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Biotech / Medical : Biotech Valuation

CRSP 50.84

-5.0%

3:53 PM EST

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To: A.J. Mullen who wrote (5314)	1/3/2002 10:46:26 PM
From: RCMac	Read Replies (2) of 52153

My understanding is that jury awards are not taxed. IS this so? Ashley, IJ has it entirely right. It seems clear that every dollar IGEN may receive in payment of a judgment (assuming we get one and it is affirmed by the Court of Appeals) will be taxable, at ordinary corporate rates (Federal plus state, apparently about 42%). IGEN has about $160M in net operating loss carryforwards to deduct against income. That's the worst possible tax treatment. If there is a settlement (before or after verdict), there are a variety of ways to lessen the tax bite. Probably the simplest would be for Roche to buy IGEN, so IGEN shareholders get either cash for their shares (taxable at capital gains rates, i.e. 20% maximum if held for more than a year); or perhaps in a tax-free exchange for Roche ADR's, which could be sold whenever the former IGEN holder wanted to cash out, again at capital gains rates. Both ways avoid subjecting the settlement proceeds to corporate tax in IGEN's hands. Lawfighter's summary of closing arguments has just been posted in a series of eight posts, starting here: messages.yahoo.com --RCM

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