On December 21, 2019, the Company entered into a license, collaboration and option agreement and a stock purchase agreement (collectively, the “Roche Agreements”) with F. Hoffman-La Roche Ltd (“Roche”), providing Roche with exclusive commercial rights to SRP-9001 (AAVrh74.MHCK7.micro-dystrophin) (the “Lead Product”), the Company’s investigational gene therapy for DMD, outside the U.S. The Company retains all rights to SRP-9001 in the U.S. and will perform all development activities directed to obtaining and maintaining regulatory approvals for SRP-9001 in the U.S. and the EU. Further, global development expenses for SRP-9001 will be equally shared between the two parties.

The closing of the transaction was subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions. The agreement became effective as of February 4, 2020, and closed on February 14, 2020.

When the Roche Agreements became effective, the Company received payments totaling approximately $1.2 billion, consisting of $750.0 million in an up-front payment and $400.0 million in an equity investment. Additionally, the Company may receive up to approximately $1.7 billion in regulatory and sales milestones related to the Lead Product. Upon commercialization, the Company is also eligible to receive tiered royalty payments based on net sales.

In addition, Roche has options to in-license (1) certain exon-skipping products that target the dystrophin gene to induce exon skipping, including eteplirsen, golodirsen, casimersen and SRP-5051, (2) certain gene therapy products other than SRP-9001 that encode and directly express dystrophin or a derivative thereof and (3) certain gene-editing products that modify, repair, or activate an endogenous dysfunctional dystrophin gene (collectively, the “Option Products”). If and when Roche decides to exercise the options, it will be required to make an option exercise payment, on a per Option Product basis, in an amount ranging between $20.0 million and $125.0 million.

As of December 31, 2019, there was no accounting impact as a result of the execution of the Roche Agreements because the closing of the transaction did not occur until subsequent to year-end.

In May 2017, the Company entered into a sponsored research agreement (the “Research Agreement”) with Genethon for its micro-dystrophin gene therapy program for the treatment of DMD. The Research Agreement provided the Company with an option to in-license the corresponding technology. On November 22, 2019, the Company exercised the option and entered into a license and collaboration with Genethon (the “Genethon Collaboration Agreement”). The Genethon Collaboration Agreement grants the Company with exclusive rights in the majority of the world (primarily excluding the EU) to Genethon’s micro-dystrophin gene therapy products (“Genethon Products”) and other micro-dystrophin gene therapy products (“Other Licensed Products”).

Under the Genethon Collaboration Agreement, a joint steering committee will be established to plan, monitor and coordinate development activities for Genethon Products and Other Licensed Products. The Company and Genethon will be responsible for 75% and 25%, respectively, of development costs related to both the Genethon Products and the Other Licensed Products. For the year ended December 31, 2019, the Company recorded $9.0 million of research and development expense related to reimbursable development costs incurred for Genethon Products to date.

Upon exercise of the option, the Company made an up-front payment of $28.0 million and may be liable for up to $157.5 million and $78.8 million in development, regulatory and sales milestones for the Genethon Products and Other Licensed Products, respectively. Furthermore, upon commercialization, the Company will be required to make tiered royalty payments based on net sales of the Genethon Products and the Other Licensed Products.

The up-front payment represents rights to potential future benefits associated with ongoing research and development activities that have no alternative future use. Accordingly, this amount has been recorded as research and development expense in the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2019. As of December 31, 2019, no development or regulatory milestones were deemed probable of being achieved and, accordingly, no additional expense has been recognized.

On November 14, 2019 (the “StrideBio Effective Date”), the Company entered into a collaboration and license agreement (the “StrideBio Collaboration Agreement”) and a stock purchase agreement (collectively, the “StrideBio Agreements”) with StrideBio, Inc. (“StrideBio”). Under the terms of the StrideBio Collaboration Agreement, StrideBio granted the Company exclusive worldwide licenses to develop, collaborate and commercialize StrideBio’s adeno-associated viral capsids for gene therapy with respect to multiple initial development targets (“Initial Targets”), and, at the option of the Company, additional development targets (“Additional Targets”). The Company also may be required to participate in StrideBio’s next preferred equity round of financing, subject to certain conditions.

