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Astex Pharmaceuticals, AŞ Message Board

  • eastcountybamboo eastcountybamboo Aug 14, 2012 2:25 PM Flag

    Royalty schedule from Quarterly transcript

    We currently receive development and license revenue from partnered programs and royalty revenues relating to sales of Dacogen� (decitabine) for Injection, a product approved by the FDA for the treatment of patients with myelodysplastic syndrome ("MDS"), which is licensed to Eisai Corporation. We are entitled to receive a royalty on worldwide net sales of Dacogen starting at 20% and escalating to a maximum of 30%. We recognize royalty revenue when the royalty statement is received from Eisai because we do not have sufficient ability to accurately estimate Dacogen sales prior to that time. In 2006, Eisai executed an agreement to sublicense Dacogen to Cilag Gmbh International ("Cilag"), a Johnson & Johnson company, granting exclusive development and commercialization rights in all territories outside North America. Cilag is responsible for conducting regulatory and commercial activities related to Dacogen in all territories outside North America, while Eisai retains all commercialization rights and responsibility for all activities in the United States, Canada and Mexico. As a result of both the original agreement with Eisai and the sublicense with Cilag, we may receive up to $17.5 million in future contingent payments dependent upon achievements for Dacogen globally. . . Approval by the European Commission would trigger $5 million of the contingent payments from Eisai upon first commercial sale of Dacogen in the European Union ("EU").
    AND
    Eisai is required to pay us royalties starting at 20% and escalating to a maximum of 30% of net worldwide Dacogen sales within 45 days after the end of each calendar quarter. During the six month period ended June 30, 2012, we recorded royalty revenue of $35.0 million. Because we do not have sufficient ability to accurately estimate Dacogen sales, we recognize royalty revenue when we receive the royalty statement from Eisai. In accordance with our license agreement with Eisai, we are entitled to receive 50% of any payments Eisai receives as a result of any sublicenses.
    SO, THE BIG QUESTION
    WHAT WILL 50% OF EISAI'S RECEIPTS BE FROM J&J IF WE GET APPROVAL?

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    • KY

      What I think Eastcounty is trying to say while Eisai will owe Astex 5 million based on the first sale in the EU. Cilag may have a deal on which they have to pay Eisai on the first sale in the EU and we would get 50& of that also,

      And while extra cash is always nice it is not a recurrent revenue stream and the stock doesnt move on those kinds of payments.

      On a more serious note I just read that Arnold Horeshack (Ron Pallilo) just died. RIP ARNOLD

    • East,

      They only get 50% of any Sublicense deal. But my understand, Eisai has the N/A and J&J has the rest of the world. So no more license deals.

      If you wonder what the revenues mean to ASTX on Dacogen for aml, it's pretty simple. We already are selling 200M in dacogen for MDS, so the top tier is reached. Anything that J&J sells for aml, is all at 30%. Granted it will come in the quarterly numbers looking lower, but later sales in the year will all be at 30%.


      Last year we had sales of Dacogen of $216M. So only 16M was treated with the 30% rate. Now after approval for aml, let's say MDS stays exactly the same and they sell an extra $50M in aml, so 2013 sales are $266M ($216 + 50M). ASTX see's the additional $50M extra treated with a 30% royality.