Fenwick Advises Royalty Pharma in $575 Million Funding Agreement with Cytokinetics

Fenwick represented Royalty Pharma (Nasdaq: RPRX), a buyer of biopharmaceutical royalties and funder of innovation across the biopharmaceutical industry, on IP diligence matters relating to its up to $575 million ($250 million on closing) expanded strategic collaboration with Cytokinetics (Nasdaq: CYTK). Cytokinetics is a late-stage, specialty cardiovascular biopharmaceutical company that focuses on discovering, developing, and commercializing first-in-class muscle activators and next-in-class muscle inhibitors as potential treatments for debilitating diseases where cardiac muscle performance is compromised. This funding agreement, the third between Royalty Pharma and Cytokinetics, will support the commercial launch of aficamten, advance Cytokinetics’ research and development pipeline, and diversify their access to capital.

Under the terms of the agreement Cytokinetics receives $50 million in cash upfront and is eligible to draw an additional $175 million within 12 months of aficamten being approved for treatment of obstructive hypertrophic cardiomyopathy, repayable over 10 years. The agreement also restructures Royalty Pharma’s royalty on aficamten so that the company will now receive 4.5% of annual net sales up to $5 billion, and 1% above $5 billion. Additionally, Cytokinetics receives $100 million to fund a confirmatory Phase 3 clinical trial of omecamtiv mecarbil in patients with heart failure and reduced ejection fraction. If that trial is positive and FDA approval is received within certain timeframes, Royalty Pharma will receive fixed payments totaling $100 million as well as an incremental 2% royalty on annual net sales and/or fixed quarterly payments. If the Phase 3 trial is not successful or doesn’t lead to FDA approval of omecamtiv mecarbil, Royalty Pharma will be repaid up to $237.5 million in fixed quarterly payments over 18 to 22 quarters. Cytokinetics has also received a further $50 million in upfront capital to fund a proof-of-concept Phase 2 clinical trial for drug candidate CK-586 in patients with heart failure and preserved ejection fraction and Royalty Pharma has the option to invest up to an additional $150 million to fund Phase 3 development of the same drug. Upon FDA approval of CK-586, Royalty Pharma would be eligible for a $150 milestone payment and a 4.5% royalty on annual net sales. Finally, Royalty Pharma has purchased $50 million of Cytokinetics common stock in a private placement. More information about the agreement is available in the press release.

The Fenwick team included patent partner Dr. Carl Morales, senior associate Dr. Glenn Foulds and senior patent agent Dr. Cara Mosley.