Biotech Values

[DewDiligence]

Additional granularity on ENTA’s partnership economics with ABBV:

Here’s an excerpt from #msg-89280314 (posted in Jun 2013):

On ABT-450, ENTA is eligible to receive $195M in pre-commercialization milestones (of which an undisclosed portion is for NDA filings and the rest is for regulatory approvals) and a double-digit royalty on worldwide sales. (ENTA already received $57M up-front and $55M in clinical-development milestones from ABBV.) ABBV funds all clinical development and commercialization expenses for ABT-450 worldwide.

Based on today’s Morgan Stanley webcast, there are two additional details we can add:

1) The $195M of pre-commercial milestones on ABT-450 payable by ABBV to ENTA consists of $40M for NDA/MAA submissions and $155M for marketing approvals. The $40M and $155M figures are further divided by geography; the overwhelming proportion of each amount is presumably attributable to the US and EU, with a lesser proportion for Japan, and (presumably) much lesser proportions for such countries as Canada, Australia, Switzerland, and emerging markets.

2) ENTA’s royalty on sales of ABBV’s ABT-450-based regimen will be tiered based on product sales in the same manner as IRS tax brackets. The lowest royalty rate is in the low teens, and the highest royalty rate is approximately 20%. The royalty applies to the proportion of value ABT-450 is deemed to contribute to the overall treatment regimen, which I estimate to be 35% for the regimen* ABBV is testing globally for genotype-1 patients. (It matters little whether ribavirin is included in this cocktail since ribavirin is available in all countries as a cheap generic.) For the ABT-450/r + ABT-267 regimen that ABBV plans to test in Japan for genotype-1b (#msg-91870291), I estimate the ENTA’ royalty will apply to 50% of the overall sales.

The information in #msg-89280314 regarding ENTA’s partnership economics on ABT-493 (with ABBV) and EDP-239 (with NVS) remains unchanged.

*ABT-450/r, ABT-267, ABT-333, and possibly ribavirin.