ASX Announcement

$BOT announcing this morning that the resubmission for Sofdra has been accepted by FDA as a "complete response" and that the timeline from resubmission in December to the approval decision is 6-months. So the decision is slated for June.

This is somewhat of a non-announcement, as that is what has been communicated previously and also what is understood by the market.

However, it is clear that $BOT are being careful to disclose everything around this key milestone to keep investors informed.

I also think it might address speculation by some that the FDA decision may come sooner.

@Nnyck777 posted a summary of the Euroz Harley report on $BOT earlier this year. I tried my usual trick of Googling "Botanix Pharmaceuticals Analyst reports" and bingo, scored the link to the April 2023 report (I don't know if there has been any update) buried somewhere on the Botanix website.

Euroz Hartleys Report

I don't think it has previously been posted on SM so I thought I'd share it for those who are looking at trying to value $BOT.

Note the disclosure that the analyst owns $BOT shares and that Euroz Hartley has been involved in providing corporate advice, raising equity and has been paid for its services in $BOT equity. So clearly they have a lot of interest in the SP of $BOT, so the research has to be viewed with that in mind.

Ahead of developing my own view in the New Year, I was interested to see the market penetration and revenue build profile assumptions. It is curious to see the forecasts have Sofdra very significantly expanding the addressible market, given its price premium to existing treatments. I think understanding this further is important.

The 6-9 month timing delay of the FDA setback is not necessarily that material to the revenue build projection in CY24 assuming a July launch if they position themselve aggressively ahead of FDA approval, which they appear to be doing. Also, given the ability for sales and marketing to target the relatively small number of dispensing dermatologists, the build profile through 2025-26-27 is actually quite pedestrian IF the product proves to be a hit with patients. So maybe, there is an element of risking in the build? Definitely room for some scenario thinking!

The target SP in this report is $0.28, and with the passage of 9 months since the report and a delay of 6-9 months due to the FDA setback, its still probably a reasonable price target today, if you accept the numbers. As I said, I will have a go at this in the New Year, so I am not giving a view on this at this stage.

Disc: Held in RL and SM

$BOT report that they have resubmitted the NDA for Sofdra to the FDA.

ASX Announcement

The original timeline they were targetting when they first received the setback from the FDA in September was for resubmission in early Q1 CY24 aiming for FDA approval in mid-CY24, with immediate commercial launch thereafter.

Along that process and since that time we've received two positive updates.

First, on 4-Dec following meeting with the FDA where the agency confirmed that $BOT's approach to update the labelling and patient use instruction are acceptable.

Second, on 14-Dec $BOT announced completion fo the Human Factors study, importantly stating that ALL patients in the trial successfully "prepared and applied Sofdra in accordance with the revised IFU".

CEO Howie McKibbon said "Our focus now is firmly on preparation for commercialisation as we work with FDA towards Sofdra approval by midyear.”

My Analysis

Unless I am missing something, FDA approval of Sofdra is entirely derisked. (That said surprises do happen!) Provide that centre for the HF study was validated (surely it must be), then a 100% compliance result should remove any questions regarding adequacy of the instructions. I don't think it can be clearer than that.

So, today the clock starts on the FDA's 6-month review timeline. Given everything we've learned Sofdra should get approval in late June 2024, with almost immediate launch.

There has been a mild positive market response today, simply because $BOT is doing what it said it would do, and the emerging news is entirely positive.

They've certainly moved along apace. Even though there is a clear sequence in which things should happen, activities are clearly being driven assuming success. That approach will be applied to the commercial / launch activities as well.

I've added 50% to my position this morning in RL, although overall it is still a small holding for me (1.6%). I'm on holiday now, but will do some proper valuation modelling of $BOT in the new year. Approval and early sales within CY24 means there is a lot of potential upside ahead and I think the risk-reward probably justifies a significantly larger position.

According to Med Esthetics, the US market for treatment of axilliary hyperhidrosis reached $500m last year. Given the attractiveness of the gel applicator over injections (which is the second line of treat for those who do not respond well to other topical applications) if $BOT can capture 20% of the market, i.e., revenue of $100m, then its current EV of c. $240m could easily re-rerate to 2x or 3x or more.

For now, I don't think the SP is going anywhere until the next FDA milestone unless $BOT starts to pick up some more analyst coverage. According to Tradingview.com there is one analyst covering it with a price target of $0.3000. (Do any StrawPeople have that research?)

Anyway, it looks like having quite a low risk profile for a drug company at its stage of development.

Disc: Held in RL and SM.

ASX Announcement

Botanix has successfully completed the planned human factors validation study assessing revised Instructions for Use (IFU) for Sofdra

• All HF Study participants successfully prepared and applied Sofdra in accordance with the revised IFU

• Botanix will now prepare to resubmit the Sofdra new drug application to FDA, including the revised IFU, human factors validation study report, and other requested materials

• Submission of the final component requested for FDA approval of Sofdra remains on track for early Q1 CY2024, targeting FDA approval in mid-CY2024

My Analysis

This is an unequivocal and clear statement. All participants in the study successfully followed the instructions. 100%. No ands or buts.

