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Biotech / Medical : Incyte (INCY)
INCY 101.78+0.5%3:59 PM EST
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To: Lighthouse who wrote (1392)3/29/2000 4:38:00 PM
From: Lighthouse  Read Replies (1) of 3202
 
O.K. there went the toe. Now I have an ankle in the slightly red water.

Good news: Cash divided by total cap equals apx. 24%

Price to sales minus cash on 2000 revenue estimates now is apx. 10.4. That is a whole lot better than a price to adjusted sales of 44.97 when we hit $289 per share.

Since this thread has been quite lately I offer up the following:

Chip Morris at T. Rowe Price has a gauge he uses in regards to high tech companies. The price to sales ratio divided by the ultimate net margins of the company. (Yes this is a very, very rough off the cuff ratio but it does have some logic to it IMHO) So again after adjusting for cash on hand today I get the folowing (this is merely to stimulate debate do not take any of this as gospel)

At ultimate net margins of 10% for INCY . . . . I get a p/e of 104, At 15% net margins I get 69 and at 20% net margins (like big pharma) I get 52.

Rough but this gives us some sense at what some portfolio managers are looking at.

My last question for the thread:

To date INCY has made 30,000 wet clones for development targets. Each clone goes out with a contract royalty agreement so that if a product is developed from it INCY gets a cut.

Question: What % of these will hit. .001% (that = .3 targets)
.01% (that yields 3 targets). At .1% we get 30 targets (now we are getting somewhere).
And finally the whopper at 1% we get 300 targets.

Big question: What is the number?

Now if we take the number of targets and can guess the average size of the drug developed, apply a small royalty to it, adjust for the time value of money we get a value of present day royalty revenue . . . . after that we have to . . . . . . Anybody interested?

Cheers,
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