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Sarepta Therapeutics, Inc. (NASDAQ:SRPT)

2012 Lazard Capital Markets Healthcare Conference

November 11, 2012 4:30 PM ET

Executives

Chris Garabedian – President and CEO

Moderator

We’re going to get started. I’m Bill (Inaudible) biotech analyst Lazard Capital Markets. I thank everybody for attending the 9th annual LCM Healthcare Conference. Hopefully today has been valuable to you and hopefully you’ll come tomorrow and that will be valuable as well. We are pleased to have Chris Garabedian and probably racked up some serious frequent flier miles in the last month and a half and somebody who is obviously very popular in the investment community with some of the data that they recently put out on Eteplirsen for treating Duchenne. So Chris, thanks very much for participating and for your presentation.

Chris Garabedian

Thanks Bill and thanks to Lazard for the invitation and well done some great research following the company. We appreciate that. I’d like to talk to you about Sarepta Therapeutics. We are an RNA based technology, but we think it’s differentiated from other approaches and we show this in the clinic, most notably with our Duchenne Muscular Dystrophy product and I’d like to talk to you about some recent data we shared. I’m going to be making some forward looking statements so please refer to your SEC documents on Sarepta to understand the risk factors associated with the company.

Our proprietary pipeline is focused on Duchenne Muscular Dystrophy program is the drug Eteplirsen where we just announced 48 week data from our phase two study and I’ll reveal those to you today. We also have a couple of other follow on compounds. This is a genetic based disease. It’s very fragmented and requires many drugs to treat all of the potential patients that would be amenable to our technology. And so we’re focused on bringing other Duchenne products with our safe technology through the clinic.

We also have an infectious disease portfolio, but largely elder funded or is currently funded by the government and department of defense, most specifically and I’ll be talking – I won’t be talking about the infectious disease program today, but I will say that our novel virus program is an active program in development that has shown very good activity on survival in non-human primates and has been shown to be safe in single setting dose. We are preparing for multiple setting dose that will take place next year.

So Duchenne is really a devastating neuromuscular disease. It affects mostly brains (inaudible) connect chromosome disease and it’s a very progressive disease. It starts with diagnosis usually by the age of three to five years of age. It typically leads to a level of progression of loss of ambulation until their pre-teens or early teen years where they’ll require a wheelchair and then they start to lose their basal muscle function, their pulmonary and cardiac function start to see this congestial decline.

They won’t live beyond the age of 30 and so this is largely caused by their lack of the essential protein that’s found in healthy muscle called dystrophin. And so what we’re attempting to do with our product and our technology is to repair the mutations that occur in the dystrophin gene that render them unable to translate and produce the protein. And so what you see on the right here is, on the top cell you see what Duchenne Muscular Dystrophy tissue looks like when say for Dystrophy you hardly see any discernible dystrophin. On the bottom is the healthy muscle tissue, what our muscles would look like with 100% dystrophin part of the fabric.

So Eteplirsen is the molecule that I’m going to be talking about today and this is a RNA antisense oligomer type that has a very different backbone chemistry than other RNA antisense approaches and really different than most of the RNA applications we see out there, whether it’s SRNA or RNAi or microRNA. It does not appear to the (inaudible) chemistry, the nucleic acid type structure negatively charged which typically interacts with other host proteins. It has inflammatory effects. It basically produces these off target effects that limit their ability to get to a dose window that phase.

And so it works in DMD by directing alternative splicing that we call exon skipping and I’ll explain that in a minute. It administers systemically through IV infusions weekly. This is the DMD application I’m referring to. The PMO here, this is the Phosphorodiamidate Morpholino Oligomer that I’m referring to is neutrally charged and the plasma half life has very attractive drug like properties. It has a short plasma half-life, two to six hours but that exposure to in this case the muscle cells get uptick and produces Dystrophin has a very much longer half-life. It can be two to four weeks, the Dystrophin half-life and potentially we might see a longer half life in compartments or inside the cell.

It’s close to the kidney. We’ve seen that it occurred intact in the urine normal tab light. We’ve not seen any antibody or imminent genetic response to the drug and in the current DMD tests we’ve tested this drug up to 15mg/kg weekly in patients that we saw low treatment adverse events, low lab abnormalities, no signals of toxicity through four weeks treatment.

