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On January 9, 2023, Ionis, a well-known and established biotech company, and Royalty, a very distinctive investment company, were launched
Pharma entered into royalty agreements
totaling $1.
125 billion.
This "concession" is the product interest
.
Under the agreement, Ionis will sell a portion of its interest in both products to Royalty
Pharma to receive $500 million in cash and up to $625 million in milestone payments
.
The two products are Spinraza (Nocinaxen sodium injection) for the treatment of spinal muscular atrophy (SMA) in collaboration with Biogen, and Pelacarsen
, a lipid-lowering drug in collaboration with Novartis.
Spinraza is the world's first gene therapy to treat SMA, and Pelacarsen is a potential blockbuster drug in the field of lipid reduction, which is expected to trigger a "revolution" in the field of lipid lowering in the next generation, both of which are antisense oligonucleotide (ASO) drugs
.
This is an interesting
case.
Both companies are quite famous, Ionis is a leader in the field of ASO, founded as early as 1989, has done a lot of groundbreaking work in the field, and has more than 8 drugs on the market so far, another Royalty
Pharma is the largest player in "royalty concession investment", raising $2.
2 billion in its IPO in 2020, making it one of
the largest IPOs in the United States that year.
Royalty
Pharma's goal is to change the financing model of biomedicine, and the deal with Ionis may become another classic example
.
1 More flexible than equity investment
More flexible than equity investmentTraditional financing is a kind of capital injection by the capital to obtain the company's shares, and then obtain income through the company's overall income dividends, stock price rise or equity transactions
.
This kind of investment is more common in biotech companies that need a lot of capital to advance product development, and investors release trust and expectations
in the company, the product, and even the founder by sharing ownership of the company.
However, such investments have limitations, while concession investments are more flexible
.
For example, on November 8, 2022, the FDA convened an expert advisory committee to discuss PT027, a new asthma drug developed by AstraZeneca, and almost unanimously approved the benefits
of the product.
In fact, this is a compound preparation of an old drug, which was not initially valued
by AstraZeneca.
This kind of Big
Pharma will not sell its equity easily, but it will also face funding needs, especially for this "uncertain" drug
.
At this time, it is a very flexible approach
to obtain funds from investment companies to cooperate in the development of drugs by selling product rights.
In the development of PT027, AstraZeneca found investment agency Avillion, who will be responsible for the post-development of PT027 and provide funding until the product is approved
.
AstraZeneca can buy back the non-interest
after the product is approved, by paying a certain amount of money.
It is equivalent to the investor both assuming part of the CRO role and investing in the "license.
"
in" took on a portion of Pharma's role
.
And in Royalty
In Pharma's partnership with Ionis, we see another asset that can be used as collateral: interests
in listed products.
2 Trade the future of blockbuster products for the cash you need today
Trade the future of blockbuster products for the cash you need todayAccording to Ionis' website, the funds raised from the deal are mainly used to develop three late-stage projects in its pipeline: eplontersen, olezarsen and donidalorsen
to prepare it for business
.
According to the characteristics of concession investment, the equity of the product that needs to be developed is generally exchanged for the funds
required for product development.
That is, if I want to develop A, I will sell A's interest, so that the buyer can decide how much to contribute by assessing A's potential, and if I am very optimistic about A, then it is possible to get a premium investment
.
For companies like Ionis, which have listed products, lack of money, and do not want to sell equity, selling more certain, future rights and interests of listed products is more attractive to investors
.
After all, investors prefer stable, long-term gains, not gambling
.
According to the agreement, until 2027, Royalty
Pharma will receive 25 percent of Ionis' share of Spinraza's sales, rising to 45 percent after 2028, and 25 percent
for another product, Pelacarsen.
Spinraza was approved by the FDA in December 2016 and had sales of $880 million in 2017, peaking at more than $2 billion annually, but was hit by Novartis' zolgensma and saw sales decline, reaching $1.
9 billion
in 2021.
Under the agreement signed between Ionis and Biogen at the time, Ionis was entitled to a share
of more than 10 percent of Spinraza's global sales.
At 15% and an average annual sales of 1.
5 billion, Royalty
Pharma could receive a cumulative share
of about $300 million by 2027.
The cap on this share will be $475 million or $550 million
, depending on the timing of Pelacarsen's approval.
According to the agreement signed between Ionis and Novartis, Ionis is entitled to a double-digit global sales share of up to 20% and a milestone payment of up to $650 million (this money is not Royalty).
Pharma's portion).
Overall, Royalty
Pharma should have made money on the deal, and Ionis got the cash
it needed most.
A number of products under development have entered the third phase, and even mature biotechs like Ionis are a bit overwhelming
.
3 Diversity of financing channels
Diversity of financing channelsThe capital chill has been going on for more than a year, and many companies are starting to run out of hold on and cut expenses
.
In this context, it is important
to look for diversified sources of financing.
In addition to regular equity investments and concession investments mentioned in this article, there are a number of other sources
of financing.
Some of them come from CRO companies, and now many CRO companies in China have established their own funds to support start-up biotechs
that hold capital needs.
In addition, some CRO companies will also provide the option of "equity mortgage" to small biotech companies, if these biotech have no money on the account and want to promote the product progress, you can choose to mortgage the equity to the CRO company, the CRO will work first, and then redeem the equity when the biotech has money
.
In addition to pulling investment, lending is also a common operation
.
On August 31, 2022, Provention Bio, an American biotech company, announced a partnership with Hercules, a well-known financial company
Capital entered into a term loan agreement of $125 million that can be drawn in up to five installments, with the first $25 million receiving the first
$25 million upon signing of the contract.
The money relieved Provention Bio's immediate need to subsequently Provention
Bio's core product, Teplizumab, a product for the treatment of type 1 diabetes, was approved by the FDA on November 17, 2022, and the company began its commercialization path
.
In general, as long as a biotech has high-value core assets, whether it is a potential blockbuster product, a scarce technology platform or a top academic powerhouse, and can demonstrate a high degree of professionalism, there are still many
channels for financing.
No one wants the winter to go on forever, and everyone is helping pharmaceutical companies get through it in a variety of ways
.
Of course, the pharmaceutical companies
that deserve to be helped.
Resources:
Resources:1、Ionis sells partial stake in royalties from Spinraza and Novartis cardio drug to Royalty Pharma for $500M upfront-Endpoint news
1、Ionis sells partial stake in royalties from Spinraza and Novartis cardio drug to Royalty Pharma for $500M upfront-Endpoint news
2.
Ionis official website
Ionis official website
3.
AstraZeneca's new asthma drug has been successfully developed, and there are several interesting places behind it - the era of medicine
AstraZeneca's new asthma drug has been successfully developed, and there are several interesting places behind it - the era of medicine
4.
Operate cross-border acquisitions and create an industry ecology - in-depth interview with "super lawyer" Dr.
Vincent Pan - Medicine Times
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Other public information
Other public information
