Is the target market for PMX really > $ 4Billion?!?!? and not $ 1.5B ??? In my previus post we discussed how the current rate/incidence of Sepsis might actually be closer to 2.4 M in the US annually (versus the 1.7M quoted using out of date stats from the CDC). Note: 2.4M does
not include the effect of Covid-19.
How do we use that to calculate the true
market potential for
NA, in
CAD $, considering occassional
extra filter usage, and the
quoted "fit" for PMX estimates?
per the latest investor presentation:
- There are 1.7 Million patients each year in the US diagnosed with sepsis
- There are 330K patients who are expected to develop sepsis shock
- There are 120K patient in the US each year that fit the Tigris/EUPHRATES patient population
- PMX will be premium priced...LASER consultant report indicated US market pricing of ~USD$7,500 per PMX column (2016)
- Spectral’s addressable US market is ~US$1.5 billion p.a.
So how is the presentation's addressable US market calculated? presumably it is based on 100k that are a "fit" for PMX (although less than the 120k stated - it used to say 100k to 120k) So 100,000 X $ 7500 x 2 col
= $ 1.5 B USD (for the US alone)
Kewl! But is that the real top line you want to highlight for investors?
What is the real number using the additional factors (mostly from the presentatio itself, but also real world study results) not included in the math?
Factor 1: higher incidence of Sepsis 5 years after CDC published data 1.40 (or 40% more - see previous post)
Factor 2: More cartridge usage. Several studies (linked previously on SH) have shown that increased duration/more filters yeids better results . Lets assume 1/2 of patients benefit from a 3rd filter. Factor 1.5 ie. 2.5 average vs 2. (2 +3) / 2 /2 = 2.5/2 = 1.25
Factor 3: Canadian Usage. Canada's population is approx 10 % of the US population. Factor 1.1
Factor 4. 120k as a "fit" vs 100k used in calc. Factor 1.2
Fctor 5: convert USD to CAD $ 1.2 (conservative)
So what does a target market of $ 1.5B USD for the US become, when: the total NA market, true fit, higher incidence of Sepsis, higher usage per patient, and FX is factored in?
$ 1.5B USD X 1.4 (currents Sepsi stats) X 1.25 (more filters) X 1.1 (incl Cdns) X 1.2 (stated "fit" numbers) X 1.2 (USD to CAD$) =
$ 4,158,000,000 CAD or $ 4.2 B CAD $ rounded Tada !!!
To me that sounds alot less modest and more realitic. All IMHO of course.
But I'm sure a potential buyer could do this math and woldn't be allowed to forget about the factors that drive revenues higher.
Add in the Dialco market potential and its closer to $ 10B.
Discuss amoungst yourselves...or refute my logic...if you wish
MM
PS it's a good exercise to do when you consider that on Nasdaq Biotechs that command high margins are getting valuations (SPs) that are multiples of revenue. Sometimes 5 X , 10X or more.
I'll let you do the math on that, based on 250M shares o/s
No wonder companies like Outset are getting a $ 3B valuation on Nasdaq, ...but even more amazing when you consider that they are not profitable. But then again Amazon lost money for the first 10 -15 years. Is Tesla even profitable? But then people like future revenue stories. Especially the 10Billion dollar stories.