Ian Estepan - Executive Director of Corporate Affairs Edward Kaye - President, Chief Executive Officer and Chief Medical Officer Sandy Mahatme - Senior Vice President and Chief Financial Officer Bo Cumbo - Vice President, Global Commercial Development.

Alethia Young - Credit Suisse Debjit Chattopadhyay - Janney Montgomery Scott LLC Ritu Baral - Cowen & Company Joseph Schwartz - Leerink Partners Brian Skorney - Robert W. Baird & Co.

Tim Lugo - William Blair Simos Simeonidis - RBC Capital Markets Matthew Harrison - Morgan Stanley Heather Behanna - Wedbush Securities Liisa Bayko - JMP Securities Yun Zhong - SunTrust Robinson Humphrey Steve Brozak - WBB Securities, LLC.

Good day, ladies and gentlemen, and welcome to the Sarepta Therapeutics Q3 2016 Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a remainder, this conference call may be recorded.

I would now like to introduce your host for today’s conference, Ian Estepan, Executive Director of Corporate Affairs. Please go ahead, sir..

Thank you, Scarlett, and thank you all for joining today’s call. Earlier today, we released our financial results for the third quarter of 2016. The press release is available on our website at www.sarepta.com and our 8-K was filed earlier this morning. We plan to file our 10-Q for the quarter by the SEC filing deadline in early-November.

Joining me on the call today are Ed Kaye, Sarepta’s Chief Executive Officer; Sandy Mahatme, Sarepta’s Chief Financial Officer; and Bo Cumbo, Sarepta’s Senior Vice President of Global Commercial Development.

I’d like to note that during this call, we will be making a number of forward-looking statements about our next planned corporate update; the mechanism of action of EXONDYS 51 and post-marketing commitments; the target patient population for EXONDYS 51 based on final label; the willingness of KOLs to prescribe EXONDYS 51; our goals with respect to providing treatment to DMD patients around the world; our MAA submission plans and expected timelines; our efforts with respect to the development and advancement of follow-on Exon; our clinical trial progression and plans including for ESSENCE and PROMOVI; as well as results we hope to see.

Our beliefs regarding the increased Exon skipping efficiency of certain follow-on candidate and the potential clinical and bio-clinical impacts of this; plans to transition certain clinical trial patients to commercial drug, the goals of our collaborations with Summit and Catabasis; our planned PRV sale and user proceed; the potential for a launch in the EU; our belief that we have sufficient drug supply to address the U.S.

market and clinical trial needs for our three lead Exon Skipping candidates; the expected launch progression; the time we expect for patients to obtain insurance coverage and identify site of care and expected timing; our goal is to work towards providing patient’s access to EXONDYS 51; our belief that we are well positioned and focused on executing our commercial and clinical development plans; and the goal of improving the lives of patients with DMD.

These forward-looking statements involve risks and uncertainties, many of which are beyond Sarepta’s control. Actual results could materially differ from these forward-looking statements as any and such risks can materially and adversely affect the business, results of operations, and the trading price of Sarepta’s common stock.

For a detailed description of risks and uncertainties, we encourage you to review our company’s third quarter 10-Q filing, the most recently filed Annual Report, and other official corporate documents filed with the Securities and Exchange Commission. With that, let me turn the call over to Ed, for our corporate and clinical update.

Ed?.

Thank you, Ian. Good morning, everyone. Thanks for joining us today for our financial and corporate update for the third quarter of 2016. Today, I will provide a brief update on our clinical programs, our regulatory progress, specifically relating to EXONDYS 51 in the EMA, as well as some recent corporate developments.

Sandy Mahatme, our Chief Financial Officer will provide an update on our financials for the third quarter of 2016, along with a review of our manufacturing readiness. Bo Cumbo, who is our Senior President – Vice President of Global Commercial Development will provide a high-level update on the progress of the launch of EXONDYS 51.

As you know, a little over a month ago, we received U.S. accelerated approval of EXONDYS 51, a treatment for patients with DMD, who are amenable to skipping Exon 51. At this point in time, it’s still too early to provide any metrics or guidance on the launch.

We aim to provide more color on the launch at the 35th Annual JPMorgan Healthcare Conference in early January, after the drug has been on the market for a full quarter. As a reminder, DMD is a pediatric X-linked recessive neuromuscular disease, caused by mutations in the DMD gene, which prevents the translation of a functional dystrophin protein.

Dystrophin plays a vital role in the structure, function, and preservation of muscle cells. The progressive loss of muscle function culminates in respiratory and cardiac complications that result in premature death.

EXONDYS 51 is designed to bind to Exon 51 in dystrophin pre-messenger RNA, resulting in the exclusion or skipping of this Exon, and therefore restoring the reading frame and allowing for the production of an internally truncated dystrophin protein.

The most common adverse reactions compared to a placebo group were vomiting 38%, balance disorder 38%, with contusion, excoriation, arthralgia, rash, catheter site pain, and upper respiratory tract infection also reported more frequently than placebo and it is greater than 10%.

EXONDYS 51 was approved under the accelerated approval pathway and is the only therapy approved in the United States to treat DMD patients amenable to Exon 51 skipping.

An accelerated approval maybe based on a benefit observed on a surrogate endpoint that is reasonably likely to predict a clinical benefit, even though a clinical benefit has not yet been established.

The EXONDYS 51 accelerated approval is based on the observation of an increase in dystrophin in the skeletal muscle of some patients rather than the clinical outcome. This is consistent with what is seen in many accelerated approvals based on surrogate endpoints.

Providing confirmatory clinical data will be one of the many goals of our future studies and post-marketing requirements. Continued approval for this indication may be contingent upon verification of a clinical benefit in these confirmatory trials. The final protocols for our post-marketing commitments are due in the second quarter of 2017.

