Nektar sells Cimzia and Mircera royalty rights for $124 million

US biotech firm Nektar Therapeutics (Nasdaq: NKTR) has agreed to sell to Royalty Pharma its royalties on future sales of rheumatoid arthritis drug Cimzia (certolizumab pegol) under Nektar's agreement with Belgium’s UCB Pharma, and Mircera, a continuous erythropoietin receptor activator, under Nektar's agreement with Roche. In consideration for the sale, Royalty Pharma will pay Nektar an aggregate cash payment of $124.0 million.

Nektar, whose shares rose 11% to $7.49 on the news in afternoon trading yesterday, intends to use the net proceeds of the transaction towards the repayment of its $215.0 million of convertible debt. For the 12 month period ended December 31, 2011, Nektar recognized $8.3 million in aggregate royalties from net sales of Cimzia and Mircera.

"This transaction demonstrates our ability to unlock unrecognized value in Nektar's legacy collaborations and access significant capital in a non-dilutive transaction," said Howard Robin, president and chief executive of Nektar, noting that "the proceeds from this sale will strengthen our cash position considerably and we are pleased to have Royalty Pharma as our partner in this transaction."

Pablo Legorreta, CEO of Royalty Pharma, stated that his company’s goal "is to be the preferred financial partner to leading biopharmaceutical companies seeking to access capital from their passive royalty assets. The Cimzia and Mircera royalties are very high quality assets that will be an excellent addition to our diversified portfolio of leading biopharmaceutical royalties.

Partial repayment required if net sales thresholds not met

If certain worldwide net sales thresholds for Mircera are not met for the 12 month periods ending December 31, 2012 and December 31, 2013, Nektar will be required to make a repayment of a maximum of $3.0 million in 2013 and $7.0 million in 2014, respectively.

In December 2000, Nektar entered into a license, manufacturing and supply agreement for Cimzia with Celltech Chiroscience, which was acquired by UCB Pharma in 2004. The drug is currently approved for the treatment of Crohn's Disease in the USA and for the treatment of rheumatoid arthritis in the USA and in the European Union. In December 2000, Nektar licensed its proprietary PEGylation materials to Roche for use in the development and manufacture of Mircera, a novel continuous erythropoietin receptor activator indicated for the treatment of anemia associated with chronic kidney disease in patients on dialysis and patients not on dialysis, which was launched in Europe in 2007. Mircera has been approved in the USA and, pursuant to a settlement and limited license agreement with Amgen, Roche may begin selling the product in the USA in July 2014.