Interesting volume again today.
On Corr, I don't think its been mentioned that he lectures on R&D; that is in addition to running Inov8 and being a founder and current Director of the very successful Auven Therapeutics.
To the point. I've decided a 10% royalty is a reasonable expectation; because
a) the product is ready to go
b) it addresses multiple markets - UI, POP, new mothers, H&F, sexual function/dysfunction.
c) there is a dire need for this - think mesh problems, the difficulty of performing exercises correctly, costs of other treatments, lack of resources in poorer countries, etc..
Also I believe an up front fee of say 2.5mill is reasonable given all the work put in to date, and this will tide us over nicely.
Some more thoughts on value. This 1 in 3 women suffer from ui is way off the mark as far as potential market.
If I use the most conservative estimates and figures from a variety of sources, I get a target market of 165m globally, the worst of those are 3%, and actual sales will be to 10% of the worst, and an equal amount to others.
Very conservative but ALT's own inability to sell is only one good reason for my comfort in this approach. However, that equates to around 1 million sales annually bearing in mind subscription model and a host of factors to drive sales and excluding all other markets (POP as big as UI).
That's $300m in sales. 10% royalty = 30 mill. EPS = one cent. There are many reasons to think a PE of 30 is not high; so a share price of .30 cents becomes a medium term target.
I could apply other market figures and estimates I've come across and get an sp of .60, .70 and higher. ( I think the scenario in which I arrived at $17.50 had a +/- 0 error!). So if they sell out for 50 million feel ripped off.
The licensee would net a similar figure, assuming cogs = 40%, other costs = the same.
Again, this is mostly conservative and ignores all other markets.
And is just shared notes for thought.
Also I believe a 2.5 mill up front fee is reasonable, given all the work these past years, which will tide us over until reasonable revenue begins and bar the need for a further cr.
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