Sarepta Therapeutics Announces Fourth Quarter and Full-Year 2022 Financial Results and Recent Corporate Developments

• Total revenues, which consist of net product revenues and collaboration revenues, for the fourth quarter and full-year 2022 totaled $258.4 million and $933.0 million, respectively
• Net product revenues for the fourth quarter and full-year 2022 totaled $235.9 million and $843.8 million, respectively
• Fourth quarter 2022 net product revenues increased approximately 32% over the fourth quarter of 2021; full-year 2022 net product revenues increased approximately 38% over the prior year
• Mid-cycle meeting complete; FDA does not plan to hold advisory committee for SRP-9001

CAMBRIDGE, Mass.–(BUSINESS WIRE)–Sarepta Therapeutics, Inc. (NASDAQ:SRPT), the leader in precision genetic medicine for rare diseases, today reported financial results for the fourth quarter and full-year 2022.

“Sarepta’s proven ability to launch Duchenne therapies and effectively serve the Duchenne patient community was once again on display in 2022 as we delivered nearly $236 million and $844 million in net product revenue for the quarter and year, respectively, and grew at 32% for the quarter and 38% for the year. Sarepta achieved these stellar results by prioritizing our patients and without taking a single price increase in over 6 years,” said Doug Ingram, Sarepta’s president and chief executive officer. “2023 will be a bellwether year for the patient community we serve and for the promise of gene therapy. Sarepta continues to work toward the May 29, 2023 action date for our gene therapy SRP-9001 Biologics License Application, answering questions, preparing for scheduled pre-approval inspections and preparing for launch. As of the mid-cycle review, which is now complete, the FDA posed CMC questions which have been answered by Sarepta, formally confirmed that there are no significant safety issues of concern and informed Sarepta that they are not planning to hold an Advisory Committee for this application.”

Fourth Quarter 2022 and Recent Developments:

• SRP-9001 Biologics License Application (BLA) accepted for filing and granted Priority Review by U.S. FDA: In November, the FDA accepted Sarepta’s BLA seeking accelerated approval of SRP-9001 (delandistrogene moxeparvovec) for the treatment of ambulant individuals with Duchenne muscular dystrophy. SRP-9001 has been granted Priority Review by the FDA, with a regulatory action date of May 29, 2023. SRP-9001 is an investigational gene therapy for Duchenne being developed in partnership with Roche. It is designed to treat the proximate cause of Duchenne by delivering to muscle a gene that codes for a shortened, functional form of dystrophin. In addition to a wealth of pre-clinical evidence, the BLA for SRP-9001 included efficacy and safety data from Study SRP-9001-103 (also known as ENDEAVOR), as well as from Studies SRP-9001-101 and SRP-9001-102, and an integrated analysis across these three clinical studies comparing functional results to a propensity-score-weighted external control (EC). In clinical results from more than 80 treated patients, SRP-9001 has demonstrated positive results at multiple time points, including one-, two- and up to four-years after treatment, in addition to demonstrating a consistent safety profile. In addition to Studies SRP-9001-101, SRP-9001-102 and SRP-9001-103, SRP-9001 is also being studied in EMBARK (Study SRP-9001-301), a global, randomized, double-blind, placebo-controlled clinical trial of SRP-9001 which has recruited 125 participants with Duchenne between the ages of 4 to 7. Results from EMBARK are expected by the end of 2023. Sarepta has proposed EMBARK as the post-marketing confirmatory trial for SRP-9001.

• Initiated VOYAGENE, a clinical study of SRP-9003 for the treatment of limb-girdle muscular dystrophy Type 2E/R4: In mid-February 2023, Sarepta announced that the first patient had been dosed in Study SRP-9003-102, also known as VOYAGENE. VOYAGENE is a phase 1 study of SRP-9003 (bidridistrogene xeboparvovec) for the treatment of limb-girdle muscular dystrophy Type 2E (LGMD2E). VOYAGENE is a U.S.-only study enrolling ambulant patients aged 18 years or older and non-ambulant patients aged 4 to 50 years old, using clinical process SRP-9003 material.

