Welcome to the cult... er club @jcmleng

I also bought some more today like @mikebrisy on what is already my second largest position (well behind SGI, but very meaningful). The price isn't a lot above my average buy at this point, well not relative to the perceived upside. I feel late to this compared to some on SM who bought well below 30c, but I have looked forward rather than back on BOT and still feel it's very early overall. Sofdra is possibly just the beginning was the big take aways I had from the last SM meeting with Matt - the power of the platform has as yet untapped value.

@conrad thanks for posting. @Schwerms yes, I agree EH are still being quite conservative. Having read the note, I remain very comfortable with my valuation of $1.10 ($0.80-$1.40).

Ultimately, the catalysts for SP will be a longer time series of patient flows and refill rate. And of course, more analysts covering it.

@mikebrisy yes the biggest driver here really will be coverage and a decent PE once we get cracking.

Patience, patience and more patience required. Maybe we will hit meme stock status at some point once the good quarterlies start flowing end of year, Once everyone can see we are full steam ahead to rortsville with the refills..

Definately better to be flying high over low targets then repeat misses of the high bar as well.

I wonder what the main cause of the $400 net rather than $450 was that they were estimating.

@Schwerms I think I heard Matt referring to co-pay. If I understood what he said correctly, on some plans, patients make some initial payments before their full coverage kicks in, and $BOT is picking this up. Perhaps a bit like the coverage excess in Aussie hospital cover. Not sure I got that right.

I’ll also have to go back and look at where $450 came from,…whether management have ever said it or if it’s a number they’ve quietly guided the analysts too. I’m a bit rusty on that, and I haven’t annotated my model carefully enough! Sloppy, I know.

It is material, as you highlight, but not that significant given the valuation gap. If I understand it correctly, then as the age profile of patients (I.e., time on the drug) increases over time, we could see it trend upwards, given that the payer agreements are typically for 3 years.

But I could have completely the wrong end of the stick here.

On the market reaction, we know from history that once the market starts paying attention to biotechs, you can get spectacular positive over reactions. (The last time I traded that in a serious way, was $PNV for $4 in late 2020; it’s also happened with $AVH, but I missed that one.) This over reaction is very different from the pre-revenue stage SP pops. And it arises basically because the analysts over-estimate earnings 3 years out because they get too bullish on revenues and under-estimate costs. Downgrades and a fall back to earth happens when the earnings trajectory undershoots elevated expectations.The condition you seem to need for this to happen is enough “dumb” analysts whose PTs aren’t based on any fundamental work. (I’d argue that EH are very much based on fundamentals, because they’ve been building their models off the ECCLOCK analogue for years.)

So, I’m going to be rigorous in maintaining good valuation RANGES on $BOT so that I’m clear about my decisions for IF the SP flies up beyond any reasonable upper bound. Today, I’m not selling any below $1.60 … as I think I should have a margin on my upper bound because of the lack of commercial history.

Of course, it may be some time before we get to see what the financial performance looks like. Management can allocate a lot of resources into sales and marketing, as well as licensing in new molecules, too muddy the waters. So it is very early days, and $BOT have quite a high cost base for what it is. (Management paying themselves well I think!)

However, the risk-reward on this one looks very favourable, so I am staying “all in” for the moment and am glad I bought back the shares I’d taken profits on earlier this year. It’s easily my largest RL ASX position, and moving more from a speculative position to a conviction one!

Agreed. I have held this since 2019 building a position and I embarrassed to reveal my RL portfolio percentage- probably not too far off my Strawman one. The team has done this before. I suspect new products will be added to the platform soon. Very happy to hold and add further in my SmSf.

I feel the upward trajectory will be quicker than any forthcoming NEU takeover. If that takeover comes I know where some of the proceeds will be going. To buy more BOT.

@Nnyck777 and let’s not forget, the only reason I hold $BOT is because of your early posts on it. Cheers!

@Nnyck777 I have an embarrassingly large position as well, I look at the potential upside and downside and to be honest I don't see it doing worse equivalently than Ecclock in Japan compared to the upside being as we are now seeing with the early data potentially astronomical. You must have a good average if you have been at it since 2019.

If there is a downside where this is worth less than my 35c average I can't see it coming, Trump destroying the healthcare system is the only outlier but big pharma gave him a lot of backing and having seen some of the handbrakes recently applied to him has been reassuring. (Bond market / his rich mates hurt by the tariffs)

We need an AVA style analysis by our fearless leader @Strawman he might then be having a bet on Matt and the team not Mal and the team?

