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Oaktree Provides $100MM Royalty and Debt Financing Agreement to Impel Neuropharma

March 18, 2022, 08:02 AM
Filed Under: Pharmaceuticals

Impel NeuroPharma announced two separate transactions with funds managed by Oaktree Capital Management totaling $100 million in gross funding. The transactions include a $50 million royalty agreement on net sales of the nasal spray, Trudhes, and $50 million of senior secured debt. Based on current projections, these funds provide Impel with a projected cash runway into 2024.

"This non-dilutive financing provides Impel with immediate and sufficient capital to support the continued successful launch and commercialization efforts for Trudhesa.” said Adrian Adams, Chairman and Chief Executive Officer, Impel NeuroPharma. “Additionally, this transaction meets our objectives of strengthening our balance sheet, while retaining for our shareholders the majority of upside from growing Trudhesa sales.”

Aman Kumar, Co-Portfolio Manager of Life Sciences Lending at Oaktree, added, “We are very excited to form a long-term strategic partnership with Impel by supporting the ongoing commercialization of Trudhesa and development of additional therapies utilizing the Company’s innovative drug delivery technology. There is a significant unmet medical need for targeted therapies within the upper nasal cavity and Oaktree believes that Trudhesa offers a highly differentiated and important offering to acute migraine patients, further validated by the impressive launch metrics to date.”

Under the terms of the royalty agreement, Oaktree will provide Impel with an upfront cash payment of $50 million in exchange for tiered royalty payments on annual U.S. net sales of Trudhesa, as follows: 7.75% on net sales up to $150.0 million; 4.75% on net sales between $150.0 million and $300.0 million; 0.75% on net sales greater than $300.0 million; and 10.0% of any payments received by Impel from ex-U.S. licensing or partnership deals for Trudhesa. The total royalty payable by Impel to Oaktree is capped at 1.75x of the amount funded upfront, with the ability to redeem the royalty agreement at lower multiples within the first three years from funding. Upon achievement of the cap amount, the royalty agreement will terminate.

Under the terms of the credit facility, Impel will borrow $50 million from Oaktree, all of which will be funded at closing. The credit facility will mature five years from funding and will bear interest at SOFR + 8.75% (with a SOFR floor of 1.00%). Following the achievement of $125 million in trailing twelve-month U.S. net sales, the interest rate margin will be lowered to 8.00%. Impel will make interest-only payments for the first 48 months. Concurrent with the closing, Impel will retire its existing $30 million debt obligation with Oxford/SVB.

Cowen acted as exclusive financial advisor to Impel on this transaction.

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