts. This will be a single-use site dedicated to micro-dystrophin commercial supply. We have also taken out additional capacity at Paragon, and in fact, we have sufficient space at Paragon to more than double the capacity that we have at our Brammer Bio Lexington facility. We have also not been sitting idle from a business development perspective. We have entered into a number of important partnerships and in-licenses for new technology that we will begin to discuss in more detail as we advance from preclinical into clinical focus. For instance, these include the following.
We have entered into a partnership with the University of Massachusetts Medical School and gene therapy leaders, Doctors Guangping Gao, Michael Green, and Miguel Sena-Esteves, to advance a novel gene therapy to treat Rett syndrome, a rare, invariably fatal brain disease that nearly exclusively affects girls. We have also entered into an agreement with the University of Florida College of Medicine to advance Dr. Lee Sweeney's gene therapy for the treatment of cardiomyopathies. Our gene therapy center of excellence in Columbus has built an innovative gene therapy cassette to treat Emery-Dreifuss muscular dystrophy type 1, a life-limiting and often life-ending rare neuromuscular disease that affects skeletal and cardiac muscle. We have entered into a collaboration with Columbia University and Dr. Howard Worman, the world's leader in the study of Emery-Dreifuss Muscular Dystrophy, to assist us in rapidly advancing our Emery-Dreifuss program.
Importantly, we have entered into a very exciting agreement with the University of Florida College of Medicine to advance Dr. Brad Hoffman's innovative gene therapy to treat multiple sclerosis, the most common immune-mediated disorder affecting the central nervous system. This is our first program outside of rare disease, as MS affects some 2-plus million people worldwide and is responsible for about 20,000 deaths each and every year. While this may seem to venture beyond our core area of focus, I would remind you that our head of research and development Dr. Gilmore O'Neill has a rich and very successful background in the development and the approval of novel treatments for MS. We are also providing additional tools for our gene therapy Center of Excellence.
For instance, we have entered into a collaboration with University of Massachusetts Medical School and the lab of Dr. Guangping Gao to develop novel human-derived vectors. We've also entered into a relationship with the Institute of Myology to assist in the exploration of the combination of our PPMOs and micro-dystrophin. We have the resources to execute our plans. When I joined Sarepta, we were about 200 employees. Today, we are nearly 700, and we are tracking to approximately 900 employees by the end of this year. It is a dedicated, seasoned group befitting a commercial stage, fully integrated genetic medicine leader, and many of our employees are among the most accomplished in genetic medicine today. As of the end of Q2, we are also well-resourced with about $1.1 billion in cash.
Although things have gone well in the first half of the year, we have much to do in 2019 and 2020. We cannot take our leadership position for granted or take our foot off the accelerator. We will not. For the remainder of 2019, we must continue to serve the community with EXONDYS 51, and if approved this month, VYONDYS 53. We must submit for Casimersen this year. We must rapidly enroll and dose the remainder of our increased Study 102. We must continue our yield optimization, process development, and analytical development work. Be in a position to commence dosing of Study 3 in the first half of 2020. We must dose our next cohort of 2E and build out our plans for all of our limb girdle gene therapy programs.
We must dose our first cohort of Charcot-Marie-Tooth, or CMT, and we must continue to build out our gene therapy engine and advance the remainder of our ever-increasing genetic medicine pipeline. I would like to take this opportunity to thank all of the hardworking employees at Sarepta for their dedication and for their passion to this mission. I would also like to thank our collaboration partners for their dedication to this mission, with a very special mention to Dr. Jerry Mendell, who is working tirelessly to advance our micro-dystrophin program in the clinic. I would also like to thank the families with rare disease who believe in us, and who have taken the step of participating in clinical trials with Sarepta.
It is easy to look upon those in our studies as the lucky few, but make no mistake about it, participating in a trial for an unapproved therapy requires courage and it requires dedication. Much is asked of the children and their families in our trials. It is through your participation, families with Duchenne muscular dystrophy in our trials, that we advance promising programs, ultimately to the benefit of tens of thousands, perhaps even hundreds of thousands, of families around the world living with rare diseases that we're fighting. With that, I will turn the call over to Sandy to provide an update on our financials. Sandy?
Thanks, Doug. Good afternoon, everyone. Let me start by saying that we had another strong quarter. Revenue is continuing to grow well with Q2 net revenue at $94.7 million. From a business development perspective, as Der mentioned in the call, we continue to selectively add to our pipeline and capabilities via external alliances. Year-to-date activity, including the acquisition of Myonexus, has significantly bolstered our pipeline and further positions Sarepta for long-term growth. While we remain selective, we are continuing to find opportunities to partner with the best in the field to bolster our pipeline and add to our capabilities and expand our overall network in gene therapy and RNA technologies.
Partnering with leading organizations and researchers allows us to maintain our focus on the near-term value of our DMD pipeline while assisting our collaborators in advancing their programs, and simultaneously giving us the flexibility in determining whether to bring these programs in-house as they become de-risked. As our gene therapy program in multiple sclerosis demonstrates, for the right technology, we are willing to make targeted investments beyond rare monogenic diseases. We expect to continue to invest in building our pipeline and in adding technologies in the area currently in our pipeline as with DMD, and continue to compete against ourselves to deliver better and better therapies to patients in need. Now moving to the financials, this afternoon's press release provided details for the second 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 our press release for a full reconciliation of GAAP to non-GAAP. I'd like to add a quick reminder here that our 2019 non-GAAP financials exclude net interest expense and depreciation and amortization expense, in addition to one-time expenses and stock-based compensation. Net product revenue for the second quarter of 2019 was $94.7 million, compared to $73.5 million for the same period in 2018. The increase primarily reflects higher demand for EXONDYS 51 in the U.S. We reported a non-GAAP net loss of $61.2 million or $0.83 per share, compared to a non-GAAP net loss of $28 million or $0.43 per share in the second quarter of 2018. In the second quarter of 2019, we recorded approximately $15.9 million in cost of sales, compared to $6.7 in the same period in 2018.
The increase was driven by inventory costs related to higher demand for EXONDYS 51 during 2019. Depletion of previously expensed material, as well as accrued royalty payments to BioMarin and the University of Western Australia. On a GAAP basis, we recorded $286.5 million and $122.8 million of R&D expenses for the second quarter of 2019 and 2018 respectively, which is a year-over-year increase of $163.7 million. This increase is primarily related to a $173 million payment and accrued expenses related to Myonexus. I'll note here that our 10-Q breaks out this figure as acquired in-process research and development costs. In addition to the Myonexus cost, there was an additional $15.1 million in upfront milestone and other expenses. On a non-GAAP basis, R&D expenses were $87.5 million for the second quarter of 2019, compared to $57 million for the same period in 2018, an increase of $30.6 million.
The year-over-year growth in non-GAAP R&D expenses was driven primarily by advancement of our PMO, PPMO, and micro-dystrophin clinical trials, ramp-up of manufacturing activities related to our gene therapy platform, as well as continued expansion of internal research and development within Sarepta. Turning to SG&A. On a GAAP basis, we recorded $67.4 million and $47.2 million of expenses for the second quarters of 2019 and 2018, respectively, a year-over-year increase of $20.2 million. On a non-GAAP basis, SG&A expenses were $52.3 million for the second quarter of this year, compared to $37.3 million in the same period last year, an increase of $14.9 million. The year-over-year increase was primarily driven by significant organizational growth and continued expansion to support our commercial launch plans globally, as well as almost 30 therapies in various stages of development across several therapeutic modalities.
