Ian Estepan - Investor Relations, Vice President, Chief of Staff and Corporate Affairs Doug Ingram - President, Chief Executive Officer Sandy Mahatme - Executive Vice President, Chief Financial Officer and Chief Business Officer Bo Cumbo - Senior Vice President, Chief Commercial Officer Louise Rodino-Klapac - Vice President of Gene Therapy.

Salveen Richter - Goldman Sachs Alethia Young - Cantor Jackson Harvey - Nomura Instinet Tessa Romero - JPMorgan Debjit Chattopadhyay - H.C.

Wainwright Matthew Harrison - Morgan Stanley Gena Wang - Barclays Vincent Chen - Bernstein Tazeen Ahmad - Bank of America Joseph Schwartz - Leerink Partners Ritu Baral - Cowen Joel Beatty - Citi Liisa Bayko - JMP Securities Marty Astor - Credit Suisse Tim Chiang - BTIG Tim Lugo - William Blair Yun Zhong - Janney.

Good day, ladies and gentlemen and welcome to the Sarepta Therapeutics third quarter 2018 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, today's program is being recorded.

And now I would like to introduce your host for today's program, Ian Estepan, Vice President, Chief of Staff and Corporate Affairs. Please go ahead..

Thank you Jonathan and thank you all for joining today's call. Earlier today, we released our financial results for the third quarter of 2018. The press release is available on our website at www.sarepta.com. Joining us on the call today are Doug Ingram, Sandy Mahatme, Bo Cumbo, Dr. Gilmore O'Neill, Dr. Louise Rodino-Klapac.

After our formal remarks, we will open the call up for Q&A. I would like to note that during this call, we will be making a number of forward-looking statements. Please take a moment to review the slide on our webcast, which contains our forward-looking statements.

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

For a detailed description of applicable risks and uncertainties, we encourage you to review the company's most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, as well as the company's other SEC filings.

The company does not undertake any obligation to publicly update its forward-looking statements, including any financial projections provided today, based on subsequent events or circumstances. With that, let me turn the call over to our CEO, Doug Ingram, who will provide an overview of our recent progress.

Doug?.

Thank you Ian. Good afternoon and thank you all for joining Sarepta Therapeutics' third quarter 2018 results and corporate update conference call. Before I comment on the quarter, I am pleased to announce that Dr.

Gilmore O'Neill has taken on an expanded role as Senior Vice President, Research and Development, as well as his previous Chief Medical Officer role. This structure will ensure that we have a seamless alignment across research through clinical development and approval as we accelerate our plans. As noted previously, Dr.

O'Neill is with us this evening as is Dr. Louise Rodino-Klapac, our Head of Gene Therapy. And now, as we will discuss this evening, we have had a very productive quarter, once again posting strong sales growth for EXONDYS 51 while we continue to advance our RNA platform and build our Gene Therapy Center of Excellence engine with a sense of purpose.

Starting with our RNA platform. We had another strong quarter of sales with EXONDYS 51 standing at $78.5 million and tracking toward our full year guidance of $295 million to $305 million. I am very pleased with the execution focused approach of our commercial and medical affairs teams, as reflected in our performance.

We are focused on identifying all patients who could benefit from EXONDYS 51 and working to remove any barriers that stand in their way. One of those barriers has been some misunderstanding about the FDA's accelerated approval pathway and the obligation to make therapies available.

We were pleased to see the Centers for Medicare and Medicaid Services or CMS clarify some issues and correct misconceptions regarding the obligation of State Medicaids to make access available to patients. On June 27, the CMS issued a notice to all states reminding them of the following.

First, therapies approved via the accelerated approval process have met the normal standard for safety and effectiveness and must be covered by state Medicaid programs, so long as the manufacturer has signed the standard Medicaid rebate, which we did sign at the approval of EXONDYS.

And second, states should not use the prior authorization and other utilization management methods other than to ensure the proper use of the therapy, for instance, to ensure that the therapy is used consistent with its label. There are still children who have been kept waiting for nearly two years for therapy.

This is unacceptable and hopefully CMS' clarification will resolve roadblocks to their obtaining therapy. Next, we continue to build our international presence with limited infrastructure but dedicated colleagues in Latin America and Europe and a managed access program or MAP now live in some 44 countries.

We should continue to see modest contribution from our MAP throughout 2018 with increasing contribution in 2019 and beyond.

In the quarter, we also completed the re-examination of our marketing application with the Committee for Medicinal Products for Human Use or CHMP in an effort to bring eteplirsen to the European Duchenne community in need of therapy.

While we were of course disappointed that we received a negative opinion, we obtained guidance that could provide a path forward. We will evaluate this and take advice from the European Medicines Agency in 2019.

But make no mistake, we believe it is fundamentally wrong that children in Europe do not have access to therapies that are benefiting children in the United States. Our goal, constrained only by science and regulatory process, is to bring all of our therapies to the greatest number of patients around the world who could benefit from them.

Regarding our RNA pipeline, we are completing our rolling NDA submission for golodirsen, which remains on track to be completed by year-end with a target approval in 2019. Likewise in the quarter, we met with the FDA and we obtained their guidance and their concurrence on our plan to evaluate biopsies for another therapy casimersen.

If dystrophin expression results are consistent with preclinical predictions, we plan to submit our NDA for casimersen by mid-2019 with a target approval by the end of 2019 to the first quarter of 2020.

To remind you, each of casimersen and golodirsen serve approximately 8% of the Duchenne community, which means that taken together, they should be an even larger opportunity than EXONDYS 51.

If we are successful in our plans, by early 2020 we will have three RNA-based therapies that could serve nearly 30% of the Duchenne community in the United States. We continue to make progress on our next generation RNA technology, the peptide conjugated PMO platform or PPMO for short.

To remind you, in animal models our PPMO technology exhibited greatly improved cell penetration, exon-skipping and dystrophin production as compared to our current PMO technology. We are excited about our next generation RNA platform and our first program focused on EXON 51 is progressing well in our single ascending dose study.

We should be on track to have dosing and safety insight by the first quarter of 2019, which will allow us to move to a multi-ascending dose and accelerate development.

We are also moving rapidly to complete our preclinical work and file INDs for another five PPMO programs which, along with our first, could serve approximately 43% of the Duchenne community. Now let's turn to our gene therapy platform. We have made significant progress in building our Gene Therapy Center Of Excellence engine.

Before I discuss the particular gene therapy activities in the quarter, let us place this all in context of our vision to build a substantial gene therapy engine driving a stream of late stage gene therapy programs to the community.

Our vision is brought into focus by considering our micro-dystrophin gene therapy program, the largest late stage gene therapy opportunity that currently exists.

