Royalty Pharma is taking its business model of buying up drug royalty rights to gene therapy, striking a deal to own a share of future sales of Ferring Pharmaceuticals’ new bladder cancer treatment Adstiladrin.
Announced by the companies Thursday, the agreement is the first Royalty has reached for a gene therapy and a bet that Adstiladrin can become a blockbuster product over the next decade.
Last December, Ferring won Food and Drug Administration approval of Adstiladrin to treat a high-risk form of bladder cancer that doesn’t respond to standard therapy. The company plans to make the treatment available for prescribing through an “early experience” program, beginning in September, as it prepares sufficient manufacturing to support a broader launch.
The deal with Royalty reflects Ferring’s plans for a phased rollout. Royalty will pay $300 million upfront to secure a 5.1% royalty on net U.S. sales of Adstiladrin, and has promised another $200 million if certain manufacturing goals are achieved. Should that happen, Royalty will get an 8% royalty on net U.S. sales.
“We believe [Adstiladrin] has blockbuster potential and we are pleased to provide funding to support the launch of Adstiladrin and help Ferring reach as many patients as possible with this important therapy in the United States,” said Royalty’s CEO Pablo Legorreta in a statement.
Led by Legorreta since its 1996 founding, Royalty is the largest acquirer of pharmaceutical royalty rights, owning stakes to sales of some of the industry’s top-selling products. Its most lucrative royalty stream comes from Vertex Pharmaceuticals’ cystic fibrosis medicines, but it also earns tens of millions of dollars each quarter from drugs like AbbVie’s cancer therapy Imbruvica and Biogen’s multiple sclerosis blockbuster Tysabri.
Gene therapy could be a more uncertain commercial prospect. Outside of Novartis’ spinal muscular atrophy treatment Zolgensma, the other gene therapies approved in the U.S. to date haven’t earned much in the way of sales. Making them, as Ferring is experiencing, is also much more difficult than producing small molecule pills or antibody injections.
Before its 2022 approval, Adstiladrin was rejected by the FDA over manufacturing issues at a contract facility. Ferring has since taken a more direct role in the medicine’s production, but recorded a $74 million loss on the business last year as it ramped up spending.
Adstiladrin works by delivering into the bladder, via a modified adenovrius, a gene encoding for a protein called interferon alfa-2b. This protein is meant to then help the body battle a kind of bladder cancer that doesn’t invade the muscle. Adstiladrin is approved to treat this cancer, known as NMIBC for short, in people whose tumors don’t respond to the Bacillus Calmette-Guérin vaccine.