Sarepta Therapeutics (SRPT) - Get Report provided two numbers Tuesday that should wipe away the worst fears investors have had about the commercial launch of Exondys 51, its newly approved treatment for boys with Duchenne muscular dystrophy (DMD.).
In the fourth quarter, Sarepta recorded $5.4 million in sales of Exondys 51, the company said. The drug was approved on Sept. 19.
Street expectations for Exondys 51 sales in its first quarter of commercial launch have been volatile and widely divergent but the analyst consensus was $4.9 million, according to Factset.
From this perspective, Sarepta's $5.4 million in Exondys 51 reported sales in the December quarter looks good and puts to rest the worst-case fear of insurance reimbursement denials and roadblocks preventing any DMD boys from receiving treatment. That's not happening.
"We want to make sure that everybody knows the physicians and their patients are interested in Exondys. This [the $5.4 million in sales] is the proxy for that. It's really not a bad number for a first quarter," said Sarepta CEO Ed Kaye, in an interview Monday night at the J.P. Morgan Healthcare Conference.
The second, more important, Exondys 51 launch metric provided by Sarepta Tuesday is the number of DMD boys who have started the process required to receive insurance reimbursement and treatment with Exondys 51. That is 250 patients to date, Sarepta said.
Sarepta is not providing 2017 sales guidance for Exondys 51, but the 250 patients in the queue for treatment is a proxy.
At $31 per share, Sarepta's stock price trades close the level before Exondys 51 was approved last September. Investor sentiment has been bearish because of the publicized dispute within FDA about the approval decision and anecdotal reports of insurance companies denying DMD patients access to the drug.
There is no Street consensus for the number of DMD patients lining up to receive Exondys 51, but 250 patients in the first three months is comparable to other orphan drug commercial launches.
All 250 DMD boys have already undergone a verified genetic test to demonstrate their eligibility to receive Exondys 51, per the drug's label. The boys, with Sarepta's assistance, are now working through the insurance reimbursement process that can take 30-90 days, Kaye said.
In the early months of the launch, Kaye acknowledges the reimbursement process for Exondys 51 has been a challenge. Some patients have been rejected by their insurance carriers but are now appealing.
"We expect in the early phase of the launch, reimbursement is going to be closer to 90 days. As we go through the launch, we expect that time to decline," said Kaye.
With the knowledge that 250 DMD boys have received genetic testing and are now working to receive treatment with Exondys 51, investors will start to do some math to estimate what this means for Sarepta sales moving forward.
The average age of the 250 DMD boys in the treatment queue is 13 years, Sarepta said Tuesday. This means the annual price of their Exondys treatment is likely closer to $450,000 or $500,000 because the drug is dosed based on patient weight. [The official price of Exondys 51 is $300,000 per year but that's based on a younger patient weighing approximately 25 kg.]
If all 250 DMD boys secure insurance coverage at an annual Exondys 51 price in the range of $300,000 to $500,000 per year, sales would be $75 million to $125 million.
That's a very rough forecast for Exondys 51 sales, particularly absent the actual rate of reimbursement approvals or denials, but it compares reasonably well to the current analyst consensus estimate of $138 million for 2017, according to Factset.
Sarepta has 250 DMD boys lining up for Exondys treatment in the first three months since the drug's launch. That number of DMD boys seeking treatment continues to rise.
"Our expectation is for a steady ramp and we'll see quarter over quarter increases. We're not seeing a decline in the interest for the drug," said Kaye.
In related Exondys 51 news, Sarepta expects the clinical review of the drug in Europe to take 12-15 months to complete. The filing was accepted in December. Sarepta is seeking conditional approval for Exondys 51 in Europe, much like PTC Therapeutics (PTCT) - Get Report used successfully for Translarna (but with weaker clinical data.)
If Exondys is approved in Europe, Sarepta also expects to reach a settlement with Biomarin (BMRN) - Get Report over intellectual property rights that will allow the drug to be launched there. That process will be worked out over the next year, Kaye said.
Sarepta continues to enroll DMD patients with the exon 45 and 53 mutation into the randomized, placebo-controlled phase III study known as "Essence."
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.