DCF: Market Segments The following table ties out to totals shown on slide 13 of Diagnocure's corporate presentation of Sept 2011 to Wall Street Analysts. You can access this file on the company's website. To make my table easier to read, you may want to type it into a spreadsheet. Column headers are US, ROW (rest of world, primarily Europe) and GT (Global Total).
Segment A: Biopsy - No Cancer Found: US=0.882m, ROW=0.918m, GT=1.8m biopsies
Segment B: Biopsy - Cancer Found: US=0.218m, ROW=0.682m, GT=0.9m biopsies
Subtotal: Biopsies/Year: US=1.1m, ROW=1.6m, GT=2.7m biopsies
Subtotal: PSA Tests/Year: US=2.3m, ROW=4.1m, GT=6.4m PSA tests
Segment C: Elevated PSA but No Biopsy Done: US=1.0m tests, ROW=1.6m tests, GT=2.6m tests
Subtotal: Elevated PSA (>3.0 ng/ml): US=3.3m, ROW=5.7m, GT=9m tests
Segment D: PSA screen negative (<3.0 ng/ml): US=30.7m, ROW=5.3m, GT=36m tests
Total PSA Tests/Year: US=34m, ROW=11m, GT=45m tests
Total Men Tested per Year: US=33m people, ROW=?
Segment E: Men who don't screen using PSA: US=13m people
Total Men >50 years old: US=46m people, ROW=?
The most important thing I learned doing the market segmentation is 1 biopsy is connected to multiple PSA tests. And I don't mean the annual screening tests. I realized this when a friend was diagnosed with prostate cancer this summer and we followed his progress. When his annual PSA screening test was elevated, his doctors asked him to stop certain physical activity and then re-tested him several weeks later. This test was less elevated but still a concern. By this time he was in the hands of a urologist, not his family doctor. He did one biopsy and the pathologist said he had cancer. His option was to remove the prostate surgically or to do treatment (usually radioactive seeds planted in the prostate). He opted for surgery. Recovery period was 6 week. Then after another two weeks they gave him another PSA test. It was negative. He is scheduled to do several more PSA tests at 90 day intervals. So this person has no prostate anymore and the specialists are still doing PSA tests as followup. I found many references in my research to multiple tests. In the Randomized European study (a very famous study), data shows 74% of people in the study who underwent a first biopsy had a second PSA test prior to the biopsy. Hence in my market segment table, there are over a million biopsies per year in the US each year, but more than 2 million PSA tests associated with them.
Second key thing I learned is there are really 3 decision-makers in this Testing Market: Men over 50 years old, their family doctor and the urologist. There are 46m men over 50 in the US (per US census website's 2010 estimate), 353,000 family doctors in the US, but only 9,000 urologists. It is now clear to me why GPRO is asking the FDA for approval for Segment A (negative biopsy). It is easier to penetrate because GPRO only has to sell to 9,000 urologists, not 353,000 family doctors.
My research showed there is lots of debate at the cut-off point for "elevated PSA test". Diagnocure consistently uses 4.0 ng/ml (ng=nanogram). However the incidence of cancer is a continuous curve where PSA<0.5=7%, PSA 0.6-1.0=10%, 1.1-2.0=17%, 2.1-3.0=24% and 3.1-4.0=27%. Diagnocure's corporate presentation says 5m PSA tests/year are positive, but that is at 4.0 ng/ml. I used the lower threshold because many people less than 4.0 still go to biopsy if their DRE (digital rectal exam) is abnormal.
Finally, the ROW data does not look like the US because Europe tends to not do PSA testing for screening like in the US and Canada. Europe does a PSA test if the DRE is abnormal. So fewer PSA tests for the number of biopsies. Also, cancer incidence depends on where you live. Japanese men living in Japan have cancer incidence of 10 per 100,000 men, while in US white men its 63 per 100,000 and in US black men it is 102 per 100,000. Europe is similar to the US average but Ireland is highest along with other North-West European countries. China is similar to Japan. However, for all countries, the process starting from preparing for biopsy through to treatment sounds similar.
I decided not to cite my sources in the interest of brevity. I would be delighted to provide references for specific questions for anyone who asks. My type-written notes run to 23 single-spaced pages.
I will post this so I don't lose it in a crash, then I will post the number of PCA3 tests that could be sold in each segment.