Both the Initial Targets and the Additional Targets are comprised of targets to which the Company will have the exclusive right to perform development activities (“Sarepta Development Targets”) and targets that the two parties will jointly develop through completion of Phase 1/2 clinical trials (“Joint Development Targets”). The Company also has the right to select additional Sarepta Development Targets and Joint Development Targets. For each Sarepta Development Target, StrideBio is responsible for initial research activities and each party bears its own costs while the Company is responsible for all costs following transfer of responsibilities to the Company for additional development. For each Joint Development Target, the parties will be responsible to develop a joint development plan for which the parties will share equally all costs through Phase 1/2 of clinical trials after which the Company will be solely responsible for the continued development, regulatory approval and commercialization of the target, including all related costs. The Company and StrideBio will also form a joint steering committee to oversee the collaboration activities.

As a result of execution of the StrideBio Agreements, the Company recognized an up-front expense of $46.9 million, consisting of a cash payment of $17.5 million and 301,980 shares of the Company’s common stock delivered to StrideBio equal to $29.4 million. For Sarepta Development Targets and Joint Development Targets, respectively, the Company may be liable for up to $450.0 million and $835.0 million in development, regulatory and sales milestone payments per target. Furthermore, the Company may be obligated to pay StrideBio up to $42.5 million in additional fees when and if Additional Targets are selected. Additionally, upon commercialization, the Company may be required to make tiered royalty payments based on net sales of each target.

The total up-front payment of $46.9 million, representing the fair value of the common shares delivered and cash, represents rights to potential future benefits associated with ongoing research and development activities that have no alternative future use. Accordingly, this amount has been recorded as research and development expense in the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2019. As of December 31, 2019, no development or regulatory milestones were deemed probable of being achieved and, accordingly, no additional expense has been recognized.

In May 2018, the Company entered into a Warrant to Purchase Common Stock Agreement (“Warrant Agreement”) with Myonexus Therapeutics, Inc. (“Myonexus”), a clinical-stage gene therapy biotechnology company that was developing gene therapies for Limb-Girdle muscular dystrophies (“LGMD”). Pursuant to the terms of the Warrant Agreement, the Company made an up-front payment of $60.0 million to purchase an exclusive option to acquire Myonexus for $200.0 million plus sales-related and regulatory-related contingent payments. During the year ended December 31, 2018, the Company recorded $85.0 million to research and development expense in connection with the Warrant Agreement comprised of the $60.0 million up-front payment, two development milestone payments totaling $20.0 million, and a third development milestone for $5.0 million was deemed probable of being achieved as of December 31, 2018.

On February 27, 2019, the Company announced that it exercised the exclusive option to acquire Myonexus. The final exercise price as negotiated between the Company and Myonexus was $165.0 million. In addition, the Company incurred transaction fees and other fees associated with the exercise of approximately $8.8 million. The Company may also be required to make up to $200.0 million in additional payments to selling shareholders of Myonexus based on the achievement of certain sales- and regulatory-related milestones. The acquisition closed on April 4, 2019.

As a result of the acquisition, the Company added five LGMD gene therapy programs, including MYO-101, MYO-102 and MYO-201 that are currently in Phase 1/2 clinical trials, to its research and development portfolio. The acquisition of Myonexus has been accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in a group of similar identifiable assets (the five LGMD gene therapy programs).

Additionally, the Company assessed whether any of the contingent payments met the definition of a derivative under ASC 815 and, therefore, should be accounted for as contingent consideration. The Company identified that one regulatory-related milestone (not solely based on drug approval by the FDA) met the definition of a derivative. As a result, the Company recorded a contingent consideration liability of $4.5 million at the acquisition date. Any changes in the fair value of the contingent consideration liability after the acquisition date is included in the Company’s statement of operations. This amount was estimated through a probability-weighted expected return method that incorporated industry-based probability adjusted assumptions relating to the achievement of the milestone and thus the likelihood of making the payments. This fair value measurement was based upon significant inputs not observable in the market and therefore represented a Level 3 fair value measurement. The Company did not assume any other liabilities as a result of the acquisition.

The following table summarizes the total consideration for the asset acquisition and the value of assets acquired and liability assumed:

Consideration (in thousands)
Purchase price	$	165,000
Transactions costs and other fees		8,753
Contingent consideration		4,500
Total consideration	$	178,253

Assets Acquired (in thousands)
Cash and cash equivalents	$	1,197
Prepaids		3,816
In-process research and development		173,240
Total assets acquired	$	178,253

Liability Assumed (in thousands)
Contingent consideration		4,500
Total liability assumed	$	4,500

The acquired in-process research and development asset relates to the LGMD asset group. Due to the stage of development of this asset group, significant risk remains, and it is not yet probable that there is future economic benefit from this asset. Absent successful clinical results and regulatory approval, there is no alternative future use associated with the LGMD asset group. Accordingly, the value of this asset of $173.2 million was immediately expensed to research and development expense during the three months ended June 30, 2019.