On a GAAP basis, we recorded $900,000 in other expenses for the second quarter of 2019, compared to $5.2 million of other expenses for the same period last year. The favorable change is primarily driven by the payoff of certain debt instruments during the fourth quarter of 2018, as well as a higher return on investments in the second quarter of this year. We had approximately $1.1 billion in cash equivalents, and investments as of June 30th, 2019. With that, I'd like to turn the call over to Bo for a commercial update. Bo?
Thank you, Sandy. Good afternoon, everyone. At mid-year, I'm pleased to report that the commercial organization has continued to execute on our 2019 goals and is on track to hit our revenue forecast for the year. After a successful quarter delivering net sales of $94.7 million, we expect continued interest in EXONDYS 51, driven by our ongoing efforts to ensure existing patients remain on therapy, assist those who may be facing unnecessary access and reimbursement hurdles, and identify new patients who could benefit from EXONDYS 51. We are pleased with the success of EXONDYS 51, as we're in the final months of completing three full years post FDA approval. Our commitment to the Duchenne community rests on our goal to treat all eligible individuals with Duchenne. Toward that goal, we are fully prepared to launch our next RNA-borne product, should the FDA grant VYONDYS 53 or Golodirsen marketing clearance.
We have an operational plan in place for compendia, contracting, distribution, and reporting requirements within 24 hours of approval. We will leverage our current distribution partners and our SareptAssist network to help get patients access as soon as possible. In addition, our teams will be trained on the VYONDYS 53 label immediately so that we can have important conversations with KOLs. Rapid execution on market access initiatives will be essential, and we are prepared. Our goal is to reach patients as soon as possible following approval. We expect commercial plans to provide faster access than government payers, such as state Medicaid plans, but both types of payers will follow normal new drug approval or new NDC processes for each plan/state. We also expect the commercial to Medicaid patient mix to be similar to that of EXONDYS 51, which is roughly 50/50.
If approved, we expect most patients will start therapy in the hospital and transition to home infusion at a similar rate as we've seen with EXONDYS 51. The knowledge we have gained over the past three years with the approval and launch of EXONDYS 51, potentially one of the most successful ultra-rare disease launches in history, has informed the strategies we now have in place for VYONDYS 53. VYONDYS 53 is a phosphorodiamidate morpholino oligomer or PMO, engineered to treat those individuals with Duchenne who have genetic mutations amenable to skipping exon 53 of the dystrophin gene. As a reminder, EXONDYS 51 treats approximately 13% of the Duchenne population, and if approved, VYONDYS 53 will potentially treat up to 8% of the community.
Moving on to exon 45 or Casimersen, we remain on track to submit our NDA for Casimersen this year with a target approval decision by the first half of 2020. If approved, Casimersen will treat patients amenable to skipping exon 45, which is approximately an additional 8% of the Duchenne community. What this means is that by mid-2020, we could have three approved drugs born out of our RNA platform, doubling our PMO-based opportunity in the United States. We will apply strategically important learnings from the EXONDYS 51 and VYONDYS 53 launches to place Casimersen in a position of strength at launch, if approved. We will have teams preparing for launch operations immediately for exon 45 if the FDA approves VYONDYS 53. As for gene therapy, preparing for the required execution and operational excellence needed for a global gene therapy launch of this magnitude is not easy.
We have a seasoned team in place, experienced in navigating and preparing for what could be one of the most transformative therapies in medicine. We will ask the right question, challenge convention, prepare well, and be ready for the opportunities and challenges before us. In doing so, we will be prepared for launching what could be the first gene therapy to serve the Duchenne community and pave the way for Sarepta's many other gene therapy pipeline products. Reaching the regulatory finish line is just the beginning of what we need to accomplish. We are now focusing on finding new and innovative ways for patients to get access to gene therapy.
We continue to meet with the largest commercial and Medicaid payers on pricing. Again, have held multiple meetings with payers across the U.S. over the last quarter on topics regarding gene therapy access and finding ways to partner together so that all patients will have access to potentially life-altering therapies as quickly as possible. At Sarepta, we can make quick decisions that are best for patients. We have an extensive gene therapy portfolio with micro-dystrophin, limb-girdle, CMT, MPS 3A, as well as additional programs. We will adapt, grow, and reflect on lessons learned and insights we've gained along the way so we can refine our strategies accordingly. Outside of the U.S., we are thoughtfully and strategically expanding globally into key markets.
While there's no single key to unlock local market access, tackling common barriers at the country level is a good place to start, and we're building towards this goal. We've hired the right people, individuals who know the importance of pursuing and partnering with the best opinion leaders globally, who we will continue to work with to discuss access, reimbursement, and site readiness. In closing, the commercial and medical affairs teams are focused on operational excellence, and we will be ready for future potential launches. We are committed to improving the lives of those suffering from rare neuromuscular and CNS diseases. From RNA, gene therapy, gene editing, and other potential modalities, we remain focused on patients, keeping them at the center of all conversations from discovery to global commercialization. With that, I'll turn the call back over to Doug.
Thank you, Bo. Operator, let's open the call for questions.
Thank you. Ladies and gentlemen, if you have any questions or comments at this time, please press the star and then the one key on your touchtone telephone. If your question has been answered, or you wish to remove yourself from the queue, please press the pound key. Our first question comes from Olivia Young with Cantor Fitzgerald . You may proceed.
Hey, guys. Thanks for taking my question. Congrats on all the progress so far. Two questions for you, sorry. One, I just wanted to know what went into your decision around increasing the sample size for Study 102 now? Was there anything incremental color that you can give us? The second question is just curious on what the status is around the confirmatory trial for eteplirsen, thanks?
Thanks a lot for those questions, Olivia. On the sample size, as I said before, we were comfortable with the size of the trial before, and our analysis gave us some comfort around it, and certainly, the first cohort gave us some comfort. It doesn't require a lot of imagination to realize that 24 patients is a relatively modest-sized trial, and it was, in fact, limited by the fact that we had 12 doses from Nationwide Children's Hospital at the time. We now have an opportunity. Nationwide has material available for us. As we considered that material earlier in the year, we were in a different landscape competitively than we are today, for a host of reasons. Obviously, given what we've seen from the other programs, both Solid's and Pfizer's, we are confident that the right decision is to increase the probability of success.
We're very confident in the therapy. We want to make sure that in a 12-month period, we'll be able to see a difference between the active group and the placebo group. Increasing the trial from 24 to 40, from my perspective, just makes brilliant sense from a risk perspective. Beyond that, there would have been a question about what else we could use that material for. One might have imagined a scenario in which one would want to, for instance, dose escalate. The issue on that is a simple one. Our preclinical data did not suggest to us that we should dose escalate. The dose we have right now, which is using supercoiled method 2 times e to the 14, would give us the best answer without creating undue burden on the kids. Certainly, the first four children in our first cohort supported that conclusion.
It does turn out that there was another company that was running an experiment, essentially, for us. Pfizer was at a very significantly higher dose than ours, and while they used a different titering method than we do, they dose escalated to something that was multiples higher than ours. It made sense for us to look and see what that looked like. Of course, what we saw there was, in addition to some issues organic to Pfizer's program. Both from an AE perspective and from an expression perspective. We didn't see any significant benefit from dose escalation. We didn't see much of a dose response. I think UCB, they had about 700 femtomolars, and they went to the next level, and it was 900 femtomolars at multiples higher, three times higher than their prior dose.