Of course, the FDA will have to review the updated NDA dossier and see if they agree, but it sounds pretty clear.

This removes the sole remaining impediment to getting Sofdra approved. We just have to wait for the FDA review process to complete.

Good news.

Disc: Held in RL and SM

ASX Announcement

$BOT have issued the above announcement following their feedback meeting with the FDA following the failure to receive approval for Sofdra based on the need to clarify patient instructions.

The purpose of the meeting was to better understand the FDA decision and, more importantly, to confirm that the planned changes to be included in the resubmission address the issues. FDA indicated that the proposed changes will be "acceptable for the planned resubmission of the Sofdra NDA package." While that is not the same as saying that the proposed changes will be approved (they can't say that), it is a positive indication that this final hurdle towards approval will be cleared.

The next step is for $BOT to implement the changes and then test them in a "human factors study'. The new patient information and results of the study will then be resubmitted to the FDA early in the new year, with a decision by mid-year.

Predictably, the SP has bounced, now sitting only 12.5% below its recent high just before the FDA setback.

Disc: Held in RL and SM

$BOT is in a trading halt pending announcement of a capital raising.

Despite earlier assurances to the contrary, the 6-12m delay to the FDA approval of Sofdra was always going to strain remaining cash, so in my view it was a matter of when and not if.

Disc: Held in RL and SM

$BOT are holding their AGM today.

The AGM Presentation has no material new information, but it is a good overview of where they are at. Next milestone is meeting before year end to get FDA guidance on the labelling/PIL feedback that has delayed approval of SOFDRA until mid-CY24.

Presentation has further details on the sales and marketing strategy, including details on sales force, geographic focus and telehealth strategy (recent partnership with UpScriptHealth annoucned separately).

Disc: Held in RL and SM

I wanted to better understand the precedence around the FDA letter holding up approval of sofpironium bromide gel based on labelling and patient information deficiencies.

I found an interesting reference on the subject in JAMA (Sacks et al. (2014) JAMA 311(4) 378-384). The article is a little too dated for my liking, but the information in Table 5 is interesting. (below)

Of 151 drugs not approved in their first cycle, 71 were subsequently approved following resubmission, with 80 not approved during the lifetime of the study.

What is more interesting is that only 4 drugs (2.6%) were not approved first time for labelling alone, and all 4 of these were subsequently approved.

Although the median delay in the study was 435 days this includes the entire population which is dominated by drugs with safey, efficiacy, chemistry, manufacturing and controls issues, many of which would have required further clinical trials. There's no data on the delay for labelling ony.

So this provides some independent support for the CEO's confidence that the drug will be approved when the labelling feedback is addressed.

It is many years since I was a practitioner in the industry, so it is good to know that the 2.6% of labelling rejections aligns with my own intuition that, while not un precedented, a labelling-only knockback is unusual.

In his interview on Ausbiz yesterday Howie McKibbon said "It's something that we anticipated. If we were going to get any feedback from the agency, we would have that much earlier in the cycle. So we were quite surprised that this occurred," which reinforced my own expectation that label feedback is usually addressed in earlier communication between the FDA and applicant, prior to the final decision.

Thinking about this overnight, I think the reason that this didn't happen in this case, is that the instructions relate to the use of the gel applicator, that requires validation in a controlled environment. So, its not just a change to the label (as you might easily do for a pill or capsule) but a patient instruction that has to be validated by observation and requires a supplemental submission reporting the results. I think that is why a resubmission is required and makes me think that maybe Howie shouldn't be so surprised. (It also weakens any argument about conspiracies!)

Source: Sacks et al. (2014)

ASX Announcement

FDA approval for sofpironium bromide gel has not been granted. FDA requires changes to the patient information provided with the product.

There were no adverse comments regarding safety and efficacy, so $BOT believe the path to final approval is de-risked.

This requires $BOT to makes changes to the patient information in the leaflet and the package, to conduct a trial to validate that the instructions result in correct use by patients, and to resubmit to FDA.

$BOT expect to resubmit in 1Q CY24 and to receive approval in mid CY24. They state the effective delay to commercial launch is 3-6 months.

$BOT say they have sufficient funds to launch and will manage costs.

My Takeaway

While disappointing not to receive approval, the work required to address FDA appears straightforward and, with an absence of any clinical issues, approval in mid-24 is further de-risked.

SP Pullback on any disappointment may provide an opportunity.

Disc. Held in RL and SM

$BOT responding to their ASX speeding ticket on yesterday's price action.

ASX Announcement

Yesterday's 14% jump was on the back of reasonable volumes just under 8m shares, indicating not a lot of sellers willing to get out ahead of the imminent FDA annoucement.

Given that the AGM was on Monday (with no online attendance option I am aware of), I wonder what Q&A took place and whether this led to some attendees to top-up. I wish online options were mandatory!

For example, I wonder if anything was said about discussions on the label, which could be a leading indicator?

One way or another, this one should see some further price action in the next week or two! If the result is positive, I'd like to double my initial holding, but buying discipline on price is important and I think I'll limit the order at $0.40, notwithstanding @Nnyck777's eye-watering valuation well beyond that.

Disc: Held in RL and SM