Royalty Pharma Pays $90M to Cytokinetics for Heart Drug Royalties

Royalty Pharma, a New York-based company that buys up rights to royalty streams of potentially revenue-producing drugs, is paying $90 million for a for a chance to reap 4.5 percent royalty on possible sales of an experimental heart drug being developed by Cytokinetics and its partner, Amgen.

South San Francisco-based Cytokinetics (Nasdaq:CYTK) plans to use $40 million of the up-front cash payment for the Phase 3 testing of the drug in question, omecamtiv mecarbil, a treatment that aims to help the heart contract and pump blood when it fails to do so. Cytokinetics’ drug stimulates a protein that, it says, can drive that cardiac muscle contraction. The company contends that the drug can do so without some of the pitfalls of other treatments, such as an increase in heart rate, blood pressure and arrhythmias.

Cytokinetics is selling Royal Pharma a portion of the royalty rights it has already acquired through its drug development deal with Amgen.

But because Cytokinetics is co-investing in the Phase 3 trial, which Amgen (Nasdaq:AMGN) is conducting, Cytokinetics has a chance to earn certain additional royalties. By contributing the $40 million, Cytokinetics can get up to an extra 4 percent of omecamtiv mecarbil sales everywhere in the world except in Japan, depending on the success of the drug. The company’s royalties escalate as the drug’s annual net sales increase, to a point that may “exceed 20 percent on tiered worldwide sales,” Cytokinetics said in a news release.

Royalty Pharma is also in line to receive up to an additional 1 percent in royalties, depending on the timing of the approval of the drug in the U.S. and any associated delays, the company says. Royalty Pharma also is purchasing $10 million of Cytokinetics’ common stock.

Cytokinetics is developing other drugs designed to treat diseases that affect muscles, including tirasemtiv, an experimental therapy for amyotrophic lateral sclerosis (better known as ALS or Lou Gehrig’s disease). The company announced in June that Astellas Pharma is paying $65 million for an option on the rights to tirasemtiv in Japan, if the drug can show positive results in an ongoing Phase 3 trial, among other conditions.

In the deal with Amgen, Cytokinetics is also eligible for as much as $600 million in potential milestone payments related to omecamtiv mecarbil, as well as certain co-promotion and commercialization rights in North America.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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