A most interesting analysis by DeepGlance over at

A most interesting analysis by DeepGlance over at r/CYDY.

With the growing excitement around CYDY and the impending unblinding of the data, there has been a very clear move up in the share price (~28% just today – 2/1/21) leaving many investors speculating on just how high CYDY could go Tuesday (2/1/21), but more importantly both the rational near and medium term opportunity for wealth creation. This thought exercise is clearly designed to make the very personal and important decision of when to sell. This is how I'm thinking about the unbelievable opportunity for CYDY.

At a high level, the key financial metrics that will drive valuation are Revenue, Revenue Growth, Gross Margin and Earnings. From there, I'm using a comp based approach to understand potential P/E Ratios (I use ballpark numbers as I'm missing key details about their revenue sharing agreements with distributors and other business expenses).

According to the CytoDyn's filings they have under 10% of revenue share with previous developers of Pro 140 --> Leronlimab --> Vyrologix and the other key players in the production of Vyrologix. According to this paper (http://sites.psu.edu/huz10/files/2013/02/HuiZhao_sample2_FFS.pdf) typical drug distribution fees range in the 1.7% - 5.5% range. For sake of conservative simplicity, let's assume CytoDyn’s agreement with American Regent is 5%. If it’s higher, they have a 60 day out per their 10K and can renegotiate now that they will have more leverage. Further assuming we treat this as a direct cost (above the gross margin line) and not a sales cost (in SG&A – below the line) - this projects a gross margin of approximately 85% - this represents a material increase over the typical big pharma gross margin which averages in the mid-70% range. Frankly this is more akin to a SaaS business.

Nader has disclosed his expectation of $10-$15bn of top line revenue in 2021 (assuming EUA and/or BLA), but again we go conservative and assume the low end of the range of $10bn in 2021 of top line revenue. That leaves CytoDyn with $8.5bn of gross profit.

Now we know there are approximately 700 million share outstanding on a fully diluted bases – and by the time this analysis is relevant, you better believe all the warrants, converts, options, etc will be converted or exercised. 2021 gross profit per share will be $8.5bn/700mn = $12/share.

@ThoughtfulInvesting on the YMB dug up some research from the Stern School of Business (http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html ) that shows that pharmaceutical drug companies command a 34x multiple on forward earnings, and biotechnology drug companies command a 75x multiple on forward earnings. From this we get a range of $408 - $900/share for CytoDyn just on a conservative assessment of 2021 potential revenue and earnings, which will primarily (possibly completely) be driven by the Covid 19 indication. It’s further worth pointing out that according to the same data from NYU-Stern the expected growth rate for the pharmaceutical drug companies that are averaging a 34x multiple is ~11.3% and ~19% for the biotechnology drug company cohort. Ergo we continue to be very conservative with our estimates as CytoDyn’s growth rate is essentially infinity as the company is starting with no revenue. Clearly outstanding revenue and earnings growth typically increases the multiple a company commands so it is likely that CytoDyn would be materially above the averages we used in this calculation – but we are conservative. One important point of fact around this data is it assumes Nasdaq up-listing as you would likely need the full institutional investment community with ability to invest in CYDY as many institutional investors cannot invest in OTC stocks. This has long held down the price and provided a playing field for the short bashers to feast on the emotions of the retail investor. Of course, Nasdaq up-listing is a shoe in under the scenario laid out here.

So which indications are included in the 2021 revenue stream. Well we don’t exactly know the breakdown, but it’s reasonable to assume that Nader is thinking that it primarily includes Severe/Critical Covid-19 and probably some revenue from an HIV BLA in the latter part of the year. It likely does not include potential revenue from label expansion for Mild/Moderate Covid-19, which we know it is helpful for nor for a potential positive outcome of the impending Long-Hauler study. Future revenue growth will come from these indications as well as the vast opportunity for the very large market opportunities to treat many types of cancer, Nash, GvH, stroke, and more. Clearly, everyone is in a different situation, but I would implore you to think about how life changing this opportunity could be for you financially and for the many lives CytoDyn’s drug will save.

Disclosure: My family has been investing (and accumulating) for just over a year now - we are long and strong and plan to remain so.