I am not religious and am a cybersecurity nerd, so long weekends like this are a chance to ponder. Therefore I have spent some time productively producing some figures that demonstrate why I am such a firm believer in the LONG TERM potential of Imugene, and why onCARlytics is an untapped gold mine of potential revenue and better patient outcomes.
If you follow Paradigm, you will see I did a similar write up for their OA drug Zilosul, and decided that IMU deserved it's own number crunching for onCARlytics! If I am so confident in Paradigm, why am I also heavily into Imugene you ask? Well I don't want to put both my eggs in one basket, but on the topic of eggs, I am willing to bet heavily that they are a pair of golden geese that are going to help a lot of people.
Your first thought is likely to be, HEY YOU ARE IGNORING AN ENTIRE PIPELINE of therapies, and have cherry picked just one. Correct and I am sorry, I have attributed no value to a HER-Vaxx deal, any of the B Cell Immunotherapies, Vaxinia, or CHECKvacc. Not because they are worthless (far from it), but because I wanted to pick one therapy that gets me very excited, and is a
potential industry/life changer for patients (the others are too, but this one is extra special in my eyes).
I am using numbers from the World Bank, Cancer Research UK, Cancer Council Australia, the Canadian Cancer Society, the American Cancer Society, a report from Grand View Research and estimates as the basis for this work. If you would like to confirm my data sources, I will provide them in 2048 when they are unsealed and declassified haha. If the government can do it, why can't I?
Now I want to write from the very start, it is not my intention to turn peoples suffering into statistics and fail to acknowledge these are horrible numbers that represent real people, and I would be quite content making no money if if meant this whole industry didn't need to exist.
It may also appear that I am focusing on high income countries, as if the rest don't matter. They do matter, but in an estimate like this, it makes the most sense to me to only focus on countries with high income, to indicate the highest likeliness to afford treatments. That does not mean all countries will be unable to afford treatment, in fact for all I know, all 200ish can and do. It's just for the purpose of crunching numbers, and is not intended to appear insensitive.
With that out of the way, I hope you all understand my intentions are not to offend, and are to demonstrate why I have a high degree of confidence in Imugene, and am excited at both the financial potential and medical potential for all. I will leave the significance of the science to others, I like to think about market share and potential future revenue.
According to the World Bank, the total population of the world was approximately 7.79 billion in 2020. Subtracting the estimated 6.5 billion people living in low- or middle-income countries, we get approximately 1.29 billion people living in high-income countries.In high-income countries, the lifetime risk of developing cancer is generally higher than in low- and middle-income countries due to factors such as aging populations, exposure to carcinogens, and lifestyle factors such as tobacco and alcohol consumption.
- According to the American Cancer Society, the lifetime risk of developing cancer for men in the United States is approximately 39.7%, while for women it is approximately 37.6%. This means that about 4 in 10 men and 3 in 10 women are likely to develop cancer at some point in their lifetime in the US.
- In Canada, the estimated lifetime risk of developing cancer is approximately 40% for men and 37% for women, according to the Canadian Cancer Society.
- In the United Kingdom, the estimated lifetime risk of developing cancer is approximately 44% for men and 39% for women, according to Cancer Research UK.
- In Australia, the estimated lifetime risk of developing cancer is approximately 50% for men and 33% for women, according to Cancer Council Australia.
These are not necessarily relevant to the calculations ahead, I really just wanted to highlight how widespread cancer is and what am important challenge it is for the medical industry, though I suppose most know that already and I am preaching to the choir. It gives you a sense of scale of the problem though, which I feel is important to set the scene and understand the motivations behind the great scientists and doctors who dedicate their lives to medical research.
According to the American Cancer Society, an estimated 1.9 million new cancer cases will be diagnosed in the United States in 2021. Based on the US population estimate of 331.4 million as of 2020, this translates to
a cancer incidence rate of approximately 0.57% per year. So we know have a general idea of the population in high income countries, and an approximate incidence rate per year.
