Momenta Pharmaceuticals, Inc. (MNTA)

[DewDiligence]

Re: More settlement musings

Which is why settlement is expected…there could be a negotiated delay, which would, in theory, run afoul of the FTC. I could see Momenta lowering its requested royalty for this concession, if they thought they could get away with it. According to Dew, the FTC has had difficulties in breaking such agreements, so maybe they could. To account for this, the royalty rate once Amphastar is made to launch by the FTC (should this happen) could be prospectively scaled according to how long that legal wrangle takes.

The FTC will surely make noise if there is a settlement with a delayed launch, but I don’t think the FTC’s actions will affect the legality of the settlement provided that the delay is not longer than about two years (see discussion below).

…I'm thinking the terms might be more like a 10% royalty.

I’m predicting that a settlement, if there is one, will include both a significant delay in Amphastar’s launch and a ~20% MNTA royalty on Amphastar’s sales (#msg-67801477, #msg-67891472). The only way MNTA would settle for a paltry 10% royalty, IMO, is if Amphastar’s launch were delayed considerably longer than two years. Although I don’t expect the FTC’s opposition to a delayed launch to gain traction in court, the longer the delay to Amphastar’s launch, the stronger the FTC’s ammunition. If the delay in Amphastar’s launch runs for approximately two years, the delay will not be materially longer than the time it would probably take to litigate the case (including an appeal), which undermines the FTC’s notion that such a settlement is anti-competitive.