I am new here. I bought some GTCB recently after reading the Nature article and doing limited DD and noting the recent U.S. patent and the LFB deal. I sold it for a minor profit a few days later. I have concerns regarding the LEO deal.
At the end of Q3 2005 we wrote off the entirety of the ATryn inventory on hand for a charge of $466K.
The needed product for the first approved indication are agreed to be miniscule due to the few patients suffering from that indication. It won't be needed until Leo is named and each country buys in. Phase II trials usually involve 50 to 100 patients. Again, I see little need for massive amounts of product.
Since Q4 2005 we've spent 12 million manufacturing and writing off inventories of ATryn despite starting with 0 inventory.
The 10 K says that:
"In our collaboration with LEO we will continue to be responsible for the production of ATryn. LEO will pay for all product used in clinical studies as well as for commercial sale. For product that sold for approved therapeutic use, LEO will pay us a royalty on all commercial sales, as well as a transfer price that we believe will provide us a margin on our cost of production. LEO will pay us at cost for all product used in clinical studies and will be responsible for all other clinical study costs for approval in Europe."
From the sound of this clinical product should not be subject to the transfer price provision. Fully burdened cost should be the criteria.
Why are we making so much?
In the Q3 2006 conference call Cox seemed to back off earlier statements that a profit margin could be made at significant production levels.
I call 12 mil significant.
What's your take on this concern? This may still be a good investment but I'd want to hear more from Cox about this first.
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