How many patients does Savient need to break even?

[Anonymous]

Here's my back-of-the-envelope calculation.

Start with 100 employees total, at an average fully-loaded cost of $200,000 per employee to cover salary, benefits, infrastructure, etc. That's a run rate around $20M/year.

The list price for a year of Krystexxa is 2300/dose times 2 doses per month times 12 doses per year. That's $55K per patient per year. But, Savient won't get list price, so lets figure they net about 30% after insurance discounts, royalty payments, etc. That works out to $16K per patient per year.

20M/16K=1250 patients. I.e., 1250 patients at 16K net per year covers the 20M run rate.
Lets say out of the 60 recent sales hires, there are 50 reps capable of actually generating some level of sales. 1250/50=25, so just over 2 patients per month per rep after the first year. Basically, every other week.

So, by my back-of-the envelope calculation, Savient is at break even after a year if each rep can add an average of 2 patients per month for the first year.

Of course, Savient will also have extraordinary expenses, like running new trials in order to expand their label. That was explicitly given as one of the purposes of the $200M they just raised with the convertable notes. So, this is all "hitting a moving target" to some extent. But, for now, it doesn't seem like break even would be that insurmountable of a barrier.

 

[Anonymous]

Here's my back-of-the-envelope calculation.

Start with 100 employees total, at an average fully-loaded cost of $200,000 per employee to cover salary, benefits, infrastructure, etc. That's a run rate around $20M/year.

The list price for a year of Krystexxa is 2300/dose times 2 doses per month times 12 doses per year. That's $55K per patient per year. But, Savient won't get list price, so lets figure they net about 30% after insurance discounts, royalty payments, etc. That works out to $16K per patient per year.

20M/16K=1250 patients. I.e., 1250 patients at 16K net per year covers the 20M run rate.
Lets say out of the 60 recent sales hires, there are 50 reps capable of actually generating some level of sales. 1250/50=25, so just over 2 patients per month per rep after the first year. Basically, every other week.

So, by my back-of-the envelope calculation, Savient is at break even after a year if each rep can add an average of 2 patients per month for the first year.

Of course, Savient will also have extraordinary expenses, like running new trials in order to expand their label. That was explicitly given as one of the purposes of the $200M they just raised with the convertable notes. So, this is all "hitting a moving target" to some extent. But, for now, it doesn't seem like break even would be that insurmountable of a barrier.

I spoke with the biggest Rheumy's in my territory and they told me this morning that they have less than 5 patients TOTAL in their entire practice (scopes 12 satellite offices in a top 10 metro area in the US). This is pathetic. True Krystexxa usage will be near impossible to drum up, sure there will be territories that get hot with the low hanging fruit, but that is not going to keep the lights on and the checks clearing . There was awkward silence between this news, and I ended it with a laugh and then they chuckled like a clown at my desperate little product and ploy. Docs are getting hammered by the medicare reductions and if they cannot make money on infusions like they could in the glory days, shit these were major cash cows for them at one time, this looks like a dying cause. Yes I know spare me the "you should have done this research before you took the bait", well when you are behind on your mortgage and have no other options with interviews you take what you can get in the present and work to improve while being paid to do it. I get it.

 

[Anonymous]

I spoke with the biggest Rheumy's in my territory and they told me this morning that they have less than 5 patients TOTAL in their entire practice (scopes 12 satellite offices in a top 10 metro area in the US). This is pathetic. True Krystexxa usage will be near impossible to drum up, sure there will be territories that get hot with the low hanging fruit, but that is not going to keep the lights on and the checks clearing . There was awkward silence between this news, and I ended it with a laugh and then they chuckled like a clown at my desperate little product and ploy. Docs are getting hammered by the medicare reductions and if they cannot make money on infusions like they could in the glory days, shit these were major cash cows for them at one time, this looks like a dying cause. Yes I know spare me the "you should have done this research before you took the bait", well when you are behind on your mortgage and have no other options with interviews you take what you can get in the present and work to improve while being paid to do it. I get it.

I don't believe a single word you are saying. Prove ANYTHING in the above. You haven't cited a single, verifiable fact anywhere. Post the Rheumy's name, so we can check ourselves, or show us where it says that medicare reductions will have any effect on Krystexxa, or just ANY fact ANYWHERE.

You can't, because you are just making stuff up at random.

