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Sarepta Therapeutics, Inc. Message Board

  • simp08801 simp08801 Oct 5, 2013 8:01 AM Flag


    I mean my favorite part of the analysis


    for starters, lets understand that the with orphan drugs, the universal assumption is that the profit margins are always very high, but notwithstanding this, we will ignore the profit/EPS valuation method, and revert to a more conservation sales based valuation estimate

    here are the assumptions:

    1. Srpt will have 3,500 boys on drug world-wide. I consider this assumption grossly conservative, because there will either be no competitor near-term, or at best a limited competitor that will not have an approved drug for at least 1 year after Etep is approved.

    2. All the analysts are using a range of $300,000 to $500,000 annually for drug price. Lets use $300,000. I consider this an absolute worst case scenario when you look at pricing of other orphan drugs with scant or no competition.

    3. lets assume that Srpt ends up with 37,000,000 shares outstanding, which assumes the current ATM got done at an average price of $40ish and that for cash hoarding purposes, Srpt eventually does another cash raise by 2014 year-end resulting in another 2 mil shares of dilution. I consider this share count a worst case scenario as well.

    5. lets assume a sales multiplier of 5x. This could be the most conservative of them all, as many orphan drugs are valuated on 7 to 8 times!

    put 1 thru 4 in your blender on puree for 1 minute

    Projected Srpt Price: $142

    let me say this SIMPly:

    1. IMO, this analysis conservative in every aspect

    2. if you disagree, you are something other than correct

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    • I am sticking to my valuation model: $142

      any other estimates are dead to me

    • Why shorts are not covering on $40-$50 level? Are they idiots, super-rich or both?

      • 2 Replies to vskomarovsky
      • A few months ago, the shorts on NOK were aiming to cover around $1.5 when NOK was around $3.5. Some of them may still be aiming for $1.5 now even with MSFT intending to buy part of NOK and it's trading at $7.5. There's a sales side analyst (forget which firm) who LOVES to HATE Nokia. Perhaps he had a bad experience with a Nokia phone in his past. They are not idiots nor super rich. They just do. And for now they just are wrong about NOK.

        To me it's a fair game for them to try to jaw bone the shares down. It's really a delusional effort. Unfortunately, it's also true for some longs who also try to do similarly to counter them. Delusion against delusion does not make sanity.

        For chartist wannabes here just give them time and the podium (not that anyone has a choice). Once they've had their fair share of right and wrong, they will figure it out that the placebo in stock market call is a monkey throwing darts. Even monkeys are right a percentage of times. They know honestly how well they compare their calls to monkeys' darts. And, it's not just being right for individual calls, money management is the most important. The meat is in the size of their stack when they walk away compared to it when they started.

      • Shorts motto.misery loves company.

    • Well said Simp. I could not agree more. That said, what's the short sellers "ultimate horror"? The fact that even an ultra conservative assessment yields a $142/share valuation? Or the fact that with so many shares currently short, the share price is destined to explode right past $142 thanks to the upcoming short capitulation? I'm thinking that perhaps the thing that CG is "even more excited about"
      isn't an apology from Starfe. If he announces a new disease application and/or partner for a non-DMD
      treatment, $142 will seem like a bargain to our short friends. Star will complain of course, but the short horror then could be breath taking.

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