Northwestern will receive $700 million for selling a portion of its rights to the pain-relief pill Lyrica, a blockbuster drug developed at NU that has substantially increased the university’s endowment.
Pharmaceutical company Royal Pharma paid in cash for royalty rights to the drug used to treat nerve pain caused by diabetes, epilepsy and fibromyalgia.
NU will continue to put money from Lyrica sales into the university’s $6.6 billion endowment.
It will be used to increase undergraduate financial aid, improve fellowships for graduate students and fund the maintenance and upkeep of university buildings, including the Richard and Barbara Silverman Hall for Molecular Therapeutics & Diagnostics, currently under construction.
The drug, a chemical compound known as pregabalin, was developed by NU chemistry professor Richard Silverman in 1989, and FDA approved in 2005. A portion of the payment will go to Silverman and the postdoctoral student who assisted in the drug’s development.
Eugene Sunshine, NU’s senior vice president for business and finance, described the Lyrica royalties as an extraordinarily valuable source of money for the university.
In 2006, NU sold Lyrica to Pfizer Pharmaceuticals for $1 billion. In its first year, Lyrica sales exceeded $1.2 billion. Analysts say the drug’s sales could double by 2012.
NU receives 6 percent of the drug’s revenue from Pfizer, which brought the university approximately $72 million from its Lyrica sales in 2006.
Administrators have considered selling rights to the best-selling drug for the past year.
NU President Henry Bienen told The Daily in March that a sale of a portion of the drug’s royalties could protect the university’s investments from potential poor market performance.
With Lyrica’s strong global sales, university officials felt that now was a good time to sell, Sunshine said. Consultants helped NU trustees and administrators complete the transaction.
“This decision comes out of a combination of a good market, good analysis and first and foremost, a wonderful product that was discovered and advanced by talented faculty,” Sunshine said. “It is the best thing for us to make the money permanent and let it grow over the years.”
The proceeds will also be used to supplement start-up costs associated with research endeavors that are not covered by federal grants.
“(The success of Lyrica) is a testimony to the quality of research here, which is where it all starts,” Sunshine said.
University officials declined to comment on the percentage of royalties sold. Sunshine said that NU has retained a “sizeable amount” of Lyrica’s royalty rights.
NU will still collect a portion of the royalty payments from the drug’s sales and does not currently have plans to sell the remainder of Lyrica royalties.
Reach Nathalie Tadena at [email protected].
