Royalty Pharma announced Thursday morning that it has acquired an interest in PureTech Health’s royalty in Karuna Therapeutics’ schizophrenia treatment KarXT for up to $500 million.
As per the terms of the agreement, Royalty acquires PureTech’s right to receive a 3% royalty from Karuna on sales up to $2 billion annually. Above that threshold, Royalty will receive 33% and PureTech will retain 67% of the royalty payments.
KarXT is an oral, investigational M1/M4-preferring muscarinic agonist that is being developed to treat schizophrenia and other neurological conditions.
The news came days after Karuna stated that KarXT reached its main goal in a clinical trial and showed efficacy in reducing psychosis. The company plans to file a marketing application and New Drug Application for KarXT with the Food and Drug Administration in mid-2023.
“This agreement will provide PureTech with additional non-dilutive capital to advance our Wholly Owned Pipeline, including our rapidly maturing clinical programs, towards potential commercialization,” PureTech CEO Daphne Zohar said in a statement. “Such non-dilutive sources of capital have allowed us to fund our pipeline and operations without having to raise capital from the public markets in over five years, and we are pleased to be able to benefit from the success of our invented programs.”
The $500 million agreement includes $100 million in cash up front and up to $400 million as part of additional payments contingent on the achievement of certain regulatory and commercial milestones.
PureTech will also retain the right to receive milestone payments upon the achievement of certain regulatory approvals for KarXT and 20% of sublicense income.
For Royalty, the KarXT agreement is the latest big money deal for the pharma company.
Last week, Pfizer paid Royalty $475 million in milestone payments following the FDA’s recent approval of migraine nasal spray zavegepant. Additionally, Royalty and Ionis Pharmaceuticals announced a royalty agreement for up to $1.1 billion at the start of the year for Ionis’ royalty stakes in Biogen’s Spinraza and Novartis’ pelacarsen.
“We are delighted to partner with PureTech, which began a remarkable innovation story with KarXT that has demonstrated an impressive clinical profile in Phase 3,” Royalty CEO Pablo Legorreta said in a statement. “We believe this important therapy will have a significant impact on patients with schizophrenia if approved by the FDA. This medicine is a notable addition to our royalty portfolio and is well aligned with our strategy of investing in breakthrough therapies that address areas of high unmet medical need.”