otal Addressable Market is the determination of the ultimate playing field we are participating in...Indeed Price and Value are key determinants in the whole TAM puzzle ....As Buffet's quote above implies, the price is currently cheap (my views), the future value could be quite outstanding (again, my views). It is this value...this growth story....this dividend or capital return on investment that we are paying for today....
It's an interesting question, how big can we get and indeed it forms just part of a basis for how big we may actually get. No point in getting excited over a brilliant efficacious and safe drug if there aren't many patients to make use of it and of course pay for it!
Tonight let's try and address this but as with some of my posts, we need some background first before we can hope to come up with a meaningful number or indeed a meaningful range.
In part 1 we will set up my thoughts on TAM...how big IS this market we are going to be playing in? It won't be just Mozz's thoughts, we'll look at some facts and some projections to assist us in coming up with a rough guide of numbers.
PART 2 is where I get to rub my hands together, we look at a practical case study in terms of a deal, we speculate what might happen in our case and finally we will crunch out some numbers. Of course all highly speculative and you shouldn't rely on any figures or projections here.
Do enjoy!
PAR and the TAM - PART 1
VALUE THEORY
Value theory TAM analysis proposes that we should take a more holistic look and also consider things like competitors and how customers could look at alternatives...the whole lack of viable alternatives in the OA area plays well in our favour.
"To use this approach, it’s important to think carefully about what customers find valuable and how much they may be willing to pay for that value. Next you need to estimate how many customers may find that amount of value in the product and choose it over alternatives."1
We need to firstly ask questions like what do customers want? Why would they buy our product? Would they be sticky to our solution? We'll chat about some of these types of points more so in Part 2.
SETTING THE SCENE FOR VALUE
Well we don't have to go too far to witness the underlying problems of OA in terms of current scale and projections....check out these facts.2
The above graphic is only doctor diagnosed OA...this is an UNDERESTIMATE of the true figures as there are many in pain or have symptoms but will not go to a Doc or have not been to one to date. The numbers above are only in the USA.
Are you new to The Mozz World of PAR? Maybe it should be the PAR world of Mozz? Whatever...read this startling information, if you haven't already, on the estimates of OA till date and how they may be completely wrong and how they came to be wrong! (Single left click on the hyperlink below).
Let's explore some more facts2 to give us a sense of the demand, the acuteness of the underlying problem that we will one day solve, at scale (my views).
The average direct cost to a patient in the USA of OA is $11,000 per yearIt is the 3rd most rapidly rising condition associated with disability, just behind diabetes and dementia.
OA increases the risk of developing heart disease by 50%. (Did you know PAR are currently running a pre clinical program investigating Heart Failure and how iPPS may be able to have some efficacy in this area?)
OA is not just an independent condition, it affects your ability to partake in physical activity and thus leads to a 55% increase in all cause mortality.
Estimates suggest that one-fourth of adults with arthritis experience severe joint pain, characterized by a score of 7 or greater on the 0-10 pain scale.
This next stat is an eye opener:
Over 50% of people with knee OA will have a total knee replacement done during their lifetime.
Jeepers...the numbers of TKA are literally predicted to explode.3 (Reminder- TKA stands for Total Knee Arthroplasty, replacing the knee with an artificial one, 'H' is the same thing for Hip). Let's take a look at the TKA and THA numbers, but I have put them in three charts to get a clearer idea of how big this problem is and how its is predicted to grow...this illustrates potential market size coinciding into the near term future when we are ready to sell!
It becomes clearer when you view TKA and THA together on the same chart, the gradient of TKA is steeper.
Yes you are reading that correctly, by 2040 at this rate TKA will hit three and a half million per year! That's just in USA....it's hard to believe...we will get our timing spot on...From 2025 onwards the demand for our drug could be much more than we realise.
On the surface TAM is simple...just multiply the price of drug by the number of patients that could possibly take it up. But we should not use a top down...use bottom up! ie we aren't going to address 100% of the OA market! Impossible. We need to build the figures from the ground up.
