Before the results of the 1st CRL, MSB reached a valuation of AU$3.2B. We're currently sitting at a market cap of AU$1.06 (@$0.91 SP). The stock market is full of wild valuations because retail investors typically don't know how to value companies fairly.
I consider that MSB is in a better position than they were back then in their other pipeline times because:
- AA for HLHS on the horizon next year
- Voucher for HLHS
- AA for CHF+LVAD
- CLBP delivering impressive pain relief and opiate reduction in backpain + 2nd trial started
The main negative difference is that CHF did not get the results for full approval from the one trial and the covid hype for ARDS has died down.
Because we are in a similar if not better position, logic should suggest a re-rate to at least the levels MSB was at before the 1st CRL.
This would give an SP of
AU$2.75 upon first approval.
Net cash usage in FY 2024 was US$48.5m.
If Ryoncil is reimbursed at:
- US$300k (low estimate), then MSB needs to treat just 162 patients to earn US$48.5m in revenue.
- US$500k (medium estimate), then MSB needs to treat just 97 patients to earn US$48.5m in revenue.
- US$700k (high estimate), then MSB needs to treat just 70 patients to earn US$48.5m in revenue
Those revenue figures represent break even with the current cash burn rate. With the Early Access Program (EAP) in place for many years, the clinicians currently utilizing it will become immediate payors upon approval, before any sales and marketing.
Additionally, AA of HLHS offers the promise of a Priority Review Voucher (PRV) with estimated value of US$100m.
"The reported purchase prices of PRVs to third parties averages about $100 million (
range $67.5 million to $350 million)
[21, 22]."
Once MSB is able to self-sustain its commercialisation, then its valuation should go bonkers considering its pipeline and results to date in blockbuster indications.
As I've said, if you look at acquisitions in pharma recently:
| Acquired | Acquirer | Development Stage | Disease | Value |
|---|
| 1 | Morphic Holdings | Eli Lilly | During Phase II | Crohn's | AU$4.8B |
|---|
| 2 | Cerevel Therapeutics | AbbVie | During Phase III | Parkinsons/Neuro | AU$13.1B |
|---|
| 3 | Nerio Therapeutics | Boehringer Ingelheim | Preclinical | Oncology | AU$2B |
|---|
| 4 | Carmot Therapeutics | Roche | During Phase II | Cardiovascular | AU$4.1B |
|---|
| 5 | Karuna Therapeutics | Bristol Myers Squibb | During Phase III | Schizophrenia | AU$21B |
|---|
| 6 | Cardior Pharmaceuticals | Novo Nordisk | During Phase II | Cardiac | AU$1.7B |
|---|
Then I suspect a mature biotech that is fiscally self-sufficient with Phase III candidates in CHF, HLHS, CLBP, GvHD, ARDS and a Phase II asset in Crohn's - would be valued very favourably... back of envelope valuation of current assets below:
| Asset | Stage | Disease | Hypothetical Value |
| Ryoncil | Filing | GvHD (Oncology) | AU$5B |
| Ryoncil | Phase II | Crohn's | AU$5B |
| Ryoncil | Phase III | ARDS | AU$10B |
| Revascor | Filing through AA (?) | HLHS | AU$5B |
| Revascor | Filing through AA | CHF | AU$20B |
| Revascor | Phase III | CLBP | AU$10B |
| Total | AU$55B |
| Price Per Share | AU$47.74 |
I'm not saying those are accurate valuations, but I am saying that considering recent acquisitions in the space, they're roughly in the right ballpark.
Reminding ourselves that a valuation of just AU$20B is worth $17.36 per share, and AU$10B is $8.68 per share, I think the upside is pretty darn good providing MSB finally gets the approval.
Not investment advice.
Cheers,
Gang Gang
(20min delay)