Royalty Pharma to Acquire Royalty Interest in Sanofi’s Frexalimab
Royalty Pharma plc (Nasdaq: RPRX) announced the acquisition of royalties and milestones on frexalimab from ImmuNext, Inc. for approximately $525 million. Frexalimab, developed by Sanofi, is a promising therapy for multiple sclerosis with blockbuster potential in various immune-mediated diseases. This acquisition expands Royalty Pharma's development-stage portfolio to 15 therapies, estimating to generate over $1 billion in peak royalties annually.
Acquisition of royalties and milestones on frexalimab expands Royalty Pharma's development-stage portfolio to 15 therapies
Frexalimab has multi-blockbuster potential in a wide range of immune-mediated diseases
Potential non-risk-adjusted peak sales for frexalimab may exceed €5 billion
Frexalimab is a first-in-class, second generation anti-CD40 ligand monoclonal antibody
Significant potential in a wide range of immune-mediated diseases, potentially transformative for patients
Transaction costs of approximately $525 million in cash for acquiring frexalimab royalties and milestones
Royalty Pharma to share a minority of royalties above $2.0 billion annual worldwide net sales with ImmuNext shareholders
Estimated royalties from frexalimab are projected to continue until 2041
The acquisition is subject to customary, administrative closing conditions
Insights
Examining the recent Royalty Pharma acquisition of the royalty interests in Sanofi's Frexalimab, there are multiple financial layers to unfold. Royalty Pharma is laying out a substantial
However, we must remember that these projections are non-risk-adjusted and the actual peak sales can significantly differ. Given the complexity and uncertainty of drug development, the fact that Royalty Pharma will only start receiving returns if Sanofi successfully navigates the regulatory path and achieves commercialization, introduces substantial risk. Moreover, royalties are tiered, implying a higher degree of return only beyond certain sales thresholds. From an investor perspective, while the long-term potential is attractive, the payoff is several years out and hinges on successful Phase 3 results and regulatory approval. Therefore, the immediate financial impact is neutral and the real value will unfold over time.
Diving into the therapeutic domain, Frexalimab's positioning as a 'first-in-class, second-generation' therapy flags potential advantages over existing treatments for multiple sclerosis (MS), which can be a substantial market differentiator. Existing MS therapies can compromise the immune system, so a more efficacious and safer alternative could capture significant market share. The projected peak sales of more than €5 billion by Sanofi underscore the blockbuster potential of Frexalimab.
It's worth noting that the MS market is competitive and successful market entry for a new therapy is based not just on clinical effectiveness but also on payer acceptance and physician prescribing habits. Frexalimab’s success will depend on its clinical results and how it compares to other MS treatments in terms of safety, efficacy and cost. Additionally, Sanofi’s planned BLA filing timeline suggests a market entrance at the earliest in 2027, which means Royalty Pharma's revenues from this deal will start accruing several years down the line. Therefore, from a market dynamics standpoint, the transaction has a neutral rating concerning immediate market impact.
In terms of legal perspective, the royalties and milestones involved in this transaction are contingent on a series of regulatory and clinical achievements, which means legal intricacies may play a significant role in determining the actual financial benefit of the deal for Royalty Pharma. The due diligence performed by the legal advisors, which involves scrutinizing the licensing agreement between ImmuNext and Sanofi, is a critical component that can either protect or expose Royalty Pharma to unforeseen liabilities.
Moreover, the closing conditions and the stipulated timeframe of royalties until 2041 indicate a lengthy period during which contractual obligations must be managed. This long-term legal engagement requires ongoing monitoring of Sanofi's adherence to the terms of the agreement and may involve intricate negotiations in response to future market changes or regulatory decisions. From an investment risk standpoint, these legal aspects add a layer of complexity to the valuation of the deal, leading to a neutral rating at this juncture.
- Frexalimab is in Phase 3 development by Sanofi in multiple sclerosis with multi-blockbuster potential in a wide range of immune-mediated diseases
- Expands Royalty Pharma’s development-stage portfolio to 15 therapies with the combined potential to generate significantly greater than
$1 billion in annual peak royalties - Royalty Pharma to highlight the strength of its development-stage pipeline on its first quarter of 2024 financial results call today at 8:00 a.m.
NEW YORK, May 09, 2024 (GLOBE NEWSWIRE) -- Royalty Pharma plc (Nasdaq: RPRX) announced today that it will acquire royalties and milestones on frexalimab owned by ImmuNext, Inc. (ImmuNext) for approximately
Frexalimab, in development by Sanofi, is a first-in-class, second generation anti-CD40 ligand monoclonal antibody. Frexalimab is in three Phase 3 clinical studies for the treatment of multiple sclerosis (MS). Phase 2 clinical studies for systemic lupus erythematosus and Type 1 Diabetes are ongoing. Sanofi stated that potential non-risk-adjusted peak sales for frexalimab may be greater than
Pablo Legorreta, Royalty Pharma’s founder and Chief Executive Officer said, “This transaction will expand our attractive and growing development-stage portfolio with a next-generation immunology therapy. Frexalimab has the potential to achieve high efficacy without the chronic depletion of the immune system commonly associated with currently available MS therapies. In light of frexalimab’s exciting Phase 2 study results in MS and its significant potential in a wide range of immune-mediated diseases, we believe frexalimab is a potentially transformative therapy for patients.”