 

[Anonymous]

I don't believe a single word you are saying. Prove ANYTHING in the above. You haven't cited a single, verifiable fact anywhere. Post the Rheumy's name, so we can check ourselves, or show us where it says that medicare reductions will have any effect on Krystexxa, or just ANY fact ANYWHERE.

You can't, because you are just making stuff up at random.

Agreed! I am a completely different person from you, and yet I still agree with your point while having nothing new to offer.

 

[Anonymous]

I don't believe a single word you are saying. Prove ANYTHING in the above. You haven't cited a single, verifiable fact anywhere. Post the Rheumy's name, so we can check ourselves, or show us where it says that medicare reductions will have any effect on Krystexxa, or just ANY fact ANYWHERE.

You can't, because you are just making stuff up at random.

OMG! Douche bag alert. Have you ever heard of the Medicare reform bill? Get off this board. Do you live in a cave, have you not spoken to a doctor lately about their medicare reimbursements? Dude, this is one of the biggest topics of health care reform we have seen in our lifetime. Do a little bit of googling or open your eyes, this post is evident that you not only do not work in this industry but also do not work in healthcare, let alone Savient. This is your ticket off this board. Go inform yourself about medicare reimbursement cuts for doctors especially the infusions. You should not be able to ever leave your house. You claim to work in ind. but do not understand medicare cost cuts and reimbursements to the practitioners? They have been going bye bye for many years. Not a good time to enter the market with a new product that will have to earn its due and earn its coverage. Medicare is clamping down on this like the great white they are.

 

[Anonymous]

OMG! Douche bag alert. Have you ever heard of the Medicare reform bill? Get off this board. Do you live in a cave, have you not spoken to a doctor lately about their medicare reimbursements? Dude, this is one of the biggest topics of health care reform we have seen in our lifetime. Do a little bit of googling or open your eyes, this post is evident that you not only do not work in this industry but also do not work in healthcare, let alone Savient. This is your ticket off this board. Go inform yourself about medicare reimbursement cuts for doctors especially the infusions. You should not be able to ever leave your house. You claim to work in ind. but do not understand medicare cost cuts and reimbursements to the practitioners? They have been going bye bye for many years. Not a good time to enter the market with a new product that will have to earn its due and earn its coverage. Medicare is clamping down on this like the great white they are.

None of this ranting has anything to do with coverage levels on an orphan biologic. Show me ANY proof ANYWHERE that says healthcare reform will have any impact on this. You can't, because it won't.

 

[Anonymous]

OMG! Douche bag alert. Have you ever heard of the Medicare reform bill? Get off this board. Do you live in a cave, have you not spoken to a doctor lately about their medicare reimbursements? Dude, this is one of the biggest topics of health care reform we have seen in our lifetime. Do a little bit of googling or open your eyes, this post is evident that you not only do not work in this industry but also do not work in healthcare, let alone Savient. This is your ticket off this board. Go inform yourself about medicare reimbursement cuts for doctors especially the infusions. You should not be able to ever leave your house. You claim to work in ind. but do not understand medicare cost cuts and reimbursements to the practitioners? They have been going bye bye for many years. Not a good time to enter the market with a new product that will have to earn its due and earn its coverage. Medicare is clamping down on this like the great white they are.

Don't you have anything to do ? We get it: you hate this company and the product and the environment. we get it. What is your motivation for posting here over and over ? no matter how you slice it, Krys is a gamechanger product for those afflicted. what's your interest here and your motivation? come on, it'll be our secret. honest injun. agenda is ?

 

[Anonymous1.1]

Who is kidding who? Any sophisticated study shows that IF a major
player was marketing this product it would be a billion dollar product.
There is only one problem here. These bozos at Savient couldn't
sell $100,000.00 a year in product if they owned Lipitor, Plavix and Nexium.
Clearly they have a huge product and no nothing about marketing. It's hard to believe someone hasn't come along and bought the company for $12.00 a share

 

[Anonymous]

Who is kidding who?... These bozos at Savient couldn't
sell $100,000.00 a year in product

Good question, who is kidding who?
You do know that Savient made 49.5M in 2005, 47.51M in 2006, and then revenues started to taper off to 14.02M, 3.18M, and 2.96M is 2007, 2008, and 2009, right?

I'd have to check my math, but I'm pretty sure 49.5M is more than 100K.

If they did it once, they can easily do it again.


