Acadia, page-36

Well spotted folks. I updated the figures and assumptions:
- 60% discount to Asian regional payors and 40% discount to European payors
- 50% of revenues to Asian regional JV partners and not just 35% to Chinese JV partners,
- ROW drug prices are based on US price for Daybue @$375,000 for annual treatment
- changed the PE ratio down to 15 because to reach the depth of market penetration for the drugs required for the model would see these franchises reach a mature valuation
- Increased drug prices accordingly where before I used the figure of USD$32,000 (an industry average I picked up in online literature but woefully inadequate)
- Changed 15% market penetration down to 10% market penetration only, I haven't used DCF so this adjustment might appease some of the fellow posters who, perhaps rightly, assume the original model was too optimistic.
- Autism is not included, interesting to note that Neuren specifically mentioned the 1% of world population for autism patients having the SHANK3 mutations.

I have taken out the Retts syndrome valuations because the ROW deal finalised with the same royalty table as current agreement with Acadia for the US Retts syndrome market. The scenario below assumes Neuren developing NNZ-2591 to market themselves.

- NNZ2591 United States X 4 diseases: 56,000 patients @ 10% penetration = 5600 patients X $USD 375,000 annual cost of treatment = $USD 2.1 billion/2 (50 % margin) = $USD 1.05 billion/129 million shares = $8.14 EPS X P/E of 15 = $USD 122.09 a share

- NNZ2591 Europe X 4 diseases: 71,000 patients @10% penetration = 7100 patients X $USD 225,000 annual cost of treatment (40% discount for European payors) = USD$1.60 billion/2 (50% margin) = $800 million/129 million shares = $6.20 EPS X P/E of 15 = $USD 93 a share.

- NNZ2591 Asia X 4 diseases: 205,000 patients @10% penetration = 20,500 patients X $USD150,000 annual cost of treatment (60% discount for regional payors) = $USD 3.07 billion = 50% to regional JV partners (- $USD 1.54 billion) = $USD 1.54 billion/2 (50% margin) = $768.75 million/129 million shares = $5.96 EPS X P/E of 15 = USD $89.40 a share.

Global potential for NNZ-2591 is USD $304.49 a share.

It is mind boggling to realise that whichever models, figures and assumptions you decide to use (DCF, WACC or otherwise), the huge potential for these drugs radiates out of any model put forth. For a very good and comprehensive valuation post I refer you to Kjt1969's post.