srpt-10q_20210331.htm
false 2021 Q1 Sarepta Therapeutics, Inc. 0000873303 --12-31 P1M 0.013621 2021 0 0.013621 us-gaap:ProductMember us-gaap:ProductMember us-gaap:OtherAssetsNoncurrent us-gaap:OtherAssetsNoncurrent 0 0000873303 2021-01-01 2021-03-31 xbrli:shares 0000873303 2021-04-30 iso4217:USD 0000873303 2021-03-31 0000873303 2020-12-31 iso4217:USD xbrli:shares 0000873303 2020-01-01 2020-03-31 0000873303 us-gaap:CommonStockMember 2020-12-31 0000873303 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0000873303 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-12-31 0000873303 us-gaap:RetainedEarningsMember 2020-12-31 0000873303 us-gaap:AdditionalPaidInCapitalMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2020-12-31 0000873303 us-gaap:RetainedEarningsMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2020-12-31 0000873303 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2020-12-31 0000873303 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0000873303 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0000873303 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-01-01 2021-03-31 0000873303 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0000873303 us-gaap:CommonStockMember 2021-03-31 0000873303 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0000873303 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-03-31 0000873303 us-gaap:RetainedEarningsMember 2021-03-31 0000873303 us-gaap:CommonStockMember 2019-12-31 0000873303 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000873303 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-12-31 0000873303 us-gaap:RetainedEarningsMember 2019-12-31 0000873303 2019-12-31 0000873303 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0000873303 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0000873303 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-03-31 0000873303 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0000873303 us-gaap:CommonStockMember 2020-03-31 0000873303 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0000873303 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-03-31 0000873303 us-gaap:RetainedEarningsMember 2020-03-31 0000873303 2020-03-31 0000873303 srpt:RocheMember 2020-01-01 2020-03-31 srpt:Segment 0000873303 srt:MinimumMember 2020-01-01 2020-09-30 0000873303 srt:MaximumMember 2020-01-01 2020-09-30 0000873303 srt:MinimumMember us-gaap:NonUsMember 2020-01-01 2020-09-30 0000873303 us-gaap:NonUsMember srt:MaximumMember 2020-01-01 2020-09-30 xbrli:pure 0000873303 us-gaap:SalesRevenueProductLineMember srpt:CustomerOneMember 2021-01-01 2021-03-31 0000873303 us-gaap:SalesRevenueProductLineMember srpt:CustomerOneMember 2020-01-01 2020-03-31 0000873303 us-gaap:SalesRevenueProductLineMember srpt:CustomerTwoMember 2021-01-01 2021-03-31 0000873303 us-gaap:SalesRevenueProductLineMember srpt:CustomerTwoMember 2020-01-01 2020-03-31 0000873303 us-gaap:SalesRevenueProductLineMember srpt:CustomerThreeMember 2021-01-01 2021-03-31 0000873303 us-gaap:SalesRevenueProductLineMember srpt:CustomerThreeMember 2020-01-01 2020-03-31 0000873303 us-gaap:AccountsReceivableMember srpt:CustomerOneMember 2021-01-01 2021-03-31 0000873303 us-gaap:AccountsReceivableMember srpt:CustomerOneMember 2020-01-01 2020-12-31 0000873303 us-gaap:AccountsReceivableMember srpt:CustomerTwoMember 2021-01-01 2021-03-31 0000873303 us-gaap:AccountsReceivableMember srpt:CustomerTwoMember 2020-01-01 2020-12-31 0000873303 us-gaap:AccountsReceivableMember srpt:CustomerThreeMember 2021-01-01 2021-03-31 0000873303 us-gaap:AccountsReceivableMember srpt:CustomerThreeMember 2020-01-01 2020-12-31 0000873303 srpt:AccountingStandardsUpdate202006Member 2020-12-30 2021-01-02 0000873303 us-gaap:CollaborativeArrangementMember srpt:RocheMember 2021-01-01 2021-03-31 0000873303 us-gaap:CollaborativeArrangementMember srpt:RocheMember 2020-01-01 2020-03-31 0000873303 us-gaap:CollaborativeArrangementMember srpt:RocheMember 2021-03-31 0000873303 us-gaap:CollaborativeArrangementMember srt:MaximumMember 2021-01-01 2021-03-31 0000873303 us-gaap:CollaborativeArrangementMember 2021-01-01 2021-03-31 0000873303 us-gaap:CollaborativeArrangementMember srt:MaximumMember 2021-03-31 0000873303 us-gaap:CollaborativeArrangementMember 2020-01-01 2020-03-31 0000873303 srpt:FDAMember 2021-01-01 2021-03-31 0000873303 srpt:FDAMember 2020-01-01 2020-03-31 0000873303 us-gaap:MoneyMarketFundsMember 2021-03-31 0000873303 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2021-03-31 0000873303 us-gaap:USGovernmentAgenciesDebtSecuritiesMember 2021-03-31 0000873303 us-gaap:FairValueInputsLevel1Member us-gaap:USGovernmentAgenciesDebtSecuritiesMember 2021-03-31 0000873303 srpt:StrategicEquityInvestmentsMember 2021-03-31 0000873303 us-gaap:FairValueInputsLevel1Member srpt:StrategicEquityInvestmentsMember 2021-03-31 0000873303 us-gaap:FairValueInputsLevel3Member