What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-01 · 197 added, 104 removed, 254 unchanged (54% of the section changed)

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• our belief that our proprietary technology platforms and collaborations can be used to develop potential therapeutic candidates to treat a broad range of diseases;

• our expectation that our partnerships with manufacturers will support our clinical and commercial manufacturing capacity for our Duchenne muscular dystrophy gene therapy programs and Limb-girdle muscular dystrophy programs, while also acting as a manufacturing platform for potential future gene therapy programs, and our belief that our current network of manufacturing partners is able to fulfill the requirements of our commercial plan;

• our expectation that our partnerships with Thermo Fisher Scientific Inc.

(“Thermo”) and Catalent, Inc.

• our expectation that our partnerships with manufacturers will support our clinical and commercial manufacturing capacity for our Duchenne muscular dystrophy (“Duchenne”) gene therapy programs and Limb-girdle muscular dystrophy (“LGMD”) programs, while also acting as a manufacturing platform for potential future gene therapy programs, and our belief that our current network of manufacturing partners is able to fulfill the requirements of our commercial plan;

• our expectation that our partnerships with Catalent, Inc.

(“Catalent”) will support our clinical and commercial manufacturing demand for our SRP-9001 Duchenne program and LGMD programs, while also acting as a manufacturing platform for potential future gene therapy programs;

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• the possible impact of regulations and regulatory decisions by the Food and Drug Administration (the “FDA”) and other regulatory agencies on our business as well as the development of our product candidates and our financial and contractual obligations;

• estimated timelines and milestones for the remainder of 2024 and beyond, including meeting with the FDA in the second half of 2024 with respect to SRP-5051, and the efficacy supplement review goal date of June 21, 2024 for ELEVIDYS;

• estimated timelines and milestones for the remainder of 2024 and beyond, including meeting with the FDA in the second half of 2024 with respect to SRP-5051;

• our engagement with regulatory authorities outside of the U.S.

including the European Medicines Agency (“EMA”);

including the European Medicines Agency (the “EMA”);

• our plan to continue building out our network for commercial distribution in jurisdictions in which our products are approved;

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• our expectation regarding the impact of environmental laws and regulations on our business;

• our beliefs and expectations regarding milestone, royalty or other payments that could be due to third parties under existing agreements.

and our beliefs and expectations regarding milestone, royalty or other payments that could be due to third parties under existing agreements.

We undertake no obligation to update any of the forward-looking statements contained in this Quarterly Report on Form 10-Q after the date of this report, except as required by law or the rules and regulations of the U.S.

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We are 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 our proprietary, highly differentiated and innovative technologies, and through collaborations with our strategic partners, we have developed multiple approved products for the treatment of Duchenne muscular dystrophy (“Duchenne”) and are developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne, Limb-girdle muscular dystrophies (“LGMDs”), and other neuromuscular and central nervous system related disorders.

We commercialized four products, all of which were granted accelerated approval by the FDA:

• EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), approved by the FDA on September 19, 2016, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 51 skipping.

Applying our proprietary, highly differentiated and innovative technologies, and through collaborations with our strategic partners, we have developed multiple approved products for the treatment of Duchenne and are developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne, LGMDs, and other neuromuscular and central nervous system related disorders.

We commercialized four products, all of which were granted accelerated approval or traditional approval by the FDA:

• The PMO Products:

o EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), granted accelerated approval by the FDA on September 19, 2016, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 51 skipping.

EXONDYS 51 uses our phosphorodiamidate morpholino oligomer (“PMO”) chemistry and exon-skipping technology to skip exon 51 of the dystrophin gene.

• VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”), approved by the FDA on December 12, 2019, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 53 skipping.

o VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”), granted accelerated approval by the FDA on December 12, 2019, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 53 skipping.

VYONDYS 53 uses our PMO chemistry and exon-skipping technology to skip exon 53 of the dystrophin gene.

• AMONDYS 45 (casimersen) Injection (“AMONDYS 45”), approved by the FDA on February 25, 2021, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 45 skipping.

o AMONDYS 45 (casimersen) Injection (“AMONDYS 45”), granted accelerated approval by the FDA on February 25, 2021, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 45 skipping.

AMONDYS 45 uses our PMO chemistry and exon-skipping technology to skip exon 45 of the dystrophin gene.

• ELEVIDYS (delandistrogene moxeparvovec-rokl), approved by the FDA on June 22, 2023, is an adeno-associated virus based gene therapy for the treatment of ambulatory pediatric patients aged 4 through 5 years with Duchenne with a confirmed mutation in the Duchenne gene.

• ELEVIDYS (delandistrogene moxeparvovec-rokl), approved by the FDA on June 20, 2024, is an adeno-associated virus-based gene therapy for the treatment of ambulatory pediatric patients at least 4 years old with Duchenne with a confirmed mutation in the Duchenne gene.

ELEVIDYS is also approved for non-ambulatory patients under the accelerated approval pathway.

ELEVIDYS was previously granted accelerated approval by the FDA on June 22, 2023 for the treatment of ambulatory pediatric patients aged 4 through 5 years with Duchenne with a confirmed mutation in the Duchenne gene.

ELEVIDYS is contraindicated in patients with any deletion in exon 8 and/or exon 9 in the Duchenne gene.

