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Posted On: 03/30/2020 2:27:56 AM
Post# of 148900
Obviously, we are all hoping that the current NY patients, and subsequent trial participants, all get better and prove the efficacy of leronlimab for COVID-19. And, we all want that outcome for the patients, their loved ones -- and our company.
However, based on the assumption that we successfully reach the trial endpoint, I think there are two important considerations that maybe have not be adequately discussed:
1. CytoDyn has gone on record as having prioritized the potential deployment of leronlimab for the US for COVID-19. There have been a few discussions regarding the price CytoDyn might (or would be able to) charge for the drug. There have also been discussions regarding the potential use of "soft dollars" (fast tracked FDA approval for non-related indications) they might barter for in exchange for providing product at a price that is only marginally higher than Cost of Goods.
I think it is worth remembering that from a revenue point-of-view, potential sales relating to the COVID-19 indication do not begin and end with the US. If leronlimab proves effective, and the FDA approves the drug, then global unit sales numbers will be very high -- likely be more correlated to the number of global hospitalized patients -- than those that globally died from the virus. This will be a very big number indeed, and the company will need to carefully navigate production challenges and pricing concerns in order to satisfy this quantity of global doses.
2. Of possibly greater concern is that selling the drug to the US and other countries at a margin just above COGS will undoubtedly and eventually flood the market with the vials of leronlimab. No country is going to order exactly what they project they will need -- they will all order more than they need in order to achieve margin of safety. As "herd immunity" and vaccine availability gradually reduce the need for leronlimab, those unused vials will sit in hospitals across the world.
As such, those hospitals might end up with hundreds of unused vials of the drug. And this dislocation might grow to become a concern as CytoDyn receives approvals for other non-COVID-19 indications where the company would have charged an extremely higher margin for its drug. For the avoidance of confusion, what I am saying is that CytoDyn has no viable method to monitor or police how those surplus vials will be used, and for what indication that are used.
To be sure, these are difficult challenges to navigate, and I don't envy NP and the board for having to solve this equation for X. In other words, saving the world, and the world's economies, is not as simple as just banging-out hundreds of thousands of vials of drug. It is much more complex and nuanced, and I wish NP and the BOD all the best as they (hopefully) navigate these challenges.
However, based on the assumption that we successfully reach the trial endpoint, I think there are two important considerations that maybe have not be adequately discussed:
1. CytoDyn has gone on record as having prioritized the potential deployment of leronlimab for the US for COVID-19. There have been a few discussions regarding the price CytoDyn might (or would be able to) charge for the drug. There have also been discussions regarding the potential use of "soft dollars" (fast tracked FDA approval for non-related indications) they might barter for in exchange for providing product at a price that is only marginally higher than Cost of Goods.
I think it is worth remembering that from a revenue point-of-view, potential sales relating to the COVID-19 indication do not begin and end with the US. If leronlimab proves effective, and the FDA approves the drug, then global unit sales numbers will be very high -- likely be more correlated to the number of global hospitalized patients -- than those that globally died from the virus. This will be a very big number indeed, and the company will need to carefully navigate production challenges and pricing concerns in order to satisfy this quantity of global doses.
2. Of possibly greater concern is that selling the drug to the US and other countries at a margin just above COGS will undoubtedly and eventually flood the market with the vials of leronlimab. No country is going to order exactly what they project they will need -- they will all order more than they need in order to achieve margin of safety. As "herd immunity" and vaccine availability gradually reduce the need for leronlimab, those unused vials will sit in hospitals across the world.
As such, those hospitals might end up with hundreds of unused vials of the drug. And this dislocation might grow to become a concern as CytoDyn receives approvals for other non-COVID-19 indications where the company would have charged an extremely higher margin for its drug. For the avoidance of confusion, what I am saying is that CytoDyn has no viable method to monitor or police how those surplus vials will be used, and for what indication that are used.
To be sure, these are difficult challenges to navigate, and I don't envy NP and the board for having to solve this equation for X. In other words, saving the world, and the world's economies, is not as simple as just banging-out hundreds of thousands of vials of drug. It is much more complex and nuanced, and I wish NP and the BOD all the best as they (hopefully) navigate these challenges.
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