The total cancer drug market size can vary year to year based on several factors, including the number of people diagnosed with cancer and the introduction of new cancer drugs to the market. However, according to a report by Grand View Research, the global cancer drugs market size was valued at $167.7 billion in 2020, and is expected to reach $236.7 billion by 2028, growing at a compound annual growth rate (CAGR) of 4.4% from 2021 to 2028.
Using this statistic, I have approximated that the total global cancer drugs market is somewhere between USD $180b and $190b per annum and will continue to grow about 4% each year.
A few examples of the average costs of some common cancer drugs in the United States, according to data from the American Cancer Society:
- Bevacizumab (Avastin): This drug is used to treat various types of cancer, including colorectal, lung, and brain cancer. The average cost of a single dose of bevacizumab is around $2,000, and a full course of treatment can cost tens of thousands of dollars.
- Imatinib (Gleevec): This drug is used to treat certain types of leukemia and other cancers. The average cost of a single dose of imatinib is around $400, and a full course of treatment can cost over $140,000 per year.
- Pembrolizumab (Keytruda): This drug is used to treat various types of cancer, including melanoma, lung cancer, and head and neck cancer. The average cost of a single dose of pembrolizumab is around $10,000, and a full course of treatment can cost over $150,000.
The market share for cancer drugs can vary widely depending on the specific drug, the type of cancer it treats, and the competitive landscape.
With these numbers, it's hard to even figure out what onCARlytics would be worth per dose, but I have decided to assume a treatment would cost anywhere between $20,000 to $33,000, bringing it inline with what I calculated the average cost of all existing drugs that make up the market, divided by what I calculated to the the high income countries cancer incidence rate. I know it doesn't work that way, and I am repeatedly switching between global and high income countries when it suits the calculation, but I don't have a consistent source of global figures, and there are just too many variables for me to account for.
Here are a few examples of the market share for some commonly prescribed cancer drugs in the United States, based on data from 2020:
- Keytruda (pembrolizumab): Keytruda is a popular immunotherapy drug used to treat a range of cancers, including melanoma, lung cancer, and head and neck cancer. In 2020, Keytruda had a market share of approximately 22% in the oncology drug market, making it one of the top-selling cancer drugs in the US.
- Revlimid (lenalidomide): Revlimid is a drug used to treat multiple myeloma and other blood cancers. In 2020, Revlimid had a market share of approximately 9% in the oncology drug market, making it another top-selling cancer drug in the US.
- Rituxan (rituximab): Rituxan is a drug used to treat various types of cancer, including non-Hodgkin lymphoma and chronic lymphocytic leukemia. In 2020, Rituxan had a market share of approximately 7% in the oncology drug market in the US.
Using these figures, I have assumed a total addressable market of 5-15%, however with the potential application of Imugene pipeline in conjunction with other drugs, there is a potential for anywhere from 0-100% of TAM one day (like how I stated the obvious). I am getting way ahead of myself.
IMU are more likely to partner with big pharma, so I have assumed a royalty agreement ranging from 10-20%, as this seems to be a norm, including a nice juicy upfront payment.
There will likely be future share dilution, so I have estimated this to be in the ranges of 500m-700m additional shares on issue in the next few years. This is a complete guess, so like everything written here, take it with a pinch of salt. If you have better figures, you are welcome to make your own spreadsheet.
There are a lot of variables that can be changed easily and are hard to estimate. The total addressable market, the royalty percentage, the AUD/USD exchange rate, future share dilution, the price of the therapy, and the multiplier applied to the share price once revenue generating.
If there are mistakes, ignore them and imagine there aren't, as I won't be able to edit it. I am not accounting for inflation, time value of money, the fall of capitalism, WW3, or the ultimate rise of crypto over fiat or our new overlord AI.
All scenarios are assuming trial successes and FDA approval. I am also not a financial advisor or analyst, so take it all with a pinch of salt and skepticism. These are the musings of someone in their 30s who doesn't work in finance or biopharma.
For the sake of picking a timeline, I am going to aim for 2030. Why? Because it's the future, and nothing is ever as fast as we like, although always happy to be wrong on that.