srpt:StrategicEquityInvestmentsMember 2021-03-31 0000873303 us-gaap:CertificatesOfDepositMember 2021-03-31 0000873303 us-gaap:FairValueInputsLevel1Member us-gaap:CertificatesOfDepositMember 2021-03-31 0000873303 us-gaap:FairValueInputsLevel1Member 2021-03-31 0000873303 us-gaap:FairValueInputsLevel3Member 2021-03-31 0000873303 us-gaap:MoneyMarketFundsMember 2020-12-31 0000873303 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0000873303 us-gaap:USGovernmentAgenciesDebtSecuritiesMember 2020-12-31 0000873303 us-gaap:USGovernmentAgenciesDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0000873303 srpt:StrategicEquityInvestmentsMember 2020-12-31 0000873303 srpt:StrategicEquityInvestmentsMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0000873303 srpt:StrategicEquityInvestmentsMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0000873303 us-gaap:CertificatesOfDepositMember 2020-12-31 0000873303 us-gaap:CertificatesOfDepositMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0000873303 us-gaap:FairValueInputsLevel1Member 2020-12-31 0000873303 us-gaap:FairValueInputsLevel3Member 2020-12-31 0000873303 srpt:LacertaTherapeuticsIncMember 2021-03-31 0000873303 2020-01-01 2020-12-31 0000873303 srpt:CashDepositsAndMoneyMarketFundsMember 2021-03-31 0000873303 srpt:CashDepositsAndMoneyMarketFundsMember 2020-12-31 0000873303 srpt:EXONDYSFiftyOneMember 2021-01-01 2021-03-31 0000873303 srpt:EXONDYSFiftyOneMember 2020-01-01 2020-03-31 0000873303 srpt:VYONDYSFiftyThreeMember 2021-01-01 2021-03-31 0000873303 srpt:VYONDYSFiftyThreeMember 2020-01-01 2020-03-31 0000873303 srpt:AMONDYSFourtyFiveMember 2021-01-01 2021-03-31 0000873303 srpt:ChargebacksMember 2020-12-31 0000873303 srpt:RebatesMember 2020-12-31 0000873303 srpt:PromptPayMember 2020-12-31 0000873303 srpt:OtherAccrualsMember 2020-12-31 0000873303 srpt:ChargebacksMember 2021-01-01 2021-03-31 0000873303 srpt:RebatesMember 2021-01-01 2021-03-31 0000873303 srpt:PromptPayMember 2021-01-01 2021-03-31 0000873303 srpt:OtherAccrualsMember 2021-01-01 2021-03-31 0000873303 srpt:ChargebacksMember 2021-03-31 0000873303 srpt:RebatesMember 2021-03-31 0000873303 srpt:PromptPayMember 2021-03-31 0000873303 srpt:OtherAccrualsMember 2021-03-31 0000873303 srpt:ChargebacksMember 2019-12-31 0000873303 srpt:RebatesMember 2019-12-31 0000873303 srpt:PromptPayMember 2019-12-31 0000873303 srpt:OtherAccrualsMember 2019-12-31 0000873303 srpt:ChargebacksMember 2020-01-01 2020-03-31 0000873303 srpt:RebatesMember 2020-01-01 2020-03-31 0000873303 srpt:PromptPayMember 2020-01-01 2020-03-31 0000873303 srpt:OtherAccrualsMember 2020-01-01 2020-03-31 0000873303 srpt:ChargebacksMember 2020-03-31 0000873303 srpt:RebatesMember 2020-03-31 0000873303 srpt:PromptPayMember 2020-03-31 0000873303 srpt:OtherAccrualsMember 2020-03-31 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember 2017-11-14 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember 2017-11-13 2017-11-14 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember 2021-01-01 2021-03-31 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember us-gaap:CommonStockMember 2017-11-13 2017-11-14 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember srpt:AccountingStandardsUpdate202006Member 2020-12-30 2021-01-02 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember srpt:AccountingStandardsUpdate202006Member 2021-03-31 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember srpt:AccountingStandardsUpdate202006Member 2021-01-01 2021-03-31 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember srpt:AccountingStandardsUpdate202006Member 2020-01-01 2020-03-31 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember 2021-03-31 0000873303 srpt:TwoThousandAndTwentyFourSeniorConvertibleNotesMember 2020-12-31 0000873303 srpt:TwoThousandAndNineteenTermLoanMember 2021-03-31 0000873303 srpt:TwoThousandAndNineteenTermLoanMember 2020-12-31 0000873303 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-03-31 0000873303 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0000873303 us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-03-31 0000873303 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0000873303 us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-03-31 0000873303 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-03-31 0000873303 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2021-01-01 2021-03-31 0000873303 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-01-01 2020-03-31 0000873303 srpt:RestrictedStockAndRestrictedStockUnitsRSUsMember 2021-01-01 2021-03-31 0000873303 srpt:RestrictedStockAndRestrictedStockUnitsRSUsMember 2020-01-01 2020-03-31 0000873303 srpt:EmployeeStockPurchasePlanMember 2021-01-01 2021-03-31 0000873303 srpt:EmployeeStockPurchasePlanMember 2020-01-01 2020-03-31 0000873303 srpt:CatalentAndThermoMember srpt:ManufacturingCommitmentsAgreementMember 2021-03-31

