I listened to the Biogen CC again, and particularly Jim Mullen discussing manufacturing capacity. I should�ve paid more attention the first time because I got important stuff wrong.
This is what I heard this time around: The rants in brackets is stuff rattling around my head.
These are shorthand notes and not 100% accurate.
�Given the strong demand for Tysabri, I suspect that many of you are wondering about the supply situation. And you�ll be able to tell that we are planning for a very successful product across multiple indications. We continue our efforts to keep pace with growing demand.
The variables to keep in mind are, approved bulk capacity, productivity capacity, and approved filling capacity.
The RTP facility was approved in 2004.
There are three trains of reactors and two purification swills.
One reactor and one swill have already been approved and have capacity to product enough Tysabri for 20 K patients.
The second reactor will be filed for approval this quarter and will automatically approved by the FDA within 30 days unless there are questions.
(((Note: This is where I feel the �05 capacity is limited for the moment, i.e. 40k or 50k patients. The third reactor and second swill might be reserved to test the new process improvements. Kelly Martin referred to 20k patients worth of Tysabri production being used for this purpose during Elan�s presentation. Kelly seemed to think 50k was the limit, not 40k, and this ties in with the comments coming from Jim later)))
The Oceanside facility is similar to RTP.
Will file for Oceanside approval late in �05 and expect approval 2H06 (Note: might be perceived as an issue but could change when process improvement is up and running)
Restarted work on the Denmark facility last year and expect to have this up and running as a licensed facility in 2008.
We indicated that the capacity of each plant was 70k patients in all our previous presentations. Recent practical experience has this running at 50k for RTP but it should be up to 70k or 80k again by the end of the year. (Note: this ties in with Kelly�s comments about 20k being reserved for process improvements � and I�m now thinking that this might be online at the end of the year explaining why Oceanside is out to 2H06.)
We are also working on a new much improved process which will easily double this capacity for each plant.
Then there was something about filling capacity which hear correctly, and didn�t understand. Seemed to suggest potential sticking points if we got to 40k patients b4 the end of the year.
It�s clear to me that manufacturing might an issue in the very short-term, but the situation is a lot better than I first thought. They have big plans and are getting hurdles out of the way early doors.
He seemed so confident when he spoke of being able to at least double capacity beyond 70k or 80k patients, that I feel the 4 times capacity rumour might indeed be correct.
It seems we are certainly looking at manufacturing capacity of between 300k and 600k out to �08. Why do you think they are adding another facility in Denmark? Overall manufacturing in �08 will be somewhere between 450k and 900k patients!
This is as big as it gets!
I appreciate your input on this subject, a mystery to many of us.
(So, my silly exercise did bear some fruit)
I gladly defer to your experience and contacts re RTP and Oceanside. As I indicated, I have none. I only recently have become aware of the name and locations of the contractors involved in these projects. I also appreciate that posters here are often limited in what they feel they can share.
Thanks for your continued and valued input.
I�m with you all the way Splay.
BIIB went down in my estimation on Monday, but I had to have a big rethink after listening to the CC again today. My mistake! I�ll be an admirer forever if he can meet the demand curve. Let�s wait and see what happens! I don�t mind minor mishaps because he has a difficult task at hand. Control cost while taking maximum advantage of this window of opportunity (shoulda).
I too listened to the manufacturing portion of both CCs twice and there are still some missing pieces or questions in my mind.
Martin says RTP has a capacity (using current processes) of 70,000 patients, but 20,000 worth of patients will be used for testing and product improvement purposes, leaving 50,000 for shipment to patients. Then Mullen says there are three trains which total 70,000 patients, but only one train with a capacity of 20,000 patients is currently licensed by the FDA.
In addition, BIIB plans on submitting an application this quarter to FDA to put a second train into production. He did not mention the capacity of this second train. We know the capacity of the two unlicensed trains is 50,000, but is it 25 each or 30 and 20??
Is any of the current train being used for testing and process improvement? Put another way, can an unlicensed train be used solely for process improvement thereby allowing all of the licensed train's production to be shipped to patients? If not, how much of the current train is not available to patients?
From the two CCs I can't bridge the gap between 70,000 minus 20,000 and 20,000 plus another train by, say June (my estimate) and the statement that 40,000 patients by end of year might encounter some "pinch points".
Any help based on disclosed facts or reasoning would be appreciated.
I have no experience in this area so please feel free to comment re my manufacturing calculations.
1st line--20 now at rtp;
2nd line--20 more this spring when second line get approved;
3rd line--40-50 sometime later this year with the new process (but here is where it gets really specualtive on my part), but 1st line needs to go down for re-tooling for expanded process, and once its up to 40 plus, the second line at 20 goes down for a bit to do the retooling. So by year end were still at about 70K. Then in early 06 its rtp is producing at 140 plus clip rate.
then oceanside comes on line in 06 with the new process approved for all lines (140 plus). this would coincide with the growing demand for ms and the newly approved uses in chrons and hopefully RA, and then Denmark in 08.
