Mark Odendahl
Welcome back everyone. This is Industries in Motion podcast from RBC Capital Markets. And just a reminder, this is where we explore what's new and what's next in today's fast-moving markets and industries to help you stay ahead of the curve. Please listen to the end of this podcast for important disclaimers. My name is Mark Odendahl. I'm head of US capital markets research. And let's get straight into today's episode. I'm here today with Brian Abrahams. Brian is head of our biotech research team. And we're here to talk about a report that he co-authored with our RBC elements team. RBC elements is our data science effort here at RBC research, but also all across RBC global markets. It is a differentiator that our analysts used to uncover data and create conviction around some of their research. Brian, welcome to the podcast today.
Brian Abrahams
Thanks for having me.
Mark Odendahl
Okay, the report is titled “Insights from the Bio web.” And before we get into it, Brian, could you explain to our listeners how a partnership between a biotech analyst like yourself and a team of alternative data scientists works together in practice to co-create a research project like this?
Brian Abrahams
Sure. So, as a biotech analyst, my team and I are always looking at datasets, data from clinical trials of drugs, data on prescriptions, data on stock movement, but there are a lot of other datasets out there, beneath the surface, that just take more work to mine. And sometimes one needs creative ways in which to access this publicly available data and get it into a form that's analyzable. That's where a partnership with the elements team comes in. We've worked with our alternative data scientists on the elements team multiple times to co-create research that's enabled us to find these datasets others haven’t accessed and to analyze things with a different lens. That's allowed us to make projections about company and industry trends, and to identify disconnects in the markets.
Mark Odendahl
All right, let's get into the report. Brian, can you start talking to us about the report and some of the parameters you and the team set for that analysis?
Brian Abrahams
Leveraging the RBC elements team and their data science capabilities, we conducted an extensive dive into web traffic data across our covered companies, their marketed products and their competitors; and analyzed domain level hits across patient physician rems and patient support websites. We were able to identify strong correlations and R-squared values across a range of variables, including correlating website traffic to prescription trends, product growth rate, and sales, providing both a secondary check when predicting quarterly numbers as well as an additional data point with which to gauge directional changes for drugs not as well tracked by traditional third-party prescription sources.
Mark Odendahl
Very interesting. So, what were some of the blind spots that this analysis helped you uncover in the market that traditional analysis might not pick up on?
Brian Abrahams
Well, first off, we came away with a sense that website traffic metrics can be not only useful as a second check on sales estimates, but can also potentially provide a leading indicator for drug adoption, even before the weekly prescription data starts to reflect the dynamics. Secondly, we also saw a number of interesting trends at the therapeutic category level, such as a rapid interest in injectable HIV options, the resonance of one of our covered companies direct-to-consumer campaigns, and spiking interest in a drug called Opzelura contrasting with fading website hits for a drug called Orladeyo on website volumes, which gave us insights into where each of those drugs might be in their respective launch phases. Finally, we see high utility of our analysis for products that have limited prescription tracking, such as hospital-administered biologics, setting rare disease drugs, or cell therapies
Mark Odendahl
Thanks, Brian. Investors really demand deep-dive analytics in the marketplace today. But they also really care about the level of conviction that people have around this data. What's the conviction-to-noise ratio on analytics of this nature? And are there any limitations or even risks to over interpreting web traffic data?
Brian Abrahams
Well, there are some important things to recognize about our data analysis and its predictive potential. One key issue is the limited amount of data points available both to track sales and for website hits, particularly for new launches. Those limited data points, which can lead to outliers, and inconsistent correlations for certain products and spaces, are important caveats to over interpreting the overall trends. We tried to narrow down some of this variability by identifying which drugs and therapeutic categories seemed to have the most consistent trends. And by doing this initial exercise, we now know those are the ones which should be the most reliable going forward. We also note that related website hits are not necessarily indicative of a sale and therefore might not be as strongly correlated in all instances. For example, people may visit a website when a drug’s new indication is approved or after seeing an advertisement but may not convert to being a patient. Also, this doesn't account for variables like gross-to-net compliance and pricing dynamics, which can also drive sales but would have limited impact on web traffic. All in all, we acknowledge that a prescription-based model, such as that employed in our weekly prescription tracker, is likely to outperform a website traffic model, but both generally aligned to provide confirmatory evidence of larger trends such as directional uptake, launch success, underlying grassroots interest amongst patients and physicians, and share a voice in the market.
Mark Odendahl
Let's zoom in on something you just said there, Brian. Let's zoom in on Share of Voice. To what extent do web analytics uncover interesting trends within competitive parts of biotech?
Brian Abrahams
Great question. Tracking web traffic data across the therapeutic categories can absolutely provide proxy insights into market share and share a voice across drugs in our universe, which can help to predict future market dynamics. We believe these trends can help validate company direct-to-consumer spending, as well as signal market share estimates. And any major shifts in website traffic could also potentially hint at underlying changes in the market, such as an increase in overall prescriptions, or shifts towards emerging competitors.
Mark Odendahl
So, are there other variables to tracking or predicting sales metrics for new launches, compared to more mature products?
Brian Abrahams
Yes, there are definitely differences between how we might interpret website traffic for a newly launching drug versus for one that's been on the market for a long time. For a newly launching drug, when a company or physicians are trying to drum up interest in a treatment, we would pay close attention to the website traffic for the drug itself, as well as for the disease area, especially if it's the first treatment out there for an orphan disease. This can be a good measure of how much attention it's getting and where the overall awareness is. For a more mature product, we might focus more on other things, such as how frequently a doctor might access a drug safety protocol website, as we did in one instance in this report with a cell therapy that we monitored or perhaps how website hits to a competitor website may be tracking, to help predict just how much competitive erosion we might see.
Mark Odendahl
So, Brian, the report’s been out for a few weeks. Talk to us a little bit about feedback or what the initial reaction’s been from institutional investors, and the methodologies that you applied in this report with the elements team.
Brian Abrahams
People have been really intrigued. It's unique work, and healthcare investors are always looking for how to get an edge in predicting drug sales. Our clients were very interested in understanding the predictive value across the different landscapes and how they can incorporate our analyses into their investment decisions.
Mark Odendahl
So as people invest money in biotech going forward, do you anticipate an increased need for research that's powered by data science or alternative data?
Brian Abrahams
Absolutely, especially in a space that's so complex like healthcare where there are so many different factors that play which shaped company valuations, having alternative datasets and analyses can be incredibly helpful. It's what helps sets one apart and thinking out of the box can often help capture overlooked opportunities in the biopharma market.
Mark Odendahl
So, Brian, this has been fantastic, a fantastic rundown of a great report, partnering with the RBC Elements team and it's just a great example of how our research department is utilizing data science. Thank you very much for joining today.
Brian Abrahams
It's been a pleasure, Mark. Thank you.
Mark Odendahl
What else lies ahead in today's ever-evolving markets and industries? We'll be keeping track right here on Industries in Motion. Until then, thank you again for joining today on this episode recorded April 21, 2023. Make sure you subscribe to Industries in Motion wherever you listen to your podcasts. If you'd like to continue this conversation or interested in more information around this report, please contact your RBC representative directly or visit our website which is www.RBCcm.com\industriesinmotion for further insights. Thank you very much.