Catco Reinsurance Opport... Share Discussion Threads

[graemereid] 19/1/2005 13:03

Thanks for the posts, Matthu. When will we know whether or not Abbott will appeal the judgement on royalty payments? I'm surprised how little the shre price has moved, but maybe after the results are out with a positive staement?

[matthu] 19/1/2005 07:53

In the pharmaceuticals sector, Cambridge Antibody rose 10p to 725p after Abbott Laboratories boasted of forecast-beating sales of its Humira product. Humira reported sales of $852m (£455) in the fourth quarter, compared with expectations of $821m. This is great news for CAT. It receives a royalty payment from Abbott as the US group used CAT technology to develop the rheumatoid arthritis drug. The greater sales Humira generates the larger the royalty CAT gets.

[ The $852m obviously refers to total year sales of Humira - but that translates to at least $4.25 m royalty in 2004 and an estimated $6.5 m in 2005. Should benefit when the dollar begins to strengthen too. ]

[graemereid] 07/1/2005 12:10

CAMBRIDGE ANTIBODY TECHNOLOGY ANNOUNCES
CHANGES TO THE BOARD AND EXECUTIVE GROUP


Cambridge, UK - Cambridge Antibody Technology (LSE: CAT; NASDAQ: CATG) today
announces changes to the Company's Board of Directors and Executive Group.


Dr David Glover, Chief Medical Officer at CAT, will take early retirement from
the Company and the Board after the Company's Annual General Meeting (AGM) on 4
February 2005. David was appointed to the Board of CAT in July 1997, having
joined the Company as Vice President Medical Development in November 1994. As
the first senior management appointee from the pharmaceutical industry to the
Company, David played a fundamental role in establishing product development
capabilities and expertise in CAT. He has made a major contribution to the
Company's successful institutional fundraising activities.


Following David's retirement, Dr Patrick Round, VP Development at CAT, will
assume responsibility for all of CAT's development activities and will join the
Company's Executive Group, which has responsibility for the operational
management of the Company. Before joining CAT in May 2004, Patrick was Director
of Development at Celltech and has also held positions at Glaxo Wellcome, Novo
Nordisk A/S, Denmark and Novo Nordisk Pharmaceuticals, UK.


Diane Mellett, General Counsel at CAT and Company Secretary, will join the Board
of Directors following the Company's AGM in February. Diane joined CAT in
October 1997 as Vice President Legal Affairs and Company Secretary, having
previously worked in private practice in the UK. Immediately prior to joining
CAT, she worked for an American law firm in London and Chicago. In addition to
being a solicitor, Diane is qualified as a US attorney admitted to the Illinois
Bar.


Paul Nicholson, Chairman of CAT, said "We would like to thank David for the
invaluable contribution he has made to the Company and for the expertise and
professionalism he has brought to CAT. David has played a huge role in helping
to build CAT from a small private biotech company to where it stands today.
David has our very best wishes for the future.


We look forward to welcoming Diane to the Board. Diane has been a key member of
the executive team of CAT over many years. Her appointment as a Director is
thoroughly deserved and we expect the Board will benefit greatly from her input.


Since joining CAT last May, Patrick has already made a significant contribution
to CATs progress. He will be a very valuable addition to the Companys Executive
Group."


-ENDS-

[crystalclear] 21/12/2004 17:01

Rayrac
Yes, I think so, they planned or took a stake while the legal mess was going on. See earlier RNSs; you won't have to go back far.

[rayrac] 21/12/2004 15:36

The buy of CAT shares by Astra just announced, is that old news?

[matthu] 21/12/2004 06:33

CAT wins royalties battle over Humira with US firm

Simon Bowers - Tuesday December 21, 2004 - The Guardian

Biotechnology firm Cambridge Antibody Technologies has won its high court battle with US drugs group Abbott over royalties from Humira, used to treat rheumatoid arthritis.
Abbott had used CAT's technology in the development of the genetically engineered human antibody treatment, launched in January last year.

