On June 17, 2024, PTC Therapeutics, Inc. (“PTC”) exercised an option to sell half of its retained royalties on Roche’s Evrysdi to a subsidiary of Royalty Pharma plc (“Royalty Pharma” or the “Company”) for approximately $242 million upfront. This option arose from the Evrysdi royalty transaction with PTC announced in October 2023.
Evrysdi, marketed by Roche, is an orally administered survival motor neuron-2 (SMN2) splicing modifier for the treatment of spinal muscular atrophy (SMA) that was approved by the U.S. Food and Drug Administration in 2020. In 2023, Evrysdi generated sales of approximately CHF 1.4 billion ($1.6 billion), an increase of 39% at constant exchange rates versus the prior year.
Transaction Terms
The total royalty that Roche pays on worldwide net product sales of Evrysdi is tiered ranging from 8% to 16%. Following the transaction announced today, in total, Royalty Pharma is increasing its ownership of the Evrysdi royalty from 81% to 90.5% (before the cap, as detailed below), equating to a royalty of 7.2% to 14.5% (not including any exercise of future options by PTC). Royalty Pharma will receive the increased 90.5% of the Evrysdi royalty starting with royalties paid in respect of sales for the second quarter of 2024.
Additionally, until December 31, 2025, PTC will have the option to sell its remaining 9.5% of the Evrysdi royalty to Royalty Pharma for $250 million less royalties received.
Royalty Transaction Details
|
|
|
|
|
|
|
|
|
| Date |
|
July 2020 |
|
October 2023 |
|
June 2024 (PTC option) |
|
Total (June 2024) |
| Funding amount |
|
$650m upfront |
|
$1.0bn upfront |
|
$250m upfront |
|
$1.9bn upfront (up to $250m option) |
|
|
|
|
|
| Royalty purchased |
|
43% of royalties |
|
38% of royalties before cap and 67% of royalties above cap |
|
9.5% of royalties before cap and 16.7% of royalties above cap |
|
90.5% of royalties before cap and 84% of royalties above cap |
|
|
|
|
|
| Effective royalty rate prior to 2020 deal cap (on worldwide net sales) |
|
• 3.4% up to $500m • 4.7% on $500m-$1.0bn • 6.0% on $1.0-$2.0bn • 6.9% >$2.0bn |
|
• 3.0% up to $500m • 4.2% on $500m-$1.0bn • 5.3% on $1.0-$2.0bn • 6.1% >$2.0bn |
|
• 0.8% up to $500m • 1.1% on $500m-$1.0bn • 1.3% on $1.0-$2.0bn • 1.5% >$2.0bn |
|
(Total and half of PTC option exercised) • 7.2% up to $500m • 10.0% on $500m-$1.0bn • 12.7% on $1.0-$2.0bn • 14.5% >$2.0bn |
|
|
|
|
|
| Additional details |
|
Royalties cease when aggregate royalties paid equal $1.3bn |
|
PTC may sell remaining royalty to Royalty Pharma for $500m less royalties received |
|
PTC exercises right to sell half of retained royalty for $250m less royalties received |
|
After $1.3bn cap from July 2020 transaction, Royalty Pharma entitled to 84% of royalties |
|
|
|
|
|
| Estimated duration |
|
2030-2035 |
|
2035-2036 |
|
2035-2036 |
|
2035-2036 |
Forward-Looking Statements
The information set forth herein does not purport to be complete or to contain all of the information you may desire. Statements contained herein are made as of the date of this Form 8-K unless stated otherwise, and neither the delivery of this Form 8-K at any time, nor any sale of securities, shall under any circumstances create an implication that the information contained herein is correct as of any time after such date or that information will be updated or revised to reflect information that subsequently becomes available or changes occurring after the date hereof.
This Form 8-K contains statements that constitute “forward-looking statements” as that term is defined in the United States Private Securities Litigation Reform Act of 1995, including statements that express the Company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. Examples include discussion of our strategies, financing plans, growth opportunities and market growth. In some cases, you can identify such forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “target,” “forecast,” “guidance,” “goal,” “predicts,” “project,” “potential” or “continue,” the negative of these terms or similar expressions.