Post 2 of 2
Prevalence is much higher outside the US and conservatively speaking this is at the very least a $600M drug in the US alone (assuming zero $ for PV or ET, although PV will quickly produce off-label use in the sickest of patients who are at risk of moving to MF anyway). If the MF market itself is bigger than INCY has estimated (which even they believe it will, similar to CELG type drugs for similar indications which also had zero approved therapies, prior to those drugs), 424 sales will only surprise on the upside. Non-US sales should be close to $1 Billion, not including PV or ET.
Now, most of the risk, except broad market based risk, has been mostly removed at least until ASCO. No other data until then, except non-US data on 424 Phase 3 in Europe from NVS. Friedman has indicated that it could even be , in the next 60 days (my guess). It may be better, due to the longer duration of that study (per Friedman on today's CC) and would power similarly, statistically speaking.
I have broad market downside protection through double S&P inverse index, at 2 times market beta (as that is INCY's approximate historical beta).
They are fewer than 3 small companies with $ Billion $ drugs, where the the company still holds 100% of the US market rights, like INCY. This will attract candidates. Wall Street will take your shares, most of the individual investors are always nothing but roadkill, as I say again and again.
Run your own numbers using an Excel SS. I do. Be conservative and use low numbers, and discount them with a decent discount rate for PV. Then run it differently using a P&L type for earnings power in 2012 and 2013. You will see for yourself how the numbers stack up. Current valuation sales multiples are 3 to 3.5 times revenue potential for such type of drugs. Then tag on very very modest amounts for everything else but MF, as they are all 3 in the bush as they say. You will still be totally hard pressed to come up with anything below $25-$30, under the most wildly conservative of assumptions and valuation.
Consensus of analysts before US Phase 3 results was about $21. And we are still waiting for non-US data from NVS.
No doubt 050 is the big enchilada. But this is way out in terms of time, and PFE has a head start.
This company will get sold. Friedman is over 65 and he sold his last company to MRK for $6.5 Billion. Same core R&D team from Dupont.
And, we are all waiting for IDO,CMET, topical 424 and their breast cancer drug updates as well. Their R&D team is top notch and will spin out more drugs. This R&D team will be highly valued by themselves, due to their experience will blood and inflammation. Huge areas, for large pharmas. Very few such outfits around.
Have faith and destroy the enemy! Do not become road kill. Run over them!
Post 1 of 2
No, I said "Sold" on my post. Only one word! I "SOLD" my puts that were in the money.
I am in this equity for the long run, always was. I said it so many times. This is due to safety and efficacy of a non-bioengineered, pure chemistry based drug, that works at very low absolute doses, a la other LT drugs like the statins. I said that too, many times on this board.
SVP, Rich Levy said they may try lower dosages still! Since most of the early participants have been on 424 for multiple years, and the chemistry based drug has a very rapid half life, all side effects can be managed within 48 hours, by titrating or discontinuing temporarily for a couple of days. This is another reason I'm in it for the long run. All reasons I have posted before. I also did say to look out for shenanigans and they will be fast and furious, for most individual investors, who are usually road kill, for the types of people who pay those like TJN, who is a wolf in sheep's clothing. A 2 bit paid shyster. This is one reason I do not care to post much anymore. Scre- em all, I say. I'm at all the point in my life I don't care to get excited by the sex life of ants. But these shenanigans present all of us with an opportunity now, that risk is very very low due to the SPA, and the fact that almost all patients get spleen reductions (42% response rate is only for those with at least 35% volumetric reduction in spleen size). HUge other percentages get 15%-34.9999%. These folks will all stay on 424 for years. Nearest competitor is at least 3 years away and has a drug that needs to be given 200mg (ten to fifteen times the amount of 424), on a LONG-TERM basis. What would you do, if you were the doc, or the patient? Think about this for a minute. Also, read NVS' separate release on today's 424 Phase results very carefully. They are going ahead with 424 for other indications beyond PV or ET.
Thaks for the excellent analysis. I have been investing in biotechs for over 10 years. It takes a lot of work and, in the end, some good jusgment. So, you thoughtful analysis is appreciated. What other biotechs do you like?
I think Quant bailed about a month ago. I would think he did at a profit, since he was in early and always did his dd. The game changer now is that the approval process will be moved forward in the US and Europe to follow. Watch for more than a few upgrades and mucho press in the AM. Possibly a 19 to 20 tomorrow on short covering alone. GLTA