1. New Patent Issue: BioPharma Royalty Trust by Eugene Li Summary of pages 485-495 From Ideas to Assets - Part 22

2. Background First time pharmaceutical patent royalties turned into a marketable security occurred in August 2000 BioPharma Royalty Trust totaled $115 million S&P rated the senior debt single A Royalties as an asset class have shown significant growth over the last decade

3. Rationale Rating on BioPharma Royalty Trust’s (BRT) $57.15m senior notes is based on: o Strong legal structure that segregates revenue stream supporting the notes o Credit support provided by subordinate debt and equity investors o Strength of historical and projected performance of Zerit patent royalty revenues o AAA credit rating of Bristol-Myers Squibb Co. (BMS) First pharmaceutical patent royalty securitization rated by S&P

4. Transaction Overview A major research-based academic institution rated AAA by S&P owns 100% of patent and licensing agreement Royalty divided among several parties: o 30% to two inventors o 70% to institution Licensing agreement includes US patents 911,200 (9/24/86) and 942,686 (12/17/86)

5. Structure – Role of Collateral Trustee Transaction structure highlighted by academic institution’s irrevocable assignment of rights BRT pledged quarterly cash flows to collateral trustee, Bankers Trust Co. 100% of license receivables are paid by BMS directly to collateral trustee Bankers Trust Co distributes 30% of deposited monies to academic institution and 70% to distribution account for various parties

6. Asset Analysis – HIV/AIDS Medicines S&P analyzed product sales, marketing, market share, patent royalties, modeled projected patent royalty revenues Modeling included product’s worldwide market and position Zerit and Videx are BMS’s two HIV/AIDS medicines o Zerit is the most commonly prescribed medicine for HIV therapy in USA o Zerit and Videx received regulatory approval in 1999

7. Key Transaction Details and Features Represents first pharmaceutical patent royalty rated by S&P Business strategy o Target academic/research institutions, biotech and pharma companies o Acquire products approved by FDA o Finance commercial launch or late-stage clinical development of products o Acquire companies rich in IP

8. Key Transaction Details and Features Yale University – AAA (August 2000) o Owns 100% of patent o Royalty divided among several parties. 30% to two inventors, 70% to university Bristol-Myers Squibb Co – AAA (August 2000) o One of world’s largest pharmaceutical firms o Zerit and Videx are BMS’s two HIV/AIDS medicines o Average annual growth rate of 26% in revenues