UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Trading Symbol |
Name of exchange on which registered |
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.
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).
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:
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Accelerated filer |
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Non-accelerated filer |
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Smaller Reporting Company |
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Emerging growth company |
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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 |
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(Class) |
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(Outstanding as of April 29, 2022) |
SAREPTA THERAPEUTICS, INC.
FORM 10-Q
INDEX
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Page |
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Item 1. |
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3 |
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Condensed Consolidated Balance Sheets — As of March 31, 2022 and December 31, 2021 |
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3 |
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4 |
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Condensed Consolidated Statements of Stockholders’ Equity — For the Three Months Ended March 31, 2022 and 2021 |
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Condensed Consolidated Statements of Cash Flows — For the Three Months Ended March 31, 2022 and 2021 |
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7 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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18 |
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Item 3. |
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30 |
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Item 4. |
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30 |
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Item 1. |
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31 |
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Item 1A. |
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31 |
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Item 2. |
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68 |
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Item 3. |
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68 |
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Item 4. |
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69 |
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Item 5. |
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69 |
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Item 6. |
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69 |
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70 |
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71 |
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)
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As of |
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As of |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Accounts receivable |
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Inventory |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Right of use assets |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Deferred revenue, current portion |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Lease liabilities, net of current portion |
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Deferred revenue, net of current portion |
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Contingent consideration |
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Other non-current liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss, net of tax |
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( |
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Accumulated deficit |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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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)
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For the Three Months Ended |
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2022 |
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2021 |
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Revenues: |
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$ |
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$ |
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Collaboration |
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Total revenues |
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Cost and expenses: |
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Cost of sales (excluding amortization of in-licensed rights) |
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Research and development |
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Selling, general and administrative |
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Settlement and license charges |
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Amortization of in-licensed rights |
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Total cost and expenses |
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Operating loss |
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Other loss, net: |
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Other expense, net |
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( |
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Total other loss, net |
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( |
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Loss before income tax expense (benefit) |
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Income tax expense (benefit) |
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( |
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Net loss |
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Other comprehensive loss: |
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Unrealized losses on investments, net of tax |
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( |
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Total other comprehensive loss |
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Comprehensive loss |
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$ |
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$ |
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Net loss per share - basic and diluted |
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$ |
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$ |
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Weighted average number of shares of common stock used in |
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See accompanying notes to unaudited condensed consolidated financial statements.
4
SAREPTA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited, in thousands)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Exercise of options for common stock |
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— |
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— |
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— |
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Vest of restricted stock units/awards |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under employee |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Unrealized losses from available-for-sale |
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— |
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— |
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— |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity |
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Balance at December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Cumulative effect of accounting change to |
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— |
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— |
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— |
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Exercise of options for common stock |
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— |
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— |
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— |
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Vest of restricted stock units/awards |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under employee |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Unrealized losses from available-for-sale |
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— |
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— |
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— |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance at March 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
5
SAREPTA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
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For the Three Months Ended March 31, |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to cash flows from operating activities: |
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Depreciation and amortization |
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Reduction in the carrying amounts of the right of use assets |
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Non-cash interest expense |
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Stock-based compensation |
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Other |
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Changes in operating assets and liabilities, net: |
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Net increase in accounts receivable |
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( |
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Net increase in inventory |
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Net decrease in other assets |
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Net decrease in deferred revenue |
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Net decrease in accounts payable, accrued expenses, lease liabilities and other liabilities |
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( |
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( |
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Net cash used in operating activities |
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Cash flows from investing activities: |
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Purchase of property and equipment |
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Purchase of available-for-sale securities |
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( |
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Maturity and sale of available-for-sale securities |
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Other |
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( |
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Net cash (used in) provided by investing activities |
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( |
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Cash flows from financing activities: |
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Proceeds from exercise of stock options and purchase of stock under the Employee Stock |
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Taxes paid related to net share settlement of equity awards |
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Net cash provided by financing activities |
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Decrease in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash: |
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Beginning of period |
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End of period |
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$ |
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$ |
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Reconciliation of cash, cash equivalents and restricted cash: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash in other assets |
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Total cash, cash equivalents and restricted cash |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid during the period for interest |
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$ |
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$ |
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Supplemental schedule of non-cash investing activities and financing activities: |
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Intangible assets and property and equipment included in accounts payable and accrued expenses |
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$ |
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$ |
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Lease liabilities arising from obtaining right of use assets |
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$ |
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$ |
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Lease liabilities terminated |
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$ |
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$ |
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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 (“Duchenne”), Limb-girdle muscular dystrophies (“LGMDs”) and other neuromuscular and central nervous system (“CNS”) disorders.
The Company's products in the U.S., EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”) and AMONDYS 45 (casimersen) Injection (“AMONDYS 45”), were granted accelerated approval by the U.S. Food and Drug Administration (the “FDA”) on September 19, 2016, December 12, 2019 and February 25, 2021, respectively. Indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 51, exon 53 and exon 45 skipping, respectively, EXONDYS 51, VYONDYS 53 and AMONDYS 45 use the Company’s phosphorodiamidate morpholino oligomer (“PMO”) chemistry and exon-skipping technology to skip exon 51, exon 53 and exon 45 of the dystrophin gene. Exon skipping is intended to promote the production of an internally truncated but functional dystrophin protein.
As of March 31, 2022, the Company had approximately $
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 the Company 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
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, 2022, 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
As of March 31, 2022, 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. The Company also purchases commercial paper, government and government agency bonds, corporate bonds and certificates of deposit issued by highly rated corporations, financial institutions and governments and limits the amount of credit exposure to any one issuer. These amounts may at times exceed federally insured limits. The Company has not experienced any credit losses related to these financial instruments and does not believe to be exposed to any significant credit risk related to these instruments.
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, 2021.
There have not been any material changes to the Company’s accounting policies through March 31, 2022.
3. LICENSE AND COLLABORATION AGREEMENTS
F. Hoffman-La Roche Ltd.
For both of the three months ended March 31, 2022 and 2021, the Company recognized $
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, 2022 and 2021, costs reimbursable by Roche and reflected as a reduction to operating expenses were $
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 pre-clinical 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 $
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, 2022, the Company may be obligated to make up to $
8
and settlement expenses of less than $
4
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.
During the three months ended March 31, 2022, there were no transfers between Levels 1, 2 and 3.
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Fair Value Measurement as of March 31, 2022 |
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Total |
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Level 1 |
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Level 2 |
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Level 3 |
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(in thousands) |
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Assets |
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Money market funds |
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$ |
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$ |
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$ |
— |
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$ |
— |
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Commercial paper |
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— |
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— |
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Government and government agency bonds |
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— |
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Corporate bonds |
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— |
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