Neo – some sDNA market speculation.
Note: this is just speculation related to cygx's sDNA potential from what we know today. There are many factors that could swing the market either way. The following are just my own thoughts.
Short term market will be providing sDNA to other biotechs engaged in current antisense pre-clinical animal studies. cygx can probably start selling the the material for animal research as soon as the lab is set up. Since cygx just hired a company to look at the economic feasibility of the lab, it will be a while before the lab is started and done – optimistically by the end of the year so any revenue for this will likely be in '06. Given that cygx has said that it anticipated a need for around ten grams for the clinical studies for the HSV product, my assumption is that the animal studies are in the sub gram range. (Typical quantities are a critical missing piece of information for this market analysis. If anyone knows what they might be – please share.) Another piece of missing information for is the changeover time to go from one sequence to another. It would be better if cygx could keep this production line running constantly but the early orders will likely be small batches followed by some amount of changeover. Under this scenario, maybe they could do a gram a week to satisfy the early adopters. Sounds like the process is fairly easy to set up so if the demand was sufficient they could add additional lines but a guess at the initial rate would be about 50 –100 grams a year. Depending on the price of the material and the cost of the lab – they might break even in a year at this rate – which is not bad. The real prize is down the road.
Some time after they get rolling with the animal test material, they should be able to provide the sDNA to biotechs conducting human clinical trials - but the timing for when this can start is unknown because manufacturing process has to be FDA certified first. A few members asked how long that might take but I don’t recall if there was a definitive answer. Maybe mid to end of '06. After they’re certified for the clinical trial production, they would likely be doing 10 to 20 grams a batch – and from the comment “one technician can synthesize gram quantities in a fraction of the time required for fermentation” maybe one to two weeks per batch – including the changeover and setup – about a kilogram a year. This should bring in some profit but the real money is still later.
If this material selected for use in the final retail products after the trials are complete – around three to four years from now – the production volume could be huge. At that point cygx would either create a manufacturing facility, license the technology, or both – and milk the cash cow for as long as they can.
One concern that I have is that in the last month or it was announced that sDNA should work great and cost less – who’s to say that some other company isn’t brewing up sDNA+ as we speak - that will be even better and cheaper. A question that cygx should be investigating now is if there is a requirement to use the same process for the manufacture of the material in the retail products as was used in trials. If there is, then there will be some protection for this market but the sooner they get this into the trials the better. If there is no requirement, then it’s possible that once the sequence is proven and FDA approved, that the company could use a variety of methods to manufacture the retail version – essentially outsource the manufacture to the cheapest method at the time. This may be a more difficult market to predict because it is a few years out and it is difficult to know what else might be available at that time. If there's big money in it - you can bet it will be very competitive. In that scenario the sDNA market is a moving target and best not to count the transgenic chickens before their cloned – so to speak.
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