On October 24, 2018 Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) reported consolidated financial results for the third quarter ended September 30, 2018 and reviewed recent progress with its approved and investigational medicines (Press release, Vertex Pharmaceuticals, OCT 24, 2018, View Source [SID1234530273]). Vertex also reiterated its guidance for full-year 2018 total CF product revenues and guidance for combined GAAP and non-GAAP R&D and SG&A expenses.

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We continue to make significant progress toward our goal of developing medicines for all people with CF as marked by the recent approvals of KALYDECO and ORKAMBI in younger children, the launch of SYMDEKO in the U.S. and the rapid progress we have made with our triple combination pivotal studies," said Jeffrey Leiden, M.D., Ph.D., Chairman, President and Chief Executive Officer of Vertex. "In our development pipeline, we are advancing potential medicines for pain, sickle cell disease and beta thalassemia and are also beginning to advance additional compounds from research into early clinical development that could fundamentally change the treatment of other serious diseases in the future."

Dr. Leiden continued, "Our ability to treat more and more people with CF is driving revenue and earnings growth and significant cash flow generation, which enables the company to invest to discover and develop transformative future medicines for the treatment of CF and other life-threatening diseases."

Combined non-GAAP R&D and SG&A expenses increased compared to the third quarter of 2017 due to the advancement of the company’s portfolio of triple combination regimens for CF and investments to support the treatment of CF globally.
Combined GAAP R&D and SG&A expenses decreased compared to the third quarter of 2017 due to an upfront payment of $160.0 million related to the acquisition of VX-561, an investigational once-daily CFTR potentiator, from Concert Pharmaceuticals in the third quarter of 2017, partially offset by expenses related to the advancement of the company’s portfolio of triple combination regimens for CF and investments to support the treatment of CF globally.

Third-Quarter 2018 Net Income and Cash Position

Non-GAAP net income increased 107% compared to the third quarter of 2017 largely driven by the strong growth in total CF product revenues.
GAAP net income increased compared to the third quarter of 2017 largely driven by the strong growth in total CF product revenues and by a reduction to research and development expenses due to the $160.0 million payment to Concert in the third quarter of 2017.

Cash, cash equivalents and marketable securities as of September 30, 2018 were approximately $3.1 billion, an increase of approximately $1.0 billion compared to $2.1 billion as of December 31, 2017.

2018 Financial Guidance
Vertex today reiterated its full-year 2018 total CF product revenue guidance and guidance for combined GAAP and non-GAAP R&D and SG&A expenses as summarized below:

"We have created a strong financial profile for our business and are poised for continued growth as we make progress developing medicines for many more people with CF," said Ian Smith, Executive Vice President and Chief Operating Officer. "Nearer term, we anticipate revenue growth in 2019 will be driven by the impact of the SYMDEKO and SYMKEVI launches and recently completed reimbursement agreements and label expansions for our CF medicines. The potential for additional revenue growth in 2019 will be dependent upon gaining new reimbursement agreements in key countries, including the UK and France. Continued growth beyond 2019 will be driven by the potential approval, reimbursement and uptake of a triple combination medicine for the large number of patients with a minimal function mutation who currently do not have a treatment for the cause of their CF."

Business Highlights

TRIPLE COMBINATION REGIMENS

Bringing triple combination regimens to people with CF as quickly as possible
•
Data are expected in late 2018 for the two Phase 3 studies of VX-659 in triple combination with tezacaftor and ivacaftor in people with CF who have one F508del mutation and one minimal function mutation and in people who have two F508del mutations.
•
Enrollment is expected to be complete in the fourth quarter of 2018 for the two Phase 3 studies of VX-445 in triple combination with tezacaftor and ivacaftor in people with CF who have one F508del mutation and one minimal function mutation and in people who have two F508del mutations. The company plans to report data from these studies in the first quarter of 2019.
•
Vertex plans to evaluate data from both the VX-659 and VX-445 Phase 3 triple combination programs to choose the best regimen to submit for potential regulatory approval. Together these data are expected to provide the basis for submission of a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for people who have one F508del mutation and one minimal function mutation no later than mid-2019.

Evaluating VX-659 and VX-445 in children
•
Studies are underway to evaluate both the VX-659 and VX-445 triple combination regimens in children with CF ages 6 through 11 who have one F508del mutation and one minimal function mutation and in children who have two F508del mutations. These studies are intended to support potential approval of a triple combination regimen in children ages 6 through 11.

Potential once-daily regimens
•
In early 2018, the company reported positive safety and efficacy results for the once-daily potentiator VX-561 when dosed as part of a triple combination regimen including VX-659 or VX-445 and tezacaftor. The once-daily triple combination regimens were generally well tolerated, and the majority of adverse events were mild to moderate.

Based on recent feedback from the FDA, Vertex plans to initiate a Phase 2 study in the first half of 2019 evaluating VX-561 as a monotherapy in people with CF who have a gating mutation.

SYMKEVI in the European Union
•
On July 27, 2018, Vertex announced that the European Medicines Agency (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for SYMKEVI (tezacaftor/ivacaftor) in a combination regimen with ivacaftor (KALYDECO) for the treatment of people with CF ages 12 and older who either have two copies of the F508del mutation or who have one copy of the F508del mutation and a copy of one of the following 14 mutations in which the CFTR protein shows residual activity: P67L, R117C, L206W, R352Q, A455E, D579G, 711+3A→G, S945L, S977F, R1070W, D1152H, 2789+5G→A, 3272-26A→G, and 3849+10kbC→T.
•
Approval for SYMKEVI in the European Union (EU) is expected in the fourth quarter of 2018.

