Friday, April 29, 2016 9:36:24 AM
Unfortunately, it's difficult to precisely gauge the potential stock price reaction upon a hypothetically successful Prurisol Phase II Proof of Concept trial for a few reasons, including the following two informational limitations that we have at this time:
1) Leo has explicitly stated his intentions to establish a partnership to bring the drug to market and the specific structure of such a deal will greatly impact the level of revenues, income (and cash flow) that CTIX will ultimately tally from the drug.
2) The magnitude of the hypothetical success also needs to be known in order to make a rough estimate of the level of market share that can be captured by our potentially disruptive new entrant into the psoriasis landscape.
Having said that, let me just tell you that you can google psoriasis and find multiple predictions from reputable analysts of a 7BN+++ market for drugs to treat the condition by 2020.
Without question, Prurisol would be among the easiest treatments to administer to psoriasis patients, way less gnarly then dosing of biologics. If it also demonstrated improved efficacy and limited side effects, then it'd be hard to imagine the drug couldn't capture a significant share of that $7+ BN in annual revenues. If it took 15%, that'd be a billion a year in drug sales. Average biotech trades at 5X their annual sales, so without factoring in a partnership deal, one could say that CTIX would be worth $5BN based on that blockbuster drug alone. Using fully diluted 160MM shares outstanding, that's a PPS greater than $30.
By striking a Big Pharma relationship, we'd trade a good chunk of those future revenues for cash up front, and other benefits, so don't think we could expect the PPS to reach such heights on successful results as $30/share, just giving some perspective on the value that would be created if the drug is safe and highly effective. But could we double or triple in the short-term, sure, quite easily.
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