PTC Therapeutics collaborates with Royalty Pharma in $1.5bn Evrysdi royalty agreement

PTC Therapeutics, Inc. (NASDAQ: PTCT) has forged an agreement with Royalty Pharma plc., monetizing up to a staggering $1.5 billion from the Evrysdi royalty stream. The terms dictate Royalty Pharma’s acquisition of additional Evrysdi royalties worth $1 billion upfront. The deal comes with provisions for future sales, where PTC could part with all its retained Evrysdi royalties for as much as $500 million. However, PTC retains all economic rights linked to Evrysdi global net sales milestones, potentially raking in up to $250 million.

Furthering the Strategic Partnership

This agreement is a continuation of the duo’s 2020 strategic collaboration, initially aimed at the monetization of approximately 43% of the Evrysdi royalty stream, at a value of $650 million. Following the present terms, PTC now owns roughly 19% of the Evrysdi royalty stream, with possibilities of changes based on future options exercised by either party.

Utilization of the finance garnered is directed towards settling any remaining debt obligations with Blackstone Life Sciences and channeling resources to envisaged operations.

Matthew B. Klein, M.D., PTC Therapeutics’ CEO, articulated, “Expanding our strategic bond with Royalty Pharma offers us the capital to support ongoing operations. It also grants us increased financial flexibility by settling the Blackstone debt.” He further highlighted the transaction’s potential for generating non-dilutive capital in the upcoming years.

Echoing Klein’s sentiments, Pablo Legorreta, Royalty Pharma’s founder and CEO, showcased his enthusiasm for acquiring more of Evrysdi’s royalty interest. He stated, “Evrysdi has monumentally impacted SMA patients worldwide. This marks our second transaction with PTC, reiterating our enduring partnership and our knack for devising mutually beneficial financial solutions.”

Deep Dive: Transaction Details

Post this transaction, PTC has consented to vend approximately 67% of the 57% existing Evrysdi royalties and an additional outstanding royalty over the previous agreement’s cap with Royalty Pharma. Moreover, until December 31, 2025, PTC can opt to sell the remaining Evrysdi royalty to Royalty Pharma for $500 million, split into five $100 million portions, reduced by received royalties.

Advisory Roles and About Evrysdi

Wilmer Cutler Pickering Hale and Dorr LLP offered legal advisory services to PTC Therapeutics, whereas Goodwin Procter, Fenwick & West, and Maiwald catered to Royalty Pharma.

Evrysdi (risdiplam) stands out as an SMN2 splicing modifier aimed at spinal muscular atrophy (SMA) treatment due to mutations in chromosome 5q causing SMN protein deficiency. Administered daily, Evrysdi augments the SMN protein production crucial for primary motor functions. Boasting approval in over 100 countries, Evrysdi stems from a collaboration between PTC, Roche, and the SMA Foundation.