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I did not choose "any" number. What I chose to do was make the process objective rather than subjective by using actual hard data - Keytruda's numbers...which was meant to serve as a surrogate for NWBO. It was an example!
Without Keytruda as a guideline, I would not have bothered to offer a guess; which is all too often what we see...'some recollection of some past company that had some similar experience and approaches some similar value.' Please, that is anecdotal and subjective BS. Not to put too fine a point on it, but if DCVax had a similar revenue producing experience then the reality would be numbers very similar to what I offered.
Actually, I’m just illustrating a point.
Payments are for drug applications and that more would be from BP is simple, they file more NDAs. Here is what the fee category looks like for 2021-2022...
Fee Category for each drug submitted:
Fee Rates For 2021 = $2,875,842
Fee Rates For 2022 = $3,117,218
Percent Change = 8.4%
FDA’s FY 2022 Budget Request. Our program level request totals $6.5 billion, which is comprised of $3.6 billion in discretionary budget authority and $2.9 billion in user fees. This is an increase of eight percent, or $477 million above the FY 2021 Enacted level. The Budget requests a net budget authority increase of $322 million, which reflects $343 million in requested increases and scheduled adjustments of -$21 million to reflect the authorized level for 21st Century Cures and the one-time funding provided in FY 2021.
Let me see if I understand this point...an unsupported opinion is superior to an objective algorithm? Funny, I could never get my CFO to buy that where I worked.
Thank you for making the point clear...No business can be successful without clear strategic decisions and actions by management. To suggest NWBO is managerially rudderless is nonsense. One of the many misapprehensions of business is that, unless management is dispensing PRs regularly, they are asleep at the switch.
Nope, no kool-aid for me and one must be careful how one determines the value of a firm. Kaizenman actually has the eye opening discussion, as he did E/V calculations.
Frankly, trying to value a company through market cap is intellectually lazy and neither E/V nor DCF consider market cap the prevailing means to assess a company's value.
Market capitalization, or "market cap", is the aggregate market value of a company represented in a dollar amount. Since it represents the “market” value of a company, it is computed based on the current market price (CMP) of its shares and the total number of outstanding shares.
Kaizenman, that you did the "long math" is impressive as it is very difficult (rigorous). However, the revelation is an eye opener and that you did it just makes me smile. For the uninitiated, my numbers are pedestrian in comparison because...
Enterprise value (EV) differs significantly in several ways (it considers all assets and liabilities), and many believe it to be a more accurate representation of a firm's value. EV tells investors or interested parties a company's value and how much another company would need if it wanted to purchase that company.
Your work offers investors Peace (of mind)!
Many thanks for the response and allow me to say that your analysis would be interesting to see. While DCF is good, it is limited (it does not consider the full value of all assets) and my effort was limited to using a surrogate for NWBO (Keytruda).
Your E/V analysis is intriguing (for those unaware, it covers more than DCF), and that you tied it to n/rGBM in developed countries (I assume that includes the EMA covered countries) is very cool. That, sir, is well done. And while not asking for a number, your analysis provides you a prospective value of DCVax that, as you stated, shows the significant potential for NWBO.
In case anyone is interested, here is a link that discusses a range (NOT THE range) of best practices for biotech/pharma valuations that would be of the types done by the business development people that sit in the finance depts of the BP firms...and do it for a living.
https://www.biopharmavantage.com/pharma-biotech-valuation-best-practices
Cheers!
You are too lenient with the timing...the CRL for SOX was July 2016...and we are supposed to respond as if 6 and one-quarter years ago just happened and that is the "logic" for the suppressed share price.
This totally misapprehends that revenue growth and profitability are in the here and now. Business is about where we are now! If no one is willing to invest, how does that affect Elite's valuation? The answer is - IT DOES NOT! Anyone saying otherwise lacks business knowledge. For those of us not interested in selling, the share price is irrelevant. Elite's valuation increasing is what matters. Nasrat's only exit is M&A, that is mine as well.
