zgen
"Does anyone else wonder if Zymo SGA spend on Recothrom is really justified?"
yes and yes i think it's still justified for the time being
here's what we have to go on:
williams said in an earlier cc that to make the reco franchise profitable sales need to be in the range of 50-60M. this was before the price reduction, so one has to assume that number has to be scaled up somewhat. how much really depends on what their margin now is - which we really don't know since COGs are still unknown (they are still using back inventory previously expensed as R&D). but i have to think even at current price point they would likely hit profitability with >70-75M in annual sales. that - to me - seems eminently achievable now in the next 3-4 quarters. The reason i think the COG for reco is not inordinately high is that their initial projection for margin was in line with that of typical biologics, albeit at the lower end - which i think (please correct me if i am wrong) is somewhere in the 60-70% range, so there seems to be enough breathing room to lower price by 10-15% and still make decent profit on the product. lastly, carter was adamant that they can make reco much cheaper than evicel, which is priced some 20% higher - further evidence that reco's COGs are favorable
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