OK rkrw and bluegreen, no gouging, spitting or hitting below the belt, get to your neutral corners and come out when the bell rings (the bell never rings here, if you want to fight go to Yahoo with the Yahoos, and then save your intellect for SI). Hell, at Yahoo you can have multiple aliases and even fight with yourself for fun! I hate it when my alterate personality fights with me, but I'll defend myself against myself vigorously @;-> Since you are new here, keep in mind that members of SI get permanantly kicked off for getting too nasty with each other. You certainly haven't crossed that line yet, but I thought I'd let you know that it does happen, even to people who made and were defending what turned out to be the correct investment call. Yahoo has no means to kick you off, so their boards are an absolute free-for-all where gouging, spitting and hitting below the belt are seen as a source of amusement by many (including myself at times - I just love a good creative insult). But it goes way overboard and greatly reduces the value of their threads to investors.
There is no such thing as a "stupid" question, just the fact that someone is trying to figure something out and is willing to ask others is such an overwhelming positive that it supercedes any judgement of the questions merits. What is stupid are people who don't ask questions, as they just don't ever learn much.
As far as "If you asked Bill Parcells that same stupid question I think you would get a long glare and an answer with some profanity laced in."
Hell, with Bill Parcells, you are likely to get that response from any question.......and what the hell does he know about XOMA or INCY?
Myself, I am thrilled that INCY has taken a potential equity position in another biotech. I've been pushing that concept for years as a great way to diversify their financials and asset base and greatly expand their customer base by making their products more affordable to biotechs who don't have the deep Pharma pockets and can't pay cash upfront for their services. They have taken equity in companies whose research and products they are interested in, but I'm not aware of any deals where they took equity in exchange for services or intellectual property. Contrary to what the current valuation is based on, the gravy for INCY will ultimately be the huge royalty stream that will go on for decades based on information that was produced and payed for many years earlier (like 1992-1998). Nothing like making money with no current cost for the goods. INCY could ultimately sell off everything except royalty rights, layoff everyone except one person, and become a check cashing company with one employee who gets the mail and goes to the bank and still make a huge pile of cash (not that this would ever happen, but it just illustrates the ultimate value and margins of the future royalty streams). The fact that they did this equity deal on a straight patent licensing isn't what I'd hoped for, as I'd like it in exchange for genomic services, but hey, what the hell, it is a good start.
As far as this deal impacting INCY financials, that was a bit naive as a question (but certainly not stupid). Since this is a royalty deal, XOMA will have to succeed with BPI by getting it on to the market and actually having revenues to pay royalties on. I don't see this as a near term prospect, hence any financial impact to INCY is way down the road. What does INCY lose if XOMA fails? Nothing, except some negotiating time. The INCY BPI patents are just collecting dust on the walls anyway (nice plaques by the way). Hell, with the number of patents INCY has now and has filed for, they're going to need a huge wall area to display their patents. It isn't like INCY (or anyone else near term) is going to develop the molecule. What does INCY gain if XOMA succeeds (besides thrilling Randy Scott, Pres. and Marian Marra, VP R&D Ventures, who were the original BPI developers and evangelists at INCY)? A lot! On both the appreciation of the share price and the royalty stream. INCY is an "information based" company. Intellectual property is nothing but information, that is what INCY sells. For them to not come to reasonable terms with the only ones who can use that information does not make sense. While they shouldn't be easy, they should be reasonable. XOMA has postured enough through the years that they didn't need the INCY patents (yeah right!). Well, for something they didn't need, they sure went ahead and made a deal, which didn't cost them any cash mind you, just part of the future. Well XOMA is so diluted now, what's a bit more dilution if the product actually works and gets marketed (which is the only way INCY would ever exercise the warrants). XOMA states that it was to head off potential patent litigation with INCY. That seems like a damn reasonable reason! INCY has deep pockets relative to XOMA, especially by the time BPI could actually be marketed, and has an inhouse 30 man patent group ie.) a decent size inhouse patent law firm, with staff strictly dedicated to patent enforcement. And, INCY is an information company who must defend their intellectual property, as it is essentially most of what this company has to offer. When information is your main game, you defend it vigorously as a matter of principle. This is definitely a win-win deal. INCY gets some rotting assets off the wall and into a position to make them some bucks, and XOMA gets clear sailing rights without the threat of a nasty patent suit. Keep in mind that if the INCY patents could block XOMA from marketing BPI (even if for just some indications), that XOMA has nothing such as a cross licensing deal to offer INCY. This isn't the typical case of two biotechs trying to sell the same product, each with patents that screw the other. The scenario to XOMA of finally getting marketing approval for BPI, leading to a great stock runup, followed by INCY filing a patent suit to block them, leading to a great stock dump has got to be seen as a pretty ugly and unnecessary risk, relative to giving away a small royalty and some warrants, which cost virtually nothing to give away today. How did the markets react, with a yawn as they should.
There is no question that historically, XOMA has been an abysmal investment. That does not mean that it still can't hit a homerun, but it sure is taking a hell of a lot longer any investor (or XOMA employee) ever hoped it would. Also, historically XOMA has been guilty of a fair amount of hyping themselves. One hope for XOMA investors. Did XOMA finally do this after all these years because they are getting even more confident about BPI's potential for success?
Rocketman
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