Arrowhead Shares Surge with $825 Million Sarepta Therapeutics Deal

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Arrowhead Shares Surge with $825 Million Sarepta Therapeutics Deal

On Tuesday, shares of Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR) rose 32% following the announcement of a comprehensive licensing and collaboration agreement with Sarepta Therapeutics (NASDAQ:SRPT). The deal, expected to close in early 2025, will enable Arrowhead to receive an immediate $825 million, including a $500 million upfront payment and a $325 million equity investment with a 35% premium. Additionally, Arrowhead will receive $250 million over the next five years and could earn up to $10 billion from future milestone payments, along with royalties from product sales.

The partnership provides Sarepta access to Arrowhead's Targeted RNAi Molecule (TRiM™) platform for the development of treatments for rare genetic diseases affecting muscles, the central nervous system, and the lungs. Sarepta will also have the option to select up to six new targets for Arrowhead's preclinical development.

Christopher Anzalone, Ph.D., President and CEO of Arrowhead, emphasized the significance of the agreement, stating it provides "transformative capital" and substantial non-dilutive financing potential. The agreement is expected to extend Arrowhead's cash runway to 2028 and support the advancement of its investigational drug plozasiran and pipeline programs.

In connection with the deal, Doug Ingram, President and CEO of Sarepta, will join Arrowhead's Board of Directors, bringing extensive experience in advancing investigational drugs and launching commercial products.

Arrowhead is expected to receive an additional $300 million in near-term payments related to clinical trial enrollment within the next 12 months. The company will also be eligible for development milestone payments ranging from $110 million to $410 million per program and sales milestone payments between $500 million and $700 million per program. Additionally, Arrowhead will earn tiered royalties from commercial sales.

The existing clinical programs within the agreement include ARO-DUX4 for facioscapulohumeral muscular dystrophy type 1, ARO-DM1 for myotonic dystrophy type 1, ARO-MMP7 for idiopathic pulmonary fibrosis, and ARO-ATXN2 for spinocerebellar ataxia 2. Preclinical programs ARO-HTT, ARO-ATXN1, and ARO-ATXN3 are expected to be ready for clinical trial applications in the coming years.

Arrowhead will discuss the details of this agreement during its fiscal year-end results conference call on Tuesday, November 26, 2024, at 4:30 PM ET. The closing of the transaction is subject to regulatory approvals and customary closing conditions.