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ImmunoGen, Inc. Message Board

  • joethiel Feb 25, 2013 1:45 PM Flag

    Sales levels of Kadcyla, and pricing impact on P/E level of IMGN stock

    This new product will totally replace Herceptin sales, in the very near term. Why would a patient or oncologist go with any other regimen? Consider the Quality of Life aspect alone. And then there’s “Roche, a major player in the cancer drugs market, is desperately seeking a replacement for its third best-selling drug Herceptin (trastuzumab), which will face competition from "biosimilar" generic makers in 2015”.
    The current Herceptin dosage is a combination of Herceptin plus another chemo product, not owned and marketed by DNA / Roche. Thus, with the T-DM1 / Kadcyla product, this is an, all-in-one product.
    Therefore, if it costs $9800. per month for this treatment, all revenues belong to DNA / Roche.
    So if worldwide sales of Herceptin were $6B per year, the revenues of the new product for the exact same patient population would be, what, $9B.? Stated another way, wouldn’t the effective royalty rate for all sales over $700M for the same level of replacement sales not be 5%, but closer to 7%?
    My calculation of royalty profit at $9B per year in the US is $439M – and at 85 million shares, and a 15 P/E, this equates to a stock price of $77.60. This is based on the T-DM1 alone, and not the pipeline value of IMGN, with all of the major companies who are developing their products based on TAP technology, now validated by the FDA.
    Remember, all this is royalty revenue – no cost of goods sold! If there were ever a buyout war, what would the price be??
    Shorts – better bail now!

    Sentiment: Strong Buy

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