Although I do enjoy the flaming, let's move on to substantive issues. We should try to discuss the added value of Hextend over hetastarch.
I don't believe there is any compelling evidence of improved coagulopathy properties of Hextend. As I've said before, the EBLs of the phase III trials show no statistically significant differences between the Hextend vs the hetastarch groups. I believe no SS difference was shown because the large blood loss variance represented variables of surgery rather than (non-dilutional) coagulopathy. I understand the limit to hetastarch dosage is due to hemodilution (clotting factors, oxygen carrying capability, etc) and not from non-dilutional coagulopathies. If I have time, I'll head to the medical library to check some references on this issue. My webpage (http://btim.dyn.ml.org/Biotime) links to a good overview of hetastarch and it's shortcomings. The author thot that it's non-dilutional coagulopathies were rare.
The ability of Abbott to capture market share of the starch-based plasma expanders depends on the value doctors/hospitals/HMO's see in Hextend over Hespan (hetastarch), pentastarch, etc. It seems that Abbott will only market Hextend if 1) Hextend doesn't canabalize their current generic hetastarch sales, or 2) commands a premium well over generic hetastarch greater than the 10% Biotime fee+royalty + added_cost.
If the starch-based expander market is $50M/year, and Hextend gets 1/3, then revenues will be around $18M/year. From this, Biotime would receive about $2M/year in fee+royalty. At best, $1M/year would go to bottom line, or $.10/share.
Even if the total market were $100M/year, and Hextend captures $30M/year revenue, fees+royalty would be $4M/year, bottom line of $3M/year, or $.30/share. A generous P/E of 40 (growth would only come from increased market share) would yield a share price of $12.
So I think Hextend must be able to command at least a 15% - 20% premium over the commodity starch expanders, and capture at least 30% of the market, and show a high earnings growth rate to even approach a $12/share valuation.
Steve |
