Paul Capital in $45m Merck royalty deal

Just days after the drug was approved by federal drug authorities, San Francisco-based Paul Capital announced a partial royalty interest in ROTATEQ, a Merck vaccine.

Paul Royalty Fund, a pharmaceutical royalties investment arm of Paul Capital Partners, has partnered with the developers of a new Merck vaccine, buying a slice in the royalty stream of new drug ROTATEQ.

The deal is valued at $45 million (€38 million).

ROTATEQ, developed by Merck and approved by the US Food and Drug Administration just last week, is a vaccine to prevent rotavirus, a cause of severe dehydration in infants and young children.

The vaccine was developed by The Wistar Institute and the Children’s Hospital of Philadelphia in the 1980s and was licensed to Merck in 1991.

Term of the deal give Wistar an up-front payment of $1 million and a second payment of $44 million once the drug begins marketing in the US. Russel Kaufman, the president and CEO of Wistar, said in a statement that the investment would allow his institute to continue scientific and strategic goals.

Paul Capital is one of the few private equity firms to operate a medical royalty investment programme. The royalty team is led by Dr. Walter Flamenbaum and Dr. Gregory Brown. The group raised a $656 million fund in 2003.

In December 2004, Paul Royalty securitised a collection of its existing royalties held in its debut fund, which raised $300 million in 2000.