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Edited Transcript of SRPT earnings conference call or presentation 7-Aug-19 8:30pm GMT

Q2 2019 Sarepta Therapeutics Inc Earnings Call

BOTHELL Aug 14, 2019 (Thomson StreetEvents) -- Edited Transcript of Sarepta Therapeutics Inc earnings conference call or presentation Wednesday, August 7, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alexander G. Cumbo

Sarepta Therapeutics, Inc. - Executive VP & Chief Commercial Officer

* Douglas S. Ingram

Sarepta Therapeutics, Inc. - President, CEO & Director

* Gilmore O'Neill

Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer

* Ian M. Estepan

Sarepta Therapeutics, Inc. - Senior VP of Corporate Affairs & Chief of Staff

* Louise Rodino-Klapac

Sarepta Therapeutics, Inc. - SVP of Gene Therapy

* Sandesh Mahatme

Sarepta Therapeutics, Inc. - Executive VP, CFO & Chief Business Officer

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Conference Call Participants

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* Alethia Rene Young

Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research

* Brian Corey Abrahams

RBC Capital Markets, LLC, Research Division - Senior Analyst

* Brian Peter Skorney

Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

* Christopher N. Marai

Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology

* Danielle Catherine Brill

Piper Jaffray Companies, Research Division - VP & Senior Research Analyst

* Joseph Patrick Schwartz

SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst

* Justin Alexander Kim

Oppenheimer & Co. Inc., Research Division - Associate

* Liisa Ann Bayko

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Mark William Connolly

Crédit Suisse AG, Research Division - Research Analyst

* Matthew Alexander Bannon

JP Morgan Chase & Co, Research Division - Analyst

* Maxwell Skor;Morgan Stanley;Biotechnology Equity Research Associate

* Peter B. Kim

Barclays Bank PLC, Research Division - Analyst

* Ravindra Mehrotra

Evercore ISI Institutional Equities, Research Division - Senior MD

* Ritu Subhalaksmi Baral

Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst

* Ross Howard Weinreb

Goldman Sachs Group Inc., Research Division - Research Analyst

* Shawn Michael Egan

Citigroup Inc, Research Division - Senior Associate

* Tazeen Ahmad

BofA Merrill Lynch, Research Division - VP

* Timothy Chiang

BTIG, LLC, Research Division - MD and Specialty Pharmaceutical & Biotechnology Research Analyst

* Timothy Francis Lugo

William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research

* Vincent Chen

Sanford C. Bernstein & Co., LLC., Research Division - VP

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Sarepta Therapeutics Second Quarter 2019 Earnings Call. (Operator Instructions) As a reminder, today's program is being recorded.

And 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.

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Ian M. Estepan, Sarepta Therapeutics, Inc. - Senior VP of Corporate Affairs & Chief of Staff [2]

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Thank you, Dimitria, and thank you all for joining today's call. Earlier today, we released our financial results for the second quarter 2019. The press release is available on our website at www.sarepta.com, and 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'll 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, many of which are beyond Sarepta's control. Actual results could materially different from these forward-looking statements, and any such risks 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. The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today based on subsequent events or circumstances.

And with that, let me turn the call over to our CEO, Doug Ingram, who'll provide an overview of our recent progress. Doug?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [3]

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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 midyear, let us linger for a moment on our progress to date. As we enter into 2019, we set an ambitious path, requiring significant execution and with much still to prove for the RNA platform could we continue to drive based on this performance, could we consistently create new PMO constructs for other populations of Duchenne and that 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, with the stellar initial results that we've seen with our microdystrophin gene therapy truly linked through to any of the other 10-plus gene therapy programs that we possess. For microdystrophin gene therapy itself, could we quickly complete the dosing of the 24 patients in our placebo-controlled trial for microdystrophin? What would be the competitive landscape for microdystrophin? Would we remain ahead of others both temporally and qualitatively? And 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 19. We also will not have an Advisory Committee meeting as a predicate to approval, which approval, if we obtain it by August 19, we'll have then 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 additive to 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.

And the landscape in our gene therapy platform has been nonetheless 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 factor, the consistency of these results further validated our gene therapy engine, the exceptional work of Dr. Louise 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 microdystrophin about 1 year ago. As we entered 2019, we appeared to be in the lead with 2 other credible companies advancing microdystrophin programs as well. Unfortunately, for those programs and more profoundly unfortunately for patients, initial results from both of those programs have been disappointing in terms of both the safety signals and resulting expression levels. And 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. And Pfizer has recently disclosed that its program is on a protocol-mandated hold while an Ethics Committee reviews its initial results.

So as compared to the landscape at the start of 2019, Sarepta's microdystrophin 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 risk of 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 that 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 lives. And 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.

So 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, so 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 3 or more internally developed therapies. But more than that, we will have more than double 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 a multiascending 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, due to 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 1 year. However, it is also the case that this 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 and 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. Now 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 power trial as is reasonably possible. We must also acknowledge that the external competitive environment has changed over the course of 2019, and 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 and certainly, we have seen nothing in either study itself that changes our confidence. The blinded Study 101, as you know, continues to perform very well. Study 102 is blinded and 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 the increase in the end in Study 2, there's less pressure to commence Study 3 in 2019, so 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 3-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. This should be complete by the end of August and should be qualified by about October of this year. We have achieved very good yields in the iCELLis unit -- 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. So 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, but 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 microdystrophin gene therapy alone or at least at a very significant advantage. And this means for planning purposes, we must ensure that we have optimized yields and process to potentially satisfy alone the need for the DMD community at launch. To that intent, -- 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 processing yields 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 microdystrophin program is informed by the external landscape and most importantly by our obligation to the communities who (inaudible). 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 a position to satisfy alone the requirements of the DMD community that we serve. And we are building on a Study 3 protocol that is designed with the goal of providing sufficient evidence to support rapid access for Duchenne patients, regardless of age, regardless of ambulatory status, regardless of mutation and regardless of country or citizenship.

