THE POSSIBLE SALES PROJECTION PART 2 - THE NEXT 4 YEARSParadigmers, I've always enjoyed reading Broker's reports regarding PAR and I have to specially mention the fine work 51 Capital have done in the past.But you know what, there is nothing like one of us putting together our own thoughts....I've enjoyed reading some of YOUR posts and YOUR estimates for what we might do one day.
So tonight let's dig a little deeper into our story and come up with a slightly more detailed GUESS as to how this may all play out in terms of sales casting our eye over the next 4 transformative years.
DISCLAIMERSOk first let's cover some disclaimers (legal dept never let up do they?, I can't even sneeze these days without first disclaiming the whole episode)....All these are my own thoughts. While I haven't just randomly plucked figures from the sky...it's finally only a guesstimate, there can be many hurdles on the way, there could be delays, both small and larger that will throw these figures off kilter. We don't know the future. But I have gone conservative.
A HUMIRA GLIDE PATHNow it just isn't enough for Mozz to come up with these figures from nowhere, I need a template. The best one I can find is the story of Humira which we have covered in the past. What I will uncover though is a more detailed look at USA sales specifically and how they played out.
Somewhat like the intricate guidance systems planes use, let's try and use some sort of template to guide us as well!DO YOU REALISE HOW QUICKLY THIS CAN TAKE OFF? (Yes Pool-Sovereign that was for you)Humira as we know is a fairly comparable situation for us. The more research one does, the more interesting the story becomes. Just take a look at why I am enthusiastic about us despite me having already waited since 2015.....my point is that when this takes off...it will be BIG....it will be FAST (my views).
Listen to this one fact, Paradigmers, when Humira got approved for Rheumatoid Arthritis (RA)...and don't forget the RA market is but a
tenth of the OA market, in it's first full year it went rogue....I mean the figures were off the charts! In just ONE year Humira was approved in some 38 countries.
2 ...it was prescribed to some 50,000 patients and it grossed an amazing 280 million USD. Paradigmers, read that again...280 Million in the first year...for a drug that can capture an indication that is just ONE TENTH the size of ours (OA) AND this drug wasn't great...(side effects and adverse events, though they perhaps didn't know the full extent of these at the time in 2003).
Now that's fast...but we are forgetting one thing...this will be a large layering for us...we will not only have OA going on but we will have MPS...and to a smaller extent OA in AUS, which may already have a good two years of sales growth at the time.
CONSERVATIVE MOZZ? BUT IT'S NOT JUST MEI like to be conservative when it comes to working out where we might stand in a few years. The thing is that there can be hurdles or unforeseen scenarios, we really do have to build some of these things in because you know what, not everything in life goes our way...or goes to plan. So yes I build in some fat. But I'm not the only one...let's go back to our own company's forecast, I refer you to Paradigm's corporate presentation back on 6th March 2020:
Even PAR use only up to a max 30% penetration and are using a range of revenue per dose ....So in other words, let's not use the massive (but quite possible) penetration of 65%...let's dial it back to just half of this and build up to this lofty figure over the years like Humira did...what does that do to our figures? We will investigate this very scenario under the Data section soon.
A SPLITWhile it may not happen in 4 years if our SP does escalates we could get a share split. It hasn't happened to CSL but it has for a few other companies like Apple for example.Advantage of this? Well it gives new investors a chance to get in at not so crazy prices, the advantages to us 'veteran' holders is that we have bought in at sub $4 or whatever, it is now $100...the shares get split back to say $10 and we all get 10 X the number of shares we had and our total worth does not change. It's a really good way for companies to increase and broaden their holder base. This along with the eventuality of dividends will only add to the excitement but sure, that's a few years away yet.
THE DATAOk so Table 1 shows my estimated number of patients, see notes below for further details on the figures.
Table 1 - A conservative approach to the layered number of patients we may treat.
NOTESTable 1 Number Of Patients
Well we suspect and project the TGA Provisional program should get the green light by latest mid year next year? Yes it might take us a month or two after that to do some last minute prep and formulate a plan and any written docs that must accompany the drug etc. Hopefully all the supply will be sorted out and we have ordered enough and there are no delays to shipment of the drug itself. With that in mind I have heard targets of between 10,000 and 20,000 patients in the first year. Let's assume 10,000 in the first 12 months...meaning 3,000 patients in the first 6 months is quite plausible if we get the TGA GO mid to Q3 next year.
This also then projects out roughly to 7000 patients in the following 6 months (First half of 2022). I then have simply used a rough doubling for the rest of that year to come up with the 20 K for year 2022. After that we should see some really substantial increases as the OA Aussie word gets out and figures of 100 K and 200K in the following two years are quite plausible.
Out of 3 million people that have OA in Australia, a 10% penetration rate in some 3 years is very conservative.