Following this transaction, Royalty Pharma will have 15 therapies in its development-stage portfolio, 11 of which will be in Phase 3 development or undergoing regulatory review. In aggregate, on a non-risk adjusted basis, Royalty Pharma’s development-stage pipeline will have the potential to generate combined peak royalties significantly greater than
Transaction Terms
Under the terms of ImmuNext’s licensing agreement with Sanofi, ImmuNext is entitled to receive an upward tiering net royalty ranging from a high-single digit to low-double digit percentage of worldwide net sales of frexalimab. As a result of today’s announced transaction, Royalty Pharma will receive
In addition, the acquisition will include substantial potential milestone payments from Sanofi.
Royalty Pharma estimates frexalimab, if approved, will generate royalties through 2041.
The acquisition is subject to customary, administrative closing conditions and is expected to close in May 2024.
Advisors
Gibson Dunn & Crutcher, Fenwick and Maiwald acted as legal advisors to Royalty Pharma. Goodwin Procter LLP acted as legal advisors and Jefferies LLC acted as financial advisors to ImmuNext.
About Royalty Pharma
Founded in 1996, Royalty Pharma is the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry, collaborating with innovators from academic institutions, research hospitals and non-profits through small and mid-cap biotechnology companies to leading global pharmaceutical companies. Royalty Pharma has assembled a portfolio of royalties which entitles it to payments based directly on the top-line sales of many of the industry’s leading therapies. Royalty Pharma funds innovation in the biopharmaceutical industry both directly and indirectly - directly when it partners with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when it acquires existing royalties from the original innovators. Royalty Pharma’s current portfolio includes royalties on more than 35 commercial products, including Vertex’s Trikafta, GSK’s Trelegy, Roche’s Evrysdi, Johnson & Johnson’s Tremfya, Biogen’s Tysabri and Spinraza, AbbVie and Johnson & Johnson’s Imbruvica, Astellas and Pfizer’s Xtandi, Novartis’ Promacta, Pfizer’s Nurtec ODT and Gilead’s Trodelvy, and 15 development-stage product candidates.
Forward-Looking Statements
The information set forth herein does not purport to be complete or to contain all of the information you may desire. Statements contained herein are made as of the date of this document unless stated otherwise, and neither the delivery of this document at any time, nor any sale of securities, shall under any circumstances create an implication that the information contained herein is correct as of any time after such date or that information will be updated or revised to reflect information that subsequently becomes available or changes occurring after the date hereof.
This document contains statements that constitute “forward-looking statements” as that term is defined in the United States Private Securities Litigation Reform Act of 1995, including statements that express the company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. Examples include discussion of Royalty Pharma’s strategies, estimated acquisition-related expenses, financing plans, growth opportunities and market growth. In some cases, you can identify such forward-looking statements by terminology such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project,” “expect,” “may,” “will,” “would,” “could” or “should,” the negative of these terms or similar expressions. Forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to the company. However, these forward-looking statements are not a guarantee of Royalty Pharma’s performance, and you should not place undue reliance on such statements. Forward-looking statements are subject to many risks, uncertainties and other variable circumstances, and other factors. Such risks and uncertainties may cause the statements to be inaccurate and readers are cautioned not to place undue reliance on such statements. Many of these risks are outside of the company’s control and could cause its actual results to differ materially from those it thought would occur. The forward-looking statements included in this document are made only as of the date hereof. The company does not undertake, and specifically declines, any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments, except as required by law.
Certain information contained in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and the company’s own internal estimates and research. While the company believes these third-party sources to be reliable as of the date of this document, it has not independently verified, and makes no representation as to the adequacy, fairness, accuracy or completeness of, any information obtained from third-party sources. In addition, all of the market data included in this document involves a number of assumptions and limitations, and there can be no guarantee as to the accuracy or reliability of such assumptions. Finally, while the company believes its own internal research is reliable, such research has not been verified by any independent source.
For further information, please reference Royalty Pharma’s reports and documents filed with the U.S. Securities and Exchange Commission ("SEC") by visiting EDGAR on the SEC's website at www.sec.gov.
Royalty Pharma Investor Relations and Communications
+1 (212) 883-6772
ir@royaltypharma.com
FAQ
What is the acquisition announced by Royalty Pharma plc regarding frexalimab?
What is the potential peak sales estimation for frexalimab according to Sanofi?
When is Sanofi expected to file a biologics license application for relapsing multiple sclerosis with the FDA?
How many therapies will be in Royalty Pharma's development-stage portfolio after this transaction?
Until when are royalties from frexalimab estimated to be generated?