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In July 2022, the FDA placed Study 5051-201 on clinical hold following a serious adverse event of hypomagnesemia.

The clinical hold was lifted in August 2022.

hold was lifted in August 2022.

We completed enrollment of Part B of Study 5051-201 in the first quarter of 2023.

January 2024, we announced results from Part B of Study 5051-201.

In January 2024, we announced results from Part B of Study 5051-201.

We plan to meet with FDA to discuss next steps in the second half of 2024.

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In January 2024, we announced that we had begun screening in Study SRP-9003-301, a Phase 3, multi-national, open-label study of SRP-9003.

We are conducting various clinical trials for ELEVIDYS and announced our submission of an efficacy supplement to the biologics license application (“BLA”) for ELEVIDYS to expand its label indication to remove age and ambulatory restrictions from the approved indication on December 22, 2023.

We also submitted our postmarketing requirements related to the Phase 3 SRP-9001-301 confirmatory study for ELEVIDYS requesting conversion from accelerated approval to traditional approval during December 2023.

The FDA granted priority review with a review goal date of June 21, 2024.

Our pipeline includes more than 40 programs in various stages of pre-clinical and clinical development, reflecting our multifaceted approach and expertise in precision genetic medicine to make a profound difference in the lives of patients suffering from rare diseases.

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We have also opened facilities over the past several years that significantly enhanced our internal research and development capabilities.

However, we currently do not have internal Good Manufacturing Practices (“GMP”) manufacturing capabilities to produce our products and product candidates for commercial and/or clinical use.

However, we currently do not have internal GMP manufacturing capabilities to produce our products and product candidates for commercial and/or clinical use.

For our current and future manufacturing needs, we have entered into supply agreements with specialized contract manufacturing organizations (each a “CMO”) to produce custom raw materials, the active pharmaceutical ingredients (“APIs”), drug product and finished goods for our products and product candidates for both commercial and clinical use.

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Additionally, we have evaluated, and will continue to evaluate further relationships with additional suppliers to increase overall capacity as well as further reduce risks associated with relying on a limited number of suppliers for manufacturing.

Our gene therapy manufacturing capabilities have been greatly enhanced through partnerships with Thermo Fisher Scientific Inc.

(“Thermo”), Catalent, Inc.

(“Catalent”) and Aldevron LLC (“Aldevron”).

Our gene therapy manufacturing capabilities have been greatly enhanced through partnerships with Aldevron and Catalent.

We have adopted a hybrid development and manufacturing strategy in which we have built internal expertise relative to all aspects of AAV-based manufacturing, including gene therapy and gene editing, while closely partnering with experienced manufacturing partners to expedite development and commercialization of our gene therapy programs.

We have secured manufacturing capacity at Thermo and Catalent to support our clinical and commercial manufacturing demand for ELEVIDYS and our LGMD programs, while also acting as a manufacturing platform for potential future gene therapy programs.

We have secured manufacturing capacity at Catalent to support our clinical and commercial manufacturing demand for ELEVIDYS and our LGMD programs, while also acting as a manufacturing platform for potential future gene therapy programs.

The collaboration integrates process development, clinical and commercial production and testing.

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Cash, Cash Equivalents, Restricted Cash and Investments

As of March 31, 2024, we had approximately $1,440.3 million of cash, cash equivalents, restricted cash and investments, consisting of $427.3 million of cash and cash equivalents, $963.5 million of short-term investments, $33.9 million of non-current investments and $15.6 million of non-current restricted cash.

As of June 30, 2024, we had approximately $1,476.1 million of cash, cash equivalents, restricted cash and investments, consisting of $383.6 million of cash and cash equivalents, $1,076.9 million of short-term investments and $15.6 million of non-current restricted cash.

We believe that our balance of cash, cash equivalents and investments is sufficient to fund our current operational plan for at least the next twelve months.

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There have been no changes to our critical accounting policies and significant estimates as detailed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

The following tables set forth selected unaudited condensed consolidated statements of income (loss) data for each of the periods indicated:

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Total cost and expenses

Operating loss

Other income, net:

Other income, net

Gain from sale of Priority Review Voucher

Total other income, net

Income (loss) before income tax expense

Income tax expense

Net income (loss)

Earnings (loss) per share:

For the Six Months Ended

(in thousands, except per share amounts)

Products, net

Collaboration and other

Total revenues

Cost and expenses:

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

Research and development

Selling, general and administrative

Amortization of in-licensed rights

Total cost and expenses

Operating income (loss)

Other income (loss), net:

Loss on debt extinguishment

Other income, net

Gain from sale of Priority Review Voucher

Loss on debt extinguishment

Total other income (loss), net

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Actual amounts of consideration ultimately received or paid may differ from our estimates.

The following table summarizes the components of our net product revenues, by product, for each of the periods indicated:

The following tables summarize the components of our net product revenues, by product, for each of the periods indicated:

For the Three Months Ended

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Products, net

For the Six Months Ended

(in thousands)

Products, net

not meaningful

Net product revenues for our products for the three months ended March 31, 2024 increased by $128.0 million compared with the three months ended March 31, 2023.