• Expanded strategic manufacturing partnership with Catalent for commercial supply agreement for Duchenne gene therapy candidate: In early January, Sarepta and Catalent announced the signing of a commercial supply agreement for Catalent to manufacture SRP-9001 (delandistrogene moxeparvovec), the Company’s most advanced gene therapy candidate for the treatment of Duchenne. Under the terms of this expanded agreement, Catalent will be Sarepta’s primary commercial manufacturing partner for this therapy. The agreement also structures how Catalent may support multiple gene therapy candidates in Sarepta’s pipeline for limb-girdle muscular dystrophy.

Conference Call 

The event will be webcast live under the investor relations section of Sarepta’s website at https://investorrelations.sarepta.com/events-presentations and following the event a replay will be archived there for one year. Interested parties participating by phone will need to register using this online form. After registering for dial-in details, all phone participants will receive an auto-generated e-mail containing a link to the dial-in number along with a personal PIN number to use to access the event by phone.

Financial Results 

On a GAAP basis, for the three months ended December 31, 2022, the Company reported a net loss of $109.2 million, or $1.24 per basic and diluted share, compared to a net loss of $122.0 million reported for the same period of 2021, or $1.42 per basic and diluted share. On a non-GAAP basis, the net loss for the three months ended December 31, 2022 was $46.5 million, or $0.53 per basic and diluted share, compared to a net loss of $66.0 million, or $0.77 per basic and diluted share for the same period of 2021.

On a GAAP basis, for the twelve months ended December 31, 2022, the Company reported a net loss of $703.5 million, or $8.03 per basic and diluted share, compared to a net loss of $418.8 million reported for the same period of 2021, or $5.15 per basic and diluted share. On a non-GAAP basis, the net loss for the twelve months ended December 31, 2022 was $268.2 million, or $3.06 per basic and diluted share, compared to a net loss of $308.7 million, or $3.80 per basic and diluted share for the same period of 2021.

Revenues 

For the three months ended December 31, 2022, the Company recorded total revenues of $258.4 million, which consist primarily of net product revenues and collaboration revenues, compared to total revenues of $201.5 million for the same period of 2021, an increase of $56.9 million. For the twelve months ended December 31, 2022, the Company recorded total revenues of $933.0 million, compared to total revenues of $701.9 million for the same period of 2021, an increase of $231.1 million.

For the three months ended December 31, 2022, the Company recorded net product revenues of $235.9 million, compared to net product revenues of $178.7 million for the same period of 2021, an increase of $57.2 million. For the twelve months ended December 31, 2022, the Company recorded net product revenues of $843.8 million, compared to net product revenues of $612.4 million for the same period of 2021, an increase of $231.4 million. The increase primarily reflects the continuing increase in demand for the Company’s products in the U.S. and a full period of AMONDYS 45 sales during the twelve months ended December 31, 2022 given its commercial launch in February 2021.

For the three and twelve months ended December 31, 2022, the Company recognized $22.5 million and $89.2 million of collaboration and other revenues, respectively. For the three and twelve months ended December 31, 2021, the Company recognized $22.7 million and $89.5 million of collaboration and other revenues, respectively. For all periods presented, collaboration revenue primarily relates to the F. Hoffman-La Roche Ltd. (Roche) collaboration arrangement.

Cost and Operating Expenses 

Cost of sales (excluding amortization of in-licensed rights)

For the three months ended December 31, 2022, cost of sales (excluding amortization of in-licensed rights) was $30.8 million, compared to $31.7 million for the same period of 2021, a decrease of $0.9 million. The decrease primarily reflects write-offs of certain batches of the Company’s products not meeting the Company’s quality specifications for the three months ended December 31, 2021, with no similar activity in the same period of 2022 and a decrease in royalty payments during the three months ended December 31, 2022 due to changes in the BioMarin Pharmaceutical, Inc. (BioMarin) royalty terms. For the twelve months ended December 31, 2022, cost of sales (excluding amortization of in-licensed rights) was $140.0 million, compared to $97.0 million for the same period of 2021, an increase of $43.0 million. The increase primarily reflects increasing demand for the Company’s products as well as an increase in write-offs of certain batches of the Company’s products not meeting the Company’s quality specifications for the twelve months ended December 31, 2022, as compared to the same period of 2021.

