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Risks

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

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 001-14895

 

SAREPTA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

93-0797222

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

215 First Street, Suite 415

Cambridge, MA

 

02142

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (617) 274-4000

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.0001 par value per share

SRPT

The Nasdaq Global Select Market

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.    Yes       No  

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).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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:

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

☐  

  

Smaller Reporting Company

 

 

 

 

 

 

 

 

Emerging growth company

 

☐  

  

 

 

 

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

  

79,844,654

(Class)

  

(Outstanding as of July 30, 2021)

 

 

 

 


 

SAREPTA THERAPEUTICS, INC.

FORM 10-Q

INDEX

 

 

 

 

 

Page

PART I — FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (unaudited)

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets — As of June 30, 2021 and December 31, 2020

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss — For the Three and Six Months Ended June 30, 2021 and 2020

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity – For the Three and Six Months Ended June 30, 2021 and 2020

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows — For the Six Months Ended June 30, 2021 and 2020

 

6

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

33

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

33

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

34

 

 

 

 

 

Item 1A.

 

Risk Factors

 

34

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

70

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

70

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

70

 

 

 

 

 

Item 5.

 

Other Information

 

70

 

 

 

 

 

Item 6.

 

Exhibits

 

70

 

 

 

 

 

Exhibits

 

71

 

 

 

 

 

Signatures

 

72

 

 

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)

 

 

 

As of

June 30, 2021

 

 

As of

December 31, 2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,697,275

 

 

$

1,502,648

 

Short-term investments

 

 

30,000

 

 

 

435,923

 

Accounts receivable

 

 

127,520

 

 

 

101,340

 

Inventory

 

 

268,756

 

 

 

231,961

 

Other current assets

 

 

141,666

 

 

 

213,324

 

Total current assets

 

 

2,265,217

 

 

 

2,485,196

 

Property and equipment, net

 

 

203,330

 

 

 

190,430

 

Intangible assets, net

 

 

14,105

 

 

 

13,628

 

Right of use assets

 

 

72,868

 

 

 

91,761

 

Other non-current assets

 

 

203,553

 

 

 

203,703

 

Total assets

 

$

2,759,073

 

 

$

2,984,718

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

76,681

 

 

$

111,090

 

Accrued expenses

 

 

240,141

 

 

 

193,553

 

Deferred revenue, current portion

 

 

89,244

 

 

 

89,244

 

Other current liabilities

 

 

18,956

 

 

 

22,139

 

Total current liabilities

 

 

425,022

 

 

 

416,026

 

Long-term debt

 

 

1,092,985

 

 

 

992,493

 

Lease liabilities, net of current portion

 

 

65,285

 

 

 

80,367

 

Deferred revenue, net of current portion

 

 

619,233

 

 

 

663,488

 

Contingent consideration

 

 

50,800

 

 

 

50,800

 

Other non-current liabilities

 

 

20,640

 

 

 

19,785

 

Total liabilities

 

 

2,273,965

 

 

 

2,222,959

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 3,333,333 shares authorized; none issued and

   outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value, 198,000,000 shares authorized; 79,830,411

   and 79,374,247 issued and outstanding at June 30, 2021, and

   December 31, 2020, respectively

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

3,521,721

 

 

 

3,609,877

 

Accumulated other comprehensive income, net of tax

 

 

2

 

 

 

3

 

Accumulated deficit

 

 

(3,036,623

)

 

 

(2,848,129

)

Total stockholders’ equity

 

 

485,108

 

 

 

761,759

 

Total liabilities and stockholders’ equity

 

$

2,759,073

 

 

$

2,984,718

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3


 

SAREPTA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited, in thousands, except per share amounts)

 

 

 

For the Three Months Ended

June 30,

 

 

For the Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products, net

 

$

141,839

 

 

$

111,344

 

 

$

266,765

 

 

$

211,792

 

Collaboration

 

 

22,250

 

 

 

26,019

 

 

 

44,255

 

 

 

39,245

 

Total revenues

 

 

164,089

 

 

 

137,363

 

 

 

311,020

 

 

 

251,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (excluding amortization of in-licensed rights)

 

 

19,515

 

 

 

13,341

 

 

 

41,861

 

 

 

25,963

 

Research and development

 

 

239,622

 

 

 

188,522

 

 

 

434,771

 

 

 

324,666

 

Selling, general and administrative

 

 

72,347

 

 

 

73,688

 

 

 

143,478

 

 

 

156,456

 

Settlement and license charges

 

 

 

 

 

 

 

 

10,000

 

 

 

 

Amortization of in-licensed rights

 

 

179

 

 

 

165

 

 

 

349

 

 

 

331

 

