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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, 2019

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: (617274-4000

 

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

  

74,340,417

(Class)

  

(Outstanding as of August 2, 2019)

 

 

 

 


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, 2019 and December 31, 2018

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss — For the Three and Six Months Ended June 30, 2019 and 2018

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity – For the Three and Six Months Ended June 30, 2019 and 2018

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows — For the Six Months Ended June 30, 2019
and 2018

 

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

 

32

 

 

 

 

 

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

 

65

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

65

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

65

 

 

 

 

 

Item 5.

 

Other Information

 

65

 

 

 

 

 

Item 6.

 

Exhibits

 

65

 

 

 

 

 

Exhibits

 

66

 

 

 

 

 

Signatures

 

67

 

 

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, 2019

 

 

As of

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

808,591

 

 

$

370,829

 

Short-term investments

 

 

294,478

 

 

 

803,083

 

Accounts receivable

 

 

56,981

 

 

 

49,044

 

Inventory

 

 

156,569

 

 

 

125,445

 

Other current assets

 

 

110,799

 

 

 

77,782

 

Total current assets

 

 

1,427,418

 

 

 

1,426,183

 

Property and equipment, net of accumulated depreciation of $38,398

   and $28,149 as of June 30, 2019, and December 31, 2018, respectively

 

 

117,201

 

 

 

97,024

 

Intangible assets, net of accumulated amortization of $4,685 and $3,852 as of

   June 30, 2019, and December 31, 2018, respectively

 

 

11,825

 

 

 

11,574

 

Right of use asset, net

 

 

39,449

 

 

 

 

Other assets

 

 

151,860

 

 

 

107,294

 

Total assets

 

$

1,747,753

 

 

$

1,642,075

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

44,045

 

 

$

33,829

 

Accrued expenses

 

 

107,328

 

 

 

134,095

 

Deferred revenue

 

 

3,303

 

 

 

3,303

 

Other current liabilities

 

 

7,413

 

 

 

2,463

 

Total current liabilities

 

 

162,089

 

 

 

173,690

 

Long-term debt

 

 

431,040

 

 

 

420,554

 

Lease liabilities

 

 

50,209

 

 

 

 

Deferred rent and other

 

 

5,248

 

 

 

15,555

 

Total liabilities

 

 

648,586

 

 

 

609,799

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

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

   outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value, 99,000,000 shares authorized; 74,327,767

   and 71,071,887 issued and outstanding at June 30, 2019, and

   December 31, 2018, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

3,031,050

 

 

 

2,611,294

 

Accumulated other comprehensive income (loss)

 

 

82

 

 

 

(99

)

Accumulated deficit

 

 

(1,931,972

)

 

 

(1,578,926

)

Total stockholders’ equity

 

 

1,099,167

 

 

 

1,032,276

 

Total liabilities and stockholders’ equity

 

$

1,747,753

 

 

$

1,642,075

 

 

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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product, net

 

$

94,668

 

 

$

73,529

 

 

$

181,679

 

 

$

138,133

 

Total revenues

 

 

94,668

 

 

 

73,529

 

 

 

181,679

 

 

 

138,133

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

15,919

 

 

 

6,735

 

 

 

27,982

 

 

 

12,317

 

Research and development

 

 

113,266

 

 

 

122,848

 

 

 

203,819

 

 

 

169,052

 

Selling, general and administrative

 

 

67,393

 

 

 

47,156

 

 

 

127,959

 

 

 

90,497

 

Acquired in-process research and development

 

 

173,240

 

 

 

 

 

 

173,240

 

 

 

 

Amortization of in-licensed rights

 

 

217

 

 

 

217

 

 

 

433

 

 

 

433

 

Total cost and expenses

 

 

370,035

 

 

 

176,956

 

 

 

533,433

 

 

 

272,299

 

Operating loss

 

 

(275,367

)

 

 

(103,427

)

 

 

(351,754

)

 

 

(134,166

)

Other loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense, net

 

 

(862

)

 

 

(5,218

)

 

 

(1,034

)

 

 

(9,703

)

Other loss

 

 

(862

)

 

 

(5,218

)

 

 

(1,034

)

 

 

(9,703

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax expense

 

 

(276,229

)

 

 

(108,645

)

 

 

(352,788

)

 

 

(143,869

)

Income tax expense

 

 

174

 

 

 

622

 

 

 

258

 

 

 

761

 

Net loss

 

 

(276,403

)

 

 

(109,267

)

 

 

(353,046

)

 

 

(144,630

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on investments

 

 

63

 

 

 

282

 

 

 

181

 

 

 

18

 

Total other comprehensive income

 

 

63

 

 

 

282

 

 

 

181

 

 

 

18

 

Comprehensive loss

 

$

(276,340

)

 

$

(108,985

)

 

$

(352,865

)

 

$

(144,612

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(3.74

)

 

$

(1.67

)

 

$

(4.85

)

 

$

(2.22

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares of common stock used in

   computing basic and diluted net loss per share

 

 

73,958

 

 

 

65,484

 

 

 

72,850

 

 

 

65,060

 