So 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 5x E^13, and we obtained mean protein positive fibers of 51%, 250% of the predefined milestone of success of 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'll choose between the 2 doses for a pivotal trial. With our manufacturing partner, Paradigm, we'll also chart out a pathway for all 5 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 7 patients in our Phase II/III gene therapy program to treat MPS IIIA, also known as Sanfilippo syndrome, a devastating neurological disease that robs the life of children before the age of 15. And 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 square-foot 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 iCELLis units that we use solely for process and analytical development activity. Brammer is near completion of our 75,000 square-foot gene therapy facility in Lexington, Massachusetts. This will be a single-use site dedicated to microdystrophin 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 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. And 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. And 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 at the lab of Dr. Guangping Gao to develop novel human-derived vectors. And we have also entered into a relationship with the Institute of Myology to assist in the exploration of the combination of our PPMOs and microdystrophin. And we have the resources to execute on 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 (inaudible) 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. And we cannot take our leadership position for granted or take our foot off the accelerator, and 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 2. We must continue our yield optimization, process development and analytical development work and 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 hard working 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's working tirelessly to advance our microdystrophin program in the clinic. And I'd 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 trial for an unapproved therapy requires courage and it requires dedication. Much is asked of the children and their families in our trials, and 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 they're fighting.

And with that, I will turn the call over to Sandy to provide an update on our financials. Sandy?

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Sandesh Mahatme, Sarepta Therapeutics, Inc. - Executive VP, CFO & Chief Business Officer [4]

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Thanks, Doug. Good afternoon, everyone. Let me start by saying that we had another strong quarter. Revenues continuing to grow well with Q2 net revenue at $94.7 million.

From a business development perspective, as Doug 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 positioned 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 derisked.

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 areas 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 website. 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 onetime 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 million 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 $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 microdystrophin 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 20 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, cash equivalents and investments as of June 30, 2019.

With that, I'd like to turn the call over to Bo for a commercial update. Bo?

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Alexander G. Cumbo, Sarepta Therapeutics, Inc. - Executive VP & Chief Commercial Officer [5]

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Thank you, Sandy. Good afternoon, everyone. At midyear, 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 our existing patients remain on therapy, assist those who may be facing unnecessary access and reimbursement hurdles and identify new patients who can benefit from EXONDYS 51. We are pleased with the success of EXONDYS 51 as we're in the final months of completing 3 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 market clearance. We have an operational plan in place for compendium, 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 our new NDC processes for each plan's last 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've gained over the past 3 years with the approval and launch of EXONDYS 51, potentially one of the most successful ultra-rare disease launches in history, has informed the new -- 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 the 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 3 approved drugs borne out of our RNA platform, doubling our PMO-based opportunity in the United States. Again, we will apply strategically important earnings 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. But 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 of 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. And 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 microdystrophin, limb-girdle, CMT, MPS IIIa as well as additional programs, and we will adapt, grow or reflect on lessons learned and insights we 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 is no single key to unlock the whole market access, tackling common barriers at the country level is a good place to start and we are 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.

And with that, I'll turn the call back over to Doug.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [6]

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Thank you, Bo. Dimitria, let's open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Alethia Young with Cantor Fitzgerald.

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [2]

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Congrats on all the progress so far. Two questions from me, sorry. One, I just wanted to know kind of what went through your decision around increasing the sample size for Study 102 now? Like was there anything incremental color that you can give us? And then the second question is just curious on what the status is around the confirmatory trial for casimersen.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [3]

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Sure. This is Doug. Thanks a lot for those questions, Alethia. So I mean, the sample size, as I said before, we were comfortable with the size of the trial before, and our analysis gave us some comfort. And it is certainly the first cohort gave us some comfort. But it is not -- 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. So 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. And so, 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. 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. So increasing the trial from 24 to 40. From my perspective, it just makes brilliant sense from a risk perspective. Beyond that, it would have been a question about what else we could use that material for. One might have imagined the scenario in which one would want to, for instance, dose escalate. But 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 (inaudible), would give us the best answer without creating undue burden on the kids. And certainly, the first 4 children in our first cohort supported that conclusion. Now it does turn out that there was another company that was running an experiment essentially for us. Pfizer was at a very -- a 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. And, of course, what we saw in there was in addition to some issues organic to Pfizer's program. And 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 using theirs, they had about 700 femtomolars and they went to the next level and it was 900 femtomolars at multiples higher -- 3x higher than ours. So from our perspective, the best use of that material was clearly, to increase the end of 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'm wanting to make sure I remind you once again what I said in the script, which is, we haven't seen anything in the study that's changed our confidence around the trial. This is an opportunity. 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 -- 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 (inaudible).

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [4]

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So the confirmatory trial is actually moving well. We have -- our protocol is well -- 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. So we're very confident that we are in a good position to be able to execute as soon as possible.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [5]

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One other thing. So people understand it's not as if -- there has been work done. But the confirmatory trial we are establishing is unusual, it is not a simple trial versus a placebo. It's a confirmatory trial for eteplirsen. Excuse me?

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [6]

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(inaudible)

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [7]

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I think confirmatory trial for eteplirsen, right?

