Good day, ladies and gentlemen, and welcome to the Sarepta Therapeutics first quarter 2018 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. If anyone should require operator assistance, please press star then the zero key on your telephone keypad. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Ian Estepan, Vice President, Chief of Staff and Corporate Affairs. Please go ahead, sir.
Thank you, Christy, and thank you all for joining today's call. Earlier today, we released our financial results for the first quarter of 2018. The press release is available on our website at www.sarepta.com, and our 8-K was filed earlier this afternoon. Joining me on the call today are Doug Ingram, Sandy Mahatme, and Beau Cumbo. After our formal remarks, we will 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 statement. These forward-looking statements involve risks and uncertainty, any of which are beyond Sarepta's control. Actual results could materially differ from those forward-looking statements, as any such risk can materially and adversely affect the business, results, and operations, and the trading price of Sarepta's common stock.
For a detailed description of applicable risks and uncertainty, 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. We filed our 10-Q this afternoon, May 3rd, 2018, for the first quarter of 2018 by the SEC required filing deadline. The company does not undertake any obligations to publicly update its forward-looking statements, including any financial projections provided today based on subsequent events or circumstances. 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 Sarepta Therapeutics' first quarter 2018 financial results and corporate update conference call. We have much to cover today, including our financial performance, the CHMP trend vote, and our upcoming R&D Day. Before covering all of that, I hope you will indulge me as I make a few brief comments about the state of genetic medicine innovation and, in the context of the transaction we announced this afternoon, the intention of Sarepta to participate in shaping the future of genetic medicine. At Sarepta, our mission has always been ambitious: to relieve the suffering of those inflicted with DMD and other devastating diseases.
We are fortunate to be standing with the biotech industry at a moment where, after nearly a half-century of hope, innovation, breakthroughs, setbacks, learnings, and more breakthroughs, the long-held promise of gene therapy to dramatically change the course of disease is becoming a reality. Sarepta intends to play a central role in shaping that reality. We will only achieve this by continuing to allocate the right resources, persisting in overcoming obstacles, and marching toward a future where many fatal genetic diseases, which have robbed families, first of hope and then of loved ones, are transformed into treatable obstacles. We took a major step forward in that direction today as we announced an exclusive partnership with Myonexus Therapeutics, a clinical stage biotechnology company developing transformative gene therapies for limb-girdle muscular dystrophies, also known as LGMD. Limb-girdle is a group of distinct, degenerative, life-threatening neuromuscular diseases.
While the various forms of limb-girdle have distinct phenotypes, like DMD, they involve muscle degeneration and wasting, eventual wheelchair assistance, and far too often death from cardiopulmonary complications before the age of 30. The pipeline of 5 limb-girdle gene therapy candidates in development by Myonexus targets some of the most severe and common forms of the disease and includes 3 clinical and 2 pre-clinical programs. Myonexus's lead program has generated encouraging pre-clinical safety and efficacy data and utilizes Rh74 vector, the same vector used in the microdystrophin gene therapy program Sarepta is developing with Nationwide Children's Hospital. Of note, Dr. Louise Rodino-Klapac is one of our principal investigators and co-inventors of the microdystrophin gene therapy trial, and she also is the inventor of the portfolio of limb-girdle candidates, is the co-founder of Myonexus, and serves as its chief scientific officer.
We will commence the first clinical trial with MYO-101 being developed for limb-girdle 2E in mid-2018 and will report gene expression data in late 2018 to early 2019. MYO-101 is designed to restore the beta-sarcoglycan protein in the affected tissues and reverse the effects of the limb-girdle 2E mutation. Systemic delivery of the therapeutic vector in pre-clinical models has restored full-length beta-sarcoglycan and demonstrated significant expression levels, restoring function in mice. No significant safety issues were observed in pre-clinical studies. Turning to the terms of the agreement, in addition to an upfront option payment, Sarepta will pay certain milestone payments that will be used to fund development and will have an option to purchase MyoNexus at a set price after it has had an opportunity to review the clinical results of this trial. This partnership fits brilliantly into our strategic vision for a number of reasons.
First, it aligns with our mission of bringing life-changing therapies to patients with rare diseases through the development of genetic medicine and specifically gene therapy. It was developed by gene therapy luminary, Dr. Rodino-Klapac and her team, a group we know well and respect immensely. It bolsters our already deep genetic medicine pipeline of 16 compounds to now 21 compounds, and it begins to fulfill the commitment we made in January 2018 at the J.P. Morgan Healthcare Conference to expand our therapeutic focus beyond DMD. To support the successful execution of our deep pipeline, we have been focusing on increasing our talent base across all divisions, but particularly focused on our research, development, regulatory, and access functions.
We set a goal at the beginning of this year to add a new employee every business day through the first two quarters of this year. I am pleased to say that the team has met that goal, and we are significantly augmenting our talent. To accommodate our growth, we have also doubled the size of our U.S. headquarters in Cambridge, Massachusetts, and we have acquired additional property in Andover. Moving to our first quarter highlights and other recent corporate developments. We are pleased to announce that we recorded sales of $64.6 million in the first quarter, and we remain on track to achieve our previously stated 2018 guidance of $295 million-$305 million for EXONDYS 51.
We remain confident in the trajectory of the launch, especially in light of our performance in the first quarter, as we also managed well through the disruptions relating to moving to a permanent J-code and working through the natural chop in the first quarter of the year, as patients often change health benefit plans. We are also pleased with the progress we have made in advancing our pipeline. At J.P. Morgan, we outlined our key inflection points for 2018. I will now provide an update on how we are tracking so far against these milestones.
In February of 2018, we announced the outcome of our Type C meeting held with the FDA's Division of Neurology to solicit the division's guidance on the development pathway for our therapeutic candidate, golodirsen, a PMO engineered to treat those DMD patients who have genetic mutations subject to skipping exon 53 of the DMD gene. We remain on track to complete a rolling NDA submission by year-end 2018, seeking accelerated approval based on an increase in dystrophin protein as a surrogate endpoint, and with a target approval in mid-2019. If we receive accelerated approval, ESSENCE would serve as a confirmatory study. We are in talks with the division about potential enhancements to ESSENCE, including a proposal to analyze 48-week biopsies for patients amenable to skipping exon 45, with the goal of accelerating the development of casimersen, one of the two therapies being studied in ESSENCE.
