SEPR result: This is not exactly a new thought, but it struck home while thinking about the approvable letter and what I would do with my modest SEPR holdings. As much as the FDA decision regarding Estorra in and of itself is a milestone event--to have another marketed product (assuming all goes well with the re-submission), what it also does is to reduce by a significant degree the financial risk of holding SEPR and improve its valuation characteristics.
That is, in reducing that degree of risk of insufficient funding, it improves the odds that development of other products in the pipe can be moved forward, in a diligent, informed and professional manner, to logical endpoints, whether those endpoints result in the filing of NDAs or not. Thus, beyond the approvable of Estorra in and of itself, I believe that Sepracor becomes a more attractive holding because of better odds on the rest of the products in development. Put differently, I think a case can be made that, beyond a discounted cash flow or multiple of revenues analysis attributable to a likely Estorra product on the market, the value of the rest of the pipe has increased.
Depending on price action over the near term, I may increase my SEPR exposure with leaps. This is, of course, an admission that, when SEPR was in single digits, I saw only doom and not opportunity. (:-(
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