Botanix Pharmaceuticals Quarterly Activity Report and 4C Quarterly Cash Flow Report

Key highlights

• Botanix is on track to launch its patient experience program in Q4 CY2024
• Botanix has finalised contractual arrangements with a number of key US payers (insurers) which reflect the target financial and patient access restrictions previously communicated, with
• further contracts to be signed in coming months
• Botanix has filled key positions in sales, marketing, sales training and sales operations that will
• support the commercialization of Sofdra
• In September Botanix was featured in both the ASX Small and Mid-Cap Conference and the E&P
• Small Cap Healthcare Conference in concert with a non-deal roadshow
• Cash position of A$67.62 million at September 2024 quarter end with no debt

Full Ann click here

At a glance there is nothing exciting here, but that's fine. Seems to be on track. In line with the plan.

Staff hired and rolling on toward sales in the new calendar year.

Steady as she goes.

Wow out old left field- I am just digesting how this news could impact Botanix’s value.

https://www.durbin.senate.gov/newsroom/press-releases/durbin-leads-senators-in-demanding-answers-from-pfizer-eli-lilly-on-new-telehealth-platforms-amid-concerns-of-inappropriate-prescribing

There will be a senate inquiry into Pfizer and Eli Lilly’s online telehealth platform. Is there room for abuse and over prescribing or a breach of possible kickback laws for drug companies.

I need to do more reading but I wanted to highlight this and kickstart some conversations around this topic.

Botanix uses a telehealth set up and access to a doctor who can prescribe a medication for AHH. It then uses independent rx provider Upscript to dispense this medication. Does this provide Botanix with an arms length protection? Does this protect the overprescribing of said drug and Medicare / Medicaid rebates that the government is worried about in the US. Or does this threaten all online telehealth platforms. A must watch piece of the puzzle for Botanix holders.

This could potentially add a lot of value or place uptake pace in danger if this distribution plan is vetoed by senate.

My gut feeling is that Big pharma running telehealth and distribution networks themselves may be vetoed.

Let me know your thoughts.

Botanix CEO Dr Howie McKibbon's 20 minute presentation at the recent ASX Small and Mid-Cap Conference September 2024 is now available on Youtube

ASX Small and Mid-Cap Conference September 2024 | Botanix Pharmaceuticals Limited (ASX:BOT)

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.

From Stockhead: Click here

Alive and Kicking: No sweat as Botanix readies for US launch of its hyperhidrosis treatment

Health & Biotech

 Tim Boreham

Alive and Kicking is renowned biotech journo Tim Boreham’s new daily wrap covering morning movers and shakers of note in the ASX Healthcare sector, Monday through Thursday.

• Botanix plans a US launch of its anti-sweating treatment in the March 2025 quarter
• Pacific Smiles shareholders have a new offer to get their teeth into
• Bubs Australia enrols its 400th and final infant for US clinical trial

Botanix Pharmaceuticals (ASX:BOT) says it will launch its approved product for excessive sweating in the US in the March quarter of next year, targeting 10 million sufferers of the common but little-known primary axillary hyperhidrosis (PAH).

In June the US Food & Drug Administration green-lighted its topical gel Sofdra, a “novel, safe and effective solution for patients who have lacked treatment options for this socially embarrassing medical condition.”

PAH is sweating over and above what is required to regulate the body’s temperature. We’re talking about shirt-drenching sweat, not something that can be ameliorated with an extra spray of Brut 33.

It’s the third biggest dermatological condition behind acne and dermatitis.

At an investor update this morning, the company said it had recruited 500 patients via the International Hyperhidrosis Society – yes, there is such a thing – with 18,000 to follow.

Meanwhile, the company has hired 27 sales reps across three regions to kick-start the sales and is wooing the small number of physicians – 4500 or so – who prescribe PAH treatments.

The company says seven million PAH patients have been diagnosed over the past 10 years, while three million remain undiagnosed. Given the US population of 336 million, that’s an incidence rate of a not insignificant 3%.

The company stresses that Sofdra will be eligible for reimbursement, with no out of pocket costs for most patients.

Initially, Botanix focused on developing synthetic cannabinoid treatments for skin diseases including acne, atopic dermatitis and psoriasis.

But results were patchy and in May 2021 the company obtained the rights to the sofpironium bromide (renamed Sofdra).

Unlike antiperspirants, Sofdra addresses the underlying problem by suppressing underarm receptors. Technically, Sofdra works by inhibiting M3 muscarinic receptors in eccrine glands at the application site. 

Found throughout the body, these receptors induce a ‘fight or flight’ response, including sweating and salivating, lactation and even urination. 

The excessive sweating comes in three iterations: primary axillary (under the arms), cranio-facial (head and face), palmar (hands and palms) and plantar (feet). The company has FDA approval for the first. 

Initially, the FDA rebuffed the company because of concerns about the wording of instructions in the Sofdra packaging, but these issues proved surmountable. 

However the March 2025 timeline is a slippage from the originally envisaged mid-2024 launch.

Immediately after approval, Botanix raised $70 million in an institutional placement, so it is well placed to lob its first US underarm delivery.

Botanix shares closed one cent higher at 42 cents, ascribing a meaty $770 million market capitalisation.

$BOT have posted the presentation for their Commercial Webinar later this morning at 10:30am.

Presentation

Good clarity on the timeline and how different US market segments will be accessed.

The Feb-25 HY report should give comprehensive (??) feedback from the Patient Experience trial, as well as the initial progress on IHhS (18,000) and Targeted Patient Lists (1 million).

