Hi Medicine Man, thank you for your reply. The first main...

Hi Medicine Man, thank you for your reply.

The first main concern I was expressing with your post was that, by making comparisons with Neuren but then omitting or distorting several key facts, you have positioned readers to take the view that going it alone is greatly preferable to licensing out assets. When you ask the question, “Who is making more money – NEU or Acadia?” without sufficient facts, readers are likely to conclude that the answer is Acadia. But what if they had been made aware that Acadia, 20 years in drug development and now with two FDA approved drugs, both the only approved drugs in their indications, also has an accumulated deficit of A$3.77bn +, has never paid a dividend and is yet to report a profit?

I’m not going to speculate on what Neuren’s financial position would be might be had it proceeded alone with trofinetide – I don’t believe I can do that with sufficient accuracy as there are far too many unknowns. My point is that while 100% of sales revenue always sounds attractive, one can’t effectively ignore the very high costs of drug development, the high costs involved in post-approval marketing, required post-approval studies and patient support programs as well as the high number of highly experienced people that would be needed to effectively execute the whole process.

My second main concern was with your PYC valuation in which you estimated a recurring annual income for PYC of US$10bn from 2028 onwards, based on earnings from the ADPKD drug alone. You foresaw a share price of A$54 (600 x what it is now) and $3.28 dividends being paid to shareholders.

The problem with estimating likely annual sales from a drug is, again, the many unknowns, even if you have a rough idea of the patient population and a likely price. The full market will never be captured, especially if a treatment is expensive. Sales can be dramatically impacted by payer refusal (insurance companies and government schemes). You also need to consider what will be the likely market penetration. E & P, for example, estimate just 10%. Then there’s competitor drugs. The impact on sales will depend on factors such as the number of competitors, their marketing muscle and their drugs’ relative efficacy, side effect profile and pricing. Then, what percentage of the patients who do take your drug will persist? Persistence rates can be below 50%. Also, how long until peak sales are achieved? E & P estimates 5-6 years.

To use Acadia as an example again, its first drug was approved by the FDA 8 years ago. It became the only FDA approved drug in a condition that impacts 6 million people worldwide. Yet sales of the drug have only now climbed past US$500m per year.

Then there’s the matter of generics. PYC first filed a patent application in treating kidney disease in 2022. Patent expiry could therefore be expected in 2042 so that’s potentially 13 years of protected sales from generics, if the patent is granted. This, of course, does not provide protection from any non-generic competitors.

I’ll leave it there. Suffice to say, although I am bullish on PYC and it is probably top of my ASX biotech stock picks, I am not expecting anything like US$10bn annual revenue, $54 share price and $3.28 dividends being paid from 2028 just on the strength of PYC’s currently preclinical ADPKD asset.