From our perspective, the best use of that material was clearly to increase the N on this trial. It doesn't create an enormous amount of additional time in the study at all, and I think it increases the probability of success. For the avoidance of any doubt, I want to make sure I remind you once again what I said in the script, which is that we haven't seen anything in the study that's changed our confidence around the trial. This is an opportunity. The Nationwide Children's Hospital has material. It would allow us to go to 40 patients. It increases the probability of success. It gets us to a confidence level, a powering level of well over 90%, and I think it's the best answer for the patients as well.
On the confirmatory trial, I'll turn that over to Dr. O'Neill, who can talk about the status of our confirmatory trial for eteplirsen.
The confirmatory trial is actually moving well. Our protocol is very well developed. We are in discussions with regulatory authorities around the world about it, and we are actually on track with regard to site identification, regulatory dialogues, et cetera. We're very confident that we are in a good position to be able to execute as soon as possible.
One other thing, people understand, it's not as if there has been work done. The confirmatory trial for eteplirsen is unusual. It is not a simple trial versus a placebo. Excuse me?
Sorry, I answered the wrong question. I was answering confirmatory trial for gene therapy.
Oh, apologies.
My apologies. I'm so sorry.
I think the confirmatory trial for eteplirsen.
I am so sorry.
On eteplirsen, real quick. The request from the agency has been to test the current dose of eteplirsen versus a higher dose of eteplirsen. It's a little unusual in the sense that we have to first do a study in healthy human volunteers to ensure that consistent with the preclinical data that would suggest that it's safe, that we're safe at these doses. We've actually completed all of the enrollment for that study. The readout on that study will be September, and assuming everything goes well, and it will, I think I'm sure this week will go well based on all the stuff we have so far. We'll start the confirmatory trial before the end of this year.
Yes. Forgive me for asking that question. I just misheard your question. I apologize. We're actually initiating sites now, et cetera, so we'll be ready to execute.
Perfect. That was my fault because I filibustered the first question.
My apologies.
Thanks, guys.
Thanks, Olivia.
Our next question comes from Tazeen Ahmad with Bank of America Merrill Lynch. You may proceed.
Hi, good afternoon. Thanks for taking my questions. Doug, I'm sorry if you've already said this, I just want to be clear that I understand all of this correctly. Can you remind us what data you expect to be in this package for DMD gene therapy? What time point do you need from Study 3 to get approval, and when should we expect that data? Maybe to follow up on that, what, if any, interaction have you had with FDA since Pfizer might have shown its data at PPMD, and did FDA influence your decision to upsize your study? Thanks.
Let's start with the last question first. No, the FDA didn't play a role in upsizing the study. This is literally a decision that they would be perfectly fine with the size of the study that we had. We simply looked at the opportunity in front of us, realized that it made the most sense for patients. I mean, if we think about it, nothing would be more tragic than to find that you have a very efficacious therapy, but you missed that gig by some small margin because you didn't take the time to make sure that the study was dosed. It was a really easy decision when we had 12 doses. Now we have more doses, it certainly makes brilliant sense to make sure we can upsize this to 40.
Now let's talk about the timelines, because it's important to consider timelines, and now you'll see why it makes so much sense to upsize it. Let's start with Study 102 itself. We will be done certainly in the fourth quarter dosing the entire study. Dr. Jerry Mendell did a brilliant job earlier this year in dosing those first 24 patients. I will remind us, the fourth patient was analyzed in that first cohort and was at it was either October or November. I'm forgetting now when we had the Argentina meeting. Was it what?
October.
October. It was last October, and from there, we literally designed, got the blessing of the agency, started a placebo-controlled trial, and Dr. Mendell got all of those patients dosed. We will, between Dr. Mendell and we'll have a new site up and running very shortly, we'll have all of the next cohort of patients that make it to 40 dosed before the end of this year, which means Study Two will read out before the end of 2020. We really haven't taken any significant delay by increasing the N. We've only increased the probability of success. With Study Three, our goal is to start as early as possible in 2020 with Study Three, and then we'll have a cohort.
One of the goals right now that we have is to have a subset of Study 3 that we are going to look at for expression at the 3-month level from a biopsy perspective. Our goal is to have that available by the time Study 2 would read out as well. That was our goal before. That's still our goal. We think we're on track for that. Before the end of 2020, our goal is to have a number of things. To have Study 2 fully dosed before the end of this year, to have a readout on function in Study 2 before the end of 2020, to have Study 3 up and running early next year, to have the subset of patients with expression levels from the biopsies read out at the same time as Study 2, before the end of this year.
Our goal, at least, is to approach the agency with the view, assuming that we're successful in all of these, that we would be able to submit on that basis and obtain an approval on the basis that we have shown first that the construct that we have is functional and beneficial to children with Duchenne muscular dystrophy, and that the commercial supply that we're using is comparable to the clinical supply. As far as what discussions we've had with the agency, we've had very good discussions with the agency around CMC and manufacturing issues. We're designing our Study 3, and then we're essentially designing Study 3, and then we'll take that to the agency and talk through with the agency whether they accept all of that, and we feel confident that we're in the right direction. We'll start that study early next year.
Okay. It seems like, just so that timelines are clear, are you guiding to a start to the commercial study in the first half of 2020? Because you seem to be giving yourself kind of a wide band on this.
Yes.
Is it the first half, or is it early 2020?
We're trying to give ourselves some breathing room. Yeah, we want to be as early in 2020 as is possible. There's a number of things we want to get done for that. There's a couple of things. One is, of course, site readiness, getting the sites up and running. We can get that done before the end of this year, so that won't be an issue. We always intended to do that. Finishing the design of Study 3 and getting the blessing of the agency and the input of the agency on that, we can get that done before the end of 2019. Getting the commercial process at the right place.
That, from our perspective, we can get to a place before the end of the year where we could use commercial process supply and start the study. As I mentioned in my script, our goal is to really get the yields in a good place so that as we start Study 3, we're going to continue to improve. We don't so improve yields thereafter that we find ourselves in a position that we have to do some additional bridging study for approval. The short answer is, our official word is obviously first half of 2020 that we would commence Study 3. It will not surprise you, those who know Sarepta and our sense of urgency, that it is as early in study in 2020 as is reasonably possible. We would like to do it as early in 2020 as is possible, first quarter if possible.
Our next question comes from Brian Abrahams. You may proceed.
Hey, thanks very much for taking my question. Congratulations on all the progress. Any comments you could make on the safety that you're seeing from the ongoing 24-patient study? I realize it's blinded, just wondering if there's any sort of safety events that would be considered reportable, what would have been a bar for stopping or pausing that study, and did that change over the course of time when your competitor's tox issues became known to the FDA? I had a quick follow-up.
Yeah. Thanks, Brian, for that discussion. Gilmore here. As you well know, the study remains blinded. We do, as you quite rightly inferred, have stopping rules and rigorous oversight of the study. We have not crossed the threshold for the stopping rules. We've not come close to that. The study continues, from that point of view, we are actually very happy with the ongoing study. It is worth noting that in our Study 101, if you're well aware of this, that we had no evidence of significant adverse or serious adverse events, we actually are very happy with that. With regard to the readout from the other companies, Pfizer and Sage, we have not seen what they have described. I want to restate one thing, which is that we do have stopping rules.
We have not hit the stopping rules, and 102 is progressing well and remains fully blinded.
One of the things I will also add is that obviously, and really all kudos to Dr. Jerry Mendell for this. The study is going very well. It's progressed well. We've got a good inventory of patients, and that gave us a lot of confidence to increase the
Yeah
end of the study from 24 to 40 and still ensure ourselves that we'll be able to comfortably finish the dosing of the study.
