Sarepta’s Duchenne difficulties: potential implications for gene therapy licensing

Earlier this year, we reported on key considerations that parties involved in the negotiation and drafting of financial milestone provisions in Cell and Gene Therapy (CGT) IP licences should be aware of, in light of the differences and uncertainties in regulatory pathways and clinical trial phases as compared to more traditional pharmaceutical products. This article was first published in the Bio-science Law Review (Volume 19, Issue 6) by Lawtext Publishing).

The recent news relating to Sarepta Therapeutics, Inc.’s (Sarepta) decision to pause shipments of its Duchenne muscular dystrophy (Duchenne) gene therapy ELEVIDYS in the US (following the tragic deaths of two individuals treated with ELEVIDYS and a third treated with a related Sarepta gene therapy) serves as yet another reminder for those involved in gene therapy licensing of the uncertainties and risks involved in bringing a gene therapy to market.

Background and timeline of events

Duchenne is an inherited genetic condition, predominantly affecting boys, caused by mutations in the dystrophin gene which means that individuals living with the condition cannot make the dystrophin protein, leading to muscle cell necrosis. There is currently no cure for Duchenne and people living with the condition have a significantly reduced life expectancy. 

In June 2023, the U.S. Food and Drug Administration (FDA) approved ELEVIDYS in the US as the first gene therapy for the treatment of ambulatory individuals aged 4 to 5 years old with Duchenne. ELEVIDYS was approved through the FDA’s Accelerated Approval pathway. As a condition of such accelerated approval, the FDA required Sarepta to complete further clinical studies to confirm the clinical benefit of ELEVIDYS. ELEVIDYS was developed by Sarepta in collaboration with Roche, with Roche having rights to the therapy outside the US.

In 2024, the FDA expanded its US approval of ELEVIDYS with the therapy receiving traditional approval in ambulatory individuals 4 years of age and older with Duchenne with a confirmed mutation in a specific gene, and accelerated approval in non-ambulatory individuals 4 years of age and older with Duchenne with a confirmed mutation in the same specific gene. 

However, despite gaining FDA approval in the US (a key milestone which usually represents a significant derisking of a product), Sarepta’s ELEVIDYS has faced a number of widely reported setbacks triggered by the deaths of two patients as a result of acute liver failure. In response to the fatalities, Sarepta suspended shipments of ELEVIDYS for infusions in non-ambulatory patients in the commercial setting in the US, and also paused its Phase 3 Duchenne trial titled ENVISION.

On 18 July 2025, the FDA requested that Sarepta suspend distribution of ELEVIDYS. Despite Sarepta initially refusing to comply with this request (a decision that many in the industry were concerned would lead to an unprecedented regulatory battle), the company confirmed on 21 July 2025 that it would temporarily pause all ELEVIDYS shipments in the US to allow the FDA to complete a review of available safety information. 

Most recently, on 28 July 2025, the FDA notified Sarepta that it may lift its voluntary pause on shipments of ELEVIDYS for ambulatory patients with Duchenne. 

Potential implications for CGT licensing

The implications of this situation for Sarepta, ELEVIDYS and Duchenne patients have been significant and continue to unfold, and the impact on the wider gene therapy field remains to be seen. 

Aside from the obvious and tragic impact of the Sarepta situation, it also invites further consideration as to how parties might approach the future drafting and negotiation of gene therapy IP licences. As noted in our previous article, obtaining regulatory approval is a critical milestone in the development of a drug and a positive step towards successful commercialisation. However, as recent events have shown, there are several factors that may prevent a therapy that obtains regulatory approval from being commercially successful, including (in addition to safety issues) reimbursement challenges, market access limitations and the nature of conditional approvals. 

In light of this, we consider below three key areas that parties should consider when negotiating a gene therapy IP licence: (i) financial terms; (ii) diligence obligations; and (iii) regulatory and compliance. 

Financial terms: determining the value of an IP licence agreement involves a delicate balancing act of financial modelling, risk allocation and strategic forecasting, with the financial provisions being the subject of significant negotiation. The Sarepta situation further highlights the need for careful evaluation and scrutiny not only of milestone payment triggers but also the overall balance of payments (spread between upfronts, milestones and royalties) in gene therapy IP licences. The allocation of value across these different types of payments can depend on a number of factors, including the development stage, probability of success and market potential. 

Generally speaking, as the risk of a product failing gets lower, upfront payments may be higher. Whereas for products with a higher risk of failure, the balance may be shifted to later stage milestone payments and royalties. As compared to traditional therapeutics, there seems considerably more risk that a gene therapy product falters at any stage of its lifecycle, as highlighted recently by ELEVIDYS. It will therefore be interesting to see whether this results in licensees for gene therapies becoming more reluctant to agree large milestone payments linked to regulatory approvals (particularly in regard to conditional MAs where safety data is still being collected), and/or looking to further shift value allocation to later stage payments (i.e. royalties and sales-based commercial milestones). 

Diligence obligations: diligence obligations in IP licences are important to get right. They define the steps and efforts that a licensee must take to bring a product to market and commercialise it. These terms can be heavily negotiated and vary from licence to licence, depending on a number of different factors, including the negotiation power of the parties. Licensees often draw a clear line between development / regulatory diligence obligations and commercial diligence obligations, and some (particularly larger pharma licensees) may resist agreeing commercialisation obligations beyond, for example, achieving a first commercial sale of the product in a key market(s). Wherever parties land on diligence, it is important to be clear that the licensee can factor in issues such as the safety and efficacy of the product when taking commercialisation decisions. A licensee needs to be able to react quickly to any potential safety concerns (as Sarepta has needed to in respect of ELEVIDYS) without the risk of breaching its obligations to its licensor. 

Regulatory and compliance obligations: parties to a gene therapy IP licence should agree a clear allocation of responsibility for managing regulatory matters relating to a product. As we have discussed, regulatory processes for gene therapies are complex and, as the Sarepta situation has demonstrated, it is important that interactions with regulatory authorities are carefully managed.

Generally, a licensee will always want to have sole control over interactions with regulatory authorities and may also want to ensure the cooperation of its licensor in any such interactions. However, depending on the structure of the deal, and particularly where the licence includes a territorial split where the licensor retains rights to the product in certain territories (as is the case with ELEVIDYS where Sarepta has US rights and Roche has rights outside the US), the parties should agree a more detailed contractual regime, and potentially also a pharmacovigilance agreement, to address regulatory cooperation and the exchange of safety information and safety surveillance. Careful considerations of these points at the outset is critical to ensure parties to a gene therapy IP licence can react swiftly as needed in the event of any regulatory or safety issues. 

Conclusion

In conclusion, the recent developments surrounding Sarepta's ELEVIDYS gene therapy underscore the complexities and risks inherent in bringing gene therapies to market. The tragic events and subsequent regulatory actions highlight the need for careful consideration in the drafting and negotiation of gene therapy IP licences. Key areas such as financial terms, diligence obligations and regulatory compliance need to be carefully considered by parties to gene therapy IP licence agreements so as to ensure appropriate allocation of risk and to enable parties to react swiftly to any safety or regulatory issues. 

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For more information on how we can advise you on commercial transactions involving the development, exploitation and/or transfer of intellectual property rights in the life sciences sector, please contact Ellen Lambrix, Luca Cericola or another member of the Bristows Commercial & IP Transactions team.