Replies to post #77023 on Biotech Values

[corpstrat]

<<3 yr for peak is too soon>>

Many other biologics are for chronic or adjuvant rather than terminal indications. RA, anemia, neutropenia etc are not useful comparators for Provenge.

If I recall correctly, when I looked at this question using products like Rituxan, Herceptin and Avastin (in its first indications*), 3 years seemed pretty reasonable to reach peak sales.

Of course, if the chemo boys - as distinct from the urologists - control the pt at the time he hits AIPC (and I'm not sure what current wisdom is on this), there's a risk that their resistance to immunotherapy will limit penetration.

Whether / how fast DNDN will find a way to make Provenge attractive to both oncs and uros may affect both the height of the penetration peak and the time to reach that peak. Aranesp did very well in the chemo mkt (before bad data showed up) because Amgen found a way to make it more lucrative than Procrit for the oncs. It's best to figure this out before launch, so that manipulation of price, discount and practice margin is not too obvious.

* Clearly if the drug gets approved for additional disease states that starts a new trajectory to a new peak

[DewDiligence]

Re: DNDN valuation

3 yrs for peak market penetration is too soon. Most biologic launches use 5-6 yrs as the peak in calculating NPV

Actually, it makes little difference to the valuation arithmetic whether peak sales occur in 3 years or in 5-6 years, provided that the sales 3 years post-launch are at least close to the peak sales.

Sales 5-6 years out obviously have to be discounted more steeply than sales 3 years out; however, moving the peak out to 5-6 years would cause the fourth bulleted item in #msg-37458891 to change from cash-neutral to cash-positive, which would largely offset the steeper discounting of peak sales.

p.s. I’m still waiting for a reply from p3analyze before proceeding to the next step in the valuation exercise.