In my earlier post entitled “Thoughts about Total Addressable Markets,” I ended with the following point:
“If the initial label in the US is potentially $500 million, and there are 1 million RA patients, that implies that each RA patient is going to be scanned ON THE AVERAGE once per year at a cost of $500. Is that reasonable? When tilmanocept becomes the standard of care (I say “when” not “if”), will tilmanocept produce $500 million of revenue? I think it will. But not $500 million of revenue to NAVB. Let’s talk royalties.”
NAVB has licensed tilmanocept for RA diagnostics in the US to Jubilant Radiopharma subject to the deal being finalized this fall. In addition to sales milestones, NAVB will receive royalties on sales speculated as being somewhere between 10 and 20%. The estimated revenue from each scan of $500 will be split between Jubilant and NAVB. Jubilant will manufacture the tilmanocept, package and distribute it, and hire and train the salesforce. NAVB developed the product, will get it through the FDA, and will process the scans. Once tilmanocept hits the market, most of NAVB’s cost is “sunk” cost rather than current expense.
The point to be made is that when management talks about a $500 million opportunity for NAVB on the initial label of tilmanocept for RA diagnostics, and given that 1 million RA patients receive on average 1 scan per year, that DOES NOT mean $500 million of revenue to NAVB’s top line. So let’s talk top line revenue.