Monday, January 31, 2011 4:59 PM
Verne, B. Michael
Subject: RE: Draftemail
Thank you fortaking the time to speak to me earlier regarding the HSR reportability of theagreement described below.
Company A andCompany B are currently parties to a marketing and distribution arrangement fora branded pharmaceutical product. Company A holds the NDA and relatedregulatory materials, as well as the relevant trademarks. There are no patentsassociated with the product. Company A also manufactures the product and sellsit to Company B at a transfer price. Company B is the exclusive distributor ofthe product in the US and has a non-exclusive license to use Company S'strademarks to market and distribute the product. Company B made a lump sumpayment to Company A to acquire the distribution rights, and also paysadditional amounts annually (either as an aggregate payment or as a share ofsales, depending on the calendar year).
The parties wouldlike to terminate the current arrangement and enter into a new agreementwhereby Company B would purchase the NDA and related regulatory materials, andCompany A's books and records relating to the product. The purchase price,which exceeds the size of the transaction test, is a lump sum one-time payment,and Company B will no longer be obligated to make annual payments to Company Apursuant to their price arrangement. No intellectual property will be assigned.Rather, Company A will retain all trademarks and know-how associated with the product,and Company A will continue to supply the product to Company B pursuant to asupply agreement. Company B will acquire an exclusive license to use CompanyA's trademark in the US to sell the specific product.
I should also notethat the companies exceed the relevant size-of-the-parties thresholds.
Several informalinterpretations (including, e.g., #0812010) make clear that the trademarklicense is not an asset acquisition for purposes of HSR in this case.Accordingly, you indicated that the NDA and related materials are the onlyqualifying assets, and that the transaction is reportable if the portion of theacquisition prices allocable to the NDA and related materials exceed therelevant thresholds.