RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Examples of efficacy from dose escalation studiesI 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.