Question
March 8, 2004
Via E-Mail
Nancy M. Ovuka
FTC Premerger Notification Office
Federal Trade Commission
600 Pennsylvania Ave, NW
Washington, D.C. 20580
DearNancy:
Thank you for taking the timeto speak with me today and on Friday, March 5, regarding my questions on theapplication, of the Hart-Scott Rodino Antitrust Improvements Act (the "HSR Act"), 15 U.S.C.18a. I am writing this letter to confirm the conclusion that Company X inthe following fact situation would not have to file a Notification and ReportForm for Certain Mergers and Acquisitions pursuant to the HSR Act. The facts thatwe discussed are as follows.
Company X is a foreign entityengaged in the research, development and sale of pharmaceutical products.Company X owns patents and know-how in an active ingredient that Company Xhopes to develop or have developed into a marketable drug product in the United States for humanuse in all dosage forms.
Company X has decided togrant to Company Y, a U.S. entity, an exclusive license under the patents andknow-how to use the active ingredient to conduct development of the drugproduct in the United States and Canada. Company X will continue to manufacture (or havemanufactured) the active ingredient.
Under theterms of the agreement, Company Y shall use its commercially reasonable effortsto conduct all development activities necessary to obtain the regulatoryapprovals needed to launch the drug. Once the necessary approvals have beenobtained and the drug product has been launched, Company Y shall have theexclusive right to manufacture and sell the drug in the United States from theactive ingredient supplied by or on behalf of Company X. The research iscurrently in Phase 3 studies and a new drug application has not yet been filed.
It is my understandingfrom our conversations that this is not a reportable transaction. First, theexclusive license to develop the active ingredient is not deemed the transferof an asset, since no right to manufacture the active ingredient is beingconveyed. Second, while the acquiring party, Company Y, is also being grantedan exclusive right to manufacture and sell any approved drug derived from the developmentof the active ingredient, no HSR filing is required since the acquisition of a future rightto manufacture a product that does not currently exist does not constitute thetransfer of an asset.
Please let me know at your earliest convenience whetherthe conclusions in this letter correctly reflect our conversations and the viewof the Premerger Notification Office of the Federal Trade Commission. I can bereached at (redacted). Thank you again for your time and attention.