Arrowhead issues statement on exclusive license agreement with Sarepta

Arrowhead (ARWR) issued a statement to address questions about the status of its ongoing exclusive license and collaboration agreement with Sarepta (SRPT). The company said, “Arrowhead continues to conduct clinical and non-clinical studies as stipulated in the agreement, and it expects Sarepta to continue to meet its required financial obligations. Sarepta has provided no indication of any intention to fail to fulfill any of its obligations, however if that occurs there are clear termination provisions that would cause assets and associated intellectual property to be returned to Arrowhead. Arrowhead believes its strong balance sheet and multiple opportunities for additional near- and mid-term business development would be sufficient to support existing and future advancement of these potentially impactful therapies through clinical and preclinical development. Below is an overview of the agreement. Upon closing of the agreement in February 2025, Arrowhead received a $500 million upfront payment and $325 million through the purchase by Sarepta of Arrowhead common stock priced at $27.25 per share. Arrowhead will also receive $250 million to be paid in annual installments of $50 million over 5 years, with the first $50 million payment due in February 2026. Arrowhead is eligible to receive $300 million in near-term payments associated with the continued enrollment of certain cohorts of a Phase 1/2 study of ARO-DM1. Arrowhead believes it is on track to earn the first $100 million soon and the remaining $200 million by the end of the year. Arrowhead is also eligible to receive a further $10 billion in potential milestones and tiered royalties on commercial sales up to low double digits. Included in the agreement were four clinical-stage drug candidates, three pre-clinical programs, and up to six additional targets outside Arrowhead’s pipeline. Sarepta has recently experienced setbacks in products and programs unrelated to those licensed from Arrowhead. These setbacks led Sarepta to conduct a strategic restructuring plan that included cost cutting measures and a pipeline review that prioritizes the funding, development, and commercialization of programs licensed from Arrowhead. Sarepta has clearly stated that it believes this represents the future of their company and has taken measures to ensure they meet their financial obligations. Should Sarepta fail to make either the $100 million or $200 million near-term payment associated with enrollment of ARO-DM1 cohorts, Arrowhead would have the right to terminate the agreement with respect to ARO-DM1, and the program and all associated intellectual property would revert back to Arrowhead. Similarly, should Sarepta fail to make any development or commercial milestone payment, Arrowhead would have the right to terminate the agreement with respect to the asset for which the payment was owed, and the program and all associated intellectual property would revert back to Arrowhead. If Sarepta fails to make any of the annual $50 million payments, Arrowhead would have the right to terminate the entire agreement and all of Arrowhead’s intellectual property rights that have been licensed to Sarepta under all of the programs would revert to Arrowhead. In such cases, Arrowhead would have no obligation to return any consideration Sarepta had already paid.”