The drug generated sales of $180m (£93m) in 2003 but Abbott argued that CAT was only entitled to a reduced royalty payment of $5.6m - 2% of sales - because of the substantial involvement of other royalty-seeking firms in the development process.

Yesterday, however, high court judge Mr Justice Laddie ruled that such reduced payments did not meet the requirements of the royalties-sharing contract between the two firms. He said Abbott's defence "does violence to the language of the agreements, renders them obscure and makes little or no commercial sense".

He added that there was no need to try to divine the original intentions behind the contract, which were clear enough. There was a "royalties offset" clause allowing Abbott to reduce payments to CAT, but only in the event that its contribution could be shown to be lessened by the involvement of another royalties-seeking contributor.

Mr Justice Laddie said that CAT should rightfully receive only about 6% of Humira sales in relation to 2003, worth $16.8m. Yesterday, shares in CAT, which had been suspended early in the day pending Mr Justice Laddie's judgment, closed up 81p at 713p.

Investor focus was on future sales of Humira which are expected to exceed $800m this year, according to Abbott's projections. Analysts have suggested the drug could reach peak annual sales of $2bn. Following yesterday's ruling, CAT is entitled to between 5% and 6% of net sales of Humira.

Abbott said in a statement: "We are disappointed by the judge's decision to rule in CAT's favour. We have requested an appeal." The application for appeal will not be heard before late January. CAT chief executive Peter Chambre said he was "delighted" with the ruling. "They [Abbott] took an interpretation of a key financial clause in the contract and we didn't think that was right so we entered litigation ... At no point did Abbott put us in a position where we could settle the dispute."

Abbott won the rights to Humira when it acquired BASF's Knoll drugs arm in 2000.

[matthu] 21/12/2004 06:32

Little guys score a victory in the battle for fairer drug royalties
By David Firn and Nikki Tait
Published: December 21 2004 02:00 - Last updated: December 21 2004 02:00

Cambridge Antibody Technology's High Court victory over Abbott Laboratories in a bitter dispute over royalties for its Humira arthritis drug will do much more than boost the biotechnology company's revenues.


Peter Chambré, CAT chief executive, hailed the victory as "an exceptionally good result" for investors, as the company's shares rose 25 per cent in early trading.

But some industry watchers believe CAT's victory is also an important step for small biotechnology companies that license their products to big pharmaceutical groups.

"Maybe now UK investors will see that it is possible for the fruits of UK bioscience to be appropriately commercially rewarded," says Martyn Postle of Cambridge Healthcare & Biotech, a consultancy.

If CAT's victory stands - Abbott has said it would appeal against the ruling - it will create a well-funded biotechnology company in a sector that has been looking anaemic since profitable groups Celltech, PowderJect and Amersham were bought by foreign companies.

Humira is forecast to achieve sales of more than $2.5bn (£1.3bn) a year. The effect of the High Court ruling will be to raise the royalty rate that CAT receives from Abbott from 2 to 5 per cent. That means CAT no longer faces the prospect of having to return to the stock market for funds before the drug becomes profitable - expected in 2008.

The extra cash should also strengthen CAT's position in the biotechnology industry's equivalent of speed dating.

Almost every week, somewhere in Europe and the US, biotechnology and pharmaceutical companies sit down at "biopartnering" conferences. The biotechnology companies showcase their experimental drugs, while the pharmaceutical companies attempt to demonstrate that they are "the marketing partner of choice". Yet while increasing numbers of pharmaceutical companies profess that ambition, few biotechnology executives believe it.

Big pharmaceutical companies are more reliant than ever on biotechnology companies as a source of new products. But when it comes to making deals, lossmaking biotechnology companies are negotiating from a position of weakness.

Mr Postle says there is a lot of room for improvement in the way big pharma companies are perceived by their smaller licensing partners in the biotechnology industry. "The complacency of some big pharma companies is that they think just because they are big, biotech will come cap in hand to them," he says.

Keith Redpath, head of banking at Wood Mackenzie, says CAT's victory over Abbott is "a victory for the little guy", at a time when big pharmaceutical companies were facing a productivity crisis in research and development.