The label does not have any restrictions on age, disease severity, and has no contraindications, making every patient that is amenable to Exon 51 skipping a potential candidate. The recommended dose of EXONDYS 51 is 30 milligrams per kilogram administered once weekly as a 35 to 60 minute intravenous infusion.

Some of the world’s leading experts in DMD recently gathered at the World Muscle Society Conference in Granada, Spain. At this early stage of the launch, we are pleased, there is a broader awareness of EXONDYS 51 and a clear understanding of our data.

These key opinion leaders indicated that they look forward to prescribing EXONDYS 51 to their eligible patients. It’s our goal to bring treatments to as many patients with DMD in as many countries as possible around the world.

While we are intently focused on the launch of EXONDYS 51 in the US, we will work towards potentially treating a larger group of patients by submitting a marketing authorization application for eteplirsen to the EMA by the end of the year.

Once the submission is validated, the review period for an application by the CHMP is typically 12 months to 15 months. We are keenly aware that EXONDYS 51 only treats approximately 13% of the DMD population. Our clinical teams are continuing to work diligently to support the development and advancement of the follow-on Exons.

On that effort, I’d like to provide an update on our current clinical trials. On September 28, we announced the first patient was dosed in the ESSENCE trial. ESSENCE is a randomized, double-blind, placebo-controlled study for patients amenable to either Exon 45 or Exon 53 skipping.

We plan to enroll approximately 99 patients in total, including at least 30 patients in each of the Exon 53 and Exon 45 amenable treated arms. Approximately 33 Exon 45 or 53 amenable patients will be enrolled in the placebo arm of the study.

After patients have completed 96 weeks in the study, they may roll over into an open label extension arm in which all patients will receive active treatment. We hope this study will reach its primary endpoint of change in six-minute walk test distance from baseline.

And in doing so, further the use of dystrophin as a surrogate endpoint and help validate other endpoints that can be used to measure efficacy in a shorter time period. The EMA has expressed interest in data from PROMOVI, our Phase III open-label study in patients amenable to skipping Exon 51.

So we have decided to keep this program open and enrollment is expected to be complete near the end of 2016. As a reminder, PROMOVI is a 96-week study, enrolling patients aged 7 to 13 years, who can walk between 300 meters to 450 meters, as measured by the six-minute walk test distance.

Study 4053-101, our Phase II study of Exon 53 in Europe has completed enrollment and we are expecting to have data available from the study in 2017. Due to advances in sequence optimization, we believe that our clinical candidates that skip Exon 45 and 53 have better Exon skipping efficiency than eteplirsen.

We are eager to see if increased Exon skipping efficiency will lead to a positive clinical trial results and the detection of larger quantities of measurable dystrophin in biopsy samples. There are currently 127 boys on eteplirsen enrolled across all of our clinical programs.

We plan on transitioning some of these patients on to commercial product over the coming months. All 12 patients from Study 201, 202 are anticipated to rollover to EXONDYS 51 as a commercial therapy.

All 24 patients from Study 204 are also anticipated to make the transition once they complete 96 weeks of treatment, as this study is a component of our pediatric investigational plan for the EMA. All patients in this study will have completed the trial by the end of April.

We are currently evaluating if a subset of patients from PROMOVI would roll over to commercial product. The remaining patients in PROMOVI will stay on the clinical trials, as I mentioned earlier, as this data is important to the EMA, its evaluation of eteplirsen.

Patients in Study 203 will continue to be monitored through 96 weeks in their clinical trial setting, as we are interested in seeing the effect of treating younger patients who have less significant muscle damage.

Finally, before I turn over the call to Sandy Mahatme and Bo Cumbo for financial and commercial updates, I would also like to highlight two corporate updates, which were recently announced. A joint research collaboration with Catabasis Pharmaceuticals and a collaboration with Summit Therapeutics.

Both of these collaborations are an effort to explore novel approaches to the treatment of Duchenne Muscular Dystrophy with complementary technologies to make the most meaningful impact in treating this devastating disease.

On September 29, we announced an agreement with Catabasis to jointly conduct early stage research, Edasalonexent, an oral investigational drug that inhibits NF-kappa B. In boys with DMD, the absence of dystrophin combined with mechanical stress in muscle leads to an activation of the NF-kappa B pathway.

Activated NF-kappa B drives muscle damage and prevents muscle regeneration. Therefore, it’s hypothesized that knocking down NF-kappa B could lead to more available transcript, which could result in increased Exon skipping and ultimately more dystrophin production.

The objective of this early stage joint research is to study the safety and efficacy of combining these two treatment strategies using a mouse model of DMD and evaluating any potential synergistic benefits of the combination.

We are looking forward to this collaboration with Catabasis and plan on evaluating the data generated from this study in the coming months. On October 4, we entered into an exclusive license and collaboration agreement for European Rights to Summit’s Utrophin Modulator Pipeline for the treatment of Duchenne Muscular Dystrophy.

As part of the agreement, Sarepta also obtained an option to license Latin American Rights to Summit’s Utrophin Modulator Pipeline. Summit’s technology represents a potentially promising approach to treat DMD, which may complement Exon Skipping.

Summit’s technology is not mutation specific and therefore, it has the potential to treat patients not amenable to Exon skipping. The partnership with Summit Therapeutics furthers our commitment to invest in innovative approaches to treating Duchenne and supports our goal of improving the lives of patients with DMD.

Now, I’d like to turn the call over to Sandy Mahatme, our Chief Financial Officer for an update on our financials for the third quarter of 2016..

Thanks, Ed. Good morning, everyone. As I stated on the previous approval conference call, we will not be providing financial guidance at this stage of the launch. This includes guidance on market assumptions, patient numbers, gross to net or sales potential.

