Hey @SEPAthanks for your efforts to better our understanding....

Hey @SEPAthanks for your efforts to better our understanding. Like you and many, I'vespun my wheels around pricing, and tried to slice the numbers various ways withvarious assumptions, however there is a lot of unknowns.

What we do know, per published data points, in rough order they became known(earliest to latest. Note dollar values are on a per script basis, and assume 1script equals 1 month supply):

1. Research analysts, who are likely guided somewhat by the company (subject to MNPI/regulation), published a Net Price of US$490 (E&P) and US$540 (EH)
2. Prime Therapeutics (a Pharmacy Benefit Manager) previously posted US$1,161 as the Average Wholesale Price (AWP). The original link has been taken down and replaced with a more generic update (with no price): Drug Approvals Quarterly Update - Prime Therapeutics - Portal
3. United also list the no coverage cost at US$1,161 (select plans), supporting the above: Review Your Drug Cost | Get Started | Prepare for next year (uhc.com)
4. Management noted that current competitive products have a retail price of ~US$600. Note this is not necessarily future Sofdra competing products (considering safety, efficacy etc), hence perhaps the large retail price difference (below). Page 4: 0679ty65cprrcq.pdf (asx.com.au)
5. Traditional retailers list the Sofdra retail price as ~US$1,000 (pre-insurance, with a coupon). Source: Buy Sofdra at the best price (hellohippo.com)
6. At ~8 min 40 sec on the 25 Sep 2024 ASX Small/Mid Caps pres, Howie states the target Net Price is ~US$400-500. Source: ASX Small and Mid-Cap Conference September 2024 | Botanix Pharmaceuticals Limited (ASX:BOT) (youtube.com)

Putting all this together, I think we can infer and deduce that, on average,pricing could be:
Traditional Sales Channels (brick and mortar pharmacies/chemists)

1. Start at AWP, US$1,161
2. Discount by 25-35% to arrive at Wholesale Acquisition Cost (WAC), ~US$750 using 35%
3. Intermediaries, such as wholesalers and distributors get a discount. Wholesalers ~1-5% from WAC, Distributors ~2-10% from WAC (primarily subject to volume purchased). This is the BOT Pre-Copay Assistance Net Price, ~US$675-750
4. Intermediaries add a margin and sell to pharmacies/chemists, who then also add a margin, to arrive at the retail price of ~US$900-1,200 (est.)
5. Patients visit the store, with varying insurance coverage. Insurance covers a percentage (0-100%), BOT chips in an amount via co-pay assistance program if required
6. We arrive at the BOT Post-Copay Assistance Net Price of ~US$400-500. An average figure, based on BOT's understanding of insurance coverage, reimbursement and co-pay assistance program (assuming I've interpreted the Small/Mid Caps pres comment correctly)
7. Checks out with research analyst figures. Means the copay assistance is on average ~US$175-350, or ~15-30% of AWP, quite substantial. Considering Tier 3 insurance generally covers 50-80% of the retail price, this co-pay assistance would bring the out of pocket cost down significantly, maybe to ~US$150 to nil for many. Obviously Tier 2 would be even more favourable, and require less co-pay assistance

Direct to Consumer Sales Channel (telemedicine platform)

1. Start at a retail price higher than Net Price, unknown but say ~US$500-700
2. Minus digital platform fees, any insurance co-pay/reimbursements
3. Net Price US$400-500
4. This is a simpler channel with fewer intermediaries adding margins, hence a lower retail price. Insurers generally cover a consistent % of the price across channels (usually based on AWP or a negotiated price, and again subject to individuals' coverage). All up, reducing the patient out of pocket cost and overall potential co-pay assistance required, while maintaining the same/similar BOT Net Price of US$400-50

Note the average Net Price between the two channels could vary, but on averageacross both, we are told US$400-500, so I've applied that to keep it moresimple. Estimates and views are, as always, based on my personal understandingand the data available, which is fluid.

You can see this Net Price is a bit lower than some of my prior posts. This isbecause we now know a co-pay assistance program will be in place. Managementmust be taking the view that a lower profit margin per unit is worth it for anintended increase in volume. This makes sense considering price is the numberone factor determining if a patient purchases Product A or Product B, assumingthey're both similarly effective (per published survey). I'm near certain ofone thing - pricing won't stay the same, it's very dynamic in this space alongthe whole value chain. If large volume is flowing through telemedicine,traditional channel intermediaries would likely be incentivised to reduce theirfees to capture more volume. If BOT can move more volume, they can achieveimproved economies of scale, such as perhaps negotiating for lower per unitmanufacturing or digital platform costs, improving EBITDA Margins/making up forco-pay assistance. Or perhaps they can negotiate further with insurers for moreattractive tiering and coverage. As the user base takes up the product andlearns of its benefits and if it works for them, they become more sticky. Oncepenetration has grown, perhaps the co-pay assistance is dialled back.

Considering the BOT narrative to date, which has been heavily focused on thetelemedicine platform benefits, and the fact that a very large portion of theTAM has already been diagnosed (and hence are more likely to purchase via themore convenient channel), I think we will see the majority of sales flowthrough the telemedicine channel (relative to traditional channels), albeitsome will prefer traditional due to proximity/habits. This can result inexplosive sales growth as it's simpler and faster to get to market. Further, inaddition to increasing conversion rates (a potential patients' probability ofbuying the product), and then sticking with it (higher refill rate) - byacquiring online visitors and data, the value of BOT's online platform, andultimately the company, grows. This has the potential to be leveragedefficiently as the company scales, such as bolt-on asset acquisitions.

Whilst it would be helpful for valuation to have more pricing clarity, I'veaccepted that this is for strategic reasons. If I were Management, I wouldn'twant to be giving away too much information so my competitors can easily pivotto protect their market share from the incoming tsunami.

For now, perhaps we as shareholders don't need to know each step for how thesausage is made. But we're told the end result - that it's big and juicy. Andwe know Vince knows how to work the grill

For the vegans out there, shortly we can divide quarterly revenue by quarterlyscripts sold, and inspect actual opex, to get more clarity.