Fund of the week: Oberland Capital
In my November 25 post, I discussed "Royalties as a Credit Derivative," exploring how creative financing can extend a biotech's runway without diluting equity. Oberland Capital is the real-world practitioner of that theory – a specialist fund that doesn't just bet on biotech outcomes, but engineers them through structured deals. In the current 2025 market, where the IPO window is highly selective and only the strongest data can crack open a listing, many biotechs are seeking alternative bridges to get them to a lucrative buyout or partnership.
M&A activity is heating up as big pharma hunts for late-stage assets, but emerging companies need cash to reach those inflection points.
Enter Oberland Capital: a private investment firm that provides "bridge" capital allowing biotechs to hit key milestones (like pivotal trial readouts or FDA approvals) without crushing their existing shareholders with dilution.
For example, Oberland recently struck a unique $600 million financing deal with Biohaven as it awaited an FDA approval – injecting life into the company at a critical juncture. Rather than a simple equity purchase, that deal was structured as a note purchase agreement (debt financing) with multiple tranches tied to Biohaven's milestones, precisely to carry the company through approval and toward commercialization.
This kind of tailored funding exemplifies how Oberland turns capital stacking theory into practice: providing cash now in exchange for a slice of future success, thereby building a synthetic bridge over the chasm between a cash-strapped present and a potentially profitable future.
Crucially, Oberland's money isn't "free" – it comes at a price – but the structure means the company's equity holders get to live to fight another day. In Biohaven's case, Oberland's support gave management the "flexibility to continue advancing [the] pipeline" and prepare for launch. Equity investors welcomed this lifeline: Biohaven's stock jumped ~10% on news of the Oberland funding, a positive reaction reflecting relief that the company secured needed capital without a massively dilutive stock offering.
This narrative – avoiding dilution while buying time to hit value-creating milestones – is at the core of Oberland's appeal. It's theory-into-practice for biotech financing: instead of trading public shares on binary events, Oberland structures private deals that manufacture a favorable outcome for all sides if the science delivers. In a market where many funds simply trade the volatility of clinical trial results, Oberland is the quiet engineer in the background, structuring the synthetic royalty streams and credit deals that turn those results into actual dollars and cents.
The Firm: From Paul Capital Spinout to $3.5 Billion Platform
Origins and Founding Team
The Oberland story begins at Paul Capital, where Jean-Pierre Naegeli and Andrew Rubinstein built and co-managed a healthcare royalty platform through the early 2010s. Both brought complementary backgrounds that would prove essential to Oberland's distinctive approach.
Jean-Pierre Naegeli, Managing Partner, spent nearly a decade at Johnson & Johnson, including five years leading principal investments at J&J Development Corporation, the pharmaceutical giant's strategic venture arm. His training included operational roles assessing healthcare technologies across all J&J divisions – pharmaceuticals, medical devices, and diagnostics.
This operational experience at one of the world's largest healthcare companies gave Naegeli deep insight into how products move from development through commercialization. Prior to J&J, he worked at Credit Suisse First Boston in investment banking. He holds an MBA from Yale School of Management and an engineering degree from ETH Zurich.
Andrew Rubinstein, Managing Partner, followed a different path – investment banking at Merrill Lynch's Financial Sponsors Group (focused on private equity clients), then serving as CEO of Microban International, a global antimicrobial licensing business where he led operations across 30 countries.
This CEO experience provided rare operational perspective for an investor. Before Paul Capital, he also worked in venture capital and merchant banking. Rubinstein holds a JD from NYU School of Law and an MBA from NYU Stern School of Business.
When they launched Oberland in 2013, their first key hire was Michael Bloom, a Paul Capital colleague who had previously consulted for healthcare firms including Health Advances and the Frankel Group. Bloom earned his MBA with honors from Wharton's Healthcare Management Program and remains a Partner today.
The founding trio brought William Clifford from Paul Capital as well – he had led strategy engagements for biotech and medical device clients at Health Advances and even worked at In-Q-Tel (the CIA's venture capital arm) during graduate school.