MPS : Well this program is also slated for GO ahead some time next year? Let's assume it is later in the year, perhaps October? Perhaps November? We can only guesstimate...In that case there won't be a lot of time next year for sales so I've just put a token figure in of 150 patients being treated. The year after this will ramp...now you have to remember that we are dealing with US and Europe here, There are estimates of around 13,000 patients just in US...so you'd have to think there would be 20,000 in Europe (USA 350 mil pop -v- 740 Mil in Europe)....Again I've gone quite conservative and have just said we'd get 1000 in 2022 and perhaps 3000 and 5000 in the subsequent years which is not out of question.
OA in USA and Europe are the big ones but we are potentially delayed till 2023 ...I've just put in 5000 for each jurisdiction for the first year which again may only occur at the tail end of the 2023 year.2024 we should start to see some meaningful sales here on the proviso everything goes well in terms of supply and a suitable distribution partner.
A distribution deal will also accelerate our plans for serious revenue and big milestone payments to boot are generally part of such deals. Typical for such drugs like Humira the growth path for the first few years does ramp up significantly but again I haven't gone too crazy in this area just to temper the figures. 200,000 patients each in the second year is again rather conservative out of the millions out there.
Ok we now multiply out the patient numbers by Revenue, again some notes below:
Table 2 - Look at that revenue in 2024.
This is purely gross revenue, there are expenses that will come out of all this, there are royalties, there is the % we lose due to our distribution partner, there are head office costs there are marketing and some advertising and all the little things like conferences we present to, additional staff, reg fees and even the trial fees that must be paid for (yes a lot of it we have but there could be other costs that are on going). Don't forget the payment to Bene too. Unfortunately we won't get to keep all this wonderful revenue, most likely we'll get 20% of it..hopefully higher like 25 or 30% but it all depends on the deal that's done for each major area.
I've also delayed European sales slightly on the assumption it might take a couple of months more to get approval there after FDA have approved?
Hopefully with MPS it could be a higher percentage of royalty if there is one, it might just be a joint venture and we keep a higher percentage again, but lets discount it to 50%. Perhaps 50% is a good estimate for now as we will just be piggy backing off some existing Enzyme Replacement Treatment provider such as BioMarin and it will be a symbiotic relationship, Ie we help them with their sales and they help us...together we do wonders for the patient. I have also built in some slack into my projected revenue figures in that I'm only taking $2500 as the revenue for each course...in actual fact it should be higher than this subject to the durability findings. On top of that I'm saying its $2500 AUD no matter where in the world we sell our drug, in actuality it could be for example $2500 in AUS but $2500 USD in US etc.
THE CALCULATION GOING FORWARDOk the main thrust of my calculation is looking at Humira's ultimate market penetration. We know for a fact that they achieved an enormous
65% market penetration
3 at their peak.So what I did was extrapolated this backwards and worked out a very rough percentage penetration trajectory. In other words it was 65% at their peak US sales in 2017, what then based on their rough US sales per year did this represent of the market of RA for each year? You could reasonably expect PAR to get a similar growth path, or at least we can use that to come up with a rough idea of how our sales may take over n the next 17 years or so? Again all quite conservative. Now the dollars aren't adjusted for inflation but it gives us a very rough glide path.This can be seen in Table 3 below.
I've also only taken a 2 X lift even though strictly, as I've mentioned, OA is a massive 10 X compared to the RA market. Also note the below Humira figures are only what they achieved in the USA. There were other indications it might have been used in the outer years but in the same way iPPS will also be used for other indicators specially a few years out from now. The below table also does not factor any other revenue in eg Aus Sales, MPS worldwide etc. It's just for OA in the USA.
So working backwards we can get an idea of how our sale might lift over time..
Table 3 - Using Humira as a template for us.
FINAL NOTESome compelling figures here and I believe I have gone suitably cautiously. Again we don't know how and when it will exactly play out but even taking just a fraction of the US potential, the figures look compelling from where I stand. All this is potentially just how many years away? Both Aussie OA revenue and MPS revenue could start in just 14 months time, maybe sooner?!
DYOR
REFERENCES
1]
https://www.linkedin.com/pulse/story-humira-swiss-army-knife-pharmaceutical-drugs-tuhin-a-rahman2]
https://4.bp.blogspot.com/-LjIh3XZWh-E/Vbdukc55iuI/AAAAAAAAHvE/dO2ut3-QPvc/s1600/Humira-sales-2004to2020.jpg3]
http://www.wboc.com/story/41710451/global-humira-market-size-share-2020-industry-growing-rapidly-with-recent-demand-trends-development-revenue-and-forecast-to-2025-says4]
https://www.drugchannels.net/2015/07/pharmas-bright-future-meet-top-10-drugs.html
(20min delay)