Pinned straw:
As @Strawman made special efforts to feed the "spreadsheet jockeys" on the call this morning, I thought it only fair to respond in kind.
Matt referred to the potential that Sofdra really takes off, being a case not at all considered in the E&P and EH valuations of $0.47 and $0.55. So I thought I'd have a go a putting some dimensions around that.
Assumptions (details shown in the spreadsheet below)
- Assume sales build to peak over 5 years according to the profile given
- 5% of diagnosed market captured in yr 5
- 2.5% of undiagnosed market capture in yr 5
- 12 scripts per year at 50% persistency (absolute, not progressive/cumulative)
- %GM 76%; SG&A grows at 20%; R&D at 10% of revenue; nominal DD&A (capital light)
- No debt
- SOI grow at 2.5% per annum
- P/E in 2029 of 50 (which is modest if this baby takes off)
Crank the handled and discount back at WACC of 10% and you get a valuation of $12bn, today.
In this scenario, they are writing 2m scripts p.a. in 2029. That's just double the rate in Japan after 3 years. With excellent marketing and execution, that's not inconceivable.
To be clear, this IS NOT my valuation. I am happy to leave my valuation at a "modest" $1.20.
The point is that if we see a strong revenue trajectory in 2Q25, 3Q25 and 4Q25, then this indicates the order of maghnitude change that could possible emerge - which is probably more in line with where Howie and Vince are thinking.
For sure, there is a lot amount of execution risk. But this kind of upside potential means that this morning I've added a further 20% to my RL holding at $0.335, and will align SM accordingly. I want to place a bigger bet here.
I wasn't around to get on the $PNV bus pre-revenue, but I'm damned sure that I'm on this one with a solid position.
I'll write a separate straw with some reflections on the SM meeting later today.
Disc: Held in RL (7%) and SM
Firstly thank you @Strawman a really great interview. That alone was worth my years Strawman membership to get questions answered in that detail was fantastic as a long term holder.
Firstly Scuttlebutt is that the Hyperhydrosis Society in the US has not listed any details about Sofdra yet. People are watching this keenly as there are 50K members that will get direct targeted advertising immediately.
Matt confirmed that FDA approving marketing and social media campaign. Once BOT receive green light this will go off with a bang.
Matt’s point about the pharmacy distribution system being so broke. With one Pharmacy going bankrupt and the big players closing 30% of their locations is a fascinating insight. This really highlights the disruptor platform and potential for changing the way Americans get a lot of their medicines for visible - telehealth conditions. My first thought was Rosacea and Dermatitis they are diagnosed by sight. This mean other products that are in the market my opt to sign partnerships with Botanix for distribution. Wow income without capital expenditure.
The insight into the aim for between a $0 and max $35-$65 co pay was really important. So $500 net is a useful sum to plug into spreadsheets.
Most interesting take away as I suspected if pipeline progressed Rosacea seems to be the next pipeline play rather than acne - given it’s stellar 2B results. This is the 4-5th largest dermatology market in the US.
Good to finally get the information about CPL in Canada being their manufacturing partner and to understand that they have planned and financed extra manufacturing runs if Sofdra takes off hard there will be capacity to grow quickly.
Fascinating to learn that 70 to 80c in the dollar in a traditional pharmaceutical chain is clipped along the way. Avoiding wholesalers alone brings 20% of profits back to BOT. Once again this highlights the value of their platform.
It makes sense that other pharmaceuticals are likely to sign partnering or commercial agreements if they can prove that this new system works.
It was good to get clarification around the 3.7 million estimated market for AH and that it is based on current item codes not just estimated numbers
Interesting comment that any new drug launched in a space whether stellar of not is initially likely to take 30% market share.
Matt also provided clarification around competitors that I had not heard before.
-2/3rds of people offered Botox decline treatment (that is a lot) and only 1% go on to have surgery (a tiny figure).
Interesting to hear partner talks have begun in South America and Oz/ Canada. That FDA and Sofdra package should be enough for applications.
Europe is obviously more challenging.
Best comment of all Vince and Howie would be embarrassed if they didn’t beat previous Exit prices.
Exciting times ahead.
Firstly thank you @Strawman a really great interview. That alone was worth my years Strawman membership to get questions answered in that detail was fantastic as a long term holder.
Firstly Scuttlebutt is that the Hyperhydrosis Society in the US has not listed any details about Sofdra yet. People are watching this keenly as there are 50K members that will get direct targeted advertising immediately.
Matt confirmed that FDA approving marketing and social media campaign. Once BOT receive green light this will go off with a bang.
Matt’s point about the pharmacy distribution system being so broke. With one Pharmacy going bankrupt and the big players closing 30% of their locations is a fascinating insight. This really highlights the disruptor platform and potential for changing the way Americans get a lot of their medicines for visible - telehealth conditions. My first thought was Rosacea and Dermatitis they are diagnosed by sight. This mean other products that are in the market my opt to sign partnerships with Botanix for distribution. Wow income without capital expenditure.
The insight into the aim for between a $0 and max $35-$65 co pay was really important. So $500 net is a useful sum to plug into spreadsheets.
Most interesting take away as I suspected if pipeline progressed Rosacea seems to be the next pipeline play rather than acne - given it’s stellar 2B results. This is the 4-5th largest dermatology market in the US.
Good to finally get the information about CPL in Canada being their manufacturing partner and to understand that they have planned and financed extra manufacturing runs if Sofdra takes off hard there will be capacity to grow quickly.
Fascinating to learn that 70 to 80c in the dollar in a traditional pharmaceutical chain is clipped along the way. Avoiding wholesalers alone brings 20% of profits back to BOT. Once again this highlights the value of their platform.
It makes sense that other pharmaceuticals are likely to sign partnering or commercial agreements if they can prove that this new system works.
It was good to get clarification around the 3.7 million estimated market for AH and that it is based on current item codes not just estimated numbers
Interesting comment that any new drug launched in a space whether stellar of not is initially likely to take 30% market share.
Matt also provided clarification around competitors that I had not heard before.
-2/3rds of people offered Botox decline treatment (that is a lot) and only 1% go on to have surgery (a tiny figure).
Interesting to hear partner talks have begun in South America and Oz/ Canada. That FDA and Sofdra package should be enough for applications.
Europe is obviously more challenging.
Best comment of all Vince and Howie would be embarrassed if they didn’t beat previous Exit prices.
Exciting times ahead.