So how many months do we assign for each patient?

This is actually one of the easier estimates to produce. To come up with this number we simply use the Median Overall Survival of 18 months produced during the Phase II clinical trial of the drug (here). Why? Patients living the 18 months are being treated with Perifosine and this is their average survival while on the drug. The average cost of patient will be $180,000. So using this number we can derive an actual average cost per patient per year. We can safely assume that since patients are living longer than 18 months that each one will theoritcally use it each month of the year. So yearly revenues for the drug per patient will be $120,000, (remember there are only 12 months in a year).
So the company will receive the following amount in revenues per year from the drug:

$120,000 x 4,920 = $590,400,000 or $ 590.400 million in the first year

We now take this number and estimate a profit margin or net income margin using an industry standard average that I have taken from NYU professor Damodaran who has collected extensive statistics on the matter. His most recent estimate is that pharma companies on average derive a 22.91% profit margin. So taking that number we have the following net income attributable to shareholders.

22.91% x $590.400million = $135,260,640

cont’d on next page

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