The termination of the agreement led PDL BioPharma to receive approximately $21.4 million which included repayment of the full principal amount outstanding ($20.6 million) as well as accrued interest and a prepayment fee.
We note that PDL BioPharma and Avinger had entered into a loan and royalty agreement in 2013. Under the agreement, PDL BioPharma had agreed to provide up to $40 million of financing to Avinger, of which only $20 million was funded to date. In exchange, PDL BioPharma was entitled to receive interest on the principal amount outstanding as well as a low single-digit royalty on Avinger's revenues from the sale of its suite of products through Apr 2018.
Per terms of the agreement, PDL BioPharma will however continue receiving royalty but at a reduced rate of 0.9% on Avinger's net revenues from the prepayment date through 2018, subject to minimum quarterly payments.
Meanwhile, PDL BioPharma has been pursuing strategic deals to boost royalties. Earlier this week, the company acquired a portion of the royalties on sales of AcelRx Pharmaceuticals Inc.'s ACRX Zalviso in the EU, Switzerland and Australia. Per the terms of the agreement, PDL BioPharma provided gross proceeds of $65 million to AcelRx. In exchange, the company is entitled to receive 75% of the royalties AcelRx receives from its commercial partner, Grünenthal GmbH, as well as 80% of the first four commercial milestones subject to a capped amount.
A couple of days back, Zalviso received EU approval for the management of acute moderate-to-severe post-operative pain in adults. Zalviso is expected to be available in Western Europe from the first half of 2016.
PDL BioPharma carries a Zacks Rank #2 (Buy). Gilead Sciences Inc. GILD is another favorably ranked stock in the health care sector carrying a Zacks Rank #1 (Strong Buy).