Transcript Slide 1

Cure’s Dilemma
GTX – A SHOT IN THE ARM, OR A
COSTLY MISTAKE
by
PEER PRESSURE
Harold Matskevich, Min Ji Lee, Asha Jayakumar, & A.J. Calbert
Nov.20.2009
Agenda
Introduction to Diseases
Introduction to Drug Candidates
A bit of Scientific Background
SWOT Analysis
Summary of Financials
Signals for Success
Recommendations
Nov.20.2009
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What Ails the Market?
Inflammatory Bowel Disease (IBD)
Crohn’s Disease (CD):
Ulcerative Colitis (UC):
 Affects small intestine & colon
 Affects colon & rectum
 Approx. 830,000 cases in the 7
 Approx. 1.12MM cases in US, EU,
 Mild to moderate cases served by
 Mild cases typically served by 5-
 Moderate to severe cases served
 Moderate to severe cases served
pharma markets
steroids and immunomodulators
mostly by biologics
Nov.20.2009
and China
ASAs
by biologics and
immunomodulators
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GTX-001 vs. GTX-002
GTX-001
GTX-002
 Biologic
 IκK Kinase inhibitor
 Target Market:
 Target Market:
- severe cases of CD and UC
- mild-moderate cases of CD
- Size: ~ 244,000 US & EU
- Size: ~ 618,000 US & EU
 Key to success:
 Key to success:
- positive response
- few side effects in patients who
don’t react to TNF-α inhibitors
- overwhelmingly positive response
in mild and moderate CD
sufferers
Nov.20.2009
4
Novel Approaches to an Old Problem
What’s out there
New Approach
GTX001
TNF-α
LPS
NFκB
inducers
VLA-1
IFNγ
GTX002
IKK
NFκB
Cytokines,
Chemokines,
Anti-apoptotic
factors
VLA-1
NFκB
Source:
http://www.crohnsdiseasefocus.com/articles/crohns-disease-treatment/crohns-disease-treatment-anti-tnf.php
http://www.healthcentral.com/rheumatoid-arthritis/h/list-of-humira-side-effects.html
http://www.empr.com/cimzia-approved-for-rheumatoid-arthritis/article/136790/
Nov.20.2009
Target gene activation
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GTX-001 – SWOT Analysis
Strengths
• Not a TNF-α inhibitor
• Humanized (assumption)
• Effective at low concentrations
• Works for both CD and UC
• Can be combined with steroids
Opportunities
• CD: 45 – 70% of severe patients react
poorly to TNF-α inhibitors
• UC: 50 – 60% of severe patients react
poorly to TNF-α inhibitors
• Potential to combine with steroids for
induction therapy, and continue use for
maintenance.
Nov.20.2009
Weaknesses
• IV administered
• May require unstable treatment regimen
• Unexpected side effects
Threats
• Tough competition from other biologic
treatments
• Competitor biologics administered
subcutaneously
• Competitor patent expiry may cause
market prices to fall
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GTX-002 – SWOT Analysis
Strengths
• Orally administered
• Great in combination with ASA/steroids
• Effective at treating mild to moderate CD
Weaknesses
• May cause liver and kidney toxicities
• May alter GI commensal flora
• Inhibiting IκB kinases blocks beneficial
cellular processes
• Not effective for UC sufferers
Opportunities
Threats
• CD: Mild to moderate sufferers don’t react
to ASA treatment
• Comparable treatments cause serious side
effects
• Potential to combine with steroids for
induction therapy, and continue use for
maintenance.
• Small target market size
• Competitor prices are relatively low
• Low probability of FDA approval due to
potential serious side effects
• Consumers may not differentiate GTX-002
from other IM treatments
Nov.20.2009
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Summary of Financials – GTX-001
Pricing
Key considerations
 1) Competitive products’ patents will
expire before 2020
 2) Patented products have a price
range of $10,000-30,000
 GTX-001 should be priced at the low
end of patented products
Price Range USD 10,000 – 14,000
Market Share
Key assumptions



Biologics market: 45-70% of CD
patients and 50-60% of UC patients’
needs are unmet
Among them 10%(CD) and 30%(UC)
will try GTX-001 in the first year
This will grow by 10% if effective
Nov.20.2009
NPV and IRR
Key assumptions
 23-year time period beginning 2010
 Probability of getting FDA’s approval:
60%**
 Discount rate: 8%
(In thousand dollars)
Price
NPV
Exp. Value
10
424,910
64,562
12
684,162
220,112
14
943,413
375,663
* Exp.Value : Expected value of the project considering
60% chance of getting FDA’s approval
Calculated IRR 14% (price $10,000)
** Source: http://www.msnbc.msn.com/id/20321830/
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Summary of Financials – GTX-002
Pricing
Key considerations
 All other immunomodulator products
are currently off-patent
Price Range USD 1,000 – 3,000
NPV and IRR
Key assumptions
 23-year time period beginning 2010
 Probability of getting FDA’s approval:
60%
 Discount rate: 8%
(In thousand dollars)
Market Share
Key assumptions



