David MacNaughtan (Sagard Holdings)

Roy­al­ty Phar­ma gets more com­pe­ti­tion as a pri­vate eq­ui­ty firm launch­es $725M roy­al­ty-buy­ing fund

Pablo’s got some peers.

Twen­ty-five years af­ter Mex­i­can bil­lion­aire Pablo Legor­re­ta start­ed buy­ing up fu­ture roy­al­ties on ap­proved drugs — and eight months af­ter he turned that in­to a record-set­ting $2.2 bil­lion IPO for Roy­al­ty Phar­ma— an­oth­er firm is rais­ing large sums to do the same thing. Sagard Hold­ings, the Cana­di­an in­vest­ment firm, raised $725 mil­lion for a new fund, known as Sagard Health­care Roy­al­ty Part­ners, that will pur­chase roy­al­ties in drugs, di­ag­nos­tics and med­ical prod­ucts.

Sagard joins a small clutch of well-heeled in­vest­ment firms that have tried to fol­low on Legor­re­ta’s suc­cess. Last year, Black­stone dropped $2 bil­lion on Al­ny­lam for a chunk of stock and half their roy­al­ties on in­clisir­an, a No­var­tis drug that is ex­pect­ed to be a block­buster. Al­so in 2020, Health­care Roy­al­ty Part­ners raised a new $1.8 bil­lion fund for the same pur­pose. And the year be­fore, Or­biMed launched their third such pot, this one val­ued at $1.2 bil­lion.

The fund — led by David Mac­Naugh­tan, a long­time in­vestor who led busi­ness de­vel­op­ment at Pal­adin Labs be­fore it was bought out by En­do — has al­ready dis­closed a cou­ple of its deals. In Au­gust, Athenex an­nounced that it had sold Sagard a small por­tion of its roy­al­ty rights to an oral ver­sion of the chemother­a­py pa­cli­tax­el for $50 mil­lion. The drug is now at the FDA un­der pri­or­i­ty re­view for metasta­t­ic breast can­cer.

The deal pro­vides an ex­am­ple of the ap­proach Mac­Naugh­tan will look to take in an in­creas­ing­ly com­pet­i­tive space. Rather than the large deals Roy­al­ty Phar­ma has be­come fa­mous for — the firm fa­mous­ly spent $3.3 bil­lion for the Cys­tic Fi­bro­sis Foun­da­tion’s roy­al­ties on Ver­tex’s CF drugs — they will look to spend be­tween $25 mil­lion and $100 mil­lion.

“We are fo­cused on the small­er to mid-sized end of the mar­ket,” Mac­Naugh­tan told End­points News. “Where we would dif­fer from Roy­al­ty Phar­ma — they’re look­ing for bil­lion dol­lar trans­ac­tions.”

Part of that means deals with small­er com­pa­nies and drugs like Athenex and their oral chemother­a­py. But it al­so means go­ing af­ter drugs that have not yet been ap­proved, where the risk and re­ward is greater, and try­ing to find peo­ple and en­ti­ties up and down the drug de­vel­op­ment time­line — such as ear­ly aca­d­e­mics — who might hold roy­al­ties and might be will­ing to sell for a good deal.

There, they’ll be com­pet­ing di­rect­ly with Roy­al­ty Phar­ma, which does both. In par­tic­u­lar, Roy­al­ty has moved in­creas­ing­ly in­to un­ap­proved med­i­cines over the past few years and, in do­ing so, shown a will­ing­ness to ex­e­cute deals that be­gin to dip to­ward the range Sagard is tar­get­ing. Last month, they bought roy­al­ties for a de­pres­sion drug from Min­er­va Neu­ro­sciences for $60 mil­lion, with $95 mil­lion promised in mile­stones.

Tar­get­ing a Po­ten­tial Vul­ner­a­bil­i­ty of Cer­tain Can­cers with DNA Dam­age Re­sponse

Every individual’s DNA is unique, and because of this, every patient responds differently to disease and treatment. It is astonishing how four tiny building blocks of our DNA – A, T, C, G – dictate our health, disease, and how we age.

The tricky thing about DNA is that it is constantly exposed to damage by sources such as ultraviolet light, certain chemicals, toxins, and even natural biochemical processes inside our cells.¹ If ignored, DNA damage will accumulate in replicating cells, giving rise to mutations that can lead to premature aging, cancer, and other diseases.

Fol­low biotechs go­ing pub­lic with the End­points News IPO Track­er

The Endpoints News team is continuing to track IPO filings for 2021, and we’ve designed a new tracker page for the effort.

Check it out here: Biopharma IPOs 2021 from Endpoints News

You’ll be able to find all the biotechs that have filed and priced so far this year, sortable by quarter and listed by newest first. As of the time of publishing on Feb. 25, there have already been 16 biotechs debuting on Nasdaq so far this year, with an additional four having filed their S-1 paperwork.

