Comment from the FT.
(What are the royalty numbers ? Every time I see an estimate, it's slightly different)
Cambridge Antibody Technology threatened Abbott Laboratories with legal action on Tuesday, over the level of royalties the US healthcare company has paid on its recently-launched arthritis treatment Humira.
The first royalty check is normally a cause for celebration at a biotechnology company, but John Aston, CAT's chief financial officer, said Abbott had used loopholes in the 1995 licensing agreement to cut its payment by about 70 per cent.
The news sent CAT shares down 21p to 505p.
The dispute centres on whether royalties that Abbottpays to other companies for the right to make Humira should be offset against the 3.5 per cent sales royalty CAT was due to receive for the arthritis drug. Abbott is thought to have paid only 1 per cent, a cut that could cost CAT up to $25m-a-year in lost revenues.
Analysts say Humira could be a billion-dollar product, with sales expected to hit $250m this year. "If you compute the difference this makes to CAT it is significant numbers," Mr Aston said.
CAT and Abbott have agreed to go to arbitration over the payments, but Mr Aston said the dispute could end up in court if they failed to reach an agreement.
Karl Keegan, analyst at Canaccord, said the cut in royalties was equivalent to about 400p-a-share, but that it had been widely expected. "This gives you a lower valuation and the dispute is not likely to be resolved soon, but on the positive side it removes uncertainty [over the payments] and it is not a life or death issue for CAT," he said... |