APPROVED CF MEDICINES
Establishing long-term reimbursement outside of the U.S.
•
On October 1, 2018, Vertex announced that it had entered into an innovative access contract with the Danish pharmaceutical and procurement organization, Amgros. This agreement provides eligible Danish CF patients access to all of Vertex’s current and future CF medicines. An agreement in Austria was also recently secured to provide access to ORKAMBI for all people with CF ages 6 through 11 who have two copies of the F508del mutation.
•
In September 2018, Vertex announced a reimbursement agreement in Australia for the use of ORKAMBI in people with CF ages 6 and older who have two copies of F508del mutation. A pathway to access for future Vertex CF medicine, tezacaftor/ivacaftor, was also established as part of this process.

Treating patients at younger ages with CFTR modulators: The company continues to make significant progress toward gaining approval for its CF medicines to be used earlier in the course of disease progression. Recent highlights include:
•
Vertex plans to submit a supplemental New Drug Application (sNDA) to the FDA in late 2018 based on positive data from a recently completed 24-week single-arm Phase 3 safety study of tezacaftor/ivacaftor in 70 children ages 6 through 11 who have two copies of the F508del mutation or who have one copy of the F508del mutation and one residual function mutation. The primary endpoint of the study was safety. The study met its primary safety endpoint, and safety data from the study showed that the treatment was generally well tolerated and safety data were consistent with those seen in previous Phase 3 studies of tezacaftor/ivacaftor in children ages 12 and older. To support approval in the EU, an eight-week, double-blind, placebo-controlled Phase 3 efficacy study is ongoing to evaluate tezacaftor/ivacaftor in approximately 65 children ages 6 through 11. The primary endpoint of this study is the absolute change in lung clearance index.
•
KALYDECO was approved in August 2018 in the U.S. for children with CF ages 12 to <24 months. On October 19, 2018, Vertex announced that it received a positive opinion from the European CHMP for KALYDECO in this age group. The company expects a decision in the EU in late 2018.
•
On October 18, 2018, Vertex announced positive data from a Phase 3 study evaluating ivacaftor in infants ages 6 to <12 months. These are the first data to demonstrate the potential to treat the underlying cause of CF in patients as young as six months old. The company plans to submit an sNDA to the FDA and a line extension to the EMA in late 2018.
•
ORKAMBI was approved in August 2018 in the U.S. for children with CF ages 2 to 5 years old. A line extension has been submitted to the EMA with a decision anticipated in the first half of 2019.
•
Dosing is underway in Phase 3 study evaluating lumacaftor/ivacaftor in children ages 12 to <24 months.

LATE-STAGE RESEARCH & CLINICAL DEVELOPMENT

Vertex continues to invest to discover and develop transformative medicines in other serious diseases. The company has a portfolio of potential medicines across a range of diseases, including:

Sickle Cell Disease & β-Thalassemia: Vertex and its partner CRISPR Therapeutics are developing the autologous gene-edited hematopoietic stem cell therapy CTX001 for the treatment of β-thalassemia and sickle cell disease.
•
In the U.S., Vertex and CRISPR Therapeutics recently announced that the FDA lifted the clinical hold on the CTX001 Investigational New Drug application (IND) for the treatment of sickle cell disease that was submitted earlier this year. The companies previously received regulatory approval to conduct a Phase 1/2 study in multiple countries in Europe and Canada. Vertex and CRISPR plan to initiate the study in sickle cell disease by the end of 2018. The first two patients in the study will be dosed sequentially and, pending data from these initial two patients, subsequent patients can be dosed concurrently.
•
Enrollment for a Phase 1/2 study in people with β-thalassemia is currently open at multiple clinical trial sites in Europe, and the first patient has now enrolled in this study. The Phase 1/2 trial is designed to assess safety and efficacy in adult transfusion-dependent non-beta zero/beta zero β-thalassemia patients. Similar to the study in sickle cell disease, the first two patients in the study will be dosed sequentially and, pending data from these initial two patients, subsequent patients can be dosed concurrently. This study is designed to enroll up to 45 patients.

Pain: Potential Role of Nav1.8 Inhibition
•
The company is planning to initiate a Phase 2b dose-ranging study evaluating the Nav1.8 inhibitor VX-150 using an oral formulation in patients with acute pain following bunionectomy surgery. The study is designed to evaluate multiple oral doses of VX-150 to potentially support pivotal development in acute pain.
•
Enrollment is complete in a Phase 2 proof-of-concept study evaluating VX-150 for the treatment of pain caused by small fiber neuropathy, and data are expected in early 2019.

Vertex continues to invest to discover other potential pain molecules that target the sodium channel 1.8 (Nav1.8) and other new mechanisms.

Alpha-1 Antitrypsin Deficiency (AAT)
•Vertex has advanced multiple small molecule correctors of AAT through preclinical development and is preparing to initiate clinical development for the first of these potential medicines by the end of 2018. AAT is a genetic disorder that is caused by mutations in a single gene that result in life-shortening systemic complications, primarily in the lung and liver.

