Risk/reward benefit makes AEGR a compelling buy = target $4,189/share
Reading some of the random posts on message boards like SA at try to pretend to be a "news source" makes me laugh. It is remarkable how some people try to apply standardized formulas in order to appear intelligent. One guy apparently projected that AEGR would only capture 17% marketshare of the 14,000 worldwide patient market.
First, the worldwide market is 15,000.
Second, for a patient population that is DYING and only ONE treatment option available, historical models project market capture at 90%+. While we have to consider regulatory approval and delays to market, by 2018, that is still FIVE years away, so the vast majority of those will be worked through by 2018.
So, reapplying formulas from a fatal patient population, with 90% market capture of 15,000 patients is 13,500 patients * $300K per patient = $4.050B in earnings. Knock off $50M for production costs to keep numbers round, and divide the $4B by 29M shares outstanding, and EPS lands at $139.65/share. Apply the PE of 30 and share price target results in $4,189.65/share.
We can debate the cost side, double the current costs to $100M or even quadruple it to $200M, it is still I consequential to the resulting numbers and price per share.
It is simply unreasonable for anyone to think that only 17% of parents of dying patients to give their child the medication that they know will save their child's life. History says otherwise.
As John McEnroe said, 'You can't be serious.' $100 billion dollar company with one 20 year old drug held together with a paper-mach numbers patent. Maybe AEGR can buyout MRK then and have a real pipeline. t