In service of our goal of bringing this potentially transformative one-time therapy to the Duchenne community around the world, we are rapidly building a first-in-class Gene Therapy Center Of Excellence, the greatest level of manufacturing capacity that the world has yet seen in gene therapy and bolstering our already proven commercial health economics and medical affairs teams to be the leaders in gene therapy.

Now if our micro-dystrophin program is successful, we will launch the program and we anticipate some number of years of enormous growth as we treat the greatest percentage possible of the prevalent population of Duchenne muscular dystrophy around the world at a staggering 70,000 potential patients and then we will fall back to treating the incident population, approximately 3,500 patients each year.

While the incident population is still very significant and the value to humanity will obviously be great, we will nevertheless have excess capacity when the prevalent population is finally treated, which also means we will have expertise and ability that could be leveraged to bring a better life to countless additional patients, but that requires a vision, it requires a new model and not in the distant future but actually right now.

There is a solution to this. It is a gene therapy engine that through in-licensing and the build our own constructs advances dozens of programs to serve large groups of patients living with genetic-based disease. This is our vision and in relation to it, consider the following.

First, while this vision does not require us to serve only rare disease, the opportunity in rare disease alone is enormous. There are 7,000 rare disease, 80% of which result from genetic mutations and there is literally only one approved in vivo gene therapy today. The opportunity to help others is breathtaking.

Second, if we are thoughtful and we select well-characterized genetic disorders, the theoretical probability of success of each program should be far greater from the earliest days than one might anticipate from small molecule R&D. And why would that be the case? It's because gene therapy is in essence a micro-engineering project.

This is not passive drug discovery. We are not discovering therapeutic candidates through serendipity. We are literally building constructs to serve well-characterized problems. Third, consider accelerated gene therapy timelines relative to traditional pharmaceuticals.

As the FDA recently acknowledged in its gene therapy rare disease guidance in July, developers like Sarepta need to build programs that are, from the very first dosing of patient, intended to safely provide a benefit and should be built to be registration trials.

This provides us with the opportunity to rapidly follow on our success with micro-dystrophin with new therapeutic areas and new constructs and the success that we build with each program should have read through to the next program.

Considering these elements, I hope you will agree with me that our vision, while certainly audacious, is also quite realistic and achievable. And with that vision in mind, let me discuss the progress we have made toward it this quarter. We made great progress first in our micro-dystrophin program in the third quarter.

As you may recall, we faced a clinical hold in the quarter based on out of spec finding due to the use of research-grade plasmid.

I am very proud to say that our team, quality, regulatory and research, jumped on this issue, completed the work necessary to satisfy the FDA and we were able to come off clinical hold in September, resulting in no delay to our program.

This has to be one of the fastest and most efficient responses to a clinical hold in history and it speaks reams to our team's ability to execute. Shortly after the close of the quarter, Dr.

Jerry Mandel, our close collaborator and the principal investigator for our micro-dystrophin program, presented results of the fourth patient in our proof of concepts cohort and updated biomarker and functional data for all four patients at the World Muscle Society in Mendoza, Argentina. Results were entirely unprecedented across all measures.

All patients showed robust micro-dystrophin expression properly localized to the sarcolemma. All showed up regulation of the dystrophin associated protein complex, an additional indication of the functionality of micro-dystrophin. All showed an unprecedented drop in creatine kinase or CK levels.

And all showed positive functional improvement that is markedly greater than natural history could have predicted. No serious adverse events were observed.

Now our results are limited to four patients and so it is incumbent on us to move rapidly to confirm these results in a larger well-controlled study, but certainly we are more than a little encouraged by everything that we have seen thus far.

Finally, we requested a meeting with the FDA to confirm our approach to our pivotal trial and to our manufacturing plans. That meeting will take place in the fourth quarter and our goal is to commence this trial, which will be a pivotal trial, by the end of this year.

Going beyond our micro-dystrophin program, we have built out our engine with additional programs, now equaling 14 and growing. As you may recall, back in May, we entered into a partnership with Myonexus, a spinout from Nationwide Children's Hospital for five new programs under the broad umbrella of limb-girdle muscular dystrophy.

There is potentially significant read through from our micro-dystrophin program to our limb-girdle program as they share a common inventor, a common capsid, similar disease state and in three of the five, a common promotor.

We are on track to dose all of the patients in our first cohort of our beta-sarcoglycanopathy or 2E program this year with biomarker results available in the first quarter of 2019.

Going on, in August, we entered into a relationship with beta-sarcoglycanopathy, a spinout from the University of Florida and an entity associated with nine top gene therapy researchers in the world that gives us three programs, all in CNS and the most advanced of which is Pompe disease.

Next, shortly after the close of this quarter, we entered into an agreement with Nationwide Children's Hospital to gain access to Nationwide Children's gene therapy candidate, neurotrophin 3 or NT-3 to treat Charcot-Marie-Tooth neuropathies, including CMT type IA. CMT is serious, life limiting disease.

It is also the largest inherited neuromuscular disease in the world and we are excited to work with Dr. Zarife Sahenk, a true neuromuscular and gene therapy pioneer who has been dedicated to this program for over 15 years.

And even more recently, we entered into an agreement with Lysogene to gain rights to two gene therapy programs, including Lysogene's late-stage program to treat MPS IIIA, also known as Sanfilippo syndrome type A, a rare, fatal inherited neurodegenerative lysosomal storage disorder.

The pivotal trial for MPS IIIA is planning to commence by the end of 2018. As previously mentioned, our work has expanded our gene therapy platform to 14 and more than that, please understand that most of these programs are quite advanced. Consider the following. We plan to commence our pivotal trial for micro-dystrophin by the end of 2018.

We plan with Lysogene to commence the pivotal trials for MPS IIIA, again by the end of 2018. We plan to complete the first cohort of our limb-girdle 2E trial by the end of this year and to commence our pivotal trial next year. We will move with equal speed on the next four limb-girdle trials.

Dosing in the CMT program should begin in the first half of 2019. And likewise, dosing in the Pompe program will also occur in 2019. Now our gene therapy aspirations require a robust approach to manufacturing.

We previously announced that we have developed a hybrid gene therapy strategy, building internal expertise, while also building a federation of manufacturing relationships to ensure that we can rapidly scale to serve the community at launch. Our first partnership announced was with Brammer Biosciences, a world leader in gene therapy manufacturing.

As we have previously noted, our goal with Brammer is to have more gene therapy commercial capacity in about two years than, as we understand it, all of the gene therapy capacity that currently exists in the world.

We followed that up with the announcement this quarter of our manufacturing partnership with Paragon Bioservices, another world leader committed to gene therapy manufacturing.

Our relationship with Paragon significantly expands our commercial capacity, gives us a second supplier for our micro-dystrophin gene therapy program and bolsters our clinical and commercial capacity for our current and future pipeline programs including, for instance, our limb-girdle programs.

