Value Microcaps Motherboard

[Bobwins]

I have a call into IR to ask about the derivative issue. Also found that Vphm owes Lilly 50% royalty on all sales from 44 to 65 million. That is going to put a $10.5million damper on q3&4. I was coming up with a buck by increasing the sales over the company guidance. They may have purposely lowballed the gross revs to take this extra royalty payment into account. Bobwins




We paid Lilly an upfront cash payment of $116.0 million. In addition, we will pay Lilly royalties on annual net sales of Vancocin as set forth below:




2005 50% royalty on net sales between $44-65 million
2006 35% royalty on net sales between $46-65 million
2007 35% royalty on net sales between $48-65 million
2008 through 2011 35% royalty on net sales between $45-65 million



No royalties are due to Lilly on net sales below or above the net sales levels reflected in the above table. We will account for the future royalty payments as contingent consideration and will record an adjustment to the carrying amount of the related intangible asset and a cumulative adjustment to the intangible amortization upon achievement of the related sales milestones. Accordingly, during the first quarter of 2005, no royalty payments were due to Lilly and there was no impact on our operating results or financial position.