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Cashing in On Duchenne Approval, Sarepta Sells Voucher to Gilead For $125M

Xconomy Boston — 

Sarepta Therapeutics didn’t just get its first drug to market when the FDA approved the Duchenne muscular dystrophy drug eteplirsen (Exondys 51) last year—it got a potentially lucrative voucher from the FDA too. Today the Cambridge, MA, company cashed that in.

Sarepta (NASDAQ: SRPT) this morning sold what’s known as a priority review voucher to Gilead Sciences (NASDAQ: GILD), of Foster City, CA, in a deal worth $125 million. Sarepta will use the cash to help develop next-gen drugs for Duchenne. Eteplirsen is designed to treat about 13 percent of people with the disease.

Priority review vouchers are awarded to companies that bring treatments to market for neglected tropical diseases and rare pediatric ailments. They enable a swifter review from the FDA once a company files for approval of a subsequent drug, which can cut months off the review process, potentially adding millions in revenue for a company, or giving a drugmaker a leg up over a competitor with a rival therapy. The vouchers can be used for any drug in a company’s pipeline, and be flipped like any other asset—the way Sarepta did today.

Over the course of 2014 and 2015, PRVs became hot commodities. Regeneron Pharmaceuticals (NASDAQ: REGN) bought one from BioMarin Pharmaceutical (NASDAQ: BMRN) for $67.5 million in July 2014, the first ever sale of a PRV, to try to speed an FDA review of a cholesterol lowering drug, alirocumab (Praluent). The price for PRVs climbed subsequently with a few different deals in 2014 and 2015. AbbVie (NYSE: ABBV) paid the highest price for a voucher when it shelled out $350 million for a PRV from United Therapeutics (NASDAQ: UTHR) in August 2015.

PRVs were already awarded for developers of certain tropical diseases, but the program was expanded in 2012 to help incentivize the development of drugs for rare childhood diseases. But in a report last March, the Government Accountability Office wrote that while drugmakers and patient advocacy groups supported the PRV program, FDA officials had seen “no evidence that the program was effective” and wanted to shelve it. Officials, according to the GAO report, said the PRV program “adversely affects the agency’s ability to set its public health priorities.” The additional workload strained the FDA’s resources, and can force the agency to prioritize reviews of applications for drugs applications that might not necessarily treat serious conditions.

The program could have expired last year, but former President Barack Obama extended it through the end of 2016, and a further extension through Sept. 2020 was baked into the 21st Century Cures Act, which was signed into law in November. Sarepta won a PRV when eteplirsen was approved on Sept. 19. Most recently, Marathon Pharmaceuticals was awarded a PRV for the Duchenne-treating steroid deflazacort (Emflaza), which has been approved in several other countries for years but only gained U.S. approval on Feb. 9.

This is the second time Gilead has bought a PRV, meanwhile. It paid $125 million for a PRV from Knight Pharmaceuticals in November 2014, and used the voucher to speed up the review of an HIV drug approved in March 2016 and sold under the brand name Odefsey.

Here’s more on the ups and downs of the PRV program.