Royalty Pharma plc (Nasdaq: RPRX) announced today an agreement with
PTC Therapeutics, Inc. to acquire additional royalties on Roche’s
Evrysdi for $1.0 billion upfront. The agreement includes options
for PTC to sell up to all of its retained royalties on Evrysdi for
up to $500 million or for Royalty Pharma to acquire half of such
retained royalties for up to $250 million at a later date.
Evrysdi, marketed by Roche, is an orally administered survival
motor neuron-2 (SMN2) splicing modifier for the treatment of spinal
muscular atrophy (SMA). Evrysdi was approved by the U.S. Food and
Drug Administration (FDA) in 2020 and has treated over 11,000
patients worldwide. In 2022, Evrysdi generated sales of
approximately CHF 1.1 billion ($1.2 billion), an increase of 87% at
constant exchange rates versus the prior year.
“We are excited to acquire an additional royalty interest in
Evrysdi, a convenient, oral therapy that has transformed the lives
of SMA patients worldwide,” said Pablo Legorreta, founder and Chief
Executive Officer of Royalty Pharma. “This is our second
transaction with PTC, which builds on our longstanding partnership,
and highlights our ability to structure creative, win-win funding
solutions for our partners. Further, our unmatched scale and deep
knowledge of SMA positioned us to provide PTC with substantial
capital in a timely fashion, another unique aspect of our business
model. This transaction is expected to further enhance Royalty
Pharma’s long-term growth and diversification. We remain incredibly
excited for our future given our robust transaction pipeline.”
“This transaction reflects the significant value of Evrysdi, a
medicine we are proud to have helped discover and develop in
collaboration with the Spinal Muscular Atrophy Foundation and
Roche,” said Matthew Klein, M.D., Chief Executive Officer of PTC
Therapeutics. “We are also pleased to strengthen our partnership
with Royalty Pharma, a leading funder of innovation across the
biopharma industry. With this funding, we have strengthened our
balance sheet and added financial flexibility as we pursue our
strategic objectives, including continued development and
commercialization of innovative therapies for patients with rare
disorders.”
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 43% to 81%, equating to a
royalty of 6.5% to 13% (not including any exercise of future
options by PTC or Royalty Pharma).
Additionally, until December 31, 2025, PTC will have the option
to sell the remainder of the Evrysdi royalty retained by PTC to
Royalty Pharma for $500 million less royalties received in five
equal tranches. If PTC exercises fewer than three of these options,
Royalty Pharma has the option to purchase 50% of the remaining PTC
royalty for $250 million less royalties received until March 31,
2026.
Evrysdi Financial Contribution
The purchase of additional royalties on Evrysdi is expected to
enhance Royalty Pharma’s long-term growth and increase the
diversification of its royalty portfolio. Evrysdi is projected to
be a top four portfolio royalty by 2025 with Adjusted Cash Receipts
contribution of greater than $200 million using consensus sales
estimates.
Royalty Pharma expects to fund this transaction with a
combination of existing cash on the balance sheet and approximately
$350 million from its revolving credit facility. Royalty Pharma
continues to maintain significant financial capacity for future
royalty acquisitions.
Since 2020, Royalty Pharma has announced transactions of up to
$12.8 billion, including up to $3.8 billion in 2023.
