Amid a cost-cutting drive and a looming commercial threat in Europe, PTC Therapeutics is raising cash in a new royalty deal.

In an agreement with Royalty Pharma worth up to $1.5 billion, PTC agreed to sell 67% of its royalty interest in the Roche-partnered spinal muscular atrophy drug Evrysdi. 

The deal includes an upfront payment of $1 billion, plus the option for PTC to sell its remaining royalty interest down the line for up to $500 million.

As it stands, PTC will hold onto approximately 19% of its royalty interest on the drug, which it licensed to Roche’s Genentech in 2011. 

The deal gives PTC “added financial flexibility as we pursue our strategic objectives,” PTC’s chief Matthew Klein, M.D., said in a statement. The company recently disclosed more than 300 layoffs in New Jersey as its Duchenne muscular dystrophy drug Translarna faces a potential market withdrawal in Europe.

PTC says it will use the capital to pay off its debt from Blackstone Life Sciences, which invested up to $1 billion in PTC last year.

As for Evrysdi, the drug was approved in 2020 as the first oral med for spinal muscular atrophy and the second overall for the condition in the U.S.

PTC collected its first commercial milestone payment of $20 million from Genentech weeks after the approval with the drug’s first U.S sale, then picked up another $20 million in 2021 after its first sale in the European Union.

Meanwhile, PTC is likely bracing for a setback in Europe with the looming threat of its Duchenne muscular dystrophy therapy Translarna being revoked from the market. The European Medicine Agency’s Committee for Medicinal Products for Human Use (CHMP), refused to covert the drug’s conditional marketing authorization into a full approval last month, leaving PTC “surprised and extremely disappointed,” Klein said at the time.

Last quarter, Translarna brought in $77 million in revenue for the company.

Evrysdi royalties from Roche stacked up to $36.9 million last quarter for PTC.