Biotech Values

[acgood]

if sales of the AG tail off or go to zero, the threshold at which NVS’ Lovenox sales in a given launch year switch into 45%-profit-share mode (rather than royalty mode) also decreases

Have you obtained color on this from management or other sources? I am trying to reconcile your comment above, the language in the press release, and the language in the redacted license agreement.

From the press release:

Going forward, if the authorized generic is the only marketed generic Lovenox, at the start of each subsequent product year, Sandoz is obligated to pay to Momenta a 10-12% royalty on net sales of enoxaparin sodium until the contractual profit reaches $135.0 million. Thereafter, for the balance of the product year, Sandoz is obligated to pay Momenta a 45% profit share

1.7. "AVENTIS [**]". Aventis [**] means [*$135m**] Dollars (U.S.$[**]); PROVIDED, HOWEVER, THAT, if the Aventis [**] begins on a day after the first day of a Post-Launch Year, the Aventis [**] for the remainder of such Post-Launch Year shall equal the product of (a) the number of days between (and including) the date of such termination of the [*Sole generic period*] until the end of such Post-Launch Year, multiplied by (b) the quotient of (i) U.S.$[*$135m*] divided by (ii) 365 (ie, $99.1m for 10/5/2011** thru 6/30/2011).

*The language implies an inflexible dollar amount, not an amount that moves based on AG sales levels

**99.1/135 corresponds prorated 268 days (puts the SNY AG launch on or around 10/5/2011)

4.8.1 If the [*Sole Generic Period*] Period (i) terminates because there is [*An authorized generic on market*], or (ii) never existed as a result of [**]; then (subject to the provisions of Section 4.9) thereafter until such time as there is [**] (the "Aventis [**]"), at which time the provisions of Section 4.6 or Section 4.7, as applicable, shall govern, Sandoz shall pay the Post-[*third party generic entrant*] Royalty during each Post-Launch Year (or portion thereof) until such time as the total Profits for the Product in the U.S. Territory for such Post-Launch Year (or portion thereof) equal the Aventis [**]($135m), and thereafter, solely with respect to any Profits exceeding the Aventis
[**]($135m), during the remainder of such Post-Launch Year, Sandoz shall pay Momenta the Profit Interest (45%) with respect to such excess. The Aventis [**] shall automatically terminate upon the existence of [*third party generic entrant*] in the U.S. Territory and the provisions of this Section 4.8 shall not apply thereafter.
4.8.2 The amounts payable under Section 4.8.1 shall be adjusted pursuant to SCHEDULE 4.3***

*** The Schedule 4.3 pertains to the "true-up" accounting between Sandoz and MNTA for cost-sharing, no mention of any SNY sales figures.

I don't see anything from all this that suggests the $135m is flexible year to year.