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Myrexis, Inc. Message Board

  • jacosa jacosa Nov 11, 2010 6:39 PM Flag

    CRAP SHOOT already (lottery ticket, etc.)

    MYRX essentially has 2 assets: rights to market Azixa and $139MM. So you'd think it would be simple to value. Only, the value of the rights to Azixa is kind of unclear, and management clearly intends to spend as much of the cash as necessary on determining that value.

    Using a rough rule of thumb, that the value of marketing rights to a drug approximates 1 year of total sales, things look like this:

    As a third-line treatment for GBM, the order of magnitudes are about a thousand patients a year at $100M per; $100MM gross, with a factor of 3 range depending on alternative treatments and extra comparable indications (like a small fraction of melanoma salvage treatment). If that's all the drug is good for, it would be commercially silly to spend all of that cash on it. I really think this level of "success" is already in the bag.

    As a third-line treatment for all cancers metastatic to the brain, the price per patient is comparable (the price per dose may drop some, but the courses figure to be longer), but the population is about 20-fold higher. Call it $2Bln. Cash on hand isn't remotely adequate to reach this level of success; call it $500MM more needed. Still, it's an attractive prospect. Call me a cockeyed optimist: I guestimate a 30% chance of reaching this level, with a 50% chance of getting to $1Bln.

    What you have to read between the lines a bit to see is a hope that in addition to being an anit-cancer drug in its own right, Azixa will boost other drugs (not necessarily even limited to anti-cancer drugs) by inhibiting the "multi-drug resistance" mechanism. At the top end of this possibility, the sky isn't even a limit ($50 Bln, twice that, who can say?). A somewhat realistic hope is $1-2Bln, but there's only maybe a 20% chance of getting that. Curiously, the testing needed to get this is probably no more than $500MM BECAUSE doing it thoroughly is impossible on its face. Pay full price to demonstrate the effect for 2 clearly distinct instances and the rest of pharma will partner with you to get the combination on-label for their drugs too (sure they'll be trying to make their own agents with the same effect, but those will be starting way behind).

    So MYRX is pretty-much for sure worth its current price, 50% chance worth about $30, 30% chance worth about $60, maybe 15% chance worth around $100 and say 1% chance worth $500. All these numbers "when the dust settles," which is who knows how long (3 years?). And what number is right has nothing whatever to do with management performance (2 exceptions: super-incompetent management can screw up ANYTHING, and too much chattiness could expensively poison relations with FDA)

    I sure am glad that I'm not an analyst who's going to get graded for my accuracy in predicting the future course of THIS stock price. And with that wide a range, it's hard to see a buy-out being negotiated without the use of tracking stock or an equivalent.

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