- Royalty Pharma purchases a portion of royalties on Roche’s Evrysdi for $1.0 billion upfront
- PTC Therapeutics has option to sell rest of royalty for up to $500 million; Royalty Pharma has option to buy half of rest of royalty for up to $250 million
- Transaction expected to enhance long-term Adjusted Cash Receipts growth (non-GAAP)
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NEW YORK, NY, October 19, 2023 – 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.
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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.
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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.
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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.
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This text is a press release from Royalty Pharma. The full text version of the article can be found here.
