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Spencer Osborne
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Spencer Osborne is founder of Satellite Standard Group [SSG], and a partner of Sirius Buzz (http://siriusbuzz.com/). Sirius Buzz covers the satellite radio industry as well as companies that do business in this sector. Sirius Buzz provides information and opinion to readers with an interest in... More
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  • Looking At Numbers For Arena 4 comments
    Jun 20, 2013 4:54 PM | about stocks: ARNA

    This piece is being published as an insta-blog rather than an article because it is very preliminary. It may develop into an article at some point, but the data is interesting. There is oft discussion surrounding Arena and the potential market for Belviq. There is discussion about safety, responders, and just about anything else you can imagine. Often the potential market is looked at as the 66% of the U.S. population that is overweight or obese. That very general assumption can be dangerous. One reason is that 33% are obese (BMI over 30). Another 33% re overweight (BMI over 27). The "qualifications for Belviq in the overweight category are a BMI of 27, 28, or 29 AND a co-morbid condition. Further, if you take the time to look at the BMI chart you will note that at these BMI's, the person is between 5 and 20 pounds overweight. Realistically speaking, someone that is 5 pounds overweight (or even 10 and 15 pounds) is likely not a good candidate for Belviq, and simply needs to get some more exercise.

    So here are the first parameters.

    Potential market = Population of the U.S. - 315,000,000

    Adults (over 18) is about 75%

    Potential Market Reduced To Adults - 236,250,000

    Potential Strong Market Of Obese - 33%

    Potential Strong Market Reduced To Adults That Are Obese - 77,962,500

    Percentage of Population Over 18 on SSRI's (bad interaction with Belviq) - 11% (overall stat - those that are obese are 25% more likely to be on an anti-depressant)

    Potential Strong Market That Are Obese Adults That are not On SSRI's - 69,386,625

    The strong potential market is now established based on categories and drug interactions. Now let's take it a step further.

    Of the 69,386,625 people in the strong market group a percentage will not be responders. Depending on how you look at the data responders will be between 30% and 50%. I would tend to be more conservative and use 30%, but let's split the difference and assume that 40% would respond and 60% would not.

    Potential Strong Market based on 40% Responders - 27,754,650

    Now to the financial data.

    According to a Humedica study, 3.3% expressed a willingness to pay $50 or more. The same study says that 11.9% (including the 3.3% already noted) would be willing to pay between $40 and $50. Given the status of insurance coverage (only 30% cover, and most of those are at a higher tier), we need to look at those two categories closely.

    The 3.3% group would bring the Potential Strong Market down to - 915,903

    The 11.9% group would bring the Potential Strong Market down to - 3,302,803

    From a medical and financial standpoint the target group is now between 900,000 people and 3.3 million people.

    This is why the AMA decision to classify obesity as a disease, and the insurance issue is so important to the success of Belviq. If the cost to the patient were to be between $20 and $30, the pool goes up to about 9.3 million.

    These numbers do not consider the use of Phentermine or Qsymia, or people that simply have no desire to try. These numbers simply are trying to determine the size of the pool that are most likely to have success with Belviq from a statistical standpoint when considering population, interactions (anti-depressants), likely responders, and finances.

    For the moment, as an investor, you want to see 69.3 million engaged, 27.7 million remain as responders, and then boil it down to the financial side. Also, remember, that I have excluded the BMI of 27, 28, and 29 from the data.

    No, these numbers are not as impressive as the 200 million people as a potential market that some toss about, but they are based on real statistics. Getting all 915,000 of the pool can be impressive.

    915,000 * $135 per month * 12 months = $1,482,300,000

    That is blockbuster status.

    Do not rush to that number. It will take time (as in years). Not everyone in that pool may want to get treated. Some will take another drug, others will try surgery, etc. Even so, there is indeed potential here.

    Stay tuned

    Disclosure: I am long ARNA.

    Additional disclosure: I have no position in Vivus

    Stocks: ARNA
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Comments (4)
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  • Day Trader001
    , contributor
    Comments (779) | Send Message
    As usual, excellent data and very well written. I enjoyed the read and hope it pans out for the many faithful longs.


    Thanks again!
    20 Jun 2013, 09:06 PM Reply Like
  • Day Trader001
    , contributor
    Comments (779) | Send Message
    P.S. Publish it, and send it over to CNBC.
    20 Jun 2013, 09:07 PM Reply Like
  • Spencer Osborne
    , contributor
    Comments (12023) | Send Message
    Author’s reply » Day Trader....


    Unfortunately, there are too many investors in this equity that will not take these for what they are and then go on and on about how I am bashing. I think I want to enjoy my weekend....LOL
    20 Jun 2013, 10:28 PM Reply Like
  • Day Trader001
    , contributor
    Comments (779) | Send Message
    True, and yes enjoy your weekend! I do have a few suggestions for you though.


    1. Stop replying to the people that just want attention (the Trolls)
    2. Ignore foolish statements, you are smarter than that.
    3. Keep writing! There are many people that enjoy your articles (whether they agree or not) you present good data very well written.


    Thanks Spencer
    21 Jun 2013, 08:45 AM Reply Like
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