Athenex entered into a $50 million revenue interest financing (RIF) agreement with Sagard Healthcare Royalty Partners, (SHRP), a division of multi-strategy alternative asset manager Sagard Holdings.
Athenex expects to use the proceeds from the financing to fund the commercial launch of oral paclitaxel and encequidar (Oral Paclitaxel), ongoing pipeline development, manufacturing infrastructure, and working capital and general corporate purposes.
Athenex is a global biopharmaceutical company dedicated to the discovery, development and commercialization of novel therapies for the treatment of cancer and related conditions.
The agreement provides Athenex with $50 million of capital upon approval by the U.S. Food and Drug Administration (FDA) of Oral Paclitaxel for the treatment of metastatic breast cancer. In exchange for funding this capital, SHRP will receive a temporary mid-single digit royalty on net sales of Oral Paclitaxel. The agreement allows the RIF to be repurchased by the company at an IRR of as low as 13%. The facility has no maturity date and no fixed amortization schedule.
In addition to its revenue interest financing, SHRP and certain of its co-investors purchased by assignment $50 million of outstanding loans and undrawn commitments from funds managed by Oaktree Capital Management, becoming lenders under Athenex’s $225 million term loan facility entered into between Oaktree and Athenex in June 2020. There is no incremental capital available to Athenex as a result of this transaction.
“We are delighted to have Sagard Healthcare Royalty Partners as another financial partner, as Athenex continues to make excellent progress towards our goal of bringing important novel cancer therapies like Oral Paclitaxel to patients,” Dr. Johnson Lau, chairman and CEO of Athenex, said. “The recent funding arrangements will provide Athenex further flexibility and cash runway to support our commercial launch activities and ongoing pipeline development. We believe that this revenue interest financing transaction is precedent-setting in that it would provide $50 million of additional non-dilutive capital that co-exists with the covenant-light, six-year, $225 million senior term debt provided by Oaktree.”
“Revenue interest financing is becoming an increasingly attractive option for innovative companies such as Athenex as they look to commercialize novel therapies. We’re excited to be providing this funding and to be partnering with Oaktree Capital Management on the loan facility,” David MacNaughtan, head of SHRP, which recently completed a second close of its inaugural fund, said.
Ladenburg Thalmann and Royalty/Revenue Interest Capital Advisors served as financial advisors to Athenex and Cooley served as legal counsel to Athenex. Torys served as legal counsel to Sagard Holdings.
