“We believe that this predialysis opportunity represents blockbuster potential for Zerenex. To give all of you a sense of the market opportunity with an addressable patient population of over 1.5 million patients in the U.S., CKD stage 3 to 5 patients suffering from iron deficiency anemia with only a 7% market penetration and a price of $10,000 per patient per year, one would exceed $1 billion of sales in pre-dialysis alone, and that’s just for the U.S. We believe that an effective oral drug for the treatment of iron deficiency anemia and elevated phosphorus can actually do much better than 7% penetration.” – Ron Bentsur – 11/5/13 CC
But the 1.5 million patient figure is very conservative …
“Roughly 16 million [U.S.] patients are chronic kidney disease stages 3 to 5.” – Ron Bentsur – 1/15/14 JPM Presentation
“Iron deficiency is extremely common in persons with stage 3, 4 & 5 chronic kidney disease.” -- Dr. Glenn Chertow -- 11/5/13 CC
So let’s conservatively say there are 3 million Stage 3-5 CKG patients with iron deficiency anemia in the U.S., and that 500,000 of them go for Zerenex. (After all, Zerenex does 6 things for patients VERY well, and does nothing bad, and thus leaves the competition in the dust.)
500,000 x $10,000 = $5 billion in annual sales.
Add a conservative 30% for the dialysis & non-CKD anemia markets $5.0B x 1.3 = $6.5B.
Add 100% for the rest of the world. $6.5B x 2 = $13B. (To keep the math simple, I’m treating Japan like the rest of the world. The end result is about the same.)
Factor in the 10%/year inflation for phosphate binders. This doubles the sales after 7.2 years. $13B x 2 = $26B/year by 2021.
Apply a 4x Price/Sales factor to get the projected 2021 market cap: $26B x 4 = $104B. (Stock price = $1,150.)
Finally, reduce by 20% to factor in dilution & regulatory risk. $1,150 x .8 = $920/share in 2021. Not bad! As stated above, I think I’ve been conservative.
Sentiment: Strong Buy
"Add 100% for the rest of the world. $6.5B x 2 = $13B"
I suggest you adjust your analysis from the above assumption to reflect the fact that KERX is going to get only royalties from Japan and the EU partner. After payments to Panion, net royalties from Japan will be 5%. Just a WAG on the EU, but net royalties of 10-12% might be in the ball park.
thanks for the figures. I realize it's a best best case scenario. probably too rosy but it's useful to have to determine price. the problem is the market is always going to discount price so 40 in a year and 150 in 4 or 5 is probably a lot more realistic.
Let's make it a million dollars a share ; what freaking idiots!! And at 10000 dollars no one will order it; they will suffer the pill load for a thousand dollars worth of treatment. Way too expensive...another provenge!!!!! No one will care for it at that price and the competitors will eat kerx alive.
There's just no way you can charge $10,000/pt/year cause NO ONE WILL PAY FOR THAT. The gov certainly won't since they pay out a flat fee of $30,000-50,000/pt/year for dialysis patients and that includes certain meds like IV iron and Epogen, but there's just no way they will pay 1/3 of that for ONE drug...dreaming there for sure. $20 is too much to pay for this snake oil. 99.9% of Nephrologists will keep prescribing their old phosphate binders, Ron's pumping be ddam ned!! Back to $14's we go.
Sentiment: Strong Sell
I think the $10,000 price will make a lot of sense after KERX releases its pharmaco-economic publications highlighting Zerenex’ IV-iron, ESA and safety-related savings. The first 2 of these are worth north of $700 million/year just in the U.S. and rising. The last of these includes fewer hospitalizations.
Numbers more interesting, although US population actually getting younger when compared to world population over next 50 years, baby boomers for exclusive rights re zerenex getting older for next 15 to 20 years and zerenex will have larger potential user population. In Europe with declining births population aging faster and again larger potential for zerenex users. Finally Ron mentioned and spoke about iron Defency anemia uses for zerenex that are not related to kidney disease. 90% of GI bleeds are also iron defencient and often IV iron is used, zerenex is a cheaper more patient friendly manner to treat this and has far fewer complications and far fewer side effects. This was gone over in Q and A after presentation. The drug works and now it needs to be properly introduced to the medical community.
Thanks for laying out your calculations. I think some on this board just throw out numbers without justification, whether high or low, and then ridicule actual calculated projections.
No one knows for sure yet what the cost will be, but I think people can easily apply various scenarios and discover what the baseline estimate might look like in terms of sales for the US.