Scholar Rock Holding Corporation (SRRK) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call highlighted strong financial health, with a significant cash runway and positive interactions with the FDA, indicating confidence in the upcoming approval of apitegromab. The management's constructive discussions with payers and plans for global expansion further support a positive outlook. Despite some uncertainties around CDMO site observations, the overall tone was optimistic, and the company's strategic initiatives are likely to bolster stock performance in the near term.

Key Financial Performance

Cash and Cash Equivalents $295 million at the end of Q2 2025, reflecting increased investment in infrastructure to support commercial readiness and supply of apitegromab for launch.

Debt Facility $50 million available to draw down this year, with an additional $50 million post-approval to support the upcoming launch.

Anticipated Runway Into 2027, supported by $50 million debt facility, $16 million from exercise of outstanding common warrants, and potential monetization of a priority review voucher.

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Operating Highlights

Apitegromab: Regulatory approvals are being pursued in the U.S. and Europe. The U.S. launch is planned for Q3 2025, pending FDA approval on September 22, 2025. European launch is expected in 2026, starting with Germany. Apitegromab is the first muscle-targeted therapy for SMA, showing significant motor function improvements in clinical trials.

SRK-439: An IND application for SRK-439, a potent anti-myostatin antibody, is planned for later in 2025 to support its first-in-human study.

Global SMA Market: Scholar Rock is targeting approximately 35,000 SMA patients globally, with 10,000 in the U.S. The company aims to expand access to apitegromab in Europe, Asia Pacific, and Latin America.

Commercial Readiness: The U.S. customer-facing team is fully trained and deployed, engaging with SMA treatment centers, key opinion leaders, and payers. Preparations for the global rollout are underway.

Financial Position: The company ended Q2 with $295 million in cash and has additional funding options, including $50 million under a debt facility and $16 million from warrant exercises, extending the runway into 2027.

Pipeline Expansion: Plans to initiate clinical development of apitegromab in at least one additional neuromuscular indication by the end of 2025. The company is also exploring partnerships for its anti-myostatin platform.

Capital Allocation: Focused on disciplined investment in commercial and development initiatives, aligning pipeline investments with commercial success.

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Risk or Challenges

Regulatory and Manufacturing Risks: The FDA noted observations at two of Scholar Rock's CDMOs during inspections, including Catalent, Indiana, which was recently acquired by Novo Nordisk. These observations require responses within the review cycle, posing potential risks to the approval timeline for apitegromab.

Supply Chain and Manufacturing Challenges: The fill/finish for apitegromab is conducted at a site that recently underwent FDA inspection, which could lead to delays or complications in production and supply chain readiness for the U.S. and global launches.

Market and Competitive Pressures: Despite the potential of apitegromab, the SMA market already has established SMN-targeted therapies. Convincing healthcare providers and patients to adopt a new treatment modality may be challenging, especially given the need for dual-modality approaches.

Financial Risks: The company is heavily reliant on the success of apitegromab for sustainable growth. Any delays in approval or market adoption could strain financial resources, despite the current cash runway into 2027.

Strategic Execution Risks: The global rollout of apitegromab, including launches in Europe, Asia Pacific, and Latin America, requires significant coordination and investment. Any missteps in execution could impact the company's growth trajectory.

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Guidance & Outlook

Regulatory Approvals and Launch Timeline: Scholar Rock anticipates FDA approval of apitegromab by September 22, 2025, with a U.S. commercial launch immediately following approval. European approval is expected by mid-2026, with Germany as the first launch country.

Global Market Expansion: The company plans to expand apitegromab's availability to additional countries in Europe, Asia Pacific, and Latin America over time, aiming to serve the global SMA patient population of approximately 35,000 individuals.

Pipeline Development: Scholar Rock intends to initiate a Phase II OPAL trial for infants and toddlers under 2 years old with SMA in Q3 2025. Additionally, the company plans to begin clinical development of apitegromab for at least one other neuromuscular indication by the end of 2025.

Financial Outlook: The company has $295 million in cash and anticipates additional funding from debt facilities and warrant exercises, extending its financial runway into 2027. Scholar Rock also plans to monetize its priority review voucher post-approval.

