A few claims for the potential of the share price to drift North have been made recently, and with an FDA meeting looming around the corner, it's probably a good idea to take a look at what it might take to support the share price being that high off the back of just COVID ARDS in the USA.
How high? Lets look at 90 AUD per share.
That would give MSB a market cap around 57.6 Billion AUD give or take.
If we compare CSL's Market cap to sales or revenue, we can see what kind of sales / revenue MSB would need to be proportionately as successful.
CSL Market cap 130 Billion AUD, with income of 9.2 Billion USD for a 2.1 Billion USD profit.
Mesoblast would need Annual sales of 4.02 Billion USD, or a profit of around 920 Million USD.
Since they are licensing this to Novartis, I think we need to forget the annual sales and focus on profit from Royalties - which we also have no idea on the agreed percentage, apart from it's more than 10%. We might be able to take a clue from the wording in the agreement that stated future indications can be on a 50/50 profit share basis. The fact that this was not mentioned for the current agreement makes me think that the current agreement is probably not a profit share or 50% agreement.
If we use 75,000 USD as average sale price per person for COVID ARDS treatment, and say that MSB receives a 25% royalty ( I have no idea if this would be close or not ) , Per patient MSB would be seeing $18, 750 USD.
To support a 920 Million USD profit, MSB would need to receive this 25% royalties from 49,000 patients.
The company has already stated it is planning for up to 250,000 patients per year......
All of a sudden, with approval $90 AUD doesn't seem all that ridiculous.
The above is my opinion and not financial advice.
Also - I won't put a deadline on when I think it will get approved.
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