CoverageIn our opinion, the FDA approval is the last major milestone required for full commercialization in the US (the test is now sold as an ASR with limited push from the major laboratories and rules preventing GPRO from doing any kind of publicity) and will provide physicians with the required evidence and official endorsement to start using it routinely.
Gen-Probe currently pays an 8% royalty to DiagnoCure on sales of PCA3. Under the terms of the agreement, this royalty will increase to 16% when GPRO reaches cumulative sales of $50 million (~500,000 tests)(current level of cumulative sales nears $15 million). We estimate that about 19,500 PCA3 tests were sold during the latest quarter for an estimated total of 150,000 cumulative tests (assuming US$100 selling price).
While awaiting FDA approval, GPRO continues its sales efforts in Europe and recently introduced an automated test platform named Panther, on which we believe the PCA3 will be offered. GPRO will be able to offer this platform to more than 1,500 laboratories in Europe, with a launch expected there by year-end, and to more than 1,000 existing customers in the US. GPRO’s management anticipates about 1,200 shipments of Panther globally over the next five years.
(I want to add that NBF is frustrated by the length of time it has taken to get to this point. They are conservative when it comes to their time prediction for FDA approval. I am looking for us to cross $2.00 at some point in the near term and than we will see investors coming in to time up the stock jump with the FDA approval. I am still looking for $3 prior to approval and than your guess is as good as mine in terms of how high we will go the following week)