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [8]

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I'm so sorry.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [9]

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On eteplirsen real quick. The request from the agency is then to test the current dose of eteplirsen versus a higher dose of eteplirsen so it's a little unusual in the sense that we have to first do a study in healthy volunteers to ensure that consistent with the preclinical data that would suggest that it's safe that we're safe with these dosages. We've actually completed all of the enrollment on that study, the readout on our study will be September assuming everything goes well and it will I think. I'm sure (inaudible) well based on all the stuff we have so far. We will start the confirmatory trial before the end of this year.

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [10]

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Yes. And we are -- and forgive me for (inaudible) question. I misheard your question, I apologize. We are actually initiating sites now, et cetera, so we'll be ready to execute.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [11]

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That was my fault because I (inaudible) first question.

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [12]

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My apologies.

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Operator [13]

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And our next question comes from Tazeen Ahmad with Bank of America Merrill Lynch.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [14]

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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? So what time points do you need from Study 3 to get approval? And when should we expect that data? And maybe to follow up on that. What, if any, interaction have you had with FDA since Pfizer might have shown a data at PPMD? And did FDA influence your decision to upsize your study?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [15]

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So 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 will 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's made the most sense for patients. I mean if you think about it, nothing would be more tragic than to find that you have a very efficacious therapy, but you missed that say by some -- some small margin because you didn't take the time to make sure the study was dosed. It was a really easy decision when we had 12 doses, but now we have more doses, it certainly makes brilliant sense to make sure we can upsize this 40. And 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 because -- let's start with study 2 itself. We will be done certainly in the fourth quarter dosing the entire study. Dr. Jerry Mendell did a really good job earlier this year in dosing those first 24 patients. I will remind as you know the fourth patient was analyzed in our first cohort and it was at the -- it was either October or November, I'm forgetting now when we had the Argentina meeting, but -- when it was?

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Louise Rodino-Klapac, Sarepta Therapeutics, Inc. - SVP of Gene Therapy [16]

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October.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [17]

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October. So 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. So we will -- between Dr. Mendell and we'll have the new site up and running very shortly, we will have all of the next cohort of patients that make it to 40 dosed before the end of this year, which means Study 2 will read out before the end of 2020. So we really haven't taken any significant delay by increasing the end. We've only increased the probability of success. Now with Study 3, our goal is to start as early as possible in 2020 with Study 3 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. And 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're on track for that. So before the end of 2020, our goal is to have 2 things -- 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 for the biopsies read out at the same time as Study 2 before the end of this year. And then 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 CMT and manufacturing issues. We're designing our Study 3 and then we are very -- we'll essentially design Study 3. And then we'll take that to the agency and talk through with the agency whether they accept all of that initial confidence that we're in the right direction. And then we'll start that study early next year.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [18]

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Okay. So it seems like (inaudible) timelines are clear, are you guiding to a start to the commercial study in the first half of 2020 because it seems to be -- you seem to be giving yourself kind of a wide band on them? Is it the first half or is it early 2020?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [19]

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It's -- while we've given ourselves a little bit of -- we're trying to give ourselves some breathing room, we want to be as early in 2020 as possible. There is a number of things we want to get done for that. We want to -- there is couple of things. One is, of course, site readiness, getting the sites up and running. We need to 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 (inaudible) agency on that, we can get that done before the end of 2019. Getting the commercial process at the right place. And 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. But 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 still improve yields thereafter that we find ourselves in a position that we have to do some additional bridging study for approval. So the short answer is our official word is obviously first half of 2020 that we would commence Study 3 and we'll not surprise you. But those who know Sarepta and our sense of urgency that it is as early a study in 2020 as is reasonably possible, so we would like to do as early in 2020 as is possible, first quarter if possible.

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Operator [20]

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And our next question comes from Brian Abrahams.

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Brian Corey Abrahams, RBC Capital Markets, LLC, Research Division - Senior Analyst [21]

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Congratulations on all the progress. Any comments you can make on the safety that you're seeing from the ongoing 24-patient study? I realize it's blinded, but just wondering if there's any sort of safety events that would be considered reportable, what would be a bar for stopping -- would have been a bar for stopping or pausing that study? And did that change over the course of time when the -- your competitors talks issues became known to the FDA? And I had a quick follow-up.

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [22]

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Yes. Thanks, Brian, for that question. It's Gilmore here. So as you well know the study remains blinded. We do, as you quite rightly inferred, have staffing rules and rigorous oversize of the study. We have not crossed the threshold for the staffing rules. We've not come close to that. The study continues. And so from that point of view, we are actually very happy with the ongoing study. It is worth noting that in our 101 study, you're well aware of this, that we had no evidence of significant adverse or serious adverse events, and so we actually are very happy with that. And with regards to the readout from the other companies, Pfizer and Solid, we have not seen what they have described. But I want to restate one thing, which is that we have not -- we do have staffing rules, we have not hid the staffing rules and 102 is progressing well and remains fully blinded.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [23]

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One of the things I will also add is that obviously and really all kudos to Dr. Jerry Mendell for this. The studies went 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 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 before the end of this year and not create any kind of significant delays in our cohorts.

