The Cystic Fibrosis Foundation (CFF) announced this week that its nonprofit affiliate, Cystic Fibrosis Foundation Therapeutics, has sold its royalty rights for CF treatments developed by Vertex Pharmaceuticals Inc., including the new cystic fibrosis drug Kalydeco. The Foundation sold the rights to Royalty Pharma for $3.3 billion in what is claimed to be the largest pharmaceutical royalty purchase ever completed. Funds will be used to expand cystic fibrosis research, care and patient programs.
“This is a transformational moment for people with CF and the CF community that will enable us to accelerate our mission as never before,” said Robert J. Beall, Ph.D., president and CEO of the Cystic Fibrosis Foundation.”These new funds give us a tremendous opportunity to supercharge our efforts to develop lifesaving new therapies, ensure that the best possible care and resources are available for people with CF, and pursue daring, new opportunities that one day may lead to a permanent, lifelong cure for this disease.”
“We are honored to work with the Cystic Fibrosis Foundation on this extraordinary royalty transaction, says Pablo Legorreta, Royalty Pharma’s Chief Executive Officer, who founded Royalty Pharma in 1996, after creating and managing two “proof of principle” investment vehicles in 1993 and 1994 that invested in royalty interests in two leading biotechnology products. “Our goal is to be the premier provider of innovative capital to enable the life sciences industry to accelerate development of important novel therapies. Furthermore, this transaction represents an important validation of the Foundations bold vision under Dr. Beall’s leadership to fund new drug development as part of its successful venture philanthropy model. These therapies are notable examples of fundamental research leading to breakthrough treatments that dramatically improve patients lives.”
Cystic fibrosis (CF), a fatal genetic disease that primarily affects the lungs and digestive system, afflicts an estimated 70,000 children and adults worldwide. For most of the last century, scientists and physicians had very little understanding of the disease, other than the fact that very few patients ever reached adulthood. However in 1989, CFF-sponsored scientists identified the cystic fibrosis transmembrane conductance regulator (the CFTR) gene, which is defective in patients with cystic fibrosis. This breakthrough 25 years ago paved the way for the discovery and development of Kalydeco and other medicines specifically engineered to treat the underlying cause of CF. Currently, the median predicted age of survival for a person with CF is between 34 and 47 years, and recently passed the 50 years threshold in Canada, although the median age of death remains in the mid-20s.
In an open letter to the CF community, Dr. Beall notes: “The funds from this sale give us a tremendous opportunity to accelerate our mission as never before. We will expand our efforts to help develop lifesaving new therapies and work to ensure that the best possible care and patient programs are available for people with CF and their families. We will also pursue daring new research that we hope will one day lead to a lifelong cure that targets the disease at its genetic level.
“Simply put, these new resources will allow us to ‘dream big’ in ways we never could have imagined.
“The sale is a powerful example of our highly successful efforts in venture philanthropy over many years. We have been pioneers in providing initial investments to pharmaceutical companies to help speed the development of new therapies for people with CF. Funds from any royalties we receive are reinvested into further research and drug development and advance our mission to find a cure. Virtually every CF drug available today was made possible because of our support…. This transaction will enable us to significantly expand programs and services for people with CF and families throughout our care center network, including those for the growing adult CF population. In addition, the Foundation plans to enhance essential patient resources and education programs that help people with CF access the high-quality, specialized care and treatment they need.”
The sale is the most recent example of the Cystic Fibrosis Foundation’s successful venture philanthropy model, through which the organization has raised and invested hundreds of millions of dollars to discover and develop breakthrough CF therapies.
Kalydeco (ivacaftor) was discovered as part of a collaboration by Vertex Pharmaceuticals and Cystic Fibrosis Foundation Therapeutics, Inc., and is indicated to treat only a relatively small sub-minority of what is an already relatively small number of cystic fibrosis cases overall who have at least one copy of the G551D mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene. It has been available to patients in the United States through private insurance or state Medicaid plans since 2012, and In 2013, England, Scotland, Ireland and Northern Ireland started funding Kalydeco for use by their patients. Kalydeco was approved by the European Medicines Agency in July 2012, by Health Canada in November 2012 and by the Therapeutic Goods Administration in Australia in July 2013 for use in people with CF ages 6 and older who have at least one copy of the G551D mutation in the CFTR gene. Kalydeco is also currently available in France, Germany, the Netherlands, Austria, Denmark, Sweden, Norway, Greece and Italy.
A donor-supported nonprofit organization, the Cystic Fibrosis Foundation is the world leader in the search for a cure for cystic fibrosis. Based in Bethesda, Maryland, the Foundation provides upfront funding for pharmaceutical companies to help reduce the financial risk of developing drugs to treat CF and ensure that this rare disease has not been ignored. The Foundation funds more cystic fibrosis research than any other organization, and nearly every CF drug available today was made possible because of Foundation support. This approach has led to tremendous advances in life expectancy for people with CF, which has doubled in the last 30 years.
The Foundation also supports and accredits a national care center network that has been recognized by the National Institutes of Health as a model of care for a chronic disease.
Royalty Pharma specializes in acquiring royalty interests in marketed and late stage biopharmaceutical products. With total assets of over $12 billion, Royalty Pharma owns royalty interests in 40 products including Humira, Remicade, Rituxan, Lyrica, Prezista, Atripla, Truvada, Complera, Stribild, Neupogen/Neulasta, Januvia/Janumet, Nesina, Tradjenta, Onglyza/Kombiglyze, Tecfidera and Imbruvica. Royalty Pharma also funds late-stage clinical trials in exchange for royalty interests.
Bank of America Merrill Lynch acted as financial advisors to Royalty Pharma in this transaction and Goodwin Procter acted as legal advisor. Royalty Pharma financed this acquisition with cash on hand and a $2.7 billion unsecured term loan provided by Bank of America Merrill Lynch. Morgan Stanley acted as the exclusive Structuring Agent for CFFT and Schaner & Lubitz acted as legal counsel.
The Cystic Fibrosis Foundation
Vertex Pharmaceuticals Inc.
The Cystic Fibrosis Foundation