- Ultragenyx Pharmaceutical sold European royalty rights to one of its two commercialized drugs in a $320 million sale to Royalty Pharma, the biotech said Wednesday.
- The rights to a portion of the European sales of Crysvita, which gained approval last year, will add to Royalty Pharma's sprawling collection of royalties, which have a total value exceeding $16 billion, according to the privately held company.
- Shalini Sharp, Ultragenyx's chief financial officer, emphasized that the California biotech didn't have to give up equity to raise $320 million, which will go toward commercialization efforts for its approved therapies, Crysvita and Mespevli, she said in a statement.
Royalty Pharma has found a powerful niche in the drug development industry, primarily by buying existing royalty rights from drug companies, universities, hospitals or whoever else may hold them.
The company holds royalties on some of the industry's best-selling drugs, including AbbVie's Humira (adalimumab), Johnson & Johnson's Remicade (infliximab) and Biogen's Tecfidera (dimethyl fumarate).
In the case of Ultragenyx, the deal exchanges a long-term royalty stream for an immediate injection of capital. That'll be needed as the biotech's cash burn rates have climbed, and are expected to further increase as the company invests more in commercializing its drugs.
In 2013, Ultragenyx and Kyowa Kirin entered into a deal to develop and commercialize Crysvita. The drug gained U.S. and European approvals in the first half of 2018 for a rare disorder called X-linked hypophosphatemia, setting up its market debut.
Through that deal, Kyowa Kirin took the lead on Europe, with Ultragenyx receiving up to 10% of those sales through its royalty rights, which has now been sold to Royalty Pharma. Through the first nine months of 2019, Ultragenyx received about $6 million on European sales of Crysvita.
The deal will automatically end if Royalty Pharma makes $608 million from the royalty rights before the end of 2030. That would translate to a return-on-investment of about 190% over a decade. If that mark isn't reached, the deal would end whenever the company makes $800 million from the royalty stream.
Royalty Pharma CEO Pablo Legorreta called the deal a "win-win transaction" in a Dec. 18 statement, saying Ultragenyx can extract cash now from "a passive, EU royalty stream to power its current strategic plan."
Ultragenyx's stock was up 4% Wednesday morning.