Hi Kpax and NZTYour valuation estimate and commentary got my attention and for what its worth here is my 2 bobs worth.
Lets take your initial figures but apply a captured 60% market share as suggested by PTP which I believe is far more reasonable. Let’s also recognize that the incumbents stand to lose approx. $1.5 billion in revenue each year assuming they continue to sit on their hands and watch PAA take their market share. This is highly unlikely IMHO.
So if its $900 million gross revenue for 30% then its US$1.8 billion gross revenue for 60%. Now assuming MPL extends the life of the majority of MND patients this would be a conservative figure as the MND population on MPL would continue to grow (existing and new patients).
Based on a November 2023 report noting the gross margin of the top 15 BP ranged from 57% to 83% (https://www.statista.com/statistics/473429/top-global-pharmaceutical-companies-gross-margin-values/) let’s take a gross margin of 50% for PAA. Assuming a GP of 50% (rare disease with ODD) then that would give PAA a gross profit of $900 million per year.
Now “For pharmaceutical companies, the median gross profit margin was 76.5% (95% CI, 70.3%-82.7%), the median EBITDA margin was 29.4% (95% CI, 26.3%-32.5%), and the median net income margin was 13.8% (95% CI, 10.2%-17.4%)….3 Mar 2020.
Let's use 10% for a net profit and doing so PAA would generate an annual net profit of $90 million per year. If we then did an NPV (disc @ 10%) over 5 years with a terminal value of 3 years we would generate a value of $500 million for MND alone. This does not include any price escalation or increase in MPL treated population numbers.
Given the 2015 PAA valuation put a value on human and canine cancer at approx. $50 million then we could add that to the $500 million and add further value for covid and other potential diseases MPL may “cure”.
If this was done than a valuation in the order of $600 million to $1 billion is not without reason at this point in time.
PAA Price at posting:
9.4¢ Sentiment: Buy Disclosure: Held
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