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 March 31, 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: (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

  

79,774,575

(Class)

  

(Outstanding as of April 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 March 31, 2021 and December 31, 2020

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss — For the Three Months Ended March 31, 2021 and 2020

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity – For the Three Months Ended March 31, 2021 and 2020

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows — For the Three Months Ended March 31, 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

 

31

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

31

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

32

 

 

 

 

 

Item 1A.

 

Risk Factors

 

32

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

68

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

68

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

68

 

 

 

 

 

Item 5.

 

Other Information

 

68

 

 

 

 

 

Item 6.

 

Exhibits

 

68

 

 

 

 

 

Exhibits

 

69

 

 

 

 

 

Signatures

 

70

 

 

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

March 31, 2021

 

 

As of

December 31, 2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,481,836

 

 

$

1,502,648

 

Short-term investments

 

 

255,997

 

 

 

435,923

 

Accounts receivable

 

 

118,203

 

 

 

101,340

 

Inventory

 

 

240,333

 

 

 

231,961

 

Other current assets

 

 

174,981

 

 

 

213,324

 

Total current assets

 

 

2,271,350

 

 

 

2,485,196

 

Property and equipment, net

 

 

203,107

 

 

 

190,430

 

Intangible assets, net

 

 

14,124

 

 

 

13,628

 

Right of use assets

 

 

65,068

 

 

 

91,761

 

Other non-current assets

 

 

211,584

 

 

 

203,703

 

Total assets

 

$

2,765,233

 

 

$

2,984,718

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

76,651

 

 

$

111,090

 

Accrued expenses

 

 

180,636

 

 

 

193,553

 

Deferred revenue, current portion

 

 

89,244

 

 

 

89,244

 

Other current liabilities

 

 

18,205

 

 

 

22,139

 

Total current liabilities

 

 

364,736

 

 

 

416,026

 

Long-term debt

 

 

1,091,110

 

 

 

992,493

 

Lease liabilities, net of current portion

 

 

60,675

 

 

 

80,367

 

Deferred revenue, net of current portion

 

 

641,483

 

 

 

663,488

 

Contingent consideration

 

 

50,800

 

 

 

50,800

 

Other non-current liabilities

 

 

20,984

 

 

 

19,785

 

Total liabilities

 

 

2,229,788

 

 

 

2,222,959

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

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; 79,748,109

   and 79,374,247 issued and outstanding at March 31, 2021, and

   December 31, 2020, respectively

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

3,490,658

 

 

 

3,609,877

 

Accumulated other comprehensive (loss) income, net of tax

 

 

(3

)

 

 

3

 

Accumulated deficit

 

 

(2,955,218

)

 

 

(2,848,129

)

Total stockholders’ equity

 

 

535,445

 

 

 

761,759

 