The increase primarily reflects $133.9 million of net product revenues associated with sales of ELEVIDYS during the three months ended March 31, 2024 after its launch in June 2023.

The following table summarizes the components of our collaboration and other revenues for the periods indicated:

Net product revenues for our products for the three and six months ended June 30, 2024 increased by $121.6 million and $249.5 million, respectively, compared with the three and six months ended June 30, 2023.

The increase primarily reflects $121.7 million and $255.7 million, respectively, of net product revenues associated with sales of ELEVIDYS during the three and six months ended June 30, 2024, which was approved by the FDA and launched in June 2023.

The following tables summarize the components of our collaboration and other revenues for the periods indicated:

For the Three Months Ended

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Total collaboration and other

For the Six Months Ended

(in thousands)

Amortization of performance obligations**

Contract manufacturing and other

Total collaboration and other

not meaningful

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Hoffman-La Roche Ltd.

For the three months ended March 31, 2024 and 2023, we recognized $54.0 million and $22.0 million of collaboration and other revenues, respectively.

The increase is primarily due to the $48.0 million of collaboration revenue recognized in the three months ended March 31, 2024 related to Roche’s declined option to acquire the ex-US rights to a certain external, early stage Duchenne development program.

Please refer to Note 3, License and Collaboration Agreements for further discussion of the Collaboration Agreement with Roche (the “Collaboration Agreement”).

For the three months ended June 30, 2024 and 2023, we recognized $2.4 million and $22.3 million of collaboration and other revenues, respectively.

The decrease is primarily driven by the amortization of the single, combined performance obligation under the Collaboration Agreement with Roche (the “Collaboration Agreement”) during the three months ended June 30, 2023, which was fully amortized as of December 31, 2023.

This was partially offset by royalty revenue from Roche included in contract manufacturing and other for the three months ended June 30, 2024.

Please refer to Note 3, License and Collaboration Agreements for further discussion of the Collaboration Agreement.

For the six months ended June 30, 2024 and 2023, we recognized $56.4 million and $44.3 million of collaboration and other revenues, respectively.

The increase is primarily due to the $48.0 million of collaboration revenue recognized in the six months ended June 30, 2024 related to Roche’s declined option to acquire the ex-US rights to a certain external, early stage Duchenne development program.

This was partially offset by the amortization of the single, combined performance obligation under the Collaboration Agreement during the six months ended June 30, 2023, which was fully amortized as of December 31, 2023.

In addition, in accordance with the Collaboration Agreement, the parties agreed to enter into a supply agreement in order for Sarepta to supply Roche with clinical and commercial batches of ELEVIDYS (the “Supply Agreement”).

While the Supply Agreement is in the process of being negotiated, we delivered batches of commercial ELEVIDYS supply to Roche that were agreed upon on a purchase order-by-purchase order basis.

For the three months ended March 31, 2024, we recognized $6.0 million of contract manufacturing and other revenues, which is primarily related to these Roche shipments, with no similar activity for the three months ended March 31, 2023.

For the six months ended June 30, 2024, we recognized $8.4 million of contract manufacturing and other revenues, which is primarily related to these Roche shipments and royalty revenue from Roche, with no similar activity for the six months ended June 30, 2023.

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

Our cost of sales (excluding amortization of in-licensed rights) consists of inventory costs that relate to sales of our products and the related overhead costs and royalty payments primarily to BioMarin Pharmaceuticals, Inc.

(“BioMarin”) and the University of Western Australia (“UWA”) for EXONDYS 51, AMONDYS 45 and VYONDYS 53 (collectively, the “PMO Products”) and to Nationwide Children’s Hospital (“Nationwide”) for ELEVIDYS.

(“BioMarin”) and the University of Western Australia (“UWA”) for our PMO Products and to Nationwide Children’s Hospital (“Nationwide”) for ELEVIDYS.

Prior to receiving regulatory approval for EXONDYS 51, VYONDYS 53, AMONDYS 45 and ELEVIDYS by the FDA in September 2016, December 2019, February 2021 and June 2023, respectively, we expensed such manufacturing and material costs as research and development expenses.

For the PMO Products, all previously expensed manufacturing costs had been fully consumed prior to the three months ended March 31, 2024 and 2023.

For ELEVIDYS sold in the three months ended March 31, 2024, the majority of related manufacturing costs incurred had previously been expensed as research and development expenses, as such costs were incurred prior to the FDA approval of the product.

If product related costs had not previously been expensed as research and development expenses prior to receiving FDA approval, the incremental inventory costs related to ELEVIDYS sold, including products sold to Roche under the Collaboration Agreement, would have been approximately $23.8 million higher for the three months ended March 31, 2024.

For the PMO Products, all previously expensed manufacturing costs had been fully consumed prior to the three and six months ended June 30, 2024 and 2023.

For ELEVIDYS sold in the three and six months ended June 30, 2024, the majority of related manufacturing costs incurred had previously been expensed as research and development expenses, as such costs were incurred prior to the FDA approval of the product.

If product related costs had not previously been expensed as research and development expenses prior to receiving FDA approval, the incremental inventory costs related to ELEVIDYS sold, including products sold to Roche under the Collaboration Agreement, would have been approximately $15.9 million and $39.7 million for the three and six months ended June 30, 2024, respectively.