Yeah
before the end of this year and not create any kind of significant delays in our timelines.
That's really helpful. Then secondly, as you work to optimize yields and margins, I'm curious, what shapes your confidence that you will be able to ultimately get to a point that you could potentially supply the whole DMD market, and with material that is indeed comparable to the NCH product? I'll hop back in the queue. Thanks.
Thank you. There's a lot of things that give us confidence. We've got a lot of good data in front of us now. We're doing a lot of work. There are three groups right now working on the process development and then also the analytical development and yield optimization. We've got process development experts at Brammer. We've got process development experts at Paragon, and we've got our own process development experts. In fact, we've got probably one of the world's leader, if not the single world leader in process development, Dr. Reed Clark, who I think for anyone who's done diligence in gene therapy will find is probably the most renowned in AAV biology and process development that exists right now. We're doing a lot of good work. We will get there. We've got the talent, let's start there.
We've got the talent, both external and internal, to get it done. We've got the resources, where, as I said before, we will spend a good $600 million to $650 million in the next 15 months or so, making sure that we not only get process and analytical development done right, but that we get the capacity necessary to fully serve this community. We've made good progress today. We have very good results from the iCELLis Nanos, the iCELLis Nano units. We've scaled up already to iCELLis 500s, we are in the process of optimizing yields of the iCELLis 500s. We still have much more to do there, it's just a matter of time from our perspective. Every time we do runs and optimize, we're getting better results.
We do feel very confident that we're going to get to a place where we're going to be able to serve the community. We had always envisioned a world in which it might be the case that we would need to serve this community alone. Today, to be direct, and these are early days, but to be direct, we believe there is a very enhanced probability that when we launch this product, we are going to be launching this product that has to serve this entire community from day one and for probably a very long time thereafter alone. We have to take very seriously the issue that we have to have the capacity available to us, which means we have to have the right yields, the right investment, the right capital, the right manufacturing facilities, and we're working on all those even as we speak.
Process development is going along. It's going well right now. The capacity issues are going well. We have the Lexington facility, which will be complete, as I mentioned, sometime probably in the next 30 days or so, and we'll be qualified certainly before the end of this year. That's Brammer in Lexington. That's a single-use facility, about 75,000 square feet. At Paragon, actually, we have taken out sufficient space to more than double that amount of capacity at Paragon, and we can use that space both for microdystrophin as well as our limb-girdle programs. We are very confident about the process right now and about the flight path we have for being able to produce enough to satisfy the community, assuming that our trials work out.
Our next question comes from Martin Auster with Credit Suisse. You may proceed.
Hi, this is Martin. Thanks for taking my questions. I guess first question is, you announced that you're expanding your gene therapy pipeline by exploring Rett Cardiomyopathy, another muscular dystrophy program, and multiple sclerosis. I'm sure you looked at multiple targets. I guess I'm just curious how you settled on these specific programs and if there were any unifying themes that made these indications particularly attractive. My second question is, with WMS less than two months away, I'm curious what data, if any, you plan on presenting at that conference. Thank you.
Sure. On the first one, I'm going to take the question on these new research programs from both Dr. O'Neill and Dr. Louise Rodino-Klapac only because I don't want to spend time going into the underlying programs themselves. They're in research stages right now. I really want to focus on our clinical programs for the time being. We're very excited about these programs, and we're not done. We said for a while we're going to continue to do program transactions like this to bolster our pipeline. There are a number of things about these programs that excite us. First of all, they're all very serious diseases. We are a company focused on the use of genetic medicine, both RNA and gene therapy, to bring a better life to people who are suffering from and dying with serious diseases. We have historically focused on rare diseases.
That certainly is a big part of us. MS, while it is not a rare disease, is a serious disease, and we have the expertise internally with our own Dr. Gilmore O'Neill to progress that. We're excited about it. The seriousness of these diseases is part. The elegance of the constructs in these various programs. Without going into much detail, the elegance of the approach and the elegance of the constructs is something that's given us a lot of excitement and made sense to pursue. We're very excited about the approach that's being taken in these, and they align with many of the ideas that we have and that Louise and her team has about the approach to genetic medicine. Beyond that, we have the opportunity in all of these programs to work with some of the best and brightest in gene therapy and genetic medicine.
As I listed in the text of my initial comments, the gene therapy leaders that are running many of these programs are who's who in gene therapy, luminaries in this area. It's all of those together that excite us. I'd say MS is a really interesting concept, and it does take us into a place that is different than rare disease. I get that. We will be continuing to look at things like that over time. We are a number of things at the same time. First and foremost, we are a genetic medicine company, so we are focused on genetic medicine, RNA and gene therapy. We are to date a neuromuscular, neural, and rare disease company, but we are a gene therapy leader. We are, as we stand here today, almost certainly the world's leader in gene therapy.
There is a lot of opportunity in there to do good. We're going to take gene therapy as far as it can go. That means we are going to, without busting our balance sheet, we are going to do interesting things that explore all of the meats and bounds of where genetic medicine and gene therapy can take us. This program with Dr. Brad Hoffman for MS is a very, very interesting one. It's a research program right now. It's pre-clinical. We're not in humans yet, but we're very excited about it, as we are excited about our Rett program, as we are excited about our Emery-Dreifuss program, which Dr. Louise Rodino-Klapac and her team developed themselves except for us.
We're excited about these pipeline programs, and we think they align with our strategy, particularly the strategy that we have about building an enduring gene therapy engine that can do good in the world and be successful for investors over time.
Our next question comes from Christopher Marai with Nomura. You may proceed.
Oh, hi. Thanks for taking the question. Just a couple here on the new study to size and your powering assumptions. Could you maybe talk about some of the effect size you're expecting to see there, numbers that went into that powering assumption? On Study 3, thinking about the subset that you're going to look at, the three-month biopsy, what biopsy data will you specifically be looking at? When we think about the size of that subset, is it sort of 30 patients, 32 patients, sort of like your current or your new Study 2 size? How should we think about that? Just because it wasn't answered on the last question, do we expect any limb-girdle data or anything else at World Muscle, even safety data on a program like that or CK? Thank you.
Yeah. Let me answer the last question first because I failed to answer the World Muscle question from the last question, that was just an error on my part. Thank you for mentioning limb-girdle because that is likely the thing that would be presented at World Muscle. One of the things we're looking at right now is the following. Dr. Mendell is very interested and excited about the possibility of presenting data on the functional data on the first cohort of limb-girdle 2E that we announced the expression results and safety results for earlier in the year. While it hasn't been nailed down right now, I would suspect that that is going to be something that's going to be presented at World Muscle as Dr. Mendell is available and has the data available in an appropriate place by then.
With that, I'll turn it over to Dr. O'Neill to talk about the powering.
Chris, thanks very much for that question about powering at Gilmore here. I think you understand that for many reasons, competitive and other, that we won't disclose the specifics and details of our power assumptions, particularly the effect size. What I will say is that the assumptions around variance, et cetera, are strong. They haven't changed since our original calculations, and they are backed by a very strong data set of raw data, both internally generated and externally generated from various registries. I think what I can say is that we're very confident about the strength of our calculations there. Forgive me for not just going into the effect size. There are obvious reasons for that. With regard to the sub-cohort in Study 3 from which we will do the muscle biopsies, those muscle biopsies will be skeletal muscle.
