Sorry for the consolidated response -- but the Admin of this board does not seem interested in my respectful and repeated requests to upgrade to unlimited posts. I clearly don't understand this business model.
Rubraquercus wrote:
ClosetInvestor wrote:
My only comment regarding these two quotes is that I view valuation NOT based on top line sales, revenue, or market cap. I look at Net Income and EBITDA.
For me, as a quick back-of-the-envelope calculation, EPS is a better metric to use to establish appropriate stock price ranges, of course, with an appropriate sector-specific P/E ratio applied.
I have reviewed leronlimab's large number of potential indications, derived not only from the Company's latest slide deck presentation, but also from ohm20's very nice Disease List (thank you omh20: https://investorshangout.com/post/view?id=5723002). And I've thought about how those many indications generally fit into established blockbuster definitions: Blockbuster (>$1B), Super Blockbuster (>$2B), Mega Blockbuster (>$10B). I'm guessing many of you have done the same.
Interestingly, around a month ago or so (maybe the March 5 Conference Call???), Nader seemed to admit to being overwhelmed with having to place a valuation on these indications, and then went on to estimate annual, post-approval, peak sales of $100B or more. I tend to think that if CytoDyn receives approvals for only half ohm's Disease List indications, $100B is probably achievable (and maybe easily achievable).
Let's spitball for a moment:
If on the strength of the indications and associated bargaining power, CytoDyn is able to replicate their Vyera 50% of Net Sales deal with future commercialization partners (ignoring for the moment the COGS +10% reimbursement to CytoDyn, and the 5% of Net Sales royalty payment to Progentics), then a $100B peak annual top line sales number might very well translate to $50B of Net Revenue. Now, I believe the fully authorized shares are 700M. So $50B divided by 700M equals $71 per share -- and that's without a P/E ratio applied.
Feel free to do your own research, but profitable biotech companies frequently trade at 25 to 40 times their Forward P/E, some much more than that. But let's ignore that fact and say that CytoDyn only trades at 2x Forward P/E. That would suggest the implied stock price, based on FDA approval of those indications, would be around $142 per share. And I view that number as being quite conservative.
However, this calculus would not apply to a potential pre-approval buyout offer from Big Pharma. In that scenario, you would have to price-in the total cost of clinical trials, the risk associated with not being granted FDA approvals for one or more indications, the cost of commercialized the drug, and the risk of future competition.
Honestly, I view the potential of FDA approval of leronlimab for COVID-19 as being an incredible catalyst -- not so much for the Net Revenue it might supply (although that revenue might very well allow the company to avoid further financing) -- but because it shines a very bright light on the details of the company, the molecule, the MOA, and the many potential life-changing indications.
And reckon that light would be so bright, and the media would be so primed to report those details -- that Big Pharma would no longer be unable to suppress it -- and they would also likely have to come to grips with the necessity of an acquisition. Let's face it, leronlimab is likely going to highly disruptive, and represents an existential risk to many small, medium, and big -- pharma companies.
From what I can tell, and from what I believe Nader has inferred, all roads point to an exit strategy that includes a buyout. I'm fully on-board with that strategy, as long as stock holders don't sell the company short on a low-ball offer. That is a risk that Nader is concerned about (expressed in that same conference call), and that I am concerned about. Not everyone has done their due diligence and considered the true value of these indications.
Rubraquercus wrote:
.Quote:$39 billion market cap will require sales projections at least equal to or even in multiples of that annually
ClosetInvestor wrote:
Quote:When comparing companies, you have to use market cap and not PPS because of the most likely difference in outstanding shares.
My only comment regarding these two quotes is that I view valuation NOT based on top line sales, revenue, or market cap. I look at Net Income and EBITDA.
For me, as a quick back-of-the-envelope calculation, EPS is a better metric to use to establish appropriate stock price ranges, of course, with an appropriate sector-specific P/E ratio applied.
I have reviewed leronlimab's large number of potential indications, derived not only from the Company's latest slide deck presentation, but also from ohm20's very nice Disease List (thank you omh20: https://investorshangout.com/post/view?id=5723002). And I've thought about how those many indications generally fit into established blockbuster definitions: Blockbuster (>$1B), Super Blockbuster (>$2B), Mega Blockbuster (>$10B). I'm guessing many of you have done the same.
Interestingly, around a month ago or so (maybe the March 5 Conference Call???), Nader seemed to admit to being overwhelmed with having to place a valuation on these indications, and then went on to estimate annual, post-approval, peak sales of $100B or more. I tend to think that if CytoDyn receives approvals for only half ohm's Disease List indications, $100B is probably achievable (and maybe easily achievable).
Let's spitball for a moment:
If on the strength of the indications and associated bargaining power, CytoDyn is able to replicate their Vyera 50% of Net Sales deal with future commercialization partners (ignoring for the moment the COGS +10% reimbursement to CytoDyn, and the 5% of Net Sales royalty payment to Progentics), then a $100B peak annual top line sales number might very well translate to $50B of Net Revenue. Now, I believe the fully authorized shares are 700M. So $50B divided by 700M equals $71 per share -- and that's without a P/E ratio applied.
Feel free to do your own research, but profitable biotech companies frequently trade at 25 to 40 times their Forward P/E, some much more than that. But let's ignore that fact and say that CytoDyn only trades at 2x Forward P/E. That would suggest the implied stock price, based on FDA approval of those indications, would be around $142 per share. And I view that number as being quite conservative.
However, this calculus would not apply to a potential pre-approval buyout offer from Big Pharma. In that scenario, you would have to price-in the total cost of clinical trials, the risk associated with not being granted FDA approvals for one or more indications, the cost of commercialized the drug, and the risk of future competition.
Honestly, I view the potential of FDA approval of leronlimab for COVID-19 as being an incredible catalyst -- not so much for the Net Revenue it might supply (although that revenue might very well allow the company to avoid further financing) -- but because it shines a very bright light on the details of the company, the molecule, the MOA, and the many potential life-changing indications.
And reckon that light would be so bright, and the media would be so primed to report those details -- that Big Pharma would no longer be unable to suppress it -- and they would also likely have to come to grips with the necessity of an acquisition. Let's face it, leronlimab is likely going to highly disruptive, and represents an existential risk to many small, medium, and big -- pharma companies.
From what I can tell, and from what I believe Nader has inferred, all roads point to an exit strategy that includes a buyout. I'm fully on-board with that strategy, as long as stock holders don't sell the company short on a low-ball offer. That is a risk that Nader is concerned about (expressed in that same conference call), and that I am concerned about. Not everyone has done their due diligence and considered the true value of these indications.
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