Sarepta Revitalizes Medication Portfolio Through Partnership with Arrowhead
Dive Brief:
- Sarepta Therapeutics has initiated a new deal aimed at rejuvenating its drug pipeline, which has raised concerns among analysts regarding its size. On Tuesday, the company announced a collaboration with Arrowhead Pharmaceuticals. This agreement will provide Sarepta with four clinical-stage therapies and an additional three that are currently in preclinical stages.
- In exchange, Sarepta will pay Arrowhead an upfront cost of 0 million, alongside a further 5 million to acquire Arrowhead shares at a premium based on the stock’s recent weighted average. Additionally, Sarepta will pay Arrowhead million annually for the next five years.
- The deal stipulates that Arrowhead will conduct the ongoing Phase 1/2 trials for the four clinical-stage therapies, after which the development responsibilities will transition to Sarepta. Arrowhead will also conclude preparatory work for the preclinical programs before handing them over. Moreover, Sarepta will gain the rights to propose six additional drug targets for Arrowhead to pursue possible candidates.
Dive Insight:
By partnering with Arrowhead, Sarepta is tapping into valuable drug development technology that aligns well with its previous efforts in genetic medicine.
Arrowhead excels in RNA interference, a technique that silences gene expression through small interfering RNA molecules, known as siRNA. This technology has seen significant advances, particularly by Alnylam Pharmaceuticals, which has introduced five RNAi drugs approved in the U.S. However, these products primarily target liver diseases, and other firms like Arrowhead are innovating RNAi therapies that can address a broader range of conditions.
The clinical-stage drugs that Sarepta is acquiring target diseases affecting the muscles, central nervous system, and lungs. Notably, two of these medications focus on muscular dystrophies, a central area of Sarepta’s drug development agenda. The three preclinical assets are geared towards conditions impacting the central nervous system.
According to Louise Rodino-Klapac, Sarepta’s CSO, “Robust and compelling early data from Arrowhead’s differentiated siRNA approach platform suggests potentially best-in-class treatments that will profoundly improve the lives of those with rare, genetic diseases.”
Analysts perceive this partnership as a sound tactic to strengthen Sarepta’s drug pipeline, particularly as the company recently reduced its offerings by discontinuing a successor to its approved product, Exondys 51, along with its original drug platform.
In a client note, Mizuho Securities analyst Uy Ear remarked, “This collaboration should alleviate concerns regarding Sarepta’s limited pipeline, which has been a major concern, and open up multiple growth avenues moving forward.”
Sarepta’s board has also approved a share buyback plan totaling up to 0 million over the next 18 months, a move that investors have been anticipating.
“Investors we spoke to expressed a desire for Sarepta to 1) acquire new offerings and 2) repurchase shares: today’s announcement satisfies both requirements,” noted Kristen Kluska, an analyst at Cantor Fitzgerald.
As of September 30, Sarepta reported nearly .4 billion in cash, cash equivalents, and liquid investments. Furthermore, sales of the company’s gene therapy for Duchenne muscular dystrophy, Elevidys, have been on the rise and are projected to continue increasing, providing Sarepta with a growing revenue stream to support the development of its newly acquired candidates.
Danielle Brill, an analyst at Raymond James, expressed in a client note, “We do not believe this deal means the Elevidys launch is derailing; the significant upfront payment indicates management is confident in their cash flow projections.”