I've been here for almost 3 years, had a huge stake and sold majority of them prior to the approval. Finally I sold out during Sep-Oct or so for 14-15 and got out. The issue facing Affy have always been giant AMGN irrespective of the drugs issues (of late and the subsequent recalls).
Takeda on its own can match AMGN one on one.
Currently the stock is at 90-95 cents. I wrote earlier the potential if and when FDA approves, The potential payout is:
$5 - Milestone payment
Potential upto 300 MLN (2 BLN sales @15% Royalty- no expenses) = $8 per year for the next 15 years
Since AFFY does not have any operations, you can say probably max of 1-2 MLN expenses.
They have close to 500 MLN NOL, which can shield them forever.
Anyone buying AFFY is buying a fully Paid CALL OPTION for the above deal and collect your payout for the entire lifetime.
This is the best deal you could ever get. IMHO the BOD has done everything right under the circumstances, after watching independent AFFY under ORWIN fumble in every respect, no fault of him, size of AMGN the core competitor is NO SMALL.
Takeda is the new owner and responsible party to do what is good for them. For them it is a blockbuster drug and they will have to make it to work, they will do everything at their disposal to straighten this out.
I bought on worked for 99.98% of the population and only during the problem occurred the first day. Once worked for a day, it never had an issue. The problems seems very easy to fix, of course I'm not a scientist or a nephrologist, however I've been here for long and read lots of stuff with this anemia by spending precious time.
With almost 600 MLN spent already and having the control over the drug, it is Takeda who needs to get it straightened out. Takeda has been dealing with 100's of companies worldwide in terms of licensing.
If you have shorted at high 20's made an amazing stuff. @90 cents, shorties will loose a ton on any small positive development, it is not worth the risk, JMHO
Do you factor in less than 100% market penetration into your 2BLN sales? I can't imagine them doing more than say 400MM per year in sales and that is after several years of rolling it out, they have to split the market with AMGN who is already established.
Jagan. Good points. I still think a complete buyout is what Takeda would want. I do have a question regarding this scenario. If Affy remains a shell company with minimal expenses and just collects royalties, and let's say for arguments sake that after expenses they come up to $8 a share, how would shareholders get the money. Would it be in the form of dividends each year?.I am really not familiar with this aspect of it as I have never encountered it. If this turns out to be the case, then wouldn't the share price go parabolic, because of guaranteed payments for years to come. Affy will then be a cash cow to whoever holds on to the stock. Am I right?.
As and when they collect the money they will distribute the funds. Probably it might work as a TRUST. Some big boyz will buy up all the shares and they will provide the direction. We small frys will sell for a small profit. This will be a huge one. What I mentioned is just US sales. Worldwide it would be another 1 BLN added international sales atleast 1 BLN, it will be another 200 MLN Royalty payment. Another $6 per share, which I did not include.
No wonder institutions are still holding on.