To fuel CEO Richard Francis’s “pivot to growth” plan, Teva has turned to royalty financing to fuel the accelerated development of a pipeline antipsychotic drug in its innovation portfolio.
Teva has secured $100 million in funding to support the clinical development of olanzapine LAI, a long-acting version of Eli Lilly’s schizophrenia drug Zyprexa, the Israeli company said Monday.
Royalty Pharma will provide the money, and the two companies could increase the total amount to $125 million in the future. In exchange, Teva will pay Royalty back over five years if the drug, also coded TEV-’749, wins the FDA’s approval. In addition, Royalty is also entitled to low- to mid-single-digit royalties based on the drug’s sales.
The financial partnership comes as Teva’s new CEO Richard Francis is trying to remake the generics giant by focusing more on complex therapies such as innovative drugs, biosimilars, drug-device combinations and long-acting injectables.
Neuroscience remains one of Teva’s core therapeutic areas, with tardive dyskinesia and Huntingon’s treatment Austedo contributing the lion’s share of growth at the company. And olanzapine LAI is currently the most advanced pipeline program in Teva’s neuroscience department.
Teva is proposing olanzapine LAI as a once-monthly subcutaneous injection, while Zyprexa is taken once per day by mouth. There is Zyprexa Relprevv, which can be given via intramuscular injection up to every four weeks. But that long-acting version’s deep penetration earned it a boxed warning about post-injection delirium/sedation syndrome. Teva believes its formulation’s subcutaneous administration could avoid that problem.
Teva’s drug utilizes MedinCell’s copolymer technology SteadyTeq, which is already incorporated in Teva’s Uzedy, an extended-release injectable suspension that got the FDA’s approval to treat schizophrenia in April.
Olanzapine is used among about 20% of schizophrenia patients who take an oral drug. So a satisfactory long-acting version with a better safety profile than Zyprexa Relprevv’s could gain traction, according to Teva.
For this potential upcoming growth driver, Teva recently accelerated the phase 3 trial for olanzapine LAI, Chief Medical Officer Eric Hughes, M.D., Ph.D., said on the company’s quarterly earnings call last week. With enrollment accruing faster than expected, Teva now expects a readout in the second half of 2024.
The Royalty pharma deal enables Teva to “continue to accelerate the development of olanzapine LAI (TEV-’749), a critical program for us, without impacting resources dedicated to our innovative and generic medicines,” Francis said in a statement Monday.
As of the end of September, Teva had $2.25 billion of cash or cash equivalents and nearly $20 billion in debt.
Royalty financing has gained popularity lately as traditional fundraising becomes increasingly difficult amid an overall biotech market cooldown. The most prominent example is perhaps Blackstone’s strategic financing with Alnylam. As part of a deal signed in 2020, Blackstone offered the RNA interference specialist up to $2 billion in exchange for half of the royalties owed to Alnylam on global sales of Novartis’ PCSK9 cholesterol drug Leqvio.
Royalty Pharma itself is built around drugs’ royalties. In September, the New York company funneled $150 million into Ascendis Pharma to purchase a 9.15% royalty on U.S. revenue of growth hormone deficiency therapy Skytrofa.
In October, Royalty paid PTC Therapeutics $1 billion upfront to purchase additional royalty interest in Roche’s fast-growing spinal muscular atrophy drug Evrysdi. PTC said it’s using the proceeds to wrap up its debt with Blackstone Life Sciences and to fund operations.