Not sure I share your confidence there. There is more to this contract than a 3 line summary, and in my opinion @Sector raises a valid, however contrary and therefore unpopular question regarding royalties.
If you agree that remestemcel-L is the same product being used in both GvHD and ARDS, then I believe you can see based on the below parts I have copied and pasted, why exactly:
EXHIBIT 3.2
EARNOUT
In addition to the amounts payable underSection 3.1, until the earlier of (x) ten (10) years after the first commercial sale of an Earnout Product in any country and (y) the first commercial sale of any competing product containing any ceMSC in any country by a Person other than MSB, its Affiliates or a Person authorized by MSB or its Affiliates whether pursuant to a sale, transfer, assignment or license of any Product (the “Earnout Period”), MSB shall pay to OTI the following payments in accordance withSection 3.2(each such payment, an “Earnout”):
(vi) for the portion of the accrued Annual Net Sales less than or equal to $250,000,000, MSB shall pay to OTI an amount in cash equal to four percent (4%) of such portion of the accrued Annual Net Sales;
(vii) for the portion of the accrued Annual Net Sales greater than $250,000,000 and less than or equal to $500,000,000, MSB shall pay to OTI an amount in cash equal to six percent (6%) of such portion of the accrued Annual Net Sales;
(viii) for the portion of the accrued Annual Net Sales greater than $500,000,000 and less than or equal to $750,000,000, MSB shall pay to OTI an amount in cash equal to eight percent (8%) of such portion of the accrued Annual Net Sales; and
(ix) for the portion of the accrued Annual Net Sales greater than $750,000,000, MSB shall pay to OTI an amount in cash equal to ten percent (10%) of such portion of the accrued Annual Net Sales.
[I have included the necessay definitions below:]
“Earnout Product” means any Product the Marketing Authorization for which references or incorporates safety, efficacy or manufacturing data included within any Assigned Regulatory Materials and Authorizations transferred to MSB hereunder, other than the mere citation of publicly available data as part of a general literature review of the stem cell field.
“Product” means any and all bulk and finished preparations (including any and all formulations, forms and dosage strengths) of ceMSCs or a product containing ceMSCs, including those products that OTI is developing or commercializing as Prochymal® (such product that is being developed or commercialized under the Prochymal trademark as of the Closing, the “Prochymal Product”)or Chondrogen™.
“Regulatory Materials and Authorizations” means (a) all material regulatory applications, submissions, notifications, communications, correspondence, registrations, protocols or other filings made or submitted to and all resulting permits, approvals, authorizations or clearances, received from any Governmental or Regulatory Authority (including minutes of meeting with Governmental or Regulatory Authority) that are necessary or used (i) in the conduct of the Business or (ii) to obtain and maintain any material approval for the research, study, development, manufacture, marketing, sale or other commercialization of any Product (including Marketing Authorizations and applicable approvals of labeling, price and reimbursement for such therapeutic product) (collectively, “Regulatory Authorizations”); and (b) all material files related to any Regulatory Authorization, including dossiers, reports, data and other written materials filed as part of or referenced in any Regulatory Authorization.
https://www.sec.gov/Archives/edgar/data/1345099/000119312515361222/d943277dex107.htm
”incorporates safety, efficacy or manufacturing data included within any Assigned Regulatory Materials and Authorizations transferred to MSB hereunder” - remestemcel-L, formerly known as Prochymal and P1, P2 and one P3 trial undertaken by Osiris, requiring an IND filed by Osiris to do so, through which safety of Prochymal was proven.
”a product containing ceMSCs” - not limiting it to any indication.
”all material regulatory applications, submissions, notifications, communications, correspondence, registrations, protocols or other filings made or submitted to and all resulting permits, approvals, authorizations or clearances, received from any Governmental or Regulatory Authority - see my point above regarding the IND filed by Osiris as well as the P1-3 trials conducted by Osiris.
Having said that, once remestemcel-L generates US$750 million in net sales, I’m sure the max amount of 10% royalties wouldn’t matter anymore anyway.
My Interpretation only.
(20min delay)