Ultragenyx, a California-based drugmaker, has sold a portion of the royalties it receives from a rare disease medicine to a Canadian pension fund.
In exchange for $500 million, the fund, called OMERS, will get 30% of Ultragenyx’s royalty interest on future sales of Crysvita in the U.S. and Canada, where it’s approved to treat two rare conditions that cause lower-than-normal levels of phosphate in the blood. The payments OMERS receives will be based on net sales of Crysvita starting next April, and they will be capped at 1.45 times the deal’s upfront price.
Ultragenyx said in a statement that Crysvita, which was first approved by the Food and Drug Administration in 2018, has generated more than $1.3 billion in its first four years on the North American market. Ultragenyx co-developed and is co-commercializing the drug with the Japanese pharmaceutical company Kyowa Kirin.
“This non-dilutive financing bolsters Ultragenyx’s balance sheet, funds the ongoing commercialization of multiple approved medicines and the advancement of our diverse clinical pipeline,” Mardi Dier, chief financial officer at Ultragenyx, said in the Thursday statement.
By the end of March, Ultragenyx had about $814 million in cash, cash equivalents and marketable debt securities, a sum it said would fund operations for "at least" the next year. The company recorded $80 million in revenue over the first three months of the year, with about 60% coming from collaborations and licensing deals. That revenue figure was 20% lower than the almost $100 million the company recorded during the first quarter of 2021.
Ultragenyx’s share price, meanwhile, has fallen 24% over the last year amid a broader downturn in the biotechnology stock market.
It’s not commonplace for a drug company to sell royalty rights to a pension plan. And yet, some unconventional biotech investors have notched significant returns in recent years. For instance, The Wall Street Journal reported how Alaska Permanent Fund Corp., a state-backed fund founded in the mid-1970s and initially built around oil sales, had achieved “outsized” returns from its biotech investments.
OMERS says it's one of the largest defined benefit pension plans in Canada, with $121 billion in net assets under management at the end of last year. Rob Missere, managing director and head of life sciences in the company’s capital markets investment division, said the Ultragenyx deal “furthers our mandate of delivering steady, long-term returns to our more than 541,000 members.”
Ultragenyx sells three medicines, including Crysvita, and owns partial rights to a cholesterol-lowering drug from Regeneron. The company also has research programs that span small molecule drugs, biologics and gene therapies. In May, Ultragenyx grew its pipeline by acquiring rights to a potential gene therapy for Sanfilippo syndrome Type A.