The plight of big pharma was highlighted last week when bad news on top- selling products knocked 14 per cent of Pfizer's share price and 8 per cent off AstraZeneca's.

One response to such problems has been to license-in drugs from biotechnology companies. The top-10 pharmaceutical companies generated 35 per cent of their revenues from in-licensed products in 2003, according to data from Wood Mackenzie.

Merck, which was recently forced to withdraw Vioxx, one of its top-selling products, is expected to see revenues from in-licensed products rise from 25 per cent to 45 per cent by 2008. Even Abbott, which came out worst in a recent survey of biotechnology companies' views of their partners, strikes 50 biotechnology deals every year.

With an increasing amount of sales generated by other companies' products, it is important to minimise the royalties paid.

Merrill Lynch estimates that Abbott pays 13 per cent of Humira sales to four companies for the right to use their technology in development or manufacturing.

The dispute with CAT centred on how much of the royalty stack Abbott could offset against CAT's royalties. The judge said it had deliberately misinterpreted its contract to underpay CAT.

Mr Redpath says that if companies such as Abbott are seen to be acting unfairly, they risk damaging their reputations as good partners. "Given the competition for good development products, it does seem strange that Abbott would risk its reputation as a partner of choice over a sum of money, which while of enormous significance to CAT, is an insignificant amount to Abbott," he says.

Mr Postle says pharmaceutical companies must make more effort to woo prospective partners. "Pharmaceutical companies have been very good at marketing themselves to physicians, the public and investors, but not to the drug discovery companies. What is the point of having a great relationship with prescribers if you have no products to sell?" he says.

Nevertheless, most people who have seen Abbott's contract with CAT also agree that bad drafting gave Abbott the opportunity to attempt to reduce its royalty payments

"I think people will now look at what their stacking agreements are," says Stephen Bennett of Lovell's, the law firm, although he points out that companies were stuck with deals already inked and that the real impact of the High Court decision would be on new agreements.

Nigel Jones, head of intellectual property at Linklaters, the law firm, says the CAT/Abbott case might also encourage companies to look at alternative ways to resolve disputes over royalties. The legal challenge took 12 days of court time, and occupied four QCs, along with numerous other barristers and bulky teams of solicitors. The legal bills will be considerable.

[matthu] 21/12/2004 06:32

CAT defeats drug giant in battle over royalties
By Rosie Murray-West, City Correspondent (Filed: 21/12/2004)

A British biotechnology company that has helped develop a vital rheumatoid arthritis drug yesterday won a groundbreaking court victory against pharmaceutical giant Abbott Laboratories.

Cambridge Antibody Technology, known as CAT, played a key role in developing Humira - a drug that is expected to become a so-called "blockbuster", with sales of more than $1billion a year. Humira is the most successful drug to emanate from the British biotechnology industry.

The company signed a co-development deal with Abbott Laboratories on Humira, entitling it to around 5pc of net sales when the drug was commercialised. However, Abbott then claimed that it could reduce the royalties paid to CAT by deducting the payments due to other people involved in developing the drug. When the British company realised it was only likely to receive about 2pc of the drug's royalties, it took Abbott to an independent arbitrator and then to the High Court.

Mr Justice Laddie said yesterday, finding in favour of CAT, that Abbott's way of interpreting the agreements between the two companies "does violence to the language of the agreements, renders them obscure and makes little or no commercial sense.

"For that reason CAT wins the action," he continued. "It follows that Abbott was in error when it made its first royalty payment to CAT, calculated on the basis that only 2pc of the net sales was due. It should have calculated on the basis of the full royalty of just over 5pc and should have paid, and continue to pay, CAT accordingly."

Abbott has applied for permission to appeal - and said yesterday that it was "disappointed" by the court hearing. "The decision has no material ongoing financial impact on Abbott and it was contemplated in our recently announced guidance range," a spokesman said.

Peter Chambré, chief executive of CAT, said he was "delighted" by the court's decision. "We believed all the way through that our case had merit," he said. "This is a very good outcome." The Abbott appeal is expected to be heard in late January, but analysts said yesterday that Mr Justice Laddie's strong language suggested that the appeal had little chance of success.