Hi @Schwerms

Trump is definitely the wildcard factor. His antics certainly have lead to a few sleepless nights. The 3 year insurance contracts certainly give me some piece of mind. Trump vs pharmaceuticals I think Pharma will win.

It's been a violent ride hasn't it, one after the half year and then Uncle dons tariffs.

The insurance contract length was one of my bigger concerns that's for sure.

On the back of @conrad kindly sharing the EUROZ analysis and in the spirit of @Schwerms analysis I have run my own sale projection. As per @@Schwerms I have adopted the US$400 net revenue per prescription, but EUROZ takes 75% reimbursement of US$450 (ie$337.50) as revenue, which I don’t follow but be about a 15% reduction in my projections if applied.

I am also just looking to FY28, the long tail EUROZ has is far to speculative at this point and they effectively assume net patient additions will remain around 2,500 until FY29 but only 6 refills. Implied assumption is either 100% of patients re-prescribe or the new patient addition rate increases to compensate for those drop of at 12 months by not re-prescribing.

My view is that all 11 refills can be forecast (12 scripts in total) due to the zero co-pay and automatic refill business model (which is the killer value adder). However, I assume only 50% renew their prescription after a year (on the basis of Phase 3, 60% had >= 2 point improvement in HDSM-Ax-7), and new patient additions remain at 2,500 a month which I see as a conservative base line for the next few years. 

This leads to more of an S curve that @mikebrisy refers to for Drugs, where as the EUROZ sales are almost a straight line up and to the right with it only flattening slightly in FY34.

Conclusion

A$100m sales in FY26 is now looking like a very soft target under either sets of assumptions with a run rate at the end of FY25 of A$100m in reach (3.5k patient addition per month for Q4) and I am leaning more towards A$200m (US$140m) being well within reach for FY26 net sales.

The number of prescribers is likely to grow more slowly per Matt saying 4-5k are their target market, but the rate they prescribe Sofdra should increase, so patient additions from the Dermatologist channel should grow beyond the 2.5k current run rate. Add to that the DTC channel having even modest success and I would expect 3.5k patient additions a month by Jun25 as a likely upside on the model.

Hence the EUROZ valuation of $0.80 is very conservative, their 12 refill valuation of $1.64 I think starts to look reasonable, but I would call more a Base case than a Bull case.

Summary Table

Full Table

Summary 3.5k Patient Additions/mth

Disc: I own RL+SM

@Tom73 this is a great analysis, and I think it is a very reasonable way to think about it.

Patient additions will keep growing as i) new prescribers are added, ii) physicians get used to prescribing and iii) telehealth kicks in (big unknown, which Matt agrees with), plus of course iv) any word of mouth as reputation grows. Either way we are still at the accelerating part of the s-cuvre - Matt having made the point that he doesn't believe the bolus effect is very strong here. Probably right. Your 2500 is still reasonably conservative, but we'll find out soon enough.

The new thinking your analysis brings to this which I think is really insightful is to recognise that near to 100% persistency will likely be maintained through year 1. But when a newscript is required, for many, its not going to have been such a great product. We know that from the clinical data as you've reminded us. So at that point, we'll see a persistency tail off. Even when it does, it will be a damn sight better than pretty much any other prescription dermatology drug out there. So this approach to modelling is more sophisiticated and a better simulation of the real world than that EH approach, IMO.

However you look at it, I think the consensus we're seeing is that a SP of $0.80 is "very conservative" and $1.64 is a "bull case".

It is good to see different StrawPeople bring different analysis lenses to bear on this.

Apart from a Trump Pharmageddon, I am struggling to develop much of a Bear case. In the near term, there isn't much on the competitive landscape. Even if the DTC teleheath channel fairs, the boots on the ground are in place. Management are seasoned dermatology marketeers, so you'd have to back them to keep getting the sales and marketing and execution right.

Short of black swans like rare adverse events, or a quality problem in the supply chain (neither of which you can ever rule out in pharma), I need to do more thinking on what the low-case looks like.

For the record, I have added a little more in RL today, just reinvesting some cash from recent dividend receipts, and have mirrored this with a SM order. It is still very comfortably in the "buy" zone for me.