- MyoKardia will spend up to $80 million to buy back U.S. royalty rights on mavacamten and MYK-224 from Sanofi, the last economic tie the two companies have retained since the French big pharma ended its collaboration in January.
- The transaction will put a dent into the cash reserves of South San Francisco, California-based MyoKardia, which amounted to $628 million as of March 31. The company, which has no products on the market, says it has enough money to fund operations into the second half of 2021.
- MyoKardia will know soon enough whether its gamble was worth it, as the Phase 3 trial of mavacamten in obstructive hypertrophic cardiomyopathy is due to read out in the second quarter of 2020.
What is the economic value of U.S. mavacamten sales? MyoKardia believes it to be more than $800 million. That's a conclusion one can draw from its decision to buy back royalty rights from ex-partner Sanofi.
As part of the collaboration, MyoKardia owed Sanofi tiered royalties of 5% to 10% on U.S. sales of mavacamten and MYK-224. That was retained even after Sanofi ended the main part of the collaboration in January. Sanofi also has sold off its 11% share in MyoKardia.
The royalty buyback has been structured as an upfront payment of $50 million with another $30 million to follow by June 30, 2020. By then, MyoKardia should know whether the EXPLORER-HCM cardiomyopathy trial has succeeded and whether it's worth it to follow through on the royalty buyout.
A price tag of $80 million to buy back royalties means the break-even number for MyoKardia is in the range of $800 million to $1.6 billion worth of total profits from U.S. sales at tiered royalties of 5% to 10%.
Along with the Sanofi transaction, MyoKardia announced that enrollment in the EXPLORER-HCM trial will close in August, a milestone that will allow them to accelerate the announcement of results from the second half of 2020 to the second quarter of 2020.
EXPLORER-HCM is due to enroll 220 patients with obstructive hypertrophic cardiomyopathy (oHCM) and randomize patients to take either mavacamten or a placebo. The endpoint is clinical response as defined by improvement in oxygen uptake and NYHA classification. MyoKardia believes the difference between mavacamten and placebo will be at least 25 points.
At 410,000 in the U.S., the oHCM population is much smaller than the broader heart failure population, but as a clearly defined subgroup mavacamten might stand a better chance of showing a definitive improvement over current medications, and thus have greater pricing flexibility.
By comparison, Novartis' Entresto (sacubitril/valsartan) treats heart failure with reduced ejection fraction, which has as many as 3 million patients. Because of the modest benefit compared with ACE inhibitors, however, Entresto has struggled to gain traction with payers, and Novartis has entered into outcomes-based reimbursement arrangements to satisfy them.
Novartis reported Entresto sales of $421 million in the second quarter, so heart failure is clearly a disorder that can generate blockbuster sales.
If EXPLORER-HCM is successful, the gamble might pay off. Cantor Fitzgerald analyst Alethia Young forecasts oHCM sales for mavacamten of $1.7 billion in 2026.