This biopharmaceutical company (NASDAQ: OSCID) required capital to acquire U.S. rights to the cardiovascular product ANTARA® 130 mg (fenofibrate) capsules from Reliant Pharmaceuticals. Oscient concluded that they would need to finance the majority of the acquisition but needed a flexible means to do it. An all equity financing would have been too dilutive, and a full revenue interest financing, where the company sells a percentage of future product revenues in exchange for an upfront payment, would have impacted Oscient's earnings.
To meet the financial objectives of Oscient, Paul Capital Healthcare developed three financial instruments, totaling $70 million, fulfilling Oscient's capital raising goal: $40 million in a revenue interest that entitles Paul Capital Healthcare to receive a royalty on the net sales of ANTARA and Oscient's existing product FACTIVE®; $20 million in structured debt with warrant coverage; and a $10 million equity investment.
By acquiring ANTARA, Oscient dramatically expanded its revenue base, accelerated its path to profitability and leveraged its existing sales infrastructure. In this case the revenue interest portion of the transaction was very attractive to Oscient because it acquired a cash flow positive asset that both the company and Paul Capital Healthcare would immediately benefit from.