Total liabilities and stockholders’ equity

 

$

2,765,233

 

 

$

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

March 31,

 

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

Products, net

 

$

124,926

 

 

$

100,448

 

Collaboration

 

 

22,005

 

 

 

13,226

 

Total revenues

 

 

146,931

 

 

 

113,674

 

 

 

 

 

 

 

 

 

 

Cost and expenses:

 

 

 

 

 

 

 

 

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

 

 

22,346

 

 

 

12,622

 

Research and development

 

 

195,149

 

 

 

136,144

 

Selling, general and administrative

 

 

71,131

 

 

 

82,768

 

Settlement and license charges

 

 

10,000

 

 

 

 

Amortization of in-licensed rights

 

 

170

 

 

 

166

 

Total cost and expenses

 

 

298,796

 

 

 

231,700

 

Operating loss

 

 

(151,865

)

 

 

(118,026

)

 

 

 

 

 

 

 

 

 

Other (loss) income:

 

 

 

 

 

 

 

 

Other expense, net

 

 

(15,528

)

 

 

(7,420

)

Gain from sale of Priority Review Voucher

 

 

 

 

 

108,069

 

Total other (loss) income

 

 

(15,528

)

 

 

100,649

 

 

 

 

 

 

 

 

 

 

Loss before income tax (benefit) expense

 

 

(167,393

)

 

 

(17,377

)

Income tax (benefit) expense

 

 

(143

)

 

 

115

 

Net loss

 

 

(167,250

)

 

 

(17,492

)

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

Unrealized (losses) gains on investments, net of tax

 

 

(6

)

 

 

574

 

Total other comprehensive (loss) income

 

 

(6

)

 

 

574

 

Comprehensive loss

 

$

(167,256

)

 

$

(16,918

)

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(2.10

)

 

$

(0.23

)

 

 

 

 

 

 

 

 

 

Weighted average number of shares of common stock used in

   computing basic and diluted net loss per share

 

 

79,454

 

 

 

76,432

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

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

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

5


 

SAREPTA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(167,250

)

 

$

(17,492

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

8,930

 

 

 

6,529

 

Reduction in the carrying amounts of the right of use assets

 

 

2,220

 

 

 

2,153

 

Amortization of investment discount

 

 

(82

)

 

 

(1,284

)

Non-cash interest expense

 

 

1,816

 

 

 

6,342

 

Stock-based compensation

 

 

28,508

 

 

 

24,024

 

Gain from sale of Priority Review Voucher, net of commission

 

 

 

 

 

(108,069

)

Other

 

 

2,774

 

 

 

(1,381

)

Changes in operating assets and liabilities, net:

 

 

 

 

 

 

 

 

Net increase in accounts receivable

 

 

(16,863

)

 

 

(15,996

)

Net increase in inventory

 

 

(8,372

)

 

 

(1,789

)

Net decrease (increase) in other assets

 

 

34,915

 

 

 

(27,966

)

Net (decrease) increase in deferred revenue

 

 

(22,005

)

 

 

820,437

 

Net decrease in accounts payable, accrued expenses and other liabilities

 

 

(44,962

)

 

 

(57,718

)

Net cash (used in) provided by operating activities

 

 

(180,371

)

 

 

627,790

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(21,149

)

 

 

(9,120

)

Purchase of available-for-sale securities

 

 

(29,989

)

 

 

(365,437

)

Maturity and sale of available-for-sale securities

 

 

210,000

 

 

 

250,000

 

Proceeds from sale of Priority Review Voucher, net of commission

 

 

 

 

 

108,069

 

Other

 

 

(2,196

)

 

 

(1,192

)

Net cash provided by (used in) investing activities

 

 

156,666

 

 

 

(17,680

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

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

   Purchase Program

 

 

9,226

 

 

 

7,482

 

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

 

 

 

 

 

316,338

 

Net cash provided by financing activities

 

 

2,893

 

 

 

319,022

 

 

 

 

 

 

 

 

 

 

(Decrease) increase in cash, cash equivalents and restricted cash

 

 

(20,812

)

 

 

929,132

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Beginning of period

 

 

1,511,713

 

 

 

843,645

 

End of period

 

$

1,490,901

 

 

$

1,772,777

 

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,481,836

 

 

$

1,764,212

 

Restricted cash in other assets

 

 

9,065

 

 

 

8,565

 

Total cash, cash equivalents and restricted cash

 

$

1,490,901

 

 

$

1,772,777

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

11,688

 

 

$

5,385

 

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

 

 

 

 

 

 

 

 

Intangible assets and property and equipment included in accrued expenses

 

$

5,729

 

 

$

6,154

 

Lease liabilities arising from obtaining right of use assets

 

$

901

 

 

$

24,783

 

Lease liabilities terminated

 

$

19,967

 

 

$

 

Issuance costs related to the Roche Collaboration in accrued expenses

 

$

 

 

$

4,285

 

 

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. EXONDYS 51, VYONDYS 53 and AMONDYS 45 are 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, respectively, of the dystrophin gene. Exon skipping is intended to promote the production of an internally truncated but functional dystrophin protein.

