Good to see the 10 big pharma companies in your list average over 75% gross margins, with COGS including manufacturing, sales, and executive/corporate overhead one would assume. NNVC would only be paying 30%+ on manufacturing and not the other categories. If any of the BPs use CMOs, then they are paying a markup on manufacturing too. NNVC has no sales force (no need for them with no products!) and could potentially just be outlicensing things anyways. NNVC has minimal staffing. If Theracour really can produce a product NNVC could sell, it's important to know the expected gross margin to Theracour, as pointed out in previous posts.
For R&D, NNVC pays TC a markup for sure, but outsources work to other contractors too (all the preclinical animal model testing, skin organ culture testing, biosafety lab testing, toxicology, etc...). These other contractors also have a markup, so it's not clear Theracour is ripping NNVC off. BP companies outsource a certain percentage of their R&D too, with markups. NNVC will be paying some CMO to run the trials, at some markup (close to 30%)?
The true question is this: does Diwan / Theracour provide a good value proposition in the development work they are doing for NNVC? Diwan loves to claim Theracour has saved NNVC a lot of money (and produced a full pipeline on the cheap), but this is really a judgement call. So far, TC has taken a lot of NNVC R&D money, and produced no IND candidates for testing at all! The main impediment has seemed to be their inability to produce the drugs reliably at scale. Why else did FluCide stall?
Of the near $100M NNVC has gone through thus far, I would estimate Theracour has gotten $30-40M. It was ~$3M per year for 2017-2019 (out of $5-6M total R&D spend). Have we gotten our money's worth? I sure hope we can find out if the HerpesCides work.
So, for the reasons above, NNVC will be paying less than 30% markup on COGS and R&D. Unless BP does everything themselves, their costs are already inflated too (paying markup to 3rd parties).
If gross margins are high enough to pay the high 15% royalty it will still leave some for NNVC.
NNVC still has a chance to be successful (depending on probability of success and projected gross margins), even as grim as things are looking now.
First they need to raise some money to get the IND and into trials. If successful after a Phase II, they will have to decide whether to get a BP partner or try to raise some more and go it alone. Here's hoping NNVC is around long enough to get one drug into trials and possibly have enough success to be able to face that strategic decision. It sure would be nice if Uncle Milton was still around to finance things a little further. Since they canceled the S-1, what is the plan to raise money??? What options will we have? |