We will continue to evaluate the possibility of providing guidance over the next few quarters, once we gain comfort with the ramp of the launch, market dynamics and key metrics. This morning’s press release provided details for the third quarter of 2016 in both an adjusted or a non-GAAP basis, as well as GAAP basis.

The press release is available on SEC and company websites. The non-GAAP results we will discuss on this call provide a more accurate picture for ongoing operations and the impact of operations on our cash balance and exclude restructuring and stock compensation expenses.

Please refer to our press release for a full reconciliation of GAAP and non-GAAP. In the third quarter of 2016, we reported an adjusted or non-GAAP net loss of $45.9 million, or $0.95 per share, compared to non-GAAP net loss of $46.3 million, or $1.11 per share in the third quarter of 2015.

Adjusted research and development expenses were $30.9 million for the third quarter of 2016, compared to $34 million in the third quarter of 2015, a decrease of $3.1 million.

Adjusted general and administrative expenses were $14.8 million for the third quarter of 2016 compared to $12 million in the third quarter of 2015, which is an increase of $2.8 million. Following our recent financing, we had approximately $406 million in cash and investments.

In addition, we have pre-paid approximately $20.9 million towards our 2016 and 2017 manufacturing expenses. Along with the approval of EXONDYS 51, we received a rare pediatric disease Priority Review Voucher. Last week, the issuance of the PRV was included in the Federal Register.

We have successfully – we have recently engaged bankers to conduct a sales process for the PRV. If we are successful in selling the PRV, we will use the proceeds to offset some of the costs associated with the continued build-out of our clinical development pipeline and manufacturing scale-up and entry into European markets.

As you can see, the recent uptick in cash burn seen in Q3 compared to Q2 is related to the manufacturing and infrastructure build-out in preparation for a potential launch in Europe. There is a long lead time to scale manufacturing, so it is necessary to invest now in order to be able to supply the market for a potential approval in Europe.

Lastly, from a manufacturing perspective, we believe we have drug supply sufficient to address the entire U.S. market and meet the demands of our current and upcoming clinical studies across our three lead Exon skipping candidates.

With that, I’d like to turn the call over to Bo Cumbo, Senior Vice President of Global Commercial Development for an update on the U.S. launch of EXONDYS 51..

Thank you, Sandy. The very early stages of the EXONDYS 51 launch are progressing well and as we expected. To facilitate patient access to therapy within 24 hours of approval, EXONDYS 51 was available within key systems utilized by payers, distributors, and specialty pharmacies.

We have a strong and knowledgeable commercial team in the field with an average of 10 years of experience in rare diseases and cumulative experience of over 100 product launches. As Ed mentioned previously, we are pleased with the initial feedback we’ve received from KOLs and their enthusiasm for prescribing EXONDYS 51 to appropriate patients.

We were excited that on October 6, 17 days post-approval, the University of Florida announced that the first patient was dosed commercially with EXONDYS 51.

But as discussed on our post-approval call, we would like to remind everyone that typical of other rare disease launches, we anticipate to take approximately 30 days to 90 days for the majority of the patients to obtain insurance coverage and identify a site of care.

We expect a lag of this duration for each patient prescribed at the treatment before sales are recognized. It is also important to note, site of care must be established before a patient can receive treatment for the first time.

As sites become established across the country, any delays related to this part of the infusion process are anticipated to diminish. We have a very experienced national accounts team with greater than 70 years of combined experience and more than 50 product launches completed.

They’re in the process of meeting with payers around across the country to educate them on EXONDYS 51.

Although, we will not comment on individual discussions, we are pleased that multiple payers have so quickly recognized the importance and urgency of treating the underlying cause of the disease and have already decided to formally provide coverage for patients amenable to Exon 51 skipping.

Based on our overall experience, we believe the discussions with payers are following a course similar to other rare disease and specialty launches and we are happy with the progress we’ve made within the first month following approval.

As we would expect and support, managed care plans have a prior authorization to ensure that each patient has a genetic mutation amenable to Exon 51 skipping and confirm that only appropriate patients receive EXONDYS 51 therapy.

Our case managers working the Sarepta’s program are experienced in rare diseases, dedicated to help patients navigate the reimbursement landscape and prepared to assist with the identifying the appropriate coverage for patients. We are committed to patients accessing EXONDYS 51 and working toward this goal.

And with that, I’ll turn the call back over to Ed..

Thanks, Bo. Before we open the call to questions, I’d like to conclude by saying that we believe the company is well-positioned and focused on executing on our commercial and our clinical development plans, with a goal of improving the lives of patients with Duchenne Muscular Dystrophy. And with that, operator, we can open up the call to questions..

Certainly. [Operator Instructions] Our first question will be coming from Thank you line of Alethia Young from Credit Suisse. Your line is now open..

Hey guys, thanks for taking my question and congrats again on the battle of getting this drug approved.

I guess, just wanted to talk a little bit about, I know you can’t give a lot of detail on this, but maybe broad strokes around kind of identifying sites, genotyping patients like what kind of work you think needs to be done there like, where do we kind of stand relative, meaning like how many people have been identified so far, kind of characterize where we are in the process would be very helpful? Thanks..

Sure. So, Alethia, one of the things that’s been very helpful for us in the U.S. is that, we have 39 sites that have been involved in our studies already. So we have a lot of physicians and experts in neuromuscular disease in the U.S. that know how to use the drug, or understand the need for intravenous therapy.

And so, we’ve been really in contact with all of really the key sites in the U.S. about 50 in total that we’re in fairly constant communication. So these sites are ready. They are already going through and looking through their charts, trying to identify patients who are amenable to Exon 51 skipping.

The other process that we’ve been working on and we’ve been working in collaboration with PPMD is to make sure that patients know their genotype. Prior to the approval of a very specific personalized genetic medicine, Exon skipping drug, there wasn’t an absolute need to know what your genetic mutation was.

