Seems like there are a lot of anxious folks on the board right now, but I think some of you are missing the point when trying to put together the picture around financing, the acquisition, the Prostagene test and a possible licensing deal, etc. So let's think this through a bit.
The value of the diagnostic test has been estimated at anywhere between about $500mm to $700mm annually, depending on reimbursement rates (where the $3,500 figure came from - that's what insurance companies currently pay) and market penetration (which is assumed to be high... a more accurate test that has you pee in a cup instead of having twelve needles "penetrate" your prostate? sign me up). The high end assumes the same reimbursement price tag as is currently paid, and near 100% adoption rate. You can do that math yourself from data in the most recent investor deck. A colleague of mine noted that the independent market study found something closer to a $500mm annual market - I haven't seen that number, but that's easy enough to get to from the data I have seen by being a bit more conservative. Assuming the test works - and it appears to - it seems that it will be quite a cash cow at some point for someone. I'm throwing unfounded numbers here, but something like $30mm up front with a kicker when it's approved doesn't seem like a bad investment for a BP.
Why would we license it, and why would we license it for so "cheap" if the real cash flow is that certain? Or why wouldn't Pestell have simply sold Prostagene and become a billionaire, then bought a significant portion of CYDY if he was interested?
The sum is simply greater than the parts. Don't forget that the Prostagene acquisition included Pestell's IP as well. That's the IP/patents around using CCR5 inhibitors for cancer, in particular...
He thinks that CCR5 inhibition is a superior mechanism for treating metastatic cancer, and has the IP to protect that research for a time.
CytoDyn has an effective and safe CCR5 inhibitor, but is largely boxed out of studying it for cancer due to Pestell's IP.
So yeah, he could have sold Prostagene, or licensed out the test independently. He actually mentioned in the conference call Q&A on 9/13 that he was previously in discussions to license the test, and thought that things could proceed quickly post-acquisition. But where would that have left him? With a boat load of money, but without the compound he had researched for the past two years in conjunction with his cancer IP. Now, he has a significant share of the company that has his preferred CCR5 inhibitor, and he's the CMO. He brought over the IP that allows his research to use that compound. And he/they can license the test - on the cheap if need be - to fund the necessary trials.
Everyone should relax. And you should ask yourself this...
If he gave up full ownership of the diagnostic test and his IP for ~10% of CytoDyn, what must he think CytoDyn is worth?
