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Biotech / Medical : Human Genome Sciences, Inc. (HGSI) -- Ignore unavailable to you. Want to Upgrade?

To: software salesperson who wrote (1067)	7/21/2009 11:05:13 AM
From: rkrw	Respond to of 1127

I don't know how Birchenough could come up with a target market of only 5% of lupus patients. That seems absurd.

To: software salesperson who wrote (1067)	7/21/2009 11:10:56 PM
From: kenhott	Read Replies (2) \| Respond to of 1127

There's a lot of info in the coverage piece. I don't have time to read it now but maybe I will have time later. Instead of guessing at the stock price if the second phase 3 is successful, I would suggest maybe a line of thinking. There are of course different ways to skin the cat (sorry cat lovers) here. I will remind myself that we still need to see much more details of the trial, info that would help or hurt this drug not just re: approval but marketing. But what was released... so far, so good. So if I can extrapolate a little.... In the total population of lupus suffers, the mild patients don't need something like Benlysta. So I will just pick a number, 60% mild, 40% moderate/severe. No mild would use the drug so that leave 40% of mod/severe. Given that Lupus problems come in and out for a significant number of patients, somewhere along the timeline, each of these 40% mod/severe would find themselves considering or be considered for Benlysta. Once someone gets on Benlysta, all the reasons why it is difficult to solve Lupus re: in/out symptoms, placebo effect, etc. now helps to maintain someone on the drug.... If I take the drug, if the drug works, I feel better. If I get better due to the normal course of lupus, I feel better. If it is placebo effect, I feel better. Mentally why would I get off the drug, take off the security blanket? If I feel better and I get off the drug and I get another flare, I may strongly consider getting back on. To "fail" Benlysta, I would have to take the drug and get an unacceptable AE or don't feel better after a "standard" period. This drug has a GOOD AE profile (we will see more with data presentation) which is an important strength of the drug that people don't completely understand. And if the "standard" period is defined by GSK as 6 month or more, it would be unusual to not feel better one way or another within a longish time frame. So it would be kind of unusual to quit treatment because of AEs and outright failure. So, I expect many will try and I don't see many obvious reasons for people to drop the drug. If I assume that the drug really DOES help after having two positive phase 3 trials, I would be hard pressed not to buy into most of the thinking above. Of course people will drop the drug for all kinds of reasons, like convenience, etc. but the basic foundation of use is there to support this drug in a decent percentage of suffers in this indication. You can maybe see the evidence of this "bias" in the fact that after 5 years, ~50% of the phase 2 patients are still on Benlysta. I don't think this is 50% of the ITT but the sub-group. The phase 2 was in countries similar to the next phase 3 (76 weeks) which are countries in West EU and USA, etc. So we have a pool of 40% mod/severe patients with a lowish "fail" rate, etc. Would the drug be covered? I find it hard to believe that it won't be mostly covered. I can see the headlines "After 50 years of trying, first new drug for Lupus suffers are rejected by insurance companies...". Economically it would be expensive with a decent co-pay but drug companies have been getting around the co-pay issue by paying for the co-pay for the patients. I expect the price of the drug to be like $20kish per year. HGSI estimates 5 million lupus suffers in the world. So one can pick a number for lupus patients in USA, EU, Japan, (Don't completely discount China and other similar countries with growing middle/upper classes), etc. etc. Take 40% of that for mod/severe, take off some more percent for -- Won't try, Failures, AEs, Convenience issues, Insurance problem, cost, etc. to get to some max. potential sales $ number for Benlysta. The deal with GSK is 50/50, worldwide. Patent coverage in the USA is like 2023. This is a biologic and not a small molecule. The sales cost in the USA to cover prescribing docs is not that high. We are talking lowish hundreds of sales reps and not thousands of sales reps. It may make sense to run TV ads so that could get expensive. But one can argue the payback equation would be easy to figure out by a decent marketing person. Once I ran thru my numbers, as I know GSK would do, I ask myself what GSK is going to do. And what other company may be interested in the 50%. If you run the numbers, you will see that it is not too hard to get to $2B+ in sales worldwide ($2B is $20k times 100k patients, $3B is $20k times 150k patients, etc.). At $15 per share, HGSI is total value about $2B. What would be the cost to buyout HGSI if/when $2B or $3B or some large sales number is fully digested by the market. Vs. before the next phase 3 data, or after the next phase 3 data, etc. One big unknown is future competition. When and how good.