Good day, ladies and gentlemen, and welcome to the Sarepta Therapeutics Second Quarter 2019 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, Senior Vice President, Chief of Staff and Corporate Affairs. Please go ahead.

Thank you, Dmitry and thank you all for joining today's call. Earlier today, we released our financial results for the second quarter of 2019. The press release is available on our website at www.sarepta.com and our 10-Q was filed with the SEC earlier this afternoon. Joining us on the call today are Doug Ingram; Sandy Mahatme; Bo Cumbo; Dr. Gilmore O'Neill; and Dr. Louise Rodino-Klapac. After our formal remarks, we'll open the call up for Q&A. I'd like to note that during this call, we'll be making a number of forward-looking statements. Please take a moment to review our slide on the webcast, which contains our forward-looking statements. These forward-looking statements involve risks and uncertainties, any of which are beyond Sarepta's control. Actual results could materially differ from these forward-looking statements and any such risks can materially and adversely affect the business, results of operations, and trading prices 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. And 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 us for Sarepta Therapeutics second quarter 2019 results and corporate update conference call. As we pass through mid year, let us linger for a moment on our progress to date. As we entered 2019 we set an ambitious path requiring significant execution and with much still to prove for the RNA platform. So we continue to drive the excellent [ph] performance, but we're consistently creating new PMO constructs for other populations of Duchenne and have been truly forged with the FDA in efficient pathway for approval of efficacious new RNA therapies, one that would bring new treatments to the community rapidly and without the necessary controversy and contention. For the gene therapy platform we've discovered initial results and we've seen with our micro-dystrophin gene therapy truly meet through the any of the other 10 plus gene therapy programs that we possess. For micro-dystrophin gene therapy itself we quickly completed the dosing of the 24 patients in our placebo-controlled trial for micro-dystrophin. One in vivo competitive landscape for micro-dystrophin where we remain ahead of others sort of [indiscernible] and qualitatively and we developed the resources, the talent, the energy necessary to build out a commercial manufacturing process for gene therapy. Over the course of 2019 the answers to these questions have been positive, in some ways more positive than we could rightly have anticipated as we entered the year. It is not just simply one continuous to perform. The FDA accepted our filing for golodirsen in the first quarter and we have PDUFA date of August 19. We also will not have advisory committee meeting as a predicate to approval which approval if we obtain it by August 19 will have a month of sufficient and rapid development and approval…

Thanks, Doug. Good afternoon, everyone. Let me start by saying that we had another strong quarter. Revenues continuing to grow well and the Q2 net revenue at $94.7 million. From a business development perspective, as Doug mentioned in the call, we continue to selectively add to our pipeline and capabilities via external alliances. The year-to-date activity, including the acquisition of Myonexus, has significantly bolstered our pipeline and further positions Sarepta for long term growth. While we remain selective, we are continuing to find opportunities to partner with the best in the field to bolster our pipeline and add to our capabilities and expand our overall net worth in gene therapy and pioneer technologies. Partnering with leading organizations and researchers allows us to maintain our focus on the near term value of our DMD pipeline while assisting our collaborators in advancing their programs and simultaneously giving us the flexibility in determining whether to bring these programs in-house as they become derisked. As our gene therapy program in multiple sclerosis demonstrates, for the right technology we are willing to make targeted investments beyond rare monogenic diseases. We expect to continue to invest in building our pipeline and in adding technologies in the area currently in our pipeline as with DMD and continue to compete against ourselves to deliver better and better therapies to patients in need. Now moving to the financials, this afternoon's press release provided details of the second quarter 2019 on a non-GAAP basis as well as GAAP basis. The press release is available on Sarepta's websites. Please refer to our press release for a full reconciliation of GAAP to non-GAAP. I'd like to add a quick reminder here that our 2019 non-GAAP financials exclude net interest expense, depreciation and amortization expense in addition to one-time expenses and stock-based compensation.…

Thank you, Sandy. Good afternoon, everyone. At mid-year, I'm pleased to report that the commercial organization has continued to execute on our 2019 goals and is on track to hit our revenue forecast for the year. After successful quarter delivering net sales of $94.7 million, we expect continued interest in EXONDYS 51, driven by our ongoing efforts to ensure existing patients remain on therapy, assist those who may be facing unnecessary access and reimbursement hurdles, and identify new patients who could benefit from EXONDYS 51. We are pleased with the success of EXONDYS 51 as we are in the final months of completing three full years post-FDA approval. Our commitment to the Duchenne community rest on our goal to treat all eligible individuals with Duchenne. Toward that goal, we are fully prepared to launch our next RNA borne product should the FDA grant VYONDYS 53, or golodirsen marketing clearance. We have an operational plan in place for compendium contracting distribution and reporting requirements within 24 hours of approval. We will leverage our current distribution partners and our Sarepta's network to help give patients access as soon as possible. In addition, our teams will be trained on the VYONDYS 53 label immediately, so that we can have important conversations with KOLs. Rapid execution on market access initiatives will be essential and we are prepared. Our goal is to reach patients as soon as possible following approval. We expect commercial plans to provide faster access and government payers, such as state Medicaid plans. But both types of payers will follow normal new drug approval or new NDC processes for each plan by stage. We also expect the commercial to Medicaid patient mix to be similar to that of EXONDYS 51, which is roughly 50-50. If approved, we expect most patients will start…

Thank you, Bo. Dmitry, let's open the call for questions.

Thank you. [Operator Instructions] And our first question comes from Alethia Young with Cantor Fitzgerald. You may proceed.

Hey guys, thanks for taking my question and congrats on all the progress so far. Two questions for you, sorry. One, I just wanted to know kind of what went through your decision around increasing the sample size for one or two now like, was there anything incremental color that you can give us. And then the second question is, just curious on what the status is around the confirmatory trial for eteplirsen? Thanks.

