12:57 PM EDT, 07/02/2024 (MT Newswires) -- DRI Healthcare Trust acquired a second royalty stream in Xenpozyme from HLS Therapeutics, notes National Bank.

This investment is DHT's second royalty stream on Xenpozyme, with the first US$30 million transaction (with another US$26.5 million in potential milestone payments) racking up US$1.1 million in royalty income in the five quarters since. As the drug was only approved in Japan, the EU and the U.S. in 2022, National Bank expects sales to continue ramping up over the 14 years remaining on the patent.

The dip back into Xenpozyme continues the trust's year-long streak of re-investing in drugs on which it already has royalty streams, says analyst Zachary Evershed. "While this practice increases revenue concentration, as we see just under 30% of royalty revenue coming from Omididria next year, and just under 20% from Orserdu, the trust gains operating leverage on extensive due diligence already completed for each subsequent investment." In this case, concentration is not a concern as Evershed expects Xenpozyme will continue to account for only a low- to mid-single-digit percentage of royalty income in the coming years.

DRI Healthcare is rated Outperform, with a $23.50 target.

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