Market Opportunity for ZS-9 in Hyperkalemia

We conducted a survey of 76 nephrologists to estimate the market potential for ZS Pharma’s (NasdaqGM: ZSPH) ZS-9 as a treatment for hyperkalemia in the chronic setting. Our survey results suggest that the market potential for ZS-9 as a chronic therapy for patients treated by nephrologists is as much as $3 billion per year in the US. The results are in line with other estimates of the market and highlight the potential of ZS-9 to generate revenues in excess of $1 billion.

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Survey Rationale. ZS Pharma is developing ZS-9 for the treatment of excess serum potassium, known as hyperkalemia, and is expected to file for approval in the US in the second quarter of 2015. The clinical data supporting ZS-9’s approval indicate that it has a median time to normalization of 2 hours, and 80-94% of patients were controlled in long-term studies. With an FDA decision anticipated in 2016, the focus has shifted to the potential commercial opportunity for ZS-9.

The current treatments for hyperkalemia only offer temporary relief or are associated with tolerability issues that limit long-term use. This means that if approved ZS-9 will enter a new, unserved market with clear unmet need. Top-down estimates starting with the number of CKD patients in the US have typically indicated that nephrologists treat approximately 2 million patients with hyperkalemia each year. Our current survey of nephrologists provides a bottom-up estimate for the patient size and market opportunity for ZS-9 in the chronic setting.

Key Results from the Survey. Below are three key results from our analysis of the survey data. We note that the estimates are for patients treated exclusively by nephrologists, and does not include patients with heart failure treated by cardiologists.

  • An estimated 1.24 million patients per year in the US would benefit from chronic therapy with an agent such as ZS-9, translating into a $3 billion market opportunity.
  • There are between 1.6 and 1.8 million hyperkalemia patients per year in the US that see a nephrologist in the office setting. Many of these patients could benefit from chronic therapy.
  • Approximately 1 million patients per year in the US have a strong incentive to chronically manage hyperkalemia so that they can maintain adequate doses of RAAS inhibitor therapy.

Figure 1. Market Potential for ZS-9 in Patients Treated by Nephrologists

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Survey Data Suggest a Market Potential Near $3 Billion for Chronic Therapy with ZS-9. We extrapolated the data from question #7 of our survey to provide a bottom-up estimate of the potential market opportunity for ZS-9 in the chronic treatment setting. Worth noting is that this estimate does not include those treated by cardiologists, who represent a separate and additional market opportunity. As shown in Figure 1, nephrologists reported that on average 23 patients per month, or approximately 276 patients per year, could benefit from a non-absorbable compound with ZS-9’s profile. The top entry is bolded to indicate that it came directly from our survey. An estimated 50% of the hyperkalemia patients are seen in the office setting. Assuming these numbers are representative of the total nephrologist specialty, there are approximately 1.24 million patients each year in the US who could benefit from an agent such as ZS-9. We assumed a penetration rate of 50%, an estimated price of $600 per month, and a compliance rate of 75% across 12 months of potential therapy. In total the market opportunity for a non-absorbable agent like ZS-9 as a chronic treatment in the nephrologist office setting is approximately $3 billion per year in the US.

Hyperkalemia Population Estimate from Survey is in Line with a Top-down Approximation. We took our survey data and constructed a simple bottom-up estimate for the total number of hyperkalemia patients seen by nephrologists per year in the US. This was validated by comparison to a top-down, population and epidemiological-based analysis. As shown in Figure 2, surveyed nephrologists reported that on average they see 29 patients per month, or approximately 350 per year with hyperkalemia. The top left entry is bolded to indicate that it came directly from our survey. An estimated 50% of the hyperkalemia patients are seen in the office setting. Assuming these numbers are representative of the total nephrologist specialty, it would amount to approximately 1.6 million hyperkalemia patients that visit nephrologist offices each year in the US. Having hyperkalemia does not necessarily indicate the need for treatment, which is why we performed the analysis in the prior figure to estimate the patients who may benefit from chronic therapy.

