Sarepta Therapeutics said Tuesday that it will pay Arrowhead Pharmaceuticals $500 million in cash for a series of experimental RNA-based drugs to treat rare diseases in the muscles, nervous system, and lungs.
In addition to the upfront payment, Sarepta will also make a $325 million investment in Arrowhead, pay out $50 million a year for the next five years, and promise $300 million in “near-term’’ milestone payments related to clinical trial enrollment. Arrowhead could also receive royalties and other milestone payments collectively worth up to $10 billion, although most of those are contingent on sales.
The deal represents the first significant investment Cambridge-based Sarepta has made to expand its pipeline in years.
The much-debated approval of Elevidys, its gene therapy for Duchenne muscular dystrophy, already appears to be a windfall for the company, bringing in $181 million in the third quarter. Those revenues, while expected to rise, won’t last forever. Other Duchenne gene therapies are in trials. And because these are one-time therapies, the eligible patient population — and market — shrinks with each person treated.
Sarepta has gene therapies for other forms of muscular dystrophy in development, but those diseases are quite rare. And earlier this month, the company axed a next-generation pipeline of its own RNA drugs amid safety concerns.
With the Arrowhead collaboration, Sarepta is buying into a lucrative, fast-moving race to develop RNA drugs that can get to previously hard-to-reach tissues.
Sarepta built its business in large part on developing RNA-based medicines to knock down certain regions of genes, with Duchenne drugs such as Exondys. But these medicines only reached muscle cells at very low levels, stoking debate about their effectiveness.
Since then, a series of startups have launched with new technologies for gluing RNA to new types of tissue-specific delivery vehicles.
Four of California-based Arrowhead’s programs are already in trials. One therapy is meant to reduce expression of a gene that drives Facioscapulohumeral muscular dystrophy, or FSHD, a relatively common, generally adult-onset form of muscular dystrophy.
Sarepta and Arrowhead will also target a disease called myotonic dystrophy, a condition also being pursued by Vertex, Avidity, and Dyne Therapeutics.
There is also a clinical-stage program for idiopathic pulmonary fibrosis, a rare form of lung scarring, and for a form of Spinocerebellar ataxia, a brain disorder. Preclinical programs include two other forms of Spinocerebellar ataxia disorders and Huntington’s disease.
Arrowhead said it is on track to receive all of its clinical-trial enrollment-based milestones in the next year.