Acute Spinal Cord Injury

In October 2014, VRTX in-licensed VX-210 (Cethrin) from BioAxone BioSciences, Inc. as a potential new treatment for spinal cord injury. An interim analysis of a Phase 2b study evaluating VX-210 in patients with certain acute cervical spinal cord injuries was recently conducted and based on the available data, the study’s Data Safety Monitoring Board (DSMB) recommended to stop the study early due to futility. There were no safety concerns noted in the DSMB’s review of the data. Based on the DSMB’s recommendation and Vertex’s review of the data, the company has decided to stop all development of VX-210, and will terminate the Phase 2b study. Vertex will discuss with BioAxone the next steps for the program.

On October 24, 2018 Sarepta Therapeutics, Inc. (NASDAQ: SRPT), a leader in precision genetic medicine for rare diseases,reported financial results for the third quarter of 2018 (Press release, Sarepta Therapeutics, OCT 24, 2018, View Source [SID1234530290]).

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"We are pleased to report another positive quarter, delivering strong EXONDYS 51 sales and tracking to achieve our full-year sales objectives while both advancing our RNA pipeline and making substantial progress in the creation of an enduring gene therapy engine," stated Doug Ingram, Sarepta’s president and chief executive officer. "We continued this quarter to advance our RNA pipeline, PMOs and next-generation PPMO platform, with urgency. Further, the strides we have taken in service of our gene therapy engine, including unprecedented results in our micro-dystrophin program, rights to what are now 14 gene therapy programs, the addition of manufacturing partners, and the continued hiring of gene therapy talent, speak to our vision. Others may be content with steady progress. We see a revolution and it is our intention to lead that revolution to the benefit of countless genetic disease patients awaiting life-enhancing therapies."

Third Quarter 2018 and Recent Corporate Developments

Lysogene Agreement – Signed a license agreement with Lysogene, a biopharmaceutical company specializing in gene therapy targeting central nervous system (CNS) diseases, for the development of a gene therapy, LYS-SAF302, to treat Mucopolysaccharidosis type IIIA (MPS IIIA), also called Sanfilippo syndrome type A, a rare, severe and fatal inherited neurodegenerative lysosomal storage disorder. The pivotal gene therapy study is scheduled to start by year-end 2018; and the trial will assess the efficacy of LYS-SAF302 in improving or stabilizing the neurodevelopmental status of MPS IIIA patients. Sarepta receives full commercial rights to LYS-SAF302 in the U.S. and other markets outside of Europe, while Lysogene retains full commercial rights in Europe.

Exhibit 99.1

Paragon Bioservices Agreement – Entered into long-term manufacturing partnership with Paragon Bioservices, significantly expanding Sarepta’s commercial capacity for its micro-dystrophin gene therapy program, as well as bolstering the Company’s clinical and commercial capacity for its other pipeline programs.

Nationwide Children’s Hospital Gene Therapy Partnership, Charcot-Marie-Tooth (CMT) Neuropathy – Forged another agreement with Nationwide Children’s Hospital giving Sarepta the certain exclusive rights to the Nationwide Children’s gene therapy candidate, neurotrophin 3 (NT-3), to treat CMT neuropathies, including CMT type 1A. CMT is a group of hereditary, degenerative nerve diseases that can affect motor skills, resulting in muscle weakness, and limiting patients’ ability to walk or use their hands. CMT is the most common inherited neuromuscular disorder, affecting over 2.8 million people worldwide. A clinical trial is scheduled to begin in 2019 in the most prevalent subtype of CMT, CMT type 1A.

Positive Micro-Dystrophin Gene Therapy Clinical Results in DMD Patients Presented at the 23rd International Congress of the World Muscle Society (Mendoza, Argentina) – Jerry Mendell, M.D., of Nationwide Children’s, presented positive updated results from the gene therapy clinical trial assessing AAVrh74.MHCK7.micro-Dystrophin in individuals with Duchenne muscular dystrophy (DMD). Dr. Mendell’s presentation included positive results from the biopsy of the fourth patient showing robust micro-dystrophin expression as measured by Western blot and immunohistochemistry. In all patients, expression of micro-dystrophin was associated with significant expression and up regulation of the dystrophin-associated protein complex, an additional indication of functionality of dystrophin. All patients showed significant decreases of serum creatine kinase (CK) levels at last measure versus baseline, and positive functional improvements were shown across all measures. No serious adverse events (SAEs) were observed.

Clinical Hold Lifted for DMD Micro-dystrophin Gene Therapy Program – The Food and Drug Administration (FDA) lifted the clinical hold for Sarepta’s DMD micro-dystrophin gene therapy program. Sarepta previously announced on July 25, 2018 that the FDA placed the program on clinical hold due to the presence of trace amounts of DNA fragment in research-grade third-party supplied plasmid in a manufacturing lot. In response, and in collaboration with Nationwide Children’s, an action plan was developed and submitted to the FDA, including an audit of the plasmid supplier and a commitment to use GMP-s plasmid for all future production lots.

Exhibit 99.1

Negative CHMP Re-examination Opinion Received for Eteplirsen – The Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) confirmed its May 31, 2018 negative opinion for a Conditional Marketing Application for eteplirsen. Relying upon CHMP advice and input, Sarepta will seek further scientific advice from the EMA on a possible path to bring eteplirsen to patients in Europe.

Conference Call

The Company will be hosting a conference call at 4:30 p.m. Eastern Time, to discuss Sarepta’s financial results and provide a corporate update. The conference call may be accessed by dialing 844-534-7313 for domestic callers and +1-574-990-1451 for international callers. The passcode for the call is 6099548. Please specify to the operator that you would like to join the "Sarepta Third Quarter 2018 Earnings Call." The conference call will be webcast live under the investor relations section of Sarepta’s website at www.sarepta.com and will be archived there following the call for 90 days. Please connect to Sarepta’s website several minutes prior to the start of the broadcast to ensure adequate time for any software download that may be necessary.