They are limb, and the current thinking right now is that they are distal lower extremity gastrocs. With regard to the size of the cohort, as you can imagine, based on the strength of the expression data we've seen to date, we don't believe that you need a large number. I think that final number is going to be a matter of discussions with regulatory agencies and what they want to see. We believe that that number will be small. That represents really a small fraction of the global population that we're enrolling in multiple countries in that study. I think done with the third question.
Great. Thank you.
Our next question comes from Matthew Harrison with Morgan Stanley. You may proceed.
Hi, this is Max Score on for Matthew Harrison. Regarding the PPMO program, could you talk about the safety profile with single doses and how we should think about your ability to release data from the multi-dose study? When will you be taking muscle biopsies, and will you wait for all patients? Thank you very much.
I'll give you the broad strokes on it. Our goal is to get insight from the PPMO program and the MAD study by early next year. That is our goal. What we know from preclinical work is that if we get to good dosing levels with our program, that we should get significantly enhanced expression versus the PMO. In fact, in animal models, we get an order of magnitude greater expression. We're very excited about that. The issue that we're talking about here is the issue of the safety profile, and that's what we're going to find out over the course of this year into early next year. Things have gone very well so far. We've been in a single ascending dose study. We're getting great results so far, and we've started dosing the multi-ascending dose study, and we're getting great results there as well.
I want to be cautious that it's too early to say that because we're not at the dose levels that we really want to get to be correlated with micro-dystrophin expression. This is still, in a very real sense, too early to declare victory. We started, I think, the MAD study at, what did we start at? 5 mgs per kg?
Four.
Four. Started at 4 mgs per kg, and we're going to continue to dose that up. Things are going very well with the MAD study if not a little slower than I would have anticipated a year ago. Dr. O'Neill has come on board, and she's got that in order. We'll know by early next year if what we've seen in preclinical models bears out with these kids, and so far things are looking very good. We'll give you a good update on it early next year.
Our next question comes from Anupam Rama with JPMorgan. You may proceed.
Hey, guys. This is Matt on for Ananth tonight. Thanks so much for taking our question. Congrats on the progress. Just some higher-level questions from us. You mentioned that you'll be nearing 900 employees by year-end. Kind of just as you expand your processes and potentially your geographical reach, where do you see this number going over the next few years? On your gene therapy manufacturing efforts, can you just remind us of how much cash you've earmarked on this front, kind of in the same timeframe? Thanks so much.
Good questions. Great questions, actually. We're going to end the year at around 900, maybe a little shy of 900 employees worldwide. We are going to begin to moderate the growth of our employee base. We already are over the course of this year for a host of reasons. The reason that we grew, we didn't grow from 200 to 700 simply because we had the ability to. We had the need to. We've really expanded our ambition. We have probably going on now with programs, both disclosed and undisclosed. We're probably well over 30 programs in RNA and gene therapy together right now. We've needed to really bolster in all areas of the company, but specifically in the research and development and manufacturing tech ops, CMC areas.
We're getting to a place now where we're getting to a very comfortable place from an employee perspective, both quantitatively and qualitatively. We've got great people here right now. We are a magnet for good people right now, I'm proud to say, and we'll start moderating that growth. We'll have growth next year over the 900 that we have this year, but we will not be doing what we did this year. Don't imagine that we're going to double yet again in a year the size of this. We'll start moving more to a rational growth rate on employees after this year. Otherwise, we're going to have too many fixed costs as we move forward, and we don't. We're actually getting to a place where we're comfortable with the number of employees and the quality of employees that we have.
With respect to gene therapy, as I said before, in broad strokes, between milestones, capital expense, and prepaid cost of goods. We'll actually benefit from a lot of these expenses. They're not simply capital or direct expenses. We'll spend something like $600 million over the next, well, including what we've already spent this year into the end of next year and into a little bit of the following year, probably in the $600 million range. Do you agree with that, Sandy?
Yeah, I would agree. Slowly, we'll be starting to ramp up our goods that will effectively be going to inventory. Some portion of that will be in cost of goods, if you will.
Our next question comes from Gena Wang with Barclays. You may proceed.
Hi, this is Peter for Gena Wang. Thanks for taking our question. A couple from us, Sumit. I guess first is, I think this has been asked before, but just to make sure. Were there any measurements from Study 102 that prompted the expansion? Would you be able to measure anything that may inform the pivotal study design at all? Is it completely independent?
Thank you for giving me an opportunity to answer this question again. Actually, I really do appreciate it, Peter. Let me be very clear, so there's no avoidance of any doubt. There's nothing, there's no analysis, blinded or unblinded or otherwise out of Study 2 that motivated the increase in the N at all. In fact, the only data that we've had is the data from the first four patients in Study 1, and that's given us tons of confidence in where we are. The reason that we've increased the N is quite simply because we have opportunity in front of us. I think that it is a small price temporally to pay, literally measured in weeks and maybe months, a couple of months, to be in a position to feel that we have a study that's really robustly powered.
Powered to be over 90% now, which increases the probability of success and gets us really comfortable with Study 2 as we plan for Study 3. To say something that is obvious without being overly starchy about it, there's no exogenous reason why we wouldn't do this right now. The race that we're in right now is a race against the disease itself. It's not a race against another company as it stands right now. We are, I think, significantly in the lead versus others around this, both temporally, but frankly, maybe even more importantly, qualitatively. We really need to think about these families and these patients first and foremost.
While it may delay us by some number of weeks or maybe even a month or two to ensure that we have the right power of this study, it increases the probability that we don't have additional delays in the back end because we've powered the study at the right level. It's the best answer for the program, and it's more important than all of that, the best answer for the families around the world who are waiting for a transformative therapy in Duchenne muscular dystrophy. I'll just be really direct about it. We feel really, really good about this opportunity to increase the N, and we think it's a real opportunity for the program and a real opportunity for families.
Our next question comes from Vincent Chen with Bernstein. You may proceed.
Congrats on the progress. Thanks for taking the questions. A couple of specific ones on Study 2. First, about your statistical assumptions. How would you expect the mean effect size from the gene therapy to compare to the likely standard deviation? Just in ballpark numbers, would you say that's roughly about the same size? Would you say it's likely larger, smaller? The second question would be, if you had wanted to, could you have increased the study size for Study 2 even further than 40 patients? How much longer would the trial have been extended, for example, if you decided to increase to, say, 50 or 60 patients?
I'll answer the last question, then I'll turn it over to Siyamak Abdi. I feel like we've been answering your first question.
You just keep seeing the.
Yeah. No, we could have modestly increased the size of the study even greater than we did with the material available, but we were very comfortable with the 40-patient study. It's the right level for us. It's not a compromise issue. It wasn't a timing issue. We felt good about the end of 2024. We felt good about the end of 2024. Frankly, the data evolved in Study 101. As you know, we got nine months of data from the kids in the Study 101, and it only confirmed even more that we were feeling very good about the assumptions we were making and the powering we had for Study 2. 40 patients and getting to significantly over 90% power just gives us even more confidence that we're doing the right thing for these families.
Vincent, thanks for the other question. Again, I'm not going to go into the specifics of our assumptions around effect sizes and standard deviations. The only thing I can sort of tell you about standard deviations is that based on our raw data, the standard deviations that are published in the literature are in the ballpark of what we're seeing for the North Star, et cetera. Forgive me for, again, not going into the specific effect size. These are things that we just want to keep internal right now.