We will not know if this is possible as an avenue until we have had further discussions with and we have taken advice from the division. The next milestone is the status of our eteplirsen filing in Europe. As referenced in today's press release and consistent with last quarter's remarks about the challenges we faced with our marketing authorization application, the Committee for Medicinal Products for Human Use, also known as CHMP, of the European Medicines Agency, rendered a negative trend vote for our MAA for eteplirsen following our oral explanation last week. Let me provide some context. Our team, accompanied by world-leading DMD outside experts, did a fabulous job of presenting the benefits and clinical results of eteplirsen, including the positive results across three studies and multiple meaningful functional endpoints. You can find our presentation, including our analyses across three studies, in our 8-K disclosure.
The slides include the results for six-minute walk tests, loss of ambulation, North Star Ambulatory Assessment, and pulmonary function data. In preliminary discussions with the EMA to gain insight into the trend vote, we understand that the CHMP has not concluded that eteplirsen is not sufficiently effective or that its risk-benefit is not sufficient, but rather that Sarepta has not yet met the regulatory standard for conditional approval, particularly based on the rapporteur's concerns regarding the use of external controls rather than placebo controls in the study and the functional importance of pulmonary endpoints in ambulatory patients, one of the most important measures on which Sarepta showed significant benefit across all three separate studies. Sarepta appreciated the opportunity to present its data and the robust discussion with the CHMP. Nevertheless, we firmly believe that eteplirsen should be expeditiously made available to patients in Europe waiting for eteplirsen.
We will seek a re-examination, and we will request that a scientific advisory group, also known as a SAG, made up of DMD and neuromuscular specialists, be called to provide expert guidance and insight into, among other things, the validity of the external controls used and the importance of significantly slowing pulmonary decline in patients suffering from DMD. In follow-up discussions with the EMA this past week, it is our understanding that the re-examination and a related SAG should be granted. It is our understanding that the re-examination process will likely be completed by year-end 2018. So that there is no confusion, let me be clear that we are committed to bringing eteplirsen, our next-generation RNA therapies, and our gene therapies to patients around the world, including Europe.
We will continue to build our global presence in a way that advances the growth of our pipeline, and as we get better clarity on the commercial launch, we will build our infrastructure to support an appropriately timed commercial presence as well. Moving on to our next milestone for the year. We look forward to hosting our first R&D day on Tuesday, June 19th. The day will highlight our product development strategy and provide an in-depth review of our pipeline programs. Our R&D day will be webcast live on our website. In addition to a review of all of our genetic medicine programs, we look forward to presenting our microdystrophin safety and expression data from at least two patients enrolled in our current gene therapy clinical trial underway with Doctors Mendell and Rodino-Klapac of Nationwide Children's Hospital.
An additional milestone in 2018 relates to our next generation RNA platform, the PPMO, otherwise known as the peptide conjugated PMO. We look forward to announcing progress later in the year on our single ascending dose study for our first PPMO candidate, SRP-5051, which is designed to treat patients with DMD amenable to skipping exon 51. If successful, PPMO offers the potential for significantly improved efficacy with less frequent dosing for patients. In addition to SRP-005051, we are conducting IND-enabling preclinical trials on five additional PPMO candidates, covering patients with mutations amenable to exon skipping for exons 53, 45, 52, 50, and 44. Our first six PPMO candidates would address about 43% of the DMD population.
Beyond this, we are working on an approach to bring the PPMO therapies to the extremely rare exon mutations. We are engaging in a policy-level discussion with the FDA to discuss how to efficiently bring ultra-rare exon PPMOs to patients with DMD. In addition to being a promising next generation platform for DMD, if we are able to generate successful proof of concept data, PPMO offers potential utility in a broad range of other diseases. We intend to build out a strategy for the use of our PMO and PPMO technology in other rare diseases over the course of this year. The team continues to execute against the milestones that we set forth at the beginning of the year.
For the balance of the year, our goal is to continue to execute with the same level of focus and commitment against our remaining milestones and to continue to fight for patients with DMD who are waiting for therapy in the U.S. and the rest of the world. With that, I will turn the call over to Sandy Mahatme for an update on the financials. Sandy?
Thanks, Doug. Good afternoon, everyone. Some of the highlights for the first quarter of 2018 include $64.6 million of net product revenue and approximately $1 billion in cash equivalents, and investments on hand as of March 31, 2018. Moving to the financials. This afternoon's press release provided details for the first quarter of 2018 on a non-GAAP basis as well as a GAAP basis. The press release is available on the SEC and on our website. Please refer to our press release for a full reconciliation of GAAP to non-GAAP. I would like to note that we have made some adjustments to our non-GAAP presentation. We now exclude net interest expense and depreciation and amortization expenses from our non-GAAP financial presentation, as we believe this presentation best reflects our core financials.
In the first quarter of 2018, we reported a non-GAAP net loss of $17.9 million or $0.28 per share, compared to non-GAAP net loss of $31.4 million or $0.57 per share in the first quarter of 2017. I will now go through each P&L line item. Net product revenue for the first quarter of 2018 was $64.6 million, compared to $16.3 million for the same period for 2017. The increase primarily reflects increasing demand for EXONDYS 51 in the U.S. In the first quarter of 2018, we recorded approximately $5.6 million in cost of sales, compared to $200,000 in the same period of 2017.
The increase was driven by higher inventory costs relating to increased demand for EXONDYS 51 during 2018, as well as accrued royalty payments of $3.1 million to BioMarin as a result of the settlement and license agreements we entered into with BioMarin in July of last year. We expect our cost of sales to modestly increase in the last quarter of this year due to the depletion of materials that were expensed prior to approval. On a GAAP basis, we recorded $46.2 million and $29.1 million of R&D expenses for the first quarter of 2018 and 2017, respectively, a year-over-year increase of $17.1 million. On a non-GAAP basis, these R&D expenses were $43.3 million for the first quarter of 2018, compared to $26.7 million for the same period of 2017, which is an increase of $16.6 million.
