quid,
Current market cap is $1.3 billion.
Natrecor is a very tricky drug to value, mainly because it's not clear just how widely it will be adopted.
Forecast 2002 sales are in the $55m to $60m range, up very sharply from FY00's $14m (launch was about mid-year). I would expect them to beat that estimate, based on how quickly they have already gained traction. (It helps some that they aren't competing with drugs that are being actively detailed, but it hurts that they don't have a real pharma partner in the US). They pay a declining royalty through 2008 to their marketing partner (QTRN's Innovex).
There are about a million admissions for acute CHF each year. There are also a substantial number of patients (one estimate I saw was 80k) that are at home but always on the verge of acute CHF. These could potentially receive (perhaps) weekly therapy at home, which would dramatically increase the market for the drug.
So at one extreme the drug could eventually become a billion dollar blockbuster. Alternatively, sales could stall at much lower levels - perhaps $200m, or comparable to Milrinone. A lot will depend on how their post-marketing trials go and how the drug is perceived as working in real life.
If you take the conservative $200m eventual peak sales view, then SCIO is likely already fairly valued at these prices (assuming your posited failure of their P-38 program). If you take the blockbuster view, then the stock likely is still a potential 5-bagger, assuming it isn't acquired first. (The CEO has multiple myeloma).
Peter |
