DYOR. Not advice.
No specific buy or sell recommendation or advice is given. Analysis is highly-speculative.
I was further looking at the logic for the Bell Potter estimate and it doesn't stack up - mainly related to the number of ARDS patients going onto mechanical ventilation.
From a study in New York, currently around 86% of people in ICUs with COVID ARDS are going onto invasive mechanical ventilation. Of the 320 people that had mechanical ventilation 38 or 12% survived. That same data is the source of the comparison data from the
24 April announcement.
View attachment 2180563So if Mesoblast's MSCs are anywhere near as effective as the compassionate use trial then I would envisage a minimum of 50% of ventilator-dependent patients being treated with MSCs. It would be a life or death choice that doctors are making, given that only 12% of ventilator-dependent patients are currently surviving.
So if there are 100,000 patients per annum in US with COVID ARDS requiring ICU admission and 86% of these go onto mechanical ventilation, then that's a pool of 86,000 patients. If 50% of these are then treated with MSCs then that is 43,000 patients per year.
I've used the following assumptions:
- Price at USD $75,000 (although @ecoool2 thinks pricing could be much higher)
- Revenue share scenarios at 25%, 50%, 75% and 100% (although it's Mesoblast's technology and they have just raised $138M to support initiatives for setting up manufacturing so I think the 50%, 75% or 100% revenue scenarios are the most likely ).
- I've tuned the assumed after-tax margins so that gross margins for the scenarios sit in the 60% to 80% range (this is based on @ecoool2 thoughts on gross margins). Assumption is also that margins will be higher for Mesoblast for the smaller revenue portions.
- Depreciation at 10% (to help make the estimate realistic)
- P/E at 22.48 ( from http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html )
This gives me a share price range of $23 for the 25% share of revenue scenario through to $68 for the 100% share of revenue scenario. These numbers are for US only and just for COVID ARDS.
View attachment 2180671I've also reworked the Non-COVID ARDS scenarios with the following assumptions:
Even if just 50% of ARDS patients were treated ( i.e. US only and excluding other regions ) then estimates start at after tax profit around AUD $3.6B. At industry average P/E 22.48 would be a share price around $131.
View attachment 2180743
(20min delay)