The approach that we are taking to manufacturing, relying as we are on a hybrid manufacturing model and a federation of gene therapy manufacturers and in our most advanced programs of micro-dystrophin and limb-girdle, evolving from an adherent HYPERStack to a more robust but still adherent approach is intended to ensure that we are moving rapidly with the highest probability of success to treat the maximum number of patients, assuming a very fast launch.

So summarizing, the results and activities of this quarter exemplify our approach, one that marries ambitious vision with execution and humility.

We do set an ambitious vision, but we also ensure that we mind current execution against our goals with a ruthless attention to detail and we do it with a healthy sense of humility as one can see by our brace of the best and the brightest in genetic medicine, scientists like doctors, Jerry Mandel and Kevin Flanigan, Barry Byrne, Zarife Sahenk, Charlie Gersbach, Serge Braun our own doctors, Gilmore O'Neill and Louise Rodino-Klapac and of course our relationships with manufacturing partners Brammer and Paragon.

And we overlay all of this with an enormous sense of urgency. We insist on moving fast. Some may ask, why we are so slavishly focused on speed of action? Now there are many reasons I could give. I could talk about the fact that genetic medicine has come of age. The opportunity is right in front of us and we need to seize it.

Or perhaps I could discuss the competitive value in being first in curative therapies. But instead let me use Duchenne muscular dystrophy, the center of our culture as the example.

If we catalog all of the DMD children in the world and they are all children or at most young adults and then we looked again in two years, a substantial portion of them would no longer be with us. Death is the brutal reality of this cruel disease. And other rare diseases are similar or in the case of MPS IIIA, even worse.

So if we take the leisurely pace of traditional pharma, if we accept the status quo, if we requested to the mean of our compatriots in the industry, by the time we get around to a therapy for these children, we will have lost an entire generation. Some might accept this as the inevitable consequence of development and regulatory bureaucracy.

We do not. So, to those who wonder why we agitate, why we count our timelines in hours and days and not months and years, I say this, meet a family living with Duchenne muscular dystrophy. I will now turn the call over to Sandy Mahatme for an update on our financial performance.

Sandy?.

Thanks Doug. Good afternoon everyone. Over the past year, we have executed on our business development strategy to become the leaders in gene therapy.

With patients in mind, we have judiciously used our resources to rapidly expand our gene therapy pipeline to 14 compounds in development to treat devastating diseases while simultaneously potentially positioning investors for a return on investment that dwarfs industry standards.

Back by this philosophy, we will continue to forge strong partnerships with leaders in gene therapy over the coming months. We have also put our balance sheet to work to ensure that we not only develop the best drugs, but also have the manufacturing capabilities to supply them to patients.

We signed two exclusive partnerships to become the largest gene therapy supplier in the world. This gives us significant manufacturing capability, but also from a capacity standpoint puts us at multiples over what a 2,000 reactor can deliver. We believe that these investments lay the foundation for building shareholder value for many years to come.

Now moving to the financials. This afternoon's press release provided details for the third quarter of 2018 on a non-GAAP basis as well as GAAP basis. The press release is available on the SEC as well as Sarepta websites. Please refer to our press release for full reconciliation of GAAP to non-GAAP.

I would like to add a quick reminder here that our 2018 non-GAAP financials exclude net interest expense, depreciation and amortization expenses in connection with one-time items, as well as stock-based compensation. Net product revenue for the third quarter of 2018 was $78.5 million compared to $46 million for the same period of 2017.

The increase primarily reflects increasing demand for EXONDYS 51 in the U.S. We reported a non-GAAP net loss of $37.1 million or $0.56 per share in the third quarter of 2018 compared to non-GAAP net loss of $10.7 million or $0.17 per share in the third quarter of 2017.

In the third quarter of 2018, we recorded approximately $8.7 million in cost of sales compared to $3.1 million in the same period last year.

The increase was driven by higher inventory costs related to increasing demand for EXONDYS 51 during 2018 as well as an increase of $1.7 million in royalties payable to BioMarin as a result of the settlement and license agreement we entered into with BioMarin in July of last year.

We expect our cost of sales in Q4 2018 to be consistent with this quarter. On a GAAP basis, we recorded $86.6 million and $34.2 million in R&D expenses for the third quarter of 2018 and 2017, respectively, which is a year-over-year increase of $52.4 million.

The year-over-year increase in GAAP R&D expenses was driven by upfront and milestone payments, increased patient enrollment in our late stage clinical trials, a ramp-up of manufacturing activities for our PPMO platform as well as an expansion of our research and development pipeline.

On a non-GAAP basis, the R&D expense was $64.2 million for the third quarter of 2018 compared to $31.5 million for the same period last year, which is an increase of $32.7 million. Turning to SG&A.

On a GAAP basis, we recorded $53 million and $28.2 million of expenses for the third quarter of 2018 and 2017, respectively, a year-over-year increase of $24.8 million. On a non-GAAP basis, the SG&A expenses were $42.5 million for the third quarter of this year, compared to $22.2 million for the same period last year, an increase of $20.3 million.

The year-over-year increase was primarily driven by continued buildout supporting our global expansion, On a GAAP basis, we recorded $7 million in net interest expense for the third quarter of this year, compared to $200,000 of net interest income for the same period last year.

The unfavorable change is driven by higher interest expense in Q3 of 2018, which is related to our debt instruments that entered into in the latter half of last year. Turning to our cash position. We ended Q3 with approximately $794 million in cash, cash equivalents and investments.

This was a decrease of $156 million in our cash position from the prior quarter and was driven primarily by a $68 million expense related to new business development deals as well as our manufacturing activities and $33 million related to the pay-off of our term loan, as well as related interest expenses.

In addition, we have prepaid approximately $54.7 million towards future manufacturing expenses in connection with our gene therapy and RNA programs. From a cash perspective, we are well-positioned to execute on our corporate objectives. With that, I would like to turn the call over to Bo for a commercial update.

Bo?.

Thank you Sandy. Good afternoon everyone. We have now completed two full years of the EXONDYS 51 launch and I would like to take a moment to say thank you to the entire Sarepta team for all their hard work, dedication and passion to bringing EXONDYS 51 to the individuals who need it.

We have taken our key learnings over the last two years and are preparing to launch two additional exon-skipping products, golodirsen and casimersen, as well as multiple new gene therapy programs for Duchenne and limb-girdle muscular dystrophy over the next few years. We are proud of what we have accomplished to-date and we are ready for the future.

Similar to previous quarters, we had a solid three months and remain on track to achieve our full year guidance of $295 million to $305 million. The team has been able to successfully navigate challenges since approval and maintain patients on therapy without significant disruptions.

