Best case? Dunno but here's my thinking.
ASB sold to get us cashed up, to focus on Pericoach and other ideas they might have, and to boost sp.; though it's potentially worth around net $10m p.a. I won't suggest a sale figure as I don't know how innovative good products without sales are valued.
And a global major paying 25m for a 50/50 joint venture on Pericoach. (They'd likely want a 51% controlling interest)
Estimates of moderate to severe sufferers range to 17%; however the mean and also the best determined figure is 6%. Our potential market therefore is 170m adult female sufferers globally.
Applying what I consider reasonable assumptions - sales to 10% of that moderate to severe market gives 17m units @ $60 (20%) profit giving
over $1b profit
. Given our partner is good at sophisticated marketing there should be
another billion from sales to i.e. new mothers, health & fitness, & sexual function markets. Add 8m units sold for the POP indication =
another half billion.
Allow say 7 years for our clever JV partner to build sales to 2.5b profit.
Although that profit figure in itself sounds unreasonable from our current situation I consider factors such as - no comparable product, the cost of surgery, current expenditure on related incontinence products, risks associated with mesh, the rate of population growth, a fattening population, a more health conscious market, an ageing population, rising middle classes around the world, limited alternatives in 3rd & 2nd world nations, the skill and influence of our partner, over-the-counter sales, annual subscription model, lower cost of goods sold at scale, strong possibility of govt. subsidies, cost is way less than what sufferers are willing to pay.
Assume our share is 1.25b. Divide by say 3.5b shares = 36c per share. For the reasons listed above, plus a very nice dividend, plus a big cash war chest, plus a forward looking market, I think a p/e of 30 conservative. 30 times 36 = a sp of
$10.80!
Royalties from licensing could be up to 25% depending on the products offerings. For the pluses about v3 I think 5% poor, 10% reasonable, 15% good. 10% gives us $30 unit sold, so the same result as above, without 25m cash for half ownership.
I won't cry over that. I won't cry over 5% royalty.
I won't cry if sales are 10% of above - extremely conservative and only a $1 sp!
Despite dilution the sp will rise on JV deal ann. due to what it promises including near term cash.
IMO, dyor, check my calcs, and I'm happy to hear constructive criticism & counter argument.
Worst case. Other than an unforeseen problem ruining everything, a sale wouldn't allow us to realise the medium to long term life changing financial success.
As I said earlier I don't know how valuations of PeriCoach are determined, but they will offer us half that due to risk. A cash offer of under 35c seems a rip off,
yet we wont't be crying over that either.
On a semi-unrelated note, how do they value V3's ability to generate data. I don't get why it's important; probably in part due to its power in determining severity and type of incontinence, also ability to guide r&d. Management said multinationals approached wanted this feature, they delivered, and now say its the strategic focus. Must be worth ...?