The portion of the $200.0 million in contingent payments related to the sales milestone will be accrued when and if the sales milestone becomes probable of being achieved, and the related payment will be capitalized and amortized over the life of the patent. As of December 31, 2019, the sales milestone was not probable of being achieved.

In October 2018, the Company entered into a license and collaboration agreement to develop and commercialize LYS-SAF302, a gene therapy to treat MPS IIIA as well as an equity investment agreement with Lysogene S.A. (“Lysogene”). Under the license and collaboration agreement, in addition to the payment of up-front fees, the Company may be liable for a total of $102.8 million in development, regulatory and sales milestones. Furthermore, the Company may be required to make tiered royalty payments based on net sales of the LYS-SAF302 product subsequent to its commercialization. Under the equity investment agreement, the Company purchased 950,606 shares of common stock issued by Lysogene, representing 8% of the outstanding equity of Lysogene at the time of the transaction.

As a result of execution of the agreements, for the year ended December 31, 2018, the Company recorded research and development expense of $44.8 million, consisting of $26.1 million related to the payment of up-front fees and $18.7 million related to the achievement of a development milestone. In addition, $1.9 million of the total up-front fees paid was allocated to the equity investment in Lysogene and recorded as an other non-current asset. Changes in the fair value of this equity investment are recorded to other (loss) income in the Company’s consolidated statements of operations and other comprehensive loss.

As of December 31, 2019, no additional development or regulatory milestones were deemed probable of being achieved and, accordingly, no additional expense has been recognized. Further, the changes in the fair value of the equity investment for the years ended December 31, 2019 and 2018 were not material.

In August 2018, the Company entered into a license, development and option agreement (the “Lacerta License Agreement”) and a Series A Preferred Stock Purchase Agreement (the “Stock Purchase Agreement”) with Lacerta Therapeutics, Inc. (“Lacerta”). Pursuant to the Lacerta License Agreement, the Company licensed exclusive worldwide rights to develop, manufacture and commercialize a pre-clinical Pompe product candidate (the “Pompe License”). Lacerta also granted the Company exclusive options to enter into exclusive license agreements to develop, manufacture and commercialize other gene therapy product candidates for Sanfilipo syndrome and L-Amino Acid Decarboxylase Deficiency for additional consideration of $42.0 million (collectively, the “Options”) when (and if) the Options are exercised. Additionally, the Company may be liable for up to approximately $44.0 million in development, regulatory and sales milestones associated with the Pompe License and may be required to make tiered royalty payments based on net sales of the Pompe product subsequent to its commercialization. Under the Stock Purchase Agreement, the Company purchased approximately 4.5 million shares of Series A preferred stock issued by Lacerta.

Under the agreements, the Company made an up-front payment of $38.0 million to Lacerta, $30.0 million and $8.0 million of which were allocated to the Series A preferred stock investment and the Pompe License, respectively. The amount allocated to the Pompe License represents rights to potential future benefits associated with ongoing research and development activities that have no alternative future use. Accordingly, this amount was recorded as research and development expense in the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2018. As of December 31, 2019, no development or regulatory milestones were deemed probable of being achieved and, accordingly, no additional expense has been recognized.

The $30.0 million allocated to the Series A preferred stock investment was initially measured at cost and is classified as an other non-current asset in the accompanying consolidated balance sheets. Changes in the carrying value of the investment are reported as a component of earnings whenever there are observable price changes in orderly transactions for identical or similar investments of Lacerta in the future. For the years ended December 31, 2019 and 2018, the Company did not record any changes in carrying value of the investment as Lacerta did not issue identical or similar shares during the corresponding periods.

