Sarepta Therapeutics Inc SRPT forged a deal with Summit Therapeutics PLC (ADR) SMMT to develop its utrophin pipeline in exchange for European rights and a Latin America option.
Summit's stock soared higher by more than 100 percent following the announcement, but analysts at Wedbush focused on what Sarepta has to gain.
Heather Behanna maintained an Outperform rating and $66 price target on Sarepta's stock, noting that the agreement is "low risk, high reward."
Behanna noted that Summit's compounds aim to keep utrophin levels upregulated more consistently over time. The analyst added that pre-clinically, upregulation of utrophin expression has "led to dramatic improvements of function in DMD animal models."
Summit's lead candidate ezutromid is in a proof-of-concept study called PhaseOut DMD. The analyst noted the following:
"Summit is testing two formulations of ezutromid in the POC study; the compound has low bioavailability. Its proof-of-concept study is open label with MRI as a primary endpoint; muscle biopsy data at 24 weeks are expected in 2Q/3Q 2017. A placebo controlled study is slated to begin later next year. Beyond ezutromid, Summit is working with its Oxford collaborators on next-generation utrophin modulators; Sarepta has rights to both ezutromid and its pipeline."
Bottom line, the analyst concluded that the deal is "compelling" for Sarepta and gives the company a path to treat all DMD boys.
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