Biotech Values

[Rocky3]

Quote:
ENTA is looking at roughly 35 mil cash burn per quarter for fiscal year 2018.
Not true! The guidance you cited is for gross operating expenses, not cash burn. ENTA will have substantial royalty income on Mavyret during FY2018 (and beyond).

So the question is how much more than $35MM a quarter will the royalty income be, and, even more important, how long will it last?

The highest that it ever was from V-Pak was ~$14MM in 6/30/16 quarter. The royalty is ~66% higher in Mav sales, but Mav is priced >60% lower on the 8 week price. So TRx for Mav need to be 50% higher than V-Pak were, and NRx need to be ~125% higher than V-Pak if all of Mav are for 8 weeks. It looks like these are very doable. But that is just to maintain the same royalty ($14MM). To get to $35MM a quarter, they have to increase another 150%. Since V-Pak is not going totally away, there will be additional income there. My point is that the "substantial royalty income" does not necessarily translate into "significant income." And when added to the possible, if not probable, continued reduction in the overall HCV market at some point in 2018, there are still lots of questions.

Mav continues to see significant growth, so anything is possible. The overall HCV market has stopped falling for the last few months. ABBV/ENTA market share is hitting new highs at ~25% of NRx and ~18% of TRx. It may be able to get to >40% of NRx or even higher. But given its price (even before discounts), how much revenue will be produced is unknown. So today's negative market reaction seems overblown to me, but I surely am not committing new funds until I see growth in NRx for another month or two.