Arrowhead Pharmaceuticals, Inc. (NASDAQ: ARWR) has successfully closed its global licensing and collaboration agreement with Sarepta Therapeutics (NASDAQ: SRPT), which was initially announced on November 26, 2024. The closing of this highly anticipated transaction was contingent upon the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, in addition to other customary conditions. This significant partnership is set to bolster Arrowhead’s clinical and commercial pipeline and further expand its reach in the biopharmaceutical sector.
Financial Terms of the Agreement
As a result of this transaction, Arrowhead Pharmaceuticals will receive substantial financial benefits that will support its ongoing research and development efforts. Upon closing, Arrowhead has secured an upfront payment of $500 million from Sarepta. Additionally, Sarepta will purchase $325 million worth of Arrowhead common stock at a price of $27.25 per share.
Arrowhead will also receive $250 million, to be paid in annual installments of $50 million over the next five years, providing steady cash flow to support its pipeline. Beyond these guaranteed payments, Arrowhead has the potential to receive up to $300 million in near-term payments tied to the continued enrollment of specific patient cohorts in the ongoing Phase 1/2 study of ARO-DM1. Arrowhead is on track to meet these milestones within the next 12 months, unlocking further financial opportunities.
The agreement also includes a series of performance-based milestones. Arrowhead stands to receive development milestone payments ranging from $110 million to $410 million for each program, depending on the achievement of specific scientific and regulatory objectives. Sales milestones are also part of the agreement, with Arrowhead potentially earning between $500 million and $700 million per program, contingent on the commercial success of the therapies. Additionally, Arrowhead is eligible to receive tiered royalties on the commercial sales of the products resulting from this partnership, which could reach up to the low double digits.
Programs Under the License and Collaboration Agreement
The collaboration between Arrowhead and Sarepta is focused on advancing several promising clinical and preclinical-stage programs. These programs aim to address rare genetic diseases, with a particular emphasis on neuromuscular disorders and other serious conditions.
Clinical Stage Programs
- ARO-DUX4: ARO-DUX4 is designed to target the gene responsible for producing the DUX4 protein, which is implicated in facioscapulohumeral muscular dystrophy type 1 (FSHD). This genetic disorder leads to progressive muscle weakness, and ARO-DUX4 is being investigated as a potential treatment to reduce or silence the DUX4 gene’s expression. The program is currently dosing patients in a Phase 1/2 clinical study, and its progress will be a key focus of this collaboration.
- ARO-DM1: This program is targeting the dystrophia myotonica protein kinase (DMPK) gene, which is responsible for myotonic dystrophy type 1. The disease, characterized by progressive muscle weakness and myotonia, currently has no disease-modifying treatments. ARO-DM1 is designed to reduce the expression of the DMPK gene in skeletal muscle. It is also in a Phase 1/2 clinical study, and its progress will be closely monitored.
- ARO-MMP7: Aiming to treat idiopathic pulmonary fibrosis (IPF), ARO-MMP7 is designed to reduce the expression of matrix metalloproteinase 7 (MMP7) in the lungs, a key mediator of fibrosis. IPF is a progressive and fatal lung disease with few treatment options. The program is currently in a Phase 1/2 clinical study, marking an important step in the development of therapies for this challenging condition.
- ARO-ATXN2: This program targets the toxic ATXN2 protein that plays a key role in spinocerebellar ataxia type 2 (SCA2), a neurodegenerative disease. ARO-ATXN2 is designed to silence the expression of the ATXN2 gene in the central nervous system (CNS). Currently in a Phase 1/2 clinical study, ARO-ATXN2 holds potential as a disease-modifying therapy for SCA2, a condition for which there are no approved treatments. Enrollment for this study is ongoing.
Preclinical Stage Programs
- ARO-HTT: Aiming to address Huntington’s disease, ARO-HTT is designed to reduce the levels of the mutant huntingtin protein, which causes the progressive neurodegenerative effects of the disease. Expected to be clinical trial application (CTA)-ready by 2025, ARO-HTT represents a promising therapeutic avenue for this currently untreatable condition.
- ARO-ATXN1: Targeting spinocerebellar ataxia type 1 (SCA1), ARO-ATXN1 is designed to silence the toxic ATXN1 gene in patients. This program is expected to be CTA-ready by 2026, and it aims to provide a potential treatment option for patients suffering from this rare genetic disorder.
- ARO-ATXN3: Similar to ARO-ATXN1, ARO-ATXN3 is focused on spinocerebellar ataxia type 3 (SCA3), another neurodegenerative disease caused by the expansion of a genetic repeat in the ATXN3 gene. Arrowhead expects ARO-ATXN3 to be CTA-ready by 2026, providing hope for those affected by this condition.
Discovery Programs
As part of the five-year collaboration agreement, Sarepta has the option to propose up to six new CNS (central nervous system) or muscle targets for Arrowhead to explore in the discovery and preclinical stages. Upon successful development, Sarepta would receive an exclusive license to those programs and assume responsibility for their clinical development and commercialization. This discovery component adds a level of flexibility to the partnership, potentially leading to new therapeutic avenues over the course of the agreement.
Drug Manufacturing
Under the terms of the agreement, Arrowhead will be responsible for manufacturing the clinical drug supply for all programs resulting from the license and collaboration. Additionally, Arrowhead will be tasked with producing the commercial drug product for the four programs currently in clinical trials. This responsibility allows Arrowhead to leverage its expertise in drug production while ensuring quality control and supply chain stability as the therapies advance through clinical development.
Strategic Significance
The closing of this global licensing and collaboration agreement with Sarepta Therapeutics marks a major milestone for Arrowhead Pharmaceuticals. With a combination of substantial upfront and milestone payments, as well as royalties on future sales, the agreement provides Arrowhead with a robust financial foundation to accelerate the development of its pipeline. The partnership also offers access to Sarepta’s expertise in neuromuscular diseases, which could further enhance the clinical progress of Arrowhead’s programs.
This collaboration is poised to advance several innovative therapies for patients with rare and debilitating genetic disorders. By combining Arrowhead’s cutting-edge RNA-targeted therapeutics with Sarepta’s deep expertise in genetic medicine, the companies aim to bring new treatments to market that could transform the lives of patients suffering from conditions with limited or no treatment options.
In conclusion, the successful closing of the licensing and collaboration agreement between Arrowhead Pharmaceuticals and Sarepta Therapeutics represents a significant step forward for both companies. It reinforces their commitment to advancing science and providing patients with the next generation of transformative therapies. With multiple programs in clinical and preclinical stages, this partnership promises to make a lasting impact on the treatment of genetic diseases, offering new hope to those in need.
