On July 29, 2015 ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) reported that it will receive $100 million in cash – $50 million upon deal execution late yesterday and an additional $50 million in one year – through a synthetic-royalty financing from PDL BioPharma, Inc. (NASDAQ: PDLI) in exchange for paying PDL a mid-single-digit royalty on future sales of Iclusig (ponatinib) until PDL receives a fixed internal rate of return (IRR) (Press release, Ariad, JUL 29, 2015, View Source;p=RssLanding&cat=news&id=2072149 [SID:1234506731]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

ARIAD also has an option, in its discretion, to receive up to an additional $100 million at any time between 6 and 12 -long-term commercialization of brigatinib," said Harvey J. Berger, M.D., chairman and chief executive officer of ARIAD. "We are confident based on the latest clinical data on brigatinib and other ALK‐inhibitors, that brigatinib may be an important new cancer medicine for patients with ALK+ lung cancer. With the funding provided by this royalty transaction, we expect to start the front-line trial by early next year, ahead of our expected filing for initial marketing approval of brigatinib in patients with refractory ALK+ NSCLC."

Dr. Berger added, "This synthetic-royalty financing allows us to access the needed capital at low cost without selling any equity and gives us the greatest flexibility in implementing our corporate strategy."

Royalty Interest Financing Terms

Pursuant to the agreement, ARIAD will pay PDL 2.5% of global net revenues of Iclusig for the first year of the agreement, 5.0% after the first year through the end of 2018, and 6.5% from 2019 until PDL receives a specified very low double-digit IRR. The 6.5% royalty rate would increase to 7.5% if the Company draws down more than $150 million. In all cases, the royalty no longer is payable once PDL receives its predefined IRR.

ARIAD may also buy out the royalty at any time by making a payment to PDL that will, together with royalties paid, provide a specified return to PDL. Furthermore, if after five years from receiving each payment tranche, PDL has not received total payments that are at least equal to the total amounts it has paid to ARIAD, then ARIAD will be required to pay to PDL an amount equal to such a difference.

Upon the occurrence of specified events, such as a change of control of ARIAD, PDL has the right, but not the obligation, to terminate the agreement by requiring ARIAD to repurchase the revenue interests owed to PDL at a predefined price.

Houlihan Lokey acted as sole placement agent and financial advisor for this synthetic-royalty financing transaction. Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC represented ARIAD in this transaction.

About Iclusig (ponatinib) tablets

Iclusig is a kinase inhibitor. The primary target for Iclusig is BCR-ABL, an abnormal tyrosine kinase that is expressed in chronic myeloid leukemia (CML) and Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ ALL). Iclusig was designed using ARIAD’s computational and structure-based drug-design platform specifically to inhibit the activity of BCR-ABL. Iclusig targets not only native BCR-ABL but also its isoforms that carry mutations that confer resistance to treatment, including the T315I mutation, which has been associated with resistance to other approved TKIs.

Iclusig is approved in the U.S., EU, Australia, Switzerland, Israel and Canada.

In the U.S., Iclusig is a kinase inhibitor indicated for the:

Treatment of adult patients with T315I-positive chronic myeloid leukemia (chronic phase, accelerated phase, or blast phase) or T315I-positive Philadelphia chromosome positive acute lymphoblastic leukemia (Ph+ ALL).
Treatment of adult patients with chronic phase, accelerated phase, or blast phase chronic myeloid leukemia or Ph+ ALL for whom no other tyrosine kinase inhibitor (TKI) therapy is indicated.
These indications are based upon response rate. There are no trials verifying an improvement in disease-related symptoms or increased survival with Iclusig.

IMPORTANT SAFETY INFORMATION, INCLUDING THE BOXED WARNING

WARNING: VASCULAR OCCLUSION, HEART FAILURE, and HEPATOTOXICITY

See full prescribing information for complete boxed warning

Vascular Occlusion: Arterial and venous thrombosis and occlusions have occurred in at least 27% of Iclusig treated patients, including fatal myocardial infarction, stroke, stenosis of large arterial vessels of the brain, severe peripheral vascular disease, and the need for urgent revascularization procedures. Patients with and without cardiovascular risk factors, including patients less than 50 years old, experienced these events. Monitor for evidence of thromboembolism and vascular occlusion. Interrupt or stop Iclusig immediately for vascular occlusion. A benefit risk consideration should guide a decision to restart Iclusig therapy.
Heart Failure, including fatalities, occurred in 8% of Iclusig-treated patients. Monitor cardiac function. Interrupt or stop Iclusig for new or worsening heart failure.

Hepatotoxicity, liver failure and death have occurred in Iclusig-treated patients. Monitor hepatic function. Interrupt Iclusig if hepatotoxicity is suspected.

Please see the full U.S. Prescribing Information for Iclusig, including the Boxed Warning, for additional important safety information.