Canada-based biopharmaceutical company Zymeworks Inc. and United States-based Royalty Pharma plc have announced a $250 million (€212 million) royalty-backed note financing agreement with repayments from 30 per cent of worldwide tiered royalties on Ziihera until fully repaid, according to a company announcement reported by Globe Newswire.

Under the non-recourse agreement, Zymeworks will retain 70 per cent of royalties on Ziihera sales during the note repayment period, with full royalty rights reverting to Zymeworks once payments to Royalty Pharma cease.

Royalty Pharma will stop receiving royalties when cumulative payments reach either 1.65 times the note amount by 31 December 2033 or 1.925 times the note amount thereafter.

"This strategic funding provides non-dilutive capital that enhances our flexibility to continue repurchasing shares at current prices, which we believe represents a compelling discount to our estimate of intrinsic value," said Kenneth Galbraith, chair, chief executive officer and acting chief financial officer of Zymeworks. "It also gives us additional capacity to pursue strategic acquisitions that meet our rigorous risk-adjusted return criteria and fund our cash runway beyond 2028."

"We are delighted to enter into this royalty funding agreement with Zymeworks on royalties from Ziihera, a therapy with the potential to meaningfully change the treatment landscape for patients with HER2‑positive gastric and biliary tract cancers," said Pablo Legorreta, chief executive officer and chairman of the board of Royalty Pharma.

Zymeworks is eligible to receive tiered royalties of 10 per cent to high teens on global annual sales of Ziihera up to $2 billion (€1.7 billion) and 20 per cent on annual net sales above that threshold under collaboration agreements with Jazz Pharmaceuticals and BeOne Medicines.

View the full press release on Zymeworks' royalty financing structure and pharmaceutical commercialisation strategy.