As we know, during the 6-11-2020 CC, NP stated if
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Posted On: 06/21/2020 2:42:38 PM
As we know, during the 6-11-2020 CC, NP stated if the FDA approves leronlimab, at current US prices for COVID:
2020 -- 1.5M vials that can treat 375k patients, which could generate $2.5B revenue
2021 -- Almost 6M vials that can treat 1.5M patients, which could generate $9B revenue
The 2021 number is actually somewhat correlated to a recent Bloomberg article entitled: "Gilead Upgraded With Covid Sales Seen Reaching $7.7 Billion"
Link: https://www.bloomberg.com/news/articles/2020-...-7-billion
However, the devil is in the details, and NP did not disclose if those were top line gross revenue numbers, or actual revenue to CytoDyn net of royalties to others and distribution partner costs.
In terms of the following calculations, I'm going to optimistically assume those numbers represent revenue to CytoDyn net of those 3rd party costs, simply because a full-fledged marketing and sales force is not required for COVID.
However, I am going to offset that admittedly optimistic revenue assumption in the calculations by using the full, future anticipated authorized share count of 800M. Currently, we have been told that if a capital raise is necessary, only 7-10% of the additional 100M authorized shares would be necessary.
Lastly, we have to acknowledge that NP's numbers clearly do not represent true net revenue, which factor: COGS, clinical trial expenses, rent, staff, and a bevy of other operating costs.
So, with those caveats having been disclosed, and my admission these are completely blue sky, spit-balled numbers, and using an authorized share count of 800M -- NP's 2021 $9B revenue estimate equates to $11.25 per share.
Some might take that number and project the price per share by using various P/E multiples, in this case:
P/E 05 = 56.25
P/E 10 = 112.50
P/E 15 = 168.75
P/E 20 = 225.00
P/E 25 = 281.25
P/E 30 = 337.50
P/E 35 = 393.75
P/E 40 = 450.00
However, we have to remember that NP's projected revenue numbers only relate to US sales in 2021. What happens when all of the other countries in the world place orders for leronlimab?
I believe we could easily be looking at global demand in excess of 10x NP's 2021 projection -- I would guess somewhere between 60-100M vials. So, take a moment and consider the impact of sales multiples on the price per share and P/E numbers listed above.
Now, I think we have to acknowledge that developing countries are not going to pay full freight for leronlimab. Developing countries do not pay the same amount for drugs as developed countries.
A perfect contextual example of this is Gilead offering non-exclusive voluntary licensing agreements with generic pharmaceutical manufacturers based in Egypt, India and Pakistan to further expand supply of remdesivir. This is only for the COVID indication and is “royalty-free” only until WHO says the COVID-19 outbreak is no longer a global health crisis -- or “until a pharmaceutical product other than remdesivir or a vaccine is approved to treat or prevent COVID-19.” So, pricing will change if leronlimab is approved.
Link: https://www.cnbc.com/2020/05/12/remdesivir-co...tries.html
Notwithstanding, there are many developed countries that will place full price, "immediate need" orders for leronlimab. And that will be very lucrative. However, I believe the real money is in stockpiles.
The US is getting the first vials of leronlimab. After that, there is a long list of countries that will have to wait their turn as their citizens continue to suffer and die.
This will not be considered acceptable, and whether this virus continues unabated, or comes in waves, countries will want stockpiles of this drug so that they are never again waiting in line (or waiting for production runs).
And, let's not forget that leronlimab is virus agnostic -- meaning its MOA does not care or depend on the specific DNA of the virus. So, the drug can be used by these countries for new and emerging pathogens in the future, not to mention all of the other exciting indications in the pipeline.
In my estimation, stockpile demand is a force multiplier -- because it is on top of "immediate need". We could very easily be looking at market demand that is much higher than 10x.
As an aside, it will be interesting to see if those countries place their stockpile orders of the product in a frozen state -- which has a much longer shelf life. If so, it will also be interesting to learn of Ajinomoto Althea will be used for the bulk drug “fill and finish” to vials.
Link: https://www.prnewswire.com/in/news-releases/a...84839.html
If we are lucky enough to be approved, we will soon learn the 'brick wall' production limitations of Samsung Biologics. We will also probably learn how long it might take for both Samsung and AGC to increase production using related facilities, which will require a lengthy FDA approval process (Samsung reportedly has identical bioreactors and AGC bought a massive facility in Bolder, CO which is slated to go online in April 2021).
Objectively speaking, as we countdown to the trial results being released, we are looking at a number of favorable catalysts:
FDA Revokes Emergency Use Authorization for Chloroquine and Hydroxychloroquine
Link: https://www.fda.gov/news-events/press-announc...oquine-and
The US Government's Supply of Covid-19 Drug Remdesivir Runs Out at the End of June
Link: https://www.cnn.com/2020/06/07/health/remdesi...index.html
US and Global Resurgence of COVID Due to Relaxed Distancing
Too many articles to link
Trump Approval Ratings and Administrative Pressure for a Therapeutic
Too many articles to link
Meanwhile, the jury is still out regarding whether or not a vaccine is possible, and if herd immunity can ever be achieved:
What happens if a coronavirus vaccine is never developed? It has happened before
https://www.cnn.com/2020/05/03/health/coronav...index.html
Top HIV scientist says he wouldn't count on a vaccine for coronavirus soon
Link: https://www.reuters.com/article/us-health-cor...SKBN22W34T
Humans may never develop immunity against Covid-19, according to new research on antibodies by Chinese and American scientists.
Link: https://www.scmp.com/news/china/science/artic...uhan-study
Coronavirus antibodies may last only two to three months after infection, study suggests.