So many patients haven’t had the genetic testing. So we’re making sure that patients are aware that they need to have the testing and the PPMD has a program called Know Your Duchenne. And what they’ve done is really provided services and for patients who don’t have insurance or who have inadequate insurance.

It helps pay for the cost of the genetic testing. So it’s a fairly large effort that we’re supporting to make sure that patients are genotyped, and so that they can find out whether or not they could be really amenable to Exon 51 skipping..

Great. Thanks..

Thank you. Our next question comes from the line of Debjit Chattopadhyay from Janney. Your line is now open..

Hey, good morning.

Can you hear me?.

Yes..

Yes..

Great. If you’ll indulge me, I’ve got two questions.

The first one, when you enroll patients in the PROMOVI and now in ESSENCE studies, how many did you have to screen to enroll one patient based on the narrow entry criteria?.

I don’t – that’s a good question, Debjit. I don’t have the exact numbers. Obviously, a lot of the screening had occurred prior to the patients actually coming for formal screening, because the clinicians were trying to determine whether or not a patient would be amenable.

For the most part, the patients that actually presented for screening were accepted for the trial. But a lot of the patients, of course, haven’t made it, because the physician already figured out that they wouldn’t qualify for the site. So that number is a little hard to know, because they were already pre-screened..

Great. And then, could you walk us through the EMA scenario again. Do you plan to submit by year-end, but EMA apparently needs the PROMOVI data.

So will they validate the application next year, or will they wait till 2018 till you get data from PROMOVI, and are they looking for both six-minute walk test in dystrophin, or any one would suffice? Thank you..

Sure. So I think the process there – remember, we are applying for conditional approval in the EMA. So they are interested in the PROMOVI data. But again, the expectation is that would be provided later in the course of the development.

What we’ve heard is that they certainly are interested in the dystrophin data to just to show from a proof of concept that the drug is working as expected. But they’ve been also very interested in the data in regards to the clinical data. So we will be providing them four years’ worth of data.

It will be not only the six-minute walk test, but things like the ability to ambulate, ability to rise the North Star Ambulatory pulmonary function. So it’s a fairly robust package from not only the dystrophin data, but also all of the clinical data that we’ve added on.

So it’s – and if you recall, when we had filed in the U.S., at that time, we only had three years’ worth of data. So this will be four years’ worth of data and also including the safety updates, which – we now have in this package, we have boys – 88 boys, who had over one year of exposure. So it’s a fairly full package for a relatively rare disease..

Thank you. Our next question comes from the line of Ritu Baral from Cowen. Your line is now open..

Hi, guys. Thanks for taking the question. Could you give us any more updates on your discussions with the FDA on the confirmatory trial and specifically your thoughts on dose? What if any statistics or hurdles maybe part of that design and how that higher dose may factor into Sandy’s comment on supply capabilities for US..

Yes, thanks, Ritu. We are literally just in the process of finishing our – the first draft of the protocol and that will be sent and this is for the eteplirsen study and that’s going to be sent to the FDA. So we have not had any specific discussions with them in exactly what the trial will look like and even having discussions over the dose.

So that’s something that it’s going to take some time and a lot of negotiation. And so, it’s not going to be really, we don’t expect these to be finalized until the second quarter of next year, because there’s going to be a lot of give and take over the discussions.

And I think in regards to planning ahead, I mean, one of the things that we’ve been very focused on is our next-generation chemistry. And I’ve mentioned before that our plan on that and this is with our cell-penetrating peptide PMOs, we plan to be in the clinic by the end of 2017.

So that gives us a much greater flexibility in – because of the potency of this product and also the ability to dose much less frequently. So these are the kind of things that we’re making sure that, as we plan for the future, we have a number of options.

So we – if – as we go forward, we are continuing to improve the drugs and making sure that the patients have the best therapy available..

Great. And if I can squeak-in one quick follow-up, if I may, just very briefly.

What are the most common statics that you are seeing in your payer discussions? I think we saw Humana yesterday say, they are restricting coverage to ambulatory patients with some – I guess a follow-up response criteria for maintenance of ambulatory, a state criteria?.

Ritu, I think I’ve been through this now. This now the fifth time I’ve been involved in launching basically the first drug for a disease. So one of the things that certainly that I have experienced is, there’s a lot of education when you’re the first drug to be approved.

And so one of the things that we’re going through is making sure the payers understand that this is a fatal disease. And it’s not unusual to have a discussion. And I think the thing that we fall back on is our label is a very broad label, it’s not restricted to age or the severity of the disease.

And obviously, we have a lot of information on the boys up to -- who are non-ambulatory, I think we studied those boys in the Study 24. So typically, what happens is there will be a discussion.

There is frequently a denial that occurs and then you have to have a justification where the physician writes a written justification for why he thinks it’s necessary. So this is, I think, a fairly normal part of the reimbursement process.

And I think, obviously as we go further down the path, as the payers understand the disease, as they get more information, and we’re going to make sure that we provide as much information for them. So far there’s nothing that I’ve seen that looks any different from all the other rare disease drugs that for the first time when we’ve had a therapy..

Great. Thanks for taking the questions..

Thank you. [Operator Instructions] Our next question comes from the line of Joseph Schwartz from Leerink Partners. Your line is now open..

Thanks so much and congrats on the approval. So, I was wondering if you could give us some more insight into the genotyping situation in the market today.

How many patients with DMD, do you estimate are already genotyped either overall or at those 39 sites? How many patients are at those 39 sites? I’m just wondering if you can give us some insight into that process to determine whether a patient is Exon 51 skip amenable, so that way we can all imagine what the most likely ramp of uptake is going to be? Thanks..

