"Commercialization is not our forte" - part 2Part 2
Valuation models:
A. Revenue based 40% penetration per Seto (reiterated in May 2022 presentation).
Times $ 4B addressable market - CAD $ (see below)
This means an eventual top line revenue of $ 1.6B (40% of $ 4B)
Rev per share $ 5.33 (1.6B /300M shares)
1X revenue seems too low to value an (eventual?) FDA approved treatment, high barriers to entry, high margins, only new treatment in decades, etc. - but I prefer to be conservative !
B. EBITDA Based How about EBITDA multiple valuation?
$ 200M per Seto. for US (reiterated in May 2022 presentation)
lets prorate for higher number of Sepsis cases in 2022 vs 2017 (incl Canada), CAD $
revised EBITDA = $ 458M ($200M x 220/120 x 1.25)
A 5 X EBITDA multiple seems awefully low but lets use that...cuz it's often better to be conservative (within reason)
5 X $ 458M = $ 2.3 B CAD
divide by 300M shares
$ 7.66 per share Ave of Rev multiple valuation basis and EBITDA multiple valuation model basis
$ 6.50 share (for PMX only) Excluded from valuation:
1. EAA diagnostics - worldwide rights - as a triage tool to look for elevated endotoxiins.
2. Dialco with its potential addressable market of $ 13B.
3. Discount factor for time value of money.
4. Probablitiy of FDA success factor
* * *
Part 1 - with corrections
"End of Q3 for Interim Data milestone." We'll see.
35-45% market penetration re-iterated. Dust off your $ 200M EBITDA calcs(* see part 2)...and see what you come up with as a reasonable valuation (Pre- Dialco with its $ 13B target market within a few years)
"exceeding expectations" reiterated.
"about 10% of Sepsis cases we can treat" - JK (e.g Gram negative, accompanied by elevated endotoxins)
1.7 million Spesis cases in US in 2017 per CDC.
Realistically given Sepsis growth rates (not including the Covid-19 induced gut disbyosis), likely over 2M cases in US per year, in 2022 (a mere 17% higher than 2017 in 5 years where many artticles suggest an annualized growth rate of 8% in Sepsis per year)
Add 10% for Canada's population (vs US)
Total 2.2 M Sepsis cases annually in NA (again not Incl Sepsis caused by Covid -19)
So 10 % of 2.2 M cases in NA, = 220,000 target market (again JK likes to use 10% as the portion of the Sepsis cases that PMX can do something about)
Spectral Target market used = 120,000 per most recent presentation.
Unexplained gap 100,000 ? (= 220,000 - 120,000)
Does the GAP grow larger if Covid-19 patients are included.? Covid apparently is not going away. Will we have the ability to treat more patients (e.g >.9 with higher capacity filters, or perhaps using 3 filters in some cases- i.e. longer duration of treatment - where several studies have already shown improved results)
Lets assume all the above revenue boosters are not real - just to be conservative. But lets use 220,000 target subset of Sepsis patients, and $ 7,500 - given it's "exceeding expectations" status under Tigris)
Addressable Market ?
220,000 x 2 col x 7500 = $ 3.3 B USD (= $ 4.125 B CAD $ using 1.25 CAD/USD)
Rounding lets say $ 4B CAD (used in part 2)
Addressable Market per presentation = $ 1.6 B USD for PMX
(= 120,000 x 2 col x $ 6750)
Top Line Addressable market gap = $ 1.7B USD. Why ? Not sure.
Does "exceeding expectations" allow for an increase from the estimated price of $ 6750 /col? Or the oft, and past quoted $ 7,500 per column - given a 30% relative mortality benefit ? especially with no other FDA approved treatment?
Are we showing our house in the best light? Or , in the case of public consumption, is it a little dim and a little unkempt?
MM