Question-and-Answer Session
Operator
(Operator Instructions) And your first question comes from the line of Gregg Gilbert of Merrill Lynch. Please proceed.
Gregg Gilbert - Merrill Lynch
Good morning. A couple for Veronica. Can you quantify the effect of the wholesaler inventory reduction on Megace ES sales?
Veronica Lubatkin
It's roughly a week. The inventory levels for Megace ES has ranged about two weeks to a little over three week throughout last year or so, but a week is worth a little over $2 million in net sales.
Gregg Gilbert - Merrill Lynch
Okay. So perhaps if I can follow on with John that implies a $380 to $390 per script type of level. Is that a realistic level to use going forward in light of the contracting or should that go up or down?
John MacPhee
What I would say is that the wholesale acquisition, the direct price for Megace ES is about $527 I think it is, and I think you should use it a net price that is maybe about 20% less than that for you're modeling, a little bit more than 20%, between 20% and 25% lets say, less than that.
Gregg Gilbert - Merrill Lynch
Thanks. And Veronica you mentioned or Pat maybe mentioned the R&D budget for generics of $20 million or more for next year. Can you comment on the R&D budget for Strativa?
Veronica Lubatkin
The R&D budget for Strativa will be mainly milestone driven.
Gregg Gilbert - Merrill Lynch
Yeah.
Veronica Lubatkin
And so, that really depends on the progress of the pipeline products.
Gregg Gilbert - Merrill Lynch
How much can we think about for sort of internal R&D related to Strativa, if we are trying to exclude milestones?
John MacPhee
This is John. As it relates right now to internal R&D, the only R&D project to keep in mind is Zensana, and what we'll spend in 2009 depends upon our review of the results that we are currently undertaking with NovaDel. So there could be some -- what I would describe as modest R&D expenses associated in Zenzana in 2009.
Gregg Gilbert - Merrill Lynch
And then finally and then I'll get back in line, Veronica, the 30 -- roughly $30 million or so quarterly run rate for SG&A excluding items that you expect in the fourth quarter. Is that a good level to think about going forward, or does the restructuring eat into that line?
- To read the full transcript on Seeking Alpha, click here »
