Walter and Eliza Hall in $400m royalties deal for cancer drug

The Walter and Eliza Hall Institute of Medical Research (WEHI) has made a landmark deal worth up to US$325 million ($408 million) from the partial sale of royalty rights for anticancer treatment venetoclax.

CPPIB Credit Europe S.à r.l., a wholly owned subsidiary of Canada Pension Plan Investment Board (CPPIB), has acquired rights to a portion of the future venetoclax royalties owned by the institute.

The transaction includes a cash payment of US$250 million upfront and potential milestone payments of up to US$75 million. The institute will also retain partial royalties for the treatment.

Venetoclax is the result of a research collaboration with Genentech (a member of the Roche Group) and AbbVie. It is based on groundbreaking scientific discoveries made at the institute over three decades.

“With venetoclax, we have shown the institute has both the scientific determination and entrepreneurial acumen to take basic research all the way to being a clinical and commercial success, alongside our partners. This need not be a one-time event. Venetoclax is proof that Australian institutions can be key players in globally significant translation,” said WEHI Director Professor Doug Hilton AO.

A portion of the income will be invested in the institute’s endowment, ensuring the long-term financial stability needed to continue the institute’s focus on fundamental and translational research. Income will also go towards enhancing and accelerating the discovery and translation of new medicines; the acquisition of state-of-the art dynamic imaging technology; and support for the construction of an on-site early childhood education and care centre, as part of the institute’s commitment to supporting staff and their families.

WEHI board president Christopher Thomas AM said negotiating a partial sale of rights in the medicine was a unique opportunity for the institute to solidify its financial security, build its funds base for the long term and ensure groundbreaking scientific research could be undertaken for decades to come.

“The institute decided to make a partial sale of rights to minimise the risks associated with the longer term volatility in the pharmaceutical marketplace. Having observed similar transactions by other research institutions, and then realising venetoclax’s potential, we decided this was the right approach for the institute,” Thomas said.

“We will invest some of the funds into building the institute’s endowment to create a favourable long-term outlook for the institute. This will enable us to deliver research initiatives that can lead to further collaboration with commercial partners and the potential for further successes like venetoclax.

“Retaining partial rights in the treatment ensures the institute preserves potential future opportunities from the medicine until the global patents expire.”

John Graham, CPPIB’s managing director and head of principal credit investments, said the investment was an attractive opportunity to expand CPPIB’s global intellectual property program through the acquisition of royalty rights for this proven anticancer treatment.

“With stable, long-term cash flows, alternative assets like intellectual property add diversification to the CPP Fund as performance is generally uncorrelated to that of the broader capital markets,” Graham said.

US, EU, Canadian and Australian therapeutic regulatory bodies have approved venetoclax for treating people with previously treated chronic lymphocytic leukaemia with 17p deletion. This enables doctors to prescribe venetoclax to patients with this form of blood cancer.