To all: here is some text from Stressgen's latest 10-K about the terms of its agreement with Roche. I post this now because, in the recent conference call, the CEO said that they had had multiple meetings with a possible new collaborator on HspE7. He said the Roche agreement had no penalties for either side if Stressgen made a deal with a new partner on the first generation HspE7 product. He pointed out the favourable terms in the Roche agreement which would need to be exceeded by any potential new partner- Stressgen gets all revenue from the for the first 3 years, after which Stressgen gets 35% royalty for the US and Canada and 20% for the rest of world.
from the 10K
Restructured Roche Agreement
On December 2, 2003, we announced a restructuring of our June 24, 2002 collaboration agreement with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (together, “Roche”), providing for the development and commercialization of our pharmaceutical fusion product candidate, HspE7. By regaining control of the HspE7 manufacturing program, we expect the restructured agreement to better facilitate our clinical development of HspE7 in recurrent respiratory papillomatosis and additional indications caused by the human papillomavirus, while allowing Roche to develop a second generation HspE7 product targeting genital warts. We have resumed all responsibility for all manufacturing and other costs of the indications we choose to develop.
Roche may pay a fee and event-driven milestones aggregating up to $207,000,000 (US$138,000,000) to obtain exclusive rights to the first generation HspE7 product, in which case it will become responsible for related costs. Assuming this fee is paid and all HspE7 development and commercial milestones are achieved and Roche exercises its rights to certain other CoValTM fusion product candidates, the payments to us, excluding sales-based payments (similar to royalties), could approximate $340,500,000 (U.S.$227,000,000), beyond the approximately $32,250,000 (U.S.$21,500,000) we have received from Roche relating to the development of a first generation HspE7 product to date. Until March 31, 2005 we can elect, under defined circumstances, to terminate Roche’s exclusive rights to the first generation HspE7 product.
Once the first generation HspE7 product is on the market, we can elect to launch a sales force in the U.S. and Canada and record sales for three years after regulatory approval in those countries. In that case we will pay Roche a mid-single digit percentage or a low double-digit percentage of our net sales, depending upon the timing and occurrence of Roche’s exercise. Under these conditions, no earlier than three years after market launch of HspE7, Roche can begin recording sales in the U.S. and Canada. Once Roche begins recording sales in those countries, we will receive sales-based payments, which are expected to approximate 35% of Roche’s net HspE7 product sales. In the rest of the world, Roche will record sales immediately after market launch and we will receive sales-based payments of 20% of Roche’s net sales.
Roche can also obtain exclusive rights to develop a second generation HspE7 product upon payment of a license fee. In such case, we will receive alternative milestones based upon the clinical and regulatory development of the second generation product. Roche will assume responsibility for manufacturing and all costs of its development program. After commercialization of the second generation HspE7 product, we will receive tiered, progressive sales-based payments from Roche at levels that we believe are competitive with other agreements of this stage and type. Roche can credit a portion of its milestone payment against the sales-based payments on the second generation product.
Roche is obligated to make additional commercial success payments of up to $127,500,000 (US$85,000,000) depending upon the aggregate net sales of either or both generations of the HspE7 product. In addition Roche has separate non-exclusive rights to negotiate licenses to our CoValTM fusion product candidates for the treatment of cancer and hepatitis C. By paying additional fees, Roche can make these rights exclusive to January 1, 2007. |
