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Neoprobe Corporation Common Sto Message Board

  • bairdgs bairdgs Jun 29, 2011 5:09 PM Flag

    Interesting Remarks from Fool Board

    I checked out the Motley Fool board on biotechs and found two very interesting posts about NEOP. The posts are by
    'projectchris' on 6/17 and 6/21. This guy believes NEOP will be approved by the FDA and in earlier posts he trashed Martin S. for his 'analysis'. He appears be a nuclear medicine guy. Anyway the post on 6/17 is technical. The post on 6/21 is interesting to me as he tries to estimate the value of a share of NEOP stock. I like this sort of analysis myself as it attempts to take a cold, hard look at whether you hold a good stock or just a good company.
    I would be interested in the thoughts of others on this board about this poster's remarks on 6/21. Go to www.fool.com and click on 'boards' and then on 'industry discussions' and finally on 'biotechnology'.
    Disclosure: I own a modest number of NEOP shares.

    Stephen

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    • There's something really fishy about this Fool board business.

    • Go to investors village. check out the Neop oldtimes lounge. DDbuyer and Toonos are two of the more informed that I have read. They have also posted links to other blogs and reports that in my opinion dwarf anything seen on this board.
      For example: DDbuyer refuted rather nicel;y, point by point 'Shrek's inaccurate letterbashing Neop of several weeks ago. I now only check this board for the occasional laugh since there seems to be way too may bashers and fools willing to believe them. Long and staying long.

    • I have no idea who the Albanian is. However, I'd like to see more quantative information refuting this guys assumptions. The place to start would be in my view, the number of patients that he identifies that Lymphoseek would serve. Here is the important part of his post:
      Okay, lets talk valuation. Approx. 150 million diluted share count x $3.39 (yesterdays closing price) = approx 509 million cap company.

      Lets give 3 scenerios to lymposeek basing only on U.S. Breast and Melanoma. I start here because surgeons have adopted SNLB as standard of care in these markets. Breast market more likely to see patients undergo SNLB upon being newly diagnosed vs melanoma.

      Crazy high, and unlikely---300,000 patients for Breast&Melanoma use lymphoseek.

      Using $200 lymphoseek price = $60 million at $300= $90 million


      High, and assumes lymphoseek takes all SNLB procedures within Breast
      150,000 patients

      Using $200 = $30 million at $300= $60 million

      Using more realistic 75,000 patients(this still assumes lymphoseek is stealing away a good chunk of market share in Breast)

      using $200= $15 million using $300= $30 million

      I'm going to use $30 million sales run rate because I think it is achievable.

      If lymphoseek is approved in early 2012, I believe it could reach $30 million in sales for 2013. The profit Neoprobe would likely get after factoring 50% revenue share and 70% margins would be approx. $10 million. There is upside to this if lymphoseek can penetrate and establish other indications as SOC. Lymphoseeks clearance rate makes it an ideal agent to make it a possibility, but surgeons adoption into other indications more hopeful than certain at this point.


      Now lets look at simple ways to value biotech companies
      (below assumes hopeful lymphoseek $30 million total rev and $10 million 2013 profit)

      5x revenue for Neoprobe counting even Cardinal stake= $150 million (well short of current market cap

      20 PE assuming lymphoseek profit $10 million without factoring SG&A would equal $200 million for 2013 well short of current $500 million cap. The real number would likely be PE 50 for 2013.

      Now I guess we could see approval in Europe, and a partnering deal to include overseas commericialization at some point. The fact remains there is no partner in Europe, and I don't know where Neoprobe is in regulatory status over there.



      You could argue that RIGS has potential for large sales at some point, but remember this is at least 3-4 years away.

      • 3 Replies to bairdgs
      • You are not even close on the number of procedures. The number of patients receving lymphatic mapping (the indication Lympho treats) in the US and EU is over 1MM per year.

      • I was quoting the market cap currently on the yahoo quote.

        The pricing will depend to some degree on the labelling. If the FDA allows a superior labelling all surgeons will use it. Even if the perception in the surgical community is that is is superior it will become the standard of care. No surgeon will want to be sued for potentially missing a malignant lymphnode which could have been detected using another product.

        The pricing to some degree will depend on the above. If SEEK is the standard of care you can obviously charge more.
        This is why I think the analysis on the motley fool board is misleading.

 
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