DRI Capital, a Canadian healthcare investment firm, is in the market with a $450 million securitization of drug royalty payments, according to a presale report published by Standard & Poor’s.

S&P has assigned a preliminary ‘BBB’ rating to $180 million of class A-1 notes and $270 million of class A-2 notes. Both classes benefit from overcollateralization of 36.2% and have a final maturity of July 2023.

Bank of America and Goldman Sachs are the lead underwriters.

The collateral supporting the series 2014-1 issuance consists of 31 royalty streams on 14 patent-protected drugs.  According to the presale report, product concentration risk is relatively high, with the top three drugs--Stelara, Simponi, and Tysabri--representing approximately 24.9%, 19.1%, and 17.4%, respectively, of the aggregate discounted asset values of all assets as of the closing date.

Among other risks, S&P said the manufacturing and sale of the products could be impaired by if they are withdrawn from the market, or by product liability lawsuits, and loss of patent protection.

Drug prices could become also compressed due to changes in insurance reimbursements in major North American and European markets.

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