In December 2016, the Company entered into an exclusive option agreement with Nationwide Children’s Hospital (“Nationwide”) from which the Company obtained an exclusive right to acquire a worldwide license of the micro-dystrophin gene therapy technology for DMD and Becker muscular dystrophy. In October 2018, the Company exercised the option and entered into a license agreement with Nationwide (“Nationwide License Agreement”). Pursuant to the Nationwide License Agreement, the Company licensed exclusive worldwide rights to develop, manufacture and commercialize micro-dystrophin gene therapy product candidates. Under the agreement, the Company made an up-front payment of $1.0 million to Nationwide, which was recorded as research and development expense in the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2018. Additionally, the Company may be required to make up to $29.0 million in development, regulatory and sales milestone payments per micro-dystrophin product and low-single-digit royalty payments based on net sales of the micro-dystrophin products upon commercialization. As of December 31, 2019, no development or regulatory milestones were deemed probable of being achieved and, accordingly, no additional expense has been recognized.

In July 2017, the Company and the University of Western Australia (“UWA”) entered into a settlement agreement with BioMarin Pharmaceutical, Inc. (“BioMarin”). On the same day, the Company entered into a license agreement, which was subsequently amended in April 2019, with BioMarin and Academisch Ziekenhuis Leiden (“AZL”) (collectively with the Company, UWA and BioMarin, the “Settlement Parties”). Under these agreements and amendment, BioMarin agreed to provide the Company with an exclusive license to certain intellectual property with an option to convert the exclusive license into a co-exclusive license and the Settlement Parties agreed to stop most existing efforts to continue with ongoing litigation and opposition and other administrative proceedings concerning BioMarin’s intellectual property. As a result of execution of the agreements, the Company made total up-front payments of $35.0 million. Additionally, the Company may be liable for up to approximately $65.0 million in regulatory and sales milestones for eteplirsen as well as casimersen and golodirsen. BioMarin is also eligible to receive tiered royalty payments, ranging from 4% to 8%, based on the net sales for the two products and product candidate. The royalty terms under the license agreement will expire in March 2024 in the U.S., December 2024 in the EU and no later than December 2024 in other countries.

Of the $35.0 million paid to BioMarin, $28.4 million was expensed as incurred and $6.6 million was recorded as an intangible asset, representing the fair value of the U.S. license to BioMarin’s intellectual property. The intangible asset is being amortized on a straight-line basis over the remaining life of the patent and has a carrying value of $4.2 million as of December 31, 2019.

The FDA approval of VYONDYS 53 in December 2019 resulted in a settlement charge to BioMarin of $10.0 million and has been expensed as incurred. No regulatory or sales milestones were achieved for the years ended December 31, 2018 or 2017. For the years ended December 31, 2019, 2018 and 2017, the Company recognized royalty expense of $19.4 million, $15.1 million and $4.7 million, respectively. As of December 31, 2019, no other regulatory or sales milestones were deemed probable of being achieved and, accordingly, no additional in-licensed rights or expenses have been recognized.

In April 2013, the Company and UWA entered into an amendment to an existing exclusive license agreement relating to the treatment of DMD by inducing the skipping of certain exons. The agreement was further amended in June 2016. Under the amended agreement, the Company may be obligated to make payments to UWA totaling up to $26.0 million upon the achievement of certain development, regulatory and sales milestones. Additionally, the Company is required to pay a low-single-digit percentage royalty on net sales of products covered by issued patents licensed under the agreements with UWA. Corresponding with the FDA approval of EXONDYS 51 in 2016, the Company recorded a $1.0 million milestone payment as an in-licensed right intangible asset in its consolidated balance sheet. Similarly, corresponding to the milestone payments associated with the FDA approval of VYONDYS 53 in December 2019, the Company recorded a $0.5 million milestone payment as an in-licensed right intangible asset in its consolidated balance sheet. Both intangible assets are being amortized on a straight-line basis over the remaining life of the relevant patents and have a combined carrying value of $1.1 million as of December 31, 2019. For the year ended December 31, 2019, the Company recorded $3.5 million in royalty expense, which is included in cost of sales, related to agreements with UWA with no such an expense incurred in 2018 or 2017. As of December 31, 2019, no other development, regulatory or sales milestones were deemed probable of being achieved and, accordingly, no additional in-licensed rights or expenses have been recognized.

As of December 31, 2019, the Company may be obligated to make up to $3.0 billion of future development, regulatory, commercial, and up-front royalty payments associated with its collaboration and license agreements. For the years ended December 31, 2019, 2018 and 2017, the Company recognized approximately $113.2 million, $142.4 million and $22.0 million relating to certain up-front, milestone and settlement payments as research and development expense, respectively, under these agreements. The Company is also obligated to pay royalties on net sales of certain of its products related to these collaboration and license agreements. The royalty rates range from the low-single-digit to high teens percentages for both inside and outside the U.S.