As of March 31, 2021, the Company had approximately $1,747.1 million of cash, cash equivalents and investments, consisting of $1,481.8 million of cash and cash equivalents, $256.0 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 additional cash resources through public or private debt and equity financings, seek additional government contracts and establish collaborations with or license its technology to other companies.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), reflect the accounts of Sarepta and its wholly-owned subsidiaries. All intercompany transactions between and among its consolidated subsidiaries have been eliminated. Management has determined that the Company operates in one segment: discovering, developing, manufacturing and delivering therapies to patients with rare diseases.

In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with the U.S. GAAP, but that is not required for interim reporting purposes, has been omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2020 which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission on March 1, 2021. The results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

Estimates and Uncertainties

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of accounts receivable from customers, cash held at financial institutions and cash equivalents and investments.

7


As of March 31, 2021, the majority of the Company’s accounts receivable arose from product sales in the U.S. and all customers have standard payment terms that generally require payment within 60 to 91 days. Outside of the U.S., the majority of the Company’s customers have payment terms ranging between 45 and 150 days. Three individual customers accounted for 49%, 40 % and 7% of net product revenues for the three months ended March 31, 2021 and 44%, 40 % and 12% of net product revenues for the three months ended March 31, 2020. Three individual customers accounted for 49%, 40% and 7% of accounts receivable from product sales as of March 31, 2021 and 45%, 41% and 9% of accounts receivable from product sales as of December 31, 2020. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in its customers’ credit profile. As of March 31, 2021, the Company believes that such customers are of high credit quality.

As of March 31, 2021, the Company’s cash was concentrated at three financial institutions in the U.S., which potentially exposes the Company to credit risks. However, the Company does not believe that there is significant risk of non-performance by the financial institutions.

Significant Accounting Policies

For details about the Company’s accounting policies, please read Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncements of the Annual Report on Form 10-K for the year ended December 31, 2020.

  There have not been any material changes to the Company’s accounting policies through March 31, 2021, other than those noted below relating to the adoption of ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.”

 

Recent Accounting Pronouncements

Recently adopted

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.” This ASU simplifies the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exceptions for contracts in an entity’s own equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument, such as the Company’s senior notes due on November 15, 2024 (the “2024 Notes”), will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments and requires additional disclosures. This guidance is required to be adopted by January 1, 2022, and early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

The Company has elected to early adopt this guidance on January 1, 2021, using the modified retrospective method. Under this transition method, the cumulative effect of the accounting change removed the impact of recognizing the equity component of the Company’s convertible notes (at issuance and the subsequent accounting impact of additional interest expense from debt discount amortization). The cumulative effect of the accounting change as of January 1, 2021 increased the carrying amount of the convertible notes by $96.8 million, reduced accumulated deficit by $60.2 million and reduced additional paid-in capital by $157.0 million. Interest expense of the 2024 Notes will be lower as a result of adoption of this guidance. The if-converted method for such instruments will be used to compute diluted net earnings per share if and when profitability is achieved. As a result of the adoption of this guidance, interest expense and net loss was reduced by $5.4 million for the three months ended March 31, 2021, which was $0.07 per share.  

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which is intended to simplify the accounting for income taxes. This ASU removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. The new guidance was effective beginning January 1, 2021. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

 

 

8


 

3. LICENSE AND COLLABORATION AGREEMENTS

Roche Holding A.G.

For the three months ended March 31, 2021 and 2020, the Company recognized $22.0 million and $13.2 million of collaboration revenue, respectively, associated with the license, collaboration and option agreement (the “Roche Agreement”) with Roche Holding A.G. (“Roche”). As of March 31, 2021, the Company has total deferred revenue of $730.7 million associated with the Roche Agreement, of which $89.2 million is classified as current. The portion of deferred revenue related to the separate material rights for the options to acquire ex-U.S. rights to certain DMD-specific programs was $485.0 million as of March 31, 2021.

