Company is expecting 100 million each year from 2015 to 2018 and 30 million more in 2018 from Amgn. They get 25 million a quarter of which say 20 million pays off debt and 5 million is used for R&D. So take off debt which will be paid by 2015 and the 100 million from Amgn goes right to bottom line. What is the present value of this royalty stream 300 million? Ok. Then the Gattex market is estimated to be ovdf 350 million. If they can get 30% margins or thereabout that is another 100 million once peak sales arrived, say 2015. So in 2015 they could be netting 200 million or 2 bucks a share. Put a 15 multiple on that and you have a 30 dollar stock. Ok ok the royalty isn't forever so why the 15 multiple well if they get approval for Natpara then that is a 250 million dollar market and 30% of that in terms of gross margins is 70 million. So that would replace the AMGN royalty. Then there is the pipeline. This makes no sense but ... hey short term traders just selling the news.
I think AMGN buys them here is why: They get from AMGN another 1/2 billion dollars (the debt they carry is in large part an advance on the royalty they received from AMGN). Imagine AMGN agrees to give them 15 dollars a share which would be a billion and a half. Amgen gets the 400 million that will be due NPSP over the years. They get Gattex with a 350 million dollar market with ultra orphan pricing so look for about a 100 million in net profit (so over 15 years that is a billion and a half net do a DCF and call that a billion) and then you get NATPARA for hypothyroidism and that is a 250 million dollar market so that over 15 years could be worth 700 million. So at 15 bucks AMGN gets or a billion and a half AMGN gets 400 million from the royalty stream that don't have to pay, another 100 million in cash, and two drugs which together could have peak sales of 500,000. They get both drugs for a billion. Typically companies are sold for 5 times peak sales. 5 times peak sales of JUST Gattes is 1.5 billion forget the cash, forget the royalty stream, forget NATPARA. Its a no brainer. Of course, maybe the company won't sell or wants more money