Sarepta's Q3 2025 Earnings Call: Contradictions Emerge on ELEVIDYS Sales Recovery, FDA Interactions, and Infusion Center Activity

Date of Call: None provided

Financials Results

• Revenue: $399M total revenue in Q3 2025; $370M net product revenue (Elevidys $131M; PMOs $239M) and $29M collaboration/other; company also stated 'net product revenue of $370M' and noted shipping disruptions impacted Q3/Q4 volumes.
• Operating Margin: Operating loss of $103M GAAP and $36M non-GAAP in Q3; adjusted operating profit would have been $37M GAAP and $64M non-GAAP after $41M restructuring and $100M DM-1 milestone; company also cited strong YTD underlying operating profit after adjusting for a $584M Arrowhead upfront.

Guidance:

• Request meeting with FDA on ESSENCE totality of evidence by year-end; meeting expected in Q1.
• Final CSR to be submitted in spring; agency meeting outcome will determine next steps on traditional approval.
• Q4 infusion volumes expected flat to slightly down vs Q3 due to pause/seasonality.
• Reiterated Elevidys ambulant annual revenue floor of $500M (stress-test basis).
• Q4 combined non-GAAP R&D + SG&A expected $420M–$430M; full-year guidance ~ $1.86B.
• Expect single-dose PD/clinical data for siRNA programs to be shared in Q1 2026.

Business Commentary:

• ESSENCE Study Results and Impact:
• The ESSENCE study demonstrated numerical superiority across primary and secondary endpoints but did not reach statistical significance on the primary endpoint, the four-step ascend at 96 weeks.
• The study was impacted by the COVID-19 pandemic, with twice as many consecutively missed doses during the COVID period compared to COVID-free patients, affecting the primary endpoint.

• Despite COVID's impact, post-hoc analyses showed a significant treatment response with a least square mean difference of 0.186 steps per second and a p-value of 0.01 when using a prognostic score.

• Elevidys Market Dynamics:

• Elevidys net product revenue was $131 million, contributing to the total product revenue of $370 million for the quarter, despite a pause in shipments to the ambulatory population.
• The pause led to temporary disruptions and delays in patient access, with some infusion dates canceled and new patient identification efforts slowed.

• However, demand proved resilient with infusions resuming within a week of lifting the pause, indicating ongoing interest and support for Elevidys.

• Financial Performance and Restructuring Efforts:

• Cash and investments increased from $850 million to $865 million, and the company achieved cash flow positivity in Q3, driven by strategic investments and debt restructuring.

• The company reduced planned expenses by nearly $300 million from the midpoint of the 2025 guidance, reflecting proactive steps taken to enhance near-term liquidity and improve the balance sheet.

• Pipeline and Clinical Progress:

• Positive emerging data were presented for the SRP-9003 program for LGMD Type 2E, meeting its primary endpoint and demonstrating restoration of sarcoglycan complex proteins.
• The company plans to discuss next steps with the FDA following a regulatory dialogue, aiming to determine the path forward for the program based on its clinical benefits.

Sentiment Analysis:

Overall Tone: Neutral

• Management acknowledged ESSENCE 'did not reach statistical significance on the primary endpoint' but argued the 'totality of the evidence' (post‑hoc COVID‑free and prognostic subgroup analyses) plus real‑world data support benefit; highlighted solid Q3 net product revenue of $370M and steps taken to strengthen liquidity and reduce maturities.

Q&A:

• Question from Anupam Rama (JPMorgan): What other endpoints should we look for in publications/FDA package to support the ESSENCE data?
  Response: Management: The CSR will include secondary functional endpoints and biological endpoints (expression/biomarkers); these plus the real‑world evidence comprise the 'totality of evidence' to present to FDA.

• Question from Jian Wang (Barclays): With a p=0.09 in the COVID‑free analysis, how will FDA view this and is there risk of losing authorization?
  Response: Management: They do not believe withdrawal is likely; argue 0.09 can be meaningful in rare disease, COVID reduced power, and combined trial plus robust real‑world evidence support continuing authorization and a case for traditional approval.

• Question from Various Analysts (Multiple Firms): What level of data to expect from early siRNA/Arrowhead programs (DM‑1, FSHD)?
  Response: Management: Expect safety, PK (serum and tissue), and validated PD (knockdown/splicing or downstream gene changes); PD assay transfer/validation delayed presentation to Q1 2026.

• Question from Brian Abrahams (RBC Capital Markets): Any color on serolimus (psoromas) study design and timeline/readout expectations?
  Response: Management: Protocol largely as previously presented with minor agency feedback; ready to enroll quickly if approved; early effectiveness data expected first half following near‑term start and full dataset in second half next year.