The costs associated with co-development activities performed under the Roche Agreement are included in operating expenses, with any reimbursement of costs by Roche reflected as a reduction of such expenses when the related expense is incurred. For the three months ended March 31, 2021 and 2020, costs reimbursable by Roche and reflected as a reduction to operating expenses were $13.4 million and $16.4 million, respectively. As of March 31, 2021, there was $15.1 million of collaboration receivable included in other current assets.

BioMarin Pharmaceutical, Inc.

 

 

The FDA approval of AMONDYS 45 (casimersen) in February 2021 resulted in a settlement charge to BioMarin Pharmaceutical, Inc. (“BioMarin”) under the terms of the previous settlement agreement with BioMarin. This amount, which was expensed as incurred, is separately presented in the statement of operations for the three months ended March 31, 2021.

 

Research and Option Agreements

 

The Company has research and option agreements with third parties in order to develop various technologies and biologics that may be used in the administration of the Company’s genetic therapeutics. The agreements generally provide for research services related to preclinical development programs, and options to license the technology for clinical development. Prior to the options under these agreements being executed, the Company may be required to make up to $14.0 million in research milestone payments. Under these agreements, there are $237.0 million in potential option payments to be made by the Company upon the determination to exercise the options. Additionally, if the options for each agreement are executed, the Company would incur additional contingent obligations and may be required to make development, regulatory, and sales milestone payments and tiered royalty payments based on the sales of the developed products upon commercialization. As of March 31, 2021, the Company has not exercised any options nor have any research milestone payments become probable of occurring.  

 

Milestone Obligations

 

The Company has license and collaboration agreements in place for which it could be obligated to pay, in addition to the payment of up-front fees upon execution of the agreements, certain milestone payments as a product candidate proceeds from the submission of an investigational new drug application through approval for commercial sale and beyond. As of March 31, 2021, the Company may be obligated to make up to $3.9 billion in future development, regulatory, commercial and up-front royalty milestone payments associated with its license and collaboration agreements. These obligations exclude potential future option and milestone payments for options that have yet to be exercised within agreements entered into by the Company as of March 31, 2021, which are discussed above. For the three months ended March 31, 2021 and 2020, the Company recognized up-front, development milestone, settlement and other expenses of $14.0 million and $8.5 million, respectively, as research and development expense in the accompanying unaudited condensed consolidated statement of operations and comprehensive loss.

 

 

4. GAIN FROM SALE OF PRIORITY REVIEW VOUCHER

In February 2021, the Company entered into an agreement to sell the rare pediatric disease Priority Review Voucher (“PRV”) it received from the FDA in connection with the approval of AMONDYS 45 for consideration of $102.0 million. The closing of the transaction is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions. The transaction closed on April 13, 2021 and the net proceeds will be recorded as a gain from sale of the PRV as it does not have a carrying value at the time of the sale during the quarter ended June 30, 2021.

In February 2020, the Company entered into an agreement to sell the rare pediatric disease PRV it received from the FDA in connection with the approval of VYONDYS 53. Following the early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in March 2020, the Company completed its sale of the PRV and received proceeds of $108.1 million, net of commission, which was recorded as a gain from sale of the PRV as it did not have a carrying value at the time of the sale.

 

9


 

5. FAIR VALUE MEASUREMENTS

The Company has certain financial assets and liabilities that are recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

 

Level 1 — quoted prices for identical instruments in active markets;

 

Level 2 — quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

 

Level 3 — valuations derived from valuation techniques in which one or more significant value drivers are unobservable.

The tables below present information about the Company’s financial assets and liabilities that are measured and carried at fair value and indicate the level within the fair value hierarchy of valuation techniques it utilizes to determine such fair value: 

 

 

 

Fair Value Measurement as of March 31, 2021

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

1,053,383

 

 

$

1,053,383

 

 

$

 

 

$

 

Government and government agency bonds

 

 

359,029

 

 

 

359,029

 

 

 

 

 

 

 

Strategic equity investments

 

 

40,640

 

 

 

3,740

 

 

 

 

 

 

36,900

 

Certificates of deposit

 

 

250

 

 

 

250

 

 

 

 

 

 

 

Total assets

 

$

1,453,302

 

 

$

1,416,402

 

 

$

 

 

$

36,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

50,800

 

 

$

 

 

$

 

 

$

50,800

 

Total liabilities

 

$

50,800

 

 

$

 

 

$

 

 

$

50,800