Fund Progression and Capital Raising
Oberland has demonstrated remarkable fundraising momentum, with each successive fund significantly larger than the last and all reaching hard caps ahead of schedule:
| Fund | Vintage | Target | Final Close | Notes |
|---|---|---|---|---|
| Fund I | 2015 | $350M | $425M | 21% above target |
| Fund II | 2018 | — | $800M | Hit hard cap |
| Healthcare Solutions Fund | May 2020 | — | $1.05B | Late-stage clinical focus |
| Fund III | Oct 2022 | — | $1.2B | Closed in ~6 months |
The firm now manages over $3.5 billion in assets under management dedicated to healthcare royalty and credit opportunities. This consistent oversubscription reflects strong institutional demand for the asset class and confidence in Oberland's execution capabilities.
Current Team and Expertise
Oberland's approximately 20-25 employees combine scientific, operational, financial, and legal expertise rarely found in a single firm. The team boasts over 200 years of collective healthcare experience across science, investing, and business development.
| Name | Title | Background |
|---|---|---|
| Jean-Pierre Naegeli | Managing Partner | J&J Development Corp (9 years), Credit Suisse First Boston |
| Andrew Rubinstein | Managing Partner | Microban International CEO, Merrill Lynch, Paul Capital |
| William Clifford | Partner | Health Advances, In-Q-Tel, Paul Capital |
| Michael Bloom | Partner | Health Advances, Frankel Group, Wharton MBA |
| Cecilia Gonzalo | Partner | Warburg Pincus (12 years), Essex Woodlands, Goldman Sachs |
| Molly Scott, PhD | Partner | Yale PhD (microbiology), AstraZeneca |
| Brandon Holtrup, PhD | Partner | Yale PhD, AstraZeneca business development |
| Johannes Lauenstein, PhD | Partner | Cambridge PhD, BCG pharma consulting |
| Kristian Wiggert | General Counsel | Partner at Covington & Burling, Morrison & Foerster |
| David Dubinsky | CFO | Managing Director & CFO at Siguler Guff ($10B+ AUM) |
| Sarah Siber | Vice President | Pfizer Corporate Development |
| Sean Fillion | Vice President | Siemens Healthineers Strategy & M&A |
This hybrid team can evaluate Phase 3 clinical data, assess regulatory pathways, model commercial scenarios, structure complex transactions, and monitor portfolio companies – capabilities that pure financial investors lack.
Strategy – The "Senior Security" Approach
Oberland Capital's strategy centers on being the senior, risk-mitigated capital provider in a biotech's capital stack. Unlike an equity fund (e.g., RA Capital) that takes on binary clinical trial risk in exchange for unlimited upside, Oberland focuses on later-stage assets – typically products in late Phase III, near approval, or even on the market – where the scientific risk is lower and commercial execution is the next step. By targeting commercial or near-commercial assets, Oberland is effectively lending against something tangible (or soon-to-be tangible) rather than a moonshot idea.
This is the essence of its "Senior Security" approach: Oberland structures its investments as senior secured obligations or revenue-linked royalties, positioning itself at the top of the capital structure with first claim on certain asset cash flows. The firm often insists on robust downside protection – think collateralization of IP or using bankruptcy-remote vehicles to hold the royalty rights – so that if the operating company fails, Oberland's claim on the product's revenue can survive.
Investment Parameters
| Parameter | Details |
|---|---|
| Deal Size | $50 million to $300+ million per transaction |
| Target Stage | Late Phase III, NDA/BLA filed, approved, or commercial |
| Sectors | Pharmaceuticals, biotechnology, medical devices, diagnostics |
| Geography | Global, with focus on US and Europe |
| Structure Types | RIPAs, royalty monetization, secured notes, hybrid instruments |
| Return Profile | Credit-like downside protection with equity-like upside participation |
The Financing Toolkit
What truly sets Oberland apart is the flexibility and creativity of its deal structures. The firm doesn't just hand out loans or buy stock; it custom-crafts hybrid instruments that can include debt, royalties, and equity kickers all in one package.