5% of patients with no treatment or 5ASA only will try GTX-002 in 1st yr
10% of patients with steroids will be
likely to try GTX-002 due to steroids’
long-term side effects
This will grow by 10% if effective
Nov.20.2009
Price
NPV
Exp. Value
1
-562,671
-527,987
2
-253,995
-342,781
3
54,681
-157,576
* Exp.Value : Expected value of the project considering
60% chance of getting FDA’s approval
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Signals for Success
Preclinical Stage
Clinical Stage
GTX-001
 Anti VLA-1 antibody
 Effective & safe
 Positive dose response
GTX-002
Remission in CD & UC patients
unresponsive to TNFα inhibitors
 IKK inhibitor
 Can be used with ASA
and steroids
 Toxicity & susceptibility
to infections
 Distinct gut flora
With steroids: refractory CD &
UC patients
Humanized: lower side effects &
no change in gut flora
Nov.20.2009
Oral administration and
compliance
Mild-moderate CD refractory to
5-ASAs
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Recommendations
License
License only GTX-001
Market GTX-001 for both CD and UC
Price GTX-001 at $10,000/annual supply
Marketing
Market GTX-001 primarily to health professionals
Advertise heavily in professional health journals
Host conferences promoting new treatment
Nov.20.2009
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APPENDIX
Nov.20.2009
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Appendix 1
Source: Peyrin-Biroulet L, Desreumaux P, Sandborn WJ, Colombel JF Volume 372, Issue 9632, 5 July 2008-11 July 2008, Pages 67-81
Nov.20.2009
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Appendix 2 – Market Landscape Projection
GTX-001
Market Size (in USD)
Crohn’s Disease
Patients Population
Total number of patients using biologics: 145,000 (US+EU)
Remicade
As-is(2008)
Humira
Humira
Cimzia
To-Be(2032)
Tysabri
Cimzia
To-Be(2032)
Tysabri
GTX-001
0
Ulcerative Colitis
Remicade
As-is(2008)
50000
100000
GTX-001
150000
0
500
1000
1500
2000
Total number of patients using biologics: 99,000 (US+EU)
As-is(2008)
Remicade
As-is(2008)
Remicade
GTX-001
To-Be(2032)
Other
0
40000
80000
• Number of patients for competitive products are calculated by
2008 sales divided by yearly cost
• Number of patients for GTX-001 is based on the previous
assumptions.
Nov.20.2009
GTX-001
To-Be(2032)
Other
0
500
1000
1500
• Competitors’ sales are based on the scenario of 10% drop in
price after gone off-patent
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Appendix 3 – Assumptions for financials
GTX-001
year
(in thousand dollars)
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Revenue
CD
UC
TOTAL
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(60,000)
(60,000)
(60,000)
(60,000)
(60,000)
(40,000)
(40,000)
(40,000)
(40,000)
(40,000)
65,250
148,500
213,750
Cost
licensing
fee
late-stage
dev cost
milestone
payment
promotion
al costs
royalty
cost
TOTAL
Profit
Present Values
NPV
NPV(60% of FDA
approval)
(10,000)
(40,000)
(40,000)
(40,000)
(40,000)
(40,000)
(100,000)
(21,375)
(50,000)
(50,000)
(50,000)
424,910
(40,000)
(40,000)
(37,037)
(40,000)
(40,000)
(34,294)
(40,000)
(40,000)
(31,753)
(40,000) (100,000) (100,000) (100,000) (100,000) (100,000) (121,375)
(40,000) (100,000) (100,000) (100,000) (100,000) (100,000)
92,375
(29,401) (68,058) (63,017) (58,349) (54,027) (50,025)
42,787
64,562
Cost Allocation


Late-state development costs occur at last 5 years of
development (Phase 3)
Equal amount of annual milestone payments
Nov.20.2009
Revenues


No returns, allowances thus net sales equal total revenues
The probability of getting FDA’s approval
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Appendix 4 – Sensitivity Analysis
Sensitivity analysis for NPV reflecting
60% chance of getting FDA’s approval
GTX-001
inc. rate
price
9
10
11
12
13
14
5%
-182,001
-122,979
-63,958
-4,937
54,084
113,106
7%
-121,261
-55,491
10,279
76,049
141,819
207,590
10%
-13,214
64,562
142,337
220,112
297,888
375,663
12%
72,092
159,346
246,600
333,854
421,107
508,361
15%
223,973
328,102
432,232
536,361
640,491
744,620
20%
557,454
698,637
839,820
981,003
1,122,186
1,263,369
GTX-002
inc. rate
Nov.20.2009
(In thousand dollars)
(In thousand dollars)
price
0.8
1
1.5
2
2.5
3
5%
-600,755
-572,646
-502,373
-432,099
-361,826
-291,553
7%
-587,898
-556,575
-478,266
-399,957
-321,649
-243,340
10%
-565,028
-527,987
-435,384
-342,781
-250,179
-157,576
12%
-546,971
-505,416
-401,528
-297,640
-193,752
-89,863
15%
-514,823
-465,230
-341,249
-217,268
-93,287
30,694
20%
-444,235
-376,995
-208,897
-40,798
127,300
295,399
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