UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol |
Name of exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock with $0.0001 par value |
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(Class) |
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(Outstanding as of August 2, 2024) |
SAREPTA THERAPEUTICS, INC.
FORM 10-Q
INDEX
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Page |
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Item 1. |
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3 |
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Condensed Consolidated Balance Sheets — As of June 30, 2024 and December 31, 2023 |
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3 |
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4 |
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Condensed Consolidated Statements of Stockholders’ Equity — For the Three and Six Months Ended June 30, 2024 and 2023 |
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5 |
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Condensed Consolidated Statements of Cash Flows — For the Six Months Ended June 30, 2024 and 2023 |
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6 |
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7 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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21 |
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Item 3. |
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36 |
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Item 4. |
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36 |
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Item 1. |
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37 |
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Item 1A. |
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37 |
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Item 2. |
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74 |
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Item 3. |
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74 |
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Item 4. |
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74 |
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Item 5. |
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74 |
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Item 6. |
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74 |
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75 |
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76 |
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2
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
SAREPTA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
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As of |
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As of |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Accounts receivable, net |
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Inventory |
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Manufacturing-related deposits and prepaids |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Right of use assets |
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Non-current inventory |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Deferred revenue, current portion |
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Current portion of long-term debt |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Lease liabilities, net of current portion |
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Deferred revenue, net of current portion |
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Contingent consideration |
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Other non-current liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive (loss) income, net of tax |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
3
SAREPTA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands, except per share amounts)
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For the Three Months Ended |
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For the Six Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues: |
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$ |
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$ |
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$ |
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$ |
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Collaboration and other |
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Total revenues |
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Cost and expenses: |
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Cost of sales (excluding amortization of in-licensed rights) |
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Research and development |
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Selling, general and administrative |
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Amortization of in-licensed rights |
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Total cost and expenses |
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Operating (loss) income |
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Other income (loss), net: |
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Other income, net |
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Gain from sale of Priority Review Voucher |
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Loss on debt extinguishment |
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Total other income (loss), net |
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Income (loss) before income tax expense |
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Income tax expense |
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Net income (loss) |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Unrealized (losses) gains on investments, net of tax |
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Total other comprehensive (loss) income |
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Comprehensive income (loss) |
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$ |
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$ |
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$ |
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$ |
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Earnings (loss) per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average number of shares of common stock used in computing earnings (loss) per share: |
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Basic |
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Diluted |
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See accompanying notes to unaudited condensed consolidated financial statements.
4
SAREPTA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited, in thousands)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity |
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BALANCE AT DECEMBER 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Exercise of options for common stock |
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— |
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— |
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— |
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Vest of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under employee |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Unrealized losses from available-for-sale |
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— |
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— |
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— |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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— |
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BALANCE AT MARCH 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Exercise of options for common stock |
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— |
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— |
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Vest of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock for conversion of 2024 Notes |
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— |
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— |