Sure. This is Doug. Thanks a lot for these questions Alethia. So on the sample size, as I said before, we were comfortable with the size of the trial report and our analysis gave us some comfort around it. And certainly the first cohort gave some comfort, but is it is not, it doesn't require a lot of imagination to realize the 24 patients is a relatively modest sized trial and one in fact limited by the fact that we had 12 doses from Nationwide Children's Hospital at that time. So we now have an opportunity, Nationwide has material available for us. As we consider that material earlier in the year, we were in a different landscape competitively than we are today for a host of reasons. And so, obviously given what we've seen from the other programs of [indiscernible] and Pfizer's we are confident that the right decision is to increase the probability of success. We're very confident in the therapy, we want to make sure that in the 12-month period, we will be able to see a difference between the actual improvement of placebo group, so increasing the trial from 24 to 40 from my perspective just makes really sense from a risk perspective. Beyond that it would have been a question of what else we could use that material for, one might imagine the scenario and which one would want to for instance dose escalate. But the issue on that is simple work. Our preclinical data did not suggest to us that we should escalate. The dose we have right now which is using supercoiled method two times given to 14 would give us the best answer without creating undue burden on the kids -- and certainly the first four children in our first cohort supported that…

So the confirmatory trial is actually moving well. We have - our protocol is well, very well developed, we are in discussions with the regulatory authorities around the world about, and we are actually on track with regard to and site of densification regulatory dialogs, et cetera. So we're very confident that we are in a good position to be able to execute as soon as well.

One of the things that people understand it is not as if, there has been work done, but confirmatory trial for eteplirsen is unusual. It is not a simple and trial versus a placebo. It is confirmatory trial for eteplirsen. The request from the agency is then to test the current dose of eteplirsen versus a higher dose of eteplirsen. So it's a little unusual in the sense that we have to first do a study in healthy volunteers to ensure that consistent with the preclinical data that would suggest it and that were safety studies we've actually completed all of the enrollment for that study, readout on that study will be September, right? Assuming everything goes well and did well I think in it. Well, I think you have and so I believe over the well based on all that we have so far. We will start to confirmatory trial before the end.

Yes we are, as it was and forgive me for Biosciences, IBIS for question, I apologize. We are actually initiating science now et cetera. So would be ready to execute.

That was my fault my fault because I told her not to take the first question.

Thanks, guys.

Thanks.

And our next question comes from Tazeen Ahmad with Bank of America Merrill Lynch. You may proceed.

Hi, good afternoon. Thanks for taking my questions. So, I am sorry if you've already said this, I just want to be clear that I understand all of this correctly. Can you remind us what data you expect to be in this package for DMD gene therapy? So what time points you need from Study 3 to get approval and when should we expect that data? And may be the follow up on that, what if any interaction have you had with FDA since, Pfizer might have its data at PPMT and did FDA influence your decision to upsize your study? Thanks.

So let's start with the last question first. So, no, the FDA didn’t play a role upsizing the study. This is a literally a decision that – we're perfectly fine with the size of the study that we have. We simply looked at the opportunity in front of us to realize that it made the most sense for patient. So I mean, we think about it, nothing would be more tragic than to find that you have a very efficacious therapy, but you missed out by some mark or small margin because you didn't take the time to make sure the study was dose. It was a really easy decision when we had 12 doses. But we have more doses it certainly makes brilliant sense to make upsize this to 40. And I was talking about the timelines and it's important to consider timelines and now you'll see why it makes so much sense to upsize it. Because, let's start with Study 2 itself. We will be done certainly in the fourth quarter dosing the entire study. Dr Jerry Mendell did a really good job earlier this year in dosing those first 44 patients. I will remind us, you know before the patient was analyzed in the first cohort and was at – it was either October or November, I'm forgetting now when we had the Argentina meeting. But was it what, October, so it was last October and from there we literally designed, also the agency started placebo-controlled trial and Dr. Mendell got all of the patients dose. So we will – between Dr. Mendell and revenue side and probably very shortly, really have all of the - next innovation make it to 40 doses before the end of this year, which means Study 2 will read out before…

Okay. So it seems like just so the timelines are clear, are you guiding to a start to the commercial study in the first half of 2020, because it seems to me, you seem to be giving yourself kind of a wide band on the, is it the first half or is that early 2020?

Well, we have given ourselves a whole bit of, trying to give ourselves some breathing room. Yes, we want to be as early in 2020 as is possible, as a number of data and for that we want to – there's two other things, one is of course site readiness, getting the sites up and running, we can get that done before the end of this year. So that won't be an issue, we always intended to do that. Facing the design of Study 3 and getting the blessing of the agency approval of the agency, on that, we can get that done before the end of 2019. Getting the commercial process at the right place, and that from our perspective, we can get to a place before the end of the year where we could use commercial process supply at the start of the study. But as I mentioned in my script, our goal is to really get the yields in a good place so that as we start Study 3, we're going to continue to improve. We don't so improve yield thereafter that we find ourselves in a position that we have to do some additional bridging study for approval. So the short answer is, and the official word is obviously first half of 2020 that we will commence Study 3 and it will not surprise you. But those are who know Sarepta and our sense of urgency that it is early in Study in 2020 as is reasonably possible. So we might do it as early in 2020 as is possible. First quarter possibly.

And our next question comes from Brian Abrahams. You may proceed.

Hey, thanks very much for taking my question and congratulations on all the progress. Any comments you can make on the safety that you're seeing from the ongoing 24 patient study? I realize it's blinded, but just wondering if there's any sort of safety events that would be considered reportable what would be a bar for stopping or would have been a bar for stopping or pausing that study and did that change over the course of time when the your competitors tox issues became known to the FDA? And I had a quick follow-up.

