CPPIB acquires partial royalty interest in Keytruda from LifeArc for US $1.3B

CPE Media News (5/20/2019) – Canada Pension Plan Investment Board’s (CPPIB) through its wholly owned subsidiary CPPIB Credit Europe S.à r.l. has acquired a portion of LifeArc’s royalty interests on worldwide sales of Keytruda®* (pembrolizumab), MSD’s anti-PD-1 therapy, for approximately US $1.297 billion.

LifeArc secured rights to royalties from pembrolizumab as a result of the charity’s 2007 collaboration to humanise the antibody-based therapy now marketed by MSD.

In 2016, LifeArc, formerly known as MRC Technology, sold a small proportion of its pembrolizumab royalty interest for US $150 million to DRI Capital.

CPPIB investment was made through its Americas Structured Credit and Financials Group, which in addition to intellectual property, invests in portfolios of credit and other structured credit investments.

photo credit: Bru-nO via pixabay

News Release

LifeArc monetises Keytruda® royalty interests to fund further research and investment

Canada Pension Plan Investment Board acquires rights through subsidiary CPPIB Credit Europe S.à r.l.

20 May 2019 – LifeArc, a UK-based medical research charity, has received US$1.297 billion from CPPIB Credit Europe S.à r.l. – a wholly owned subsidiary of Canada Pension Plan Investment Board (CPPIB) – for a portion of its royalty interest in Keytruda®[1] (pembrolizumab), MSD’s anti-PD-1 therapy. LifeArc secured rights to royalties from pembrolizumab as a result of the charity’s 2007 collaboration to humanise the antibody-based therapy now marketed by MSD.

The transaction will make LifeArc one of the UK’s leading medical research charities by size of its investment assets and allows it to significantly expand its mission of advancing research that has direct benefits for human health.

Dr Melanie Lee, CEO, LifeArc, said: “At LifeArc, we advance promising research into new health interventions for patients and the public benefit. This agreement with CPPIB allows us to increase our support for new approaches and collaborations and bolster access to our expertise and resources. Ultimately, we can support life sciences research and accelerate the development of new therapies, diagnostics and devices for those people in greatest need.”

John Graham, Senior Managing Director & Global Head of Credit Investments, CPPIB said: “This investment in Keytruda provides us the opportunity to continue expanding CPPIB’s global intellectual property program. Alternative assets related to intellectual property help to diversify the Fund through income streams that are typically uncorrelated to the broader capital markets. The acquisition of royalty interests from LifeArc for this market-leading cancer therapy provides stable, long-term cash flows.”

In 2016, LifeArc sold a small proportion of its pembrolizumab royalty interest for US $150 million to a private equity fund. It used part of this capital to establish two funds, worth £30 million: the LifeArc Philanthropic Fund provides grants for translational research in rare diseases, and the LifeArc Seed Fund invests in nascent or early stage spin-out companies.

Dr John Stageman, Chairman of the Board, LifeArc, said: “The agreement with CPPIB is a once in a generation opportunity, providing LifeArc with additional resources to accelerate our work. The Board of Trustees are committed to ensuring our resources enhance the translation of medical innovation and boost the UK life science ecosystem. We are continuing to evolve our strategy and approach to maximise the impact on innovation, sustainability and patient benefit.”

MTS Health Partners, L.P. acted as exclusive financial and structural advisor, and Covington & Burling LLP acted as special counsel to LifeArc in connection with the transaction.

[1] KEYTRUDA® is a registered trademark of Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., Kenilworth, NJ, USA.

About LifeArc

LifeArc is a self-funded medical research charity. Our mission is to advance translation of early science into health care treatments or diagnostics that can be taken through to full development and made available to patients. We have been doing this for more than 25 years and our work has resulted in a diagnostic for antibiotic resistance and four licensed medicines.

Our success allows us to explore new approaches to stimulate and fund translation. We have our own drug discovery and diagnostics development facilities, supported by experts in technology transfer and intellectual property who also provide services to other organisations. Our model is built on collaboration, and we partner with a broad range of groups including medical research charities, research organisations, industry and academic scientists. We are motivated by patient need and scientific opportunity.

Two funds help us to invest in external projects for the benefit of patients: our Philanthropic Fund provides grants to support medical research projects focused on the translation of rare diseases research and our Seed Fund is aimed at start-up companies focussed on developing new therapeutics and biological modalities.

Find out more about our work on this website, or follow us on LinkedIn or Twitter.

About CPPIB

Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits in the best interests of 20 million contributors and beneficiaries. In order to build a diversified portfolio, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments.

Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, São Paulo and Sydney, CPPIB is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At March 31, 2019, the CPP Fund totalled C$392 billion.

For more information about CPPIB, please visit www.cppib.com or follow us on LinkedIn, Facebook or Twitter.

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