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Brian Corey Abrahams, RBC Capital Markets, LLC, Research Division - Senior Analyst [24]

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That's really helpful. And 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?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [25]

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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 are doing a lot of work. So there are 3 groups right now working on the process developments 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 leaders if not the single word leader in process development, Dr. Reed Clark, who I think if anyone has been diligent in gene therapy will find he's possibly the most renowned in AAG biology and process development that exists right now. So we've done a lot of good work. We will get there. We are putting -- we've got the talent. Let's start here. We've got the talent both external and internal to get it done. We've got the resources. We -- 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. And we've made good progress to date. We have very good results from the iCELLis nanos, the iCELLis nano units. We've scaled up already to iCELLis 500s, and we are in the process of optimizing yields of iCELLis 500s. We still have much more to do there, but then it's just a matter of time from our perspective. We're getting -- every time we do runs and optimize, we're getting better results. So we do feel very confident that we are going to get to a place where we were to be able to serve the community. We have always envisioned a world in which it might be the case that we would need to serve this community alone. But today, I mean 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 1 and for probably a very long time thereafter alone. And so we have to take very seriously the issue that we 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 -- is 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 will be qualified certainly before the end of this year at 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. So we are very confident about the process right now and about the path we have for (inaudible) to satisfy the community, assuming that our trials work out.

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Operator [26]

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And our next question comes from Martin Auster with Crédit Suisse.

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Mark William Connolly, Crédit Suisse AG, Research Division - Research Analyst [27]

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This is Mark on for Marty. I guess the first question is, you announced that you're expanding your gene therapy pipeline by exploring rat 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 are any unifying themes that made these indications particularly attractive? And then my second question is with WMS less than 2 months away, I'm curious what data, if any, you plan on presenting at the conference.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [28]

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Sure. First -- on the first one, I'm going to take the question on these research programs from Dr. O'Neill and Dr. (inaudible) only because I don't want to spend time going into the underlying programs themselves. They're at research stages right now and I really want to focus on the clinical programs for the time being. We are very excited about these programs and we're not done. We said for a while we're going to continue to do transactions like this to bolster our pipeline. There are a number of things about these programs that excite us. First of all, they are all very serious diseases. We are -- our 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 a (inaudible) focused on their disease and that certainly is a big part of us, but 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, so we're excited about it. So the seriousness of these diseases is part that -- the obligation of constructs is 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 makes sense to pursue. So 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 have about the approach to genetic medicine. They -- and if there's -- 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. The -- has I listed in the text of my initial comments that the gene therapy leaders that are running many of these programs are (inaudible) in gene therapy luminaries in this area. So 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. And we will be continuing to look at things like that over time. We have 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, neuro 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. And so we are going to -- and there's a lot of opportunity in there to do good and we're going to take gene therapy as far as we can go. And that means we are going to, without busting our balance sheet, we are going to do interesting things that explore all of the leaps and bounds of where genetic medicine and gene therapy can take us. And this program with Dr. Brad Hoffman for MS is a very, very interesting one. It's a research program right now, it's preclinical, we're not in humans yet, but we're very excited about it, as we are excited about our Rett program, as we're excited about our Emery-Dreifuss program, which Dr. Louise Rodino-Klapac and her team develops themselves and accepts for us. So we're excited about these pipeline programs and we think they align with our strategy, particularly this strategy that we have about building an enduring gene therapy engine that can do good in the world and be successful for investors at the same time.

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Operator [29]

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And our next question comes from Christopher Marai with Nomura.

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology [30]

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Just a couple here on the new Study 2 size and your powering assumptions. Can you maybe talk about some of effect size you're expecting to see there, numbers that went into that powering assumption? And then on Study 3, thinking about the subset that you're going to look at, the 3-month biopsy, what biopsy data will you specifically be looking at? And then when we think about the size of that subset, is it sort of 3 patients, 32 patients, sort of like your current -- or your new Study 2 size? How should we think about that? And then 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?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [31]

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Let me answer the last question first because I failed to answer the World Muscle question from the last question, and that was just an error on my part. And thank you for mentioning limb-girdle because that is likely the thing that would be presented at World Muscle. So 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 first -- the functional data on the first cohort of limb-girdle 2b that we announced the expression results and safety results for earlier in the year. And 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 and in an appropriate place by then. With that, I'll turn it over to Dr. O'Neill to talk about the powering.

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [32]

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Great. Thanks very much for that question about powering. Gilmore here. So I think you understand that for many reasons, competitive and others, that we won't disclose the specifics and details of our power assumptions, particularly the effect size. However, what I will say is that the assumptions around variants, 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. So I think -- what I can say is that we're very confident about the strength of our calculations there. And forgive me for not disclosing the effect size, there are obvious reasons for that. And with regard to the subcohort in Study 3 from which we are going to do the muscle biopsies, those muscle biopsies will be (inaudible) to muscle. They are dim and the current thinking right now is that they are just to lower extremity, gastrocs. With regard to size of the cohort, as you could imagine based on the strength of the expression data we've seen to date, we don't believe that you need a large number, but I think that final number is going to be a matter of discussions with regulatory agencies and what they want to see. But we believe that that number will be small and represent really a small fraction of the global population that we're enrolling in multiple countries in that study. I think you then go to the very -- compare question.

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Operator [33]

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And our next question comes from Matthew Harrison with Morgan Stanley.

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Maxwell Skor;Morgan Stanley;Biotechnology Equity Research Associate, [34]

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This is Max Skor 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 multidose study? When will you be taking muscle biopsies and will you wait for all patients?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [35]

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So I'll give you broad strokes on it. The -- our goal is to get insights on the PPMO program and the MAD study by early next year. So 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 expressions. So we're very excited about that. But the issue that we're talking about here is the issue of the safety profile and that's what we're working 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 a multi-ascending dose study, and we're getting great results there as well. But I want to be cautious that it's early to say that because we're not at the dose levels that we really want to get to, to be correlated with grand expressions. So this is still, in a very real sense, too early to declare victory. We started, I think, the NASH study in -- what it start at, 5 mg per kg? 4? Started at 4 mg per kg and we're going to continue to dose that up. So things are going very well with the NASH study, if not a little slower than I would have anticipated a year ago. Dr. O'Neill is still on board, she's got that in order. And 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. So we'll give you a good update on it early next year.