I see. Well, maybe one follow-up then. You mentioned that the data you were seeing from the initial study corroborated what you had expected in terms of your powering, the effect sizes, and so forth. Is it fair to say that the data you've seen from the first four patients is pretty much in line with what you would have expected in terms of the likely gene therapy effect size?
I would say a couple things on that. One, I would say we've taken the results from the first study, what we've seen, and then we've been more conservative. I will give you the qualitative answer. We've been more conservative in our powering assumptions. We're not leaning all of our assumptions in an aggressive direction just you know, I don't want you to get the impression that we're fooling ourselves into our power calculations. I think they're justified given that we're an increased spend and therefore things like that. If you want to know what our view is, it's hard to say what one should have anticipated from a study going into it because frankly, in the history of all Duchenne muscular dystrophy, no one has ever seen these kinds of transformative results before. I think probably people may have different views.
I think broadly speaking, the results we saw from the first cohort of kids were pretty shockingly positive. It was probably greater than one could have normally anticipated. We're used to dealing with therapies that tease out differences from background over a long period of time, and what we saw with these kids was a fairly dramatic benefit. Open label, four kids, please understand, I understand that as well. Early days, both quantitatively and qualitatively, we saw a fairly dramatic change in these kids. I'd say the preclinical models generally support that same kind of concept. If you've ever looked at the gene therapy micro-dystrophin golden retriever models in video, you might have anticipated this kind of transformative effect. We were very pleased with what we saw in Study 1.
Still took a very conservative approach in powering Study 2, now we're taking, I think, an appropriate, not overly conservative approach to increase that and to increase the powering of that study and to increase the chance that we can get this therapy as fast as possible, but with the highest POS to patients waiting around the world. Frankly, waiting and degenerating while they wait, we feel that making these decisions intelligently is important.
Our next question comes from Ritu Baral with Cowen. You may proceed.
Hey, guys. Thanks for taking the question. Going back to Study 3, Doug, is it still your idea to keep that a placebo-controlled study? In that case, how would you handle placebo biopsies in a study like that? You mentioned that the biopsies are going to be taken from a subset of patients. How are you thinking about the other patients as part of Study 3 in your FDA negotiations? Who else are you going to include, age range, et cetera? I've got a follow-up.
A couple broad stroke issues. I guess there's a lot to unpack. The question about the ability to take a subset of patients and do a biopsy of them on a blinded study, I can give you sort of some proof that that's possible. We just did it. We did it with Casimersen. It is possible to do without unblinding the study.
Yeah. This is Gilmore. I just want to actually step in. With regard to the biopsy, our intent is to biopsy all the patients. The sub-cohort we're talking about is not a sub-cohort of biopsy patients. It's just a cohort in time. That's the first thing I want to say. I think the second thing I want to say about placebo control is that we do anticipate this will be a placebo-controlled study. I think to Doug's point, there are a couple of important lessons that are worth pointing out, which is, one, that we actually have our successfully running placebo-controlled studies with Duchenne patients in the context of our Casimersen and eteplirsen protocols and in our Study 2 protocol. We're confident that we can actually execute on that.
Of course, that really comes down to a very important thing that we have built and that Kate literally built this organization, which strong relationships with patients, strong relations with investigators, and a very good patient advocacy group where we actually sit down and explain in detail the rationale, the thinking, and the importance of this work to patients and their families.
We've got the placebo-controlled nature of the main Study 3, as it was with Study 2, is a difficult one, and it's one that takes a lot of thought before one does, because there is a price to pay for these placebo trials, and I want everyone to understand that we're mindful of that. Our goal, one of the things I said in my text is, you may have noted, is to have such a robust set of evidence at the time that we launch this therapy that we can get kids of all ages and mutations and status on therapy rapidly and to do it around the world, not simply in the United States of America. It's important as the United States of America is to us and to our company and to the families in the U.S.
We want to create a program that is fit for purpose around the world. We do believe, as difficult as that decision is to make at times, that a placebo trial, at least for the main trial, is appropriate. That main trial will very likely be kids that will match the cohort that we're looking at right now in the four to seven-year-old range. With respect to other cohorts, different age ranges, it's something we're still talking about. As relates to that main cohort of patients in the next study, it will almost certainly be a placebo-controlled trial. Do you agree with that, Doctor?
Yeah. Agree.
Our next question comes from Brian Skorney with Baird. You may proceed.
Hey, good afternoon, guys. Just a couple of quick ones from me. Just one, been getting a lot of questions with the FDA release yesterday about some data integrity issues with the Novartis of AveXis Gene Therapy, Zolgensma. Just wanted to know, given the similar origins of that program in 9001, if you've looked into the issues there and what level of confidence you can give in your construct that these Zolgensma issues are specific to Zolgensma. As you talk about ramping up inventory with the competitors in gene therapy seemingly falling behind, I think you'd previously anticipated having a couple thousand doses at launch.
Just wondering if kind of these new efforts to meet demand, if you're changing that to a higher number now, or you think you can make it to a higher number, and should we expect to see the manufacturing costs of these doses effectively expensed into R&D over the next two years?
Yeah. Let's go to the first question, the AveXis Novartis issue that occurred yesterday. We know nothing more than others know who have been able to read the documents that currently exist. We've looked directly at the 483, just so we're all on the same page. There's nothing about that issue that reads through to anything that we're doing at all. It appears to be a very specific issue with a very specific person or a couple of people at that company on a particular data entry issue. It's nothing to do with us at all and nothing to do with any of our programs. Just so we're unequivocal about it, there's zero, beyond zero read-through in anything that may have occurred there to anything that we're doing. No correlate whatsoever at all.
With respect to the dosing, there's sort of two things on getting the yields right and the like. One is the target we have for the number of doses available and the ability to treat the community, and the other is just probability of success that we'll have that amount of doses at the time. Getting the yields right does both. It gets us to a place where we feel confident not only in the number of doses, the probability of success, but we can also make decisions around the amount of dosing. I still think the kind of couple thousand at launch is a good aspirational target for us, but we'll take a more careful look at that over the next couple of months, and we might make some additional decisions depending on what yields we achieve, and we have lots of room for capacity as well.
The short answer is that we want to be in a position, if at all possible, to fully serve this community first in the U.S. and then around the world at launches without any risk that patients will have to wait for our therapy. That's why we're taking the time, now that we have the time, with Study 2 to ensure that we continue to enhance our process development and to enhance our yields before we start Study 3.
Our next question comes from Danielle Brill with Piper Jaffray. You may proceed.
Hi, guys. Thanks for the questions. A quick follow-up to a previous one. When you decided to expand enrollment in Study 2, did you consider including older patients with signs of function decline? Any specific reasons why you stuck with that four to seven-year age range? I think you mentioned you're planning to open an additional site. Is that also for Study 2? I'm just curious from a safety perspective, how do you get comfortable with someone other than Jerry administering the drug? Thanks.
Well, I think that last question is a great one. He is fantastic, we're going to have to have other sites someday. The good news is that Dr. Mendell is very committed to ensuring that we maintain consistent quality as we bring other sites along as well. In fact, we've had good, detailed discussions about the fact that we need to have essentially a Mendell University around the way we approach gene therapy and the way we approach these fusions and the like. Dr. Mendell is very much on board for all of that. We're very confident about what we're doing. The sites that we're going to be bringing online are going to be really top quality neuromuscular sites with experienced therapy. As it relates to Study 102, they will be in the four to seven-year-old range.
