Based on the patient population estimates that Roche has given for Erivedge patients under the current approved label, we should be off to a good start. They estimate 14,000 patients in the US and another 8,000 in the EU. Using $7500 per month and a 10 month course of treatment that makes Erivedge a blockbuster at $1.65 billion. We can’t expect 100% market penetration, so let’s use half that amount, $825 million.
Curis also gave guidance on their spend for 2013, up to $20 million for R&D and another $12 million for general expenses, so $32 total. 5% royalty on the $825 million is $41.25 million to Curis. Take away expenses and we are left with $9.25 million. That comes out to $0.12/share on their 80 million outstanding shares. If you used a P/E ratio of 30, this justifies the current stock price. This does not include any milestone payments either. Gives you an idea of what our expectations should be for Erivedge this year.
It's just how the math works out, not that CRIS should have a P/E of 30. If you look at other biotech's their P/E ratios range from 15 to 31 the last time I looked. I think the average P/E for a stock on the Nasdaq is around 17.