One thing that I haven't heard much discussion on is the indirect benefit of Eteplirsen. Namely, even if the drug doesn't cure, only slows (or halts) the degeneration, it buys these children time while other therapies are developed and other drugs created. That extends the time frame each of them have to get the help that will cure them for good.
This has really fallen far too much too fast for no reason. The Macro level picture hasn't changed at all and the institutional investors I've talked to say this is a general market drawdown and nothing specific to SRPT at all. Their advice to me was to take advantage of the buying opportunity because 6-months from now it will have doubled.
Do you really not understand how the markets work, or are you just a short pretending to be dumb? Here is the reason. If you try to buy $100M of stock, it will drive the price up substantially. $100M of stock at $38/share is 2.63M shares of stock. With an average daily volume of 1,527,760/day this would create a HUGE spike in the share price, probably driving it up to $50 or $60 in a few days. Therefore, getting it at a bulk rate discount at $38 is a great deal.
Combine that with the fact that those that bought it at $38 will probably come buy MORE to drive up their investment, it will quickly rise to about $50/share before trading sideways for a bit.
Be careful wolp. There was a moron who shorted a boatload of AEGR at $12 because he thought the company over-estimated the patient population and that the company was doomed. Well, the stock just kept going up. He was forced to cover at $60 which cost him his life savings (so he claimed). The stock went to $100, peaked, and I got out at $91 (which was lucky as it is down around $45 now). My point is, that regardless of whether your underlying reason for shorting is valid, the momentum can push it to a devastating loss. So be careful.
Now that moron is still hanging out on the AEGR board, angry, bitter, and broke. He doesn't even have a position in that stock but hangs out there out of hatred. You can go check it out, he is still there using a wide array of aliases including Censored, AdamWang, Jetmanbash and others. You will quickly discern the bitterness in his posts.
Don't be like him. Short if you want, I'm not saying that, just put so,e stop losses in or hedge your bets with some call options just in case, or something.
So cut it in half and go with:
At a P/E of 10 that values shares at $ 566.10/share
At a P/E of 20 that values shares at $1,032.20/share
At a P/E of 40 that values shares at $2,064.40/share
That's easy (presuming you are serious - though few shorts are). The math goes like this: 1 in 3500 have DMD and 13% are targeted by this medication. So, in the U.S. that equates to 11,142 in the patient population in the U.S. (worldwide is 20x more as the U.S. is about 5% of the world population).
So, at $350K/year per patient, that ball parks the Total Available Market in the U.S. around $3.899B/year. Divide that by the 37M shares and you are looking at $105/share. So pick your P/E that you like. At P/E of 10 that projects to $1,050/share. At P/E of 20 it is $2,100/share. Let's not forget though that it is revenue we are talking about, not really profits, so lets go conservative and only consider $75/share as real profit (easily achievable and many out there doing precisely this business model). At P/E of 10 that is $750/share and P/E of 20 it is $1,500/share.
Let's not forget that they don't get 100% of the market overnight, so a P/E of 20 with only a 50% market penetration is still $750/share fair value. Remember, this is the ONLY medicine for a fatal disease, so it isn't a weight-loss pill that is optional. Insurance covers the cost, so no issues there. This is the target value we are talking about and it isn't a done deal yet. They aren't approved yet, but this is where we are heading, so good to know what the goal is. As we get closer to approval it will realize more of the expected value.
So, no matter how you slice & dice it, at anything under $100/share this is a screaming buy.
Seriously, if I didn't think it would be over $100 by the end of the year, I wouldn't be in it. I firmly believe it will be over $100 before the end of the year, possibly substantially over $100. The valuation is compelling.
True that there are several events that have to line up still, but if things stay on their present course, then $100 will happen sooner than anybody expects.
They said they would sell "up to" $100M so looking at the current Market Cap of $1.47B and taking the $100M divided by the $1.47B makes it a 6.8% dilution. I was surprised by this since they already have $256M is cash on hand and a burn rate of $64.69M means they have 4-years of cash on hand.
So I asked a friend of mine who is a professional money manager and he said that it easily could be to block a hostile takeover attempt because this would extend them to 6-years worth of cash burn and would drive up the price significantly of any takeover attempt since the company isn't in any need for a buyout. Still, it remains to be seen what they will do with the cash.
Are you explaining what you just learned or assuming everybody else doesn't already know this in an attempt to talk it down?
Either way this is a marked change from the FDA's earlier stance that the trial size was too small. The FDA now acknowledges that the existing trial data could be sufficient combined with ongoing additional trials. This is a substantial shift, though well reasoned, careful, and useful to all.
Watch for methodical short covering over the next month instead of a panic short squeeze. It will be steadily driven upward on a daily basis.
Look for an investment partner like GSK to buy into SRPT soon. This started when GSK dropped propensa. Look at the M&A activity today and look how undervalued SRPT is. It is inevitable.
Underlying calculations show the potential. Then he Q is how long it will take to realize that potential.
Lots of similarities except that SRPT has a deeper pipeline and a broader patient base. Whereas AEGR had arguably 3,000 potential patients in the U.S. (some would argue far less), SRPT should have more than that 3,000 number - so look for SRPT to shoot much much higher. This could easily be a 5-bagger from here.
Remember that not a single short share has been covered yet and with 12.89M shares shorted (40% of total) this is going to rocket up.
The real winners are the boys & families of those helped by Eteplirsen. Thank you to my friend on this board who reminded me of this moments ago. That is the real prize. From the financial perspective though, this bodes well for all long shot biotechs because when SRPT pays off it will mean that others will want to try the same thing, which mean more kids will be helped.
Everybody wins (except the shorts).
With 1 in 3500 suffering from DMD, and 13% of those as potential candidates for Eteplirsen, it puts the preliminary patient population in the U.S. Around 11,142 and worldwide 222,857 (based on 300M people in the U.S. And 6B people worldwide.
At $350K per patient per year, that sets the Total Available Market (TAM) at $3.899B/year for the U.S. alone. The worldwide market is much harder to quantify as many of the 222,857 won't be able to afford it even with socialized healthcare coverage. Still that multiplies out to $78B TAM worldwide so even 1/4 of that is huge.
But let's get back to reality. The U.S. Market of $3.899B divided by 37.78M shares still puts sheer revenue at $103.22/share.
At a P/E of 10 that values shares at $1,032.20/share
At a P/E of 10 that values shares at $2,064.40/share
At a P/E of 10 that values shares at $4,128.80/share.
And that is only based on the domestic market. The world market is 20x as big.
Bottom line: anything under $100/share is a screaming buy.