Here we go again. At least this guy says that his calculations are basic. He only projects $200 million in revenue by 2015. 10% of the total market? You mean regardless of the price, the cost and the dosing advantage, (I understand contract issue), the market is just going to sit there and ignore the drug? I think the calculations are low for a drug with the advantages to the gov and patient. Don't get me wrong, Amgen is the king, but AFFY is going to get more tham 10%. There is also a takeover premium the author hasn't factored in either. And, what about the low float?
We have a global problem with math teaching at schools in US. I believe peg will have at least $200M sales in EU by 2014. As about US pessimistic estimate is $500M. Sales will be shared with Takeda. How this corresponds with current AFFY valuation of $375M? Author's estimate is not 'rough'. He is totally wrong.
Surprisingly he didn't even mention possibility of Peg rejection.
He mentions the possibility of FDA not approving by discounting projected sales to 90%.
That said, I still cannot follow his numbers. He says AFFY will get one-half of a projected $330 million in sales by the end of 2015. That's $165 million. Recognizing the (modest) risk of non-approval, he discounts that to 90%, which would be $148.5 million. For time value, etc..., he further discounts that by another 20%, which would bring us to $118.8 million, which he multiplies by 5 to arrive at an enterprise value. However, the discounted sales figure he uses is not $118.8 million, but rather a figure in the 70s.
Obviously, $118.8 million (x 5) would yield a much higher enterprise value, even with his conservative sales projections.