Sarepta Therapeutics (SRPT) remains a solid long-term buy in my opinion. There are several reasons why I believe this is going to be the case. The biggest reason of all is that as of today, sales for its Duchenne Muscular Dystrophy (DMD) drugs have been achieving huge year-over-year increases. Not only that, but there has been about 20 consecutive straight quarters of revenue growth. To that end, there are two additional treatments in the pipeline specifically being developed to keep such a trend moving forward. What two drugs are these? One of them is the next generation PPMO drug, known as SRP-5051, which is being developed to target exon 51 skip amenable DMD patients. This mutation of DMD is found in up to 13% of these patients, but it is nice to see that Sarepta is developing a drug that could potentially improve upon the currently available eteplirsen being sold by it. Part B of the pivotal MOMENTUM study is currently exploring the use of SRP-5051 in patients with the mutation of the dystrophin gene amenable to exon 51 skipping. Once results are available, with primary endpoint being met, then it can seek for Accelerated FDA approval for SRP-5051. Besides this endeavor, another way it is increasing its footprint in the DMD space is a gene therapy approach. This involves the use of gene therapy SRP-9001, which is currently being explored in a pivotal phase 3 study known as EMBARK. The trial is expected to be fully enrolled by the 1st half of 2022, with data out shortly thereafter. With successful results in this phase 3 study, then it will definitely capture a huge part of the DMD market.
Sales Growth Has Remained On Track And Likely To Continue
The best thing about Sarepta Therapeutics is that it has three FDA approved drugs to treat patients with Duchenne Muscular Dystrophy. These three FDA approved drugs are as follows:
- EXONDYS 51 – Eteplirsen
- VYONDYS 53 – Golodirsen
- AMONDYS 45 – Casimersen
With the last RNA exon skipping drug approved for the company thus far, AMONDYS 45, Sarepta now captures about 30% of the entire DMD market. Is there potential to expand the market even further when considering its RNA exon skipping drugs? For sure and that’s what the company is exactly working on in the discovery / preclinical phase. Other mutations seen in DMD which the company is planning to develop drugs for are:
- Exon 52
- Exon 43
- Exon 44
- Exon 50
- Exon 55
- Plus several other PPMOs
Exon 52 is in the preclinical phase, while the other four drugs are currently in the discovery phase. It will take time to bring these drugs into human studies, but it is nice to see that Sarepta is already pushing forward toward expanding its presence in the DMD market further with other RNA exon skipping drugs.
I noted above about the drug SRP-5051. It is being developed to target exon 51 skipping amenable DMD patients, like currently FDA approved EXONDYS 51 (eteplirsen). Therefore, SRP-5051 is going after the same mutation, but the hope is that this next generation PPMO drug provides superior efficacy over EXONDYS 51. SRP-5051 is currently being explored in a pivotal study known as MOMENTUM. Specifically, PART B of the MOMENTUM study, which is testing out this next generation peptide-conjugated phosphorodiamidate morpholino oligomer (PPMO) to treat patients with Duchenne who are amenable to exon 51 skipping. The study is going to recruit about 20 to 40 patients who are between the ages of 7 and 21. Both ambulatory and non-ambulatory patients are going to be recruited into it. If this trial is successful, with primary endpoint being met, then Sarepta will be able to seek Accelerated Approval from the FDA for SRP-5051. Not only this, but there is potential for improved efficacy along with less frequent dosing.
Even setting aside the possibility that Sarepta might be able to expand the target DMD market it is going after, it is still seeing some massive growth in sales of its drugs for this particular space. Net product sales for Q3 of 2021 reached $ 166.9 million, which is a 37% year over year increase compared to the same quarter in 2020. It also raised its sales guidance by $ 40 million, stating that it would end 2021 with product revenue of between $ 605 million to $ 615 million.
Gene Therapy Candidate In Pivotal Study Holds Potential To Capture Most Of DMD Market
As I described above, Sarepta is pushing forward to target specific genetic mutations of DMD patients with its PPMO drugs. However, at the same time, it is moving forward a potential gene therapy by the name of SRP-9001. The use of this gene therapy is being explored in the EMBARK study, which intends to recruit up to 120 patients with DMD between the ages of 4 and 7. The primary endpoint is going to be something you typically see in DMD studies, which is North Star Ambulatory Assessment (NSAA) score. The change in NSAA total score will be measured from baseline to week 52. SRP-9001 will be compared to placebo to determine efficacy. This study is expected to complete recruitment in the 1st half of 2021, with data being released shortly after. One thing to note is that SRP-9001 holds the potential to capture a large part of the DMD market, but not the entire market. Why is that? It is because the study is not recruiting specific types of mutations. Such mutations not eligible to be recruited into the study are those with mutations between or including exons 1-7 and those with exon 45. Regardless, SRP-9001 can go after a large segment of the DMD population. The primary endpoint NSAA is an important one. That’s because it is a 17-item rating scale used to measure functional motor abilities in outpatient children with DMD. In essence, it measures progression of the disease for the individual and can also determine if current treatment options are working.
