December 14, 2011

Target-rich Environment

What is the addressable market in melanoma for PV-10? Remember, addressable, not target.

Target, as I would envision the use of the word, would be that part of the population for which PV-10 is being claimed to be suitable or used as it relates to the FDA and the design of the Phase 3 trial.

The target market is 7%.

The addressable market, however, is 50%.

Here’s how I come up with these two very different numbers:
  • Of the people afflicted by melanoma (the "total population"),
    • 50% are Stage I
    • 30% are Stage II; and, 
    • 20% are metastatic (Stage IIIa, IIIb, IIIc, IV M1a, IV M1b, IV M1c).
  • Of the people suffering from metastatic melanoma (the "MM population"):
    • 80% is cutaneous or sub-cutaneous; and,
    • 20% is visceral.
  • So, overall:
    • cu/sub-cu MM is 16% of the population (0.2 x 0.8); and, 
    • visceral MM is 4% of the population (0.2 x 0.2)
One of the company's PIs, Sanjiv Argawala stated, conservatively in my view, that PV-10 might be applicable for one-third of the MM population, or 7% of the total population (0.33 x 0.2).

I've obviously been liberal in my sectioning of the populations above, but for purposes of this blog, my hope is to be illustrative and accurate, rather than precise.

The target population, supported by the Phase 2 results, might range from 7% (based on Dr. Argawala's conservative assessment) to 16% of the population (and perhaps, arguably, as much as 20%).

Management believes the addressable market is at least half of the entire melanoma market. They assert that PV-10 is applicable to and helpful for at least half of the entire population of folks suffering from melanoma, from Stage II to very late in Stage IV (M1c) by:
  • Utilizing the immuno-studies as the basis for the study looking to treat Stage II patients with PV-10 before removing the lesions surgically, after the immune system had been primed by PV-10 to fight back as nature had intended it to do; and,
  • Combining PV-10 and another treatment for those very late stage folks where PV-10 might prime the immune system, followed by other treatments that would reduce the patients' tumor burden.
Acknowledging more study is necessary and more work is required, but it is this kind of assertion that underscores management's belief in PV-10 (and PH-10). It is this kind of assertion that makes Provectus a gem on an investment opportunity, and one in which the upside is dramatically more commensurate than the risk an investor is taking on.

MM is estimated to affect 40,000 patients each year in the U.S. and 60,000 in the rest of the world (source). At $30,000 per course of therapy (using the methodology of the source's author), this makes for a target market for MM of $1.2 to $1.8 billion. If MM is about 20% of the total population, and the addressable market is 50% of the total population, this makes for $3 to $4.5 billion.

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