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Biotech / Medical : Somatogen (SMTG)

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To: Bharat H. Barai who wrote (68)2/27/1997 9:38:00 PM
From: Todd King of 442
 
Hello Bharat.

Thanks very much for your helpful insight.

From my study of the public information, I tend to agree with you regarding the manufacture of Optro. Although there are always potential pitfalls in scaling up a process, the fact that Lilly has extensive experience in this area would make one optimistic that costs will be reasonable for the production of commercial quantities.

I think another big question at the moment is the premium to donated blood that Optro might command. Mr. Kelly suggests that the premium will be small because the risk of virus transmission is "very low". For example, HIV 1/500,000 units, HepC 1/103,000, etc. Still, this means around 40 people in the US contract HIV, 200 hepatitis C, and so on from blood transfusions annually (not to mention hemolytic reactions). So some premium seems to be in order. Lehman Brothers suggest that this premium might be on the order of $150 to $300 per unit. My guess is that it will be on the lower end of the range, and would be a valuable "insurance policy".

Thanks again.

Todd
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