The 100% revenue beat is AMAZING.
ITS ALL ABOUT THE 6 month launch trajectory!
At only roughly 10% penetration of hospital formulary, to have those volume numbers is outstanding.
Fact of the matter is that good hospitals run on 4% margins..and about 40% of hospitals have no margin (lose money). Despite those economics, they cannot deny the evidence behind this medication. Retail payers understand the value and have not denied this medication for approval which is a very health sign.
I can guarantee you that the 10% of hospitals Dificid is on formulary are some of the highest volume hospitals out of the roughly 6000 in the United States. They also are most likely in an Accountable Care Organization or forming one (according Health Affairs..90% of Hospital CEO's said they are forming an ACO..up from 25% in June). The ACO is designed to smash the silos between Acute and Chronic care, and CDAD is a disease, and DIFICID is a drug that bridges those two worlds, with acute initiation but late (out of hospital) mortality improvement. These ACO's will look at CDAD as a DRG where they can show improvement, and rather than just look at the ACQUISITION COST of Dificid, they will be INCENTIVIZED MONETARILY to improve outcomes by lowering mortality and reduce costs by 30 day readmits. In an ACO model, with a bundled payment negotiated with a private insurer, Dificid is a slam dunk winner for both quality and costs.
The 40% of hospitals that are losing money now do not have the capital costs to make the IT investment necessary to survive in the ACO world, where high performing IDN's can negotiated with private insurers (the only payor that actually pays more than costs). They will be bought by the Vanguards and Kaisers and Trinity IDN's of the world..and then guess what..in the ACO model will have their SQIP measures, CDAD DRG costs, and 30 day readmits compared on a monthly basis. DIFICID will be an necessary to compete with the other hospitals. At that point, the financial ROI of Dificid makes sense for the Hospital, in addition to the ACO and the private payer.
You can draw a straight line from launch to 2 years to where a drug finds its equilibrium..check "Launch Excellence" to see.and Dificid just redrew its line to DOUBLE revenues that analysts projected at year 2. That combined with the aging of the population and the inclusion of post-acute costs in the cost/value proposition of Dificid means this drug is on its way to moon in terms of revenue.
Excellent; however I wonder about the pps with the $200,000,000 offering. I'm not the math guy so would you who are care to take a stab at that; considering of course that there are many unknown variables. Bioman, a word of advice if i may. Don't bother discussing anything with Pro-sophist; he is just that.
Thank you for the paid advertisement. In hospital where Vancomycin is working very well (low rate of resistance on their antibiograms), there is no need to adopt Dificid. Also, you got your data backwards. Initial launch is strong because hospitals with high rate of recurrence did their analysis and jumped on board. Many hospitals actually have very low rate of recurrences and these hospitals will not jump on board. You cannot take your initial trajectory, draw a straight line, and say we are going to the moon....
so, help me understand....hospitals that have a low rate of recurrence would not use a drug known to lower that rate...and lessen their liabilities[it's hospital- borne] Your argument points to the fact that they are not educated to the benefits of using this drug...which ties in with the fact that it's very early in the launch process and in the meantime...alarms are going off in hospitals around the country associated with the spread of this killer.....I am very sorry about the real-estate business decline....hope you are not close to that fire.....but if thats what has given you the free time to short stocks.....don't think that's gonna work out for you either....at least not with OPTR!!!!!!!!!
Your implication that hospitals with low vanco resistance would not need Dificid on formulary only works in the case that the resistance is 0%.
So let me present a scenario. You have a septic patient, CDif is the causative agent, admit to ICU, its day 2 and this infection is not turning around. The ID and intensivist round , patient not responding to fluids. They both know the data that early appropriate effective antiinfectives are critical to outcomes for sepsis patients, and that baseline mortality in sepsis is at least 20%. They missed the window for early effective abx, patient is vanco resistant, and their organs are crashing.
Do you really think they are going to just cross their fingers and hope the vanco starts working? Or are they going to order Dificid? And once they do order it, how much longer before the rep sees that on his report and shows up with a product monograph and the intensivist and ID request P&T to vote for formulary access?
All it takes is ONE train wreck where Vanco fails and Dificid works and the door is open.
