Replies to post #175725 on Biotech Values

[Rocky3]

When the data is taken together, I submit that it supports the bolus view of the treatment opportunity and a rapidly declining revenue from peak.

Given this, I again ask, what PE should be applied to these earnings?

If correct, the issue should be "Declining to what level?"

Will sales/earnings disappear? Maybe a p/e from '13 levels.

Will sales/earnings not disappear, then who will have what percentage of market and how big will be market?

If GILD has 60% of market and sales level off at $5B/yr for industry, then maybe 15 p/e times $3.50/earnings.

If GILD has 80% of market and sales level off at $10B/yr, then maybe 18 times $6.

I am assuming peak industry sales much higher due to "bolus," maybe as high as $25B in '16 or '17. So huge earnings and sales and big uncertainty as whether there is a bolus, so interim pricing maybe be 20 times $9.

As to ENTA, depends on pricing method. DD uses sum of parts and a 8 times max royalty. If bolus, 8 is much too high - 3-4 would be much more appropriate, but if no sales eventually, that is too high. As to p/e, again the issue would be level of eventual market.

All of the above is pretty much out of the air with no real basis except for analysis of total market of $200B before no more patients. Not really able to guess eventual market share - too many new players and very uncertain competitive pricing environment.

What level due you think HCV will fall to and what p/e is appropriate?

[jq1234]

I am somewhere in between the two arguments. Many of your arguments are valid to me. To prevent the sharp decline of revenues you forecasted after a few years, it really depends on what the manufactures do IMO. For example, better education and take consideration of social and economic status of majority HCV patients - lower income, less educated, drug user and prisoner etc - and to make sure both public and private payers don't raise unnecessary burden for utilization. People on this board would get treated without any symptoms even if have to jump through hoops doesn't mean majority of other patients would.

I really hope ABBV would price much lower than GILD to reach larger patient population. GILD doesn't price the drug to be used by millions of people to me. I think people who argue about Sovaldi being priced fairly compared to Incivek/Victrelis miss the point, yes pricing is fair compared to those two on individual patient basis, but drug pricing has to take consideration of size of usage population. Incivek/Victrelis weren't going to be used by millions of people. Sometimes companies need to think outside of the box, short term vs long term etc. If all oral DAAs were priced similar to Sovaldi, I would be very close to your position that revenues would drop sharply after a short few years.

I think ABBV/ENTA have a great opportunity here, not for any other reason than their own economics. I'd be a seller if they'd price similarly.

[justrpaul]

About 25% of the infected are in prison. Few of them will get treated.

Actually, It's 25 - 35 % of those in prison who are infected, not 25% of the total. Far different overall impact, that your statement.

The vast majority of those infected were infected between 1945 and 1965 Here, the accurate way of saying it is - the vast majority of those infected were born between 1945 and 1965. Again, a far different meaning.