CPPIB boosts IP assets by investing in rights to cancer drug

The Canada Pension Plan Investment Board is boosting its intellectual property portfolio by purchasing royalty rights to a cancer drug.

CPPIB Credit Europe, a wholly owned subsidiary of the pension fund, has acquired the rights to a portion of future royalties in the drug, venetoclax, from the Walter and Eliza Hall Institute of Medical Research in Australia.

The transaction includes an upfront cash payment of about $315 million and possible milestone payments of more than $90 million, with the institute maintaining partial royalties for the drug. Venetoclax is specifically effective as treatment for certain patients with relapsed or refractory chronic lymphocytic leukemia.

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“This investment is an attractive opportunity to expand CPPIB’s global intellectual property program through the acquisition of royalty rights for this proven anti-cancer treatment,” said John Graham, managing director and head of principal credit investments at the CPPIB. “With stable, long-term cash flows, alternative assets like intellectual property add diversification to the CPP fund as performance is generally uncorrelated to that of the broader capital markets.”

The CPPIB launched its strategy to invest in rights for royalties, patents, trademarks and copyrights, primarily in the pharmaceutical and technology sectors, in 2011. Since then, it has invested  about $3 billion in the area.

Besides the drug transaction, the CPPIB also announced its wholly owned subsidiary, CPPIB Credit Investments Inc., will issue a more than $400-million subordinated facility to Intu Properties, a British real estate investment trust.

The investment is indirectly secured against the trust’s Trafford Centre in Manchester, a major shopping centre in Britain.

“This investment fits well with our strategy of providing customized, large-scale funding solutions to best-in-class operators of high-quality underlying real estate assets,” Geoff Souter, managing director and head of private real estate debt.

Read: CPPIB invests in British science and technology business park

In addition to its newest British venture, the CPPIB has partnered with the trust on the joint ownership of shopping centres on Spain.
 
In other investment news, the Caisse de dépôt et placement du Québec has acquired all Class A common shares of Boralex Inc. held by Cascades Inc. for $287.5 million.
 
Boralex develops, builds and operates renewable energy power facilities in Canada, France and the United States.
 
“This stake in Boralex is an opportunity for us to invest in both a promising sector and high-quality assets, many of which are in Quebec,” said Macky Tall, executive vice-president of infrastructure at the Caisse.
 
“In addition to sharing our long-term vision, Boralex’s ability to innovate and strong operating capacity ensure the reliability of its installations and contribute to its development. It has played an important role in the growth of this Quebec-based company, both here and in global markets.”
 
Read: Caisse invests $2.6B in global aircraft financing platform