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Operator [36]

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And our next question comes from Anupam Rama with JPMorgan.

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Matthew Alexander Bannon, JP Morgan Chase & Co, Research Division - Analyst [37]

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This is Matt on for Anupam. Congrats on the progress. So just some high-level questions from us. You mentioned that you'll be nearing 900 employees by year-end, so 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? And then on your gene therapy manufacturing effort, can you just remind us of how much cash you have earmarked on this front, kind of in the same time frame?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [38]

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Yes. Good questions, great questions actually. So we're going to end the year at around 900 -- maybe a little shy of 900 employees worldwide. But 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 have the ability to, we have the need to. We've really extended 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. So we needed to really bolster in all areas of -- probably -- but specifically in the research and development and manufacturing (inaudible) CFC areas. But we're getting to a place now where we're comfortably -- 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. So 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. We 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 get -- we're going to have too many fixed costs as we reported. We're actually getting to a place where we're comfortable with the number of employees and the quality of the 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, so we actually benefit from a lot of these expenses there. They're not simply capital or reflect expenses. We'll spend something in the area of $600 million over the next -- well, for the -- including what we've already spent this year into the end of next year and kind of into the -- a little bit into the following year probably in the $600 million range.

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Sandesh Mahatme, Sarepta Therapeutics, Inc. - Executive VP, CFO & Chief Business Officer [39]

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I would agree. And slowly we'll be starting to wrap up our goods that will effectively be going to inventory. So some portion of that will be cost of goods if you will.

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Operator [40]

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And our next question comes from Gena Wang with Barclays.

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Peter B. Kim, Barclays Bank PLC, Research Division - Analyst [41]

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This is Peter for Gena Wang. Just a couple from us, if we may. I guess the first is, I think this has been asked before but just to make sure. Were there any measurements from Study 2 that prompted the expansion? And would you be able to measure anything that may inform the pivotal study design at all? Or is that -- was that completely independent?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [42]

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So thank you for giving me the opportunity to answer this question, I really do appreciate it, Peter. So let me be very clear, so there's no avoidance or any doubt. There's nothing and there's no analysis, blinded or unblinded or otherwise out of Study 2 that motivated the increase in the -- at all. In fact, the only data that we've had is the data from the first 4 patients in Study 1 and that's given us tons of confidence in where we are. The reason that we've increased the end is quite simply because we have opportunity in front of us. And I think 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 at over 90% now, which increases the probability of success and gives us -- gets us really comfortable with Study 2 as we plan for Study 3. And there's just -- to say something that is obvious without being overly snarky about it, there's no exogenous reason why we wanted to do this right now. We are -- 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. And so we really need to think about these families and these patients first and foremost. And while it may delay us by some number of weeks or maybe even a month or 2, 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 powered the study at the right level. So it's the best answer for -- the program is -- 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. So we really help -- just to be really direct about it, we feel really, really good about this opportunity to increase the end. And we think it's a real opportunity for the program and a real opportunity for families.

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Operator [43]

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And our next question comes from Vincent Chen with Bernstein.

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Vincent Chen, Sanford C. Bernstein & Co., LLC., Research Division - VP [44]

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Congrats on the progress. 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? Because -- just in ballpark numbers, would you say that it's roughly about the same size, would you say it's likely to be larger or smaller? And then 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 been extended, for example, if you decided to increase to say, 50 or 60 patients?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [45]

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I'll answer the last question and then I'll turn it over to Dr. O'Neill who likely might answer your first question. We could have modestly increased the size of the study even greater than we did with the (inaudible) element. We are very comfortable with the 40-patient study, it's the right level for us. And we weren't -- we didn't start a compromise issue, it wasn't a timing issue. We feel -- we felt good about the end of 24, we felt good about the end of 24. And frankly, the data evolved in Study 101. As you know, we got 9-month 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 have for Study 2. But -- 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.

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [46]

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And to add, Vincent, thanks for the other question. You know again, I'm not going to go into specifics or assumptions around the fact sizes and standard deviations. I think the other thing (inaudible) the standard deviations is that based on our raw data, the standard deviations that are published in literature are in the ballpark of what we're seeing for the North Star, et cetera. But forgive me for, again not going into specific details about size (inaudible) we just want to keep internal right now.

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Vincent Chen, Sanford C. Bernstein & Co., LLC., Research Division - VP [47]

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I see. Maybe 1 follow-up then. You mentioned that the data you were seeing from the initial study you kind of 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 4 patients is pretty much in line with what you would've expected in terms of the likely gene therapy effect size?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [48]

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So I would say a couple of things on that. One, we were -- one, I'd say we took the -- 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 very conservative in our powering assumptions, okay. So we're not taking -- we're not leading all of our assumptions in an aggressive direction, just so you know. I don't want you to get the impression that we're fooling ourselves into a power (inaudible). I think it is obvious given that we're increasing the end (inaudible) and things like that.

And 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 this -- these kinds of transformative results before. So I think probably people may have different views. I think broadly speaking, the results we saw from the first cohort of kids was 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, 4 kids. Please understand I understand that as well, but early days. Both quantitatively and qualitatively we saw a fairly dramatic change in these kids. I think the preclinical models generally support that same kind of concept. If you've ever looked at the gene therapy microdystrophin golden retriever models and video, you might have anticipated this kind of transformative effect. But we were very pleased with -- very pleased with what we saw on Study 1, still took a very conservative approach in powering Study 2 and now we're taking, I think, an approach where you -- not overly conservative approach, to increase that and to increase the powering of that study and to increase the chance that we'd 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. So we really need to -- making these decisions intelligently is important.