 

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

 

 

(Loss) Income

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2018

 

71,072

 

 

$

7

 

 

$

2,611,294

 

 

$

(99

)

 

$

(1,578,926

)

 

$

1,032,276

 

Exercise of options for common stock

 

382

 

 

 

 

 

 

9,973

 

 

 

 

 

 

 

 

 

9,973

 

Grant of restricted stock awards and vest of

   restricted stock units, net of cancellations

 

35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes

 

(7

)

 

 

 

 

 

(889

)

 

 

 

 

 

 

 

 

(889

)

Issuance of common stock for cash, net of

   offering costs

 

2,604

 

 

 

 

 

 

365,264

 

 

 

 

 

 

 

 

 

365,264

 

Issuance of common stock under employee

   stock purchase plan

 

48

 

 

 

 

 

 

2,326

 

 

 

 

 

 

 

 

 

2,326

 

Stock-based compensation

 

 

 

 

 

 

 

16,139

 

 

 

 

 

 

 

 

 

16,139

 

Unrealized gains from available-for-sale

   securities

 

 

 

 

 

 

 

 

 

 

118

 

 

 

 

 

 

118

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(76,643

)

 

 

(76,643

)

Balance at March 31, 2019

 

74,134

 

 

 

7

 

 

 

3,004,107

 

 

 

19

 

 

 

(1,655,569

)

 

 

1,348,564

 

Exercise of options for common stock

 

176

 

 

 

 

 

 

7,092

 

 

 

 

 

 

 

 

 

7,092

 

Grant of restricted stock awards and vest of

   restricted stock units, net of cancellations

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for cash, net of

   offering costs

 

 

 

 

 

 

 

89

 

 

 

 

 

 

 

 

 

89

 

Stock-based compensation

 

 

 

 

 

 

 

19,762

 

 

 

 

 

 

 

 

 

19,762

 

Unrealized gains from available-for-sale

   securities

 

 

 

 

 

 

 

 

 

 

63

 

 

 

 

 

 

63

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(276,403

)

 

 

(276,403

)

Balance at June 30, 2019

 

74,328

 

 

$

7

 

 

$

3,031,050

 

 

$

82

 

 

$

(1,931,972

)

 

$

1,099,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2017

 

64,792

 

 

$

6

 

 

$

2,006,598

 

 

$

(379

)

 

$

(1,217,008

)

 

$

789,217

 

Exercise of options for common stock

 

653

 

 

 

1

 

 

 

11,887

 

 

 

 

 

 

 

 

 

11,888

 

Grant of restricted stock awards and vest of

   restricted stock units, net of cancellations

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee

   stock purchase plan

 

34

 

 

 

 

 

 

756

 

 

 

 

 

 

 

 

 

756

 

Stock-based compensation

 

 

 

 

 

 

 

10,526

 

 

 

 

 

 

 

 

 

10,526

 

Unrealized losses from available-for-sale

   securities

 

 

 

 

 

 

 

 

 

 

(264

)

 

 

 

 

 

(264

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,363

)

 

 

(35,363

)

Balance at March 31, 2018

 

65,493

 

 

 

7

 

 

 

2,029,767

 

 

 

(643

)

 

 

(1,252,371

)

 

 

776,760

 

Exercise of options for common stock

 

872

 

 

 

 

 

 

21,743

 

 

 

 

 

 

 

 

 

21,743

 

Grant of restricted stock awards and vest of

   restricted stock units, net of cancellations

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes

 

(45

)

 

 

 

 

 

(5,750

)

 

 

 

 

 

 

 

 

(5,750

)

Issuance of common stock under employee

   stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

15,279

 

 

 

 

 

 

 

 

 

15,279

 

Unrealized gains from available-for-sale

   securities

 

 

 

 

 

 

 

 

 

 

282

 

 

 

 

 

 

282

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(109,267

)

 

 

(109,267

)

Balance at June 30, 2018

 

66,346

 

 

$

7

 

 

$

2,061,039

 

 

$

(361

)

 

$

(1,361,638

)

 

$

699,047

 

 

 

5


SAREPTA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

For the Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(353,046

)

 

$

(144,630

)

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

 

 

 

 

 

 

 

 

Acquired in-process research and development

 

 

173,240

 

 

 

 

Depreciation and amortization

 

 

14,064

 

 

 

5,125

 

Amortization of investment discount

 

 

(5,800

)

 

 

(2,828

)

Non-cash interest expense

 

 

10,513

 

 

 

9,958

 

Stock-based compensation

 

 

35,901

 

 

 

25,805

 

Other

 

 

892

 

 

 

37

 

Changes in operating assets and liabilities, net:

 

 

 

 

 

 

 

 

Net increase in accounts receivable

 

 

(7,937

)

 

 

(13,517

)

Net increase in inventory

 

 

(31,124

)

 

 

(20,521

)

Net increase in other assets

 

 

(87,708

)

 

 

(29,866

)

Net increase in accounts payable, accrued expenses, deferred revenue and

   other liabilities

 

 

25,768

 

 

 

17,515

 

Net cash used in operating activities