A keen buyer and a pragmatic seller? That’s a deal

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In today’s biotech market doing any deal is as important as doing the right deal at the right price used to be. So it makes sense for BioMarin to have bought Prosensa, especially when the target seems to have been so pragmatic about the price.

Duchenne muscular dystrophy makes a decent fit for BioMarin, a rare disease specialist whose cash balance and need for M&A trumped the huge regulatory risks still attached to Prosensa’s exon-skipping approach. Why Sarepta, a company that has fallen behind Prosensa and whose credibility is at a low, rose 6% in early trade today is a bigger mystery.

One key point is that Sarepta has a large retail investor following, as well as a hugely emotive patient advocacy campaign behind it, with much of these playing out across social media. Thus a simple positive read-across is that BioMarin’s $680m endorsement of the exon-skipping approach is positive for Sarepta.

That said, BioMarin has backed Sarepta’s rival and not Sarepta, and putting Prosensa’s drisapersen in the hands of a bigger player puts up obvious hurdles. Then there is Sarepta’s lack of progress beyond a 12-patient study, management infighting, and recent FDA request for more data (Sarepta’s credibility unravels, October 7, 2014).

Realistic on price

The $680m price tag for Prosensa says much about the target’s pragmatism; little more than a year ago Prosensa traded above this valuation, so management has shown itself to be realistic on price. Of course, in September 2013 drisapersen had not yet flunked its pivotal trial, and GlaxoSmithKline was still a licensing partner.

In contrast it was only recently that Sarepta still had a $1bn market cap, which based on the few data-mined results it has generated likely put it out of the reach of realistic buyers.

Additionally, BioMarin has utilised a smart deal structure, making two additional $80m payments conditional on approvals of drisapersen in the US by May 2016 and in the EU by February 2017.

The US group, whose Vimizim was approved in the US this year for Morquio A syndrome, had $666m in the bank at the end of September. The balance of the purchase price will presumably come from the sale of long-term investments.

Robust data

On a call today BioMarin kept repeating its view that Prosensa had generated a relatively robust dataset, comprising three randomised trials and extension studies, which it said amounted to a “substantial body of evidence” – the pivotal failure notwithstanding.

This, coupled with the already initiated rolling US NDA process, contrasts with Sarepta’s missed deadlines and 12-patient trial, which is only arguably positive.

Backing the case for Sarepta, BioMarin said the six-minute walk test could be an approvable endpoint – but stressed the need to explain the phase III failure. It said in phase III there had been recruitment imbalances, and the data were complicated by the addition of new study sites, a single six-minute walk measurement, and the non-standard use of corticosteroids.

Two confirmatory trials are to start in the first half of 2015, and before then BioMarin expects to have completed the rolling NDA filing; next year it also hopes to submit an application with the European regulator.

The rolling submission and evolving FDA stance were clearly a trigger for the BioMarin approach, and after Prosensa’s rollercoaster ride its management can hardly be blamed for selling out to a bigger player willing to take on the risk.

The buyer might not be big pharma, but after Glaxo’s desertion it must be abundantly clear that this is not an area for which big pharma has the right risk appetite.

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com or follow @JacobEPVantage on Twitter

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