This is a phase 2/3 biopharma with late stage trial(s) pending. It’s unrealistic to think Leo can more than $20 billion pre-revenue and $10 billion post-Phase 2 even with 7 drugs across 3 platforms. There is still a lot of work left (reformulations for 3 drugs) and a lot of time and investment left for a partner or buyer. There is also the issue of legacy royalties for B and K which reduce valuation on a tax. Also, I can find no precedent for 10s of billions even adding the values of similar deals for 7+ drugs across 3 platforms.
First, an outright buyout should fetch $5 to $10 billion. Depending on a lot of factors, B platform is currently between 3 and 5 billion based on current proof of safety and efficacy, market size and blue skies OM and UP. Prurisol would fetch 1 to 3 billion and K 1 to 2 billion as a safe and proven p53 modulator. There are plenty of examples for those valuations for phase 2-3 drugs and includes BTD and 505b2 pathways. It also includes greater than 30 PASI75, but also its value as an anti-puritus should it be less than 30 PASI75.
Second, it’s unclear what deals Leo is pursuing. We can only guess. If it is a license/partner then precedent shifts downward. If Prurisol is successful in phase 2b, then I’m pretty sure that will be the first agreement. A 505b2 pathway drug would get $30 million to $75 million upfront with a few $100 million in milestone payments how many millions depending on the backend royalty structure. The money would then be used for further development of B and K. OM would be the minimal go to if P shows a low PASI score. That should get $45 million to over $100 million upfront, again depending on the backend terms.
Third, the previous paragraph takes the IPIX cap to $1 to $2 billion, $4 to $8, on a spike and then pullback to roughly half that. As trials ramp back up, and key milestones are hit (including first market approval), the SP over time might approach $40 to $50 a share and even later after continued success, new partners and approvals finally reach multiple 10s of billions. But, that’s far in the future.
Bottom line, $15 to $40 a share for the whole kit and kaboodle will change the finances and retirement for a lot of people, as would even $5.
* Never borrow to invest.
