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12:00 AM
Apr 07, 2008
 |  BioCentury  |  Finance

Ebb & Flow

For small companies with constrained options in the current financing environment, alternative approaches tied to royalty or revenue interests continue to be the order of the day. Last week, a trio of alternative vehicles went through, two revenue interest financings, one by Paul Capitaland another by Deerfield Capital, and a royalty financing by Deerfield.

Genitourinary company Plethora (LSE:PLE) signed a $25 million revenue interest financing with Paul Capital, with an option for an additional $3 million equity investment.

Plethora received an upfront payment of $15 million, with an additional $10 million to be received upon the first commercial sales of PSD502 for premature ejaculation.

Phase III data are expected by year end for the topical analgesic spray. Sciele(NASDAQ:SCRX) has exclusive U.S. marketing rights, while Plethora retained some co-promotion rights.

Paul Capital will receive an undisclosed interest in the revenue of Plethora's three male health candidates: PSD502; ErecAid, which is marketed to treat erectile dysfunction (ED); and PSD510, which is in Phase III testing for premature ejaculation and ED. The company's female urological disorder candidates are not covered under the agreement.

In addition, Plethora amended and expanded its July 2007 convertible debt facility with ETV Capital. ETV could potentially make available an additional $3.4 million for a future product or corporate acquisition.

In 1H07, the company's most recent reporting date, Plethora had revenue of £2.8 million ($5.6 million) and an operating loss of £4.1 million ($8.2 million). At June 30, 2007, the company had £7.4 million ($14.8 million) in cash.

In another revenue interest deal, Deerfield got a share of revenue for marketed ED treatment Muse alprostadil from Vivus(NASDAQ:VVUS). In 2007, the company had product revenue of $19.4 million from Muse.

Deerfield will provide $20 million over 18 months and will also make a $10 million equity investment. The funds will go to advance Phase III ED candidate avanafil, a fast-acting oral phosphodiesterase-5 (PDE-5) inhibitor. If it is marketed, Deerfield is eligible for a share of product sales.

Vivus has the right to repurchase the rights from Deerfield at any time in the first three years for $25 million or for $28 million in the fourth year.

The company had a total of $54.7 million in 2007 revenue, with an operating loss of $1.5 million. At Dec. 31, it had $179.5 million in cash.

Separately, DRI Capital made a royalty deal with molecular and in vitro diagnostic company Nanogen(NASDAQ:NGEN) for...

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