valuing hyact

Has anybody noticed the differences in the potential valuations of HyAct by ACL and Nomura in their report dated 2 April 2012 ( available on the Alchemia website)

ACL have repeatedly mentioned sales figures of up to 500m pa and align the potential of the product to that of Abraxis that was sold for approx 3B
I paraphrase Andrewm457m recent post.

"Value of HyACT" - Should expect that HA-irinotecan would be worth $300-400m/year on its own. This comment is conservative, but based on ACL's own estimates:

Alchemia Presentation November 2011, page 15:

"On approval, HA-Irinotecan is expected to be a ‘drop in’ replacement for irinotecan with sales potential of up to $500 million, depending on achieving a comparable price to Camptosar (irinotecan)".

Nomura however in their detailed report only believe the market size of the global generic irinotecan market will be USD64mn in 2014 but allow the following considerations when formulating a valuation per share

• Reimbursement: We assume a treatment cost per injection of USD2,000. ACL’s closest comparable is Abraxane, which was reimbursed at USD4,000 per treatment when it was released onto the market in 2005, so we believe our assumption is not unreasonable. We assume this price will decline 5% per year;
• Timeline for getting to market: We assume the HA-irinotecan opportunity will get to market in FY16 in the EU, and in FY15 in the US;
• Penetration rate: We forecast a FY16F penetration rate of 7.1% in the US. This increases by 6.5% per annum for 10 years;
• Market share: We have assumed peak market share of 25% in US by 2018.
• Royalties: We believe ACL will license this product. As a result of this potential deal, we believe that ACL will earn a royalty rate between 25-40% on net sales of the product by its partner. We have used 30% in calculating our forecasts.

• Valuation of the opportunity: Hence, the risk-weighted NPV for ACL’s HA-irinotecan opportunity is AUD0.33 per share. We have calculated the potential upside from a successful HA-irinotecan trial. Our non-weighted valuation is AUD0.54 for the global opportunity from HA-irinotecan sales. However, assuming greater market share in the US and royalty gives upside to AUD1.27.

Quite some differences in valuation even if one accepts that ACL can get to AUD1.27 per share.

Nomura I note are only reviewing the Irinotecan market and not the potential offered by the HyAct platform across a range of cancer programs and treatments.