Arrowhead earns $100 million milestone payment from Sarepta

PASADENA - Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR) has earned a $100 million milestone payment from Sarepta Therapeutics (NASDAQ:SRPT) after reaching the first of two enrollment targets in a Phase 1/2 clinical study of ARO-DM1, according to a company press release statement. According to InvestingPro data, Sarepta, currently valued at $1.17 billion, has seen significant revenue growth of 59% over the last twelve months, though the company faces challenges with cash burn.

The payment was triggered when Arrowhead reached a prespecified enrollment target and received authorization to dose escalate in the study of ARO-DM1, an investigational RNA interference therapeutic for type 1 myotonic dystrophy, the most common adult-onset muscular dystrophy.

Arrowhead expects to receive the payment within 60 days, in accordance with the license and collaboration agreement between the companies. The company anticipates achieving the second enrollment target by the end of 2025, which would trigger an additional $200 million milestone payment.

The milestone comes from a global licensing and collaboration agreement signed in November 2024 and closed in February 2025, through which Sarepta received rights to multiple investigational treatments using Arrowhead’s Targeted RNAi Molecule platform.

When the agreement closed, Arrowhead received a $500 million upfront payment and $325 million through Sarepta’s purchase of Arrowhead common stock at $27.25 per share. The agreement also includes $250 million to be paid in annual installments of $50 million over five years.

The collaboration encompasses four clinical-stage programs, including ARO-DM1, as well as three preclinical programs expected to be ready for clinical trials between 2025 and 2026. Sarepta can also propose up to six new central nervous system or muscle targets for Arrowhead to perform discovery and preclinical development work.

Under the agreement, Arrowhead will manufacture clinical drug supply for all programs and commercial drug product for the four programs currently in clinical trials.

In other recent news, Sarepta Therapeutics has faced significant challenges with its Elevidys therapy. Barclays downgraded Sarepta from Equalweight to Underweight, citing concerns following the suspension of Elevidys at the FDA’s request after a third death related to the therapy. Similarly, JPMorgan also downgraded Sarepta from Neutral to Underweight, highlighting negative headlines around Elevidys as a key factor. Jefferies, while maintaining a Buy rating, lowered its price target from $40 to $35, referencing Roche’s reduced sales guidance for Elevidys outside the U.S. Citi reiterated its Sell rating on Sarepta, pointing to regulatory hurdles and an agreement among CBER reviewers that Elevidys should not return to the market. Reports indicate that Sarepta may need to conduct new studies to potentially reintroduce its Duchenne muscular dystrophy treatment. These developments have raised concerns among investors and analysts regarding the future of Sarepta’s gene therapy.

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