Germany Seeks PTC Therapeutics (PTCT) Translarna Discount - Oppenheimer
Oppenheimer analyst, Christopher Marai, quantified PTC Therapeutics' (NASDAQ: PTCT) lost opportunity from a failed arbitration process in Germany. More detail will be on today's earnings call after the close but the analyst defines the scope to keep in context. No change yet to the Outperform rating.
PTC announced Friday that an arbitration process with German Federal Association of the Statutory Health Insurances (GKV-SV) concluded with an unacceptable decision. Authorities may have suggested as much as a 65% price reduction, though this is unconfirmed. PTCT is considering removing the drug from the German market; under this plan patients in Germany would, instead, have access to Translarna through an importation pathway, under German law, that would be reimbursed at a "sustainable price."
The analyst, estimates, based on a $300K USD price estimate, that EU sales in nmDMD are worth $23/share. The German market represents $8-10/share. This change may delay revenues from Germany during the remainder of 2016 while PTC's commercial team communicates importation pathway to prescribing physicians. However, once established, patients are likely to come back on drug quickly, given unmet need and no other nmDMD-specific drugs in clinical development. We do not view this as material to EMA approval, as the EMA is an independent agency to the GKV-SV.
Roughly 1/4 to 1/2 of Translarna's current revenues come from Germany. The total est. prevalence of nmDMD patients in Germany is ~400. There are est. to be 160-200 German pts under the current Translarna label (ambulatory pts, ages 5+).
The pricing decision is not contestable, as it was a result of an arbitration process. Pricing renegotiations in Germany take place 12 months after launch and depend on early assessment of benefit vs. existing products. The early benefit process determines price of an innovative pharmaceutical product based on degree of additional benefit demonstrated. In Germany, drugs are immediately reimbursed at approval with initial "free pricing" (i.e., price set by the company selling the drug) for 12 months. Pulling the product off the German market may be PTC's best decision for pricing protection. More than 20 countries directly or indirectly reference German prices for price determination and going forward pricing discussions may be difficult.
PTC will give an update on pricing decision and recently received RTF on Monday at 4:30pm earnings call. (877) 303-9216 passcode 51896300
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Shares of PTC Therapeutics closed at $7.99 yesterday.