Can a radical new device make an old steroid into a big seller? For OptiNose's Xhance, analysts say yes

Jefferies analysts expect Xhance sales reach $55 million for 2018, with peak sales exceeding $1.1 billion even at the low end. (OptiNose)

OptiNose has big things in mind for its nasal polyps spray Xhance, which combines the standard steroid fluticasone with a device that, from a non-engineer's perspective, turns the usual nasal plunger upside down. And while analysts have been totting up blockbuster predictions, the company has been busy prepping for that launch this month.

“We say all the time that you only get one chance to launch a product, and our goal is to have awareness and market access in place during the launch,” said OptiNose CEO Peter Miller during the company’s fourth-quarter earnings call in mid-March.

A big part of that awareness has to focus on the device itself. In what Miller calls “the magic of the breath,” the Xhance device delivers the drug when patients exhale into it. The soft palate naturally seals off during an exhale, trapping the drug inside the nasal cavity, OptiNose says. The device allows the drug to reach deep in the nasal space instead of passing down the throat as nasal sprays can, particularly when administered incorrectly. And that means better contact with inflamed tissue.

OptiNose needs to take advantage of Xhance's unique appeal with a targeted salesforce. The launch is following a three-stage plan, Miller said. In the first wave, OptiNose plans to reach 1.2 million nasal polyps patients currently treated by a relatively small group of 15,000 physicians. About 120 sales reps are on the ground targeting 14,000 of them, while the other 1,000 will be reached through digital promotions. A team of about 85 nurse educators has been helping educate physicians since last November.

With that novel drug delivery mechanism targeting a disease area where patients are dissatisfied with existing treatments, Xhance could deliver peak sales of $1.1 billion at the low end, Jefferies analysts say. The high end? As much as $2.4 billion. Both figures far exceed previous consensus of about $700 million.

One reason for the optimism: Physicians are clearly interested. In a prelaunch survey Jefferies conducted with 50 high prescribers, 72% reported some level of awareness of the drug, and 82% of those reported high enthusiasm. The doctors told Jefferies they anticipate prescribing Xhance to 38% of their relevant patients this year, and Jefferies expects $55 million in sales for the product this year.

Another is the size of the market. OptiNose estimates about 30 million adults in the U.S. suffer from chronic rhinosinusitis, of whom a third have nasal polyps, and the company is aiming to expand its list of approvals to reach the rest. What’s more important, many primary care physicians and ear, nose and throat specialists are not satisfied with existing options like Merck’s Nasonex or even surgery.

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OptiNose is working the cost angle, too. On March 5, the company launched a program called Xperience, which offers select physicians and their patients the chance to gain early, free access to Xhance so that they can “acquire positive patient treatment experiences and therefore improve demand for Xhance during the early phases of product launch,” said the company.

Besides, “management appears to have priced Xhance to maximize sales while minimizing payer pushback,” wrote Jefferies' David Steinberg in a note Thursday. Xhance is currently priced at a wholesale acquisition tag of $425 for one month of therapy, an 11% discount compared to Nasonex when used for nasal polyps.

OptiNose expects that its pricing will help secure favorable formulary placement with payers. The company has talked to about 40 payers, and it expects to win deals with plans that cover 65% of commercial lives during the retail launch. By year's end, it's aiming for 75% coverage, Miller said.

As for the second wave, OptiNose aims to reach an additional 6 million patients with 50,000 additional primary care physicians, which OptiNose hopes to justify with the follow-on label expansion. Its ambition for the third wave is to “activate” some 20 million patients who suffer from chronic rhinosinusitis but are not currently seeking treatment. The company's research suggests that a large majority of these patients have actually tried other treatments but gave up probably due to dissatisfaction. To its estimate, the entire market size would reach $9.5 billion at the final stage.