On October 25, 2021, AnaptysBio, Inc. ("AnaptysBio") reported that it entered into a Royalty Purchase Agreement (the "Royalty Purchase Agreement") with Sagard Healthcare Royalty Partners, LP ("Sagard") to monetize a portion of AnaptysBio’s future JEMPERLI royalties and milestones under AnaptysBio’s Collaboration and Exclusive License Agreement, as amended (the "Collaboration Agreement"), with Tesaro, Inc. and Tesaro Development, Ltd., each a wholly-owned subsidiary of GlaxoSmithKline ("GSK") (Filing, 8-K, AnaptysBio, OCT 25, 2021, View Source [SID1234591898]).

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Upon closing of the transaction with Sagard, which is anticipated by the end of 2021, Sagard will pay AnaptysBio $250 million upfront in exchange for royalties payable to AnaptysBio under the Collaboration Agreement on annual global net sales of JEMPERLI below $1 billion starting October 2021. The royalty rate applicable below the $1 billion annual net sales threshold is 8%. Sagard may also receive up to a total of $105 million in potential cash milestones, of which $15 million are subject to certain future JEMPERLI regulatory filing and approval milestones and up to $90 million are subject to certain commercial sales milestones due prior to JEMPERLI achieving the $1 billion in annual global net sales threshold.

Royalties payable above $1 billion JEMPERLI annual global net sales, which are paid by GSK at 12% to 25%, and certain milestones payable on annual sales at or above $1 billion are retained by AnaptysBio and are not subject to the Royalty Purchase Agreement. Royalties and milestones due upon development and commercialization of the AnaptysBio-generated anti-TIM-3 antagonist (cobolimab) or anti-LAG-3 antagonist (GSK4074386) antibodies under the Collaboration Agreement, including in combination with JEMPERLI, are also not subject to the Royalty Purchase Agreement. In addition, royalties due to AnaptysBio from GSK’s global net sales of ZEJULA (niraparib) are excluded from the Royalty Purchase Agreement. The closing of the transaction is subject to the satisfaction of customary closing conditions.

The aggregate JEMPERLI royalties and milestones to be received by Sagard under this Agreement is capped at certain fixed multiples of the upfront payment based upon time. Once Sagard receives an aggregate of either $312.5 million (125% of the upfront) by the end of 2026, or $337.5 million (135% of the upfront) during 2027 or $412.5 million (165% of the upfront) at any time after 2027, the Royalty Purchase Agreement will expire resulting in AnaptysBio regaining all subsequent JEMPERLI royalties and milestones.

The foregoing summary of the Royalty Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Royalty Purchase Agreement and the Collaboration Agreement. A copy of the Collaboration Agreement is available as Exhibit 10.10 to AnaptysBio’s Registration Statement on Form S-1, as amended, filed on May 10, 2016 and as Exhibit 10.16 to AnaptysBio’s Annual Report on Form 10-K for the year ended December 31, 2020. A copy of the Royalty Purchase Agreement will be filed as an exhibit to AnaptysBio’s Annual Report on Form 10-K for the year ended December 31, 2021.