PREVIOUS APPROACH OF THE NASH MARKET, SIZE AND SHARING (Updated Dec 2016)


A NASH MARKET SEGMENTATION AND SHARING

After several weeks and many news, it seemed to me necessary to completely take over the evaluation of the treatment of NASH market with a new look incorporating the segmentation of this market, its dynamics and the shares that can expect the most advanced competitors.

We will focus on North American and European markets in the first instance.

The prevalence of NASH is still debated; according to the party, its goes from 5% to 17% of the population in industrialized countries. The most advanced laboratories on the subject (and Intercept GENFIT) reported in their submissions a consensual prevalence of 12%, Gilead speaks of 10% 20%, The NIDDK him, always refers to a document, dated 2006, reporting a prevalence between 3 and 5%. 

The FDA for its part raised a prevalence between 12 and 17%.

The range is wide; I tend to think that the laboratories are generally optimistic about the market size they are targeting in their communications to investors.

However the lowest assessment from NIDDK date nearly 10 years and was not revised in light of recent studies.

To assess the market prudently, I chose an intermediate prevalence I estimated ¼ of patients with NAFLD (31%), so, according to published studies, a prevalence of NASH about 7, 5% of the adult population.

This population is not homogeneous, all NASH are not necessarily of the same nature. There are NASH strongly linked to obesity, some do not. Some are associated with identified cardiovascular risk, others with type 2 diabetes. Some are associated with a combination of these three factors or correlated with a genetic typology.

It is important to understand this, because developing medications do not target all of these typologies but will be effective only on one or more segments.

Furthermore NASH is considered the hepatic manifestation of the metabolic syndrome for which current treatments are limited.

NASH is a silent disease because it has no clear symptoms for much of its evolution and becomes apparent at the onset of symptoms associated with the disease it causes, such as liver fibrosis.

Therefore,  what the laboratories presents as a treatment for NASH; is often the treatment of only a single factor, or more symptoms thereof.

This further complicates the analysis of the potential market.

Sorting between laboratories whose molecule specifically targets the accumulation of fat in the liver, which is not yet NASH  but NAFL wicch can potentially evolve to NASH, those targeting liver cirrhosis and advanced fibrosis that are not the treatment of NASH but the consequences of the latter, and the 'pure NASH players’ curing the liver and metabolic derangement which is the main characteristic of NASH, is not easy.

So we should not deviate from the study the "NASH side players" targeting the upstream and downstream of the disease because, if spreads, there will be very few companies in the market studied, one or two..

Liver fibrosis is one of the monitored parameters in NASH patients,  although mortality generated progression to fibrosis is largely inferior to that related to increased cardiovascular risk.

This is quite understandable because it is easier to focus in clinical research on an objectively measurable factor in a relatively short time, as the advancement of fibrosis, rather than a multi factorial result, as the complex mechanism increased cardiovascular risk.

It is quite simple, based on histological observations, to classify patients according to the progress of their hepatic fibrosis on a scale of F0 to F4.  F0 meaning no fibrosis, and F4 meaning mainly cirrhosis.

Companies like GILEAD and simtuzumab, Galectin or TOBIRA thus concentrate their studies of patients with advanced fibrosis (F3) or cirrhosis (F4) from NASH. These companies present their drug candidate as a treatment for NASH, but in fact they only target the symptoms of the final stages.

A sub market segmentation, integrating the different stages of fibrosis is therefore needed to take into account the specific typology of these targets.

So I tried to segment the market with the following parameters

  • Patients with NAFLD or NASH with a NAS score partitioned between 3 and 8.
  • Patients with cardiovascular risk proved or not.
  • Patients with T2 diabetes or not.
  • Patients divided according to their fibrosis score between F0 and F4

 

This ambitious segmentation, NASH divides the market into 140 segments, which is difficult to represent.

I tried to evaluate the prevalence of these 140 segments in the adult population, which is not easy, because no study to date has reached this degree of accuracy.

So i proceeded empirically, with the only evidence I could find.

In addition to many articles, each with statistics and sometimes, contradictory patients distributions, there is a base, the FLINT study, and the PIVENS study, although small, which can help.

