La Jolla Pharmaceutical Company (Nasdaq: LJPC) (La Jolla), a leader in the discovery, development and commercialization of innovative therapies intended to significantly improve outcomes in patients suffering from life-threatening diseases, today announced that it has closed a $125 million royalty financing agreement with HealthCare Royalty Partners (HCR).
Under the terms of the agreement, La Jolla will receive $125 million in exchange for tiered royalty payments on worldwide net sales of GIAPREZA. Payments under the agreement start annually at a maximum royalty rate, with step-downs based on the achievement of annual net sales thresholds. Through December 31, 2021, the royalty rate will be a maximum of 10%. Starting January 1, 2022, the maximum royalty rate may increase by 4% if an agreed-upon, cumulative sales threshold has not been met, and, starting January 1, 2024, the maximum royalty rate may increase by an additional 4% if a different agreed-upon cumulative sales threshold has not been met. The agreement is subject to maximum aggregate royalty payments to HCR of 180% of the $125 million to be received by La Jolla, at which time the payment obligations under the agreement would expire. The agreement was entered into by La Jolla’s wholly owned subsidiary, La Jolla Pharma, LLC, and HCR has no recourse under the agreement against La Jolla or any assets other than GIAPREZA.
On a pro-forma basis, adjusting for the net proceeds from this transaction, La Jolla’s cash and cash equivalents as of March 31, 2018 were $279 million.
“This transaction provides us with a strong financial position to support the commercial launch of GIAPREZA, while at the same time furthering the development of LJPC-401 and our other programs,” said George F. Tidmarsh, M.D., Ph.D., President and Chief Executive Officer of La Jolla.
“We are pleased to partner with La Jolla,” said Clarke Futch, Managing Partner and Chairman of the Investment Committee of HCR. “Our investment reflects our confidence in GIAPREZA’s ability to meaningfully improve outcomes for patients suffering from septic or other distributive shock.”
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