Sarepta Therapeutics Inc (SRPT), GlaxoSmithKline plc (ADR) (GSK): An Edge Emerges in the Race to Treat Muscular Dystrophy

Strong alliances for development
The company has strong alliances with both the U.S. and EU governments on research programs for rare diseases.

U.S. government: In 2012, Sarepta signed a contract for $3.9 million with the U.S. Department of Defense to evaluate the feasibility of AVI-7288 through IM route against the Marburg virus. Earlier, the company had an agreement for the development of therapeutics AVI-6002 and AVI-6003 against Ebola and Marburg viruses. The government continues to support Sarepta’s clinical programs for the Marburg portion of the contract in four steps. It is expected that Sarepta will receive around $84.4 million to carry out the remaining development activities. Also, the company will receive additional revenues of $0.4 million related to H1N1 influenza.

EU agreement: In November 2012, Sarepta signed an agreement of approximately $2.5 million with EC Health Innovation for development related studies for DMD. Sarepta will receive around $1.2 million.

Competition in antiviral segment
In influenza, Sarepta Therapeutics Inc (NASDAQ:SRPT)’s antiviral candidate currently competes with two FDA-approved products — Tamiflu from Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) and Relenza from GlaxoSmithKline plc (ADR) (NYSE:GSK). Tamiflu posted significant growth of around 44% in the second quarter ending in 2013, and is expected to grow further from increasing demand for H1N1 flu in China. However, in the U.S. it has been losing market share for the last four years and is expected to continue doing so. However, Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) has a whole has shown significant upside in sales, operating profit, and earnings per share this quarter.

Eteplirsen’s success with DMD will trigger in a lot of activity for Sarepta’s core RNA technology. I expect significant upside in licensing fees, technology sharing agreements and other milestone payments for the RNA technology. Overall, the market optimism in Sarepta seems to be based on good foundation.

The article An Edge Emerges in the Race to Treat Muscular Dystrophy originally appeared on and is written by Kanak Kanti, De.

Kanak Kanti De has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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