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— |
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Unrealized losses from available-for-sale |
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— |
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— |
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— |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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— |
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BALANCE AT JUNE 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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(Loss) Income |
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Deficit |
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Equity |
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BALANCE AT DECEMBER 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Exercise of options for common stock |
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— |
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— |
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— |
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Vest of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock for |
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— |
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— |
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— |
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Partial settlement of capped call share |
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— |
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— |
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— |
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— |
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Issuance of common stock under employee |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Unrealized gains from available-for-sale |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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BALANCE AT MARCH 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Exercise of options for common stock |
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— |
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— |
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— |
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Vest of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Unrealized losses from available-for-sale |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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BALANCE AT JUNE 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
5
SAREPTA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
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For the Six Months Ended June 30, |
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2024 |
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2023 |
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Cash flows from operating activities: |
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Net income (loss) |
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$ |
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$ |
( |
) |
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Adjustments to reconcile net income (loss) to cash flows from operating activities: |
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Depreciation and amortization |
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Reduction in the carrying amounts of the right of use assets |
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Non-cash interest expense |
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Stock-based compensation |
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||
Accretion of investment discount, net |
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|
( |
) |
|
|
( |
) |
Non-cash change in the fair value of contingent consideration |
|
|
|
|
|
( |
) |
|
Loss on debt extinguishment |
|
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|
|
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||
Gain from sale of Priority Review Voucher |
|
|
|
|
|
( |
) |
|
Other |
|
|
( |
) |
|
|
|
|
Changes in operating assets and liabilities, net: |
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|
|
|
|
|
||
Net decrease (increase) in accounts receivable, net |
|
|
|
|
|
( |
) |
|
Net (increase) decrease in manufacturing-related deposits and prepaids |
|
|
( |
) |
|
|
|
|
Net increase in inventory |
|
|
( |
) |
|
|
( |
) |
Net decrease in other assets |
|
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|
|
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||
Net decrease in deferred revenue |
|
|
( |
) |
|
|
( |
) |
Net decrease in accounts payable, accrued expenses, lease liabilities and other liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Purchase of available-for-sale securities |
|
|
( |
) |
|
|
( |
) |
Maturity and sale of available-for-sale securities |
|
|
|
|
|
|
||
Purchase of intangible assets |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of Priority Review Voucher |
|
|
|
|
|
|
||
Net cash provided by investing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
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|
|
|
||
Proceeds from exercise of stock options and purchase of stock under the Employee Stock |
|
|
|
|
|
|
||
Partial settlement of capped call share options for 2024 Notes |
|
|
|
|
|
|
||
Debt conversion costs for 2024 Notes |
|
|
|
|
|
( |
) |
|
Net cash provided by financing activities |
|
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|
|
|
|
||
|
|
|
|
|
|
|
||
Decrease in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash: |
|
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|
|
|
|
||
Beginning of period |
|
|
|
|
|
|
||
End of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Reconciliation of cash, cash equivalents and restricted cash: |
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|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash in other assets |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid during the period for income taxes |
|
$ |
|
|
$ |
|
||
Cash paid during the period for interest |
|
$ |
|
|
$ |
|
||
Supplemental schedule of non-cash activities: |
|
|
|
|
|
|
||
Intangible assets and property and equipment included in accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
Lease liabilities arising from obtaining right of use assets |
|
$ |
|
|
$ |
|
||
Common stock issued for conversion or exchange of 2024 Notes |
|
$ |
|
|
$ |
|
||
Capitalized stock-based compensation and depreciation as inventory |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
See accompanying notes to unaudited condensed consolidated financial statements.
6
SAREPTA THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION AND NATURE OF BUSINESS
Sarepta Therapeutics, Inc. (together with its wholly-owned subsidiaries, “Sarepta” or the “Company”) is a commercial-stage biopharmaceutical company focused on helping patients through the discovery and development of unique RNA-targeted therapeutics, gene therapy and other genetic therapeutic modalities for the treatment of rare diseases. Applying its proprietary, highly-differentiated and innovative technologies, and through collaborations with its strategic partners, the Company has developed multiple approved products for the treatment of Duchenne muscular dystrophy (“Duchenne”) and is developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne, Limb-girdle muscular dystrophies (“LGMDs”) and other neuromuscular and central nervous system disorders.
The Company's products in the U.S., EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”) and AMONDYS 45 (casimersen) Injection (“AMONDYS 45”) were granted accelerated approval by the U.S. Food and Drug Administration (the “FDA”) on September 19, 2016, December 12, 2019 and February 25, 2021, respectively. Indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 51, exon 53 and exon 45 skipping, respectively, EXONDYS 51, VYONDYS 53 and AMONDYS 45 (collectively, the “PMO Products”) use the Company’s phosphorodiamidate morpholino oligomer (“PMO”) chemistry and exon-skipping technology to skip exon 51, exon 53 and exon 45 of the dystrophin gene. Exon skipping is intended to promote the production of an internally truncated but functional dystrophin protein.
