I actually think that there's a reasonable path to a standard lump sum buyout that the vast majority of investors here would be happy with.
As Ken notes, typically a 3x multiplier to the "current" share price of a company is the largest you typically see. If CYDY were to find itself at $8 after cold to hot news, a big partnership with a company like Roche/GSK/Merck, and a breakthrough designation or orphan drug status, we could see a roughly $25/share buyout at 3x once there's an approval for LL's first indication. That would be what, something like $35 billion? I'm no swami, but you're not going to get a whole lot of no votes on $25/share.
I understand why people want CVR and I can see why a company might offer it up in their bids. But we have to remember that nothing in this world is a given. We believe strongly that LL is capable of bringing in billions upon billions in sales to whoever owns it, but there are other drugs working toward the same goals, patent windows limit the big money timeline, management decisions can change the course of companies and their drugs for good or bad, and a variety of other things can curtail what we see as an easy hundred kabillion dollar drug from reaching its full potential.
A pharma company buying it still has a LOT of work to do in order to maximize the value of LL. They'll spend billions in manufacturing, R&D, and new trials to support expanded indications. There will be obstacles coming years from now that we can't even predict today. Wars and global pandemics. They can't buy it at full value and then spend the entirety of the exclusivity window to just break even. It's why a pawn shop isn't giving you full market value for something you bring in to sell. They need to build in a margin so they make money too.
If Merck buys CYDY for $35 billion, it'll likely take them 6-7 years to break even as the growth of LL sales is offset by the underlying cost of ramping up a shitload of supportive trials they'll need to back up future indications. Considering they don't have decades to play around before exclusivity ends, they'll need to price their buyout so that, conservatively, they see a path to paying off their purchase sometime in the first half of the patent window. It'll probably outperform expectations and pay itself off sooner, but that's not a given.
I'm firmly on the bus with those of us who think $35, which is a made up number by me to use in my example but which feels like a reasonably "solid" offer, would be an absolute steal for any big pharma. But I also don't see that we have the leverage in place to demand the kinds of three digit numbers people toss about. LL would have to start bringing in 10+ billion in sales per year right away to start paying back those kinds of numbers and allow profit to be made for the acquiring company.
The reason I don't think we have the leverage is because we don't have enough of that future potential built out. In a standard pharma partner>buyout scenario, which is what I feel strongly will happen here, the partnership is going to come "soon" from the cold to hot transition (mostly, as there is some other data they can see). The new partner is going to help drive the crc and mtnbc trials forward and one or both are going to end up nearing approval pretty damn soon. We may (should) even get a couple breakthrough or orphan drug designations. That's the point the partner moves to acquire the whole thing. They'll build out stroke and alzheimers and gliio and the rest, but those have longer roads to navigate. Which leaves the deal looking like more like an IMMU $21 billion dollar deal at the outset, but of course with significantly more upside potential to draw out of the drug. Which is why it should be more than that $21 billion by a good bit.
It's all just spitballin' about the CVR stuff, the wild numbers some throw out, and the reality of pharma acquisitions. I do think that what we'll have is a bidding war on the front end of this whole thing once Cytodyn shares the PDL1 numbers along with everything else they've taken from the study so far. The value of what it means to unlock cold tumors for these monster checkpoint inhibitors is going to be noticed. So my guess is that we get a really nice deal on the front end as far as partnerships go, but that the partner will have negotiated the rights to buy the whole thing and they will as soon as approval hits or right before some other LL indication explodes. Because if all of a sudden there's a massive success in alzheimers or glio that brings press and value to LL, the partner would probably want to move on a buyout early to avoid the price doubling.
This is all just guestimation, by the way. And if we've all learned anything from investing in Cytodyn for years and years it's that we're almost always wrong.
As Ken notes, typically a 3x multiplier to the "current" share price of a company is the largest you typically see. If CYDY were to find itself at $8 after cold to hot news, a big partnership with a company like Roche/GSK/Merck, and a breakthrough designation or orphan drug status, we could see a roughly $25/share buyout at 3x once there's an approval for LL's first indication. That would be what, something like $35 billion? I'm no swami, but you're not going to get a whole lot of no votes on $25/share.
I understand why people want CVR and I can see why a company might offer it up in their bids. But we have to remember that nothing in this world is a given. We believe strongly that LL is capable of bringing in billions upon billions in sales to whoever owns it, but there are other drugs working toward the same goals, patent windows limit the big money timeline, management decisions can change the course of companies and their drugs for good or bad, and a variety of other things can curtail what we see as an easy hundred kabillion dollar drug from reaching its full potential.
A pharma company buying it still has a LOT of work to do in order to maximize the value of LL. They'll spend billions in manufacturing, R&D, and new trials to support expanded indications. There will be obstacles coming years from now that we can't even predict today. Wars and global pandemics. They can't buy it at full value and then spend the entirety of the exclusivity window to just break even. It's why a pawn shop isn't giving you full market value for something you bring in to sell. They need to build in a margin so they make money too.
If Merck buys CYDY for $35 billion, it'll likely take them 6-7 years to break even as the growth of LL sales is offset by the underlying cost of ramping up a shitload of supportive trials they'll need to back up future indications. Considering they don't have decades to play around before exclusivity ends, they'll need to price their buyout so that, conservatively, they see a path to paying off their purchase sometime in the first half of the patent window. It'll probably outperform expectations and pay itself off sooner, but that's not a given.
I'm firmly on the bus with those of us who think $35, which is a made up number by me to use in my example but which feels like a reasonably "solid" offer, would be an absolute steal for any big pharma. But I also don't see that we have the leverage in place to demand the kinds of three digit numbers people toss about. LL would have to start bringing in 10+ billion in sales per year right away to start paying back those kinds of numbers and allow profit to be made for the acquiring company.
The reason I don't think we have the leverage is because we don't have enough of that future potential built out. In a standard pharma partner>buyout scenario, which is what I feel strongly will happen here, the partnership is going to come "soon" from the cold to hot transition (mostly, as there is some other data they can see). The new partner is going to help drive the crc and mtnbc trials forward and one or both are going to end up nearing approval pretty damn soon. We may (should) even get a couple breakthrough or orphan drug designations. That's the point the partner moves to acquire the whole thing. They'll build out stroke and alzheimers and gliio and the rest, but those have longer roads to navigate. Which leaves the deal looking like more like an IMMU $21 billion dollar deal at the outset, but of course with significantly more upside potential to draw out of the drug. Which is why it should be more than that $21 billion by a good bit.
It's all just spitballin' about the CVR stuff, the wild numbers some throw out, and the reality of pharma acquisitions. I do think that what we'll have is a bidding war on the front end of this whole thing once Cytodyn shares the PDL1 numbers along with everything else they've taken from the study so far. The value of what it means to unlock cold tumors for these monster checkpoint inhibitors is going to be noticed. So my guess is that we get a really nice deal on the front end as far as partnerships go, but that the partner will have negotiated the rights to buy the whole thing and they will as soon as approval hits or right before some other LL indication explodes. Because if all of a sudden there's a massive success in alzheimers or glio that brings press and value to LL, the partner would probably want to move on a buyout early to avoid the price doubling.
This is all just guestimation, by the way. And if we've all learned anything from investing in Cytodyn for years and years it's that we're almost always wrong.
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