The following table summarizes the components of our cost of sales (excluding amortization of in-licensed rights) for each of the periods indicated:

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Royalty payments

Total cost of sales (excluding amortization of in-licensed rights)

For the Six Months Ended

(in thousands)

Inventory costs related to products sold (excluding products sold to Roche**)

Royalty payments

Inventory costs related to products sold to Roche**

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** See above for further details regarding product supply sold to Roche via contract manufacturing under our Collaboration Agreement.

The cost of sales (excluding amortization of in-licensed rights) for the three months ended March 31, 2024 increased by $15.5 million, or 44%, compared with the same period in 2023.

The change primarily reflects increasing demand for our products and

an increase in royalty payments related to ELEVIDYS sales, as well as an increase in the write-offs of certain batches of our products not meeting our quality specifications for the three months ended March 31, 2024, as compared to the same period of 2023.

The cost of sales (excluding amortization of in-licensed rights) for the three months ended June 30, 2024 increased by $10.4 million, or 31%, compared with the same period in 2023.

The change primarily reflects cost of sales related to ELEVIDYS for the three months ended June 30, 2024, following its FDA approval and launch in June 2023, with no similar activity for the same period of 2023.

The cost of sales (excluding amortization of in-licensed rights) for the six months ended June 30, 2024 increased by $26.0 million, compared with the same period in 2023.

The change primarily reflects cost of sales related to ELEVIDYS for the six months ended June 30, 2024, following its FDA approval and launch in June 2023, with no similar activity for the same period of 2023 and an increase in royalty payments related to ELEVIDYS sales.

Research and development expenses

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We do not maintain or evaluate and, therefore, do not allocate internal research and development costs on a project-by-project basis.

As a result, a significant portion of our research and development expenses are not tracked on a project-by-project basis, as the costs may benefit multiple projects.

The following table summarizes our research and development expenses by project for each of the periods indicated:

As a result, a

significant portion of our research and development expenses are not tracked on a project-by-project basis, as the costs may benefit multiple projects.

The following tables summarize our research and development expenses by project for each of the periods indicated:

For the Three Months Ended

(in thousands)

LGMD platform

Eteplirsen (exon 51)

Other gene therapies

PPMO platform

Casimersen (exon 45)

Golodirsen (exon 53)

Other projects

Internal research and development expenses

Roche collaboration reimbursement

Total research and development expenses

For the Six Months Ended

(in thousands)

LGMD platform

Eteplirsen (exon 51)

PPMO platform

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Total research and development expenses

The following table summarizes our research and development expenses by category for each of the periods indicated:

The following tables summarize our research and development expenses by category for each of the periods indicated:

For the Three Months Ended

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*Beginning in the period ended March 31, 2024, we implemented an updated manufacturing absorption methodology that allocates the absorption of indirect manufacturing costs to their respective originating categories.

Research and development expenses by category, specifically manufacturing expenses, compensation and other personnel expenses, facility- and technology-related expenses and professional services have been reclassified for the period ended March 31, 2023 for comparability.

This reallocation has no impact to the total research and development expenses recognized.

Research and development expenses for the three months ended March 31, 2024 decreased by $45.3 million, or 18%, compared with the three months ended March 31, 2023.

Research and development expenses by category, specifically, manufacturing expenses, compensation and other personnel expenses, facility- and technology-related expenses and professional services, have been reclassified for the period ended June 30, 2023 for comparability.

This reallocation has no impact on the total research and development expenses recognized.

Research and development expenses for the three months ended June 30, 2024 decreased by $62.2 million, or 26%, compared with the three months ended June 30, 2023.

The decrease was primarily driven by the following:

• $48.8 million decrease in manufacturing expenses primarily due to the capitalization of commercial batches of ELEVIDYS manufactured after its approval in June 2023;

• $3.3 million increase in clinical trial expenses primarily due to an increased patient enrollment and site activation for our MOMENTUM and MIS51ON programs;

• $1.8 million increase in research and other expenses primarily driven by an increase in collaboration cost-sharing expenses related to Genethon's micro-dystrophin drug candidate and an increase in sponsored research with academic institutions during the three months ended March 31, 2024;

• $1.3 million increase in the offset to expense associated with a collaboration reimbursement from Roche due to continuing development of our SRP-9001 gene therapy programs.

• $58.0 million decrease in manufacturing expenses primarily due to the capitalization of commercial batches of ELEVIDYS manufactured upon its approval in June 2023;

• $2.6 million decrease in clinical trial expenses primarily due to a ramp-down of the ESSENCE studies for AMONDYS 45 and VYONDYS 53;

• $2.4 million decrease in compensation and other personnel expenses primarily due to an increase in indirect manufacturing costs absorption offset as a result of ELEVIDYS approval in June 2023, partially offset by changes in headcount;

• $1.8 million decrease in stock-based compensation expense primarily due to an increase in indirect manufacturing costs absorption offset as a result of ELEVIDYS approval in June 2023, partially offset by the achievement of performance conditions related to certain restricted stock units with performance conditions (“PSUs”) during the three months ended June 30, 2024 and changes in the value of stock awards;

• $1.3 million decrease in pre-clinical expenses primarily due to a decrease in toxicology study activity in our PPMO and PMO platforms;

• $7.1 million decrease in research and other expenses primarily driven by $7.5 million of up-front payments as a result of the execution of certain research and license agreements in the three months ended June 30, 2023, with no similar up-front or milestone activity for the three months ended June 30, 2024.

