With Elevidys expansion in hand, Sarepta commits up to $10 billion to develop short interfering RNA–based drugs to build out its pipeline.
Sarepta Therapeutics is putting massive biobucks on the line to work on RNA drugs with Arrowhead, paying out $500 million upfront to find new treatments for rare genetic diseases of the muscle, central nervous system and lung.
A $325 million investment will also be made in Arrowhead as an equity investment with another $250 million over the next five years, according to a Tuesday press release. With milestones expected from a Phase I/II study, Arrowhead could receive another $300 million in the next 12 months. The Pasadena, California-based biotech then has up to $10 billion in milestones up for grabs later, plus royalties.
The deal added almost 20% to Arrowhead’s stock, which rose to $22.42 Tuesday morning.
Arrowhead expects the transaction to extend its cash runway into 2028, which will support its move to get an initial drug approval for plozasiran in familial chylomicronemia syndrome. That nod could come as soon as 2025. Sarepta’s CEO will join Arrowhead’s board of directors in the deal to guide the company from a clinical-stage biotech into the commercial stage.
Sarepta on the other hand is looking to add to its mid- to early-stage pipeline, which includes gene therapies and other modalities for Duchenne muscular dystrophy and limb-girdle muscular dystrophies.
Four of the programs covered under the Arrowhead agreement include facioscapulohumeral muscular dystrophy (FSHD), myotonic dystrophy type 1 (DM1), idiopathic pulmonary fibrosis (IPF) and spinocerebellar ataxia 2 (SCA2). Arrowhead’s RNA interference platform delivers small interfering RNA to suppress disease-causing genes.
Sarepta has four drugs on the market, including the Duchenne muscular dystrophy gene therapy Elevidys, which recently received full approval for patients four years and up with a confirmed mutation to the DMD gene. Analysts at the time predicted a “rapid uptake” of Elevidys, which carries a big-ticket price tag of $3.2 million.
The collaboration with Arrowhead is the first significant investment Sarepta has made to expand its pipeline in recent years. In a note to investors, Jefferies analyst Andrew Tsai said the deal is expected to be “well-received” by the markets. Sarepta’s shares rose over 6% to $122.20 as the markets opened Tuesday morning.
Sarepta gains exclusive access to seven or more siRNAi programs for rare disease indications which have limited-to-no treatments, Tsai noted. The move also diversifies the biotech’s pipeline beyond DMD, which will help solve the upcoming revenue cliff for Elevidys beyond 2030.
“We think the deal is smart,” Tsai said, and “could yield billions of cash flows in the long run.”
Sarepta isn’t the only one dropping potential billions for siRNA tech. In January, Boehringer Ingelheim inked a collaboration with Chinese biotech Suzhou Ribo Life Science and its Swedish unit Ribocure Pharmaceuticals to develop siRNA-based treatments for nonalcoholic or metabolic dysfunction-associated steatohepatitis. The companies did not disclose a target, but said the deal could exceed $2 billion.