Strategic Investments: Scholar Rock is prioritizing investments in commercial readiness, including a fully trained U.S. customer-facing team, and infrastructure to support the global rollout of apitegromab.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you tell us more about the specific observations at the two CDMO sites, whether a reinspection is required prior to apitegromab approval, and if the facilities are currently releasing other pharmaceutical products?

A:The management acknowledged the observations at the two sites, noting that GMP inspections are standard and that 70% of inspections result in observations. They expressed confidence in the FDA's constructive tone during the late cycle meeting and stated that the facilities continue to operate and release products. They also emphasized their readiness with apitegromab's launch supply.

Q:Can you further characterize interactions with the FDA on the apitegromab review outside of the CDMO observations?

A:The management described the late cycle meeting with the FDA as exceptionally constructive, with all necessary disciplines present. They expressed confidence in the FDA's progress toward the September 22 PDUFA date.

Q:How are discussions with U.S. payers regarding coverage of apitegromab progressing?

A:The management reported positive discussions with payers, highlighting the durability of response to apitegromab. They noted that over 20% of SMA patients are already receiving more than one therapy, indicating payer willingness to support dual therapies.

Q:Have you had labeling discussions with the FDA, and are you able to discuss possible labels with payers?

A:The management confirmed constructive labeling discussions during the late cycle meeting but did not provide specific details. They emphasized that the FDA is working toward the September 22 PDUFA date.

Q:What is the next step following the CDMO observations, and how likely is a positive review outcome on time?

A:The management is working closely with CDMO partners to address observations and ensure transparency with the FDA. They expressed confidence in the FDA's commitment to the September 22 PDUFA date.

Q:What does an ideal label for apitegromab look like, and what should the indication statement be?

A:The management aims for a broad label covering patients aged 2 years and older, based on consistent data across age groups in the SAPPHIRE trial. They emphasized the importance of a broad label for patient access.

Q:Can you elaborate on pricing discussions with payers and the budget impact of dual SMA therapies?

A:The management highlighted the rarity and severity of SMA and the compelling benefits of apitegromab. They noted that payers are already supporting dual therapies and emphasized the unmet medical need and durability of response as key factors in pricing discussions.

Q:Should we view the new indication study later this year as a pilot or the first of many?

A:The management sees significant opportunities for myostatin antagonists in neuromuscular disorders and plans to add more indications in quick succession after the initial study.

Q:What are the expected enrollment timelines for the OPAL trial, and how significant is this expansion opportunity?

A:Enrollment for the OPAL trial will start in Q3, with further guidance on completion timelines to follow. The management emphasized the importance of addressing the prevalent SMA population, which is much larger than the incident population.

Q:If another inspection is required for the CDMO sites, what are the timelines and potential resolution processes?

A:The management is focusing on robust responses to observations to potentially avoid reinspection. They highlighted the FDA's constructive tone during the late cycle meeting and commitment to the September 22 PDUFA date.

Q:Can you provide more color on the late cycle review meetings and the difference in efficacy between the 10-mg and 20-mg doses?

A:The management described the late cycle meeting as constructive and noted that both doses showed equivalent pharmacodynamic effects. They expect the FDA to approve the 10-mg dose as the lowest efficacious dose.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the labeling discussions with the FDA, the exact timelines for potential reinspections, and the final indication statement for apitegromab. They also used general language when discussing the robustness of responses to CDMO observations and the FDA's commitment to the PDUFA date.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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The earnings call summary indicates solid financial performance, strategic global expansion, and strong cash runway into 2027. The Q&A session reveals proactive risk management and strategic financing, with a focus on minimizing operational disruptions and ensuring FDA compliance. Although some uncertainties exist regarding the reinspection timeline, the company's strategic investments and optimistic guidance suggest a positive outlook. The stock price is likely to increase by 2% to 8% over the next two weeks, driven by the company's strategic initiatives and financial health.

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The earnings call presents a mixed picture with several concerns: missed EPS expectations, lack of guidance, and potential financial risks due to increased expenditures. Despite positive discussions with payers and FDA, the absence of a shareholder return plan and competitive market challenges weigh negatively. The Q&A section reveals management's avoidance of specifics, adding uncertainty. While the company is prepared for a quick launch post-approval, the financial and competitive risks, combined with the missed EPS, lead to a likely negative stock reaction.

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