This was partially offset by the termination of an external early stage Duchenne development program during the three months ended June 30, 2024;

• $10.2 million decrease in the offset to expense associated with a collaboration reimbursement from Roche due to timing and frequency of clinical supply costs and engineering runs for our SRP-9001 gene therapy programs.

For the Six Months Ended

(in thousands)

Manufacturing expenses*

Clinical trial expenses

Compensation and other personnel expenses

Facility- and technology-related expenses

Stock-based compensation

Professional services

Pre-clinical expenses

Research and other

Roche collaboration reimbursement

Total research and development expenses

This reallocation has no impact on the total research and development expenses recognized.

Research and development expenses for the six months ended June 30, 2024 decreased by $107.5 million, or 22%, compared with the six months ended June 30, 2023.

The decrease was primarily driven by the following:

• $106.7 million decrease in manufacturing expenses primarily due to the capitalization of commercial batches of ELEVIDYS manufactured upon its approval in June 2023;

• $3.0 million decrease in compensation and other personnel expenses primarily due to an increase in indirect manufacturing costs absorption offset as a result of ELEVIDYS approval in June 2023, partially offset by changes in headcount;

• $1.9 million decrease in stock-based compensation expense primarily due to an increase in indirect manufacturing costs absorption offset as a result of ELEVIDYS approval in June 2023, partially offset by the achievement of performance conditions related to certain PSUs during the six months ended June 30, 2024 and changes in the value of stock awards;

• $1.3 million decrease in pre-clinical expenses primarily due to a decrease in toxicology study activity in our PPMO and PMO platforms;

• $5.3 million decrease in research and other expenses primarily driven by $7.8 million of up-front payments as a result of the execution of certain research and license agreements in the six months ended June 30, 2023, with no similar up-front or milestone activity for the six months ended June 30, 2024.

This was partially offset by the termination of an external early stage Duchenne development program during the six months ended June 30, 2024;

• $8.8 million decrease in the offset to expense associated with a collaboration reimbursement from Roche due to timing and frequency of clinical supply costs and engineering runs for our SRP-9001 gene therapy programs.

Selling, general and administrative expenses

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Other general and administrative expenses include an allocation of our facility- and technology-related costs and professional fees for legal, consulting and accounting services.

The following table summarizes our selling, general and administrative expenses by category for each of the periods indicated:

The following tables summarize our selling, general and administrative expenses by category for each of the periods indicated:

For the Three Months Ended

(in thousands)

Professional services

Compensation and other personnel expenses

Stock-based compensation

Facility- and technology-related expenses

Roche collaboration reimbursement

Total selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2024 increased by $20.2 million, or 17%, compared with the three months ended June 30, 2023.

This increase was primarily driven by the following:

• $6.2 million increase in professional service expenses primarily related to the continued efforts to commercialize ELEVIDYS and ongoing litigation matters;

• $1.8 million increase in compensation and other personnel expenses primarily due to changes in headcount;

• $4.9 million increase in stock-based compensation expense primarily related to the achievement of performance conditions related to certain PSUs during the three months ended June 30, 2024;

• $2.3 million increase in facility- and technology-related expenses primarily due to our continuing expansion efforts;

• $4.9 million increase in other expenses primarily due to the timing of charitable contribution activity.

For the Six Months Ended

(in thousands)

Professional services

Compensation and other personnel expenses

Stock-based compensation

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Total selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended March 31, 2024 increased by $16.3 million, or 15%, compared with the three months ended March 31, 2023.

Selling, general and administrative expenses for the six months ended June 30, 2024 increased by $36.5 million, or 16%, compared with the six months ended June 30, 2023.

This increase was primarily driven by the following:

• $10.8 million increase in professional service expenses primarily related to ongoing litigation matters and the continued efforts to commercialize ELEVIDYS;

• $5.4 million increase in compensation and other personnel expenses primarily due to changes in headcount;

• $4.6 million increase in professional service expenses primarily related to ongoing litigation matters;

• $4.5 million increase in stock-based compensation expense primarily related to the achievement of performance conditions related to certain PSUs during the six months ended June 30, 2024;

• $4.2 million increase in facility- and technology-related expenses primarily due to our continuing expansion efforts;

• $6.7 million increase in other expenses primarily due to timing of charitable contribution activity.

• $11.6 million increase in other expenses primarily due to the timing of charitable contribution activity.

Amortization of in-licensed rights

Amortization of in-licensed rights relates to the agreements we entered into with UWA, Nationwide, BioMarin, and Parent Project Muscular Dystrophy in April 2013, December 2016, July 2017 and May 2018, respectively.

Each in-licensed right is being amortized on a straight-line basis over the remaining life of the relevant patent from the date the related fee was incurred, either the regulatory approval or the first commercial sale of the applicable product.

For the three months ended March 31, 2024 and 2023, we recorded amortization of in-licensed rights of approximately $0.6 million and $0.2 million, respectively.

