rkrw: Thanks for posting that. Bot a small position before the court case without doing enuf dd, and thinking of buying more. Had no idea the net royalty rate could be so low, and still not quite sure that I believe your broker. Good point on mc -- I forgot to add the 10.2 mil additional share on the AZN deal.
Here's what CATG's 20f says about the royalty to MRC
>CAT pays MRC royalties of 3% of the net invoice price on the sale by CAT of products made using the patent rights and technology licensed under this agreement. Where CAT’s sub-licensees sell such products, CAT is obligated to pay MRC between 1% and 2.3% of the net invoice price, calculated in accordance with a specified formula. CAT pays a royalty to MRC in connection with Abbott’s sales of HUMIRA.<
I don't know how to translate that to CATG's net royalty on H sales, but per your cited broker report, the net to CATG is only 2.1 percent. That doesn't look right on its face, and I hope it's wrong. If CATG is getting a little over 5 percent gross royalty, even if they paid 2.3 percent to MRC they should retain a minimum of 2.7 percent net. That would still be disappointing to me, but better to find out now than after I screw up. I couldn't find a ref to other royalty obligations so I think MRC is the only party here. Can anybody untangle this? PULEEEZ!
MC is $737 mil today, based on 51.3 mil shares. But they had $177 mil cash at 9/30, less maybe $20 mil or so to the end of this qtr. But add roughly $150 mil (75 mil british pounds) from AZN investment and you have, say, around $300 mil cash right now. So you have a business valued at at around $437 mil.
I see some positives here -- tend to be too optimistic, I'm told. First, H sales may be headed towards $2 billion in a few years, and there may be other drugs in development at ABT for which CATG will get royalties. I haven't focused on that yet. Second, I believe CATG is a top notch company creating value with their programs. Which ones? How much? Beats the hell out of me, but I don't think "the market" has a real good handle on it either. When the market doesn't have a good handle, it tends to undervalue. To me, this has the smell of a pretty safe investment that, given a little luck, could be a big winner. Hope we can get some others who have looked at CATG to pile on here, pro or con.
ps, sorry about the football game jim. didn't think Miami had any chance...
add/edit: Woops! Didn't see Wilder's post 'til I pulled the trigger. Thanks -- the 3 percent looks better to me.
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