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Sarepta Signs Gene Therapy Agreement With Roche for $1.15B

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Sarepta Therapeutics, Inc. (SRPT - Free Report) announced that it has entered into a licensing agreement with Roche RHHBY related to its lead gene therapy candidate, SRP-9001, for treating Duchenne muscular dystrophy (“DMD”). Per the agreement, Sarepta will Roche grant exclusive rights to launch and commercialize SRP-9001 in ex-U.S. markets in exchange of an upfront payment of $1.15 billion. The upfront payment includes $750 million in cash and $400 million investment in Sarepta’s stock for $158.59 per share. The deal is expected to close in the first quarter of 2020.

Per the deal, Sarepta will also be eligible to receive $1.7 billion in regulatory and sales milestones, along with royalties on potential future sales of the candidate. Please note that Sarepta is currently developing SRP-9001, an AAV-mediated micro-dystrophin gene therapy candidate, in a phase I/II study for treating DMD. Sarepta will remain responsible for clinical development and manufacturing of SRP-9001. However, global clinical development cost for the candidate will be shared by both the companies.

The deal is likely to help both the companies. While Roche will gain Sarepta’s expertise in the field of DMD, especially development of gene therapy, Sarepta will benefit from Roche’s global reach, commercial presence and regulatory expertise to accelerate approval and commercialization process for SRP-9001.

Moreover, the upfront payment will significantly boost Sarepta’s cash resources, which, in turn, will help it to continue its other research activities in the field of gene therapies. Shares of Sarepta were up more than 12% in pre-market trading on Dec 23. Sarepta’s stock has outperformed the industry so far this year. The company’s shares are up 15.6% compared with the industry’s increase of 9.2% in that period.

The approval of Vyondys 53 by the FDA for treating DMD patients who are exon 53 amenable earlier this month was also an encouraging news for Sarepta’s investors. The drug’s approvalis likely to increase eligible DMD patient population for the company’s commercial portfolio of DMD drugs by 8% in the United States. The company’s older DMD drug, Exondys 51, treats patients who are exon 51 amenable and has generated sales of $280.7 million in the first nine months of 2019, up almost 30% year over year. Successful development of SRP-9001 as a potential treatment for DMD will further boost the company’s prospects. Meanwhile, there are several other companies developing gene therapies for treating DMD including Solid Biosciences SLDB, Audentes Therapeutics BOLD and Pfizer.

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Sarepta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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