Conference Call ... Nesbitt Burns Inc.
QLT PhotoTherapeutics Inc. CHRISTINE CHARETTE
(QLT - TSE; QLTI - NASDAQ)
(416) 359-6190
November 22, 1999 Toronto, Ontario
EVENT: Dr. David Guyer, a prominent retinologist with a large AMD practice in New York, shared his views on Visudyne during a conference call on Friday.
IMPACT: Positive.
DETAILS: Dr. Guyer is a practicing retinologist and Associate Clinical Professor of Ophthalmology at Cornel University Medical Center and Director of Residency Training, Manhattan Eye Clinic of N.Y., Presbyterian Hospital, with over 100 publications to his name. He is a partner in a large retinal practice with seven other physicians. About 95% of his practice involves AMD patients. Dr Guyer was not a clinical investigator for Visudyne but attended the FDA advisory committee meeting as a consultant for other pharmaceutical companies. The following are the major points made during the conference call.
1. Dr. Guyers' impression was that the panel meeting was very favourable. Dr. Wiley Chambers (the head of the ophthalmology division at the FDA) was extremely positive and appeared to be seeking guidance on labeling only.
2. AMD is a progressive and relentless disease leading to blindness. Stopping the progression of vision loss is all we can hope for since improvement in vision can only be accomplished with tissue regeneration which is not feasible today. Visudyne will not cure AMD but retinal specialists in general believe Visudyne has very important and significant clinical effects since it can slow or stop vision loss. In the predominantly classic AMD patients, about two- thirds of patients were able to maintain their vision at one year. This translated to a 72% higher probability in maintaining vision when compared to placebo.
3. The advisory committee meeting gave us the first inkling that Visudyne's treatment benefit lasts a second year: a member of Visudyne's Data Safety and Monitoring Board stated that the second year of data showed a continuation of treatment affect without any additional safety issues. This was the most important information to come out of the meeting and is consistent with the natural history of the disease as placebo patients are expected to experience continued vision loss. Based on the natural history of the disease, Dr. Guyer expects the difference between placebo and Visudyne patients to at least stay the same during the second year. It is possible that the difference in the number of treated and placebo patients that maintain vision will increase.
4. Visudyne does not have any significant safety issues. Side effects are mild, transient and mostly avoidable with precautions. This will be a positive influence in doctors' decision to treat patients.
5. Based on population studies, there are about 600,000 new patients worldwide (our assumption is 400,000) which breaks down into 200,000 in each of the U.S., Europe and ROW. However, Dr. Guyer believes the 200,000 figure for the U.S. is conservative. There is also a backlog of 1.2 to 1.5 million patients who already have wet AMD. His practice group has done a not-yet-published study to look at the proportion of patients that are predominantly classic at initial presentation. They found that 35-40% of patients fit this category but this does not include patients who eventually progress.
6. Off-label use could dwarf the approved indication. Since physicians have nothing else to offer patients, Visudyne is likely to be used in all a good proportion of the 200,000 new patients per year in the U.S., even though it will be approved for predominantly classic AMD only. There are also about 40 other eye diseases, each with incidences of 5,000-20,000 patients, that are caused by abnormal blood vessel growth [40 x 20,000= 800,000]. These blood vessels are as a result of a multiple of different conditions such as histoplasmosis, inflammation, infections, high myopia etc. Retinologists are likely to explore and use photodynamic therapy off label for these diseases similarly to what was done with thermal laser.
7. Dr. Guyer believes the rate of adoption will be quick since the awareness among retinal specialists and even patients is high. Early on, the use of Visudyne is likely to be limited to retinal specialists but within a couple of years, is likely to be adopted by general ophthalmologists with large retinal practices.
8. In a move that he believed to be unprecedented prior to FDA approval, Medicare has already stated that it will accept billing for photodynamic therapy. In its new code book effective January 2000, there is a statement that it can be billed using the existing retinal laser code. Reimbursement will be about US$800 per treatment. No problems are anticipated for the reimbursement of Visudyne itself. He expects that the miscellaneous drug code will be used until a permanent code is received.
9. There will be some practical issues for some retinal practices but these are small considering the strong financial incentive for adopting the technology. Large retinal centres, such as his own, already have technical staff in place to handle the infusion of Visudyne. Some changes in the office are necessary in order to obtain optimal patient flow but these changes are already under way in large retinal centres. Changes implemented in his practice group will allow the treatment of 20-25 patients per day, five days a week. (Note: at the low end of the range, this will translate to about US$80,000 in revenue per week). A larger number of patients would require more changes to the office setting. Several groups are already thinking of opening centres that specialize in photodynamic therapy.
10. Other types of potential therapy are still 3-5 years from the market. Also these will not be directly competitive but synergistic and adjunctive to photodynamic therapy.
ASSESSMENT: Visudyne will have a large impact on the practice of retinal specialists. Given the level of awareness, the lack of alternatives and the financial incentive, adoption should be rapid even if some changes to daily practices are needed. Visudyne may be used for a number of other eye related diseases.
RECOMMENDATION: We recently upgraded the stock to an S5 following the positive recommendation from the advisory committee. Our target price remains C$87.50 (US$61.00). |