Oberland's Financing Solutions:
| Structure Type | Description | Example |
|---|---|---|
| Royalty Monetization | Purchase of existing royalty streams | Agenus $115M royalty transaction |
| Revenue Interest Purchase Agreement (RIPA) | Synthetic royalty on future product sales | ImmunityBio $320M, Esperion $200M |
| Secured Notes | Senior debt with milestone tranches | Biohaven $600M, Verastem $157.5M |
| Tiered Royalty Interest | Percentage varies with sales levels | ClearPoint Neuro structure |
| Project-Specific Financing | Funding tied to specific drug/indication | Impact Biomedicines fedratinib |
| Hybrid Instruments | Combination of debt + royalty + equity | ClearPoint $110M (note + royalty + equity) |
For example, in May 2025 Oberland provided ClearPoint Neuro with a structured financing that combined a secured note, a tiered royalty interest, and an equity purchase – a "broad suite" solution tailored to the company's needs.
The Limited Partner Base: Institutional Capital at Scale
Oberland's LP base spans public pension funds, corporate pensions, endowments, foundations, sovereign wealth funds, and family offices across the United States, Europe, and the Middle East. The firm has disclosed the following confirmed institutional investors:
Confirmed Limited Partners
| Investor | Type | Fund Commitment | Assets Managed |
|---|---|---|---|
| Public Safety Personnel Retirement System of Arizona (PSPRS) | Public Pension | Fund I (2015), Fund III (2022) | ~$24 billion |
| Motion Picture Industry Pension Plan (MPIPHP) | Industry Pension | Healthcare Solutions Fund (2020) | Multi-billion |
PSPRS, managing approximately $24 billion in assets for Arizona firefighters, police officers, and corrections employees, committed to Oberland Capital Healthcare LP (Fund I) in April 2015. PSPRS has been recognized by Institutional Investor magazine as "Allocator of the Year" (2017), with CIO Mark Steed named "Innovator of the Year" (2023). The pension allocates 25% of its portfolio to "Contractual Income" – including private credit and royalty payments – emphasizing pharmaceutical investments and non-market-correlated returns.
MPIPHP, established in 1953 through collective bargaining between entertainment unions and employers, committed to Oberland's Healthcare Solutions Fund at its May 2020 close. The plan covers employees across 30+ entertainment industry unions and guilds.
Legal Advisors for Fund Formation
Ropes & Gray LLP has served as legal counsel for Fund II onward, with Partner Marc Biamonte leading the team and tax partners Dan Kolb and Seth Piken supporting. No placement agents have been disclosed, suggesting the firm has relied primarily on direct investor relationships.
Complete Deal History: The Portfolio in Detail
Oberland's investment range spans $50 million to over $600 million per transaction. Below is a comprehensive review of the firm's disclosed investments with detailed terms where available.
