‘Thank you’ Bernard. Your ‘star glazing’ (or is the wrong thing to say to a TA reader?) is appreciated.
At this stage Progen’s fundamentals re. revenue etc. is perhaps not so relevant considering it is a bio research company with no real income stream. They have $14mil in cash and currently restrict expenditure.
A deal with a big pharma is expected in the near future (se article below) which could draw a whole new chart – is it called a ‘shooting star’ when it goes straight up like a rocket?
Once again ‘thank you’ for your input.
Henrik
Australian Financial Review - Mon, 11 Oct 2004
Fingers crossed on Progen
Sure it's been a bull sharemarket and all, but Street Talk still longs for some really ballsy stock calls.
Well, we've found at least one, courtesy of Mark Fordree's specialist biotech house eG Capital. For some time, eG has been a big fan of Progen Industries, a stock that had its ups and downs over the years but has been a bit of a mainstay of the sector.
Progen is about to show whether it's really the next big thing because managing director Lewis Lee has flagged a possible announcement by the end of the year on forging a licensing deal with a major drug company for its PI-88 cancer compound.
Ideally the announcement would be timed before the annual meeting on November 30. If it works out the way eG is betting, Progen could be worth as much as $16.90, compared with $5.25 now.
The difference seems like light years to a sceptic, but if one considers that Progen is capped at less than $200 million and another cancer-curing hopeful, Novogen, is capped at close to $500 million, it's easier to see the potential for re-rating.
Just to add to the pressure on Lee, if Progen can achieve a US pharma licensing deal involving upfront, milestone and royalty payments, this will be one of the greatest feats ever by an Australian drug company.
The deal could theoretically involve an upfront payment of $US50 million to $US100 million ($68 million to $134 million), which is conservative when compared with other oncology licensing deals in the US and a royalty rate of 8 per cent, which is also conservative.
The $16.90 price assumes the drug actually gets to market, while more conservative assumptions are a $6.15 valuation for eG that discounts some of the risks up to commercialisation.
PI-88's potential stacks up well against the established Avastin anti-cancer drug produced by Genetech, which reported $US183million in third-quarter sales." |
