Expert Financial Analysis and Reporting

Introduction

The size of the chronic refractory gout market that Krystexxa targets have been a concern to investors and some believe that the slow takeoff of Krystexxa signals that this is a very small patient population. Because there has been no effective drug therapy, there is almost no experience to draw on to help estimate the size of the market. I do not propose that I have come up with the answer to this question that is central to the stock potential for Savient. However, here is what I know.

Size of the Refractory Gout Market

Savient has spent a great deal of time trying to size the patient population and has come up with some insightful data. The company starts with the NHANES survey performed by the Center for Disease Control that did a detailed study of the entire gout market. NHANES questioned some 50,000 health care professionals and also made on-site visits in an attempt to estimate the size of the gout market. Based on this survey they concluded that there are 8.0 million people in the US with gout and the market is growing at 3% to 5% per year. Of this group, 3.2 million patients are currently seeking treatment.

The NHANES data provides an insight into the size of the gout market as a whole, but no specific information on the size of the chronic refractory gout market that Krystexxa serves. To answer this question, Savient hired a research firm to try to answer the question; Savient played no direct role in the survey. The research firm spoke to 500 physicians who evaluated data on 3,000 gout patients. They asked doctors to look at the charts of all of their gout patients and make a judgment as to whether they met certain key criteria for chronic refractory gout as defined in Kystexxa’a package insert. These were: (1) had the patients’ failed previous therapy with allopurinol and febuxostat and (2) was the uric acid concentration above 8 mg/dl?

The consulting group took the results of the survey and extrapolated them to the entire gout universe to estimate the incidence of refractory gout in the patient population. They arrived at an estimate of 120,000 chronic refractory gout patients in the US. Savient will not reveal the methodology used to make the extrapolation citing this as proprietary information that it did not want current or prospective competitors to have. I think that the number for refractory gout patients was probably arrived at by taking the incidence of refractory gout in this 5,000 patient population and extrapolating it to the prevalence of gout in the 3.2 million patients currently being treated for gout.

In the advisory committee meeting on Krystexxa, the FDA estimated that the size of this market was 50,000 patients. However, they offered no insight into how they came up with that number. I don’t think that this estimate was carefully thought out.

My experience is that there are refractory patients within every disease state. This often stems from genetic factors that make patients unresponsive to drug therapy. Based on this and the large size of the gout market, I would think that there could be a sizable population of chronic refractory gout patients. However, this is intuitive judgment and doesn’t lend itself to making a meaningful projection.

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