Progenics Pharmaceuticals Announces $50 Million Royalty Monetization

Dechert LLP advised Progenics Pharmaceuticals, Inc. (Nasdaq: PGNX), an oncology company developing innovative medicines and other products for targeting and treating cancer, in connection with the monetization of royalties payable to Progenics from future sales of RELISTOR® (which is intended to treat patients suffering from opioid-induced constipation).

The monetization, which closed on November 4, 2016, was structured as a US$50 million loan to a newly formed subsidiary of Progenics, MTNX Royalties Sub LLC. In connection with the transaction, Progenics transferred its rights to receive certain royalty payments from the sales of RELISTOR® Tablets and RELISTOR® Subcutaneous Injection under Progenics’ collaboration agreement with Valeant Pharmaceuticals International, Inc. to MNTX Royalties. Pursuant to the terms of the loan agreement, MNTX Royalties pledged its rights to these royalty payments, along with certain related rights under the collaboration agreement, to the lender, a fund managed by HealthCare Royalty Partners, as security for the loan.

In raising funds by monetizing royalty streams, Progenics joins a growing number of pharmaceutical companies relying on monetization transactions to meet capital needs. Although the structural details of these transactions vary, they present an attractive combination of features that permit companies to raise money while avoiding both the high cost of funds and dilutive effects of capital markets and the encumbrance of intellectual property portfolios involved in traditional debt financing. Dechert has a long and proven track record advising both life sciences companies and the most active lenders in this space in connection with these innovative royalty monetization transactions.

The interdisciplinary Dechert team advising Progenics was led by corporate partner Kristopher Brown, alongside finance partner Malcolm Dorris, counsel Joshua Strathman and associate David Finkelstein. Assistance on intellectual property matters was provided by partner Thomas Rayski and assistance on tax matters was provided by partner Michael Rufkahr and associate Glen Ellsworth.

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