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24/04/18
11:28
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Originally posted by Eire2011
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Hi Stonemasonn,
What an excellent post and so thought provoking. Thank you!
It is certainly an interesting exercise to do as we all need be aware of the underlying intrinsic value in Admedus.
Running this exercise does not necessarily mean or suggest that the market cap will be $346 by the end of the year. However, once sentiment changes and the market sees the proof of what we are achieving it’s entirely possible. Check out PNV - similar type of company valued at $330 million MC on have year revenue under $3 million ( but the market believes).
However, share price aside, it has purely been my conviction of the underlying “intrinsic value” in our company that has allowed me to add at our darkest SP moments. So having a firm believe in the value of what you own (whether reflected by the markets view or not) is critical.
So just quickly here are my ideas around the proposed valuations by Stonemasonn.
Infusions - I value about $26 million based on 10 times $2.6 ish net profit. If we add our own IP in an infusion device then this could be more. A very solid profitable cash generating business that continues to grow.
Regenerative business - I think 6 times revenue at this stage is fair which would equal $108 million. However by end of 2020 if it was valued this way and targets are hit it would ballon to about $200 million.
Immunotherapies- who knows! But it could be worth a lot or very little depending on trial results and any future partnerships and or divestments etc. As a base case I think it could be worth somewhere between $10 and $20 million. The bull case would be a lot more.
I think the value given to TAVR is very realistic at $100 million. This would be based on successful animal trials and the granting of patents. A commercialisation deal and this could balloon. Remember the market is forward thinking but is virtually ascribing no value to this potentially huge project for the company. While still blue sky it is certainly as blue as any Vaccine blue sky ever was but with a much higher chance of success.
TMVR - again any potential from this is not not being reflected in our current valuation. While a few years away this device is very exciting, is unique and will disrupt the TMVR market if it gets FDA approval (results have been excellent to date).
There is a really strong chance that this will be bought out sometime in 2019 / 2020 (current management have acknowledged this) by a major and this will accelerate its commercialisation. So you are right Shady this will be reflected in Adapt sales but is not currently projected or shown. Therefore it deserves some value. I think a base case for now of $5 million is a reasonable risk weighted estimate.
In relation to our 3D pipeline. We know that collectively they have a revenue potential of over $500 million when all on the market. This technology and portfolio is valuable in its own right and not just the future revenue projected. I think a conservative value of $50 million for this pipeline is conservative.
So remember this is not saying the share price will reflect the value that Stonemasonn or I see because that is up to the market. However, for me this is the value I see in what I own and will at some stage be reflected in the SP over the years ahead.
Until then we have opportunities to buy while the gap between value and price is so large. We are now up 70% from the bottom and in a new up trend. Hopefully most of us here have all had the conviction, gumption and the funds to add while below 25 cents. I am now happy to let others take this higher to where it deserves to be.
So for me by years end with all targets and milestones hit I estimate our value to be around $304 million. Our share price may not get to the level to reflect this by years end by will sometime in 2019 and thats exciting.
DYOR and Not advice.
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Thanks Eire, although I find your multiplier of 6 for the revenue of $18 million for ADAPT completely out of whack with reality considering if its met it would represent a real 'breakout' of growth for ADAPT and a 160% increase on the FY/CY 17 figure of $7.1 million.... Considering the high margin/recurring nature of the revenue I thought even my multiplier of 8 was very very low and unrealistic although I wanted to keep it realistic. Time, as always will tell. First we have to actually achieve the revenue target!
The rest of your post I thought was pretty good.
One amendment to my original post I'd like to make is with regards to my valuation of the TAVR division which I had at $100 million based on 5 patents pending and good progress made in animal models.... If WP were to sign a co-commercialisation deal with a global major the value I'd think more appropriate to that division would be $250 million.