M&A Speculation Begins as Sarepta CEO Puts in His Notice

M&A Speculation Begins as Sarepta CEO Puts In His Notice April 28, 2017
By Mark Terry, BioSpace.com Breaking News Staff

In a move that surprised almost everyone, Edward Kaye, president, chief executive officer and director of the board of Sarepta Therapeutics announced yesterday that he would be leaving the company when his term ends on September 20, 2017.

Kaye was named interim chief executive officer of the company in March 2015, after the former CEO, Chris Garabedian, abruptly resigned. Kaye at that time was chief medical officer. He only dropped the interim title seven months ago. Kaye helmed the company during its often tumultuous and always dramatic approval of Duchenne muscular dystrophy (DMD) drug Exondys 51, which was approved by the U.S. Food and Drug Administration (FDA) in September 2016.

At the first-quarter conference call, where Kaye made his announcement, he said, “I’m announcing this now to provide ample time to work with the management team, the Board of Directors, and other senior leaders at Sarepta to find a suitable candidate that embodies really the culture of Sarepta and ensures a smooth and seamless transition. Following this transition period, I will continue to serve the company as an active Board member as Special Regulatory and Scientific Advisor.”

Some analysts view Kaye’s departure as a possible sign the company might be up for sale. Joseph Schwarz, an analyst with Leerink, wrote in a note to investors, “CEO Kaye credits an impressive array of achievements in the past two years and believes a commercially-oriented leader makes sense at the helm. He will remain with the company, and we are curious on the potential implications of today’s resignation announcement and who may ultimately replace Ed Kaye. With an upcoming switch in leadership, prospect of a sale may resonate with some investors.”

That may depend somewhat on other companies’ thoughts on Exondys 51. With a steep price averaging $350,000 per year, the drug nonetheless was approved by the FDA with an asterisk alongside it. Because there was so much contention inside the FDA over whether the drug had actually been proven to be effective, it was approved with the requirement that the company conduct a two-year, randomized controlled trial to verify its benefits. Essentially, more data is needed to prove that the drug actually improves motor functions. If the trial fails, FDA approval could be withdrawn.

As John Carroll, writing for Endpoints News, says, “That approval came only after its application triggered a virtual civil war in the FDA as top regulators allied in a failed attempt to overturn Janet Woodcock’s insistence on an approval based on a tiny, controversial study.”

At the quarterly report, Sarepta indicated that the company had created $16.3 million in revenue in the first quarter, which was higher than the consensus estimate of about $14 million.

The company projects net revenue this year of more than $95 million, greater than previous estimates of $80 million.

In related news, Jean-Paul Kress, one of the Sarepta board members, informed the board that he would not stand for re-election. He will stay until his term is completed, citing time commitments and a possible conflict of interest with his future plans. The company was clear to say that his leaving was not because of a disagreement with the company or anything related to company policies, operations or practices.

Sarepta took a slight dip in after-hours trading after the news, although it seems to have mostly recovered. It is currently trading for $34.72.

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