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Sarepta Therapeutics Inc (SRPT) and Summit Therapeutics DMD Deal Viewed Bullishly: Analyst

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Sarepta Therapeutics has acquired the rights for Utrophin modulation from Summit

Sarepta Therapeutics Inc. (NASDAQ:SRPT) has effectively expanded the Duchenne Muscular Dystrophy treatment pipeline in Europe, after it struck a mutual collaboration and licensing deal with Summit Therapeutics. According to the agreement, Sarepta will now have full control over research and development of Utrophin modulation treatment for Duchenne Muscular Dystrophy. Chad Messer, analyst at Needham and Company, sees the development as a large positive for Sarepta and believes it will further strengthen the product portfolio of Sarepta in the DMD market.

The Utrophin modulation treatment is clinically undergoing phase 2 trials and has been submitted to European Medicines Agency by Summit under the name of “Ezutromid”. The analyst notes that Utrophin is currently the highest potential drug for the treatment of DMD, a part of which is due to Utrophin’s very similar structure to that of Dystrophin gene mutations, which is the primary cause of Duchenne Muscular Dystrophy. According to pre-clinical studies, Utrophin has had a very positive impact on muscle performance of the patients and is very likely to be approved following the clinical trials.

To sum it up, the analyst believes that Sarepta has played the right move by acquiring the license for utrophin modulation in Europe. The price tag of $40M upfront is well deserved, despite the fact that Ezutromid is yet to be approved. According to Mr. Messer’s estimates, Ezutromid is going to be approved during the first half of 2019. Furthermore, the agreement is also a beginning of collaboration between the two companies and will surely accelerate the research and development efforts at both the companies.

Needham and Company has chosen to reaffirm its price target of $81 along with its buy rating. The analyst opinion for Sarepta has six buy, five outperform and three hold ratings. The stock currently trades at a price of $62.16, after having declined by 0.30% in the current session.

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