To me, the manufacturing issues are the big news of the week. This is because I believed that the ramp after good EDSS data would have forced allocation of Tysabri, even if we had been producing at a 70,000 patient rate.
I had assumed that we had been producing to inventory at a rate higher than a 20,000 patient rate for the last 9 months or so. I now realize that the January-end inventories were probably no more than approximately 150,000 infusions (a little over 11,500 patient-years). You can bet that we will try to hold at least two months in inventory, so we won't be able to infuse at a higher rate than the production rate for very long (perhaps 2- 3 months) - not much cushion. With the second train and second fill contractor started up in April, and possible use of the third train later on, you can pretty much plot the maximum ramp up.
If we can produce at a 60,000 patient-year rate for the last half of the year, then we would still have a shot at $0.9 billion total Tysabri sales for 2005. At 35% margins we might break even for the year. I obviously had higher projections for 2005 and 2006, based on 9 months production at 70,000 prior to launch. All based on the expected superior EDSS results, of course.
I do know that for any product you have a market window so you better make it while you can - who knows what will come down the pike in 5 years. Among what I don't know is how Biogen allocates production capacity at the RTP - they make several products there - and how the pre-launch and current production was limited by FDA requirements. Maybe they were just caught flat-footed. Only time will tell but I assure you I'll steer clear of the infusion centers at the time of the EDSS stampede.
I'd appreciate any insight on Biogen's production arrangements at RTP.
Our numbers are very close, my 'guess' for 2005 Tysabri is: gross sales $1.035 billion,
net to Elan, $335. million.
But that means being able to sustain 60,000 patients from 1 July onward. If we had more, I believe we could sell more. Perhaps reaching 100,000 by year's end, which could add another $100 million to Elan's earnings.
IMO, Mullen was too clever by half when addressing production concerns. RTP can produce plenty of product and 60K patients by mid-year will not be a problem if needed. Furthermore, Oceanside is going great guns to ramp up high titer process. Production over the next 2 years may experience what Jim Mullen referred to as a pinch point or two, but they will not force rationing of product.
I couldn�t get my head around why they hadn�t already filed to have all reactors approved. Now I�m of the opinion that they might be juggling things to get the new improved process online, one reactor at a time. This requires one of three reactors and one of the two swills to be out of action.
It could go something like this:
Get first reactor and swill online. 20k
Work on applying the new technology to the second reactor.
Depending on demand, progress and timing, file for approval of the second reactor. Hopefully this will be the one with the new process but the third reactor hasn�t been committed just in case.
Work on applying the process improvement to the third reactor.
Get this online.
Take the first reactor offline and work on process improvements.
Get the third reactor and second swill online.
RTP is now utilising the new improved process with capacity between 150k and 300K.
Get Oceanside online (old or new process depending on demand)
Worst case scenario in the short term � two reactors online using old technology 40k/50k � so report as such.
At all times keeping in mind that there might be a small royalty cost associated with the new process, so use it if needed.
This is pure uneducated guessing of course. Perhaps someone might let us know if it�s possible.
I have been concerned about production as I believe that Tysabri could be limited to selling to the level of current production.
I think 60,000 patients will be reached by 1 July 2005. Can this number be supplied?
Someone remarked about 20,000 doses being reserved for 'FDA proof (testing?)'.
As neuro has pointed out, patients are being shunted around the official 'gateway' run by Biogen, so counts are suspect. I am worried that they are undercounting and could run out of the drug, a bad situation if it were to happen. Simple sales don't tell the story, are they for stocking or immediate infusion?
So what is the present rate of production? How many patients can be continually supplied?
Any information will be appreciated.
Within the last two weeks or so, a few posters who say they are MS patients reported 11/05 expiration dates on their vials. Product manufactured in 08/04 carries a 11/05 expiration date. Then a poster who says he is a patient said he saw a vial with a 12/05 expiration on 1/31/05.
Assuming the posted information is correct it means to me that no later than 1/31/05 ELN and BIIB (not wholesalers and distributors) had no more 08/04 production in stock.
Now I'm waiting for an end user (patient or MD) to report the date an expiration date of 01/06 is first seen. If first-hand people report the dates, we can calculate how fast ELN/BIIB is running thru monthly production.
I share your concern about production capacity.
By tracking how fast elb/biib is running through each months production, this board can lead the market in seeing a capacity limit approaching (if it approaches).
We can't know precisely how much product is being manufactured or how much is stockpiled. I believe that Biogen/Elan can handle 60K patients on drug in July and that they will be able to handle twice that number by the end of the year. I would be surprised if your 60K estimate by mid-year does not come under fire! But I sure like your optimism (which I share and try to supress!)