future relenza royalties, page-6

QUOTE:
With that logic though they could avoid all royalties to Biota by saying pay $10 p.a. per dose and if you need it we'll give it to you for 1c a dose... BTA getting 7% of 1c.

Port,
Get some reality into your hypothetical.
Just like any call options, GSK’s “reservation method” has to be priced realistically to the underlying commodity to be able to attract sales. You think every potential buyer is like Peter Cook who would turn down a $100M offer plus legal costs and then settle for $20M without costs?

There is a reason why GSK priced it at $6 per annum. Take the price for buying Relenza; divide it by the life span and add in the time decay and then allow some discount to make it attractive to the buyers. Conversely the $6 p.a x the 5 years life span is $30; then using a discounted cash flow you will get the present value of the total potential payment. It is a win-win situation for GSK and the buyer except BTA who is paid royalty when GSK deliver Relenza to the buyer! And when will this oocur? When a bird flu pandemic occurs!! What good will the royalty do for BTA shareholders in a full blown bird flu pandemic!