The mechanism of action that I described, the exon skipping or direct alternative splicing is really attending to repair the lesion that occurs in the Dystrophin gene in these patients. Now, lesions along the gene can manifest itself in two ways. It can produce a Duchenne patient that is a much more severe phenotype. It’s degenerative embedded with 100% fatal. Typically the majority of patients lose the ability to walk by age 12 and it’s characterized by an outer frame deletion that renders them unable to reach through and produce the protein.

This similar dilution in the gene of in frame. It produces a Becker muscular dystrophin phenotype. This is a milder disease and often times there’s a chain ambulation until late adulthood. Often times they’re not even aware they have a muscular dystrophy as they grow into adult life. What we’re essentially doing is converting a Duchenne genotype into a Becker genotype and the hope phenotype to produce a milder disease. And by doing that, we’re able to restore the legal frame and allow these patients to produce a dystrophin protein albeit a truncular protein like we see in Becker, but a functional dystrophin protein nonetheless.

This is just more specifically an example of a patient in our studies that would have, let’s say 49, 50 deletion in the gene. You see that it’s out of frame. So the code-ons don’t match up and we understand what the bad actor is in any specific Duchenne genotype. In this case it’s the silence exon 51 or hybrid frame out of the reading frame we’re able to create an in frame deletion and restore. So we’re converting a 40, 50 deletion to a 49, 51 deletion which is something you see in a Becker muscular dystrophy patient.

And we see that we could produce a protein in an earlier UK study. This was a phase 1C study where we were able to produce novel dystrophin via the muscle biopsies and immunofluorescent staining. Here are some examples of the vessel RT-PCR and the immunofluorescent staining we did a patient in the study. But we weren’t satisfied that we’ve achieved the optimum levels of dystrophin that we thought would translate to a clinical benefit. So these doses went up to – from 0.5mg/kg to 20 mg/kg and within 20mg/kg were more consistently producing novel dystrophin.

So really we want to understand is how do we produce more and if you look at the first 24 weeks of this scheme here, of the study design, we did that by staggering the biopsies and to try to understand the relationship between dose and duration. So we wanted to look at a higher dose, 50mg/kg at a short timeframe, 12 weeks consistent with our UK study, but we also wanted to look at a lower dose study mg/kg over a longer duration, 24 weeks to see if dystrophin would be produced.

What we learned from the first 24 weeks is that we don’t see meaningful levels of dystrophin until 34 weeks, despite looking at a higher dose at 12 weeks, they had on average is 0.8% dystrophin positive fibers while the 24 week 30mg had over 20% dystrophin positive fibers. Now, we continued these patients on and rolled the placebo patients over and we scheduled a third biopsy you see here at 48 weeks. And I’m going to show some of that data which was very encouraging with the follow up. Just as background, these were the baseline characteristics in our study. Again we had great conformity around age and the six minute walk baseline, with the exception of you’ll notice that we had a slightly older mid age and a 30mg group.

They were taller on average in the 30mg group and they had a lower six minute baseline. This is important to highlight because there were two boys that we have now disclosed were homozygous twins that basically had the lowest six minute walk baseline scores. They were the tallest in the study and that’s notable because height and taller height has been a contributor to rapid decline on ambulation and they also were slightly older. Although they weren’t the oldest in this study, they were in the older end of the range. So you’ll notice the study in their groups were important because those two boys who lost ambulation that I’ll describe in a moment were in that 30mg group.

I just want to highlight, I’ll be showing a lot of dystrophin data. We had a very rigorous methodology to collect the dystrophin and measure the dystrophin. This was a blinded process. So the reviewer did not know what they were looking at in the blinded phase, whether they were looking at treated or a placebo patient, whether it’s pre-treatment or post-treatment. We also in the 48 week put some additional slides for review to not allow them to understand what they were looking and they were blinded also for dose in the 48 week timeframe. But ultimately, these were very robust analysis and that they used multiple samples.

We took a long tissue sample from the belly of the bicep. We sliced that into, in the case of the immunofluorescence, 12 slices for each block of two blocks to 24 slices just to do the immunofluorescence and we took an average of that and then we did that again at the 24 week timeframe and the 48 week timeframe. So using the averages, we also factored out the baseline dystrophin levels because in this process you can see some noise or reverting fibers present at baseline. And so we wanted to take a conservative approach and factor that out so that we really understood what is the novel dystrophin positive fibers that we’re creating. We didn’t want to artificially fail.