As we move into our third year of commercializing EXONDYS 51, the majority of our efforts are focused on identifying patients amenable to exon 51 skipping while continuing active dialogue with payors to support broad coverage and reimbursement decisions.

We will continue to work with key offices to help educate around the importance of patient identification, early diagnosis and potential treatment options. Top-tier centers continue to receive referrals or identify new patients amenable to exon 51 skipping and submit start forms as appropriate.

We continue to call on the top-tier centers but have purposely expanded our efforts for the future. A portion of our educational endeavors have shifted to large pediatric offices within key states, where we are helping to educate on the importance of early identification for children who have not yet been diagnosed with Duchenne.

These efforts are now focused on supporting early testing and diagnosis and will ultimately shorten the timeframe of referrals from pediatrician offices to neuromuscular specialists. From an adherence and persistency perspective, throughout the last two years we have seen high compliance rates and minimal discontinuations.

We have also transitioned greater than 50% of patients to home infusion which we believe has helped patients stay on therapy over time.

Our national accounts and medical affairs teams continue to have ongoing engagement with both commercial and government level payors around Duchenne, EXONDYS 51 and the new CMS guidance letter on the obligation of State Medicaids to make accelerated approval treatments available to patients.

In 2018, we have continued to see an increase in patients covered by Medicaid, which has increased the payor coverage mix to 50% commercial and 50% government. Previously the mix was approximately 55% commercial and 45% government.

Over the course of the last two years, we have continued to adapt our approach to the market and have had the flexibility to quickly resolve potential obstacles. We believe this is a strength of ours as we head into future launches and prepare for potential RNA and gene therapy approvals.

As Doug highlighted, Sarepta's mission is to develop a precision genetic medicine engine where we can help improve the lives of patient suffering from rare diseases around the world.

We are able to achieve this mission by collaborating with the most notable experts worldwide, continuously striving to advance our multiplatform pipeline and keeping patients at the center of all conversations. We currently have 24 programs in development and we are not going to stop there.

With each new program comes the responsibility of ensuring treatment access for patients. We are putting the framework in place from distribution networks, market access, sales, medical affairs and patient support, which will allow us to reach patients globally.

We have continued to strengthen our global presence in Europe, Brazil and MENA by engaging with key opinion leaders and advancing our distribution networks. We have also started meeting with key opinion leaders throughout Japan to understand the landscape and assess commercial opportunities in the Asia-Pacific markets.

We are continuing to challenge the thinking of our commercial and medical affairs teams to ensure we remain flexible and adaptable in diverse markets. We have the right people, individuals who are highly motivated and proactive, who work with a sense of purpose and possess the agile thinking to make decisions that are best for patients.

In closing, the U.S. commercial success of EXONDYS 51 over the last two years has provided Sarepta the framework, the infrastructure and the resources to support future global launches. We are thinking different. We are being bold and leveraging our knowledge to prepare ourselves for operational and executional success globally.

Thank you for following our important mission. I will now turn the call back over to Doug..

Thank you Bo. As you all may recall, as we tracked into 2018 we had a significant number of important inflection points in front of us. As we track to the end of 2018 and into 2019, the number of important milestones and inflection moments has only multiplied considerably.

Over 2018, we have over doubled the number of talented and passionate Sarepta employees dedicated to this mission. We have increased our pipeline to some 24 RNA and gene therapy programs and fueled by encouraging data we have brought into sharper focus our strategic vision and charted out the path we intend to carve to achieve that vision.

Precision genetic medicine is driving a revolution now in healthcare and we intend to be the leaders of that revolution to the benefit of countless patients formerly bereft of potentially transformative therapies. With that, we will open the line for questions..

[Operator Instructions]. Our first question comes from the line of Salveen Richter from Goldman Sachs. Your question, please..

Good morning. Thanks for taking my question.

So with regard to the CMT program, can you just comment on the proportion of the opportunity targeted here in the type 1A program? And then the construct, if you could just describe it for us and whether the gene needs to be truncated? And then finally, the endpoints and biomarkers we should be looking for here to determine clinical benefit? Thank you..

I will pass it over to Louise to answer, at least the last two.

Louise?.

Sure. So CMT as a group is one in 2m500 and CMT 1A is the most common form which is about one in 10,000 individuals. So our program or Dr. Sahenk's program at Nationwide Children uses NT-3 which fits into AV, so it's not truncated. And this is secreted molecule.

So what she's doing is injecting directly into the muscle, using the muscle as a factory to create and generate NT-3. And this allows for a sustained circulating levels of NT-3 producing a therapeutic effect.

So NT-3 is important for nerve regeneration and therapeutic effect which is shown preclinically as well as in earlier Phase I trial with just a recombinant NT-3 module.

So in this first Phase I trial of nine subjects, we will be looking for endpoints using the CMT pediatric scale over 100-meter time test electrophysiology, CMA potential as well circulating NT-3 levels..

Thank you..

Thank you. Our next question comes from the line of Alethia Young from Cantor. Your question, please..

Hi guys. Thanks for taking my question. I just wanted to maybe talk a little bit about, I get a lot of questions about kind of thinking about the pivotal design for the gene therapy study.

Just can you help maybe frame for us what the potential base case could be? And just a quick one question on have you guys had the conversation with the FDA yet? Thanks..

So I will answer the second one first. And the answer is, we haven't scheduled it. It will be this quarter. So we will definitely have our meeting with the FDA this quarter. And as I said during this, ultimately our goal is to commence the pivotal trial this year.

As it relates to the pivotal trials, broadly speaking it's consistent with what we have said in the past. We are proposing a 24 patient study, 12 and 12, a placebo double blinded study. One year on function and we will, obviously look at biomarkers as well as including expression levels and we are going to look at it in two ways.

So our base case is that we could get accelerated approval. This will certainly be one of the issues we will discuss with the FDA. But accelerated approval on the basis of expression but also powering the study in the hope that we would also see a functional benefit at the one year mark.

And so we would actually confirm the accelerated approval at the end of the study and we get an approval that wouldn't just be accelerated.

And the only reason I say hoping that is that we have seen really exciting results out of the first four patients, but of course these results are entirely unprecedented and so as we track into the pivotal trial, we want to ensure that we have both the opportunity to get an approval on accelerated basis as well as the potential to get an approval on a functional basis.

And then let me say one other thing as long as I am talking because the question then may come up, what about the age range on the label? And the answer is going to be that our goal is to have the broadest age range possible, hopefully no limitation whatsoever on age.

And the way we are going to do that is we have a main study of 24 patients focused on a very tight group of 47-year-olds consistent with original proof-of-concept cohort that we did.

And then we are going to separately have a cohort to look at expression and safety in younger children, in older and heavier children as well as some additional of the earlier exons that may be excluded from the main study. So our goal at the end is to cover the maximum number of patients available.

