Basics of a Royalty Monetization Transaction

A Step-by-Step Guide to Biotech Funding Through Royalties

A step-by-step guide to Biotech Funding through royalties
1

Step 1: License Agreement

The Biotech company develops a drug or technology and licenses it to a Pharma Partner (a bigger pharmaceutical company).

In exchange, the Pharma Partner agrees to pay royalties and milestone payments based on the drug's success or sales.
2

Step 2: Royalty Monetization

Instead of waiting for future, uncertain royalties, the Biotech company sells a portion of its future payment rights to a royalty financer.

The royalty financer provides upfront payment (Capital), enabling immediate funding for operations or growth.
3

Step 3: Cash Flow to Royalty Financer

As the drug generates sales, the Pharma Partner pays royalties directly to the royalty financer until the agreed portion is fully paid.

This provides non-dilutive funding (no new equity issued) while leveraging future royalties.

Variations

The above schedule outlines the standard royalty monetization concept. However, as with licensing deals, many variations are possible:

Multiple Assets and Licenses

The concept can be applied to baskets of assets and licenses; this makes RM more attractive to RM financers.

No Milestones, Only Royalties

Deals can be structured in such a way that certain milestones are not or only partly included in a RM deal if that fits other stakeholders' interest better.

No License But Revenues

If you do not have license deals but a predictable or growing revenue stream from one or more of your products, these can be monetized as well.

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From Lab to Liquidity: Royalty and Milestone Monetization for Universities and Inventors

From Lab to Liquidity: Royalty and Milestone Monetization for Universities and Inventors

Universities, research institutes, and academic centers are powerhouses of innovation in pharmaceuticals and biotechnology, developing novel technologies, drug candidates, and intellectual property (IP) that promise to transform healthcare.
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Eagle Pharmaceuticals Announces $69 Million Agreement to Monetize BENDEKA® Royalties

Eagle Pharmaceuticals Announces $69 Million Agreement to Monetize BENDEKA® Royalties

Eagle Pharmaceuticals, Inc. (OTCMKTS: EGRX) (the “Company” or “Eagle”) today announced that it has entered into a royalty purchase agreement with an entity that was provided capital by funds managed by Blue Owl Capital Inc. (“Blue Owl”) (the “Agreement”), dated March 31, 2025, to sell the royalty interest in annual net sales of BENDEKA® (bendamustine hydrochloride injection) in the United States for an aggregate purchase price of $69 million before transaction costs.
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Nuvation Bio Secures Up to $250 Million in Non-Dilutive Financings from Sagard Healthcare Partners

Nuvation Bio Secures Up to $250 Million in Non-Dilutive Financings from Sagard Healthcare Partners

Nuvation Bio to receive $150 million in royalty interest financing and $50 million in debt upon U.S. FDA approval of taletrectinib, with access to additional $50 million in debt at the Company’s option
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