Samir Devani, at Code Securities, said: "While Abbott has made application to appeal, the judge's verdict for CAT on both construction and rectification clearly indicate his belief that CAT's case was strong."

He estimated that the royalty stream for Humira would now be worth £210m to CAT, and added that the company would now be able to claim back £12m from royalties that had not been paid to it. CAT has also made an application for its legal costs to be paid by Abbott, but the judge has yet to decide on this.

"Following the court victory, the company's risk position is clearly lower - losing the court case would have meant the company needing to raise further money at some point," Mr Devani said. "Now a further financing is no longer necessary and indeed the company's aim of profitability in 2008 is now visible."

CAT shares were suspended until the outcome of the case was announced this morning. They rose 81½ to 713½p, a 12-month high.


City comment
Edited by Neil Collins (Filed: 21/12/2004)

This swipe at the American beast will raise hopes in the biotech alley

CAT defies drug giant in battle over royalties

The race is not always to the swift, nor the battle to the strong - but, as Damon Runyon put it, that's the way to bet. He'd have lost his money yesterday, as the CAT gave the Abbott a nasty scratch. Few gave little Cambridge Antibody Technologies much chance against mighty Abbott Labs, but thanks to the British courts, the US drugs giant will at least need a strong antiseptic.

Big pharma has got used to pushing the kittens around, striking deals which gave most of the cream to the big cats, so it was something of a surprise to see CAT protesting.

The dispute centres on royalties from a rheumatoid arthritis drug, the only blockbuster to date from Britain's biotechnology industry. When Abbott's cheque arrived, it was much smaller than CAT had anticipated, because Abbott had decided to pay some of the money to other partners - an interpretation of the deal which the judge decided "does violence to the language of the agreements, renders them obscure and makes little or no commercial sense".

That drew blood from Abbott, but whether it will produce better behaviour from the rest is anyone's guess. The whole of the struggling British biotech industry can only hope it does.

[matthu] 20/12/2004 22:04

from
Little guys score a victory
By David Firn and Nikki Tait
Published: December 20 2004 20:34 | Last updated: December 20 2004 20:34

Cambridge Antibody Technology's High Court victory over Abbott Laboratories in a bitter dispute over royalties for its Humira arthritis drug will do much more than boost the biotechnology company's revenues. Peter Chambré, CAT chief executive, hailed the victory as "an exceptionally good result" for investors, as the company's shares rose 25 per cent in early trading.

But some industry watchers believe CAT's victory is also an important step for small biotechnology companies who license their products to big pharmaceutical groups.

"Maybe now UK investors will see that it is possible for the fruits of UK bioscience to be appropriately commercially rewarded," says Martyn Postle of Cambridge Healthcare & Biotech, a consultancy.

If CAT's victory stands Abbott has said it will appeal against the ruling it will create a well-funded biotechnology company in a sector that has been looking anaemic since profitable groups Celltech, PowderJect and Amersham were bought by foreign companies.

Humira is forecast to achieve sales of more than $2.5bn a year. The effect of the High Court ruling will be to raise the royalty rate that CAT receives from Abbott from 2 per cent to 5 per cent. That means CAT no longer faces the prospect of having to return to the stock market for funds before the drug becomes profitable expected in 2008.

The extra cash should also strengthen CAT's position in the biotechnology industry's equivalent of speed dating.

Almost every week, somewhere in Europe and the US, biotechnology and pharmaceutical companies sit down at "biopartnering" conferences. The biotechnology companies showcase their experimental drugs, while the pharmaceutical companies attempt to demonstrate that they are "the marketing partner of choice". Yet while increasing numbers of pharmaceutical companies profess that ambition, few biotechnology executives believe it.

Big pharmaceutical companies are more reliant than ever on biotechnology companies as a source of new products. But when it comes to making deals, lossmaking biotechnology companies are negotiating from a position of weakness.

