Based on the stated $300,000 per patient per year and a patient population of 6,000 that equates to $1.8B/year and with 25M shares out, it is $72/share. That is straight value, no premium, no extra for anything else, just straight value.
Said another way, a PE of 1 (though we have to technically subtract out the $46M they spend annually but that is not statistically significant in the $1.8B revenue market as it moves earnings only down to $1.754B or $70.16/share for a PE of 1.
Or $701.60 for a P/E ratio of 10.
Yeah, but if only half the patients use the treatment then you can only count half that revenue. Of course the P/E is light, so bump that to 20.
New price per share value is $701.60 based on a totally different set of calculations.
Man, I wish you were correct . . . . however . . .
Patient population, based on recommended REMS, may only be 3,000 to 4,000 per annum, and not all will use the treatment. If we go conservative and use 2,000 patients, then use $300K per year for the treatment, you're looking at $600M in annual revenue, which is a bit higher than most estimates of $450M. At $600M, the margin, (as there is a cost associated with the treatment), will likely be in the area of 75%, or $450M in gross profit. SG&A will increase from current levels, likely to $125M, thus leaving $325M in taxable income. Even after taxes and interest, net earnings would be at least $200M. At a multiple of even 5x earnings, the market cap would be $1B. Today it sits at $470M.
The point being, even using conservative esimates, there is a double here.
ISIS has $100M in annual revenue today, plus a developing pipeline, non of which is remotely close to even having Phase 3 trials, yet it sat at $1.3B in market cap prior to yesterday's 22% decline. Add to this that they only receive 30% of the potential revenue from Kynamro (Sanofi gets the rest), and the estimates were only $180M per year for them. Add the $180M from Kynamro to the current $100M in revenue and you get $280M per annum for a company with a market cap of $1.3B. I don't care what investors say, that's a lot of market cap for such a small amount of revenue and an unproven development pipeline, but welcome to the wonderful world of biotech investing.
No matter what you cut it, AEGR has MAJOR upside from the current level and could easily be priced for a market cap of well over $1B.
Sentiment: Strong Buy
Aren't they talking about a worst case low of 300 patients per year with that split among competing drugs? Even 2000 could be a very optimistic number.
Assuming AEGR is approved today and ISIS is denied tomorrow, I'll be happy with a pop to $22 rising to $25 by FDA approval at end of year.
Anything else is pie in the sky.
Forbes article confirms the 6,000 patient population as the IMMEDIATE target for the drug and there could even be an expanded population that is larger.
The fact that this stock has this kind of potential has to be incredibly frightening to anyone with a short position. The ability to even formate that kind of math to sustain such a share price.
With the relatively small patient population, there isn't huge marketing fees, they don't need a partner to split profits with, they don't need elaborate advertising, this one will evolve in time to a very good situation.