Replies to post #129384 on Biotech Values

[mcbio]

Yes on the first question.

The answer to the second question is technically no, but is yes from a practical standpoint. I.e. the “hybrid” economics in the NVS-MNTA Lovenox agreement remain permanently in effect once an AG has been launched; however, if sales of the AG tail off or go to zero, the threshold at which NVS’ Lovenox sales in a given launch year switch into 45%-profit-share mode (rather than royalty mode) also decreases, which has the effect of increasing MNTA’s net take.

Thanks DD. Makes sense and makes the decision on the PI all the more important IMO.

[acgood]

if sales of the AG tail off or go to zero, the threshold at which NVS’ Lovenox sales in a given launch year switch into 45%-profit-share mode (rather than royalty mode) also decreases

Have you obtained color on this from management or other sources? I am trying to reconcile your comment above, the language in the press release, and the language in the redacted license agreement.

From the press release:

Going forward, if the authorized generic is the only marketed generic Lovenox, at the start of each subsequent product year, Sandoz is obligated to pay to Momenta a 10-12% royalty on net sales of enoxaparin sodium until the contractual profit reaches $135.0 million. Thereafter, for the balance of the product year, Sandoz is obligated to pay Momenta a 45% profit share

1.7. "AVENTIS [**]". Aventis [**] means [*$135m**] Dollars (U.S.$[**]); PROVIDED, HOWEVER, THAT, if the Aventis [**] begins on a day after the first day of a Post-Launch Year, the Aventis [**] for the remainder of such Post-Launch Year shall equal the product of (a) the number of days between (and including) the date of such termination of the [*Sole generic period*] until the end of such Post-Launch Year, multiplied by (b) the quotient of (i) U.S.$[*$135m*] divided by (ii) 365 (ie, $99.1m for 10/5/2011** thru 6/30/2011).

*The language implies an inflexible dollar amount, not an amount that moves based on AG sales levels

**99.1/135 corresponds prorated 268 days (puts the SNY AG launch on or around 10/5/2011)

4.8.1 If the [*Sole Generic Period*] Period (i) terminates because there is [*An authorized generic on market*], or (ii) never existed as a result of [**]; then (subject to the provisions of Section 4.9) thereafter until such time as there is [**] (the "Aventis [**]"), at which time the provisions of Section 4.6 or Section 4.7, as applicable, shall govern, Sandoz shall pay the Post-[*third party generic entrant*] Royalty during each Post-Launch Year (or portion thereof) until such time as the total Profits for the Product in the U.S. Territory for such Post-Launch Year (or portion thereof) equal the Aventis [**]($135m), and thereafter, solely with respect to any Profits exceeding the Aventis
[**]($135m), during the remainder of such Post-Launch Year, Sandoz shall pay Momenta the Profit Interest (45%) with respect to such excess. The Aventis [**] shall automatically terminate upon the existence of [*third party generic entrant*] in the U.S. Territory and the provisions of this Section 4.8 shall not apply thereafter.
4.8.2 The amounts payable under Section 4.8.1 shall be adjusted pursuant to SCHEDULE 4.3***

*** The Schedule 4.3 pertains to the "true-up" accounting between Sandoz and MNTA for cost-sharing, no mention of any SNY sales figures.

I don't see anything from all this that suggests the $135m is flexible year to year.