8-K: New River/Shire Collaboration
From the 8-K: "On January 31, 2005, Shire Pharmaceuticals Group PLC entered into a Collaboration Agreement with New River Pharmaceuticals Inc. relating to the global commercialization of NRP104, New River’s Phase 3 compound for treatment of Attention Deficit Hyperactivity Disorder (“ADHD”), and other potential indications. The collaboration will include product development, manufacturing, marketing and sales.
Under the Agreement, Shire will pay New River $50 million within 10 days of signing and an additional $50 million on acceptance of the New Drug Application filing by the U.S. Food & Drug Administration (FDA). Shire will also pay up to $300 million in milestone payments depending on the characteristics of the FDA approved product labeling. An additional $100 million will be payable upon achieving a significant sales target. The maximum amount of payments, including all contingent payments, is $505 million. New River could be required to refund Shire up to a total of $50 million in the event that regulatory approval is not obtained by certain dates. Shire currently plans to expense the first two $50 million payments, and to capitalize and amortize over the life of the product the milestone payments.
The collaboration will be managed by committees that will have equal representation of Shire and New River, although ultimate responsibility for approval is allocated to one party or the other in certain areas. New River, at its own expense, will bear primary responsibility for development and regulatory approval of the product in the U.S for ADHD, and Shire will bear primary responsibility for development and regulatory approval in other countries, and in certain cases will share those expenses with New River. Shire will have primary responsibility for commercialization in all countries, and New River will have certain co-promotion rights in the US.
Shire will book the product sales. The parties will divide the operating profit in the U.S. when and if the product is approved by the FDA, in accordance with the following general principles: Shire will retain 75% of the profits for the first two years following launch and the parties will share the profits equally thereafter. Shire will pay New River a royalty, that is generally in the low double-digits, on net sales in the rest of the world."
Under the Agreement, Shire will pay New River $50 million within 10 days of signing and an additional $50 million on acceptance of the New Drug Application filing by the U.S. Food & Drug Administration (FDA). Shire will also pay up to $300 million in milestone payments depending on the characteristics of the FDA approved product labeling. An additional $100 million will be payable upon achieving a significant sales target. The maximum amount of payments, including all contingent payments, is $505 million. New River could be required to refund Shire up to a total of $50 million in the event that regulatory approval is not obtained by certain dates. Shire currently plans to expense the first two $50 million payments, and to capitalize and amortize over the life of the product the milestone payments.
The collaboration will be managed by committees that will have equal representation of Shire and New River, although ultimate responsibility for approval is allocated to one party or the other in certain areas. New River, at its own expense, will bear primary responsibility for development and regulatory approval of the product in the U.S for ADHD, and Shire will bear primary responsibility for development and regulatory approval in other countries, and in certain cases will share those expenses with New River. Shire will have primary responsibility for commercialization in all countries, and New River will have certain co-promotion rights in the US.
Shire will book the product sales. The parties will divide the operating profit in the U.S. when and if the product is approved by the FDA, in accordance with the following general principles: Shire will retain 75% of the profits for the first two years following launch and the parties will share the profits equally thereafter. Shire will pay New River a royalty, that is generally in the low double-digits, on net sales in the rest of the world."
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