Yes. Thanks, Brian for that question. Gilmore is here. So, as you well know, the study remains blinded. We do, as you quite rightly inferred, have stocking rules and rigorous oversight of the study. We have not crossed the threshold for the stopping, losing, or come close to that. The study continues, and so from that point of view, we are actually very happy with the ongoing study. It is worth noting that in our one-on-one that you're well aware of this, that we no evidence of significant adverse or serious adverse events and so we actually are very happy with that. And with regard to the readout from the other companies, Pfizer and [indiscernible], we have not seen what they have described. But I want to restate one thing which is that we have not, we do have stopping rules, we are not changed the stopping rules and 1 and 2 is progressing well and remains fully blinded.

Yes, well, one of the things I will also add is that obviously, hey really all kudos to Dr Jerry Mendell all for this. The studies were very well. It has progressed well. We've got adequate inventory patients and that gave us a lot of confidence to increase the end of the study from 24 to 40 and still ensure ourselves that we'll be able to comfortably fix the dosing for Study 40units, not creating kind of treatment delays in our accounts.

That's really helpful. And then, secondly, as you work to work to optimize yields and margins, I'm curious, what shapes your confidence that you will be able to ultimately get to a point that you could potentially supply the whole DMD market and with material that is indeed comparable to the NCH product? I'll hop back in the queue. Thanks.

There's a lot of things that give us confidence. We've got a lot of good data in front of us now, we're doing a lot of work. So there are three groups right now working on the process development and then also the analytical development and yield optimization. We've got process development experts and in fact we've got probably one of the world's leader, is not the single world leader in process development, Dr. [indiscernible]. I think, if anyone has done diligence in gene therapy will find this probably the best renown in bio gene process development that we just, so we do a lot of good work. We will get there. We are staying, we've got the accounts to start that, we've got the talent of external and internal to get it done. We've got the resources. As I said before, we will spend a good $600 million to $650 million in the next few months or so. Then you saw that we are now in the process and analytical development done right, but then we get the capacity necessary to fully serve this community, and we've made good progress to date. We have very good results from yeah the iCellis nanos that I say in every year. We've scaled up already to iCellis 500s and we are in the process of optimizing yields of iCellis 500 so we still have much more to do there, but then it is just a matter of time from our perspective. We're getting every time we do, months and optimizing and we get greater results. So we do feel very confident that we're going to get to a place where we're going to be able to serve the community. We had always envisioned a world in which it might be the case…

And our next question comes from Martin Auster with Credit Suisse. You may proceed.

Hi, this is Mark on for Marty. Thanks for taking my questions. I guess first question is, you announced that you're expanding your gene therapy pipeline by exploring Rett cardiomyopathy, another muscular dystrophy program and multiple sclerosis. I'm sure you looked at multiple targets. I guess, I'm just curious how you settled on these specific programs and if there are any unifying themes that made these indications particularly attractive? And then my second question is, with WMS less than two months away, I'm curious what data if any you plan on presenting at that conference? Thank you.

Sure. So I mean, firstly I'm going to take the question on these research programs from Dr. O'Neill, only because I don't want to spend the time going into the underlying programs itself. There are really some stages right now, I want to focus on our clinical programs for the time being. We are very excited about these programs and we're not done. Well, you know, as we said for a while, we're going to continue to do further transactions like this to bolster our pipeline. There are a number of things about these programs that excite us. First of all, they are all very serious diseases. We are a company focused on the use of genetic medicine, both RNA and gene therapy to bring a better life to people who are suffering from and dying with serious diseases. We have a strong focus on rare diseases that certainly is a big part of us. But MS, while it is not a rare disease, is a serious disease. We have the expertise internally, with our own Dr. Gilmore O'Neill to progress that, so we're excited about it. So the seriousness of these diseases is part of that. Then the elegance of the constructs this can be used in various programs, without going into much detail, the elegance of the approach and the elegance of the constructs is something that's given us a lot of excitement and made sense to pursue. So we're very excited about the approach that's being taken in these and may align with many of the ideas that we have and that [indiscernible] to has about the genetic medicine. And beyond that, we have the opportunity in all of these programs to work with some of the best and brightest in gene therapy and genetic medicine. As…

And our next question comes from Christopher Marai with Nomura. You may proceed.

Hi, thanks for taking the question. Just a couple here on the new Study 2 size and your powering assumptions, could you maybe talk about some of the effect size you're expecting to see there, numbers that went into that powering assumption? And then on Study 3, thinking about the subset that you're going to look at, the three-month biopsy, what biopsy data will you specifically be looking at? And then, when we think about the size of that subset, is it sort of three patients, 32 patients, sort of like your current or your new Study 2 size, how should we think about that? And then, just because it wasn't answered on the last question, do we expect any like Limb-girdle data or anything else at World Muscle, even safety data on a program like that or CK? Thank you.

Yes, let me answer the last question first, because I failed to answer the World Muscle question from the last question. That was just an error on my part. And thank you for mentioning Limb-girdle. That is likely the thing that would be presented at World Muscle. So, one of the things we're looking at right now is the following; Dr. Mendell is very interested and excited about the possibility of presenting data on the first - the functional data on the first cohort of Limb-girdle 2E that we announced expression results and safety results for earlier in the year. And while it hasn't been nailed down right now, I would suspect that that is going to be something that's going to be presented at World Muscle as Dr. Mendell is available and that's the data that is probably going to place on there. With that, I'll turn it over to Dr. O'Neill, to talk about the powering.

