Covington Represents OrbiMed in Structured Royalty Financing

Covington Represents OrbiMed in Structured Royalty Financing

September 30, 2024

NEW YORK-Covington advised OrbiMed in a non-dilutive royalty financing agreement with Poxel SA to monetize a portion of Poxel's future royalties and sales-based payments from TWYMEEG® sales by Sumitomo Pharma in Japan.

Under the terms of the agreement, Poxel received a gross upfront payment of $50 million from the OrbiMed funds in exchange for an issuance of its bonds in the same aggregate amount. For the bonds issued by Poxel, the OrbiMed funds will receive (i) royalties payable by Sumitomo Pharma on net sales of TWYMEEG® in Japan, net of Poxel's obligation to Merck, (ii) sales-based payments due by Sumitomo Pharma in connection with the commercialization of TWYMEEG® in Japan, and (iii) a portion of the cash flows received by Poxel, in the event of partnership for the development and commercialization of Imeglimin in Asian countries other than Japan, and for which Poxel just recovered the rights from Sumitomo Pharma. Poxel has initiated discussions to develop and market Imeglimin in China, the world's second largest type 2 diabetes market.

The agreement will expire, and the bonds be deemed repaid once OrbiMed receives a capped return equivalent to 2 times its investment, i.e. $100 million, plus specified expenses, if any.

OrbiMed is a healthcare investment firm, with approximately $17 billion in assets under management. OrbiMed invests globally across the healthcare industry, from start-ups to large multinational corporations, through a range of private equity funds, public equity funds, and royalty/credit funds.

Poxel is a clinical stage biopharmaceutical company developing innovative treatments for chronic serious diseases with metabolic pathophysiology, including non-alcoholic steatohepatitis (NASH) and rare disorders. TWYMEEG® (Imeglimin), Poxel's first-in-class product that targets mitochondrial dysfunction, is marketed for the treatment of type 2 diabetes in Japan by Sumitomo Pharma

The Covington team included Peter Schwartz, Jennifer Uren, and Jeremy Goldberg (finance), and Kurt Baca (tax).