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| Royalty Interests are entitlements to (i) royalty payments between a licensor and a licensee from the sale of a healthcare product, (ii) performance-related and other payments based upon a percentage of healthcare product revenue, or (iii) other consideration such as warrants or product rights.
ROYALTY INTERESTS CAN BE GENERATED AT VARIOUS STAGES OF THE PRODUCT DEVELOPMENT PROCESS |
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History
The Royalty Interest market originated with investments in traditional Royalties, which are payments between a licensor and a licensee from the sale of a product. Due to a variety of economic, technical and product development considerations, Royalties are an important component in the development of new biotechnology and pharmaceutical products. The development of the Royalty Interest market was primarily driven by companies, institutions and individual researchers that were looking for ways to raise capital or diversify risk by monetizing their interests in products, technologies and processes. The company, institution or individual typically negotiates a sale of all or part of its Royalty for a specified timeframe, usually coinciding with the remaining life of the underlying patent.
As the market for Royalty Interest investments evolved, it expanded to include Revenue Interests. Revenue Interests are created when a marketing, manufacturing or biotech company sells a portion of its future revenue stream on a marketed product or products. In such agreements, the company in effect creates a Royalty on an existing product or products. These companies choose to sell a portion of future product revenue in commercialized drugs/products in order to fund the capital requirements of other drugs/products under development. Alternatively, companies seeking to acquire additional commercialized products can sell Revenue Interests to fund acquisition costs.
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