Giving maths a go. kpmg reckons average royalties in the chem...

Giving maths a go. kpmg reckons average royalties in the chem field is 5%. I’d argue this is a new mode of action and with esg benefits we should look for more but let’s use this for example. The Clarke deals for USA and caymans have a tam of $250m pa for a narrow use case (mosquito control). At full whack this would translate into about $12.5m of royalty of which say $10m would flow to profit. Let’s adjust this to allow for market share / execution down to $5m. Let’s say this represents only 5% of the available opportunity in geography and use case terms that we can now reasonably infer. That indicates about $100m in ebitda without accounting for economies of scale. Add sales of the feedstock and let’s go for $150m ebitda. At 10x multiple an ev of $1.5b is implied. Vs todays share price that’s 100x. Add takeout premium and maybe 120-140x. Given the customers are funding us through the process for now the dilution is minimal.

very happy for others to unpack and re-pack my maths. Either way, risk / reward is good imo. Dyor.

https://assets.kpmg.com/content/dam/kpmg/pdf/2015/09/gvi-profitability.pdf