Sarepta Therapeutics Inc said it secured the European rights to Summit Therapeutics Plc's experimental Duchenne muscular dystrophy (DMD) drug as it looks to build on its lead in treating the fatal muscle-wasting disease.
Summit's shares doubled, to 262 pence on the London Stock Exchange, while its U.S. stock jumped 128 percent to $19.75. Sarepta's shares inched up about 1 percent to $61.60.
The deal is significant for Summit, given its constrained balance sheet and the strong rationale for a potential combination of the companies' DMD treatments, analysts said. The deal gives Sarepta rights to Summit's utrophin modulator pipeline, including its lead experimental drug, ezutromid, in Europe, Turkey and the Commonwealth of Independent States.
Sarepta and Summit will share all research and development costs, the companies said on Tuesday.
The collaboration could give Sarepta access to an additional 20 percent of DMD patients outside the United States, said Debjit Chattopadhyay, an analyst at Janney Montgomery Scott.
Ezutromid could act as a foundational therapy applicable to all DMD patients, he added.
Sarepta's drug - the first to secure the U.S. Food and Drug Administration approval to treat DMD - targets patients with a form of the disease who are amenable to what is known as exon 51 skipping.
DMD is believed to be caused by a lack of dystrophin, a protein needed to keep muscles healthy.
Sarepta's Exondys 51 is designed to enhance dystrophin production and slow progression of the disease.
Utrophin is a protein with function similar to dystrophin.
Sarepta's drug targets about 13 percent of all DMD patients, or some 1,300-1,900 patients in the United States.
PTC Therapeutics Inc's (PTCT.O) DMD drug, Translarna, which targets a different subset of patients, received conditional approval in Europe in 2014.
As part of the deal, Milton Park, Oxfordshire-based Summit will get $40 million up front and is eligible to receive up to $522 million in milestone payments.
RBC Capital analyst Simos Simeonidis said the deal made Sarepta an even more attractive takeover target.
The partnership is a "smart move" and a small price for Sarepta to pay to buy into potential competition, he said.
DMD typically emerges in boyhood, causing weakness in the arms and legs and eventually the lungs and heart. Patients frequently die in their 20s or 30s, according to the National Institutes of Health.
Sarepta said last week it would collaborate with Catabasis Pharmaceuticals Inc to explore a combination DMD treatment approach.
(Reporting by Natalie Grover in Bengaluru; Additional reporting by Mamidipudi Soumithri; Editing by Ted Kerr and Sriraj Kalluvila)