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Sarepta, Roche Strike Gene Therapy Licensing Agreement Worth Up To $2.85B

Sarepta, Roche Strike Gene Therapy Licensing Agreement Worth Up To $2.85B

Roche Holdings AG Basel ADR (OTC: RHHBY) said Monday that it has signed a licensing agreement with Sarepta Therapeutics Inc (NASDAQ: SRPT) to acquire the commercial rights to the latter's investigational gene therapy asset SRP-9001 outside of the U.S. The asset is being evaluated in Duchenne muscular dystrophy. 

DMD is a rare degenerative neuromuscular disorder that causes severe progressive muscle loss and premature death.

SRP-9001 works by delivering the microdystrophin-encoding gene directly into the muscle tissue, aiming to produce mucrodystrophin protein, the lack of which causes DMD.

Terms Of The Roche-Sarepta Deal

Sarepta is eligible to receive an upfront payment of $750 million in cash and $400 million in equity. Additionally, Sarepta could pocket $1.7 billion in potential regulatory and sales milestones, as well as royalties on net sales.

Sarepta is vested with the responsibility for the clinical development and manufacturing of SRP-9001. The global development expenses will be shared equally by Roche and Sarepta.

The agreement also gives Roche an option to acquire ex-U.S. rights to certain future DMD-specific programs from Sarepta in exchange for separate milestone and royalty considerations and cost sharing.

The companies expect the deal to close in the first quarter of 2020 subject to the receipt of antitrust clearance and the satisfaction of other customary closing conditions.

Roche And Sarepta's Deal Logic 

Roche recently completed its $4.3-billion acquisition of gene therapy company Spark Therapeutics. The deal with Sarepta is likely to cement its position in the lucrative therapeutic area.

Sarepta could tap into Roche's financial and marketing muscle to take its gene therapy products outside of the U.S.

"As a mission-driven organization, we are inspired to partner with Roche with the goal of bringing SRP-9001 to patients outside the United States," Sarepta CEO Doug Ingram said in a statement. 

"This collaboration will not only increase the speed with which SRP-9001 could benefit patients outside the United States, but will also greatly expand the scope of territories within which we could potentially launch SRP-9001 to improve and save lives."

Sarepta has two exon-skipping RNA therapies that are approved to treat DMD: Exondys and Vyondys. These two therapies provide it with an addressable market of about 20% of the total DMD patients in the U.S.

Sarepta shares were trading 5.47% higher to $133.07 at the time of publication Monday. Over-the-counter Roche shares were trading 0.67% higher at $40.15. 

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