So we think it’s very important to have baseline dystrophin biopsy samples to measure against or to calibrate what it should look like in a Duchenne patient. So just want to highlight the rigor that went into the dystrophin analysis. And this was the overall summary table. We shared in October of what we showed at 48 weeks. You see the top numbers here represent after 48 weeks of the Eteplirsen treatment. We showed 47% dystrophin positive fibers and I’ll show you some fibers that reflect an example of what this looks like in the muscle biopsy.

We had seemingly no dose response here. The 30mg actually numerically had higher dystrophin positive fibers than 50mg, but generally these were not different from each other. They were both particularly different from the baseline and we think that generally this says that even 30mg over a long enough duration of therapy produces very robust levels as much as we might see with 50mg.

When we look at the placebo crossover patients, these were just four patients after 24 weeks of treatment. Again comparable levels steady 8% after 24 weeks of treatment dystrophin positive fibers and again because these were in two, we didn’t have specific scores on the subgroup, but numerically 50mg did a little better than 30mg. but generally this tells us that the dystrophin levels were higher at 48 weeks over 24 weeks and we don’t seem to see a real dose response in having 50 mg produced significantly more dystrophin.

These are the individual patient scores and again, because the first part of the study we staggered the biopsy so you have to look at the color key here, but you see notably on the left hand side the 30mg group where we did have dystrophin present at 24 weeks, this was before patients where we could understand does dystrophin increase with continued dosing. And this is where it was very encouraging in that every one of those patients showed increased dystrophin and was consistent.

Those range from the average of about 28% to 31% increased dystrophin positive fibers from 24 to 48 weeks. And again I’ll just remind you that the two non-ambulant boys were in this cohort. So even in a non-ambulance setting, we’re showing that dystrophin can be present. This structure will be taken safely. These boys continued to take the drug and they showed increases consistent with what we saw in the ambulatory population. And then you’ll see, look there are other factors, host factors and maybe sampling variability that leads to some of the fluctuations across the individual patients.

But in general, all of them even the 24-week patient showed about a 30% Dystrophin positive fibers, up to 60% Dystrophin positive fibers across the cohort.

And these are really encouraging to see in that you can visually and qualitatively see the difference in the biopsy sample of what the pre-treated biopsy uses the 30 milligram groups, that you see the Dystrophin basically localizing at the cell membrane in the Sarcolemma, which is exactly where we want to see it. And then you see in the photo where we treat the cohort of the same patients, you really start to see the additional distribution and well diffused Dystrophins throughout the muscle biopsy. So this was very encouraging.

If you look at this on a computer we have these slides on our website. You really start to see the Dystrophin pop in a dark room if you are looking at a well at screen. And here we wanted to show – again, we are showing every single patient in our study, pre and post treatment. We think that is important in that we receive a consistency across each patient – again, on the left hand side you can see the 50 milligram group at 48 weeks and then here you see the placebo crossover groups 50 versus 30.

Here we show a 6-Minute Walk. So we did collect a clinical outcome and had the primary clinical measure of 6-Minute Walk test captured and what we’ve done here is we have taken those two boys that I described. These were the Monozygotic twins who went non-ambulance shortly after and whom in the study before we had a chance for the drug to produce Dystrophin, they had already, were well on their way to losing ambulation. We have now – this is our modified intent to treat where we have combined the 50 milligram group and the 30 milligram group into the treatment cohort and we compare that to the placebo group that had delayed treatment.

And as I mentioned, the Dystrophin we’ve produced was fairly consistent across 30 and 50 milligrams. So we wanted to understand if you combined those patients who are still ambulant producing those levels of Dystrophin, how do they perform as a group compared to the placebo delayed treatment.

And again here we’re presenting this modified intent to treat which led to a 67 meter differential at 48 weeks with a P-Value of 0.001. And again this is somewhere near the graph and that we are combining and including the 30 milligram. We have reported previously that the 50 milligram had a better treatment effect than the 30 but we don’t think that that means 30 is not responding to the drug. In fact, we do see a differential and although 30, the two patients in 30 didn’t hit the physical significance compared to placebo. When they are combined with our treated group we do retain the P-Value in our modified intent to treat. So we thought it was important to recognize that the 30 milligram group even when they are included in the treatment again leads to a good benefit over the placebo delayed treatment group.

And what we wanted to highlight was for those that are new to the story, I shared with how the Dystrophin was delayed in seeing those meaningful levels. At 12 weeks at the highest phase we saw 0.8% Dystrophin positive fibers. So we know that sometime between week 12 and week 24 is when we would expect the Dystrophin to materialize in the muscle tissue and to be at meaningful levels. So what you can see here is when we would expect Dystrophin to be present in the muscles is the shaded part for both the treatment group and for the delayed placebo group. And so you see until we were able to produce Dystrophin you see the placebo group was on that progressive decline that we expected and they seem to have stabilized between weeks 36 and week 48.

