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Date
Rule
801.2
Staff
Michael Verne
Response/Comments
Agree.

Question

From: (redacted)

Sent: Wednesday, June 20, 2007 12:18 PM

To: Verne, B. Michael

Cc: (redacted)

Subject: HSR Question

Mike,

Our clienthas licensed a pharmaceutical compound that we believe is nonexclusive and nonreportableand wanted to receive your input. The license grants the licensee the right to research,develop and commercialize a compound within the US. The license also grants the licensee exclusiverights to use the active pharmaceutical ingredient to manufacture the finishedproduct within the US, butthe licensor retains the right to manufacture the active pharmaceuticalingredient. For reasons unknown to our client, the licensor insisted that itretain manufacturing rights over the active pharmaceutical ingredient. Thelicense agreement provides that the licensee shall manufacture the activeingredient as a subcontractor for the licensor and the licensor willmanufacture additional amounts of the active ingredient once the licensee'srequirements exceed certain volume thresholds.

We concluded that the licensor's retention of manufacturingrights for the product's active ingredient renders the agreement to benonexclusive under HSR rules and informal interpretations and, thus, there isno reportable asset acquisition. Do you agree?

Thanks,

(redacted)

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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