Botanix held a webinar to update the market on the commercial launch of Sofdra.

One of the key points I took away is that the number of diagnosed patients in the US is now thought to be 7 million out of 10 million people suffering axillary hyperhydrosis. Botanix previously had this at 3.5 million diagnosed. If correct that means there are twice as many patients who are aware of their diagnosis and open to trying a new product. 

This may also increase the number of patients able to access Sofdra with no out of pocket expenses. If an insurer requires a patient to have already tried an alternative treatment before authorising Sondra, it seems having a larger cohort of diagnosed patients increases the number of patients who have already tried a competitor and be eligible for $0 out of pocket coverage. This could bring forward the customer adoption rate and accelerate sales.

Where to from here?

So far so good. I’m bullish on the prospects for Botanix, to the point where I’m asking myself: what am I missing?

There is execution risk: it’s possible that all these plans don’t work, or the product doesn’t work, or the customers try it and just switch back to competing products.

The thing is it’s not actually a new product and has been successfully sold in Japan (though a different formulation). So it probably does actually work. We’ll have to see how many patients try it and stick with it. Maybe it’s better than the alternative but not that much better? 

If these commercial plans come off the upside is significant. I’d expect low multiples of the current share price and then up from there if customer retention is good. 

So why does it appear to be overlooked? There’s no revenue yet, so the stock probably doesn’t look attractive on traditional metrics. You have to understand what is in motion. I also wonder if it suffers a bit from being in a less glamorous market: they aren’t curing cancer. This is OK with me but maybe makes it less exciting to follow for some.

The share price has had a good run up over the last 12 months, and I’m weighing up whether to buy more. I’m suffering from some price anchoring here - I bought it earlier when it was cheap, but if I do believe the price remains significantly undervalued then the current price is attractive with less risk than when I purchased previously. I probably will buy more but be patient. I don’t think there’s going to be anything in the next few months to cause a price inflection.

Came across this post on Livewire where Lennox Capital fund manager discusses Botanix as a high conviction position:

With binary approval risk in the US no longer being an issue, we think the opportunity in front of the company is immense, especially when you couple that with management’s history of commercialising dermatological products in the US.

I don’t know Lennox Capital at all so don't put any weight in their picks as such, but I do find it interesting to see a fund manager declaring they are bullish, and something to watch for more momentum in the price. Trading volume still higher since the FDA approval but is easing.

Botanix have posted an update on their progress in regard to FDA approval for Sofdra:

• Botanix has submitted the last label materials to FDA for Sofdra, a treatment for excessive underarm sweating
• Labeling discussions are the final step for Botanix before anticipated FDA approval of Sofdra and have involved discussions with the FDA on product carton design and wording of information that is provided to patients and physicians about the product
• The materials submitted today included the Prescribing Information and Patient Information
• Approval of Sofdra remains on target for 21 June 2024

I was surprised that material is still being submitted this close to approval. I'm not familiar enough with the process to know if this is typical, or suggests more revisions were requested. My understanding is that FDA approval doesn't involve a lot of two way communication so it may well be part of the scheduled process.

A previous announcement mentioned June 20 as the target for approval, but today's announcement refers to June 21. Not sure if this is a change, a typo, or just referring to different timezones (June 20 in US, June 21 here).

[Held]