Great, thanks very much for that question about powering, Gilmore here. So I think you understand that for many reasons competitive or other we don’t disclose the specifics or details of our power assumptions, particularly the effect size. However, I will say is that the assumptions around variance et cetera are strong. They haven't changed since our original calculations and they are backed by a very strong dataset of raw data, both internally generation and externally generation from various registries. So I think what I can say is that we're very confident about the strength of our calculations there. And forgive me for not disclosing the effect size. There are obvious reasons for that. Then, with regards to the sub-cohort in Study 3, from which we will do the muscle biopsies, those muscle biopsies will be skeletal muscle. They are limb, and the current thing right now is that they are just the lower extremity, gastrocs. With regard to the size of the cohort, as you could imagine, based on the strength of the expression data we've seen to date, we don't believe that you'd need a large number. But I do not find the number is going to be a matter of discussions with regulatory agencies unless they want to see, but we believe that that number will be smaller that represents really a small fraction of the global population that we're enrolling in most of the countries in that study.

Great, thank you.

And our next question comes from Matthew Harrison with Morgan Stanley. You may proceed.

Hi, this is Max Score (ph) on for Matthew Harrison. Regarding the PPMO Program, could you talk about the safety profile with single doses and how we should think about your ability to release data from the multi-dose study? When will you be taking muscle biopsies and will you wait for all patients? Thank you very much.

So I'll give you the broad strokes on it. Our goal is to get inside from the PPMO Program from the MAD study by early next year, so that is our goal. What we know from preclinical work is that if we get to good dosing levels with our program, that we should get significantly enhanced expression versus the PMO, in fact, in animal models, we get an order of magnitude greater expression, so we're very excited about that. But the issue that we're talking about here is the issue of the safety profile, and that's what we're working to find out over the course of this year and into early next year. Things have gone very well so far. We've been in a single ascending dose study, we're getting great results so far. And we started dosing the multi ascending dose study and we're getting great results there as well. But I want to be cautious that it's early to say that. Because we're not at the dose levels that we really want to get to be correlated with brand expression. So this is still in a very real sense, too early to declare victory. We are - we started I think the MAD study at [indiscernible], sorry that's four okay we're going to continue the dose data. So I think we're going very well over that study if not a little slower than I would have anticipated a year ago. Dr. O'Neill will sum up more of this. He's got that in order and we'll know by early next year if what we've preclinical models, hear us out, review the kids and so far things are looking very good. So we'll give you a good update on it early next year.

And our next question comes from an Anupam Rama with JPMorgan. You may proceed.

Hey, guys, this is Matt on for Anupam tonight. Thanks so much for taking our question and congrats on the progress. So, just some higher level questions from us. You mentioned that you'll be nearing 900 employees by year-end. So kind of just, as you expand your processes and potentially your geographical reach, where do you see this number going over the next few years? And then on your gene therapy manufacturing efforts, can you just remind us of how much cash is earmarked on this front, kind of in the same timeframe? Thanks so much.

Yes, several questions, great questions actually. So we're going to end the year at around 900, maybe a little shy of 900 employees worldwide. But we are going to begin to moderate the growth of our employee base. We already are over the course of this year for host of reasons. The reason that we grew, we didn't grown from 200 to 700 simply because we have the ability to, we have the need to. We've really expanded our ambition. We have probably going on now with the programs to go both disclosed and undisclosed, we're probably well over 30 programs in RNA and gene therapy together right now. And so, we've needed to really bolster in all areas of the company, but specifically in the research and development and manufacturing, tech ops, CMC areas. But we're getting to a place now, we're comfortably - we're getting a very comfortable place from an employee perspective, both quantitatively and qualitatively, we've got great people here right now. We are a magnet for good people right now, I'm proud to say. And we'll start moderating that growth. So we'll have growth next year over the 900 that we have this year, but we will not be doing what we did this year. We don't imagine that we're going to double yet again in a year the size of this. We'll start moving more toward a rational growth rate on employees after this year, not otherwise because we're going to get, we'll have too many fixed costs as we report [indiscernible]. That we have. With respect to gene therapy, and as I've said before in broad strokes between milestones, capital expense, and prepaid cost of goods to actually benefit from a lot of these expenses. They're not typically capital expenses. We'll spend something around $600 million over the next – well, for the – including what we've already spent into this year, into the end of next year and kind of into the little bit in the following year range.

Yes, I would agree. And slowly we'll be starting to ramp up our goods that will effectively be going into inventory. So some portion of that will be cost of goods if you will.

And our next question comes from Gena Wang with Barclays. You may proceed.

Hi, this is Peter for Gena Wang. Thanks for taking the question. Just couple from us, you may, I guess the first is, I think this has been asked before, but just to make sure; were there any like measurements from Study 2 that prompted the expansion and would you be able to measure anything that may inform the pivotal study design at all or is that, does that, is it completely independent?

So, thank you for giving the opportunity again to answer this question again. I really do appreciate it, Peter. So let me be very clear. So there is no [indiscernible] there nothing in the growing knowledge (ph) has blinded or unblinded or otherwise out of Study 2 that motivated the increase at all. In fact, the only data that we had, is the data from the first four patient of Study 1. And that's given us tons of confidence in where we are. The reason that we've increased in the end is quite simply because we have opportunity in front of us. And I think that it is a small price temporarily to pay, literally measured in weeks and maybe months, couple of months to be in a position to feel that we have the study that's really robustly powered, powered with over 90% now which increases the probability of success and gives us - really comfortably with Study 2 as we plan for Study 3. And there is just, to say something that is obvious without being overly snarky about it, there's no sign and reason why we would to do this right now. We are - the race that we're in right now is a race against the disease itself. It's not a race against another company as it stands right now. We are, I think, significantly in the lead versus others around us, both importantly, but frankly maybe even more importantly qualitatively. And so, we really need to think about these standards in these patients first and foremost. And while it may delay us by some number of weeks or maybe even a month or two, to ensure that we have the right power of this study, it increases the probability that we don't have additional delays in the back end, because we've powered this study at the right level. So, it's the best answer for the program. And it's more important than all of that, the best answer is for the families around the world who are waiting for a transforming therapy in Duchenne muscular dystrophy. So, we really are just be direct about it. We feel really-really good about this opportunity to increase again, I think it's a real opportunity for the program and a real opportunity for us.