So again we are very encouraged by these data, the goal of therapy is to maintain stability in this population that has this progressive disease or slow the progression of the disease. And we think if you start earlier before they started to lose progression that both work for the ability to keep them in a fairly good ambulance state for a longer duration of time.

And we’d just like to highlight that the two boys who were non-ambulant, we don’t think that that means that the drug is not having an effect, we think that it was too late to show an effect on an ambulatory measure but non-ambulatory measures such as pulmonary function tests are important and we continue to follow them in these patients. We are just showing in a few that after 48 weeks the two twins who were non-ambulant have maintained their pulmonary function. And the reason we picked this out is because what we typical see as fairly good healthy pulmonary function in an ambulatory population but after they go non-ambulant you start to see this compupentory decline. And so one of the highlights that we’ve not seen any signal of decline on the pulmonary function we’ll continue to follow them out further. We are also looking at muscle strength and nine hole tech tests and other non-ambulatory measures that we think are relatively insensitive of their able and shorter duration but over time we think those are going to become meaningful of maintaining the level of function on some of these other ambulatory measures.

And then we just showed this for – to address any questions about where one or two patients driving the treatment effect and this really breaks down the subgroup analysis and our modified intent to treat pretty finitely. And if you refer to our press releases about 46 weeks and 48 weeks in July 24, October 3, you’ll see we get baseline characteristic even of the subgroup. So if you really start to dig into this you‘ll really understand that this was not limited to one or two patients who did better on treatment. That it was really a robust analysis across these various subgroups.

And again we just wanted to highlight how thorough the analysis was on our safety parameter and labs. And again we have seen no evidence of toxicity across all of these types of measures and we continue to follow these to see normality or stability on many of these measures and so we continue to dose all of these patients, this is a long term safety and efficacy study and so we intend to follow these patients indefinitely as long as this program continues to move forward. And so we look forward to analyzing further data at future time points.

And this is our treatment emerging adverse events slides that now look at those that were dosed for Eteplirsen 24 weeks in total. So these was all 12 patients after 24 weeks of treatment at Eteplirsen. We have eight patients now that have been on Eteplirsen for 48 weeks, that’s the second column and then we have that placebo group for 24 weeks to compare what were the adverse events that were coming up in the first 24 weeks in the placebo. But importantly, there’s been no treatment related adverse events and we’ve been well tolerated, no series adverse events in the study or discontinuations, no treatment related changes on safety lab parameters including several level-specific enzyme work related to the kidneys, so that was very important to look at. And then no proteinuria or change in blood coagulation profiles or thrombocytopenia that has been observed, which has been observed with other chemistries in the R&A state.

Just to discuss briefly upcoming activities, in the fourth quarter we’ll be preparing briefing documents with the 48 week phase IIb data. By the end of the year we will request end of phase 2 meeting with the FDA, this will be calendered in the first quarter of ’13, where we will meet with the FDA to discuss the confirmatory study and the fastest path to approval. In the – really next year is a planning year to prepare for whatever we learn for these FDA meetings to plan for those confirmatory study or studies and as well as preparing manufacturing scale up. So in the second to third quarters of next year, we will be preparing manufacturing scale up, we’ll have our CMC meeting with the FDA, we’ll be producing drug materials for our confirmatory trial, we’re doing protocol development, site selection, patient identification and pre-screening. We are in the first quarter of ’14 as well we expect to have IRB approvals and to initiate patient dosing and whatever confirmatory study we agree upon with the FDA.

And we think this dataset that I’ve shared with you is highly reproducible across other Exon-Skipping targets in DMD. We already have two collaborations with academia and government funding. Just a production on 45 and Exon 50. We’ve been working additional collaborations on Exon 52 and Exon 44 that will hope will come to fruition and we think that these top five Exons represent about 45% of the Exon-Skipping amenable population. And we think if we see consistent results, standard dosing, similar pharmacokinetics and safety profile which manufacture the same way and we see consistent responses that this could enable what we hope will be a class approval whether were the Exons, which in feasible to do clinical safety and efficacy studies, both there is a mechanism with the EMA and the FDA to get a broad class approval.

