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Biotech / Medical : VaxGen Inc.-The 1st AIDS Vaccine in Phase 3 HumanTrials
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To: glen who wrote (99)7/18/1999 5:06:00 AM
From: Manfred Sondermann  Read Replies (2) of 250
 
>I think VaxGen's share price will trade well above $50 before
>year's end.

I do not have any opinion where the stock will trade before the
FDA approval, because I think this stock will be highly volatile
before the approval.

However, let us make some very rough long term estimates in the
BEST CASE of FDA success:

Assumptions:
-best case scenario: 30 per cent efficiency is found in 2001.
-there may be then about 15 million VXGN stocks.
-GPSite is right with his $85 billion market.
-the French competition in the long run may also take perhaps
half of the cake, despite being two years behind.
-there will be a worldwide vaccination all over the world for
about seven years, till most of the worlds population is vaccinated.
-VXGN, as such a sexy stock, might trade with a P/E of 35, long
after AIDSVAX is on the market.

Then this stock might trade at $3800:

"Proof":
From $85 billions AIDSVAX gets the half: $42.5 billions.
Now you can read in the prospectus that in the States Vaxgen gets
30 per cent of the revenue and Genentech 70%. In the rest of the
world it is just opposite: VXGN gets 70% and Genentech gets 30%
of the revenues. So let us assume that in total VXGN gets 55%
of the revenue worldwide, that is $23.4 billions. Divided by the
duration of vaccination, (7 years assumed), so VXGN has an annual
revenue of $3.3 billions. Take away from it the costs of the company
and the taxes, then there might be left the half of it: an earnings
of $1.65 billions each year, or $110 per share. (15 million shares
assumed).
With a P/E of 35 the stock price will be $3850 in about 7 or 10 years.

But dont forget that this is the best case scenario that could
happen. I think this is very unlikely.
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