Sarepta Auctions Off Its Priority Review Voucher for Exondys 51 to Gilead for $125 Million
February 21, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Cambridge, Mass.-based Sarepta Therapeutics won a Rare Pediatric Disease Priority Review Voucher (PRV) from the U.S. Food and Drug Administration (FDA) when Exondys 51 was approved for Duchenne muscular dystrophy (DMD). The company announced today that it had auctioned off its voucher for $125 million.
Although Sarepta didn’t identify the winner of the auction in its announcement, its filing with the U.S. Securities and Exchange Commission (SEC) today identified the buyer as Gilead Sciences .
Priority Review Vouchers were designed to increase innovation. They allow the company that receives one to knock up to four months off the review process. And, as should be obvious, they are allowed to auction them off to other companies.
John Carroll, writing for Endpoints News, notes that the $125 million price seems rather low. In mid-2015, AbbVie bought one for $350 million.
Joseph Schwarz, an analyst with Leerink, wrote in a note to investors, “Upon Exondys 51 approval and the receipt of the PRV, we had initially estimated a ~$350 million PRV value in our DCF (discounted cash flow). With the reauthorization of the PRV program, we decreased our estimate to $200 million to account for a reduction in the scarcity value of these instruments and to reflect the minimum benefit accorded by the previous PRV purchased by Regeneron from BioMarin . Today’s announcement of $125 million is even lower than our adjusted estimates. And while this non-dilutive amount will surely add additional runway to Sarepta’s cash position, we cannot help but wonder if this transaction reflects a 1) broader decline in PRV interest among bidders, or 2) an undervalued asset sale.”
Carroll notes that PRVs can be a bit controversial. The FDA doesn’t want it to look like they’re playing favorites with any company that can buy a PRV from another company. On the other hand, he writes, “Lawmakers like the added incentive, claiming that it encourages innovation where it’s needed most.”
Northbrook, Ill.-based Marathon Pharmaceuticals recently received a PRV after the FDA approved Emflaza (deflazacort) to treat DMD in patients five years or older. Marathon brings other controversy along for the ride. Deflazacort is a corticosteroid that has been on the market in other countries for decades. It is available in Canada, for example, for about $1,000. But Marathon indicated its plans to sell the drug for $89,000 for a year’s treatment.
Note that Sarepta’s Exondys 51 is running around $300,000 for a year of treatment.
Carroll writes, “The news should help encourage Marathon, which also landed a PRV just days ago after its controversial approval for its cheap, generic steroid deflazacort, to be sold in the U.S. as a treatment for Duchenne MD. Marathon likely spent far less than that for its own development program, according to a pair of experts. And a deal for the PRV at $125 million could easily make their drug profitable, before it’s even sold.”
Of the sale of the PRV to Gilead , Edward Kaye, Sarepta’s chief executive officer, said in a statement, “Our mission at Sarepta Therapeutics is to treat more boys with Duchenne muscular dystrophy. The sale of the PRV provides an important source of non-dilutive capital to support the rapid advancement of our follow on exon skipping candidates and next generation RNA targeted antisense platform.”