We are a commercial-stage specialty pharmaceutical company that develops and commercializes innovative supportive care products. We have two marketed products: Subsys, a proprietary sublingual fentanyl spray for breakthrough cancer pain, or BTCP, in opioid-tolerant patients and Dronabinol SG Capsule, a generic equivalent to Marinol (dronabinol), an approved second-line treatment of chemotherapy-induced nausea and vomiting, or CINV, and anorexia associated with weight loss in patients with AIDS. We market Subsys through an incentive-based sales model.
We launched Subsys as a commercial product in March 2012. Subsys is the fourth new branded product in the TIRF market over the last four years. Within the first four weeks of product launch, Subsys realized greater market share than the previous three branded products combined at their respective peak market penetration levels to date according to Source Healthcare Analytics. In December 2013, Subsys was the most prescribed branded TIRF product with 28.3% market share on a prescription basis according to Source Healthcare Analytics. Through our ongoing commercial initiatives, we believe we can continue to grow our market share and net revenue for Subsys. According to Source Healthcare Analytics, in 2013, TIRF products generated $421.2 million in annual U.S. product sales. The physician prescriber base for TIRF products is concentrated with approximately 1,850 physicians writing 90% of all TIRF product prescriptions in 2013, according to Source Healthcare Analytics. As a result, our commercial organization is able to promote Subsys using a highly targeted approach designed to maximize impact with physicians.
We market Subsys through our U.S.-based, field sales force focused on supportive care physicians. We utilize an incentive-based sales model that employs a pay structure where a significant component of the compensation paid to sales representatives is in the form of potential bonuses based on sales performance.
We commercialize Subsys through a cost-efficient commercial organization utilizing an incentive-based sales model similar to that employed by Sciele Pharma and other companies previously led by members of our board of directors, including our founder and Executive Chairman. We intend to market Dronabinol Oral Solution and other proprietary supportive care products, if approved, using the same approach and our commercial organization.
As of December 31, 2013, we had 145 full-time sales and marketing personnel. We expect the number of our sales and marketing personnel to increase as we seek to continue to increase our existing product sales and as any subsequently approved products are commercialized. We expect our sales and marketing expenses, along with our research and development expenses, to be our largest categories of operating expenses for the foreseeable future. In addition, because we use an incentive-based compensation model for our sales professionals, we expect our sales and marketing expenses to fluctuate from period to period based on changes in Subsys net revenue. Specifically, we expect our sales and marketing expenses to increase in 2014 to the extent that expected increases in Subsys net revenue are realized.
Very wrong of course is off-label selling and diversion to drug addicts. Worse still is the systematic creation of drug addicts by your sales force who are paid by incentives.
Medicare paid Awerbuch [the allegedly corrupt doctor] $6.9 million from Jan. 1, 2009, through Feb. 6, 2014, for Subsys he prescribed. The next highest amount a U.S. prescriber received was $1.6 million.
"Awerbuch is responsible for approximately 20.3 percent of the Subsys prescribed to Medicare beneficiaries nationwide during this time," the affidavit stated.
He wrote 1,283 prescriptions for the drug in five years, while the next closest prescriber wrote 203 prescriptions, the complaint stated.
On one visit, an undercover officer asked for a Vicodin prescription and attempted to bribe Awerbuch for the drug with $1,000. The officer told Awerbuch he would sell the drug to coworkers.
Awerbuch refused the bribe and asked the officer not to sell Vidodin again. He also asked if the officer was a Drug Enforcement Administration for FBI agent. The officer said he was not, and Awerbuch issued him the Vicodin prescription.
During a later visit, Awerbuch proscribed Subsys to the officer even though the officer had not been diagnosed with cancer.
Just in passing the affidavit mentions prescriptions to individual patients. They go up very rapidly consistent with addiction. If you want the bull case for the company that is it. Rapid growth based on addiction.
It is much easier for a narcotics user to prepare a sterile liquid for IV use than a medicated lollipop. I have a pet suspicion - not proven - that one reason for the very rapid uptake of the spray version is that it is much more suitable for diversion.
(b) a drug that seems designed for diversion,
(c) an incentive system for sales people that encourages them to make sales regardless and who - because of their incentives - may be tempted to sell off label,
(d) a single doctor who prescribes a double-digit percentage of the Medicare total for the drug and who is currently under indictment.
Finally we have (e) a drug with perfectly good substitutes such that the loss of the company marketing the drug will mean no real loss to society or patients.
Oh, and the company is trading at a big multiple of sales and of earnings.