La Jolla inks royalty deal to support Giapreza launch
- La Jolla Pharmaceutical has signed up to a deal with HealthCare Royalty Partners, giving the pharma $125 million in financing in return for tiered royalty payments on worldwide sales of Giapreza. The money will help the company push the shock drug onto the market.
- Royalties will start at a maximum of 10% to Dec. 31, 2021, stepping down as the drug reaches pre-set annual sales thresholds. From Jan. 1, 2022, the maximum royalty rate may increase by 4% if the preset cumulative sales threshold is not met, with an additional 4% increase from Jan. 1, 2024.
- The maximum royalties payable are 180% of the $125 million upfront payment; if this threshold is reached, then the payment obligations expire. While La Jolla is upbeat, the market was not so much with a near 7% slide by close on Friday.
Giapreza (angiotensin II) was approved by the U.S. Food and Drug Administration in December 2017 under Priority Review to increase blood pressure in adults with septic or other distributive shock causing dangerously low blood pressure. This was after a not particularly straightforward route to market; La Jolla reported mixed results of its ATHOS-3 study of Giapreza in catecholamine resistant hypotension, a severe form of vasodilatory shock, last year.
La Jolla ended the first quarter of 2018 with just $154.4 million in cash and cash equivalents, showing a net loss of $50.5 million during the first quarter, more than double the loss recorded the previous year. Now that the biotech finally has a product on the market, it needs cash to make sure the drug gets off the ground. Tapping HCR gives it that flexibility, while sacrificing only a small percentage of future sales.
The company has only one product in its clinical pipeline, LJPC-401 (synthetic human hepcidin), which moved into Phase 2 development for the treatment of iron overload in December 2017.
"This transaction provides us with a strong financial position to support the commercial launch of Giapreza, while at the same time furthering the development of LJPC-401 and our other programs," said George Tidmarsh, president and CEO of La Jolla, in a statement.
HealthCare Royalty Partners' business model is to buy up royalty streams or use "debt-like" structures to invest in products that are near to or on the market. Plenty of other companies have used the HCR route to quick cash. Adamas Pharmaceuticals took the money to pay general expenses and commercialize its Parkinson's disease drug ADS-5102. Portola Pharmaceuticals needed a bridge through regulatory delays for its anticoagulant antidote AndexXa (andexanet alfa). Immuno-oncology company Agenus swapped $230 million for royalties on sales of GlaxoSmithKline’s QS-21 containing vaccines in order to redeem a royalty bond and advance registrational studies. Albireo Pharma signed up to a $60 million deal in return for Japanese royalties on elobixibat.
"Our investment reflects our confidence in Giapreza’s ability to meaningfully improve outcomes for patients suffering from septic or other distributive shock," said Clarke Futch, managing partner and chair of the HCR investment committee.
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