Agios cashes in on cancer drug again with $905M Royalty Pharma deal

Dive Brief:

• Agios Pharmaceuticals has agreed to sell to Royalty Pharma rights to royalties on a brain cancer drug it invented and sold to Servier.
• Per deal terms announced Tuesday, Agios will receive $905 million in cash from Royalty Pharma should the drug, currently known as vorasidenib, win approval from U.S. regulators. In exchange, Royalty Pharma will receive a 15% royalty on up to $1 billion in annual U.S. sales, and a 12% royalty on U.S. sales over $1 billion. Agios will keep 3% of the royalties on U.S. sales surpassing $1 billion.
• Royalty Pharma expects the drug to generate more than $1 billion in annual U.S. sales as well as more than $150 million in yearly royalties. The company forecasts the royalty stream to last through 2038. The FDA will decide by Aug. 20 whether to approve vorasidenib for a form of glioma.

Dive Insight:

The deal gives Agios an opportunity to again reap the benefits of the oncology research for which it was once known.

Founded in 2007 and for years run by GV general partner David Schenkein, Agios successfully developed and won approvals of two leukemia drugs in about a decade. But Agios struggled to sell them and continued to lose money, ultimately leading the company to shift its focus to rare diseases and in 2020 sell its cancer drug portfolio to French drugmaker Servier for $1.8 billion.

The deal gave Servier one of Agios’ marketed drugs, Tibsovo, as well as a trio of experimental medicines. One of those prospects was vorasidenib, which at the time was in advanced testing for certain types of low-grade gliomas. While Servier acquired full drug rights in the deal, Agios was promised a $200 million milestone payment upon the drug’s approval in the U.S. It also kept a piece of U.S. royalties.

That deal, along with the Royalty Pharma agreement announced Tuesday, gives Agios the ability to become “cash flow positive without additional raises,” wrote Piper Sandler analyst Christopher Raymond. Notably, Agios should now be able to fund the launches of its drug mitapivat in beta thalassemia and sickle cell disease in 2025 and 2026, respectively, he wrote in an investor note Tuesday.

“We see this as a smart deal for the company and also creates a sizable war chest which [Agios] can use to enhance or expand their pipeline,” Raymond wrote.

The deal adds to a string of recent investments by Royalty Pharma, meanwhile. Earlier this month, the company paid $525 million to buy into an autoimmune disease drug currently owned by Sanofi. Before that, the company acquired rights to Roche’s spinal muscular atrophy medicine Evrysdi, a cancer therapy from Ferring Pharmaceuticals and a schizophrenia drug from Karuna Therapeutics.