Bill: Maybe you should preface your post with: "In My Opinion"
I do not have the same opinion. IMO, European approval is not factored into the price. How could it be? At what price is it factored in? $40? $56? $70? $75? Does anyone actually know how much Agouron will receive from European sales of Viracept and Saquinivir, once European approval is final? The analysts have consistently underestimated sales of Viracept in the US and they have a lot more information than any of us armchair analysts.
European approval will give Roche the right to distribute Viracept in 15 to 16 countries. Approval will be for pediatric use as well. That is a big market. If the analysts have consistently underestimated the U.S. market, does anyone really think that they can accurately estimate the European or Canadian or Australian or Asian markets? In this past quarter, 40% of Merck's Crixivan sales came from Europe. That is a significant amount. ($47 million out of $130 million, if I remember correctly.)
BTW, Agouron WILL issue a press release when European approval is granted, as European approval will be a very big deal for Agouron. They will get an $11 million milestone payment from Roche immediately, plus royalties from European sales of Viracept, plus royalties from European sales of Roche's Saquinivir that exceed sales of Viracept, plus profits from the manufacturing of Viracept. Royalties on European saquinivir sales will be on a sliding scale, the more Saq sales, the higher the royalties from Roche. This is to discourage Roche from pushing Saq over Viracept. I don't think Roche would have agreed to this arrangement if they had not anticipated large European sales of Viracept.
Randy Schmid, in a great post (2863) said that Agouron is making progress on lowering the manufacturing cost of Viracept, which will add to the bottom line. Is this factored in?
As far as the recent paranoia manifested towards drug companies, major drug companies do not behave in grossly unethical ways; they don't kill people for marketing reasons. The successful companies are honest in the data they present to FDA and they move to market in an orderly way without delays. There has been a Viracept expanded access program in Europe for some time. People do have access to the drug.
Roche co-funded Viracept development, and is paying 80% of Thymitaq's development cost. Roche recognized that Viracept was a better alternative for patients than their own product, and has funded Saq/Vcept studies. Roche will devote their own substantial resources to the success of Viracept -- their sales force, their advertising (in many languages yet), their warehouses, their trucks, their information systems, their regulatory contacts, their company prestige. Agouron could never duplicate what Roche is putting behind their product.
Europe is not a single country. In addition to approval from the European Medicines Evaluation Agency (EMEA), there may be country-specific registrations that have to be completed before Viracept can be sold there. As LMMoss said on AOL today,
"When Viracept is broadly approved in Europe, I am sure that Agouron will issue a press release. Let's be patient while we await this almost certain outcome, and let's not confuse the recommendations of panels with final governmental approval."
So lets not think bad thoughts against either company because they have not made a premature press-release to drive the stock price up. I've been guilty of it myself. It is far better that a company plans carefully, assures line of supply, meets all the regulatory conditions, than to have a big splash and then disappoint investors. Patience!
BTW, it would appear that options activity yesterday was actually bullish. There were 671 contracts to buy Nov@ $45, which was $3.37 out of the money and closes on Friday. The stock price is usually unpredictable as it gets closer to options expiration. This isn't the first time this has happened. We all know this stock is not for those with faint hearts :) The overall market is not for the faint hearted either, lately. You have to believe in the company and it's management. |
