This independent research institution was entitled to receive a percentage of future royalties on Merck's RotaTeq®, a rotavirus vaccine jointly developed by its researchers. Wistar wanted to expand its research capabilities substantially to meet its scientific goals but had limited financial resources. The institution was also motivated to achieve the best price for the sale of the royalty and, in particular, did not want to lose the upside potential from future sales of RotaTeq.
Paul Capital Healthcare structured a royalty financing in which Wistar sold a portion of the anticipated worldwide royalty payments from RotaTeq to the Fund in exchange for a $1 million upfront payment and a $44 million milestone payment when the vaccine received marketing approval in the United States. As part of the agreement Wistar retained all worldwide royalties on annual sales in excess of approximately $300 million.
Wistar was able to use the funds to increase its endowment significantly and accelerate and expand its current research programs. The transaction structure also allowed the institution to benefit from future royalties — thereby participating in the upside from future RotaTeq sales.