The year-over-year growth in non-GAAP R&D expenses was driven by increased patient enrollment in our late-stage clinical trials, a ramp of manufacturing activities for our PPMO platform, an expansion of research and development pipeline, as well as collaboration cost-sharing with Summit. Commencing on January 1, 2018, we have started sharing 45% of the costs related to Summit's research and development for the Utrophin program. Turning to SG&A. On a GAAP basis, we recorded $43.3 million and $26.2 million of expenses for the first quarter of 2018 and 2017, respectively, a year-over-year increase of $17.1 million. On a non-GAAP basis, the SG&A expenses were $33.7 million for the first quarter of 2018, compared to $21.1 million for the same period for 2017, which is an increase of $12.6 million. The year-over-year increase was primarily driven by continued build-outs supporting our R&D and commercial expansion.
On a GAAP basis, we recorded $4.5 million in net interest and other expense for the first quarter of 2018, compared to $125.3 million of net interest and other income for the same period of 2017. The unfavorable change is a result of a gain of $125 million from the sale of the priority review voucher in Q1 of last year, partially offset by higher interest expense in Q1 of 2018 related to our debt instruments entered into the latter half of 2017. We had approximately $1 billion in cash equivalents, and investments as of March 31, 2018. In addition, we have prepaid approximately $15.5 million towards our 2019 manufacturing expenses. With that, I'd like to turn the call over to Beau for a commercial update. Beau?
Thank you, Sandy. Good afternoon, everyone. We are very pleased with the progress the team has made over the last six quarters of the EXONDYS 51 launch. We had a strong first quarter and remain on track to achieve our full year guidance of $295 million to $305 million. During the first quarter, many biotechnology companies often face headwinds that impact revenue. As Doug previously mentioned, we faced headwinds related to our permanent J-code and typical health plan enrollment cycles. The team was able to successfully navigate these challenges and maintain patients on therapy without significant disruption. Our U.S. commercial efforts are still focused on identifying patients amenable to exon 51 skipping and driving prescriptions, continuing active dialogue with payers to support broad coverage and reimbursement decisions, and ensuring all patients with DMD have a current genetic test and are appropriately identified for exon skipping amenability.
We are pleased that we are seeing continued adoption across all age groups. The average age of patients on therapy is 13 years old, which slightly decreased from last quarter. This trend is due to more patients at a younger age starting therapy in the first quarter of 2018. We do not expect the average age of patients to dramatically change until newborn screening for Duchenne becomes standard medical practice, which would identify hundreds of new patients eligible for EXONDYS 51 and other exon skipping or gene therapy products. From an adherence and persistency perspective, we continue to see high compliance rates and minimal discontinuations. All Tier 1 and Tier 2 centers, which treat approximately 75% of the DMD population, continue to prescribe EXONDYS 51. These centers continue to identify new patients amenable to exon 51 skipping and submit STAR forms.
We continue to call on top-tier centers, have expanded our efforts to reach additional sites to educate physicians on EXONDYS 51 and the importance of identifying exon 51-amenable patients. This initiative is intended to identify patients on non-DMD centers of excellence. While the patient demographics have remained fairly consistent throughout the launch, the mix of patients on commercial and government plans has slightly changed. The mix was approximately 55% commercial, 45% government in Q1 of 2018, compared to 60/40 in Q4 of 2017. As Doug previously mentioned, the data that was used during our discussions with the EMA is also being used as appropriate with our medical affairs organization in ongoing engagement with payers. As a result, payers have a better understanding of the disease and patients who will benefit from EXONDYS 51.
Our mission is to develop precision genetic medicine that improves the lives of all patients with DMD. During the reexamination period with the EMA, we will continue to strengthen our global presence in Europe by solidifying our relationships with KOLs, partnering with advocacy groups, and advancing our distribution network. Our focus and commitment to providing EXONDYS 51 to all amenable patients in Europe has not wavered, and we remain fully dedicated to bringing this therapy to patients around the world. The commercial success of EXONDYS 51 has provided the framework and infrastructure to support launches of future therapies for rare diseases. We are incredibly excited to enter into a new therapeutic area. From a commercial perspective, the partnership with MyoNexus Therapeutics makes strategic sense because with success, we would be calling upon the same neuromuscular experts with whom we have relationships and who treat both Duchenne and limb-girdle muscular dystrophy.
Our market research supports that limb-girdle patient population has a similar epidemiology to that of Duchenne. If successful, we look forward to serving these patients. Between our gene therapy programs for both DMD and limb-girdle muscular dystrophy, our team is preparing to launch up to six different gene therapy programs within a two-year window of time. This is in addition to our multiple PMO and PPMO-based programs for Duchenne, which, if successful, could be launching over the same period of time. In addition, we will plan for the potential of combination therapy with our RNA programs being the cornerstone of Duchenne treatment. We are preparing ourselves for operational and executional success and are very excited about the future as Sarepta now has one of the deepest rare disease pipelines in biotech.
Given the work we have done to date and the multiple opportunities before us, our position as global leaders in precision genetic medicine has never been stronger. We are paving the way to bring new medicines to patients with rare neuromuscular diseases. With that, I will turn the call back over to Doug for closing remarks.
Thank you, Beau. At the risk of repetition, let me again say that 2018 is proving to be a year of transformation for Sarepta, driven by a steady stream of catalysts in support of our vision to become a leader in precision genetic medicine and positively impact the lives of patients who suffer from DMD and other rare diseases. These past several months have been filled with progress, along with new challenges that we will address and tackle. We will continue to focus on relentless execution, advancing our pipeline with urgency, and fighting to overcome obstacles and bring therapies to patients with DMD around the world. We look forward to our upcoming R&D day in June, which will showcase the depth and breadth of our pipeline programs, our science, our collaborations, and the many milestones we intend to achieve in 2018 and beyond.
With that, operator, can you please open the call to questions?
Thank you. Ladies and gentlemen, if you have a question at this time, please press star then the number one key on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, to ask a question, that's star one. Our first question comes from the line of Brian Skorney of Robert W. Baird. Your line is open.
Hey, guys. Good afternoon. Thanks for taking the questions. I guess just when we think about the new licensures that you're taking on with gene therapy and the center, and I understand it's coming from Nationwide Children's Hospital. What does this imply in terms of the vector that you're working with for microdystrophin? I mean, it's the same vector. Is this a sign of confidence in this program, that you're seeing safety, or you're seeing any sort of metrics that would indicate that this is working in these two kids? Have you seen any data yet from these two kids?