Financial Results

On a GAAP basis, Sarepta reported a net loss of $76.4 million and $47.7 million, or $1.15 and $0.78 per basic and diluted share for the third quarter of 2018 and 2017, respectively. On a non-GAAP basis, the net loss for the third quarter of 2018 was $37.1 million, or $0.56 per basic and diluted share, compared to a net loss of $10.7 million for the same period of 2017, or $0.17 per basic and diluted share.

On a GAAP basis, for the nine months ended September 30, 2018, Sarepta reported a net loss of $221.0 million, or $3.38 per basic and diluted share, compared to a net loss of $26.7 million reported for the same period of 2017, or $0.47 per basic and diluted share. On a non-GAAP basis, the net loss for the nine months ended September 30, 2018 was $83.1 million, or $1.27 per basic and diluted share, compared to a net loss of $65.7 million for the same period of 2017, or $1.15 per basic and diluted share.

Net Revenues

For the three months ended September 30, 2018, the Company recorded net revenues of $78.5 million, compared to net revenues of $46.0 million for the same period of 2017, an increase of $32.5 million. For the nine months ended September 30, 2018, the Company recorded net revenues of $216.6 million,

Exhibit 99.1

compared to net revenues of $97.3 million for the same period of 2017, an increase of $119.3 million. The increases primarily reflect increasing demand for EXONDYS 51 in the U.S.

Cost and Operating Expenses

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

For the three months ended September 30, 2018, cost of sales (excluding amortization of in-licensed rights) was $8.7 million, compared to $3.1 million for the same period of 2017. For the nine months ended September 30, 2018, cost of sales (excluding amortization of in-licensed rights) was $21.1 million, compared to $3.8 million for the same period of 2017. The increase primarily reflects royalty payments to BioMarin Pharmaceuticals (BioMarin) as a result of the execution of the settlement and license agreements with BioMarin in July 2017 as well as higher inventory costs related to increasing demand for EXONDYS 51 during 2018. In addition, prior to the approval of EXONDYS 51, the Company expensed related manufacturing and material costs as research and development expenses.

Research and development

Research and development expenses were $86.6 million for the third quarter of 2018, compared to $34.2 million for the same period of 2017, an increase of $52.4 million. The increase in research and development expenses primarily reflects the following:

$18.0 million increase in up-front and milestone payments. The Company made a milestone payment of $10.0 million to Myonexus Therapeutics (Myonexus) for the achievement of one of the development milestones. In addition, the Company expensed $8.0 million related to the purchase of license to develop, manufacture and commercialize a pre-clinical Pompe product candidate under a license agreement with Lacerta Therapeutics (Lacerta);

$12.8 million increase in clinical and manufacturing expenses primarily due to increased patient enrollment in the on-going ESSENCE trial as well as a ramp-up of manufacturing activities for golodirsen, our micro-dystrophin program and our PPMO platform. These increases were partially offset by a ramp-down of clinical trials in eteplirsen primarily because the PROMOVI trial has been fully enrolled;

$8.1 million increase in compensation and other personnel expenses primarily due to an increase in headcount;

$3.8 million increase in pre-clinical expenses primarily due to the continuing ramp-up of toxicology studies in our PPMO platform;

Exhibit 99.1

$2.6 million increase in facility-related expenses due to our continuing expansion efforts;

$2.6 million increase in sponsored research with institutions such as Duke University and Nationwide Children’s Hospital;

$1.6 million increase in collaboration cost sharing with Summit on its utrophin platform; and

$1.4 million increase in stock-based compensation expense primarily driven by increases in headcount and stock price.

Research and development expenses were $255.6 million for the nine months ended September 30, 2018, compared to $122.3 million for the same period of 2017, an increase of $133.3 million. The increase in research and development expenses primarily reflects the following:

$56.0 million increase in up-front and milestone payments. The Company made an up-front payment of $60.0 million to Myonexus upon execution of the warrant to purchase common stock agreement in May 2018 and a milestone payment of $10.0 million to Myonexus upon achievement of one of the development milestones in September 2018. In addition, the Company expensed $8.0 million related to the purchase of license to develop, manufacture and commercialize a pre-clinical Pompe product candidate under a license agreement with Lacerta. In May 2017, the Company made a milestone payment of $22.0 million to Summit as the milestone of the last patient dosed in the safety arm cohort to the PhaseOut DMD study was achieved;

$25.0 million increase in clinical and manufacturing expenses primarily due to increased patient enrollment in the on-going ESSENCE trial as well as a ramp-up of manufacturing activities for golodirsen, casimersen, our micro-dystrophin program and our PPMO platform. These increases were partially offset by a ramp-down of clinical trials in eteplirsen primarily because the PROMOVI trial has been fully enrolled;

$16.7 million increase in compensation and other personnel expenses primarily due to an increase in headcount;

$7.9 million increase in pre-clinical expenses primarily due to the continuing ramp-up of toxicology studies in our PPMO platform as well as golodirsen and casimersen;

$7.6 million increase in collaboration cost sharing with Summit on its utrophin platform;
rimarily due to continuing accelerated company growth as a result of expansion of our R&D pipeline;

$4.7 million increase in facility-related expenses due to our continuing expansion efforts;

Exhibit 99.1

$4.5 million increase in stock-based compensation expense primarily driven by increases in headcount and stock price as well as achievement of a milestone related to the September 2016 restricted stock awards with a performance condition; and $4.0 million increase in sponsored research with institutions such as Duke University, Genethon and Nationwide Children’s Hospital.

