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Biotech / Medical : Zonagen (zona) - good buy? -- Ignore unavailable to you. Want to Upgrade?

To: Tokyo VD who wrote (1901)	1/21/1998 10:42:00 PM
From: khrnyc	Read Replies (2) \| Respond to of 7041

Good evening Tokyo Thankyou for your post regarding efficacy rates. It is an important one. It is true that Viagra has a higher rate of efficacy than Vasomax. This was never in dispute, and is the reason why in valuation models Viagra is usually handed 85% market share of sales, whereas Vasomax only 15%. The key question in determining whether Pfizer (Pfe) or Zona is the better investment choice is to ask how these sales contribute to the ultimate share price of the stock. I'll go through a valuation model of Zona in a future post. For now I leave you with this: If Pfe gets 85% market share, contribution to stock price will be a few dollars added to Pfe's current stock price (for a gain of 5-10%). On the other hand, if Zona gets only 15% market share, contribution to Zona's stock price will be enormous. As I will elaborate in a subsequent post (using standard models for pricing biotech companies), the present value of Zona' shares for a biotech company with completed phase III data, in a market this size should command a stock price around $42 pre-NDA, and about $67 post-NDA. (for a gain of about 100 to 200%). In summary: From my assessment, Zona is today worth around $42 per share (not its current $17) and when the NDA is filed will be worth around $67 per share. It is only a matter of time before the market appreciates this.