ELEVIDYS (delandistrogene moxeparvovec-rokl), approved by the FDA on June 20, 2024, is an adeno-associated virus-based gene therapy for the treatment of ambulatory pediatric patients at least 4 years old with Duchenne with a confirmed mutation in the Duchenne gene. ELEVIDYS is also approved for non-ambulatory patients under the accelerated approval pathway. ELEVIDYS was previously granted accelerated approval by the FDA on June 22, 2023 for the treatment of ambulatory pediatric patients aged 4 through 5 years with Duchenne with a confirmed mutation in the Duchenne gene. ELEVIDYS is contraindicated in patients with any deletion in exon 8 and/or exon 9 in the Duchenne gene.
As of June 30, 2024, the Company had approximately $
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), reflect the accounts of Sarepta and its wholly-owned subsidiaries. All intercompany transactions between and among its consolidated subsidiaries have been eliminated. Management has determined that the Company operates in
In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with U.S. GAAP, but that is not required for interim reporting purposes, has been omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2023 which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission on February 28, 2024. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year.
Estimates and Uncertainties
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
7
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash held at financial institutions, cash equivalents, investments and accounts receivable, net, from customers. As of June 30, 2024, the Company’s cash was concentrated at three financial institutions, which potentially exposes the Company to credit risks. However, the Company does not believe that there is significant risk of non-performance by the financial institutions. The Company also purchases commercial paper, government and government agency bonds, corporate bonds and certificates of deposit issued by highly rated corporations, financial institutions and governments and limits the amount of credit exposure to any one issuer. These amounts may at times exceed federally insured limits. The Company has not experienced any credit losses related to these financial instruments and does not believe to be exposed to any significant credit risk related to these instruments. As of June 30, 2024, three entities accounted for
Significant Accounting Policies
For details about the Company's accounting policies, please read Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncements of the Annual Report on Form 10-K for the year ended December 31, 2023.
There have not been any material changes to the Company's accounting policies or recent accounting pronouncements that could have a material impact through June 30, 2024.
3. LICENSE AND COLLABORATION AGREEMENTS
F. Hoffman-La Roche Ltd.
For the three and six months ended June 30, 2023, the Company recognized $
The costs associated with co-development activities performed under the Roche Agreement are included in operating expenses, with any reimbursement of costs by Roche reflected as a reduction of such expenses when the related expense is incurred. For the three and six months ended June 30, 2024, costs reimbursable by Roche and reflected as a reduction to operating expenses were $
In accordance with the Roche Agreement, the Company agreed to enter into a supply agreement with Roche in order to supply them with clinical and commercial batches of ELEVIDYS (the “Supply Agreement”). While the Supply Agreement is in the process of being negotiated, the Company has delivered batches of commercial ELEVIDYS supply to Roche that were agreed upon on a purchase order-by-purchase order basis. For the six months ended June 30, 2024, the Company recognized $
8
Research and Option Agreements
The Company has research and option agreements with third parties in order to develop various technologies and biologics that may be used in the administration of the Company’s genetic therapeutics. The agreements generally provide for research services related to pre-clinical development programs and options to license the technology for clinical development. Prior to the options under these agreements being executed, the Company may be required to make up to $
Milestone Obligations
The Company has license and collaboration agreements in place for which it could be obligated to pay, in addition to the payment of up-front fees upon execution of the agreements, certain milestone payments as a product candidate proceeds from the submission of an investigational new drug application through approval for commercial sale and beyond. As of June 30, 2024, the Company may be obligated to make up to $
4. FAIR VALUE MEASUREMENTS
The Company has certain financial assets and liabilities that are recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.
During the six months ended June 30, 2024, there were no transfers into or out of Level 3.
|
|
Fair Value Measurement as of June 30, 2024 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Assets |
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|
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|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Government and government agency bonds |
|
|
|
|
|
|
|
|
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|
||||
Corporate bonds |
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|
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|
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Strategic investments |
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