GlaxoSmithKline offloads royalty rights for 2 cancer drugs in $342M windfall it will use to finance consumer spinoff
As GlaxoSmithKline continues plans to spin off its Pfizer-partnered consumer health division, the British pharma pulled in a new heaping of cash to accomplish that goal.
GSK sold its royalty rights for Exelixis drugs Cabometyx and Cometriq to Royalty Pharma on Thursday morning, netting a $342 upfront payment and a promise for up to $50 million more in milestones depending on regulatory approvals in new indications. The proceeds will go toward the spinout efforts, a GSK spokesperson confirmed to Endpoints News, as the drugmaker looks to raise more than $2.2 billion in cash to finance the split.
“In February 2020, we announced our programme to prepare GSK for a separation into two great new companies … which would largely be funded by disposals,” the spokesperson told Endpoints. “This is a smart deal from our perspective, which delivers a significant amount of cash for an asset in which we no longer have any commercialisation or development involvement.”
The GSK split remains on schedule for 2022, the spokesperson added.
GSK had originally obtained 3% royalties as part of a 2002 collaboration with Exelixis for cabozantinib products — the generic name for both Cabometyx and Cometriq. Under Thursday’s deal, Royalty Pharma gains royalties on net cabozantinib sales outside the US through the full term of the royalty, as well as US royalty sales through September 2026.
The move continues Royalty’s largely successful strategy of buying up royalties on drugs, diagnostics and medical products. CEO Pablo Legorreta rode the business model to Nasdaq last June in a massive IPO that raised $2.2 billion and a debut valuation of nearly $17 billion.
Legorreta has engineered royalty deals for several prominent drugs over the years, including Humira, Truvada, Imbruvica and Trodelvy. Last year alone, Royalty acquired royalty sales in Roche and PTC Therapeutics’ risdiplam for $650 million and residual royalties in Vertex’s cystic fibrosis franchise from the CF Foundation for $575 million upfront.
Previously, Royalty had been obligated to pay 50% of those royalties to the CF Foundation. But the new deal, agreed to last November, eliminated that commitment, resulting in what Royalty says is a potential $5.8 billion annual windfall.
In Cabometyx, Royalty gets a drug that’s on track to be an up and coming blockbuster, having won approvals as a monotherapy and in combination with Opdivo as a first-line treatment for renal cell carcinoma. The Opdivo cocktail greenlight came in January as patients treated with Opdivo and Cabometyx in a Phase III study lived twice as long without their tumors progressing as those treated with Pfizer’s Sutent.
Last year, sales of Cabometyx and Cometriq totaled $742 million and €289 million, respectively.
Both Cabometyx and Cometriq are tyrosine kinase inhibitors, though they come in different formulations. Whereas Cabometyx comes in the form of a tablet to treat kidney cancer, Cometriq is an oral capsule used for thyroid cancer.