Non-GAAP research and development expenses were $64.2 million and $31.5 million for the third quarter of 2018 and 2017, respectively. Non-GAAP research and development expenses were $164.5 million and $92.2 million for the nine months ended September 30, 2018 and 2017, respectively.

Selling, general and administration

Selling general and administrative expenses were $53.0 million for the third quarter of 2018, compared to $28.2 million for the same period of 2017, an increase of $24.8 million. The increase in selling, general and administrative expenses primarily reflects the following:

$9.8 million and $1.7 million increase in professional services and facility-related expenses, respectively, primarily due to continuing global expansion;

$9.4 million increase in compensation and other personnel expenses primarily due to an increase in headcount; and

$3.0 million increase in stock-based compensation primarily due to increases in headcount and stock price.

Selling general and administrative expenses were $143.5 million for the nine months ended September 30, 2018, compared to $90.5 million for the same period of 2017, an increase of $53.0 million. The increase in selling, general and administrative expenses primarily reflects the following:

$23.1 million increase in compensation and other personnel expenses primarily due to an increase in headcount;

$21.8 million and $2.9 million increase in professional services and facility-related expenses, respectively, primarily due to continuing global expansion;

$11.9 million increase in stock-based compensation primarily due to increases in headcount and stock price, the achievement of a milestone related to the September 2016 restricted stock awards granted with a performance condition, as well as the impact of a revised forfeiture rate assumption for equity awards granted to officers and directors;

Exhibit 99.1

$4.8 million decrease in restructuring expenses due to the relief of cease-use liabilities as a result of the termination of the rental agreement for our Corvallis facility; and

$3.5 million decrease in severance expense as a result of termination of our former CEO in June 2017.

Non-GAAP selling, general and administrative expenses were $42.5 million and $22.2 million for the third quarter of 2018 and 2017, respectively. Non-GAAP selling, general and administrative expenses were $113.5 million and $67.5 million for the nine months ended September 30, 2018 and 2017, respectively.

EXONDYS 51 litigation and license charges

As a result of the execution of the settlement and license agreements with BioMarin in July 2017, the Company recognized litigation and license charges of $25.6 million and $28.4 million during the three and nine months ended September 30, 2017, respectively. There was no such a transaction in 2018.

Amortization of in-licensed rights

For the three and nine months ended September 30, 2018, the Company recorded amortization of in-licensed rights of approximately $0.2 million and $0.6 million, respectively. For both the three and nine months ended September 30, 2017, the Company recorded amortization of in-licensed rights of approximately $0.8 million.

Other (loss) income

Gain from sale of Priority Review Voucher

In connection with the completion of the sale of the Priority Review Voucher (PRV) in March 2017, the Company recorded a gain of $125.0 from sale of the PRV in the first quarter of 2017.

Interest (expense) income and other, net

For the three and nine months ended September 30, 2018, the Company recorded $7.0 million and $16.7 million, respectively, of interest expense and other, net. For the same periods of 2017, the Company recorded $0.2 million and $0.7 million, respectively, of interest income and other, net. The period over period unfavorable change primarily reflects the interest expense accrued on the convertible notes issued in November 2017 partially offset by interest income from higher balances of cash, cash equivalents and investments.

Cash, Cash Equivalents, Investments and Restricted Investment

Exhibit 99.1

The Company had approximately $793.9 million in cash, cash equivalents and investments as of September 30, 2018 compared to $1.1 billion as of December 31, 2017. The decrease is primarily driven by the use of cash to fund the Company’s ongoing operations during the first three quarters of 2018.

Use of Non-GAAP Measures

In addition to the GAAP financial measures set forth in this press release, the Company has included certain non-GAAP measurements. The non-GAAP loss is defined by the Company as GAAP net loss excluding interest expense/(income), income tax expense/(benefit), depreciation and amortization expense, stock-based compensation expense, restructuring expense and other items. Non-GAAP research and development expenses are defined by the Company as GAAP research and development expenses excluding depreciation and amortization expense, stock-based compensation expense, restructuring expense and other items. Non-GAAP selling, general and administrative expenses are defined by the Company as GAAP selling, general and administrative expenses excluding depreciation and amortization expense, stock-based compensation expense, restructuring expense and other items.

1. Interest, tax, depreciation and amortization

Interest income and expense amounts can vary substantially from period to period due to changes in cash and debt balances and interest rates driven by market conditions outside of the Company’s operations. Tax amounts can vary substantially from period to period due to tax adjustments that are not directly related to underlying operating performance. Depreciation expense can vary substantially from period to period as the purchases of property and equipment may vary significantly from period to period and without any direct correlation to the Company’s operating performance. Amortization expense associated with in-licensed rights as well as patent costs are amortized over a period of several years after acquisition or patent application or renewal and generally cannot be changed or influenced by management.

2. Stock-based compensation expenses

Stock-based compensation expenses represent non-cash charges related to equity awards granted by Sarepta. Although these are recurring charges to operations, management believes the measurement of these amounts can vary substantially from period to period and depend significantly on factors that are not a direct consequence of operating performance that is within management’s control. Therefore, management believes that excluding these charges facilitates comparisons of the Company’s operational performance in different periods.

