Royalty Pharma plc (NASDAQ:RPRX) has increased its ownership of the royalties for Evrysdi, a spinal muscular atrophy (SMA) treatment, by acquiring an additional share from PTC Therapeutics (NASDAQ:PTCT), Inc. for approximately $242 million. The transaction, announced on Monday, builds upon a previous deal from October 2023 and boosts Royalty Pharma's stake in the Evrysdi royalty from 81% to 90.5%.
Evrysdi, which is marketed by Roche and was approved by the U.S. Food and Drug Administration in 2020, achieved sales of roughly CHF 1.4 billion ($1.6 billion) in 2023, marking a 39% increase from the previous year. Royalty Pharma's newly acquired share corresponds to an effective royalty rate of 7.2% to 14.5% on worldwide net sales of the medication.
Under the terms of the arrangement, Royalty Pharma will begin receiving its increased share of royalties from the second quarter of 2024. Additionally, PTC (NASDAQ:PTC) retains the option to sell its remaining 9.5% royalty stake to Royalty Pharma for $250 million less any royalties received, until December 31, 2025.
The series of transactions involving Evrysdi royalties began in July 2020 when Royalty Pharma initially purchased 43% of the royalties. With the completion of the June 2024 option exercised by PTC, the cumulative upfront funding amount provided by Royalty Pharma has reached $1.9 billion, with the potential for an additional $250 million depending on future options.
Royalty Pharma's investment in Evrysdi is part of a broader strategy to secure long-term revenue streams from pharmaceutical royalties. This latest move reflects the company's confidence in Evrysdi's market performance and its commitment to expanding its portfolio in the pharmaceutical sector.
The information disclosed in this article is based on statements from a recent SEC filing by Royalty Pharma.
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