Thanks for the advice Ahmed - here's another shot at it, let me know what you think.
Proportion of patients on Presendin Estimates show that around 20% of IIH patients require shunting - representing a failure of medical therapy requiring surgical intervention (1). It's also quoted that 48% of patients on acetazolamide will stop therapy, and that 38% of IIH patients are hospitalized annually (2).
So, as a rough estimate, incorporating rates of non-compliance, we could say that around 20% of IIH patients at every point in time could be taking Presendin. This would include most of the patients that would otherwise require shunting, and some patients on medical therapy that have either switched or are taking a combination of medications including Presendin.
Calculating total revenue Assuming 100k IIH prevalence at year 0, and rising by 10k/yr, we have in total 910k patient-years over 7 years. Our assumed rate of use of Presendin multiplied by this value gives 20% * 910k = ~180k annual doses. Annual cost (18k) * total annual doses (180k) = $3.2bn in total sales revenue over 7 years.
NPV Revenue * GP margin of 70% (typical of pharma companies) = GP of ~2.2bn USD This can be approximated to be the NPV of Presendin from the viewpoint of a potential partner (US Market only).
Royalties Fixed royalties are on average 12% for approved products on revenue (3), corresponding to 3.2bn*12% = 380m USD
Final value Average rate of success from Phase 3 to approval is 50% giving us $190m USD ?NPV to Invex for the US Market. Roughly double that value to include Europe market to arrive at $380m USD = $575m AUD
With total shares on issue of 75m this gives us approx 575/75 = ~$7.7/share
Admittedly this is half of the above prediction, the difference mostly coming from not accounting for 50% rate of failure from phase 3 up til approval, and not accounting for royalty fractions above. Although I will say, for this drug and this indication, the results are already quite compelling, so that 50% success rate could be nudged higher to 70 or 80%, with corresponding rise in share price. Other reasons why the value could be greater than predicted are if the patents are approved, meaning that instead of 7 years of exclusivity we could have around double that.
Again, comments and criticisms welcome. I've cut a few corners here and there to arrive at a quick approximation hopefully without too great of an impact on the valuation.
References 1. Curry Jr, W. T., Butler, W. E., & Barker, F. G. (2005). Rapidly rising incidence of cerebrospinal fluid shunting procedures for idiopathic intracranial hypertension in the United States, 1988–2002. Neurosurgery, 57(1), 97-108.
2. Friesner, D., Rosenman, R., Lobb, B. M., & Tanne, E. (2011). Idiopathic intracranial hypertension in the USA: the role of obesity in establishing prevalence and healthcare costs. Obesity reviews, 12(5), e372-e380.