Mr Postle says there is a lot of room for improvement in the way big pharma companies are perceived by their smaller licensing partners in the biotechnology industry. "The complacency of some big pharma companies is that they think just because they are big, biotech will come cap in hand to them," he says.

Keith Redpath, head of banking at Wood Mackenzie, says CAT's victory over Abbott is "a victory for the little guy", at a time when big pharmaceutical companies face a productivity crisis in research and development.

The plight of bigpharma was highlighted last week when bad news on top- selling products knocked 14 per cent of Pfizer's share price and 8 per cent off AstraZeneca's.

One response to such problems has been to license-in drugs from biotechnology companies. The top-10 pharmaceutical companies generated 35 per cent of their revenues from in-licensed products in 2003, according to data from Wood Mackenzie.

Merck, which was recently forced to withdraw Vioxx, one of its top-selling products, is expected to see revenues from in-licensed products rise from 25 per cent to 45 per cent by 2008. Even Abbott, which came out worst in a recent survey of biotechnology companies' views of their partners, strikes 50 biotechnology deals every year.

With an increasing amount of sales generated by other companies' products, it is important to minimise the royalties paid. Merrill Lynch estimates that Abbott pays 13 per cent of Humira sales to four companies for the right to use their technology in development or manufacturing.

The dispute with CAT centred on how much of the royalty stack Abbott could offset against CAT's royalties. The judge said it had deliberately misinterpreted its contract to underpay CAT.

Mr Redpath says that if companies such as Abbott are seen to be acting unfairly, they risk damaging their reputations as good partners. "Given the competition for good development products, it does seem strange that Abbott would risk its reputation as a partner of choice over a sum of money, which while of enormous significance to CAT, is an insignificant amount to Abbott," he says.

Mr Postle says pharmaceutical companies must make more effort to woo prospective partners. "Pharmaceutical companies have been very good at marketing themselves to physicians, the public and investors, but not to the drug discovery companies. What is the point of having a great relationship with prescribers if you have no products to sell?" he says.

Nevertheless, most people who have seen Abbott's contract with CAT also agree that bad drafting gave Abbott the opportunity to attempt to reduce its royalty payments.

"I think people will now look at what their stacking agreements are," says Stephen Bennett of Lovell's, the law firm, although he points out that companies are stuck with deals already inked and that the real impact of the High Court decision will be on new agreements.

Nigel Jones, head of intellectual property at Linklaters, the law firm, says the CAT/Abbott case might also encourage companies to look at alternative ways to resolve disputes over royalties. The legal challenge took 12 days of court time, and occupied four QCs, along with numerous other barristers and bulky teams of solicitors. The legal bills will be considerable.

[matthu] 20/12/2004 21:59

from
CAT shares soar after drug royalties victory

Mark Tran
Monday December 20, 2004

Cambridge Antibody Technology, Britain's leading biotech company, today won a crucial legal battle over royalties for its arthritis drug, Humira.
Shares in CAT soared by up to 28% following the high court ruling. In a decision considered vital to the company's future, Judge Hugh Laddie said US healthcare firm Abbott Laboratories should pay CAT a royalty of just over 5% on sales of Humira, which has potential sales of £1bn a year.

Abbott - which jointly discovered Humira with CAT using the British firm's technology - had been paying a royalty of 2% of net sales.

"I have come to the conclusion that the construction advanced by CAT is correct, and that the construction advanced by Abbott does violence to the language of the agreements, renders them obscure and makes little or no commercial sense. For this reason CAT wins this action," judge Laddie ruled.

The judge said Abbott had been wrong when it made its first royalty payment to CAT, calculated on the basis that only 2% of net sales was due. "It should have calculated on the basis of the full royalty of just over 5% and should have paid, and continued to pay, CAT accordingly," he said.

Humira is the only CAT drug on the market, and defeat in the court case would have dealt a major blow to the loss-making business, which has no other drugs close to being marketed.

CAT is a leader in drugs based on antibodies - the body's natural immune defences - which generally have fewer side effects than conventional chemistry-based medicines.