And our next question comes from Vincent Chen with Bernstein. You may proceed.

Congrats on the progress and thanks for taking the questions. A couple of specific ones on Study 2. First, about your statistical assumptions, how would you expect the mean effect size from the gene therapy to compare to the likely standard deviation? Because just in ballpark numbers, would you say it's roughly about the same size, would you say it's slightly larger, smaller? And then the second question would be, if you had wanted to, could you have increased the study size for Study 2 even further than 40 patients? How much longer would the trial be extended, for example, if you decided to increase to, say, 50 or 60 patients?

I'll answer the last question and then I'll turn it over to Dr. O'Neill, who might answer the first question. So we could have modestly increased the size of the study even greater than we did with the material available. But we are very comfortable with 40-patient study, because it's the right level for us. And we didn't – it's not a compromise issue, it wasn't a timing issue. We feel, we felt good about the endpoint. And frankly, the data involved in the Study 101 as you know, we got 9-month data from the kids in the Study 101, and it only confirmed even more that we were feeling very good about the assumptions we were making and apparently have for Study 2, but 40 patients in getting to significantly to over 90% power just gives us even more confidence that we're doing the right thing for the service [ph].

And Vincent, thanks for the other question. Again, I'm not going to go into the specifics of our assumptions around that size and standard deviation. I mean, [indiscernible] which his that based on our raw data, the standard deviations that are published in the Journal are - is in the ballpark of what we're seeing for North Star, et cetera. But, forgive me again for not going into study size [indiscernible] we just want to keep internal right now.

I see. Maybe one follow-up then. You mentioned that the data you're seeing from the initial study, you kind of corroborated what you had expected in terms of your powering the effect sizes and so forth. Is it fair to say that these - is it fair to say that the data you've seen from the first four patients is pretty much in line with what you would have expected in terms of the likely gene therapy effect size?

It's - I'd say a couple of things on that. One, we were – one, I think we took - we've taken the results from the first study of what we've seen and then we've been more conservative. I will give you a qualitative answer. We've been more conservative in our powering assumptions, okay? So we're not taking, we're not leaving all of our assumptions in an aggressive directions to say you know [indiscernible] that we're fooling ourselves with our powering calculations. I mean the job is given a very [indiscernible] like that. And if you want to know what our view is, it's hard to say what one should have anticipated from a study going into it, because frankly in the history of all Duchenne muscular dystrophy, no one has ever seen these kinds of transformative results before. So I think probably people may have different views. I think broadly speaking, the results we saw from the first cohort of kids was pretty shockingly positive. It was probably greater than once could have normally anticipated. We're used to dealing with therapies that tease out differences from background over a long period of time. And what we saw with these kids was a fairly dramatic benefit. Open-label, more kids. Please understand, I understand that as well. But early days, both quantitatively and qualitatively we saw a fairly dramatic change in these kids. I think the preclinical models generally support that same kind of concept. If you've ever looked at the gene therapy micro-dystrophin golden retriever [ph] models and video, you might have anticipated this kind of transformative fact. But we were very-very pleased with – very pleased with what we saw in Study I. Still took a very conservative approach in powering Study 2 and now I think the appropriate, not overly conservative approach, to increase that and to increase the powering of that study to increase the changes that we did this therapy as fast as possible with the highest POS to patients waiting around the world, frankly waiting and degenerating along the way. So we really, we're making these decisions intelligently.

And our next question comes from Ritu Baral with Cowen. You may proceed.

Hey guys, thanks for taking the question. Going back to Study 3, Doug, is it still your idea to keep that a placebo-controlled study? In that case, how would you handle placebo biopsies in a study like that? And you mentioned that the biopsies are going to be taken from a subset of patients, how are you thinking about the other patients as part of Study 3 in your FDA negotiations, like, who else are you going to include, age range, et cetera? And then I've got a follow-up.

Couple of broad history of cases, I guess there's a lot going back. The question about the ability to take a subset of patients and do a biopsy in the Study I can give you sort of the improvement as possible just did. So we did [indiscernible]. So it is possible to do without unblinding the study.

So hi, this is Gil, I thought I should step in. With regard to the biopsy, our intent as to biopsy [indiscernible] I did not see sub cohort of biopsy patients. It's just a cohort in time. That's the first thing I want to say. I think the second thing, I want to say about placebo-control is that we do anticipate to do placebo [ph] growth study. And I think, to Doug's point, there are couple of important lessons that I want to point out, just one, that we actually have - are successfully running placebo controlled study in Duchenne patients in context of our casimersen and golodirsen protocols depending on our study 2 protocols that were [indiscernible] been actually executing on that. And of course, that really comes down to a very important thing that we have built some of the capabilities [indiscernible] which strong relationships with patients, strong relationships with investigators, and a very good patient advocacy group, where we actually sit down and explain in detail the rationale thinking and the importance of this work to patients and their families.

And the placebo-controlled nature of the main Study 3, as it was in Study 2 is a difficult one and it's one that takes a lot of thought. That's because, theirs is a price to pay for these placebo trials. And I want everyone to understand that we are mindful of that. But our goal, one of the things I said in my text is, you may have noted that our goal is to have such a robust set of evidence at the time that we launched this therapy, if we can get kids of all ages and mutations and status on therapy rapidly, and to do it around the world not 70, 80, 90 days from [indiscernible] to us and to our company and to the families in the United States. We want to create a program that is fit for purpose around the world. So we do believe this as difficult as that submission is to answer, the placebo trial at least for the main trial is appropriate. The main trial will very likely be kids that will match the cohort that we're looking at right now for the 7-year-old range. With respect to other cohorts, different age ranges, it's something that we're still talking about. But as it relates to that meeting, cohort of patients in the next study will almost certainly be [indiscernible]. Agree with that Dr. O'Neill?

