Apogee Therapeutics announced on May 27 a $1.3 billion royalty financing agreement with Blackstone Life Sciences, prompting a drop of about 11% in the company’s shares before market open. The deal comes as Apogee released data for its atopic dermatitis candidate zumilokibart, which analysts at Truist Securities said “looks competitive.”
Truist analysts said in a note to clients, “We suspect this morning’s stock reaction … is being driven in part by the synthetic royalty agreement with Blackstone announced alongside the data. Given that many investors view APGE as a potential M&A candidate, today’s transaction may signal that an acquisition is not imminent,” Truist said.
Chief Executive Officer Michael Henderson addressed investor concerns by highlighting provisions in the funding arrangement: “We felt that they were a great partner that provided us a bespoke capital structure and an attractive cost of capital that gives us a path to commercialization and even profitability without needing to rely on the equity markets anymore,” Henderson said during an investor call.
The agreement grants Blackstone up to $1.3 billion in funding—the largest ever royalty financing for a pre-Phase 3 program according to Apogee—including $800 million in synthetic royalties and $500 million as future senior debt. Blackstone will receive up to 6.25% royalty on worldwide annual sales of zumilokibart up to $5 billion, decreasing to as low as 1.7% if sales reach $20 billion.
Alongside the financing announcement, Apogee revealed results from part B of its Phase 2 APEX trial for zumilokibart showing higher performance for the mid dose compared with high dose; Truist noted this may disappoint some investors but called mid-dose efficacy "broadly comparable" to Eli Lilly's Ebglyss. The main endpoint was met by 61.6% of patients at high dose and 65.9% at mid dose after sixteen weeks.
Looking ahead, Apogee plans Phase 3 trials for atopic dermatitis later this year and expects additional studies for eosinophilic esophagitis and asthma through 2027.
