Ultragenyx sells rare disease drug royalties to Canadian pension fund

Ultragenyx, a California-based drugmaker, has sold some of the royalties it receives from a rare disease drug to a Canadian pension fund.

In exchange for $500 million, the fund, called OMERS, will get 30% of Ultragenyx’s royalty rights on future sales of Crysvita in the United States and Canada, where it is approved to treat two rare diseases that lead to lower than normal phosphate levels in the blood. Payments received by OMERS will be based on Crysvita’s net sales from next April, and will be capped at 1.45 times the original transaction price.

Ultragenyx said in a statement that Crysvita, which was first approved by the Food and Drug Administration in 2018, generated more than $1.3 billion in its first four years in the North American market. Ultragenyx co-developed and co-markets the drug with Japanese pharmaceutical company Kyowa Kirin.

“This non-dilutive financing strengthens Ultragenyx’s balance sheet, funds the ongoing commercialization of several approved drugs and the advancement of our diverse clinical pipeline,” Ultragenyx chief financial officer Mardi Dier said in Thursday’s release.

At the end of March, Ultragenyx had about $814 million in cash, cash equivalents and marketable debt securities, a sum it said would fund operations “at least” next year. The company posted $80 million in revenue in the first three months of the year, about 60% of which came from collaborations and licensing deals. That revenue was 20% lower than the nearly $100 million the company recorded in the first quarter of 2021.

Ultragenyx’s stock price, meanwhile, has fallen 24% over the past year amid a broader downturn in the biotech stock market.

It is not common for a pharmaceutical company to sell royalty rights to a pension plan. And yet, some unconventional biotech investors have seen significant returns in recent years. For example, the Wall Street Journal reported how Alaska Permanent Fund Corp., a state-backed fund founded in the mid-1970s and initially built around oil sales, had earned “outsized” returns from its investments in biotechnologies.

OMERS says it is one of the largest defined benefit pension plans in Canada, with $121 billion in net assets under management at the end of last year. Rob Missere, managing director and head of life sciences in the firm’s capital markets investment division, said the deal with Ultragenyx “reinforces our mandate to deliver stable, long-term returns.” to our more than 541,000 members”.

Ultragenyx sells three drugs, including Crysvita, and has partial rights to a cholesterol-lowering drug from Regeneron. The company also has research programs that cover small molecule drugs, biologics and gene therapies. In May, Ultragenyx expanded its pipeline by acquiring the rights to a potential gene therapy for Sanfilippo syndrome type A.

Dolores W. Simon