DRI Capital gains $1.45B in fresh firepower for drug royalty deals

DRI Capital has put the final pieces together for its $1.45 billion fund to buy drug royalties. Eyeing a range of biopharma companies, academics and inventors, the 21-year old investment group says it's looking to expand on a portfolio of royalties that already includes some top-selling medicines.

Toronto-based DRI says this new Drug Royalty III fund, which comes three years after it raised $926 million for its last big royalty fund in 2010, gives it $3 billion in purchasing power. And while it's been a big player in picking up royalty streams on approved drugs, DRI says it is also keen to add some Phase III assets to the list--which currently includes Cubicin, Enbrel, Myozyme, Remicade, Sensipar, Soliris, Stelara, Simponi, Synagis, Tysabri and Xolair.

Last fall, for example, DRI picked up Biogen Idec's ($BIIB) royalty stream on Benlysta, a new lupus drug controlled by GlaxoSmithKline ($GSK). That drug, though, has been a big disappointment since Human Genome Sciences gained an approval amid some initial excitement about its market potential.

"We have a competitive cost of capital, and we look forward to investing in royalty streams on a variety of differentiated healthcare products over the next several years, including product candidates in Phase III of clinical development," says DRI CEO Behzad Khosrowshahi in a statement. "We have a long track record of working with royalty holders to creatively structure transactions, and our team is excited to do more deals in the global life sciences community."

Royalty deals have been snaring the industry's attention over the last year with some marquee efforts mounted by Royalty Pharma. Just weeks ago Royalty snagged the royalty stream Quest Diagnostics ($DGX) held on the Phase III cancer drug ibrutinib for $485 million. The treatment is widely viewed as a likely blockbuster following a near-term approval. And Royalty made a high-profile effort to acquire Elan ($ELN) recently in order to gain control of its royalty portfolio, though that effort ended in failure. 

- here's the press release