good news, page-11

Just answering some questions, I think ACL oncology will list on the ASX (mainly because it will cheaper and easier than Nasdaq). ACL oncology has a clean, transparent structure, so its chances of being bought out by a US entity are just as high with an ASX listing as they would be with a Nasdaq listing. (I don't subscribe to the Biota view that a Nasdaq listing increases the market cap of biotechs relative to an ASX listing).

I'd expect listing costs (legal and admin fees) to be in the region of $500k. I'd expect the new entity to do a small top up capital raising at the time of listing (such that there will be no dilution to the fonda arm of ACL, only to the new oncology entity).

I think that once this risk averse market is confident of fonda profit share being in the region that most analysts (and people on this thread) think it will be, then the Fonda arm of ACL (i.e., excluding oncology) is likely to trade on a PE of between 8 and 10. On my numbers, this gives ACL fonda a market cap in excess of $300mill following confirmation of an 8-10c annual dividend. (So there is plenty of upside potential over the next 12 months with fonda alone).

For ACL fonda to trade on a PE higher than 10, either Dr Reddy's would need to get a market share approaching 50%, or the total size of the Arixtra pie would need to be significantly increased. The latter would likely happen if the FDA ever gets round to approving Arixtra for ACS. This would effectively increase the size of the fonda pie by around 20% (yes, some US doctors are using arixtra for ACS off label already, but these are tiny numbers relative to the ACS usage with FDA approval). The safety issues surrounding Pradaxa etc are also fairly new, and further evidence (FDA warnings etc) on this front over coming years could also significantly boost Arixtra sales. Finally, Arixtra also has many advantages over Lovenox, and further promotion of Arixtra (perhaps eventually by Dr Reddy's?) could also pay dividends by eating further into Lovenox market share.