COVID-19 ARDS and ARDS Share Price Scenarios, page-225

DYOR. Not advice.
Analysis is highly speculative. No specific advice or buy or sell recommendation is intended.​

Combined Estimate of Potential Value for Non-COVID ARDS, CHF, CLBP & aGVH

Scenarios ranging from 20% share of revenue to 80% share of revenue. Consensus seems to be that partnering approaches are more probable than a direct to market approach.

The company recently raised AUD $138M (USD $90M) to support scale up of manufacturing plus has access to a loan facility ( USD $80M currently drawn against a USD $115M facility ).

Crohn’s disease excluded as it is difficult to determine addressable market.

Potential Value

Intent of estimates is to provide perspective of potential value.

Risked @ AUD $21 to $64 (50% risk weight used for all parts)
Unrisked @ AUD $42 to $128

Note - No allowance for additional dilution. Estimates assume success of treatment for COVID ARDS leads to revenues sufficient to allow Mesoblast to avoid further-diluting shareholders in commercialising for aGVHD, CLBP and CHF pathways.

Estimates imply to me that on a strong outcome from the COVID ARDS trial the share price fair value should sit at AUD $20+ until details of partnering strategy emerge for Non-COVID ARDS. After COVID assumption is that Mesoblast would then move onto treating Non-COVID ARDS through label extension, based on data collected from the COVID ARDS trial.

A 20% revenue share from Non-COVID ARDS may result in NPAT of ~ AUD $550M . At industry average P/E of 22.48 this would equate to a share price of $20. 80% revenue share would be worth AUD $61 due to lower gross-margin.



Assumptions

General

• For 20% revenue share assume 80% gross margin, for 80% revenue share assume 60% gross margin with sliding-scale between
• P/E at pharma industry average 22.48
• Depreciation/Amortisation assumed at 10% of EBITDA
• Tax at 30%
• Fully-diluted share issue

aGVHD

• US Only
• Addressable market and pricing as per Edison Estimates (USD $285,000)
• Child patient population 396 pa and 65% share
• Adult patient population 1,662 pa and 45% share
• Total addressable market 1,005 patients pa

Congestive Heart Failure

• US only
• Market penetration as per Edison estimates ( total addressable market 7,260 ). They used 1% market penetration against a patient population 726,000
• Price USD $50,000

Chronic Low Back Pain

• US & Europe market as per Edison estimates
• US at 200,000 doses pa
• Europe at 150,000 does pa
• Price USD $10,000 in US
• Price USD $7,500 in Europe

ARDS (Non-COVID)

• US only
• Price at USD $75,000
• Annual Incidence of Acute Lung Injury at 190,600
• 25% of patient population treated ( keeps the estimate conservative and there would be time to scale-up distribution and treatment )

In this scenario after treatment of COVID-19, Real World Evidence (RWE) [1] from treatment of COVID-19 ARDS is used to fast-track the treatment for Acute Lung Injury, perhaps with support of further trials. The estimated annual incidence of Acute Lung Injury in the US is 190,600 cases [2].

[1] https://www.fda.gov/media/120060/download
[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6880255/