Cytokinetics Inc. (CYTK) agreed to sell to Royalty Pharma a portion of the royalties it will get from its heart-drug development partnership with Amgen Inc. (AMGN) for $100 million. The royalties will come from sales of omecamtiv mecarbil, a heart failure drug jointly developed by Cytokinetics and Amgen.

Under the deal, Royalty Pharma will pay $90 million upfront to Cytokinetics and acquire a $10 million equity investment in Cytokinetics. In return, Royalty Pharma will receive 4.5% of the royalties from worldwide sales of the heart failure drug. The deal also provisions for royalty rates to be conditionally increased up to 5.5%.

Under the arrangement, Cytokinetics will be eligible to receive an incremental royalty of up to 4% on increasing global sales of omecamtiv mecarbil except for those in Japan. Cytokinetics retains the right to receive more than $600 million from Amgen in potential milestone payments, as well as escalating double-digit royalties that may exceed 20% on tiered global drug sales outside Japan, with a lower royalty rate in Japan. (See also: Amgen-Servier See Huge Profit in Heart Drug.)

New York-based Royalty Pharma focuses on royalty interests from biopharma deals and partnerships. It holds similar interests in more than 40 approved therapies, along with seven drugs which are in clinical trials or are pending approval in America or Europe.

Cytokinetics-Amgen Heart Drug Collaboration

Cytokinetics has been collaborating with Amgen since 2006 to develop various heart failure drugs. The omecamtiv mecarbil drug works as an activator of cardiac myosin, a protein in the cardiac muscle cell which converts chemical energy into the mechanical force resulting in cardiac contraction. Such activators are believed to improve heart conditions. Heart failure disorder impacts around 23 million individuals globally. (See also: Novartis Unveils Heart Failure Social Network.)

In December 2016, Cytokinetics received a $26.7 million milestone payment from Amgen for successfully completing a Phase 2 clinical trial. (See also: Amgen, Cytokinetics Launch Heart Study.) Cytokinetics plans to invest around 40% of the deal proceeds to finance an ongoing Phase 3 development of the omecamtiv mecarbil drug.