@Schwerms I also keep half an eye on my “investing failures”.

If $BOT falls much further it will eventually get to the point where, if it makes to profitability, it could deliver an investment return. (Statement of the obvious. And a big “if”.)

Frankly, a single product derm company like this doesn’t make sense. The natural endpoint is for it to get sold to a company with a bigger derm. portfolio.

The alternative was for them to license in other derm products to leverage their sales force and direct platform. But they don’t have the financial capacity to do that, and likely lack credibility with investors to raise the required capital.

Also, there is a bunch of talented people who are going to want to move on and achieve something. So talent retention is a risk.

Overall, I’d not be surprised if Vince and Howie are trying to sell it.

All that said, I’ll continue to do 5 minutes work each quarter just to see how sales and GTN are tracking.

Disc: Not Held

Dear BOT, it is you, not me, but it is still my mistake…

What I thought for sure that just wasn’t so:

• Proven efficacy: Approval in Japan and US meant that this was not a binary outcome Biotech investment but a product play with patent backing.
• Proven product: Ecclock sales in Japan were solid and under challenging accessibility for users given the draconian prescription requirements compared to what was going to be the case in the US.
• Proven team: You couldn’t have asked for a better set of credentials for management, the industry and product aligned experience and track record was exceptional.
• Proven DTC platform: Testing of the DTC platform was “successful” and ready to go along side the Dermatological channel, providing significant upside opportunities for growth.
• Great economics: The US$450 per scripted (later US$400, and now… er maybe US$200 on a good day), low cost to manufacture and supply plus the killer auto refill via DTC to smash industry norms for refill rates and platform ability to offer product range and resell expansion opportunities to further enhance the business economics.
• Blue sky opportunity: TAM, immediate 3m with expansion to 10m customers in the US. A 3x population opportunity to Japan in straight numbers but much bigger opportunity in revenue due to high pricing, smoother go to market for higher refills and an enhanced product.

My Thesis for BOT was commercial based (not scientific like other Biotechs) on the above and confidence due to what looked to be many supporting success factors adding to each other. So far none have come to pass and given they are spending $2 in product, sales and marketing for every $1 in revenue and those costs are growing as fast, if not faster than revenue – currently, this company doesn’t have the runway even with the raise to get to the point where revenue starts growing more than costs let alone overtake them.

Sure, there is hope that some or even all the reasons I invested start playing out, I am quite frankly dumbfounded as to why it all went wrong and management are not helping come to grips with these issues. So it could just as easily suddenly succeed as quickly and inexplicably as it has thus far failed.

I am all for an asymmetric punt (dutifully weighted based on risk), it can after all only go to zero but I have already well over allocated on the opportunity to loose money on this company already, hence I will keep watching to try and extract some value from it via an education.

I hope for those invested or thinking of investing it goes well.

@Tom73 This is one of the clearest and most honest thesis autopsies I’ve seen on the platform. OK, I haven't been here long, you laid out the assumptions, showed where each one failed and separated the company’s issues from your own decision‑making. Posts like this raise the standard for everyone. Thanks for putting it up.

I think the biggest failure of the thesis was taken up rates, Japan scripts per population vs USA.

We were nowhere near the Japanese units considering larger TAM easy accessibility.

Think in the studies the weaker version used is actually superior, similar results vs less side affects.

My theory is that US citizens care a lot less about hygiene vs the Japanese.

Japan is very clean very considerate people. Don't litter, wear a mask to be considerate when sick. Theory is much more inclined to want to reduce sweating, usage that my not typically be categorised as usage for excessive sweat.

It's the only way I can think of the explain the poor unit numbers

@Schwerms interesting idea. I’ve also struggled to reconcile the lack of uptake to date, considering the Japanese experience.

Might it also be price? At c. 10x more in US than Japan, I know insurers cop the lions share, (with a fair bit of copay by $BOT). So, is the visibility of the gross price to HCPs and even customers a consideration in assessment of value for money?

I know $BOT offers “$0 copay” to get patients on the drug. But it is a high cost product and so insurer requirements for prior authorisation, as well as uncertainty as to what the ongoing cost may be and who will pay might also be a factor.

On costs, I wonder to what extent HCPs consider the lifetime cost of the treatment vs. alternatives and limited efficacy?

So it was these factors that made me think the limited uptake was more related to economics and efficacy vs. alternatives.

One thing I’ve learned across many years following pharma. and medical devices, is that success in one market is no guarantee of success in another. And maybe you’ve hit on some other factors that have contributed to Sofdra getting lost in translation!

My thoughts on the insurance piece were based on Matt Callahan saying they set the price, rebates etc at a level insurers were happy with and weren't going to give them too much grief.

With the alleged streamlined insurance process through send RX would have thought it might not be as much of an issue.

When I look back there are a couple of key thoughts that come to mind as sort of "I should have exited because" if not exited greatly reduced holding.

1- pre launch I asked myself and I think I posted on here, how does in the insurance work RE deductibles etc and prior auth. The answer is, it hammers the gross to net for a while and Prior auth can take a long time for approvals to flow through.

2- why is the Qbrexza total annual sales so low and Sofdra is going to shoot the lights out, there were some clinical answers from trial data, but it was a very long way to go from the annual qbrexza sales to a # of annual units that would have been needed to put BOT at the high valuations it was aiming for.

Data showed it was a fair bit better with a few less side affects but not 10X better.

Sold a dream with the digital can't do anything about the marketing material I swallowed hook line and sinker from the webinars.

As you noted also it doesn't make sense now for the amount spent on boots on the ground to be a single product company, big overheads to be covered by a small GTN.

theres a chance they do well coming into summer but the symphony data I have seen popping up isn't showing that yet, still on a monthly run rate of 2000. not enough.

Thanks @Foxlowe, BOT is such a powerful reminder to me why position sizing is so important and that no matter how confident you are you need to have limits. The quote that sums this up beautiful is:

There is always something you miss (and management miss), so I want to keep taking what I see as asymmetric bets, but I should never ever think any of them are a sure thing!

Find weighted coin flips and limit your bets so you don’t get killed by a run of losses but get exposure to the long run upside.