mjbaker84 - I'll chime in as I've experienced this type of transaction before both within a company licensing in, licensing out as well as part of investment.
On a basic level - usually two tiers of revenue for a licensing agreement (which typically includes marketing, sales, distribution, etc. as well as purchase of goods from approved supplier)
* Licensing fees - value/magnitude structured to align with market size/geography, indication and sales potential. This is a one time fee though other arrangements can be made based on the product's progressin the approval lifecycle
* Royalties on sales - typically high single to low double digit % figure based on net sales and may also include milestone payments (reaching certain revenue tiers that result in additional one-time payments or higher royalty percentages to licensor
Usually these are strictly restricted by market/geography as well as indication. Of course, when partnering with a large entity who has well established presence and effective sales/distribution team in more than one market, covering broader physical geography with one contract is preferred.
Once a product is approved in one or more markets, physicians can typically prescribe off-label when the health authorities and payors allow. This can get sticky as these types of sales cross the targeted indication agreement and language needs to be put in place to exclude (or allow) for these cases on specific pre-arranged basis.
The company (CytoDyn in this case) also sets up a distributor to sell or make the product available to the licensee. This is one way to address the cross indication sales channels as anything sold outside of the licensed indication means revenue coming in through the distributor but not to the licensee (partner).
Last thing that comes to mind - many agreements with strong partners (capacity, financials, depth of knowledge, experience, etc.) also incorporate further product development activities ( = more investment by the partner) to broaden the coverage through additional trials and expansion of label.
In this case and using Covid as an example:
License for Covid Critical to Severe -->
Run trials and file for mild/moderate and then expand into mild/moderate -->
Complete trials for LH and if successful expand into LH
Doesn't have to happen this way but separating license agreements within the same indication is incredibly difficult and unwise (as in one partner sells Leronlimab to cover Critical/Severe and another handles LH).
Just a quick perspective on what is otherwise a complex set of agreements that traditionally take upwards of 6-9 months to work out.
MH