Yes, agree.

And our next question comes from Brian Skorney with Baird. You may proceed.

Hey, good afternoon guys. Just a couple of quick ones from me. I just wanted to – you've been getting a lot of questions with the FDA released yesterday about some data integrity issues with the Novartis of excess gene therapy Zolgensma. And just wanted to know given the similar origins of that program in 9001, if you've looked into the issues there and what level of confidence you can give in near construct these all trans measures are specific to Zolgensma? And then, as you talk about ramping up inventory with the competitors in gene therapy seemingly falling behind, I think you had previously anticipated having a couple of thousand doses at launch. I'm just wondering if kind of these new efforts to meet demand if you're changing that to a higher number now or you think you can make it to a higher number and should we expect to see the manufacturing costs of these doses effectively expensed into R&D over the next two years?

Yes, so couple – so let's go to the first question, the excess Novartis issue that occurred yesterday. So what we know about it more than others know, who've been able to read the documents that currently exist and look directly to Study 3, just so we're all on the same page, there's nothing about that issue that reads through to anything that we're doing at all. It appears to be a very specific issue with a very specific person or couple of people at that company on a particular data entry issue. It's nothing to do with us at all and nothing to do with any of our programs. So there is just so we're – unequivocal, zero, beyond zero read through that anything that they have accrued there to anything that we're doing. So there's nothing - no correlate whatsoever at all. And then with respect to the dosing, there's sort of two things I'm getting yields right and the like, one is the target we have for the number of doses available and the ability to treat the community, and the other is, just probability of success that we'll have that at the time. The yields [indiscernible] takes us a to a place where we feel confident not only in the number of doses but probability of success, that we can also make decisions around the amount of dosing. I still think that kind of couple of thousand at launch is a good aspirational target for us. But we'll take a more carefully look at that over the next couple of months and we might make some additional decisions depending on what yields we achieve and we have lots of room for capacity as well. So the short answer is that we want to be in a position if at all possible to fully serve this community first in the United States and then around the world at launches without any risk that patients will have to wait for our therapy and that's why we're taking the time. Now that we have the time with Study 2, to ensure that we continue to enhance our cross-development issues and to enhance our yields before we start selling.

And our next question comes from Danielle Brill with Piper Jaffray. You may proceed.

Hi guys, thanks for the questions. A quick follow-up to a previous one. When you decided to expand enrollment in Study 2, did you consider including other patients, older patients with signs of function decline? And any specific reasons why you're stuck with that 4 to 7-year age range? And then I think you mentioned you're planning to open an additional site, is that also for Study 2? And I'm just curious from a safety perspective, how do you get comfortable with someone other than Jerry administering the drug? Thanks.

I think that last question is a great one. Yes, he is fantastic. We're going to have – we're happy to have him on site someday. So the good news is that Dr. Mendell is very committed to ensuring that we maintain consistent quality as we bring other sites along as well. In fact, we've had good detailed discussions about the fact that we need to have essentially a Mendell's University around the way we approach gene therapy and the way we approach these infusions and the like and Dr. Mendell is very much onboard for all of that. So we're very confident about what we're doing. And besides that we're going to be bringing online really top-quality neuromuscular sites with experience [indiscernible]. As it relates to Study 2, they will be in the 4 to 7-year-old range. They will be exactly the same cohort and they must be. And the reason they must be is because our goal is to increase the probability of success, to increase the power. If we went to other age ranges, we would actually create mostly a deviation and we would reduce the power. In fact, we couldn't do it because you want it for instance all non-ambulatory [ph] we have to use a different method than NSA, we could use NSA. So for this study we have to narrow the focus in the children we have the same matched population, so that we have the same confidence around the powering. And as I said before, it's 90%. In Study 3, such will not be the case. In Study 3, we are going to have a number of different studies [indiscernible] will be in 3A. It will be a main cohort of advances. It will have older, non-ambulatory patients in a separate study as well. But we will cover larger age ranges and different measures in the next study.

And our next question comes from Joel Beatty with Citi. You may proceed.

Hi, this is Shawn Egan on for Joel. Thank you for taking my questions. I have a few more specifically on yields and capacity. So, first, have your initial iCellis lot test satisfied your yield goals? And at this point, is it the expectation that the extra yield optimization process time you described today will raise your maximum capacity estimates or help you reach your original estimates? And I have a follow-on question as well.

Yes, so we've reached very good yield in the iCellis nanos. We are in the process of scaling to iCellis 500s right now. And iCellis 500 we are not at the optimized number. Yes, but we're getting, we're getting there, we'll get there. The issue with - and just to understand why, what that means, this process it just takes time. Every time you do a run you find opportunities to enhance it, you make changes and then you run it in a run case somewhere in the month or more time frame. So it just takes some time. So the short answer is we are getting very good yields in the hunt of what we want in iCellis nano. We scaled to iCellis 500s. We've made a number of runs in iCellis 500s. We have made a number of improvements, significant improvements every time we do it and we're very confident we're going to get to see the same kinds of yields we got in iCellis 900 and iCellis 500 over time. And there's sort of two targets. There's kind of a optimized target that gets us to where we want to go. And of course, if we can get even beyond that, fantastic. It could give us, which would give us, both more capacity, as well as lower cost of goods. So the goal here is to get to as optimized as is possible for yield to really before we start selling [indiscernible].

And our next question comes from Salveen Richter with Goldman Sachs. You may proceed.

