Replies to post #216882 on Biotech Values

[DewDiligence]

Re: ENTA’s FY2018 financial performance

A few points:

• ABBV’s $2.5B sales figure is probably conservative, for the reason mentioned in #msg-138017796.

• The midpoint of ENTA’s FY2018 guidance for gross operating expenses is $130M—not the $140M number you cited. (The guidance range is $122-138M: #msg-136339615.)

• Your 5.5% royalty rate—equivalent to an 11% royalty on the glecaprevir component of Mavyret—is probably too low insofar as it implies that almost all of Mavyret’s 2018 sales will fall in the 10% (lowest) royalty tier. If 2018 Mavyret sales reach ABBV’s figure of $2.5B—or higher (as I suspect)—then a larger proportion of sales than what you’re modeling will almost certainly reach the 15% (mid-level) royalty tier. (Note that V-Pak’s highest-ever annual sales were $1.2B, less than half of what ABBV is forecasting for Mavyret in 2018.)