Figure 2. Size of Hyperkalemia Market Treated by Nephrologists

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For our top-down analysis, shown on the right of the figure, we started with the estimated number of Stage 3 and 4 CKD patients in the US in 2000, which was derived from a >13,000 patient database from the National Health and Nutrition Examination Surveys. The number was adjusted to account for the 9.7% increase in US population between 2000 and 2010 based on the US census. Approximately 36% and 11% of Stage 3 and Stage 4 CKD patients, respectively, have hyperkalemia defined as serum potassium ≥5.5 mEq/L. About 30% will see a nephrologist within 1 year of diagnosis, resulting in 1.8 million hyperkalemia patients seen by nephrologists per year in the US.

Despite some differences between the two methods such as the focus on CKD and a higher threshold for defining hyperkalemia in the top-down analysis, the two estimates are largely in line with one another and suggest a large market of chronic hyperkalemia patients being treated by nephrologists.

Patients on RAAS Inhibitors Remain the Target Population for ZS-9 in the Chronic Treatment Setting. RAAS inhibitors, including ACEs, ARBs, and aldosterone blockers, have been proven in large outcomes studies to reduce morbidity, mortality, and progression of disease in patients with heart failure and kidney disease. However, their mechanism of action results in the retention of potassium, which increases risk of hyperkalemia and often leads to discontinuation of RAAS inhibitor therapy. We did follow up calls with certain survey respondents, and the nephrologists we spoke to stressed the importance of maintaining patients on adequate levels of RAAS inhibitors, and the difficulty posed by routinely having to adjust doses to avoid hyperkalemia. This suggests that patients who are receiving RAAS inhibitors, and especially those on lower than guideline recommended doses, are prime candidates for long-term hyperkalemia treatment. In Figure 3 we show a bottom-up analysis using two different survey questions to estimate this patient population, and also included a top-down analysis.

Figure 3. Number of Hyperkalemic Patients with a Strong Incentive for Treatment

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These three estimates indicate that approximately 1 million hyperkalemia patients are seen by nephrologists each year in the US and have a strong incentive to manage their disease, or their physician has a strong interest in managing their disease. Using this patient estimate and similar assumptions that were used in Figure 1, the market potential for an agent such as ZS-9 is approximately $2.4 billion in the nephrology setting per year in the US.

Study Design and Full Results. We surveyed 76 nephrologists and asked them to complete a questionnaire outlining their experience with hyperkalemia patients, as well as to understand their view of the utility for a non-absorbable compound with ZS-9’s profile. Figure 4 shows the survey design and a summary of the results.

An overview of the survey results is below:

  • #1: More than two-thirds of the respondents categorized their practice as a major referral or academic center. The remaining physicians were split between community centers and a mix of both center types.
  • #2: The nephrologists reported seeing on average 29 hyperkalemia patients per month, and that approximately 50% of these patients are seen in the office setting and are candidates for chronic therapy.
  • #3: The nephrologists reported that on average, 53% of hyperkalemia patients are on RAAS inhibitor therapy or their condition is exacerbated due to RAAS inhibitors.
  • #4: On average, the nephrologists see 21 patients per month who are on lower than optimal guideline recommended RAAS inhibitor doses due to hyperkalemia or concerns of hyperkalemia. Based on our discussions with nephrologists, these patients are prime candidates for chronic hyperkalemia treatment to enable more stable or larger doses of RAAS inhibitors.
  • #5: The previous point is validated by 89% of participants reporting that they would use a non-absorbable agent to treat hyperkalemia, and enable use of RAAS inhibitors or to increase the dose.
  • #6: 71% of nephrologists were aware that elevated serum potassium can increase aldosterone levels and that elevated serum potassium can increase renal and cardiovascular fibrosis.
  • #7: The nephrologists reported seeing on average 23 patients per month who may benefit from a non-absorbable agent for hyperkalemia, and approximately 50% of these patients are seen in the office setting and are candidates for chronic therapy.

Figure 4. Nephrologists Survey Design and Results

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Source: LifeSci Capital, LLC research report

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