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BPCR gains windfall profit on Tesaro loan

BioPharma Credit increases diversity of portfolio

BPCR boosted by windfall profit on Tesaro loan

BioPharma Credit (BPCR), the LSE-listed investment vehicle that specialises in providing loans to biotech companies, is to receive a windfall profit from the early repayment of a $500m loan (of which it provided 64%) to Tesaro last year. This follows the completion of the acquisition of Tesaro, a US-based oncology company, by GlaxoSmithKline yesterday. BPCR is to receive $370m in settlement of its original $322m share of the loan, which includes make-whole and prepayment charges. This return represents 14.2% of the principal, which is the equivalent of what it would have received had the loan remained outstanding for another fifteen months, BPCR says.

Following the repayment, BPCR will have a cash balance of $760m which will be used to fund future investments. Pharmakon Advisors, the investment manager, expects to redeploy the funds within the next twelve months, noting a highly supportive environment for its investment strategy.

BPCR targets an annualised dividend of US$0.07 per share and a net total NAV return of 8–9% per year through investment in debt assets of life sciences companies. Its portfolio comprises senior secured loans and royalty instruments. The coupon on the senior secured loans in BPCR’s portfolio ranges from 9-12% and predominantly fixed or based on USD LIBOR plus a spread. The loan agreements usually include a make-whole call provision covering a period of interest payments and/or a prepayment fee. Following the Tesaro loan repayment, BPCR’s principal loans will be to Sebella ($194m), Amicus ($150m), Novocure ($150m) and Lexicon ($124.5m).

BPCR’s share price is denominated in US dollars and it is listed in the specialist funds segment of the LSE.

BPCR: BPCR boosted by windfall profit on Tesaro loan

 

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