Burford Capital Share Discussion Threads

[monte1] 17/8/2019 21:39

#11453

I inserted a non disclosure agreement with myself in respect of point 6 so am now unable to read it.

[monte1] 17/8/2019 21:36

8. Napo were required to pay Glenmark 2.5m for their legal fees and costs - end of.

7. Eh? The collaboration agreement provided for Napo to make the drugs and Glenmark to sell them. If Glenmark don’t do their part then Napo can have a crack - pretty reasonable I would have thought. Interestingly Glenmark can also source the drugs from somewhere other than Napo although in that event they must still pay Napo a royalty.

I am struggling to understand what you find so difficult about this pretty straightforward concept.

[bbmsionlypostafter] 17/8/2019 21:36

Sparusty
17 Aug '19 - 21:13 - 11449 of 11452

Point 6 has me worried.

What happened to "arguably insolvent"

It'll be addressed when they restate the accounts.

[sparusty] 17/8/2019 21:30

Monte you have materially overstated your accounts what are you hiding behind No6.LOL

[adnan17] 17/8/2019 21:26

Monte -

Your point 8 is still wrong. There was no lump sum payable. The settlement agreement is very clear. Payment will only come from Royalty payments. Once again you assume. Most important thing in contract law is never assume. Only go by what the contract states. In this case the settlement agreement is very clear. Payment must only come from Royalty fees.

Point 7 is very important. And hence not immaterial. Both parties wanted to right to commercialise the drugs. That is why Napo terminated the initial contract. They wanted to then commercialise it themselves. That point is very clear. The settlement agreement concluded that Glenmark would commercialise in 140 countries, if they were not able to or refused to do it then Napo would have the right to commerialise the drugs. The right to commercialise would determine who would get the estimated $700m in sales. Hence very bizarre why you consider this point immaterial.

[monte1] 17/8/2019 21:18

#11549

LOL

I wonder where I put point 6 - anyone seen it?

[monte1] 17/8/2019 21:17

Point 8. - the reasons are immaterial. Napo had to pay, whether a lump sum or set-off of royalties due. If insufficient royalties were generated to offset the sum, they would surely still be liable for the monies due.

Point 7. - the settlement agreement provided the reasonable option of Napo taking over the marketing of Napo didn’t commence commercialisation within 2 years of receiving regulatory approval. Again this point is immaterial in the context of more n or lose which is, of course, the only thing that matters in this particular discussion.

As for your ‘I have successfully refuted....’ we will have to agree to disagree on that one.

[sparusty] 17/8/2019 21:13

Point 6 has me worried.

What happened to "arguably insolvent"

[adnan17] 17/8/2019 20:53

Monte - Also your point 8 is very bizarre. What evidence can you provide that Napo could not pay. Where does it state that?

Please provide the evidence and stop assuming.

[adnan17] 17/8/2019 20:49

Monte - your point 7 is wrong. Also i have successfully refuted all your and SK comments over the last few days.

The original contract was changed. The original contract stated Only Glenmark would have the right to commercialise the drugs. The court decided in the revised contract that if Glenmark did not commercialise the drugs in the 140 countries then Napo would have the right to commercialise the drugs.

Very surprising that a company like Glenmark that makes billions of dollars in sales would sue Napo to ensure that it still had the opportunity to commercialise the drugs. Why would Glenmark start a trial against Napo if it did not believe in the ability to sell the drugs.

Given that both companies wanted the rights to sell the drugs in 2013 it is very clear that all market participants believed the drug had considerable value. Hence the drug was considered very valuable to both entities including Glenmark a Global Pharmaceutical company.

[monte1] 17/8/2019 20:40

#11445

Noted.

I didn’t follow the trail any further.

[bbmsionlypostafter] 17/8/2019 20:18

Robert Ballache, head of IR.

How appropriate given what appears to be coming down the pike.

[monte1] 17/8/2019 19:40

#11437

Giving you the benefit of the doubt, I can only presume that you have no concept of how commercial contracts operate.

1. The contract gave Glenmark the right to market.

2. In return Napo would receive a royalty.

3. Sales were not happening. Napo obviously believed this was due to Glenmark’s failure.

4. Napo terminated contract.

5. Glenmark sued Napo.

7. Arbitration ruled Napo did not have right to terminate and the original contract remains in force.

8. Glenmark were awarded costs. Napo could not pay and the ability to offset these against future royalty earnings was agreed.

9. Presumably sales eventually commenced, debt was settled and Napo receive ongoing royalties in accordance with contract.

10. Why would BUR be due a cut of royalties that were part of the original contract when they had provided funding for a case that was lost?

11. 700m was a lifetime estimate of potential sales value and is meaningless as the actual sales will be whatever they are. Royalties will be paid in arrears at agreed intervals.

[williamcooper104] 17/8/2019 19:37

Technically you're right - the accounting adjustment relative to current market cap should not be too material But the point is if they blatantly lied (and I don't think they did) then that would totally kill confidence in management Which is why this and most of the legitimate point behind MW is on governance

[luckymouse] 17/8/2019 19:09

BUR are looking this lol..

