Question-and-Answer Session
Operator
(Operator instructions) Your first question is from Ian Sanderson with Cowen & Company.
Ian Sanderson – Cowen & Company
Good morning. Thanks for taking the question. First, and I’m not sure if you can answer this, but I’ll give it a shot, any update you might be able to provide on Opana ER franchise extension plan, when we might hear a little more about that as well as the European licensing rights?
And then secondly, Ben, could you – sorry to make you do this, but could you just walk through the kind of the royalty steps coming up, which you just did, but I couldn’t write it fast enough on Opana ER.
Jennifer Good
So I’ll start, Ian. You’re right. I really can’t say too much because you probably could tell the new regime at Endo sort of I think staying in a little bit tighter box around this. I can say there are efforts are going on at both fronts. We’re happy with how it’s moving, but I can’t really give a whole lot more color on that. I think I need to respect their disclosure policies. Ben, I’ll let you take them to the money side.
Ben Palleiko
Yes. So the numbers I went through, sorry if I went so fast, are that they used up $8.1 million of the royalty holiday in the second quarter. There’s $5.9 million left. We expect them to start – we expect to start recognizing royalty payments from them in the third quarter, next quarter. Once they start making those royalty payments, they – it’s part of our amended agreement, they get to withhold 50% of those payments to – in order to recoup that $28 million, which is an agreed to amount of development expense they funded on our behalf.
Ian Sanderson – Cowen & Company
So you would just be recognizing – you won’t be recognizing the whole thing and just receiving cash of 50%. You’ll only recognize the 50%, correct?
Ben Palleiko
Correct. We will only recognize the 50%. That is correct.
Ian Sanderson – Cowen & Company
Yes.
Ben Palleiko
And again, how long that takes is dependent highly on how sales grow over time? But as we said there today, we’d expect to start recognizing the full royalty rate sometime at the end of 2009.
Ian Sanderson – Cowen & Company
Okay. And in terms of PTO feedback on the 192 patent, any schedule there?
- To read the full transcript on Seeking Alpha, click here »
