One of the investments that contributed to our 2012 performance and remains a potential 16 bagger is GCVRZ, a Contingent Value Right (CVR) issued to Genzyme shareholders upon a sale to Sanofi-Aventis (SNY) in 2011.
Broadly speaking, a CVR is a contract that offers contingent future payments to holders of the contract upon the completion of specific predetermined milestones. A CVR can be used in acquisitions, like SNY-GENZ, where the two management teams cannot come to an agreement over the future value of a particular product, in this case a drug to treat multiple sclerosis called Lemtrada.
GCVRZ's value can be divided into two parts: i) a $1 payment for drug approval of Lemtrada by the FDA, which...