First, there is no 60% rule. It was a guess by me.
This is all about profit maximizing behaviors in a duopoly competition. In this situation you expect roughly a 50/50 split by revenue. Anything more than that and you run the risk that even in a duopoly that you trigger more competition. Just how far can you push the branded before they retaliate. That could be price or in this particular market the launch of an AG.
Here the trigger seems to have been aL approval and affirmation they would launch at-risk knowing the patent issue.
The fun part now is that AG sales have been suspended. I mentioned that possibility before it happened. Now the parties play the game. They know better than we will the risks and rewards of playing.
SNY is not a party to the Amphastar litigation, and hence it is not bound in any way by the Judge’s statement that the AG has been “suspended.” However, SNY did presumably signal its intention to be rational and to maintain duopoly pricing stability, which is a positive development for MNTA.
Even if true - doesn't matter. Their agreement with NVS is written such that once an authorized generic enters the market the profit sharing arrangement is changed permanently. There is no mechanism in which the profit share reverts back to the original scenario even if the market goes back to a single generic market. MNTA's economics will remain diminished.
Two clarifications that can hopefully end this exchange:
As soon as I made the post, I knew that someone would have issue with the ambiguity in my statement. No one is saying that the hybrid model goes away. Under the hybrid model, the profit share would start up after m-enox had about $99M in profit and this would last through July. If m-enox reaches $200M in the quarter, then we would be hitting that point about now.
Second, I had no idea that someone would read that the suspension in AG sales was due to a court order, and Sanofi was bound to not sell the AG. Simply, the news was made public by the public court documents, but not mandated by the court decision.
My sense is that the unit volume for m-enox has been roughly maintained throughout, the question is how much was the price impacted and it will it bounce back?
There's a real possibility that MNTA exits next summer with $500M in cash/receivables, no debt, an FOB partner, and much greater visibility into m-copaxone and the primary FOB project.