Liver-focused startup nabs $115M in exchange for rare disease drug royalties
A Boston biotech focused on liver disease raised some quick cash last week, selling royalty rights to its sole FDA-approved drug.
Albireo Pharma sold the royalties to Canada-based investment firm Sagard Holdings for $115 million, nabbing the funds in exchange for future sales of Bylvay, approved last year to treat pruritus in all subtypes of progressive familial intrahepatic cholestasis (PFIC). The money will help the biotech extend its runway ahead of a 2024 Phase III readout in biliary atresia, CEO Ron Cooper said in a statement.
Investors appeared mildly pleased with the decision, as Albireo shares $ALBO closed up about 11% on Thursday.
As outlined in an SEC filing, Albireo will get the $115 million in exchange for tiered royalties. For the first $250 million in revenue, Sagard will net 12.5% of sales. For the next $100 million (the revenue between $250 million and $350 million), the rate will be 5%. Royalties for the dollars earned above $350 million will also be 5%, unless Bylvay is approved for biliary atresia, when it will fall to 1%.
The full amount of royalty payments will be capped at $184 million, but can be increased to $230 million if Sagard doesn’t reach the first threshold by the end of 2028. And if the payments to Sagard don’t reach the second threshold by the end of 2036, Albireo has agreed to make up the difference.
Albireo is attempting to build Bylvay into a “billion-dollar product,” Cooper said, after the biotech followed the suit of other liver players and failed in NASH. Researchers had been evaluating another of its pipeline candidates for the fatty liver disease, but a Phase II flop in 2020 forced the company to call it quits.
But a year later, Albireo secured Bylvay’s first approval with a wide label, leading analysts to project exciting things. Peak sales figures ranged from $162 million to $762 million in PFIC, a rare pediatric disease where Bylvay’s OK also won a priority review voucher. Albireo is working on expanding Bylvay’s label into at least three other liver diseases.
Sagard, meanwhile, is making another move after launching a $725 million royalty-buying fund in February 2021. The firm is one of a handful of VCs attempting to follow in Pablo Legorreta and Royalty Pharma’s successes, after Blackstone dropped $2 billion for Alnylam stock and its inclisiran royalties, and Healthcare Royalty Partners and OrbiMed each raised their own $1 billion-plus funds.
Last October, Sagard had plunked down $250 million to buy out AnaptysBio’s royalties for GSK’s PD-1 drug, Jemperli.