PSYK - Sarepta: Advancement In DMD Space With SRP-9001 And Licensed MyoAAV

• BLA filing of SRP-9001 for the treatment of patients with DMD is expected in fall of 2022; If filing and review go well then FDA Accelerated approval possible mid-2023.
• The global market opportunity for Duchenne Muscular Dystrophy is expected to reach $4.11 billion by 2023.
• Sarepta licensed MyoAAV from The Broad Institute for DMD and several other indications; MyoAAV has enhanced capsid (outer shell) compared to currently used AAVs, which may yield superior safety/efficacy.
• Net product revenues in the most recently reported quarter for the already approved RNA-based PMO drugs was $211.2 million, which was a 50% increase from same quarter last year.

Sarepta Therapeutics, Inc. ( SRPT ) is a great speculative biotech play to look into. The reason why is because I believe additional upside is possible on the premise that it could possibly obtain accelerated approval for its gene therapy SRP-9001, which is being developed for the treatment of patients with Duchenne muscular dystrophy ((DMD)).

The thing is that this company is already generating revenue using its other FDA approved drugs for DMD known as eteplirsen, golodirsen and casimersen. However, it holds potential to submit its BLA to the FDA for SRP-9001 for DMD this fall. If all goes well with the review thereafter, then it's quite possible that it could obtain accelerated approval by mid-2023. There is no guarantee of this, but still remains a good possibility.

Regardless, net product revenues in the most recently reported quarter for the already approved RNA-based PMO drugs was $211.2 million. This figure is important because it represents a growth of net product revenues by 50% compared to the second quarter of the year prior. If such growth continues, then I think the stock will do well regardless. Speaking of which, Sarepta even raised full-year guidance because of the growth it has been seeing with respect to product sales. Besides SRP-9001, the company recently licensed MyoAAV from The Broad Institute. The point of doing so is the ability to capture an AAV that is far more efficient at lower doses, while possibly having superior efficacy. In essence, Sarepta holds the potential to develop an improved gene therapy, one that could potentially be superior compared to SRP-9001.

Good Remarks Thus Far For SRP-9001 For Duchenne Muscular Dystrophy

Sarepta has done well to obtain FDA accelerated approval in the past for its DMD drug eteplirsen. It has also been able to obtain a few regulatory approvals thereafter with golodirsen and casimersen. The global market opportunity for Duchenne Muscular Dystrophy is expected to reach $4.11 billion by 2023. How can it possibly advance the DMD treatment space even further? Well, it may be able to do so with SRP-9001. This is a gene therapy which Sarepta has been advancing in collaboration with its partner Roche ( RHHBY ). Sarepta had received an upfront payment of $1.15 billion and holds potential to earn $1.7 billion in regulatory and sales milestones. Plus, the ability to earn the typical royalties on net sales of this gene therapy as well.

I think that things could possibly go well for investors for the advancement of SRP-9001. Why do I say that? That's because Sarepta had already spoken to the FDA about being able to file an application for potential accelerated approval of this gene therapy product for the treatment of DMD patients. Surprisingly, it got some pretty good feedback. Matter of fact, with the feedback it received from the FDA, it intends to submit a Biologics Licensing Application ((BLA)) to the FDA this fall. This would be one major catalyst for investors to look forward to, one in which I think could cause the stock to rise.

A second catalyst would be if Sarepta ultimately receives FDA approval for SRP-9001, which may be possible by mid-2023. I believe these two events are going to be huge for the biotech, as such I view them as good trade opportunities. It was able to get to the point of being able to file a BLA in the fall for SRP-9001, because of a few successful studies. For instance, in one of the studies, which is known as SRP-9001-103 (ENDEAVOR study). It was shown that patients who received this gene therapy outshined those who received external control. This was proven both in unadjusted means and least squared means in 20 patients aged 4 to 7 as follows:

• Using unadjusted means at 1-year NSAA score - 4 points improvement for SRP-9001 compared to 0.2 points for external control
• Using least squared means at 1-year NSAA score - 3.9 points improvement for SRP-9001 compared to 0.2 points for external control

What does this data mean and why do I believe there is a good chance SRP-9001 will be approved? In essence, the point improvements involve something known as North Star Ambulatory Assessment ((NSAA)) score. It is a scale that determines if a person can function independently on their own in terms of muscle movement. The scores are as follows:

• 2 points - normal activity
• 1 point - Modified method but can still achieve goal independent of physical assistance from another person
• 0 point - Unable to achieve independently

The maximum score is 34 points. Taking one example from above with respect to NSAA, let's look at the Unadjusted means at 1-year score. Again, there was a 4 point improvement (improvement was 22.1 points to 26.1 points). This may not seem like much, but such an improvement is pretty huge when you compare what the external control accomplished. For those who took external control they went from 21.9 points to 22.1 points (0.2 point increase). In addition, the company released pooled long-term results from study SRP-9001-101. After 4 years of treatment, 4 patients achieved a positive mean 7.0 point difference on total NSAA score compared to baseline. When looking at it compared to a propensity-weighted external control, total NSAA scores for those given the gene therapy treatment were 9.9 points (unadjusted means) and 9.4 points (least square means).

The point here is that treatment with gene therapy helped patients see a great improvement in NSAA over a long period of time. I believe there is a good chance that SRP-9001 may receive FDA accelerated approval for SRP-9001 for the treatment of patients with DMD.

