Arrowhead to get $825M in Sarepta licensing pact, appoints Sarepta CEO to board

Arrowhead (ARWR) announced a global licensing and collaboration agreement with Sarepta (SRPT). Upon closing, Arrowhead will receive $825M, consisting of $500M cash and $325M as an equity investment priced at a 35% premium. Arrowhead also receives $250M to be paid in equal installments over five years and is eligible to receive an additional $300M in near-term payments, which Arrowhead is on track to achieve during the next 12 months. Additionally, Arrowhead is eligible to receive royalties on commercial sales and up to approximately $10B in future potential milestone payments. The agreement covers multiple clinical and preclinical programs in rare, genetic diseases of the muscle, central nervous system and the lungs, as well as allows Sarepta to select up to six new targets for Arrowhead to conduct discovery and preclinical development activities in areas complementary to Sarepta’s leadership in precision genetic medicine for rare diseases, which can utilize Arrowhead’s Targeted RNAi Molecule platform. At the close of the agreement, Doug Ingram, president and CEO of Sarepta, will be appointed to the Arrowhead board of directors. Upon closing, Arrowhead will receive a $500M upfront payment and $325M through the purchase by Sarepta of Arrowhead common stock priced at a 35% premium to the 30-day volume weighted average price. Arrowhead will also receive $250 million to be paid in annual installments of $50M over five years. Arrowhead also has the potential to receive $300M in near-term payments associated with the continued enrollment of certain cohorts of a Phase 1/2 study, which Arrowhead is on track to achieve during the next 12 months. Arrowhead is eligible to receive development milestone payments of between $110M and $410M per program and sales milestone payments of between $500M and $700M per program. Arrowhead is also eligible to receive tiered royalties on commercial sales up to the low double digits. Under the agreement, Arrowhead will manufacture clinical drug supply for all programs arising out of the license and collaboration, and commercial drug product for the four programs currently in clinical trials. The transaction is expected to close in early 2025, subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.