I get the non-NWBO intrusions from time to time to time to time :)
This line said it all...that you understood the point...
Interesting the numbers that came up using the analysis of Keytruda's revenue alone, and what NWBO would be at using those numbers.
We await that explanation, as it would be an astounding level of clarity as yet unseen!
Sorry, but that is incorrect and ungrounded in business reality. But, since I am always willing to learn (not a universal truth), please provide examples to counter my point.
That is ELTP worthy... :)
I understand the frustration. But feckless? A little history would show the company has increased revenues 4x over three years and is profitable. The changing structure will allow Elite to benefit more from the sale of its products. But, these successes do not matter because of not keeping investors informed of material events? Let's talk about that...
Have investors not ultimately been told of the events? Why yes they have! So, the issue is not a lack of being informed, but of timing? If the information gets out, why would timing matter? The information speaks for itself, the business is growing.
What I find interesting is that investors complained that LCI was not doing a good job on XR (Elite had no choice but to speak well of them, it is what is done amongst partners), but when we are told of the cancellation of the partnership, the reaction was as if we lost Pfizer as a partner rather than the stumbling near BK'd LCI. This is after Nasrat leaving hints in CCs about wanting Elite's own sales & marketing arm, precisely because of the tenuousness of LCI. Still, with the sky apparently falling, shareholders complained that Elite has no plan?
Where I worked we knew the best way to maximize shareholder value was to do our freaking jobs and the results would drive the share price. That same sentiment abounds in business and it is why we see employees getting stock - to align their efforts with the business. Exactly how is it that Elite is aligning along the same path and, yet, the share price remains unaffected? Blaming Elite is easy and wrong. They have done their job. At what point is it not clear that the actions that allow other businesses to have their share price increase are not applicable to Elite's? How is that possible? And no, it is not about investors not being informed in some timely manner.
This is exactly right...
ready to hit the ground running and rapidly ramp
How often have I said to you that when you have eliminated the impossible, whatever remains, however improbable, must be the truth?
While we fully expect Nasrat to do things - they have partnered with an ex-US firm and bought a building without letting investors know until it was done. But, key strategic decisions by companies are not likely to be conveyed to the world before they are done. That is the way it is in business management. In fact, a company can impinge upon its own success by revealing too much.
Thank you. Making an error comes with my territory. Strategy is about adapting. I do. As I have said, I am not about being right, I am about getting it right! This is supposed to be a discussion board where we work to do that.
Fair point...my day job and sense of expediency got in my way. Happens. But that will be the last time I get complacent.
Did you see your federal taxes at work to ensure Elite's legal market access?
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Thanks. I appreciate it.
Thanks for the find, where did you see it? Link please?
Here is an answer...
First, let's set the predicate...
On April 2, 2022, the Company entered into a loan and security agreement with East West Bank, pursuant to which the Company was granted by the Bank a termloan of $12,000,000 for a duration of five years and an asset-based Revolving Line of Credit up to $2,000,000. The Company has received the proceeds of $11,959,880 out of the term loan net of applicable professional changes, and it will be used for general working capital purpose. In return for the term loan, the Company is required to meet certain financial terms and conditions.
bio, thanks for the response. Not to belabor the exercise, but it is important to understand that I am not saying NWBO is worth any of the projections offered. What I did was to use Keytruda as an example of what is possible. As that stands, the Keytruda numbers support what I projected. My point was that if NWBO had a similar experience with revenue growth, this is what it could be worth. I tried to provide a grounded analysis instead of just another subjective opinion.
I have been on the wrong side of a biotech that could not manage to stay liquid with an approved NDA and, yep, Chp 7 - liquidation - saw their asset go to a larger pharma. But the issue was with management and not BP.
