New River Shire Collaboration Agreement

New River Shire Collaboration was nominated for The Most Creative and Significant Deal' at the Best of Biotech 2005 Awards at the 18th Annual Biotech CEO Meeting in Laguna Niguel, California.

Based on Shire's 8-K of January 31, 2005 and 10-K:

New River/Shire Collaboration Agreement:

• Phase III for ADHD and all other indications


• US:


1. New River responsible for clinical development


2. collaboration in marketing and selling; New River may supply up to 25% of the sales effort


• ROW: Shire to develop and commercialize


• New River responsible for manufacturing development

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Financial terms:

• $50M license fee


• $50M acceptance of filing of the NDA


• up to $300 million in milestones based on the characteristics of the FDA approved product labelling


• $5M on commercial sale in specified European countries


• $100M sales milestone


• US: sharing


1. first two years: New River/Shire 25% / 75%


2. thereafter: New River/Shire 50% / 50%


• ROW: low double-digit royalty*


• Shire may be entitled to refunds of amounts previously paid in the event of a delayed product approval

* the royalty rate is different in the EU than in the ROW; rate may be reduced by generic competition only (no reduction for absence of patent rights)

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Things that are interesting about this agreement:

• increasing refund to Shire as product approval is delayed past each of three dates - capped at $50M


• development options for new compounds and other indications


• on termination for breach: non-terminating party buys out breaching party at a price to be determined by investment bankers

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Development options:

• options for development of new compounds, indications


• by agreement: JDC determines development responsibility; costs shared*


• if New River proposes and Shire does not agree: no development*


• if Shire proposes and New River does not agree: development at Shire’s expense


• non-developing party has a Phase III opt-in right

* Share of costs depends on whether or not the development can be used only in the US or also ROW; New River can unilaterally develop a combination product

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Other things to see:

• calculation of “Net Sales” is reduced by cost of third party licenses necessary for commercialization


• Territory is the world; diligence requirements are only in US and, after US approval, major EU countries


• extensive warranties by New River on IP; development activities to date; scope of disclosure


• exhibit summarizing supply terms

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The redacted full text of the January 31, 2005 Collaboration Agreement is here.

That agreement was subsequently replaced by two agreements:

The New River Shire US Collaboration Agreement (full text) and the New River Shire ROW Territory License Agreement (full text), both of March, 2005.