The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Redwine - the year 1 performance of Auryxia (c$111m rev from a standing start) is no doubt why Madison is now CEO. If he can replicate even 50% of this with Accrufer (which is a better product and has a wider use) in year 1 that will be ahead of predicted targets.
Looking at his CV he left Keryx in 2018 so i'm not sure how hands on he would have been but he would have certainly been heavily involved in the strategy and i suspect much of this can be replicated in his current role.
I think STX revenue projections are quite modest so Greg has the opportunity to smash these - i'm still hoping for breakeven by month 12 not 15 to 18 as advised.
I think the US market is more transparent than the UK - STX has stated they have identified 100 doctors/clinicians who prescribe over 1,000 iron doses per year - with a total market size of 10m p.a these 100 account for 1% of this market!!
In terms of Norgine the slow take up is a bit concerning. I am not an expert but my observations are:
1. Norgine have not assigned as many resources to it as we would like, partly waiting until extra European countries were added - think France, Spain and Italy have now been added
2. H2H study has delayed things as this was designed to assist marketing. As these errors were STXs doing i think they are not kicking up a fuss
3. I think Norgine focus on IBD whereas Ferracru has a wider use so they are not exploiting the whole market
4. Uk market in particular is very disparate with loads of small doctors practices and regional NHS. This makes access more time consuming
5. Norgine were slow to adjust to covid and are predominantly face to face selling
6. UK NHS is focus on cost , not the same as cost effectiveness. Salt based iron tablets are always prescribed as cost is so low (pence per day)
I get exactly what you mean about the stagnation while in a no-news lull. Though I would temper that with buying interest at what is still seen as a low price. So I think it'll bounce around in a broad channel for a while. It doesn't appear to be a "trader's share", so thankfully doesn't seem to have attracted the quick buck brigade (yet !) which should afford us some stability.
Anyway, it's delivered exactly what I wanted so far, the new management seems to be "on it" and I think we'll be smiling in 2022.
I am more hopeful. I revisited over the weekend the last Hardman forecasts form May. I know they are paid for research but their methodology is sound with the variable being your call on the market penetration and speed of ramp up.
Remember that Madison was CEO of Keryx whose Ferric citrate product that went from zero to 111m in sales in the space of a year and in the last year that I can find reported was selling 128m. That product has a less wide label than Accrufer. So my point here is the speed can be quicker than they currently forecast. Second is market share. Hardmans last valuation has SP tgt at 281p on 2023 sales of 1.3% market share and $94m revenue. if you substitute their 2024 forecast at 2023 timing so, quicker ramp up (and more in line with Madisons previous company), then the you get closer to that valuation earlier. Therefore for me it becomes about the sales and marketing activities and their efficacy. This is where Madison will add his value, based on his previous experience.
All of that said I have 2 doubts. 1. Norgine result so far looks poor. Is it the drug? Is it Norgine? Whatever if it doesn't improve soon then there is an issue somewhere.
More immediately I think the SP will drift lower. I cant see any comment from STX before the September update. I would think they will wait until they have something clearly positive to say on the outlook for next year. They wont in my view comment until they reach a point where the market can bank an assumption on future sales based on some hard data.
So short term I can see this drift lower through the summer and next year 1.50 minimum should good news be forthcoming.
Dang it. I posted a reply, shandy. But it was from my mobile and it didn't actually get posted. Gnnnn.
Anyway, it was along the lines of thinking about the sales team effectiveness. Early days maybe 5 or 6 of them will make sales (hit the right person with the right message and convince them to start prescribing Accrufer). These early adopters will negotiate a lower price in return for providing references and case-studies.
But those activities will enable the next 10-12 salespeople to make inroads. And the sales really start to pick up.
Within a year I think that £2.5M burn-rate will be down to £1M a month, and we'll soon after hit the transition point where incoming profit exceeds the cash burn.
They'll most likely manage costs by retaining the services of the most effective 25 salespeople, or may increase the team further depending on their effective load (ie: the number of clients that can be professionally served by each salesperson).
I'm loathed to predict a share price (gotten it wrong too many times) but I can see very good returns - double or maybe even triple - in a year's time, on positive early sales results. I'll be happy with that action.
yes good point Pick - the sell on news brigade have missed a point. STX dropped massively from Dec 2020 due to telling everyone a deal was close, almost nailed on, and then it didn't happen. This damaged sentiment massively. Therefore, when it came to the placing it was done at a much lower price than could have been achieved a few months prior.
Having stated Q2 launch it was imperative that this date was met, even though in the grand scheme of things a few weeks either way is irrelevant . In terms of the 30 salespeople i was less bothered - firstly you arguably don't need all 30 on day 1 and also in case people were working notice periods etc they might not be ready to start by 30/6. As it is they are so this is pretty much a big bang launch.
In terms of newsflow i am hoping we might get a few updates prior to mid year in Sept. First revenues hitting the bank account would be well received and this could be in the next month or so etc.
The only risk IMHO is if take up is a little slower than anticipated. With US costs of c$30m a year (top end of guidance) that's $2.5m a month. Getting to monthly breakeven is a massive milestone. This is expected in month 15 to 18 (so Sept 2022 to Dec 2022) - i'm hoping this could be achieved in Q2 2022, a year from now.
@shandy (and everyone else, of course !) - what's encouraging to me is that they did state the intent to have all 30 salespeople in place by the end of June. They have met that intent. Exactly what you want to hear as an investor.
That kind of reassurance builds investor confidence, which is the one thing STX has been lacking for the last two years.
IMO, we might sit in a channel now for a couple of months around the mid 50s, until the first quarterly sales results land.
Mind you, I said that a fortnight ago and we have been up to 60 and down to 51 in that time. So maybe mid-50s is the anchor-point but with a large up/down swing.
Just watched this via the link on the STX website (you need to sign in before you get access).
The slides are pretty much the same as those that have been in place for a few months. as expected but a few things i gleaned are:
1. Greg comes across as assured and confident - a big improvement on previous CEO
2. All 30 salespeople in place - great news, i thought we might be building up to 30 after day 1 launch
3. Greg mentioned the option of combining Accrufer with IV - i have mentioned this before, but it's the first time STX has said so to my knowledge. Get iron levels up via IV and then use Accrufer to kept them there
4. 2.3m iv injections in US last year at a cost of c$1.2bn so each IV costs c$500 - i think average number of IVs per patient is 3
5. The number of clinicians to contact has increased - previously i think they quoted c15k write 70% of business. Now a higher number for c60% of iron prescriptions
First impressions are that Greg knows his stuff and there is a clear plan in place that is now being worked through.
Accrufer is not a cheap product but there is a clear unmet need and the US model should be easier to access that say the UK where the focus is all on cost rather than cost effectiveness.
Exciting times ahead.
After FDA approval this share was almost £2 - so c £230m valuation, now it is half this valuation and clearly in a better position. I'm happy to hold