Lowball scenario:We partner with a big pharma for a nice upfront payment, and agree to a 10% royalty. The combination therapy of CD19 and CF33 works well, has good patient outcomes, and therefore the Pharma gets USD $20,000 for a full treatment of a patient. The company has issued a number of shares (700m), resulting in dilution to shares. We are only successful in achieving a TAM of 5% of the 6.45m patients in high income countries. The exchange rate remains unchanged, and we only trade a 5 times multiplier.
So in a few years, we are valued at $0.68 a share. A 400%-500% return over 7 years, which averages to lets say 57% per annum. Seems good to me and is a market beater that's for sure.
Reasonable (in my eyes) scenario: We partner with a big pharma for a decent upfront payment, and agree to a 15% royalty. The therapy is very successful and fetches USD $25,000 for a full treatment. The company has issued 600m more shares, resulting in dilution to shares. We achieve a 10% TAM, of the 6.45m patients in high income countries. The exchange rate remains unchanged, and we trade at a fair 10 times multiplier.
So by 2030, we are valued at $5.17 a share. A 3400% return over 7 years, which averages to lets say 485% per annum. Seems good to me.
Dreamin' (but not impossible) scenario:We partner with a big pharma for a massive upfront payment, and agree to a 20% royalty. The therapy is the first in the world to work across the board with all types of cancer, and due to it's success, it fetches USD $33,000 for a full treatment. The company has issued 500m more shares resulting in dilution to shares. We achieve a 15% TAM, of the 6.45m patients in high income countries. The exchange rate remains unchanged, and we trade at a fair 15 times multiplier.
So by 2030, we are valued at $20.75 a share. A 13800% return over 7 years, which averages to lets say 1971% per annum. Seems good to me.
Ideal world (we pretty much cure cancer):I am adding another one, as it's nice to think about. We partner with a big pharma for a massive upfront payment, and agree to a 20% royalty. The therapy is the first in the world to work across the board with all types of cancer, and due to it's success and desire to drive availability, it fetches USD $50,000 for a full treatment. The company has issued 300m more shares resulting in dilution to shares. We achieve a 75% TAM, of the 6.45m patients in high income countries. The exchange rate remains unchanged, and we trade at a high 20 times multiplier. This would achieve
a share price of $161.91 and represent a 1000+ bagger.
Reminder, I am ignoring an entire pipeline of other therapies, and have cherry picked just one. I have attributed no value to a HER-Vaxx deal, any of the B Cell Immunotherapies, Vaxinia, or CHECKvacc. Not because they are worthless, but because I wanted to pick one that gets me very excited, and is a potential industry/life changer.
Summary
You may say these are all
pie in the sky numbers, and
you would be 100% right. But there is no disputing that onCARlytics and the other Imugene pipeline represent potential game changers in considerably large markets, that affect huge populations of the world. If all of the stars align, we are looking at potentially being a revenue pumping machine. This will scale to huge numbers.
Everyone on every HC thread says, "well if it's so good, it could get bought out easily for nothing but it hasn't, so it must not be amazing". It's a fair point to make, but goes against how the world works in reality.
People want sure things. People want to run across the finish line and be part of the winning group. That goes for big pharma too. They don't want to buy a company when it's yet to prove beyond a doubt it is a game changer.
They are not in the business of risking money for drugs that may end up being duds. I can't stress this enough though, this could end up being a dud, and the company could lose a majority if not all of it's value. That's where the risk lies, but with risk, comes reward. Will we ever make it to $160 a share, probably not.
Will we ever make it to $5 a share, I think it's a good chance. Will Imugene
crash and burn and delist,
potentially. All the options are still on the table and comes with a huge amount of risk. Remember though, the reward is there too. I want everyone to think for a moment. If the possible value of the cancer therapy market for Imugene is $20 per share, when picking just high income countries and a TAM of 15%, what if it was a TAM of 75% like the perfect world scenario? Better yet, what are the other therapies in the pipeline capable of achieving?
Thanks for reading, I hope you have found it interesting!
(20min delay)