Founded in 1990, CAT has faced tough times. Like many biotechnology companies, it was forced to sign away the vast majority of future sales of its biggest drug hope, Humira, to secure help in funding and eventually marketing the medicine.

Humira has proven to be a big success, with sales almost tripling in the third quarter, rising to £116.5m. However, there have also been setbacks, with CAT losing out in a bid battle for Oxford GlycoSciences last year and its eye drug, Trabio, failing a clinical study this year.

[matthu] 20/12/2004 19:06

from
UK biotech company Cambridge Antibody Technology (CAT) has won its court fight for bigger royalties from the sale of arthritis medicine Humira.
Abbott, which makes Humira under a CAT license, was wrong to deduct payments to help cover other companies' fees, the High Court has ruled.

CAT's royalties are now set to double to more than 5%.

Shares in CAT closed up 12.9% as analysts said the ruling was crucial to the Cambridge-based firm's future.

CAT is a world leader in monoclonal drugs - treatments based on antibodies, which generally have fewer side effects than conventional chemistry-based medicines.

Industry observers believe that the market for such products will rise more than five-fold to about $25bn (£12.8bn) annually by 2010.

However, in common with other firms in the sector, CAT signed away future sales of its biggest drug hope in 1993, to secure funding and promotional help.

The loss-making firm has other products in development but Humira, with predicted sales of $2bn a year, is currently its only drug on the market.

Royalty boost

CAT chief executive Peter Chambre said the court win would allow the company to continue a research deal announced last month with Astra Zeneca to develop the next generation of anti-inflammatory drugs.

Abbott, which is to appeal the ruling, said the case would have no material impact on its finances.

Under a 1993 deal, CAT licensed Abbot to use CAT technology to develop Humira, which went on sale for the first time in 2003.

Abbott agreed to pay CAT royalties of more than 5% but argued it was entitled to charge CAT to cover some of the costs of third-party technology. CAT took Abbott to court claiming it was entitled to more than the 2% share of sales it had been receiving.

Mr Justice Laddie said "Abbot was in error" in the way it had calculated the royalty payments.

[matthu] 20/12/2004 19:05

from
Cambridge Antibody's Underdog Story
By Brian Gorman
December 20, 2004
Cambridge Antibody Technology's (Nasdaq: CATG) legal victory over Abbott Laboratories (NYSE: ABT) shows that a biotech David can triumph over a pharmaceutical Goliath. The case may be a harbinger of increasing assertiveness from biotech companies in their relationships with larger players.

A court in the U.K. today ruled that Abbott has been underpaying Cambridge Antibody on royalties for Humira, a monoclonal antibody approved to treat rheumatoid arthritis. The pharmaceutical company had been paying Cambridge a 2% royalty on the medication's sales, but the court ruled that the royalty should amount to just over 5%. Humira has been a major growth driver for Abbott, with sales rising 189% in the third quarter alone to $227 million. Sales for this year are forecasted at $800 million and for 2005 at $1.2 billion.

Cambridge Antibody's stock rocketed 14% on the news, but an improved royalty stream alone isn't likely to make the company profitable in the near term. Certainly the extra cash will put the company on firmer ground, and investors may have hopes for Cambridge Antibody's own pipeline of products. Success in this area, though, may be a ways off. The company's lead candidate, Trabio, is in phase 3 development for the treatment of scarring following glaucoma. However, that medication previously failed to meet initial studies' primary endpoint.

Nevertheless, Cambridge Antibody has gained the respect of major drug developers, and this respect in turn has meant more beneficial deals for the company. Last month, AstraZeneca (NYSE: AZN) agreed to buy a $140 million stake in the biotech outfit as part of a strategic alliance. That deal complemented an earlier large investment pact for Cambridge Antibody with Genzyme (Nasdaq: GENZ) in 2000.

Although Cambridge Antibody continues to bleed red ink, its expertise in the development of monoclonal antibodies puts it in a powerful position. The court case against Abbott demonstrates that Cambridge Antibody is aware of its own prominence, while its equity alliances suggest that its view of itself is shared by others.

