As a condition to receiving FTC clearance to complete the reverse merger in the United States, Schering-Plough agreed to divest a part of its cancer research candidates program, so that the same would not be automatically shelved, by potentially-competing research programs, then underway at Merck. The buyer of those Schering-Plough assets was Opko Health. Specifically, Opko purchased Schering-Plough's Neurokinin Receptor Antagonist Research programs, the lead candidate of which is Rolapitant.
In an SEC Form 10-Q filed today, Opko disclosed (at pages 17 and 18) that it agreed to pay only $2 million at closing for the assets; but may potentially pay another $27 million, if various research milestones are acheived. In other words, Opko got a great deal:
. . . .On October 12, 2009, we entered into an asset purchase agreement (the “Schering Agreement”) with Schering-Plough Corporation (“Schering”) to acquire assets relating to Schering’s neurokinin-1 (“NK-1”) receptor antagonist program. Under the terms of the Schering Agreement, we will pay Schering $2 million in cash upon closing and up to an additional $27 million upon certain development milestones. Rolapitant, the lead product in the NK-1 program, recently completed Phase II clinical testing for prevention of nausea and vomiting related to cancer chemotherapy and surgery, and other indications. Phase I clinical testing has also been initiated for a second compound in the same class. . . . .
For a cancer compound in very late-stage Phase II trials, $2 million is a stone-cold steal. $29 million, all in (if all milestones are met) -- is a still an extremely handsome bargain. Word.
5 comments:
calling it a bargain implies that it was something of value.
calling it a late-phase cancer therapy is somewhat misleading. That's like calling bandaids a cardiovascular/hematologic medical device.
Interestingly, yours would be more plausible if we did nit already know that the FTC required it's divestiture.
FTC's minimum standard here, if memory serves, and my math is sound -- would work out to a minimum value of $50 million, before it even hit FTC's radar screen -- on Hart Scott review.
While it is true that it is not a cancer therapy, proper -- but reduces nausea associated with cancer therapies -- it is likely to be a drug with more than $100 million in market potential -- otherwise Schering-Plough would not have funded it to completion of Phase II trials.
Is it a billion dollar-plus blockbuster? No, clearly not. But it is certainly worth in excess of $50 million, and perhaps close to $250 million, at a two times expected annual sales valuation. Do stop back, to offer any countervailing facts you might possess, here Anonymous.
Namaste
Odd -- the iPhone went on a multi-post jag just now. So sorry -- I deleted the serial postings.
I also see that my auto-correct on the tiny keypad helped me out with several unintended typos. And I made a few of my own, all by myself.
But I think you get the gist -- FTC doesn't require divestiture of worthless assets; Schering-Plough wouldn't likely have paid perhaps $300 million to get the candidate through Phase II trials, if it were not atleast a $250 million per year potential drug.
Please show me my logical or factual errors, here. My typos, on the other hand, are legion.
Namaste
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