RVX Valuation mind gameHi GV thanks for the input re Stockhouse. Not sure where f5 is on my Mac hahaha :) I had problems again today so hopefully they get it fixed.
tundup has been providing some very valuable insight around the valuation of RVX by sharing references to a number of other deals that have been completed. There have been remarkable successes.
My question (mind game) is this. Let us make (a very hypothetical hypothesis) that the probability of BETonMACE success is p=1 i.e. that there is a perfect probability that BETonMACE will be a completely successful trial.
- Then, under this assumption what do the financial and other experts think RVX would be valued at?
- Note - While p=1 seems ridiculous the p may be very high. Keep in mind the RRR in combined ASSURE/SUSTAIN was 77% in DM CVD patients and the BETonMACE target is only RRR = 30%.
The purpose of this experiment is to clear away the most important probabilistic (risk) issue (i.e. noise) and thus allow a very clear valuation of RVX as a successful asset.
I'm a math guy/statistician not a finance person. However, it is fairly clear to me that Don, NGN and Eastern as well as many others such as Blackburn have worked through their scenarios re RVX and have good estimates. Of course those with experience can offer analogies as tundup has done.
I suggest making the assumptions fairly simple:
- Let's assume that if BETon MACE succeeds that there will be a market for rvx-208 and other intellectual properties held by RVX.
- Let us assume that no viable competitive drug or treatment immerges before the the success of BETonMACE.
- Let's assume that the existing patents of rvx-208 and rvx-208 + Crestor remain in place.
- We all know there are applications of rvx-208 beyond MACE reduction in patients with diabetes mellitus and CVD but lets restrict the valuation to just this patient segment (DM CVD).
- Also, let's restrict the market to North America even though we know the markets will extend around the world.
- I know there are various options of getting the product to market but for simplicity let's assume that market access would be through a BP partner (note - Eastern and NGN are capital companies but they may well have go to market capabilities).
- Let's assume the share float remains at 80mm and that Eastern and NGN retain their current positions.
- Let's assume that drug funding through insurance in the USA and OHIP and other provincial systems Canada support the drug.
- Let us also ignore the possible, complicating agendas of Don, Eastern and NGN. We already know they want billions. Let's ignore them and generate a pure valuation.
I've probably missed key factors but this is a start.
So then it occurs to me we can have a fairly simple system;
- What is the size of the patient population of DM CVD in North America in any given year (we know that it is growing rapidly already due to aging and obesity but let get the value now).
- What is the potential size of the market to whom Crestor would apply to (hence Crestor + rvx-208).
- What is the potential revenue for this market?
- What types of margins would be expected given the norms in the industry?
So my challenge to those of interest with the knowledge whether via analogy or straight out financial expertise in the biomed industry is to put a
back of the napkin estimate on the size of this market. There may be some former v.p.s of finance or business development people from the industry that could shed light.
The purpose of this challenge is to
clear away all of the fuzzy noise and get a good range estimate +/- $xxxbillion of the market. After that we can assume a diluted share base of 100mm and get a share price range.
Very simple but useful as a framework. Don has presented his perspective at various times.
So that's my challenge and I hope someone will take the challenge or issue a better challenge.
Then after the fuzzies are removed it is
then up to each investor or potential investor to re-introduce their your own risk factors in order to determine current value to yourself.
As each day passes we are getting closer and closer to the BETonMACE trial design announcement!
GLTA
Cheers
Toinv :)