GSK Sells Royalty Rights to Two Oncology Drugs Cabometyx and Cometriq for $342 Million to Fund Consumer Healthcare Spin-off

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As GSK continues to plan the spin-off of its consumer healthcare business in partnership with Pfizer, the company requires new cash reserves to achieve this goal. On April 1, GSK sold the patent rights for Exelixis’ drugs Cabometyx and Cometriq to Royalty Pharma, receiving an upfront payment of $342 million, with the potential to earn an additional $50 million in milestone payments contingent on regulatory approvals for new indications. GSK aims to raise more than $2.2 billion in cash to fund the separation.

A GSK spokesperson confirmed: “In February 2020, we announced plans to spin off GSK into two great new companies, which would be primarily funded by asset divestitures. From our perspective, this is a prudent transaction that provides substantial cash for assets in which we are no longer involved in commercialization or development. The GSK spin-off will still proceed as planned in 2022.”

As part of its collaboration with Exelixis to develop cabozantinib (the generic name for Cabometyx and Cometriq) in 2002, GSK initially secured a 3% royalty rate. Under the deal reached on Thursday, Royalty Pharma will receive royalties on net sales of cabozantinib outside the United States, as well as U.S. royalty sales through September 2026.

This move continues Royalty Pharma’s successful strategy of acquiring royalties from pharmaceuticals, diagnostics, and medical products. Last June, the company’s CEO, Pablo Legorreta, leveraged this business model to conduct a large-scale IPO on NASDAQ, raising $2.2 billion, with an IPO valuation nearing $17 billion.

Legorreta has structured royalty agreements for several blockbuster drugs over the years, including Humira, Truvada, Imbruvica, and Trodelvy. Last year alone, Royalty Pharma acquired the rights to risdiplam from Roche and PTC Therapeutics for $650 million, and paid a $575 million upfront fee to acquire the remaining royalties from Vertex’s cystic fibrosis franchise.

Prior to this, Royalty Pharma was obligated to pay 50% of its royalties to the CF Foundation. However, a new agreement reached last November eliminated this commitment, potentially enabling Royalty Pharma to secure an annual windfall of $5.8 billion.

With Cabometyx, Royalty Pharma has acquired a drug with blockbuster potential, which has been approved as monotherapy and in combination with Opdivo for the first-line treatment of renal cell carcinoma. In Phase III studies, patients treated with Opdivo and Cabometyx had twice the progression-free survival compared to those treated with Pfizer’s Sutent.

Last year, sales of Cabometyx and Cometriq reached $742 million and €289 million, respectively.

Reference Source: GlaxoSmithKline offloads royalty rights for 2 cancer drugs in $342M windfall it will use to finance consumer spinoff