DYOR. Not advice.
No specific buy or sell recommendation or advice is given. Analysis is highly-speculative.
Updating my earlier scenario for COVID-19 ARDS.
General Assumptions- Currently fully-diluted share issue is ~ 611M shares.
- Industry average Net Profit Margin 13.8% ( source https://pubmed.ncbi.nlm.nih.gov/32125401/ ).
- Industry average P/E 22.8 ( source http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html ).
- Current exchange rate $0.65
- Bell Potter in their estimate arrived at pricing of USD $75,000 for an ARDS treatment. Essentially fewer doses than for treating aGVHD.
- Each MESO American Depository Share (ADS) on the NASDAQ is for 5 MSB shares. I used the current exchange rate for the conversion ( does not allow for arbitrage ).
I used industry-average Net Profit Margin and P/E as I wanted the scenarios to be conservative.
COVID-19 ARDS Scenarios (US-Only)I had previously looked at a scenario with a 30% revenue share but wanted to explore scenarios where Mesoblast gets a larger share of the revenue.
I used the following approach and assumptions for the revenue model:
- Bell Potter forecast that 67,000 patients with COVID-19 ARDS would be treated. I have lifted this to 100,000 per annum based on @ecoool2 musings ( see Post #:44587849 )
- Bell Potter assumed 30% share of revenue, however I wanted to model a range of scenarios from 25% to 100% of revenue ( after-all it is Mesoblast’s technology and they have the patents, so this puts them in a strong commercial position ).
The figures are for US only and it is important to remember that even if there are less than 100,000 cases treated in the US, if successful the treatment will be rolled out elsewhere (Europe, Asia, etc, etc).
I thought I would try and independently evaluate @ecoool's 100,000 patient per annum estimate, just looking at US data.
Currently approximately 15,500 ICU beds needed per day. Length of stay is around 10+ days and most patients are going onto invasive mechanical ventilation ( currently around 14,000 per day ).
https://covid19.healthdata.org/united-states-of-americaView attachment 2162347View attachment 2162350Whilst numbers are tapering off above, the US is aggressively opening up their economy so I think this will only lead to a second wave of infections and the same will happen elsewhere ( Europe, Asia ), etc.
Now I think stem cells will be used to treat more than just ventilator patients in ICU, as they may be pre-treated before going onto a ventilator if the case is severe enough ( this would help slow down the rate of demand on mechanical ventilators ).
So from above, assume 40% of the patients at any one time in ICU are being dosed with MSCs. That works out at ~6,200 doses per day or ~186,000 in a 30 day period ... just in the US. Understanding is that each course is about 4 doses, so that's ~46,000 treatments per month at ~ USD $75,000 per treatment. On this logic 100,000 treatments (of 4 doses ) is very conservative.
For patients surviving in an ICU, typical stay is around 10 days.
So here are the numbers for 4 different revenue scenarios from Mesoblast at 25%, 50%, 75% and 100% of revenue respectively.
Valuations range from $15 per MSB to $59 per MSB and
remember that the larger non-COVID ARDS opportunity follows, notwithstanding the potential from aGVHD, Chronic Heart Failure, Lower Back Pain, etc, etc.
View attachment 2162419
(20min delay)