Will the pivotal EMBARK study be successful? It’s hard to say, but there were some preliminary results released from several studies. These studies done by Sarepta are as follows:
- Study 101
- Study 102
- Study 103
Across these 3 studies, it was noted that the gene therapy treatment was tolerable. Study 101 had the best data but only 4 patients were recruited, where patients given SRP-9001 had an 8.6 point improvement in NSAA. The other two studies where patients took the gene therapy, Study 102 and Study 103, the patients had a 2.9 point and 3.0 point improvement in NSAA respectively. Ultimately, SRP-9001 has to beat out placebo and help patients achieve a statistically significant point improvement compared to placebo.
Potential Gene Therapy Competitors For Treatment Of Patients With DMD
Sarepta’s SRP-9001 holds huge potential, but the first step is to achieve pivotal results upon release in 2022. Besides the need for succeeding in the clinical trial, there are two other pharmaceutical companies who are developing a gene therapy for patients with DMD. They are Pfizer (PFE) and Solid Biosciences (SLDB). While they are possible competitors, they both have had trouble with their respective gene therapies. For instance, Pfizer had to halt a phase 1b study for its experimental gene therapy PF-06939926, which is being developed to treat patients with DMD. The reason why was because there was a patient death and so it had to pause it. It’s hard to say what will happen to the phase 3 CIFFREO study, where it dosed the first patient January 7, 2021. What happens now with Pfizer’s program is highly dependent upon the conclusion of the investigation of the patient death. Solid Biosciences is the other potential competitor. It had a problem at first when its DMD gene therapy SGT-001 was placed on clinical hold. Since then, it has been able to get the clinical hold lifted. However, it had to alter its manufacturing process and put a risk mitigation strategy in place. This means that its gene therapy may suffer in terms of efficacy, because of the need to change it. Having said that, it continued dosing for its phase I / II IGNITE DMD study using SGT-001 for patients with DMD. In the 1st half of 2022, it will release results from this study. Hopefully, the efficacy lives up to expectations after having to alter the gene therapy process to get the hold lifted. It may take a while, but there is a potential for a comeback for Solid Biosciences if it can achieve success with its next generation gene therapy. It is advancing a different type of gene therapy known as SGT-003, which is a next generation adeno-associated virus (AAV) gene therapy. The effort here is that it is not like AAV9 (SGT-001) that had a lot of safety issues. Whether this next generation AAV gene therapy SGT-003 does better in terms of safety / efficacy will not be seen for quite some time. That’s because currently in the pipeline it is only in preclinical testing.
According to the 10-Q SEC Filing, Sarepta Therapeutics had $ 1.6 billion in cash as of September 30, 2021. As I noted above, the company is generating sales for its three FDA approved DMD drugs. Net product sales from them for Q3 2021 were $ 166.9 million, a 37% increase. The biotech also recognized about $ 22.5 million of collaboration revenue in the most recently reported quarter. The primary reason for this collaboration revenue was the agreement Sarepta made with Roche (OTCQX: RHHBY). That is when Sarepta received an upfront payment of $ 750 million and $ 400 million equity investment from it for ex-US rights for SRP-9001. That’s right, Roche has rights to sell this gene therapy outside the United States. Still, Sarepta maintains US rights and the huge sum of money it got upfront from Roche was a big boost in being able to fund its massive pipeline.
Risks To Business
The biggest risk I would say would be the release of results from the pivotal phase 3 EMBARK study, which is using gene therapy SRP-9001 to treat patients with DMD. While the gene therapy did well in several of the early studies done above, there is no guarantee that the primary endpoint of NSAA total score of 52 weeks will be met. There are two things to keep a logical expectation of such data to be released likely in 2022. The first is that the EMBARK study is recruiting a lot more patients, about 20 to 40. The other prior studies recruited fewer patients. Also, these other studies deployed natural history studies of NSAA scores to compare to, whereas EMBARK is going to be far more critical, because there is a placebo involved. The comparison of SRP-9001 to the natural history study results are still good though, but beating out placebo is what will ultimately matter to the FDA. A second risk would be the MOMENTUM study. The goal is to see that the next generation PPMO drug SRP-5051 performs better than EXONDYS 51. I would say that the drug has to perform better than it and not just match it in terms of efficacy to be considered relevant.
Sarepta Therapeutics is a good long-term biotech to own. Even setting aside SRP-9001 and SRP-5051, it is still growing revenue year over year with its FDA approved DMD drugs. I would not bet against 20 straight quarters of sales growth. Having said that, the company is moving forward in the pipeline to target other amenable exon skipping mutations for DMD. I highlighted them above being: Exon 52, Exon 43, Exon 44, Exon 50 and Exon 55. In addition to many others like:
The point here is that there is so much additional potential when it comes to targeting mutations for these DMD patients. I think this is great, because it is not reliant on SRP-9001 being successful. With continued revenue growth for the DMD drugs and a large pipeline with 40+ drugs in development, I believe Sarepta Therapeutics is a great long-term biotech to own.