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)