Each in-licensed right is being amortized on a straight-line basis over the remaining life of the relevant patent from the date the related fee was incurred, either the regulatory approval of or the first commercial sale of the applicable product.

For the three and six months ended June 30, 2024, we recorded amortization of in-licensed rights of approximately $0.6 million and $1.2 million, respectively.

For the three and six months ended June 30, 2023, we recorded amortization of in-licensed rights of approximately $0.2 million and $0.4 million, respectively.

Other income, net

Other income, net primarily consists of interest expense on our debt facilities, interest income on our cash, cash equivalents and investments, amortization of investment premium or accretion of investment discount and change in the fair value of contingent consideration related to regulatory-related contingent payments meeting the definition of a derivative.

Interest expense primarily

includes interest accrued on our convertible notes.

Other income, net primarily consists of interest expense on our debt facilities, interest income on our cash, cash equivalents and investments, amortization of investment premium or accretion of investment discount, unrealized gain or loss from our investment in our strategic investments and change in the fair value of contingent consideration related to regulatory-related contingent payments meeting the definition of a derivative.

Our cash equivalents and investments consist of money market funds, corporate bonds, commercial paper, government and government agency debt securities and certificates of deposit.

For the three months ended March 31, 2024, other income, net decreased by approximately $6.2 million compared with the three months ended March 31, 2023.

The decrease is primarily due to a $10.1 million increase in the fair value of contingent consideration, partially offset by a $2.8 million increase in accretion of investment discount, net due to an increase in interest rates, as well as a $2.2 million reduction of interest expense incurred as a result of the partial debt extinguishment of our senior convertible notes due on November 15, 2024 (the “2024 Notes”) in March 2023.

For the three months ended June 30, 2024 and 2023, other income, net, was $14.3 million and $16.9 million, respectively.

The decrease is primarily related to a decrease in accretion of investment discount, net.

For the six months ended June 30, 2024 and 2023, other income, net was $20.8 million and $29.6 million, respectively.

The decrease is primarily due to a change of $10.1 million in the fair value of contingent consideration during the six months ended June 30, 2024.

Income tax expense

Income tax expense for the three months ended March 31, 2024 and 2023 was approximately $5.3 million and $4.0 million, respectively.

Income tax expense for all periods presented primarily relates to federal and state income taxes.

Income tax expense for the three and six months ended June 30, 2024 was approximately $7.1 million and $12.4 million, respectively.

Income tax expense for the three and six months ended June 30, 2023 was approximately $9.4 million and $13.4 million, respectively.

Income tax expense for the three and six months ended June 30, 2024 and 2023 relates to state, federal and foreign income taxes.

Liquidity and Capital Resources

There have been no material changes to our obligations under lease or debt arrangements as reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no material changes to our obligations under lease arrangements as reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

The following table summarizes our financial condition for each of the periods indicated:

March 31, 2024

June 30, 2024

December 31, 2023

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Short-term investments

Non-current investments

Restricted cash

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Total working capital

not meaningful

For the periods ended March 31, 2024 and December 31, 2023, our principal sources of liquidity were primarily derived from sales of our products, net proceeds from sale of the ELEVIDYS priority review voucher, net proceeds from our offering of 1.25% convertible senior notes due on September 15, 2027 (“2027 Notes”), proceeds from the partial settlement of capped call options associated with the exchange of a portion of the 2024 Notes for shares of our common stock and our collaboration arrangement with Roche.

For the periods ended June 30, 2024 and December 31, 2023, our principal sources of liquidity were primarily derived from sales of our products, net proceeds from sale of the ELEVIDYS priority review voucher, net proceeds from our offering of 1.25% convertible senior notes due on September 15, 2027 (“2027 Notes”), proceeds from the partial settlement of capped call options associated with the exchange of a portion of the 2024 Notes for shares of our common stock and our collaboration arrangement with Roche.

Our principal uses of cash are research and development expenses, manufacturing costs, selling, general and administrative expenses, investments, capital expenditures, business development transactions, settlement of long-term debt and other working capital requirements.

The changes in our working capital primarily reflect use of cash in operating activities.

The changes in our working capital primarily reflect the use of cash in operating activities.

While our contractual obligations, commitments and debt service requirements over the next several years are significant, we intend to continue to fund our short-term financing needs and working capital requirements from cash flows of operating activities as well as cash on hand, and such sources are anticipated to be adequate to fund working capital requirements for at least twelve months from the date these unaudited condensed consolidated financial statements were issued.

Beyond March 31, 2025, our cash requirements will depend extensively on our ability to advance our research, development and commercialization of product candidates.

Beyond June 30, 2025, our cash requirements will depend extensively on our ability to advance our research, development and commercialization of product candidates.

We may seek additional financings primarily from, but not limited to, the sale and issuance of equity and debt securities, the licensing or sale of our technologies, and entering into additional government contracts and/or funded research and development agreements.

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We cannot provide assurances that financing will be available when and as needed or that, if available, the financings will be on favorable or acceptable terms.

If we are unable to obtain additional financing when and if we require, this would have a material adverse effect on our business and results of operations.

If we are unable to obtain additional financing when and if we require, this would have a material adverse effect on our business and the results of operations.

To the extent we issue additional equity securities, our existing stockholders could experience substantial dilution.

