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Prosensa IPO Filing Looks Good For Sarepta Therapeutics

LEIDEN, Netherlands ( TheStreet) -- Prosensa Holding filed papers Friday seeking to raise as much as $60 million in an initial public offering. My initial reaction after hearing the news:

Prosensa's planned IPO is an incremental positive for Sarepta Therapeutics (SRPT - Get Report). Why? Because of the answer to this question:

Surely Prosensa was shopped to GlaxoSmithKline (GSK - Get Report) before the decision was made to file for an IPO, right? Glaxo already has full control over Prosensa's lead drug drisapersen and has first opt-in rights to the remainder of the company's Duchenne muscular dystrophy platform. If any of these DMD drugs are successful, the milestone and royalty payments Glaxo must pay to Prosensa are greater than Prosensa's market value. Glaxo could save money by buying Prosensa but it chose not to. Instead, Prosensa is going public.

Very strange, unless Glaxo doesn't want to fully commit to Prosensa because of the safety issues hanging over drisapersen. To me, the Prosensa IPO is a sign that Glaxo lacks confidence in its partner's technology platform.

Perhaps Glaxo is regretting the choice it made and wishes it would have saddled up with Sarepta.

Prosensa filed an F-1 registration statement with the Securities and Exchange Commission on Friday night. Here's are some of the more interesting tidbits from the filing, starting with disclosures about drisapersen's safety:

Clinical trial experience to date with drisapersen indicates adverse events which include proteinuria, local injection site reactions (pain, bruising, erythema, induration, pigmentation), thrombocytopenia, and increases in certain liver enzymes. In addition to the adverse events noted above, single reports have been received of the following clinical conditions: intracranial venous sinus thrombosis (considered unrelated by the sponsor), extramembranous glomerulonephritis and nephrotic-linked proteinuria.

The drisapersen safety profile looks incrementally worse in Prosensa's filing than what's been previously disclosed by Glaxo.

Glaxo is conducting the phase III study of drisapersen and results are expected in the fourth quarter.

Prosensa has no control over drisapersen. The drug is entirely in the hands of Glaxo, which explains why relevant safety has been dripped out, almost begrudgingly. From the F-1:

We do not and will not have access to all information regarding the products being developed and potentially commercialized by GSK, including potentially material information about clinical trial design and execution, safety reports from clinical trials, spontaneous safety reports if the product is later approved and marketed, regulatory affairs, process development, manufacturing, marketing and other areas known by GSK. In addition, we have confidentiality obligations under our agreement with GSK. Thus, our ability to keep our shareholders informed about the status of product candidates under our collaboration will be limited by the degree to which GSK keeps us informed and allows us to disclose such information to the public. If GSK fails to keep us informed about the clinical development and regulatory approval of our collaboration and product candidates licensed to it, we may make operational and investment decisions that we would not have made had we been fully informed, which may materially and adversely affect our business and operations.

Prosensa also had some noteworthy things to say about potential market competition between its drisapersen and Sarepta's eteplirsen:

In the United States, a product candidate with orphan drug status qualifies for market exclusivity for seven years after FDA approval, unless a chemically identical competing product for the same indication is proved to be "clinically superior," that is, safer, more effective or significantly more convenient. Thus, if drisapersen is granted regulatory approval in the United States, the FDA may not approve a competing generic product during the market exclusivity period; however, a chemically dissimilar product such as Sarepta's eteplirsen would not be affected by drisapersen's U.S. market exclusivity and could similarly obtain market exclusivity in the United States if it were to receive FDA approval.

And this:

In Europe, EMA regulations provide ten-year marketing exclusivity in Europe for orphan drugs, subject to certain exceptions, including the demonstration of "clinically relevant superiority" by a similar medicinal product. EMA orphan marketing exclusivity applies to drug products for the same indication that use the same method of action but can be chemically dissimilar. Eteplirsen has been granted orphan drug designation in the European Union. If Sarepta were to obtain marketing approval from the EMA for eteplirsen before drisapersen is approved by the EMA, Sarepta could have the benefit of orphan drug marketing exclusivity to our detriment because both products use the same method of action (exon skipping) for patients with DMD. Drisapersen would have to demonstrate a clinically relevant advantage over eteplirsen (in efficacy, safety and/or pharmacokinetics) in order to defeat such market exclusivity in Europe. If drisapersen is approved by the EMA before eteplirsen, eteplirsen could defeat drisapersen's market exclusivity in Europe by demonstrating a clinically relevant advantage.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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