Interesting and thanks for setting out
However, I feel you're missing the entire point on how biotechs are valued and what PAR is attempting to achieve here. Your statement in particular "
PAR is a highly speculative stock, and my personal target for a speculative stock is 20% pa" also caught my attention as being contradictory and inconsistent with why you would invest in PAR now given the asymmetric risk does not warrant it. For highly speculative stocks you really need to be looking at a ratio of at least 3:1. Indeed, most successful investors accrue 90% of their outperformance from 10% of their investments. This effectively means you need to shoot the lights out on a few holdings to make up for the rest if you want to stay in the game and generate outsized returns.
Curiously many also continue to overlook (or simply dismiss) the actual information PAR has consistently now presented to all of us. PAR's corporate team is not just licking their finger to see which way the wind is blowing in terms of what they believe should be presented as our TAM and potential financial revenue metrics.
In particular,
This US$10B+ calculation based on 10% penetration dissatisfied patients with Knee and Hip OA in the 72m addressable market of US, EU5,
Canada and Aus. at price of US$2500.
At 2030 OA numbers this number becomes US$16.8B at no more than 10% market share and no inflation in our sales price for Zilosul.
Another valuation metric that is quite frequently applied in biotech pricing is what would happen under M&A scenario - 5X peak sales would be realistic. Assuming we signed a early deal for 20% OA sales royalty this metric derives a US$16.8B ($59/share) output for PAR alone*. However, in reality this is also exactly what makes us an early target for someone to swoop in and take 100%.
My key point is that your DCF is not an effective tool to generate the possible share price values ranges we should expect to see if PAR gets through NDA. IMO the regional/global OA partnering deals will start to shine some light on where we're headed beforehand in any regard.
* At $6k DMOAD pricing (no inflation) = US$40.2B peak sales (which translates to $141 per PAR share under M&A scenario)
(20min delay)