royalties from Vitropin could add up very quickly for us AND make us net inc positive imo
"Vitro Diagnostics, Inc., (the “Company” or “Licensor”) announced that effective March 30, 2011, it entered into a Technology License, License Option and Technical Assistance Agreement (“License Agreement”) with James T. Posillico, Ph.D. (“Licensee”) granting Licensee an exclusive license covering two of the Company’s patents: United States Patent Number 5,990,288, Method for Purifying FSH and United States Patent Number 6,458,593 B1, Immortalized Cell Lines and Methods of Making The Same. The patents are related to treatment of infertility and know-how relating to the commercial production and cellular generation of the hormone, follicle-stimulating hormone and related gonadotropin hormones for use in the treatment of infertility in both humans and animals. In addition, the License grants the exclusive option to license a pending patent application for the commercial production of clinical grade gonadotropin hormones and, in addition, the Company’s intellectual property related to generation of crude materials containing gonadotropin hormones from certain cellular sources. The License has a term of five (5) years; however, the License can be terminated after two and one-half years if there have been no sales of Licensed Products.
In consideration of the rights and licenses granted Licensee paid the Company a non-refundable payment of $200,000 (“License Fee”). The Licensee was previously an executive officer of the Company, and the Company has carried a $200,000 liability for unpaid compensation due to the Licensee, which was forgiven in satisfaction of the License Fee. In addition there shall be a royalty payment of three percent (3%) of the Gross Sales of all Licensed Products made, used, sold, offered for sale, imported, leased, or otherwise transferred by or on behalf of Licensee (“Royalty Payment”) during the first year following sales of Licensed Product. Such Royalty Payment shall be 4% of the Gross Sales of all Licensed Products during the second year of sales of Licensed Product. Such Royalty Payment shall be 4.5 % of the Gross Sales of all Licensed Products during the third year of product sales and shall remain at this level throughout the remaining term of the agreement. "
"Since the market for pharmaceutical treatment of infertility is estimated to be quite substantial, capture of even a small portion of the total market can have a positive impact to the Company's financial position since royalty income is largely transferred to net income because of minimal associated expenses"
assume year 1:
$ 1,000,000 annual sales at 3% we get: $ 30,000
$ 10,000,000 annual sales at 3% we get: $ 300,000
$100,000,000 annual sales at 3% we get: $3,000,000
not bad considering our current revs
... and what happens in 2016 when the license term expires? Do we get said product rights back? Renegotiate and extend?
AND are we still waiting to hear from the FDA on approval?
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All posts are strictly my opinion and are not buy or sell recommendations.