Research and development

Research and development expenses were $213.8 million for the three months ended December 31, 2022, compared to $197.3 million for the same period of 2021, an increase of $16.5 million. The increase in research and development expenses primarily reflects the following:

• $18.2 million increase in up-front and milestone expenses primarily due to $18.3 million of up-front payments as a result of the execution of certain research and license agreements during the fourth quarter of 2022, offset by $0.1 million of similar activity during the fourth quarter of 2021;
• $13.8 million increase in clinical trial expenses primarily due to a continuing ramp-up of the Company’s SRP-9001 gene therapy programs, including the Company’s EMBARK program;
• $9.9 million increase in compensation and other personnel expenses primarily due to changes in headcount;
• $6.8 million increase in research and other expenses driven by increases in lab-related expenses, partially offset by a decrease in sponsored research with academic institutions during the three months ended December 31, 2022;
• $4.5 million increase in stock-based compensation expense primarily due to changes in headcount and the value of stock awards;
• $4.0 million increase in facility- and technology-related expenses primarily due to the Company’s continuing expansion efforts;
• $1.4 million increase in professional service expenses primarily due to an increase in reliance on third-party research and development contractors;
• $1.3 million decrease in collaboration cost-sharing expenses primarily due to the termination of the Lysogene S.A. (Lysogene) license and collaboration agreement and timing of expense incurred related to Genethon’s micro-dystrophin drug candidate;
• $3.5 million decrease in pre-clinical expenses primarily due to a decrease in toxicology study activity in the Company’s PPMO platform;
• $15.5 million decrease in manufacturing expenses primarily due to Company’s accelerated amortization of nonrefundable advance payments due to capacity changes associated with its manufacturing and supply agreement with Thermo Fisher Scientific, Inc. (Thermo) during 2021 with no similar activity in 2022; and
• $21.9 million increase in the offset to expense associated with a collaboration reimbursement from Roche due to continuing development of the Company’s SRP-9001 gene therapy programs.

Research and development expenses were $877.1 million for the twelve months ended December 31, 2022, compared to $771.2 million for the same period of 2021, an increase of $105.9 million. The increase in research and development expenses primarily reflects the following:

• $61.1 million increase in manufacturing expenses incurred primarily related to the gene therapy manufacturing and supply agreement with Thermo, including charges of $54.0 million related to recognition of minimum purchase requirements and a continuing ramp-up of SRP-9001 manufacturing;
• $33.0 million increase in compensation and other personnel expenses primarily due to changes in headcount;
• $31.1 million increase in clinical trial expenses primarily due to a continuing ramp-up of the Company’s SRP-9001 gene therapy programs including the Company’s EMBARK program;
• $14.5 million increase in facility- and technology-related expenses primarily due to the Company’s continuing expansion efforts;
• $10.8 million increase in stock-based compensation expense primarily due to changes in headcount and the value of stock awards;
• $5.4 million increase in professional service expenses primarily due to an increase in reliance on third-party research and development contractors;
• $3.2 million increase in research and other expenses primarily driven by increases in lab-related expenses, partially offset by a decrease in sponsored research with academic institutions during 2022;
• $5.2 million decrease in up-front, milestone and other expenses primarily due to a $28.7 million increase of an accrued sublicense fee to Nationwide Children’s Hospital and $11.6 million of expense incurred as a result of up-front and milestone payments related to certain research and license agreements during 2021. This was offset primarily by $26.1 million of up-front payments as a result of the execution of certain research and license agreements, $4.5 million of expense incurred as a result of milestone achievements in certain research and license agreements and $4.5 million of option and termination expenses during 2022;
• $8.2 million decrease in collaboration cost sharing primarily due to the termination of the Lysogene license and collaboration agreement and timing of expense incurred related to Genethon’s micro-dystrophin drug candidate;
• $12.7 million decrease in pre-clinical expenses primarily due to a decrease in toxicology study activity in the Company’s PPMO platform; and
• $27.0 million increase in the offset to expense associated with a collaboration reimbursement from Roche due to continuing development of the Company’s SRP-9001 gene therapy programs.

