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New Sarepta CEO background sparks sale speculation

July 1, 2017

Sarepta Therapeutics (SRPT) announced the appointment of Douglas Ingram as its new president and chief executive yesterday. Just a day later, investors and analysts are speculating that Ingram’s selection might mean the company is interested in a sale.

Sarepta is best known for its Duchenne muscular dystrophy (DMD) drug Exondys 51 and the dramatic and controversial story of its approval. Ingram is replacing Edward Kaye, who will remain in an advisory capacity during the transition.

Ingram’s most recent position was as president and chief executive officer of Chase Pharmaceuticals, which was acquired by Allergan in 2016. He was the president of Actavis plc (ACT) until it was acquired by Allergan (AGN) in 2015. Prior to that he was Allergan’s president Europe/Middle East/Africa in London, UK, and held various leadership positions throughout Allergan, including Legal Affairs, Regulatory Affairs and Pharmacovigilance, and others.

But biopharma watchers are latching onto the fact that Ingram was heavily involved in two major M&A transactions.

Joseph Schwartz, an analyst with Leerink, wrote in a note to clients, “His corporate success across biotech and pharma companies, and knowledge and expertise in the neurodegenerative diseases make him an ideal appointment for Sarepta which is seeking to solidify its leadership in the Duchenne muscular dystrophy space.”

Rumors that Sarepta might be up for sale gained some speed after Exondys 51 was approved. That’s not completely unusual when a company attempts to make the shift from a developer of drugs to a seller of drugs. There is often interest in being acquired by a company with existing and experiences sales forces and knowledge of the ins-and-outs of global pharmaceutical marketing.

“Appointment of Mr. Ingram, given his past experiences at Allergan and Chase, will likely increase takeover speculation among investors that could layer on some M&A premium to the company valuation,” Schwartz wrote in his investor note.

Schwartz speculates that a potential buyer of Sarepta would be Paris-based Sanofi (SNY). Since Sanofi lost out to Pfizer (PFE) when it acquired Medivation (MDVN) and to Johnson & Johnson (JNJ) when it acquired Actelion (ALIOF.PK), investors have wondered if three times would be a charm and when Sanofi would prove it could close on a big deal. Maybe Sarepta will be that deal.

Investors Business Daily writes, “RBC analyst Matthew Eckler sees Ingram benefiting Sarepta with his background in neurology drug development as Duchenne muscular dystrophy is a neurological disorder. His prior dealmaking experience could also help Sarepta to in-license the drug.”

Ingram will be paid a base salary of $650,000 pear year. If he meets the board’s goals, he could get up to 90 percent of his base salary as a bonus each year. Sarepta has also included 335,000 shares in his compensation package with an option of acquiring another 3.3 million shares at $34.65 each.

Sarepta stock is currently trading for $33.20.

Otherwise, the company appears to be focusing on expanding its presence in DMD. Shortly after Exondys 51 was approved., it signed an exclusive license and collaboration deal with UK-based Summit Therapeutics for the rights to Summit’s utrophin modulator pipeline, including its lead clinical candidate, ezutromid. Utrophin modulation has the potential to treat at least part of DMD regardless of the specific dystrophin gene mutation.

Exondys 51 treats patients with a specific mutation. It acts by binding to a specific section of the dystrophin gene—called gene skipping—which allows for truncated production of the dystrophin protein. This results in a shorter dystrophin protein, which is believed to slow the progression of the disease.

Utrophin is a different approach. The utrophin protein is functionally and structurally similar to dystrophin. Preclinical studies suggested that when utrophin is expressed, it has a positive effect on muscle performance.

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