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  • valufound valufound Aug 17, 2006 9:30 AM Flag

    Dacogen Estimates Conservative -R&R

    08:36 SUPG SuperGen: Revenue estimate of $25 mln put forth by MOGN may prove to be conservative - Rodman & Renshaw (3.29 )

    Rodman & Renshaw notes that last summer Vidaza scripts were down 35% when compared to the monthly levels during the Spring. They say the number of Vidaza-treated patients declined 25% this July sequentially, as estimated by Oncology Inc. At the same time, they say patients treated with Dacogen increased by nearly 30% in July (vs. June). Even if assuming that the number of patients on Dacogen (~600 in July) remain constant on a monthly basis for the remainder of the year, they think the revenue estimate of $25 mln put forth by MGI Pharma (MOGN) may prove to be conservative. The firm is more optimistic than MOGN, and believe that by the end of the year, over 1,300 MDS patients would be treated with Dacogen per month. They say this would translate to revenues of approximately $43 mln for the year.

    ** If 2006 revs are $43m, then we should see easily $100m+ for 2007 (with EU approval late in 07) Do the math...

    $50m * 22.5% = $11.25m
    $50m * 25% = $12.5m
    Total 2007 Dacogen royalties, $23.75m

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    • It looks like 6M per month in sales. The EU and Asia markets are expected to be each equal to U.S. market. I estimated in 9 months that sales WW could average 18M per month. That equates to 216M WW sales. Thats about 50M for SUPG. If AML approval comes your looking at additional 50% increase on these numbers. Keep the faith.

      • 1 Reply to billyteex1
      • billyteex1-

        I noticed that your SUPG royalty estimates seem to be based on 20% of sales.

        In case you were not aware, that 20% ratchets up by 2.5% for every $50m in sales up to a max of 30% royalty.

        Thus, if SUPG does nearly $50m this year and $100m in the first half of 2007, they will be earning closer to 30%. Your $216m 2007 estimate would bring in closer to $60m for the year and make SUPG profitable by a landslide.

        If they do indeed reach $200m next year, SUPG will be trading in the double digits.

    • I've check both news on mogn and supg without finding a trace of news refering to R&R. I would think it would be in the news for one of these company.
      And if you check PHRM the price is screaming today.

      • 1 Reply to roryrae
      • I haven't had a chance to look at the report but do not doubt it. R&R has been saying all along that estimates on the market for Dacogen are conservative. If I remember correctly, R&R looked at an independent market research report on the addressable market for Dacogen and thinks SUPG is actually low-balling the estimate for Dac's potential a bit. Anyway - I suggest you read the report and make your conclusions.

        As for news - while it appears to me that SUPG's PR machine is not the most prolific, I doubt they would quote a SUPG equity analyst. If you have access to research reports, you'd notice these reports come out quite frequently. I doubt think companies generally quote analysts of their stock. Media groups (WSJ, etc) do that.