NEW YORK - Royalty Pharma plc (NASDAQ:RPRX) has made a significant move in the pharmaceutical industry by acquiring an interest in the royalties of a promising brain tumor medication, vorasidenib, from Agios Pharmaceuticals. This acquisition, contingent on U.S. Food and Drug Administration (FDA) approval, is valued at $905 million in upfront cash.
Vorasidenib, a drug developed for the treatment of IDH-mutant glioma, has shown notable results in a pivotal Phase 3 clinical trial by extending progression-free survival. The drug is poised to become the first targeted therapy for this form of brain tumor, which has not seen a major treatment innovation in over two decades. The FDA has granted vorasidenib priority review with a Prescription Drug User Fee Act (PDUFA) date set for August 20, 2024.
Royalty Pharma's CEO, Pablo Legorreta, expressed optimism about the drug's potential, highlighting its unprecedented efficacy and well-tolerated safety profile. The estimated incidence of low-grade IDH-mutant diffuse gliomas is about 1,500 patients per year in the U.S., with a prevalence of around 10,000, according to Royalty Pharma's estimates.
Under the agreement terms, Royalty Pharma will pay Agios $905 million upon FDA approval of vorasidenib. In return, Royalty Pharma will receive a 15% royalty on annual U.S. net sales of the drug up to $1 billion and a 12% royalty on sales exceeding $1 billion. Agios retains a 3% royalty on annual U.S. net sales over $1 billion.
The financial projections for vorasidenib are optimistic, with Royalty Pharma forecasting over $1 billion in peak annual sales, which could translate to royalties exceeding $150 million annually for the company. If approved, the royalties are expected to be generated through 2038.
Today, Royalty Pharma will host an investor call at 8:30am EDT to discuss the transaction further. Interested parties can access the call and webcast through the Investors page of Royalty Pharma's website, where a replay will be available for at least 30 days.
The information in this article is based on a press release statement.
InvestingPro Insights
Royalty Pharma's recent acquisition of vorasidenib royalties has put a spotlight on the company's strategic moves in the pharmaceutical industry. The InvestingPro data and tips provide a deeper look into the company's financial health and market position. With a market capitalization of $15.9 billion, Royalty Pharma is a significant player in the pharmaceutical investment space. The company's P/E ratio stands at 14.93, which indicates its earnings relative to its share price are higher than what is typical in the market, hinting at investor optimism about future growth.
One of the notable InvestingPro Tips for Royalty Pharma is that management has been aggressively buying back shares, which can often be taken as a sign of confidence in the company's future prospects. Additionally, the company has a history of raising its dividend for 4 consecutive years, showcasing a commitment to returning value to shareholders. With a current dividend yield of 3.16%, investors might find Royalty Pharma an attractive option for steady income.
Furthermore, analysts have revised their earnings upwards for the upcoming period, suggesting that Royalty Pharma's financial performance may exceed current expectations. This aligns with the company's optimistic projections for vorasidenib, potentially bolstering future revenue streams.
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