Thanks for taking my question. This is Ross on for Salveen. Doug, can you just elaborate a little bit further on the current manufacturing situation here? So, like regardless of the competitive dynamics that you mentioned earlier, you would need to have your yields fully maximized and your process development optimized. So, could you just define what this looks like today versus what it looked like previously? And then I have a follow-up.

I'm trying to sort of - we're kind of midway through the process. I'd say we're midway through a very so far successful process. There are number of things to do from a manufacturing perspective place to launch the therapy. The first thing of course is just capacity itself. We've got, we're building a facility with Brammer. We're just about done with that. That's in licensing. The next issue is, we haven't talked much about today, we'll talk about it over time. In analytical development, we're making very good progress there. As I said, we've got Dr. Reed Clark [ph] on board, so we feel very confident that we have the talent in place to get all the analytical developments done in a way that's effective. And then the final one is process development and yield optimization. And as I said, it's - step-wise, where we are, first thing to do is working in smaller units in iCellis, and we've done that. We've got to good numbers there. Now we're moving up to the iCellis 500. We've done a number of runs there. We're continuing to improve that. So we're kind of in the middle of a process. Our goals, there's a number of things we have to get to before the commercial trial. I don't want to suggest that there is not opportunities to continue to optimize after the trial. But we want to get as far along as is possible before we start the trials, so that even as we're making additional improvements in yield, for instance, there's no reason why we would continue to do that. We don't want to find ourselves in a position that we feel dramatically increased yield that we have an argument around a new product and we have to do a bridging study to yet again prove that we have the same product. So we're in the middle of the process, things are going very well. We've got great partners and we've got a lot of folks looking at it, lot of really smart-expert folks. We've got Brammer doing the work, we've got Paragon. Paragon is fantastic, frankly. They're behind a lot of the Nexus [ph] work. Nexus has kind of come back to Paragon. But more than all that, we've got our own folks. We've got Dr. Reed Clark, we've got iCELLis units. So, we're doing very well. It's going very well so far.

And our next question comes from Tim Lugo with William Blair. You may proceed.

Thanks for the question. And other new gene therapy programs announced during the quarter, will any of us be in the clinic over the next year and can you - and are you may be deemphasizing some of the other previously announced preclinical programs? And I may have missed it, but do you have a total number for gene therapy programs currently in the pipeline?

We'll have to – I can fill a number out on gene therapy programs, but I fear I might be wrong. We'll update our pipeline. We're well now over, probably nearly 15 or more programs in preclinical and clinical. Actually, I think, [indiscernible] adequate number. As I said before, I was going to make an error if I try to give you a number. We're over 15. We're over 15 programs in clinical preclinical. We're not deemphasizing the preclinical programs that we have. One of the things that had suggested some time ago is that we're building an engine and we have an aspiration to continue to fuel that pipeline, we're going to continue to do that. So we're very excited about the program. We don't want to spend a lot of time talking about the depth right now is that we [indiscernible] really exciting cassettes [ph] that research programs, but needless to say, these are great areas of focus with great leaders behind them. We've got – and we drive this, the leadership there, the additions in the world's leader, Dr. Worman on that. We've got our own gene therapy Center of Excellence and Louise Rodino-Klapac who's still very conservative. We're working on there. We've got Rett syndrome, we're very excited about Rett syndrome as the focus it aligns perfectly with where we're going, and we've got a very exciting gene therapy program there. We're very excited about our cardiomyopathy program with Dr. Sweeney [ph]. He's obviously one of the big luminaries in gene therapy, so we're very excited about that. And cardiomyopathy is sort of a natural extension of the area that we've been in, in neuromuscular. And then of course it goes without saying we are excited about MS, and we're very excited about working with Brad Hoffman. He's got a very innovative approach to still research, but it's a very innovative approach, we're going to lean into that as well. So we're excited about that.

And our next question comes from Joseph Schwartz with SVB Leerink. You may proceed.

Great, good afternoon and thanks for squeezing us in. Just two quick questions from us. Doug, so just going back to an earlier question on Zolgensma and the regulation yesterday, I guess given the numerous similarities, I was wondering how do you see the Zolgensma revelation affecting the way the agency will review, adjudicate or scrutinize your CMC module, or even as you continue the optimization work here? Second is, strategically speaking, as we look forward, you mentioned the status update on PPMO the SRP 50-51, so congrats on that. But I guess there's growing competition in DMD with gene therapy, gene editing, as well as antibody conjugated, ASOs emerging. So I guess, as you think about your base business of antisense oligos, what are your strategies there given how PPMOs may have hit a little bit of a delay with safety here and you only have 50-51, do you have alternatives to maintain that base business and if so, what would that be? Thanks.

Okay. Let's take Zolgensma has zero effect. And more than that, I am confident it will have zero effect on the way these [indiscernible] programs. If one looks past the really salacious headlines about this cohort and what one would [indiscernible] Zolgensma is looking at 43, this is a very specific issue, not about gene therapy, but about individuals who may have done something with data manipulation as the phrase is being used with respect to the study. That is something that didn’t affect the integrity, apparently from what we've read in the integrity study it didn't affect the actual outcomes [indiscernible] efficacy or even the durability of the program. But what's concerning, because I think really there were some questions about intentionality and all of that. It is a very specific issue about specifically being a specific company. It does not relate in any way to our program, nor do I believe that there is any reason to believe that they will change how the agency would approach other drugs or these programs. I mean, it goes without saying what has to be very thoughtful and careful and follow SOPs, good clinical practice and research and data. And that's this - that was the same answer the day before and yesterday, it's the same answer today. So I'm not at all concerned that this impacts the way the agency approaches programs. It's a very specific issue. The status of SRP-5051, what I really want to make clear, we haven't hit any slack on [indiscernible]. The issue that we've always had, the open issue with respect to the PPMO is can you get safely to a high dose? If you can get safely through an acceptably high dose, we are very confident that [indiscernible] that we're going to see significant…

And our next question comes from Justin Kim with Oppenheimer. You may proceed.

