Biotech Values

[DewDiligence]

Re RGEN:

>> Do they [RGEN] have a microscopic valid suit against IMCL? <<

swampboots: Does your use of the word microscopic refer to the size of the potential judgment or settlement?

I’m not in a good position to assess probabilities here because I haven’t seen the briefs filed with the Court. Shooting from the hip, I would caution that RGEN needs a four-legged parlay: first, get the expired patent extended; second, prevail on the merits; third, beat back an appeal; and fourth, stay in business long enough to collect.

Say the probability of the first parlay leg is 70%, the second leg 40%, the third leg 80%, and the fourth leg 90%. Then the probability of a successful outcome for the whole parley is: .7x.4x.8x.9=20%. Hence, at some unspecified date, there’s perhaps a 20% chance that RGEN will collect some unspecified amount of money from IMCL, of which part may be claimed by MIT. In the interim, there are legal expenses to be paid. How much is all that worth when discounted into a present-value figure? Probably, not much.

Of course, investors might get a nice payday from a quick lower-court judgment or settlement, but the bottom line is that I probably wouldn’t buy RGEN based on this rationale.

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For background, this is what is says in RGEN’s latest 8K filing:

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Repligen Corporation and The Massachusetts Institute of Technology (MIT) have filed an action for patent infringement against ImClone Systems, Inc. for infringement of United States Patent No. 4,663,281 based on Imclone's manufacture and sale of the recently-approved cancer drug Erbitux(R). The technology, which was developed and patented by MIT, covers certain genetic elements ("DNA enhancers") that increase protein production in a mammalian cell. Repligen is the exclusive licensee of MIT for this patent. Repligen and MIT believe that the cell line, which is used to manufacture Erbitux(R), was developed by Damon Biotech, a predecessor of Repligen, in 1990 for the National Cancer Institute and uses the technology which is the basis of the patent. Repligen and MIT have filed an application for patent term extension for United States Patent No. 4,663,281, which expires on May 5, 2004.
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