Steve Cutler, Icon CEO (Icon)

In the biggest CRO takeover in years, Icon doles out $12B for PRA Health Sci­ences to fo­cus on de­cen­tral­ized clin­i­cal work

Contract research M&A had a healthy run in recent years before recently petering out. But with the market ripe for a big buyout and the Covid-19 pandemic emphasizing the importance of decentralized trials, Wednesday saw a tectonic shift in the CRO world.

Icon, the Dublin-based CRO, will acquire PRA Health Sciences for $12 billion in a move that will shake up the highest rungs of a fragmented market. The merger would combine the 5th- and 6th-largest CROs by 2020 revenue, according to Icon, and the merger will set the newco up to be the second-largest global CRO behind only IQVIA.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 102,000+ biopharma pros reading Endpoints daily — and it's free.

Tom Barnes (Orna)

The mR­NA era is here. MPM be­lieves the fu­ture be­longs to oR­NA — and Big Phar­ma wants a seat at the ta­ble

If the ultra-fast clinical development of Covid-19 vaccines opened the world’s eyes to the promises of messenger RNA, the subsequent delays in supply offered a crash course on the ultra-complex process of producing them. Even before the formulation and fill-finish steps, mRNA is the precious end product from an arduous journey involving enzyme-aided transcription, modification and purification.

For Bristol Myers Squibb, Novartis Institutes for Biomedical Research, Gilead’s Kite and Astellas, it’s time to rethink the way therapeutic RNA is engineered.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 102,000+ biopharma pros reading Endpoints daily — and it's free.

Michael Rome (Foresite)

In search of 'house­hold health­care brands of the fu­ture,' Fore­site Cap­i­tal rais­es $969M to sa­ti­ate a tech-heavy ap­petite

Back in April 2018, just before Foresite Capital unveiled its $668 million Fund IV and a strategy to focus on tech-driven life science bets, one of its portfolio companies quietly made an announcement.

Fount Therapeutics, a drug discovery outfit backed by Foresite and Eshelman Ventures, had raised $22 million in Series A cash to hatch several fledgling spinouts. “The first ‘NewCo,’ Kinnate, will be focused on developing precision oncology treatments,” read a press release.

Masayoshi Son, SoftBank CEO (glen photo/Shutterstock)

Japan's Soft­Bank plots bil­lions in biotech in­vest­ments in move that could keep the val­u­a­tion flood ris­ing — re­port

The valuation crazy train in biotech continues to roll into the new year with more than a dozen companies taking a chance on Nasdaq and money flowing in from all sides. Now, a Japanese institutional investor is reportedly weighing an entry into the market in a big way — will it keep the bitcoin-esque flood rising?

Already a part-time investor in biotech, SoftBank could drop billions of dollars into the industry as part of helmsman Masayoshi Son’s plan to spend around $80 billion of the firm’s own assets, according to a report from Bloomberg citing people familiar with the plan.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 102,000+ biopharma pros reading Endpoints daily — and it's free.

S&P ex­pects steady ero­sion in Big Phar­ma's cred­it pro­file in 2021 as new M&A deals roll in — but don't un­der­es­ti­mate their un­der­ly­ing strength

S&P Global has taken a look at the dominant forces shaping the pharma market and come to the conclusion that there will be more downgrades than upgrades in 2021 — the 8th straight year of steady decline.

But it’s not all bad news. Some things are looking up, and there’s still plenty of money to be made in an industry that enjoys a 30% to 40% profit margin, once you factor in steep R&D expenses.

Tal Zaks, Moderna CMO (AP Photo/Rodrique Ngowi, via still image from video)

CMO Tal Zaks bids Mod­er­na a sur­prise adieu as biotech projects $18.4B in rev­enue, plots post-Covid ex­pan­sion

How do you exit a company after six years in style? Developing one of the most lucrative and life-saving products in pharma history is probably not the worst way to go.

Tal Zaks, Moderna’s CMO since 2015, will leave the mRNA biotech in September, the biotech disclosed in their annual report this morning. The company has already retained the recruitment firm Russell Reynolds to find a replacement.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 102,000+ biopharma pros reading Endpoints daily — and it's free.

Ken Frazier, Merck CEO (Bess Adler/Bloomberg via Getty Images)

UP­DAT­ED: Mer­ck takes a swing at the IL-2 puz­zle­box with a $1.85B play for buzzy Pan­dion and its au­toim­mune hope­fuls

When Roger Perlmutter bid farewell to Merck late last year, the drugmaker perhaps best known now for sales giant Keytruda signaled its intent to take a swing at early-stage novelty with the appointment of discovery head Dean Li. Now, Merck is signing a decent-sized check to bring an IL-2 moonshot into the fold.

Merck will shell out roughly $1.85 billion for Pandion Pharmaceuticals, a biotech hoping to gin up regulatory T cells (Tregs) to treat a range of autoimmune disorders, the drugmaker said Thursday.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 102,000+ biopharma pros reading Endpoints daily — and it's free.