Biotech Values

[Rocky3]

What are your own forecasts for these prices?

OK! OK! OK!

I have given this a lot of thought, but I am the first to admit that I really have no competence (or least no confidence) to come up with just a number, so I will give a range. And the range keeps changing. After the GILD conference call, the range went up.

As to GILD, I think that the 8 week cost will control. I think that it will be priced under the current cost of Sovaldi plus the other drugs. According to slide 30 from the CC, the current cost is $94,078. So I think that the 8 week cost of the all oral will be $65,000-$75,000. If you really need one number, it would be the mid-point of $70,000, or $1250/pill. Using the range for the 8 weeks, the range for 12 weeks becomes $97,500-$112,500 - midpoint $105,000 (which is a little less than the current cost of the 48 weeks use of Olysio or Incivek and a lot less than the cost of the combined use of Olysio and Sovaldi, which has been used in about 20% of the case I think).

As to ABBV/ENTA, I am even less sure. ABBV has indicated that they do not plan to buy market share. But the analysis that I have seen claimed that it would maximize income by pricing at a 40-50% discount to GILD. And ABBV must be concerned about the future competition from MRK, etc. If it starts with a low price, does it make it more likely that MRK will price even lower? Of course, the payers are hoping for that kind of price war. I actual think that it is unlikely. So net-net, my range from would be $50,000-$62,000 for ABBV with a midpoint of $56,000, or a 20% discount from the 8 week cost from GILD.

But as I said at the beginning, I don't have a lot of confidence about the numbers. I have a lot more confidence that the market opportunity in 2014 and 2015 will be much larger than anyone has estimated (good for both GILD and ABBV). I disagree with your emphasis that the market is supply constrained - not with 50% of the doctors not having prescribed the drug yet.