While I could write at length about BP and their change in R&D and product development, I would simply say that all BP used to spend about 18-20% of revenues on R&D. At some point in the past, they changed and decided it was cheaper to acquire than develop. Today R&D for many BPs barely breaks double-digits, with claims of being more efficient, which is misleading, The focus is really on a highly competent business development group that sits in finance and looks at businesses to buy or partner with. They are the people that do the sophisticated analysis that make my little DCF exercise look pedestrian.
Make no mistake, a BP will take out a crippled firm. However, when they find one that is very valuable in a longer term view, they will jump in with cash and a partnership that, over time and an effective "tryout" often turns into an acquisition.
Senti,
Okay, to avoid any mistaken impressions, DCF is a valuation method used to estimate the value of an investment today, based on projections of future cash flows (how much money it will generate in the future). As I said, it is both art and science. For some this can be difficult to grasp, nonetheless...
The science is easy (the algorithm). The art is more difficult because, when identifying the independent variables, the question is based on what? NWBO has nothing to base a DCF upon. However, Keytruda provided the basis for good comparisons...novel cancer drug with an actual track record. The time projections? The time frame is always a SWAG (unless you have an actual timeframe, but that was provided by Keytruda). That is why I did two analyses (y'a how, solve for X and solve for Y) to give us a fair range. This is not proof of its value, it is just one person's analysis.
But your point about Merck is a worthy one and for that I did another analysis and it was even more interesting...
I did an analysis on Keytruda as a separate business not as a drug, and used their real numbers to project NWBO's potential growth. So, real numbers, real timeframe for revenues (NWBO has neither). In keeping with the concept of DCF - valuing an investment today using future cash flow projections based on the real experience of Keytruda - NWBOs share price today would be 187.11.
That's my story and I am sticking to it!
Fireman,
Allow me to address the second paragraph...impressive! I imagine the mental and physical challenges of the job would be the attraction. A rare combination and that you do much of it outside is pretty cool (no pun intended)!
As for the first paragraph, I agree with your concerns about debt and lack of revenues, a deadly combination for many firms. But DCVax, as a separate vaccine and potentially in combination, has game-changing potential. So, the negotiations are done best when both sides work toward a mutually beneficial agreement, rather than viewing negotiations as a zero sum game. This is a potential medical breakthrough and the approach should be consistent with any firm's values statement. FWIW...
Here is Merck's...
Everything we do, in and out of the laboratory, is based on our deep appreciation for life. That’s the reason we come together across the business with one purpose – to use the power of leading-edge science to save and improve lives around the world.
Working for Roche means more than just having a job. To us, it means a daily obligation to maintain our personal integrity, think boldly and be passionately committed to improving medicine. Our three Roche values are central to how we want to behave as individuals, and collectively as an organization.
I hope that is not because misery loves company! :)
I am absolutely in agreement with that scenario. In fact, as it relates to the journal article providing medical and academic gravitas, there will be share price movement even without regulatory approvals. Moreover, I cannot help but think there are companies that have been talking to NWBO - Merck and Roche to name a couple. Both have portfolio needs and, as sophisticated acquirers, they know how the dance is done.
Mike, at this point in time, I am not a believer in the buyout scenario. So, for me, there is no "IF". Relatedly, I have to say that most discussions of buyouts come from tired long time investors, those underwater and those unfamiliar with the reality that, despite M&A frequency in pharma/bio, the failure rate is still north of 70%.
Finally, my use of examples is illustrative of growth potential not an attempt at suggesting correlations. Having said that, I think any suggestions of hyper-inflated increases in the share price in the immediate future are folly. Still, approvals by regulatory agencies in pharma have unpredictable influences.
About where NWBO can go from its current share price has many variables. However, not included among them are constraints based on comparisons. I will accept your comparators, but provide another math/financial perspective...
BioNtech was 17.37 in 2019 and hit a high in 2021 of 389.01, a 22x increase. With NWBO at .73 x 22 ~ 16.25 p/s.