Well, thank you for the question. This is Doug. Two things. First, as we look to MyoNexus, we do have great confidence in our relationship with MyoNexus because of our experience, not only with Nationwide Children's Hospital and not only with Dr. Louise Rodino-Klapac, who by the way, is very likely one of the most successful and prolific gene therapy luminaries that exist today, but also because of, frankly, our experience with the vector RH74. It gives us a lot of confidence moving forward. This transaction could not be better suited for Sarepta. Internally, we've called this Project Twin, and in reality, I think we really ought to think of this as Project Goldilocks. It's a perfect next step for this company in gene therapy.
As it relates to what we're seeing, let me just say that we are excited for June 19, and we look forward to the opportunity to present our entire pipeline and data to the community on June 19th.
I guess just as a follow-up, to dig a little bit more in terms of what is known to date. I guess the first biopsy has definitely been done. Has a Western blot already been run on that biopsy, or is the plan to run the Western blot on the first two biopsies simultaneously?
Two things. One, four children so far have been dosed, because we're dosing once a month. As you know, we're dosing at significant, potentially therapeutic levels, 2 times 10 to the 14th. So far, things are going quite well there. We are taking biopsies and reviewing along the way. What I would say generally is that we're excited to present data to the community on June 19th and to explore where we are on June 19th in depth.
Okay. Thanks, Doug.
Thank you very much.
Thank you. Our next question is from Alethia Young of Credit Suisse. Your line is open.
Hey, guys. Thanks for taking my question. Unfortunately on Europe, but good news on gene therapy. I wanted you to kind of give a comparison on the Nippon chemistry versus yours. It seems more like the Nippon chemistry is like drisapersen with the antisense. Just wanted your thoughts on that. The second one, I just wanted to talk about in Europe and the PROMOVI study you have underway, is there a way that you can make that work for Europe? Just more color on what maybe the next step would be if the re-review doesn't work. Thanks.
I apologize. I missed the second question. On the first question, Nippon's is a morpholino, so it's less like drisapersen and a morpholino. That's about what we know. They haven't presented any real data yet, so there's very little we know about the program other than that. Apologies on the second question.
It's on Europe. You have PROMOVI, I believe. That's still underway. I guess I'm just trying to figure out, is there a way that you could sort of use something like that? If the re-review doesn't go well in Europe, how do we think about what the next step would be there?
That's an excellent question. I can tell you in conversations with representatives from the EMA, they are also considering the same issues. There would be other possibilities for developing additional analyses and evidence in the event that the approach that we're currently taking with our current MAA filing was unsuccessful on a re-exam. We know that the EMA is considering some of those issues as well with us. Our current approach, first and foremost, is to, when we get the final ruling after the trend vote, which will happen toward the end of May, we'll commence a re-examination process, request a SAG, or otherwise known as a Scientific Advisory Group process. Hopefully, see if we can change the perspective through that approach.
If not, we're going to have to regroup and consider what additional analyses or evidence that we can develop that could speed this therapy to children in Europe that are waiting for it. Because again, I will say, and I know it sounds self-serving, but having been present, I think that the eteplirsen presentation and discussion was impressive and only makes us more resolute that children in Europe amenable to exon 51 skipping ought to have availability of eteplirsen, otherwise known as EXONDYS 51 in the U.S., sooner rather than later.
Just to follow up, is that re-review timeline four months? I know, I think it was that with another company I dealt with, but just wanted to get your view on that. Thanks.
Yeah, that is exactly correct. It's our understanding that it's approximately four months. The entire re-exam, including the SAG, as we understand it, ought to be complete before the end of 2018.
All right, great. Thanks.
Thank you very much.
Thank you. Our next question is from Brian Abrahams of RBC Capital Markets. Your line is open.
Hey, thanks very much for taking my questions. A couple questions on microdystrophin gene therapy. I'm just wondering, when we look towards June 19th, how interpretable, I guess, additional data beyond microdystrophin expression will be. Will we see or be able to interpret functional data or any biomarker data or anything else related to microdystrophin? Just sort of wondering, obviously, we can maybe infer some confidence in the vector and the approach based on the MyoNexus deal. I'm just wondering if anything you or the physician group may be seeing clinically or even pre-clinically that might improve confidence in the durability of gene therapy in muscle overall. I'll hop back in the queue. Thanks.
Yeah. Thank you so much for the question. First of all, as it relates to the data, so what we will see in June 19th is a couple of very important issues, in fact, seminal issues. We'll see dystrophin expression through Western blot. We'll also see both localization and distribution through immunohistochemistry. We'll get not only to the extent to which dystrophin is being expressed and the amount of dystrophin being expressed, but also we'll get localization at the sarcolemma and distribution, which will give us a strong view, at least preliminarily, on the functional nature of the dystrophin that's being produced. We'll also likely get some biomarkers. We'll likely get to look at some biomarkers and make some conclusions on biomarkers. As it relates to functional endpoints, it will remain to be seen. This will be only a few months out for both these children.
The likelihood that we'll have functional endpoints given their young age and the like that would be interpretable is probably a little lower. I would expect a little less on that than biomarkers and what we're really looking for right now, which is dystrophin expression, localization, and therefore implied function. As it relates to durability, we have a fairly significant amount of pre-clinical work that gives us some comfort around long-term durability, and we'll see a lot of that on June 19th, and there'll be discussion from both Doctors Mendell and Rodino-Klapac as it relates to that. I think one of the most significant issues that relates to durability will be the amount of expression.
I know there's already been pre-clinical work that says that at relatively robust expression levels, that the probability of having long-term durability is much higher. Obviously, it'll be sort of a virtuous cycle. If we have robust expression, then obviously we can start getting comfortable that even with some diminution over time, that durability will be sufficient to continue to confer significant functional benefit. That's kind of the way we're looking at June 19th.
Thanks, Doug.
Thank you very much.
Thank you. Our next question is from Salveen Richter of Goldman Sachs. Your line is open.
Thanks for taking my question. Just a couple from me. One is, in light of this partnership today, how do you see Sarepta evolving as a company? Are you just a broader muscular dystrophy company or with a bunch of technologies that you're going to pursue, or do you see yourselves expanding into other disease areas?
