explanation, page-66

Hey Tewk yes I do try and keep it a bit conservative and realistic, I have used this sort of method for years as a prediction/target for myself, I then take a look to see what upside is left if/when targets are reached, these move all the time also.

You will notice that I update it when GSK come out with their latest sales (see latest post below). The one your referring to was done before that. I don't know if you have the burn rate, discount rate (could be 5%, 10% or 15%) and taxes worked out in your model?




My Latest Pricing:

I have updated my own figures FWIW with the full year of 2009 Arixtra sales. Obviously we have to get FDA approval first before any of this could be entertained.

Things included:

1. Using $5m cash burn rate. This would be expected to increase of course as we progress the pipeline now and phase 3 trials, the $15m raised will take care of most of this and any additional burn above this could counter the actual premium we would add to the below prices for the likes of HA-irintecan etc.

2. Two scenarios are given to show the AUD v USD conversion. One is for parity of the prices and the other is for a conversion rate of AU$1.10 for every USD, currently the conversion is around AU$1.15 for every USD but I will keep it a little more conservative as this happened rather quickly in the past 2 weeks with the AUD getting thumped.

My personal calcs only:

Total yearly sales of Arixtra in the USA was around US$220m for the year of 2009. ACL will be able to access these full sales as soon as/if FDA approval is given. If we use 50% market share (I expect more like 60% over time), this equals US$110m yearly sales for Dr Reddy's, take off 15% to allow for reduced generic pricing (it may be less than this) and this equals US$93.5m.

Now using 190m shares on offer after the Rights Issue.

50% = US$93.5m (35% of total sales = ACL profit) x 35% = US$32.72m. Take out $5m cash burn p/a and no tax rate (because we will have many years of expense claims) gives you US$27.72m profit or US14.58c eps.

I would hazard the guess that we will trade in the 20 - 25x PE area due to the growth prospects of worldwide sales in 2012 and the Asia Region that could be added at any time, choosing your own PE:

AUD & USD Parity

14.58c x 15 PE = $2.18
14.58c x 20 PE = $2.91
14.58c x 25 PE = $3.64

AUD = $1.10 per USD (currently higher at $1.15 approx) = .1458 x 1.10 = 16c

16c x 15 PE = $2.40
16c x 20 PE = $3.20
16c x 25 PE = $4.00


Workings for worldwide sales (2012/13 onwards):

Total yearly sales of Arixtra worldwide was around US$396m for the year 2009. ACL will be able to access most of these sales in just over a couple of years due to the European patent running out in 2012. If we use 50% market share, this equals $198m yearly sales for Dr Reddy's, take off 15% to allow for reduced generic pricing and this equals US$168.3m, the following are my simple calculations and please remember these are just my personal thoughts::

Now using 190m shares on offer after the Rights Issue.

50% = US$168.3m (35% of total sales = ACL profit) x 35% = US$58.9m. Take out $5m cash burn p/a and 15% tax rate (15% because we will have many years of expense claims and continued R&D/trial costs) gives you US$45.8m profit or US24.1c eps. The PE ratio here could still be in the area of 20x due to HA-irintecan being very close to completion if not completed and our pipeline very well progressed if not active but if we use 15x onwards to be safe and only factor in the Generic sales we get:

AUD & USD Parity

24.1c x 15 PE = $3.61
24.1c x 20 PE = $4.82
24.1c x 25 PE = $6.02

AUD = $1.10 per USD (currently higher at $1.15 approx) = .241 x 1.10 = 17.6c

26.5c x 15 PE = $3.97
26.5c x 20 PE = $5.30
26.5c x 25 PE = $6.62



Once again just my personal scratchings updated with the new sales figures from GSK, please double/triple check as I'm not qualified to do this, it's just for me.