Royalty Pharma said today it spent $3.3 billion in cash to acquire royalty rights to Vertex Pharmaceuticals' cystic fibrosis treatments owned by an affiliate of the Cystic Fibrosis Foundation, in the largest pharma royalty purchase ever completed.

The affiliate, Cystic Fibrosis Foundation Therapeutics, first began collaborating on R&D with Vertex in 1998—nine years after foundation-sponsored scientists identified the cystic fibrosis transmembrane conductance regulator (the “CFTR”) gene, which is defective in patients with cystic fibrosis.  That discovery paved the way for the discovery of three CFTR modulators designed to treat the underlying cause of cystic fibrosis: The marketed drug Kalydeco® (ivacaftor), a potentiator; and two other treatments, both ‘correctors” in clinical trials.

The two correctors are VX-809, a Phase III treatment; and VX-661, which is in Phase II. Both are being studied in combination with Kalydeco for people with cystic fibrosis who have the F508del mutation. Vertex and the foundation expanded their collaboration in 2011 to support development activities for VX-661, as well as accelerated discovery and development of next-generation correctors.

The royalty deal is not without its critics—one of which has publicly raised concerns about whether the windfall to the foundation creates a disincentive to advocate for lowering the $300,000 annual cost of Kalydeco, thus diverting the nonprofit foundation’s focus from helping patients, and posing a potential conflict of interest: “I would like to see them do more to get the price of this drug down to something that is going to be sustainable,” Paul M. Quinton, a cystic fibrosis researcher at the University of California’s Riverside and San Diego campuses, told The New York Times.

“And I have some concern about the possible appearance of a conflict,” added Dr. Quinton, who has cystic fibrosis.

Robert J. Beall, Ph.D., the foundation’s president and CEO, told the newspaper his organization had raised its concern over the cost of the drug to Vertex, but lacked power over the drug’s price.

On its website, Vertex promotes a financial assistance and patient support program called “Vertex Guidance and Patient Support (GPS).” The program is intended, the company says, to assist “eligible patients who do not have insurance and provide coverage for co-pay or co-insurance costs” associated with Kalydeco and the company’s other approved treatment, the hepatitis C drug Incivek (telaprevir), an NS3/4A protease inhibitor indicated for use in combination with peginterferon alfa and ribavirin.

However, Vertex stopped marketing Incivek in the U.S. as of October 16, after its sales cratered following the launch of newer treatments showing greater effectiveness against the disease, such as Gilead Sciences’ Sovaldi (sofosbuvir). Incivek racked up $10.3 million in net revenues during the third quarter, compared with $85.6 million in Q3 2013.

In a statement, Dr. Beall said his organization would use the proceeds to expand cystic fibrosis research, care and patient programs.

“This is a transformational moment for people with cystic fibrosis and the entire CF community,” Dr. Beall said.  “These new funds give us a tremendous opportunity to supercharge our efforts to develop lifesaving new therapies, ensure that the best possible care and resources are available for people with CF, and pursue daring, new opportunities that one day may lead to a permanent, lifelong cure for this disease.”

Royalty Pharma said it financed the acquisition with cash on hand and a $2.7 billion unsecured term loan provided by Bank of America Merrill Lynch.

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