RE:The Pathway to $ 9 !? - CorrectedThe $ 24 Billion dollar market potential (ie using HP as a solution for Sepsis) as suggested by Joyce, got me thinking about out $ 1.5B target market for PMX (as suggested by Spectral's last Investor Prezzie - which has since replaced with a "Coming Soon" message).
What should our target SP target be based on Spectral's very modest targets for PMX ($ 1.5B) and its potential use in the battle against Sepsis (using pre-Covid stats) ?. The analysis below excludes: the potential for Dialco, EAA sales worldwide, and the potential for upside if PMX can be used to treat Covid patients that become endotoxemic (as many KOL's seem to believe is reasonable)?
The analysis below focuses on EBITDA projections, which of course is a key factor used by analysts that use industry standard US based EBITDA multipliers to arrive at SP valuations/projections.
The $ 9 calculated below for PMX only, still stands. Conservative? You be the judge. Many will say that it should be much higher due to: growth in Sepsis stats, Covid and long Covid-19 which will result in increasing rates of Sepsis in the future, USD appreciation, PMX use for other conditions, use of the EAA as a Triage tool, EAA use outside of North Amrerica (Spectral owns world-wide rights to the key, FDA approved, companion diagnostic), etc.
Of course if I used James Joyce's target market potential, I would have to multiply everything by 24B/1.5B (=16) and that might brake my calculator, and I don't want to do that. The same thing would happen if i used industry standard US based EBITDA multipliers. The same thing would happen if I attempted to value Dialco vs its peers and add it to the SP. Can't take that chance with my trusted calculator, so I'll stick with my conservative valuation, using Spectral's last published EBITDA calcs. All IMHO. DYODD
mercedesman wrote:
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Targeteded Market penetration thru partnership with Baxter (35-45%) (per presentation)
Let's use 40% (the midpoint)
EBITDA (EAA & PMX based on $ 7500/column market price - per presentation) * note this figure could be higher if Tigris results were stellar or if for example PMX could be used in the fight against Covid.
EBITDA used = $197.50M USD (midpoint of 35% $ 173M and 45% $ 222M USD - EBITDA's are per presentation)
(Note: EBITDA's seem to use a 120k potential patient target, yet the updated "competitor" comparison chart seems to suggest 150k potential patient market. perhaps allowing for interim growth in Sepsis since the last CDC read in 2017?) Needless to say, if factored into EBITDA calcs, this could represent another 25% upside to the share price (for the PMX portion only)?
fully diluted pro-forma # shares 275M (per presentation)
EBITDA multiple (say 10X - highly conservative for an FDA approved medical device co., with limited competition in a given space, and high barriers to entry. Some industry standard EBITDA multiplier sites suggest > 20 is the appropriate multiplier.
Estimated MC based on the more conservative EBITDA multiple = $ 197M USD X 10 = $ 1,975M
Per share valuation estimate:
$ 7.18 USD (= $1,975M / 275M shares)
or approx.
$ 9 CAD (using todays FX rates). PMX & EAA (NA) only.
note: EAA is really worldwide and can/should be used ww (incl. in USA) to triage patients with Sepsis symptoms, to eliminate possibiltiy of endotoxemia (not factored into the presentation, that I can see). Zero valuation for Dialco. No upside for growth in Sepsis since 2017, and no upside for use of PMX on severe Covid patients.
Note...(1) no PV discount factor used, (2) if you thought PMX had a 2.5 % chance of success in the "confirmatory" Phase 3B Trial, you might value it at say $ 0.24 today (2.4% x $ 9). i.e. this assumes a 97.5% likellihood of a residual valuation of $ 0 (for Dialco, EAA, tax loss carryforwards, etc.0 , and a 2.5% likelihood of $ 9 valuation. (of course this also assumes an efficieint market and promotion - neither of which seems to be very evident)
Personally, I prefer to use a 50-60% likelihood of success, based primarliy on: societal need for a new Sepsis solution, stated early results, Meta-analyses of various PMX studies/Trials over 2 decades, non culturable bacteria subgroup, other newer RWE, likely CV-19 impact on go-forward Sepsis stats, nature of the Trial (Bayesian, Open Label, 2:1), Kellum's commitment to, & enthusiasm for, the co., etc.
note: Paradigm assumes a 75% likelihood that the Tigris Trial will complete successfully.
Please critique my math at your leisure.
MM