Sure. Joe. So what we’re finding now is and we don’t have obviously, exact numbers, because it’s still early in the launch and people are going through. But there’s a significant number of boys who haven’t been genotyped, maybe 40% or so, as a guess, and there is obviously a big emphasis on the part of the clinicians to get those boys genotyped.

So that they know whether or not they’re are Exon 51 amenable. What we are seeing and I think that’s been fairly consistent is approximately 13% of Exon – of all the boys with DMD, who have an Exon 51 skippable mutation is fairly consistent. I think we are still trying to get at the numbers, trying to really understand what the impact is.

Obviously, one of the challenges that we have is that, because there wasn’t a therapy available, we are expecting that there is going to be a greater awareness, there will be a greater emphasis on genotyping, there will be earlier diagnosis for boys with Duchenne Muscular Dystrophy, because the neuromuscular experts, they don’t want to miss an opportunity to treat a boy, especially a condition like this, which is so universally fatal.

So I think we’re still – it’s still very early to try to understand the numbers, but I think the emphasis that we’re really pushing on in all of our medical science liaisons that are in the field are just making sure that we’re making it as easy as possible to get that genotype.

Obviously PPMD is making sure if they don’t have insurance coverage, that’s paid for, so that’s not a block to getting the data. So I think in a couple of months, we’ll have a better idea about how many patients are going to be available.

But what we can say is, there has been a lot of interest from the sites to make sure that they are bringing these boys in and getting screened. So I think that enthusiasm has been very encouraging..

Great. Thanks, again..

Thank you. Our next question comes from the line of Brian Skorney from Robert Baird. Your line is now open..

Hey, good morning, guys. Thanks for taking the question. Maybe to just ask kind of some more about the EXONDYS 51 patient dynamics. Maybe trying to contrast this launch with your experience with Kalydeco.

I mean, I just see a lot of parallels, both drugs been targeted to genetic sub-population is roughly equivalent in size first drug on the market with a disease modifying effect.

Aside from the obvious parallels, I mean, how do you see the differences in terms of the early stages of the launch between those two experiences?.

Yes, thank you, Brian. I appreciate the question. They are very similar in the sense that there’s a great need to have a treatment available and the providers as well understand that need and they are actively looking for the patients.

I think Ed touched on one difference between CF and DMD is that more patients were already genotyped in CF than they were in DMD. And I agree with Ed, that roughly 60% of the population we believe are genotyped. The physicians are actively looking for their patients, they are calling their patients in. They are going through the records.

They understand the urgency of being treated for the underlying cause of the disease, which is lack of dystrophin. So I think they are very similar in that sense.

And to Ed’s point as well, a lot of the patients that are – do not have genotypes are actively calling their physicians and the physicians are actively calling them as well to get genotyped and to try to identify them as fast as possible..

I guess, I was also looking for maybe, just commentary generally on differences in terms of the breakdown in payer coverage.

Is it roughly equivalent in terms of like private, public in the subset there and just also in kind of the actual prescription approval, reimbursement approval and pick up process, maybe breakdown the differences between what it means for having an IV infusion versus just an Rx that you can pick up with – in a bottle of pills?.

Yes. So a couple of points there. First, on the breakdown of commercial to Medicaid. We’ve felt that going into this is going to roughly be a 50% commercial market compared to 50% Medicaid, give or take 5% or 10% on either side and we still feel pretty comfortable with that.

I think from – to your point on infusion times and such, it is different, because in this you do have to find the site of care. The time that we’re looking for a site of care as well, they run in parallel with the prior authorization process.

So while there’s a lag at the very beginning to make sure that we do identify sites of care that is different than a Kalydeco type launch, where you don’t have to look for infusion suites. But typically, this happens once for the first patient in a site, and then once that happens, things smooth out.

From a prior authorization process, I’ve been a part of many launches – many specialty launches and to Ed’s point as well, what’s I’m seeing is consistent with other launches.

They’re putting out policies to make sure that they identify the appropriate patients that patients do not get on therapy that don’t have Exon 51, or do not have an Exon 51 mutation. So they are putting policies in place. They are managing, as they have with other launches. And I think that Ed had a very good point.

These are ongoing discussions that we’re having with the payers. We have multiple meetings with the payers that are out there and they go very well, because there’s a – while there’s a broad awareness of EXONDYS 51, they do need to be educated on what does Exon 51 mean, because they don’t have that data in front of them.

So I think things are going well and I’m very pleased in early stage of the launch..

So, Brian, maybe another comparison would be to some of the lysosomal storage diseases, where you are required to have intravenous infusion. So similar problem that was experienced with Myozyme when I was working on it is, is we had a broad label, but the study only included infants.

And yet there was expectation that it should have a similar benefit on the adult population, which in fact was 80% of entire population. So and we had an ongoing double blind, placebo-controlled trial that had been completed.

So that was challenging because people were waiting for the results, but we still were able to get a majority of the patients covered. So I think in that regards, it’s very similar.

I think because it’s such a huge unmet medical need, because it’s a fatal disease, I think there often is certainly an interest on that part of the physicians to make sure patients are on therapy. So sometimes, there is always denials, there is always discussions that have to occur. But I think this is – there aren’t alternatives.

It’s not like you can use another off-the-shelf drug that’s available for this disease. So it’s a little bit of effort, not unusual.

And I think obviously, I think we’re fortunate to have a very well-trained group of people with a lot of experience that know how to make sure that we present the data to the insurers to make sure that they understand why it’s reasonable to be covered..

Gotcha. Thanks, guys..

Thank you. Our next question comes from the line of Tim Lugo from William Blair. Your line is now open..

Thanks for taking the question, and not to harp too much on managed care, although I do know that that’s obviously a focus for people on the call.

How long do these initial discussion cycles normally take for similar plans where you had a more negative initial reception? And is changing the site of care, is that, I guess, a potential strategy for eventually getting these patients reimbursed?.

