Biotech
Thursday, June 30th, 2022 6:14 am EDT
Dive Brief:
- Blueprint Medicines may receive as much as $1.25 billion through two new deals that hand the precision drug company cash in exchange for royalties on some of its therapies.
- The first deal, struck with the investment firm Sixth Street, offers up future royalties on one of Blueprint’s marketed drugs, Ayvakit, plus another, experimental treatment called BLU-263. The three-part agreement also includes up to $400 million in a senior secured credit facility and $260 million in a potential credit facility to “support buy-side business development opportunities.” Altogether, the Sixth Street deal provides Blueprint with $400 million in cash up front.
- The second deal, with New York-based Royalty Pharma, centers on Blueprint’s other marketed drug, Gavreto. For $175 million, Royalty will now receive the royalties that Blueprint has been getting from its development partner Roche, which sells Gavreto outside of the U.S. and Greater China. Additionally, the deal offers up to $165 million in potential milestone payments based on future sales of the drug.
Dive Insight:
Blueprint’s research focuses on uncommon diseases as well as cancers with specific genetic mutations. In January 2020, Ayvakit became the company’s first approved medicine, cleared for use in certain patients with rare tumors that affect the digestive system. Eight months later, Blueprint would secure approval for Gavreto, for the treatment of adults with metastatic non-small cell lung cancer who have what’s known as a “RET” mutation.
Since then, Blueprint has locked down secondary approvals for both drugs, with Ayvakit now used to treat advanced systemic mastocytosis and Gavreto a subset of thyroid cancer patients with RET mutations.
Blueprint, though, hasn’t yet reached profitability. It recorded $180 million in total revenue last year, of which $58 million came from net product sales, and a net loss of $644 million. By the end of March this year, the company had $37 million in cash and cash equivalents, plus another $856 million in marketable securities. Blueprint reported that, given its current plans, these assets should be enough to continue operations into at least May of 2023.
Andrew Berens, an analyst at the investment firm SVB Securities, wrote in a Thursday note to clients that “most investors did not view [Blueprint] as having a short cash runway or needing financing.” However, Berens did call the Sixth Street deal “fairly valued” and the Royalty deal “favorable” for Blueprint, based on SVB’s estimates of the current net value of the programs involved.
With the biotech stock market experiencing a historic downtown that’s made raising money more difficult, other analysts also saw the deals as a positive for Blueprint.
Stifel’s Bradley Canino, for example, noted how Blueprint investors have been closely watching a clinical trial evaluating Ayvakit as a treatment for ISM, or indolent systemic mastocytosis, a trial that should produce initial results by late summer. According to Canino, investors had come to expect Blueprint to conduct a highly dilutive equity raise if the study read out positively.
“This scenario would have been [Blueprint] being forced to raise cash ‘when it needed to,’” Canino wrote in a note to clients. The Sixth Street and Royalty deals, conversely, show Blueprint raising cash “when it could,” and the resulting infusion “removes this financing overhang, and should … potentially add to the upside if the ISM trial reads out positive.”
Canino wrote that the $575 million in upfront payments, plus the ability to take on more debt, extends Blueprint’s cash runway “by at least five quarters,” and full terms of the deals “should bring [Blueprint] to profitability … without the need for future equity raises. The analyst added that profitability is anticipated sometime in 2026 or 2027, provided Blueprint successfully launches Ayvakit in the ISM indication.
Shares of Blueprint were down almost 5% late Thursday morning, to trade at just under $50 apiece.
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