The one limitation we will almost certainly have is, of course, that there may be screen-out for pre-existing antibodies. The good news for us right now, as we sit here we have screened a lot of patients and what we are seeing right now across all age groups is about a 15% screen-out rate.

We wish there was zero but 15% is much better than the literature would anticipate for other factors, humanized factors like AAV9 and the like..

Great. Thanks..

Thank you. Our next question comes from the line of Christopher Marai from Nomura Instinet. Your question, please..

Hi. This is Jackson Harvey, on for Christopher. I was just hoping if you could expand a little bit on how we should expect the LGMD data to be released in first quarter of 2019? Will that be through a call? Or will it be presented at a conference? And then I have a follow-up question..

Sure. Well, the short answer on that is that we haven't made decisions on the form of release of that data. What I can tell you is that it is our goal to have the entire first cohort fully dosed this year and to have available data by the first quarter of next year.

But exactly how and to what extent that get released is something we are going to have to decide later..

Got it. And the decision to work with Lysogene and this direct-to-brain approach, now do you see an opportunity for systemic dosing with brain penetration? And also what was the rationale for exploring these direct-to-brain approaches? Thank you..

I can pass this over to Louise, if you want to touch on this briefly?.

Sure. The MPS IIIA, which is the primary target for Lysogene, is primarily a CNS disease. It has profound mental retardation and minimal somatic manifestation. So Lysogene tested this.

They looked at targeting the light matter directly intraparenchymal injection versus intraventricular or intervascular and found that it resulted in significantly higher expression and broadest distribution throughout the brain. So that was the rationale for that decision.

Now however, this does leave the door open for wider systematic delivery for the somatic pieces as well..

Thank you. Our next question comes from the line of Anupam Rama from JPMorgan. Your question, please..

Hi guys. This is Tessa, filling in for Anupam this evening. Thank you for taking our questions.

So now thinking about the limb-girdle program, as we are thinking towards the early 2019 update, help us set expectations here for the scope of the data that we will see? And how we should be thinking about the benchmark for a clinically meaningful change in gene expression in the 60-day biopsy data? And then maybe relatively, what can we expect to see on any other biomarkers or potential functional endpoints in the initial look? Thanks so much guys..

Well, generally speaking and Louise you can follow up on this as well to make sure I don't misspeak, but broadly we will be looking at expression levels from a two-month biopsy. You will note that in our micro-dystrophin program, we looked at three-month biopsies.

This is a self complementary construct, so it's more efficient and two months actually seems like the appropriate time. And it will be expression levels and there will be both expression levels of the protein at interest.

We will probably look at other ones as well including the dystrophin associated protein complex and I believe also dystrophin itself, because at least in preclinical models and Louise has already published this in preclinical models, the restoration of the protein of interest also regulates generally the dystrophin associated protein complex and upregulates dystrophin as well.

Louise, did I miss anything there?.

No. I think you covered it all. Mainly primarily looking at expression and restoration of dystrophin vector copies as we would, similar to micro-dystrophin..

Thank you. Our next question comes from the line of Debjit Chattopadhyay from H.C. Wainwright. Your question, please..

Hi. Thanks for taking my questions. Just a couple, firstly on the MPS program. The concept that's heading into the pivotal study is different from the original concept that was studied and specifically the transgene is different and the promotor is different.

So any thoughts on what caused the changes and how do you expect that to run straight into may be a more pronounced effect?.

I will touch on it briefly and then Louise can give you probably a better more nuanced answer. The short answer is that the two most significant changes that moved from the prior cohort to the current pivotal is firstly use of a more efficient promotor.

A promotor that appears, at least in animal models, to be more than three times more efficient than the prior promotor that was used and then secondly the dose itself. Informed by the prior cohort, the dosing is actually going to be a full order of magnitude higher.

So taking together, it's potentially 30 times more efficacious therapy, at least 30 times more potent therapy. And with that, Louise I am sure I have missed some of the nuance there..

No. Actually you covered it well. So the promotor itself is driving higher levels of expression. We significantly anticipate a much higher effect from this new construct..

Great. And then on the CMT related stuff, as you try to narrow down the patient population that's most likely to benefit from a gene therapy, any thoughts on the NT-3 as a target for whole range of other neurologic or neuromuscular indications? Thank you so much..

There is a lot of potential opportunity that we are exploring with that. We are talking to Dr. Sahenk about that, even as we speak..

[Operator Instructions]. Our next question comes from the line of Matthew Harrison from Morgan Stanley. Your question, please..

Great. Thanks for taking the question. I will ask only one. I just wanted to follow up, Doug, on a comment you made earlier related to the pivotal program for DMD.

So what I call preferable studies in four seven-year-olds and the younger cohort and the elder cohort and maybe some of the other exons, are you expecting them all to start at the same time and have data around the one year mark with the sort of pivotal cohort? Or are these going to be later studies and I guess how would that impact to your filing plan?.

So they will start a little bit later than the commencement of our initial study but they will be comfortably completed before the end of our study and the submission and the approval of our study, which obviously, as we said before, ambitiously our goal is to try to get an approval by the end of 2020.

And you may say, how is that the case? Because for those patients, our proposal is not to run a full-year study for those but actually since those are really safety studies and expression related studies to look at three-month biopsies on those studies. It's a safety look at three-month biopsies and follow the patient.

So if we get a good concurrence from the agency on that, then obviously these cohorts can all be completed comfortably within the timelines as we build out our flight path to an approval in the United States and then around the world..

Thank you..

Thank you. Our next question comes from the line of Gena Wang from Barclays. Your question, please..

Thank you. I will also only ask one question. So regarding the manufacturing, I know you signed a contract with both Brammer Bio and Paragon.

I am just wondering, how will these two companies share experience when they are doing their optimization process? And will both of them be focusing on adherence cells? And how will the manufacturing capacity be split in the future?.

Well, as it stands right now, so remember Paragon is a secondary manufacturer to Brammer. So we have already transferred out to Brammer and we are actually completing the process development work with Brammer and that will all go to the benefit of transference to Paragon as well for our micro-dystrophin program.

Remember with our Brammer program alone, our goal was on a stand-alone basis to have sufficient manufacturing capacity to fully serve the market at launch. And then Paragon is our secondary source and backup as well, But the new assets will move around the world.

And then of course remember, beyond that Paragon has the opportunity to provide us with capacity far beyond Duchenne muscular dystrophy, most acutely in limb-girdle and 2E and the like. And of course, the plan both for Paragon and for Brammer for both limb-girdle and for Duchenne muscular dystrophy, micro-dystrophin is adherence.

They sell us units, as Sandy discussed during his discussion. And of course the reason for that is that can create capacity with a much lower risk reducing the numbers of unknown steps. I mean that's the way we are approaching that.