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Operator [49]

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And the next question comes from Ritu Baral with Cowen.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [50]

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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? And 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, like who else are you going to include, age range, et cetera? And then I've got a follow-up.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [51]

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We'll still give a broad stroke -- issues, I guess there's a lot done on that. But the question about the ability to take a subset of patients and do a biopsy on them on a blinded study, I can give you sort of some proof that that's possible, we just did it. So we did it (inaudible), so it is possible to do without unblinding the study.

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [52]

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So this is Gilmore. So as Doug said, with regards to the biopsy, our intent is to biopsy all patients. The subset 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 wanted to say. I think the second thing I want to say about placebo-controlled is that we do anticipate this to be a placebo-controlled study. And I think to Doug's point, there are couple of important lessons that work, (inaudible) is one, that we actually have our successfully running placebo-controlled study in Duchenne patients in the context of our (inaudible) and a (inaudible) profile and in our Study 2 profile. So we're confident that we can actually execute on that. And of course, that really comes down to a very important thing that we have built on that capability of this organization, which is strong relationships with patients, strong relationships 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.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [53]

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And 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 we (inaudible) there is a price to pay for these placebo trials and I want everyone to understand that we're mindful of that. But our goal -- one of the things I said in my text is, you may have noted this, our goal 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 or Europe. As important as the United States of America is, to us and to our company and to the families in the United States, we want to create a program that is fit-for-purpose around the world. So 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. The main trial will very likely be kids that will match the cohort that we're looking at right now 4- to 7-year-old range. With respect other cohorts, different age ranges that some people are still talking about. But as it relates to that main cohort of patients in the next study, will almost certainly be a placebo-controlled trial. You agree with that Doctor?

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [54]

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Yes. I agree.

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Operator [55]

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And our next question comes from Brian Skorney with Baird.

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Brian Peter Skorney, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [56]

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Just a couple of quick ones from me. Just one, you've been getting a lot of questions with the FDA released yesterday about some data integrity issues with Novartis AveXis gene therapy Zolgensma. And just wanted to know, given the similar origins of that program and [9001]. Have you looked into the issues there? And what level of confidence you can give in your construct that these Zolgensma issues are specific Zolgensma? And then as you talk about ramping up inventory with the competitors in gene therapy seemingly falling behind, I think you had previously anticipated having a couple of thousand doses at launch. And just wondering if these efforts to meet demand if you're changing that to a higher number now or you think you could 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 2 years?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [57]

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Yes. So a couple -- so let's go to the first question, the AveXis Novartis issue that occurred yesterday. So we know nothing more than others now who have been able to read the documents that currently exist and it looks directly to [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. So there is -- just so we're unequivocal about this, 0 -- beyond 0 read through in anything that may have occurred there to anything that we're doing, so. Nothing -- no correlate whatsoever at all.

And then with respect to the dosing, sort of 2 things, I'm getting yields right and the like. One is the target we have for the number of doses available and the ability to 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 that we can also make decisions around the amount of dosing. I still think the kind of a couple of 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. So the short answer is that we want to be in a position, if at all possible, to fully serve this community, first in the United States and then around the world, at launches without any risk that patients will have to wait for therapy and that's why we're taking the time, now that we have the time with Study 2, to ensure we continue to process it to enhance our (inaudible) development, and to enhance our yields before we would start Study 3.

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Operator [58]

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And our next question comes from Danielle Brill with Piper Jaffray.

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Danielle Catherine Brill, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [59]

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A quick follow-up to a previous one. When you decided to expand enrollment in Study 2, did you consider including other patients, older patients with signs of function decline? And any specific reasons why you stuck with that 7 -- 4- to 7-year-age range? And then I think you mentioned you're planning to open an additional site. Is that also for Study 2? And I'm just curious from a safety perspective how you get comfortable with someone other than Jerry administering the drug?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [60]

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Well. That last one is a great one. He is fantastic and we're going to have to -- we'll have that other site someday. So 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 the infusions and the like, and Dr. Mendell is very much on broad with all of that. So we're very confident about what we're doing and the sites that we're going to be bringing online are going to be really top-quality neuromuscular sites with experience in gene therapy.

As related to Study 2, they will be in the 4- to 7-year-old, they will be exactly the same cohort and they must, they must be. And 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, it would actually create more standard deviation and we would reduced the power. In fact, we couldn't do it because if you went say, for instance, older nonambulatory kids, we'd have to use a different measure than NSA, we couldn't use NSA. So for this study, we have to narrow the focus and ensure that we have the same matched population so that we have the same confidence around the powering and as I said, for us 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 -- Dr. Mendell is giving me a dirty look -- (inaudible) I'm told them one study. It will be in IIIa, it will be a main cohort of patients. We'll have older nonambulatory patients in a separate study as well, but we'll have our larger age ranges and different measures in the next study.

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Operator [61]

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And our next question comes from Joel Beatty with Citi.

