Idenix Pharmaceuticals (IDIX)

[DewDiligence]

>I find it hard to believe that NVS will now spend 80-100 million in the US alone annually for Tyzeka.<

They won’t. But they may spend almost that much on the global Tyzeka program.

Under the old arrangement, IDIX paid half of certain Tyzeka expenses related to commercialization in the US and Western Europe. Since IDIX says it will save $40-45M per year from the restructuring, it might seem that NVS will now spend $80-90M per year plus whatever it costs to commercialize the drug in Asia and other regions not covered by the original agreement.

However, NVS will actually spend less than the above amount for several reasons:

1. The overhead of running the joint venture has been eliminated.

2. For a given number of sales reps, it is less costly for NVS to sell than for IDIX to sell because NVS has other drugs for its reps to detail.

3. NVS may intend to reduce the number of total details for Tyzeka, although this hasn’t yet been acknowledged by either company.

For IDIX investors, only item #3 remains relevant.