Insight & Intelligence

More »

GEN News Highlights

More »
July 29, 2015

Ariad to Receive Up-to $200M in Royalty Deal

  • Ariad Pharmaceuticals said today it will receive up to $200 million through a synthetic-royalty financing from PDL BioPharma, in exchange for paying PDL a mid-single-digit royalty on future sales of Iclusig® (ponatinib) until PDL receives a fixed internal rate of return.

    Under the agreement, Ariad will receive at least $100 million in cash—to consist of $50 million upon execution of the deal late yesterday, and an additional $50 million to be paid in one year. The company also has the option to receive up to an additional $100 million at any time between six and 12 months from the agreement date, in one or two tranches on comparable terms.

    In return, Ariad has agreed to pay PDL 2.5% of global net revenues of Iclusig for the first year of the royalty agreement. The percentage rises to 5% after the first year through the end of 2018; and to 6.5% from 2019 until PDL receives a 10% internal rate of return, Ariad disclosed in a Form 8-K regulatory filing. The 6.5% royalty rate would increase to 7.5% if Ariad draws down more than $150 million, the company added.

    According to the filing, Ariad also granted PDL as collateral “all of our revenues from sales of Iclusig covered by the Agreement, certain segregated deposit accounts established under the Agreement, and certain intellectual property, license agreements, and regulatory approvals related to Iclusig.”

    The agreement remains in effect until December 31, 2033, unless terminated earlier by either party, Ariad disclosed.

    Ariad said it intends to use its proceeds to conduct a front-line trial of brigatinib, its investigational ALK inhibitor, in patients with non-small cell lung cancer (NSCLC); to support brigatinib commercial readiness; and to continue ongoing Iclusig initiatives. Iclusig is a kinase inhibitor targeting BCR-ABL, an abnormal tyrosine kinase that is expressed in chronic myeloid leukemia and Philadelphia-chromosome positive acute lymphoblastic leukemia.

    The company said it is on track to complete enrollment in the pivotal ALTA trial of brigatinib in the third quarter of this year, and file for U.S. approval next year. Subject to regulatory approval, Ariad added that it was on track to launch brigatinib by early 2017.

    Brigatinib carries the FDA’s Breakthrough Designation.

    “With the funding provided by this royalty transaction, we expect to start the front-line trial by early next year, ahead of our expected filing for initial marketing approval of brigatinib in patients with refractory ALK+ NSCLC,” Ariad chairman and CEO Harvey J. Berger, M.D., said in a statement. “We are confident based on the latest clinical data on brigatinib and other ALK-inhibitors, that brigatinib may be an important new cancer medicine for patients with ALK+ lung cancer.”

    Ariad said it can also buy out the royalty at any time through a payment to PDL that will provide a specified return to PDL, together with royalties paid. If PDL has not received total payments that are at least equal to the total amounts it has paid to ARIAD after five years from receiving each payment tranche, Ariad acknowledged, it will have to pay to PDL an amount equal to the difference.

    In case of a change of control of Ariad or other specified events, the company added, PDL has the right, but not the obligation, to terminate the agreement by requiring Ariad to repurchase the revenue interests owed to PDL at a predefined price.

    “This agreement provides Ariad with the flexibility needed for future financing and business development activity,” Dr. Berger added in a statement issued by PDL.

Related content