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Saturday, October 29, 2011 4:25:22 PM
It is possible I think. In scenario you describe the trigger(to royalty switch/hybrid mode) has really not happened because AG never really had any sale or sale and immediate subsequent retraction was insignificant so as to trigger a royalty/hybrid mode switch as originally intended in the contract. So it is possible in the scenario of retraction, MNTA may negotiate in good faith with Sandoz on this contractual issue.
Remember not everything written in contract can literally be interpreted. So the 2 parties can interpret a contract and suggest the intent of some language in the contract(in this case the trigger) really meant when a AG permanently comes to market or is meaningfully launched in the market.
I am not a lawyer but I know there is something like "Good Faith Clause"(see below) in contract agreements.
Let us see what happens here.
Here was IR reply when I had asked the question early last week
Question: If Momenta gets PI against Ampha and if Sanofi withdraws AG within the next week, is it possible that you go back to "Contractual profitshare" mode then ?
Answer: The contract doesn’t have a provision for the scenario you suggest so we are going to remain in hybrid mode unless an additional generic enters the market.
Good Faith:
A good faith agreement clause in a contract states that both parties will uphold the terms of the contract and that if for some reason they cannot, they will work together in good faith to come to mutually beneficial terms of agreement.
( PS: I am also not sure if retraction of AG is given esp if Sanofi believes that another generic may enter the market in a year's time via settlement or trial decision?? I don;'t think they would need such a long lead time for AG uptake.)
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