Major Transactions Summary Table
| Company | Date | Amount | Structure | Key Terms |
|---|---|---|---|---|
| Biohaven | Apr 2025 | $600M | Note Purchase Agreement | $250M at close, $150M at FDA approval, $200M optional; tiered royalties up to 10 years |
| ClearPoint Neuro | May 2025 | $110M | Note + Royalty + Equity | $33.5M at close; $3.5M equity at $12.69/share |
| Verastem | Jan 2025 | $157.5M | Notes + Equity | $75M at close; 6-year interest-only; 1% revenue participation |
| BillionToOne | Sep 2024 | $140M | Non-dilutive notes | $50M at close; retired $35M existing debt |
| ImmunityBio | Dec 2023 | $320M | RIPA + Equity | $210M at close; 3-10% tiered royalties; 195% cap |
| Humacyte | May 2023 | $160M | Revenue-based + Equity | $40M at close; milestone tranches; $10M equity option |
| Agenus | 2022 | $115M | Royalty Monetization | Non-dilutive royalty transaction |
| Zealand Pharma | Dec 2021 | $200M | Secured Notes | 7-year term; 6.0% + LIBOR; repaid May 2023 |
| Axogen | 2020 | $75M | Secured Notes | 7-year term; 11.5% IRR target make-whole |
| Esperion | Jun 2019 | $200M | RIPA | 2.5-7.5% royalties; 200-225% cap; repaid Jun 2024 |
| NorthStar Medical | Apr 2019 | $100M | Secured Financing | $75M at close; Mo-99 production expansion |
| Melinta | 2017 | $90M | Debt + Equity | Baxdela commercialization; company filed Ch.11 Dec 2019 |
| Impact Biomedicines | Oct 2017 | $90M | Structured Financing | Fedratinib development; acquired by Celgene Jan 2018 |
| Axogen | 2014 | $28.55M | Loan + Revenue Interest | $25M loan + 3.75% revenue interest + $3.55M equity |
Detailed Deal Breakdowns
Biohaven: $600 Million for Rare Disease (April 2025)
The firm's largest disclosed transaction is a $600 million Note Purchase Agreement with Biohaven (NYSE: BHVN), structured across three tranches:
| Tranche | Amount | Trigger |
|---|---|---|
| Initial | $250M | Funded at closing |
| Second | $150M | FDA approval of troriluzole (company option) |
| Third | Up to $200M | Mutual agreement for permitted strategic acquisitions |
The return structure includes:
- Regulatory approval milestone payments (payable quarterly through December 31, 2030)
- Tiered single-digit royalty payments on global net sales of troriluzole
- Maximum royalty term of 10 years
- All payments capped at a multiple of amounts funded
Legal advisors: Covington & Burling LLP for Biohaven; Cooley LLP for Oberland.
ImmunityBio: Revenue Interest Plus Equity (December 2023)
Oberland committed up to $320 million to ImmunityBio (NASDAQ: IBRX) in a hybrid structure:
| Component | Amount | Terms |
|---|---|---|
| RIPA | $300M | $200M at close; $100M at FDA approval |
| Equity | $20M | $10M at close (2.43M shares); $10M option |
RIPA Royalty Terms:
| Stage | Royalty Rate | Geography |
|---|---|---|
| Pre-approval | 3-7% of net sales | Global ex-China |
| Post-approval | 4.5-10% of net sales | Global ex-China |
| Cap | 195% of investment | By 12th anniversary |
Critical structural element: Nant Capital agreed to subordinate its existing ~$505 million in notes to Oberland's senior position. Jefferies LLC advised ImmunityBio.
Verastem: Launching with Financial Strength (January 2025)
Oberland provided up to $157.5 million to Verastem Oncology:
| Component | Amount | Terms |
|---|---|---|
| Notes | $150M | $75M at close; $75M at milestones |
| Equity | $7.5M | 1.42M shares |
Note Terms:
- Six-year interest-only period with floating rates (floor and cap)
- 1.0% revenue participation on first $100M of annual net sales
- Proceeds repaid $42.7M Oxford Finance loan
- PDUFA date: June 30, 2025 for avutometinib + defactinib
Esperion: The Full Transaction Lifecycle (2019-2024)
Oberland's $200 million RIPA with Esperion Therapeutics (NASDAQ: ESPR) demonstrates the complete lifecycle:
| Tranche | Amount | Trigger | Date |
|---|---|---|---|
| Initial | $125M | Closing | June 2019 |
| Second | $25M | FDA approval of NEXLETOL | March 2020 |
| Third | $50M | Sales milestone | April 2021 |
| Total Funded | $200M | ||
| Repayment | $343.75M | Early termination | June 2024 |
Royalty Structure:
| Sales Level | Royalty Rate | Step-Down Conditions |
|---|---|---|
| Base | 2.5-7.5% | — |
| >$350M by Dec 2021 | 2.5% flat | Sales achievement |
| Full capital return by Dec 2024 | 0.4% | Return + sales thresholds |
The June 2024 repayment at $343.75 million – funded by a royalty sale to OMERS Life Sciences – represented approximately 172% return on the $200 million funded, consistent with the 200-225% cap.