Thank you very much for that. First of all, I want to say this before I move on, because I just want to make sure we never lose sight of the fact that we are a DMD company. As we will expand beyond DMD. I don't want anyone to get the impression that we're ever leaving DMD. We are focused on and committed to bringing a better life to children around the world who suffer from Duchenne muscular dystrophy across, hopefully, as many exons and exon mutations as possible. Beyond that, we do have the intention of becoming a very significant and meaningful genetic medicine company over time. We likely mean that in two ways. On gene therapy, we're building a significant gene therapy expertise across a number of different ways.
From a talent perspective, from an asset perspective, from a manufacturing perspective, et cetera. Then we will bring on assets that make sense, additional gene therapy assets and targets that make sense to continue to drive benefit to folks that have rare disease. It may very well, as relates to gene therapy, go even beyond neuromuscular disorders. We will look at that on a case-by-case basis. This is the perfect next step today with limb-girdle, because it is one step over. It's not an enormous reach. The beauty of limb-girdle is, I should say, is epidemiologically, it is about the same size as DMD, and we have five gene therapy programs in limb-girdle, and that represents about 70% of limb-girdle. Sort of compare that to DMD, and eteplirsen, for instance, is 13% of DMD.
Our limb-girdle will be about 70% of about the same epidemiological size. I would imagine with gene therapy, we'll do other neuromuscular disorders and maybe even move beyond other neuromuscular disorders, if that makes sense. On the RNA side, there's two ways to look at the RNA side, and we're doing the work right now and building out our strategy right now. Particularly as we see positive signals in our PMO, we have the opportunity to move into other rare disease areas with our PPMO as well. In that area, we will likely focus our attention and interest and dedication to what we really know well, which is neuromuscular and also CNS. If we see positive signals in PPMO, I imagine there'll be those who will be interested in partnering with us even beyond that. We would certainly consider that at the time.
If you look across these, if you sort of think about the future and the vision of Sarepta across the pipeline, understand that, particularly as it relates to DMD, there is a real value to being the player in RNA as well as the player currently in gene therapy, because there is a real opportunity to benefit these children. Hopefully not just children now, but also adults as people age, by giving them combination therapies of exon skipping to benefit them, and then also gene therapy to transform them, both pre-gene therapy and post-gene therapy. That's the way we're looking at our vision into the future.
Thanks. At your R&D day, will we see data on three patients out to three months, or will we see data on more patients? What about the two other DMD programs that you are conducting? With the MyoNexus program, any clarity you can give us here about the pre-clinical data that you've had to date, and then with regard to your vector constructs, how similar are these to the Nationwide Microdystrophin Program?
First of all, let's walk through it. As it relates to the microdystrophin program, we'll have at least five patients dosed by June 19th, but we'll actually have biopsy data that will be analyzed very likely on two. There would be a hope that we could have three, but it's unlikely, just given the process and the timing of taking biopsies and getting the Western blot and the biochemistry done. It is almost certainly the case that we'll have two patients that we'll be able to present biopsy data on with respect to that. I'm sorry, the other two questions were-
Construct.
Yeah. On the construct, the short answer is that again, as Dr. Louise Rodino-Klapac was the co-inventor of microdystrophin as well as the inventor of the limb-girdle constructs, cassettes, et cetera. There is enormous similarities. One of the interesting things about limb-girdle is it is in many ways, not just phenotypically, but also underlying, very similar to DMD. This is the very complex that is associated with dystrophin, and in fact, not in all five of them, but in, I think three of the five, they result in a lack of dystrophin, which is why they have a significantly serious phenotype. There's a lot of construct similarity between these two, not just in the vector, of course, rAAVrh74, which we're getting increasingly confident about, but also in just the way they were built and the effect. They're neuromuscular, and the promoters are similar, et cetera.
They're very, very similar. I think you had a third question, and I apologize for that.
Just anything you can give us on the preclinical data here.
The preclinical data is, we'll discuss this in depth on June 19th, I'll do a very poor job of discussing it now, other than to note that as it relates to, I think, at least two, maybe three of the constructs, there is preclinical data, and there is actually in two of them, IM data on two patients. This was back at a time, this is a little bit earlier, where there was intramuscular injections as first steps that was being done, CBER and the industry does it a different way now where we go straight to infusions because of the fact that IM essentially inoculates the children to future gene therapy programs and isn't the right approach. There were IM approaches with respect to children on at least two of these programs, and there was very positive proof of concept on both.
There was both great expression as well as correlated functional benefit, but it was from an IM perspective. We're moving with MYO-101, our most advanced program, into the clinic with patients, in an infusion way with potentially therapeutic levels that will give us really robust potential data by the end of 2018 into the first quarter of 2019.
Thank you.
Thank you. Our next question is Anupam Rama of J.P. Morgan. Your line is open.
Hey, guys. Thanks so much for taking the question. Maybe just a couple logistical questions on the EU regulatory process. What kind of input do you guys have on the scientific advisory group that's going to be convened? I believe after the trend vote, 30 days later you get a final vote, but does that shift to year-end or 2018 now or is it viewed as two separate processes? I guess a final question is what gives you confidence that the EU situation could result in a win here the second time around? Thanks so much.
Thanks for that. A couple things. First, the scientific advisory group will be chosen obviously by the CHMP and EMA. There obviously are a limited number of real luminaries in DMD in Europe, so we can envision who some of those potential participants would be. I think they're going to focus on trying to find physicians who are general thought leaders in Duchenne muscular dystrophy as well as some other neuromuscular participants. You are right about the process. What we're announcing right now is a trend vote. It's not the actual vote. The actual vote will occur toward the end of May, 30 days after the oral explanation. For our planning purposes, we don't envision that the final vote will be any different than the trend vote.
We'll have 15 days thereafter to commence the re-examination process, and that will be approximately a four-month process. The SAG, or the scientific advisory group process, will occur within that construct. It will occur within that re-examination process. That will all occur fairly rapidly inside of that process. There's always the opportunity, independent of that, to look for scientific advice, separate from what we're currently doing, because the re-exam, so you understand, doesn't permit us to provide additional evidence. You're not allowed to do that in the re-exam. This is really looking at the analysis and re-analysis of the data that we've done in the re-exam. As far as confidence goes, I want to be very clear about this. I don't want to create the false impression that we don't have a significant challenge in front of us.
