Wolf
care to quantify a guess
as to the impact would have been if that Thursday NR
had been an approval
1. The valuation approach
Assumptions all Canadian:
a) 30mm population
b) 10% or 3mm are OA patients
c) $60 / 60ml bottle selling price per month supply
d) COGS 50%, or Net Rev 50%
e) 45mm shares o/s
f) expectd PE ratios = 30x
For every 1% market share captured the answer is
$0.24 earnings per share
$7.20 share price component
For a 5% market share captured the answer is 5x or
$1.20 earnings per share
$36 share price at 5%market share
Given that Pennsaid Phase IV, there are more than 3,400 canadians who already used Pennsaid. Assume status quo, there is an immediate 3,400 customers on day 1 or roughly 10% of the 30k people needed to capture 1% of the market.
Thereforem, under this approach, I would use the $7.20 number and discount it for a portion of 1% market share that can be garnered upon approval, in year 1. Given dismal sales results in UK but encouraged by Phase IV numbers, I guess the HC premium or HC catch up should be up to $3.60 max (50% on catchup)and DMX share price around the $8.60 - $9.60 level and stick. Then it'll move another $3.60 when shareholders anticipate future value of earnings to capture just 1% market share.
2. Comparative model
I'll use HML.
a) It has about 40mm shares o/s. Comparable to DMX.
b) Currently waiting for HC marketing approval. Comparable to DMX.
c) every time an HC rumour, jumps to $9.00
d) when rumour doesnot come thru, drifts back to high $6.xx
Differences
e) HML does not have FDA "marketing" approval "around the corner" yet.
f) I could be wrong here, HML does not have another major candidate in phase III.
Therefore, under this approach, I would guess HC premium should be $3.00 max and DMX share price around the $8.00 - $9.00 level and stick.
I stand correction on any of the assumptions. Hmm, please do correct. All comers.
F.D.A.eh!! |