How Revenue Interest Purchase Agreements Actually Work
Oberland's RIPAs represent a hybrid between traditional royalty and debt financing. Understanding the mechanical structure illuminates why these instruments appeal to both companies and investors.
RIPA Structure Comparison
| Feature | Traditional Debt | RIPA | Perpetual Royalty |
|---|---|---|---|
| Payment timing | Fixed schedule | Tied to sales | Tied to sales |
| Interest rate | Fixed or floating | N/A (% of revenue) | N/A (% of revenue) |
| Principal repayment | Required | Via royalty cap | Never |
| Upside participation | None | Capped | Unlimited |
| Downside protection | Company assets | Specific product IP | Specific product IP |
| Term | Fixed maturity | Until cap reached | Perpetual or patent life |
Key Structural Elements
Capital Deployment:
- Companies receive large upfront payments (typically 50-80% of commitment)
- Additional milestone tranches tied to regulatory approvals, clinical events, or sales thresholds
- Front-loading provides immediate capital while aligning future payments with commercial success
Payment Mechanics:
- Percentage of product net sales – typically single-digit royalties (2.5%-10%)
- Rates may vary based on pre- versus post-approval status
- Geographic scope defined (often global ex-China or specific territories)
- Payments flow quarterly based on actual sales
Return Caps:
- Unlike perpetual royalties, payments capped at predetermined multiple of investment (typically 175%-225%)
- Once achieved, all rights revert to company
- ImmunityBio: 195% by 12th anniversary
- Esperion: 200-225%
Security Arrangements:
- Senior security interests in specified assets
- Royalties, license agreements, intellectual property, accounts receivable
- Covenant packages restrict additional liens, indebtedness, M&A transactions, asset sales
- Put options allow termination upon bankruptcy, material breach, or change of control
Illustrative RIPA Economics
| Scenario | Investment | Royalty Rate | Annual Sales | Annual Payment | Years to Cap | Total Return |
|---|---|---|---|---|---|---|
| Base Case | $200M | 5% | $400M | $20M | 10 | $200M (100%) |
| Upside | $200M | 5% | $800M | $40M | 5 | $200M (100%) |
| Cap Applied | $200M | 5% | $1.2B | $60M | 7.5 | $450M cap (225%) |
| Downside | $200M | 5% | $100M | $5M | 40+ | Capped over time |
Portfolio Outcomes: From $7 Billion Exits to Bankruptcy Navigations
Impact Biomedicines: The Signature Exit
The Impact Biomedicines investment represents Oberland's defining success story:
| Event | Date | Details |
|---|---|---|
| Impact founded | 2016 | Acquired fedratinib (JAK2 inhibitor) from Sanofi |
| Series A | 2016 | ~$22M from Medicxi |
| Oberland financing | October 2017 | ~$90M structured financing |
| Celgene acquisition announced | January 2018 | Up to $7 billion |
| Celgene upfront | January 2018 | $1.1 billion |
| Regulatory milestones | Potential | Up to $1.25 billion |
| Sales milestones | Potential | Up to $4.5 billion (if >$5B annual) |
| FDA approval (Inrebic) | August 2019 | Myelofibrosis indication |
The timeline – just three months from Oberland investment to Celgene acquisition announcement – demonstrates exceptional returns on the structured financing.