Hi, thanks for taking the question from Hartaj [ph] and me. Maybe just want to circle back on the excess gene therapy supply in DMD. Were there any thoughts to lessening the age criteria in order to establish a longer term safety experience in these older patients before a regulatory review?

I apologize. I'm not sure what the question is. I couldn't do it in Study 2, because in Study 2 we haven’t got the powering right. We will be looking again at older patients in Study 3 as well. So we will have evidence both from [indiscernible] reviews [indiscernible] and a safety perspective on non-ambulatory patients and older patients and heavier patients in what I call Study 3, and then Dr. Gilmore O'Neill likely knows it's actually series of substance.

Okay, got it. And then, is there a target goal of what proportion of the additional patients would come from second clinical site?

We're going to dose as fast as we can. So we're opening a second site to dose both as fast as possible. There's no target. We'll take them all from [indiscernible]. We'll have a second site, very reputed, well reputed second site to assist in that dosing to make sure there's no risk [indiscernible].

And our next question comes from Ravi Raja with Evercore. You may proceed.

Yes, thank you. I have some done questions. But I just wanted to clarify the very specific functional endpoint of the 102 study from which you increased the end number, it gives you greater confidence in powering. I ask some [indiscernible] assuming the specific functional endpoint is NSAA [ph], can you just confirm that? And can we presume that the same endpoint NSAA will be the same one you used in 103 so primary functional endpoint? And then as a continuation for the 103 study, when will you be able to give us specifics on the end number within the main cohorts of 47 and the additional cohorts? Thank you.

So it's a double, so first on the first two, I want to confirm that it's NSAA in Study 2, and it will be the primary endpoint for Study 3 as well. And given that we're going to start Study 3 as earlier as is rationally possible in 2020, that we'll certainly come back to early 2020 and give you an update with more particulars around [indiscernible].

And our next question comes from Tim Chiang with BTIG. You may proceed.

Hi, thanks, Doug. I think you mentioned that Dr. Mendell might be presenting some Limb-girdle data at WMS. I mean, would the functional data would be just the three patients that have been dosed or the data that you've shown in the three patients that were dosed in MYO-101, is that right?

Yes, it will be the functional data, yes. So as you may recall, we announced data at the first quarter of this year on 2E program. We're very pleased with the results of expression level and [indiscernible] perspective as well. Given the size of these kids, you know, one of the interesting thing is that these are the largest kids that has ever been dosed as far as I'm aware of the full infusion gene therapy here in 13 year old children. But we are too – it was too early. We adjust literally dose to the child to give functional data. So we will at World Muscle we will be to present functional data on those first two kids.

And our final question comes from Lisa Bayko with JMP Securities. You may proceed.

Hi, thanks for taking my question and squeezing me in. Just to clarify, Study 2 will capture the functional endpoint that you'll use for filing in addition to Studies 3 showing expression, and at that point when you get expression data combined with Study 2 functional your file, you're not going to wait for the functional data from Study 3, is that correct?

Yes, that is our goal. One of the other things we need to do when we filled out Study 3 plans is to sit down with the agency, confer with the agency and get thereby into the approach that we're taking. But our current goal is to have – for Study 3, we'll have functional data as well to actually but they have the sub cohort of Study 3 is to look at expression level and show comparability between clinical supply and commercial supply. And Dr. O'Neill knows, we're talking about FDA issues right now. But the best approach in the U.S., assuming if the FDA agrees with the approach that we're taking. And then of course we'll have to consider what approach we take ex-U.S. Because I'm sure, you know, our goal is to bring this therapy to as many patients around the world as can benefit from it as rapidly as is possible.

Okay, great. And then just to also - how do we think about or how do you think about what is comparable? Because obviously there is variability in expression from patient-to-patient and this is kind of not exactly like a bio-equivalency study. So I guess what is the tolerance around some of those things to say it's actually the same? I'm curious about how you think about that.

Well, that will be obvious. It's subject of discussion with the agency obviously, and this sort of based on gene therapy, so we'll have a lot of these talks. But there is a lot of different ways to look at measurements [indiscernible] CMC related issues. And we also have what others would [indiscernible] other programs for instance that you wouldn't have it in SMA. We've got biopsies. We do have a good way to triangulate on comparability between commercial supply and clinical supply. And then, of course will have to talk to the agency about what level of tolerance is permissible between clinical supply and commercial supply.

Okay, great. Thanks a lot.

Thank you very much.

Ladies and gentlemen, this now concludes our Q&A portion of today's call. I'd now like to turn the call back over to Doug Ingram, CEO, for closing remarks.

Well, thank you all very much for spending this evening with us as we updated for the second quarter on our performance in the second quarter and our flight path forward. We have a lot to do in 2019. I hope I may impress upon everyone our perspective on this. We are in a privileged position as an organization with respect to some of our programs, right now. We don't take that privileged position for granted. We don't intend to slow down as a result of that, and we don't intend to develop any form of arrogance. In fact, we want to approach all of the work that we have to do in front of us with an enormous amount of humility. We have a lot to do this year. We have to continue to perform with EXONDYS 51. We have to bring forward golodirsen, assuming that we are successful by August 2019. We have to submit for casimersen. We have to continue to push forward our various gene therapy programs, get these kids dosed in the micro-dystrophin Study 2, get our process developments and capacity for micro-dystrophin gene therapy program done by the end of this year, so we can start dosing patients in our Study 3, and we will give you additional updates over the course of the year as we progress against our goals. So thank you very much. Thanks for your support and have a lovely evening.

Ladies and gentlemen, thank you for attending today's conference. This does conclude the program. You may all disconnect. Everyone, have a great day.