As we have said, I think hopefully many times leading up to the oral explanation, the standard is very high as set by the CHMP for this review, and that doesn't change in the re-examination. It remains a very challenging issue. The one thing that we are at least hoping for is that we will all get additional insight from true Duchenne muscular dystrophy experts, given that we are told that we will get a SAG in connection with the re-exam. That at least gives us some hope that our re-exam will be informed by Duchenne muscular dystrophy expertise. I don't want to create the false impression that we don't have a significant challenge on our hands. We do. We have a significant challenge on our hands. We're going to give it a full-throated re-examination effort.
We are hoping that the SAG will be meaningful and helpful in that process, and we'll have that done by the end of the year. Separate and apart from that, we'll begin to consider what additional steps we could take apart from the re-exam if the re-exam itself is ultimately unsuccessful.
Great. Thanks for taking our questions.
Thank you.
Thank you. Our next question is from Matthew Harrison of Morgan Stanley. Your line is open.
Great. Good afternoon. Thanks for taking the questions. If I could just maybe shift to ESSENCE for a second. Can you just talk about what the steps are to adjust that study to be able to use the 48-week biopsy for exon 45, and what sort of consultation you have to take with the FDA to be able to do that, and sort of what the pluses and minuses for that study would be if you were to do that? Separately, could you just also talk a little bit about from EXONDYS 51 from the commercial side, maybe just be a little bit more specific about the permanent J-code headwinds and exactly do you expect that to persist into the second quarter, or do you think that's completely finished now in the first quarter? Thanks.
Right. Okay, dealing first with the first question. The short answer on the ESSENCE and the potential modification of ESSENCE is that we're calling a Type C meeting with the agency. We've already teed it up with the division, and we're going to have a Type C meeting where we discuss the mechanisms and protocol that would be associated with looking at the biopsies from 25 exon 45 amenable patients that have been treated with casimersen for one year and looking at dystrophin expression. The goal of all of this, so we're quite clear, is that in the event that we're able to do that, and in the event that casimersen dystrophin expression is robust, and at least in preclinical models, which so far have shown themselves to be very predictive of what we'll see in human clinical trials, we should see robust casimersen expression.
By the way, in preclinical models, casimersen is about as efficient in the production of dystrophin as golodirsen was, and as you know, golodirsen was 3 and a half times as efficient as eteplirsen. That's the goal of all this. What is the issue, and why do we need to make sure we're very careful, and we talk in depth with the agency about that? That's a very simple thing. ESSENCE is going to be the confirmatory trial for golodirsen. We're in a really good position with that. It will also, by the way, in the event that we're able to do this, become the confirmatory trial for casimersen as well.
We want to make sure that we walk through this issue with the division and ensure that we have their buy-in on doing this and their comfort that we're not doing anything through our protocol that would compromise the integrity of ESSENCE. Because, in the event that we compromise the integrity of ESSENCE, we would compromise the ability to get approval for golodirsen and ultimately casimersen. That's the concept there. We'll only know the FDA's view, obviously, when we have our Type C meeting, and hopefully, either they agree with this or they have additional protocol concepts that we'll obviously adapt to. In the event that the agency is very uncomfortable with this, then we wouldn't do it because it would compromise both casimersen and golodirsen. If we can do it, just so we're clear, it would put casimersen approval only about nine months after golodirsen.
It really would be valuable to the 8% of children that are exon 45 amenable and waiting for a therapy. On the commercial side, I'd say broadly speaking, then I'll turn it over to Beau, broadly speaking, this J-code issue was a Q1 issue. It's not a Q2 issue at all, but we'll let Beau provide additional color on this.
Doug has it correct. Switching from a temporary J-code to a permanent J-code, all the patients that have medical benefits will switch over, and it's really the majority Q1, a little bit into Q2, but for the most part, it's over.
Great. Doug, if I can just follow up just briefly. On ESSENCE, is the issue an unblinding issue that they would be worried about? Can you maybe just talk maybe a little bit more specifically about what you think that the issue may be? Is there a timeline here for the Type C meeting and when you think you'll be able to provide feedback to us on if you can make a modification or not?
You've hit the nail exactly on the head. The concern would be whether we've created the right sufficiently rigorous protocols around the look at biopsies so that we have avoided any concerns with compromising the trial through some unblinding that would compromise the integrity of the trial. That's the issue. We think we have good protocols for it. We think we've been very thoughtful about it, but we really want to sit down with the division, get their input, ensure that they agree with us. If they don't, but they have alternative ideas, adapt them, obviously, and then we'll make the call. We are in the process right now of requesting the meeting. We don't have a meeting set yet. We're requesting the meeting even as we speak.
We probably are at least three months or so out from our ability to provide a meaningful update. Certainly, by the end of the year, we'll know exactly where we are, and maybe by the third quarter we'll have a good view on where we are. We'll keep you informed as we're moving along with it.
Great. Thanks very much.
Thank you. As a reminder, ladies and gentlemen, please limit yourselves to one question. Our next question is from Joseph Schwartz of Leerink Partners. Your line is open.
Great. Thanks very much. Congrats on all the progress. You've obviously been making some progress with follow-on candidates. How sufficient is the oligo manufacturing that you've been putting into place, and do you think it can keep pace with multiple PMO approvals? We've been hearing that some CMOs are pretty stretched with all of the activity in the industry, and your oligos are on the more demanding side of the complexity spectrum.
We have, Sandy can comment on this. We have no current concerns regarding supply issues with our oligos. We're in great shape.
Yeah, that's really what I would say as well. We really have no concerns. We have a significant capacity that we've built up with multiple backups, and we also have an inventory built up of both subunits as well as APIs for all our three lead programs, which is obviously 51, 53, and 45 for both PMOs and PPMOs. Joe, we have no concerns on the manufacturing front.
Okay, great. Thanks. I'll leave it to that one question.
Thank you.
Thank you. Our next question is from Tim Lugo of William Blair. Your line is open.
