Sarepta Therapeutics reports non-GAAP net loss of $29.1 million for Q4 2013

Feb 27 2014

Sarepta Therapeutics, Inc. (NASDAQ: SRPT), a developer of innovative RNA-based therapeutics, today reported financial results for the three months and year ended December 31, 2013, and provided an update of recent corporate developments.

"We continue to be encouraged by the eteplirsen clinical data through 120 weeks and the general stability we've observed on the 6-minute walk test and pulmonary function measures," said Chris Garabedian, president and chief executive officer of Sarepta Therapeutics. "We look forward to our continued discussions with the FDA to gain clarity in the coming weeks on the clinical path forward for eteplirsen."

Financial Results

For the fourth quarter of 2013, Sarepta reported a non-GAAP net loss of $29.1 million, or $0.77 per share, compared to a non-GAAP net loss of $8.9 million for the fourth quarter of 2012, or $0.34 per share. The incremental loss is primarily the result of a $4.7 million decrease in contract revenues as well as a $15.5 million increase in non-GAAP operating expenses, due to corporate growth.

On a GAAP basis, the net loss for the fourth quarter of 2013 was $8.8 million, or $0.23 per share (including $3.7 million of stock-based compensation and restructuring expenses), compared with a net loss of $62.1 million for the fourth quarter of 2012, or $2.36 per share (including $1.4 million of stock-based compensation and restructuring expenses). The decrease in net loss is the result of a $75.8 million decrease in expense incurred due to the change in valuation of the Company's outstanding warrants, offset by a $4.7 million decrease in contract revenues and a $17.8 million increase in operating expenses.

Revenue for the fourth quarter of 2013 was $2.6 million, down from $7.3 million for the fourth quarter of 2012. The $4.7 million decrease was primarily due to the August 2012 stop-work-order and subsequent termination for convenience of the Ebola portion of the Ebola-Marburg U.S. government contract due to a lack of available U.S. government funding. The termination of the Ebola portion did not impact the Marburg portion of the contract. Revenues from the Marburg portion of the contract also decreased during the fourth quarter of 2013 due to the timing of activities throughout the normal progression of the contract. These decreases were partially offset by revenue from the Company's European Union SKIP-NMD agreement supporting development of an exon 53 skipping therapeutic.

Non-GAAP research and development expenses were $23.6 million for the fourth quarter of 2013, compared to $12.4 million for the fourth quarter of 2012, an increase of $11.2 million. GAAP research and development expenses were $25.1 million for the fourth quarter of 2013 (including $1.5 million of stock-based compensation and restructuring expenses), compared to $12.8 million for the fourth quarter of 2012 (including $0.4 million of stock-based compensation and restructuring expenses), an increase of $12.3 million.

Non-GAAP general and administrative expenses were $8.2 million for the fourth quarter of 2013, compared to $3.9 million for the fourth quarter of 2012, an increase of $4.3 million. GAAP general and administrative expenses were $10.4 million for the fourth quarter of 2013 (including $2.2 million of stock-based compensation and restructuring expenses), compared to $4.9 million for the fourth quarter of 2012 (including $0.9 million of stock-based compensation and restructuring expenses), an increase of $5.5 million.

The increased operating expenses were primarily caused by corporate growth as the Company continues the development of its programs in Duchenne muscular dystrophy (DMD).

For the year ended December 31, 2013 the operating loss was $90.3 million, compared to an operating loss of $29.7 million for the prior year. The $60.6 million increase was the result of a $20.5 million increase in research and development expenses and a $17.0 million increase in general and administrative expenses as well as a $23.1 million decrease in revenue from research contracts.

Revenue for the year ended December 31, 2013 decreased to $14.2 million from $37.3 million in 2012 primarily due to the August 2012 stop-work-order and subsequent termination of the Ebola portion of the Ebola-Marburg U.S. government contract due to lack of available U.S. government funding.

