Abgenix, Inc. (ABGX) Message Board

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Biotech / Medical : Abgenix, Inc. (ABGX)

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To: keokalani'nui who wrote (356)	8/3/2004 5:32:47 PM
From: JFitnich	Read Replies (1) of 590

To all and anyone, I’ve had a chance to look through a couple of the reports for IMCL and ABGX. There seems to be a lot of room in various brokers assumptions for 3rd line metastatic cases. For example, in 2008, SG Cowen thinks there are 19,000 treatable cases of 3rd line. Smith Barney says there are a lot more – around 45,000. This could merely be the difference between what’s 3rd line and what’s 3rd line and treatable with Erbitux and ABX-EGF. I’m not entirely sure even after reading the reports. Looking at the revenues that might be generated in 2009 or 2010 (around peak sales?), I’m concerned that ABGX is going to have sell a lot more drug than what’s currently expected just to break even. My assumptions: $320MM in sales ($160MM to ABGX) - Smith Barney is looking at 20k patients treated – at $16K per pop – that may give Tuck some insight into pricing. As you can tell from above, this is more than all the 3rd line cases total in SGC’s estimates. $10-15MM in WW Sales royalty (I figured 11% - if anyone has different let me know) $35MM or so in contract royalties $150MM in R&D $50MM or so in SG&A (most likely just G&A) COGS is another issue. I’m exactly sure how it’s going to work out. Could be similar to IMCL where they have a contract and derive revenues and the revenues offset the costs. This could be the swing factor that generates some extra revenues – any thoughts? This is supposedly what ABGX brings to the table for partners... I’m also assuming around 100MM shares out (to make the math easier and taking into account dilution – my guess is that this is conservative – the pie may have a lot more pieces to it by ’09-’10) I’ve seen anywhere from $250MM to $350MM for peak sales estimates. I usually assume a 40x multiple and discount back 35%. From my calc, this means that ABGX has to sell around $600MM worth of drug to get an EPS in the ’09 / ’10 period that translates to a decent discounted stock value today. Feel free to rip this up one side and down the other. Somebody (Wilder??) said it gets really hard to make any money once the share count gets up there. They’re right. I own ABGX, for how much longer I'm not sure. JF

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