Moderna was selling for 18.32 a share in 2018 and in 2021 its share price hit 449.38. That is a near 25X increase. With NWBO at about .73 x 25 ~ 18.25 p/s.
Alnylam was 5.25 in 2004 and is at about 215 now, a near 41x increase. With NWBO at .73 x 41 ~ 30.00 p/s.
Seagen was 2.87 in 2003 and hit 175.14 in 2021, a 61x increase. With NWBO at .73 x 61 ~ 44.53 p/s.
I do not think it necessary to continue with comparisons. It remains the math is not improbable if NWBO gets approvals.
Given the reference to Keytruda, I presume this is about the NWBO DCF analysis I did. As to an answer to the question, I am sorry, there is clearly a deficit in knowledge that I cannot overcome.
I absolutely agree. Any discussions of NWBO being acquired at this point are either hopeful imaginings by underwater investors or musings by those lacking business experience in M&A.
Based on experience in business and teaching strategy, I am often resistant to executives calling everything they do leadership and all their initiatives a competitive advantage. In fact, there are few products that actually qualify as a competitive advantage and, even when so, it is generally not sustainable. In reality, it is only the company logo that qualifies as C/A - think Shell, MCD, SBUX, Coke...as what they sell offer easy substitutes. However, as a novel drug, DCVax qualifies and, as with Keytruda and Humira, its durability is tied to the patents. Consequently, DCVax qualifies as a competitive advantage under VRIN analysis...Valuable, Rare, Inimitable, and Non-substitutable!
Crash, I lack pm capability. But as to your question, I am more than happy to share the algorithm. You and everyone else can play with it and will likely as not arrive at different data points. Given the variables needed, I would start with parallels to Keytruda for obvious reasons. Just to ensure anyone interested in giving it a go has the same basis for the PROJECTION, here is the Keytruda growth...
Merck had zero revenues with it in 2014; $1.4B in year three (2017); and $11.1B in year five (2019). In year seven (2021) they had $17.2B in revenues.
I did not invest in a stock, I invested in a company - Elite. I am on a journey and it will end at some point, I expect via a buyout. But as with anyone on a journey, I am not looking at the landscape as it passes and continually ask from the backseat, "Are we there yet?"
How difficult is it to understand, outsiders are the basis for OBJECTIVE analyses. Funny, in an odd sort of way, that any medical professionals who might be paid by NWBO are rendered a useless reference source and, yet, when an objective analysis is done by an outsider, that too is rejected. All one can take from it is that NO ONE can offer analysis that in any way looks at NWBO in a positive light. Please explain how that is logical.
Frankly, this says it all...
Nasrat has no distribution plan that I’m aware of
Fireman, thanks for the perspective. I noticed that when there was a discussion of fires, you provided a level of expertise that made it clear many lacked the knowledge that you bring to the table. So it is that my analysis was not - pardon the intentional pun - blowing smoke. Perhaps you missed the part where I said I was a global executive with a Fortune 50 and involved in our due diligence for the many acquisitions we did.
The DCF I did on NWBO had nothing to do with revenues, debt or cash on hand. In fact, it had nothing to do with its assets. It was grounded in a projection. While more complex in their various analyses, business development functions in large firms do it for a living and are very good at valuations to ensure their companies do not overpay. And, as NWBO will have a valuation of its own, that is where the negotiations begin.
If DCVax is as good as we are led to believe, the question is what would be a realistic valuation of the company. Looking for a reasonable comparison, I used what Keytruda produced in its first seven years and did a set of DCF analyses, both conservative and not with a full Keytruda growth path. Admittedly, there is subjectivity...but the algorithm is the algorithm. Based on that, the projected share price was $21.29 for the very conservative estimate and $64.77 for the second.
The takeaway is that NWBO would have their own analyses done and have a basic idea of their value. But, realistically, it has to be more than $7-12.
Not always...
the shareholders of the acquiring company must be convinced that the acquisition is a good one
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