Jun. 24 at 11:18 AM
$RVMD $RPRX
Revolution Medicines enters
$2B funding agreement with Royalty Pharma
Revolution Medicines (RVMD) has partnered with Royalty Pharma (RPRX) on
$2B in flexible funding to support Revolution Medicines' independent global development and commercialization strategy and operations. Revolution Medicines retains full strategic and executional control of product development and commercialization for its portfolio of RAS(ON) inhibitors in the US and internationally, enabling the company to leverage its assets, capabilities and momentum toward establishing new global standards of care and creating value for shareholders.
The funding agreement provides for
$2B in committed capital comprised of up to
$1.25B in synthetic royalty monetization on sales of daraxonrasib, the company's RAS(ON) multi-selective inhibitor, and up to
$750M in corporate debt. The agreement provides significant flexibility to Revolution Medicines with
$1.25B of the total funding reserved as optional to the company at its discretion, subject to the achievement of specific milestones. Royalty Pharma will provide up to
$1.25B in exchange for tiered royalties for a term of 15 years on worldwide annual net sales of daraxonrasib; the royalties decrease based on sales and for sales above
$8B the royalty rate is zero.
The
$1.25B synthetic royalty funding is divided into five tranches of
$250M. The first two
$250M tranches, totaling
$500M, are payable prior to daraxonrasib's approval by the FDA and royalty obligations begin only after daraxonrasib approval. Revolution Medicines received the first
$250M tranche at closing and the second
$250M tranche is due to the company upon a positive data readout from the company's RASolute 302 study, a global Phase 3 trial in patients with previously treated pancreatic ductal adenocarcinoma. The royalty rates on annual net sales for these two tranches are 4.55% on the first
$2 billion, 2.50% on
$2 billion to
$4B, 1.00% on
$4B to
$8B and zero above
$8B.
At annual net sales of
$8B, the effective blended royalty rate for these tranches would be 2.26% and this rate progressively decreases as net sales increase above
$8B. The subsequent three equal tranches, totaling
$750M, are post-approval tranches that can be drawn at the company's discretion after certain milestones are achieved. In a scenario where the company draws the entire
$1.25B: The royalty rates for all five tranches on annual net sales are 7.80% on the first
$2B, 4.55% on
$2B to
$4B, 2.40% on
$4B to
$8B and zero above
$8 billion. At annual net sales of
$8B, the effective blended royalty rate would be 4.29% and this rate progressively decreases as net sales increase above
$8B.
The potential exists for overlapping indication labels across certain assets within the company's pipeline. If zoldonrasib, the company's RAS(ON) G12D-selective inhibitor, were approved in the same indication as daraxonrasib, zoldonrasib sales would be included in the calculation of total net sales that are subject to the royalty schedule noted above. If zoldonrasib is approved solely for indications outside of daraxonrasib indications, zoldonrasib sales would not be subject to any royalties under the royalty agreement.
The debt facility is an up to
$750M senior secured term loan consisting of three
$250M tranches linked to commercialization of daraxonrasib. The company would receive the first debt tranche of
$250M following first FDA approval of daraxonrasib for the treatment of metastatic PDAC, if this occurs by January 1, 2028. Debt tranches two and three are optional at the company's discretion and will be available to the company based on achievement of annual net sales milestones for daraxonrasib.
The term loan is an interest-only facility, with principal due at the earlier of 6 years after the first tranche is funded and December 31, 2032. The interest rate is calculated based on the 3-month Standard Overnight Financing Rate plus 5.75%, with a SOFR floor of 3.50%.