Trust i have been falling pharma for quite a while, Here's a severe intrinsic problem with all the longs blinded and off target analysis of C diff pathology and market. Lilly sold oral Vanc to vphm back when the c. Diff market was minuscule <$50million/Yr, thus the reason they sold it. Yes in there has been an increase in occurrence in CDI (lucky for Vphm) the last 5-7 years, but like every thing in the infectious diseases, these outbreaks are cyclical and with increasing cleaning and contaiment practices, these incidences will fall (trend back to historical averages). At no time in history has the market for cdi been bigger than $250m/yr for oral Vanc, even during the most severe outbreaks. OPTR is dead in the water, shareholders holding for the long term will be severely disappointed....
Sorry "proinvestor" but your weak arguments just won't fly.
Point #1: "cleaning and containment practices will make CDAD rates fall back to historical trends" News Flash: The SQIP procedures of pre and postop antibiotics have been widely adopted since about 2007 and now have at least 98% compliance rates..see Hospital Compare. Antibiotic cleanser gels have been posted on every corner of hospital walls for years. At best these measures have provided a 10% to 20% relative reduction in HAI's (VAP the outlier)..and the bugs are always evolving (check out hypervirulent CDI in Canaada.) In addition, there is an epidemic rise in the rates of cancer and diabetes in the U.S., both which predispose patients to infection. So to say "cleaning (do u mean sterlization?) and containment??? is going to reverse these counter trends of infection susceptibility specifically for CDAD is naive.
The fact of the matter is that according to AHRQ, the incidence and prevalence of CDAD as a primary and secondary diagnosis increased in a range of 116% to 137% respectively, from just 2000 to 2005..to a total of 301,000 cases.
Another report from the AHRQ estimated on the low end a CDAD HAI case cost and incremental $6,400 per patient. So if the ITT NNT for Dificid vs. Oral Vanco on a readmission is approximately 10, then 301,000/10 = 30,100 potential patients spared readmission by Dificid. Now lets be conservative only 150,000 get Dificid, and cutting the "relative reduction in admits population" to only 15,000. Using Dificid results in cost savings of $6,400 * 15,000 or $96 million/year savings to Medicare/Private Insurance just on readmits by using Dificid. That doesn't include the cure rates and reduction in LOS an costs associated there for survivors, so is very conservative.
Now repeat that for every country in the EU, and for Canada, and add the licensing fees and revenue sharing from those and other countries (with $0 cost of sales) to the revenue figures for Dificid. Or better yet..double the prevalance to 700,000 cited by Optimer, which is dead on the trajectory set from 2000 to 2005. You see that this drug can ramp revenue very quickly..
Point #2: Lilly
To point to Lilly and associate them with any marketing move that was remotely intelligent (sold oral Vanc to vphm for $50m?) in light of their subpar stock performance (last place vs. big pharma last 5 yrs) and Corporate Integrity Agreement is preposterous. Lilly sold in 2004..and Evidence Based Medicine was barely practiced then, and certainly hospitals had the IT capability to even accurately measure readmission and recurrence rates, etc. that are so crucial to price and benefit valuations to current pharmaceutical payors. The ACO will change all of this.
Just know that the inpatient acquisition cost vs. overall clinical/cost effectiveness debate currently strongly favors the hospital in terms of incentives, transparency, and accountability. It is all about cost cutting every dollar right now on the inpatient side.
Very soon that calculation and decision will be a more fair and balanced analysis...and one that truly benefits the patient!
Oh, I should point out that longs are invested in a poorly managed company, with extreme exaggerated expenses (multiple >3 very expensive leases, excessive amount of VPs ~10, and counting), poor IP, no pipeline, Chinese/Taiwanese questionable connections, I.e company shuttling money/investing in Taiwan questionable entities....read the SEC filings! This is a slam dunk short....oh and Ronald Macdonald BS firm recommends it...lol
Thanks...you tied it all together...I've seen this in action and it's not good. Let these shorts have their day in the sun and drive it down and create a nice buy point for those people who are just coming aboard....think your dbl. est. will come sooner than you think...
Well hospitals have incentives to get the patients out the door spending as little as possible...even if the patient lingers on and dies in a nursing home or is readmitted to another hospital, no penalties or repercussions to the original hospital..
The ACO and advanced health IT with sharing of the electronic health records will allow Medicare to track 30 and 90 day mortality rates, 30 day readmissions (no more gaming by readmitting to another hospital), and quality performance down to the DRG.
So in other words, inpatient pharmacy directors and P&T committees trying to deny patients access to the best evidence proven medicines to save a few dollars, or a pharmacist's job will be exposed by the Joint Commission, or hospital report cards comparing to other hospitals, or the Hospital Compare website..allow with more and more transparency and granularity to the DRG level..