Dive Brief:

• Sarepta on Thursday said it’s reached agreements that remove about $700 million from a pile of debt due in 2027.
• The private agreements with debt holders will allow Sarepta to exchange the 1.25% convertible senior notes due in 2027 for $602 million worth of 4.875% convertible senior notes due in 2030, up to 6.7 million shares of Sarepta stock and about $123 million in cash. Separately, the company entered into a private placement of about 1.4 million shares.
• The transaction “significantly enhances our balance sheet flexibility and strengthens our financial position,” Sarepta CEO Doug Ingram said in a statement. Sarepta will still have $450 million in existing convertible notes due in 2027.

Dive Insight:

Sarepta’s fortunes have dramatically changed over the course of the last year. In June 2024, the company was riding high on an expanded approval for its Elevidys gene therapy treatment for Duchenne muscular dystrophy. Its shares soared, topping $160 that month. 

But the trajectory for Elevidys sales changed when the company reported a patient death in March of this year and then another in June. The Food and Drug Administration in July asked Sarepta to stop shipping the therapy, a request that Sarepta initially refused.

While the FDA allowed Elevidys shipments to resume for certain patients in the U.S. in late July, the sales outlook for the therapy is uncertain, and investors have punished Sarepta’s stock. The shares were trading at less than $20 apiece early Thursday.

The questions about Elevidys sales also raised new concerns about whether Sarepta could repay looming debt and make hundreds of millions of dollars in milestone payments to its partner, Arrowhead Pharmaceuticals. Even after laying off more than a third of its staff, analysts questioned whether Sarepta would need to make more cuts to meet its commitments.

Sarepta is answering those questions with a series of financial transactions. In addition to the latest refinancing of 2027 debt, Sarepta last week announced that it planned to sell its entire equity stake in Arrowhead. After both moves, “we are well positioned to fully fund our pipeline and meet our near-term obligations,” Sarepta CEO Ingram said in the company’s statement Thursday.

The transactions will help ease investors’ immediate concerns about Sarepta’s balance sheet, Leerink Partners analyst Joseph Schwartz wrote in a Thursday note to investors. “With the near-term overhang removed, we think investor focus will remain squarely on how demand for Elevidys trends following the safety events and regulatory saga,” he wrote.