Exhibit 99.1

3. Restructuring expenses

The Company believes that adjusting for these items more closely represents the Company’s ongoing operating performance and financial results.

4. Other items

The Company evaluates other items of expense and income on an individual basis. It takes into consideration quantitative and qualitative characteristics of each item, including (a) nature, (b) whether the items relates to the Company’s ongoing business operations, and (c) whether the Company expects the items to continue on a regular basis. These other items include the aforementioned gain from the sale of the Company’s PRV and up-front and milestone payments.

The Company uses these non-GAAP measures as key performance measures for the purpose of evaluating operational performance and cash requirements internally. The Company also believes these non-GAAP measures increase comparability of period-to-period results and are useful to investors as they provide a similar basis for evaluating the Company’s performance as is applied by management. These non-GAAP measures are not intended to be considered in isolation or 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 selling, general and administrative expenses, non-GAAP other income and loss adjustments, non-GAAP income tax expense, non-GAAP net loss, and non-GAAP basic and diluted net loss per share may differ from similar measures reported by other companies, which may limit comparability, and are not based on any comprehensive set of accounting rules or principles. All relevant non-GAAP measures are reconciled from their respective GAAP measures in the attached table "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures."

About EXONDYS 51

EXONDYS 51 uses Sarepta’s proprietary phosphorodiamidate morpholino oligomer (PMO) chemistry and exon-skipping technology to skip exon 51 of the dystrophin gene. EXONDYS 51 is designed to bind to exon 51 of dystrophin pre-mRNA, resulting in exclusion of this exon during mRNA processing in patients with genetic mutations that are amenable to exon 51 skipping. Exon skipping is intended to allow for production of an internally truncated dystrophin protein.

Important Safety Information About EXONDYS 51

Exhibit 99.1

Hypersensitivity reactions, including rash and urticaria, pyrexia, flushing, cough, dyspnea, bronchospasm, and hypotension, have occurred in patients who were treated with EXONDYS 51. If a hypersensitivity reaction occurs, institute appropriate medical treatment and consider slowing the infusion or interrupting the EXONDYS 51 therapy.

Adverse reactions in DMD patients (N=8) treated with EXONDYS 51 30 or 50 mg/kg/week by intravenous (IV) infusion with an incidence of at least 25% more than placebo (N=4) (Study 1, 24 weeks) were (EXONDYS 51, placebo): balance disorder (38%, 0%), vomiting (38%, 0%) and contact dermatitis (25%, 0%). The most common adverse reactions were balance disorder and vomiting. Because of the small numbers of patients, these represent crude frequencies that may not reflect the frequencies observed in practice. The 50 mg/kg once weekly dosing regimen of EXONDYS 51 is not recommended.

In the 88 patients who received ≥30 mg/kg/week of EXONDYS 51 for up to 208 weeks in clinical studies, the following events were reported in ≥10% of patients and occurred more frequently than on the same dose in Study 1: vomiting, contusion, excoriation, arthralgia, rash, catheter site pain, and upper respiratory tract infection.

On October 23, 2018 IDEAYA Biosciences, Inc., reported it has entered into an exclusive license agreement with Novartis to develop and commercialize Novartis’ LXS196, a Phase 1 protein kinase C (PKC) inhibitor for the treatment of cancers with GNAQ and GNA11 mutations (Press release, Ideaya Biosciences, OCT 23, 2018, View Source [SID1234535455]).

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LXS196, which will be recoded as IDE196 by IDEAYA for future development, is a potent small molecule inhibitor of PKC demonstrating early clinical activity and tolerability in an ongoing Phase 1 study of IDE196 for patients with metastatic uveal melanoma (MUM). IDE196 is active across multiple PKC isoforms and is highly selective relative to other kinases. MUM is an orphan disease of high unmet medical need, with median overall survival of approximately 10 months and no FDA approved therapies.

"There are no approved therapies for metastatic uveal melanoma, and continued development of promising clinical stage agents, such as IDE196, with a clear genetic biomarker rationale to treat patients that harbor GNAQ and GNA11 mutations through PKC are paramount," said Dr. Sophie Piperno‐Neumann, M.D., LXS196 Study Investigator and Medical Oncologist at Institute Curie, Paris, France.

IDEAYA will continue development in metastatic uveal melanoma and will also explore a tumor agnostic basket study of solid tumors with mutations of GNAQ and GNA11. Both GNAQ and GNA11 mutations are listed in multiple diagnostic panels, including the FoundationOne CDx NGS panel, FoundationOne Liquid Biopsy Panel, and the Guardant360 Liquid Biopsy panel, which provides a clear path towards identifying patients. IDEAYA is also evaluating the potential use of IDE196 to target various PKC fusion isoforms.

Novartis is conducting an ongoing Ph1 clinical trial, entitled "A Phase I, multi-center, open-label, study of LXS196, an oral protein kinase C inhibitor, in patients with metastatic uveal melanoma" (ClinicalTrials.gov Identifier: NCT02601378). In the ongoing trial, IDE196 is being studied as a single-agent and in combination therapy with HDM201, Novartis’ human double minute 2 (HDM2) inhibitor, an important negative regulator of the p53 tumor suppressor. Notably, approximately 90% of metastatic uveal melanoma patients harbor activating mutations in GNA11 or GNAQ.

