Hi
@reginaldp: I posted valuations for CLBP but had that post redacted because I had not spread the revenues over on an annual basis. So posting again with some adjustments, based on feedback from
@BazsaNOTE: There are a lot of assumptions I am making, so feel free to critique.
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@reginaldp Since you asked me about the potential for CLBP, here is my attempt:
If we take the current US population of 340 million (yes we are a lot of people here, LOL) 78% are adults, which equates to 265 million adults.The incidence of Chronic Low Back pain is a varying number, as reported in various sources. It is known that almost 80% of adult population experiences low back pain at some point in their lives. But we cannot use 80% as the incidence for CLBP. After having looked at various sources, and coming up with an extremely conservative estimate, let us use 8.2% of US adult population afflicted with chronic low back pain.So the patient population for CLBP in just the US = 22 million (8.2% of 265 million)Using your number of $30,000 USD per treatment and estimating that only 25% of the patients would get MESO's CLBP treatment, we can see the revenues to be $30,000 X 22,000,000 X 0.25 = 165 billion USD
But wait: The 165 billion USD is if all 22 million CLBP patients get the treatment at the same time in the same calendar year. We know that is not going to happen. So a realistic situation would be as follows, assuming 20% of the affected population gets the treatment every year. So I am going to spread the revenues across 5 years, with each year seeing 20% of the 22 million people getting the treatment:
Year Number of Patients Revenue
1 4.4 1.32 billion USD
2 4.4 1.32 billion USD
3 4.4 1.32 billion USD
4 4.4 1.32 billion USD
Above assumes the treatment cost remains the same at $30K every year - it could decrease or increase
Now the interesting thing is this:
"
a single intra-discal injection of 6 million MPCs resulted in meaningful improvements in both pain and function that were durable for at least three years".
We can expect that the patients would return for a repeat treatment every 3 years, assuming they are not totally cured. I am making this assumption because the treatment provided only improvements. So in essence, the revenues will sustain as follows:
Year 1 patients will get a second treatment in Year 4
Year 2 patients will get a second treatment in Year 5
Year 3 patients will get a second treatment in Year 6 and so on.......
I am also assuming that all patients will return for a second treatment (big assumption) and not counting new patients resulting from new cases above and beyond the initial population of 22 million.
I am not a bean counter and I will stay away from profit margins, cost of revenue, cost incurred in sales, etc. But what I can do is extrapolate the market cap based on the above revenue and revenue alone.If the company trades at just 10 times revenue (which is about average for pharma), then the market cap at the end of Year 1 would be 13.2 billion USD for CLBP alone and just in the US.
Please understand that there are several ASSUMPTIONS here, which could be off. The $30,000 per treatment, the 25% of affected population getting MESO's treatment are assumptions, MESO going it alone in CLBP in the US, which it seems like since the partnership with Grunenthal excludes the US and most importantly insurance companies agreeing for the $30K cost. But a lot needs to happen and we have a long road to FDA approval of the CLBP treatment. But Greg George seems to be gung ho about the prospects.Could Mesoblast be taken over by Big Pharma? I am afraid we very well could be, looking at the ADR trading the past few days. The volume does not lie.It will be a very sad day if a takeover happens as us shareholders would get compensated only a small fraction of the real potential riches that would be in store if Meso exists by itself.PS: None of this is investment advice as it is not meant to be. Please do not construe this as investment advice..co
(20min delay)
