Zincit Case

Zincit:

Used the data to obtain a patent of the use of zinc salts for acid reflux

One company wants to use the tablet as a competitor to Tums. The “Zums” team is not going to apply for FDA approval;

Dr. Hasan hired lawyer Sam Massey to help negotiate the deal. Hasan was more than a bit surprised (and pleased) when Massey came back with a $20 million all-cash offer.

The “Zincit” (pronounced Zinc-It) team has experience with the FDA approval process.

The process would likely cost $10 million, but since getting FDA approval would be a huge boost to sales, Zincit is willing to commit to the expense

Scenario 1

• FDA approval, the company expects to earn $200 million in total revenue
• $120 million in profits over the life of the drug
• 5% royalty (based on revenue) would be worth $10 million to Hasan

Scenario 2

• Zums offer, Zincit team has concluded Hasan's compound

• Zincit team has concluded Hasan compound only has a 1 in 10 chance of winning approval
• Zums offer: can't buy the license for less than 20 million dollars