Replies to post #187841 on Biotech Values

[DewDiligence]

BMY acquires option on Bavarian Nordic’s Prostvac program:

http://finance.yahoo.com/news/bristol-myers-squibb-signs-exclusive-063202297.html

Under terms of the agreement, Bavarian Nordic will receive an upfront payment of $60 million.

Bristol-Myers Squibb can exercise the option in its sole discretion within a designated time after data is available from the ongoing Phase 3 trial. Bavarian Nordic would be entitled to a payment of $80 million upon exercise of the option plus additional incremental payments starting at $50 million, but with a potential to exceed $230 million should the median overall survival benefit of PROSTVAC exceed the efficacy seen in Phase 2 results.

Furthermore, Bavarian Nordic could receive regulatory milestone payments of $110 million, up to $495 million in sales milestones as well as tiered double-digit royalties on future sales of PROSTVAC. The parties have also agreed to enter into a supply contract, under which Bavarian Nordic will undertake the future commercial manufacturing of PROSTVAC.

I don’t think I’ve ever seen a milestone payment that’s contingent on the median value of any clinical-trial Perhaps that’s not the case here either—i.e. the PR could be mistaken and the milestone payment may actually be contingent on the OS hazard ratio in phase-3 relative to phase-2.

See #msg-111132953 for related info on Prostvac.