Say if the buy out doesn't happen and Affy becomes a shell company with minimum royalties. Let's say O comes back on to the market and Affy just collects royalties each year and distributes them to their share holders. How does that work out?. Is it in the form of dividends each year. Say for arguments sake that royalties come up to $8 per share. So does that mean that if I hold 10000 shares I get 80000 a year, give or take a few thousand, depending on sales. Did I understand it rightly that this is a cash cow for share holders for years to come or am I missing something here. Never faced this kind of scenario before.
WHO SAID THEY WILL DISTRIBUTE MILESTONE PAYMENTS AND ROYALTIES??? Wouldn't the company just reinflate itself hire a new management team with hefty compensation? Try and get new drugs approved.
They hired a third party service provider which should be considered as "you work / hourly basis". Of course they will charge hourly basis, which will be more than the avg Joe, however they get all the required talents under one roof. Probably the whole expenditure won't be more than Orwin's or Gross's annual pay.
As for as O's market share, it will move up from day one the benefit of once a month dosage, far outweighs. The sudden recall by Takeda seems to (IMHO) me despite it was working fine for 99.98% of the population, to show how convenient and cost effective for the dialysis centers with Omanty's considering EPO or Arsnep. This will make these centers, if and when reintroduced, to adopt O's. The 100% recall seems to me, was a very calculated and well orchestrated move by #$%$'s (to get rid of AFFY's redundant work force and to show Dialysis centers how convenient O was).
i thought about this too. I recall the market for O being several hundred million. Market penetration will never be 100%. If affy got 13% of 100 million profit then that's 13 million/year, or 0.35/share per year. 180 million is added in as an upfront payment, or $4.86/share. I don't think you can put a typical EPS on this, because there's no growth in the company due to new products, etc. The money would prob be distributed as a dividend once all administration was covered.
I doubt you'd see $8/share per year. The share price would move to about 10/share give or take 2 dollars, there would be an upfront payment of 4 dollars and then a steady dividend probably.
Lets keep it simple. When you buy a stock, all you are doing is holding a piece of paper until some other idiot comes along and pays you a higher price for it. Thats it. Always remember, bulls make money and bears make money, but greedy pigs get slaughtered ! The moral is, when you feel you made good profit, then pull that trigger and sell. Stay thirsty my friend.
infamous1stunna: it all depends on what you hold and what potential it can bring. I'll tell you a small example of a company I held in 98/99 for 20-30 Canadian cents called Hurricane Hydrocarbons, a company which had operations in Kazakh one of the best oilfield. I knew that had a great potential and I need to keep. Just kept selling on every upmove and when it reached 10, I had just 1000 shares only and then that too I sold. The company was sold to China oil for 55 $ per share after couple of splits, and free bonds too along with a great dividend payout.
I won't be working today, if I held on to my $10000 investment and probably would have retired.
fog: go and read the recently filed 8K when Takeda took over the control for Omantys along with the Financial terms.
AFFY will have zero expenses, except the BOD payout and now the consultants. Max 1-2 MLN.
They have lots NOL's carry forward too. For years to come at the corporate level they don't need to pay any taxes.
They will have to dole out the monies as soon as it is received from Takeda, probably keeping a 5-10 MLN for reserve and exingencies..