aturday, July 23, 2016
Sophiris Bio (SPHS) Buyout Prediction
There's been a lot of controversy about what to expect a buyout valuation to be if and when SPHS gets acquired. Here's my view on the matter.
Benign Prostatic Hyperplasia (BPH)
23% of urologists would recommend PRX302 before Phase 3a results. Estimate positive data increased this percentage to 26%.
3,200,000 x 0.26 = 832,000 patients
$5,000,000,000 market size / 3,200,000 patients = ~$1,500/patient
PRX302 is considered a more expensive treatment option
Estimate $1,500 average x 1.25 = PRX302 cost
PRX302 cost = ~$2k/patient
Estimate 50% of non treated but bothered people with BPH aren’t treated due to current procedures being too invasive (900,000).
Estimate PRX302 appeals to 20% of this group (180,000)
180,000 + 832,000 = 1,012,000 patients after 5 years of market penetration
1,012,000 x $2,000/patient =
~$2,024,000,000 after 5 years of market penetration
Year 1: $500,000,000
Year 2: $853,875,000
Year 3: $1,138,500,000
Year 4: $1,518,000,000
Year 5: $2,024,000,000
Total sales: $6,034,375,000
35% corrosion rate per year from approval (i.e. $6,034,375,000 x 0.65)
Estimating P3b from Q2 2017 - Q4 2018
Estimating FDA approval Q2 2019
PRX302 value for Benign Prostatic Hyperplasia: $1,657,190,234
Prostate Cancer (PC)
If ~23% of urologists recommend PRX302 for treatment of BPH, it's a safe bet to estimate 33% would recommend PRX302 as a treatment for Prostate Cancer if their Phase 2a shows a 70% total ablation rate or better.
3,000,000 people have Prostate Cancer
$10,000,000,000 market size
3,000,000 patients / $10,000,000,000 market size = ~$3,300/patient
Again, PRX302 is more expensive than most treatment methods so we’ll estimate the cost per patient at $4,000.
3,000,000 x 0.33 = ~1,000,000 patients after 5 years of market penetration
1,000,000 x $4,000/patient = $4,000,000,000 after 5 years of market penetration
Year 1: $1,265,625,000
Year 2: $1,687,500,000
Year 3: $2,250,000,000
Year 4: $3,000,000,000
Year 5: $4,000,000,000
Total sales: $12,203,125,000
35% corrosion rate per year from approval (i.e. $4,000,000,000 x 0.65)
Estimating P2b Q3 2016 - Q4 2017
Estimating P3 Q2 2018 - Q4 2019
FDA approval Q2 2020
PRX302 Value for Prostate Cancer: $2,178,334,081
$1,657,190,234 + $2,178,334,081 =
Account now for:
Cost of Trials
A fair buyout price for Sophiris Bio is $3,500,000,000. This would put the share price around $169 a share (~3,840% increase).
Valuation of a biotech company with high potential drug candidates depends of many factors. Big pharma running out of patents and thus desperately looking for new revenue sources. I have seen biotech companies were acquired at high price tags because their drug candidates offering great potential even though the drugs were not approved.
For example, back in 2012, Bristol-Myers bought Inhibitex for $2.5B ($36/sh) for its phase-II Hep C drug. Earlier this month, JAZZ Pharma acquired CPXX for its phase-3 drug delivery candidate CPX351 for $1.3B ($30/sh). CPXX's product CPX-351 is not a drug, rather it's a nano-technology based drug delivery technology for AML patients who are already getting SOC with 2 chemo drugs (combination therapy). CPX-351 improves the delivery with greater accuracy and efficiency, hence gives better result. AML patient population is little, thus the peak revenue for CPXX is only $200M. And it was bought out with 6.5 times forward sales. But CPX-351 could be applicable to other cancer combination therapies to deliver the drugs to the targets with better efficiency & result. Hence is the potential.
Now look at SPHS
1. Fantastic solution for multi-billion dollar BPH market. PRX-302 passed Phase-3 with strong efficacy and safety. Millions of patients with BPH looking for a good treatment. PRX-302 offers multi-billion dollar revenue potential from BPH market
2. Prostate Cancer. Strong Phase-2 data. And the treatment option is non-invasive (non-surgical) and far superior than the existing ones. Huge market. So a non-surgical, very effective treatment will definitely change the entire PC landscape if approved. PC patient population increased 100% over past one decade.
3. Technology: PRX-302 works when PSA (Prostate Specific Antigen) activates it. PSA is available only in the prostate. That's why the drug does not have any side effect and results are fantastic as the drug is injected on the target directly. Such technology for PC market is not available today.
So with these high potentials, what could be a BO price tag? $2B to $3B easy. And only 20M shares available.
Buyout is coming- I"m thinking $10-$15. See zero downside. Double by August 1.
Here we go folks. textbook consolidation yesterday and rocket launch today
I'm looking for $4+ today.
Pernix Therapeutics has had a strong run in the market recently. However, with the stock gaining so much, can this really continue? In my opinion, the answer is yes. The reality is that the company is making the right moves, at the right time, with the right backing. Today, we’ll talk about just what I mean by that and why I believe PTX is headed up!