2009 2008 2007 2006 2005
Period End Date 12/31/2009 12/31/2008 12/31/2007 12/31/2006 12/31/2005
Period Length 12 Months 12 Months 12 Months 12 Months 12 Months
Stmt Source 10-K 10-K 10-K 10-K 10-K
Stmt Source Date 03/01/2010 03/02/2009 03/14/2008 03/16/2007 03/16/2007
Stmt Update Type Updated Updated Updated Updated Restated

Revenue 2.96 3.03 13.83 47.35 48.04
Other Revenue, Total 0.0 0.15 0.2 0.16 1.45
Total Revenue 2.96 3.18 14.02 47.51 49.5

 

[Anonymous]

1,256.73

 

[Anonymous]

I spoke with the biggest Rheumy's in my territory and they told me this morning that they have less than 5 patients TOTAL in their entire practice (scopes 12 satellite offices in a top 10 metro area in the US). This is pathetic. True Krystexxa usage will be near impossible to drum up, sure there will be territories that get hot with the low hanging fruit, but that is not going to keep the lights on and the checks clearing . There was awkward silence between this news, and I ended it with a laugh and then they chuckled like a clown at my desperate little product and ploy. Docs are getting hammered by the medicare reductions and if they cannot make money on infusions like they could in the glory days, shit these were major cash cows for them at one time, this looks like a dying cause. Yes I know spare me the "you should have done this research before you took the bait", well when you are behind on your mortgage and have no other options with interviews you take what you can get in the present and work to improve while being paid to do it. I get it.

Here's a free clue for you: Rheu's aren seeing very few, if any, TFG patients because, duh, the treatments failed, and pts went back to PCP for symptom mgmnt, including pain control. When Rheus learn more about K and access those initial 2 pts you mentioned will become 4..then 6 etc, as primary care MDs can refer their toughest cases to reu to try krys. Prior to krys there was no treatment option for tfg pts. Now there is. May not worrk for everyone but it's a godsend for those tat can benefit. Gout flares are wicked painful.

 

[Anonymous]

however your increase in patient volume will come to a grinding halt for the IOI rheum when he does not get paid!
sending patients to hospitals will only last so long, as they will not sit back and eat drug cost like they used to...overcome the payer market, lets see how "tolerable" this shit is, and then you might have a mildly successful drug.

 

[Anonymous]

Here's a free clue for you: Rheu's aren seeing very few, if any, TFG patients because, duh, the treatments failed, and pts went back to PCP for symptom mgmnt, including pain control. When Rheus learn more about K and access those initial 2 pts you mentioned will become 4..then 6 etc, as primary care MDs can refer their toughest cases to reu to try krys. Prior to krys there was no treatment option for tfg pts. Now there is. May not worrk for everyone but it's a godsend for those tat can benefit. Gout flares are wicked painful.

I agree with both of these posts above, bits and pieces from both are true. I have 14yrs in....all Rheu, all buy and bill. Big dollar sales. The market and medicare reimb. are not what they used to be, the hospitals are no longer budgeting in "losses" for infusions and diagnostic test like they did for so long and tried to fight out the payment in the long appeal process. Not only did the ordering doc's fight the bills but ultimately it was the patients getting the invoices at that time they were already in collections.
Hospitals will not absorb the cost for K, a few years ago many institutions and out patient testing and infusion clinics would be more fair game to taking on the concept of ordering in and stocking something like K, but they have been burnt severely by companies like Savient and have lost big big chunks of dollars playing these games with small start up'w comp. like Savient, a drug that does not have any immediate negotiated contracts, no set reimbursement schedule etc. CMS will not even be reviewing this drug until June or July.
I would not expect Savient to be able to fund operational costs, sales force overhead, marketing overhead, and royalties and costs for their web based offerings any more than 5-6 months. The cash burn rate will be enormous and shareholders will not be happy with the money going out, the low adaption rate only by the Rhems who have the physically disabled gout refractory patients on drug, there are NOT enough of those patients floating around to support revenue.

 

[Anonymous]

Here's a free clue for you: Rheu's aren seeing very few, if any, TFG patients because, duh, the treatments failed, and pts went back to PCP for symptom mgmnt, including pain control. When Rheus learn more about K and access those initial 2 pts you mentioned will become 4..then 6 etc, as primary care MDs can refer their toughest cases to reu to try krys. Prior to krys there was no treatment option for tfg pts. Now there is. May not worrk for everyone but it's a godsend for those tat can benefit. Gout flares are wicked painful.

