Agenus said today it has completed a $115 million royalty-based loan with an investor group led by Oberland Capital Management, with the biotech planning to use the net proceeds to advance its immuno-oncology programs.

Oberland Capital and Agenus have signed a Note Purchase Agreement that gives the biotech $100 million upon closing. In return, Overland Capital gains 100% of Agenus’ rights to global royalties on sales of GlaxoSmithKline’s (GSK’s) shingles (HZ/su) and malaria (RTS,S) prophylactic vaccines, pending repayment of all principal and interest on the loan.

If and when all principal and interest on the notes have been repaid, 100% of the remaining GSK royalty payments will revert back to Agenus.

Also under the transaction, Agenus receives an option for an additional $15 million following approval of HZ/su by the FDA, as long as such approval occurs no later than June 30, 2018. Agenus also has the option to buy back the loan at any time under prespecified terms.

“This financing allows us to monetize a significant share of the value of our QS-21 platform while allowing us to retain any upside remaining after the loan terms are satisfied,” Agenus chairman and CEO Garo Armen, Ph.D., said in a statement. “This transaction will provide non-dilutive funding towards executing on our strategic and operational goals.”

Under the agreement, principal and interest payments will only be made from royalties paid by GSK on the HZ/su and RTS,S vaccines. Both contain the QS-21 adjuvant, developed by Agenus in partnership with GSK and Janssen Sciences Ireland.

If the royalty payments made by end of the 12th year, or 10 years after the first commercial sale in a major market (the “make whole” date)—whichever is earlier—are less than the initial principal amount of the notes, Agenus will owe a “make whole” payment equal to the difference between the principal amount and any such royalty payments made through the make whole date.

The loan is secured only by the future royalties on the HZ/su and RTS,S vaccines. Notes issued under the Note Purchase Agreement will accrue interest at a rate of 13.5% per year, compounded quarterly.

Immediately before executing the Note Purchase Agreement with Oberland Capital, Agenus re-purchased from Ingalls & Snyder Value Partners and Ingalls’ Arthur Koenig their rights to receive 20% of all GSK royalties for $20 million cash, plus 300,000 shares of Agenus common stock. Ingalls has no further interest in any royalties associated with products containing QS-21.

The initial $100 million cash payment is expected to yield net cash proceeds to Agenus of approximately $78 million, including the $20 million payment to Ingalls. As of June 30, Agenus reported $139.6 million in cash, cash equivalents, and short-term investments.

Agenus focuses on discovery and development of novel checkpoint modulators, vaccines and adjuvants to treat cancer and other diseases.

Using its Retrocyte Display™ and SECANT® platforms—the latter acquired in April from Celexion for $4 million-plus—Agenus is working to discover and develop novel antibodies to target GITR, OX40, CTLA-4, LAG-3, TIM-3, PD-1, CEACAM1 and other undisclosed checkpoints in partnered and internal programs.