K - Royalty Pharma PureTech in pact for royalties in Karuna's lead asset

March, 23 2023 07:54 AM Kellogg Company

2023-03-23 07:54:57 ET

Royalty Pharma ( NASDAQ: RPRX ) has acquired PureTech Health’s ( NASDAQ: PRTC ) royalty interest in KarXT, the lead investigational product of Karuna Therapeutics ( NASDAQ: KRTX ), for up to $500M, according to a Thursday press release.
PRTC added ~7% in the pre-market trading in reaction while RPRX gained ~3% . Karuna ( KRTX ) is trading ~4% higher .
Per the terms, Royalty Pharma ( RPRX ) will acquire PRTC’s right to receive a 3% royalty from Karuna ( KRTX ) on annual KarXT sales of up to $2B, after which PureTech ( PRTC ) will retain 67% of the royalty payments with RPRX receiving the remainder.
In return, RPRX will pay $100M of upfront cash and up to $400M in additional milestone-based payments.
However, PureTech will retain its 3.1% equity ownership in Karuna ( KRTX ) and also keeps the rights to receive milestone payments based on regulatory approvals and 20% of sublicense income.
The agreement comes days after KRTX and its partner Zai Lab ( ZLAB ) said KarXT reached the primary endpoint in a Phase 3 trial for adult patients with schizophrenia.

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