Biotech Stock Mailbag: Celldex, Hep C Bubble, Al Mann Anger

I don't have an exact fix on a consensus for fiscal 2012 Nuedexta sales, but it looks to be in the low- to mid-$30 million range. Avanir posted Nuedexta sales of $6.1 million in fiscal 2011 (ending Sept. 30). Nuedexta ended the year on an annualized run rate of $15 million, so it needs to grow sales by about 50% over the next four quarters to reach current targets.

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On a related note, excuse me while I rant a bit about sell-side analysts. Here's what Wedbush's Greg Wade wrote on Avanir in a Dec. 18 note to clients:

"Nuedexta sales continue to be the main driver for the stock and have been somewhat slower than initially anticipated by the Street. Given that AVNR launched Nuedexta in early February 2011 with little to no prior marketing work and as a new therapy for a completely new indication, early slowness in the launch is understandable. With several quarters of Nuedexta sales now in hand, we have enough data from which we believe we can accurately project the launch trajectory ..."

Nuedexta sales in 2011 were "somewhat slower" -- really? That's the understatement of the year. And if Wade believes early slowness in the Nuedexta launch was understandable, why did he issue hugely bullish forecasts? Last May, Wade was predicting Nuedexta sales of $9 million, $55 million and $178 million for fiscal years 2011, 2012 and 2013, respectively. Today, his 2012 and 2013 Nuedexta sales estimates have been slashed to $34 million and $75 million.

If Wade didn't have the data necessary to make accurate predictions during the early days of the Nuedexta launch, why was he so overly optimistic?

My apologies to Wade. He's certainly not the only Avanir analyst who got the stock wrong last year. But I don't understand why analysts, generally, make excuses for their mistakes instead of just owning up to them.

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I've been thinking about some of the staggering sales estimates being tossed around on the size of the hepatitis C treatment market if (or when) an all-oral regimen is approved. With an estimated 5 million to 7 million people in the U.S. and Europe infected with hep C (split between diagnosed and undiagnosed), the commercial market opportunity could be $20 billion or $50 billion or $100 billion or $200 billion (!) depending on assumptions made about drug pricing, market penetration, diagnosis rates and access to treatment.

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