Sarepta Therapeutics and Arrowhead Pharmaceuticals have announced a global licensing and collaboration agreement focused on developing RNA interference (RNAi)-based treatments for rare genetic diseases affecting muscles, the central nervous system (CNS), and lungs. The deal, potentially worth up to $10 billion in milestone payments and royalties, aims to leverage Arrowhead's Targeted RNAi Molecule (TRiM) platform to expand Sarepta's therapeutic pipeline.
Collaboration Details
Under the agreement, Sarepta will receive exclusive rights to several of Arrowhead’s clinical-stage programs. These include ARO-DUX4 for facioscapulohumeral muscular dystrophy (FSHD), ARO-DM1 for myotonic dystrophy type 1 (DM1), ARO-MMP7 for idiopathic pulmonary fibrosis (IPF), and ARO-ATXN2 for spinocerebellar ataxia 2 (SCA2). These programs utilize Arrowhead’s TRiM platform for precise siRNA delivery.
The financial terms of the deal include an upfront payment of $500 million to Arrowhead, along with a $325 million equity investment in Arrowhead common stock at a 35% premium. Additionally, Arrowhead will receive $250 million, paid in annual installments of $50 million over five years. Arrowhead is also eligible for up to $10 billion in future milestone payments and royalties on commercial sales.
Strategic Rationale
Doug Ingram, president and CEO of Sarepta, stated that the collaboration with Arrowhead provides a synergistic platform to complement Sarepta’s gene therapy and gene editing efforts. He emphasized the potential for new treatments for devastating genetic diseases with significant unmet needs, aligning with Sarepta's strategic priorities for long-term growth.
Chris Anzalone, PhD, president and CEO of Arrowhead, highlighted Sarepta’s clinical, regulatory, and commercial expertise, noting that the collaboration validates Arrowhead's TRiM platform technology. Upon closing of the agreement, Doug Ingram will be appointed to the Arrowhead board of directors.
Pipeline Expansion and Future Development
Sarepta and Arrowhead have also entered into a discovery collaboration for up to six additional muscle, cardiac, and/or CNS targets, utilizing Arrowhead’s delivery technologies. Sarepta will have an exclusive license to Arrowhead’s technology for developing therapeutics against a range of skeletal muscle gene targets.
Arrowhead will be responsible for completing Phase I/II trials currently in progress, after which development will transition to Sarepta. Arrowhead will also manufacture clinical drug supply for all programs arising from the collaboration, as well as commercial drug product for the four programs currently in clinical trials.
Financial Implications and Market Reaction
The transaction is expected to close in early 2025, pending regulatory approvals. Analysts view the deal as a positive step for Sarepta, addressing concerns about its pipeline and providing multiple avenues for future growth. The collaboration extends Arrowhead's cash runway into 2028, potentially through multiple product launches.
Sarepta's board of directors has approved a $500 million share repurchase program as part of its overall capital allocation strategy, reflecting confidence in the company's financial performance and ability to generate substantial cash flow.