Potential Improvement Of AAV Gene Delivery With Capsid Enhancement

While it is up in the air whether or not SRP-9001 will be approved for patients with DMD, that doesn't mean Sarepta isn't advancing other drugs for the very same indication. Matter of fact, it developed a license agreement with the Broad Institute (Broad Institute of MIT and Harvard) for the use of MyoAAV for Duchenne Muscular Dystrophy ((DMD)) and other certain types of neuromuscular and cardiac indications.

Right away, you can see that not only can the company potentially achieve an enhancement for AAV gene therapy delivery, but it also gains an expanded pipeline towards other indications. Why do I believe that this license agreement is a value adding event? It is because it pertains to the possibility that MyoAAV can not only be far more effective compared to SRP-9001, but could also be safer. It all has to do with MyoAAV using a modified outer protein shell of AAV (known as the capsid). Using this, it is able to far outpace other adeno-associated viruses ((AAVs)). This was proven in data published in a medical journal known as Cell in 2021, in which was shown that MyoAAV was able to establish more efficient of genetic payloads and delivery of gene therapy. This led to muscle function being restored completely and improved survival rates in mouse models.

Secondly, in preclinical data in non-human privates, MyoAAV achieved many functions of superiority over natural AAV serotypes. One improvement of this type of AAV is that it delivers 25-50 times greater gene expression in skeletal muscles and 10-15 times greater gene expression in cardiac muscle. How can this help? Well, much lower dosing achieves superior efficacy. Safety improvements noted are:

• Lower accumulation in the liver
• 50% reduction in reduced delivery to the liver
• MyoAAV can be developed to be used up to a log lower dose compared to traditional AAV vectors (This is as a I described above in that efficacy is substantially increased more despite a lower dose being utilized)

Even though this program is in the early stages, there is hope that it could yield far superior data compared to SRP-9001. In addition, if it ends up working out, then two possibilities could come about. Another partnership for MyoAAV with upfront payment and milestones/royalties for starters. Secondly, ability to keep innovating to fend off any potential competition that may exist. Why the need for MyoAAV? That's because current AAV options are toxic and are not efficiently delivered. Secondly, it can be delivered in doses up to 250 times lower than what is found for traditional AAVs. It's all made possible thanks to the modification of the capsid (outer shell of the AAV).

The tech was modified to be delivered far more efficiently to muscles. However, it can also possibly be done with other organs as well. What's left now? It works well in animal models and non-human primates. What needs to be done now is to see the same effects in humans. The only thing is that under the terms of this license agreement is that Sarepta will have to pay an upfront payment to the Broad Institute on top of future royalties and milestone payments.

Financials

According to the 10-Q SEC Filing , Sarepta Therapeutics had $1.9 billion in cash, cash equivalents, restricted cash and investments as of June 30, 2022. As I noted above, Sarepta Therapeutics already has 3 RNA-based PMO drugs approved for the treatment of patients with DMD. It obtained net product revenues of $211.2 million in Q2 of 2022, which was a 50% growth over the same quarter last year. Based on the growth it has seen so far, it has updated its full-year guidance for net product revenue.

The new full-year guidance range for net product revenue is now between $825 million and $840 million. It believes it has enough cash to fund its operations for at least June 30, 2023. Beyond that, it highly depends what other programs it advances in the pipeline or may have to ultimately remove. If it does seek cash earlier than expected, it will be due to a business transaction or another strategic motive not yet known.

Risks To Business

There are several risk factors that investors of Sarepta Therapeutics need to worry about. The biggest risk of them all would be whether or not SRP-9001 will be approved for the treatment of patients with DMD. While I believe there is a good chance it will receive FDA accelerated approval, there is no guarantee of this. In addition, if it is not approved by mid-2023, there will be two issues. The first is that I expect the stock to possibly drop by 20% or more for starters. Secondly, depending upon the deficiencies noted, eventual regulatory approval may take longer than expected.

A second risk would be as it relates to the recently licensed MyoAAV. While it has performed well in preclinical models and non-human primates, there is no assurance that this technology will perform the same when human testing is started.

The final risk is based on the financials. While it well capitalized for now, that doesn't mean it won't take advantage of a sharp rise in the stock price. I believe such a rise could occur when it files the BLA for SRP-9001 in the fall of this year. In addition, it's possible it could raise earlier to achieve a strategic transaction.

Conclusion

I believe that Sarepta Therapeutics is a great speculative biotech play to look into. That's because it already has 3 RNA-based PMO drugs which have already been approved for the treatment of patients with DMD. As I noted before, net product revenues have been climbing, with the most recent quarter showing a 50% year over year increase to $211.2 million.

There are two catalysts for investors to look forward to, which I believe would be huge for the company and its stock. The first is the actual filing of the BLA for SRP-9001 for the treatment of patients with DMD. The second catalyst could be the possible FDA accelerated approval of this gene therapy for this patient population in mid-2023.

Lastly, it is not just pinning its hopes on SRP-9001 alone. It has already taken the step to license MyoAAV from The Broad Institute. The potential to use up to a log lower dose and possibly achieve superior safety/efficacy could be groundbreaking. This wouldn't even only be for DMD either, because the license agreement accounts for additional target indications as well. I see many positives for this company and such, these are the reasons why I believe it is a great speculative biotech play to look into.

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