Royalty Pharma Expands Ownership of Evrysdi Royalties with $1 Billion Investment in Roche SMA Drug

Royalty Pharma (RPRX.O) has announced the acquisition of additional royalties for Roche (ROG.S) and PTC Therapeutics’ (PTCT.O) oral spinal muscular atrophy (SMA) drug, known as Risdiplam and branded as Evrysdi. This purchase was made for an upfront payment of $1 billion according to a report by Reuters.

Evrysdi received approval from the U.S. Food and Drug Administration in 2020 for the treatment of spinal muscular atrophy in adults and children aged two months and above. Spinal muscular atrophy is a severe genetic disorder that hinders the body’s ability to produce a protein crucial for neuromuscular development.

Royalty Pharma’s agreement with PTC has increased its ownership of the Evrysdi royalty from 43% to 81%. This equates to a royalty ranging from 6.5% to 13%. Notably, in 2020, Royalty Pharma had already purchased approximately 43% of PTC’s royalty interest in Risdiplam for a one-time payment of $650 million.

PTC has stated that it intends to use the proceeds from this deal to repay its debt owed to Blackstone Life Sciences and fund its planned operations. This agreement has been seen as removing a significant financial burden and addressing investor concerns regarding PTC’s obligations to Blackstone, as noted by Truist Securities analyst Robyn Karnauskas.

Following this announcement, shares of PTC rose nearly 5% in early trading, while Royalty Pharma saw an increase of about 1%. Additionally, PTC has the option to sell its retained royalties on Evrysdi to Royalty Pharma for up to $500 million at a later date.

Royalty Pharma is expected to finance this transaction using a combination of existing cash and around $350 million from its revolving credit facility. In 2022, Evrysdi generated global sales of 1.12 billion Swiss Francs ($1.25 billion).

Royalty Pharma specializes in acquiring royalties on future drugs from academic labs and biotechnology companies. These acquisitions provide capital for these organizations to continue their research and development efforts. (Note: $1 = 0.8963 Swiss francs)

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