relenza production/bta royalty GSK have been overwhelmed with...

relenza production/bta royalty GSK have been overwhelmed with orders from governments as has Roche.

Reports that GSK had produced 11 million courses last year are the ravings of a journalist. We know already how much was produced from a GSK spokeswoman some weeks ago. Since 2001 they have produced only 4 million courses of which only half was sold leaving 2 million in store that was suddenly snapped up by Germany and France. This tiny production meant BTA received very little income.

Roche produced 20 million courses in the last year but they too are overwhelmed by orders and are now allowing other companies to license the drug for strategic stockpile purposes. They cannot supply demand on their own. GSK most definitely cannot supply demand on their own either. Any sub-licensing does not mean income is foregone. Third party manufacturing costs have to be met an d these are not trivial. The agreement with BTA or Gilead for that matter with Roche is such that royalties remain due. If the price is reduced as a result of increased production then so be it. It will still remain 6% of sale price to BTA but since manufacturing costs are so high then the price could not be reduced much below $20-25/course and all that on hugely increased production.

GSK can ramp up production (and certainly will) to 40 million courses by 2007 when they have 3 production lines each producing 20 million courses but at different starting points. Approval for use as a prophylactic will be granted well before there is any new supply of Relenza for sale.

Total production needs to be 100-200 million courses pa to meet the underlying demand from governments alone. The same is true for Tamiflu and Roche knows it.

You will all by now have noted that the FDA is to fast track these drugs as an emergency measure. To those of you who still believe this is a beat up (as opposed to those with other agendas) let me assure you that the FDA does not yield to pressure from media interests, not ever. Indeed they are usually dragged kicking and screaming to agree to any new drug approval unless there is at least a 10% improvement over some existing treatment. FDA refusal to approve Relenza at the first try was the cause of a 50% intraday fall in BTA SP one or two of you may recall.

The CURRENT strain of the bird flu that they are worried about (as opposed to the legion of other bird flu strains that are endemic) is approaching the type of strain that was Spanish flu through convergent evolution. There is an underlying pathway that is causing extreme alarm in the minds of authorities. There may only be one or two more mutational steps before this particular strain unleashes a direct pandemic in humans without having to be firstly converted to a human form such as the last two mild pandemics in the 50s and 60s.

Ignore the media hype and listen to the FDA and WHO. This is why we cannot pass up every opportunity to avoid the ramifications of a serious pandemic through insurance. We all want to avoid these consequences. This is not about anything so trivial as a small biotech company SP nor even a large pharma SP (proportionately even more trivial to GSK). The chance of a pandemic may be 10%, 1% or 50% but either way we can't afford the consequences of a direct hit. If NI drugs help stop the spread before effective vaccines from a hundred different suppliers hit the disease then let's have them all.

And finally how about a few thanks to the scientists and their supporters at CSIRO/BTA whose work has led to this stop gap measure to protect people in advance of the provision of vaccines? Many have devoted most of their lives to this task. It's easy for traders to ignore background as they flit from company to company on a daily basis with a smattering of misinterpreted media reports to guide them.

I have been a long term holder of BTA since they were 30 cents, about 14 years ago. BTA owes me nothing. All my current holdings (increasing) have an effective net price of zero so I am in the position of not needing to speculate on short term moves and will continue to remain long on this stock. Nothing I have read on this forum in any way dissuades me from anticipating long term success for the company, especially now with a potential FDA-directed fast tracking of an injectable LANI for vastly more effective government pandemic stockpiling purposes.