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Shawn Michael Egan, Citigroup Inc, Research Division - Senior Associate [62]

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This is Shawn Egan on for Joel. I have a few more specifically on yields and capacity. So first, have your initial iCELLis lab tests satisfied your yield goals? And 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.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [63]

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Yes. So we've reached very good yields in the iCELLis nanos. We are in the process of scaling to iCELLis 500s right now. In the iCELLis 500s, we are not at optimized number yet, but we're getting there, we'll get there. The issue with -- and just so you understand why -- 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 a month or more time frame. So it just takes some time. So the short answer is, we are getting very good yields in the hunt of what we want in iCELLis nano. We 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] in iCELLis 500 over time. And there're sort of 2 targets. There's kind of a -- there's sort of an optimized target that gets us to where we want to go, and of course, if you can get even beyond that, fantastic. Which would give us both more capacity as well as lower cost of goods. So the goal here is to get to as optimized as is possible and yield, really before we start Study 3 if at all possible.

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Operator [64]

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And our next question comes from Salveen Richter with Goldman Sachs.

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Ross Howard Weinreb, Goldman Sachs Group Inc., Research Division - Research Analyst [65]

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This is Ross on for Salveen. Doug, can you just elaborate a bit further on the current manufacturing that you're racing here? So like regardless to competitive dynamics that you mentioned earlier, you would need to have your yields fully maximized and your process element optimized. So can you just define what this looks like today versus what it looked like previously? And then I have a follow-up.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [66]

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I'm trying to -- we're kind of midway through a process. I'd say we're midway through a very so far successful process. We're -- there are a number of things to do from a manufacturing perspective. You need a place to launch the therapy. The first thing, of course, is just capacity itself. We've got -- we're building a facility with Brammer and we're just about done with that, and that's in Lexington. The next issue, which we haven't talked much about today, we'll talk about it over time, is the analytical development. We're going -- 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 developments done in a way that's effective. And then the final one is process development and yield optimization. And as I said, sort of step-wise where we are is the first thing you do is work in smaller units of iCELLis, we've done that. We've gotten to good numbers there. Now we're moving it up to the iCELLis 500. We've done a number of runs there, we're continuing to approve that, so we're kind of in the middle of a process.

Our goal -- there's a number of things we have to get to before the commercial trial. I don't want to suggest that there is no opportunities to continue to optimize after the trial, but we want to get as far along as is as possible before we start the trial so that even if we're -- 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 so dramatically increase 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. So we're in the middle of the process, things are going very well, you know. We've got great partners and we've got a lot of folks working on it, a lot of really smart expert folks. We've got Brammer doing the work, we've got Paragon. Paragon is fantastic frankly. They were behind wanting to get back to this work. It's come back to Paragon. But more than all that, we've got our own folks. We've got Dr. Reed Clark, we've got 10 iCELLis units, so we're doing very well. It's going very well so far.

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Operator [67]

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And our next question comes from Tim Lugo with William Blair.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [68]

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And of the new gene therapy programs announced during the quarter, will any of those be in the clinic over the next year? And can you -- and are you maybe deemphasizing 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?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [69]

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We'll have to -- 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 that should be (inaudible) is an adequate number.

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Gilmore O'Neill, Sarepta Therapeutics, Inc. - Executive VP of R&D and Chief Medical Officer [70]

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(inaudible)

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [71]

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As I said before I was going to make an error if I tried to do your job. We're over 15. We're over the 15, I think (inaudible). We're over 15 programs, clinical and preclinical. We're not deemphasizing the preclinical programs, that isn't preclinical programs that we have. One of the things that we had suggested some time ago was 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. So we're very excited about the programs. We don't want to spend a lot of time talking about the depth right now simply because they're preclinical and we don't want to have them promotional with our currently really exciting cassette but research programs but 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. Gordon, on that. We've got our own Gene Therapy Center of Excellence and 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 target of outlets program with Dr. Sweeney. He's obviously one of the big luminaries in gene therapy. So we're very excited about that. And cardiomyopathy is sort of a natural extension of the area that we've been in, in neuromuscular. And then, of course, it goes without saying, we're 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. So we're excited about our research programs and we're not done.

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Operator [72]

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And our next question comes from Joseph Schwartz with SVB Leerink.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [73]

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Just 2 quick questions from us. Doug, so just going back to an earlier question on Zolgensma and the regulation 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 or 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 DPM or the SRP-5051, so congrats on that. But I guess there's growing competition in DMD with gene therapy, gene editing as well as antibody conjugated ASOs emerging. So I guess as you think about your base business of antisense oligos, what are strategies there given how PPMO's may have hit a little bit of delay with safety here and you only have 5051? Do you have alternatives to maintain that base business? And if so, what would that be?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [74]

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I'm going to take to ourselves. Zolgensma has 0 effect, 0 -- and more than that, I'm confident will have 0 effect on the way the agency looks at other programs. If 1 looks past the really salacious headlines about this -- still, what one looks at when you go and actually look at the [483], 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. It's something that didn't affect the integrity, apparently it didn't, from what we read, didn't affect the integrity of the study, didn't affect the actual outcomes, safety, efficacy or even the probability of the program. But what's concerning, because I think from what we read, there was some question about intentionality and all of that. It is a very specific issue about specific human beings, a specific company. It does not relate in any way to our program, nor do I believe that there is any reason to believe that they would change how the agency would approach other folks' program. I mean it is -- it goes without saying one has to be very thoughtful and careful and follow SOPs, good clinical practice and research and data and that's the -- that was the same answer the day before yesterday, it's the same answer today. So I'm not at all concerned that this impacts the way the agency approaches programs. I mean it's a very specific issue.

The status of SRP-5051 -- what I do want to make clear, we haven't hit any snags on 5051, they were 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 that statistically, that we're going to see significant increases in (inaudible) production over our PMOs. In fact, as I said before, we should literally an order of magnitude, better expression. So there is a lot of reason to be excited about the PPMO's. The only reason that we don't promote that concept is I want to see how high we get in the multi-sending dose before we start declaring victory on there.