"Targeting PKC, a pathway which is active in this disease, may result in improved clinical outcomes, and the data with IDE196 treatment thus far demonstrate objective responses, with tolerability that will enable ongoing and future monotherapy and combination trials," said Dr. Ellen Kapiteijn, M.D. Ph.D., LXS196 Study Investigator and Medical Oncologist at Leiden University Medical Center, Leiden, Netherlands.

Under the exclusive license, Novartis increased its equity ownership in IDEAYA, and is due future milestones and royalties, and Novartis will continue the ongoing IDE196 monotherapy and combination study with the Novartis HDM201 compound. IDEAYA has exclusive rights for further clinical development of IDE196, together with unrestricted rights to commercialize worldwide.

"IDE196 enhances our robust precision medicine pipeline, and we are ecstatic to develop this first-in-class therapy for cancer patients who harbor activating mutations of GNAQ and GNA11," said Yujiro Hata, Chief Executive Officer of IDEAYA. "Novartis has been an investor in IDEAYA since the Series A, so we are pleased to enter into this agreement and further enhance our strategic relationship."

On October 23, 2018 Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), a clinical-stage biopharmaceutical company focused on addressing key mechanisms of tumor drug resistance, reported that it has initiated an open-label, multicenter, Phase 1b/2 study of rebastinib in combination with paclitaxel to assess safety, tolerability, pharmacokinetics and efficacy in patients with advanced or metastatic solid tumors (Press release, Deciphera Pharmaceuticals, OCT 23, 2018, View Source [SID1234530064]).

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"We are excited to initiate this Phase 1b/2 clinical trial of rebastinib, our small molecule switch control inhibitor of TIE2," said Michael D. Taylor, Ph.D., Deciphera’s President and Chief Executive Officer. "In preclinical testing rebastinib has shown activity as a single agent and when combined with paclitaxel, we observed synergistic reductions in circulating tumor cells and ablating distant metastases. As a result, we believe rebastinib has the potential to be an important new therapy for cancer patients when combined with chemotherapy. In addition to the Phase 1b/2 clinical trial with paclitaxel, we intend to initiate a second Phase 1b/2 clinical trial of rebastinib in combination with carboplatin in the coming months."

In this two-part Phase 1b/2 clinical trial, rebastinib will be evaluated for the treatment of patients with advanced or metastatic solid tumors in combination with paclitaxel. Part 1 is designed to evaluate the safety, tolerability and pharmacokinetics of 50 mg and 100 mg rebastinib twice daily (BID) when administered in combination with paclitaxel, and to determine the recommended phase 2 dose (RP2D) of rebastinib in combination with paclitaxel, in patients with advanced or metastatic solid tumors that are refractory to standard therapies. In part 2, the safety, tolerability and efficacy of the RP2D of rebastinib in combination with weekly paclitaxel will be assessed across multiple cohorts, including: breast cancer, ovarian cancer, and endometrial cancer. This trial will enroll up to 36 evaluable patients in part 1 and up to 132 evaluable patients in part 2. For more information about the clinical trial design please visit www.clinicaltrials.gov (NCT03601897).

"There is an increasing understanding of the mechanisms by which tumors co-opt the surrounding microenvironment to grow, survive and become more invasive. TIE2 kinase is involved in multiple mechanisms favoring a pro-tumoral microenvironment, including the regulation of a population of immunosuppressive macrophages, promotion of tumor angiogenesis, and participation in perivascular pumps that lead to tumor cell intravasation and distal metastasis," said Oliver Rosen, M.D., Chief Medical Officer at Deciphera. "Certain of these macrophages express TIE2 and we believe selective inhibition of this kinase with rebastinib in combination with paclitaxel is a promising approach to treating these patients."

About Rebastinib
Rebastinib is an investigational, orally administered, potent and selective inhibitor of the TIE2 kinase, the receptor for angiopoietins, an important family of vascular growth factors in the tumor microenvironment that also activate pro-tumoral TIE2 expressing macrophages. In a Phase 1 clinical trial, biomarker data have demonstrated rebastinib-induced increases in the TIE2 ligand angiopoietin 2, secondary to TIE2 inhibition. Rebastinib is currently being evaluated in a Phase 1b/2 clinical trial in combination with paclitaxel (NCT03601897) and an investigator sponsored Phase 1b trial in patients with metastatic breast cancer in combination with paclitaxel or eribulin (NCT02824575).

On October 23, 2018 Incyte Corporation (Nasdaq: INCY) reported that it has released updated data from its ongoing Phase 2 FIGHT-202 trial for the evaluation of pemigatinib (INCB54828), its selective inhibitor of fibroblast growth factor (FGFR), in patients with metastatic or surgically unresectable cholangiocarcinoma in an advanced stage (cancer of the bile ducts) that did not respond to at least one previous treatment (Press release, Incyte, OCT 23, 2018, View Source [SID1234530065]). In patients with translocations of FGFR2 who were followed for at least eight months, the results of the intermediate study show a global response rate (ORR) of 40 percent, the main endpoint, and a progression-free survival (PFS) average of 9.2 months, a secondary endpoint.