The Feb report will be very significant, as it will provide decent real world commercial sales data from which forecasts will be updated. I expect there will be huge divergence that early in the s-curve, given the conservatism of current forecasts! That is, unless the product bombs!

Very much looking forward to the next 6 months.

Disc: Held in RL and SM

Some back ground info regarding suffers of Hyperhrdrosis from the International Hyperhrdrosis Society Website (sweathelp.org).

It’s quite eye opening to see the impact this can have on one’s life.

Key Facts About the Hidden Costs of Hyperhidrosis

• There are approximately 15.3 million individuals living with hyperhidrosis (Hh) in the U.S. (Archives of Dermatological Research 2016)
• Hyperhidrosis' impact on quality of life is equal to or greater than that of psoriasis, severe acne, Darier's disease, Hailey-Hailey disease, vitiligo, and chronic pruritus. (Eur Med J Neurol 2001)
• The prevalence of anxiety and depression is significantly higher in those with Hh than those without Hh (21.3% vs 7.5% and 27.2% vs 9.7%, respectively). (J Am Acad Dermatol 2016)
• 20% of hyperhidrosis sufferers report problems using computer keyboards, a computer mouse, mobile phones, and touch screens.  (Health and Quality of Life Outcomes 2017)
• 80% of Hh sufferers say they are dissatisfied with their abilities at work; 42% say that Hh prevents them from following a particular career path; 30% say they become frustrated with daily activities. (Brit J Dermatol 2002 & Dermatology 2006)
• Hh sufferers have a 300% greater risk of skin infections.  (J Am Acad Dermatol 2009)
• 60% of Hh sufferers report negative impacts on general health. (Archives of Dermatological Research 2016)
• 40% of Hh sufferers report physical discomfort. (Health and Quality of Life Outcomes 2017)
• 5% of Hh sufferers indicate they take antidepressants or anti-anxiety medications due to their sweating. (Brit J Dermatol 2002)

So $BOT announced today they are going to hold a "Commercial Day Webinar" on 17th September.

Apparently, the market values the statement "to provide a comprehensive update on its commercial launch plans and market insights for Sofdra™"  at $0.05 per share or $90m. Go figure.

(I'm not complaining, as I believe that once the market starts to get a 2-3 year view of the sales profile, there's plenty to more to come. However, the reaction to this "news" gives some insights into the potential choppiness of the ride ahead.)

Happy weekend all.

Disc: Held in RL (8.3%) and SM

informative article in end points https://endpts.com/next-gen-biotech-acquirers-find-ma-momentum-in-q2/

Take overs/ buyouts for 2024- looks to me like there is some room for Dermatology and Neurodevelopmental drugs - nothing on the list so far !

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

The recording for today's meeting is up, but here are some notes:

Botanix Pharmaceuticals, founded in 2016, spent a bunch of time and money looking for suitable applications of the Permetrex drug delivery technology, and relatively recently hit upon an treatment for primary axillary hyperhidrosis (excessive underarm sweating) -- a product called Sofdra that has just got FDA approval and for which there are 10 million estimated sufferers in the US alone.

For those affected, there aren't a lot of good options (existing options range from antiperspirants to invasive procedures like Botox and nerve surgery.)

But this product, which needs a script from a dermatologist, and for which should have minimal cost for (insured) patients, has the potential to be a bit of a game changer.

The company is now looking to gear up to meet expected demand (FDA approval of marketing materials, distribution setup, and launching a patient experience program etc) and expects first revenues later this calendar year.

Targeting early 2025 for sales force deployment. The company is hoping to bypass a lot of traditional pharmacy challenges with direct-to-patient distribution. And aiming for minimal out-of-pocket expenses for patients through insurance negotiations.

BOT is projecting market share of 30% for diagnosed patients and targeting undiagnosed patients through digital and telemedicine efforts.

Focus is on the US market due to high pharmaceutical spend. But exploring partnerships for other markets (e.g., Japan, Australia, Europe).

The team behind the company appears to have serious form, with people like Vince Ippolito (Executive Chairman) and Howie McKibbon (CEO) demonstrating successful track records in dermatology product launches and exits.

Execution on current plans while exploring additional product opportunities.

Potential for expanding Sofdra™'s use to other body parts.

When asked about the potential financials, Matt provided the following insights:

• In the US, there are 10 million people with underarm hyperhidrosis.
• 3.7 million have been diagnosed in the last 12 months.
• A typical new product aims for a 30% market share of diagnosed patients within a few years.
• Targeting 1% of the remaining 6.3 million undiagnosed or non-recently diagnosed patients through digital and telemedicine efforts.
• Each patient using the product 12 times per year.
• A target net revenue of $500 USD per patient per month

In his words, that's a "very big number" -- if my math's is right about US$7billion per year (of which some will be taken by contract manufacturers and other counterparties.)

Matt referenced the following notable exits during the interview and expressed confidence in Botanix's potential to achieve similar outcomes:

• Anacor Pharmaceuticals (Vince Ippolito, the Executive Chairman of Botanix, was the lead commercial officer at Anacor) developed several products, and was acquired by Pfizer for $5.2 billion.
• Medicis Pharmaceutical (Vince was also a senior commercial officer here) was sold for $2.4 billion.

Matt said the team would be disappointed if they didn't achieve a similar outcome.

Of course, there's a lot of execution risk still present, but it does seem like the company is positioned well.