SAN FRANCISCO – Concerns that launch expectations for Sarepta Therapeutics Inc.'s Duchenne muscular dystrophy (DMD) drug Exondys 51 (eteplirsen) might be too ambitious were largely put to rest Tuesday, as CEO Ed Kaye provided updates on patient starts and reimbursement efforts and reported higher-than-expected fourth-quarter revenue.

Taking the podium during an early Tuesday presentation at the J.P. Morgan Healthcare Conference, Kaye said his aim was to "convince you that we're well on our way to helping" boys with DMD, a rare, genetic, neuromuscular disease for which Exondys 51 marks the first FDA-approved therapy, gaining accelerated – some would say, controversial – approval in September. (See BioWorld Today, Sept. 20, 2016, and BioWorld Insight, Sept. 26, 2016.)

Even if more relieved than jubilant, Wall Street acknowledged Sarepta's early launch success, sending shares of the Cambridge, Mass.-based firm (NASDAQ:SRPT) up $6.63, or 21.2 percent, to end the day at $37.89.

The stock, which closed at nearly $50 the day the FDA cleared Exondys 51 for use in DMD patients with a mutation for exon 51 skipping, had been backsliding since, amid skepticism that the drug – at an estimated cost of $300,000 per year – would meet with significant resistance from payers. Social media chatter has added to the general pessimism, according to a December report by Leerink Research analysts, who wrote that Sarepta would have to disclose more than 200 start forms in its JPM presentation in order to meet consensus expectations in 2017.

Sarepta did just that. Kaye told JPM attendees during his prepared remarks that 250 genetically tested patients had submitted start forms for Exondys 51 treatment. The company focused on start forms due to the lengthy process of getting patient access to the drug. Once a start form has been submitted and the patient's genetic mutation has been confirmed, the process continues with reimbursement authorization, following by selecting an infusion site, ensuring that the drug is on the hospital formulary and shipping the drug. In cases where patients opt for a surgical intravenous port, there would be a delay, though Kaye said, the port would add convenience – and likely improve compliance – in the long run.

"Going forward, we're going to focus on revenue numbers, because I think that gives a better description of how the launch is going," Kaye explained.

Sarepta, however, did report fourth-quarter revenue of $5.4 million, "above our $4.5 million estimate," Piper Jaffray analyst Edward Tenthoff wrote in a research note, adding that the firm is "making good progress on reimbursement and expects payer conversions to accelerate" in the second half of this year.

Piper Jaffray estimates U.S. sales of Exondys 51 to be about $274 million for this year, with peak U.S. sales topping $500 million.

In the meantime, Sarepta remains in "active dialogue with payers to support broad coverage," Kaye said, with initial efforts having focused on the two highest-tier DMD centers, covering about 80 percent of eligible patients. To date, about 95 percent of Tier 1 centers and 93 percent of Tier 2 centers have submitted patient forms.

TESTING AND COVERAGE

To navigate the reimbursement landscape, Sarepta has a team deployed to educate payers, both on the therapy and on the burden of disease. "This is the first time payers are being introduced to DMD" and its impact on patients and families, Kaye said.

Access discussions are going well, he said. The majority of plans are reviewing Exondys 51 reimbursement on a case-by-case basis.

That is "not unusual for a rare disease launch," he added during a breakout session that followed his remarks, adding that it was a typical experience during his time at Sanofi SA unit Genzyme Corp., where he served as group vice president of clinical development until mid-2011, when he joined Sarepta as its top executive, president and chief medical officer. "All these patients were on a case-by-case basis. And that's appropriate: We want to make sure the right patient with the right genetic mutation is being treated."

Payers saying "no" is usually just "the first step in the discussion," he said. "So there's a denial process we go through with every single patient." In some cases, the payers might not understand DMD; other times, they might be confused about "accelerated approval."

Sarepta reported Tuesday that 79 percent of covered lives are pending policy decisions, while 13 percent already have a favorably policy. Eight percent are denying covering, though conversations are ongoing.

The company also had made headway in efforts to increase genetic testing, something that hasn't been routine for DMD patients but is necessary to make sure the right patients are selected for Exondys 51 treatment. In 2015, Sarepta "started a big effort" to boost genetic testing. The company had discovered that insurance companies didn't always cover the test, Kaye noted, so the firm partnered with other organizations, such as Parent Project Muscular Dystrophy, which "allowed any boy who had problems with insurance get tested."

