George, the non-disclosure of exact royalty percentages is, for good or for bad, standard practice. Still, the current (early 98) info packet from Microcide includes a detailed report from Merrill Lynch (dated Sept 2, 1997) where an 8% number is assumed. This is done across the board, for the J&J, Daiichi, and Pfizer collaborations.
One would think that MCDE, while not officially endorsing these numbers, would not let the analyst make too much of a fool of himself (as per Rick Harmon's comment elsewhere).
I would say this information should reduce the guess range from your 2-25% to, perhaps, 5-15% or even 6-10%. Also, these deals often have "step-up" clauses, whereby sales beyond certain level lead to higher royalty numbers. Say, you get 6% in the first $100 mill, but from then on you get 10%, etc.
PB |