And then also remember one thing, how do we stitch together sort of Brammer on the one hand, Paragon on the other and perhaps another partner down the road. And the answer is that we have a hybrid manufacturing model. We are not simply contracting with contract manufacturing organizations that entirely outsource everything.

We actually are building our own expertise and we look to Brammer and we look to Paragon and we look to others, not to be outsourced service providers but to actually be partners with us, with our employees, with our experts, sharing information.

So, they are all garner the benefit of the entire federation of manufacturers and to our own internal experts driven by Palani, our head of manufacturing..

Thank you. That's very helpful..

Thank you..

Thank you. Our next question comes form the line of Vincent Chen from Bernstein. Your question, please..

Great. Thanks for taking the question. So thinking towards the upcoming PPMO read out, I was wondering if you could provide a bit more detail on the cadence and progress of the PPMO dose escalation study.

For example, how many doses do you intend to evaluate? How many patients are treated via each of these different dose cohorts? What degree of run outs are required of each dose? What safety assessments are done? What toxicity is to be considered dose limiting and potentially hot for the progression? What needs to happen for each additional dose cohort to be opened? And how quickly would you expect to progress to the next dose after one dose cohort is opened? And finally, if you can, where are you in this study?.

That was off of the top of your head? It's a traditional 3-by-3 single-ascending-dose study. To be entirely frank, I would have liked to have a more exotic approach to our singular setting dose study. But unfortunately, I did not have the benefit of Dr. Gilmore O'Neill when it was originally designed.

I think we would have been a little bit more creative in that approach today. But we are progressing well, I would say. We haven't really discussed the exact doses we have gotten to. We haven't hit any kind of serious adverse events or anything concerning. And we should have dosing insights by next year. But with that said, perhaps Dr.

O'Neil you could provide some additional insight..

So I think your question is, define or reveal a familiarity with the dose escalation in Phase I. As Doug said, we will have insights in the first quarter of next year. We are actually evaluating other ways to accelerate our dose exploration and move into patients at potentially therapeutic ranges in next year.

But I think the key also is that we know what about target organs, based on our non-clinical tox, we are monitoring those closely not just looking for tolerability but actually monitoring chemically for those known target organs and we have not seen anything to-date..

Okay. Thank you very much..

Thank you very much..

Thank you. Our next question comes from the line of Tazeen Ahmad from Bank of America. Your question, please..

Hi. Good afternoon. Thanks for taking my question. Doug, in your prepared statements you talked about some of the programs which you plan on moving into the clinic. One of them was for Pompe. You had also said that it's important to try to be as fast as possible to get the drugs to market and the importance of being first.

So given that there are quite a number of companies already that have talked about their plans to move into the clinic for their own Pompe assets, how are you thinking about Sarepta's chances there? And what do you think would distinguish your ability to develop a drug versus anything else that might also be in development? Thanks..

I will turn this over to Dr. O'Neil to comment but before I do, let me say this. We are taking a unique approach to Pompe. So the approach that we are taking to Pompe is CNS driven that is different than the other programs that exist out there. This is a differentiated program..

Yes. So I think Doug has actually just said giving the key differentiating answer. In some cases you know speed, well first of all speed matters because these are sick patients who actually are waiting for the drugs.

I think the second obviously is where the differentiation is clear that actually it is very important, but I think there is clear differentiation. Then I think there is room and certainly first of all we are moving aggressively and secondly there is clear differentiation because this is CNS delivered.

And I think it's important to remember that Pompe is not a truly muscular disease.

In fact it's a neuromuscular disease with a significant impact, something to contemplate, to Pompe on the anterior horn cell and motor neurons which is why we believe that this differentiated approach to CNS delivery is a critical and possibly probably likely very meaningful delivery approach that we can bring to this disease.

So that's why we believe that we have that edge here and can bring real value to patients..

I think one other thing to remember, another potential differentiator for us is that we have Dr. Barry Byrne, who is the inventor and the driver behind this.

One of the things that I have said many times including tonight is that we are going to approach the mission ahead of us with an enormous sense of humility leaning heavily on the experts around the world. To that end, as you may remember, we stole from Nationwide Children's Hospital, as much as it pains Dr. O'Neil every time I use the word steal. Dr.

Louise Rodino-Klapac and her lab and Dr. Barry Byrne is one of the world's experts in gene therapy which gives us an enormous additional level of confidence that we have something with the Pompe program..

Okay. Thanks.

And do you think that would help your rate of enrollment being CNS delivered as well?.

I don't know if we have really considered that, frankly. So I don't have any answer, one way or the other. Apologies for that..

Okay. Thank you..

Thank you so much..

Thank you. Our next question comes from the line of Joseph Schwartz from Leerink Partners. Your question, please..

Great. Thanks very much.

So I was wondering if you could quantify how much misconceptions about reimbursing drugs which were approved in an accelerated manner have held back EXONDYS sales? How many DMD patients would you estimate have not been able to access EXONDYS as a result? And have you noticed any change since the CMS clarification?.

So it's still little bit early days. The process is slow. It is State Medicaid, to be fair. It is a very state-by-state related issue. Some states, frankly some of the larger states have very good policies and have done a brilliant job of getting patients on therapy.

States like Texas and California and Florida have had very good policies and actually those are some of the larger states as well. But there have definitely been a significant number of states in patients, not the majority but a significant number that have had misconceptions.

I think a lot of it is driven by misconceptions about what an accelerated approval is, notwithstanding the fact that accelerated approval is a concept that's existed in the regulations for a very, very long time and therefore we are fully cognizant of the requirement of State Medicaids to provide access to drugs approved through the accelerated approval process and not to unduly delay that.

So I would say, it hasn't been an enormous impact but over time it will be. And I think it's also in the benefit of patients, many of whom, frankly a minority, but many of whom have been waiting since the very of approval of EXONDYS to get on therapy..

Great. Thank you for taking my question..

Thank you..

Thank you. Our next question comes from the line of Ritu Baral from Cowen. Your question, please..

Hi guys. Thanks for taking the question. Mine is on the MPS Sanfilippo program. One, this represents a little bit of a departure from your neuromuscular focus being lysosomal storage neurological disease.

What does that say to your overall, I guess, near-term clinical focus? And two, what is that pivotal trial is going to look like, especially given the controversy around what pivotal endpoints can this be and what neurocog scales are acceptable?.

Okay. I will let Louise answer the trial and endpoint related questions.

But what it says about our approach is meaningful and what it says is that we are going to build this Gene Therapy Center of Excellence and this gene therapy engine and we are going to focus on what we know and we are also going to focus on adjacencies to the areas that we are in.

So if you think about it, we started with DMD, so we are doing muscular. So when we move beyond DMD and moving to other the neuromuscular diseases, something limb- limb-girdle muscular dystrophy is a brilliant next step. But if you think about neuromuscular generally then obviously thinking about CNS is not a significant departure.

