Sarepta Snags $1 Billion Deal With Roche For Gene Therapy – Nasdaq

On Monday morning, Sarepta Therapeutics announced that Roche would pay $1.2 billion up front for the rights to sell Sareptas experimental gene therapy for Duchenne muscular dystrophy outside of the United States.

On Monday morning, Sarepta Therapeutics announced that Roche would pay $1.2 billion up front for the rights to sell Sareptas experimental gene therapy for Duchenne muscular dystrophy outside of the United States.

The Swiss pharmaceutical giant Roche just crowned a gene therapy winner.

On Monday morning, the biotech firm Sarepta Therapeutics (ticker: SRPT) announced that Roche (RHHBY) would pay $1.2 billion up front for the rights to sell Sareptas experimental gene therapy for Duchenne muscular dystrophy outside of the United States.

We view this as a big win for the company, wrote Cantor Fitzgerald analyst Alethia Young in a note Monday. We think validation from a company like Roche performing extensive diligence and choosing to partner should significantly increase investor confidence in [Sareptas] entire gene therapy program.

The deal comes after a rocky few months for Sarepta, in which the company saw its shares fall after the Food and Drug Administration rejected an application to approve another of its Duchenne muscular dystrophy treatments, Vyondys 53, before reversing course in mid-December and approving the drug.

The Duchenne muscular dystrophy gene therapy, called SRP-9001, is currently in clinical development, and has not yet been approved. Sarepta is one of a number of companies looking to develop a gene therapy for Duchenne muscular dystrophy, and early data has suggested that it has the best shot of reaching the market first.

Shares of Sarepta were up about 8% in pre-market trading. Analysts said the deal was one of the biggest ever for rights to distribute a drug outside of the U.S., and would significantly impact their estimates for Sarepta looking forward. Cowen analyst Ritu Baral wrote that she had previously not included any revenue projections at all for the Duchenne muscular dystrophy gene therapy sales outside of the U.S. in her price target.

We think the Roche partnership will allow SRPT to realize more value (and faster) for the 9001 program than if SRPT commercialized the program themselves, she wrote.

For Roche, meanwhile, this deal is yet another major investment in gene therapy: Last week, the company completed its acquisition last week of the gene therapy biotech Spark Therapeutics.

The back story. Shares of Sarepta are up 15.6% so far this year. The stock dipped over the summer, after the FDA denied approval for Vyondys 53, but has rebounded in December after the agency changed its mind. Still, the stock lags behind its biotech peers. The iShares Nasdaq Biotechnology ETF is up 26.6% so far this year.

Whats new. Analysts said that the new deal amounted to an important vote of confidence by Roche, which had likely seen proprietary data on Sareptas gene therapy program. And they said that it would allow Sarepta, which has no infrastructure outside of the U.S., to reach markets it wouldnt have otherwise been able to access.

One of the largest single-asset, ex-U.S. deals to date, this licensing agreement instills added confidence in SRPTs gene therapy programs and removes any remaining financial overhang for SRPT, in our view, wrote SVB Leerink analyst Joseph P. Schwartz.

Under the terms of the deal, Sarepta gets $750 million in cash and $400 million in Sarepta stock up front, and is eligible to receive another $1.7 billion if it hits certain milestones. It will also receive net sales royalties. Sarepta retains rights to sell SRPT-9001 inside of the U.S.

This collaboration will not only increase the speed with which SRP-9001 could benefit DMD patients outside the United States, but will also greatly expand the scope of territories within which we could potentially launch SRP-9001 and improve and save lives, said Sareptas president and CEO, Doug Ingram, in a statement.

Looking forward. Sarepta is hosting a conference call to discuss the deal at 8:30 a.m. Eastern on Monday.

RBC Capital Markets analyst Brian Abrahams wrote that an acquisition of Sarepta remained possible, despite the deal. While some may be disappointed that SRPT did not get acquired outright...we do not believe there is a standstill precluding Roche from acquiring SRPT, and note examples in the past of companies partnering their products ex-U.S. but still getting acquired later on, he wrote.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Sarepta Snags $1 Billion Deal With Roche For Gene Therapy - Nasdaq