The details are much harder and complex...why Mozz?Because of the inputs, the factors, the variables, there are many and most of them really are unknown. But we can take a stab at it....I don't know about you, but I will err on the conservative side...I like the UPOD...Under Promise...over Deliver and you know what? I get the feeling PAR kinda like that too sometimes...how? Well because they aren't just resting on their laurels...they aren't just waiting for their main OA program...there is so much going on in the background and that's what we know....eg revolving around the re-purposing of PPS....but as we got a little hint and taste...there could be others coming up soon involving different drugs altogether...this will help to boost the underlying value.
We'll explore some examples to build up to a TAM.
LABEL
In our case, our product will garner more utility as time goes by. What do I mean by this?Well currently our whole focus is on OA and to a lesser extent MPS...Even within OA there are some 100 different types of OA...there is also RA. We also are also looking at Hip OA for the purpose of broadening the label. The broader it is, the larger the market.
TIME & TIMING
Well as it names suggests, Total Addressable Market has no time stamp or deadline on it...we are just assessing the total market as of today...or at least when we have the green light to sell. To be realistic, to be conservative, our first selling year will be when? Most likely some time in 2024....so lets be conservative and say that it will start towards the end of 2024...so by the time maybe by November 2025, sales we will be in full swing. Now yes I agree 2025 isn't really just around the corner but look at it this way:
When this thing starts, it will start with a bang...I mean a real big bang...so much so that there are gonna be a lot of ppl that finally hear about us and they will questions themselves as to why they didn't hear about us earlier, why they didn't buy us earlier, was this stock ever sub $3 ? We hit both Europe and the US at the same time.(Hint, yes it was sub $3...it is today, at the date of this post, but for how long? @twincreeks ? Anyone?)
Mate stocks tend to move before the real drama unfolds...independently of anything else...our stock will start moving steadily upwards specially at milestone time.err Mozz, what is milestone time...well there are a few, some include 3rd Phase read out....registration, first time sales of OA oh and what about this juicy one ---> that first quarterly report that states how many sales we did in the first 3 months of sales...the first year...the first crossing of $100 million in revenue...I can't wait for these milestones.
Deal....yes we get a deal and we will get an immediate jump, we don't necessarily have to wait for the jump of registration to see a real potential lift in our shares. Paradigmers, I'm not talking a big day of 30 cents....or a 50 cent gain in one session...I'm talking whole dollars and potentially multiple dollars on deal announcement....sellers of shares will disappear quicker than bottled water at a marathon on a hot day...
What a mess, but this is nothing compared to the carnage of short sellers coming once we lift properly! (Just my views)
Paradigmers, quite simply, the more value is garnered the earlier in the story. Perhaps Stuart Baker from Macquarie Bank coins it (apologies) more eloquently than I can
“You have to bet, and buy in the face of uncertainty.” He also says that “you’re only going to make money if you bring yourself to the level that allows you to see what drives the market.” " 4
In other words, once the market catches on.,..it will be a different value proposition. The trick is to get in early BEFORE the market catches on. Amazingly that time is still now. I definitely salute some of the bigger investors that I'm luckily in touch with that got in at Mez level...(you know who you are)....they got in at such an early stage and are riding that great big superlift into the Cloud level of this skyscraper...they assure me they are riding it all the way up.
It's the view I want one day...not impossible.
GEOGRAPHIC AREA ANOMALIES/NUANCES
The best thing for us here is that we aren't tackling the super large areas of US and Europe in tandem. We will be doing it simultaneously...so as I have said, the initial bang will be quite large.The best way to think and compare this to is the progression of other drugs that started from basically zero and map on to their trajectories.
My best goto example is Humira as it's a semi comparable area (RA and inflammation). The exciting thing is that while we have a rough defined schedule (subject to change) such as Readout of OA occurring on the rough scheduled dates...overlapping trials which are mapped out etc....we simply do not know when a deal will strike...see the next paragraph for more on this.
DEAL
Well this is the big one and a global deal is going to increase our TAM by a lot....if we were to go alone (not really an option) it would be decades to build up a decent sales staff, then broach all countries far and wide....yes sure the sheer demand would assist, but logistically, it would be a nightmare...
We need to partner up, and with someone large that has the necessary infrastructure and selling channels in place, that are already supplying drugs to Docs at scale...that have Medical associations on their books....it's an immediate vast network we want....J & J...maybe a Pfizer..something of that order...yeah sure, let them compete and out bid each other, when you boys and girls are done. just come to us with the best deal and we will, well, partner up!
