Royalty rights are generally an attractive asset for their holders but nevertheless carry a certain risk related to the commercial performance of the underlying biopharmaceutical product.

Revenues from product sales and royalties will fluctuate from quarter to quarter and from year to year depending on, among other factors, demand by consumers for the product and its competitors, new product introductions, the seasonal nature of products, ordering patterns, production schedules, product withdrawal, reimbursement and label changes. By selling a royalty right, a holder can realize the value of the future royalty stream immediately, without the risk associated with waiting for the product sale to occur.

The reasons people chose to sell their royalty interests vary, but most often it is a simple desire to convert an unpredictable income stream into immediate cash. Other motivating factors include, but are not limited to:

• Capital funding needs
• Risk reduction strategy
• Finance commercial launch or late stage clinical development
• Merger-related divestitures
• Earnings management
• Estate and tax planning for individuals