Research and development expenses were $72.9 million for 2013, compared to $52.4 million for the prior year, a $20.5 million increase. The increase was primarily due to an increase in the Company's DMD program and proprietary research costs offset by a decrease in costs under the Company's government Ebola and Marburg contracts.

General and administrative expenses for 2013 were $31.6 million, compared to $14.6 million for 2012, an increase of $17.0 million. The increase was primarily due to increased personnel costs as well as increased professional service costs compared to the prior year.

The Company had cash, cash equivalents and restricted investments related to its letters of credit of $264.9 million as of December 31, 2013 compared to $187.7 million as of December 31, 2012, an increase of $77.2 million. The increase in cash and cash equivalents was primarily due to $125 million in proceeds from the issuance of approximately 3.4 million shares of common stock under the At-the-Market (ATM) equity financing that was put in place in July 2013 and $18.9 million in proceeds from the exercise of warrants and stock options, offset by cash used to fund the Company's ongoing operations.

The warrant liability is primarily affected by changes in the company's stock price during each financial reporting period which causes the warrant liability to fluctuate as the market price of the Company's stock fluctuates.

In addition to the GAAP financial measures set forth in this press release, the Company has included certain non-GAAP measurements: non-GAAP research and development expenses, non-GAAP general and administrative expenses, non-GAAP operating expenses, non-GAAP net loss, and non-GAAP basic and diluted net loss per share, which present operating results on a basis adjusted for certain items. The Company uses these non-GAAP measures as key performance measures for the purpose of evaluating performance internally. The Company also believes these non-GAAP measures provide the Company's investors with useful information regarding the Company's historical operating results. These non-GAAP measures are not intended to replace the presentation of the Company's financial results in accordance with GAAP. Use of the terms non-GAAP research and development expenses, non-GAAP general and administrative expenses, non-GAAP operating expenses, non-GAAP net loss, and non-GAAP basic and diluted net loss per share may differ from similar measures reported by other companies. All relevant non-GAAP measures are reconciled from their respective GAAP measures in the attached table "Reconciliation of GAAP to non-GAAP net loss."

2014 Guidance

For 2014, the Company anticipates that loss from operations, excluding stock-based compensation, will be in the $110 to $120 million range. This guidance is largely based on continuing development and scale-up manufacturing for eteplirsen and the Company's follow-on DMD drugs, as well as increased investment in research with our platform technology.

Recent Corporate Developments

Duchenne Muscular Dystrophy Program

-- Announced new pulmonary function data through Week 120 from Study 202, a Phase IIb open-label extension study of eteplirsen in patients with Duchenne muscular dystrophy (DMD). Results through more than two years of treatment showed stable pulmonary function in the Intent-to-Treat (ITT) study population>

-- Announced 6MWT data through Week 120 from Study 202, a Phase IIb open-label extension study of eteplirsen in patients with DMD. Results through more than two years showed a continued stabilization of walking ability in eteplirsen-treated patients evaluable on the 6MWT. As previously reported, Study 202 met its primary endpoint of increased novel dystrophin as assessed by muscle biopsy at Week 48 and is now in the long-term extension phase in which patients continue to be followed for safety and clinical outcomes.

Infectious Disease Programs

-- Announced positive safety results from a Phase I multiple ascending dose study of AVI-7288 in healthy volunteers. AVI-7288, which uses Sarepta's advanced and proprietary PMOplus™ chemistry, is the company's lead drug candidate for the treatment of Marburg virus infection. Sarepta has been developing AVI-7288 under a Department of Defense contract managed by the Medical Countermeasure Systems BioDefense Therapeutics (MCS-BDTX) Joint Product Management Office.

Corporate Updates

-- Announced Arthur "Art" Krieg, M.D., was named senior vice president and chief scientific officer. In this role, Dr. Krieg will lead the company's drug discovery and early-stage research activities.

SOURCE Sarepta Therapeutics, Inc.