I don't know about the easy money already have been made part.
Let's look at this from the standpoint of BIIB who is THE major player in the MS space (thinking all kinds of synergies here, research, marketing, sales, patient pop, medic pop etc.) Then try to run the numbers from BIIB's standpoint:
1. They will have a good feeling in about 4 months, about how the Euro agencies feel about approval of AMPYRA, given approval by the US FDA. I'm guessing the question will be, how could they not approve. This would be hard to justify to Euro MS patients. And, if anything their socialist postures would make this an almost impossible non-approval.
2. So, assume this is approved in Euro zone and in Canada. Then look at what BIIB would have to pay ACOR both in terms of milestones and royalties. Let's be conservative (instead of $400m in royalties, let's say $300M.) Let's say peak sales in Canada and Euro, combined, same as US. Let's make US peak sales conservatively at $450M, with $8.5/yr pricing.
3. Then PV that starting with slow ramp up in '10, 11 and beginning to peak in 12-13, with about 4 years of peak sales.
4. Then add the cash today of about $250M at year 0, so no need to present value that.
I leave the discount rate for PV purposes to you, but from BIIB's standpoint, there's at least close to PV of estimated $350 Million in cumulative royalties, plus about $235 Million in PV of milestone payments (don't know timeline so major haircut of $300M in my PV).. So, that's PV of min $585 Million in non-US sales that would be due ACOR from BIIB, i.e. expense for ACOR. Now, add ACOR's cash and you are already at $835 Million.
How much is the US portion of ACOR's profit streams worth. With the same numbers, but take off 30% for Elan and cost of goods sold. Then back out taxes. I can see how that PV would come out close to at least another $1 Billion, rough numbers.
So, that makes very conservatively, with 0 value past 2018, with no upside vs. above conservative numbers in pricing, take-up, stickiness, other non-Euro/Canada markets, other potential AMPYRA indications value, 0 value for any patent protection beyond 2018.
How much would you pay for ACOR, if you were BIIB. I'd say $2 Billion (gross/inclusive of cash), easy.
Am I missing something here? |
