arixtra sales, page-18

I think a lot of people have missed the point on this stock well at least on the downside. Along with the earnings potential, there also exists a risk to it. The obvious risk is that the FDA rejects the ANDA application. A good question is, what are the chances of this happening? The answer is pretty slim, but I dont think anyone can say with any certainty what the value of this is; does it equate to 70% certainty etc. I say slim, because the application is beyond the technical review period. We discussed this in an earlier thread, and at that stage there was a question over packaging. It isnt plausible that further questions will be raised over patient trials, or any of the other phases leading up to the ANDA application at this stage.

Lets just say that the ANDA is rejected, the results on the share price would be disastrous. The strategic direction of the company hinges on the revenues of the generic product. Failure to deliver this would require a complete rethink on how the company approaches the future. Depending on the rejection reason, it could make the necessary amendments and resubmit the timing and cost of doing this will vary wildly depending on the rejection reason but it could include issues with patient numbers, or the logic used to prove the drugs efficacy. This would be one the issues weighing on investors minds, especially at this stage.

The most important risk at hand is the timing of approval. I dont think people in this forum, not just on this particular thread, consider this enough. The timing of approval is critical to the value of ACL (as highlighted above), but also the generic product and future success. Why? Everyday that passes, a competitor gets closer to completion and/or approval of their own generic. What is the value of this? nobody can say. But we do know that it is affecting ACL, the degree is the unknown part. A secondary issue within this is that ACL is losing sales and consequently profit as everyday passes. Its great that Arixtra sales are growing but ideally ACL should have grabbed a small part of that 100mill in the Q1 2010. Basically the earlier the better. My biggest worry is that with the delays, the value of the exclusivity period generally speaking with owning the only generic in the market will vastly diminish. Every forecast on sales and profit is based on this. i.e what happens if we only have 12 or even 24 months of being the only generic? What happens to sales then? And what happens if we have 3-4 generics on the market 12 months after our approval? I dont think this is completely unrealistic, and I also think that this point isnt lost on PS quite clearly he and the management team are seeking to differentiate the generic from the others or potential others (refer to oral-delivery). ACL sent us all, data from the IMS based on first-generics. Did anyone see the effect of having just one more generic on the market in terms of pricing? Historically the price drops by more than 50%! This is official data from the IMS on FDA approved generics. Having one generic on market is ok, pricing remains high, but after that its scary. Ok, written enough.