– Uncapped deal structure complements current VONJO royalty entitlement –
– Now projecting Total Income CAGR at high end of our 7-9% guidance through 2025 and flat to slightly growing Total Income until 2030 –
– The transaction extends DRI’s overall portfolio duration to over 10 years –
TORONTO, July 7, 2023 /CNW/ – DRI Healthcare Trust (TSX: DHT.UN) (TSX: DHT.U) (the “Trust” or “we”), a global leader in providing financing to advance innovation in the life sciences industry, is pleased to announce that it has agreed to purchase of a royalty interest in the worldwide net sales of VONJO from S*Bio Pte Ltd for US$66 million.
VONJO is an oral, small-molecule JAK2 inhibitor currently marketed by Swedish Orphan Biovitrum AB (“Sobi”), used for the treatment myelofibrosis (“MF”) patients with severe thrombocytopenia. It was approved by the U.S. Food and Drug Administration (“FDA”) in February 2022 and is the only approved treatment for the indication.
“VONJO has addressed a significant unmet need in cytopenic MF patients and has seen an incredible uptake in its first year on the market,” said Behzad Khosrowshahi, Chief Executive Officer of the Trust. “We are excited to purchase a second royalty on this long duration, high-quality asset. This is the second royalty acquisition our team has completed in the past month and is a testament to our team’s ability to execute on our unique pipeline opportunities. With this transaction, DRI Healthcare has now deployed US$636 million with an additional US$59 million in potential milestone payments since our IPO. With a pipeline of over US$2.5 billion in high-quality assets, we are confident in our ability to reach our deployment target of US$850-900 million by the end of 2025 and to continue to generate value for our unitholders.”
Speaking on behalf of the Trust’s investment manager, Chief Investment Officer Navin Jacob commented, “For MF patients with thrombocytopenia, VONJO is the only FDA approved option, thereby providing a protected niche opportunity for the product. Favourable guidelines and labeling have allowed VONJO to grow faster than our initial expectations and as such we were excited to increase our exposure to this product. We thank the S*Bio team for working with us to complete this transaction.”
The transaction entitles DRI Healthcare to a tiered royalty on worldwide net sales of VONJO. DRI Healthcare is entitled to receive quarterly royalty payments based on sales beginning April 1, 2023, with the first payment expected to be received in Q3 2023. VONJO is patent protected until at least January 2034. DRI Healthcare is also entitled to receive up to US$107.5 million in milestone payments.
The transaction is subject to customary closing conditions and is expected to close by the end of the month.
As a result of the VONJO transaction, we believe we will achieve the high end of our target CAGR range of 7-9% for Total Income through 2025. In addition, we anticipate the combined effect of this transaction and the recently announced purchase of Orserdu™ royalties will provide visibility on stable to slightly growing Total Income through 2030, without accounting for growth from any future royalty transactions, and an extension of our overall portfolio duration to over 10 years. “We are very excited to be able to achieve this important growth milestone and look forward to the continued long-term growth of the Trust,” said Behzad Khosrowshahi.
On March 8, 2023, DRI Healthcare announced the US$100 million acquisition of a royalty interest on worldwide net sales of TZIELD. On April 27, 2023, DRI Healthcare sold the TZIELD royalty interest to an affiliate of Sanofi SA for US$210 million. In relation to the sale, DRI Healthcare announced a US$20 million aggregate special cash distribution to unitholders. The distribution will be paid on July 20, 2023 to unitholders of record on June 30, 2023. The final per unit amount will be US$0.5334 based on the 37,494,980 units outstanding as of June 30, 2023.
The relatively unique set of circumstances that allowed the Trust to monetize the TZIELD royalty in a highly accretive transaction accelerated the payment of performance fees pursuant to the Trust’s management agreement with its manager, DRI Capital Inc. (“DRI Capital”). The Trust anticipates performance fees of approximately US$17-20 million being payable to DRI Capital for the quarter ended June 30, 2023, in accordance with the terms of the management agreement. Performance fees are based on a number of assumptions and will be subject to verification in accordance with the terms of the management agreement. While management believes that DRI Healthcare’s attractive pipeline of deals will continue to generate returns for the Trust and its unitholders, thereby triggering future performance fees, the magnitude and timing of the current performance fee payable is directly attributable to the particular circumstances of the TZIELD transaction.
