SPCEO1 wrote: Early in this article, the author mentions that HIV will soon be cured. I suspect that is more aspirational than rational, but one never knows as science can sometims ake big advances very quickly. But it got me to thinking. What if tomorrow, a cure for HIV was found? What owuld be the implications for TH's share price?
Not all that long ago, it would have been the end of the road for TH. But, due to the diversification into cancer and general NASH, the company would still have a very good future ahead of it now. Kudo's to management and the board for pulling that off all while expending a very small amount of shareholder resources to get there. Clearly, a whole lot more will need to be spent to get these two projects over the finish line and, in the end, neither may make it. But there is good reason to believe that both cancer and general NASH have a legitimate chance of making it to approval and some level of commercial success.
But what intrigued me about the scenario of HIV disappearing tomorrow is that the analysts who follow the stock would be faced with the conundrum of valuing TH at zero or finally giving the stock credit for the two moster opportunities it is currently sitting on. As we all know, analysts are more than willing to give value to other companies which have no current commercial operations but have hopes of being a NASH player or a cancer player. All too often, those valautions are actually higher than those of TH.
So, one has to wonder if the best thing for both the world and TH shareholders might be for a cure for HIV to be announced tomorrow as it would force the analysts to value cancer and NASH just like they do for other companies. As long as TH has legacy drugs, however, analysts seem to think this is not necessasry to do. Why, I have no idea since it makes no sense to ignore those opportunities in some companies and not in others, but it is what often happens.
Maybe TH should consider listing tracking shares like General Motors did many years back on its Electronic Data Systems and Hughes Satellite subsidiaries as it tried to force the market to value those portions of their business more fairly. GM had acquired both but the market valued their earnings and potential on the same low single digit multiple that GM's auto operations got. So they listed tracking shares (Class e and Class H shares) and had seaprate financials for those divisions. Unfortunately,I cannot remember if the exercise worked, but I suspect not since few have tried to emulate it. But if TH simply spun off the cancer opportunity into a separate company and/or the NASH opportunity as a separate company, the analysts would assign value to those operations. That would do so because they do actually have value since the chances of success in very large markets is not zero.
Maybe one or more of the analysts will start building a model that adequately gives value to these opportunities. Mackie already has but only gave NASH a 10% chance of success, which seems absurdly low for a phase III drug. He gave no value for cancer, which is a little more understandable given it just dosed its first patient recently. But still, it clearly at least some value as it is in the game and has a chance to win very big. Canaccord has a NASH model but it is impossible to determine if it is part of his valuation. He has talked about cancer being a potential big winner for the company but has not given it any value yet. NBF has so far ignored both opportunities.
I continue to be perplexed by how hard it has been for the company to find more analysts to cover the stock. The story they have is certainly intriguing and since no or virtually no value is currently being ascribed to those two huge opportunities, there is the chance of sizable gains as that gets corrected. You think that alone would attract interest in the stock.
TH just hired some seemingly very well qualified people to take their legacy drug marketing up to a higher level. Maybe the stock's relative futility despite two years of lots of good news and almost no bad news (outside of the OO), should convince TH's leadership team to post yet another new job on the career section of their website - Chief Share Price Marketing Officer.