Ed Kaye preps a surprising exit from Sarepta, spurring chatter about a possible sale
Only seven months after Ed Kaye won the right to drop “interim” from the CEO title at Sarepta $SRPT, he’s now planning his exit.
In a surprise move for even the most hard-bitten company observers — who have seen the revolving door outside the CEO’s office turn before — Kaye announced during Thursday’s quarterly call with analysts that he’ll be leaving, in the meantime focusing on “the next series of key initiatives for Sarepta. These key initiatives include approval of Exondys in Europe, the advancement of our next-generation PPMO chemistry into the clinic. And finally, next-generation therapies for DMD such as gene therapy.”
I’m announcing this now to provide ample time to work with the management team, the Board of Directors, and other senior leaders at Sarepta to find a suitable candidate that embodies really the culture of Sarepta and ensures a smooth and seamless transition. Following this transition period, I will continue to serve the company as an active Board member as Special Regulatory and Scientific Advisor.
Kaye took over following the turbulent rein of Chris Garabedian, who abruptly resigned two years ago, giving then CMO Kaye the top job. Sarepta has been on a roller coaster ride of epic proportions, seeing its regulatory fortunes wax and wane as the company battled, and eventually won, an approval of Exondys 51 to treat a group of boys afflicted by Duchenne muscular dystrophy. That approval came only after its application triggered a virtual civil war in the FDA as top regulators allied in a failed attempt to overturn Janet Woodcock’s insistence on an approval based on a tiny, controversial study.
The label that came out of the contested approval includes a note that the drug has not yet proven to be clinically effective, which has extended the controversy to payers, where there’s been a reluctant but growing acceptance of the therapy as quarterly sales slowly edge up.
According to an 8-K filed with the SEC Thursday, Kaye told the board on Monday that he was leaving the company at the end of his term, September 20, or a later date. A group of execs also were assured of an exit package with accelerated vesting on stock awards if they’re terminated after a new CEO steps in.
To some of the analysts watching the company, the departure could help open the door to a deal to sell the company.
Noted Leerink’s Joseph Schwartz:
CEO Kaye credits an impressive array of achievements in the past two years and believes a commercially-oriented leader makes sense at the helm. He will remain with the company, and we are curious on the potential implications of today’s resignation announcement and who may ultimately replace Ed Kaye. With an upcoming switch in leadership, prospect of a sale may resonate with some investors.
The company’s stock, though, edged down slightly after the market close yesterday. But it shot up 7% in premarket trading Friday as the speculation about an M&A deal heated up. But not everyone was buying it.
I don't want to put a damper on everybody's party, but I don't see why Ed Kaye's exit should change odds of a $SRPT buyout.
— Matthew Herper (@matthewherper) April 28, 2017