Now the best part here is that there could be a few deals that get announced in the next year or two....sure OA is the big one that will really launch us into some crazy figured territory....but what about regional areas like Japan...this in itself will get us going....even something relatively smaller like a low hundred million dollar deal will be quite transformatory and it will be a big eye opener for many that have never heard about us, specially those bigger Pharmas to consider a global deal...if they see PAR doing successful deals at a regional levels, they will be all that more inclined to move.
PRICE
I kinda left this deliberately to the end as it's a hard one to work out...it could be as low as $2500 per patient...but with the right data, oh yes, you know what I'm talking about, DMOAD 008...we could reach higher prices ranges, perhaps $4000...maybe $7000? It will really depends on a combo of how the data pans out.
Think I'm being too optimistic? Remember drugs like Humira sell for around that PER MONTH! It's a vast potential ocean of resources to share with a distribution partner...but look at the benefits of sharing...one kid manufactures the drug (Digs the dirt)....another kid distributes it (New Partner via a few dump trucks/distribution network)...and PAR manages it and has the IP (last kid that tells the other two what to do, manages the whole show and owns the relationships)....what's the visual on this Mozz:
Bene, New Partner and PAR, a day of fun at the beach? Forget just a 'day' of fun...I see a Multi-decade of Profits. Think we need more Dump Trucks.
INDICATIONS
So in this post I'm really only concentrating on OA...we have so many other potential indications we will eventually look at and from where I stand, it's blue sky...I mean take Heart Failure, it's so large...separate clinical trials will be required and that's a long way off...we know how long OA has taken and will take...but an indication like Heart Failure will be there in the background...there are a number of other possible areas and some of these are totally huge...the entire Pain realm for example, is bigger than OA.
Yes the numbers get silly...better to err on the conservative and be pleasantly surprised is my viewpoint.
That concludes part 1. In part 2 we get to do some grunt work, we'll start off by investigating a case study in terms of a deal and finally we will get to the number crunching bit.
otal Addressable Market is the determination of the ultimate playing field we are participating in...Indeed Price and Value are key determinants in the whole TAM puzzle ....As Buffet's quote above implies, the price is currently cheap (my views), the future value could be quite outstanding (again, my views). It is this value...this growth story....this dividend or capital return on investment that we are paying for today....
The average direct cost to a patient in the USA of OA is $11,000 per yearIt is the 3rd most rapidly rising condition associated with disability, just behind diabetes and dementia.
OA increases the risk of developing heart disease by 50%. (Did you know PAR are currently running a pre clinical program investigating Heart Failure and how iPPS may be able to have some efficacy in this area?)
OA is not just an independent condition, it affects your ability to partake in physical activity and thus leads to a 55% increase in all cause mortality.
Estimates suggest that one-fourth of adults with arthritis experience severe joint pain, characterized by a score of 7 or greater on the 0-10 pain scale.
Over 50% of people with knee OA will have a total knee replacement done during their lifetime.
When this thing starts, it will start with a bang...I mean a real big bang...so much so that there are gonna be a lot of ppl that finally hear about us and they will questions themselves as to why they didn't hear about us earlier, why they didn't buy us earlier, was this stock ever sub $3 ? We hit both Europe and the US at the same time.(Hint, yes it was sub $3...it is today, at the date of this post, but for how long? @twincreeks ? Anyone?)
Mate stocks tend to move before the real drama unfolds...independently of anything else...our stock will start moving steadily upwards specially at milestone time.err Mozz, what is milestone time...well there are a few, some include 3rd Phase read out....registration, first time sales of OA oh and what about this juicy one ---> that first quarterly report that states how many sales we did in the first 3 months of sales...the first year...the first crossing of $100 million in revenue...I can't wait for these milestones.
Deal....yes we get a deal and we will get an immediate jump, we don't necessarily have to wait for the jump of registration to see a real potential lift in our shares. Paradigmers, I'm not talking a big day of 30 cents....or a 50 cent gain in one session...I'm talking whole dollars and potentially multiple dollars on deal announcement....sellers of shares will disappear quicker than bottled water at a marathon on a hot day...
(20min delay)