Navigating Portfolio Company Distress
Melinta Therapeutics:
- Filed Chapter 11 in December 2019
- Deerfield Management as primary secured creditor ($140M)
- Deerfield exchanged claims for 100% equity of reorganized company (April 2020)
- Remains listed on Oberland's portfolio page
- Reflects structural challenges in antibiotics sector despite FDA approvals
Invitae:
- Filed Chapter 11 in February 2024
- Approximately $1.5 billion in total debt (primarily SoftBank's $1.2B convertible)
- Labcorp acquired through bankruptcy court-supervised sale (August 2024)
- Oberland's recovery undisclosed; secured positioning typically provides better outcomes
Current Portfolio Status Summary
| Company | Status | Key Update |
|---|---|---|
| Biohaven | Active | Awaiting FDA decision on troriluzole |
| ImmunityBio | Active | Anktiva FDA approved April 2024; commercializing |
| Verastem | Active | PDUFA date June 30, 2025 |
| ClearPoint Neuro | Active | Expanding cell/gene therapy delivery platform |
| BillionToOne | Active | IPO'd November 2025 at $60/share |
| Humacyte | Active | Advancing toward FDA BLA filing |
| Esperion | Repaid | $343.75M repayment June 2024 |
| Zealand Pharma | Repaid | Early termination May 2023 |
| Impact Biomedicines | Exited | Celgene acquisition January 2018 |
The Competitive Landscape: Positioning Against $20 Billion Giants
The life sciences royalty and structured finance market has expanded significantly, with approximately $29.4 billion in transactions from 2020-2024 – more than the entire 2015-2019 period. The 2025 market is annualizing at $5.42 billion with average deal sizes of $226 million.
Healthcare Royalty & Credit Market Participants
| Firm | AUM/Market Cap | Primary Focus | Typical Deal Size | Key Differentiator |
|---|---|---|---|---|
| Royalty Pharma (RPRX) | ~$20B market cap | Pure royalty acquisition | $100M-$2B+ | Largest, oldest player (1996) |
| HealthCare Royalty Partners (KKR) | ~$3B AUM | Royalties + credit | $50M-$500M | KKR acquired July 2025 |
| Blackstone Life Sciences | $12B+ deployed | Strategic partnerships | $100M-$750M | Pharma mega-partnerships |
| BioPharma Credit PLC (LSE: BPCR) | ~$1.1B | Senior secured debt | $50M-$350M | London-listed, public liquidity |
| Oberland Capital | ~$3.5B AUM | Flexible hybrid structures | $50M-$600M | Structural creativity, mid-market focus |
| DRI Healthcare (TSX: DHT.UN) | $3B+ deployed | Royalty acquisitions | $50M-$180M | Canadian-listed income trust |
| XOMA Royalty (NASDAQ: XOMA) | 120+ assets | Early-stage royalties | $5M-$30M | Phase 1/2 focus, milestone-based |
| OrbiMed | $17B platform | Multi-strategy | $50M-$300M | Royalty & Credit Fund V: $1.86B |
The KKR/HCRx Combination: A Formidable Competitor
In July 2025, KKR announced strategic acquisition of HealthCare Royalty Partners (HCRx), marking significant sector consolidation. Per KKR: "Royalty and royalty-related debt financing represents less than 5% of total biopharma capital needs today and remains largely underpenetrated."
| HCRx Metrics | Value |
|---|---|
| AUM | ~$3 billion |
| Total deployed since 2006 | $7+ billion |
| Products funded | 110+ |
| New owner | KKR (majority stake) |
| Strategic rationale | Global Atlantic insurance capital access |
This KKR backing provides HCRx with dramatically expanded capital markets capabilities, creating Oberland's most direct competitor.
Oberland's Competitive Positioning
| Dimension | Oberland Advantage |
|---|---|
| Structural Flexibility | Offers royalties, RIPAs, secured notes, project finance, hybrid instruments vs. competitors' narrower approaches |
| Sector Breadth | Includes medical devices and diagnostics; Royalty Pharma is biopharma-only |
| Mid-Market Focus | $50-300M sweet spot falls below Royalty Pharma's minimum but remains meaningful for growth companies |
| Scientific Expertise | Multiple PhDs, former pharma executives enable direct clinical data evaluation |
| Speed and Creativity | Smaller team enables faster structuring of customized transactions |
Why the 2024-2025 Market Makes Alternative Financing Essential
The biotech financing environment creates structural demand for Oberland's capital:
The Cash Runway Crisis
| Metric | 2021 | 2024 | Source |
|---|---|---|---|
| Biotechs with <1 year cash | 31% | 37%+ | EY |
| Biotechs with <2 years cash | ~40% | 50%+ | EY |
| Biotechs with 5+ years cash | 24% | 18% | EY |
IPO Market Dynamics
| Year | Biopharma IPOs | Capital Raised | Trading Performance |
|---|---|---|---|
| 2023 | ~30 | $5.1B | Mixed |
| 2024 | 50 | $8.52B | 8 of 30 above offering price |
| 2025 (Nov YTD) | ~10 | — | Pace slowing |
The Patent Cliff Driving M&A
| Drug | Company | Revenue at Risk | Patent Expiration |
|---|---|---|---|
| Keytruda | Merck | $29B (40% of pharma rev) | 2028 |
| Opdivo | BMS | $9B+ | 2028 |
| Eliquis | BMS/Pfizer | $12B+ | 2026-2028 |
| Total at risk through 2030 | $200-400B |
This patent cliff drives aggressive M&A – but acquirers want de-risked, clinical-stage assets. Oberland financing helps companies reach those inflection points.
