DUBLIN – Shares in Summit Therapeutics plc surged as much as 128 percent during trading on Nasdaq Tuesday on news of a deal with Sarepta Therapeutics Inc., which is in-licensing European rights to its pipeline of utrophin modulators in development for Duchenne muscular dystrophy (DMD).

Summit is getting $40 million up front plus up to $522 million in development, regulatory and sales milestones attached to its lead drug candidate, ezutromid (SMT C1100). The deal also includes second- and third-generation utrophin modulators, which pushes the headline value of the agreement to $842 million – or to $941.5 million if Sarepta exercises an option to include Latin America.

The alliance underscores the market power Cambridge, Mass.-based Sarepta has amassed since the controversial FDA approval of its lead exon-skipping drug Exondys 51 (eteplirsen) on Sept. 19. The company moved rapidly to lock in its position by raising $300 million in a stock offering three days later. (See BioWorld Today, Sept. 20, 2016.)

The two companies already had experience of cooperating with each other within the DMD community, Summit CEO Glyn Edwards told analysts on a conference call. "Once they got their approval, their ability to consider other transactions increased dramatically."

In the short term, Oxford, U.K.-based Summit stands to bank another $22 million next spring. That tranche is payable on the administration of the first dose to the last patient to be recruited onto a phase II trial of its lead drug, ezutromid. The PhaseOut trial, which is recruiting 40 DMD patients, represents the first clinical test of Summit's treatment approach. A first indication of its feasibility will become apparent soon after. Although the open-label trial runs for 48 weeks, Summit will unveil interim 24-week data in the second or third quarter next year.

Summit is testing a hypothesis developed by co-founder Kay Davies, of the University of Oxford, that the large muscle protein utrophin can functionally compensate for the absence of dystrophin in DMD patients.

Utrophin, like dystrophin, acts as a molecular shock absorber. It is widely expressed during fetal development, when muscles are being laid down, and, after birth, during muscle repair. Because of the ongoing muscle damage caused by the absence of dystrophin, utrophin expression cycles on and off in DMD patients, but Summit aims to boost levels to the point that it can have a significant impact on the course of disease.

Davies and colleagues have reported that ezutromid resulted in a twofold increase in levels of utrophin mRNA and protein and an associated decline in symptoms and an improvement in muscle control in the dystrophin-deficient mdx mouse model. In a phase I study in patients, the drug appeared safe and well-tolerated, but the company struggled initially with developing an oral formulation that delivered sufficient plasma concentration. (See BioWorld Today, Aug. 18, 2015.)

Although there is no efficacy data available to indicate the drug's clinical potential, RBC Capital Markets analyst Simos Simeonidis noted that Sarepta is hedging against a future threat.

"We like Sarepta's move of spending a relatively small amount to access this theoretical competitor, primarily because it eliminates [or] diminishes the potential overhang that would be created should this agent produce positive data in 2017," he wrote in an investor note.

FUTURE SYNERGIES

The deal offers future potential synergies as well. Utrophin modulation is a genotype-independent approach, unlike the exon-skipping strategy that Sarepta has adopted – or the promotion of translational readthrough of premature stop codons in dystrophin mRNA, which PTC Therapeutics has pursued through Translarna (ataluren), a drug that has conditional approval in Europe. It could have additive, if not synergistic, effects in combination settings. An ideal exon-skipping drug might render utrophin modulation redundant, at least in those patients with the appropriate genotype, but such a scenario is unlikely for the foreseeable future.

"By any measure, we're a long way from those ideal drugs at this point in time," Edwards said. Even so, exploring the possibility of combination therapy is not part of the immediate plan. "Right now, we're focusing on demonstrating single-agent activity with ezutromid," Edwards said.

Of more immediate interest is assessing the clinical potential of ezutromid as a single agent in boys with Becker muscular dystrophy. The condition is caused by in-frame mutations in the dystrophin gene, which give rise to truncated but partially active forms of the protein. The resulting phenotypes are milder than those associated with DMD, and life expectancy is longer. Although it is a rarer condition, the longer life span of Becker boys means that the market opportunity is on similar scale to that of DMD. "We've got nothing firm, but it is something we're exploring aggressively," Edwards said.

The deal with Sarepta covers the Commonwealth of Independent States and Turkey, as well as Europe. Summit plans to commercialize ezutromid in the U.S. itself. The company will fund all R&D activities through 2017 and will shoulder 55 percent of the costs from the start of 2018, with Sarepta taking up the remainder. The cash influx will fund Summit to the end of 2018, by which time it will have a better handle on ezutromid's potential. "The elephant in the room has been our deteriorating cash position, and people wondering whether we were going to raise cash or not," said Edwards.

Shares in Summit (NASDAQ:SMMT) closed Tuesday at $14.35 up $5.70, or 65.9 percent.