1 unchanged sentence

We have entered into long-term contractual arrangements from time to time for our facilities, the provision of goods and services, and issuance of debt securities, among others.

Additional information regarding our obligations under manufacturing arrangements is provided in Note 14, Commitments and Contingencies to the unaudited condensed consolidated financial statements contained in Item 1.

There have been no material changes to our obligations under debt or leasing arrangements as reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

Additional information regarding our obligations under debt and manufacturing arrangements are provided in Note 10, Indebtedness and Note 15, Commitments and Contingencies to the unaudited condensed consolidated financial statements contained in Item 1.

There have been no material changes to our obligations under leasing arrangements as reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

For products and product candidates that are currently approved or are in various research and development stages, we may be obligated to make up to $2.8 billion of future development, regulatory, up-front royalty and sales milestone payments associated with our license and collaboration agreements.

Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones.

Because the achievement of these milestones is not probable, and payment is not required as of March 31, 2024, such contingencies have not been recorded in our unaudited condensed consolidated financial statements.

Payments under these agreements generally become due and payable upon the achievement of certain development, regulatory or commercial milestones.

Because the achievement of these milestones is not probable, and payment is not required as of June 30, 2024, such contingencies have not been recorded in our unaudited condensed consolidated financial statements.

Amounts related to contingent milestone payments are not yet considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory approval and commercial milestones.

The following table summarizes our cash flow activity for each of the periods indicated:

For the Three Months Ended

For the Six Months Ended

(in thousands)

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Financing activities

Decrease in cash and cash equivalents

not meaningful

Decrease in cash, cash equivalents and restricted cash

Operating Activities

Cash used in operating activities, which consists of our net income (loss) adjusted for non-cash items and changes in net operating assets and liabilities, totaled $242.1 million and $209.4 million for the three months ended March 31, 2024 and 2023,

respectively.

Cash used in operating activities for the three months ended March 31, 2024 was primarily driven by the net income of $36.1 million, adjusted for the following:

Cash used in operating activities, which consists of our net income (loss) adjusted for non-cash items and changes in net operating assets and liabilities, totaled $227.1 million and $331.6 million for the six months ended June 30, 2024 and 2023, respectively.

Cash used in operating activities for the six months ended June 30, 2024 was primarily driven by the net income of $42.6 million, adjusted for the following non-cash items:

• $91.2 million in stock-based compensation expense;

• $17.5 million in depreciation and amortization expense;

• $10.1 million non-cash change in the fair value of contingent consideration;

• $4.3 million in other non-cash items.

These non-cash charges were partially offset by the $12.4 million in accretion of investment discount, net.

• $10.1 million change in the fair value of contingent consideration;

• $9.4 million in other items.

These amounts were partially offset by $22.9 million in accretion of investment discount, net.

The net cash outflow from changes in our operating assets and liabilities was primarily driven by the following:

• $145.0 million increase in manufacturing-related deposits and prepaids primarily due to an increase in prepaid raw materials with Catalent;

• $92.8 million decrease in accounts payable, accrued expenses, lease liabilities and other liabilities, primarily due to the timing and invoicing of payments with our contract research organizations and contract manufacturing organizations and payments on accrued employee compensation costs;

• $203.3 million increase in manufacturing-related deposits and prepaids primarily due to an increase in prepaid raw materials and batch fees with Catalent;

• $163.0 million increase in inventory primarily due to capitalized inventory related to ELEVIDYS;

• $40.4 million decrease in deferred revenue primarily related to the collaboration with Roche;

• $21.5 million decrease in accounts receivable, net primarily due to a reduction in payment terms for product sales related to ELEVIDYS.

Cash used in operating activities for the three months ended March 31, 2023 was primarily driven by the net loss of $516.8 million, adjusted for the following:

• $15.3 million decrease in accounts payable, accrued expenses, lease liabilities and other liabilities, primarily due to the timing and invoicing of payments with our contract research organizations and contract manufacturing organizations and payments on accrued employee compensation costs.

These amounts were partially offset by the following:

• $6.6 million decrease in other assets primarily due to a decrease in the collaboration receivable related to Roche;

• $40.3 million decrease in accounts receivable due to a reduction in payment terms for product sales related to ELEVIDYS.

Cash used in operating activities for the six months ended June 30, 2023 was primarily driven by the net loss of $540.7 million, adjusted for the following non-cash items:

• $387.3 million in loss on debt extinguishment related to the exchange of 2024 Notes;

1 unchanged sentence

• $22.1 million in depreciation and amortization expense;

• $5.2 million in other non-cash items.

These non-cash charges were partially offset by the $8.7 million in accretion of investment discount, net.

• $9.3 million in other items.

These amounts were partially offset by the gain of $102.0 million recorded from the sale of the ELEVIDYS Priority Review Voucher and $20.2 million in accretion of investment discount, net.

