This biopharmaceutical company (NASDAQ: ACOR) had recently acquired Zanaflex Capsules™ and Zanaflex® tablets, a product it was actively marketing for the management of spasticity, a painful consequence of conditions such as spinal cord injury and multiple sclerosis. At the same time it was also conducting Phase III clinical trials on a second product in its pipeline. The company was interested in funding its ongoing clinical programs by pursuing an initial public offering (IPO), but also needed capital to expand its sales force. To achieve these two goals, the company sought an alternative means of financing that would not dilute its ownership stake.
To meet Acorda's financial objectives, Paul Capital Healthcare structured a $15 million revenue interest agreement based on future net revenues of Zanaflex Capsules and Zanaflex tablets. As part of the agreement Acorda would receive two additional $5 million payments upon the achievement of certain milestones. Additionally, Paul Capital Healthcare worked closely with Acorda’s bankers and lawyers to ensure that the revenue interest would be properly disclosed and marketed during the IPO process.
The revenue interest financing accomplished Acorda's main objectives – the immediate funding of its sales force expansion for Zanaflex during the IPO process. More importantly, the financing put Acorda in a strong financial position prior to its IPO road show with public investors. Paul Capital Healthcare’s non-dilutive investment was recognized by these IPO investors as a validation of the commercial potential of Zanaflex and for creating value for the company. Acorda successfully completed its IPO two months after the revenue interest transaction closed.
