aibioREGENXBIO receives $150 million at closing of royalty bond loan with HealthCare Royalty
Tickers RGNX
A REGENXBIO subsidiary signed a limited recourse royalty bond with an affiliate of HealthCare Royalty Management, repaid only from royalties. The company says the $150 million received at closing extends its cash runway into early 2027.
Key facts
- Company
- REGENXBIO Inc. (NASDAQ: RGNX)
- News type
- Debt Financing
- Primary source
- REGENXBIO Inc. Form 8-K filed May 19, 2025 (SEC EDGAR)
REGENXBIO Inc. (Nasdaq: RGNX) said in a Form 8-K filed May 19, 2025 that it closed a limited recourse royalty bond with an affiliate of HealthCare Royalty Management, LLC (HCRx) and received $150 million at closing. The company says the money extends its expected cash runway into early 2027. The loan agreement is dated May 16, 2025. A press release was issued the same day.
The loan and its tranches
REGENXBIO RS LLC, a wholly owned subsidiary of REGENXBIO, is the borrower under the Loan Agreement. HCRx will provide up to $250 million in three tranches. The first $150 million was funded at closing. The second tranche of $50 million is available if sales of a specified product exceed a set threshold in any four-quarter period ending between the closing date and December 31, 2026. The last $50 million is available if both parties exercise an option in 2027.
The amounts are net of $1.5 million in HCRx fees and expenses. HCRx also retains an original issue discount of up to $5.63 million, assuming the full loan is disbursed, of which $3.38 million was retained on the closing date.
What backs the loan
The loan is a royalty financing. The filing says it is secured by, and repaid only from, certain royalties and milestones assigned to REGENXBIO RS under existing license agreements. Those are with Novartis Gene Therapies, Inc., formerly AveXis, for Zolgensma; with Nippon Shinyaku Co., Ltd. for clemidsogene lanparvovec (RGX-121) and RGX-111; and with licensees of the company's NAV vector platform, including Rocket Pharmaceuticals and Ultragenyx Pharmaceuticals.
Zolgensma royalties count only after repayment of the cap amount under an existing royalty purchase agreement between the company and HCRx dated December 22, 2020. The company does not guarantee the Royalty Bond and is not responsible for unpaid interest or principal. The press release says a potential sale of the expected priority review voucher for RGX-121, milestones from AbbVie and most of the development milestones from Nippon Shinyaku are not part of the agreement.
Interest, repayment and the warrant
The principal bears interest at 9.75% plus the three-month secured overnight financing rate, with a SOFR floor of 4.25%. Interest is paid from royalties. If royalties fall short, unpaid interest is added to principal. The loan matures 10 years after closing, or 12 years if a patent term extension applies. On repayment in full or at maturity, REGENXBIO RS pays HCRx 5% of the total principal amount. The Royalty Bond cannot be voluntarily prepaid.
The company also issued HCRx a warrant to buy 268,096 shares of common stock at $14.92 per share, exercisable for 10 years from closing. The press release says that price is a 100% premium to the 30-day weighted average price. The warrant was offered under Section 4(a)(2) of the Securities Act, and the company agreed to register the resale of the underlying shares. It will file the loan agreement as an exhibit to its quarterly report for the quarter ending June 30, 2025.
What management and the lender say
The release says the financing brings future funds forward and extends the runway beyond several milestones, including a potential FDA approval of RGX-121. Chief Financial Officer Mitchell Chan is quoted on the readouts expected for RGX-202 and ABBV-RGX-314. The release cites a possible priority review voucher sale as a separate source of funds that is not part of this deal.
Clarke Futch, chairman and chief executive of HCRx, calls the financing a reflection of REGENXBIO's late-stage position and its royalty-generating assets.
Advisers and the company
Patrick J. Christmas II signed the 8-K. Covington & Burling LLP served as legal adviser to REGENXBIO, and Morgan, Lewis & Bockius LLP advised HCRx. The filing names no placement agent for the loan.
REGENXBIO is a Delaware corporation headquartered in Rockville, Maryland.
What comes next
The company must file the loan agreement with its June 30, 2025 quarterly report. Whether the second and third tranches are drawn depends on sales thresholds and on the 2027 option, so the full $250 million is not assured. The filings give no cash balance against which to test the runway claim.