And in summary, our financials. We have 25.5 million shares outstanding that we disclosed on our last earnings call. This includes a recent drawdown on an ATM that gave us a $57.4 million cash balance as of November 7 a couple of weeks ago. Our current share price, closing price as of yesterday was $27 which equates to about a $690 million Market Cap and again our guidance for 2012 which we reiterated at the last earnings call was $37 million to $43 million, we are overcoming the low end of the range on the revenue because of a calculation of our bill of contract and a delay in some of our marble revenues to result in an operating loss which is still within guidance of $25 million to $30 million for calendar year of 2012.

So that’s all I have and I think we have a little bit of time for questions.

Question-and-Answer Session

Unidentified analyst

(Inaudible)

Moderator

So yeah, so you biopsy the biceps as well?

Chris Garabedian

Yeah. We biopsy the bicep muscle, we define that a priority. We did all 380 biceps for the baseline and the 24 weeks or 12 week time point. For the third we had to go to another biopsy – so rather bicep. And we gave them an option but they ended up getting it from a healthier portion. So one where they didn’t go and surgically before. We didn’t want them to go into the safe spot, potential scoring or anything like that. So we had a fresh bicep sample for the third 48-week biopsy. But we usually get that is that this systematically delivered drug. We know that it works with local injection and we wanted to make sure we affected a large extremity muscle, that’s what we are trying to impact more most of all. And we didn’t want to do it in the quadriceps because they had walking tests, a lot of function tests that they needed their legs more importantly on and we didn’t want to have any surgery or anything like that to disrupt that. We felt the biceps was a really good proxy for a large extremity muscle groups.

Unidentified analyst

I do want if you could have thought that most of the data points do better localization in both the quad and calf and diaphragm, triceps or biceps. So you could expect higher levels of Dystrophin expression I would assume in those other working muscle groups, right?

Chris Garabedian

We’ll, we think it’s a good proxy for what’s going on in the rest of the musculature. I don’t know if there’s more dystrophin we’ll see. We go into the belly of the bicep as opposed to let’s say the anterior tibia ligament, right? That’s known to be a very leaky muscle, right? They’re constantly breaking down that muscle. So if you wanted to try to get a higher Dystrophin level, you might pick that because then you’ll get better uptake of the drug, leak your muscle tissue, that may artificial inflate what your Dystrophin levels might be versus going into the belly of a large extremity muscle. But they are human subject, so we can’t unfortunately get multiple surgical biopsies. So we have to use this as a proxy to represent what we think is going on in the rest of musculature.

Unidentified analyst

And so what I would -- just in your October slides, I thought we had western blot data. So can you relate to us the Dystrophin percentage protein…?

Chris Garabedian

Yeah. We’ve not reported any quantification. In fact, we don’t believe that western are evenly quantifiable and so we really did it just to show evidence that we are producing the protein by other means. We did the same thing at RTCR. We don’t try to quantify those methods because they are very variable given the lab-to-lab that have different results. The staining -- there’s a lot of art in that and we think that there are not the most quantifiable. The reason that we picked A priority Dystrophin positive fibers to immunofluorescents is after talking to leaders in the field, we noticed some debate about this but we felt that the stronger arguments were around actually looking at what is going on in the muscle. Is it localizing where you want to see it, how distributed and how well diffuse is it across a swap of muscle tissue and wanted repeated like a western value of one value. This has 24 for each time point. Any methodology to get what you are actually being novelly produced. So we – prospect of defining if for a reason but we understand we want to be – our little evidences to support the data use in here.

Unidentified analyst

Thank you.

Chris Garabedian

Any other questions?

Unidentified analyst

Why will it take a year to sort of figure out what the next steps are. Is it complicated with the FDA in terms of what end points would look like for a traditional trial?

Chris Garabedian

We’ll, doing with the FDA we don’t know what that confirm our study is going to look like but a lot of this is preparing not only the protocol development and the site selection and all the things that are going to preparing well for an important confirmatory or a pivotal study, but it’s also producing the drug to baseless patients. We’ve been small scale production to support our ongoing trial. We want to get to the next scale of production to support clinical trials with this drug. And this is a campaign, you have to do process validation, you have to make sure that the process can translate to the higher scale, you have to work with – take transfers to the CMOs that we are working with and importantly, unless we hear otherwise from the FDA, three validated batches using GMP conditions with three months fidelity of which we have to submit to the FDA for review before we get release of the drug product. And so we are trying not to cut that too close.

Unidentified analyst

Okay. Thank you for attending.

Chris Garabedian

I appreciate it.

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