Hi, Tim. This is Bo. Changing site of care has no impact on reimbursement. It’s really about getting the patient actually infused and just finding an infusion suite once the prior authorization has gone through and the patient can receive therapy, so that has no impact whatsoever.

And I think going back to your question about prior authorization, I mean, these are ongoing – this is medical benefit, which is different than the pharmacy benefit, the discussions are ongoing. They do – what’s unique in this situation is they’re putting out policies very quickly.

This is to make sure that patients are – that are not amenable to Exon 51 are identified. I think conversation goes on for many months.

This will not just stop in one month and we’ll have ongoing meetings where we educate for EXONDYS 51 and the benefit of the efficacy as well as safety, especially since we’re the only drug that’s on the market and these kids need to be treated.

Also conversations happen between the provider, as well as the pharmacy manager or the medical manager with the managed care organization for further benefits. So I think, we’re going to – things are going to smooth out. This is going and has a typical rare disease launch fluid. It’s just playing out more so in the public eye..

So Tim, maybe one other thing that I think has been helpful. We’ve been very pleased with the support from the physicians and the community in each different region. So many of them have come out and have actually volunteered to be able to speak directly with the insurance carriers to inform them.

So it’s not just Sarepta that’s out there talking and trying to educate. It really is the people in each different region that have been – they’ve asked how we can help and how to get the information out. So, obviously, these people are very well respected in the community. Often the insurers have dealt with them before for other disease indication.

So I think that support is going to help us a great deal as we move from region-to-region and payer to payer and make sure we get the coverage..

And I guess for the disclosure purposes, will you be updating us if you were to make progress with a plan like an Anthem? Is that something that you would update us on during the conference calls, or are those press releasable events or just how do we track the progress of those discussions?.

Yes, we’re not going to get into the – obviously the individual discussions on a payer-to-payer basis. But I think, you’ll have a very good indication by, as we go forward, based on the number of patients that are on therapy and the revenue generated, you’ll get a pretty good indication of how things are going.

And remember, Tim, I mean it’s a lot of payers and not only each individual payer, but there is sub-divisions within each payer we have to go through there is pharmacy benefits, there is medical benefits. There is different regional differences and we’d have to update you with hundreds of different approval.

So I think that you probably aren’t that interested in it. But you’ll have a pretty good idea, I think, certainly by first quarter how well the launch is going and how well the reimbursement is..

Great. Thanks for that..

Thank you. Our next question comes from the line of Simos Simeonidis from RBC Capital Markets. Your line is now open..

Good morning, guys. Thank you for taking my question, and I’ll get off managed care for a change. Can we talk about ex-U.S.

primarily, is there a possibility in Europe to get something done in a shorter timeframe outside the rigid 12 months to 15 months? And secondly, for regions, for geographies, where you could reference the FDA approval, are you currently in discussions, or are you thinking of discussions for partnering the drug.

Can you talk about your commercial strategy there? Thank you very much..

Thanks, Simos. Obviously a very important question. So I think in regards to the MAA and the application in Europe, there’s a – unfortunately, they don’t have an accelerated approval process like we have in the U.S., where you can shorten the review process. So it does – the minimum time is 12 months.

There are mechanisms for basically – pre-approval for basically expanded access in certain regions prior to the approval. We are going to be looking at that very carefully, because there is the possibility for reimbursement and early access in various different regions of Europe. And that’s something that we’re looking at.

And Bo had mentioned before, we plan to hire a General Manager in Europe and we’re starting our commercial structure in Europe. And obviously, other regions of the world where we’ll be filing in Canada, we are looking at Latin America.

And I think one of the things that is fortunate about having a small rare disease population, the number of treaters and obviously the patient volume still remain small. So we are looking at this as something that we as a company, an individual company will be able to manage.

So we are developing our global strategy for commercialization and it’s something that we’re moving ahead, obviously, one step at the time. We can’t do everything immediately. But we are progressing, not only in Europe, but in other regions of the world..

Great. Thank you very much..

Thank you. Our next question comes from the line of Matthew Harrison from Morgan Stanley. Your line is now open..

Great. Thanks for taking the question. I just have sot of two parts. You touched on the cycle time of getting patients on drug.

Can you just maybe a little bit more specific about how long you think it takes once a patient is identified to get them on drug and if you think that time is going to decrease over time? And then, can you just also talk about the composition of the patients that you expect to see early in the launch versus maybe a few quarters in just in terms of weight, disease, burden, age, et cetera?.

Yes, I think just to talk about the composition of patients, one of the things that we look at is, we know that younger patients certainly have much lower weights and obviously as they age, they get certainly – larger and larger weight. But towards the end of life, they actually begin to lose weight. So it is a bell shaped curve from that perspective.

What we are expecting is that initially, some of the boys that are older and have more significant disease burden will get on therapy sooner. But as we progress, typically what happens is the age of diagnosis goes down, because there is increased recognition. The other factor that will be important in the not too distant future is newborn screening.

It’s already been done. It’s been done on pilot sections. And the reason why it wasn’t adopted by the Newborn Screening Commission as a recommended test through the states is that there was no therapy available.

So we expect that once some of the pilot programs get through, that newborn screening will become more and more available on a state-by-state basis. So that will basically decrease the age of recognition and the boys will get lighter. The one thing I think, just to think about as we move through the insurance process, initially it takes time.

And maybe I’ll let Bo comment on just what we’d expect as far as how long it would take to walk through the process..

Yrs, I think Ed summed it up very well and we continue to say 30 to 90 days and that’s each person, each boy that comes into the system has a different insurance coverage, has a different life scenario. And so, you have to treat each individual patient separately and so the process does fluctuate from patient to patient.