Here is a bonus free clue for you, even with the "toughest" ref. gout patients on drug, that will not bring in the immediate revenue that Savient needs to have happen to keep the doors open and people paid. Very simple. NO hospital is going to eat the costs and stock this product for 3 people, they will send back to the distributer, Savient will show inventory going out to hospitals and doc's, but the redemption rate on actual orders will be very low and returned inventory will have to be charged back to the books. That is why the big question was so vaguely addressed by the investors regarding how K sales revenues will be reported.

 

[Anonymous]

OK, whatever dude. Stock price bottomed out last week and float is 100% owned by institutions. Company has $250 million in cash. They aren't going anywhere for a long time. Sales staff is 100% hired and on the job, despite your best efforts to the contrary. Earnings release is a week and a half away, and we'll get some REAL info then. So, post away if it makes you feel better, but don't think for a second that anyone is actually believing your bull.

 

[Anonymous]

Here is a bonus free clue for you, even with the "toughest" ref. gout patients on drug, that will not bring in the immediate revenue that Savient needs to have happen to keep the doors open and people paid. Very simple. NO hospital is going to eat the costs and stock this product for 3 people, they will send back to the distributer, Savient will show inventory going out to hospitals and doc's, but the redemption rate on actual orders will be very low and returned inventory will have to be charged back to the books. That is why the big question was so vaguely addressed by the investors regarding how K sales revenues will be reported.

Great post! Finally somebody who gets it. These Yahoo posters who invaded this board with no pharma experience or Rheum experience is ridiculous. They don't get the fundamentals of the company, job, or what we deal with on a daily. Savient management is as shady as they come and their rep speaks for itself. These doc's we are going to be calling on did not just graduate med school, they have been through this drill with expensive "disease modifying drugs/infusions for many many many many many years. First question will be how much does it cost and will my patients get a bill when the claim is denied. End of story. Coverage and cost, formulary coverage and hospital networks only care about how much this shit will cost them, the days of hospitals eating the bill for "disease modifying meds" are a thing of the past. What will Savient end up pulling in after the claims process is completed is the only thing that matters, will it be enough to cover operational costs, I seriously doubt it.

 

[Anonymous]

I agree with both of these posts above, bits and pieces from both are true. I have 14yrs in....all Rheu, all buy and bill. Big dollar sales. The market and medicare reimb. are not what they used to be, the hospitals are no longer budgeting in "losses" for infusions and diagnostic test like they did for so long and tried to fight out the payment in the long appeal process. Not only did the ordering doc's fight the bills but ultimately it was the patients getting the invoices at that time they were already in collections.
Hospitals will not absorb the cost for K, a few years ago many institutions and out patient testing and infusion clinics would be more fair game to taking on the concept of ordering in and stocking something like K, but they have been burnt severely by companies like Savient and have lost big big chunks of dollars playing these games with small start up'w comp. like Savient, a drug that does not have any immediate negotiated contracts, no set reimbursement schedule etc. CMS will not even be reviewing this drug until June or July.
I would not expect Savient to be able to fund operational costs, sales force overhead, marketing overhead, and royalties and costs for their web based offerings any more than 5-6 months. The cash burn rate will be enormous and shareholders will not be happy with the money going out, the low adaption rate only by the Rhems who have the physically disabled gout refractory patients on drug, there are NOT enough of those patients floating around to support revenue.

From top to bottom, spot on. Good luck Savient, uphill and over priced. Will be funny to see how they calculate revenue with inventory at the distributers vs. actual infusion and claim processing. Savient is well known to be snake oil used car salesmen, will the facade continue and will the hoax work this time around? NOPE>

 

[Anonymous]

I would not expect Savient to be able to fund operational costs, sales force overhead, marketing overhead, and royalties and costs for their web based offerings any more than 5-6 months.

From top to bottom, spot on.

Really?

Savient is going to burn through $250M in 5-6 months?

And someone else thinks this is "spot on?"

What exactly do you think they'll be spending this $40M/month on? Share your obvious insight and expertise.

 

[Anonymous]

Getting back to the orginal question, I really feel that Savient needs 7 patients to break even and not have to dump the new hires. I give it 7 months. Just sayin'

 

[Anonymous]

It looks like Savient made some very serious errors in their product planning.
Shame shame on them.