Replies to post #12100 on GTC Biotherapeutics (fka GTCB)

[ghmm]

I only heard part of the CC so I would appreciate if someone would clarify the effective royalty terminology. From what I heard this is the actual royalty + additional product margin only and not just COGS. Is this correct or is it COGS + margin so the true effective royalty is lower then the stated low 20's. TIA to anyone who can clarify.

[DewDiligence]

Re: Effective royalty rate in the Ovation deal

>I think effective royalty being in the low 20s is quite good considering the kind of bargaining position they were in.<

The effective royalty rate will be lower than the low 20’s (as a % of end-user sales) during the early years of ATryn commercialization in the US; this is because the royalty portion of the effective royalty is tiered according to sales thresholds specified in the contract between GTC and Ovation.

What Dr. Cox said at the annual meeting is that the effective royalty rate from Ovation averages out to a figure in the low 20’s over the 20-year life of the collaboration. In the early years of commercialization, the effective royalty will probably be in the high teens as a % of end-user sales (similar to the Leo collaboration); in the later years of the collaboration, the effective royalty rate will probably be in the mid to high 20’s, provided that ATryn sales are sufficient to push the royalty portion of the effective royalty into the highest tier.