Biotech Values

[DewDiligence]

Re: HCV pricing and compulsory licenses

Cost per gram is a preposterous metric for evaluating drug pricing; nevertheless…

http://hepatitiscresearchandnewsupdates.blogspot.com/2013/11/will-new-hepatitis-c-drugs-trigger_26.html

In the analysis, [Andrew Hill of Liverpool University] and a colleague assumed that the production cost per gram of a hepatitis C drug was between one to 10 times higher than the equivalent HIV antiretroviral, depending on the complexity of chemical synthesis. The production cost of sofosbuvir, for instance, was estimated at $68 to $136 for a 400mg dose for 12 weeks. A Gilead spokeswoman declined to comment on the research and added that it is “premature” to comment on pricing.

This kind of argument may resurface when all-oral regimens are approved in emerging markets and governments have to decide whether to execute compulsory licenses as permitted under WTO regulations. India and Brazil would seem to be likely candidates for such action.

Note: My valuation model of ENTA (#msg-92234861, #msg-92239448) ascribes $100M of value to ABT-450 royalties outside the US and EU, but almost all of this is attributable to Japan, leaving very little value for royalties from emerging markets. This is due in part to the threat of compulsory licenses.