Agenus ($AGEN) is trading away future royalties on a GlaxoSmithKline ($GSK)-partnered vaccine adjuvant in exchange for up to $115 million, planning to invest the proceeds in its growing pipeline of immuno-oncology treatments.
Under a royalty financing deal, Agenus will hand over the rights to QS-21, used alongside GSK vaccines for malaria and shingles, to an investor group led by Oberland Capital for a $100 million loan, recouping another $15 million if and when the shingles vaccine wins FDA approval.
In a novel twist, GSK’s future royalty disbursements will serve as Agenus’ principal and cover payments on the debt, which accrues interest at 13.5% per year. If and when GSK’s payouts satisfy the loan terms, Agenus will regain full rights to QS-21; if the adjuvant doesn’t live up to its potential after 12 years, the company will have to pay its financiers the difference.[…]