On November 4, 2019 Epizyme, Inc. (Nasdaq: EPZM), a late-stage biopharmaceutical company developing novel epigenetic therapies, reported funding agreements with Royalty Pharma and its affiliate Pharmakon Advisors that, in aggregate, could bring in up to $270 million in capital, significantly strengthening Epizyme’s financial position and extending its operating runway into at least 2022 (Press release, Epizyme, NOV 4, 2019, View Source [SID1234550263]).
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"These funding transactions support our strategy of becoming a fully integrated, commercial biopharmaceutical company, and provide us significant optionality for the future," said Robert Bazemore, president and chief executive officer of Epizyme. "We are well capitalized to fully fund the anticipated launches of tazemetostat for epithelioid sarcoma and follicular lymphoma next year, and further invest in both the continued development of tazemetostat and our epigenetic pipeline. Royalty Pharma has an outstanding reputation for investing in promising, late-stage companies, and we are thrilled to have their support as we head into the next phase of our evolution."
As part of the agreements, Royalty Pharma will make an upfront payment of $100 million for shares of Epizyme common stock based on a price of $15 per share, representing a 27% premium to the prior trading day’s closing price. Epizyme also has an 18-month option to sell an additional $50 million of its common stock to Royalty Pharma at then prevailing prices, not to exceed $20 per share, and Royalty Pharma has a three-year option to purchase an additional 2.5 million shares of Epizyme common stock at $20 per share.
Epizyme and Royalty Pharma have also agreed to reduce the existing royalty rates owed by Epizyme to Royalty Pharma on worldwide sales of tazemetostat outside Japan at specified annual net sales levels. This reduction follows Royalty Pharma’s acquisition of certain future royalty streams on sales of tazemetostat in all regions except for Japan, which Epizyme previously owed to Eisai as part of their April 2015 amended and restated agreement. In addition, Epizyme has assigned to Royalty Pharma the future royalty streams on tazemetostat sales in Japan previously owed to Epizyme by Eisai.
"We are very pleased to partner with Epizyme, particularly given the tremendous progress in advancing tazemetostat over the course of 2019," stated Pablo Legorreta, founder and chief executive of Royalty Pharma. "With impressive data in treating both solid tumors and hematologic malignancies, we share the company’s excitement for tazemetostat’s broad therapeutic potential and are committed to supporting tazemetostat’s further development and anticipated launches to fully maximize its commercial opportunity. We look forward to working closely with this talented team as they transition into a commercial-stage organization."
As part of the transactions, Mr. Legorreta will be appointed to Epizyme’s Board of Directors.
Under a separate agreement, Epizyme has established a $70 million loan facility with Pharmakon Advisors, an affiliate of Royalty Pharma, which will fund the regulatory milestones owed to Eisai for the NDA submissions and U.S. approvals for tazemetostat for epithelioid sarcoma and follicular lymphoma. The facility may be drawn down in up to three tranches in conjunction with achievement of the milestones and is expandable by up to $300 million following approval of tazemetostat in follicular lymphoma, subject to mutual agreement.
For a further description of terms of the transaction agreements, please refer to Epizyme’s Form 8-K filed today.
Wilmer Cutler Pickering Hale and Dorr LLP acted as legal advisor to Epizyme; Goodwin Procter LLP, Dechert LLP and Maiwald Patentanwalts- und Rechtsanwalts GmbH acted as legal advisors to Royalty Pharma; and, Akin Gump Strauss Hauer & Feld LLP acted as legal advisor to Pharmakon Advisors.