That’s why we give this range of 30 to 90 days, because we feel pretty confident that the majority of boys will be covered or infused in this time. While you have to find site of care, that will smooth out over time. Obviously, we are only one month into the launch. And so, we are having great conversations with the payers.

I think from standpoint of the weight, Ed covered it very well and we’re seeing the physicians broadly identify the patients, all the way down to one year’s old to greater than 30..

Thanks..

Thank you. Our next question comes from the line of Heather Behanna from Wedbush. Your line is now open..

Hi, thanks. Just kind of a follow-up question; thinking ahead as far as dosing obviously about this. You’ve got an interest yet in home infusion.

Where – at what point do you think that that’s something that patients will do more than in the initial days of the launch?.

Yes. So we have anticipated that home infusions would be really a huge advantage for patients. It’s just much easier to have someone come to the house and it’s less disruptive and have the transportation. So we’ve already done that in our clinical trial. So we have experience and we know it can be done.

So we would expect and what we’ve heard from key opinion leaders is, for the first few doses, they will likely to do in a hospital setting or a clinic, so they can observe. But given the safety profile, our expectations is that, it would be for the most part, a home therapy over time..

Great.

And just a quick follow-up, if you could talk about how this discounts would change between an infusion center and home infusion that would be great?.

I’m sorry, could you say that again, Heather..

Yes, just thinking about the discounts between dosing boys in an infusion center in a children’s hospital and during a home infusion?.

Yes. So the – obviously, the boys who are on Medicaid will have a mandatory discount, and the pediatric hospitals, of course, are all 340Bs, so that’s a mandatory discount. So that would be, but – and so, even if a patient was on a home infusion who is on Medicaid, that discount would still apply..

Great. Thanks..

Thank you. Our next question comes from the line of Liisa Bayko from JMP Securities. Your line is now open..

Hi, thanks for taking the question, and maybe you’ve address this in different ways, but just wanted to kind of reframe it. I think one of the difficult things, as I look at the model is just how many patients are really in the system right now? And I know there is a very wide range, if you look at kind of U.S. prevalent for overall.

And I know it’s pretty consistent, like one-third 51.

But today as we stand, how many patients are kind of in the system in some way with the DMD broadly? And then when we think about how many patients may be on some of your trials, in terms of the U.S., how many patients would that be who would be on trials? I’m just trying to get at how many patients will be available for therapy over the next year or so?.

Yes. So, Liisa, I think obviously we’re now 23 days into the launch, so it is very early days. I think, to-date, I think we’ve been very pleased with the responses and certainly from the physicians and people very interested in therapy.

And I think we’ll know better if you try to predict how many are going to be enrolling and what the reimbursement rate is going to be. In regards to the patients in the clinical trials, as I had mentioned earlier in the script, what we talked about is those boys – those 12 boys who are in the 201, 202 study will be rolling over.

The boys who are in the 204 study, the older boys, there’s a total of 24 of those. And they’re – many of them are past 96 weeks there and they’ll be rolling over into commercial. And we would expect that everybody will be done with that by the end of April and they will be rolling over to commercial therapy when everything is completed.

And then, we have a subset of boys in the PROMOVI. If you recall, we had boys that were over – walked over 450 meters. That’s not considered part of the primary analysis and we expect that those boys will gradually rollover.

So – but what we’d keep is the 60 boys in the PROMOVI study that would be in the efficacy arm that we’re comparing to the natural history, that would remain. And we’d be keeping, we have 25 boys in our study 203, because that’s part of our pediatric investigational plan to study younger boys.

We’re doing things like MRI and looking at novel outcome measures in that study. So there’s a fair number of boys who will be rolled over. But I think, we’ll have a – certainly a better idea in the first quarter by exactly how many patients we’re going to be treating..

Okay. Thank you very much..

Thank you. Our next question comes from the line of Edward Nash from SunTrust. Your line is now open..

Hi, this is Yun for Edward. Thank you for taking the question. Just wanted to ask questions about BioMarin’s Method of Use Patent. Wanted to know if you think that patent can have any negative impact on the launch in the U.S. and also in Europe.

Do you still think that the legal action would be the most appropriate approach to get things done? Thank you..

Yes. I think, we’re feeling very comfortable in the U.S. with our patent situation and don’t see any issues as far as [indiscernible] especially for 51 and for 53. In Europe, obviously, we are still under appeal.

We would expect by the time of approval, we would hear back from the appeal process and that’s something we’re looking at obviously very carefully. But we’re continuing with our regulatory plans, we’re planning to launch. And I think we feel pretty good about our overall patented state and how this will play out.

But certainly, we’ll look at every possibility as far as making sure we have a free path in Europe. And I think especially being the only drug available; that gives us certainly an advantage to be able to make sure that we can introduce it in Europe..

Thank you. Our next question comes from the line of Steve Brozak from WBB. Your line is now open..

Yes, good morning and thanks for taking the question. Most of the questions have been asked and answered. But there is one that with dystrophin levels. Obviously, it’s just one small component of how you measure things and certainly going into the future.

But when do you think we can start to expect to see information on, for instance, the quality of dystrophin that is produced by EXONDYS versus natural dystrophin? And what do you think we’ll start to see in terms of the importance of it and when, more importantly, do you think we will start to see some of this, or what are your thoughts on that please?.

Sure, Steve. I think those are all important questions. I think one of the things that has happened over the last couple of years is the ability to measure dystrophin has really improved. And so, we’ve been spending a great deal of time making sure that the methods that we’re using are appropriate and we found out a lot.

And we’re working with many investigators throughout the world Steve Wilton, who is Perth and Francesco Muntoni, and even our own Scientific Advisory Board has been helping us to try to make sure that we’re capturing the dystrophin. One of the things I think that we’ve realized is that, especially the Western Blot it is a tricky assay.