Hi. Myles Minter on for Tim Lugo. Congratulations on the MyoNexus deal. I think it fits in really well with your gene therapy. Looking forward to you becoming a major player in the field. Just a few questions, if we can turn to GALGT2 therapy. The primary endpoint for that trial is CK-MB. I'm curious to hear what additional endpoints or what the primary therapeutic portfolio, if you like, of what you're looking for in that trial to progress that forward. When those patients are going to transfer from the dual femoral artery injection into the more mainstream IV that you're seeing with the microdystrophin programs. Thanks.
Thanks. Yeah, thank you very much. As relates to GALGT2, two things. One, for your first question is an excellent one that we need to do more work on before we get to the point of actually looking at the biopsy data and make meaning of it, which is we've got to come to a view, and we're certainly informed by Dr. Flanigan, who I think already has a pretty advanced view on what success looks like when we look at the biopsies. GALGT2 is really fascinating because it's an interesting alternative to microdystrophin. It might have great utility even beyond DMD, given the fact that the thesis is that not only does it increase utrophin expression, which acts as a surrogate for dystrophin, but it also should strengthen the sarcolemma in a general sense because it recruits proteins.
We've got to do a lot of real thinking before we go out and talk about what success looks like there and what exact expression we're looking for. It's something that we're going to have to struggle with for a bit with Dr. Flanigan. As it relates to moving over essentially to full infusion, one of the reasons that in a sense, we're on pause, Dr. Flanigan's dosed one child, the child is doing brilliantly, no issues from a safety perspective. He believes that we really ought to be moving to full infusions, and he's actually in the process of getting his IND updated so he can do both full infusions and also accelerate the pace of patients faster than just once a month. We're in that process right now.
The goal is actually to go from this forward to get the IND updated and to go full infusion, as opposed to this lower limb perfusion, which is where we are right now with the IND.
Yeah. Fantastic update there. Congrats.
Thank you so much.
Thank you. Our next question is from Debjit Chattopadhyay of H.C. Wainwright. Your line is open.
Good afternoon. Both of your lead gene therapy programs and as well as the recent partnership, they all use rAAVrh74. Assuming age and exercise-induced vector expression loss, have you or your CROs looked at retreatment strategies, or is the long-term goal supplementing with exon skipping primarily with PMO?
Yeah. Thank you. That's a great question. Both strategies are inside of our pipeline. Going to the latter part first, there is already existing literature that describes the potential benefits that exist from a combination of gene therapy and exon skipping through PMOs or PPMOs. We're actually doing additional work to actually round out that hypothesis and look at the benefits. As it relates to redosing, we are actually working already with Dr. Louise Rodino-Klapac and Dr. Mendell about strategies in the future for redosing. Dr. Rodino-Klapac has done historical work. She has some very good theses on how that can be done, and we're funding that even as we speak. Obviously it's a bit out, but it is definitely our goal.
If we're able to become successful with microdystrophin, one of the things we're going to certainly want to do is look down the road for redosing. If it turns out in 20 or 25 years, these adults then would benefit from a redose.
The PPMO program, are you halfway through the single ascending dose part right now? Thanks.
On the PPMO, yes. Is that on PPMO?
Yeah, I know we're halfway through.
Oh, halfway through. No. Unfortunately, with the single ascending dose study, which is a very traditional three-by-three study, it is a very conservative and therefore a relatively long process for dose escalation. We really started at extremely subtherapeutic levels, and we're moving up very slowly, as you can imagine. People have asked, how do we feel about it? The answer is we feel great about it, but I wouldn't take a ton of comfort around the fact that we don't have any issues right now simply because we are still significantly subtherapeutic. It'll be the end of the year before we have real significant insight.
Thanks so much.
Thank you very much.
Thank you. Our next question is from Christopher Murray of Nomura. Your line is open.
Hey, good afternoon. Thanks for taking the question. Maybe one for Beau real quick, just on the EXONDYS number. Any ex-U.S. map sales in that number, and then when should we anticipate any color on that or inclusion of ex-U.S. sale? Perhaps one for Sandy, just to squeeze it in there, the gene therapy product with MyoNexus and your DMD program, I assume, is being made nationwide. How should we think about manufacturing the build-out? When will that occur? Thank you.
Hi, Chris. Yeah. Even at the J.P. Morgan Conference, we hinted around that the ex-U.S. sales were going to be insignificant, that's exactly what it was this case. We're going to hit the target of $295 million-$305 million this year, maybe a few million dollars will come from ex-U.S. sales, but it will be insignificant just as it was this quarter. The majority of sales happen from U.S.
Thanks for your question, Chris. In terms of gene therapy GMP manufacturing, we've made a lot of progress. I'll quote your words as you said, "$100 million goes a long way to fixing the gene therapy manufacturing problem," that's exactly the way we see it. We've assembled quite a few people in our gene therapy manufacturing group, we will have a significant update in the near term. Stay tuned.
Okay. Thank you very much.
Thank you. Our next question is from Ritu Baral of Cowen and Company. Your line is open.
Hey, guys. Thanks for taking the question. Just continuing client debate about the degree of microdystrophin expression needed to constitute success for when you unveil the data in June. Doug, you mentioned localization, distribution as variables, and also, the higher the better for durability. Is there a number that you have in your head where you say, "Yeah, this is a home run?" Is there a number where you say, "Okay, maybe we have to think about dosing up"? And given the seemingly good safety you've seen so far, why not do that now? Why not dose up?
Great. A couple answers. First of all, on dosing, just to go there. One of the great things about working with Dr. Rodino-Klapac, as well as Dr. Mendell at Nationwide, is that we really do stand on the shoulders of just a ton of pre-clinical work that justifies the safety of our vector. As an example, we have the ability, from a safety margin perspective, to dose up. We're at two times 10 to the 14th, which interestingly is the highest dose that anyone has ever received in gene therapy. We could actually dose up to six times 10 to the 14th. The reason that we're not doing that is simply because in pre-clinical models, two times 10 to the 14th has shown very robust expression in animal models.
Our current thesis is that 2 times 10 to the 14th is an appropriate dose for robust expression. In the event that we didn't see robust expression, we could reconsider that, but that is not our working thesis right now. Sort of what is success? There's two ways to look at it. Informed by what we know about dystrophin, you could actually have fairly modest expression and still believe it's robust. I think, as we all know, very small amounts of increased dystrophin properly localized confers benefit. Not only do we know that in eteplirsen and golodirsen, but we know that from nature. You can look at exon 44 amenable children. They have only background amounts of exon skipping that they get naturally, just like it confers by eteplirsen, golodirsen, or casimersen.