They will be exactly the same cohort. They must be. The reason they must be is because our goal is to increase the probability of success, increase the power. If we went to other age ranges, we would actually create more standard deviation, and we would reduce the power. In fact, we couldn't do it because you went to, for instance, older non-ambulatory kids, we'd have to use a different measure than NSAA. We couldn't use NSAA. For this study, we have to narrow the focus and ensure that we have the same matched populations so that we have the same confidence around the power. As I said before, it's going to be 90%. In Study 3, such will not be the case. In Study 3, we are going to have a number of different studies, as Dr. Mendell is giving me the dirty look.
Dr. Mendell when I call one of them one study. It'll be in 3A. It'll be a main cohort of patients. We'll have older, non-ambulatory patients in a separate study as well. We will cover larger age ranges and different measures in the next study.
Our next question comes from Joel Beatty with Citi. You may proceed.
Hi, this is Sean Egan on for Joel. Thank you for taking my questions. I have a few more specifically on yields and capacity. First, have your initial iCELLis lot tests satisfied your yield goals? At this point, is it the expectation that the extra yield optimization process time you described today will raise your maximum capacity estimates or help you reach your original estimates? I have a follow-on question as well.
Yeah. We've reached very good yield in the iCELLis Nanos. We are in the process of scaling to iCELLis 500s right now. In the iCELLis 500s, we are not at the optimized number yet, but we're getting there. We'll get there. Just so you understand what that means, this process just takes time. Every time you do a run, you find opportunities to enhance it, you make changes, and then you do another run, and a run takes somewhere in the month or more timeframe. It just takes some time. The short answer is we are getting very good yields in the hunt of what we want in the iCELLis Nano. We've scaled to iCELLis 500s. We've made a number of runs in iCELLis 500s.
We have made a number of improvements, significant improvements every time we do it, and we're very confident we're going to get to the same kinds of yields we got in the iCELLis 900 and iCELLis 500 over time. There's sort of two targets. There's the sort of optimized target that gets us to where we want to go. Of course, if we can get even beyond that, fantastic, which would give us both more capacity as well as lower cost of goods. The goal here is to get to as optimized as is possible a yield really before we start Study 3, if at all possible.
Our next question comes from Salveen Richter with Goldman Sachs. You may proceed.
Thanks for taking the question. This is Ross on for Salveen. Doug, can you just elaborate a little bit further on the current manufacturing situation here? Regardless of the competitive dynamics that you mentioned earlier, you would need to have your yields fully maximized and your process development optimized. Can you just define what this looks like today versus what it looked like previously? Then I have follow-up.
We're kind of midway through a process. I'd say we're midway through a very, so far, successful process. There's sort of a number of things to do from a manufacturing perspective to be in a place to launch the therapy. The first thing, of course, is just capacity itself. We're building a facility with Brammer Bio. We're just about done with that. That's in Lexington. The next issue, which we haven't talked much about today, we'll talk about it over time, is analytical development. We're making very good progress there. As I said, we've got Dr. Reed Clark on board, so we feel very confident that we have the talent in place to get all the analytical development done in a way that's effective. The final one is process development and yield optimization.
As I said, just sort of stepwise where we are is the first thing to do is work in smaller units of iCELLis. We've done that. We've gotten the good numbers there. We're moving up to the iCELLis 500. We've done a number of runs there. We're continuing to improve that. We're kind of in the middle of a process. There's a number of things we have to get to before the commercial trial. I don't want to suggest that there's not opportunities to continue to optimize after the trial, but we want to get as far along as is possible before we start the trial so that even as we're making additional improvements in yield, for instance, there's no reason why we wouldn't continue to do that.
We don't want to find ourselves in a position that we've so dramatically increased yield that we have an argument around a new product, and we have to do a bridging study to yet again prove that we have the same product. We're in the middle of the process. Things are going very well. We've got great partners, and we've got a lot of folks working on it, a lot of really smart expert folks. We got Brammer doing the work. We got Paragon. Paragon is fantastic, frankly. They were behind a lot of the AveXis work. AveXis has come back to Paragon. More than all that, we got our own folks. We got Dr. Reed Clark. We've got 10 iCELLis units. We're doing very well. It's going very well so far.
Our next question comes from Tim Lugo with William Blair. You may proceed.
Thanks for the question. Of the new gene therapy programs announced during the quarter, will any of those be in the clinic over the next year? Are you maybe de-emphasizing some of the other previously announced preclinical programs, and I might have missed it, but do you have a total number for gene therapy programs currently in the pipeline?
I can throw a number out on gene therapy programs, but I fear I might be wrong. We'll update our pipeline. We're well over probably nearly 15 or more programs between preclinical and clinical. Actually, I think Dr. Rodino-Klapac could be looking at me like I willfully was inadequate in that number. I think it's higher than that. It's higher than that. As I said before, I was going to make an error if I tried to do the math.
Less than-
We're over 15. Between 15 and up. No. In all seriousness, we're over 15 programs, clinical and preclinical. We're not de-emphasizing the other preclinical programs that we have. One of the things that we had suggested some time ago is that we're building an engine, and we have an aspiration to continue to fuel that pipeline, and we're going to continue to do that. We're very excited about programs. We have been. We don't want to spend a lot of time talking about them in depth right now simply because they're preclinical. We don't want to go overly promotional with our currently really exciting cassettes with research programs. Needless to say, these are great areas of focus with great leaders behind them. We've got Emery-Dreifuss and the leadership there, in addition to the world's leader, Dr. Worman, on that.
We've got our own Gene Therapy Center of Excellence in Louise Rodino-Klapac, who's built the very cassette that we're working on there. We've got Rett syndrome. We're very excited about Rett syndrome as a focus. It aligns perfectly with where we're going, and we've got a very exciting gene therapy program there. We're very excited about our cardiomyopathy program with Dr. Sweeney. He's obviously one of the big luminaries in gene therapy, so we're very excited about that. Cardiomyopathy is a sort of a natural extension of the areas that we've been in, and neuromuscular in there. Of course, it goes without saying, we are excited about MS, and we're very excited about working with Brad Hoffman. He's got a very innovative approach. It's still research, but it's a very innovative approach, and we're going to lean into that as well.
We're excited about our research programs, and we're not done.
Our next question comes from Joseph Schwartz with SVB Leerink. You may proceed.
Great. Good afternoon. Thanks for squeezing us in. Just two quick questions from us. Doug, just going back to an earlier question on Zolgensma and the revelation yesterday. I guess given the numerous similarities, I was wondering, how do you see the Zolgensma revelation affecting the way the agency will review, adjudicate, or scrutinize your CMC module, or even as you continue the optimization work here? Second is, strategically speaking, as we look forward, you mentioned the status update on PPMO, the SRP-5051, congrats on that. I guess there's growing competition in DMD with gene therapy, gene editing, as well as antibody conjugated ASOs emerging. I guess, as you think about your base business of antisense oligos, what are your strategies there, given how PPMOs may have hit a little bit of a delay with safety here, and you only have SRP-5051.
Do you have alternatives to maintain that base business? If so, what would that be? Thanks.
Okay, let's take this in order. Zolgensma has zero effect, zero read-through. More than that, I am confident will have zero effect on the way the agency looks at other programs. If one looks past what are really salacious headlines about this still hardest thing, what one looks at when you go and actually look at the 43 is this is a very specific issue, not about gene therapy, but about individuals who may have done something with data manipulation as that's the phrase that's being used, with respect to a study. Something that apparently, from what we've read, didn't affect the integrity of the study, didn't affect the actual outcome, safety, efficacy, or even the approvability of the program. Was concerning because I think from what we read, there was some question about intentionality in all of that.