Non-GAAP research and development expenses were $186.8 million and $175.5 million for the three months ended December 31, 2022 and 2021, respectively, an increase of $11.3 million. Non-GAAP research and development expenses were $784.1 million and $693.4 million for the twelve months ended December 31, 2022 and 2021, respectively, an increase of $90.7 million.

Selling, general and administrative

Selling, general and administrative expenses were $120.5 million for the three months ended December 31, 2022, compared to $78.1 million for the same period in 2021, an increase of $42.4 million. The increase in selling, general and administrative expenses primarily reflects the following:

• $16.3 million increase in stock-based compensation expense primarily due to the Chief Executive Officer grant modification executed during 2022;
• $14.9 million increase in other expenses primarily related to charitable contributions made during 2022;
• $7.6 million increase in compensation and other personnel expenses primarily due to changes in headcount; and
• $3.3 million increase in professional service expenses primarily due to an increase in reliance on third-party selling, general and administrative contractors.

Selling, general and administrative expenses were $451.4 million for the twelve months ended December 31, 2022, compared to $282.7 million for the same period in 2021, an increase of $168.7 million. The increase in selling, general and administrative expenses primarily reflects the following:

• $108.3 million increase in stock-based compensation expense primarily due to the Chief Executive Officer grant modification executed during 2022;
• $23.7 million increase in professional service expenses primarily due to an increase in reliance on third-party selling, general and administrative contractors;
• $18.6 million increase in compensation and other personnel expenses primarily due to changes in headcount;
• $16.4 million increase in other expenses primarily related to charitable contributions made during 2022; and
• $2.0 million increase in facility- and technology-related expenses primarily due to the Company’s continuing expansion efforts.

Non-GAAP selling, general and administrative expenses were $86.6 million and $60.1 million for the three months ended December 31, 2022 and 2021, respectively, an increase of $26.5 million. Non-GAAP selling, general and administrative expenses were $270.3 million and $209.2 million for the twelve months ended December 31, 2022 and 2021, respectively, an increase of $61.1 million.

Settlement and license charges

In February 2021, the Company recognized a $10.0 million settlement charge related to contingent settlement payments to BioMarin as a result of the approval of AMONDYS 45 in the U.S. This was a result of a settlement and license agreement with BioMarin in July 2017. There was no such expense recognized during the same period of 2022.

Amortization of in-licensed rights

For both the three months ended December 31, 2022 and 2021, the Company recorded amortization of in-licensed rights of approximately $0.2 million. For both the twelve months ended December 31, 2022 and 2021, the Company recorded amortization of in-licensed rights of approximately $0.7 million. This is related to the amortization of the in-licensed right assets recognized as a result of agreements the Company entered into with BioMarin and the University of Western Australia in July 2017 and April 2013, respectively.

Other income (expense), net

For the three months ended December 31, 2022 and 2021, other income, net was $5.5 million and other expense, net was $16.1 million, respectively. For the twelve months ended December 31, 2022 and 2021, other expense, net was $35.0 million and $68.4 million, respectively. The changes are primarily due to an increase in interest income and accretion of investment discount due to the investment mix of the Company’s investment portfolio as well as a reduction of interest expense incurred as a result of the repayment of the December 2019 Term Loan, partially offset by losses on the disposal of assets.