Total cost and expenses

 

 

331,663

 

 

 

275,716

 

 

 

630,459

 

 

 

507,416

 

Operating loss

 

 

(167,574

)

 

 

(138,353

)

 

 

(319,439

)

 

 

(256,379

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain from sale of Priority Review Voucher

 

 

102,000

 

 

 

 

 

 

102,000

 

 

 

108,069

 

Other expense, net

 

 

(16,185

)

 

 

(12,447

)

 

 

(31,713

)

 

 

(19,867

)

Total other income (loss)

 

 

85,815

 

 

 

(12,447

)

 

 

70,287

 

 

 

88,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax (benefit) expense

 

 

(81,759

)

 

 

(150,800

)

 

 

(249,152

)

 

 

(168,177

)

Income tax (benefit) expense

 

 

(354

)

 

 

20

 

 

 

(497

)

 

 

135

 

Net loss

 

 

(81,405

)

 

 

(150,820

)

 

 

(248,655

)

 

 

(168,312

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on investments, net of tax

 

 

5

 

 

 

(618

)

 

 

(1

)

 

 

(44

)

Total other comprehensive loss

 

 

5

 

 

 

(618

)

 

 

(1

)

 

 

(44

)

Comprehensive loss

 

$

(81,400

)

 

$

(151,438

)

 

$

(248,656

)

 

$

(168,356

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(1.02

)

 

$

(1.93

)

 

$

(3.12

)

 

$

(2.18

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares of common stock used in

   computing basic and diluted net loss per share

 

 

79,746

 

 

 

77,968

 

 

 

79,601

 

 

 

77,200

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


SAREPTA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

79,374

 

 

$

8

 

 

$

3,609,877

 

 

$

3

 

 

$

(2,848,129

)

 

$

761,759

 

Cumulative effect of accounting change to

    adopt ASU 2020-06

 

 

 

 

 

 

 

(156,953

)

 

 

 

 

 

60,161

 

 

 

(96,792

)

Exercise of options for common stock

 

108

 

 

 

 

 

 

4,683

 

 

 

 

 

 

 

 

 

4,683

 

Vest of restricted stock units

 

204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee

   stock purchase plan

 

62

 

 

 

 

 

 

4,543

 

 

 

 

 

 

 

 

 

4,543

 

Stock-based compensation

 

 

 

 

 

 

 

28,508

 

 

 

 

 

 

 

 

 

28,508

 

Unrealized losses from available-for-sale

   securities, net of tax

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

 

 

(6

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(167,250

)

 

 

(167,250

)

Balance at March 31, 2021

 

79,748

 

 

$

8

 

 

$

3,490,658

 

 

$

(3

)

 

$

(2,955,218

)

 

$

535,445

 

Exercise of options for common stock

 

72

 

 

 

 

 

 

3,526

 

 

 

 

 

 

 

 

 

3,526

 

Vest of restricted stock units

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes

 

(18

)

 

 

 

 

 

(1,432

)

 

 

 

 

 

 

 

 

(1,432

)

Stock-based compensation

 

 

 

 

 

 

 

28,969

 

 

 

 

 

 

 

 

 

28,969

 

Unrealized losses from available-for-sale

   securities, net of tax

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(81,405

)

 

 

(81,405

)

Balance at June 30, 2021

 

79,830

 

 

$

8

 

 

$

3,521,721

 

 

$

2

 

 

$

(3,036,623

)

 

$

485,108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

75,185

 

 

$

8

 

 

$

3,112,130

 

 

$

50

 

 

$

(2,294,001

)

 

$

818,187

 

Exercise of options for common stock

 

97

 

 

 

 

 

 

3,687

 

 

 

 

 

 

 

 

 

3,687

 

Vest of restricted stock units

 

98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock to Roche, net of

   issuance costs

 

2,522

 

 

 

 

 

 

312,053

 

 

 

 

 

 

 

 

 

312,053

 

Issuance of common stock under employee

   stock purchase plan

 

56

 

 

 

 

 

 

3,795

 

 

 

 

 

 

 

 

 

3,795

 

Stock-based compensation

 

 

 

 

 

 

 

24,024

 

 

 

 

 

 

 

 

 

24,024

 

Unrealized gains from available-for-sale

   securities, net of tax

 

 

 

 

 

 

 

 

 

 

574

 

 

 

 

 

 

574

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,492

)

 

 

(17,492

)

Balance at March 31, 2020

 

77,958

 

 

$

8

 

 

$

3,455,689

 

 

$

624

 

 

$

(2,311,493

)

 

$

1,144,828

 

Exercise of options for common stock

 

449

 

 

 

 

 

 

