"Ultimately, we remain confident that DAYBUE will find its place in an evolving therapeutic landscape with peak uptake at ~50% and average persistency ~60% in North America"
With ~10,000 Retts patients in North America 50% uptake x 60% persistency (assuming this means 60% persistency applies to the 50% uptake) would give a net peak patients of 3,000.
Average drug price US$375,000 = US$1.125b peak sales, which is blockbuster level. E&P clearly has very positive expectations for Daybue and Neuren.
This would provide annual royalties to Neuren of AU$222m, plus milestone payments totaling AU$455m. If this happens in the US, then we would expect to get a similar success rate in Europe/Japan/Canada/ROW. Traditionally revenues from rest of world markets are similar to US (US = 50% of world orphan drug revenues).
Neuren's has a higher AU$550m of non-US milestones to collect and ~30% better royalty levels. But lets just assume Europe/Japan/Canada/ROW gives same net revenues to Neuren.
Once peak sales occurred in both markets we'd end up with AU$1b milestone payments and $440m annual royalties to Neuren, or $2.50 a share after tax.
Neuren will have $280m cash in bank CY24. So $280m + $1b = $10 a share in additional cash.
E&P's valuation is $19 a share. So after removing the cash this leaves $9, which could be explained by a PE of 3.6.
So E&P values Neuren at a PE of ~4 based upon peak sales of Daybue. Of course, there is a discount rate in here too (perhaps 12%), so if you add this perhaps you're talking a PE of 6.
Whoops - we forgot about NNZ-2591. Based upon above NNZ-2591 must account for another $0 per share?
There is no way I can square this guys analysis with his final valuation. If you are projecting Daybue to be a blockbuster how on earth can you then turn around and discount it down to just $19 a share?
I'd love for this guy to share his calculations - there must be some enormous fudge factor in it, like most of the analysts. Something like
"Based on detailed analysis and modelling.... our share price target = current share price x today's fudge factor. (where today's fudge factor appears to be 1.5)
This is only slightly better than the fudge formula Bell Potter used to use of "share price target = current share price + $2"
(20min delay)