They show either somewhere between undetectable amounts in Western blot to what we've done, which is show that even after 19 years, they might have around 2%. They have a clinical phenotype that is significantly different. They stay out of a wheelchair about three to five years longer. Small amounts matter. What we're kind of looking at, if you look at it from that perspective, we would say 5% would be significantly higher than anyone's ever been able to achieve with dystrophin production. It would clearly be a benefit. We'd consider 5% acceptable. We wouldn't consider it a home run by any stretch. 10% or above, I think would be a home run on a Western blot perspective for microdystrophin.
I will also say, for those who go and check the background, in animal models, we're seeing significantly greater expression than that, but that isn't what we need for success. I'd say, if we saw 10%, we would have a very significant therapy on our hands.
Doug, does that factor in the durability comment you made earlier? Do you need 15 to ultimately steady state at 10?
I think that's a really good point. I think if we had 5% dystrophin, which is at three months, which is literally 500% higher than we see with golodirsen at one year, that would be really significant. The thing that would give us some pause is long-term durability. When does 5% become 4% or 3%? How many years does that take? To your very good point, if we have 10% or better yet, 12 or 13 or 14%, we can start getting comfortable that even if there is a loss of durability over the long term, we'll stay above the therapeutic amount for quite some time.
The other thing that I would say, again, going back to what we've seen in other models, Dr. Voigt, as an example, has a paper on this issue, which is on the durability issue, we stand at an interesting place as a company because we have RNA and gene therapy, and we have the ability to use exon skipping, which will enhance durability. What Dr. Voigt's paper shows is, at least in animal models, if you use exon skipping in advance of gene therapy, you reduce any loss of the early vector by something like eight times. The hypothesis is if you use some form of exon skipping, either PPMO or PMO afterwards, you're very likely going to increase the long-term durability. We stand at an interesting place given the fact that we have a multi-platform genetic medicine approach to DMD.
Understood. Thanks for taking the question.
Thank you. Our next question is from Hartaj Singh of Oppenheimer. Your line is open.
Hi. Thanks for the question. I just had one quick question. Assuming you have positive data from the gene therapy programs and the update we get in June, how do you sort of see the next step in terms of your clinical trials? What would you go to? Would it be a trial analogous to what you ran with golodirsen, the phase I/II, which could then get you to accelerated approval? Just any thoughts and color there would be really appreciated. Thank you.
Thank you for that. Let me say that we are going to give an update on June 19th about our approach to gene therapy, and to the extent that we have positive data, our approach to bringing that therapy as rapidly as possible to patients in the U.S. and then ultimately around the world. I don't want to go into any detail now on that simply because we're working through some issues, and we're going to save that for June 19th, other than to say this, it won't come as a surprise to those who know our approach. We feel a great sense of responsibility to patients suffering from Duchenne muscular dystrophy in the U.S. and around the world.
We understand that every day, these patients around the world, and there's some 70,000 or 80,000 of them, are suffering irreversible damage that even gene therapy won't fix. We can stop the decline. We feel a sense of moral responsibility to move rapidly. What you will see on June 19th, in the event that we have positive data, is a plan that will be very ambitious in our effort to bring the therapy to patients that are waiting for it.
Great. Thank you.
Thank you very much.
Thank you. Our next question is from Liisa Bayko of JMP Securities. Your line is open.
Hi, this is John on for Liisa. Thanks for taking the question. Just a quick follow-up on the CHMP vote. You just noted that the trend vote was negative. I was wondering what the actual vote was on and what the voting results were. Thank you very much.
We don't have that with the final vote. We just know that the trend vote was negative, and we also know that representatives from EMA were quite direct with us that the vote was not a vote that the therapy was ineffective or that the risk-benefit was established to not be there, but rather it was lingering questions around the issues associated with the use of external controls in the three studies. There were a number of issues, but these are the biggest ones, it seems, is that issue, and the second significant issue is that we have three studies, and across all three studies, both ambulatory and non-ambulatory, we showed a significant arrest of pulmonary decline in both ambulatory and non-ambulatory patients.
You can see this because there's an 8-K that has the entire presentation in it. I think there were questions from the rapporteur about the clinical meaningfulness of pulmonary decline and arresting pulmonary decline. That's why our hope is that in the re-exam with the SAG, we can get additional insight into the clinical importance of slowing pulmonary decline, which, of course, we believe is important given the fact that children with Duchenne muscular dystrophy almost always die as a result of either cardiac or pulmonary issues.
Thank you. Our last question is from Yun Zhong of Janney. Your line is open.
Hi, thanks for taking the question. This might be a follow-up question to a previous question on ex-U.S., and I believe you talked about an expanded access program in Europe at one point. I just wonder if you are able to share any information on the current status of that program and also on the re-examination. Is it possible at all that you can submit any new information, data, or is it going to be purely based on whatever you have presented?
I'll answer the latter question, and then the first question, Beau can provide additional color on our Managed Access Program or MAP program. As it relates to the re-exam, the short answer is that you can't provide new evidence. As I understand, you could probably provide new analyses of preexisting evidence and data, but we can't provide additional evidence. For instance, we have additional PROMOVI patients and additional evidence from additional PROMOVI patients as that trial's ongoing, but we can't insert that into the re-examination process. That would have to happen through a separate process that we would certainly consider in the event that we were unsuccessful in the re-examination. With that, I would turn it over to Beau to comment on the MAP program.
Yeah, we set up a MAP program, really, in Europe, it goes very slowly. It goes slowly across the globe. Really, 2018, we were not expecting a lot of sales. As I mentioned to Chris earlier, this year will be insignificant from a MAP program. We've set up the basic infrastructure. Now we have been hiring MSLs, medical directors to support the staff as needed, but it's going to be insignificant in 2018 regardless.
Okay, thank you.
Thank you. That does conclude our Q&A session for today. I'd like to turn the call back over to Mr. Doug Ingram for any further remarks.
Thank you everyone for joining today's call. I appreciate that you're joining us, and I appreciate the questions. We look forward to updating you on our ongoing progress in the coming months, including on our R&D Day, which, as we've said, is scheduled for June 19th. Have a lovely evening.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a good day.