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In currently sealed court documents are details of Allergan's "Florida Plan", aimed at reducing royalties on the breakthrough drug Restasis®. This plan, devised by Allergan's Niv Caviar, then Vice-President and head of marketing for the pharmaceutical giant, was expected to save $1 billion in future royalties otherwise due to the venture partners that were involved in the development of Restasis®.
 





Allergan's plan, described as "sinister" by Athens-Clarke County Superior Court Judge David Sweat, would buy out future royalties from partners Novartis, Inspire, and the University of Georgia, where Professor Renee Kaswan invented the groundbreaking drug. Allergan’s plan relied on overstated risks, low sales estimates and excluding inventor Dr. Kaswan be excluded from the buy-down negotiations.

Without Dr. Kaswan, UGA was deprived of information she had from working closely with Allergan in the R&D phase of the drug and knew the company’s market expectations for Restasis®. By excluding Kaswan as a valuable resource during the negotiations, the University of Georgia Research Foundation (UGARF) undermined the best interests of itself, their inventor and Georgia’s taxpayers. By excluding Kaswan as a subject matter expert from negotiations, the University of Georgia Research Foundation (UGARF) not only undermined their own royalty valuation, but betrayed their inventor and Georgia taxpayers' interests.

Initially, Allergan offered less than $14 million for a royalty stream currently estimated at over $290 million. Later, their offer increased to approximately $23 million, still quite a bargain for Allergan at over a 90% discount. A 15% discount is the industry standard for royalty monetization.

So why would UGARF accept Allergan's dismal projections for Restasis®? Was it because UGARF had an impartial expert evaluation of this invention? The answer is NO. It was not until after the buy-down proposal was consummated that UGARF sent Allergan's undervalued projections to a valuation expert.

 

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