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Biotech / Medical : Agouron Pharmaceuticals (AGPH) -- Ignore unavailable to you. Want to Upgrade?

To: Bryan Arnold who wrote (4339)	5/19/1998 4:24:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 6136

Bryan, I'll check the report again later...maybe I missed something. I also thought they were receiving royalties on the Roche product also. Maybe Margie can clarify this. I'm getting away from the computer for a while after Dell reports. sf

To: Bryan Arnold who wrote (4339)	5/23/1998 2:25:00 PM
From: Peter Singleton	Respond to of 6136

We've talked a bit about the Roche deal. I've done a little more checking on this, and it turns out some of my information / speculation in the past has been incorrect. Here's the facts as best I can determine them. 1 - royalty rate This following is just a best guess, since the actual #s haven't been disclosed by either Roche or AGPH, but ... BioCentury estimated when the deal was signed the royalty rate at 28-32%. It's split 50:50 between JT and AGPH. However, the analysts' models show a rate to AGPH alone starting at 10 or 12% in 1998, rising to 14% in a year or two. According to AGPH, the royalty rate is tiered, based to annual sales. I asked about the analysts' models. While not confirming, AGPH did not dispute their numbers. From this, we can infer that the actual rate is probably in the range of c. 20 - 28% depending on annual sales volume, with net to AGPH after the JT split of 10-14%. The BioCentury estimates of up to 32% appear to be too high. 2 - Viracept, Invirase/Fortovase royalties Another issue is AGPH compensation for Invirase/Fortovase sales. That's a key part of the agreement, since it protects AGPH from Roche putting Viracept on the shelf and selling their PI's. According to AGPH, there are two computations of royalty: a - Viracept sales alone b - Viracept + Invirase / Fortovase sales, with a higher rate on Viracept sales alone. AGPH gets the larger of the two. So, by way of explanation, suppose at a certain volume of Viracept sales there's a 24% royalty on Viracept alone, and 12% on the combination of V + I + F. In this case, AGPH would be paid on Viracept if Viracept sales were greater than the Roche PIs, and on the combination if the Roche PIs were greater than Viracept. The actual (and relative) royalty rates, and how the ramp-up period (with limited Viracept sales) are treated are unclear to me, though. Peter