On a population basis with NAFLD, with a prevalence of 31%, and a quarter who have NASH,  we can extract from the FLINT study  a segmentation of fibrosis scores.

But as the FLINT recruitment  departed cirrhosis, we must recover the cirrhosis rate in the NASH population in another study and allocate percentages of fibrosis scores on the rest of the population.

Once this is done, we have a distribution of fibrosis scores on the whole sample of NASH, with a NAS> = 4.

There is another published study that disaggregates fibrosis score between NAS <= 4 and those> 4 which shows that statistically fibrosis progresses with the worsening of the disease.

This correlation is stronger with the progression of inflammation and ballooning as steatosis, which is logical, but should have been further subdivided into 3 new segmentations, which would have burdened the exercise beyond the reasonable.

It was therefore necessary to somewhat ‘empirically' fill some lines so that, taking into account the horizontal split NASH population (score NAS), and vertical (fibrosis score), the assembly is consistent on two axes and reflects a progression of fibrosis in most advanced patients.

This method of distribution is partly empirical, but consistent, in row and column with the ratios of the population of FLINT.

We must also consider what concerns the important and accessory in the selected segmentations. For example, the segmentation of cardiovascular risk is only of interest because some companies (especially INTERCEPT) had to deviate from the recruitment of their Phase 3 patients with a specific cardio vascular risk, and patients with a rate not mastered high LDL, closing much of their market.

Similarly, companies with products increasing insulin resistance should not be prescribed to patients with type 2 diabetes.

Conversely some drugs appear to be effective only in patients with diabetes (see FLINT study)

To assess the prevalence, I joined a rate of 55% of NASH patients with cardiovascular risk, but no serious study corroborates this point. Circulating figures, and in particular the survey conducted by the Financial Analyst Morgan Stanley stared at the figure above 50%.

For diabetes rate I took the 53% prevalence of diabetes in the NASH population recruited for the FLINT study of INTERCEPT.  Since it became known that the prevalence of diabetes among patients enrolled in the GOLDEN study of GENFIT was only 40%.

We can push this figure by averaging between the two studies and establishing the supposed prevalence of diabetes in the NASH population to 46%, in my opinion, this ratio should grow up with the publication of other studies.

The recalculated distribution of prevalence in the adult population gives an empirical picture of the prevalence by market segment, but consistent with the known studies to date.

 

 

To continue in the market assessment logic, it is necessary to introduce a second parameter, which, too, has an empirical side: the health care rates.

GENFIT's announcement of the development of a technique for diagnostic biomarkers, greatly changes the estimated detection rate of the disease.

This method of companion diagnostic biomarker can identify with a simple blood test patients with NASH and likely to respond to treatment companion.

It is not yet known whether GENFIT think rapidly expand the scope of its test system for screening of responders to other molecules that ELAFIBRANOR, but it would be logical.

The cost of this test is not yet known but it is essentially based on the dosage of two micro RNA and other more traditional settings, all analyzed by a proprietary algorithm.

The dosage of micro RNA required, there is little time, long and expensive sequencing, but it has become very accessible from the development of molecular techniques tag sequences that are read by simple cytometers. (see http://www.fireflybio.com website)

The cost of the diagnosis should be reduced to a few hundred dollars at the beginning of its commercialization, to quickly go below $ 100, which give the very suitable for mass screening.

Thus it becomes difficult to assess comprehensively the care rate of NASH because it will change for each drug, depending on the existence or not of a companion diagnostic.

The method used in the end will assess an estimated average rate of care for each market segment, in order to assess the number of patients in the respective predictable general case.

In case the candidate drug is associated with a companion diagnostic, the rate would be adapted to the rate assessed answering in the patient population, which will automatically reduce the number of targeted patients, but with greatly increased care rates, Because of the ease of diagnosis, one offsetting the other

So we left the overall assessment of the market and we enter the specific market evaluation of each drug candidate.

In doing so, we only get closer to what is becoming the rule in medicine, more targeted drugs associated with diagnostic techniques and monitoring of individualized efficiency.

However, apart GENFIT laboratory, no other drug candidate has yet announced a functional companion diagnostic method. The overall market analysis thus remains the rule for these drug candidates.

