Royalty Pharma execs shed light on strategy behind their first gene therapy deal

A deal with Ferring Pharmaceuticals last month represented Royalty Pharma’s first foray into gene therapy royalties, and it’s already raising questions about whether it represents a shift in the company’s philosophy.

CEO Pablo Legorreta and other Royalty execs addressed the topic for the first time Tuesday at Morgan Stanley’s healthcare conference in New York. While they’re excited about the Ferring deal, they suggested that much of the strategy that’s guided Royalty for its nearly three-decade existence will remain the same.

Royalty Pharma is typically selective with the royalties it chooses to purchase, opting for drugs it knows can generally bring a double-digit return.

Terrance Coyne

“We’ve always got questions of: ‘When are you going to ever make a gene therapy investment?’” CFO Terrance Coyne said. “And what we said is: We’re going to be patient there. There’s a lot that we still need to understand. But this opportunity came along. The data is really remarkable.”

Royalty paid $300 million upfront to acquire a 5.1% royalty on net sales of the Ferring drug, known as Adstiladrin. It will pay Ferring an additional $200 million if certain manufacturing milestones are achieved by 2025.

The FDA approved the drug last December to treat high-risk Bacillus Calmette-Guérin-unresponsive non-muscle invasive bladder cancer.

Legorreta said Tuesday that Adstiladrin stood out from other gene therapies in both safety and convenience, and he believes that it could be a $1 billion-per-year drug, particularly if it gets into the intermediate-risk population, which would double the number of patients to 30,000.

“It’s not like many gene therapies, where there’s a ton of patients that are going to get on it and you have to go through a growth phase,” Legorreta said. “I see it as a $500 million investment because that milestone of $200 million is very likely to get paid, and it’s very exciting.”

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