Aviragen has just announced a deal with HealthCare Royalty...

Aviragen has just announced a deal with HealthCare Royalty Partners involving a $20m payment (cash injection) in return for an undisclosed % of future Inavir (LANI in Japan) royalties.

HealthCare Royalty Partners play in this interesting space where they come up with different ways to gain a stake or make cash payments pinned to future royalty streams (http://www.healthcareroyalty.com)

Last 4 years of Inavir royalties (from Daiichi Sankyo) totaled $18m - specifically (in US$):
2015 $4.8m
2014 $4.5m
2013 $4.2m
2012 $4.5m

So given the $20m equates to roughly the equivalent of the last 4 years of Inavir royalties, hopefully the bean counters have not given too much away by comparison with alternative methods they could have advance funded a similar amount of money.

Given the % of royalties given up is undisclosed, I wonder how it will be reported in the Annual Report?  Hopefully we have not given up too much more than 33% of our future Inavir Royalties.

I'm in two minds about this deal.  A $20m advance is nice and there is no debt associated with it - they are giving up a future proportion of royalties out of Japan on Inavir sales - which is our main income stream at present.  Anything is possible with Inavir sales in the future.  We know it is the lead Flu antiviral in Japan.  There have not been any pandemics in recent years, so perhaps HealthCare Royalty Partners are banking on a near term pandemic to boost their return.  I guess we now have some partners that have skin in the game and perhaps there might be some hope in terms of some sort of future monetisation opportunity in resurrecting LANI.

Aviragen is clearly looking forward at its other non-Flu products.  I guess the longer Aviragen can fund future trials without giving up stakes in the drugs, the bigger the future windfall if these drugs get through their FDA trials.

On balance, I guess most investors still remaining here as a result of past failed potential might be reasonably happy with the approach taken here.  The past slate has been wiped clean and though everything moving forward with this company is a gamble in terms of recouping what has been invested, I am personally comfortable that deals are being done and a couple of trials are looking pretty solid.

http://investors.aviragentherapeutics.com/releasedetail.cfm?ReleaseID=966553

Aviragen Therapeutics Completes Royalty Deal With HealthCare Royalty Partners for Proceeds of $20 Million

Non-Dilutive Financing Provides for Company's Continued Participation in Future Royalties

ATLANTA, April 25, 2016 (GLOBE NEWSWIRE) -- Aviragen Therapeutics, Inc. (NASDAQ:AVIR) (formerly Biota Pharmaceuticals, Inc.) a pharmaceutical company that is developing the next generation of antivirals, today announced that it has signed a definitive agreement to receive a cash payment of $20 million from HealthCare Royalty Partners in exchange for an undisclosed portion of the Company's royalty rights related to Inavir^®, an inhaled neuraminidase inhibitor that is approved in Japan for the treatment and prevention of influenza. Aviragen plans to use the non-dilutive proceeds to advance its pipeline of direct-acting antivirals in development to treat infections that have limited therapeutic options.​

"This transaction allows us to partially monetize our royalty stream from Inavir^® for significant cash consideration, while also retaining the opportunity to benefit from future upside potential of the product," said Mark P. Colonnese, Executive Vice President and Chief Financial Officer of Aviragen. "These proceeds further enhance our balance sheet as we continue to execute our strategic plan that will deliver multiple Phase 2 data readouts in the second half of 2016."
"We have been following Inavir^® for an extended period and have seen consistently robust sales growth year-over-year as it has established a leading market position among flu medications in Japan," commented Todd C. Davis, co-founder and Managing Partner of HealthCare Royalty Partners. "This investment is consistent with our strategy to invest in market-leading pharmaceutical products marketed by strong commercial organizations with attractive risk-reward profiles."
FBR Capital Markets & Co. acted as exclusive financial advisor to Aviragen Therapeutics, Inc. in connection with this transaction.