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Avanir Pharmaceuticals, Inc. Message Board

  • jonasmoses11111 jonasmoses11111 Sep 19, 2012 10:41 PM Flag

    Guess what?

    per ray, "6 weeks to go from 2,232 to 2,552 is growth of 9.86% in six weeks or 1.64% growth per week.
    At these low levels that is slooow grooowth (I took three "o"s out of "sloooooow groooooowth" because of your objection, but it's still slooow grooowth"

    Well, I am not sure where to start, but here we go:

    1. 1.64% WOW growth DOUBLES every 44 weeks. We are at almost $54MM now in NET N revenues at only 2552 weekly scripts. N is a High Margin Free Cash Flow Generator. Only 20% margins, 80% straight to Bottom Line earnings for Big Pharma.

    2. 1.64% growth will result in approximately $115 to $120 MM in NET N revenues (ie, free cash flow to big pharma in a little over 3 more measly quarters with one more 10 percent price increase along the way.

    3. That represents a $2 to $3 Billion plus Buyout plus at 15 to 30 PE Ratios for Biogen etc. Unlike HGSI and ARNA, AVNR has ONLY 136M shares outstanding.

    So that is $15 to $24 PPS WITH NO DISCOUNTING OF FUTURE REVENUES and NO value for other indications, studies, DDEX etc. assuming PBA only growth can continue at 1.64%. AVNR already has it on "a silver platter". Thus, that is a low value in reality - a ridiculously low number.

    4. Do you really think that growth will only be 1.64% with all of the other studies for ALZ agitation, ALS S&S, MS Pain and expanding Insurance coverage. As data comes out over the next few months, the docs will prescribe.

    5, If growth merely continues for PBA at 1.64% WOW, game over! If it happens faster, AVNR definitely will not see week 44 as a standalone company IMHO. unfortunately for the longs. IMHO, the TUTES will take 15 to 18 and call it good.

    And that, in significant part, is why the PPS has risen over 116 PERCENT since 12/16/11.

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    • "That represents a $2 to $3 Billion plus Buyout plus at 15 to 30 PE Ratios for Biogen etc"
      The institutional investors set the stock price. And the stock price now gives a market cap of $521.6 million.

      So Jonas would have longs illogically believe that the same instiutions that have the stock price today at a market cap of $521.6 million, really think a buyout is coming relatively soon for almost 4 times to almost 6 times that amount! And they are not bidding the price up, despite knowing also that if they did suddenly bid the price up just in that general direction, like even to $0.8 billion, they could cause a short squeeze.

      Jonas would have longs believe these professional institutional traders are instead "biding their time" as they identify a possible 384% to 576% gainer in the short term! They would be running the risk of losing this homerun trade. Also highly illogical. These investors would jump on such an investment.

      You can't price a biotech stock based on the P/E of potential acquirers.

      I try to be conservative and think a buyout could occur at two times peak sales and this way I'm less likely to be disappointed.
      I'm hoping for peak sales of $1.095 billion if off-label pain sales would ever start, so I could see a buyout for $2.19 billion but first have to see off-label pain sales start happening and first have to see net sales accelerate hugely from the present puny $54 million per year run rate.

      • 1 Reply to rayonman1
      • IMHO, you are way wrong. Watch and learn.....

        Biotechs WITHOUT FDA approval who are still non-revenue generating sell at a discounted present value multiple of future peak sales. That is not AVNR.

        AVNR has FDA Approval and is a free Cash Flow earnings generator with 80% margins.

        If whomever you may work for does not want to pay fair value, others will. The Tutes own almost 100 Million Shares because they anticipate a 4 BAGGER or more on their $4.40 per share purchase price and will demand no less than a 4 times multiple. They are not looking for a 6% return. Seriously. Otherwise they would be in other lower beta investments.

        Analysts will be revising targets up btw soon.

        IMHO, AVNR will likely be acquired for more than $2 Billion in the next 12 to 15 months and likely much sooner rather than later depending on AVNR's EU decision. Time will tell.

    • "1. 1.64% WOW growth DOUBLES every 44 weeks. We are at almost $54MM now in NET N revenues at only 2552 weekly scripts."
      In a drug launch, growth slows as the launch matures, ie. as you go from small numbers to larger numbers, it becomes harder to maintain the faster percentage rate of growth, just as Nuedexta's growth has sequentially slowed, quarter over quarter since the drug was launched 2/7/11.
      So if Jonas knew this he would not blithely assume the 1.64% growth rate today would be maintained for the next 44 weeks.

      • 3 Replies to rayonman1
      • 44 weeks from the week ending 9/7/12 is the week ending around June, 24, 2013 according to my quick calculation.
        Yes, I think there will be less than 5,000 weekly scripts by then, unless pain sales start.
        I think it's all about the pain sales.

      • Ray
        Growth systems whose underlying elements remain static both absolutely and with respect to each other display the mathematical characteristic of declining growth rates over time, as you correctly point out. A larger sales force being put in place right now combined with three new insurance carriers providing coverage starting Nov 1, 2012 along with likely better tier placement in many other insurance companies starting in the new plan year Jan 1, 2013 may delay this inevitable decline in growth rates for six months or so.

        Sentiment: Hold

      • I guess it is safe to say that you do not believe AVNR will have over 5000 weekly scripts in 44 weeks including any EU revenue equivalents.

        I DO. In fact, I don't even think it will be close and I think that scripts will continue to grow quarter over quarter as KK indicated it should consistent with prior quarters.

        Nor do I think we will get a chance to get there as the EU, insurance coverage expansion and early study data for ALZ, ALS and MS together with any DDEX data will cause Big Pharma to act sooner rather than later.

        Great the UBS presentation is before the MARKET Opens tomorrow! The last few weeks have been like a Python slowly wrapping around and around the shorts over and over.