It is different than neuromuscular but not an enormous departure. We started with Pompe which is a CNS approach to a neuromuscular manifestation and then of course going to Lysogene is one step further CNS driven and will do more things opportunistically like that. And that's the way we are going to grow over time.

As I said before, we have 14 gene therapy programs today.

I think over time, probably in the next few years, it would not surprise me at all that we have as many as 30 gene therapy programs which will, as it stands right now, we are really focusing on in-licensing but we are building a Gene Therapy Center of Excellence around Louise and her lab in Columbus, Ohio and they will be creating their own constructs as well.

I think between the mix of in-licensing and our own constructs, I think it is really very possibly in the next couple of years we have as many as 30 programs fueling this engine that we have with hopefully near-term results and a series of launches and it will be neuromuscular, it will be CNS and it will be in kind of an evolutionary way moving into adjacencies to both of those areas over time.

Because if you think about gene therapy, the expertise in gene therapy is significantly focused on delivery. This is the delivery, like a rocket ship, of a payload and we can build new payloads and we have increasing expertise around the rocket ship itself. And we will start building payloads in CNS and neuromuscular.

And I am quite confident over time beyond that..

Thank you. Our next question comes from the line of Joel Beatty from Citi. Your question, please..

Hi. Thanks for taking the question.

Just on the pivotal trial of the micro-dystrophin gene therapy program, can you share some thoughts on what the magnitude of benefit of the trial is powered to detect on both the biomarker endpoints and the functional endpoints?.

Well, I am really sorry. I missed it. Apologies, can you just repeat the question one more time. I apologize for that..

So for the micro-dystrophin gene therapy program, what magnitude of benefit is the trial powered to detect and the biomarker endpoints and the functional endpoints?.

Well, it's powered to see a sophisticatedly significant difference, both on the biomarkers, obviously on the dystrophin expression which I don't think anyone's going to believe is difficult powering and also on function as well.

So based on informed by what we see in the first four patients, it is powered to see a statically significant difference on functional difference. One thing I would like to go back and do, because it didn't get answered in the last question was, I think the endpoint-related question and maybe Dr. O'Neill want to touch on..

Yes. So actually I think it was either myself or Dr. Rodino-Klapac, but I think the prior questioner had asked about the outcomes for the MPS-3 or the Sanfilippo. And so we will be looking at sleep agitation and other behavioral outcomes.

I think we believe that we can actually see, we will be able to demonstrate clear benefits with that approach and obviously have had, our partners have had the opportunity to discuss this with regulatory agencies I think between the discussions with the regulatory agencies and the potency of their approach, I think that this is a very reasonable approach with a good likelihood of success.

So sorry for hijacking your question to go back to the prior question..

That's fine. Thank you..

Thank you. Our next question comes from the line of Liisa Bayko from JMP Securities. Your question, please..

Hi. Yes. Total departure in question and one more for Sandy. Can you just give us some color on how to think about R&D and SG&A spend next quarter and into next year. Thank you. I mean next year, actually. Thanks..

Yes. So you should see a quarter-over-quarter increase going into next quarter as increasing number of programs come online especially in PPMO. Next year, we haven't really come up with our long-term strategic plan as yet. So we will be in a much better place to guide on it early next year, Liisa.

But you should see an increase there as well simply because of the number of people. As Doug indicated, we have almost doubled the size of our employee base, both in the U.S. as well as in some foreign locations. And then as our gene therapy program start increasing in size, you should see an increased spend on manufacturing in that area as well.

But again, it's a little too early to guide on that..

Okay. Thank you..

Thank you. Our next question comes from the line of Marty Astor from Credit Suisse. Your question, please..

Thanks for taking my question. Congrats on all the BD activity this quarter.

I had a question for you about, was just kind of curious about the competitiveness of some of those recent gene therapy deals and kind of what do you see as your differentiation in kind of lending some of these assets? And then I also wanted to know if you have any appetite for kind of more advanced stage clinical gene therapy assets, whether you had some clinical data already produced? Thanks..

So if you were a typical small molecule-based company, we wouldn't do an academic in-license or a company that just spun out from an academic institution, we would be in-licensing a program that was 12 or 14 years potentially from the market with a probability of success in the single digits at best. But gene therapy is not like that.

We go and do something like we did Myonexus. Myonexus was just freshly spun out of Nationwide Children's Hospital and we will have our entire cohort of our first cohort at, what we believed to be, therapeutic doses done this quarter.

So the ability to actually in-license assets that are later stage with a fairly significant probability of success is inconsistent versus history. I think we are taking advantage of that right now. Well, that's not going to continue forever, right. So the competition is going to increase over time.

We are kind of taking advantage of what seems to be a fairly inefficient market in that regard. That won't remain the case forever. But the good news for us is that we are building our Center of Excellence. We will be building our own constructs. We will be the masters of our own destiny at that point.

We will certainly always be looking to other business development in-licensing. I think we have a core competency in that. But we don't have to rely solely on that as we get our Gene Therapy Center of Excellence propped up and that will be by February of 2019..

Thanks for the insights on that. I appreciate it..

I think Sandy had somebody else to add..

Just to add to that, I mean, to answer your question. Some of those deals were bitterly competitive and it went to the very end and we were very pleased with our ability not just to compete with other public biotechs but also big pharma. And I think it's primarily for two or three different reasons.

Firstly, our manufacturing expertise that we have and our ability to be able to supply our partners with the drug that they need and that really differentiated us in a very big manner. Doug also referred to the speed of execution of the entire team, from clinical, legal and obviously business development to get these deals done.

And then lastly, as we have said before, we continue to forge strong partnerships to become the leaders in gene therapy.

But what has occurred now is, because of our relationships with the various KOLs and our success in business development, we are getting a lot of inbound inquiries that lets us both be more selective in terms of the quality of the deals that we want to do but also ensure that the cadence of business development deals that we are getting keeps increasing.

So you will see us continue forging these partnerships over the upcoming months and years..

Thanks..

Thank you. Our next question comes from the line of Brian Abrahams from RBC. Your question, please..

Hi. This is Burt, on for Brian. Thanks for taking our question and congratulations on all the progress. My question is on the DMD gene therapy program.

So given the known effects of increased activity and exercise on CK level, do you see CK levels as kind of the best way to measure the durability of the gene therapy? Or do you think more focusing on the functional gains or even repeated biopsies would be a better way to judge the durability?.

That's a great question. So I think that there is that enormous confounding variables with the use of CK. First, CK as variable. As an example, you look at it, there are phenotypically non-muscular dystrophy Becker's patients that will show significant spikes in OK. So it's already a bit of a variable endpoint.

