Vivus, Pharmakon Advisors L.P. deal

Vivus secured $50 million from Pharmakon Advisors in exchange for capped royalty payments over four years from sales of Vivus' obesity drug Qsymia phentermine/topiramate. The biotech has an option to draw down an additional $60 million before year end. In 2014, Vivus is required to make quarterly payments to Pharmakon on the first tranche that are capped at the lesser of 25% of net sales for the quarter or a scheduled quarterly payment of $3 million. For 2015-17 the scheduled quarterly payments are $5 million and in the first calendar quarter of 2018, the final scheduled payment is $1.7 million. If Vivus makes all of the scheduled payments, it would pay back $73.7 million on the $50 million tranche, for an implied annual interest rate of 17.8%. If 25% of Qsymia sales is lower than the scheduled payment, the biotech must pay the scheduled amount the next quarter plus any amount outstanding from previous quarters multiplied by 1.03. Terms for the $60 million tranche are similar. ...