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Affymax, Inc. Message Board

  • maxdad01 maxdad01 Jun 16, 2013 10:59 AM Flag


    provided in a multi thread response to the post TITLED HYPOTHETICAL QUESTION FOR MAXDAD, JAGAN, ETC.. I tried to cover some of the key questions on what it would mean to current shareholders when OMONTYS is returned to market IF AFFY should be converted to a Publicly Traded Royalty Trust. The simple answer is that it would be valued much more like a REIT or VARIABLE ANNUITY or even certain types of bond funds with sensitivity to yield curve, interest rate changes AND the potential for future risks and the impact they would have on initial and long term valuations based on the details of the Takeda investigation, FDA response to return to market (as appropriate) and even any potential EMA response. It is NOT as simple as just doing a revenue based milestone and royalty DCF based on the recently Amended Agreement between Affymax and Takeda.

    I personally would prefer a Royalty Trust (private over publicly traded) but truly do NOT believe that this is the option most likely being sought by Takeda (especially with their recent significant win in the $2.15 billion case that they won with Pfizer...see news on that for details and distribution..Takeda gets 34%). All my experience points me toward Takeda wanting to not only get this definitively over but taking complete control of Omontys world-wide. However, the very potentiality of a Royalty Trust does help establish a much richer basis for valuation of the ultimate Buyout than a more traditional acquisition and I believe that we can count on the Institutional Shareholder's playing these cards very aggressively OFFSET by Takeda's cards on the present condition (and share price) of AFFY in negotiating the final buyout price. Would personally love to be at this negotiating table but can say with absolute 100% confidence is that IF (notice the IF my basher friends) Omontys is restored (and I believe that "IF" is extremely close to "WHEN"), the value of Affy will be at least 10X current and probably 20X +++, FWIW.

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    • lets hope your right

      • 1 Reply to kittysown2
      • Kitty, as I said the only question left is Omontys or NO omontys back on market...My piece on the Royalty Trust economics, share price conversion etc. is as sound as I can be without making it even more complex. Over thirty years in putting deals like this together teaches one a thing or two about how these can/do work and short of actually having you read actual royalty trust trust agreements what I have provided is about as accurate as you'll find...sorry if that sounds at all arrogant, I just wanted you to know that this is content I am extremely familiar with over many years.

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