Biotech Sector Valuation
The XBI biotech ETF and broader healthcare sector trade at approximately 30% discount to the broader market – one of the most significant de-ratings in 35 years. This valuation compression makes equity raises extremely expensive for companies, increasing demand for non-dilutive alternatives.
Inside the Deal Mechanics: IP Collateralization and Bankruptcy Remoteness
Oberland's legal structures employ sophisticated techniques from project finance and securitization:
Security Interest Framework
| Asset Class | Protection Mechanism |
|---|---|
| Patents | USPTO recordation, security interest filings |
| Royalties | Assignment or security interest in payment streams |
| License Agreements | Consent rights, assignment provisions |
| Accounts Receivable | Blanket lien, proceeds capture |
| After-Acquired Property | Automatic capture clauses |
Bankruptcy-Remote Structures
Industry-standard approaches isolate financial risk:
| Element | Purpose |
|---|---|
| Special Purpose Vehicle (SPV) | Holds royalty rights separate from operating company |
| Independent Director | Required consent for bankruptcy filing |
| True-Sale Opinion | Confirms asset transfer (not merely pledge) |
| Non-Petition Covenant | Creditors agree not to force SPV bankruptcy |
| Limited Purpose Provisions | SPV can only engage in specified activities |
Subordination and Intercreditor Arrangements
The ImmunityBio deal illustrates subordination mechanics:
- Nant Capital's existing ~$505M in promissory notes subordinated to Oberland
- Intercreditor agreement defines priority of claims
- Oberland's RIPA receives first claim on product revenue
Legal Advisors and Deal Counsel
Fund Formation
| Counsel | Funds | Key Partners |
|---|---|---|
| Ropes & Gray LLP | Fund II, Solutions, Fund III | Marc Biamonte, Dan Kolb, Seth Piken |
Portfolio Transaction Counsel
| Firm | Role | Example Transactions |
|---|---|---|
| Cooley LLP | Oberland counsel | Biohaven, ClearPoint Neuro |
| Covington & Burling LLP | Company counsel | Biohaven, ClearPoint Neuro, Humacyte |
| Wilson Sonsini | Company counsel | ImmunityBio |
| Jefferies LLC | Financial advisor | ImmunityBio |
Red Team vs. Blue Team: Evaluating Oberland's Model
Blue Team (Optimist) – Why Oberland's Strategy Shines
Non-Dilutive Lifeline: From a biotech company's perspective, Oberland is a savior that provides vital runway without diluting ownership. As Oberland's own partners emphasize, they pride themselves on offering "an attractive, non-dilutive source of capital" to help companies advance important new therapies. In practical terms, this means a company can fund trials or product launches and still have the full upside if those efforts succeed – equity holders' percentage ownership remains intact.
Aligned with Milestones – Boosting Confidence: Oberland's financings are typically aligned with the company's milestones (e.g., tranches tied to FDA approval or sales targets), which sends a positive signal to the market. Investors often welcome Oberland's involvement as a validation of an asset's quality and the company's prospects. For example, when Biohaven announced Oberland's $600 million funding deal, shares jumped ~10% – a sign that shareholders appreciated the endorsement.
