Don't know about life affirming Caketin, but here they are:)
A long post........
My thoughts on where to and what may be FWIW. Obviously we have to get FDA approval first before any of this could be entertained.
Firstly I will show US sales only as we will start on these as soon as FDA is given, I will then show European/ROW sales that should kick in around 2012/2013 as the patent expires in 2012 and we will be submitting by the end of this year. Obviously we need to crack into these figures and as has been reported before Reddy's have already lined up the top 10 purchasing groups for Fonda and are ready to go.
US sales, things included:
1. Using $5m current cash burn rate. This would be expected to increase of course as we progress the phase 3 trials of HA-irinotecan, the $15m raised will take care of most of this.
2. Just the one scenario showing $US earnings, considering we are on par or near by.
My personal calcs only:
Total yearly sales of Arixtra in the USA was around US$266m for last 12 months earnings. 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, reports show up to 70% as posted before), this equals US$133m 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$113m.
Now using 190m shares on offer.
US$113m (35% of total sales = ACL profit) x 35% = US$39.55m. Take out $5m cash burn p/a and 15% tax rate (because we will have many years of expense claims, approx $80m) gives you US$29.36m profit or US15.45c eps.
Now, I am going to use PE�s of 10x, 15x and 20x, I reckon that once sales are flowing we would be fluctuation around at least the 15x and only around the 10x when the markets are weak overall, so much more to come with the points below to keep us in the upper range.
Choosing your own PE:
$US
15.45c x 10 PE = $1.54 15.45c x 15 PE = $2.32 15.45c x 20 PE = $3.09
* PLEASE NOTE - these PE multiples used will fluctuate depending on what the company is up to, they can be affected by:
1. Oral Fondaparinux, could be a market in the $5-6Bn range if they (oral anticoagulants) break into the atrial fibrillation market as well as the out-patient DVT prevention market, though this would take time and patients would have to switch. Still, this is a huge market even if they (oral antis) crack 1/4 of the potential.
2. HA-irinotecan, phase 3 trials will start as soon as FDA id given for our Generic, nearly all companies in phase 3 trials are ascribed some value given they have made it thus far.
3. The absolute rapid growth that Arixtra has been seeing year on year in sales, reported at 40% odd for the last year alone.
4. Additional indications that Arixtra may be accepted for, mainly ACS as per the Oasis 8 trials that seemed to come out as positive.
5. Competition (albeit probably 3 years or more away, imo). Smoke screen imo as they haven�t even filed an ANDA and wont be able to manufacture at scale going by their DMF.
Let's look at us taking 50% of the Euro market added in:
Total yearly sales of Arixtra in the EURO was around US$157m for last 12 months earnings (see below). Using 50% market share, this equals US$78.5m yearly sales for Dr Reddy's, take off 15% to allow for reduced generic pricing and this equals US$66.7m. NOTE, this does not include the ROW sales totaling US$36m.
As the figures for the new agreement with Reddy�s in an unkown for the Royalty earnings I�m going to reduce the % of sales to 30% as our profit.
US$66.7m (30% of total sales = ACL profit) x 30% = US$20m. I�ll add the above profits before tax etc of $39.55m and we get US$59.5m, take out $5m cash burn and now I�ll take away 20% tax, we have that $80m to expense against earnings over the coming years to help with this. So with the above taken out we get US$43.6m profit or 22.9c EPS.
Choosing your own PE:
$US
22.9c x 10 PE = US$2.29 22.9c x 15 PE = US$3.43 22.9c x 20 PE = US$4.58
THEN, we could start to think about HA-irinotecan, actually we would be thinking of this at the same time that we would be entering Europe and probably before any competition ever entered in the Fonda picture considering the phase 3 trial will only take about 18 months.
From BioShares:
"For less than $20m ACL can complete phase 3 trials for HA-irintecan. There are also many existing oncology drugs that could be combined with HA for improved performance, if they are water soluble,including carboplatin, cisplatin, Erbitux,5-FU, doxorubicin"
As you know I'm only using the $300 - $500m revenue because it was said by the company in that BioShares report. A while back I asked about what sort of deal would/could be done and was told they could do anything, from a large upfront payment and then revenue sharing or the company could look at going it alone, we would have Fonda earnings rolling in.
So just to be conservative and try and punch out a number I had it if ACL were to strike up a similar deal to what they have with Reddys, but for this type of deal, then we could be looking at a rather large up front payment ($??) and lets say to be cheap 20% of total sales as profit, that could be:
$60m profit for revenues of $300m = 31.5c eps
31.5c x 10 PE = $3.10 + Fonda earnings = US$5.39 31.5c x 15 PE = $4.72 + Fonda earnings = US$8.15 31.5c x 20 PE = $6.30 + Fonda earnings = US$10.88
$100m profit for revenues of $500m = 52.6c eps
52.6c x 10 PE = $5.26 + Fonda earnings = US$7.55 52.6c x 15 PE = $7.89 + Fonda earnings = US$11.32 52.6c x 20 PE = $10.52 + Fonda earnings = US$15.10
We would be adding these sort of prices to the Fonda earnings for both US and Europe, not to mention Oral Fonda as a possible mass money maker in its own right and the growth of Fonda also!! It's not hard to get carried away when trying to value this, stay conservative and still be highly excited as to the potential. Obviously all things must be considered and go right for the company/shareholders, not to mention the markets as a whole not imploding, although this is a good sector to hide in and generics would certainly benefit in harsh times.
PLEASE PLEASE check all figures and don't by any means take this as advice and or to be correct, double check everything and take care:)
Where the figures came from.
GSK Figures USD:
> 3rd Quarter 10 US$67m sales in USA US$34m sales in Europe US$11m sales in Rest of World
Total = US$112m total sales for quarter
> 2nd Quarter 10 US$69m sales in USA US$41m sales in Europe US$9m sales in Rest of World
Total = US$119m total sales for quarter
> 1st Quarter 10 US$61m sales in USA US$40m sales in Europe US$8m sales in Rest of World
Total = US$109m total sales for quarter
> 4th Quarter 09 US$69m sales in USA US$42m sales in Europe US$8m sales in Rest of World
Total = US$119m total sales for quarter
> 3rd Quarter 09 US$52m sales in USA US$39m sales in Europe US$6m sales in Rest of World
Total = US$97m total sales for quarter
> 2nd Quarter 09 US$52m sales in USA US$35m sales in Europe US$8m sales in Rest of World
Total = US$95m total sales for quarter
ACL Price at posting:
54.0¢ Sentiment: Buy Disclosure: Held
(20min delay)