As it 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. So first I would start with this issue about increasing competition. I actually think the competition has moderated over the last 6 to 9 months, frankly. The biggest competition to our PMO and PPMO franchise is our own gene therapy. And so 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 gene therapy, our microdystrophin program on the other, and we're doing work right now. So we look at that and we actually have a partnership looking at that is well and 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 is a room for a PMO or PPMO thereafter, then so be it. The patient community is benefited from that. But we think to just answer today, there may very well be a good synergistic benefit of having a PMO or PPMO on the 1 hand and our microdystrophin program on the other. So we feel very confident about where we're going.

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Operator [75]

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And our next question comes from Justin Kim with Oppenheimer.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [76]

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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?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [77]

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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 to get older patients in Study 3 as well. So we will have evidence both from an efficacy perspective and a safety perspective on nonambulatory patients and older patients and heavier patients in what I call Study 3 and that Dr. Gilmore O'Neill likely knows is actually a series of subsets.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [78]

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Okay, got it. And then is there a target goal of what proportion of the additional patients would come from a second clinical site?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [79]

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We're going to dose as fast as we can. We're opening the second site to dose folks as fast as possible. There's no the target, we'll take them all from Dr. Mendell if he doesn't want those from nationwide. We'll have a second site, very reputed -- well reputed second site just to make 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.

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Operator [80]

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And our next question comes from Ravi Mehrotra with Evercore.

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Ravindra Mehrotra, Evercore ISI Institutional Equities, Research Division - Senior MD [81]

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I have some questions, but I just wanted to clarify the very specific functional endpoint for the 102 study from which increasing the end number gives you great confidence and powering (inaudible) is a assuming the specific functional endpoint is NSAA. Can you just confirm that? And can we presume that this same endpoint, NSAA, will be the same one used in 103 as the primary functional endpoint? And then as a continuation for the 103 study, when will you be able to see those specifics on the end number within the main cohort of 4 to 7 and the additional cohorts?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [82]

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So then a couple -- so first -- on the first 2 we confirm if it's NSAA in Study 2, and it will be the primary endpoint for Study 3 as well. And given that we were going to start Study 3 as early as is rationally possible in 2020, that we'll certainly come back to you in early 2020 and give you an update with more particulars around a common (inaudible).

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Operator [83]

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And our next question comes from Tim Chiang with BTIG.

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Timothy Chiang, BTIG, LLC, Research Division - MD and Specialty Pharmaceutical & Biotechnology Research Analyst [84]

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Doug, I think you mentioned that Dr. Mendell might be presenting some limb-girdle data at WMS. I mean would the functional data would be just the 3 patients that have been dosed or the data that you've shown in the 3 patients that were dosed in MYO-101. Is that right?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [85]

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It will be the functional data, yes. Yes. So as you may recall, we asked for data the first quarter of this year on -- it's a lead program. We were very pleased with the results as an expression level and a safety perspective as well given the size of these kids. One of the interesting things to me -- they're the largest kids that have never been dosed as far as I'm aware of. For infusion gene therapy, there are 13 year olds, 2 of them. But we were -- it was too early, we had just literally dosed the third child so we couldn't get functional data. So the goal at World Muscle would be to present functional data on those first 3 kids.

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Operator [86]

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And our final question comes from Liisa Bayko with JMP Securities.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [87]

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Just to clarify, Study 2 will capture the functional endpoint that you'll use for filing in addition to Study 3 showing expression. And at that point when you've got 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?

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [88]

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That is our goal. Now 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 agency and get their buy-in to the approach that we're taking. But our current goal is to have -- for Study 3, we'll have functional data as well eventually, but to have -- I mean a subcohort of Study 3 to look at expression level and show comparability between clinical supply and commercial supply. (inaudible). We're talking about FDA issues right now. I mean that's the approach in the U.S., assuming that the FDA agrees with the approach that we're taking. And then, of course, we'll have to consider what approach we take ex U.S. because as you -- I'm sure know, our goal is to bring this therapy to as many patients around the world as can benefit from it as rapidly as is possible.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [89]

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Okay. Great. And then just to also I guess, how do we think about or how do you think about what is comparable? Because obviously there is variability in expression for patient to patient, and this is kind of not exactly like a bioequivalency study, so 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.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [90]

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Well that'll be obviously something in discussion with the agency, obviously. I mean it's sort of engaged in gene therapy. So we'll have a lot of things to talk about. But there's a lot of different ways to look at measurements, there's potency plus COC related issues. And we also have what others, (inaudible) and a number of other programs, for instance, that you wouldn't have had it in (inaudible). So we do have a good way to triangulate our comparability between commercial supply and clinical supply, and then, of course, we'll have to talk to agency about what level of tolerance is permissible between clinical supply and commercial supply.

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Operator [91]

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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.

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Douglas S. Ingram, Sarepta Therapeutics, Inc. - President, CEO & Director [92]

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Well, thank you all, very much for spending this evening with us as we updated for the second quarter on our -- our performance in the second quarter and our flight now forward. We have a lot to do in 2019. I hope I may -- impressed upon everyone our perspective on this. We have -- 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, and 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 19, we have to submit for casimersen, we have to continue to push forward our various gene therapy programs, get these kids dosed in the microdystrophin Study 2, get our process developments and capacity for our Microdystrophin Gene Therapy Program done by the end of this year so we can start dosing patients in our Study 3 and we'll give you additional updates over the course of the year as we progress against our goals. So thank you very much. Thanks for your support and have a lovely evening.

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Operator [93]

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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.