VU Prevalence

This is an attempt to make a realistic 12 to 18 month Price projection based on current information.

From most sources I've come across venous leg ulcer prevalence ranges between 0.1% to 0.3% rather consistently across countries. However most of the data I have come across to arrive at these figures is up to 10 years old. After approval we know that Tissue Therapies will be initially targeting Germany the UK and the Benelux region. It is noted on the Tissue Therapies home page “In Germany, according to cautious estimates, approximately 3-4 million people suffer from hard to heal wounds”

Now if you take the whole population of Europe approx 700m and the average prevalence from the data I sourced 0.2% you get 0.002 x 700,000,000 = 1,400,000 cases. But if you take Tissue Therapies data for Germany alone you get 3-4 million cases let’s assume Tissue Therapies data is correct as it should be and determine a projected price.

So say we just target the German populace and take an average number of cases 3.5 million (3+4)/2 and say we have a mere 10% market penetration which is more than achievable, at $80 a tube (a figure that has been touted around and is comparable to competitive products) for an average 10 week course (usually an 8 to 12 week course at a tube a week based on trials) with a net profit margin of 0.2 reasonable since we were at one point seeking a partner paying royalties of 0.3 i.e 0.3 x (1- tax of 0.3) = 0.21 (you would think we would be after something similar if not more going it alone otherwise we would have lowered our requirements), and a P/E of 20 reasonable given sector P/E is 25 and with currently 300m shares on issue this allows us to form the following.

Cases = 3,500,000
Penetration = 3,500,000 x 0.1 = 350,000
Revenue = 350,000 x 80 x 10 = $280,000,000
Net Profit = 280,000,000 x 0.2 = $56,000,000
EPS = 56,000,000 / 300,000,000 = 18.67 cents
Price = 0.1867 x 20 = $3.73

Now to me this seems like a widely outrageous price estimate and either TIS is on a real winner or the No. of cases is widely off. Theoretically this price would be achieved within 2 years since Germany is one of our initial target countries. If we are to change the number of cases to the whole of Europe (not just Germany) to the data I sourced being 1,400,000 cases and leave all other variables the same which I believe are more than reasonable you get a Price of $1.49 after the whole of Europe is targeted say 3 years.

This leaves me wondering where TIS got this cautious estimate of 3-4 million cases for Germany alone from and if they're correct then this thing is going to go off the charts. Not so long ago they were providing 2 year projected revenue figures in the order of 280,000,000 so who knows maybe their no. of cases figure is correct. I know Germany has a higher than average prevalence thus why they are an initial target country, but 3 to 4 million high?