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Strategies & Market Trends : BCRX: Target practice for shorts
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To: Wolff who wrote (57)8/27/1999 10:16:00 AM
From: Biomaven  Read Replies (2) of 96
 
I have no long or short position in BCRX (nor am I likely to any time soon).

do they even get royalties?

Of course they get royalties. You say you have been involved in a "lot of biopharma deals" - care to name a few examples where the biotech company licensed a compound to a big pharma and didn't get royalties?

If you look in the 10-K you'll see the contract with Ortho. Here's an extract:

4.4 In further consideration of the rights and licenses granted to ORTHO under
Article 2 of this Agreement, ORTHO shall pay to BIOCRYST on a country by
country and compound-by-compound basis in the Territory the following
royalties based on the cumulative annual Net Sales of all Licensed Products
containing a given Active Compound, including sales of Rx Licensed
Products, OTC Licensed Product and Licensed Product within combination
products containing such Active Compound:
...


Of course we don't know what the royalties are - it is standard practice to elide these numbers from the disclosures. However, the analysts almost always have a pretty good idea of the range of the royalties, so these are typically "open secrets" for anyone who has seriously researched a biotech. In this case, as is usual, they are a sliding scale depending on sales. If I had to make a wild guess (I don't follow BCRX so it's no more than that), I would assume high single digits rising to low-to-mid teens on good sales.

Peter
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