Predictable Returns for Investors (LPs): From the perspective of Oberland's own investors (the pensions, endowments, etc.), the model offers attractive, more predictable returns relative to traditional biotech venture capital. By focusing on products with real revenue potential and structuring deals to have first claim on cash flows, Oberland generates steady royalty or interest income even if equity markets are volatile. The firm's exclusive focus on serious, high-need diseases also means they are backing products that, if successful, will likely have durable demand.
Red Team (Skeptic) – Risks and Caveats to Consider
High Cost of Capital: The flip side of "non-dilutive" is that Oberland's money is expensive. A skeptical view is that these deals, while avoiding immediate dilution, siphon off a significant portion of future revenues, which can hamstring the company later. For instance, Biohaven agreed to pay "tiered single-digit royalties on global net sales for up to 10 years" as part of Oberland's deal. That means if troriluzole succeeds, a meaningful chunk of its sales for the next decade goes to Oberland.
Complexity and Covenants – Strings Attached: Oberland's financings come with heavy structuring and covenants, which can be a double-edged sword. In a best-case scenario, those structures protect both parties – but if things start to go wrong for the company, the strict terms might accelerate the downfall. The red team would point out that having senior secured debt and royalty obligations increases the fixed burden on a biotech. If the clinical trial fails or approval is delayed, the company could find itself owing money it cannot pay.
Sharing the Upside and Impact on Exit: Even in successful outcomes, a red-team analyst might argue that Oberland's involvement crimps some upside that would otherwise accrue to shareholders or an acquirer. Because the royalty/notes are usually capped at a multiple, if a drug turns into a mega-blockbuster, the company will eventually buy out Oberland by reaching that cap – but until then, the payments act like a drag on cash flow.
Summary: Neither Good nor Bad, but Powerful
| Consideration | Blue Team View | Red Team View |
|---|---|---|
| Dilution | Avoided entirely | Future earnings diluted via royalties |
| Cost of Capital | Acceptable for runway | Expensive over product life |
| Covenants | Appropriate protection | Restrictive in distress |
| Exit Impact | Bridge to higher valuation | Acquirer must buy out obligation |
| Downside | Senior security protects Oberland | Company still bears execution risk |
Conclusion: The Architect of Biotech Capital Stacks
Oberland Capital's model is a sophisticated tool in the biotech financing toolkit – neither inherently good nor bad, but powerful. Blue team optimists see it as a brilliant way to fund innovation without killing the equity goose that may later lay the golden eggs, leveraging structured finance to everyone's benefit. Red team skeptics caution that the golden eggs don't come free – some of the gold is pre-sold to Oberland, and if the eggs don't hatch, you're left with a heavy obligation.
As we spotlight Oberland this week, it's clear that they exemplify the "capital stacking" approach: stacking debt, royalty, and equity layers to build a bridge for biotechs to cross the valley of death. Whether that bridge leads to a blockbuster payday or adds weight on a shaky foundation depends on the situation. But one thing is for sure – in 2025's biotech landscape, Oberland Capital has become a key architect of deals, quietly shaping the fate of drugs and companies from behind the scenes.
For institutional investors seeking healthcare exposure with income-like characteristics, the firm has delivered consistent fund raises and portfolio execution across market cycles. For biotech companies facing capital constraints but holding promising clinical assets, Oberland offers a differentiated value proposition: patient capital, flexible structures, deep domain expertise, and alignment through milestone-based funding and capped returns.
In a sector where more than a third of public companies face existential cash crunches, Oberland Capital has positioned itself as an essential – and increasingly sought-after – source of alternative financing. And for that, they've earned a reputation as one of the most innovative and important funding partners in the industry, turning financial theory into practice one structured deal at a time.
Disclaimer: I am not a lawyer or financial adviser. This article does not constitute investment advice, legal advice, or financial advice of any kind. All information presented here is derived from publicly available sources including SEC filings, press releases, and industry reports. Details of specific transactions may have changed since publication. Readers should conduct their own due diligence and consult with qualified legal and financial professionals before making any investment or business decisions.
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