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Avanir Pharmaceuticals, Inc. Message Board

  • placesontherun37 placesontherun37 Jul 3, 2013 3:07 AM Flag

    AVP-825 Numbers Look Nice Indeed..

    From the conference call this afternoon, we heard that:

    - AVNR would be paying ON a royalty in the.."low double digits percentage of AVP-825 sales" milestone payments to be made upon AVP-825 hitting certain numeric sales bench marks....

    - KK said that AVP-825 would have a 90% gross margin...

    - KK said that Infrastructure expenses would be peanuts over the first 15 months or so...@ 10M versus the large incremental revenues AVP-825 will bring the 20M up front...AVNR will get that back from the money it will get on the EU partnership deal to be struck its a wash...even if no money here, which is highly unlikely, this is maybe 4 months of sales of AVP-825 to where AVNR gets it return on capital, then from that point forward, with that sensational 90% gross margin, the IRR on AVP-825 will be very high to AVNR;

    So, lets say that AVP-825 does 90M annually in sales...

    less say a 12.5% (low double digits, this sounds about right)royalty to that's less 11.25M...then deduct another 7.5M for a hypothetical milestone payment...this leaves 70M left to AVNR...on a 90% gross margin product...

    Gross margin would be 63M...and net margin would be in the 30-40M range easily...what's not to like about this deal? Nothing! All this assumes of course, that there will be high demand for AVP-825, which I think there will be...McFadden's sales team will cross sell the heck out of AVP-825 as a complementary product in the suite along with N....the synergies are just there...big time...

    The way this drug is taken and its fast acting capabilities are also very impressive..and will ultimately draw a big pharma to pay that 15X revenue for AVNR, before it is TOO LATE and AVNR grows so fast it will not be a good take out candidate...look at ONXX...some of the reports I read on it value it at north of $160 per share, $40 over AMGN's bid of $120...the proverbial window of time for big pharma's to take out AVNR is closing fast...offer soon likely!

    Sentiment: Strong Buy

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