MeiraGTx's (MGTX) $400 million strategic financing agreement with Oberland Capital provides a meaningful source of non-dilutive capital to support the development and potential commercial launches of its XLRP and xerostomia programs, RBC Capital said in a Tuesday note.

The brokerage said the royalty financing is only minimally accretive to its financial model but viewed the transaction positively because it strengthens MeiraGTx's cash position.

RBC also said Oberland's willingness to provide at-risk synthetic royalty financing before any of the company's programs receive regulatory approval represents external validation of MeiraGTx's late-stage pipeline.

According to the report, the agreement features a relatively low 1.95% royalty rate and a capped repayment structure, which compares favorably with similar royalty financing transactions in the biotechnology sector.

RBC maintained its outperform rating on the stock and raised its price target to $26 from $25.

MeiraGTx shares were down 6.2% in Wednesday trading.

Price: 13.72, Change: -0.95, Percent Change: -6.45