The net cash outflow from changes in our operating assets and liabilities was primarily driven by the following:

• $67.5 million decrease in accounts payable, accrued expenses, lease liabilities and other liabilities, primarily due to the $54.0 million shortfall payment to Thermo made during the three months ended March 31, 2023 and the timing and invoicing of payments;

• $93.7 million decrease in accounts payable, accrued expenses, lease liabilities and other liabilities, primarily due to the $54.0 million shortfall payment to Thermo Fisher Scientific, Inc.

made during the six months ended June 30, 2023, payments to Catalent for raw materials and the overall timing and invoicing of payments;

• $44.3 million decrease in deferred revenue related to the collaboration with Roche;

• $22.5 million increase in other assets primarily due to the Roche collaboration receivable outstanding as of three months ended March 31, 2023;

• $9.2 million increase in accounts receivable, net due to an increase in the demand of our PMO products;

• $7.5 million increase in manufacturing-related deposits and prepaids as we ramped up production of SRP-9001 prior to ELEVIDYS approval.

• $27.0 million increase in inventory due to the addition of capitalized inventory after the approval of ELEVIDYS in June 2023, partially offset by a decrease in inventory for our PMO Products;

• $22.2 million increase in accounts receivable due to an increase in the demand of our PMO Products.

These amounts were partially offset by $11.0 million decrease in other assets and manufacturing-related deposits and prepaids primarily due to a decrease in the collaboration receivable related to Roche and timing of manufacturing prepaids.

Investing Activities

Cash provided by investing activities was $218.8 million for the three months ended March 31, 2024, compared to $12.5 million of cash provided in the three months ended March 31, 2023.

Cash provided by investing activities for the three months ended

March 31, 2024 primarily consisted of $477.7 million from the maturity of available-for-sale securities, partially offset by $216.5 million of purchases of available-for-sale securities and $32.4 million of purchases of property and equipment.

Cash provided by investing activities for the three months ended March 31, 2023 primarily consisted of $448.8 million from the maturity and sale of available-for-sale securities, partially offset by $426.8 million of purchases of available-for-sale securities and $9.5 million of purchases of property and equipment.

Cash provided by investing activities was $120.3 million and $109.1 million for the six months ended June 30, 2024 and 2023, respectively.

Cash provided by investing activities for the six months ended June 30, 2024 primarily consisted of $739.2 million from the maturity and sale of available-for-sale securities, partially offset by $547.3 million of purchases of available-for-sale securities, $61.6 million of purchases of property and equipment and $10.0 million of purchases of intangible assets.

Cash provided by investing activities for the six months ended June 30, 2023 primarily consisted of $102.0 million of net proceeds related to the sale of the ELEVIDYS Priority Review Voucher and $864.5 million from the maturity and sale of available-for-sale securities, partially offset by $829.8 million of purchases of available-for-sale securities and $27.4 million of purchases of property and equipment.

Financing Activities

Cash provided by financing activities was $22.1 million and $101.8 million for the three months ended March 31, 2024 and 2023, respectively.

Cash provided by financing activities for the three months ended March 31, 2024 consisted of $22.1 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program.

Cash provided by financing activities for the three months ended March 31, 2023 consisted of $80.6 million in partial settlement of capped call share options for the 2024 Notes and $28.0 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program, partially offset by $6.9 million in third-party debt conversion costs related to the partial debt extinguishment of the 2024 Notes in March 2023.

Cash provided by financing activities was $62.1 million and $107.7 million for the six months ended June 30, 2024 and 2023, respectively.

Cash provided by financing activities for the six months ended June 30, 2024 consisted of $62.1 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program.

Cash provided by financing activities for the six months ended June 30, 2023 consisted of $80.6 million in partial settlement of capped call share options for the 2024 Notes and $33.9 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program, partially offset by $6.9 million in third-party debt conversion costs related to the 2024 Notes Exchange.

Quantitative and Qualitat ive Disclosures about Market Risk

1 unchanged sentence

Our cash is primarily deposited in and invested through highly rated financial institutions in the U.S.

As of March 31, 2024, we had approximately $1,440.3 million of cash, cash equivalents, restricted cash and investments, comprised of $427.3 million of cash and cash equivalents, $963.5 million of short-term investments, $33.9 million of non-current investments and $15.6 million non-current restricted cash.

As of June 30, 2024, we had approximately $1,476.1 million of cash, cash equivalents, restricted cash and investments, comprised of $383.6 million of cash and cash equivalents, $1,076.9 million of short-term investments and $15.6 million non-current restricted cash.

The Company only holds debt securities classified as available-for-sale.

The fair value of cash equivalents and investments is subject to change as a result of potential changes in market interest rates.

The fair value of cash equivalents and short-term investments is subject to change as a result of potential changes in market interest rates.

The potential change in fair value for interest rate sensitive instruments has been assessed on a hypothetical 10 basis point adverse movement across all maturities.

As of March 31, 2024, we estimate that such hypothetical adverse 10 basis point movement would result in a hypothetical loss in fair value of approximately $0.4 million to our interest rate sensitive instruments.

As of June 30, 2024, we estimate that such hypothetical 10 basis point adverse movement would result in a hypothetical loss in fair value of approximately $0.4 million to our interest rate sensitive instruments.

Our $1,150.0 million aggregate principal amount of our 2027 Notes has a fixed interest rate of 1.25% per annum, payable semi-annually in cash on each March 15 and September 15 and our $91.6 million aggregate principal amount of our 2024 Notes has a fixed interest rate of 1.5% per annum, payable semi-annually in cash on each May 15 and November 15, and therefore are not subject to fluctuations in market interest rates.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis