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  • Halozyme And Roche Have A Secret - How Much Do Herceptin & MabThera Sales Earn HALO? (Tell You In '19) 2 comments
    Feb 16, 2014 10:18 AM | about stocks: HALO, RHHBY

    The recent Confidential Treatment Order- Issued 12/31/13 has never been addressed to my satisfaction. Halozyme is keeping confidential the up front payments, maintenance payments, anniversary payments, and sales target payments Roche owes Halozyme based on the two active exclusive licenses issued for pH20 (Enhanze) omn Herceptin and MabThera. Thje upcoming event payments are most interesting as Herceptin sales have recently begun, initiated with a $10M payment, and MabThera EMA approval is due in early April.

    Below find the CTO and original portions of the Dec 15, 2006 Exhibit 99.1 containing the confidential paragraphs.

    Halozyme and Roche, like Louis and Rick, seem to have a great future planned together....they just don't want us or Ilsa Lund (Celgene) to know about until at least the end of 2018. I always thought it was Bogie who should have run off with Ingrid.

    UNITED STATES

    SECURITIES AND EXCHANGE COMMISSION

    December 31, 2013

    ORDER GRANTING CONFIDENTIAL TREATMENT

    UNDER THE SECURITIES EXCHANGE ACT OF 1934

    Halozyme Therapeutics, Inc.

    File No. 001-32335 - CF#30504

    _____________________

    Halozyme Therapeutics, Inc. submitted an application under Rule 24b-2

    requesting an extension of a previous grant of confidential treatment for information it

    excluded from the Exhibits to a Form 8-K/A filed on December 15, 2006.

    Based on representations by Halozyme Therapeutics, Inc. that this information

    qualifies as confidential commercial or financial information under the Freedom of

    Information Act, 5 U.S.C. 552(b)(4), the Division of Corporation Finance has determined

    not to publicly disclose it. Accordingly, excluded information from the following exhibit

    will not be released to the public for the time period specified:

    Exhibit 99.1 through December 15, 2018.

    3.4 Designation of Roche Targets .

    3.4.1 Initial Exclusive Targets . The three (3) Targets specifically identified on Exhibit C hereby are designated Roche Targets and Roche Exclusive Targets.

    3.4.2 Option Targets and First Designation Right .

    (a) Prior to the tenth (10 th ) anniversary of the Effective Date (or such later date as the parties mutually agree in writing), Roche shall have the right to select Targets of interest, from the *** (***) Option Targets, for inclusion in this Agreement. During such period, Roche shall give Halozyme irrevocable express written notice of each such Target selected. Subject to the limitations set forth in Section 3.4.4, upon receipt by Halozyme of such written notice of the selection of such Target, such Target thereafter shall be designated a Roche Target.

    (b) Each Roche Target that is selected by Roche from the *** (***) Option Targets pursuant to Section 3.4.2(a) shall become a Roche Exclusive Target as of the date (and only if) Roche either (i) pays to Halozyme the nonrefundable and noncreditable exclusivity fee for such Roche Target pursuant to Section 4.1.2, or (ii) makes the final nonrefundable and noncreditable development event payment under Section 4.2.1 with respect to a Product comprising a Roche Biologic directed to such Roche Target.

    (c) Neither Halozyme nor its Affiliates, directly or indirectly, shall enter into, or engage in negotiations therefor, any agreement (a "Third Party Agreement") with a third party to develop, manufacture, sell or otherwise commercialize any product in a kit form (i.e., in separate containers, but packaged and labeled together at a single price) or a co-formulation (i.e., pre-formulated together in a single solution in a single container.

    3.4.4 Not more than *** (***) Targets in the aggregate may become Roche Targets pursuant to Section 3.4.2(a); not more than *** (***) additional Targets in the aggregate may become Roche Targets pursuant to Section 3.4.3; and not more than thirteen (13) Targets in the aggregate may be Roche Targets under this Agreement; provided, however, that:

    (a) Prior to each anniversary of the Effective Date (commencing on the second anniversary of the Effective Date), Roche shall have the right (but not the obligation) to maintain its rights under Section 3.4.2(a) for each Option Target that has not yet been designated a Roche Target pursuant to Section 3.4.2(a) by paying to Halozyme the nonrefundable and (except as set forth below) noncreditable designation maintenance fee of *** ($***) per annum for each such Option Target (not to exceed a maximum aggregate designation maintenance fee of *** ($***) for each such Option Target) in each case specifying the Option Target to which such fee applies. If an Option Target is designated as a Roche Target pursuant

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    to Section 3.4.2(a), the aggregate designation maintenance fees (if any) previously paid to Halozyme for such Option Target under this Section 3.4.4(a) shall be credited against the designation fee owing to Halozyme under Section 4.1.2 for such Option Target. If Roche fails to timely pay such designation maintenance fee for a specific Option Target as set forth above, thereafter such Option Target shall cease to be an Option Target, the maximum number of Targets that may become Roche Targets pursuant to Section 3.4.2(a) shall be reduced by one (1), and the maximum number of Targets that may become Roche Targets under this Agreement shall be reduced by one (1).

    (b) Prior to each anniversary of the Effective Date (commencing on the second anniversary of the Effective Date), Roche shall have the right (but not the obligation) to maintain its rights under Section 3.4.2(b) for each Option Target that has not yet been designated a Roche Exclusive Target pursuant to Section 3.4.2(b) by paying to Halozyme the nonrefundable and (except as set forth below) noncreditable exclusivity maintenance fee of *** ($***) per annum for each such Option Target (not to exceed a maximum aggregate designation maintenance fee of *** ($***) for each such Option Target) in each case specifying the Option Target to which such fee applies. If an Option Target is designated as a Roche Exclusive Target pursuant to Section 3.4.2(b) by paying the exclusivity fee pursuant to Section 4.1.2, the aggregate exclusivity maintenance fees (if any) previously paid to Halozyme for such Option Target under this Section 3.4.4(b) shall be credited against the exclusivity fee owing to Halozyme under Section 4.1.2 for such Option Target. If Roche fails to pay such exclusivity maintenance fee for a specific Option Target, Roche's right to designate such Option Target as a Roche Exclusive Target shall terminate and such Roche Target may not become a Roche Exclusive Target.

    (c) Prior to each anniversary of the Effective Date (commencing on the second anniversary of the Effective Date), Roche shall have the right (but not the obligation) to maintain its rights under Section 3.4.3 for up to *** (***) Targets, less the number of Targets that have been designated a Roche Target pursuant to Section 3.4.3, by paying to Halozyme the nonrefundable and (except as set forth below) noncreditable designation maintenance fee of *** ($***) per annum for each such Target slot (not to exceed a maximum aggregate designation maintenance fee of *** ($***) for each such Target slot) in each case specifying the Target slot to which such fee applies. If a Target from a Target slot is designated as a Roche Target pursuant to Section 3.4.3, the aggregate designation maintenance fees (if any) previously paid to Halozyme for such Target slot under this Section 3.4.4(c) shall be credited against the designation fee owing to Halozyme under Section 4.1.3 for such Target. If Roche fails to timely pay such designation maintenance fee for a specific Target slot as set forth above, thereafter the maximum number of Targets that may become Roche Targets pursuant to Section 3.4.3 shall be reduced by one (1), and the maximum number of Targets that may become Roche Targets under this Agreement shall be reduced by one (1).

    3.4.5 In order to assist Roche's efforts to select one or more potential Targets for inclusion in this Agreement pursuant to Section 3.4.3, upon the written request of Roche, Halozyme shall provide Roche with reasonable research quantities of PH20 Drug formulated with a Biologic provided by Roche (without revealing the identity of such Biologic or the Target to which it is directed). Such PH20 Drug/Biologic shall be provided by Halozyme to Roche pursuant to a mutually acceptable material transfer and testing agreement ***. For each

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    such PH20 Drug/Biologic provided, Roche shall have a period of four (4) months in which to conduct an evaluation.

    4.1.2 Within thirty (30) days after the designation of each Roche Target pursuant to Section 3.4.2(a), Roche shall pay to Halozyme the nonrefundable and noncreditable designation fee of *** million dollars ($***). At any time on or after the designation of each Roche Target pursuant to Section 3.4.2(a), Roche shall have the right to pay to Halozyme the nonrefundable and noncreditable exclusivity fee of *** million dollars ($***) to designate such Roche Target as a Roche Exclusive Target; provided, however, if prior thereto Halozyme has granted to one or more third parties a license under the Licensed IP Rights to commercialize products comprising Biologics directed to such Roche Target, then such exclusivity fee shall be adjusted by multiplying it by a fraction, the numerator of which equals one (1), and the

       

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    denominator of which equals the sum of one (1) plus the number of third parties to whom Halozyme previously granted such a license.

    4.1.3 Within thirty (30) days after the designation of each Roche Target pursuant to Section 3.4.3, Roche shall pay to Halozyme the nonrefundable and noncreditable designation fee of *** million dollars ($***); provided, however, if prior thereto Halozyme has granted to one or more third parties a license under the Licensed IP Rights to commercialize products comprising Biologics directed to such Roche Target, then such designation fee shall be adjusted by multiplying it by a fraction, the numerator of which equals one (1), and the denominator of which equals the sum of one (1) plus the number of third parties to whom Halozyme previously granted such a license.

    4.2 Event Payments .

    4.2.1 Within thirty (30) days following the first achievement of each of the following development events with respect to the first Product comprising a Roche Biologic directed to each Roche Target, on a Target-by-Target basis, Roche shall give written notice to Halozyme and shall pay to Halozyme the corresponding non-refundable and noncreditable event payments within thirty (30) days after receipt of an invoice from Halozyme:

        
     $*** Enrollment of the first subject in the first Phase I Clinical Trial for such Product by Roche, its sublicensee or their respective Affiliates;
        
     $*** Enrollment of the first patient in the first Phase II Clinical Trial for such Product by Roche, its sublicensee or their respective Affiliates;
        
     $*** Enrollment of the first patient in the first Phase III Clinical Trial for such Product by Roche, its sublicensee or their respective Affiliates;
        
     $*** Submission of the first BLA for such Product by Roche, its sublicensee or their respective Affiliates; and
        
     $*** First Commercial Sale of such Product by Roche, its sublicensee or their respective Affiliates; provided, however, that such payment shall be increased to $*** if such Product comprises a Roche Biologic directed to a Roche Target that is not one of the three (3) Targets specifically identified on Exhibit C.

    If for whatever reason (other than due to a breach by Roche) a development event payment is not paid for a Target and the subsequent development event for such Target is achieved, then both first and the second development event payments shall be payable at the time the second development event payment is payable.

    4.2.2 Within thirty (30) days following the first achievement of each of the following commercial events with respect to all Products, collectively, comprising any Roche

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    Biologic directed to each Roche Target, on a Target-by-Target basis, Roche shall give written notice to Halozyme and shall pay to Halozyme the corresponding non-refundable and noncreditable event payments:

        
     $*** If Net Sales of all Products comprising any Roche Biologic directed to such Roche Target equal or exceed *** dollars ($***) in a given calendar year; and
        
     $*** If Net Sales of all Products comprising any Roche Biologic directed to such Roche Target equal or exceed *** dollars ($***) in a given calendar year.

    4.2.3 Notwithstanding anything to the contrary in this Agreement, Roche (a) shall be obligated to pay each of the event payments under Section 4.2.1 or 4.2.2 only once for each Roche Target regardless of the number of Roche Biologics directed to such Roche Target, and (b) shall not be obligated to pay each of the event payments under Section 4.2.1 or 4.2.2 more than thirteen (13) times even if all thirteen (13) Roche Targets have more than one Roche Biologic directed thereto.

    4.3 Royalties .

    4.3.1 Within thirty (30) days following the First Commercial Sale of each Product in each country, Roche shall give written notice to Halozyme thereof.

    4.3.2 During the applicable Royalty Term, Roche shall pay to Halozyme royalties equal to *** percent (***%) of Net Sales of each Product sold by Roche, its sublicensee or their respective Affiliates during the Royalty Term.

    4.3.3 If during the applicable Royalty Term the manufacture, use, offer for sale, sale or import of such Product in the country in which manufactured, used, offered for sale, sold or imported would not infringe a Valid Claim (if such Valid Claim were in an issued patent) in such country, then the applicable royalty rate under Section 4.3.2 for such Product in such country shall be reduced to *** percent (***%) of Net Sales by Roche, its sublicensees and their respective Affiliates.

    4.3.4 If Roche, its sublicensees or their respective Affiliates sells a Product to a third party who also purchases other products or services from Roche, its sublicensees or their respective Affiliates, and Roche, its sublicensees or their respective Affiliates discounts the purchase price of such Product to a greater degree than it generally discounts the price of its other products or services to such customer, then in such case the Net Sales for the sale of such Product to such third party shall equal the arm's length price that third parties would generally pay for the Product alone when not purchasing any other product or service from Roche, its sublicensee or their respective Affiliates.

    4.4 PH20 Bulk Transfer Price . For all PH20 Bulk supplied by Halozyme under Section 6, Roche shall pay to Halozyme a transfer price equal to *** percent (***%) of the fully-burdened cost to Halozyme to manufacture (or have manufactured), store and supply PH20 Bulk. Halozyme shall invoice Roche for all PH20 Bulk upon shipment in accordance with

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    Section 6, and Roche shall pay each such invoice within thirty (30) days after receipt. If after the Effective Date, Halozyme sells to any third party PH20 Bulk at a weighted average transfer price of less than *** (***%) of the fully-burdened cost to Halozyme to manufacture (or have manufactured), store and supply PH20 Bulk, based upon similar purchase volumes, terms and conditions, then Halozyme thereafter shall reduce the transfer price charged hereunder to Roche for PH20 Bulk to such lower weighted average transfer price for so long as Halozyme sells to any third party PH20 Bulk at such lower weighted average transfer price. Halozyme shall use commercially reasonable efforts to manufacture or have manufactured PH20 Bulk in a cost effective manner.

       
    *** Portions of this page have been omitted pursuant to a request for Confidential Treatment filed separately with the Commission.

    OH, and here's a final thought as we stand on the runway....

    either party may, without the written consent of the other, assign this Agreement and its rights and delegate its obligations hereunder in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger onsolidation, change in control or similar transaction. Any permitted assignee shall assume all obligations of its assignor under this Agreement.

    Here's looking at You Celgene....

    Disclosure: I am long HALO.

    Stocks: HALO, RHHBY
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  • fezziwig2008
    , contributor
    Comments (108) | Send Message
     
    Author’s reply » Some have priced the cost of the royalty "buy outs"? as an offset to the upcoming bid price, This Roche-Halo agreement demonstrates that this concern is not valid, at least for this major deal. The determined premium over the value of halo will not here be offset.
    16 Feb, 10:04 PM Reply Like
  • fezziwig2008
    , contributor
    Comments (108) | Send Message
     
    Author’s reply » MabThera SC Approved today- this CTO becomes more important.
    28 Mar, 01:45 PM Reply Like
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