It goes without saying that a patient already followed for cardiovascular risk and diabetes, is more likely to be detected and treated as another. Similarly, the higher the pathology progresses, clinical signs become important and induce a higher rate of diagnosis (cirrhosis having the highest treatment rate).

Conversely, a NAFLD, NASH with NAS or 3, silent in a patient with no cardiovascular risk or proven diabetes, is unlikely to be detected by a physician during a routine visit

The following table try to address these issues by providing a treatment rate per segment between 2% and 60%,  it is very cautionnous ! for example in France this rate for diabetes (patients under treatment / patients with a diabetes, regarding prevalence )  is over 76% !!



 

The third component that we must assess in order to present a segmented approach to the market is the estimated annual cost of treatment.

The logic used here is that the acceptable cost for the treatment of distressed patients, such as those with cirrhosis, is much higher than the acceptable cost of chronic treatment with a silent disease.

but in very advanced disease , this cost should be compared with the one of a liver transplant estimated to 739 000 $ in 2014

pic14989


Nevertheless, these figures have been lowered compared to my first analysis because of recent controversies related to the costs of medical treatments. Funders and political organizations are becoming very vigilant on new medication costs.

As the purpose of this analysis is not to rely on an optimistic vision, but a realistic vision, I stayed cautious on the potential price of treatments. From 300 $ per year to 8000 $ per year.




 

Once all of these combined figures, we can calculate an estimate size of the annual global market of NASH treatment and its segmentation on an overall population of 600 million adults, the equivalent of the adult population USA, and eight major European countries.


 

This estimate applies to an annual market of $ 35 billion that can be forecast at its maximum from 2022 to 2023 approximately. The current lack of easy diagnosis, combined with a lack of authorized treatment implies that today, this market does not exist and should not exist before 2019.


The first figures extracted from this segmentation are  :






TIMED SEGMENTATION

The drug candidates are at very different stage in clinical research, and their arrival on the market will be spread over time. Moreover they do not cover the same market segments.

How the gradual arrival of drugs on different market segments is he going to impact the respective competition and potential market share between drugs.

A dynamic modeling approach of this market is possible but it requires numerous calculations and remains very empirical because of the large number of unknowns.

How to evaluate the evolution of this market in time ?

We cannot predict the success or not of each molecule and take the party to consider that the six most advanced molecules will all reach the market.

An assessment of the expected arrival on the market of the six drugs is detailed in the following table.



The goal is to make this calculation on each of 140 segments for each quarter between the arrival of the first laboratory on the market beginning in 2019 and ending in 2022 when all six laboratories will theoretically present in the market. (ICPT, GNFT, GILD, GLMD, ALLERGAN, GALT)


This generates; 12 quarters to study for six drugs and 140 segments, or a set of 10080 results to calculate.

This calculation done, it should be possible to calculate a figure forecast total sales of each drug per quarter, which obviously will be an indicative projection given the number of assumptions used initially.

The labs segment market coverage was calculated using the datasheets you’ll find on this site (HERE).

For each drug and each quarter, the computation of  estimated income was done regarding the others drug present on each segment and then sharing the all segment in pieces for each drug . 

To complete, the Global Market progression was evaluated on the following figure and is based on a linear progression of diagnosis and  disease knowlege by the medical community from Q4-2018 to Q4-2023 


The potential income of each drug was summarized for the 140 segments and each quarter

The figures following represents a forecast of the market shares 

By year :


 

and by quarters : 



Those figures can be compared with the following Figure published in Nature doi:10.1038/nrd.2016.188  Published online 03 November 2016



It is easy to see that there is a bonus for the first drug reaching the market, INTERCEPT and GENFIT will benefit from their lead. GENFIT who benefit from a larger segments coverage and nos safety problems is the potential  big winner of the race with an annual sale peak over 6 B$. 

The more drugs will come on the market, the more it will be shared between the players.

This approach does not take into account the relative effectiveness and safety of each drug  which should impact the prescription.


NEW ! a completed analysis based on the same segmentation, a modified prévalence , 15 drugs candidates and a projection until 2027 is available clicking here !



Share on StockTwits

WWW.NASHBIOTECHS.COM  -  Copyright G DIVRY 2015-2016