Loss on debt extinguishment

On September 14, 2022, the Company entered into separate, privately negotiated transactions to repurchase a portion of the outstanding senior convertible notes due on November 15, 2024 (the “2024 Notes”). The holders exchanged $150.6 million in aggregate principal value of 2024 Notes held by them plus accrued interest of $0.8 million for an aggregate payment of $248.6 million. The Company accounted for the repurchase of the 2024 Notes as a debt extinguishment by recognizing the difference between the repurchase price of the debt and the net carrying amount of the extinguished debt as loss on debt extinguishment. The loss incurred on the extinguishment was $98.5 million.

On September 16, 2022, the Company repaid in full all of its amounts outstanding with respect to the December 2019 Term Loan and repaid in full all obligations to the lenders. The aggregate payoff amount was approximately $585.5 million, which includes $550.0 million of principal amounts, additional loan consideration and premiums of $25.4 million, and accrued interest of $10.1 million through the repayment date. The loss incurred on the extinguishment was $26.9 million and represents the difference between the aggregate payoff amount and the net carrying amount of the December 2019 Term Loan.

Gain on contingent consideration, net

The gain on contingent consideration, net, relates to the fair value adjustment of the Company’s contingent consideration derivative liability related to regulatory-related contingent payments to Myonexus Therapeutics, Inc. selling shareholders as well as to two academic institutions under separate license agreements that meet the definition of a derivative. During the twelve months ended December 31, 2022 and 2021, the Company recognized a $6.7 million and $7.2 million net gain, respectively, to adjust the fair value of the contingent consideration.

Gain from sale of Priority Review Voucher

In February 2021, the Company entered into an agreement to sell the rare pediatric disease Priority Review Voucher (PRV) it received from the FDA in connection with the approval of AMONDYS 45. Following the termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in April 2021, the Company completed its sale of the PRV and received proceeds of $102.0 million, with no commission costs, which was recorded as a gain from sale of the PRV as it did not have a carrying value at the time of the sale. There was no such gain recognized during the same period of 2022.

Income tax expense (benefit)

Income tax expense for the three and twelve months ended December 31, 2022 was approximately $7.9 million and $13.5 million, respectively. Income tax expense for the three months ended December 31, 2021 was approximately $0.1 million, while income tax benefit for the twelve months ended December 31, 2021 was $0.2 million. Income tax expense (benefit) for all periods presented relates to state and foreign taxes.

Cash, Cash Equivalents, Restricted Cash and Investments 

The Company had approximately $2.0 billion and $2.1 billion in cash, cash equivalents, investments and long-term restricted cash as of December 31, 2022 and 2021, respectively. This is driven by cash used to fund the Company’s ongoing operations during 2022 and repayment of the term loan and a portion of the convertible debt, partially offset by net proceeds from the Company’s convertible note offering and sales of the Company’s products.

Use of Non-GAAP Measures 

In addition to the GAAP financial measures set forth in this press release, the Company has included certain non-GAAP measurements. The non-GAAP loss is defined by the Company as GAAP net loss excluding interest (income) expense, net, income tax expense (benefit), depreciation and amortization expense, stock-based compensation expense and other items. Non-GAAP research and development expenses are defined by the Company as GAAP research and development expenses excluding depreciation and amortization expense, stock-based compensation expense and other items. Non-GAAP selling, general and administrative expenses are defined by the Company as GAAP selling, general and administrative expenses excluding depreciation and amortization expense, stock-based compensation expense and other items.

1. Interest, tax, depreciation and amortization 

Interest (income) expense, net amounts can vary substantially from period to period due to changes in cash and debt balances and interest rates driven by market conditions outside of the Company’s operations. Tax amounts can vary substantially from period to period due to tax adjustments that are not directly related to underlying operating performance. Depreciation expense can vary substantially from period to period as the purchases of property and equipment may vary significantly from period to period and without any direct correlation to the Company’s operating performance. Amortization expense primarily associated with in-licensed rights as well as patent costs are amortized over a period of several years after acquisition or patent application or renewal and generally cannot be changed or influenced by management.

Contacts

Investor Contact:

Ian Estepan, 617-274-4052

[email protected]

Media Contact:

Tracy Sorrentino, 617-301-8566

[email protected]

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