It is a very specific issue about specific human beings at a specific company. It does not relate in any way to our program, nor do I believe that there's any reason to believe that they would change how the agency would approach other folks' program. It goes without saying, one has to be very thoughtful and careful and follow SOPs, good clinical practice in research and data, and that was the same answer the day before yesterday. It's the same answer today. I'm not at all concerned that this impacts the way the agency approaches programs. I think it's a very specific issue. The status of SRP-5051. One thing I do want to make clear, we haven't hit any snags on safety. Things are going brilliant.
The issue that we've always had, the open issue with respect to the PPMO is can you get safely to a high dose? If you can get safely to an acceptably high dose, we are very confident mechanistically that we're going to see significant increases in dystrophin production over our PMOs. In fact, as I said before, we could have literally an order of magnitude better expression. There is a lot of reason to be excited about the PPMOs. The only reason that we don't sort of promote that concept is I want to see how high we get in the multi-ascending dose before we start declaring victory on there. As relates to the base business and what that means from gene therapy and the like, I would say a couple of things there as well. First, I would start with this issue about increasing competition.
I actually think the competition has moderated over the last six to nine months, frankly. The biggest competition to our PMO and PPMO franchise is our own gene therapy. Frankly, we think there is a real possibility that there is a room for both the PMO or PPMO, if it's successful on the one hand, and adjunctively with a gene therapy, our micro-dystrophin program on the other. We're doing work right now to look at that. We actually have a partnership looking at that as well. We'll have better information about that probably by the middle or so of next year. If it turns out in the long run that the gene therapy is so transformative that there isn't room for a PMO or PPMO thereafter, so be it. The patient community has benefited from that.
We think as it stands today, there may very well be a good synergistic benefit of having a PMO or PPMO on the one hand, and our micro-dystrophin program on the other. We feel very confident about where we're going.
Our next question comes from Justin Kim with Oppenheimer. You may proceed.
Hi. Thanks for taking the question from Hartaj and me. Maybe just wanted to circle back on the excess gene therapy supply in DMD. Were there any thoughts to loosening the age criteria in order to establish a longer-term safety experience in these older patients before a regulatory review?
I apologize. I'm not sure what your question is. I couldn't do it in Study 2 because in Study 2, we have to get the powering right. We will be looking in older patients in Study 3 as well. We will have evidence both from an efficacy perspective and a safety perspective on non-ambulatory patients and older patients and heavier patients in what I call Study 3 that Dr. Gil O'Neill rightly notes is actually a series of sub-studies.
Okay, got it. Is there a target goal of what proportion of the additional patients would come from a second clinical site?
We're going to dose as fast as we can. We're opening a second site to dose both as fast as possible. There's no target. We'll take them all from Dr. Mendell if he gets them all dosed from Nationwide Children's Hospital. We'll have a second site, very reputed, well-reputed second site to assist in that dosing to make sure that there is no risk that we're not going to have it all dosed before the end of this year.
Our next question comes from Umer Raffat with Evercore. You may proceed.
Yeah. Thank you. Perhaps a dumb question, but I just wanted to clarify the very specific functional endpoint for the Study 102 from which increasing the N number gives you greater confidence in powering. I am asking this, assuming the specific first line endpoint is NSAA. Can you just confirm that? Can we presume that the same endpoint, NSAA, will be the same one used in the Study 103 as a primary functional endpoint? Then as a continuation for the Study 103, when will you be able to give us specifics on the N number within the main cohorts of 47 and the additional cohorts? Thank you.
I would say on the first two, I can confirm both. It is NSAA in Study 2, and it will be the primary endpoint for Study 3 as well. Given that we're going to start Study 3 as early as is rationally possible in 2020, that we'll certainly come back to in early 2020 and give you an update with more particulars around what I'm calling Study 3.
Our next question comes from Tim Chiang with BTIG. You may proceed.
Hi. Thanks, Doug. I think you mentioned that Dr. Mendell might be presenting some limb-girdle data at WMS. The functional data would be just the three patients that have been dosed, or the data that you've shown in the three patients that were dosed MYO101. Is that right?
It'll be the functional data, yeah. As you may recall, we announced data the first quarter of this year on 2E program. We were very pleased with the results both from an expression level and a safety perspective as well, given the size of these kids. One of the interesting things, these are the largest kids that have ever been dosed, as far as I'm aware, with a full infusion gene therapy. There are 13-year-olds, two of them. It was too early. We had just literally dosed the third child, so we couldn't get functional data. The goal at World Muscle would be to present functional data on those first three kids.
Our final question comes from Lisa Baco with JMP Securities. You may proceed.
Hi, thanks for taking the question and squeezing me in. Just to clarify, Study 2 will capture the functional endpoint that you'll use for filing in addition to Studies 3, showing expression. At that point, when you get expression data combined with Study 2 functional, you'll file. You're not going to wait for the functional data from Study 3. Is that correct?
That is our goal. One of the things we need to do when we build out Study 3 in our plans is to sit down with the agency, confer with the agency, and get their buy-in to the approach that we're taking. Our current goal is to have for Study 3, we'll have functional data as well eventually, but to have a sub-cohort of Study 3 to look at expression level and show comparability between clinical supply and commercial supply. Dr. O'Neill can probably guess, we're talking about FDA issues right now. That's the approach in the U.S., assuming that the FDA agrees with the approach that we're taking.
Of course, we'll have to consider what approach we take ex-US, because as I'm sure you know, our goal is to bring this therapy to as many patients around the world as could benefit from it as rapidly as is possible.
Okay, great. How do we think about, or how do you think about what is comparable? Obviously there's variability in expression from patient to patient, and this is kind of not exactly like a bioequivalency study. I guess, what is the tolerance around some of those things to say it's actually the same? I'm curious about how you think about that.
Well, that'll be obviously a subject of discussion with the agency, obviously, and this is early days in gene therapy, so we'll have a lot of things to talk about. There's a lot of different ways to look at measurements. There's potency plus CMC-related issues. We also have what you have in a number of other programs. For instance, you wouldn't have had it in SMA. We have biopsy. We do have a good way to triangulate on comparability between commercial supply and clinical supply. Of course, we'll have to talk to the agency about what level of tolerance is permissible between clinical supply and commercial supply.
Okay, great. Thanks a lot.
Thank you very much.
Ladies and gentlemen, this now concludes our Q&A portion of today's call. I'd now like to turn the call back over to Doug Ingram, CEO, for closing remarks.
Well, thank you all very much for spending this evening with us. We updated for the second quarter on our performance of the second quarter and our flight path forward. We have a lot to do in 2019. I hope I may impress upon everyone our perspective on this. We are in a privileged position as an organization with respect to some of our programs right now. We don't take that privileged position for granted. We don't intend to slow down as a result of that. We don't intend to develop any form of arrogance. In fact, we want to approach all of the work that we have to do in front of us with an enormous amount of humility. We have a lot to do this year. We have to continue to perform with EXONDYS 51. We have to bring forward Golodirsen, assuming that we are successful.
By August 19th, we have to submit for Casimersen. We have to continue to push forward our various gene therapy programs, get these kids dosed in the micro-dystrophin study two, get our process development and capacity for our micro-dystrophin gene therapy program done by the end of this year so we can start dosing patients in our study 3. We'll give you additional updates over the course of the year as we progress against our goals. Thank you very much. Thanks for your support, and have a lovely evening.
Ladies and gentlemen, thank you for attending today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.