Cheap just on recurring revenueSpent some time looking at Crescita and the way I see it, it is very cheap even without counting on any of the milestone or launch payments that are likely to happen. Recurring revenues in 2020 are likely to be:
- The skincare products and CDMO business should do at least $12 million.
- Royalties from Taro should easily be $6 milion
- Galderma was already selling in Italy, so it should be fairly easy for Cantabria's Italian royalty to be $600,000
- There will be some revenue from Pliaglis sales in Canada
Just those will come to about $4 million EBITDA and $2 million of free cash flow. Crescita would be cheap if that was all (with the organic growth in those revenues). But there's also the $2.75 million upfront payment from Cantabria, $1 million cash coming in once Flexicaine is approved by the FDA, launch payments when Pliaglis is launched in France, Spain, and Portugal, 2 more possible sales milestone payments from Taro, and then any sales milestones that Cantabria might hit. Sales in Portugal, Spain, and France probably start in 2020 or before as well, so there should be royalties from those countries too. Plus you have the rights to Plalis in another 23 countries, who knows what those could bring in just from upfront payments.
All this, and the company has net cash (and is cash flow positive) with a small (but no cost) pipeline. I wish I had bought at the lows when I was first told about it, but Crescita is obviously very undervalued still.
I wrote this with my full thoughts:
https://www.canadianvaluestocks.com/crescita-therapeutics/
It shold explain my assumptions above, and clarify the risks, and expand on the valuation.