RE: Covidien Partnership . . . from klaatutuSorry to say but klaatutu's comments were full of subjectivity and personal opinion. Almost the entire post via "Marianne11" is a meandering trying to find a direction. i mean, the second paragraph offers a sincere congratulations to Nuvo saying that it has cleared a significant hurdle into the USA. Then we go on for paragraphs on how the deal is not really that good, then we end with "At the very least, this is a bone fide US distribution deal. Covidien looks like a reputable partner." (last paragraph) See what i mean, a peripatetic wandering that distracts from our goals. IS it a good deal or a bad deal? Total meandering.
And what is our goal? Our goal is precision in thought and to stay on course.
Here is an example of subjectivity and meandering: "But the inclination to give management an attaboy is tempered by amazement at how poorly the announcement was handled. Tuesday's release is like a monument to sloppy communication."
This is so opinionated that the reader gets lost, loses, course and precision. In fact, after reading that post, i lost my course and direction and for a millisecond, i wasn't sure what to think.
So here is my interpretation with what i consider precision.
Covidien is a large cap company on the NYSE. They make lots of MONEY. They make lots of money because they know how to make lots of money. They make lots of money because they have people who know how to sell. Can't get more precise than that.
The deal IS a bone fide US distribution deal and Covidien is a reputable partner. And to keep this reputation, they must continue to show profits. If they can't make profits from Pennsaid, then there is no achievement and no profit and they lose their reputation. Clearly, Covidien is motivated to sell Pennsaid and Pennsaid Plus. Reputation is everything.
How is a US $2 BB from Topical NSAID market a "head scratcher" when some market researchers are stating that the worldwide topical NSAID sales hit USD$2 BB a while back dominated by Novartis? Well those market researchers could be off, but they won't be off by $1.7 BB. So if history says approx. $2 BB, then that is the market we are playing for. If Chicoine didn't say what region he was talking about, it is obvious that he was referring to worldwide. And if Nuvo's own analysts pegged the US market at around $350 MM, what was the time frame, the first year or two? It looks like quotes taken out of context- very imprecise.
As for the 140 countries, it is clear that Covidien is interested in the Rest of World. Why not? There is value there even if it takes years. But the largest market is the USA, and that is what counts. Every other country is a nice extra. From what i read, some countries are heavily interested and rely on the US FDA. The decisions of the FDA DO influence other jurisdictions. The Chinese FDA is one example.
How can anyone say that Pennsaid Plus is being turned over for "free". Since when were the clinical trials free?It appears to me that this is the business model- you want it, you pay for it's development and pay us a royalty because we hold the patents. The financial risk and burden are gone.
And what is "Is there any obligation to actually do these trials?" suppose to mean? Let's get back on track, because this is another meandering. You might as well ask: Does Covidien want to make money from Pennsaid Plus or not?
Well, they better, or what will their shareholders think? Isn't $30 MM a lot of money still? Of course it is.
The above quoted question is actually not a fair question at all and another meandering. You said that Covidien's drug R&D history appears slim to non-existent, and Covidien's own news release ignores any commitment to develop a Pennsaid follow-on. Yet, my understanding is that Nuvo does the R&D, while Covidien pays for it. That's the business model or am i wrong? So if Nuvo is doing the R&D and someone else is paying for it, isn't that revenues before the royalties too?
Let me be very very precise and straight in my path of thinking.
FDA approval is very likely.
Covidien placed a $10 MM bet on it. (That is a lot of money imo- would you bet $10 mm on anything- how about $10 mm worth of 649 lotto tickets?)
Nuvo has a bonefide US distributor.
Covidien is a reputable partner. They have a reputation. They are not some nomad that cares not.
Sales in the US at the low end will be at least 10 X that of Canada due to similar cultures and demographics.
Sales in Greece are excellent despite different cultures and demographics.
The USA market is the largest by far and the one that matters the most.
If the Covidien deal lacks the details you want, it also lacks the details the competition wants.
If the royalties are industry standards, then we are pursuing average, and that is not to say mediocre.
To all the Fathers out there, "Happy Father's Day!"