BioPharmX Corp fka BPMX

[finesand]

Evaluation Exercise & Discussion

Discussing evaluation with 01 and others, what is the company and hence their products actually worth?

Trading wise for common shares, we survived the RS threat (expired) and the next step is to either receive favorable financing of the trials via partnership, if not being bought out right away.
Partnership may not only finance the trials but provide proper distribution and sales after FDA approval.

OK, posting our slightly edited notes here

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Fully diluted OS around 375M maximum, this includes the new Series A and B, as well as the prepaid Warrants from November 2017 and all other outstanding convertibles.

Zacks report from 2017-12-14 is post the offering and should contain the whole share structure, but you will see below that it did not.

"With all that said, when it comes to the company s valuation, we believe the company s shares still have
enough room for further appreciation. Currently the company s shares are trading at about $0.11 per
share, which values the company at $15 million in market capitalization based on 154 million outstanding
shares. This is certainly a deep discount.
As we discussed above, by 2019, BioPharmX will have three commercially available products targeting
the two big markets: women s health and acne. Based on our financial model, BPMX will become
profitable in fiscal 2020 with an earnings per share (EPS) of $0.13 based on total revenue of $62.5 million.
Considering the company s growth potential, we think a P/E multiple of 35, which is the biotech industry s
average P/E ratio, should be used to value the company. Therefore, we come up with our price target of
$2.50 per share based on the 35x P/E ratio, discounted at 25% for two years. Our price target of $3.00
per share values the company at $342 million in market cap, which is still conservative in our view.

They base it on $342M mcap -> $3/sh and 114M shares, hence not based on fully diluted value - sloppy.

Fully diluted: $342M mcap @ 375M OS -> $0.912/sh.

They base it on $62.5M revenues and $14.82M earnings only in 2020 (From their EPS and 'em using only 114M OS)
Their P/E 35 and 375M fully diluted OS -> $1.38/sh. With 25% discount $1.037/sh voila

Now we need to figure our the BO price, often a 4 year multiple?

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More bullish proposals where annual revenue above $500M possible, based on claim that 'US acne market is 5 Billion annually', Worldwide may double.
Below shows that Zack's revenue projection might be very low ball, very conservative.

Here Acne Vulgaris Different OTC Treatments (A must read)
- Total direct costs for acne have been reported to exceed $3 billion annually.4
- over $1 billion is spent on prescription medications annually, and
- the OTC market is estimated to be anywhere from 2 to 4 times this amount.5,6
- Worsens Acne: Using oil-based skin and hair products (BPX01 is the only water based treatment)

See Acne Treatment Market:
- Global Acne Treatment: "estimated to create a little more than US$ 3,000 Mn, or close to 60% share of the total market in 2017 and more than US$ 4,500 Mn, or a little over 60% by 2025 end, expanding at a CAGR of 5%"
- Inflammatory Acne Segment: "is expected to create absolute $ opportunity of US$ 145.7 Mn in 2018 over 2017. ... The inflammatory acne segment is the most attractive segment, anticipated to record an attractiveness index of 1.3 over the forecast period. "

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This would be a 4-8 multiplier of above low PT based on Zacks revenue projection.

In 2012, Valeant Pharmaceuticals, a Canadian company, purchased Medicis and its flagship product Solodyn® for $2.6 billion. Solodyn® was Medicis' biggest money-maker, accounting for around 40% of Medicis' sales.

Therefor, a low ball PT of $1.50 for 2020 around, and stepping up until.
Buyout price around $2.70/sh - $3.65/sh, MCAP $1.01B - $1.37B.
That is our low ball non-pumper figure, could be a multiple as you can read above Acne's market size.

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The above was only discussing the Acne BPX01 value.
We also have Rosacea treatment, entering Phase 2/3 study now.
Rosacea treatment will be the icing on the cake of the driving value of BPX01.

See Treating Rosacea.

Oracea Sales in 2007

New York Times reports that sales of Oracea for the first half of 2006 totaled $9.1 million and that if you are ‘reading the graph right’, Oracea prescriptions numbered 1.2 million a month in December 2007. Oracea sales was worth approximately $104 million for the twelve-month period ending July 2009. This figure is up almost 200% from the previously reported sales of $52.5 million in 2007

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We like to see more comments to resort on a bullet proof evaluation.

Disclosure: I am long BPMX but trading a certain swing position around the core. This is not an investment advice legally speaking.