AEGR is estimating price per patient at $300,000/year and with a patient population at 6,000 that puts the Total Available Market (TAM) at $1.8B. With 25M shares outstanding, that projects potential EPS at $72/share. Apply a P/E ratio of 10 (conservatively as it could hold a P/E of 20+ with no competitors) and this stock could easily be worth $720/share or more. At a P/E of 20 it goes to $1,440/share.
Even if we go conservative, a P/E of 10 and say they only capture half the patients, we are STILL looking at a price of $360/share.
Sentiment: Strong Buy
Good question. First, a P/E of 20 isn't particularly high. Still, the growth potential is at the root of your question. There are substantial off-label secondary uses for the drug. Many of them will be initially off limits as the price is prohibitive. However, in addition to treating homozygous familial hypercholesterolemia, or HoFH, they can also treat other situations where hypercholesterolemia is at the core. The company also plans to develop lomitapide for the treatment of adult patients with a severe genetic form of hypertriglyceridemia called familial chylomicronemia, so additional derivative opportunities.
It won't be explosive growth, but it will be steady sustainable growth over a 5-10 year span at 15-25% annually (higher in the beginning, lower in the out years).
... what would the value be if the number of homozygous patients is 300, and then you subtract the % of patients that dropped off during the study, and then you adjust for competitive impacts for Mipomersen?
Although I heard that AEGR already has more than 1,000 patients registered with them in the US alone, and that was months ago. Who knows how many they have now...
No, actually, I'm using earnings. They are burning $38.93M/year and if they earn $1.8B then the burn of $38.93M is largely irrelevant. Sure it knocks earnings down to $1,761.17M but that doesn't change the math much.
You would be better off arguing the patient population, though the deeper you dig into that topic, the sooner you realize that it is actually more than 10,000 and not 6,000 patients.
Several insurers (Blue Cross/Blue Shield, Express Scripts, and Aetna, etc.) have already set it up with preliminary approval, but you make an excellent point, because to my knowledge, ISIS has made no such progress.