TBG has cleaned up balance sheet with sufficient short term assets to sustain them under ultra-low operating cost...ALL "warnings" provided in 10Q are consistent with prior "warnings" and are required under present circumstances. These are the same "warnings" that have been cut and paste on this board repeatedly since last Q.
As presented previously all considerations are based upon whether Takeda will return Omontys to market.
-- The long thesis is that Takeda WILL RETURN OMONTYS to market, the AMENDED AGREEMENT BETWEEN TAKEDA AND AFFYMAX will kick in paying milestone and royalty payments AND that this agreement will be overriden by a buyout by Takeda.
-- The short thesis is that Takeda will not return Omontys to the market and that Affymax will be forced to file bankruptcy.
Takeda continues to move the investigation forward and as of last week Fresenius' Chairman said that they were working with Fresenius (and FDA) on The DNA test associated with completing the investigation.
As stated above, NOTHING material has changed other than a clean (short term) balance sheet and dramatic reduction in costs to sustain Affymax through the remainder of the investigation.
NOTE: For those who have been made fearful, Affymax is still very much alive (not kickin' much) and has not and is not bankrupt, regardless of whatever fear tactics may be further employed. IF in fact bankruptcy was a fait a complis (FAR FROM IT), they would have already filed and the restructuring actions taken by The Brenner Group would NEVER have occurred.
Actually there is a change. The company is moving further away from the threat of any bankruptcy and the short interest is being greatly reduced for reason. AFFY is still alive.
I'll try to explain more at a later time as additional positive developments occur.
Be good, EXPstocktrader
Thank you for yet again posting some great factual information tied to the story of AFFY, Max. Your due diligence is very much appreciated by me and the rest of the investment community checking in here on this message board.
Sentiment: Strong Buy
Just a question Max regarding probability and valuation- what is your assumption regarding future sales of O and royalty stream to AFFY? What discount rate are you using for royalties and milestone payments and timing? What probability are you assigning to return of O to market. Just trying to get a Net Present Value (NPV) of the cash streams to justify the $50mm (or potentially much higher) market value of the company. Appreciated.
Great question !!!
1. Since I know of NO Rx with O's mortality stats that has been permanently removed from the market (and have asked for anyone to post ANY example...no response...even from the bashers) AND know of 100's of Rx's with similar or worse mortality stats, my confidence level is very high (95%). IF, as I believe, it was human error by Fresenius personnel...It's 100%. If something other than Anaphylaxis caused the three deaths it obviously depends on what that was...BUT it is highly unlikely that if there was a totally independent cause of fatalities from Omontys that the incidence stats would be significantly higher than 3 fatalities and about 90 serious reactions out of the 25000 patients.
2. I am using a very conservative 10% market penetration for Omontys upon return JUST on Amgen's ESA sales of $4 Billion per year. That's $400 million to Takeda and with an average royalty of approx. 15% to Affymax (as per the Amended Agreement) that is about $60 million per year in royalties (plus the $180 million milestone payment which = $4.50 per share once paid). At just under 40 million shares outstanding the $60 million royalties converts to $1.50 PER AFFY SHARE PER YEAR...or 100% ROI PER YEAR JUST FROM ROYALTIES...Adjust the market share number up (or down) as you see fit, but the calculation is easy and without any buyout (just a royalty collection vehicle) there will be very little operating expense (to distribute royalties to shareholders).
3. To get a net present value running a DCF against this, estimate when you think the Milestone payments will occur (probably 2014) and then use whatever market penetration number you think makes sense (I believe 10% of Amgen's share alone is quite conservative given what we saw before the recall as they were just getting ramped up). And then use whatever cost of capital rate you want for the DCF analysis against the $4.50 milestone and whatever Royalty Per Share per year # you come up with.
Diejour...Your MONEY is on the RETURN OF OMONTYS :-) I'm right there with you as there has NEVER been a permanent recall of ANY drug (that I'm aware of after 30 years in the business) with the mortality stats of Omontys...And thus far my call on this board (and other places) for anyone to come up with JUST ONE comparable example that has either not been withdrawn or withdrawn and not returned has produce ZIP...NOTHING...NADA. I'm still waiting... history is the best teacher of future events!!!
The short thesis is that AFFY's crushing litigation precludes the potential of any buy out and will compel AFFY to seek BK protection to shield it from litigation expenses/liabilities in the near future, and long before Takeda ever completes O's investigation, satisfies the FDA's patient safety issues and makes any decision to remarket O. Here is just one new tidbit from AFFY's latest 10Q:
[W]e have limited resources with which to continue our operations and we have substantial ongoing obligations. IN PARTICULER, WE EXPECT TO CONTINUE TO SPEND SIGNIFICANT AMOUNTS IN DEFENSE OF OUR EXISTING AND POTENTIAL FUTURE LITIGATION.
The Judas Sheep, Maxdad, has said that AFFY's litigation is of no concern to AFFY longs. IMHO, it is the main reason AFFY cannot not survive until O's return to market, if ever.
No, you are not the author of the "short thesis". You want to be, but due to the fact that you misrepresent facts and fabricate bold lies (such as the one to which I am replying) and endeavor to make them your mantra; you end up as the laughing stock of this board. You make it incredibly easy to be a long (pun intended). I thought with the release of the 10K you would understand that your postulations don't hold together when compared with each other. Your drunken gun-slinging synopsis only proved that I granted you an IQ that was far above the level at which you operate. Jim
Sentiment: Strong Buy
I have always said that legal was one of the few costs that are being sustained...and that statement is NOT NEW (as you well know). All those "WARNINGS" remain as "IF" statements just like before and NOTHING HAS CHANGED!!! Since you have NO IDEA when the Takeda investigation will be over (we both have very different opinions) you once again use your MANIPULATIVES like "PRECLUDES THE POTENTIAL OF ANY BUY OUT AND WILL COMPEL AFFY TO SEEK BK PROTECTION...etc."...These ARE ALL TOTALLY CONTINGENT STATEMENTS EXACTLY AS SPELLED OUT IN THE REPORT...
Everyone can see for themselves that TBG has been doing their job exceedingly well...shedding assets AND expenses to put Affymax in a position to sustain themselves until the investigation is complete and Omontys is returned to market.
There was NO DOUBT in my mind (or anyone else's here other than your little cadre) THAT WHATEVER WAS PUBLISHED would be FODDER for your continued assaults. So it comes as no surprise that your "vigilance" is sustained !!!
Exactly. None of us are hoping for the strong return of AFFYMAX as Palo Alto's most successful company. This report does allow another company to buy out, place in new management, have low liabilities from low operating costs during times of struggle, and have a drug that is a strong competitor to a monopoly.
Sentiment: Strong Buy