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$300m C share issue planned for BioPharma Credit

$300m C share issue planned for BioPharma Credit – BioPharma Credit has released its first annual results, covering the period from launch to 31 December 2017. The NAV at the end of the period was $1.0091, up from 98 cents immediately after launch. The original target was to pay a 4% dividend per annum. It declared interim dividends totalling $0.02 per share during the period and on 1 March it declared an interim dividend of $0.021 per share, comprising an ordinary dividend of $0.01 and a special dividend of $0.011.

On 31 December 2017 the Company’s shares closed at $1.0470, a 4.7% premium.

The proceeds of the IPO included the contribution in exchange for shares of $338.6 million of seed assets. These comprised of a $185.1 million note secured by royalties on sales from 22 biotechnology and pharmaceutical products, including some of the world’s largest, (the “RPS Note”) together with a $153.5 million interest in BioPharma lll Holdings LP, through which the company gained exposure to an interest in five loans, also secured by rights to approved life sciences products.

The company has made four investments to date in addition to the opening portfolio:

  • Up to $500m loan agreement with oncology focused Tesaro (NASDAQ: TSRO). This was the largest non-convertible life sciences debt issuance by a biotech company with a market capitalisation of less than $10bn since 2007;
  • Up to $200m loan agreement with fully integrated biopharmaceutical company Lexicon (NASDAQ: LXRX);
  • 140m-160m purchase, sale and assignment agreement with a subsidiary of Royalty Pharma Investments (“RPI”) for the purchase of a 50 per cent interest in payments acquired by RPI’s subsidiary from Bristol-Myers Squibb (NYSE: BMY);
  • and it entered a senior secured loan agreement for $150m with commercial stage oncology focused NovoCure Limited (NASDAQ: NVCR). BioPharma Credit already has exposure to Novocure through BioPharma III.

These were funded from the initial issue proceeds and a $154m fundraise in December 2017.

At the end of the period, the company had cash of $351m. Following hefty returns of cash, the amounts in the opening portfolio investments had dropped to $123.48m for the interest in BioPharma III and $99.65m for the RPS note. The Tesaro loan was $222m and the Lexicon loan was $124.5m.

Pedro Gonzalez de Cosio, co-founder and CEO of Pharmakon (the investment adviser), said: “there is a robust pipeline of investment opportunities but the timing of their execution is not completely within our control. In addition, given the recent pace of investment activities, we will continue to explore additional sources of capital in order to finance new investments and fund existing commitments. We remain focused on our mission of creating the premier dedicated provider of debt capital to the life sciences industry while generating attractive returns and sustainable income to investors. Further, we remain confident of our ability to deliver attractive returns that will enable the Company to pay a robust dividend yield for our investors.”

The company has today announced a new fundraise, through an issue of C shares, with target proceeds of $300m.

BPCR : $300m C share issue planned for BioPharma Credit

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