How do you come to the target price of $8 to $12? R&R's prediction of $17 is flawed, Dac itself is worth $17 with approval in US and Europe is too high IMO. Remember, R&R (and other SUPG paid reports that I have read years back) predicted Dac revenue of $120-$150Mil a year. Now their profit is $4Mil in 2006 if Dac is approved. The bigger thing is the one-time payment up to $26Mil from MOGN once Dac gets approved. So I have to say this over and over again, IMO SUPG's decision to license Dac to MOGN has to be the best decision management has done because SUPG negotiated a great deal out of it, and these different upfront/milestone payments was something that SUPG truly needed financially. Otherwise, they are either way too deep in debt or more shelf filing would have been made due to all the delays.
The Montigen acquisition is not a surprise and came a bit later than what SUPG had planned in 2004. They wanted to acquire in 2005 but didn't. $9 in cash and $9 in stock, that reduces their cash position not by a whole lot, down to low $40 mil. Strategically and timing wise, that's smart on SUPG's side. They have to do something, they don't have any choice! Positive is providing some growth potential to the company's potfolio. Possible negative, higher burn rate!
Montigen has two products that will begin its Phase I development in Q42006. Expect burn rate to climb during those time. Montigen has only preclinical cancer drugs and nothing in Phase I/II. This means it's a long-long road to go and some may consider that a downside. But... you get what you pay for and SUPG must not have found a Phase I/II drug that's promising at the right price.
All in all, SUPG's lifeline is all tied to Dac. Once Dac is approved, they have something to work with. Any unexpected oops from Dac, SUPG will need major cuts, and possibly "blindside" investors with another infamous shelf offering (well.. I use blindside because some of you just don't see something obvious that is coming your way, sarcasm). By that time (discussing Dac failed), distressed SUPG probably get bought out in 3 years.
Last thing I wanna comment, Orathecin. Sigh, new guys just don't get it. When it was in clinical trial, it "used" to be an interesting drug that could possibly compete with gemcitabine. For newbies, the advantage as the name implies, it's taken orally. But trials have proven over and over again that its toxicity is way higher than gemcitabine. That means no one would use it as a first line treatment (I wouldn't). Can it be used in combination with gemcitabine? That's what SUPG wants to find out, it could **if** trials can prove the combo provides better efficacy at a safe toxicity level. Anything can happen, but given Orathecin's higher toxicity level... I'm not too optimistic. IMO Orathecin can be used as a third line treatment. It's great for the patient because it can help some of them, BUT be realistic because revenue from it will be meager if it can get passed the FDA (that itself will be difficult). It's not dead and everyone knows it, but pulse is weak as hell. It's situation is a catch-22, I don't know what to think of it, someone else with better understanding will have to enlighten me.
Reiterate, Dac is superman to Supergen. Once superman dies, Supergen will go with it. $8 to $12?? You're looking at a unrealistically high forward PE for $12 (high fPE even for $8). If that happens, you're lucky and run, don't walk to sell it!
My target is really $9-$10. I dislike the way some people post stupid messages on this board. So I call them the village idiots and poke fun at them. I believe its actually one person using different alias names. A few year ago there was a person called the art collector that used to reign over the message board. Alot of people used to follow his moves until many of his stocks went south. He used to bash the hell out of me because I didn't think orthecin would be approved. So now dacogen is up at bat and I think this drug will be approved. But the bashers are thinking differently.
May 15, 2006. I expect ddecision to be much earlier but its only a hunch. When they announced on Dec. 15, 2005 of the FDA decision for the 6 months basis i thought it was correct time frame due to 2 months was not enough time. Two months would of been Jan. 15, 2006.