[williamcooper104] 17/8/2019 19:08

It's the cross-x point LBA might cost £10k (should cost £1k but would cost £10k min:) The main case could have cost millions and lost But they could have cleaned up on the LBA

[luckymouse] 17/8/2019 19:05

It's SK & H who doing the relentless psych bombing? But hey - feelings lol

[jakeah1174] 17/8/2019 19:02

I don’t see this as a MW vs BUR ‘clash of the titans’ where investors are unsure of what side to take at all. I think investors believe in BUR as a business but are now afraid of just what can happen on AIM as a result of some nonsensical opportunistic sensationalism masquerading as activism. Great, great news about the US listing.

[adnan17] 17/8/2019 19:02

Apologies for the delayed response. Went out to play some tennis with the younger members of the family.

So lets go through the entirety of the Napo V Glenmark case, including the background which helps set the context and provides a full summary of what happened and what the final settlement was.

1. In 2005, Glenmark invested Rupees 4,350,000 ($836k) cash into Napo. Napo would sell a drug called Crofelemer to Glenmark. In turn Glenmark would commercialise the drug in 140 countries. The estimated value of this commercialisation of the drug would be $700m. In turn Glenmark would pay royalty fees to Napo of 14% of the sales. So Napo would receive $98m roughly in royalty fees. See below link:

hxxps://www.business-standard.com/article/companies/glenmark-buys-5-in-napo-us-105070901060_1.html

2. By 2011, Glenmark had not made any progress in commercialising the drug. Napo got annoyed and terminated the contract. Napo then wanted to commercialise the drug by itself. If you had a product that could generate sales of $700m wouldn't you want to sell it as quickly as possible and pocket all that money? See link below:

hxxps://www.businesswire.com/news/home/20111212006268/en/Napo-Terminates-Glenmark-Pharmaceuticals-Failure-Commercially-Develop

3. Then in 2011 Glenmark having lost the rights to commercialise the drug decided to sue Napo. A company like Glenmark which had sales of $778m would only sue if it believed the drug to be valuable otherwise why bother? See below 2 links:

hxxps://www.thehindubusinessline.com/companies/glenmark-files-arbitration-claims-against-napo/article23055487.ece



4. Then in 2013 the courts obliged that Glenmark must commercialise the products in the 140 countries and any sales by Glenmark will result in Royalty Fees payable to Napo. If Glenmark does not start the commercialisation then Napo has a right to commercialise the drug in the countries. After all the estimated sales value of the drug is worth $700m and royalty fees are $98m. See link below (section 4.4; obligations of Glenmark):

hxxps://www.sec.gov/Archives/edgar/data/1585608/000104746917003695/a2232030zex-10_59.htm

5. Then Glenmark demanded that Napo pay the legal fees of $2.5m. Instead of the court saying yeah sure, Napo you must pay the legal fees from your cash sources. Instead what the court decided was that the legal fees would be paid by reducing the royalty fees payable to Napo. Hence the estimated royalty fees payable from Glenmark to Napo would be reduced from $98m to $95.5m (Assuming sales of $700m for the drug and royalty fees of 14%). To me this comes across as a Settlement. And funnily enough the heading of the SEC link is titled SETTLEMENT. See link below:

hxxps://www.sec.gov/Archives/edgar/data/1585608/000104746917003695/a2232030zex-10_60.htm

6. So it appears that Burford then took a cut from the royalty fees payable to Napo.

[gettingrichslow] 17/8/2019 18:56

Are we not bothering with the ‘arguably insolvent’ point any more then?

Is the only remaining issue a £15m payment (a tenth of a Neymar or a Messi) over 6 years ago??

Is that what this has all come down to now??

[henchard] 17/8/2019 18:46

Now that BUR is in the mood to listen to shareholders, I think it would be a good idea for all shareholders to email the company, asking it to release an RNS clarifying the Napo/$15.8m matter.

I'm not sure if [e-mail] currently listed as an investor relations contact would be appropriate, while the recently announced (12 Aug) new head of IR, Robert Bailhache ([e-mail]), will "take up his position with effect from 1 September 2019" although perhaps, as he's also listed on the investor relations page, his taking up his position has been brought forward.

An alternative would be to contact the independent non-executive directors, but their contact details don't appear to be available on the BUR website.

[sweet karolina2] 17/8/2019 18:42

William,

"A private settlement reached after a Letter Before Action wouldn’t create any public record"

Indeed but why would Napo need litigation funding for such a settlement? Can you really conceive of any situation like that which would give rise to a $15.8m entitlement to BUR?

That is the key point, whatever the case, it needs to be significant enough for BUR's cut to be $15.8m ie at least $50m in damages.

Anyway it will all become clear on Mon morning won't it?

[gettingrichslow] 17/8/2019 17:58

No WilliamC that’s not right because SweetK has declared she is 99.9% sure it’s dodgy. Your statement suggests it’s only 50/50.

Why would SweetK lie? She has no position remember!