• Question from Joe Schwartz (Leerink Partners): How many infusion centers are active post‑pause and variability across sites?
  Response: Management: Top/experienced sites continued treating; majority of less‑experienced sites are restarting and submitting enrollment forms; no comprehensive count provided.

• Question from Salveen Richter (Goldman Sachs): Any guidance on Elevidys full year / stress test and will FDA 'move the goalpost' on ESSENCE?
  Response: Management: Not updating broad guidance now; remain comfortable with $500M ambulant floor in stress test; confident FDA won’t change the previously stated standard and plan to meet with the agency.

• Question from Mitchell Kapoor (H.C. Wainwright): Can you provide hard numbers on infusion postponements vs cancellations and start forms in Q3?
  Response: Management: Declined to provide broad metrics; gave specific: 14 cancellations during the pause and 11 of those patients rescheduled and redosed in August; no full start‑form totals provided.

• Question from Biren Amin (Piper Sandler): How do you reconcile COVID impact on function with earlier biomarker (dystrophin) data that showed no COVID effect?
  Response: Management: Biopsy timing varied across patients (not all had sequential biopsies), so sensitivity analyses will be run when full data are available to assess any COVID effect on dystrophin expression.

Contradiction Point 1

ELEVIDYS Sales Recovery and Demand Outlook

It involves the responsiveness of ELEVIDYS sales recovery and demand outlook, which is crucial to understand the company's financial performance and growth expectations.

Have you seen a recent increase in start forms indicating confidence in revenue growth by 2026? - Gavin Clark Gardner(Evercore)

2025Q3: We are seeing sites identifying patients and submitting enrollment forms, indicating a positive outlook for demand. - Patrick Moss(CMO)

How do you reconcile the lower guidance with the expected increase in patient demand? - Yanan Zhu(Wells Fargo)

2025Q1: We are seeing green shoots in start forms and expect an increase in the second half of the year. - Dallan Murray(CCO)

Contradiction Point 2

FDA Interactions and ESSENCE Study Status

It involves the ongoing relationship with the FDA and the status of the ESSENCE study, potentially impacting regulatory approval timelines and market access.

How will the FDA assess data from the non-COVID population, and what are the potential outcomes of their decision? - Jian Wang(Barclays)

2025Q3: The 0.09 p-value is close to the standard of 0.05, and recent FDA leadership comments suggest 0.09 could be acceptable for rare diseases. - Doug Ingram(CEO)

What risks exist for ELEVIDYS being pulled from the market following a patient death? Could Dr. Prasad’s appointment lead to more stringent actions? - Andrew Tsai(Jefferies)

2025Q1: Our interactions with FDA remain on course, with no changes in approach from the previous administration. - Doug Ingram(CEO)

Contradiction Point 3

Clinical Trial Data and FDA Approval

It involves the interpretation of clinical trial data and its implications for FDA approval, which are crucial for the company's regulatory and market strategy.

How will the FDA evaluate data from the COVID-free population, and what is the potential outcome of their decision? - Jian Wang (Barclays)

2025Q3: The 0.09 p-value is close to the standard of 0.05, and recent FDA leadership comments suggest 0.09 could be acceptable for rare diseases. - Doug Ingram(CEO)

Is there any discussion about adding another cohort to support approval given the strong ROA in this cohort? - Jefferies

2024Q4: I don't think we have any concerns about where we are and what we documented in our package. - Doug Ingram(CEO)

Contradiction Point 4

Infusion Center Activity and Patient Enrollment

It involves the status and activity of infusion centers, which directly impacts patient enrollment and revenue generation for the company.

Can you provide numbers on infusion postponements, cancellations, and start forms for Q3? - Mitchell Kapoor (H.C. Wainwright)

2025Q3: There were 14 cancellations, with 11 re-scheduled, and the rest are in process. We are using revenue as our metric for reporting. - Patrick Moss(CMO)

Has the 190,000 number been updated, and if so, why is the reporting period delayed? - Jason Gerberry (UBS)

2024Q4: We were on pace to a really nice recovery, all of our pace for the year ahead of schedule, even excluding those that were not enrolled. - Doug Ingram(CEO)

Contradiction Point 5

FDA Communication and ESSENCE Trial

It involves communication with the FDA regarding the ESSENCE trial and its implications for the company's regulatory strategy.

How might the FDA view data from the non-COVID population, and what could be the potential outcome of their decision? - Jian Wang (Barclays)

2025Q3: We anticipate discussing traditional approval with the FDA, but the outcome will be determined post-discussions. - Doug Ingram(CEO)

What incremental changes in Blackwell GPU affect revenue and customer reactions? - Vivek Arya (Bank of America Securities)

2024Q4: We intend to have a meeting with the FDA in the first half of the year to discuss the specifics of how we are going to approach Phase 3. - Doug Ingram(CEO)