The Omidria revenue estimates came out from Symphony, via Bloomberg and then from a investment manager to me to you. November sales were poor and a smidgeon less than October, which was the first month without reimbursement.
I don't even need my spreadsheet to know that real sales in Q4 will be dismal. How dismal depends on the rebound in December.
If I were to make a moderately optimistic guess, I'd suggest $2M average in Oct. & Nov. and a possible 7 to 8 million in December, plus a recapture of the 8 million written off in Q3, so an optimistic view would be $20 million, or slightly less.
I will eventually use the spreadsheet, but it no longer really matters what Q4 was, except for one thing:
The progress in selling to the non-Medicare 55% of the market is almost non-existent AND at a minimal and unacceptable level.
In the first period without separate reimbursement, Omeros sold about $1M/month worth of Omidria during the bundle by Medicare. Now, without CMS coverage sales are twice as high, but still dismal.
$8M/month or $24M/Q is 20,000 vials/m.
$1M is 2,500 vials/mo and $2M is 5000.
Putting that into context, there are 316.7K procedures/mo in the USA alone. The non-Medicare portion is 174.2k/mo and the medicare portion, subject to non-reimbursement is the remaining 142.5K procedures/mo.
That means selling $2 million worth in a month is 2.87% penetration of the non-Medicare market. In a normal month with an additional $6M Omidria revenue ($400/vial), they sell 15,000 vials to Medicare patients even though there are 142.5K procedures. That is a weak 10.5% Medicare market share penetration.
The question I have been asking myself for years is what if the price was reduced to $100, from $400? The Gross Profit Margin would still be over 90% so the question would be whether they could sell more than 80,000 vials per month in the USA? That would be a 25.26% market penetration, as a whole.
If they sell anywhere near the price I suggest, the salespeople should have a much easier time selling AND they may finally be able to sell in Europe and the UK, Canada, Australia/NZ and elsewhere. Those ex-US market is substantially larger. a ~10% market penetration there would increase sales by about 50%.
A potential acquirer of Omidria, one who already has sales reps visiting lens replacement surgeons, could do this at reduced selling expenses.
Rounding off these very speculative, back-of-envelope, results, serving only the English-speaking markets and Europe could bring in $36M/Q instead of $24M, which comes to $432M revenue/year, with Gross profit of about $388.8M.
Gross revenue at $432M/yr would imply a buyout value of $1.296 BILLION, comfortably more than the current Market Cap of the whole company.
Of course, CMS would have to provide permanent separate reimbursement at $100/procedure for this to happen. This would seem to me to be a reasonable possibility.
I ask myself whether some smart major Pharma might see this and offer $800M to 900M for Omidria and then use the tactic I suggest, gambling that at only $100/vial, penetration of the US and foreign markets could be even greater than I estimated.
original content ©2020 to 2021 by Alan Robert Ross
Founder, Trust Intelligence
The foregoing is not investment advice.