21,860

 

 

 

 

 

 

 

 

 

21,860

 

Vest of restricted stock units, net of cancellations

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

27,616

 

 

 

 

 

 

 

 

 

27,616

 

Unrealized losses from available-for-sale securities, net of tax

 

 

 

 

 

 

 

 

 

 

(618

)

 

 

 

 

 

(618

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(150,820

)

 

 

(150,820

)

Balance at June 30, 2020

 

78,432

 

 

$

8

 

 

$

3,505,165

 

 

$

6

 

 

$

(2,462,313

)

 

$

1,042,866

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

5


 

SAREPTA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

For the Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(248,655

)

 

$

(168,312

)

Adjustments to reconcile net loss to cash flows from operating activities:

 

 

 

 

 

 

 

 

Gain from sale of Priority Review Voucher, net of commission

 

 

(102,000

)

 

 

(108,069

)

Depreciation and amortization

 

 

17,377

 

 

 

13,004

 

Reduction in the carrying amounts of the right of use assets

 

 

6,023

 

 

 

5,389

 

Amortization of investment discount

 

 

(101

)

 

 

(1,928

)

Non-cash interest expense

 

 

3,691

 

 

 

12,217

 

Stock-based compensation

 

 

57,477

 

 

 

51,640

 

Other

 

 

3,786

 

 

 

(800

)

Changes in operating assets and liabilities, net:

 

 

 

 

 

 

 

 

Net increase in accounts receivable

 

 

(26,180

)

 

 

(13,149

)

Net increase in inventory

 

 

(36,795

)

 

 

(8,271

)

Net decrease (increase) in other assets

 

 

73,670

 

 

 

(44,309

)

Net (decrease) increase in deferred revenue

 

 

(44,255

)

 

 

794,484

 

Net increase (decrease) in accounts payable, accrued expenses and other liabilities

 

 

6,445

 

 

 

(11,709

)

Net cash (used in) provided by operating activities

 

 

(289,517

)

 

 

520,187

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(27,043

)

 

 

(28,289

)

Proceeds from sale of Priority Review Voucher, net of commission

 

 

102,000

 

 

 

108,069

 

Purchase of available-for-sale securities

 

 

(29,989

)

 

 

(756,738

)

Maturity and sale of available-for-sale securities

 

 

436,000

 

 

 

626,980

 

Other

 

 

(3,243

)

 

 

(1,927

)

Net cash provided by (used in) investing activities

 

 

477,725

 

 

 

(51,905

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options and purchase of stock under the Employee Stock

   Purchase Program

 

 

12,752

 

 

 

29,342

 

Taxes paid related to net share settlement of equity awards

 

 

(6,333

)

 

 

(4,798

)

Proceeds from issuance of common stock to Roche, net of offering costs

 

 

 

 

 

312,053

 

Net cash provided by financing activities

 

 

6,419

 

 

 

336,597

 

 

 

 

 

 

 

 

 

 

Increase in cash, cash equivalents and restricted cash

 

 

194,627

 

 

 

804,879

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Beginning of period

 

 

1,511,713

 

 

 

843,645

 

End of period

 

$

1,706,340

 

 

$

1,648,524

 

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,697,275

 

 

$

1,639,959

 

Restricted cash in other assets

 

 

9,065

 

 

 

8,565

 

Total cash, cash equivalents and restricted cash

 

$

1,706,340

 

 

$

1,648,524

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

27,780

 

 

$

15,032

 

Supplemental schedule of non-cash investing activities and financing activities:

 

 

 

 

 

 

 

 

Intangible assets and property and equipment included in accounts payable and accrued expenses

 

$

7,760

 

 

$

9,032

 

Shares withheld for tax included in accrued expenses

 

$

1,432

 

 

$

 

Lease liabilities arising from obtaining right of use assets

 

$

10,582

 

 

$

37,586

 

Lease liabilities terminated

 

$

19,967

 

 

$

 

 

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 is developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne muscular dystrophy (“DMD”), Limb-girdle muscular dystrophies (“LGMDs”), and other neuromuscular and central nervous system (“CNS”) related disorders.  

 

Its 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 DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 51, exon 53 and exon 45 skipping, respectively, EXONDYS 51, VYONDYS 53 and AMONDYS 45 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.

As of June 30, 2021, the Company had approximately $1,736.6 million of cash, cash equivalents and investments, consisting of $1,697.3 million of cash and cash equivalents, $30.0 million of short-term investments, and $9.3 million of long-term restricted cash and investments. The Company believes that its balance of cash, cash equivalents and investments as of the date of the issuance of this report is sufficient to fund its current operational plan for at least the next twelve months, though it may pursue raising addi