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Sarepta's DMD Drug Launch Slow; What's in Store for 2017?

Zacks Equity Research

We issued an updated research report on Sarepta Therapeutics, Inc. SRPT on Mar 9, 2016.

Sarepta is a commercial-stage biopharmaceutical company that focuses on the discovery and development of RNA-based therapeutics targeting rare and infectious diseases. It concentrates on the development of exon-skipping drug candidates targeting Duchenne muscular dystrophy (DMD),a fatal paediatric muscular disease.

In Sep 2016, Sarepta gained accelerated approval for Exondys 51 in the U.S. for the treatment of patients suffering from DMD amenable to exon 51 skipping. Exondys 51 is the first approved disease-modifying therapy for DMD in the U.S. as well as the company’s first product to receive marketing approval.  The FDA approval of Exondys 51 was thus a huge boost for Sarepta as DMD is a devastating and incurable muscle-wasting disease. There is a significant unmet need for DMD treatments. Exondys 51 has the potential to address up to 13% of the total DMD population. In the U.S., Sarepta commenced shipments of Exondys 51 at the end of the third quarter of 2016. Also, a marketing application is under review in the EU, which if approved, should augment sales.

However, the drug’s commercial launch has been slower than expected. Slower patient starts, revenue conversions and reimbursement hurdles are being held responsible for the slower-than-expected launch of Exondys 51. However, Sarepta expects a pickup in patient starts and conversion rates as 2017 progresses.

Moreover, the company’s collaboration agreements with Summit Therapeutics plc SMMT and Catabasis Pharmaceuticals, Inc. CATB as well as its own follow on exon-skipping pipeline candidates represent the most comprehensive approach to treat DMD.

Sarepta entered into an exclusive license and collaboration agreement with Summit Therapeutics in Oct 2016 to acquire the rights to Summit’s utrophin modulator pipeline—including its lead candidate, ezutromid — in Europe, in Turkey and the Commonwealth of Independent States. Ezutromid is currently being evaluated in a phase II study, PhaseOut DMD, with 24-week biopsy data from the initial group of patients anticipated in 2017.

Moreover, Sarepta entered into a joint research collaboration with Catabasis in Sep 2016 to explore a combination-drug treatment approach for DMD. The companies will contribute their respective expertise to study an exon-skipping treatment developed by Sarepta, together with an oral NF-kB inhibition treatment developed by Catabasis in a mouse model of DMD. Sarepta also has two gene therapy-focused partnerships with Nationwide Children's Hospital for the treatment of DMD.

Meanwhile Sarepta is looking to build its own DMD pipeline beyond Exondys 51 by developing other exon-skipping treatments. Sarepta has about eight exon-skipping candidates in its pipeline that could treat 75%–80% of the DMD population.

Last week, Sarepta announced that it is selling its non-core asset - a rare paediatric disease priority review voucher or PRV - to Gilead Sciences Inc. GILD for $125 million, thus increasing its cash funds which should support its DMD pipeline development.

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