Albireo Signs Royalty Deal with $115 Million Upfront Payment
September 26, 2022
Rare disease drug company Albireo Pharma entered into a royalty monetization agreement with Sagard Healthcare Partners for a total of $115 million upfront in return for a mid-single digit average royalty rate on Bylvay global annual net revenues, the company’s therapy for the rare liver disease progressive familial intrahepatic cholestasis.
Progressive familial intrahepatic cholestasis (PFIC) affects young children and causes progressive, life-threatening liver disease. In many cases, PFIC leads to cirrhosis and liver failure within the first 10 years of life. The most prominent and problematic ongoing manifestation of PFIC is pruritus, or intense itching, which often results in a severely diminished quality of life. Prior to the approval of Bylvay the only available treatment options have been surgical, which include biliary diversion surgery (BDS) and liver transplantation. Without them, most PFIC patients do not survive past the age of 30.
Bylvay is a non-systemic ileal bile acid transport inhibitor administered as a once-daily capsule or opened and sprinkled onto soft foods.
“With this agreement, we are significantly strengthening our balance sheet, providing us flexibility, and extending our cash runway beyond at least the topline data readout of our BOLD study in biliary atresia in 2024,” said Ron Cooper, president and CEO of Albireo. “These additional resources allow us to build Bylvay into a billion-dollar product and advance the development of our early asset pipeline.”
Sagard will provide the $115 million of funding. The agreement provides Albireo with a buy-out option at 1.3x invested capital in the first three years, rising to 1.45x in the fourth year, 1.65x in the fifth year, and 2.0x thereafter, net of royalties paid. The agreement grants a first lien security interest on Albireo’s worldwide annual consolidated net revenues relating to Bylvay and associated additional collateral and does not provide for liens on Albireo’s intellectual property.
Sagard will receive a 12.5 percent royalty rate on Albireo’s worldwide Bylvay annual net revenues for revenues up to $250 million; the royalty rate reduces to 5 percent for annual net revenues above $250 million, and further reduces to 1 percent on annual net revenues exceeding $350 million if the FDA approves Bylvay in biliary atresia, providing a mid-single digit average royalty rate based on current sales forecasts. The total royalties are capped at 1.6x invested capital if repaid by December 31, 2028, and 2.0x thereafter. Upon achievement of the cap amount, the royalty agreement will terminate.
Bylvay is the first drug approved in the United States. for the treatment of pruritus in patients 3 months of age and older in all types PFIC. The European Commission and U.K. Medicines and Healthcare Products Regulatory Agency have also granted marketing authorization of Bylvay for the treatment of PFIC in patients aged 6 months or older.
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