Zymeworks secures $250 million in royalty-backed financing from Royalty Pharma

Zymeworks Inc. (NASDAQ: ZYME) announced a $250 million royalty-backed note financing agreement with Royalty Pharma plc (NASDAQ: RPRX), with repayments tied to 30% of worldwide tiered royalties on Ziihera until fully repaid.

Under the agreement, Zymeworks will retain 70% of royalties on Ziihera sales during the repayment period. Full royalty rights will revert to Zymeworks once payments to Royalty Pharma cease. Royalty Pharma will stop receiving payments when it receives cumulative payments of either 1.65x the note amount by December 31, 2033, or 1.925x the note amount thereafter.

Zymeworks receives tiered royalties of 10% to high teens on global Ziihera sales up to $2 billion and 20% on annual net sales above $2 billion under its collaboration with Jazz Pharmaceuticals. The company also receives mid-single to mid-double digit royalties on sales up to $1 billion and 19.5% on sales above $1 billion under its agreement with BeOne Medicines.

The company stated the proceeds will support its stock repurchase program, potential strategic acquisitions, and extend its cash runway beyond 2028. Kenneth Galbraith, Chair and CEO, said the funding provides "non-dilutive capital that enhances our flexibility to continue repurchasing shares."

Zymeworks will retain all earned regulatory and commercial milestone payments under its agreements with Jazz and BeOne, including up to $440 million in near-term milestone payments tied to future regulatory approvals of Ziihera, according to the company's statement.

Ziihera is currently indicated in the United States for treating adults with previously treated, unresectable or metastatic HER2-positive biliary tract cancer. The FDA granted the drug accelerated approval based on overall response rate and duration of response.

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