It's not disclosed. At H&Q, Boger said that Glaxo will pay a "very high" royalty.
I think Vertex got punished more because the Barron's comments, for them, were accurate across the board. They _are_ about a year away. That is, the downgrade _and_ Barron's took their toll, whereas only the downgrade paranoia was relevant to AGPH.
At this point, the downgrade is interesting. Lenstra took the stance that a negative surprise, given the run, would hit hard. It was sort of a defensive play, without negative comment (for those who don't know what I'm talking about, Smith Barney analyst Reijer Lenstra cut Agouron to a neutral from outperform today, strictly on the basis of price). However, I think that the Roche news indicates that it's no longer AGPH versus Merck, Abbott and Roche, but AGPH, Roche and JT versus Merck. If the two PI trial that Roche and AGPH are running with saquinavir/viracept works out, I'll up my estimate of market penetration to about 40% by 12/31/98. I'll still assume marketing and manufacturing costs at 50% of sales (out of thin air). That leaves a cool $100 million/year, or about $7.60/share. If they're pulling in that sort of profit, what sort of PE do you assign to a company with plenty of cash, Roche paying the way for cancer, JT paying the way for anti-virals, three novel anti-cancers in clinicals, and a jammed preclinical program?
From here on, it's all ifs and butts. From my perspective, it looks like the VRTX product, although early in testing, looks slightly more potent than Viracept. Josh Boger at H&Q said that the 28 day antiviral potency (log drop) was 0.7 Roche (old formulation), 1.1 Abbott, 1.7 AGPH, and 2.1 Glaxo/Vertex. It looks to me (do your own homework), like the new formulation of saquinavir will give crixivan a run for its money. Frankly, I'd say that Merck is going to find itself with majority near-term market share, holding the fourth best drug, behind Roche, AGPH and VRTX (kiss off ritonavir). The Roche deal for Europe this morning was followed by Peter Johnson with comments about two protease therapies. I suspect that Roche wants to lock up distribution in Europe of what they suspect and/or hope will become the standard for therapy, the saquinavir/viracept combination. The dream would be to throw away AZT, 3TC and other drugs, and have a two pill therapy pointing toward Ho's experiments. This therapy would be expensive, but, overall, it would not represent much of an increase, if any, relative to current three drug combos. As a society, we need to find cost-effective routes to control of HIV and make sure that there is sufficient availability and opportunity for patient compliance. We've been in a downward spiral, throwing cash and toxic drugs at a fatal disease. The cost to our society, both in terms of money and morale, has been enormous.
There are examples where mutations in a viral protein, in response to different drugs, are complementary. That is, the virus can't become fully resistant to both drugs at once. If this is shown true for saquinavir and viracept, market penetration may involve very little in the way of head-bumping with Merck. It would be a cake walk.
Vertex and Glaxo are a year behind. It will be fun to see what the world of protease inhibitors looks like when and if they arrive, but, if they're facing a unified Roche/Agouron and strong "two PI" data, they may find the going tough.
Now, the question is............. is AGPH preparing for a "two PI" approach for the future because the phase III data is not as good as expected, or is Mr. Johnson just pointing to a potential home-run while the original plan is intact. Given that Roche has been a long-term partner for cancer and is running the saquinaivr/viracept trial, I'd guess that all is well. It's going to be interesting.
Cheers! Rick |