Link: https://www.cnbc.com/2020/06/18/coronavirus-a...gests.html
AstraZeneca COVID-19 vaccine likely to protect for a year, CEO says
https://www.cnbc.com/2020/06/16/astrazeneca-c...-says.html
2020 -- 1.5M vials that can treat 375k patients, which could generate $2.5B revenue
2021 -- Almost 6M vials that can treat 1.5M patients, which could generate $9B revenue
The 2021 number is actually somewhat correlated to a recent Bloomberg article entitled: "Gilead Upgraded With Covid Sales Seen Reaching $7.7 Billion"
Link: https://www.bloomberg.com/news/articles/2020-...-7-billion
However, the devil is in the details, and NP did not disclose if those were top line gross revenue numbers, or actual revenue to CytoDyn net of royalties to others and distribution partner costs.
In terms of the following calculations, I'm going to optimistically assume those numbers represent revenue to CytoDyn net of those 3rd party costs, simply because a full-fledged marketing and sales force is not required for COVID.
However, I am going to offset that admittedly optimistic revenue assumption in the calculations by using the full, future anticipated authorized share count of 800M. Currently, we have been told that if a capital raise is necessary, only 7-10% of the additional 100M authorized shares would be necessary.
Lastly, we have to acknowledge that NP's numbers clearly do not represent true net revenue, which factor: COGS, clinical trial expenses, rent, staff, and a bevy of other operating costs.
So, with those caveats having been disclosed, and my admission these are completely blue sky, spit-balled numbers, and using an authorized share count of 800M -- NP's 2021 $9B revenue estimate equates to $11.25 per share.
Some might take that number and project the price per share by using various P/E multiples, in this case:
P/E 05 = 56.25
P/E 10 = 112.50
P/E 15 = 168.75
P/E 20 = 225.00
P/E 25 = 281.25
P/E 30 = 337.50
P/E 35 = 393.75
P/E 40 = 450.00
However, we have to remember that NP's projected revenue numbers only relate to US sales in 2021. What happens when all of the other countries in the world place orders for leronlimab?
I believe we could easily be looking at global demand in excess of 10x NP's 2021 projection -- I would guess somewhere between 60-100M vials. So, take a moment and consider the impact of sales multiples on the price per share and P/E numbers listed above.
Now, I think we have to acknowledge that developing countries are not going to pay full freight for leronlimab. Developing countries do not pay the same amount for drugs as developed countries.
A perfect contextual example of this is Gilead offering non-exclusive voluntary licensing agreements with generic pharmaceutical manufacturers based in Egypt, India and Pakistan to further expand supply of remdesivir. This is only for the COVID indication and is “royalty-free” only until WHO says the COVID-19 outbreak is no longer a global health crisis -- or “until a pharmaceutical product other than remdesivir or a vaccine is approved to treat or prevent COVID-19.” So, pricing will change if leronlimab is approved.
Link: https://www.cnbc.com/2020/05/12/remdesivir-co...tries.html
Notwithstanding, there are many developed countries that will place full price, "immediate need" orders for leronlimab. And that will be very lucrative. However, I believe the real money is in stockpiles.
The US is getting the first vials of leronlimab. After that, there is a long list of countries that will have to wait their turn as their citizens continue to suffer and die.
This will not be considered acceptable, and whether this virus continues unabated, or comes in waves, countries will want stockpiles of this drug so that they are never again waiting in line (or waiting for production runs).
And, let's not forget that leronlimab is virus agnostic -- meaning its MOA does not care or depend on the specific DNA of the virus. So, the drug can be used by these countries for new and emerging pathogens in the future, not to mention all of the other exciting indications in the pipeline.
In my estimation, stockpile demand is a force multiplier -- because it is on top of "immediate need". We could very easily be looking at market demand that is much higher than 10x.
As an aside, it will be interesting to see if those countries place their stockpile orders of the product in a frozen state -- which has a much longer shelf life. If so, it will also be interesting to learn of Ajinomoto Althea will be used for the bulk drug “fill and finish” to vials.
Link: https://www.prnewswire.com/in/news-releases/a...84839.html
If we are lucky enough to be approved, we will soon learn the 'brick wall' production limitations of Samsung Biologics. We will also probably learn how long it might take for both Samsung and AGC to increase production using related facilities, which will require a lengthy FDA approval process (Samsung reportedly has identical bioreactors and AGC bought a massive facility in Bolder, CO which is slated to go online in April 2021).
Objectively speaking, as we countdown to the trial results being released, we are looking at a number of favorable catalysts:
FDA Revokes Emergency Use Authorization for Chloroquine and Hydroxychloroquine
Link: https://www.fda.gov/news-events/press-announc...oquine-and
The US Government's Supply of Covid-19 Drug Remdesivir Runs Out at the End of June
Link: https://www.cnn.com/2020/06/07/health/remdesi...index.html
US and Global Resurgence of COVID Due to Relaxed Distancing
Too many articles to link
Trump Approval Ratings and Administrative Pressure for a Therapeutic
Too many articles to link
Meanwhile, the jury is still out regarding whether or not a vaccine is possible, and if herd immunity can ever be achieved:
What happens if a coronavirus vaccine is never developed? It has happened before
https://www.cnn.com/2020/05/03/health/coronav...index.html
Top HIV scientist says he wouldn't count on a vaccine for coronavirus soon
Link: https://www.reuters.com/article/us-health-cor...SKBN22W34T
Humans may never develop immunity against Covid-19, according to new research on antibodies by Chinese and American scientists.
Link: https://www.scmp.com/news/china/science/artic...uhan-study
Coronavirus antibodies may last only two to three months after infection, study suggests.
Link: https://www.cnbc.com/2020/06/18/coronavirus-a...gests.html
AstraZeneca COVID-19 vaccine likely to protect for a year, CEO says
https://www.cnbc.com/2020/06/16/astrazeneca-c...-says.html
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