[matthu] 20/12/2004 17:24

extract from

Cambridge Antibody Wins Lawsuit Against Abbott Labs (Update5)

Peter Chambre, Cambridge Antibody's chief executive, said the ruling gave the company "better financial flexibility." Cambridge Antibody won't issue guidance on the ruling's financial impact, he said. The judge will rule next month on the royalties and interest the company is owed, Chambre said.

Changed Perspective

"It's very good for (Cambridge Antibody) because it will enhance its cash flow and it will be less dependent on the market to raise cash," said Reijer Lenstra, managing director of Biopharma Fund, which manages about $150 million in biotechnology investments. "It really changes the perspective for the company in a big way."

Cambridge Antibody's case was "overwhelming", Justice Laddie wrote in his ruling. Laddie said the more he considered arguments submitted by Lord Grabiner QC, Abbott's lawyer, "the more difficult his client's position appears to be."

Abbott gained Humira in 2001 when it bought BASF AG's Knoll drug business, which had an agreement with Cambridge Antibody for the therapy at the time. The Illinois-based company said Dec. 17 that it had asked the U.S. Food and Drug Administration to approve Humira's use to treat psoriatic arthritis.

Unreliable

The judge said he found two of Abbott's witnesses, Jochen Salfeld, who led BASF's team of negotiators for its agreements with Cambridge Antibody, and Robert Shaw, a former in-house lawyer for BASF, "unreliable."

Salfeld, now a vice president in biologics discovery at Abbott, suffered from "progressive amnesia" when questioned by a lawyer for Cambridge Antibody, Justice Laddie said.

Shaw, who gave evidence by videolink because he was unwell, was a "man who had a story to put across and who was not prepared to let contemporaneous documents get in his way," Justice Laddie wrote. "The clear impression given to me was that Mr. Shaw was giving inaccurate evidence and he knew it."

"Abbott's witnesses were attempting to recall contract negotiations from about a decade ago and, to the best of their ability, described these discussions to the court," Abbott said in a statement.

I will be very surprised if Abbott decides to proceed with this appeal.

[dancer03] 20/12/2004 17:16

I agree with most peoples opinion here, that CAT shares are still very much under-valued and expect them to rise significantly upwards as this news is fully digested. Still gives me a chance to top up.

It's a little annoying though that I would have lost about £2 a share had they lost the court case, yet they won and we only see a mark up of less than a pound. I have little doubt though that this company is most definately going places and you'll never see £6 again.

[danny_boffin] 20/12/2004 16:57

My view:
Today was always going to be dominated by selling. People will be taking a quick buck and getting out of here.

Tomorrow, the profit takers will be gone, the news will appear in the broadsheets, and CAT will begin its progress towards those price targets that are being talked about.

Just my humble opinion etc.

[matthu] 20/12/2004 16:21

Cambridge Antibody Gets Legal Win Over Abbott
By Elena Berton
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Cambridge Antibody Technology PLC (CATG) Monday said a court has ruled that Abbott Laboratories (ABT) must increase the royalties paid to the company on sales of rheumatoid arthritis drug Humira.

The two companies have been in dispute since last year over the royalties Abbott pays to Cambridge Antibody. Abbot had interpreted a royalties agreement to mean it should pay 2% of net sales, while Cambridge Antibody had claimed the deal meant it should receive 5% of net sales.

A U.K. High Court judge ruled in favor of Cambridge Antibody.

Abbott, which said it will appeal the ruling, obtained the rights to Humira when it acquired BASF AG's (BF) pharmaceutical unit, Knoll, four years ago. The royalties agreement was put in place while Knoll still co-owned the rights to Humira.

Analysts said the court decision, while still pending an appeal, reduces Cambridge Antibody's risk position.

"Losing the court case would have meant the company needing to raise further money at some point," said Samir Devani, an analyst at Code Securities.

The company suffered a setback in November when clinical trials for Trabio, its eye surgery treatment, failed and left it without any products in late-stage development.

Devani, who is reviewing his sell stance on the company, also said Cambridge Antibody's target of reaching profitability in 2008 is now viable.

