How many LEMS patients are there really in America?

Catalyst Pharmaceuticals (CPRX) has been projecting that there an estimated 3,000 adult Lambert-Eaton myasthenic syndrome (LEMS) patients for quite some time.

The estimated number of patients is a critical number for investors valuations of CPRX. The goal in this analysis is to do a meta-level analysis about Catalyst’s LEMS estimate.

Note: Firdapse is FDA approved only for adults, therefore, all calculations are based on the number of adults in America. If you have some helpful data or sources, please do share.

What does Catalyst Pharmaceuticals (CPRX) say about the number of Lambert Eaton patients?

Statement 1: CPRX Estimates Based on Claims Data

CPRX estimates, “3,000 patients in the U.S. who suffer from LEMS of which approximately half, or 1,500, have been definitively identified in claims data over the past two years.” Source: CPRX 12/18 8K (Page 6)

Statement 2: CPRX claims-based estimate matches epidemiology studies

CPRX goes onto say, “This estimate of the diagnosed patient population compares well with the epidemiology studies in the literature, and we have defined the approximate 1,500 patients as our immediate addressable market.” Source: CPRX 12/18 8K (Page 6)

What claims data did they use to conduct their analysis to determine their addressable market? And, what methodology did they use to do derive their numbers?

Based on their December 2018 8K, Catalysts suggests they used a “zero-based bottom up approach” of overall LEMS prevalence using “published epidemiology studies, healthcare claims transactions as well as hospital discharge data and other triangulation methodologies.”

There are not too many private health insurance carriers that will provide their data to pharmaceuticals. To that end, it makes sense to assume Catalyst used the Center for Medicare and Medicaid Services’s data. There are public data sets available; however, the claims records are anonymized and not tied to a specific individual. Specifically, Medicaid and Medicare data needs to de-identified. De-identification under the HIPAA Privacy Rule occurs through two methods:

1. The removal of 18 specific identifiers (Safe Harbor Method)
2. Obtain the expertise of an experienced statistical expert to validate and document the statistical risk of re-identification is very small

Source: Protected_health_information, Wikipedia

Conducing the Analysis: How did they conduct the analysis?

Catalyst has not provided specific information regarding their claims-based analysis (e.g., assumptions, how they de-duped the data, etc); however, here is what I believe the baseline for the analysis would be:

• Determine relevant ICD10 Codes for LEMS
• Review claims records where LEMS ICD10 code is referenced
• Given the claims records are anonymized, determine a methodology to remove duplicate records, since there are inevitably multiple claims records for a specific individual (including re-admission)

What do epidemiology estimates say?

According to Orphan.net: The prevalence [of LEMS] is estimated to be between 1/250,000- 1/333,300 worldwide. (Source : Orphan.net)

If we assume the number of adults over the age of 18 is around 254 million (254,387,204 = Over the age of 18 = 328,587,204 US Population minus 74,200,000 Under the Age of 18), then the total # of LEMS patients is the following based on the epidemiology estimates:

• # of LEMS Patients (Low Estimates) = 763 = 1/333,300 Orphan.net Low LEMS Ratio X 254,387,204 Adult US Population
• # of LEMS Patients (High Estimates)= 1018 = 1/250,000 Orphan.net High LEMS Ratio X 254,387,204 Adult US Population

Based on this epidemiology data, the total # of LEMS patients is nearly 1/3 or less of CPRX’s estimate. Note: The Orphan.net estimate is based on all age groups, and the ratio is being applied to the US adult population. This should provide a higher estimate of LEMS patients because the ratio is for all age groups.

If we take Biomarin’s earnings, market penetration results, and compare to the EU population, what would a “Biomarin Europe Market Penetration Ratio” look like?

In the European Union, Firdapse received the regulatory nod in December 2009, and has been marketed there by BioMarin since April 2010. In Europe, the drug is reportedly set to cost $60,000 a patient /year.

Firdapse fetched revenue of $14.05 million in the first nine months of 2017, and annual revenue of $18 million for BioMarin in 2016.”

Source: Business Insider’s In The Spotlight: Catalyst Pharmaceuticals

Potential Patients based on Biomarin’s 2016 Revenue = 300 = [$18,000,000 Biomarin 2016 Firdapse Revenue]/[$60,000 Biomarin List Price per Patient in Europe]

• EU Addressable Market = 441,959,80 = 508,000,000 EU Population minus 66,040,200 UK Population
• Biomarin Europe Market Penetration Ratio = 17/25,000,000
• # of LEMS Patients based on Biomarin EU Market Penetration Ratio = 173 = 17/25,000,000 Biomarin EU Market Penetration Ratio X 254,387,204 Adult US Population

Note: The Biomarin estimate is based on all age groups, and the ratio is being applied to the US adult population. This should provide a higher estimate of LEMS patients because the ratio is for all age groups. Separately, I believe that Europe is more flexible and allows compounding pharmacies to develop 3,4 DAP, which may be the reason for Biomarin’s low market penetration of Firdapse — here is no data to support this hypothesis.

If we take the number of 3,4 DAP patients over the past 20+ years served via Jacobus Pharmaceuticals, what would the ratio look like?

• Jacobus Pharmaceuticals LEMS Patient via Compassionate Use Program = 250
• 3,4 DAP Based Ratio = 1/1000000 = 250 3,4 DAP Patients via the Compassionate Use Program/254,387,204 Adult US Population

If we use Catalyst’s estimate shared during analyst calls, what would the ratio look like?

• Catalyst Claims-Based LEMS Potential Patient Population = 3,000
• Catalyst Estimate Based Ratio = 3/250,000 = 3,000 Catalyst Pharmaceutical LEMS Ratio/254,387,204 Adult US Population

Summary of LEMS Patient Ratios:

• CPRX LEMS Ratio = 3/250,000 = 3,000 Est. Patients
• Orphan.net Low LEMS Ratio = 1/333,300 = 763 Est. Patients
• Orphan.net High LEMS Ratio = 1/250,000 = 1018 Est. Patients
• Biomarin EU Mkt Based Ratio = 17/25,000,000 = 173 Est. Patients
• 3,4 DAP Based Ratio = 1/1000000 = 250 Est. Patients

Key Considerations:

• Catalyst maintains the highest ratio compared to the various estimates mentioned.
• In 2013, there was a Class Action Lawsuit against Catalyst Pharmaceuticals: “In a furious promotional blitz to keep itself alive during the Class Period, Catalyst told investors that it is a company trying to develop a drug for a 3,000 U.S-patient community with “ no effective treatment ” for their disease winning a race to approval against a distant competitor. But the community has less than 1700 members and probably no more than 1000, and the competitor and Catalyst are neck-and-neck because the competitor — Jacobus Pharmaceutical Co., Inc. — had been providing its effective drug, for free, to LEMS patients in the U.S., for twenty years.” (http://securities.stanford.edu/filings-documents/1051/CPRX00_01/2014123_r01c_13CV23878.pdf)
• A pharmaceutical company inherently has the incentive to use higher estimates and more generous assumptions as it supports a higher market evaluation.
• How many LEMS patients are there really?

Disclaimer: The above is an attempt to conduct research and analysis on a topic — you need to draw your own conclusions. If you have more up-to-date information or sources or data, please let me know.