Many perspectives required when covering cancer drugs on benefits plans

The Canada Pension Plan Investment Board is acquiring a US$1.3 billion stake in LifeArc’s royalty interests on worldwide sales of immunotherapy drug Keytruda through its European credit group.

The drug, which is intended to help the body fight certain forms of cancer, was developed by Merck Sharp & Dohme Corp. and has been approved in 85 countries.

“This investment in Keytruda provides us the opportunity to continue expanding the CPPIB’s global intellectual property program,” said John Graham, senior managing director and global head of credit investments at the CPPIB, in a press release. “Alternative assets related to intellectual property help to diversify the fund through income streams that are typically uncorrelated to the broader capital markets. The acquisition of royalty interests from LifeArc for this market-leading cancer therapy provides stable, long-term cash flows.”

In other investment news, Premium Brands Holdings Corp. completed a private placement of 2,631,000 common shares to the CPPIB at a price of $76.02 per share. The price was based on a 1.5 per cent discount to the five-day volume-weighted average trading price of Premium Brands’ common shares as of closing on May 17, 2019.

“Premium Brands’ strong track record of value creation, combined with its opportunities to expand its portfolio in Canada and the U.S., make this a compelling investment for CPPIB,” said Deborah Orida, senior managing director and global head of active equities at the CPPIB, in a press release. “This investment builds on our relationship investments group’s strategy to provide strategic, long-term capital to leading public companies where we can help create greater value through ongoing partnership.”