Greetings, Trey, Staff, all. Viracept is priced at about $5600 per year wholesale, Crixivan near $4400. Viracept 250mg. is an elongated blue tablet. One takes three of them, three times a day, or 270 tablets per month, with food. They shipped quantity for 21,000 users in March, a run-rate of $120mm in annual revenues.
The profit Agouron will realize from Viracept will be obscured by their expenses in building the company. They have hired and trained a sales force, and are advertising for manufacturing personnel. The bear case on the stock valuation is that the high gross margin from Viracept will not fall to the bottom line immediately. The bull case is that Viracept gross margins will build Agouron into a strong company, rather than be paid out to partners and accumulation of cash-on-hand in excess of what they need.
In any case, the current level of users is sufficient to justify the entire market cap of the company on a PSR basis, relative to valuations of other biotech companies at the dawn of product commercialization. A bet that usage will not grow is hard to understand -- Asian and European approvals are near, Viracept has lesser side effects than competitors, sales are only two weeks old in the US, and all protease inhibitors together have only penetrated 20% of the US market.
Much has been made of Glaxo adding Vertex' PI to their reverse transcriptase inhibitors. Investors seem to regard that as filling out the triple crown and grabbing the whole market! Peter Johnson makes the case that double PI therapy may be the wave of the future, and that toxic RTI's may be headed for diminished usage.
"So", growls the skeptic, "Johnson is just a little guy in a newbie biotech, who believes him?"
Well, Glaxo for one -- Vertex' PI is being tested with Viracept in a double PI combo. And Merck -- Crix is also being tested with Viracept. And Abbott -- they're testing with Viracept also (what have they got to lose?). And Roche is testing with Viracept. More telling is that Roche paid $40 million and royalties for the right to market Viracept in Europe _in competition_ with its own drug Saquinivir. Also Roche will pay Saq royalties to Agouron if Saq sales exceed Viracept. Looks like Roche believes in double PI, and they have more clinical experience with the concept than anyone else.
If there has ever been a case where a product on the market for only two weeks so completely dominated its competitors, I haven't seen it. Well, maybe Willie Mays' rookie season... or Magic's or Michael Jordan's. |
