Predictive Technology Group Inc (PRED)

[Ian345]

It is difficult to determine how much of an opportunity the Patent provides but it is interesting to note that all of the other patents, licenses and trade secrets carried on PRED's balance sheet are valued at less than $25m.

If we look at the opportunity in the United States royalties for genetic tests typically range from $5-$20 per test.

If PRED were to license at $50/test and an upfront fee of $250k per lab the cash flows might look something like this:

Best Case next 10 years:

Estimated 5m women tested = 5,000,000 x $50 = $250m

Lab Fees: 100 Labs x $250k = $25m

So Gross Cash Flows over the next 10 years might be $275m if everything went right and PRED obtained close to 100% market share.

This of course does not take into account the cost and risk of further development and licensing. Unlicensed tests or the very likely chance that royalties are significantly less than $50/test as there are competing technologies in development and the current alternative is a $250 ultrasound and physical exam.

So the stock is likely a wee bit ahead of itself.

NPV of $27.5m per year for 10 years with an 8% discount rate is around $180m and this does not reflect any incremental costs for this project.