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These results will be presented at the European Oncology Congress (ESMO) (Free ESMO Whitepaper) 2018, which is being held in Munich, Germany, in a poster presentation on Sunday, October 21 at 12:45 p.m., Spanish Peninsular Time, at 1:45 p.m. Spanish peninsular (6:45 am East Coast time at 7:45 am East Coast time). (Location: Hall A3 – Poster Area Networking Hub, summary # 756P)

"We are delighted to share with ESMO (Free ESMO Whitepaper) the updated intermediate results of our ongoing FIGHT-202 study, which underscore the potential of pemigatinib as a new effective treatment option for patients with advanced cholangiocarcinoma who have translocations of FGFR2," Steven Stein said. MD, medical director, Incyte. "If the full data set supports this, we hope to send a new application for new drug registration to the FDA in 2019 and obtain authorization for pemigatinib as the first selective inhibitor of FGFR of its kind to treat patients with advanced cholangiocarcinoma, a disease devastating ».

Cholangiocarcinoma is a cancer that arises from bile duct cells. It is often diagnosed late (phases III and IV) and the prognosis is unfavorable. It is more common in people older than 70 years, and more in men than in women. The FGFR2 fusion genes drive the onset of the disease, which occurs almost exclusively in patients with intrahepatic cholangiocarcinoma (iCCA), a subtype of the disease, and are present in up to 20% of iCCA patients. The incidence of cholangiocarcinoma with translocation of FGFR2 is growing and it is currently estimated that there are between 2,500 and 3,000 patients in the USA. UU., Europe and Japan.

Main results of FIGHT-202

The updated data, with longer-term follow-up, of the intermediate analysis presented today in the ESMO (Free ESMO Whitepaper) (with a cut-off date of July 24, 2018) show that, in advanced / metastatic or surgically unresectable iCCA patients with translocations of FGFR2 treated with pemigatinib that were followed up for at least eight months (cohort A, n = 47), the combined overall response rate (ORR) was 40%, including 19 patients (40%) with confirmed partial response and 21 patients ( 45%) with stable disease (SD). The combined disease control rate (CRD) was 85% (40/47). In addition, mean progression-free survival (PFS) was 9.2 months and mean overall survival (OS) was 15.8 months.

FIGHT-202: global response rates (ORR), disease control rates (DCR), response durability (DOR), progression-free survival (PFS), and overall survival (OS) per cohort of patients

Pemigatinib was tolerated well. The most common adverse events during treatment (TEAE) were hyperphosphatemia (61 percent), alopecia (42 percent), diarrhea (39 percent), decreased appetite (37 percent), and fatigue (36 percent). TEAEs of grade ≥ 3 (observed in> 5 percent of patients) were hyperphosphatemia (14 percent), hyponatremia (8 percent), abdominal pain (7 percent), and arthralgia (7 percent). Five patients experienced TEAE resulting in death, none of them related to the study treatment.

"I am greatly encouraged by the intermediate results of the FIGHT-202 study, which have shown significant clinical activity and a promising preliminary prediction of progression-free survival. As a practicing physician, I am excited about the potential of pemigatinib to provide a new treatment option for my patients with advanced cholangiocarcinoma, a deadly disease, "said Antoine Hollebecque, MD, Institute of Cancérologie Gustave Roussy, Villejuif, France.

About FIGHT-202

FIGHT-202 is a multicentre open-label study (NCT02924376) that evaluates the safety and efficacy of pemigatinib (INCB54828), a selective inhibitor of fibroblast growth factor receptor (FGFR), in the clinical research phase, potent and orally developed. by Incyte, in adult patients (age ≥18 years) with advanced / metastatic or surgically unresectable cholangiocarcinoma with known fibroblast growth factor (FGFR) / FGFR alterations and who have not responded to at least one previous treatment.

Patients were included in one of these three cohorts: cohort A (translocations of FGFR2), cohort B [other genetic alterations (GA) of FGF / FGFR] or cohort C (without GA of FGF / FGFR). All patients received 13.5 mg of pemigatinib orally once a day (QD) during a 21-day cycle (two weeks with treatment / one week without treatment) until the radiological progression of the disease or a level of toxicity unacceptable.

The main endpoint of FIGHT-202 is the overall response rate (ORR) in cohort A, independently assessed according to the RECIST v1.1 criteria. Secondary endpoints include ORR in cohorts B, C and A plus B, progression free survival (PFS), overall survival (OS), durability of response (DOR), disease control rate (DCR) and security.

Recruitment for the FIGHT-202 study was conducted entirely outside of Japan, and it is planned to present updated data for the second half of 2019. For more information on FIGHT-202, visit View Source show / NCT02924376 .

About FIGHT

Phase 2 studies investigating the safety and efficacy of monotherapy with pemigatinib in various neoplasms motivated by FGFR are underway. The FIGHT clinical trial program (FIbroblast Growth factor receptor in oncology and Hematology Trials) currently comprises the FIGHT-201 study in patients with metastatic or surgically unresectable bladder cancer, including activating alterations of FGFR3; the FIGHT-202 study in patients with metastatic or surgically unresectable cholangiocarcinoma who did not respond to previous treatment, including activating translocations of FGFR2; and the FIGHT-203 study in patients with myeloproliferative neoplasms with activating translocations of FGFR1.NCT03656536 ).

About the FGFR and Pemigatinib (INCB54828)

Fibroblast growth factor receptors (FGFR) play an important role in the proliferation of tumor cells and in survival, migration and angiogenesis (formation of new blood vessels). The mutations, translocations and activating gene amplifications of the FGFRs are closely correlated with the development of various types of cancer.

Pemigatinib is a potent selective inhibitor of isoforms 1, 2 and 3 of FGFR that, in preclinical studies, has shown a selective pharmacological activity against cancer cells with alterations in FGFR.