Femasys (NASDAQ: FEMY) stock jumped 130%. FEMY stock leapt because the company announced that it's likely to gain a patent on its permanent birth control product. The aim here is to provide a permanent - ire, akin to sterilisation - form of birth control that doesn't require surgery, is simply an in-office treatment. Well, OK, yes, a useful goal, something that works and doesn't have the potential complications and costs of tubal ligation would be a good product.
We do think the stock price movement is more than a little premature though: ““The allowance of claims for the FemBloc permanent birth control is another important milestone in protecting the commercial potential for this novel, non-surgical contraceptive option for women seeking a permanent birth control solution, which is expected to begin its pivotal clinical trial phase this quarter,” stated Kathy Lee-Sepsick, Femasys' founder, president and chief executive officer.” Something that's important to note. Pharma - whether of a drug or a treatment - patents come at the start of the process, not the end. That means that revenue from this is up to a decade away still.
Femasys stock price from Google Finance
Obviously, a patent is a necessary step. There's not point in developing a new treatment at the usual vast cost if anyone can sell it once you've proven it works. The patent provides that exclusivity that means money can be made. The patent here - if granted, this is just the permission to ask for it - would last out to 2039. Which is great, obviously.
But we should also note that this is only the start of the clinical trial phase. That's going to take several years at least - longer than many others in fact, because it will be necessary to observe women for some years after treatment for proof of non-pregnancy.
As we say, this is the start of that testing process, not the end. We'd also note that costs are likely to rise substantially in this testing process - trials do cost a lot. Femasys has some $10 million in cash and loses $3 million a quarter. We'd expect costs - and losses - to rise. And we'd also note that Femasys has filed a stock registration form. We would expect fairly substantial issuances of stock in the short to medium term future.
Yes, it's true, gaining the right to apply for a patent is a useful step forward. But given the way that pharma works it's something that happens before the majority of costs required before gaining FDA approval. It also has nothing, at all, to do with whether the treatment works.