As noted, the FDA New Chemical Entity (NCE) exclusivity is a mere 5 years (relatively short compared to the significant R&D and time spent to commercialise), however Sofdra has further protection from generics via multiple patents. 1. Active Ingredient Patent: active, protecting the chemical structure of SB for ~20 years from the patent filing date, i.e. expiring ~2035-2040's depending on the jurisdiction. US ~2040 2. Formulation Patent: active, protecting the specific method and ingredients used in the production of SB and its delivery, being a topical gel. Dates as above 3. Method of Use Patent: active, protecting the specific use, and applicator, of SB to treat excessive sweating/hyperhydrosis. Dates similar to the above
A generic developer circumventing, or proving these patents invalid, would be challenging. Especially considering the increased risk of side effects with oral systemically delivered anticholinergic products.
FDA NCE provides the strongest protection from generics in our current primary target market, the US - it prevents the submission of an Abbreviated New Drug Application, which relies, at least partially, on prior clinical data which the sponsor (new applicant) did not generate. I think this partly explains the premium Sofdra pricing we're currently seeing from third-parties. Once the NCE expires, I assume the pricing strategy will pivot to protect/enhance market share, depending on the competitive landscape at the time. Intangible brand equity will be meaningful once we're there, especially in the sensitive area of healthcare, requiring trust - how many people know someone who is adamant on purchasing branded Panadol for $5 per 20 pack versus generic paracetamol for $0.80? Generics aside, it takes new/innovator drugs on average 10-15 years and US$1-2 billion in capex to commercialise. So I'm comfortably valuing beyond 5 years and capturing residual risk in the sensitised discount rate.
Whilst on the topic of licencing, something I think which is easily overlooked with BOT is the value of Permetrex. Safely and effectively delivering pharmaceuticals to the skin to treat disease is challenging - the skin actively works against chemical/environmental externalities to protect us. As we know, it works by using the kinetic effects of evaporation to concentrate the active ingredient and drive it into deeper layers of the skin. BOT has exclusive rights worldwide to utilise Permetrex for the skin delivery of all cannabinoids (CBD, THC, CBN etc etc). Permetrex can be paired, say through acquisition or partnership, with other already approved active ingredients to create new products, which can be commercialised on an accelerated basis. CBD is a growing and relatively underexplored space for naturally derived medical solutions - look at the success of aspirin (derived from salicylic acid found in willow bark), penicillin (derived from mould) and paclitaxel for chemotherapy (derived from the bark of a yew tree). CBD's anti-inflammatory, analgesic and neuroprotective properties are exciting beyond treatment for skin disorders - perhaps topical areas of interest could be neuropathic pain (arthritis, multiple sclerosis, shingles), wound healing and/or anti-aging/skin health? I speculate, maybe even Dr. Cooper (owner of Permetrex), following potential success from the Sofdra partnership and 5% net sales royalty, may expand with BOT out of exclusively cannabinoids? Avenues for growth come exit matter, and this is a big one in my opinion.
Very interested to hear more from the upcoming webinar, particularly around AWP/WAC pricing and if insurers have classed Sofdra as a Tier 3 or Tier 4 product, which will largely determine how much patients contribute to the cost via co-pay, ultimately impacting demand.
Food for thought on a glorious Sunday.
BOT Price at posting:
41.5¢ Sentiment: Buy Disclosure: Held
(20min delay)