IRW, previous agreement was an "scale up" according to revenues/gross profit. Imcl was to get 60% of the drug income. Now is reduced to 40%, and no "scale up" (my interpretation, not completely clear myself).
Bmy is being paid with the $100M reduction, Bmy take more risks, cause $140M is now as opposed to BLA acceptance, this Imcl guy is very smart.
But, not clearcut in the press release is that Bmy MD/JD guy will be in charge of drug development "join" team. I think this is where Bmy will get some of the now $500M Imcl cash via "contract" services for the clinical trials. Imcl PROBABLY (not a fact, just a suspiciousness) will pay Bmy as a "CRO type" of business (CRO-Contract Research Organization as known in Wall Street, like Quintiles).
Nothing yet about the Bmy lock up 3 year period to sell Imcl stock, this is very good for shareholders.
IF Imcl Erbitux sales in 2007 (assuming approval in 2003) are $1 billion, then Imcl get $400M, if a P/S of 5x to 10x sales, then Market value high would be $2B to $4B ($$30 to 60 per share), way less than the peak $5.5B ($71 per share), THESE is without any dilution.
Dilution should double the number of shares by 2007 (ask sam eager sharesolder), so the price per share should be about $15 to $30 at peak $1 billion sales Erbitux in 2007. In 3 years the Bmy selling pressure begins (it could still be earlier).
Therefore, Imcl shares are overvalue at $23, they should be an aceptable risk at $7 to $10 !!! (same as I calculated before based on cash plus uncertainty of research).
All assuming Erbitux is declared guilty !!! |
