Commercial opportunity implies peak sales of $500m or better

The question was asked last week about the commercial opportunity for VF-001.  In trying to estimate this I have found the Edison report from 2016 to be a helpful reference (https://www.edisoninvestmentresearch.com/research/report/factor-therapeutics/preview/).

The annual incidence of new or recurring VLUs in major markets appears to be around the following:

• United States: 850k
• EU: 1320k
• Japan: 540k
• Australia: 60k

Margolis score 1 ulcers represent ~30% of VLUs and so the addressable patient population, so around 830k patients per year.  In practice if you have a therapy that is shown to work in moderate patients then it is often used by severe patients (Margolis 0, 45% of patients) in off-label application.  So if you want to be aggressive in your assumptions you can assume maybe half of these (an additional 620k patients) are potential users of VF-001.  If you want to be conservative then don’t assume any Margolis 0 patients.

So we have an addressable patient population per year of 830k to 1.45m.  The company has talked about a price of USD $1000.  I will talk more about the competition at a later date but this price is less than Regranex (Smith and Nephew) which was priced at USD $1200 and had $100m in sales and was quickly growing before it was linked to cancer and effectively withdrawn from the market.  This implies a maximum annual sales figure of 830m-1.4b if all patients are treated.

Your guess is as good as mine, but if the trial data for VF-001 proves to be good enough this might imply a patient penetration of maybe 50-70%.  Using the midpoint of my guesstimate range implies peak sales of around $500m-900m.

It is important to remember that this is just the market potential for VF-001 based on positive results from the VLU trials in Margolis 1 patients.  If results are positive then I would expect the company to look at an “all-comer” VLU trial which would test the therapy for all VLU patients which would increase the addressable market by 3x.

And this doesn’t include the potential for expansion beyond VLU into diabetic foot ulcers or the ocular program.   

I hope this helps shareholders and as a lot of this involves guessing please don’t take it as gospel.  Others may have much better guesses than mine.  And of course this is all conditional on success in the current trial for the EU and subsequent phase 3 for the US/AU/JP.