And then on top of that, to your very good point, we have seen a pretty strong correlation between increases in exercise these kids appear to be, again I want to be careful it's an open label, but they appear to be very active relative to a matched Duchenne child and we definitely see exercise related increases in CK and then we see them fall right back down when the kids rest.

And so it does make it difficult. These are early days. We are plugging, but it does make it difficult to use CK, for instance, as a reliable endpoint. We are going to have to, there would definitely be a secondary point in the trial..

So Gilmore O'Neill here. I think that there are a couple of points to make. First of all, the CK, what we do see is the overall trend or not just more the trend, puts us down in the range of the Becker's including with the spikes. So I think that's an important point and that's actually very reassuring.

I think the second thing is that no one would ever want to design a study where it's contingent on one outcome measure.

And then with regard to durability, I think there are multiple ways that we would be able to look at that and that we are actually designing into our program which I think you have outlined but function, CK trend, possibly controlling actually all three activity levels, prior to CK, et cetera. These are all approaches we will use.

But overall, the most important thing will be functionality. And we have actually been surprised and I shouldn't say surprised, somewhat pleasantly tantalized by the data, the really robust data we have seen so far in the four subjects from a functional point of view.

So I think all of that helps us, makes us feel confident about how we design our trial using functional outcomes for looking at durability. But we will be looking at the totality of the data..

And durability is a very important issue in the long term. The good news however, the preclinical models give us a lot of confidence on durability. We have seen both, obviously starting with a mouse model and then moving on to go to vertebrae models and moving all the way up to non-human primate models.

We have seen significant multi-year durability, no diminution from durability over very long periods of time. And then when you couple that with the kinds of expression that we are seeing, there seems to be a very high probability that we are going to have a very, very durable product. But of course, that all has to be looked at over time..

Great. Thanks so much..

Thank you..

Thank you. Our next question comes from the line of Tim Chiang from BTIG. Your question, please..

Hi. Thanks. Hi Doug.

Has the age of the patients taking EXONDYS 51 changed at all? Does it still run 13 years of age?.

It's 12.9..

And just one follow-up. I think you guys mentioned, there was a slight change in the commercial government payor mix.

What was the change?.

It's now 50-50 split between commercial and government which is, when I say government, it's almost all Medicaid. And it's just increased number of patients that are coming onboard from Medicaid plans..

And do you guys expect that to basically be the split going forward pretty much 50-50?.

Yes. We actually expected this split to be 50-50 two years prior to launch. And then at launch it was 60 40 and it's moved up. And this is how every one of my launches have ever been, Medicaids lag the commercial plans at the beginning of the launch and then they catch up.

So this is exactly what we thought would happen two years ago and we are seeing it play out..

Okay. Great. Thanks..

And then probably ironically, particularly the CMS letter gives us some opportunity over the coming couple of years...

Yes. It could give a little bit more to Medicaid but on average 50-50..

Thank you. Our next question comes from the line of Tim Lugo from William Blair. Your question, please. Tim Lugo, your line is open. You might have your phone on mute..

Hi. Hopefully you can hear me..

Yes, we can..

Okay. Great. Can you discuss maybe commercially how you are laying the groundwork for gene therapy? The industry has obviously seen more scrutiny around pricing. This will obviously be a premium price product.

How are you prepping for payor discussions and maybe some pushback from what should be robust demand?.

The short answer is, a lot of work. So we are not only working on the models itself, we are reaching out and beginning to have dialogue with payors and governments and others along the way.

But really the interesting thing about gene therapy, just to be clear, the interesting thing about gene therapy is and one of the things we are working on as an organization is the following.

The fact is that from a typical health economic perspective, if you are run our gene therapy program or any gene therapy program that would look like ours through a model, it will be very easy to get to a good number, a very good number for us.

ICER, as an example, themselves did a theoretical gene therapy analysis at a recent meeting and they had enormous numbers in the millions of dollars for a gene therapy that was sort of a theoretical gene therapy that was transformative that would take the place of a therapy that was $200,000 a year.

And when they did that, ran the math on that, from even an ICER model, it was enormous value. The issue that we are going to work on over the next two years is not the typical value proposition that you have to struggle with but rather the structural issues. The real issue is not whether the value is there. I think that's going to be a fairly easy.

That's just a mathematical exercise and I think we are going to do brilliantly in that. But is the structure ready for big transformative moments that will benefit us all health economically and benefit society, but they come in one form as opposed to chronic therapies.

So the irony is, if we don't put a lot of thought into this, our system is built around chronic therapies. What we all want as a society is big transformative potential cures but our structure may not be brilliantly adapted to it.

If you are going to be the leader in gene therapy as we believe our destiny is to be then we have got to play an enormous role in helping to figure that out. And we are doing a lot of that work even right now and having a lot of dialogue with folks right now including beginning to have a dialogues with governments payors.

Frankly, those people have put a lot of thought already into models and the like. So it's a work in progress but it's something that we are very deeply involved in right now as an organization..

Yes. Tim I will just follow-up with what Doug said. We are actively thinking about this and doing work now. We are going to keep everything very close to the chest. We are in a competitive situation. And we are planning on making sure that Sarepta's micro-dystrophin drug gets to all the kids first..

Understood. Thanks..

Thank you very much..

Thank you. Our next question comes from the line of Yun Zhong from Janney. Your question, please..

Hi. Thank you for taking my question. I wanted to ask about Europe for EXONDYS 51.

Is there any data, specific data that in your mind could potentially help you to pursue approval again? Or do you think that the micro-dystrophin therapy program can have a better chance to get there first?.

Well the good news is, we are not going to choose between them because we are going to go like mad on both and then we are going to go like mad on golodirsen and casimersen as well and then other gene therapy programs. As it relates specifically to eteplirsen, we did get some guidance from CHMP that's been very helpful.

We are being a little careful about sharing various hypotheses right now for the simple reason to be honest we don't want to die a thousand deaths as we think this issue through and work with it. But I will say that as disappointed as we are and I don't want to pretend like we weren't disappointed with the outcome of the reexamination.

Of course we were for more than anything else for patients in Europe that are waiting for this therapy. We did get good guidance from our rapid tours and from CHMP and based on that we are going to take scientific advice from EMA in 2019. And I think we will have a better understanding of what the pathway looks like in it.

And you know there might be opportunities to be more efficient than, for instance, another study or waiting for the outcome of a long term study..

Thank you..

Thank you very much..

Thank you. This does conclude the question-and-answer session of today's program. I would like to hand the program back to Doug Ingram for any further remarks..

Thank you all very much. Thanks for your good questions and for sticking with us this evening. We have a lot to do over the coming months and years but we have got the right team in place.

We are focused and we are going to not only to think big but we are going to focus on execution over the coming quarter and then the following year and then years beyond that. So thank you all very much for your questions this evening..

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day..