Ligand Pharmaceuticals Incorporated announces it will receive $10 million from a contractually specified royalty rate buy-down following the sale by CorMatrix Cardiovascular, Inc. of rights to its commercial pericardial repair and CanGaroo Envelope extracellular matrix (ECM) products to Aziyo Biologics. In May 2016, Ligand acquired rights to royalties on these products and several pipeline ECM programs from CorMatrix for $17.5 million.
Under the terms of the original transaction, Ligand was entitled to a $10 million payment if, upon acquisition, the new owner elected to buy-down the royalty rate. As a result of this transaction, Ligand will receive a 5% royalty on these commercial products from Aziyo, down from the original 20% royalty with CorMatrix. As part of the royalty rate reduction, Aziyo has agreed to pay Ligand up to $10 million of additional sales-based milestones tied to the commercial success of the currently-marketed products and to extend the term on these royalties by one year. Ligand’s rights to potential royalties from CorMatrix upon the successful development of its remaining pipeline ECM programs remain unchanged.
“The royalty transaction entered into with CorMatrix last year has been successful in generating cash and has contributed quality shots on goal to our portfolio. CorMatrix made a strategic shift to focus on its pipeline assets, and we are encouraged by the experience and marketing strength of Aziyo’s management team,” said John Higgins, Chief Executive Officer. “This transaction repays the majority of the initial royalty purchase price, adds $10 million of new potential milestones and extends the term for royalties to be earned from the underlying ECM products. Ligand also retains rights to royalties on pipeline products being developed by CorMatrix. Overall, this transaction improves the value of the deal and near-term cash generation.”