Additional valuation models from RG board:
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By: MPB1MPB1
Reply To: None Saturday, 30 Oct 1999 at 8:46 AM EDT
Post # of 10675
Valuation models are so theoretical for Biotech's in the developmental stages Makoto probably has the best take -- buy and hold. Guessing the future value is much like day dreaming what you would do with the money if you won the lottery.
It is enjoyable and unlike winning the lottery I believe we have a real chance of success.
Just to compare some numbers on patient populations:
FAP
Heather: app 3,600 -- MPB1: app 20,000 -- Kiao: app. 40,000 --a f lang not calculated I would stay with 20,000 or 50% of the worldwide market for this indication.
Sporadic Polyps
Heather not calculated -- a f lange , Kiao and MPB1 are all at 280,000. Trav had some interesting comments so let guess at only 5% of the patient population namely 140,000 patients. On the CC I thought I heard true excitement for this application.
Prostate
Heather 36,000 -- a f lang between 25,000 and 50,000. MPB and Kiao not calculated. Lets just use Heather's number. No offense please but personally, I think these numbers are so low that it is all most silly.
Guesses at PE's Heather at 45, MPB1 at 100, a f lang 10/20, kaio at 25. Lets just use Heather's numbers.
Guesses at margins a f lange 10%, MPB1 15%, Kaio 20%, Heather 25%. I would uses Kaio's number. Ultimately IMO Heather will be right but I think in the first few years ramp up costs will depress margins.
Lets be conservative with revenues per patient at $1,800.
196,000 patients times $1,800 times 20% = $70,560,000 profit.
Divided by 26MM shares = $2.71 per share times a PE of 45 = $121.95
Heather was going out 2 years I was going out 5. Lets assume 42 months. Discounting back at a 30% return compounded monthly gives us a present value of $43.23.
You can multiply PV by the percentage of off label usage.
Makoto asked when to sell -- when 3 people come up to you in Joe's Bar (one of them has to be the bartender) and say they have found the MSFT on the 21st century.
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