This biotechnology company was seeking capital to finance the expansion of its pipeline of innovative vaccine products. The company owned valuable royalties, which were not reflected in the equity value (market capitalization) of the company. As a publicly-traded company, with a market capitalization of approximately $100MM, AVANT (NASDAQ: AVAN) was interested in a non-dilutive transaction to secure necessary clinical development capital.
The parties concluded that AVANT's interest in the future net royalties of Rotarix®, GlaxoSmithKline’s oral vaccine to prevent rotavirus infection, had significant potential. By structuring a $61 million royalty interest financing with Paul Capital Healthcare, AVANT was able to monetize revenues from future Rotarix sales, while preserving significant product upside through a sizeable retained interest in royalties above a cumulative threshold. AVANT used the capital from Paul Capital Healthcare to finance the development of other products in its pipeline, while avoiding a dilutive equity offering. The company received $10 million upfront with the remaining payments made upon the achievement of milestones, including the product’s launch in the European Union and in the United States.
AVANT unlocked the unrealized value in its royalty and used the proceeds of its financing with Paul Capital Healthcare to advance the company's cardiovascular immunotherapeutic programs in the clinic, complete the validation and staffing of a new manufacturing facility, and advance a pipeline of oral vaccines to combat a wide range of bacterial threats including avian flu and typhoid fever.
