Had some time today to twiddle the thumbs and was thinking about my SP targets. I have my sight on 25cents, but what does that figure actually mean? I started to then do some simple calculations.
Target: 25cents Shares on Issue: 1,155,956,528 Market Cap, given that there is no dilution: $288,989,132
How would OBJ go about achieving that kind of market cap, well as we fully aware biotechs are well known for their P/E ratios. As to not over inflate the figures i put our P/E ratio at 5.
GSK oral healthcare turnover in 2010: $1,602 million 2011: $1,717 million
"The leading Oral care products are toothpastes and mouthwashes under the Aquafresh, Sensodyne, Macleans and Odol brand names, and a range of toothbrushes sold under the Aquafresh, and Dr Best names. In addition, denture care products are available principally under the Polident, Poligrip and Corega brand names." http://www.gsk.com/investors/pp_consumer.htm#oral
GSK annual report 2010 "Oral healthcare grew 6% to £1.6 billion, led by a strong performance from Sensodyne, which continued as the fastestgrowing toothpaste in the world, a position it has held for the last 5 years. This is a remarkable record for a brand in its 50th year. Following our 2010 launch in India, we now market Sensodyne in 124 countries. However, Aquafresh sales declined slightly." http://www.gsk.com/investors/reps10/GSK-Annual-Report-2010.pdf
As highlighted from the above the aquafresh franchise and the sensodyne franchise pull in a combined figure of $953million in 2009
The aquafresh range consists of (what what i can decipher on the website):
-Toothpastes -Toothbrushes -White trays, mouth guards for whitening of the teeth
In the collaborative development agreement announcement OBJ states that: "OBJ and GSK have agreed to work exclusively together to develop new products which makes use of OBJ's ETP and FIM technology."
So by that extract, i can assume that there will most likely be a tooth whitening patch and a tooth brush under development. Lets say for example that the FIM technology is incorporated into sensodyne and aquafresh (can easily be applied into the other, but for the sake of simplicity i will assume that toothbrushes and mouthstrips in combined total 1/5 of the combined total of the sensodyne/aquafresh sales. That will make a total of 190.6million dollars. With a double digit royalty rate we have 19.06million dollars in royalty with a P/E ratio of 5 we have:
$95.3million dollars added to the market cap.
which means that we will have a SP of 8.24cents
That is my extremely rough estimation, i'm sure there are countless holes in that figure but i thought i'd give it a crack. This prediction only takes into account GSK's oral healthcare collaboration, there is still FMCG-2's consumer healthcare and beauty applications and OBJ's sponsored products all showing the most promising signs for the short and medium term commercialisation prospect.
So is 25cents out of reach? In the long term that figure can be easily surpassed due to our DP patches if they ever get commercialised, that is where the big money lies. But for the ST/MT i've set my sights on 15cents.
Please shoot down my points guys, would be very happy to have someone else come and provide their calculations.
OBJ Price at posting:
2.2¢ Sentiment: Hold Disclosure: Held
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