PDL BioPharma acquires bulk of Cerdelga royalty interest

The company pays the University of Michigan $65.6 million for Gaucher disease treatment royalties

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INCLINE VILLAGE, Nev.—Biotech company PDL BioPharma has announced its latest royalty agreement, under which it has acquired 75 percent of the University of Michigan’s (U-M) worldwide royalty interest in Cerdelga (eliglustat) for $65.6 million. The drug, developed by Genzyme, a Sanofi company, is an oral therapy for patients with Gaucher disease type 1. Per the terms of the agreement, PDL will receive 75 percent of all royalty payments due under the university’s license agreement with Genzyme until the licensed patents expire, excluding any patent term extension. The royalty rate used to calculate the royalties to be paid by Genzyme to U-M was not disclosed.
This is something of a landmark deal for PDL, as it represents the company’s first royalty agreement with an academic institution, says Peter Garcia, chief financial officer at PDL.
“Our acquisition of the Cerdelga royalties significantly adds to our already diversified portfolio of biopharmaceutical royalties,” John McLaughlin, president and CEO of PDL BioPharma, noted in a statement. “We continue to provide leading institutions, such as the University of Michigan, with capital that will allow them to pursue their funding initiatives, while also allowing PDL to acquire meaningful income-generating assets and to create shareholder value.”
Cerdelga, which was approved by the U.S. Food and Drug Administration Aug. 19 of this year, is a novel, oral glucosylceramide synthase inhibitor for long-term treatment of adults with Gaucher disease type 1. The drug partially inhibits the enzyme glucosylceramide synthase, which in turn reduces the body’s production of glucosylceramide, a compound that builds up in the body of Gaucher disease patients. This approach was initially proposed by the late Dr. Norman Radin and further developed by Dr. James A. Shayman, both of U-M.
Gaucher disease is a rare inherited condition that affects fewer than 10,000 people worldwide. Individuals with this disease lack the necessary levels of the enzyme β-glucosidase (glucocerebrosidase), which breaks down glucosylceramide. As a result, lipid-engorged cells known as Gaucher cells accumulate in different parts of the body—primarily the spleen, liver and bone marrow—which can lead to spleen and liver enlargement, excessive bleeding and bruising, anemia and bone disease, among other symptoms.
The University licensed the compound to Genzyme in 2000. Genzyme’s clinical development program for the drug comprised the largest clinical program ever conducted in Gaucher disease, consisting of roughly 400 patients in 29 countries.
Cerdelga is something of a successor of Cerezyme, Genzyme’s first treatment for Gaucher disease. Cerezyme is an intravenous drug, and “transformational” for patients, says Garcia. It required daily injections, however, so an oral pill form of the drug promises to be significant for patients.
“Cerdelga represents the first chemical entity invented at the University of Michigan to receive FDA approval and illustrates the societal benefits of transferring discoveries from university research,” Kenneth Nisbet, associate vice president for Research–Technology Transfer at U-M, said with regard to the deal. “We’re very pleased with our agreement with PDL, which enables us to accelerate our investments in research and education. We strongly believe in Cerdelga’s potential, which is why we have retained a portion of the royalty rights.”
At present, PDL’s asset portfolio consists mainly of its Queen et al. patents for the humanization of monoclonal antibodies. Those patents expire this December, however. In pursuing additional deals, Garcia says PDL is “agnostic” to the type of product they invest in, focusing not on specific indications but simply potential, looking for “income-generating assets in the healthcare system.” Their investments will continue to consist of “acquiring royalties or loaning cash to companies primarily for their commercialization strategies.”
“That’s the area of growth that we’ll see,” he says. “We think that there are a lot of opportunities in the royalty space, and we’ll continue to pursue that, and we hope that this deal with the University of Michigan is an entree to other opportunities within academic institutions as well.”
In 2013, PDL generated $450 million in royalty revenues from a number of marketed drugs, including Avastic (approximately $144.5 million), Herceptin ($141.6 million), Lucentis, Xolair, Zynagis, Tysabri, Perjeta and Kadcyla.

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