One of the things that occurs in boys with Duchenne Muscular Dystrophy is because of all the inflammation, the dystrophin that you produce, once you do the biopsy is broken down, because it’s a very inflammatory process and you have a lot of proteases that are breaking down the protein.

So it’s very important that you do the sample analysis correctly and that you make sure you are not underestimating the amount of dystrophin. The other thing that we’ve developed is a fairly sophisticated computer algorithm program that measures dystrophin on the entire slide and it’s done by a computer read and it gives intensity.

We’ve done this with in partnership with Flagship, which is a CRO that has done a lot of work on many, many studies for, basically computer imaging.

And so we think this is really the next generation that we’ll be able to demonstrate not only the localization of dystrophin but also what’s the intensity, which is an indicator of how much dystrophin you have and that seems to correlate pretty well with the Western Blot.

So we are going to be having a lot of conversations with the FDA, because we want to make sure that the FDA is comfortable with some of these new methods. They’ve expressed an interest in working with us and we are working with their laboratory group.

So we expect that by next year, we will have very robust methods that can measure dystrophin and we’ll be looking at certainly, not only for eteplirsen, but also in our follow-on drugs for 53. So I think we’ll have a better understanding of dystrophin. And then of course, because we have more outcome measures.

We’re going to be comparing – looking at dystrophin levels and trying to look at various outcome measures to see if we can see a correlation. So there’s a lot of work that we have to get done. But I think, we’re fairly optimistic that the methods that we have now are going to be – are so much better.

I think, we’re going to be able to really detect the dystrophin in a much more sensitive pathway..

Oh, great. I look forward to obviously seeing the answers, and thank you, again..

Thank you. Our next question comes from the line of Debjit Chattopadhyay from Janney. Your line is now open..

Hey, thanks for the follow-up here.

Just a couple of thoughts on the sales force sizing in the U.S., and do you think there is a clustering of patients around these centers of excellence?.

Yes, Bo, do you want to comment on that?.

Yes. As we discussed on the approval call, we were not going to get into the discussions about the actual size of the team. I think what you can say is it’s comparable to other typical rare disease companies in size and structure. You don’t have that many sites around the U.S., they’re very concentrated.

What we focused on is not the number of individuals, but is the experience in rare disease as well as our managed markets. So I think that we’re right sized for the first year and we’ll reevaluate going forward..

If I may one more follow-up. If EXONDYS 51 had gone through the normal approval channels as opposed to a conditional approval pathway, with the non-ambulant patients that Humana is now questioning, how would they treat them? I mean, clearly non-ambulant patients would not be a part of any clinical program.

So how would they then justify paying for non-ambulant patients in that scenario?.

Well, one thing Debjit, of course, we have experienced non-ambulatory boys through our study 204. So we’d have 24 boys that we’ve followed, many of which for over two years. So we have collected a fair amount of data on that in things like the – looking at the upper limb performance and we’re also collecting, looking at forced vital capacity.

So we do have a lot of information. We know that it can be safely given in that population that doesn’t seem to be any different than the younger population. So typically, there are often queries or denials you have to justify.

I think what we will do is, we will provide the information that we have already on our Study 204 and making sure that they understand the data and why these boys could benefit from it.

So not only in regards to their upper limb function, but in the respiratory status and even things like quality of life, the ability to still use a keyboard to be able to use an electric wheelchair, to be able to transfer from out of a wheelchair.

Those are the kind of important details that we hope we’ll have an opportunity to discuss with the third-party payers, just to demonstrate why we think it’s reasonable to treat this population..

Thank you so much and good luck..

Thank you. Our next question comes from the line of Ritu Baral from Cowen. Your line is now open..

Thanks for taking the follow-up. This is – I think it’s a Sandy Bo question. You mentioned that SG&A for the quarter, I think it was $14.8 million. I’m just wondering, the spend in Q3 – obviously, given the review of the FDA documents suggested you guys kind of had a good idea when the launch would be.

Was that – did that spend include all planned costs for the launch, or is there still additional launch costs, potential additional hiring for other parts of the organization around the EXONDYS launch that we should keep in mind for Q4, Q1 and going forward even before we get formal guidance..

Yes. So Ritu, the expense for SG&A, you will see a small uptick obviously, because across the board, whether it’s manufacturing or research, or our European footprint, we will be scaling upon. So you will see some uptick, but it won’t be significant, at least, in Q4.

In 2017, it’s too early to guide, but there too, you should see a slight uptick for the reasons that I mentioned.

Also bear in mind that our West Coast Research and Development Center, we shut it down, and that was a headcount of almost 60 people that is reduced, and so you will see some increase in our Massachusetts headcount for that reason as well. So again, a slight uptick but not a major needle-mover..

Got it.

And Ed, going back to my first question, can you give us any color on what you’re proposing to the FDA as far as the confirmatory, I know you said you are submitting a draft, can you give us any details and are you concerned at all that that trial – enrolling that trial could be competitive with the number of other trials that you have ongoing? I mean, obviously a lot of the boys in the age of interest will be still locked up in PROMOVI, so how do you think about who you would like in that confirmatory study, who would be useful?.

Sure. So, obviously it would be a, as requested, a dose-ranging study. Because of the U.S. approval, trying to do this study in the U.S. would be extremely challenging. So we’re looking at Europe and other regions of the world where patients are available who want to participate.

And so where there is no therapy available, so that’s really going to be the focus that we’ll look at. And we think we have a very high likelihood, especially in the region of the world where no therapy is available that we should be able to enroll these studies, because it really would be challenging to do in the U.S..

Got it. That’s helpful. Thanks..

Thank you. That’s all the time we have for questions for today. I would now like to turn the call back over to Edward Kaye for closing remarks..

All right. well, so thank you, everyone, for joining today’s call. We look forward to another update at the 35th Annual JPMorgan Healthcare Conference in January. Thank you..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day..