This entire relationship has been definitively immaterial to Kenilworth. After spending perhaps $120 million, by the time the relationships and clincial trials are transitioned, some six months from now, I expect that Merck has actually generated sales revenue of less than than half of that amount, life-time to date, on the franchises.
Back in April of 2014, here was our take on this licensed product suite: “This melt-in-your-mouth pill — called Grazax® in Europe, and Grastek® here and in Canada (where it won approval in March of 2012) — is finally going to be available in the US with a prescription, beginning around Mothers’ Day 2014. It enters a crowded field, likely to be dominated by Stallergenes — a French pharma concern. . . .”
[That seems to be almost exactly what transpired — with a renewed tip of the hat, to our well-informed EU commenter — who predicted it all.]
. . . .Hørsholm, Denmark-based ALK expects to regain the rights to the immunotherapies–which address grass, ragweed and house dust mite allergies–early next year. Between now and then, Merck and ALK will work together on a six-month transition period. ALK has said it will use its resources in North America and its base in Denmark to smooth the transition, but with sales and marketing, registration activities and clinical development all in mid flow, there is potential for a bumpy ride. . . .
Merck has paid out more than DKK 700 million ($100 million) to ALK as part of the deal it struck in 2007 for the rights to the drugs, but its returns to date have been small. . . .
At one point, I had guessed $300 million in peak annual sales, figuring that Merck’s “hurdle rate” — for being interested in the deal, would need to be at least that high — to be worth the trouble of running the clinical trials. I now suspect that it never got close to $50 million a year.
To be clear, I think for smaller pharma concerns, that sales revenue likely still presents an attractive potential return (especially now that the clinicals are paid for), so I expect ALK-Abelló will find a new North American partner — albeit a smaller one. But the news caused an 18 per cent drop in ALK-Abelló’s stock price overnight. Onward on a glorious morning — baby-sitting a flawless new life, tonight! Woot!