Royalty Transaction Details
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Date |
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July 2020 |
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October 2023 |
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Total (October 2023) |
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PTC option(December 31, 2025) |
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RP option(March 31, 2026) |
Funding amount |
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$650m upfront |
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$1.0bn upfront |
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$1.65bn upfront(up to $500m option) |
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Up to $500m |
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Up to $250m |
Royalty purchased |
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43% of royalties |
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38% of royalties before cap and 67% of royalties above cap |
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81% of royalties before cap and 67% of royalties above cap |
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Remaining 19% of royalties before cap and 33% of royalties above
cap |
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9.5% of royalties before cap and 16.7% of royalties above cap |
Effective royalty rate prior to 2020 deal cap (on
worldwide net sales) |
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3.4% up to $500m |
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3.0% up to $500m |
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(Total
ex-option) |
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(Total and
full PTC option) |
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(Total and
full RP option) |
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4.7%
on $500m-$1.0bn |
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4.2%
on $500m-$1.0bn |
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6.5%
up to $500m |
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8% up
to $500m |
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7.2%
up to $500m |
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6.0% on $1.0-$2.0bn |
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5.3% on $1.0-$2.0bn |
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8.9% on $500m-$1.0bn |
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11% on $500m-$1.0bn |
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10.0% on $500m-$1.0bn |
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6.9% >$2.0bn |
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6.1% >$2.0bn |
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11.3% on $1.0-$2.0bn |
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14% on $1.0-$2.0bn |
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12.7% on $1.0-$2.0bn |
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13.0% >$2.0bn |
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16% >$2.0bn |
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14.5% >$2.0bn |
Additional details |
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Royalties cease when aggregate royalties paid equal $1.3bn |
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PTC may sell remaining royalty to RP for $500m less royalties
received; RP can purchase 50% for $250m less royalties received
under certain circumstances |
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After $1.3bn cap, RP entitled to 67% of royalties |
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PTC option exercisable until December 31, 2025 |
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RP option under certain circumstance until March 31, 2026After
$1.3bn cap, RP entitled to 83% of royalties |
Estimated duration |
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2030-2035 |
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2035-2036 |
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2035-2036 |
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2035-2036 |
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2035-2036 |
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Conference Call Information
Royalty Pharma will host a conference call and simultaneous
webcast to discuss the transaction today, Thursday, October 19 at
9:00 a.m. Eastern Time. Please visit the “Investors” page of the
company’s website at
https://www.royaltypharma.com/investors/news-and-events/events to
obtain conference call information and to view the live webcast. A
replay of the conference call and webcast will be archived on the
company’s website for at least 30 days.
Advisors
Goodwin Procter, Fenwick & West and Maiwald acted as legal
advisors to Royalty Pharma. Wilmer Cutler Pickering Hale and Dorr
LLP acted as legal advisors to PTC Therapeutics on the
transaction.
About Royalty Pharma plc
Founded in 1996, Royalty Pharma is the largest buyer of
biopharmaceutical royalties and a leading funder of innovation
across the biopharmaceutical industry, collaborating with
innovators from academic institutions, research hospitals and
non-profits through small and mid-cap biotechnology companies to
leading global pharmaceutical companies. Royalty Pharma has
assembled a portfolio of royalties which entitles it to payments
based directly on the top-line sales of many of the industry’s
leading therapies. Royalty Pharma funds innovation in the
biopharmaceutical industry both directly and indirectly - directly
when it partners with companies to co-fund late-stage clinical
trials and new product launches in exchange for future royalties,
and indirectly when it acquires existing royalties from the
original innovators. Royalty Pharma’s current portfolio includes
royalties on more than 35 commercial products, including Vertex’s
Trikafta, Kalydeco, Orkambi and Symdeko, Biogen’s Tysabri, AbbVie
and Johnson & Johnson’s Imbruvica, Astellas and Pfizer’s
Xtandi, GSK’s Trelegy, Novartis’ Promacta, Pfizer’s Nurtec ODT,
Johnson & Johnson’s Tremfya, Roche’s Evrysdi, Gilead’s
Trodelvy, and 11 development-stage product candidates.
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 document unless
stated otherwise, and neither the delivery of this document 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 document 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 Royalty
Pharma’s strategies, financing plans, growth opportunities and
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you should not place undue reliance on such statements.
Forward-looking statements are subject to many risks, uncertainties
and other variable circumstances, and other factors. Such risks and
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of these risks are outside of the company’s control and could cause
its actual results to differ materially from those it thought would
occur. The forward-looking statements included in this document are
made only as of the date hereof. The company does not undertake,
and specifically declines, any obligation to update any such
statements or to publicly announce the results of any revisions to
any such statements to reflect future events or developments,
except as required by law.
Certain information contained in this document relates to or is
based on studies, publications, surveys and other data obtained
from third-party sources and the company's own internal estimates
and research. While the company believes these third-party sources
to be reliable as of the date of this document, it has not
independently verified, and makes no representation as to the
adequacy, fairness, accuracy or completeness of, any information
obtained from third-party sources. In addition, all of the market
data included in this document involves a number of assumptions and
limitations, and there can be no guarantee as to the accuracy or
reliability of such assumptions. Finally, while the company
believes its own internal research is reliable, such research has
not been verified by any independent source.
For further information, please reference Royalty Pharma’s
reports and documents filed with the U.S. Securities and Exchange
Commission (SEC). You may get these documents by visiting EDGAR on
the SEC website at www.sec.gov.
Royalty Pharma Investor Relations and
Communications
+1 (212) 883-6637ir@royaltypharma.com
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