Not quite. The 2% royalty is paid by PAR -> Bene. The 18% in the...

Not quite. The 2% royalty is paid by PAR -> Bene. The 18% in the report is paid by JJ -> PAR (assuming Johnson & Johnson will be our distribution partner in the future haha).

Remember that PAR will not be selling anything. The whole idea of an out-licencing agreement is that PAR is granting JJ the IP rights to sell this product. Our only source of revenue will be sales royalties paid to us by JJ (and any other milestone and upfront payments). To illustrate this, I posted this table a while back:



Some key assumptions used:

• $2,500 sale price (if you ask me there is no way Zilosul should only sell for $2,500 when a comparable product like Humira is selling for $70,000 per annum. But I guess Paul Rennie's heart is not all about $$$...)
• 25% royalty rate (this is the 18% used in the report. Even 25% is too conservative imo. They should be able to secure a higher rate with their incredible bargaining position)
• Other expenses in line with pharmaceutical industry

Feel free to adjust the variables in the model but what it shows is a net profit to PAR of at least $270 per patient. Say we achieve 10% penetration of the US OA market - 3 million patients. That alone would generate a net profit of $800 million. At a PE ratio of 30 - that's a $100 SP. Most would agree that 10% is just the tip of the iceberg when Humira managed to achieve 65% market penetration.