<You stated that GLFD would receive $56 million for the selection of the first indication followed by $42 million for the second. These seem awfully high to me.>
I went over my conference call notes, compared them with those of a colleague, and read Alex Zisson's (H&Q) Aug 22nd report.
Originally I understood that the first milestone payment of $56MM would come when Amgen decides which program to pursue first, but it seems that it may be when the program chosen goes to trials. Amgen's choice seemed to be either dopoaminergic or cholonergic. (My guess, from the extensive primate studies soon to be reported, it will be Parkinson's.) The second milestone of $42MM would then (if this is the correct milestone determination) be paid when the SECOND program goes to clinic.
It seems reasonable that the first payment would be within 6-8 months (phase I, as a result of very favorable primate dopaminergic neurprotective and regeneration studies to be reported in a few weeks). And since Amgen is cash and cash flow rich, with not really any exciting current projects (since Regeneron is on the back burner), they will be anxious to move the second (and as many other) of these along as quickly as possible. The size and scope of the potential NIP dollars underscores Amgen's strong level of interest, and I would venture the second payment as a result of a second phase I starting could be within 18 months.
This would leave $300 for the balance of the milestones - completion through to NDA approval of the first two and development of the remaining eight, some of which would be closely related (stroke, peripheral neuropathies, brain and spinal chord trauma). Parkinson's and Alzheimer's seem to be the highest profile. I will see if I can confirm these numbers/details.
<the $35 million is composed of $15 million in cash plus $20 million in equity and warrants. So GLFD only sees $15 million in their coffers plus the $13.5 million for R&D.>
I'm not sure I follow your numbers. Guilford sees a $15MM cash payment for signing, another $15MM equity purchase (0.63 million shares at $24) and a $5MM warrant purchase (0.7 million warrants at $35.75). If all warrant are eventually exercised, Guilford will see another $25MM for the exercise into .7 million shares of GLFD common. So they will get an initial $35MM.
They will also get $13.5 R&D over 12 quarters (3 years), which, presuming even spreading as I understand, would be $1.125MM per quarter ($4.5MM/year). They also have about $180MM in cash.
<they get only $400 million for _ten_ indications. Assume (conservatively) that each indication will yield $200 million>
They basically sold Amgen the NIP program for seven named and 3 unnamed indications: Parkinson's, Alzheimer's, stroke, peripheral neuropathies, brain trauma, spinal chord trauma, multiple sclerosis, and 3 non-CNS indications. According to Zisson, the first seven have the potential to support a drug with $1 billion in worldwide sales (at likely 20% royalties, is a reasonable guess). Even if all seven aren't developed (very likely), this is STILL a major infusion for further R&D and collateral development, as well as invaluable marketing, branding and distribution relationships. And they maintained the right to US co-promote one of the drugs.
They also have Dopascan (phase IIb data will be presented next month), second generation Gliadel studies, plus phase III Gliadel to expand to primary surgeries, and RPR may expand deal to include Taxol/Taxotere wafers.
I think this relationship is a major validation and opportunity for Guilford, certainly far more significant than most expected. To trade off some portion of the NIP reward for a LOT of development-to-marketing risk (they now have the $$$, partnership and connections) was a prudent and savvy thing thing to do - especially in the very risky field of biopharmceutical development. This seems a great fit, IMO.
<my wife and I were grad students at Hopkins and my wife rotated through Sol Snyder's lab.>
What years, and are you still in the field?
Off to work (enjoy your vacation)-
Steve |
