Drug Development

Gilead bags Sarepta’s priority review voucher for a discount, paying $125M

Sarepta CEO Ed Kaye

Back in the summer of 2015, AbbVie agreed to pay $350 million for a priority review voucher, which can be used to shave four months off the schedule for any FDA drug review. But now, less than two years later, the price has come down considerably.

Early Monday Sarepta $SRPT said that it has auctioned off its PRV for $125 million, still a considerable sum of cash. Sarepta CEO Ed Kaye started the sale process right after the approval for Exondys 51 landed, looking for some added cash as they launched their drug.

Sarepta didn’t say in its statement who is buying the voucher or what drug it will be used for, but in its SEC filing today the biotech identified the buyer as Gilead, which helped get this market established in 2014 when it acquired its first PRV for $125 million.

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 US 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.

These PRVs have had a controversial history. Regulators have made it clear that they don’t like to be forced to give the inside track at the FDA to any company which can afford to pay the price to hurry along a therapy that’s not so urgently needed. But lawmakers like the added incentive, claiming that it encourages innovation where it’s needed most.

As a result, the number of PRVs on the market has multiplied. Ionis won one, for example, and Alexion has won two by itself. Gilead has been an eager buyer.

Leerink’s Joseph Schwartz was disappointed to hear what the PRV had fetched. He noted:

Upon Exondys 51 approval and the receipt of the PRV, we had initially estimated a ~$350M PRV value in our DCF. With the reauthorization of the PRV program, we decreased our estimate to $200M to account for a reduction in the scarcity value of these instruments and to reflect the minimal benefit accorded by the previous PRV purchased by REGN (OP) from BMRN (OP). Today’s announcement of $125M 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.

Credit Suisse helped market the PRV, according to Sarepta’s statement, making the outreach to “multiple” biopharma companies.

“Our mission at Sarepta Therapeutics is to treat more boys with Duchenne muscular dystrophy,” said Edward Kaye, Sarepta’s chief executive officer. “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.”

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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