PTX Is Making The Right Moves
The most recent news that we heard out of Pernix Therapeutics is the fact that the company is going through a restructuring process. As a result of restructuring, about 23% of the company’s work force will be laid off. This includes 54 sales positions as well as 6 administrative staff positions.
While doing so, PTX plans to work on prioritizing sales territories. At the moment, too much time is being spent driving from one prospective customer to another. As a result, the company will be shortening these distances and completely reorganizing its sales territories. The have also said that they will be improving the compensation plan for sales representatives. The goal is to incentivize field sales staff to contact prospective customers more often.
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Finally, as part of the restructuring process, PTX will be consolidating the Neurology and Pain sales forces. Both departments will soon be under one sales management structure. As a result, the company will realize less time consuming and costly redundancies in the process.
When announcing the new plans, John Sedor, CEO at Pernix Therapeutics had the following to offer…
“Since I took over the CEO duties at Pernix, we have been performing a thorough analysis of the specific market opportunities served by our products and how well they are addressed by our existing organizational structure. As part of this analysis it became clear that there were significant opportunities to optimize Pernix’s field force to more efficiently cover the most productive physicians. T
Agreement with John McAfee
As part of the closing condi
tions to the APA, the Company agreed to enter into an
employment agreement with John McAfee pursuant
to which Mr. McAfee will join the Company as Executive Chairman
of the Board of Directors and Ch
ief Executive Officer of the Co
the closing of the transaction contemplated
in the APA. It is currently contemplated
that Mr. McAfee will have a base annual sa
lary of $1.00
er day, payable at such
times as the Company customarily pa
ys is other senior level employees
. In addition, Mr. McAfee will be
Executive options (the “O
ptions”) to purchase an aggregate
of six million (6,000,000) shares
of the Company’s common stock (the
Shares”), which shall be exercisable for
a period of five (5) years as follows:
Mr. McAfee will also be eligible
to earn a cash and/or equity bonus as the Co
mpensation Committee may
determine, from time to
time, based on meeting performance
objectives and bonus criteria to
be mutually identified by Mr. McAfee and the Nomination an
Compensation Committee. Such objectives and cr
iteria may be based on a favorable sale or
merger of the Company, in additional t
metrics. A copy of Mr. McAfee’s proposed employm
ent agreement is included as Annex E hereto.
As stated above, there can be no
assurance that the conditions to closing the AP
A can be obtained nor th
at the transaction will
approved by shareholders of the Company.
options to purchase 1,000,000 shares of
the Company’s Common Stock at a pe
share price of the higher of $0.25 or the closing
rice of the Company’s Common Stock as
quoted on the NYSE MKT as of the
date of the full execution hereof;
options to purchase 2,000,000 shares of the Company’s Co
mmon Stock at a purchase price of $0.50 per share; an
options to purchase 3,000,000 shares of the Company’s
Common Stock at a purchase price of $1.00 per share.
No surprises? Are you serious? How about Mcafee is not the CEO now as promised. He is just one of the directors. He was positioned as the future CEO and the company was to bear his name. Now what?
Now we wait for the news icon to appear on our trading platforms
Companies release bad news after 8 p.m. Fridays. Pure and simple. You have 15 minutes to avoid the pain- GET OUT!!!
To be released week of July 4- Does that mean today or tomorrow- both are "week of July 4"
There is no compelling case for good news or bad news.
new shares (secondary) will give savvy longs to load up on half priced stocks. Got my buy order in at $2.25.
more shares equals dilution. never seen a stock go up the day a company issues new shares- Secondary offering.
All these new big names coming on board require big salaries and all the new initiatives will require tens of millions of dollars to develop and market. Sold all my shares last week for a nice profit. Looking for a much better entry point after the sell off tha'ts coming.
suit filed in the U.S. could get ugly.
The ever-present elephant in the room with John McAfee is the murder of his neighbor Gregory Faull and the charges still facing him. Years later we still don’t know exactly what happened. John claims that his neighbor Gregory Faull was murdered by the government of Belize, who had already raided his home once, in order to frame him for refusing their extortion attempts. This is a likely story and it could have happened this way. The problem is the preponderance of evidence from the other side that tells a different story.
John McAfee’s neighbors revealed that Faull had been the primary instigator complaining about McAfee’s behavior. The community didn’t like McAfee’s aggressive “security” dogs freely roaming the beach and biting tourists, his “private army” of thugs making threats, and other activities that made him an unwelcome neighbor among the wealthy American expatriate community. One night, the four dogs in question were found poisoned to death. It seems likely that act was perpetrated by a neighbor exacting vigilante revenge for the danger they had become to the community. It is possible, and indeed likely, that it was Faull who did this. Faull and McAfee were known to be enemies and Faull had filed a formal complaint with the local government just days before his murder about McAfee dangerously firing guns into the air.
A few days later, Gregory Faull was found dead in his home shot in the back of the head. McAfee was instantly the prime suspect but when the police went to question him he had already fled the scene. He briefly found himself an international fugitive. When he turned up in Guatemala and was arrested he feigned a heart attack and was deported back to the United States. With future extradition an unlikely prospect, Belize’s police satisfied themselves with the proceeds from auctioning off what McAfee had left behind.
The government of Belize is indeed violent and they had used excessive force when