At 1321 GMT Cambridge Antibody shares were trading up 17.4% at 742 pence. Trading in the stock was suspended Monday morning pending the court's decision and restarted at 1215 GMT, when shares soared almost 26%.

However, shares are likely to remain volatile until the case is resolved, analysts said. Abbott's appeal will not be heard until late January 2005. An appeal victory for Cambridge Antibody would strengthen its position in the hunt to in-license new products.

Cambridge Antibody's Chief Executive Peter Chambre has signaled his intention to hunt for new products to address the lack of advanced-stage drugs in the pipeline.

Last month the company signed a GBP75 million drug-discovery deal with U.K. drug manufacturer AstraZeneca PLC (AZN).

[matthu] 20/12/2004 16:14

CAT surges on drug royalties win
Last week, analysts at ING Financial Markets cited a 60 per cent chance that it would win the case outright. Analyst Richard Parkes raised his price target for CAT to 656p from 620p, and said that a favourable decision could see CAT's royalties on Humira sales increase from 1 per cent to 3 per cent.

Own analysis based on INGs figures

ING was pricing in only a 60% chance of victory, and only a 2% uprating in royalty. But we now know that victory is more or less assured (barring a miraculous result in the appeal court) and the royalty uprating will be a little more than 5% (I believe it will go up to 6% later).

If we assume that CAT was worth only £4.00 without the court case victory, then 60% of a 2% uprating in royalty equates to £2.56 per share (on INGs figures), implying that 100% of a 4% uprating amounts to 2.56 x 2 / 0.6 = 8.53 so their revised target becomes 4.00 + 8.53 = £12.53 per share.

If we assume that CAT was worth as much as £5.00 without the court case victory, then 60% of a 2% uprating in royalty equates to £1.56 per share (on INGs figures), implying that 100% of a 4% uprating amounts to 1.56 x 2 / 0.6 = 5.20 so their revised target becomes 5.00 + 5.20 = £10.20 per share.

So what is the share price doing languishing arounf £7.30? It can only be that investors are not yet pricing in more than a 75% chance of victory. If, on reading the judge's choice of language, you believe that this is understating CAT's chances, then this still represents a buying opportunity.

AZN obviously also thought so.

[shumba] 20/12/2004 13:35

Looking at what the judge has said they will have no chance in appeal

[matthu] 20/12/2004 13:05

CAT leaps on high court victory
By Algernon Craig Hall, Secret Buying Correspondent

Cambridge Antibody Technology's share have sky rocketed on news of a surprise high court win in its dispute with drug giant Abbott over royalty payments on potential blockbuster rheumatoid arthritis drug Humira.

Abbot is known as a shrewd legal operator and there was serious doubt about Cambridge Antibody's (CAT) chances of winning its dispute.

The market reacted with delight to news that the trial judge, Mr Justice Laddie, had found in CAT's favour and the shares, which were suspended until 12:15 today, have shot up 25% to 792.5p.

CAT can now look forward to receiving royalties of 5% on Humira sales rather than the 2% Abbot was paying.

Mr Justice Laddie said: 'I have come to the conclusion that the construction advanced by CAT is correct and that the construction advanced by Abbott does violence to the language of the agreements, renders them obscure and makes little or no commercial sense. For this reason CAT wins this action.'

Abbott made an application this morning for permission to appeal, which will not
be heard before late January.

The judgement will come as particularly welcome news for AstraZeneca (AZN), which has had a horrible month due to drug development disappointments. Last month the drug giant announced that the planned purchase of a 20% stake in CAT at 734p per share and a drug discovery joint venture.

Citywire Verdict:

Worries remain about CAT's weak early stage drug pipeline but full royalties from Humira should certainly help investors see the company in a brighter light and have more faith in its financial viability.

* The author holds shares in CAT

[matthu] 20/12/2004 12:51

It seems that the price reaction has been partly muted by the prospect of an impending appeal. This gives investors another opportunity to buy in before the appeal.

That appeal is going nowhere! These shares are worth over £9 by any calculation.