Replies to post #11952 on GTC Biotherapeutics (fka GTCB)

[DewDiligence]

The rationale for the deal is that Ovation has an established hospital salesforce for acute-care drugs in general and hematology in particular. These are the marketed products listed on the company’s website:

http://www.ovationpharma.com/products.php

HOSPITAL
Chemet®
Cogentin®
Indocin® I.V.
Intravenous Sodium Diuril®
NeoProfen®

HEMATOLOGY/ONCOLOGY
Cosmegen® for Injection
Elspar®
Mustargen®
Panhematin®

Although the fit between the companies looks good, the scant $5M in deal payments that GTC expects in 2008 is disappointing, IMO.



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[palindromy]

It could have been a lot worse.
I assume the 2m remaining in 2008 will be paid on FDA acceptance of NDA.
Given that most people would have been surprised with anything higher than 6-7m upfront payment, I think a 5+4 structure is not so bad. In many ways it forces the company to also manage their expenses much better, but exposes it to a far greater risk from FDA actions. It seems like with reasonable cash management, the company may not need to raise additional money until the P2 results and FDA actions are out. Lets hope the PPS does not go past $1 which might entice the company to do more dilution.

[DewDiligence]

Deal post-mortem:

1. Although the total potential milestones are larger, the basic structure of the Ovation deal is similar to the structure of the Leo deal. Importantly, Ovation will pay for all US-related clinical development of ATryn from this point forward (except as noted in #5 below).

2. Ovation will not permit GTC to disclose how the remaining $248M ($257M total deal size less $9M of disclosed payments for HD indication) breaks down into clinical, regulatory, and sales milestones.

3. GTC will file an 8K with the SEC this week that includes the Ovation contract, but the detailed terms will be redacted.

4. Ovation appears to be more interested in the CABG/HR indication than in the DIC/sepsis indication because it can probably be brought to market more quickly by proceeding directly to phase-3. Ovation will likely seek an SPA for the CABG/HR indication, but not until the FDA approves ATryn for HD.

5. If Leo’s phase-2 data in DIC are compelling, Ovation may decide to pursue both CABG/HR and DIC. However, if Ovation opts out of pursuing DIC, GTC will be free to partner the DIC indication with another company.

6. Among the possible sources of additional cash for GTC during 2008 are one or more FoB deals. There are about half a dozen drugs with FoB potential (presumably mAbs) in which GTC has already developed founder animals.

Source: Tom Newberry (with additional color by yours truly).