"We don't have the metrics as of today, but I think what we've seen is the number of boys continue to increase," he added. "The frequency of genetic testing has gone up fivefold to sevenfold in the last year."

Sarepta's next commercial move involves expanding into Europe and other regions. A decision in Europe, which has a larger DMD population than the U.S., could come in the next 12 to 15 months. The EMA validated the company's marketing authorization application for Exondys 51 late last year.

Like the U.S., it is estimated that roughly 13 percent of DMD patients test positive for the exon 51 skipping mutation.

The recent U.S. approval gives Sarepta the option of moving into certain areas, including Turkey, Israel and Latin America, to provide Exondys 51 in early access programs, using approval "in the U.S. as a stepping stone to get access in other areas of the world."

WIDENING THE DMD NET

While a hard-fought battle in itself, Exondys 51's approval marks only the start in treating DMD. About 13 percent of patients – an estimated 3,400 patients worldwide – are eligible for the drug, leaving plenty of additional ground to cover.

In its pipeline, Sarepta has two candidates that together could reach an additional 16 percent – about 7,600 patients – with genetic mutations in for exons 53 (SRP-4053) and 45 (SRP-4045). A global, phase III study, dubbed ESSENCE, currently is enrolling a total of 99 patients, ages 7 to 13, who will be randomized to receive one of the two treatments, depending on their mutations, or placebo. The 96-week trial will use the six-minute walk test as the primary endpoint.

Earlier in development are treatments targeting exons 44, 52, 8, 55 and 43. Altogether, those eight exons represent roughly half of all DMD patients, Kaye said.

"Given the complexity of Duchenne muscular dystrophy," he added, Sarepta has realized multiple approaches would be needed to tackle the disease and has been building a pipeline, both internally and through partnerships, to reach more patients.

In September, it inked a deal with Catabasis Pharmaceuticals Inc. to study Sarepta's exon skipping approach with Catabasis' oral NF-kB inhibition treatment in a mouse model of DMD. A few weeks later, it in-licensed European rights to Summit Therapeutics plc's pipeline of utrophin modulators for DMD, paying Summit $40 million up front, with the promise of another $522 million in potential development, regulatory and sales milestones. Targeting utrophin offers the potential to help all patients with DMD, Kaye noted. (See BioWorld Today, Oct. 5, 2016.)

On Tuesday, Sarepta disclosed two additional programs, both licensed from the Nationwide Children's Hospital. One involves a microdystrophin gene therapy program, which is expected to start phase I/IIa testing late this year, with help from a $2.2 million commitment from Parent Project Muscular Dystrophy. The second, a Galt2 gene therapy program developed by Nationwide researcher Paul Martin, which looks to induce genes capable of making proteins that can perform similar functions as dystrophin, could have potential in DMD and other, broader dystrophy applications. That program is expected to enter the clinic this year.

During Kaye's presentation Tuesday, he also disclosed new preclinical data showing promising activity for its next-generation antisense platform, PPMO, a peptide-conjugated version of its phosphorodiamidate morpholino oligomer (PMO) platform. In an MDX mouse model, a single dose of the PPMO compound was capable of sustaining increased levels of dystrophin for 90 days in an MDX mouse model. At day 30, doses of 40 mg/kg, 80 mg/kg and 120 mg/kg demonstrated a dose-dependent response for dystrophin production in both the diaphragm and heart, with an increase of 50 percent and 20 percent, respectively, at the 120-mg/kg dose.

"The diaphragm and heart are particularly important because patients often die of complications of respiratory or cardiac failure," Kaye said.

In nonhuman primates, four weekly doses of PPMO were tolerated at all doses – 20 mg/kg, 40 mg/kg and 80 mg/kg – with widespread exon skipping observed in all relevant muscle groups such as skeletal, cardiac and smooth muscle. While the efficacy is promising, it's the lack of toxicity that has Sarepta excited about the PPMO program. Kaye explained that the earlier-version PMO platform had yielded strong exon-skipping responses but had proved far too toxic in nonhuman primates when administered at efficacious doses.

The company aims to open an IND for the PPMO program before year-end.

Sarepta reported about $330 million on its balance sheet.