Champ 2003What you say about random orders is partly true....

Champ 2003

What you say about random orders is partly true. However for drugs used to treat infectious diseases government stockpiling is a more significant issue from a public health viewpoint. Because the actual numbers of people likely to be infected in a given year is unknown, particularly from influenza, and the possible public health impact (e.g. the various scenarios people are now raising)responsible public health policy is to be prepared for a worst case scenario where at a minimum there are sufficient drugs stockpiled to treat essential service providers (e.g. medical/nursing staff; police etc)and those who have chronic illness from other causes (as they are more susceptible to complications resulting from infection). Arguably in wealthier countries, governments will stockpile sufficient quantities to treat a significant percentage of the population (what we have seen recently re orders from Japan, UK and Australia for relenza).

In regard to Relenza, most nations public health authorities have been caught on the hop. Have overstocked on Tamiflu (partly because of route of administration i.e. tablet virsus inhalent)and understocked on Relenza. Now that resistance in a few cases to Tamiflu is being experieced, many governments are now starting to rebalance by ordering more relenza. Even if the current swine flu epidemic doesn't get any worse, it is likely that orders from government for Relenza will continue to be high at least for the next couple of years just to rebalance current stockpiles.

Already in the 3rd quarter BIOTA received $32.3million in royalties from Relenza (largely from sales to UK and Japanese government. Main restriction on royalties in 4th quarter will be how much relenza was available for sale (not demand).

GSK in May expected to produce 50-60 million packs in 09/10 financial year. I'm not sure but I think packs sell to government for $40 of which Biota receive royalty payment of 7% (10% for Australian orders). So likely royalty based on May projections was about $140million. Of course since early May when the announcement was made, swine flue has spread more then anticipated so likely production/sales in the upcoming financial year will be much higher. In fact GSK is already exploring options to increase production (e.g. discussion with Chinese manufacturer).

BTA also has other promising drugs in the pipeline. During ist half 08/09 received $3.5m from Astra Zeneca to contiue phase 2 trials of treatment for RSV. Earler this year did a deal with Daiichi Sankyo to manufacture and market LANI (currently nearing completion of phase 3 trail)in Japan. Given the need for big Pharma to have drugs in the pipeline its difficult not to forsee a significant takeover offer for Biota emerging. Given the drugs Biota has in the development phase and the likely revenue from Relenza at least over the next couple of years, any offer would need to be at a multiple to the current market capitalisation (less then $300 million).