RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Examples of efficacy from dose escalation studiesFirst, let me say t hat I think Palin is just flat out wrong that the market is giving value for NASH. The only analyst who has incorporated anything into their model for NASH is Mackie and they have very little influence over the stock price. The NASH KOL generated nothing for the stock. THTX's NASH entry is just not getting any respect from investors, largely because of t he backdoor way they got to this place but also because they are somewhat flailing around at the moment looking for financing. The risk of THTX doing another awful financing because Paul is insisting on moving ahead with NASH is likely hurting the stock price right now so it might be argued NASH is taking value away from the stock rather than adding value to it. Consider if you were an investor who was very interested in THTX's intriguing cancer program but the CEO keeps talking about how committed he is to fund its NASH program. You might be hesitant to step in front of that Mack truck of another low-ball share offering to fund the thing you are not interested in right? Especially since Paul and the board already have a bad track record of acting foolishly with regard to an offering.
Now, I actually think their NASH program is very viable and stands as good a chance as any other program to be a meaningful player in what could turn out to be a large NASH market in the latter half of this decade. I think their NASH program is likely worth more than the current market cap of THTX if THTX could figure out a way to get the market to buy into it. The only way I see that happening is by essentially bribing Wall Street with high fees on corporate banking deals to get their backing. It may be disgusting but it would likely be effective and it would have a lot of other benefits as well (notably better analyst coverage). And if there is no way to crystalize the value in NASH, then I sure don't want to have another foolish share offering loaded on legacy shareholders backs if management is unable to convince either potential partners or other investors that what they have in NASH is legit. If I am right and what THTX has in NASH is legit, they should be able to convince other investors that is correct. But if Paul never draws attention to the huge valuation disparity between THTX and its NASH program and other similarliy situated NASH stocks, he is not only failing as a CEO but also has little chance of pulling off a proper funding of the NASH program.
I ask again, what is wrong with this and who is going to fix it:
THTX market cap - $356 million
Taimed market cap (Trogarzo only) - $733 million
CYDY market cap (a complete joke of a company) - $1.18 billion
IVA market cap (NASH only)- $578 million
AKRO market cap (NASH only) - $773 million
PRLD market cap (phase 1a cancer only) - $1.49 billion
This is how the market is valuing these companies. Why is it that THTX is always on the short end of the stick when it has Trogarzo, Egrifta for lipo, NASH and cancer??????
You might argue the market is overvaluing all those others and you would not get a big argument about that from me. But if the market is willing to overvalue them, there is no reason I can see why THTX should not tap into that overly bullish sentiment, especially since they are looking for funding for NASH.
Wino115 wrote: I agree with you that this is all debatable. But just to recall my analysis, I didn't figure out that value based on the whole business and a sum of the parts valuation like a lot of the analysts do. So I didn't value the HIV biz, NASH and then say the rest was option value which I think is how you're looking at it here.
What I did was take actual revenue estimates from an analyst in the original 5 tumor indications based on their Trodelvy earnings model, and the discount rates (I think it was 12%) and probability adjusted peak revenues for each indication. It's a 3L drug, so close in size. I looked at the present value of those revenues and then did a simple call option valuation model on what you would pay today for something worth that in 3 years, with some pretty severe rate assumptions and volatilities. That got me to that rough valuation.
I think it's not too far off. If I generaously assume the current HIV biz spins off $8mil of EBITDA and grows 10% a year (it's currently in loss) and the stub is worth 6x EBITDA, then that gives you a value today (@10% discount) of $1.10 (all in US$). That is roughly what the EBITDA would be without any R&D and only netting cost of sales and $10mil of general and other expenses to that business. But you actually do need to support NASH and cancer if those have any value, so this is being very generous to the HIV franchise.
Then if you want to do a sum of the parts, it would be roughly:
HIV: $1.10
C Opt: $1.50
NASH: $1.15
Price: $3.75
In a way, the NASH value is also just option value now and not a discount of actual potential revenues like what is applied to IVA or MDGL or Akero. Given there isn't the cash to start it (yet) and in partnering you'd give away some economics, that may be close. That would be the equivalent of saying the market values the NPV of the unfunded project at about $115mil. Given revenues wouldn't start until 2026 and the discount rate would have to be very large and the capital costs also large, that's probably about right. In my mind, barring a NASH partnership announcement in the next 3 months, any share movement coming will be entirely due to information that lowers the discount rate on the oncology business. If we get to FTV's $5.00 in December and no NASH announcement, then cancer is now worth $2.75.
If we assume the market price is the current value by definition, what do you see these at?
palinc2000 wrote: I dont think the SP includes anything close to yoyr 1.25-1.50 ....That would leave a zero or close to zero for Nash....
Wino115 wrote: Wouldn't we all agree that there's probably about $1.25-$1.50 or so for option value on the oncology platform in the share at this point? That's based on the market (and the marginal investor) assessing whatever positive facts they've figured out from the company and the scientific literature about what is known. You have to think that option is worth more or you'd sell now and just capture the option value alone.