vac dressing - what's it worth?

It's always interesting to speculate on what a project could eventually contribute to the share price.

Here are the facts as announced by the company:

Market size for VAC dressings: $400 per annum
Time to commercialization: short
Impact on market: transformative

Ok, let's assume this will be a licensing deal and that early market penetration is 10% and the royalty is 10%, and ignoring any up front payment.

Market share: $40 million, CZD annual royalty $4 million, per share assuming most of the royalty falls to the bottom line, 1.3 cents per share, so assume 1 cent, multiplier of 20, gives a share price of 20 cents.

If market penetration reaches 20% as is quite reasonable with a transformative technology like this, then the royalty income would be $8 million per year. If we also get manufacturing income, which is also very possible, we could earn $12 million per year, and the supported share price could be about 60 cents.

If this new dressing effectively supplants the existing products with a majority share of the market, then it becomes quite possible to envision this product alone supporting a share price approaching $2.00.

Not bad for a product that wasn't on most of our radars a few months ago.