VONJO is an oral kinase inhibitor with activity against wild-type JAK2, mutant JAK2V617F form and FMS-like tyrosine kinase 3 (FLT3) which contribute to signalling of a number of cytokines and growth factors that are important for hematopoiesis and immune function. Myelofibrosis is often associated with dysregulated JAK2 signalling. Pacritinib has higher inhibitory activity for JAK2 over other family members, JAK3 and TYK2. At clinically relevant concentrations, pacritinib does not inhibit JAK1. In a clinical study of MF patients with low platelet count (below 50 × 109/L), use of VONJO resulted in a clinically significant reduction in spleen volume compared to the best available therapy.
VONJO is indicated for the treatment of adults with intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with a platelet count below 50 × 109/L. This indication was approved by the FDA under accelerated approval based on spleen volume reduction. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial(s).
DRI Healthcare Trust is managed by DRI Capital, the pioneer in global pharmaceutical royalty monetization with a more than 30-year history of accelerating innovation by providing capital to inventors, academic institutions and biopharma companies. Since our founding in 1989, DRI Capital has deployed more than US$2.5 billion, acquiring more than 70 royalties on 40-plus drugs, including Eylea, Spinraza, Zytiga, Remicade, Keytruda and Stelara. DRI Healthcare Trust’s units are listed and trade on the Toronto Stock Exchange in Canadian dollars under the symbol “DHT.UN” and in U.S. dollars under the symbol “DHT.U”. To learn more, visit drihealthcare.com or follow us on LinkedIn. References in this news release to “DRI Healthcare” refer to the Trust and its subsidiaries, on a consolidated basis.
This news release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking information generally can be identified by the use of words such as “expect”, “continue”, “anticipate”, “intend”, “aim”, “plan”, “believe”, “budget”, “estimate”, “forecast”, “foresee”, “close to”, “target” or negative versions thereof and similar expressions. Some of the specific forward-looking information in this news release may include, among other things, statements regarding our deployment target, the timing of the first royalty payment pursuant to the VONJO transaction, our growth in Total Income, our overall portfolio duration and our ability to reach our targets. This forward-looking information is subject to a number of assumptions, including potential royalty transactions which we reasonably expect to complete based on our historical track record, the terms and conditions of the transaction documentations, and our assumptions with respect to future sales of the products underlying our existing royalties. We are not providing any estimates with respect to Total Income beyond 2030. Forward-looking information is subject to a number of risks and uncertainties, many of which are beyond the Trust’s control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, those that are disclosed in the Trust’s most recent annual information form. The anticipated royalty terms for products in our portfolio may be shorter than the period of patent protection for the applicable product, depending on many factors, including the entry of generic drugs into the marketplace and competition, all of which are outside our control. The preliminary estimate of the performance fees owed by DRI Healthcare Trust to its manager, DRI Capital, have been calculated based on management’s preliminary estimates with respect to the Trust’s financial results for the three months ended June 30, 2023, which are based on currently available information, have not been reviewed or audited and are subject to change. You are cautioned not to place undue reliance upon the preliminary estimates of the performance fees. DRI Healthcare Trust has not completed its standard quarterly closing process, including the completion of all of its control procedures, which could identify adjustments causing actual results to differ from the expectations presented in this press release. The following key assumptions were used when estimating the performance fees payable: projected aggregate cash receipts of the Trust’s existing royalty investments, projected operating expenses of the Trust, projected recovery of acquisition cost, and projected interest expense. All forward-looking information in this news release speaks as of the date of this news release. The Trust does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise except as required by law. Additional information about these assumptions and risks and uncertainties is contained in the Trust’s filings with securities regulators, including its latest annual information form and management’s discussion and analysis. These filings are also available at the Trust’s website at drihealthcare.com.
SOURCE DRI Healthcare Trust