Attorneys from Mintz, Cohn, Ferris, Glovsky and Popeo, P.C. represented ARIAD Pharmaceuticals, Inc. in a $200 million non-dilutive synthetic-royalty financing.   

ARIAD will receive $100 million in cash – $50 million upon deal execution 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). ARIAD also has an option, in its discretion, to receive up to an additional $100 million at any time between 6 and 12 months from the date of the agreement, in one or two tranches on comparable 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.

Inclusig® is a kinase inhibitor.  The primary target for Inclusig® is BCR-ABL, an abnormal tyrosine kinase that is express in chronic myeloid leukemia (CML) and Philadelphia-chromosome positive acute lymphoblastic leukemia (PH+ALL).  

Leading the transaction on behalf of ARIAD was Richard Gervase, a Member of Mintz’s Intellectual Property Practice. Other Mintz attorneys included Paul Ricotta, a Member of the Bankruptcy Practice, Scott Samuels, a Member in the Corporate and Securities Practice and Jonathan Talansky, a Member of the firm’s Tax Practice.  In addition, Mark Nemes, an attorney in the Corporate and Securities Practice, assisted in the transaction.  

ARIAD Pharmaceuticals, Inc., headquartered in Cambridge, Massachusetts and Lausanne, Switzerland, is an integrated global oncology company focused on transforming the lives of cancer patients with breakthrough medicines. ARIAD is working on new medicines to advance the treatment of various forms of chronic and acute leukemia, lung cancer and other difficult-to-treat cancers. ARIAD utilizes computational and structural approaches to design small-molecule drugs that overcome resistance to existing cancer medicines. For additional information, visit http://www.ariad.com or follow ARIAD on Twitter (@ARIADPharm).