Now that I've got my graph on, I think this topic deserves it's own thread.
After approval, what might we expect in terms of USA sales, and USA sales growth. To tackle any sales forcast it's important to start off with a few basic facts, and then select a rationale to make the forecast.
This is not financial advice, and I have no financial advice training.... just presenting a few facts with a few sources.
1. The Japanese prescription drug industry
on average only sells 1 refil per patient. Source - BOT May 2024 webinar.
- Meaning the average patient buys 1 packet / tube / bottle of a prescribed drug and does not go back for another.
2. USA dermatology related prescription drugs only sell on average 2 refills per patient. Source - BOT May 2024 webinar.
- Meaning for a " base sales comparison" between Japan and USA sales, the USA sales on average are expected to sell twice as many, due to on average the USA market selling twice as many refills to 1 patient. ( Or two packets / tubes / bottles sold per patient for derma products in the USA as an average)
3. Kaken advised Botanix that they sold around 350,000 units in the previous 12 months, and that 262,500 of those sales were new sales ( implying that 87,500 units were repeat customers). I will assume here, the 12 months talked about were 2023 sales ( since Source - BOT May 24 webinar).
- That means even at year 4, there are a LOT of patients willing to try the new product. Consider BOT has released that in the USA there were 3.7 Million patients recorded as seeking treatment within a 12 month period recently, and that the Japanese percentages were similar, but population is approximately 1/3rd. This would equate to an inferred market seeking treatment in Japan of around 1.2 million people. 262,500 of which last year tried Ecclock - the Japanese equivalent product to BOT's Sofdra. While the treatment numbers are accurate ( 262,500 ) the JDM number seeking treatment are inferred so may not be accurate, but in any case this could represent 22% NEW market penetration of those seeking treatment, along with an unknown number of patients getting refills ( for a total of 87,500 refills). It is not released how those refills are occurring - weather it's 43,000 people getting 2 refills, or 8,750 people getting 10 refills, so impossible to take anything more away from that.
4. Kaken Ecclock sales figues since launch can be calculated based on the reported total Ecclock sales, knowing that the price is fixed by the Japanese government per unit ( at
¥4,874
per bottle - which is 1 unit ). BOT also released that Kaken advised them directly of 350,000 unit sales roughly in the 2023 12 month period, so that figure is a known. Source - BOT May 2024 webinar, Kaken 2020,2021,2022 financial reports.
- 2020 September Ecclock was approved, and 2020 November Japanese Sales commenced. in 2021 it was reported for the year that Ecclock sales had risen to 950 million Yen, and that the figure was a 559 % year on year increase from 2020. This allowed 2020 sales to be calculated at 170 million Yen for Ecclock, and the units sold for 2020 and 2021 to be calcuylated using the 4874 Yen unit price. In 2023 Kaken announced it had forecast sales of 2.1 Billion Yen of units of Ecclock, and that was a 67% YoY growth. This allowed the 2022 sales figure to be reverse calculated at 1.257 Billion Yen. Finally in the BOT may webinar, the actual unit sales for the previous 12 months were mentioned to be 350,000, which calculates to be slightly below the Kaken revised 2023 sales forecast. This could be because the forecast was not met, or also it could be because the " sales in the last 12 month period " is not actually lined up with the Jan to Dec reporting period, and could be March ot March for example.
- 2020 - 34,867 units ( Sales revenue based )
- 2021 - 194,911 units ( Sales revenue based )
- 2022 - 257,899 units ( Sales revenue based )
- 2023 - 350,000 units ( reported directly )
5. Bot May Webinar stressed the importance and financial relevance of the sales platform BOT is building, and in doing so inferred if the sales platform was successfull in increaseing the average patient number of refills , then sales figures would likely be drastically under forcast ( by orders of magnitude ).
- From point 2, the USA industry current average standard number of refills was 2 per year. BOT have an automated system that mails out patient refill prescriptions at the end of each month, continously for 12 months. This should increase the likelyhood of patients getting a refill, since another doctor visit is not needed, and doe snot need to be paid for.
- If BOT are successfull in increasing the number of refills from a base number of 2, they could potentially have up to a maximum of 600 % sales increase ( where average patient gets 12 months instead of 2 months )
6. In the USA Qbrexza is the only FDA approved product, that has similar efficacy as the Botanix product, but it is reported with more regular side effects. It is priced around $700 PER UNIT ( 1 MONTH SUPPLY ). BOT has already stated they expected a premium above the current selling product due to increases in safety and efficacy, and following discussions with payers about re-imbursement.
- I used 750 USD per month here as a hypothetical price for Sofdra.
7. Profit margin here is very hard to esimate, as manufacture cost is not known ( but is very small in Japan per equivalent unit sales only 70 USD per month ). In a report from 2000 to 2018 involving 35 large pharma companies, the average Earning before Interest and Tax margin for the big pharma were averaged at 29 - 30%. and Net sales margin around half that ~ 14%. I used a 30% Net sales figure here, based on the extremely low cost of goods in Japan I expect to have some resemblance to manufacturing cost in Canada, allowing BOT a larger margin.
For the calculations below,
- I used the number of Kaken Ecclock sales in Japan per year - of the sister product since approval as the base sales figure.
- I increase the number of sales to account for the USA population being 3X japan, and prevalence % of the disease being similar.
- I increased the unit repeat sales by 2, to account for USA on average selling 2 refills per year vs Japan only 1
- I increased that 2 month USA refill by 50% to 3 months , to account for BOT's auto refill platform strategy, designed to boost number of refill sales.
- I set Sofdra unit cost of $750 USD per unit, which should be in the ballpark based on BOT's webinar prices mentioned.
- I used a net margin of 30% on the $750 USD per unit ( which is a guess, and could easily be too high, probably not too high by more than 2X ( so could divide all $ forecasts in the graph by 2 ). That would leave only a 15% net margin on sales for BOT.
- Sales profit then converted to AUD, and appled to PE ratio listed for hypothetical share price.
Note - If Bot refill strategy is successfull, and instead of 2 months average, the company extends that to say 6 months, then double the $ forecasts and SP listed below. If BOT Net margin is 15% on sales, then Halve the $ forecasts and SP listed below. Tele health Sales to known USA sufferers that are NOT currently seeking treatment ( estimated 6 million patients ) , cannot be accounted for, but would be in addition to the sales listed below and result in further $ increases.
If we get approved.... I look forward to seeing the first 6 month sales figures explode !
(20min delay)